Navient Corporation · NASDAQ:NAVI
Navient — Q4 2021 Earnings Presentation
20 slides from Navient's earnings presentation, Jan 26, 2022
Slide 1: 2021 4th Quarter and Full Year Earnings Call Presentation
th 2021 4 Quarter and Full Year Earnings Call Presentation January 26, 2022
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures
Forward-Looking Statements; Non-GAAP Financial Measures The following information is current as of December 31, 2021 (unless otherwise noted) and should be read in connection with Navient Corporation’s “Navient” Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”),
Slide 3: Delivering Long-term Value
Delivering Long-term Value Federal Education Loans Consumer Lending Business Processing Successfully assisted Originated $6.0 billion of Navient employees continue borrowers in returning to high-quality Private Education to support our state and repayment Loans, meeting our mid-teens municipal
Slide 4: Continued Progress to Simplify Our Business
Continued Progress to Simplify Our Business Department of Education Resolution of Legal Matters Efficiency Initiatives Servicing Contract Transfer with State AGs and Improvements Successfully exited Reached agreements with Managing operations to a Department of Education loan state AGs to reso
Slide 5: Operating Results: Core Earnings Basis
Operating Results “Core Earnings ” Basis 1 Selected Financial Information and Ratios 4th Quarter and Full Year 2021 Highlights (In millions, except • Adjusted Core Earnings 1 per share decreased to $0.78 per share amounts) Q4 21 Q4 20 2021 2020 compared to $0.97 in the year ago quarter - Q4 21 inclu
Slide 6: Federal Education Loans Segment
Federal Education Loans Segment “Core Earnings” Basis Selected Financial Information and Ratios 4th Quarter and Full Year 2021 Highlights ($ In millions) Q4 21 Q4 20 2021 2020 Federal Education Segment net interest margin 0.99% 1.06% 0.99% 0.99% • Q4 21 Net Interest Margin: 99 basis points FFELP Loa
Slide 7: Consumer Lending Segment
Consumer Lending Segment “Core Earnings” Basis Selected Financial Information and Ratios 4th Quarter and Full Year 2021 Highlights ($ In millions) Q4 21 Q4 20 2021 2020 Consumer Lending Segment net interest margin 2.76% 3.02% 2.92% 3.20% • Q4 21 Net Interest Margin: 276 basis points • Q4 21 Annualiz
Slide 8: Business Processing Segment
Business Processing Segment “Core Earnings” Basis Selected Financial Information and Ratios 4th Quarter and Full Year 2021 Highlights ($ In millions) Q4 21 Q4 20 2021 2020 Business Processing Government Services $54 $58 $258 $191 • Q4 21 EBITDA Margin 1: 20% Healthcare RCM Services $57 $35 $230 $113
Slide 9: Q4 2021 Financing and Capital Management
Q4 2021 Financing and Capital Management Capital Management Financing ✓ Returned $175 million through share Issued $2.0 billion of Term Education Loan repurchases and dividends ABS transactions • Paid dividends of $25 million • Repurchased 7.4 million shares for Reduced unsecured debt by $1.4 bi
Slide 10: 2022 Guidance
2022 Guidance Full Year 2022 EPS Guidance: $3.00 - $3.15 1 Full Year 2022 Guidance Core Earnings Return on Equity 1 Mid to High Teens Core Earnings Efficiency Ratio 1 ~54% Adjusted Tangible Equity Ratio 1 ~6% Net Interest Margin – Federal Education Loan Segment Mid 90’s Charge-off Rate – Federal Edu
Slide 11: GAAP Results
GAAP Results (In millions, except per share Q4 21 Q4 20 2021 2020 amounts) Net income (loss) $(11) $186 $717 $412 Diluted earnings (loss) per $(0.07) $0.99 $4.18 $2.12 common share Operating expenses $448 $269 $1,207 $964 Provision for loan losses $5 $2 ($61) $155 Average Education Loans $75,066 $81
Slide 12: Appendix
Appendix © 2022 Navient Solutions, LLC. All rights reserved. 12
Slide 13: Education Loan Portfolio Generates Significant Cash Flows
Education Loan Portfolio Generates Significant Cash Flows Projected Life of Loan Cash Flows over ~20 Years Enhancing Cash Flows $’s in Billions • Generated $2.8 billion of cash flows in FY 2021 FFELP Cash Flows 12/31/21 Secured • Reduced unsecured debt by $1.4 billion in FY 2021 Residual (including
Slide 14: Education Loan Portfolio Generates Meaningful Cash Flows Over the Next Five Years
Education Loan Portfolio Generates Meaningful Cash Flows Over the Next Five Years Projected Annual Private Education Loan Cash Flows Projected Annual FFELP Loan Cash Flows $1.2 $1.1 $1.2 $1.1 $1.0 $1.0 $1.0 $0.9 $1.0 $0.9 $0.8 $0.8 ($’s in Billions) ($’s in Billions) $0.8 $0.7 $0.8 $0.7 $0.6 $0.6 $0
Slide 15: Managing Unsecured Debt Maturities
Managing Unsecured Debt Maturities (par value, $ in billions) $1.8 $1.5 $1.3 $1.4 $1.4 $1.1 $1.1 $1.0 $0.7 $0.7 $0.6 $0.6 $0.5 $0.5 $0.5 $0.2 $0.0 $0.0 $0.0 $0.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031+ As of December 31, 2020 As of December 31, 2021 Long-term Conservative Funding Approach
Slide 16: Other Segment
Other Segment “Core Earnings” Basis 2021 Unallocated Shared Services Expense 1 Shared Services Overview $229 million • Full year 2021 Regulatory Expense of $233 million included $205 million related to the agreements with State Attorneys CEO, Corporate Marketing & Other General 4% • Shared services
Slide 17: Notes on Non-GAAP Financial Measures
Notes on Non-GAAP Financial Measures (Dollars in Millions) In addition to financial results reported on a GAAP basis, Navient also provides certain performance measures which are non-GAAP financial measures. The following non-GAAP financial measures are presented within this Presentation: 1. Core Ea
Slide 18: Notes on Non-GAAP Financial Measures
Notes on Non-GAAP Financial Measures (Dollars in Millions) 4. Earnings before Interest, Taxes, Depreciation and Amortization Expense (“EBITDA”) – This metric measures the operating performance of the Business Processing segment and is used by management and our equity investors to monitor operating
Slide 19: Differences Between Core Earnings And GAAP
Differences Between Core Earnings And GAAP Quarters Ended Years Ended Core Earnings adjustments to GAAP: Dec. 31, Dec. 31, 2021 2020 (Dollars in Millions) 2021 2020 GAAP net income (loss) ($11) $186 $717 $412 Net impact of derivative accounting (85) (28) (235) 265 Net impact of goodwill and acquired
Slide 20: Navient
NAVIENT.