Navient Corporation · NASDAQ:NAVI
Navient — Q3 2021 Earnings Presentation
20 slides from Navient's earnings presentation, Oct 27, 2021
Slide 1: 2021 3rd Quarter Earnings Call Presentation
2021 3rd Quarter Earnings Call Presentation October 27, 2021
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures
Forward-Looking Statements; Non-GAAP Financial Measures The following information is current as of September 30, 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 Providing payment relief to Originated $1.6 billion of Over 3,700 Navient borrowers impacted by high-quality Private Education employees support our state COVID-19 Loans, meeting our mid-teens and municipal
Slide 4: Outlook
Outlook Increased FY 2021 EPS Guidance: Key Company & Business Segment Metrics At least $4.50 1 2021 Year to Date 2021 Original 2 Targets Actuals Core Earnings Return on Equity 1 Low Twenties ✓ 32% Core Earnings Efficiency Ratio 1 ~52% ✓ 48% Adjusted Tangible Equity Ratio 1 ~5.5% ✓ 6.4% Net Interest
Slide 5: Operating Results: Core Earnings Basis
Operating Results “Core Earnings ” Basis 1 Selected Financial Information and Ratios 3rd Quarter Highlights (In millions, except per share amounts) Q3 21 Q2 21 Q3 20 • Adjusted Core Earnings 1 per share decreased to $0.92 compared to $1.03 in the year ago quarter GAAP diluted EPS $1.04 $1.05 $1.07 •
Slide 6: Federal Education Loans Segment
Federal Education Loans Segment “Core Earnings” Basis Selected Financial Information and Ratios 3rd Quarter Highlights ($ In millions) Q3 21 Q2 21 Q3 20 Federal Education Segment net interest margin 1.04% 0.97% 1.03% • Q3 21 Net Interest Margin: 104 basis points FFELP Loans: • Q3 21 Annualized Charg
Slide 7: Closed and Novated Servicing Contract with the Department of Education
Closed and Novated Servicing Contract with the Department of Education What it Means for Navient Rationale & Impact ✓ We will continue to service our FFELP loan ✓ Focus on growth opportunities in Consumer portfolio Lending and Business Processing Segments, while ✓ Navient will no longer service gove
Slide 8: Consumer Lending Segment
Consumer Lending Segment “Core Earnings” Basis Selected Financial Information and Ratios 3rd Quarter Highlights ($ In millions) Q3 21 Q2 21 Q3 20 Consumer Lending Segment net interest margin 2.98% 2.95% 3.24% • Q3 21 Net Interest Margin: 298 basis points • Q3 21 Annualized Charge-off Rate 1: 77 basi
Slide 9: Business Processing Segment
Business Processing Segment “Core Earnings” Basis Selected Financial Information and Ratios 3rd Quarter Highlights ($ In millions) Q3 21 Q2 21 Q3 20 Business Processing Government Services $75 $66 $56 • Q3 21 EBITDA Margin 1: 31% Healthcare RCM Services $47 $64 $34 Total Business Processing • Revenu
Slide 10: Q3 2021 Financing and Capital Management
Q3 2021 Financing and Capital Management Capital Management Financing ✓ Returned $176 million through share Issued $2.0 billion of Term Education Loan repurchases and dividends ABS transactions • Paid dividends of $26 million • On October 14, priced $1.0 billion of • Repurchased 7.0 million shares
Slide 11: GAAP Results
GAAP Results (In millions, except per share Q3 21 Q2 20 Q3 20 amounts) Net income (loss) $173 $185 $207 Diluted earnings (loss) per common $1.04 $1.05 $1.07 share Operating expenses $248 $252 $232 Provision for loan losses $22 $(1) $14 Average Education Loans $76,373 $77,379 $83,168 © 2021 Navient S
Slide 12: Appendix
Appendix © 2021 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 $2.1 billion of cash flows in YTD 2021 FFELP Cash Flows 09/30/21 Secured • Reduced unsecured debt by $1.0 billion in YTD 2021 Residual (includin
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 Cash Flows assuming call option can be exercised at 10% Cash Flows assuming trusts run to maturity $1.2 $1.1 $1.2 $1.0 $1.0 $1.0
Slide 15: Managing Unsecured Debt Maturities
Managing Unsecured Debt Maturities (par value, $ in billions) $1.8 $1.5 $1.5 $1.4 $1.4 $1.1 $1.1 $0.9 $0.7 $0.7 $0.6 $0.6 $0.5 $0.5 $0.5 $0.2 $0.2 $0.0 $0.0 $0.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031+ As of September, 2020 As of September, 2021 Long-term Conservative Funding Approach • N
Slide 16: Other Segment
Other Segment “Core Earnings” Basis YTD 2021 Unallocated Shared Services Expenses Shared Services Overview $194 million CEO, Corporate Marketing & Other • Shared services are related to the management of the entire company or shared by multiple reporting segments HR & Corporate Facilities 3% 10% Inf
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 Core Earnings adjustments to GAAP: Sep. 30, Jun. 30, Sep. 30, (Dollars in Millions) 2021 2021 2020 GAAP net income (loss) $173 $185 $207 Net impact of derivative accounting (30) (30) (13) Net impact of goodwill and acquired intangible assets
Slide 20: Navient
NAVIENT.