Navient Corporation · NASDAQ:NAVI
Navient — Q1 2020 Earnings Presentation
18 slides from Navient's earnings presentation, Apr 22, 2020
Slide 1: 2020 1st Quarter Earnings Call Presentation
2020 1st Quarter Earnings Call Presentation April 21, 2020
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures
Forward-Looking Statements; Non-GAAP Financial Measures The following information is current as of March 31, 2020 (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, 2019 (the “2019 Form 10-K”), fil
Slide 3: Response to COVID-19
Response to COVID-19 Supporting our Employees and Communities • Quickly transitioned 90% of workforce to work from home • Extended flexible hours and emergency pay for impacted employees • Reassigning experienced customer support staff to aid state efforts in processing unemployment claims • Donated
Slide 4: Operating Results: Core Earnings Basis
Operating Results “Core Earnings ” Basis 1 Selected Financial Information and Ratios 1st Quarter Highlights (In millions, except per share amounts) Q1 20 Q4 19 Q1 19 • Adjusted Core Earnings per share of $0.51 compared to $0.58 in the year-ago quarter 2 GAAP diluted EPS ($0.53) $0.78 $0.52 Adjusted
Slide 5: Federal Education Loans Segment
Federal Education Loans Segment “Core Earnings” Basis Selected Financial Information and Ratios 1st Quarter Highlights ($ In millions) Q1 20 Q4 19 Q1 19 Federal Education • Q1 20 Net Interest Margin: 81 basis points Segment net interest margin 0.81% 0.87% 0.80% • Q1 20 Charge-off Rate: 15 basis poin
Slide 6: Consumer Lending Segment
Consumer Lending Segment “Core Earnings Basis” Selected Financial Information and Ratios 1st Quarter Highlights ($ In millions) Q1 20 Q4 19 Q1 19 Consumer Lending • Q1 20 Net Interest Margin: 3.31% Segment net interest margin 3.31% 3.31% 3.22% • Q1 20 Charge-off Rate: 1.3% Private Education Loans (i
Slide 7: Business Processing Segment
Business Processing Segment “Core Earnings” Basis Selected Financial Information and Ratios 1st Quarter Highlights ($ In millions) Q1 20 Q4 19 Q1 19 Business Processing Government Services $33 $34 $42 • Q1 20 EBITDA Margin 1: 7% Healthcare RCM Services $24 $25 $26 • Government services has been nega
Slide 8: Q1 2020 Financing and Capital Management
Q1 2020 Financing and Capital Management Financing Issued 3 Private Education Loan ABS transactions for $1.9 billion Refinanced 2 Credit Facilities for $472 million, extending terms and reducing costs On April 1, 2020: Extended FFELP Facility for two years, to April 1, 2022, with a capacity
Slide 9: Q1 Impacts on Loan Loss Reserve and Capital
Q1 Impacts on Loan Loss Reserve and Capital Primary Drivers of Change in Equity 1 Adoption of CECL - Increase in allowance resulted in a reduction of equity equal to $620 million. 2 Marks on Derivatives – Cumulative marks on interest rate hedges reduced equity by $629 million 1, which will reverse t
Slide 10: GAAP Results
GAAP Results (In millions, except per share amounts) Q1 20 Q4 19 Q1 19 Net income (loss) ($106) $171 $128 Diluted earnings (loss) per common share ($0.53) $0.78 $0.52 Operating expenses $251 $235 $256 Provision for loan losses $95 $50 $76 Average Education Loans $87,006 $88,266 $93,987 © 2020 Navien
Slide 11: Appendix
Appendix © 2020 Navient Solutions, LLC. All rights reserved. 11
Slide 12: Managing Unsecured Debt Maturities
Managing Unsecured Debt Maturities (par value, $ in billions) 2.1 $1.8 1.8 $1.5 1.5 1.5 1.4 1.4 1.4 1.3 $1.3 0.7 0.5 0.6 0.6 0.5 0.5 0.0 0.0 0.0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029+ As of March 31, 2019 As of March 31, 2020 Long-term Conservative Funding Approach • Issued $700 million
Slide 13: Other Segment: Shared Services Expenses
Other Segment “Core Earnings” Basis Total Unallocated Shared Services Expenses Shared Services Overview Q1 2020 $75 million • Nearly 75% of total expenses are allocated CEO, Corporate Marketing & Other • Shared services are related to the management of the entire HR & Corporate Facilities 3% company
Slide 14: Navient Is Focused On Expense Efficiency
Navient Is Focused On Expense Efficiency Notable Items Impacting Total Expenses Compared to Prior Periods ($ In millions) Q1 20 Q1 19 Reported Core Earnings Expenses $256 $257 Year over Year Change in Reported Core Earnings Expenses (0%) Restructuring & Reorganization Expenses $5 $1 Regulatory-Relat
Slide 15: 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 16: 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 17: Differences Between Core Earnings And GAAP
Differences Between Core Earnings And GAAP Quarters Ended Core Earnings adjustments to GAAP: Mar. 31, Dec. 31, Mar. 31, (Dollars in Millions) 2020 2019 2019 GAAP net income (loss) ($106) $171 $128 Net impact of derivative accounting 247 (27) 6 Net impact of goodwill and acquired intangible assets 5
Slide 18: Navient
NAVIENT.