Navient Corporation · NASDAQ:NAVI
Navient — Q4 2020 Earnings Presentation
21 slides from Navient's earnings presentation, Jan 27, 2021
Slide 1: 2020 4th Quarter and Full Year Earnings Call Presentation
2020 4th Quarter and Full Year Earnings Call Presentation January 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 December 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”),
Slide 3: Continued To Build Long-term Value Through A Challenging Environment in 2020
Continued To Build Long-term Value Through A Challenging Environment in 2020 Federal Education Loans Consumer Lending Segment Business Processing Segment Segment Providing payment relief to Dynamically adjusted our Rapidly pivoted from COVID-19 borrowers impacted by originations in response to
Slide 4: Outlook
Outlook 2021 EPS Guidance: $3.10 - $3.25 1 Key Company & Business Segment Metrics 2020 2020 2021 Original 2 Targets Actuals Guidance Core Earnings Return on Equity 3 High Teens to Low Twenties 30% ✓ Low Twenties Core Earnings Efficiency Ratio 3 ~50% 48% ✓ ~52% 5.0% Adjusted Tangible Equity Ratio 4 A
Slide 5: Operating Results: Core Earnings Basis
Operating Results “Core Earnings ” Basis 1 Selected Financial Information and Ratios Full Year and 4th Quarter Highlights (In millions, except • Adjusted Core Earnings per share increased 45% to $0.97 per share Q4 20 Q4 19 2020 2019 compared to $0.67 in the year ago quarter 2 amounts) - Adjusted cor
Slide 6: Federal Education Loans Segment
Federal Education Loans Segment “Core Earnings” Basis Selected Financial Information and Ratios Full Year and 4th Quarter Highlights ($ In millions) Q4 20 Q4 19 2020 2019 Federal Education Segment net interest margin 1.06% 0.87% 0.99% 0.83% • Q4 20 Net Interest Margin: 106 basis points • Q4 20 Charg
Slide 7: Consumer Lending Segment
Consumer Lending Segment “Core Earnings” Basis Selected Financial Information and Ratios Full Year and 4th Quarter Highlights ($ In millions) Q4 20 Q4 19 2020 2019 Consumer Lending • Q4 20 Net Interest Margin: 302 basis points Segment net interest margin 3.02% 3.31% 3.20% 3.30% • Q4 20 Charge-off Ra
Slide 8: Business Processing Segment
Business Processing Segment “Core Earnings” Basis Selected Financial Information and Ratios Full Year and 4th Quarter Highlights ($ In millions) Q4 20 Q4 19 2020 2019 Business Processing Government Services $58 $34 $191 $154 • Q4 20 EBITDA Margin 1: 23% Healthcare RCM Services $35 $25 $113 $104 • Fu
Slide 9: 2020 Financing and Capital Management
2020 Financing and Capital Management Capital Management Financing Committed to returning excess capital to Issued $6.3 billion of Private Education Loan shareholders ABS transactions in 2020 • Returned $523 million through dividends • Issued 2 Private Education Loan ABS and share repurchases tr
Slide 10: GAAP Results
GAAP Results (In millions, except per share Q4 20 Q4 19 2020 2019 amounts) Net income (loss) $186 $171 $412 $597 Diluted earnings (loss) per common $0.99 $0.78 $2.12 $2.56 share Operating expenses $269 $235 $964 $984 Provision for loan losses $2 $50 $155 $258 Average Education Loans $81,685 $88,266
Slide 11: Appendix
Appendix © 2021 Navient Solutions, LLC. All rights reserved. 11
Slide 12: Consumer Lending Segment Assisting Borrowers Through the Crisis
Consumer Lending Segment Assisting Borrowers Through the Crisis Total Private Education Loans in Forbearance 1 Total Private Education Loans in Current Repayment 1 ($’s in billions) ($’s in billions) $3.5 $24.0 $3.0 $22.0 $20.0 $2.5 $18.0 $2.0 $16.0 $1.5 $14.0 $1.0 $12.0 $0.5 $10.0 • Implemented an
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 $2.7 billion of cash flows in 2020 FFELP Cash Flows 12/31/20 Secured • Reduced total unsecured debt by $1.1 billion Residual (including O/C) $4.
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 $1.6 $1.0 $1.0 $1.4 $1.0 $0.9 $1.2 $0.8 $1.2 ($’s in Billions) ($’s in Billions) $0.8 $1.0 $1.0 $1.0 $0.9 $0.8 $0.6 $0
Slide 15: Managing Unsecured Debt Maturities
Managing Unsecured Debt Maturities (par value, $ in billions) $1.8 $1.8 $1.5 $1.5 $1.5 $1.4 $1.4 $1.1 $1.1 $0.7 $0.7 $0.6 $0.6 $0.5 $0.5 $0.2 $0.2 $0.0 $0.0 $0.0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030+ As of December 31, 2019 As of December 31, 2020 Long-term Conservative Funding Approach
Slide 16: Other Segment: Core Earnings Basis
Other Segment “Core Earnings” Basis Unallocated Shared Services Expenses Shared Services Overview $277 million CEO, Corporate Marketing & Other • Shared services are related to the management of the entire company or shared by multiple reporting segments HR & Corporate Facilities 3% 9% Information T
Slide 17: Navient Is Focused On Expense Efficiency
Navient Is Focused On Expense Efficiency Notable Items Impacting Total Expenses Compared to Prior Periods ($ In millions) Q4 20 Q4 19 2020 2019 Reported Core Earnings Expenses $269 $237 $973 $990 Year over Year Change in Reported Core Earnings Expenses 14% (2%) Restructuring & Reorganization Expense
Slide 18: 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 19: 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 20: 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, 2020 2019 (Dollars in Millions) 2020 2019 GAAP net income (loss) $186 $171 $412 $597 Net impact of derivative accounting (28) (27) 265 (5) Net impact of goodwill and acquired in
Slide 21: Navient
NAVIENT.