Navient Corporation · NASDAQ:NAVI
Navient — Q1 2021 Earnings Presentation
20 slides from Navient's earnings presentation, Apr 28, 2021
Slide 1: 2021 1st Quarter Earnings Call Presentation
2021 1st Quarter Earnings Call Presentation April 28, 2021
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, 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”), fil
Slide 3: Delivering Long-term Value
Delivering Long-term Value Federal Education Loans Consumer Lending Business Processing Segment Segment Segment Providing payment relief to Originated $1.7 billion of high- Over 4,500 Navient employees borrowers impacted by quality Private Education support our state and municipal COVID-19 Loa
Slide 4: Outlook
Outlook Increased 2021 EPS Guidance: $4.15 - $4.25 1 Key Company & Business Segment Metrics 2021 Q1 2021 Original 2 Targets Actuals Core Earnings Return on Equity 1 Low Twenties ✓ 54% Core Earnings Efficiency Ratio 1 ~52% ✓ 44% 6.2% Adjusted Tangible Equity Ratio 3 ~5.5% ✓ (Pro forma Adjusted Tangib
Slide 5: Operating Results: Core Earnings Basis
Operating Results “Core Earnings ” Basis 1 Selected Financial Information and Ratios 1st Quarter Highlights (In millions, except per Q1 21 Q4 20 Q1 20 • Adjusted Core Earnings 1 per share increased 235% to $1.71 share amounts) compared to $0.51 in the year ago quarter GAAP diluted EPS $2.00 $0.99 ($
Slide 6: Federal Education Loans Segment
Federal Education Loans Segment “Core Earnings” Basis Selected Financial Information and Ratios 1st Quarter Highlights ($ In millions) Q1 21 Q4 20 Q1 20 Federal Education Segment net interest margin 0.97% 1.06% 0.81% • Q1 21 Net Interest Margin: 97 basis points • Q1 21 Annualized Charge-off Rate: 6
Slide 7: Consumer Lending Segment
Consumer Lending Segment “Core Earnings” Basis Selected Financial Information and Ratios 1st Quarter Highlights ($ In millions) Q1 21 Q4 20 Q1 20 Consumer Lending • Q1 21 Net Interest Margin: 299 basis points Segment net interest margin 2.99% 3.02% 3.31% • Q1 21 Annualized Charge-off Rate: 68 basis
Slide 8: Consumer Lending Segment: Q1 2021 Loan Sales
Consumer Lending Segment: Q1 2021 Loan Sales Loan Sale Proceeds: Impact & Use Non-Refi Private Refi Residual 1 Loan Sale Principal $560 million $1.0 billion 2 Gain on Sale $46 million $43 million 3 Reserve Release $88 million $14 million ✓ Principal proceeds from the sale of non-refi ✓ Proceeds from
Slide 9: Business Processing Segment
Business Processing Segment “Core Earnings” Basis Selected Financial Information and Ratios 1st Quarter Highlights ($ In millions) Q1 21 Q4 20 Q1 20 Business Processing Government Services $63 $58 $33 • Q1 21 EBITDA Margin 1: 29% Healthcare RCM Services $62 $35 $24 • Revenue increased $68 million or
Slide 10: Q1 2021 Financing and Capital Management
Q1 2021 Financing and Capital Management Capital Management Financing ✓ Returned $129 million through share Issued $2.8 billion of Term Education Loan repurchases and dividends ABS transactions • Paid dividends of $29 million • Repurchased 8.2 million shares for Issued $500 million of unsecured
Slide 11: GAAP Results
GAAP Results (In millions, except per share Q1 21 Q4 20 Q1 20 amounts) Net income (loss) $370 $186 ($106) Diluted earnings (loss) per common $2.00 $0.99 ($0.53) share Operating expenses $259 $269 $251 Provision for loan losses ($87) $2 $95 Average Education Loans $80,221 $81,685 $87,006 © 2021 Navie
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 $0.7 billion of cash flows in 1Q 21 1 FFELP Cash Flows 03/31/21 Secured • On April 5th, called $627 million of unsecured debt, Residual (includi
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 $1.2 $1.1 $1.1 $1.0 $1.0 $1.0 $0.9 $1.0 $0.9 $0.9 $0.9 $0.8 $0.8 $0.8 $0.7 ($’s in Billions) ($’s in Billions) $0.6 $0.6 $0
Slide 15: Managing Unsecured Debt Maturities
Managing Unsecured Debt Maturities (par value, $ in billions) As of April 5th, called $627 million of unsecured debt that would have matured this year, reducing 2021 maturities to $0 $1.8 $1.7 $1.5 $1.5 $1.4 $1.4 $1.3 $1.1 $1.1 $0.7 $0.7 $0.6 $0.6 $0.6 $0.5 $0.5 $0.5 $0.2 $0.2 $0.0 2021 2022 2023 20
Slide 16: Other Segment
Other Segment “Core Earnings” Basis Q1 2021 Unallocated Shared Services Expenses Shared Services Overview $64 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% Inform
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: Mar. 31, Dec. 31, Mar. 31, (Dollars in Millions) 2021 2020 2020 GAAP net income (loss) $370 $186 ($106) Net impact of derivative accounting (91) (28) 247 Net impact of goodwill and acquired intangible assets
Slide 20: Navient
NAVIENT.