Navient Corporation · NASDAQ:NAVI

Navient — Investor Presentation (January 2024)

21 slides from Navient's investor presentation, Jan 31, 2024

  1. Slide 1: Strategy Update

    Strategy Update January 31, 2024 Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved. 1

  2. Slide 2: Executive summary: Strategic actions

    Executive summary: Strategic actions Following an in-depth business review conducted by the board and management, Navient is announcing strategic actions to simplify the company, reduce expense base and enhance flexibility: • Maximize net value of loan portfolio cash flows Outsource student loan ser

  3. Slide 3: Introduction

    Introduction Share Price Trend Since 2014 2014 1 2023 Year End $ 21.61 $ 18.62 • Board/management project analyzed cost data - Business decision making complicated by high percentage of “allocated” costs • Intensive cost analysis program by business unit • Project identified actionable opportunities

  4. Slide 4: Background

    Background • Legacy educational loan portfolios have driven financial performance Loan Portfolios Ending Balances ($ in billions) 2014 1 2023 Government Guaranteed $ 104 $ 38 Private 30 8 Subtotal Legacy $ 134 $ 46 Newly Originated 2 — 9 Total $ 134 $ 55 1. Navient became a stand-alone company in 20

  5. Slide 5: Background (cont’d)

    Background (cont’d) • Expense reductions have lagged revenue declines - Excludes Business Processing revenue and expenses GAAP Basis 2014 3 2023 $m % of NII $m % of NII % change Net Interest Income (NII) 1 $2,667 $862 (67.7%) Expenses 2 586 22.0% 435 50.5% (25.8%) Of Which: Corporate & Unallocated 2

  6. Slide 6: Background (cont’d)

    Background (cont’d) • Returned capital to shareholders through repurchases and dividends - Repurchased approximately 75% of shares outstanding since 2014 - Repurchases maintained EPS EPS 2014 2 2023 GAAP Basis Diluted earnings per share $ 2.69 $ 1.85 Core Earnings Basis 1 Diluted earnings per share

  7. Slide 7: Immediate issues

    Immediate issues • High percentages of corporate and operating expense - Deduct from shareholder value of loan portfolio cash flows • Currently Navient’s major asset - Burden on new business initiatives • Majority of overhead not relevant to growth businesses • Declining P/E multiple driven by finan

  8. Slide 8: Key business components

    Key business components • Loan portfolios - Legacy government guaranteed - Legacy private - Newly originated private 1 • Unrestricted cash • Earnest • Business Processing Solutions (BPS) 1. New loans are originated by Earnest. Confidential and proprietary information © 2024 Navient Solutions, LLC. A

  9. Slide 9: Key business component – loan portfolios

    Key business component – loan portfolios • Projected loan portfolio cash flows as of year-end 2023 - Principally securitization trust distributions • Net interest income • Servicing fees • Return of initial equity Cash Flow Projections 1 2029- ($ millions) Total 2024 2025 2026 2027 2028 2043 Loan Ca

  10. Slide 10: Loan portfolios (cont’d)

    Loan portfolios (cont’d) • Maximization of net loan portfolio cash flows requires active steps to minimize dilution from future: - Loan servicing expense - Corporate overhead - Interest expense on unsecured and secured liabilities • Forecasts of expected net cash flows to be updated after loan servi

  11. Slide 11: Loan portfolios (cont’d)

    Loan portfolios (cont’d) • Navient loan servicing costs affected by declining scale Student Loan Borrowers (in millions) 2014 1 2023 Student Loan Borrowers 12.0 2.7 Navient Owned Loans 2 5.8 2.7 Education Department Loans 3 6.2 - • Loan servicing costs remain competitive, but declining legacy borrow

  12. Slide 12: Key business component – unrestricted cash

    Key business component – unrestricted cash • Unrestricted corporate cash - Provides liquidity buffer for unsecured debt maturities - Available for general corporate purposes Unrestricted Corporate Cash Year-end ($ in millions) Balance 2023 $ 839 2022 $ 1,535 2021 $ 905 2020 $ 1,183 2019 $ 1,233 Conf

  13. Slide 13: Key business component – Earnest

    Key business component – Earnest • New customer-focused brand cultivating longer-term relationships with consumers who have attractive lifetime revenue potential - Distinct brand positioning from Navient • Currently profitable at approximately $200 million revenue run rate 1 - Utilizing education in

  14. Slide 14: Earnest (cont’d)

    Earnest (cont’d) • Successfully developing distinct brand and market positioning - Aids lower cost acquisition of high value customers in target demographic - Selected brand attributes • Position out of 11 brands surveyed Earnest Brand Attributes 1 Earnest Attribute Rank Empathetic 1 Ethical 1 Fair

  15. Slide 15: Earnest (cont’d)

    Earnest (cont’d) • Lending progress - Principal product is graduate loan refinancing 1 • Aligns with desired customer profile and current Navient capabilities • Alternating #1 and #2 market share position for last three years • Year end 2023 loan balance of $9.4 billion Earnest Financial Results 2 (

  16. Slide 16: Earnest (cont’d)

    Earnest (cont’d) • Business model founded on efficient customer targeting and operating execution - Annualized acquisition cost per funded loan: <0.3% 1, 2 - Customer average balance of approximately $50,000 2 • Navient Legacy private balance of approximately $18,000 - Realized loss rate of approxim

  17. Slide 17: Earnest (cont’d)

    Earnest (cont’d) • Business model demonstrating favorable operating leverage - Operating efficiency and targeted consumer acquisition growth combine for positive operating leverage Earnest Financial Results 1 2020 2023 $m % revenue $m % revenue % change Net Revenue After Provision for Loan Losses $

  18. Slide 18: Key business component – Business Processing Solutions

    Key business component – Business Processing Solutions • Most business units acquired 2015-2017 BPS Results ($ in millions) 2023 Actual Revenue $ 321 EBITDA 1 $ 39 - Relatively low capital intensity compared to lending businesses - Operational overlap currently with Navient loan servicing operations

  19. Slide 19: Summary

    Summary • Major reductions in legacy expenses - Significantly increase shareholder value from legacy loan portfolio cash flows - Increase viability and earnings impact of growth initiatives • Anticipating significant positive cash flow in coming years - Potential divestiture proceeds and current unr

  20. Slide 20: Forward-Looking Statements and Non-GAAP Financial Measures

    Forward-Looking Statements and Non-GAAP Financial Measures The following information is current as of December 31, 2023 (unless otherwise noted) and should be read in connection with Navient Corporation’s “Navient” Annual Report on 2022 Form 10-K for the year end December 31, 2022 (the “2022 Form 10

  21. Slide 21: Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved.

    Confidential and proprietary information © 2024 Navient Solutions, LLC. All rights reserved. 21

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