Excluding derivative market value adjustments1, the company's net loss was
During the fourth quarter of 2023, the company recognized a net loss after taxes and noncontrolling interest from its Nelnet Renewable Energy division of
"Our commitment has always been dedicated to the creation of long-term value and making strategic decisions aimed at maximizing long-term cash flow," said
Operating Segments
Asset Generation and Management
The AGM operating segment reported net interest income of
AGM recognized a provision for loan losses in the fourth quarter of 2023 of
AGM recognized net income after tax of
As of
Loan Servicing and Systems
Revenue from the Loan Servicing and Systems segment was
As of
The Loan Servicing and Systems segment reported net income after tax of
Education Technology Services and Payments
For the fourth quarter of 2023, revenue from the Education Technology Services and Payments operating segment was
Net income after tax for the Education Technology Services and Payments segment was
Corporate Activities
Included in corporate activities is the operating results of the Nelnet Renewable Energy (NRE) division. NRE recognized operating losses in the fourth quarter of 2023 related to its solar construction business (excluding impairments) of
Also included in corporate activities is the operating results of the company's 45 percent voting membership interest in
Year-End Results
GAAP net income for the year ended
Forward-Looking and Cautionary Statements
This press release contains forward-looking statements within the meaning of federal securities laws. The words "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "forecast," "future," "intend," "may," "plan," "potential," "predict," "scheduled," "should," "will," "would," and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements. These statements are based on management's current expectations as of the date of this release and are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results and performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: risks related to the ability to successfully maintain and increase allocated volumes of student loans serviced by the company under existing and future servicing contracts with the Department, including the company's level of service as the result of the unprecedented event of all borrowers returning to repayment in
For more information, see the "Risk Factors" sections and other cautionary discussions of risks and uncertainties included in documents filed or furnished by the company with the
Non-GAAP Performance Measures
The company prepares its financial statements and presents its financial results in accordance with
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1 Net income, excluding derivative market value adjustments, is a non-GAAP measure. See "Non-GAAP Performance Measures" at the end of this press release and the "Non-GAAP Disclosures" section below for explanatory information and reconciliations of GAAP to non-GAAP financial information. |
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2 Loan spread represents the spread between the yield earned on loan assets and the costs of the liabilities and derivative instruments used to fund the assets. |
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Consolidated Statements of Operations (Dollars in thousands, except share data) (unaudited) |
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Three months ended |
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Year ended |
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Interest income: |
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Loan interest |
$ 227,234 |
|
236,423 |
|
228,878 |
|
931,945 |
|
651,205 |
Investment interest |
48,019 |
|
48,128 |
|
34,012 |
|
177,855 |
|
91,601 |
Total interest income |
275,253 |
|
284,551 |
|
262,890 |
|
1,109,800 |
|
742,806 |
Interest expense on bonds and notes payable and bank deposits |
205,335 |
|
207,159 |
|
181,790 |
|
845,091 |
|
430,137 |
Net interest income |
69,918 |
|
77,392 |
|
81,100 |
|
264,709 |
|
312,669 |
Less provision for loan losses |
10,924 |
|
10,659 |
|
27,801 |
|
65,450 |
|
46,441 |
Net interest income after provision for loan losses |
58,994 |
|
66,733 |
|
53,299 |
|
199,259 |
|
266,228 |
Other income (expense): |
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Loan servicing and systems revenue |
128,816 |
|
127,892 |
|
140,021 |
|
517,954 |
|
535,459 |
Education technology services and payments revenue |
106,052 |
|
113,796 |
|
98,332 |
|
463,311 |
|
408,543 |
Solar construction revenue |
11,982 |
|
6,301 |
|
15,186 |
|
31,669 |
|
24,543 |
Other, net |
(27,493) |
|
(211) |
|
735 |
|
(48,787) |
|
25,486 |
Gain (loss) on sale of loans, net |
6,987 |
|
5,362 |
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(2,713) |
|
39,673 |
|
2,903 |
Impairment expense |
(26,951) |
|
(4,974) |
|
(9,361) |
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(31,925) |
|
(15,523) |
Derivative market value adjustments and derivative settlements, net |
(8,654) |
|
3,957 |
|
13,424 |
|
(16,701) |
|
264,634 |
Total other income (expense), net |
190,739 |
|
252,123 |
|
255,624 |
|
955,194 |
|
1,246,045 |
Cost of services: |
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Cost to provide education technology services and payments |
39,379 |
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43,694 |
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39,330 |
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171,183 |
|
148,403 |
Cost to provide solar construction services |
23,371 |
|
7,783 |
|
14,004 |
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48,576 |
|
19,971 |
Total cost of services |
62,750 |
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51,477 |
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53,334 |
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219,759 |
|
168,374 |
Operating expenses: |
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Salaries and benefits |
152,917 |
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141,204 |
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151,568 |
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591,537 |
|
589,579 |
Depreciation and amortization |
22,004 |
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21,835 |
|
20,099 |
|
79,118 |
|
74,077 |
Other expenses |
51,697 |
|
51,370 |
|
50,481 |
|
189,851 |
|
170,778 |
Total operating expenses |
226,618 |
|
214,409 |
|
222,148 |
|
860,506 |
|
834,434 |
(Loss) income before income taxes |
(39,635) |
|
52,970 |
|
33,441 |
|
74,188 |
|
509,465 |
Income tax benefit (expense) |
9,722 |
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(10,734) |
|
(5,459) |
|
(19,753) |
|
(113,224) |
Net (loss) income |
(29,913) |
|
42,236 |
|
27,982 |
|
54,435 |
|
396,241 |
Net loss attributable to noncontrolling interests |
21,359 |
|
3,096 |
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2,791 |
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37,097 |
|
11,106 |
Net (loss) income attributable to |
$ (8,554) |
|
45,332 |
|
30,773 |
|
91,532 |
|
407,347 |
Earnings per common share: |
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Net (loss) income attributable to |
$ (0.23) |
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1.21 |
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0.83 |
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2.45 |
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10.83 |
Weighted average common shares outstanding - basic and diluted |
37,354,406 |
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37,498,073 |
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37,290,293 |
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37,416,621 |
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37,603,033 |
Condensed Consolidated Balance Sheets (Dollars in thousands) (unaudited) |
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As of |
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As of |
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As of |
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Assets: |
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Loans and accrued interest receivable, net |
$ 13,108,204 |
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13,867,557 |
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15,243,889 |
Cash, cash equivalents, and investments |
2,039,080 |
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2,133,378 |
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2,230,063 |
Restricted cash and investments |
875,348 |
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604,855 |
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1,239,470 |
|
202,848 |
|
228,812 |
|
240,403 |
Other assets |
511,165 |
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388,080 |
|
420,219 |
Total assets |
$ 16,736,645 |
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17,222,682 |
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19,374,044 |
Liabilities: |
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Bonds and notes payable |
$ 11,828,393 |
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12,448,109 |
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14,637,195 |
Bank deposits |
743,599 |
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718,053 |
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691,322 |
Other liabilities |
942,738 |
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797,365 |
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845,625 |
Total liabilities |
13,514,730 |
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13,963,527 |
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16,174,142 |
Equity: |
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3,262,621 |
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3,294,981 |
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3,198,959 |
Noncontrolling interests |
(40,706) |
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(35,826) |
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943 |
Total equity |
3,221,915 |
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3,259,155 |
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3,199,902 |
Total liabilities and equity |
$ 16,736,645 |
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17,222,682 |
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19,374,044 |
Non-GAAP Disclosures
(Dollars in thousands, except share data)
(unaudited)
Non-GAAP financial measures disclosed by management are meant to provide additional information and insight relative to business trends to investors and, in certain cases, to present financial information as measured by rating agencies and other users of financial information. These measures are not in accordance with, or a substitute for, GAAP and may be different from, or inconsistent with, non-GAAP financial measures used by other companies. The company reports this non-GAAP information because the company believes that it provides additional information regarding operational and performance indicators that are closely assessed by management. There is no comprehensive, authoritative guidance for the presentation of such non-GAAP information, which is only meant to supplement GAAP results by providing additional information that management utilizes to assess performance.
Net income, excluding derivative market value adjustments |
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Three months ended |
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Year ended |
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2023 |
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2022 |
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2023 |
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2022 |
GAAP net (loss) income attributable to |
$ (8,554) |
|
30,773 |
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91,532 |
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407,347 |
Realized and unrealized derivative market value adjustments (a) |
9,507 |
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7,434 |
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41,773 |
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(231,691) |
Tax effect (b) |
(2,282) |
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(1,784) |
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(10,026) |
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55,606 |
Non-GAAP net (loss) income attributable to |
$ (1,329) |
|
36,423 |
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123,279 |
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231,262 |
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Earnings per share: |
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GAAP net (loss) income attributable to |
$ (0.23) |
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0.83 |
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2.45 |
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10.83 |
Realized and unrealized derivative market value adjustments (a) |
0.25 |
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0.20 |
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1.12 |
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(6.16) |
Tax effect (b) |
(0.06) |
|
(0.05) |
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(0.28) |
|
1.48 |
Non-GAAP net (loss) income attributable to |
$ (0.04) |
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0.98 |
|
3.29 |
|
6.15 |
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(a) |
"Derivative market value adjustments" includes both the realized portion of gains and losses (corresponding to variation margin received or paid on derivative instruments that are settled daily at a central clearinghouse) and the unrealized portion of gains and losses that are caused by changes in fair values of derivatives which do not qualify for "hedge treatment" under GAAP. "Derivative market value adjustments" does not include "derivative settlements" that represent the cash paid or received during the current period to settle with derivative instrument counterparties the economic effect of the company's derivative instruments based on their contractual terms. |
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The accounting for derivatives requires that changes in the fair value of derivative instruments be recognized currently in earnings, with no fair value adjustment of the hedged item, unless specific hedge accounting criteria is met. Management has structured all of the company's derivative transactions with the intent that each is economically effective; however, the company's derivative instruments do not qualify for hedge accounting in the consolidated financial statements. As a result, the change in fair value of derivative instruments is reported in current period earnings with no consideration for the corresponding change in fair value of the hedged item. Under GAAP, the cumulative net realized and unrealized gain or loss caused by changes in fair values of derivatives in which the company plans to hold to maturity will equal zero over the life of the contract. However, the net realized and unrealized gain or loss during any given reporting period fluctuates significantly from period to period. |
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The company believes these point-in-time estimates of asset and liability values related to its derivative instruments that are subject to interest rate fluctuations are subject to volatility mostly due to timing and market factors beyond the control of management, and affect the period-to-period comparability of the results of operations. Accordingly, the company's management utilizes operating results excluding these items for comparability purposes when making decisions regarding the company's performance and in presentations with credit rating agencies, lenders, and investors. |
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(b) |
The tax effects are calculated by multiplying the realized and unrealized derivative market value adjustments by the applicable statutory income tax rate. |
View original content:https://www.prnewswire.com/news-releases/nelnet-reports-fourth-quarter-2023-results-302073177.html
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