Nelnet Earnings 2020-03-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

nni-20200331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-31924

NELNET, INC.

(Exact name of registrant as specified in its charter)

Nebraska

84-0748903

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

121 South 13th Street, Suite 100

Lincoln,

Nebraska

68508

(Address of principal executive offices)

(Zip Code)

(402) 458-2370

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, Par Value $0.01 per Share	NNI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2020, there were 27,903,522 and 11,271,609 shares of Class A Common Stock and Class B Common Stock, par value $0.01 per share, outstanding, respectively (excluding a total of 11,305,731 shares of Class A Common Stock held by wholly owned subsidiaries).

NELNET, INC.

FORM 10-Q

INDEX

March 31, 2020

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(unaudited)
	As of		As of
	March 31, 2020		December 31, 2019
Assets:
Loans and accrued interest receivable (net of allowance for loan losses of $208,868 and $61,914, respectively)	$	21,158,208	21,402,868
Cash and cash equivalents:
Cash and cash equivalents - not held at a related party	16,045		13,922
Cash and cash equivalents - held at a related party	188,799		119,984
Total cash and cash equivalents	204,844		133,906
Investments	253,939		247,099
Restricted cash	675,589		650,939
Restricted cash - due to customers	219,905		437,756
Accounts receivable (net of allowance for doubtful accounts of $5,142 and $4,455, respectively)	63,206		115,391
Goodwill	156,912		156,912
Intangible assets, net	74,127		81,532
Property and equipment, net	351,097		348,259
Other assets	122,801		134,308

Total assets	$	23,280,628	23,708,970
Liabilities:
Bonds and notes payable	$	20,466,730	20,529,054
Accrued interest payable	43,874		47,285
Other liabilities	224,319		303,781
Due to customers	219,905		437,756

Total liabilities	20,954,828		21,317,876
Commitments and contingencies
Equity:
Nelnet, Inc. shareholders' equity:
Preferred stock, $0.01 par value. Authorized 50,000,000 shares; no shares issued or outstanding	—		—
Common stock:
Class A, $0.01 par value. Authorized 600,000,000 shares; issued and outstanding 28,582,032 shares and 28,458,495 shares, respectively	286		285
Class B, convertible, $0.01 par value. Authorized 60,000,000 shares; issued and outstanding 11,271,609 shares	113		113
Additional paid-in capital	9,140		5,715
Retained earnings	2,310,282		2,377,627
Accumulated other comprehensive earnings	859		2,972
Total Nelnet, Inc. shareholders' equity	2,320,680		2,386,712
Noncontrolling interests	5,120		4,382
Total equity	2,325,800		2,391,094
Total liabilities and equity	$	23,280,628	23,708,970

Supplemental information - assets and liabilities of consolidated education and other lending variable interest entities:
Loans and accrued interest receivable	$	21,180,424	21,399,382
Restricted cash	659,624		639,816
Other assets	30		31
Bonds and notes payable	(20,625,388)		(20,742,798)
Accrued interest payable and other liabilities	(108,801)		(162,494)

Net assets of consolidated education and other lending variable interest entities	$	1,105,889	1,133,937

See accompanying notes to consolidated financial statements.


NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
(unaudited)
	Three months ended
	March 31,
	2020		2019
Interest income:
Loan interest	$	181,793	242,333
Investment interest	7,398		8,253
Total interest income	189,191		250,586
Interest expense:
Interest on bonds and notes payable	134,118		191,770
Net interest income	55,073		58,816
Less provision for loan losses	76,299		7,000
Net interest income after provision for loan losses	(21,226)		51,816
Other income/expense:
Loan servicing and systems revenue	112,735		114,898
Education technology, services, and payment processing revenue	83,675		79,159
Communications revenue	18,181		14,543
Gain on sale of loans	18,206		—
Other income	8,281		9,067
Impairment expense	(34,087)		—
Derivative market value adjustments and derivative settlements, net	(16,365)		(11,539)
Total other income/expense	190,626		206,128
Cost of services:
Cost to provide education technology, services, and payment processing services	22,806		21,059
Cost to provide communications services	5,582		4,759
Total cost of services	28,388		25,818
Operating expenses:
Salaries and benefits	119,878		111,059
Depreciation and amortization	27,648		24,213

Other expenses	43,384		43,816
Total operating expenses	190,910		179,088
(Loss) income before income taxes	(49,898)		53,038
Income tax benefit (expense)	10,133		(11,391)
Net (loss) income	(39,765)		41,647
Net income attributable to noncontrolling interests	(767)		(56)
Net (loss) income attributable to Nelnet, Inc.	$	(40,532)	41,591
Earnings per common share:
Net (loss) income attributable to Nelnet, Inc. shareholders - basic and diluted	$	(1.01)	1.03
Weighted average common shares outstanding - basic and diluted	39,955,514		40,373,295

See accompanying notes to consolidated financial statements.


NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Dollars in thousands)
(unaudited)
	Three months ended
	March 31,
	2020		2019
Net (loss) income	$	(39,765)	41,647
Other comprehensive loss:
Available-for-sale securities:
Unrealized holding losses arising during period, net of gains	(3,015)		(436)
Reclassification adjustment for losses recognized in net income	235		—
Income tax effect	667		105
Total other comprehensive loss	(2,113)		(331)
Comprehensive (loss) income	(41,878)		41,316
Comprehensive income attributable to noncontrolling interests	(767)		(56)
Comprehensive (loss) income attributable to Nelnet, Inc.	$	(42,645)	41,260

See accompanying notes to consolidated financial statements.


NELNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share data)
(unaudited)
	Nelnet, Inc. Shareholders
	Preferred stock shares	Common stock shares						Preferred stock	Class A common stock	Class B common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive (loss) earnings	Noncontrolling interests	Total equity
			Class A		Class B
Balance as of December 31, 2018	—	28,798,464		11,459,641		$	—	288	115	622	2,299,556	3,883	10,315	2,314,779
Issuance of noncontrolling interests	—	—		—		—		—	—	—	—	—	26	26
Net income	—	—		—		—		—	—	—	41,591	—	56	41,647
Other comprehensive loss	—	—		—		—		—	—	—	—	(331)	—	(331)
Distribution to noncontrolling interests	—	—		—		—		—	—	—	—	—	(22)	(22)
Cash dividend on Class A and Class B common stock - $0.18 per share	—	—		—		—		—	—	—	(7,232)	—	—	(7,232)
Issuance of common stock, net of forfeitures	—	131,391		—		—		1	—	2,493	—	—	—	2,494
Compensation expense for stock based awards	—	—		—		—		—	—	1,368	—	—	—	1,368
Repurchase of common stock	—	(301,327)		—		—		(3)	—	(3,847)	(12,508)	—	—	(16,358)
Impact of adoption of new accounting standard	—	—		—		—		—	—	—	—	—	(6,077)	(6,077)


Balance as of March 31, 2019	—	28,628,528		11,459,641		$	—	286	115	636	2,321,407	3,552	4,298	2,330,294
Balance as of December 31, 2019	—	28,458,495		11,271,609		$	—	285	113	5,715	2,377,627	2,972	4,382	2,391,094
Issuance of noncontrolling interests	—	—		—		—		—	—	—	—	—	26	26
Net (loss) income	—	—		—		—		—	—	—	(40,532)	—	767	(39,765)
Other comprehensive loss	—	—		—		—		—	—	—	—	(2,113)	—	(2,113)
Distribution to noncontrolling interests	—	—		—		—		—	—	—	—	—	(55)	(55)
Cash dividend on Class A and Class B common stock - $0.20 per share	—	—		—		—		—	—	—	(7,946)	—	—	(7,946)
Issuance of common stock, net of forfeitures	—	148,422		—		—		1	—	2,940	—	—	—	2,941
Compensation expense for stock based awards	—	—		—		—		—	—	1,738	—	—	—	1,738
Repurchase of common stock	—	(24,885)		—		—		—	—	(1,253)	—	—	—	(1,253)
Impact of adoption of new accounting standard	—	—		—		—		—	—	—	(18,867)	—	—	(18,867)
Balance as of March 31, 2020	—	28,582,032		11,271,609		$	—	286	113	9,140	2,310,282	859	5,120	2,325,800

Price	65.94	EPS	3
Shares	40	P/E	22
MCap	2,644	P/FCF	19
Net Debt	-1,138	EBIT	694
TEV	1,506	TEV/EBIT	2
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-03-31	Filed 2020-05-07
10-K	2019-12-31	Filed 2020-02-27
10-Q	2019-09-30	Filed 2019-11-07
10-Q	2019-06-30	Filed 2019-08-08
10-Q	2019-03-31	Filed 2019-05-08
10-K	2018-12-31	Filed 2019-02-27
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-07
10-Q	2018-03-31	Filed 2018-05-08
10-K	2017-12-31	Filed 2018-02-27
10-Q	2017-09-30	Filed 2017-11-07
10-Q	2017-06-30	Filed 2017-08-07
10-Q	2017-03-31	Filed 2017-05-08
10-K	2016-12-31	Filed 2017-02-27
10-Q	2016-09-30	Filed 2016-11-09
10-Q	2016-06-30	Filed 2016-08-04
10-Q	2016-03-31	Filed 2016-05-05
10-K	2015-12-31	Filed 2016-02-25
10-Q	2015-09-30	Filed 2015-11-05
10-Q	2015-06-30	Filed 2015-08-06
10-Q	2015-03-31	Filed 2015-05-07
10-K	2014-12-31	Filed 2015-02-27
10-Q	2014-09-30	Filed 2014-11-06
10-Q	2014-06-30	Filed 2014-08-07
10-Q	2014-03-31	Filed 2014-05-08
10-K	2013-12-31	Filed 2014-02-27
10-Q	2013-09-30	Filed 2013-11-07
10-Q	2013-06-30	Filed 2013-08-08
10-Q	2013-03-31	Filed 2013-05-10
10-K	2012-12-31	Filed 2013-02-28
10-Q	2012-09-30	Filed 2012-11-09
10-Q	2012-06-30	Filed 2012-08-09
10-Q	2012-03-31	Filed 2012-05-10
10-K	2011-12-31	Filed 2012-02-28
10-Q	2011-09-30	Filed 2011-11-08
10-Q	2011-06-30	Filed 2011-08-09
10-Q	2011-03-31	Filed 2011-05-10
10-K	2010-12-31	Filed 2011-03-03
10-Q	2010-09-30	Filed 2010-11-09
10-Q	2010-06-30	Filed 2010-08-09
10-Q	2010-03-31	Filed 2010-05-10
10-K	2009-12-31	Filed 2010-03-03

8-K	2020-06-18
8-K	2020-05-22
8-K	2020-05-20
8-K	2020-05-07
8-K	2020-03-30
8-K	2020-03-19
8-K	2020-03-18
8-K	2020-02-27
8-K	2019-12-16
8-K	2019-11-25
8-K	2019-11-12
8-K	2019-11-07
8-K	2019-08-08
8-K	2019-06-17
8-K	2019-05-23
8-K	2019-05-14
8-K	2019-05-08
8-K	2019-05-08
8-K	2019-02-27
8-K	2018-11-08
8-K	2018-09-25
8-K	2018-08-07
8-K	2018-06-28
8-K	2018-05-24
8-K	2018-05-08
8-K	2018-04-17
8-K	2018-02-27
8-K	2018-02-07

EX-31.1	nni-3312020xex311.htm
EX-31.2	nni-3312020xex312.htm
EX-32	nni-3312020xex32.htm

NNI 10Q Quarterly Report

Nelnet Earnings 2020-03-31