Nelnet(NNI) - 2024 Q2 - Quarterly Results

Financial Performance - Total interest income for Q2 2024 was $242,866,000, a decrease of 14.4% from $284,027,000 in Q2 2023[4] - Net interest income after provision for loan losses was $62,796,000, compared to $62,259,000 in Q2 2023, reflecting a slight increase of 0.9%[4] - Other income, net, totaled $258,494,000, up from $224,055,000 in Q2 2023, representing an increase of 15.3%[4] - Net income attributable to Nelnet, Inc. was $45,091,000, compared to $27,426,000 in Q2 2023, an increase of 64.2%[4] - Earnings per share for Q2 2024 were $1.23, up from $0.73 in Q2 2023, reflecting an increase of 68.5%[4] - GAAP net income attributable to Nelnet, Inc. for the six months ended June 30, 2024, was $118.498 million, compared to $53.385 million for the same period in 2023, representing a 121.5% increase[11] - Non-GAAP net income attributable to Nelnet, Inc., excluding derivative market value adjustments, was $111.280 million for the six months ended June 30, 2024, compared to $80.294 million for the same period in 2023, reflecting a 38.6% increase[11] Assets and Liabilities - Total assets decreased to $14,501,193,000 as of June 30, 2024, down from $17,785,690,000 a year earlier, a decline of 18.9%[6] - Total liabilities were $11,281,171,000, down from $14,557,564,000 in Q2 2023, a decrease of 22.5%[6] Loan Performance - Nelnet Bank recognized a provision for loan losses of $7.8 million for the three months ended June 30, 2024, compared to $1.5 million for the same period in 2023[16] - The provision for loan losses for the six months ended June 30, 2024, was $14,440, reflecting a proactive approach to risk management[21] - The allowance for loan losses for private education loans was 5.28% as of June 30, 2024, down from 5.68% as of December 31, 2023[42] - The total allowance for loan losses as of June 30, 2024, was $10,939,519 million, down from $13,108,204 million as of December 31, 2023[41] Segment Performance - The Loan Servicing and Systems (LSS) segment reported a before-tax operating margin decrease due to a revenue decline, while operating expenses remained consistent[16] - The Education Technology Services and Payments (ETSP) segment saw an increase in before-tax operating margin due to higher revenue while maintaining a consistent cost structure[16] - Education Technology Services and Payments segment generated revenue of $116.909 million for the three months ended June 30, 2024[17] - Loan Servicing and Systems segment reported revenue of $109.052 million for the three months ended June 30, 2024[17] - Education technology services and payments revenue reached $109,858 for the three months ended June 30, 2023, showcasing the segment's growth potential[20] - Loan servicing and systems revenue for the six months ended June 30, 2023, was $261,247, showing a decrease from $236,252 in the same period last year[26] - Education technology services and payments revenue for the six months ended June 30, 2023, reached $260,449, up from $243,462 year-over-year[28] Operational Insights - The company is actively expanding its private education, consumer, and other loan portfolios, alongside investments in renewable energy and technology[8] - Nelnet Bank was launched in November 2020, contributing to the company's diversification strategy[8] - The company identified and corrected immaterial errors in previously issued financial statements during Q2 2024[9] - The company expects the before-tax operating margin to remain lower than historical prior year results for the remainder of 2024[16] Expenses and Taxation - The company reported an income tax expense of $14.753 million for the three months ended June 30, 2024, compared to $10.187 million for the same period in 2023[16] - Total operating expenses for the three months ended June 30, 2024, were $214.568 million, compared to $217.489 million in the previous quarter[17][19] - The total operating expenses for the six months ended June 30, 2023, amounted to $419,476, compared to $405,000 in the same period last year[23] Market and Strategic Changes - The company plans to focus exclusively on the commercial solar market, discontinuing residential solar operations, which will impact future revenue streams[31] - The company incurred a restructure charge of $1.6 million related to staff reductions in its solar operations, which included a reduction of approximately 40 associates[36] - The company recognized non-cash impairment charges totaling $7,776 million during the three months ended June 30, 2024, primarily related to solar facilities and inventory[35] Derivative and Investment Performance - A net gain of $6.6 million related to changes in the fair values of derivative instruments was recognized in the first half of 2024, compared to a net loss of $36.5 million for the same period in 2023[16] - The total derivative settlements income for the six months ended June 30, 2024, was $3,406 million, compared to $23,402 million for the same period last year[40] - The company recognized a net gain of $1,649 million from derivative settlements for the three months ended June 30, 2024[40] - The net derivative settlements received increased during the three months ended June 30, 2024, compared to the same period in 2023, due to an increase in the notional amount of derivatives outstanding[50]