LINCOLN, Neb., April 27, 2007 -- Nelnet, Inc. (NYSE: NNI) today reported GAAP net income for the first-quarter 2007 of $14.8 million, or $0.29 per share, compared with $52.1 million, or $0.96 per share, for the first-quarter 2006. Base net income for the first-quarter 2007 was $27.7 million, or $0.54 per share, compared with $31.6 million, or $0.59 per share, for the same period a year ago. For the first quarter of 2006, base net income excluding the special allowance yield adjustment and net derivative settlements was $20.4 million, or $0.38 per share.
"We continued our focus on the key elements important to delivering sustainable, long-term value," said Mike Dunlap, Nelnet Chairman and Co-Chief Executive Officer. "In the first quarter, we reported strong results in which we delivered on each of these key elements by increasing our student loan assets and diversifying and increasing our fee-based revenue. We will maintain our center of attention on these elements and providing exceptional service to students, families, and schools throughout the education life cycle."
Net student loan assets increased by $3.7 billion, or 17 percent, year over year to $25.0 billion. The company reported net consolidation loan originations of $590.4 million and net new consolidation loan originations of $351.0 million for the first quarter of 2007.
Fee-based revenue for the first quarter of 2007 represented 58 percent of Nelnet’s total revenue. This is an increase from the first quarter of 2006 when fee-based revenue represented 44 percent of total revenue.
Income from loan and guarantee servicing fees was $49.4 million for the first-quarter 2007, up from $47.1 million for the first-quarter 2006. Loan and guarantee servicing income includes $2.4 million before taxes or $1.5 million after taxes of incentive revenue earned by EDULINX through its existing contract with the Government of Canada.
Other fee-based income, generated primarily by Nelnet Business Solutions and Enrollment Services, increased to $40.0 million for the first quarter of 2007 compared with $18.2 million for the same period a year ago.
In the first-quarter of 2007, Nelnet repurchased 3.1 million shares, including 2.7 million shares from certain members of management, for an average price of $24.65 per share. The company has the authority to repurchase an additional 5 million shares under its existing stock repurchase program.
For the first quarter of 2007, Nelnet reported net interest income of $68.3 million compared with $86.3 million for the first quarter of 2006, which included 9.5 percent special allowance payments of $18.4 million.
The company reported core student loan spread of 1.29 percent for the first quarter of 2007 compared with 1.54 percent for the same period a year ago. For the fourth quarter of 2006, Nelnet reported core student loan spread of 1.31 percent.
Operating expenses were $136.2 million in the first quarter of 2007 compared with $108.2 million for the same period a year ago. The increase is primarily attributable to acquisitions.
A description of base net income and a reconciliation of GAAP net income to base net income can be found in supplemental financial information to this earnings release that is available online at www.nelnetinvestors.net/releases.cfm?reltype=Financial.
Nelnet will host a conference call to discuss this earnings release at 11:00 a.m. (Eastern) today. To access the call live, participants in the United States and Canada should dial 866.293.8972 and international callers should dial 913.312.1232 at least 15 minutes prior to the call. A live audio Web cast of the call will also be available at www.nelnetinvestors.net under the conference calls and Web casts menu. A replay of the conference call will be available between 2:00 p.m. (Eastern) today and 11:59 p.m. (Eastern) May 11, 2007. To access the replay via telephone within the United States and Canada, callers should dial 888.203.1112. International callers should dial 719.457.0820. All callers accessing the replay will need to use the confirmation code 2050846. A replay of the audio Web cast will also be available at www.nelnetinvestors.net.
For 28 years, Nelnet has been helping the education-seeking family plan for their education, pay for their education, and prepare for their careers. The company has invested hundreds of millions of dollars in products, services, and technology improvements for students and the educational institutions they attend. These services include live counseling to help families through all aspects of the financial aid process, benefits for borrowers, including tens of millions of dollars in fee reductions, and Nelnet sponsored scholarships. Nelnet serves students in 50 states, employs approximately 4,000 associates, and has $25.0 billion in net student loan assets.
Additional information is available at www.nelnet.com.
Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or expected. Among the key factors that may have a direct bearing on Nelnet's operating results, performance, or financial condition are changes in terms of student loans and the educational credit marketplace, changes in the demand for educational financing or in financing preferences of educational institutions, students and their families, or changes in the general interest rate environment and in the securitization markets for education loans. For more information see our filings with the Securities and Exchange Commission.
(code #: nnif)