While many companies have seen a big benefit from the recent tax code changes, Nelnet reported Tuesday its experience has been a mixed bag.
The Lincoln-based student finance company reported fourth-quarter earnings of $45.6 million, or $1.11 per share, for the fourth quarter, compared with $44.5 million, or $1.05 per share, for the same period a year ago.
Those results exclude the effects of derivative market value and foreign currency transaction adjustments as well as variation margin settlements. Including those items under generally accepted accounting principles, Nelnet said it earned $48.1 million, or $1.17 per share, for the fourth quarter, down from $98.3 million, or $2.32 per share, a year ago.
The earnings still beat financial analyst estimates by 21 cents a share.
Nelnet said in a news release that it saw a $19.3 million income tax benefit for the quarter thanks to passage of the Tax Cuts and Jobs Act and also expects its tax rate going forward to be around 23 to 24 percent, down from a historical rate of 35 to 38 percent.
On the other hand, the company said it had $7.9 million in increased costs due to the tax law change, including the $4.1 million it spent on $1,000 bonuses for all of its non-executive employees.
"The tax law changes at the end of 2017 resulted in a mixed earnings performance for the fourth quarter," Jeff Noordhoek, chief executive officer of Nelnet, said in a news release. However, he said the changes have "created long-term real cash value by lowering the company's overall tax liability."
"Nelnet will use the additional earnings from the lower tax rate to invest in current and future business opportunities. These investments will provide ongoing opportunities for existing and new associates at Nelnet," Noordhoek said.
Other drags on the company's earnings included a decrease in net interest income on its student loan portfolio and increased losses from its Allo Communications subsidiary.
Nelnet said Allo's net fourth-quarter loss more than doubled to $5.5 million this year from $2.6 million in the fourth quarter of 2016, even though its customer base more than doubled.
Allo continued to spend heavily on its network buildout in Lincoln, spending $36.7 million in the fourth quarter and $115.1 million for all of 2017.