Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q3 2011 Earnings Presentation
57 slides from Newtekone's earnings presentation, Nov 10, 2011
Slide 1: Newtek Business Services Third Quarter 2011 Financial Results Conference Call
EXHIBIT 99.1 Newtek Business Services, Inc. NASDAQ: NEWT Third Quarter 2011 Financial Results Conference Call November 9, 2011 4:15 PM Hosted By: Barry Sloane, CEO and Chairman Jennifer C. Eddelson, CAO Public Relations Contact: Liz Petrova Rubenstein Public Relations, Inc. (212) 843-9335 lpetrova@r
Slide 2: Safe Harbor Statement
Safe Harbor Statement The statements in this slide presentation including statements regarding anticipated future financial performance, Newtek's beliefs, expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private Securities Litigation Reform Act of
Slide 3: Third Quarter 2011 Highlights
Third Quarter 2011 Highlights Announce consolidated pretax income of $335 thousand for the quarter ended September 30, 2011 Versus consolidated pretax income of $248 thousand for the quarter ended September 30, 2010 Announce consolidated pretax income of $1.3 million for the nine months ended Septem
Slide 4: Third Quarter 2011 Highlights
Third Quarter 2011 Highlights Revised 2011 annual guidance range of: $122.0 million to $124.8 million for consolidated revenue range $1.25 million to $2.0 million for consolidated pretax income range $8.8 million to $9.6 million for consolidated Modified EBITDA range • Relocation of 1440 Broadway, N
Slide 5: Third Quarter 2011 Highlights
Third Quarter 2011 Highlights Announce Q3 2011 consolidated revenue of $30.7 million 5% growth vs. Q3 2010 of $29.2 million Q3 2011 revenue in EPP and Managed Technology Solutions exceed Q3 2010 Combined EPP and Managed Technology Solutions revenue for Q3 2011 is $25.5 million • Versus Q3 2010 of $2
Slide 6: Balance Sheet Shrinks
Balance Sheet Shrinks (in thousands) September 30, 2011 December 31, 2010 Total Assets $ 125,997 $ 165,015 Total Liabilities $ 69,193 $ 109,421 Total Equity $ 56,804 $ 55,594 6
Slide 7: Third Quarter 2011 Conference Call Agenda
Third Quarter 2011 Conference Call Agenda Q3 2011 financial performance, cash position, balance sheet, commentary, business trends, 2011 and 2012 guidance Strategic mission as The Small Business Authority New website launched: www.thesba.com (January 2011) 7
Slide 8: Third Quarter 2011 Financial Results
Third Quarter 2011 Financial Results Q3 2011 vs. Q3 2010 core operating segment revenue: Electronic Payment Processing: $20.7 million - up 1% from Q3 2010 Managed Technology Solutions: $4.8 million – flat from Q3 2010 Small Business Finance: $4.6 million – up 53% from Q3 2010 Q3 2011 vs. Q3 2010 cor
Slide 9: Cash Position
Cash Position $31.3 million in cash and cash equivalents, restricted cash, and broker receivable at September 30, 2011, down from $33.2 million at December 31, 2010. Equates to $0.38 cash per share. Equates to $0.88 cash per share when including restricted cash and the broker receivable, which we re
Slide 10: Developments in EPP
Developments in EPP Q3 2011 versus Q3 2010: Revenue up 1% Pretax income down 8% Modified EBITDA down 7% Nine months September 30, 2011 versus nine months September 30, 2010: Revenue up 3% Pretax income flat Modified EBITDA down 1% Cash flow positive business Significant operating leverage EPP segmen
Slide 11: Managed Technology Solutions Initiatives
Managed Technology Solutions Initiatives Q3 2011 versus Q3 2010: Revenue flat Pretax income flat Modified EBITDA down 7% Nine months September 30, 2011 versus nine months September 30, 2010: Revenue flat Pretax income up 3% Modified EBITDA down 5% Continue to evaluate expenditures versus productivit
Slide 12: Cloud Computing
Cloud Computing What is it? Outsourcing of hardware, software, personnel, storage, data security and responsibility and accountability for IT in whole or in part. Why is it relevant? Cost containment and efficiencies Better service and management of resources More security More functionality 12
Slide 13: Cloud Computing
Cloud Computing Competition Amazon Microsoft Other hosting companies and IT providers like Rackspace Hosting (RAX) Thesba has real U.S. based cloud authority personnel to service and talk to the customer Thesba has a pay for what you use at the Cloud Authority Bandwith Storage CPU 13
Slide 14: Cloud Computing: Why is this market important and why are we good at it?
Cloud Computing Why is this market important and why are we good at it? 14
Slide 15: Cloud Pricing and Margin
Cloud Pricing and Margin Shifting our energies to driving cloud sales The market is focused on the cloud Driving shared growth is not as beneficial • Average monthly cloud instance revenue is $173 vs. our most popular shared site plan of $5.95 • Gross margin as a percentage on a cloud instance is al
Slide 16: Cloud Computing: Cumulative Cloud VPS Instances Sold
Cloud Computing 400 Cumulative Cloud VPS Instances Sold 350 300 250 # of instances 200 150 100 50 0 Dec-10 Jan-11 Feb -11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 16
Slide 17: Small Business Finance
Small Business Finance We have very good lending infrastructure (origination, underwriting, funding, servicing, and collection) This infrastructure is valuable more so today This sector offers the best opportunity for Newtek shareholders 110 to 114 pricing on governments FDIC contract We are an S&P
Slide 18: Small Business Finance
Small Business Finance Servicing Portfolio (in thousands): 9/30/11 6/30/11 3/31/11 12/31/10 Servicing for loans we $ 270,258 $ 254,741 $ 236,363 $ 223,049 originated Servicing for others 95,739 75,087 75,365 73,062 Total servicing portfolio $ 365,997 $ 329,828 $ 311,728 $ 296,111 We expect future gr
Slide 19: Reduced Effect of Capco on Consolidated Results
Reduced Effect of Capco on Consolidated Results Balance sheet illusionary leverage Management time Accounting cost Other miscellaneous costs 19
Slide 20: Balance Sheet Items to Discuss
Balance Sheet Items to Discuss (in millions of dollars) 9/30/2011 6/30/2011 3/31/2011 12/31/2010 SBA loans transferred, subject to premium recourse 1.4 1.4 16.9 31.2 Credits in lieu of cash 19.2 25.1 29.0 35.5 Total assets 126.0 129.4 144.2 165.0 Liability on SBA loan transferred, subject to premium
Slide 21: Future Year End Balance of Tax Credits
Future Year End Balance of Tax Credits 21
Slide 22: What is our Growth Strategy Going Forward?
What is our Growth Strategy Going Forward? The Small Business Authority brand through www.thesba.com (launched January 2011) Emphasize cross-selling and cross-marketing into the customer base which we are now doing Continue to grow alliance channels as outsourcing of our services is attractive to ba
Slide 23: Our Strategy & Mission
Our Strategy & Mission We are a thought leader and destination for independent owner operators of small businesses. The Small Business Authority provides products, services, and data to small and medium size businesses across the United States to grow their sales, reduce their expenses, reduce their
Slide 24: Traffic Statistics for www.thesba.com
Traffic Statistics for www.thesba.com 24
Slide 25: Traffic Statistics for www.thesba.com
Traffic Statistics for www.thesba.com 25,000 Unique VS Total Visitors 21,000 Unique Visitors for TheSBA 17,000 Total Visitors for TheSBA 13,000 9,000 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 25
Slide 26: Site Statistics for thesba.com
Site Statistics for thesba.com Overall Grade: 99 Blog Grade: 95 Indexed Pages: 70,800 Linking Domains: 1,066 Tweet Grade: 91 Twitter Followers: 638 Facebook Fans: 136 RSS Feed: Yes Conversion Form: Yes Traffic Rank 0.26% 26
Slide 27: Current General Statistics
Current General Statistics 750 absolute unique visitors per day Average time on site is 3 minutes and 30 seconds 54% Bounce Rate 27
Slide 28: Small Business Authority Branding Achievements
Small Business Authority Branding Achievements Forbes publishes The Small Business Authority Blog daily which can be viewed at http://blogs.forbes.com/thesba/ Our introductory post which explains what our blog will do can be viewed at http://blogs.forbes.com/thesba/2011/06/15/your-authority-on-small
Slide 29: Small Business Authority Branding Achievements
Small Business Authority Branding Achievements Small Business Authority Hour All of the following shows podcast on thesba.com and wabcradio.com: 2/5/11 – Business Entrepreneurship 3/5/11 – Healthcare and Health Insurance effects on small businesses 4/2/11 – Small Business Lending 5/7/11 – eCommerce
Slide 30: 77 WABC Radio
77 WABC Radio “Reporting Live from The Small Business Authority Studios” over 400 mentions per month Over 250 sixty second radio commercials per month. Hear our spots on www.thesba.com click on community, then click on radio spots to hear our personalities, like Imus, Hannity, Levin, Kudlow, Batchel
Slide 31: WABC Radio
WABC Radio “The Imus in the Morning Show”– broadcast Monday through Friday, 6am EST to 9:20am EST on 77 WABC and Fox Business News See Warner Wolf broadcast sports from the SBAS several times each morning Backdrop Microphone flags See Bernard McGirk broadcast his “Bernie Briefing” from the SBAS seve
Slide 32: SB Authority Index
SB Authority Index Financial barometer for small business economy Made up of eight primary business and economic components of the small business economy SB Authority Index released at beginning of every month Available in our newsletter with over 55,000 in distribution Available on our website now
Slide 33: SB Authority Market Sentiment Survey
SB Authority Market Sentiment Survey On a monthly basis, delivers the pulse of the small business economy by polling our client base on topical issues like health care, the lending environment and other important issues affecting small businesses Usually poll in excess of 1,200 respondents Released
Slide 34: Small Business Authority Hour
Small Business Authority Hour Live radio for small business on the first Saturday of every month broadcasting from The Small Business Authority Studios on 77 WABC or nationally at WABCRadio.com Produced and directed by Newtek for independent business owners and operators Discussing key small busines
Slide 35: Marketing Focus
Marketing Focus ee in astinane THE SMALL BUSINESS
Slide 36: Strategic Alliance Partner Channel
Strategic Alliance Partner Channel Still our workhorse for distribution, clientele and relationships Driven by Newtracker™ which has a patent pending Referral volume continues to grow on a consolidated basis CUNA Latino Coalition Pershing Morgan Stanley Smith Barney Chartis New York Community Bank T
Slide 37: Small Business Authority Channel
Small Business Authority Channel Grow internet web based direct business through search through branding on TV, radio, print and public relations Increased recognition as the authority on business issues for small businesses Grow as the destination spot for independent owner/operator businesses Beco
Slide 38: In Conclusion
In Conclusion =e hn THE SMALL BUSINESS
Slide 39: Annual Pretax Income Trend
Annual Pretax Income Trend in millions $(17.5) $(13.1) $(4.0) $0.9 $1.6 $4.5 $6 $0 Pretax Income (Loss) -$6 -$12 -$18 2007 2008 2009 2010 2011 2012 Actual Actual Actual Actual Forecast Forecast Midpoint Midpoint 39
Slide 40: 2011 Revised Segment Guidance
2011 Revised Segment Guidance In millions of dollars Electronic Managed Small Total Payment Technology Business All Corporate Business CAPCO Intercompany Processing Solutions Finance Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High L
Slide 41: 2012 Segment Guidance
2012 Segment Guidance In millions of dollars Electronic Managed Small Total Payment Technology Business All Corporate Business CAPCO Intercompany Processing Solutions Finance Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High Low High
Slide 42: Consolidated Annual Pretax Income (Loss)
Consolidated Annual Pretax Income (Loss) Year Amount (in millions) 2007 $(17.5) 2008 $(13.1) 2009 $(4.0) 2010 $0.9 2011 (Forecast range midpoint) $1.6 2012 (Forecast range midpoint) $4.5 42
Slide 43: Financial Review
Financial Review Jennifer C. Eddelson – CAO
Slide 44: Non-GAAP Financial Measures
Non-GAAP Financial Measures In evaluating its business, Newtek considers and uses EBITDA and Modified EBITDA as a supplemental measure of its operating performance. The Company defines EBITDA as earnings before interest expense, taxes, depreciation and amortization and Modified EBITDA as earnings ex
Slide 45: Selected Balance Sheet Items
Selected Balance Sheet Items In thousands of dollars Balance at Balance at September 30, 2011 December 31, 2010 Cash and cash equivalents $13,678 $10,382 Restricted cash 6,979 10,747 Broker receivable 10,666 12,058 SBA loans held for sale, at fair value 938 1,014 Total short term liquidity $32,261 $
Slide 46: Q3 2011 Actual vs. Q3 2010 Actual
Q3 2011 Actual vs. Q3 2010 Actual In millions of dollars Revenue For Revenue For The Pretax Income Pretax Income Modified EBITDA Modified EBITDA The Quarter Quarter Ended (Loss) For The (Loss) For The For The Quarter For The Quarter Ended September 30, Quarter Ended Quarter Ended Ended Ended Septemb
Slide 47: 2011 Revised Segment Guidance
2011 Revised Segment Guidance In millions of dollars Electronic Managed Small Total Payment Technology Business All Corporate Business CAPCO Intercompany Processing Solutions Finance Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High L
Slide 48: 2011 Previous Segment Guidance
2011 Previous Segment Guidance In millions of dollars Electronic Managed Small Payment Technology Business All Corporate Processing Solutions Finance Other Activities Low High Low High Low High Low High Low High 2011 Full Year Revenue 80.5 81.5 19.2 19.6 20.1 21.1 1.4 1.6 1.0 1.0 Pretax Income (Loss
Slide 49: 2012 Segment Guidance
2012 Segment Guidance In millions of dollars Electronic Managed Small Total Payment Technology Business All Corporate Business CAPCO Intercompany Processing Solutions Finance Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High Low High
Slide 50: 2012 Previous Segment Guidance
2012 Previous Segment Guidance In millions of dollars Electronic Managed Small Total Payment Technology Business All Corporate Business CAPCO Intercompany Processing Solutions Finance Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High
Slide 51: Going Forward: 2011
Going Forward: 2011 Barry Sloane - CEO
Slide 52: Questions & Answers
Questions & Answers nnd a THE SMALL BUSINES
Slide 53: Addendum
Addendum nnd a THE SMALL BUSINESS
Slide 54: Modified EBITDA Reconciliation
Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the three months ended September 30, 2011 In millions of dollars Pretax Income Net Change in Fair Deferred Other than Interest Depreciation Q3 2011 Income from Tax Value of Credits in Compensation Temporary E
Slide 55: Modified EBITDA Reconciliation
Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the three months ended September 30, 2010 In millions of dollars Pretax Income Net Change in Fair Deferred Other than Interest Depreciation Q3 2010 Income from Tax Value of Credits in Compensation Temporary E
Slide 56: Modified EBITDA Reconciliation
Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the nine months ended September 30, 2011 In millions of dollars Pretax Income Net Change in Fair Deferred Other than Interest Depreciation Q3 YTD Income from Value of Credits in Lieu Compensation Temporary Ex
Slide 57: Modified EBITDA Reconciliation
Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the nine months ended September 30, 2010 In millions of dollars Pretax Income Net Change in Fair Deferred Other than Interest Depreciation Q3 YTD 2010 Income from Value of Credits in Compensation Temporary Ex
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