Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q2 2007 Earnings Presentation
35 slides from Newtekone's earnings presentation, Aug 10, 2007
Slide 1: Conference Call
Exhibit 99.2 Conference Call August 9, 2007 4:15pm Barry Sloane – CEO/Chairman Michael J. Holden - CFO 2007 Second Quarter Shareholder
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: Mission Statement
Mission Statement • Newtek is quickly becoming the premier distributor of business services and financial products to the small and medium sized business market • 79,644 business accounts as of 6/30/07 • Adding over 2,500 new clients per quarter net of attrition • Newtek is a one stop shop
Slide 4: Mission Statement
Mission Statement We want the SMB market to view NEWTEK TM as “THE Company” to go to for all their business services needs. IMPLICATION IMPLICATION
Slide 5: Product and Process are Linked
PRODUCT PROCESS CUSTOMER and/or MARKET CONTINUAL ASSESMENT and CORRECTION NEWTEK CAN START AT ANY POINT Product & Process are Linked
Slide 6: Today's Presentation and Format
Today’s Presentation and Format • Newtek Website – Shareholder’s Letter from Chairman/CEO – Second Quarter Shareholder Conference Call August, 2007 (PowerPoint currently presenting) • Focus On: – Financial Highlights – Execution of Strategy – Implementation of Strategy
Slide 7: Newtek Second Quarter Highlights
Newtek Second Quarter 07 Highlights • Growing revenues in EPP, Web Hosting and Small Business Lending: – EPP segment revenue increased by 24% Q2 ’07 over Q2 ‘06 – Web Hosting segment revenue increased by 19% Q2 ’07 over Q2 ‘06 – SBA Lending segment revenue increased by 11% Q2 ’07 over Q2 ’06 • Growi
Slide 8: Newtek Business Services Financial Strength
Newtek Business Services Financial Strength As of June 30, 2007 • $40 million in cash and cash equivalents, restricted cash, and U.S. Treasuries • $83 million in shareholders equity • $2.30 in book value per share
Slide 9: Second Quarter Highlights
Second Quarter Highlights • Met or beat guidance in 3 Key Operating Segments • 10 to 20% growth rate in revenues despite economic slowdown • 21% and 18% increase in EPP and SBA Lending segment EBITDA, respectively, over second quarter • Gains on Sale: – Buy Seasons $907,000 – 1-800 Gift Certificates
Slide 10: Second Quarter Highlights
Second Quarter Highlights • New Newtek Insurance Agency team: – William (Bill) Bayer – David Towner – Pamela Gay • New human resources managers: – Justin Strom – Judi Chompre • New director of national sales: – Brian Gagnon
Slide 11: Second Quarter Highlights
Second Quarter Highlights • $1 billion in loan referrals first 7 months vs. $621 million for same period last year • Web hosting division successfully moved to new, larger space to make way for continued expansion • Discover named EPP as a merchant acquirer in their first round • BankAtlantic chose
Slide 12: Small Business Lending Environment
Small Business Lending Environment • Liquidity • Credit Deterioration • Loan Volume • Loss Rates • Leverage • Market Position
Slide 13: SBA Lending First Half Highlights
SBA Lending First Half 07 Highlights • Weighted average best FICO score for the portfolio is now 726; most recent six months of originations (1/1/07-6/30/07) the weighted average best FICO score is 743 • GE/CIT/Signature Bank $50 million lending facility NSBF has a maturity date of 8/31/09. It was e
Slide 14: SBA Lending Loan Pipeline
SBA Lending Loan Pipeline As of July 31, 2007 • Dollar amount of loans in underwriting to be decisioned at 7/31/07 was $25MM vs $22MM at 7/31/06 • Approved pending closing pipeline at 7/31/07 was $15MM vs $10MM at 7/31/06 • Close rate for the first seven months of ’07 was 75% vs 60% for the same per
Slide 15: SBA Lending Loan Performance
SBA Lending Loan Performance • SBA general business loan actual loss rate cumulative for last 15 years: 6.2% • Newtek originated 7a loan actual loss rate cumulative 2003 to present: 2.8% • Newtek expects mature actual loss rate to be equal to or below average SBA general business loan rate
Slide 16: Newtek Second Quarter Results
Newtek Second Quarter Results 19% $0.642 $(3.460) $(2.818) Pretax Net Loss* 21% $3.985 $19.426 $23.411 Revenues % Change $ Change Q2 ‘06 Q2 ’07 In millions of dollars *before discontinued operations
Slide 17: Three Key Segments Second Quarter Results
Three Key Segments Second Quarter Results In millions of dollars 12% $0.442 $3.783 $4.225 EBITDA 25% $0.412 $1.669 $2.081 Pretax Net Income 21% $ 3.390 $16.239 $19.629 Revenues % Change $ Change Q2 ’06 Q2 ’07
Slide 18: 2007 Annual Segment Guidance
2007 Annual Segment Guidance (16.3) - (15.1) (17.2) - (15.8) 93.8 – 95.0 93.2 - 94.9 Total (4.7) – (4.7) (4.5) – (4.5) Interco Eliminations (6.8) - (6.8) (6.5) - (6.5) 4.6 - 4.6 4.7 - 4.7 Corporate Activities (1.8) - (1.6) (2.9) - (2.6) 6.0 - 6.2 4.8 - 5.1 All Others (14.9) - (14.9) (15.5) - (15.5)
Slide 19: Operational Focus for 2007
Operational Focus for 2007 I. Operational Structure II. Business Services Management III. Human Resources IV. IT Advances and Directives V. Why Do We Acquire Clients Inexpensively VI. Why Do We Process Business Inexpensively VII. Alliance Partners & Marketing VIII. Financial Focus IX. Why is Newtek
Slide 20: Operational Structure
Operational Structure A Team Sales And Marketing Personnel Add Referrals To System B Team Business Services Specialists Close and Board Transactions Within Each Division C Team Customer Service Representatives Handle Post-closing Customer Service, Cross Service and Cross Selling
Slide 21: Business Service Specialists Management
Business Service Specialists Management Lending Carmen Mouchacca Electronic Payment Processing Steve Hauler Web Hosting Derek Curtis and TBA Insurance Bill Bayer, David Towner, & Pamela Gay
Slide 22: Human Resources
Human Resources • Hiring / Training / Recruiting • Focusing on scalability across enterprise • Brownsville, Texas Operations Center receives $1.25 million Federal grant • Added Gordon Schroeder as new independent director (FISERV, Maritz, GE)
Slide 23: IT Advances and Directives
IT Advances and Directives I. Update, refine and broaden NewTracker II. Master Central Database Development III. Utilize technology for quality control, financial and management reporting
Slide 24: Why Do We Acquire Clients Inexpensively
Why Do We Acquire Clients Inexpensively 1. Wide net catches alliance partners for many offerings 2. Wide net catches business clientele for multiple offerings post close or bundled offering 3. NewTracker™ uses Merrill, Morgan Stanley, UBS, Navy Federal, AIG for brand name recognition in lieu of: a.
Slide 25: Why Do We Acquire Clients Inexpensively
Why Do We Acquire Clients Inexpensively 4. Technology makes referrals easy 5. Building our own brand
Slide 26: Why Do We Process Business Inexpensively
Why Do We Process Business Inexpensively 1. Remote production plants in Milwaukee, Phoenix and Brownsville. 2. Business gets boarded electronically through telephonic interview on strength of alliance partner. 3. Data can be shared for multiple products, services and applications. 4. Minimize commis
Slide 27: Alliance Partners and Marketing
Alliance Partners and Marketing 1. Portfolio Navy Federal CU, AIG, Morgan Stanley, UBS, PSCU, CUNA, others 2. Major Business Services and Financial Institution technology provider 3. Major Clearing Broker Dealer 4. Major Brokerage firm 5. Trade Associations
Slide 28: Financial Focus
Financial Focus 1. Grow cash flow from business services 2. Deploy operational leverage 3. Value business components 4. Reduce financial effect of CAPCO business 5. Opportunistically acquire businesses within the footprint 6. Simplify financial reporting and structure
Slide 29: Why Is Newtek Well Positioned
Why Is Newtek Well Positioned 1. Growing small business market with big appetite for services 2. High quality product offerings 3. We know of no other comparable offerings 4. Business clients prefer few providers 5. Low cost provider 6. SMB Market is coveted 7. We started with a white board 8. We ha
Slide 30: Newtek Business Services, Inc.
Newtek Business Services, Inc. We do it better
Slide 31: 2007 Q2 Guidance vs. Actual Results
2007 Q2 Guidance vs. Actual Results 1.088 1.830 1.307 EBITDA Actual (2.818) (1.765) 0.199 (3.333) 0.217 0.999 0.865 Pretax Net Income Actual 23.411 (1.232) 1.106 2.188 1.720 2.609 3.950 13.070 Revenue Actual (4.5) – (4.1) 22.7 - 23.2 Total (1.1) – (1.1) Interco Eliminations (1.5) – (1.5) 1.2 -1.2 Co
Slide 32: 2007 Q2 Actual vs. 2006 Q2 Actual
2007 Q2 Actual vs. 2006 Q2 Actual 0.924 1.781 1.078 EBITDA Q2 ‘06 Actual (3.460) (1.237) (0.707) (3.185) (0.102) 1.048 0.723 Pretax Net Income Q2 ‘06 Actual 19.426 (1.214) 1.244 0.781 2.376 2.361 3.317 10.561 Revenue Q 2 ‘06 Actual (2.818) 23.411 Total (1.232) Interco Eliminations (1.765) 1.106 Corp
Slide 33: Cash Flows from Operating Activities by Segment
Cash Flows from Operating Activities by Segment for the six months ended June 30, 2007 (in thousands of dollars) (4,795) (491) - - (4,281) - (514) (491) Income (loss) before discontinued operations Discontinued operations, net of tax (2,566) - (462) (491) 1,119 - 1,185 - - $(3,469) $- $ (2,374) $(1,
Slide 34: 2007 Annual Segment Guidance
2007 Annual Segment Guidance (16.3) - (15.1) (17.2) - (15.8) 93.8 – 95.0 93.2 - 94.9 Total (4.7) – (4.7) (4.5) – (4.5) Interco Eliminations (6.8) - (6.8) (6.5) - (6.5) 4.6 - 4.6 4.7 - 4.7 Corporate Activities (1.8) - (1.6) (2.9) - (2.6) 6.0 - 6.2 4.8 - 5.1 All Others (14.9) - (14.9) (15.5) - (15.5)
Slide 35: Newtek Business Services, Inc.
Newtek Business Services, Inc. We do it better
Newtek Business Services — Q2 2007 Earnings Presentation on 6ix