Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q2 2013 Earnings Presentation
29 slides from Newtekone's earnings presentation, Aug 8, 2013
Slide 1: Second Quarter 2013 Financial Results Conference Call
Exhibit 99.1 Newtek Business Services, Inc. “The Small Business Authority®” Second Quarter Quarter 2013 Financial Results Conference Call August 6, 2013 4:15pm ET Hosted by: Barry Sloane, President & CEO NASDAQ: NEWT Jennifer Eddelson, EVP & CAO www.thesba.com Investor Relations Public Relations New
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: Q2 2013 Financial Highlights
Q2 2013 Financial Highlights Q2 2013 diluted EPS increased by 66.7% to $0.05 • Expect to achieve at least 20% growth in diluted EPS for 2013 Total operating revenues increased by 14.5% to $37.0 million in Q2 2013 Small Business Finance: • Funded$42.8million in loansin Q22013,a 103.7%increaseover Q22
Slide 4: Q2 2013 Operational Highlights
Q2 2013 Operational Highlights Small Business Finance: • Asof June30, 2013,Total Pipeline* increasedby 101.8%to $391 million yearover year • Lenderon a run rate to receivebetween$4.5 – $5 billion in referralsfor 2013, representing approximately 2x the $2.3 billion in referrals received in 2012 • Rec
Slide 5: Q2 2013: Strong Financial Growth
Q2 2013: Strong Financial Growth Total Operating Revenues Pre-tax Net Income $37.0 $2.9 $32.3 $1.9 Q2 2012 Q2 2013 Q2 2012 Q2 2013 14.5%quarter-over-quarter increase 48.0%quarter-over-quarter increase $ in millions $ in millions Net Income Modified EBITDA* (Attributable to Newtek Business Services,
Slide 6: Consolidated Earnings Performance
Consolidated Earnings Performance Diluted Earnings per Share $0.06 $0.10 $0.09 $0.05 $0.08 $0.04 $0.06 $0.06 $0.03 $0.04 $0.02 $0.02 $0.00 $0.00 Diluted Earnings Per Share Diluted Earnings Per Share Q2 2012 Q2 2013 6 Months 2012 6 Months 2013 • 66.7%increase year over year in • 50.0%increase year ov
Slide 7: Consolidated Balance Sheet
Consolidated Balance Sheet Selected Items Balance Balance $ in thousands June 30, 2013 Dec 31, 2012 Total Cash & Cash Equivalents* $23,101 $22,685 Total Assets $162,546 $152,742 Total Liabilities $90,090 $83,840 Total Equity $72,456 $68,902 Balance Sheet changes: • Increase of $416 thousand in cash
Slide 8: Operating Segment Performance
Operating Segment Performance For the Second Quarter 2013 Small Business Lending: • Revenue increased by 40.5% to $8.4 million • Pretaxincomeincreasedby 37.3%to $2.0million Electronic Payment Processing: • Revenue increased by 9.7% to $23.4 million • Pretax income increased by 28.4% to $2.5 million
Slide 9: Small Business Finance
Small Business Finance Newtek Business Services Q22013TotalOperatingRevenue$37.0millio : n SBF Revenue Trend $8.4 $6.3 $6.0 SBF $8.4M $1.9 Q2 2013 SBF revenue was 22.6% of total operating revenue Q22013SBFrevenueincreasedby 40.5%to $8.4millionfrom $6.0millionin Q22012 Funded$42.8millionin loansin Q2
Slide 10: Small Business Finance
Small Business Finance DirectRevenue/ Expenseof a LoanSaleTransaction– An Example Key Variables in Loan Sale Transaction Resulting Revenue (Expense) Loan Amount $1,000,000 Associated Premium** $93,750 Guaranty Percent 75% Servicing Asset*** $18,630 Guaranteed Balance $750,000 Total Premium Income $1
Slide 11: Small Business Finance – Total Pipeline
SmallBusiness Finance Finance– Total Pipeline $247.9 $121.3 $55.5 $50.5 $37.7 $37.0 $16.2 $18.6 Open Referrals Prequalified In Underwriting Approved & Pending Closing 6/30/2012 6/30/2013 As of June 30, 2013, Total Pipeline* increased by 101.8%, to $391 million year over year: • Open Referrals increa
Slide 12: Comparative Loan Portfolio Data
Comparative Loan Portfolio Data (12/31/10 vs. 6/30/2013) Loan Characteristic As of 12/31/10 As of 6/30/13 Loan Characteristic As of 12/31/10 Loan Characteristic As of 6/30/13 Business Type: Existing Businesses 53.93% 82.74% Industry: Industry: Business Acquisition 25.89% 11.09% Restaurant 10.60% Res
Slide 13: Servicing Portfolio
Servicing Portfolio $639.8 $566.5 $413.8 $309.5 $257.0 $226.0 *Principal balance of loans serviced (dollars in millions) NEWT Loans* Servicing Other Loans* Total Loans* 30-Jun-12 30-Jun-13 The SBF servicing portfolioJune – 30, 2013 vs. 2012: • Total servicing portfolio increased by 13.0% to $639.8 m
Slide 14: Electronic Payment Processing
Electronic Payment Processing Newtek Business Services EPP Revenue Trend Q1 2013TotalOperatingRevenue$37.0million : $25 $23.4 $20.7 $21.4 $20.4 EPP $20 Revenue $15 $23.4M $10 $5 $0 Q2 2013 EPP revenue was 63.4% of total operating revenue Q2 '10 Q2 '11 Q2 '12 Q2 '13 Q2 2013 EPP revenue increased by 9
Slide 15: Managed Technology Solutions
Managed Technology Solutions Newtek Business Services MTS Revenue Trend Q2 2013TotalOperatingRevenue$37.0million : $6 $4.8 $4.8 $5 $4.6 $4.6 MTS $4 $4.6M $3 $2 $1 Q2 2013 MTS revenue was 12.4% of total operating revenue $- Q2 '10 Q2 '11 Q2 '12 Q2 '13 Q2 2013MTSrevenueincreased by 0.7%to $4.6million
Slide 16: Invested for the Future
Invested for the Future Linux and Cloud Growth in New Shared Linux Accounts in Growth in Total Cloud Services Cloud Environment 35,000 1400 1,233 30,000 28,637 26,054 1200 25,000 21,809 22,642 955 1000 822 20,000 800 15,000 600 430 400 10,000 200 5,000 0 0 March '13 April '13 May '13 June '13 March
Slide 17: MTS Referral Trends
MTS Referral Trends Q2 2012 vs. Q2 2013 Total MTS Referrals Total Closed MTS Referrals 5,000 4,000 4,416 4,000 3,106 3,000 3,000 2,655 1,854 2,000 2,000 1,000 1,000 0 0 Q2 2012 Q2 2013 Q2 2012 Q2 2013 Q2 2012 vs. Q2 2013 • Total MTS referrals increased by 66.3% to 4,416 • Total closed referrals incr
Slide 18: Reaffirming 2013 Guidance
Reaffirming 2013 Guidance Operating Revenue: • Midpoint of $148.2 million, with a range of $145.1 million and $151.2 million • Increase of 13.0% over 2012 revenue of $131.1 million Pretax Income: • Midpoint of $11.5 million, with a range of $10.0 million and $13.0 million • Increase of 22.3% over 20
Slide 19: Growth Strategy
Growth Strategy • Remain #1 in Non-bank Increased Government Guaranteed Cross sell, advertising SBA 7(a) Lender cross market & budget by • Grow Newtek bundle 50% Advantage™ Platform products • Expect to grow revenues by 13% organically in 2013 Grow brand Continue to organically & via grow alliance w
Slide 20: Comparable Company Statistics
Comparable Company Statistics On Deck Capital$500 – million market valuation Lending Club $–1.55 billion market valuation Digital River (DRIV) announced purchase of LML Payment Systems (LMLP) Universal Business Payment Solutions (UBPS) announced $179 million planned acquisition of credit/debit card
Slide 21: Investment Summary
Investment Summary Publicly traded Company since 2000 Management’s interests aligned with shareholders • CEO alone owns approximately 13.4% of outstanding shares* Trades at slightly more than 3.5x 2013 forecasted Modified EBITDA** • 2013 forecasted Modified EBITDA** of $20.9 million, an increase of
Slide 22: Key Statistics NASDAQ: NEWT
Key StatisticsNASDAQ: – NEWT Share Statistics* (USD) 2013 Guidance Stock Price $2.19 Revenue $148.2M 52-Week Range $1.60-$2.25 Pre-tax Income $11.5M Common Shares O/S 35.3M Diluted EPS $0.18 Market Cap $77.3M Modified EBITDA* $20.9M Avg. Daily Trading Vol. 32,545 (200-day average) * As of 8/2/2013 2
Slide 23: Financial Review
Financial Review Jennifer C. Eddelson CAO -
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures In evaluating its business, Newtek considers and uses modified EBITDA as a supplemental measure of its operating performance. The Company defines modified EBITDA as earnings before income from tax credits, interest expense, taxes, depreciation and amortization, stock comp
Slide 25: Q2 2013 Actual vs. Q2 2012 Actual
Q2 2013 Actual vs. Q2 2012 Actual Revenue For Revenue For Pretax Income Pretax Income MODIFIED MODIFIED The Quarter The Quarter (Loss) For The (Loss) For The EBITDA For The EBITDA For The Ended Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended June 30, 2013 June 30, 2012 June 30, 2013 Ju
Slide 26: 2013 Segment Guidance
2013 Segment Guidance Electronic Small Managed Total Inter- Payment Business Technology All Corporate Business CAPCO Company Processing Finance Solutions Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High Low High 2013 Full Year Revenu
Slide 27: Addenda
Newtek — “The Small Business Authority’” Addenda
Slide 28: Modified EBITDA Reconciliation
Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the three months ended June 30, 2013 Net Change in Fair Value of Credits in Lieu of Cash Second and Notes Amortization of Quarter Pretax Income Payable in Deferred 2011 Lease Depreciation 2013 Income from Tax
Slide 29: Modified EBITDA Reconciliation
Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the three months ended June 30, 2012 Net Change in Fair Value of Credits in Lieu of Cash Second and Notes Amortization of Quarter Pretax Income Payable in Deferred 2011 Lease Depreciation 2012 Income from Tax
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