Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q3 2013 Earnings Presentation
39 slides from Newtekone's earnings presentation, Nov 7, 2013
Slide 1: Newtek Business Services Q3 2013 Financial Results Conference Call
Exhibit 99.1 www.thesba.com Newtek Business Services, Inc. “The Small Business Authority®” Third Quarter Quarter 2013 Financial Results Conference Call November 6, 2013 4:15pm ET Hosted by: Barry Sloane, President & CEO NASDAQ: NEWT Jennifer Eddelson, EVP & CAO www.thesba.com Investor Relations Publ
Slide 2: Safe Harbor Statement
www.thesba.com 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
Slide 3: N2 Registration Statement
www.thesba.com N2 Registration Statement We will not comment on this call on anything outside the registration statement until its effective date. 3
Slide 4: Recent 2013 Financial Highlights
www.thesba.com Recent 2013 Financial Highlights Q3 2013: diluted EPS was $0.05; a year-over-year increase of 66.7% Nine months ended 9/30/2013: diluted EPS was $0.14; a year-over-year increase of 40% Q3 2013: operating revenues were $34.8 million; a year-over-year increase of 3.9% Nine months ended
Slide 5: Recent 2013 Operational Highlights
www.thesba.com Recent 2013 Operational Highlights For the nine months ended September 30, 2013, funded $120.0 million in loans, a 66.3% year-over-year increase Funded $17.0 million in loans in the month of October Company on track to fund $175 million of SBA 7(a) loans in 2013 As of September 30, 20
Slide 6: Reaffirming 2013 Guidance
www.thesba.com 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 o
Slide 7: Issued 2014 Guidance
www.thesba.com Issued 2014 Guidance Operating Revenue: • Midpoint of $164.0 million, with a range of $157.0 million and $171.0 million • Increase of 10.7% over 2013 revenue midpoint guidance of $148.2 million Pretax Income: • Midpoint of $14.6 million, with a range of $11.8 million and $17.9 million
Slide 8: Segment Results
www.thesba.com Segment Results Year-over-Year Comparisons Nine-Months Ended Q3 2013 September, 30 2013 SmallBusiness Finance(SBF) SmallBusiness Finance(SBF) • Revenue:$7.6 million; a 12.4%increase • Revenue:$23.4million; a 33.4%increase • Pre-taxIncome:$1.7 million; a 12.9% • Pre-tax Income: $5.9 mi
Slide 9: Q4 2013 Guidance vs. Q4 2012 Actual
www.thesba.com Q4 2013 Guidance vs. Q4 2012 Actual Guidance Actual For the three For the three Months ended Months ended December 31, 2013December 31, 2012Change Consolidated Revenues $ 38.6 $ 34.6 11.6% Consolidated Income before income taxes $ 4.3 $ 3.2 34.4% Adjusted EBITDA adjustments Income fro
Slide 10: Issued 2014 Guidance
www.thesba.com Issued 2014 Guidance Operating Revenue: • Midpoint of $164.0 million, with a range of $157.0 million and $171.0 million • Increase of 10.7% over 2013 revenue midpoint guidance of $148.2 million Pretax Income: • Midpoint of $14.6 million, with a range of $11.8 million and $17.9 million
Slide 11: Consolidated Earnings Performance
www.thesba.com Consolidated Earnings Performance Diluted Earnings per Share $0.06 $0.15 $0.14 $0.05 $0.12 $0.10 $0.04 $0.09 $0.03 $0.06 $0.02 $0.03 $0.00 $0.00 Diluted Earnings Per Share Diluted Earnings Per Share Q3 2012 Q3 2013 9 Months 2012 9 Months 2013 • 66.7%increase year over year in • 40.0%i
Slide 12: Q3 YTD 2013 Financial Results
www.thesba.com Q3 YTD 2013 Financial Results Net Income Total Operating Revenues (Attributable to Newtek Business Services, Inc.) $96.5 $105.9 $5.1 $3.6 9/30/2012 9/30/2013 9/30/2012 9/30/2013 $ in millions 9.7%year-over-year increase $ in millions 43.2%year-over-year increase Pre-tax Net Income Adj
Slide 13: Consolidated Balance Sheet
www.thesba.com Consolidated Balance Sheet Selected Items Balance Balance $ in thousands September 30, 2013 Dec 31, 2012 Total Cash & Cash Equivalents* $18,160 $22,685 Total Assets $176,971 $152,742 Total Liabilities $102,522 $83,840 Total Equity $74,449 $68,902 Cash Position: • Decrease of $4.5 mill
Slide 14: Small Business Finance
www.thesba.com Small Business Finance Newtek Business Services Q32013TotalOperatingRevenue$34.8millio : n SBF Revenue Trend $8 $7.6 $6.7 $7 $6 SBF $5 $4.6 $7.6M $4 $3.0 $3 $2 $1 $- Q3' 10 Q3 '11 Q3 '12 Q3 '13 Q3 2013 SBF revenue was 21.8% of total operating revenue Q3 2013 SBF revenue increased by 1
Slide 15: Loan-Pricing Trends
www.thesba.com Loan-Pricing Trends Weighted-Average Net Price to NSBF Sequential Year-Over-Year Q2 2013 Q3 2013 Oct-13 Q3 2012 Q3 2013 112.53 110.74 112.53 112.41 110.74 15
Slide 16: Small Business Finance: Loan Sale Transaction Example
www.thesba.com 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 Pr
Slide 17: Small Business Finance Total Pipeline
www.thesba.com Small Business Finance Total – Pipeline $288.6 $209.2 $57.0 $50.4 $41.9 $25.5 $23.2 $23.2 Open Referrals Prequalified In Underwriting Approved & Pending Closing 9/30/2012 9/30/2013 As of September 30, 2013, total loan pipeline* increased by 55.8%, to $437.9 million year over year: • O
Slide 18: Comparative Loan Portfolio Data
www.thesba.com Comparative Loan Portfolio Data (12/31/10 vs. 9/30/2013) Loan Characteristic As of 12/31/10 As of 9/30/13 Loan Characteristic As of 12/31/10 Loan Characteristic As of 9/30/13 Business Type: Existing Businesses 53.93% 81.38% Industry: Industry: Business Acquisition 25.89% 11.54% Restau
Slide 19: Servicing Portfolio
www.thesba.com Servicing Portfolio $587.6$619.3 $444.7 $328.9 $258.8 $174.6 *Principal balance of loans serviced (dollars in millions) NEWT Loans* Servicing Other Loans* Total Loans* 30-Sep-12 30-Sep-13 The SBF servicing portfolioSeptember – 30, 2013 vs. 2012: • Total servicing portfolio increased b
Slide 20: Electronic Payment Processing
www.thesba.com Electronic Payment Processing Newtek Business Services EPP Revenue Trend $34.8 Q3 2013 Total Operating Revenue : million $25 $21.7 $22.2 $20.5 $20.7 EPP $20 Revenue $15 $22.2M $10 $5 $0 Q3 2013 EPP revenue was 63.8% of total operating revenue Q3 '10 Q3 '11 Q3 '12 Q3 '13 Q3 2013 EPP re
Slide 21: Electronic Payment Processing: ISO Contribution
www.thesba.com Electronic Payment Processing Independent Sales Organization (ISO) Contribution During 2013, the Louisville, KY group: Closed 114 new merchant accounts thus far in 2013 As of September 30, 2013: • Annualized processing volume of $45.9 million • Average processing volume per client per
Slide 22: Managed Technology Solutions
www.thesba.com Managed Technology Solutions Newtek Business Services MTS Revenue Trend Q32013TotalOperatingRevenue$34.8million : $6 $5 $4.8 $4.8 $4.5 $4.5 MTS $4 $4.5M $3 $2 $1 Q3 2013 MTS revenue was 12.8% of total operating revenue $- Q3 '10 Q3 '11 Q3 '12 Q3 '13 Q3 2013 MTS revenue decreased sligh
Slide 23: Invested for the Future: Linux and Cloud
www.thesba.com Invested for the Future Linux and Cloud Growth in New Shared Linux Accounts in Growth in Total Cloud Services Cloud Environment 40,000 35,150 2,000 1,765 35,000 32,429 30,010 1,569 28,637 1,442 30,000 1,500 1,233 25,000 1,000 20,000 15,000 500 10,000 5,000 0 0 Jun '13 Jul '13 Aug '13
Slide 24: MTS Referral Trends
www.thesba.com MTS Referral Trends Q3 2012 vs. Q3 2013 Total MTS Referrals Total Closed MTS Referrals 5,000 4,000 4,126 3,177 4,000 3,000 3,000 2,504 1,846 2,000 2,000 1,000 1,000 0 0 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Q3 2012 vs. Q3 2013 • Total MTS referrals increased by 64.8% to 4,126 • Total closed
Slide 25: Growth Strategy
www.thesba.com 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
Slide 26: Comparable Company Statistics
www.thesba.com 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 cre
Slide 27: Investment Summary
www.thesba.com Investment Summary Publicly traded Company since 2000 Management’s interests aligned with shareholders • CEO alone owns approximately 13.4% of outstanding shares* Trades at approximately 5x 2013 forecasted Adjusted EBITDA** • 2013 forecasted Adjusted EBITDA** of $20.9 million, an incr
Slide 28: Key Statistics NASDAQ: NEWT
www.thesba.com Key StatisticsNASDAQ: – NEWT Share Statistics* (USD) 2013 Guidance*** 2014 Guidance*** Stock Price $2.99 Revenue $148.2M Revenue $164.0M 52-Week Range $1.66-$3.15 Pre-tax Income $11.5M Pre-tax Income $14.6M Common Shares O/S 35.4M Diluted EPS $0.18 Diluted EPS $0.23 Market Cap $105.8M
Slide 29: Financial Review
www.thesba.com Financial Review Jennifer C. Eddelson CAO -
Slide 30: Non-GAAP Financial Measures
www.thesba.com Non-GAAP Financial Measures In evaluating its business, Newtek considers and uses adjusted EBITDA as a supplemental measure of its operating performance. The Company defines adjusted EBITDA as earnings before income from tax credits, interest expense, taxes, depreciation and amortizat
Slide 31: Q3 2013 Actual vs. Q3 2012 Actual
www.thesba.com Q3 2013 Actual vs. Q3 2012 Actual Revenue For Revenue For Pretax Income Pretax Income ADJUSTED ADJUSTED 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 September 30, September 30, S
Slide 32: Q3 YTD 2013 Actual vs. Q3 YTD 2012 Actual
www.thesba.com Q3 YTD 2013 Actual vs. Q3 YTD 2012 Actual Pretax Income Pretax Income ADJUSTED ADJUSTED Revenue For Revenue For (Loss) For The (Loss) For The EBITDA For The EBITDA For The Nine The Nine Nine Months Nine Months Nine Months The Nine Months Ended Months Ended Ended Ended Ended Months End
Slide 33: 2013 Segment Guidance
www.thesba.com 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 F
Slide 34: 2014 Segment Guidance
www.thesba.com 2014 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 2014 F
Slide 35: Addenda
Newtek “The Small Business Authority’” www.thesba.com Addenda
Slide 36: Adjusted EBITDA Reconciliation
www.thesba.com Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation from Pretax Income (Loss) For the three months ended September 30, 2013 Net Change in Fair Value of Credits in Lieu of Cash Third and Notes Amortization of Quarter Pretax Income Payable in Deferred 2011 Lease Depreciation 2
Slide 37: Adjusted EBITDA Reconciliation
www.thesba.com Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation from Pretax Income (Loss) For the three months ended September 30, 2012 Net Change in Fair Value of Credits in Lieu of Cash Third and Notes Amortization of Quarter Pretax Income Payable in Deferred 2011 Lease Depreciation 2
Slide 38: Adjusted EBITDA Reconciliation
www.thesba.com Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation from Pretax Income (Loss) For the nine months ended September 30, 2013 Net Change in Fair Value of Credits in Adjusted Lieu of Cash EBITDA for and Notes Amortization of the nine Pretax Income Payable in Deferred 2011 Lease
Slide 39: Adjusted EBITDA Reconciliation
www.thesba.com Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation from Pretax Income (Loss) For the nine months ended September 30, 2012 Net Change in Fair Value of Credits in Adjusted Lieu of Cash EBITDA for and Notes Amortization of the nine Pretax Income Payable in Deferred 2011 Lease
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