Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q3 2008 Earnings Presentation
24 slides from Newtekone's earnings presentation, Nov 13, 2008
Slide 1: Newtek Business Services, Inc. Third Quarter 2008 Financial Results Conference Call
Exhibit 99.2 Newtek Business Services, Inc. NASDAQ: NEWT Third Quarter 2008 Financial Results Conference Call November 12, 2008, 4:15 PM Hosted By: Barry Sloane, CEO and Chairman Seth A. Cohen, CFO Investor Relations Contact: Barry Sloane 212-356-9500 bsloane@newtekbusinessservices.com
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: Q3 2008 Conference Call Agenda
Q3 2008 Conference Call Agenda Financial Results Snapshot Momentum Continues in EPP Segment Web Hosting Initiatives Small Business Finance Initiatives Cost Reduction Measures Third quarter 2008 corporate expenses reduced $855,000 vs. third quarter 2007 Financial Review 2008 Outlook 3
Slide 4: Q3 2008 Financial Results
Q3 2008 Financial Results Met previously stated 2008 consolidated pre-tax loss guidance Q3 2008 vs. Q3 2007 core operating segment revenue increased 6% Electronic Payment Processing: $16.0 million - up 14% over Q3 2007 Web Hosting: $4.6 million - up 10% over Q3 2007 Small Business Finance: $1.6 mill
Slide 5: Cash Position
Cash Position $27.5 million in cash and cash equivalents and restricted cash at September 30, 2008, down from $28.0 million at June 30, 2008. Equates to $0.76 cash per share 5
Slide 6: Momentum Continues in EPP
Momentum Continues in EPP Q3 2008 EPP revenue up 14.0% over Q3 2007 EBITDA margin 10.5% for Q3 2008, consistent with Q1 and Q2 2008 Have not experienced increased merchant attrition in light of challenging market; merchant attrition in line with expectations; margin compression; volumes are growing
Slide 7: Web Hosting Initiatives
Web Hosting Initiatives Q3 2008 Web Hosting revenue up 10.0% over Q3 2007 Continued growth despite challenging market Continue to invest in Web Hosting segment to support future growth Continue to evaluate expenditures versus productivity, particularly in marketing, in the Web Hosting segment seekin
Slide 8: Small Business Finance
Small Business Finance Q3 2008 revenue decreased by 40% to $1.6 million over Q3 2007 primarily as a result of: A reduction in loan originations during 2008 directly attributable to the adverse conditions in the current credit environment as well as price deterioration in the SBA secondary market. Ma
Slide 9: Small Business Finance
Small Business Finance SBA Loans have two components: Government guaranteed Loan participation market “frozen” Uninsured Loans have been historically funded by GE facility and now we have about $9 million of Gov’t guaranteed loans for sale in the facility. Prime rate - LIBOR spread caused problems S
Slide 10: Small Business Finance Prime vs. 3 Month LIBOR Spread
Small Business Finance Prime vs. 3 Month LIBOR Spread 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% -1.00% Prime 3 Month LIBOR Spread to Prime 10
Slide 11: Small Business Finance
Small Business Finance Buying sub & non-performing portfolios Bidding on SBA servicing and sub-servicing contracts We have very good lending infrastructure This infrastructure is valuable even today Are we, or will we be, the last “man” standing? The most decimated sector may offer the best opportun
Slide 12: Small Business Finance
Small Business Finance Reevaluation of primary loan origination sources Actively bidding on both performing and non-performing loan portfolios SBA lending expertise and in-house SBA servicing capabilities Ability to purchase SBA loan portfolios and servicing from banks exiting this area of lending a
Slide 13: Cost Reduction Measures
Cost Reduction Measures Significantly reduced expenses at Holding Company and segment levels Discontinued three service lines and associated headcount Cost reductions are expected to equate to a minimum $2.0 million of cash savings in 2009 Plan to continue to review other segments to recognize addit
Slide 14: What is our Growth Strategy Going Forward?
What is our Growth Strategy Going Forward? Acquisitions within our footprint Utilize balance sheet and strategic partner financings 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 attractiv
Slide 15: Financial Review
Financial Review Seth A. Cohen - CFO
Slide 16: Non-GAAP Financial Measures
Non-GAAP Financial Measures In evaluating its business, Newtekconsiders and uses EBITDA as a supplemental measure of its operating performance. The Company defines EBITDA as earnings before interest expense, taxes, depreciation and amortization. Newtek uses EBITDA as a supplemental measure to review
Slide 17: Q3 2008 Actual vs. Q3 2007 Actual
Q3 2008 Actual vs. Q3 2007 Actual In millions of dollars Revenue Revenue Pretax Net Pretax Net EBITDA EBITDA Q3 2008 Q3 2007 Income (Loss) Income (Loss) Q3 2008 Q3 2007 Actual Actual Q3 2008 Q3 2007 Actual Actual Actual Actual Electronic 15.984 14.011 1.114 0.917 1.672 1.436 Payment Processing Web H
Slide 18: Q3 2008 Guidance vs. Q3 2008 Actual
Q3 2008 Guidance vs. Q3 2008 Actual In millions of dollars Revenue Revenue Pretax Net Pretax Net EBITDA EBITDA Guidance Actual Income (Loss) Income (Loss) Guidance Actual Guidance Actual Electronic 16.6 – 16.7 15.984 1.1 – 1.2 1.114 1.6 – 1.7 1.672 Payment Processing Web Hosting 4.5 – 4.6 4.590 0.7
Slide 19: 2008 Segment Guidance
2008 Segment Guidance In millions of dollars Electronic Small Payment Web Business All Corporate Processing Hosting Finance Other Activities Low High Low High Low High Low High Low High 2008 Full Year Revenue 63.6 63.9 18.0 18.1 7.2 7.4 2.2 2.3 5.6 5.7 Pretax Net Income 4.6 4.8 3.0 3.1 (5.3) (5.1) (
Slide 20: 2008 Segment Guidance
2008 Segment Guidance In millions of dollars Total Business CAPCO Intercompany Segments Segment Eliminations Total Low High Low High Low High 2008 Full Year Revenue 96.6 97.4 8.3 8.3 (5.6) 99.3 100.1 Pretax Net Income (5.3) (4.5) (6.9) (6.9) - (12.1) (11.3) 2008 4th Quarter Revenue 23.9 24.8 3.3 3.3
Slide 21: Going Forward: 2008
Going Forward: 2008 Barry Sloane - CEO
Slide 22: Questions & Answers
Questions & Answers
Slide 23: Addendums
EF Addendums
Slide 24: EBITDA Reconciliation
EBITDA Reconciliation EBITDA Reconciliation from Net Income (Loss) In millions of dollars For The Three Months Ended September 30, 2008 Pretax Income Interest Expense Depreciation and Q3 2008 (Loss) for Q3 2008 for Q3 2008 amortization for Q3 2008 EBITDA Electronic Payment 1.114 - 0.558 1.672 Proces
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