Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q1 2011 Earnings Presentation
43 slides from Newtekone's earnings presentation, May 11, 2011
Slide 1: First Quarter 2011 Financial Results Conference Call
Newtek Business Services, Inc. NASDAQ: NEWT First Quarter 2011 Financial Results Conference Call May 11, 2011 4:15 PM Hosted By: Barry Sloane, CEO and Chairman Seth A. Cohen, CFO Public Relations Contact: Liz Petrova Rubenstein Public Relations, Inc. (212) 843-9335 lpetrova@rubensteinpr.com Exhibit
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: First Quarter 2011 Highlights
First Quarter 2011 Highlights Announce consolidated net income of $509 thousand for the quarter ended March 31, 2011 Versus consolidated net loss of $(467) thousand for the quarter ended March 31, 2010 Announce consolidated pretax income of $834 thousand for the quarter ended March 31, 2011 Versus c
Slide 4: First Quarter 2011 Highlights
First Quarter 2011 Highlights Announce Q1 2011 consolidated revenue of $30.5 million 18% growth vs. Q1 2010 of $25.9 million Primary Q1 2011 revenue trends in EPP and Managed Technology Solutions exceed Q1 2010 comparisons Combined EPP and Managed Technology Solutions revenue for Q1 2011 is $24.9 mi
Slide 5: First Quarter 2011 Conference Call Agenda
First Quarter 2011 Conference Call Agenda Q1 2011 financial performance, cash position, balance sheet, commentary, business trends, and 2011 guidance Strategic mission as The Small Business Authority New website launched: www.thesba.com (January 2011)
Slide 6: First Quarter Financial Results
First Quarter Financial Results Q1 2011 vs. Q1 2010 core operating segment revenue: Electronic Payment Processing: $20.1 million - up 7% from Q1 2010 Managed Technology Solutions: $4.8 million - up 1% from Q1 2010 Small Business Finance: $5.1 million – up 282% from Q1 2010 Q1 2011 vs. Q1 2010 core o
Slide 7: Cash Position
Cash Position $25.6 million in cash and cash equivalents, restricted cash, and broker receivable at March 31, 2011, down from $33.2 million at December 31, 2010. Equates to $0.39 cash per share. Equates to $0.72 cash per share when including restricted cash and the broker receivable, which we receiv
Slide 8: Developments in EPP
Developments in EPP Q1 2011 EPP revenue up 7% over Q1 2010 Q1 2011 EPP pretax income up 11% over Q1 2010 Cash flow positive business Significant operating leverage Q1 2011 EPP segment EBITDA of $1.6 million versus Q1 2010 of $1.5 million EPP segment does not have any debt eCommerce : Single most imp
Slide 9: Managed Technology Solutions Initiatives
Managed Technology Solutions Initiatives Q1 2011 versus Q1 2010: Revenue up 1% Pre-tax income up 32% Continue to evaluate expenditures versus productivity, particularly in marketing, seeking additional cost savings where applicable Continued growth despite challenging market Continue to invest in Ma
Slide 10: Cloud Computing
Cloud Computing What is it? Outsourcing of hardware, software, personnel, storage, data security and responsibility and accountability for IT in whole or part. Why is it relevant? Cost containment and efficiencies Better service and management of resources More security More functionality
Slide 11: Cloud Computing Competition
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
Slide 12: Cloud Computing
Cloud Computing Why is this market important and why are we good at it?
Slide 13: 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 109 to 114 pricing on governments FDIC contract We are an S&P
Slide 14: Small Business Finance Servicing Portfolio
Small Business Finance Servicing Portfolio (in thousands): 3/31/2011 12/31/2010 Increase Servicing for our loans $190,731 $ 179,894 $ 10,837 Servicing for others $ 75,365 $ 73,062 $ 2,303 Total servicing portfolio $ 266,096 $ 252,956 $ 13,140 We expect future growth in this business area.
Slide 15: 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
Slide 16: Balance Sheet Items to Discuss
Balance Sheet Items to Discuss SBA loans transferred, subject to premium recourse $16.9 million Credits in lieu of cash $29.0 million Total assets $144.2 million Liability on SBA loans transferred, subject to premium recourse $16.5 million Notes payable in credits in lieu of cash $29.0 million Total
Slide 17: Future Year End Balance of Tax Credits
Future Year End Balance of Tax Credits $- $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 (in millions)
Slide 18: Reduction of Capco Effect
Reduction of Capco Effect Reduction of balance sheet Credits in lieu of cash Notes payable in credits in lieu of cash Current percentage investment threshold and amount needed to reach 100% Alabama reached 100% investment threshold in December 2010 Capco % Investment threshold $ Investments needed t
Slide 19: 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 20: 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 21: Small Business Authority Branding Achievements
Small Business Authority Branding Achievements We anticipate Forbes publishing daily Small Business Authority Blog We anticipate Forbes publishing monthly Small Business Authority Index We anticipate Forbes publishing monthly Small Business Authority Market Sentiment Survey
Slide 22: Small Business Authority Branding Achievements
Small Business Authority Branding Achievements Small Business Authority Hour All shows podcast on thesba.com and wabcradio.com 2/5/11 – Show on Business Entrepreneurship 3/5/11 – Show on Healthcare and Health Insurance effects on small businesses 4/2/11 – Show on Small Business Lending 5/7/11 – Show
Slide 23: 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, Batche
Slide 24: 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 Wolfe broadcast sports from the SBAS several times each morning See Bernard McGirk broadcast his “Bernie Briefing” from the SBAS several times each morning B
Slide 25: 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 50,000 in distribution Available on our website now
Slide 26: 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 effecting small businesses Usually poll in excess of 1,200 respondents Released
Slide 27: 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 28: The Small Business Authority
SO ee THE SMALL BUSINESS
Slide 29: 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 30: 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 31: The Small Business Authority
SO ee THE SMALL BUSINESS
Slide 32: Annual Pretax Income (Loss) Trend
Annual Pretax Income (Loss) Trend -$18 -$12 -$6 $0 $6 Actual Actual Actual Actual Forecast Midpoint Pretax Income (Loss) $(17.5) $(13.1) $(4.0) $0.9 in millions $2.8
Slide 33: 2011 Current Segment Guidance
2011 Current Segment Guidance *Note: totals may not add due to rounding 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 79.1 82.5 19.9 20.7 17.1
Slide 34: Consolidated Annual Pretax Income (Loss)
Consolidated Annual Pretax Income (Loss) Year Amount (in millions) $(17.5) $(13.1) $(4.0) $0.9 2011 (Forecast range midpoint) $2.8
Slide 35: Financial Review
Financial Review Seth A. Cohen - CFO
Slide 36: Non-GAAP Financial Measures
Non-GAAP Financial Measures In evaluating its business, Newtek considers 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 revie
Slide 37: Selected Balance Sheet Items
Selected Balance Sheet Items Balance at March 31, 2011 Balance at December 31, 2010 Cash and cash equivalents $13,851 $10,382 Restricted cash $7,686 $10,747 Broker receivable $4,081 $12,058 SBA loans held for sale, at fair value $5,559 $1,014 Total short term liquidity $31,177 $34,201 Notes payable
Slide 38: Q1 2011 Actual vs. Q1 2010 Actual
Q1 2011 Actual vs. Q1 2010 Actual In millions of dollars Revenue For The Quarter Ended March 31, 2011 Actual Revenue For The Quarter Ended March 31, 2010 Actual Pretax Income (Loss) For The Quarter Ended March 31, 2011 Actual Pretax Income (Loss) For The Quarter Ended March 31, 2010 Actual EBITDA Fo
Slide 39: Current Segment Guidance
Current Segment Guidance *Note: totals may not add due to rounding 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 79.1 82.5 19.9 20.7 17.1 18.5
Slide 40: Going Forward: 2011
Going Forward: 2011 Barry Sloane - CEO
Slide 41: The Small Business Authority
SO ee THE SMALL BUSINESS
Slide 42: The Small Business Authority
SO ee THE SMALL BUSINESS
Slide 43: Pretax Income and EBITDA Reconciliation
Pretax Income (Loss) for Q1 2011 Interest Expense for Q1 2011 Depreciation and amortization for Q1 2011 Q1 2011 EBITDA Electronic Payment Processing 1.204 - 0.381 1.585 Managed Technology Solutions 1.231 0.028 0.375 1.634 Small Business Finance 1.271 0.630 0.192 2.093 All Other (0.296) - 0.021 (0.27
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