Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — FY2007 Earnings Presentation
39 slides from Newtekone's earnings presentation, Mar 28, 2008
Slide 1: FY 2007 Financial Results Conference Call
Exhibit 99.2 Newtek Business Services, Inc. NASDAQ: NEWT FY 2007 Financial Results Conference Call March 27, 2007, 4:15 PM Hosted By: Barry Sloane, CEO and Chairman Seth A. Cohen, CFO Investor Relations Contact: Jayne L. Cavuoto 212-273-8193 jcavuoto@newtekbusinessservices.com 1
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: FY 2007 and Related Highlights
FY 2007 and Related Highlights Exploring adoption of Fair Market Value (FMV) accounting for Capco segment In process to finalize research and take accounting position on ability to utilize FMV accounting (SFAS 159) for Capco financial assets and liabilities SFAS 159 became effective for financial st
Slide 4: 2007 Financial Highlights
2007 Financial Highlights Core operating segment revenue FY 2007 v. FY 2006 Electronic Payment Processing: $55.0 million - up 26% over FY 2006 Web Hosting: $16.2 million - up 19.1% over FY 2006 SBA Lending: $9.1 million - down (4.2)% over FY 2006 FY 2007 pre-tax loss of $17.1 million $9.4 million of
Slide 5: Core Segment Revenue Growth
Core Segment Revenue Growth Three core operating segments -Electronic Payment Processing, Web Hosting and Lending Segments -comprise 87% of total revenue, an increase from 76% of total revenue in 2006 2007 revenue increased 20% year-over-year for three core operating segments Core Segments Annual De
Slide 6: 2007 Financial Highlights
2007 Financial Highlights Financial strength (at December 31, 2007) $38.3 million in cash and cash equivalents, and restricted cash • Equates to $1.06 cash per share Very little quantifiable debt Liquidity (at December 31, 2007) GE line of credit: $50 million total capacity for small business lendin
Slide 7: 2007 Accomplishments
2007 Accomplishments 7
Slide 8: 2007 Accomplishments
2007 Accomplishments Focus on operating business New product and service line development Increased number of business accounts Enhanced and expanded operations 8
Slide 9: Focus on Operating Business
Focus on Operating Business As Capco seasons, non-cash Currently exploring ways to effect on earnings will continue present financials more clearly to decline Analyzing different types of Focus on inherent value of accounting treatments for operating business Capco; SFAS 159 Capco Non-Cash Loss Expe
Slide 10: Steady Operating Revenue Growth
Steady Operating Revenue Growth Total Revenue Excluding CAPCO Non-Cash Income $100.0 $95.0 $87.5 $80.0 $72.3 $59.2 $60.0 $36.6 $40.0 $20.0 $- 0 2004 2005 2006 2007 2008* *Projected 10
Slide 11: New Product/Service Development
New Product/Service Development Continued to enhance our one-stop-shop business service menu Products Business Credit Card, which is Newtek™ branded Visa® and MasterCard® with lines up to $50,000 Newtek™ branded unsecured line of credit with borrowing capacity of up to $100,000 Newtek receivables fi
Slide 12: Newtek Business Service Suite
Newtek™ Business Service Suite 12
Slide 13: Newtek Insurance Portal
Select from our menu of business services below and a Business Specialist will assist you in achieving your business goals. Homeowners Group Benefits Employment Specialty Practices Coverages ‘Coverage: far year hore Pactewpats in 9 group Protect yourse * fran Gaver a wide riage of nak csuraise veads
Slide 14: Capturing Market Opportunity
Capturing Market Opportunity Small business market Over 26.8 million potential clients* Over 87,000 business accounts at 12/31/2007, a year- over-year increase of 16% Tremendous opportunity to further penetrate the market Gained new strategic alliance partnerships NewAlliance Investments, Inc. PSCU
Slide 15: Partnered with the Biggest and Best
Partnered with the Biggest and Best Our Distribution Channels Morgan Stanley PSCU Financial Services AIG General Motors MDA Merrill Lynch Daimler-Chrysler MDA Credit Union National Association (CUNA) BankAtlantic Fiserv Solutions, Inc. d/b/a IntegraSys NewAlliance Bank Navy Federal Credit Union Othe
Slide 16: Enhanced and Expanded Operations
Enhanced and Expanded Operations Expanded offices to support continued growth Expanded our web hosting data center to accommodate growth in business Brownsville, TX operations • $1.25 million EDA grant to expand operations facility to a 20,000 square foot space NYC Headquarters Adding Talent Key hir
Slide 17: Core Operating Segments; A Closer Look
Core Operating Segments; A Closer Look 17
Slide 18: Lending
Lending 2007 revenue decreased by 4.2% to $9.1 million over 2006 primarily as a result of: In 2007, the average premium received on the sale of guaranteed loans decreased from 2006 levels • 2006 average premium: 9.86% nd • 2007 average premium: 9.10% (2 half of 2007 premium 8.34%) Approximate 30% de
Slide 19: Lending Statistics
Lending Statistics Lending Referrals Pre-qualified Loans $2,500,000 $230,000 $2,000,000 $225,000 $1,500,000 $220,000 $1,000,000 $500,000 $215,000 $0 $210,000 2006 2007 2006 2007 2006 2007 2006 2007 Loans Underwritten $182,000 $180,000 $178,000 $176,000 $174,000 $172,000 $170,000 2006 2007 2006 2007
Slide 20: Loans Approved & Closed
Loans Approved & Closed Total Loans Approved Total Loans Closed $80,000 $60,000 $60,000 $40,000 $40,000 $20,000 2006 2007 2006 2007 2006 2007 2006 2007 Tightened underwriting guidelines 2007 approval rate decreased to 39% from 47% in 2006 Decreased approval rate NOT a result of lack of opportunity,
Slide 21: Going Forward
Going Forward Reevaluation of primary loan origination sources Breakeven rate in CDS (name will change to Newtek Business Credit) decreased to $3.0 million from $9.0 million CDS consolidation accounts for approximately $600,000 of the 2008 forecasted pre-tax loss in the lending segment Expect to par
Slide 22: Loan Portfolio Acquisitions
Loan Portfolio Acquisitions Currently bidding on performing and non-performing loan portfolios SBA lending expertise In-house SBA servicing capabilities Underutilized capacity to support portfolio acquisition Ability to purchase SBA loan portfolios and servicing from banks exiting this area of lendi
Slide 23: Electronic Payment Processing
Electronic Payment Processing Electronic Payment Processing (EPP) Cash flow positive business Significant operating leverage Potential to increase market share 2008 EPP segment EBITDA forecast: $1.6 to $1.7 million EPP segment does not have any debt 23
Slide 24: Web Hosting
Web Hosting Continue to invest in Web Hosting segment Moved into new larger data center to support continued growth New product development • 2008: Intend to offer business and financial services to existing financial institution clients • Bundled products: i.e. Insured web hosting 2008 Web Hosting
Slide 25: Cost Reduction Measures
Cost Reduction Measures Reduced headcount and salary-related expenses at the Holding Company (Newtek Business Services, Inc.) in 2007 Plan to review other segments to recognize additional cost reductions Intend to close and consolidate certain company facilities throughout the U.S. to realize additi
Slide 26: Financial Review
Financial Review Seth A. Cohen - CFO 26
Slide 27: FY 2007 Actual vs. FY 2006 Actual
FY 2007 Actual vs. FY 2006 Actual In millions of dollars Revenue For Revenue For The Pretax Net Pretax Net Income EBITDA For EBITDA For The Year Year Ended Income (Loss) (Loss) For The The Year Ended The Year Ended December 31, For The Year Year Ended December 31, Ended December 31, 2006 Actual Ende
Slide 28: FY 2007 Guidance vs. FY 2007 Actual
FY 2007 Guidance vs. FY 2007 Actual In millions of dollars Revenue Revenue Pretax Net Pretax Net EBITDA EBITDA Guidance Actual Income (Loss) Income (Loss) Guidance Actual Guidance Actual Electronic 55.1 – 55.5 54.969 2.3 – 2.3 2.362 3.9 – 4.1 4.323 Payment Processing Web Hosting 15.9 – 16.1 16.237 3
Slide 29: Cash Flows from Operating Activities
Cash Flows from Operating Activities Cash Flows from Operating Activities by Segment For The Year Ended December 31, 2007 In millions of dollars Business Services Segments Total Electronic Business Payment Web SBA All Corporate Services CAPCO Processing hosting Lending other activities Segments Segm
Slide 30: 2007 Q4 Actual vs. 2006 Q4 Actual
2007 Q4 Actual vs. 2006 Q4 Actual In millions of dollars Revenue Revenue Pretax Net Pretax Net EBITDA EBITDA Q4 2007 Q4 2006 Income (Loss) Income (Loss) Q4 2007 Q4 2006 Actual Actual Q4 2007 Q4 2006 Actual Actual Actual Actual Electronic 15.331 12.320 (0.210) 0.864 0.342 1.296 Payment Processing Web
Slide 31: 2007 Q4 Guidance vs. Actual Results
2007 Q4 Guidance vs. Actual Results In millions of dollars Revenue Revenue Pretax Net Pretax Net EBITDA EBITDA Guidance Actual Income (Loss) Income (Loss) Guidance Actual Guidance Actual Electronic 15.4 – 15.6.5 15.331 (0.2) – (0.2) (0.210) 0.2 – 0.2 0.342 Payment Processing Web Hosting 4.1 – 4.2 4.
Slide 32: EBITDA Reconciliation
EBITDA Reconciliation EBITDA Reconciliation to Net Income (Loss) Annually In millions of dollars Pretax Income Interest Expense for Depreciation and EBITDA for the (Loss) for the Year the Year Ended amortization for the Year Year Ended Ended December December 31, 2007 Ended December 31, 2007 Decembe
Slide 33: EBITDA Reconciliation
EBITDA Reconciliation EBITDA Reconciliation to Net Income (Loss) Quarterly In millions of dollars Pretax Income Interest Expense for Depreciation and Q4 2007 EBITDA (Loss) for Q4 2007 Q4 2007 amortization for Q4 2007 Electronic Payment (0.210) - 0.552 0.342 Processing Web Hosting 0.753 0.011 0.818 1
Slide 34: 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 35: Going Forward: 2008
Going Forward: 2008 Barry Sloane - CEO 35
Slide 36: 2008 Annual Segment Guidance
2008 Annual Segment Guidance In millions of dollars Electronic Small Payment Web Business All Corporate Processing Hosting Finance Other Activities High Low High Low High Low High Low High Low 2008 Full Year Revenue 66.1 65.5 18.5 18.0 11.0 10.5 3.0 2.5 4.0 3.5 Pretax Net Income 4.8 4.3 3.3 2.9 (1.5
Slide 37: 2008 Annual Segment Guidance
2008 Annual Segment Guidance In millions of dollars Total Business CAPCO Intercompany Total Total Segments Segment Eliminations Current Accounting with adoption of SFAS 159* Current Adoption of High Low Accounting SFAS 159* High Low High Low 2008 Full Year Revenue 102.6 100.0 5.1 6.1 (4.6) 103.1 100
Slide 38: 2008 Initiatives
2008 Initiatives Adopt accounting treatment to simplify financials; focus on operations Lending initiatives Outbound marketing programs Project CDIA Bundled product offerings Industry target marketing 38
Slide 39: Questions & Answers
Questions & Answers 39
Newtek Business Services — FY2007 Earnings Presentation on 6ix