Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — FY2013 Earnings Presentation
38 slides from Newtekone's earnings presentation, Apr 1, 2014
Slide 1: Full Year 2013 Financial Results Conference Call
Exhibit 99.1 www.thesba.com Newtek Business Services, Inc. “The Small Business Authority®” Full Year 2013 Financial Results Conference Call March 31, 2014 4:15pm ET Hosted by: Barry Sloane, President & CEO NASDAQ: NEWT Jennifer Eddelson, EVP & CAO www.thesba.com Investor Relations Public Relations N
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: Business Development Company
www.thesba.com Business Development Company The Company expects to present to its shareholders a proposal to convert to a Business Development Company (“BDC”) once we are cleared to do so by the SEC In addition, the Company has filed preliminary materials to conduct a public offering of up to $50 mi
Slide 4: Full Year 2013 Financial Highlights
www.thesba.com Full Year 2013 Financial Highlights Diluted EPS of $0.20; a year-over-year increase of 33.3% • Exceeded high end of previously issued diluted EPS guidance range of $0.17 to $0.19 • Reaffirmed 2014 diluted EPS guidance midpoint of $0.23; a 15.0% increase over 2013 Net income attributab
Slide 5: Full Year 2013 Operational Highlights
www.thesba.com Full Year 2013 Operational Highlights Originated $177.9 million in loans, a 65.6% year-over-year increase • Originated approximately $50 million in loans in Q1 2014 • Expect to originate between $240-$260 million in loans in 2014 As of December 31, 2013, Total Loan Pipeline* increased
Slide 6: Revised 2014 Guidance
www.thesba.com Revised 2014 Guidance Operating Revenue: • Midpoint of $161.0 million, with a range of $154.0 million and $168.0 million • Increase of 12.1% over 2013 revenue of $143.6 million Pretax Income: • Midpoint of $13.5 million, with a range of $11.8 million and $15.1 million • Increase of 21
Slide 7: Segment Results
www.thesba.com Segment Results Year-over-Year Comparisons Full Year Ended December 31, 2013 Small Business Finance (SBF) Revenue:$34.1 million; a 34.3% increase Pre-tax Income: $10.1million; a 25.3%increase Electronic Payment Processing (EPP) Revenue:$89.7 million; a 4.9% increase Pre-tax Income:$8.
Slide 8: Consolidated Earnings Performance
www.thesba.com Consolidated Earnings Performance Diluted Earnings per Share $0.21 $0.20 $0.18 $0.15 $0.15 $0.12 $0.09 $0.06 $0.03 $0.00 Diluted Earnings Per Share Full Year 2012 Full Year 2013 33.3%increase year over year in diluted EPS in 2013 8
Slide 9: Full Year 2013 Financial Results
www.thesba.com Full Year 2013 Financial Results Net Income Total Operating Revenues (Attributable to Newtek Business Services, Inc.) $143.6 $7.5 $131.1 $5.6 12/31/2012 12/31/2013 12/31/2012 12/31/2013 $ in millions 9.5%year-over-year increase $ in millions 33.4%year-over-yearincrease Pre-tax Net Inc
Slide 10: Consolidated Balance Sheet
www.thesba.com Consolidated Balance Sheet Selected Items Balance Balance $ in thousands Dec 31, 2013 Dec 31, 2012 Total Cash & Cash Equivalents* $29,385 $22,685 Total Assets $198,612 $152,742 Total Liabilities $121,603 $83,840 Total Equity $77,009 $68,902 10 *Includes restricted cash of $16.9 millio
Slide 11: Small Business Finance
www.thesba.com Small Business Finance Newtek Business Service, Inc. FullYear2013TotalOperatingRevenue$143.6millio : n SBF Revenue Trend $40 $34.1 $35 $30 $25.4 $25 $21.0 $20 SBF $15 $9.4 $34.1M $10 $5 $- 2010 2011 2012 2013 Full Year 2013 SBF revenue was 23.8% of total operating revenue 2013 SBF rev
Slide 12: 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 13: Small Business Finance Total Pipeline
www.thesba.com Small Business Finance Total – Pipeline $293.3 $148.4 $58.8 $39.8 $35.6 $48.4 $47.4 $20.2 Open Referrals Prequalified In Underwriting Approved & Pending Closing 12/31/2012 12/31/2013 As of December 31, 2013, Total Loan Pipeline* increased by 69.5%, to $435.1 million year over year: •
Slide 14: Comparative Loan Portfolio Data
www.thesba.com Comparative Loan Portfolio Data (12/31/10 vs. 12/31/2013) Loan Characteristic As of 12/31/10 As of 12/31/13 Loan Characteristic As of 12/31/10 Loan Characteristic As of 12/31/13 Business Type: Existing Businesses 53.93% 81.05% Industry: Industry: Business Acquisition 25.89% 12.01% Res
Slide 15: Servicing Portfolio
www.thesba.com Servicing Portfolio $1,050.2 $561.4 $488.8 $528.7 $351.7 $177.0 NEWT Loans* Servicing Other Loans* Total Loans* 31-Dec-12 31-Dec-13 TheSBFservicingportfolio – December31,2012vs.2013: • Total servicing portfolio increased by 99% to $1.1 billion – Newtek portfolio increased by 39.0%; th
Slide 16: Electronic Payment Processing
www.thesba.com Electronic Payment Processing Newtek Business Services, Inc. FY2013TotalOperatingRevenue$143.6million : EPP Revenue Trend $100 $90 $89.7 $82.5 $85.5 $80.9 EPP $80 $70 Revenue $60 $89.7M $50 $40 $30 $20 $10 $0 FY 2013 EPP revenue was 62.4% of total operating revenue 2010 2011 2012 2013
Slide 17: Electronic Payment Processing
www.thesba.com Electronic Payment Processing Growth in business depends on: • Execution of Point of Sale (“POS”) in the Cloud Strategy • Execution of EuroPay, Mastercard® and Visa®(“EMV”) Strategy • Growthof NewtekAdvantage™ platform • Successful integration of our EPP product into The Newtek Advant
Slide 18: Managed Technology Solutions
www.thesba.com Managed Technology Solutions Newtek Business Services, Inc. MTS Revenue Trend FY 2013 Total Operating Revenue : $143.6 million MTS $17.6M FY 2013 MTS revenue was 12.2% of total operating revenue FY 2013 MTS revenue decreased by 3.5% to $17.6 million This segment is being transformed t
Slide 19: Managed Technology Solutions
www.thesba.com Managed Technology Solutions Results attributable to: • Decrease in the number of lower-priced shared hosting plans • Decrease in the number of higher-priced dedicated hosting plans • Maintained investment in software development costs given lower revenues Key to turnaround success: •
Slide 20: 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 35,424 2,500 36,000 2,128 2,000 30,000 24,000 1,500 18,000 16,285 1,000 12,000 500 190 6,000 0 0 FY 2012 FY 2013 FY 2012 FY 2013 For the year ended December 31, 2012 vs. 20
Slide 21: Newtek: 2014 and Beyond
www.thesba.com Newtek: 2014 and Beyond To further our positionasTHEbrand,the authoritativepresence,that independent business owners depend on for business and financial products and services Is our operating model more similar to Walmart or Amazon? Walmart • We control the service experience: 24/7/3
Slide 22: Winning Technology As A FinTech Company
www.thesba.com Winning Technology As A FinTech Company Proprietary state-of-the-art web-based technology, NewTracker® allows us to acquire clients cost effectively • NewTracker®technology positions us as a FinTech Company • To date have received over 500,000 independent business owner referrals thro
Slide 23: Winning Technology As A FinTech Company
www.thesba.com Winning Technology As A FinTech Company All-in-one e-Commerce offering • Secure proprietary gateway • Web Design • Secure web hosting in the Cloud • We are the merchant processor • Data protection and secure payments Payroll • Health & Benefits • Worker’s Compensation and P&C • Payrol
Slide 24: Services in the Cloud Through The Newtek Advantage
www.thesba.com Services in the Cloud Through The Newtek Advantage™ Current working modules include: • eCommerce in the Cloud • Payroll in the Cloud • Web hosting in the Cloud • Manage a business from a mobile device, i.e. Tablet or Smartphone Intend to add modules including: • Insurance Agency in th
Slide 25: Marketing Strategy
www.thesba.com Marketing Strategy Continue branding of The Small Business Authority® • Present Company to the independent business audience as the authoritative presence in the small- and medium-sized business market for all their business and financial product and service needs Expansion of nationa
Slide 26: Competition
www.thesba.com Competition Publicly Traded Comparables Intuit, Inc. (INTU) Digital River, Inc. (DRIV) Heartland Payment Systems, Inc. (HPY) Vantiv, Inc. (VNTV) JetPay, Inc. (JTPY) formerly UBPS Web.com Group, Inc. (WWWW) Endurance International Group, Inc. (EIGI) Rackspace Holdings, Inc. (RAX) Paych
Slide 27: Comparable Company Statistics
www.thesba.com Comparable Company Statistics On Deck Capital recently – raised $180 million in venture capital • Have made less than $1.0 billion in loans Lending Club – $2.3 billion market valuation Go Daddy estimated worth more than $6 billion in an IPO, based on GoDaddy’s nd CEO’s sales growth pr
Slide 28: 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* • Founder’s, Management and Board combined own over 25% of outstanding shares* Trades at approximately 4.0x 2014 forecaste
Slide 29: Key Statistics NASDAQ: NEWT
www.thesba.com Key StatisticsNASDAQ: – NEWT Share Statistics* (USD) ……………………….................... 2014 Guidance*** …………………………......................... Stock Price $2.83 Revenue $161.0M 52-Week Range $1.90-$3.43 Pre-tax Income $13.5M Common Shares O/S 37.0M Diluted EPS $0.23 Market Cap $104.7M Adjust
Slide 30: Financial Review
www.thesba.com Financial Review Jennifer C. Eddelson CAO -
Slide 31: 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 32: FY 2013 Actual vs. FY 2012 Actual
www.thesba.com FY 2013 Actual vs. FY 2012 Actual Revenue For Revenue For Pretax Income Pretax Income ADJUSTED ADJUSTED The Year The Year (Loss) For The (Loss) For Year EBITDA For Year EBITDA For Year Ended Ended Year Ended Ended Ended Ended December 31, December 31, December 31, December 31, Decembe
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 Revised Segment Guidance
www.thesba.com 2014 Revised 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 Hi
Slide 35: 2014 Previous Segment Guidance
www.thesba.com 2014 Previous 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 Hi
Slide 36: Addenda
Newtek’ “The Small Business Authority” www.thesba.com Addenda
Slide 37: Adjusted EBITDA Reconciliation
www.thesba.com Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation from Pretax Income (Loss) For the year ended December 31, 2013 Net Change in Fair Value of Credits in Lieu of Cash Other than and Notes Temporary Amortization of Pretax Income Payable in Decline in Deferred 2011 Lease Depre
Slide 38: Adjusted EBITDA Reconciliation
www.thesba.com Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation from Pretax Income (Loss) For the year ended December 31, 2012 Net Change in Fair Value of Credits in Lieu of Cash Other than and Notes Temporary Amortization of Pretax Income Payable in Decline in Deferred 2011 Lease Depre
Newtek Business Services — FY2013 Earnings Presentation on 6ix