Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q3 2014 Earnings Presentation
29 slides from Newtekone's earnings presentation, Nov 19, 2014
Slide 1: Third Quarter 2014 Financial Results Conference Call
Exhibit 99.2 Newtek Business Services Corp. “The Small Business Authority®” NASDAQ: NEWT Third Quarter 2014 Financial Results Conference Call November 19, 2014 4:15pm ET Hosted by: Barry Sloane, President & CEO Jennifer Eddelson, EVP & CAO Investor Relations Public Relations Newtek Investor Relation
Slide 2: Safe Harbor Statement
Safe Harbor Statement The following discussion of our financial condition and results of operations is intended to assist in the understanding and assessment of significant changes and trends related to the results of operations and financial position of the Company together with its subsidiaries. T
Slide 3: Q3 2014 Financial Highlights – Newtek Business Services, Inc.
Q3 2014 Financial Highlights – Newtek Business Services, Inc. NEWT effected a 1 for 5 reverse stock split on October 22, 2014 and all share data has been adjusted to reflect the reversestocksplit; closingstockpriceasof 11/18/14: $13.12 Pretax income was $4.5 million; an increase of 132.0% over $2.0
Slide 4: Q3 2014 Operational Highlights
Q3 2014 Operational Highlights Originated $48.7 million in loans; an increase of 15.1% over $42.3 million in the Q3 2013 Fundedapproximately$25.0millionin loansduringOctober2014;anincreaseof approximately47%over$16.9 million in October 2013 Small business finance segment closed an additional $23 mil
Slide 5: Reaffirmed 2014 Adjusted Consolidated Operating Company Guidance
Reaffirmed 2014 Adjusted* Consolidated Operating Company Guidance Expect double-digit top- and bottom-line percentage growth in 2014 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 Adjusted Pre
Slide 6: BDC Conversion – Newtek Business Services Corp.
BDCConversion– NewtekBusinessServicesCorp. NEWT converted to a business development company (a “BDC”) which is expected to result in significant tax efficienciesandallowthe Companyto payanattractivedividendto shareholders – Initial Q1 2015 dividend of $0.38/share – Anticipate average quarterly divid
Slide 7: Recent Equity Transaction
Recent Equity Transaction Sold 2.53 million shares (100% primary shares plus underwriter option) of common stock – Public offering price of $12.50 per share – Total gross proceeds of $31.625 million Plan to use proceeds to expand financing activities and primarily increase activity in SBA 7(a) lendi
Slide 8: The Conversion – New Business Structure
The Conversion N – ew Business Structure Newtek Business Services, Inc.: Existing 14-Year Old Publicly Traded Company Merging into Newtek Business Services Corp.; A Maryland Shell Corporation Newtek Business Services Corp. (Business Development Company) Newtek Small Business Finance (Consolidated Su
Slide 9: Newtek Small Business Finance
Newtek Small Business Finance Q3 2014 SBF pretax income increased by 145.6% to $4.2 million Q3 2014 SBF revenue increased by 44.5% to $10.9 million Originated $48.7 million in loans; an increase of 15.1% over $42.3 million in Q3 2013 Fundedapproximately$25.0millionin loansduringOctober2014;anincreas
Slide 10: Return on Capital
Return on Capital Newtek Small Business Finance, Inc. For the year ended 12/31/2013 ($ thousands) Total Capital at 12/31/2012 $25,428 2013 Pre-Tax Income $9,291 Total Pre-Tax Return on Capital 36.5% www.thesba.com 9
Slide 11: Newtek Small Business Finance
Newtek Small Business Finance One of 14 Non-Bank SBA Government-Guaranteed Lender Licenses (these licenses are no longer being issued) Smallbalance,industryandgeographicallydiversifiedportfolio of 732loans – Average loan size is $150K of average Newtek uninsured retained loan balance Typical $1 mill
Slide 12: Loan Sale Transaction
Loan Sale Transaction DirectRevenue/ Expenseof a LoanSaleTransaction– AnExample Key Variables in Loan Sale Transaction Resulting Revenue (Expense) Loan Amount $1,000,000 Associated Premium (2) $93,750 Guaranteed Balance (75%) $750,000 Servicing Asset(3) $18,630 Unguaranteed Balance (25%) $250,000 To
Slide 13: Comparative Loan Portfolio Data
Comparative Loan Portfolio Data 12/31/2010 vs. 9/30/2014 Since 2010, the credit quality and diversification of loan portfolio has steadily improved As of As of As of As of Loan Characteristic 12/31/10 9/30/14 Loan Characteristic 12/31/10 Loan Characteristic 9/30/14 Business Type: Industry: Existing
Slide 14: Servicing Portfolio
Servicing Portfolio $1,078.5 $578.3 $619.3 $444.7 $500.2 $174.6 NEWT Loans* Servicing Other Loans* Total Loans* Q3 2013 Q3 2014 TheSBFservicingportfolio – Q32013 vs.Q32014 – S&P-rated commercial small balance loan servicer – Total servicing portfolio increased by 74.1% to $1.1 billion • Newtek portf
Slide 15: Electronic Payment Processing
Electronic Payment Processing Q3 2014 pretax income increased by 17.6% to $2.2 million Increased transaction volumes, July price increase, and the new merchant security programs contributed to Q3 2014 growth in pretax income Entered into new partnership with SEQR, by Seamless (OMX: SEAM) which, acco
Slide 16: Managed Technology Solutions
Managed Technology Solutions We have 100% owned and operated this business since mid-2004 We host and manage SMBs computer hardware, software and their technology solutions in our Level-4, 5,000 square foot data center in Phoenix, Arizona Over 106,000 business accounts manage solutions of hardware a
Slide 17: Internally Managed BDC Public Comparables
Internally Managed BDC Public Comparables Internally managed BDC public comparables currently trade at a median price to NAV of approximately 1.5x* – Hercules Technology Growth Capital (NASDAQ: HTGC) – KCAP Financial (NASDAQ: KCAP) – Main Street Capital (NASDAQ: MAIN) – Triangle Capital (NASDAQ: TCA
Slide 18: Key Statistics: NASDAQ-NEWT
Key Statistics: NASDAQ-NEWT 2014 Adjusted Consolidated Operating 1 2 Share Statistics (USD) ………………………................. Company Guidance ………………………..................... Stock Price $13.12 Revenue $161.0M 3 52-Week Range $11.30-$17.15 Adjusted Pre-tax Income $13.5M Common Shares O/S 10.2M Adjusted Dilu
Slide 19: Investment Highlights
Investment Highlights NEWT is currently the largest non-bank institution U.S. Small Business Administration (SBA) licensed lender under the federal Section 7(a) loan program based on annual origination volume (national PLP status) Largest Non-Bank 10 th largestSBA7(a) lender including banks (1) SBA
Slide 20: Investment Highlights (Cont.)
Investment Highlights (Cont.) Small balance (average loan size is $150K of average Newtek uninsured retained loan balance), industry and geographically diversified portfolio of 732 loans Loan Portfolio All SBA 7(a) loans are floating rate, indexed to Prime and have no caps Characteristics: Borrowers
Slide 21: Financial Review
Financial Review Jennifer – C. Eddelson, Chief Accounting Officer www.thesba.com
Slide 22: Non-GAAP Financial Measures
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, depreciationandamortization,stockcompensa
Slide 23: Q3 2014 vs. Q3 2013 Actual Results
Q3 2014 vs. Q3 2013 Actual Results In millions of dollars Revenue For Revenue For Pretax Income Pretax Income ADJUSTED EBITDAADJUSTED EBITDA The Quarter The Quarter (Loss) For The (Loss) For The For The Quarter For The Quarter Ended Ended Quarter Ended Quarter Ended Ended Ended September 30, Septemb
Slide 24: 2014 Adjusted Operating Company Segment Guidance
2014 Adjusted* Operating Company Segment Guidance Electronic Small Managed Total Inter- Payment Business Technology All Corporate Business CAPCO Company In millions of dollars Processing Finance Solutions Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low Hi
Slide 25: Appendix
“The Small Business Authority™" Appendix
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation from Pretax Income (Loss) For the three months ended September 30, 2014 In millions of dollars Net Change in Fair Value of Credits in Lieu of Cash Third and Notes Amortization of Quarter Pretax Income Payable in Deferred 2011 Lease Deprec
Slide 27: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation from Pretax Income (Loss) For the three months ended September 30, 2013 In millions of dollars Net Change in Fair Value of Credits in Lieu of Cash Third and Notes Amortization of Quarter Pretax Income Payable in Deferred 2011 Lease Deprec
Slide 28: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Adjusted EBITDA Reconciliation from Pretax Income (Loss) For the year ended December 31, 2013 In millions of dollars Net Change in Fair Value of Credits in Lieu of Cash Other than and Notes Temporary Amortization Pretax Income Payable in Decline in Deferred of 2011 Lea
Slide 29: Adjusted Earnings Reconciliation
Adjusted Earnings Reconciliation NEWTEK BUSINESS SERVICES, INC. AND SUBSIDIARIES RECONCILIATION OF ADJUSTED PRETAX INCOME AND DILUTED EPS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 (In Thousands, except for Per Share Data) For the three For the nine months ended months ended September 30
Newtek Business Services — Q3 2014 Earnings Presentation on 6ix