Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q2 2006 Earnings Presentation
44 slides from Newtekone's earnings presentation, Aug 14, 2006
Slide 1: 2006 Second Quarter Shareholder Conference Call
iis Newtek Business Services, Inc. S-@@ 2006 Second Quarter Shareholder Conference Call August 14, 2006 Barry Sloane —- CEO/Chairman Michael J. Holden - CFO
Slide 2: Safe Harbor Statement
Newtek Business Services, Inc. We do it better 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 t
Slide 3: Newtek Second Quarter '06 Highlights
Newtek Second Quarter ‘06 Highlights * Newtek is back in regulatory compliance with the NASDAQ and SEC « Mike Holden and his new team will re- establish the companies financial credibility with the capital markets * Growing revenues in web hosting and EPP * Growing profitability in web hosting and E
Slide 4: Newtek Business Services Financial Highlights
Newtek Business Services Financial Hig the first 6 months ended 6/30/06 + Web Hosting revenue increased by 32% during the first 6 months ended 6/30/06 is During + Electronic Payment Processing revenue increased by 38% during the first 6 months ended 6/30/06 + Web Hosting EBITDA increased 22% during
Slide 5: Newtek Business Services Financial Strength
Newtek Business Services Financial Strength As of 6/30/06 $48 million in cash, cash equivalents, and short term treasuries * As of 6/30/06 $83 million in shareholders equity ¢ As of 6/30/06 $2.39 in book value per share Newtek Business Services, Inc. We do it better 5
Slide 6: Is Newtek Over Leveraged?
Is N k Over Leveraged? Assets as of 6/30/06 Tax Credit Receivable $103 million Small Business Loans $30 million Liabilities as of 6/30/06 Notes payable in credits in lieu of cash $89 million GE/CIT/Signature Bank Facility $22 million Shareholder Equity as of 6/30/06 $83 million + — Newtek paid off $
Slide 7: Remaining Debt
Remaining Debt * TICC — $1.9 million ¢ Notes payable insurance — $7.3 million ¢ Deferred Tax Liability - $21.6 million ¢ This liability (DTL) should decline in the future Newtek Business Services, Inc. We do it better
Slide 8: What is Newtek?
at is Newtek? * It is a major play into owning a distribution company whose target is the national small to medium-sized business market place — 24.7 million potential clients — 51% of GDP — 9 out of 10 U.S. businesses * It is achieving its goals and quickly becoming the premier provider of business
Slide 9: How is Newtek Accomplishing its Goal?
How is Newtek Accomplishing its Goal? ¢ By utilizing state-of-the-art web-based proprietary technology « Web-based Referral Systems — Allow referrals from alliance partners giving them a window into our back office operation « Web-based applications as an in-house tool to make our employees and asso
Slide 10: Newtek Comparisons
Newtek Comparisons ¢ Weare a difficult company for industry comparisons. ¢« Wal-mart - one stop shop * Geico/Progressive — centralized processing off of web-based software. ¢ Dell/Amazon — Unique distribution in MEK @ — basic service industry. Business Services, Inc. We do it better 10
Slide 11: Insurance, Lending, Hosting, Processing
insurance Lending Hosting OProcessing| Business Services, Inc. We do it better u
Slide 12: Number of Lending Customers by Year
Number of Lending Customers by Year on sm tot Customers Year Newtek Business Services, Inc. We do it better 2
Slide 13: Number of Insurance Customers by Year
Hot customers Newtek Business Services, Inc. We do it better Number of Ins. Customers by Year ame 203 ‘04 205 Year 13
Slide 14: Number of EPP Customers by Year
ber of EPP Customers by Year — Estimated 2006 Business Services, Inc. We do it better 14
Slide 15: Number of Hosting Customers by Year
Hot Newtek Business Services, Inc. We do it better Customers Number of Hosting Customers by Year 2m ame 00 am 205 ‘08 Year Estimated 2006 15
Slide 16: Customers per FTE by Division
tomers per FTE by Division —_| 0000 0000 7o000 sonon tot Customers 40000 sn000 20000 10000. Nevtek Divisions Newtek Business Services, Inc. We do it better 16
Slide 17: Revenue per FTE by Division
evenue per FTE by Division | senpco smnpcn seo p00 ‘spq0 Dollars saxo pc0 samp sanpq0 sscopc0 Newtek Divisions Newtek Business Services, Inc. We do it better
Slide 18: Shareholders' Equity per Share by Year
Shareholders’ Equity per Share by Year A ili | = ae 2001 002 om 200 005 Newtek Business Services, Inc. We do it better 18
Slide 19: Number of Referrals Submitted by Month
umber of Referrals Submitted by Moni Newtek Eee a ee Business Services, Inc. We do it better 19
Slide 20: Who Uses Our Technology? Who Has Endorsed Its Use?
Who Uses Our Technology? Who Has Endorsed Its Use? ¢ Merrill Lynch — 15,500 Financial Advisors « CUNA - 8,300 credit unions « NAVY Federal Credit Union * UBS * US WCC « National Physicians Health Care * GM Auto Minority Dealers Association Newtek Business Services, Inc. We do it better 20
Slide 21: New Technology Launches
New Technology Launches * New Website Launch * www.cusmallbusiness.com Newtek Business Services, Inc. We do it better a
Slide 22: Adding Newtek Business Solutions to Your Member Business Offerings
www.cusmallbusiness.com ree Newtek §ycune ill Adding Newtek Business Solutions to Your Member Business Offerings Newtek Business Services, Inc. We do it better
Slide 23: Develop the Brand
Newtek Business Services, Inc. We do it better Develop the Brand We will begin to unveil our Newtek branding strategy in mid September New Corporate Website Launch Virtual Sales Force & Franchise Further Develop Newtek Direct for small business 23
Slide 24: Operations Cash Flow
Operations Cash Flow ¢ Positive cash flow from operations forecasted for 2006 *« CAPCO is a Non-Contributor and a drain on earnings per share Newtek Business Services, Inc. We do it better 24
Slide 25: Capco Drag
Newtek Business Services, Inc. We do it better Capco Drag Non- Cash Income from tax credits Non-Cash Interest accretion expense Non-Cash Insurance Expense Amortization Pretax contribution to Earnings non-cash Pretax loss to earnings non-cash ngs For First half 18 Half ’05 $11.4 million $6.1million $
Slide 26: Web Hosting EBITDA for first six months of 2006
Web Hosting — EBITDA for first 6 months of 2006 In Millions of Dollars % Growth = 21.96 3.61 4.00 3.504 3.00 2.50 @ 6/30/2005 @ 6/30/2006 2.00 1.50 1.00 0.50 Newtek Htx2 Business Services, Inc. EBITDA We do it better 26
Slide 27: Income Before Taxes for first six months
ncome Before Taxes for first 6 In Millions of Dollars % Growth = 10.22 1.86 6/30/2005 12 6/30/2006 Newtek Business Services, Inc. Net Income We do it better a7
Slide 28: Electronic Payment Processing Highlights
Electronic Payment Processing Highlights * $2.5 million — Portfolio acquisition closed in 2" Quarter * $7.5 million — Portfolio had anticipated 6/30/06 close date (still uncertain; negotiations broke down) * Big revenue growth ¢ Great operating leverage and capacity to grow with capital or capex New
Slide 29: EPP Revenue for first six months of '06
EPP Revenue for first 6 months of ‘06 In Millions of Dollars % Growth = 37.0 20.0 @ 6/30/2005 @ 6/30/2006 Newtek Business Services, Inc. We do it better 29
Slide 30: EPP Pretax Net Income
Newtek Business Services, Inc. We do it better ‘06 EPP Pretax Net Income fo! In millions of Dollars % Growth = 3.64 Pretax Net Income *Includes one time gain* @ 6/30/2005 @ 6/30/2006 30
Slide 31: Lending Highlights
Lending Highlights * Originations are down but break even rate is lower « Average loan size is down and company is more efficient at processing ¢ Referrals are up and the lender is more selective * Great operating leverage exists * Cost of capital needs to improve Newtek Business Services, Inc. We d
Slide 32: Loan Loss Reserve
Newtek Business Services, Inc. We do it better 2.504 2.00 1.50 1.00 0.50 0.00 ss Reserve In Millions of Dollars % Growth 66.67 2.30) Loan Loss Reserve @ 6/30/2005 6/30/2006 32
Slide 33: 35.00% 30.00% 25.00% 20.00% 15.00% @ 6/30/2005 @ 6/30/2006 0.00% 5.00% 0.00% 33
35.00% 30.00% 25.00% 20.00% 15.00% @ 6/30/2005 @ 6/30/2006 10.00% 5.00% 0.00% Newtek Business Services, Inc. We do it better 33
Slide 34: Percentage Portfolio CCC through 6/30/06
Percentage Portfolio CCC through 6/30/06 60% 50% 40% 308 @ 6/30/2005 * @ 6/30/2006 20% 10% 0% Newtek Business Services, Inc. We do it better 34
Slide 35: Guaranteed Portfolio through 6/30/06
ed Portfolio through 6/30/06 % Growth -1.41 38.3 @ 6/30/2005 6/30/2006 Newtek Business Services, Inc. Portfolio Size We do it better 35
Slide 36: Average Loan Approval for first six months
Average Loan Approval for first 6 16 350,000 300,000 250,000 200,000 6/30/2005 150,000 @ 6/30/2006 100,000 50,000 0 Newtek Business Services, Inc. We do it better 36
Slide 37: Newtek Highlights
Newtek Business Services, Inc. We do it better Newtek Highlights « New Hires * Transition to cash flow positive operating model ¢ Great technology creates low cost producer ¢ Expanding customer base 69,918 current clients ¢ High growth business 1,600 new clients net of attrition ¢ Simplify balance s
Slide 38: Newtek Summary
Newtek Business Services, Inc. We do it better Newtek Summary « The business model in transition is an investment opportunity * The small to medium-sized business market is valuable ¢ A Direct Distributor of products and services into the SMB market ¢ Stable business model and scaleable * Low cost p
Slide 39: 2006 Segment Actual Second Quarter Results
2006 Segment Actual Second Quarter Results (in millions of dollars) Revenue Pretax Net Income EBITDA Electronic 10.6 of 11 Payment Processing Web Hosting 3.3 1.0 1.8 SBA Lending 2.4 (A) 9 CAPCO 2.4 (3.2) All Other 13 (6) Corporate 12 (1.2) Activities EEG interco (1.2) : Business Services, Inc. Elimi
Slide 40: 2006 Segment Guidance Third Quarter
2006 Segment Guidance Third Quarter (in millions of dollars) Revenue Pretax Net Income EBITDA Merchant 11.6 -12.0 1.0-1.1 1.7 -1.8 Processing Web Hosting 3.2-3.4 78 1.5-1.6 SBA Lending 3.3- 3.5 0-.1 1.1-1.2 CAPCO 3.8 (1.7)- (1.6) All Other 1.0 (.6) - (.5) Corporate 18 (1.0) - (.9) Activities N wet i
Slide 41: 2006 Segment Guidance Fourth Quarter
Newtek Business Services, Inc. We do it better 2006 Segment Guidance Fi Merchant Processing Wed Hosting SBA Lending CAPCO All Other Corporate Activities Interco Eliminations Total (in millions of dollars) Revenue Pretax Net Income EBITDA 12.9133 1.31.4 2.0-2.1 3.3-3.5 6-8 15-16 23-26 a4 13-14 95 4.0
Slide 42: Annual Segment Guidance
6 Annual Segment Guidance (in millions of dollars) Revenue Pretax Net Income EBITDA Merchant 43.9-45.5 3.4-3.8 §.4-5.8 Processing Web Hosting 12.7-13.5 2.8-3.4 6.1-6.5 SBA Lending 9.9-10.7 0.2-0.6 43-47 CAPCO 17.0 (6.0)-(4.6) All Other 45 (2.0)-(1.6) Corporate 6.0 (3.8)-(3.4) Activities Interco (4.8
Slide 43: Michael J. Holden - CFO: Management Discussion and Analysis
Michael J. Holden - CFO Management Discussion and Analysis Newtek Business Services, Inc. We do it better 4B
Slide 44: Questions & Answers
Questions & Answers Newtek Business Services, Inc. We do it better 44
Newtek Business Services — Q2 2006 Earnings Presentation on 6ix