Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q3 2006 Earnings Presentation
45 slides from Newtekone's earnings presentation, Nov 13, 2006
Slide 1: 2006 Third Quarter Shareholder Conference Call
Newtek Business Services, Inc. ree 2006 Third Quarter Shareholder Conference Call November 9, 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 th
Slide 3: Mission Statement
Mission Statement Newtek is quickly becoming the Premier distributor of Business Services and Financial Products To The Small and Medium Sized Business Market Newtek Business Services, Inc. We do it better
Slide 4: Mission Statement Implication
IMPLICATION Mission Statement We want the SMB market to view NEWTEK™ as “THE Company” to go to for all their business services needs. Newtek Business Services, Inc. We do it better
Slide 5: Business Services Suite
k Business Services Suite + Business Lending — Business loans to start up, acquire or expand a business + Electronic Payment Processing: Credit card, debit card, check conversion, and ACH solutions + Insurance Services: Nationwide commercial and personal lines of insurance + Outsourced Digital Bookk
Slide 6: Third Quarter Highlights
Newtek Third Quarter 06 Highlights ¢ Growing revenues in Web Hosting and EPP * Growing profitability in Web Hosting and EPP * SBA Lender posts third quarter profit of $500,000 ¢« Growing EBITDA across 3 key businesses * $48 million in cash = cash per share $1.37 (cash, cash equivalents and U.S. Trea
Slide 7: Newtek Business Services Financial Highlights
Newtek Business Services, Inc. We do it better Newtek Business Services Financial Highlights D In the first 9 months ended 9/30/06 Web Hosting segment revenue increased by 30% during the first 9 months ended 9/30/06 Electronic Payment Processing segment revenue increased by 37% during the first 9 mo
Slide 8: Business Services Financial Strength
Newtek Business Services Financial Strength «As of 9/30/06 $48 million in cash, cash equivalents, and short term treasuries * As of 9/30/06 $83 million in shareholders equity * As of 9/30/06 $2.39 in book value per share Newtek Business Services, Inc. We do it better
Slide 9: Assets, Liabilities and Shareholder Equity as of 9/30/06
Newtek Business Services, Inc. We do it better Assets as of 9/30/06 Tax Credit Receivable $100 million Small Business Loans $26 million Liabilities as of 9/30/06 Notes payable in credits in lieu of cash $88 million GE/CIT/Signature Bank Facility $15 million Shareholder Equity as of 9/30/06 $83 milli
Slide 10: Remaining Debt
Remaining Debt ¢ TICC — $1.4 million ¢ Notes payable insurance — $7.3 million ¢ Deferred Tax Liability - $21.7 million ¢ This liability (DTL) should decline in the future Newtek Business Services, Inc. We do it better 10
Slide 11: Newtek investment case: national SMB market
Newtek Business Services, Inc. We do it better tis e 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 becomi
Slide 12: 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 13: Who Uses Our Technology? Who Has Endorsed Its Use?
Who Uses Our Technology? Who Has Endorsed Its Use? ¢ Merrill Lynch — 15,500 Financial Advisors ¢« Morgan Stanley- 8,100 Financial Advisors ¢ CUNA — 8,300 credit unions « NAVY Federal Credit Union ¢ UBS — 7,600 Financial Advisors - US WCC ¢ National Physicians Health Care « GM Auto Minority Dealers N
Slide 14: Comparisons
Newtek Comparisons « We are a difficult company for industry comparisons. « Wal-mart - one stop shop ¢ Progressive — centralized processing off of web-based software. ¢ Unique distribution in basic service Newtek Baie, Business Services, Inc. We do it better 14
Slide 15: Number of EPP Customers by Year — Organic
Number of EPP Customers by Year — Organic Newtek Estimated 2006 Business Services, Inc. We do it better 15
Slide 16: Number of EPP Customers by Year — Including Acquisitions
Newtek Business Services, Inc. We do it better mber of EPP Customers by Year — Inclu fof Customers tions oom eed 08 m5 ae 16
Slide 17: Number of Hosting Customers by Year
Newtek Business Services, Inc. We do it better Number of Hosting Customers by Year #of Customers ~ Year Estimated 2006
Slide 18: Customers per FTE by Division
per FTE by Division [DProcessing| #of Customers 0509.4 ending insurance Newtek Divisions Newtek Business Services, Inc. We do it better 18
Slide 19: Revenue per FTE by Division
Revenue per FTE by Division Dollars Newtek Divisions Newtek Business Services, Inc. We do it better 19
Slide 20: Shareholders' Equity per Share by Year
Shareholders’ Equity per Share by Year Newtek Business Services, Inc. We do it better
Slide 21: Number of Referrals Submitted by Month
umber of Referrals Submitted by Mo: Newtek Business Services, Inc. We do it better
Slide 22: 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 22
Slide 23: Capco Drag On Earnings For Nine Months Of 2006
Newtek Business Services, Inc. We do it better Capco Drag On Earnings For Nine Months Of 2006 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 1st 9 Months 2005 $17.
Slide 24: New Technology Launches
New Technology Launches ¢ New Website Launch Establish Newtek Direct Establish V-Rep Concept Establish Further Penetration into Alliance Relationships Utilize Same Technology Platform for 3 distribution channels creates nice operating leverage Newtek Business Services, Inc. We do it better
Slide 25: Newtek Business Services website
wtek Business Services. CO mee | asp fat ASE oes canes Newtek Business Services, Inc. We do it better
Slide 26: Newtek agent tools and services
Business Services, Inc. We do it better newtekbizpro.com/masta Providing You With The Tools You Need To Manage And Grow Your Business At Newtek you have a dedicated relationship with an experienced agent \who will work with you to understand your busines and achieve your goals and objectives. Your a
Slide 27: Introducing Newtek
Introducing Newt Newtek Business Services, Inc. We do it better od
Slide 28: Web Hosting EBITDA for first 9 months 2006
wtek Business Services, Inc. We do it better Web Hostin EBITDA for first 9 m 2006 In Millions of Dollars % Growth = 15.1 5.34 EBITDA @ 9/30/2005 @ 9/30/2006 28
Slide 29: Web Hosting Income Before Taxes for first 9 months
Web Hostin come Before Taxes for first 9 In Millions of Dollars % Growth = 8.5 3.05 9/30/2005 9/30/2006 Newtek Business Services, Inc. We do it better 29
Slide 30: 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 (This transaction was not completed and EPP Guidance and Consolidated Guidance has been adjusted ) ¢ Big revenue growth * Great operatin
Slide 31: EPP Revenue for first 9 months of '06
EPP Revenue for first 9 months of ‘06 In Millions of Dollars % Growth = 37.3 35 31.3 B 9/30/2005 Bi 9/30/2006 Newtek Business Services, Inc. We do it better 31
Slide 32: EPP Pretax Net Income
Newtek Business Services, Inc. We do it better In millions of Dollars % Growth = 61.5 aii 2.4 Pretax Net Income *Includes one time gain of 900,000* % Growth without one time gain 525% @ 9/30/2005 @ 9/30/2006 32
Slide 33: 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 34: Small Business Lending EBITDA
all Business Lending 9 Month EBITD In Millions of Dollars % Growth =71.4% 0 = 47/0 3.50 | 3.20 @ 9/30/05 @ 9/30/06 Newtek Business Services, Inc. We do it better 34
Slide 35: Small Business Lending Pretax Income
all Business Lending 9 M ax Income In Millions of Dollars Segment 600.00 400.005 200.004 0.00- 2005 -200.004 2006 -400.005 -600.005 Newtek Business Services, Inc. We do it better 35
Slide 36: Hotel Concentrations through 9/30/06
Hotel Concentrations thro 9/30/06 28.00% 30.00% 25.00% 19.00% 20.00% @ 9/30/2005 15.00%: @ 9/30/2006 10.00%: 5.00% 0.00% Newtek Business Services, Inc. We do it better 36
Slide 37: Loan portfolio concentration
Newtek Business Services, Inc. We do it better 40% 35% 30% 25% 20% 15% 10% 5% 0% @ 9/30/2005 @ 9/30/2006
Slide 38: Average Loan Approval for first 9 months
Average Loan Approval for first 9 months of In Millions of Dollars @ 9/30/2005 @ 9/30/2006 Newtek Business Services, Inc. We do it better 38
Slide 39: Highlights and 2007 Objectives
Newtek Highlights * New Hires * Transition to cash flow positive operating model * Great technology creates low cost producer « Expanding customer base in excess of 70,000 current client accounts * High growth business 1,700 new clients net of attrition * Simplify balance sheet and income statement
Slide 40: Summary
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 processor * Cross selling opportunities Newtek
Slide 41: 2006 Segment Actual Results Third Quarter
2006 Segment Actual Results Third Quarter (in millions of dollars) Revenue Pretax Net Income EBITDA Electronic 11.2 0.9 1.3 Payment Processing Web Hosting 3.5 1.0 417 SBA Lending 2.8 5 1.4 CAPCO 1.7 (3.6) All Other 27 1A Corporate 1.0 (1.6) Activities Newtek Interco (1.3) Business Services, Inc. Eli
Slide 42: Segment Guidance Fourth Quarter
Newtek Business Services, Inc. We do it better Electronic Payment Processing Wed Hosting SBA Lending CAPCO All Other Corporate Activities Interco Eliminations Total Segment Guidance Fi arter (in millions of dollars) Revenue Pretax Net Income EBITDA 12.9 -13.3 -9-1.0 1.3-1.4 3.5 -3.6 6-8 1.4-1.6 2.0-
Slide 43: Annual Segment Guidance
Newtek Business Services, Inc. We do it better Electronic Payment Processing Web Hosting SBA Lending CAPCO All Other Corporate Activities Interco Eliminations Total nnual Se Guidance (in millions of dollars) Revenue Pretax Net EBITDA Income 44.2 -44.6 3.0 -3.1 4.4-4.5 13.5 -13.6 3.6 -3.8 6.7 -6.9 9.
Slide 44: Michael J. Holden - CFO Management Discussion and Analysis
Michael J. Holden - CFO Management Discussion and Analysis Newtek Business Services, Inc. We do it better 44
Slide 45: Questions & Answers
Questions & Answers Newtek Business Services, Inc. We do it better 45
Newtek Business Services — Q3 2006 Earnings Presentation on 6ix