Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q2 2012 Earnings Presentation
42 slides from Newtekone's earnings presentation, Aug 2, 2012
Slide 1: Second Quarter 2012 Financial Results Conference Call
Exhibit 99.1 Newtek Business Services, Inc. NASDAQ: NEWT Second Quarter 2012 Financial Results Conference Call July 31, 2012 4:15 PM Hosted By: Barry Sloane, CEO and Chairman Jennifer C. Eddelson, CAO Investor Relations Public Relations Newtek Investor Relations Rubenstein Public Relations, Inc. Jay
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: Second Quarter 2012 Conference Call Agenda
Second Quarter 2012 Conference Call Agenda Q2 2012 Financial Performance, Cash Position, Balance Sheet NEWT Buy Back of Common Stock Commentary, Developments and Business Trends Focus on Revenue Growth New Financing Arrangement with Summit Partners Reaffirm 2012 Guidance 3
Slide 4: Second Quarter Key Performance Statistics
Second Quarter Key Performance Statistics The Company had consolidated pretax income of $1.9 million; an increase of $1.8 million, a 1320% improvement, compared to the second quarter of 2011 The Company had consolidated net income of $1.2 million; a $1.5 million increase, or a 530% improvement compa
Slide 5: Second Quarter Key Performance Statistics
Second Quarter Key Performance Statistics Servicing fee income generated through our SBA lender grew 170% period over period from $729 thousand during the second quarter of 2011, to $2.0 million in the second quarter of 2012 Our SBA lender closed $52.0 million in loans during the first six months of
Slide 6: Second Quarter 2012 Financial Results
Second Quarter 2012 Financial Results Q2 2012 vs. Q2 2011 core operating segment revenue: – Electronic Payment Processing: $21.4 million – up 3% from Q2 2011 (revenue up 11.1% excluding impact of Durbin Amendment) – Managed Technology Solutions: $4.6 million – down 4% from Q2 2011 – Small Business F
Slide 7: Cash Position
Cash Position • The Company had $32.0 million in cash and cash equivalents and restricted cash at June 30, 2012, up from $25.4 million at December 31, 2011 – Equates to $0.66 cash per share, – Equates to $0.91 cash per share when including restricted cash 7
Slide 8: Selected Balance Sheet Items
Selected Balance Sheet Items In thousands of dollars Balance at Balance at June 30, 2012 December 31, 2011 Total Assets $ 142,994 $ 132,010 Total Liabilities 78,986 72,711 Total Equity 64,008 59,299 Major changes in Assets and Liabilities Increase of $11.7 million in Cash and cash equivalents Increa
Slide 9: Reduced Effect of Capco on Consolidated Results
Reduced Effect of Capco on Consolidated Results Balance sheet illusionary leverage • $11.6 million – Credits in lieu of cash • $11.6 million – Notes payable in credits in lieu of cash Management time Accounting cost Other miscellaneous costs 9
Slide 10: Future Year End Balance of Tax Credits
Future Year End Balance of Tax Credits $40 $35 $30 $25 $20 $15 $10 $5 $ in millions $0 2010 2011 2012 2013 2014 2015 2016 10
Slide 11: Newtek Buy Back of Common Shares
Newtek Buy Back of Common Shares During the second quarter of 2012, the Company repurchased 780,920 shares of common stock under its one million share authorization Average buy back price $1.1862 Represents great value to our shareholders On Friday, July 27, 2012, our stock price closed at $1.50/sha
Slide 12: Market Comparable Trends
Market Comparable Trends Market comparables positioning themselves similarly to Newtek Medallion Financial Corp (TAXI)Heartland Payment Systems (HPY) Web.com Group, Inc. (WWWW) Cbeyond, Inc. (CBEY) 8 x 8, Inc. (EGHT) ReachLocal, Inc. (RLOC) Stamps.com, Inc. (STMP) Marchex, Inc. (MCHX) Vistaprint, NV
Slide 13: Developments in EPP
Developments in EPP Q2 2012 EPP revenue up $657 thousand, or 3% compared with year ago period; excluding impact of Durbin Amendment, revenue increased by 11.1% Q2 2012 EPP pretax income of $1.9 million, a 42% increase compared with Q2 2011 – Cash flow positive business – Significant operating levera
Slide 14: Managed Technology Solutions Initiatives
Managed Technology Solutions Initiatives Q2 2012 Web hosting and design revenue down 4% compared to year ago quarter Q2 2012 MTS pretax income increased by 12% over prior year – Decrease in total number of web hosting plans; however, – Increase in average revenue per plan resulting from increase in
Slide 15: Developments in Small Business Finance
Developments in Small Business Finance Q2 2012 SBF revenue, after adjusting for fair value accounting adjustment related to timing of recognition of premium income included in prior quarter, increased 30% over year ago period Q2 2012 SBF pretax income $1.5 million, a 43% increase compared with prior
Slide 16: Small Business Finance
Small Business Finance Servicing Portfolio: In thousands of dollars Q2 2012 Q2 2011 Increase Servicing for our loans $ 309,500 $ 249,600 $ 59,900 Servicing for others 257,000 75,900 181,100 Total servicing portfolio $ 566,500 $ 325,500 $ 241,000 From June 30, 2011 to June 30, 2012, our total servici
Slide 17: Newtek Payroll Services
Newtek Payroll Services Payroll management, payment and reporting service Competitively priced and ideal for small and medium sized businesses Currently servicing customers in 34 states Complements existing Newtek Products – Insurance – WC Pay-go – “Payroll in the Cloud” 17
Slide 18: Growth Strategy
Growth Strategy Market Newtek ® “The Small Business Authority” brand through www.thesba.com Emphasize cross-selling and cross-marketing into the customer base Continue to grow alliance channels as outsourcing of our services is attractive to banks, credit unions and other affinity groups Outbound ca
Slide 19: Our Strategy & Mission
Our Strategy & Mission We are a thought leader and destination for independent owner operators of small businesses. Newtek® The Small Business Authority provides products, services, and data to small and medium size businesses across the United States to grow their sales, reduce their expenses, redu
Slide 20: Total Referrals
Total Referrals 8,000 7,181 7,000 6,777 6,000 5,000 4,000 3,000 2,000 1,000 0 Q2'11 Q2'12 Total referrals received increased 6% as compared with the year ago quarter as a result of our new initiatives
Slide 21: Visitor Trend to www.thesba.com
Visitor Trend to www.thesba.com As a result of our direct marketing initiatives: Total Visitors to www.thesba.com increased by 65% in the current quarter compared to the year ago quarter Total Unique Visitors increased by nearly 100% in the current quarter 64% of Visitors in the current quarter are
Slide 22: Current General Statistics
Current General Statistics Our Alexa traffic ranking in the U.S. is 42,434 with 568 sites linking in 69% Bounce Rate; average time on site is 1 minute and 51 seconds An average of approximately 1,000 unique visitors per day 22
Slide 23: Small Business Authority Branding Achievements
Small Business Authority Branding Achievements The Small Business Authority Index is published by Bloomberg Newswire monthly The Small Business Authority Market Sentiment Survey is published on CNBC, NYDailyNews, Small Business Trends, etc. Forbes publishes The Small Business Authority Blog daily wh
Slide 24: Forbes Blog - The Small Business Authority
Forbes Blog - The Small Business Authority Our introductory post which explains what our blog will do can be viewed at http://blogs.forbes.com/thesba/2011/06/15/your- authority-on-small-business/ Forbes Contributor Since June 2011 Over 70 published articles regarding issues that affect entrepreneurs
Slide 25: Current Marketing Strategy
Current Marketing Strategy Generate awareness to qualified small business owners through a National prime-time television advertising campaign with a 50% increased budget Media parameters will include National TV exposure through commercials, online display and search Key product offerings will incl
Slide 26: SB Authority Index
SB Authority Index Financial barometer for small business economy Made up of eight primary business and economic components of the small business economy SB Authority Index released at beginning of every month Available in our newsletter with approximately 60,000 in distribution Available on our web
Slide 27: SB Authority Market Sentiment Survey
SB Authority Market Sentiment Survey On a monthly basis, delivers the pulse of the small business economy by polling our client base on topical issues like health care, the lending environment and other important issues affecting small businesses Usually poll in excess of 1,200 respondents Released
Slide 28: Marketing Focus
Newtek “The Small Business Authority’” WT 2/ Marketing Focus
Slide 29: Percent of Referrals from Direct Channel
Percent of Referrals from Direct Channel 16.0% 14.0% 13.6% 12.0% 10.0% 8.0% 5.9% 6.0% 4.0% 2.0% 0.0% Q2'11 Q2'12 As a result of our revised marketing message focused on Small Business Lending, Direct Channel referrals to www.thesba.com increased from 5.9% to 13.6% over the year ago quarter 29
Slide 30: Small Business Authority Channel
Small Business Authority Channel Grow internet web based direct business - through search - through branding on TV, radio, print and public relations Grow as the destination spot for independent owner/operator businesses Increase recognition as being “The Authority” in business issues for small busi
Slide 31: In Conclusion
Newtek “The Small Business Authority’” In Conclusion WT 2/ 31
Slide 32: Annual Pretax Income Trend
Annual Pretax Income Trend $(17.5) $(13.1) $(4.0) $0.9 $2.3 $7.5 $12 $6 $0 -$6 -$12 -$18 2007 2008 2009 2010 2011 2012 Actual Actual Actual Actual Actual Forecast Midpoint Pretax income (loss), in millions 32
Slide 33: 2012 Segment Guidance
2012 Segment Guidance Electronic Managed Small Total Payment Technology Business All Corporate Business CAPCO Intercompany Processing Solutions Finance Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High Low High 2012 Full Year Revenue
Slide 34: Financial Review
Financial Review Jennifer C. Eddelson – CAO
Slide 35: Non-GAAP Financial Measures
Non-GAAP Financial Measures In evaluating its business, Newtek considers and uses modified EBITDA as a supplemental measure of its operating performance. The Company defines modified EBITDA as earnings excluding income from tax credits, net change in fair value of credits in lieu of cash and notes p
Slide 36: Q2 2012 Actual vs. Q2 2011 Actual
Q2 2012 Actual vs. Q2 2011 Actual Revenue For Revenue For Pretax Income Pretax Income MODIFIED MODIFIED The Quarter The Quarter (Loss) For The (Loss) For The EBITDA For The EBITDA For The Ended Ended Quarter Ended Quarter Ended Quarter Ended Quarter Ended June 30, 2012 June 30, 2011 June 30, 2012 Ju
Slide 37: 2012 Segment Guidance
2012 Segment Guidance Electronic Managed Small Total Payment Technology Business All Corporate Business CAPCO Intercompany Processing Solutions Finance Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High Low High 2012 Full Year Revenue
Slide 38: Going Forward: 2012
Going Forward: 2012 Barry Sloane - CEO
Slide 39: Questions & Answers
Newtek “The Small Business Authority’” WT 2/ Questions & Answers
Slide 40: Addendum
Newtek “The Small Business Authority’” WT 2/ Addendum
Slide 41: Modified EBITDA Reconciliation
Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the three months ended June 30, 2012 Net Change in Fair Value of Credits in Lieu of Cash and Notes Pretax Income Payable in Deferred Lease Depreciation Q2 2012 Income from Tax Credits in Comp restructuring In
Slide 42: Modified EBITDA Reconciliation
Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the three months ended June 30, 2011 Net Change in Fair Value of Credits in Lieu of Cash and Notes Other than Payable in Temporary Pretax Income Credits in Decline in Deferred Depreciation Q2 2011 Income from
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