Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q3 2007 Earnings Presentation
37 slides from Newtekone's earnings presentation, Nov 9, 2007
Slide 1: Conference Call: 2007 Third Quarter Shareholder
Exhibit 99.2 Conference Call November 8, 2007 4:15pm Barry Sloane – CEO/Chairman Seth A. Cohen - CFO 2007 Third Quarter Shareholder “Positioned For Success”
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: 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 • 84,183 business accounts as of 9/30/07 • Adding over 2,500 new clients per quarter net of attrition • Newtek is a one stop shop
Slide 4: Mission Statement
Mission Statement We want the SMB market to view NEWTEK ™ as “THE Company” to go to for all their business services needs. With our product offerings this is becoming a reality. IMPLICATION IMPLICATION
Slide 5: Newtek's Distribution Advantage
PRODUCT PROCESS CUSTOMER and/or MARKET CONTINUAL ASSESMENT and CORRECTION NEWTEK CAN START AT ANY POINT Newtek’s Distribution Advantage Product & Process are Linked
Slide 6: Newtek Third Quarter Highlights
Newtek Third Quarter 07 Highlights • Growing revenues in EPP, Web Hosting; – EPP segment revenue increased by 25% Q3 ’07 over Q3 ‘06 – Web Hosting segment revenue increased by 20% Q3 ’07 over Q3 ‘06 • Positioned to grow in Small Business Lending: – SBA Lending segment revenue decreased by 22% Q3 ’07
Slide 7: Newtek First Nine Months Highlights
Newtek First Nine Months 07 Highlights • Growing revenues in EPP and Web Hosting: – EPP segment revenue increased by 27% for the nine months ended September 30, 2007 vs. – Web Hosting segment revenue increased by 20% for the nine months ended September 30, 2007 vs. 2006 • positioned to grow in the S
Slide 8: Newtek Business Services Financial Strength
Newtek Business Services Financial Strength As of September 30, 2007 • Over $40 million in cash and cash equivalents, and restricted cash • $79 million in shareholders equity • $2.19 in book value per share
Slide 9: Third Quarter Highlights
Third Quarter 07 Highlights • EPP segment Q3 ’07 revenue of $14.0mm increased by $2.8mm or 25% over Q3 ‘06 • Web Hosting segment Q3 ’07 revenue of $4.2mm increased by $0.7mm or 20% over Q3 ‘06 • SBA Lending segment Q3 ’07 revenue of $2.2mm decreased by $0.6mm or (22)% over Q3 ’06
Slide 10: First Nine Months 2007 Highlights
First Nine Months 2007 Highlights • EPP segment ’07 YTD revenue of $39.6mm increased by $8.4mm or 27% over ’06 YTD • Web Hosting segment ’07 YTD revenue of $12.0mm increased by $2.0mm or 20% over ’06 YTD • SBA Lending segment ’07 YTD revenue of $7.1mm decreased by $0.2mm or (3)% over ’06 YTD
Slide 11: Small Business Lending Environment
Small Business Lending Environment • Liquidity • Credit Deterioration • Loan Volume • Loss Rates • Leverage • Market Position
Slide 12: SBA Lending Loan Performance
SBA Lending Loan Performance • SBA general business loan actual loss rate cumulative for last 15 years: 6.2% • Newtek originated 7a loan actual loss rate cumulative 2003 to present: 2.8% • Newtek expects mature actual loss rate to be equal to or below average SBA general business loan rate
Slide 13: Newtek Small Business Lending
Newtek Small Business Lending “We are not just an SBA 7(a) lender anymore.”
Slide 14: Small Business Lending: Positioned for Success
Small Business Lending “Positioned for Success” New Lending Menu: • Newtek branded Visa® and MasterCard® (up to $50K) • Newtek branded unsecured line of credit (up to $100K) • Newtek Receivables Finance • Newtek Merchant Cash Advance • Conventional commercial loans up to $10 million • SBA 504 loans
Slide 15: SBA Lending Momentum: Pre-Qualified Loans
SBA Lending Momentum Pre-Qualified Loans $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $52,242,950 $53,840,371 $56,014,925 $54,620,702 $56,183,646 $50,926,505 $62,550,756 $77,880,600 $56,250,000 $32,450,250 Q1 Actual Q2 Actual Q3 Actual Q4 Actual/
Slide 16: SBA Lending Momentum: Loans Submitted to Underwriting
SBA Lending Momentum Loans Submitted to Underwriting $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $39,304,003 $37,422,761 $41,152,600 $56,691,962 $40,533,566 $50,065,962 $46,677,744 $59,520,000 $47,500,000 $24,857,023 Q1 Q2 Q3 Q4 Actual/Projected Q4 Budget Q4 to Date
Slide 17: SBA Lending Momentum: Loan Referrals
Loan Referrals SBA Lending Momentum $0 $100,000,000 $200,000,000 $300,000,000 $400,000,000 $500,000,000 $600,000,000 $700,000,000 $312,939,349 $211,251,323 $244,890,338 $185,587,506 $374,382,761 $429,650,856 $606,296,858 $630,644,700 $373,750,000 $266,272,207 Q1 Q2 Q3 Q4 Actual/Projected Q4 Budget Q
Slide 18: Small Business Lending: Positioned to Contribute
Small Business Lending “Positioned to Contribute” • 200 Million in loan servicing • State of the art origination software • Additional products to lending menu • High leveragability in operational platform • Ability and interest in buying distressed assets • Capital available to participate – Debt –
Slide 19: EPP Results
EPP Results • Great growth continues • Channels and strategy are working • Training programs are working • Selling solutions, strategy, security and not price • Alliance partners are driving front-end • Back office capability is keeping expenses low
Slide 20: Strategic Alliances
Strategic Alliances • FISERV • PSCU • Merrill Lynch • Morgan Stanley • Others in the pipeline
Slide 21: Web-Hosting Highlights
Web-Hosting Highlights • Great revenue growth continues • We have invested in and are expensed with 50% of excess capacity for our server center • New product development will stress security, service and not price • Bundle advantage exists • Market leader recognized by entities like Microsoft
Slide 22: New Key Hires
New Key Hires • Donna Neary • Darcy Klaus • Bill Bayer • Jayne Cavuoto • Justin Strom
Slide 23: Three Key Segments for the Nine Months
Three Key Segments for the Nine Months Ended September 30 2007 and 2006 Results In millions of dollars 0% $0.037 $11.643 $11.680 EBITDA (4)% $(0.243) $5.471 $5.228 Pretax Net Income 21% $ 10.230 $48.500 $58.730 Revenue % Change $ Change Nine Months Ended September 30, 2006 Nine Months Ended Septembe
Slide 24: 2007 Annual Segment Guidance
2007 Annual Segment Guidance (16.3) - (15.1) 93.8 – 95.0 Total (4.7) – (4.7) Interco Eliminations (6.8) - (6.8) 4.6 - 4.6 Corporate Activities (1.8) - (1.6) 6.0 - 6.2 All Others (14.9) - (14.9) 6.6 - 6.8 CAPCO 3.9 - 4.2 0.4 - 0.7 10.3 - 10.5 SBA Lending 6.6 - 7.0 3.2 - 3.6 15.9 - 16.1 Web Hosting 5.
Slide 25: Human Resources
Human Resources • Hiring / Training / Recruiting • Focusing on scalability across enterprise • Our Brownsville, Texas companies benefit from $1.25 million Federal grant to build out offices • Added Gordon Schroeder as new independent director (FISERV, Maritz, GE)
Slide 26: IT Advances and Directives
IT Advances and Directives I. Update, refine and broaden NewTracker II. Master Central Database Development III. Utilize technology for quality control, financial and management reporting
Slide 27: Why Do We Acquire Clients Inexpensively
Why Do We Acquire Clients Inexpensively 1. Wide net catches alliance partners for many offerings 2. Wide net catches business clientele for multiple offerings post close or bundled offering 3. NewTracker™ uses Merrill, Morgan Stanley, UBS, Navy Federal, AIG for brand name recognition in lieu of: a.
Slide 28: Why Do We Process Business Inexpensively
Why Do We Process Business Inexpensively 1. Remote production plants in Milwaukee, Phoenix and Brownsville. 2. Business gets boarded electronically through telephonic interview on strength of alliance partner. 3. Data can be shared for multiple products, services and applications. 4. Minimize commis
Slide 29: Financial Focus
Financial Focus 1. Grow cash flow from business services 2. Deploy operational leverage 3. Value business components 4. Reduce financial effect of CAPCO business 5. Opportunistically acquire businesses within the footprint 6. Simplify financial reporting and structure
Slide 30: Why Is Newtek Well Positioned
Why Is Newtek Well Positioned • Cash Flow positive from business service operations (the 3 key segments) • Very little financial leverage deployed • Clean operation with lots of operating capacity • Great sale leverage available • Great opportunity in lending business • We know of no competitor whic
Slide 31: Newtek Business Services, Inc. We do it better
Newtek Business Services, Inc. We do it better
Slide 32: 2007 Q3 Guidance vs. Actual Results
2007 Q3 Guidance vs. Actual Results 0.777 1.364 1.387 EBITDA Actual (4.632) (2.325) (0.685) (2.913) (0.017) 0.440 0.868 Pretax Net Income Actual 23.067 (0.877) 0.760 1.273 1.570 2.157 4.173 14.011 Revenue Actual (5.1) – (4.6) 23.4 - 24.0 Total (1.1) – (1.1) Interco Eliminations (1.5) – (1.5) 1.2 - 1
Slide 33: 2007 Q3 Actual vs. 2006 Q3 Actual
2007 Q3 Actual vs. 2006 Q3 Actual 1.423 1.729 1.330 EBITDA Q3 ‘06 Actual (1.613)* (1.677) 1.195* (3.572) 0.510 0.996 0.935 Pretax Net Income Q3 ‘06 Actual 21.492* (1.264) 0.993 2.520* 1.743 2.783 3.481 11.236 Revenue Q 3 ‘06 Actual (4.632) 23.067 Total (0.877) Interco Eliminations (2.325) 0.760 Corp
Slide 34: Nine Months Ended September 30, 2007 vs. 2006 Actual
9 Months Ended September 30, 2007 vs. 2006 Actual In millions of dollars * Excluding discontinued operations 3.199 5.338 3.106 EBITDA for the Nine Months Ended September 30, 2006 Actual (9.705)* (3.929) (0.348)* (10.899) 0.352 3.047 2.072 Pretax Net Income (Loss) for the Nine Months Ended September
Slide 35: Cash Flows from Operating Activities by Segment
Cash Flows from Operating Activities by Segment for the nine months ended September 30, 2007 (in thousands of dollars) (8,758) (495) - - (6,667) - (2,091) (495) Income (loss) before discontinued operations Discontinued operations, net of tax (4,730) - (999) (495) 1,504 - 1,941 - - $(2,077) $- $ (918
Slide 36: 2007 Annual Segment Guidance
2007 Annual Segment Guidance (16.3) - (15.1) 93.8 – 95.0 Total (4.7) – (4.7) Interco Eliminations (6.8) - (6.8) 4.6 - 4.6 Corporate Activities (1.8) - (1.6) 6.0 - 6.2 All Others (14.9) - (14.9) 6.6 - 6.8 CAPCO 3.9 - 4.2 0.4 - 0.7 10.3 - 10.5 SBA Lending 6.6 - 7.0 3.2 - 3.6 15.9 - 16.1 Web Hosting 5.
Slide 37: Newtek Business Services, Inc.
Newtek Business Services, Inc. We do it better
Newtek Business Services — Q3 2007 Earnings Presentation on 6ix