Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — FY2010 Earnings Presentation
43 slides from Newtekone's earnings presentation, Mar 25, 2011
Slide 1: FY 2010 Financial Results Conference Call
Newtek Business Services, Inc. Exhibit 99.2 NASDAQ: NEWT FY 2010 Financial Results Conference Call March 16, 2011 4:15 PM Hosted By: Barry Sloane, CEO and Chairman Seth A. Cohen, CFO Investor Relations Contact: Barry Sloane 212-356-9500 ext. 10101 bsloane@thesba.com
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: FY 2010 Highlights
FY 2010 Highlights Announce FY 2010 consolidated net income of $1.4 million Versus FY 2009 consolidated net loss of $(429) thousand Announce FY 2010 consolidated pretax net income of $877 thousand Versus FY 2009 consolidated pretax net loss of $(4.0) million Current 2011 annual guidance for consolid
Slide 4: FY 2010 Highlights
FY 2010 Highlights Announce FY 2010 consolidated revenue of $112.7 million 7% growth vs. FY 2009 of $105.7 million Primary FY 2010 revenue trends in EPP and Web Hosting exceed FY 2009 comparisons Combined EPP and Web Hosting revenue for FY 2010 is $100.1 million • Versus FY 2009 of $88.5 million • 1
Slide 5: FY 2010 Conference Call Agenda
FY 2010 Conference Call Agenda FY 2010 financial performance, cash position, balance sheet, commentary, business trends, and 2011 guidance Strategic mission as The Small Business Authority New website launched: www.thesba.com (January 2011) 5
Slide 6: FY 2010 Financial Results
FY 2010 Financial Results FY 2010 vs. FY 2009 core operating segment revenue: Electronic Payment Processing: $80.9 million - up 16% from 2009 Web Hosting: $19.2 million - up 2% from 2009 Small Business Finance: $9.4 million – up 28% from 2009 FY 2010 vs. FY 2009 core operating segment pretax net inc
Slide 7: Cash Position
Cash Position $33.2 million in cash and cash equivalents, restricted cash, and broker receivable at December 31, 2010, up from $25.8 million at December 31, 2009. Equates to $0.29 cash per share. Equates to $0.93 cash per share when including restricted cash and the broker receivable, which we recei
Slide 8: Developments in EPP
Developments in EPP 2010 EPP revenue up 16% over 2009 2010 EPP pretax net income up 31% over 2009 Cash flow positive business Significant operating leverage 2010 EPP segment EBITDA of $7.4 million versus 2010 guidance of $7.1 to $7.3 million EPP segment does not have any debt eCommerce : Single most
Slide 9: Web Hosting Initiatives
Web Hosting Initiatives 2010 versus 2009: Revenue up 2% Pre-tax net income up 21% Continued growth despite challenging market Continue to invest in Web Hosting segment to support future growth Continue to evaluate expenditures versus productivity, particularly in marketing, seeking additional cost s
Slide 10: Cloud Computing: What is it?
Cloud Computing What is it? Outsourcing of hardware, software, personnel, storage, data security and responsibility and accountability for IT in whole or part. Why is it relevant? Cost containment and efficiencies Better service and management of resources More security More functionality 10
Slide 11: Cloud Computing
Cloud Computing Competition Amazon Microsoft Other hosting companies and IT providers like Rackspace Hosting (RAX) Thesba has real US based cloud authority personnel to service and talk to the customer Thesba has a pay for what you use at the Cloud Authority • Bandwith • Storage • CPU 11
Slide 12: Cloud Computing: Why is this market important and why are we good at it?
Cloud Computing Why is this market important and why are we good at it? 12
Slide 13: Small Business Finance
Small Business Finance We have very good lending infrastructure (origination, underwriting, funding, servicing, and collection) This infrastructure is valuable more so today This sector offers the best opportunity for Newtek shareholders 109 to 114 pricing on governments FDIC contract We are an S&P
Slide 14: Small Business Finance
Small Business Finance Servicing Portfolio (in thousands): 2010 2009 Increase Servicing for our loans $179,874 $ 142,513 $ 37,361 Servicing for others $ 73,062 $ 794 $ 72,268 Total servicing portfolio $ 252,936 $ 143,307 $109,629 We expect future growth in this business area. 14
Slide 15: Reduced Effect of Capco on Consolidated Results
Reduced Effect of Capco on Consolidated Results Balance sheet illusionary leverage Management time Accounting cost Other miscellaneous costs 15
Slide 16: Balance Sheet Items to Discuss
Balance Sheet Items to Discuss SBA loans transferred, subject to premium recourse $31.2 million Credits in lieu of cash $35.5 million Total assets $165.0 million Liability on SBA loans transferred, subject to premium recourse $30.8 million Notes payable in credits in lieu of cash $35.5 million Total
Slide 17: Future Year End Balance of Tax Credits
Future Year End Balance of Tax Credits $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $- 2011 2012 2013 2014 (in millions) 17
Slide 18: Reduction of Capco Effect
Reduction of Capco Effect Reduction of balance sheet Credits in lieu of cash Notes payable in credits in lieu of cash Current percentage investment threshold and amount needed to reach 100% % Investment $ Investments needed Capco threshold to reach 100% DC 60% 5,059,000 TX 67% 7,723,000 LA2 50% 1,80
Slide 19: What is our Growth Strategy Going Forward?
What is our Growth Strategy Going Forward? The Small Business Authority brand through www.thesba.com (launched January 2011) Emphasize cross-selling and cross-marketing into the customer base which we are now doing Continue to grow alliance channels as outsourcing of our services is attractive to ba
Slide 20: Our Strategy & Mission
Our Strategy & Mission We are a thought leader and destination for independent owner operators of small businesses. 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, reduce their
Slide 21: 77 WABC Radio
77 WABC Radio “Reporting Live from The Small Business Authority Studios” over 400 mentions per month Over 250 sixty second radio commercials per month. Hear our spots on www.thesba.com click on community, then click on radio spots to hear our personalities, like Imus, Hannity, Levin, Kudlow, Batchel
Slide 22: WABC Radio
WABC Radio “The Imus in the Morning Show” – broadcast Monday through Friday, 6am EST to 9:20am EST on 77 WABC and Fox Business News See Warner Wolfe broadcast sports from the SBAS several times each morning See Bernard McGirk broadcast his “Bernie Briefing” from the SBAS several times each morning B
Slide 23: 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 over 50,000 in distribution Available on our website now
Slide 24: 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 effecting small businesses Usually poll in excess of 1,000 respondents Released
Slide 25: Small Business Authority Hour
Small Business Authority Hour Live radio for small business on the first Saturday of every month broadcasting from The Small Business Authority Studios on 77 WABC or nationally at WABCRadio.com Produced and directed by Newtek for independent business owners and operators Discussing key small busines
Slide 26: Marketing Focus
Marketing Focus ae ee __ THE SMALL BUSINESS
Slide 27: Strategic Alliance Partner Channel
Strategic Alliance Partner Channel Still our workhorse for distribution, clientele and relationships Driven by Newtracker™ which has a patent pending Referral volume continues to grow on a consolidated basis CUNA Latino Coalition Pershing Morgan Stanley Smith Barney Chartis New York Community Bank *
Slide 28: 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 Increased recognition as the authority on business issues for small businesses Grow as the destination spot for independent owner/operator businesses Beco
Slide 29: In Conclusion
In Conclusion ae = THE SMALL BUSINESS
Slide 30: Annual Pretax (Loss) Income Trend
Annual Pretax (Loss) Income Trend in millions $(17.5) $(13.1) $(4.0) $0.9 $2.8 6 0 Pretax Net -6 (Loss) Income -12 -18 2007 2008 2009 2010 2011 Actual Actual Actual Actual Forecast Midpoint 30
Slide 31: 2011 Current Segment Guidance
2011 Current Segment Guidance In millions of dollars Electronic Small Payment Web Business All Corporate Processing Hosting Finance Other Activities Low High Low High Low High Low High Low High 2011 Full Year Revenue 79.1 82.5 19.9 20.7 17.1 18.5 1.6 1.8 1.0 1.0 Pretax Net Income (Loss) 5.8 6.3 4.7
Slide 32: Consolidated Annual Pretax Income (Loss)
Consolidated Annual Pretax Income (Loss) Year Amount (in millions) 2007 $(17.5) 2008 $(13.1) 2009 $(4.0) 2010 $0.9 2011 (Forecast range $2.8 midpoint) 32
Slide 33: Financial Review
Financial Review Seth A. Cohen - CFO
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures In evaluating its business, Newtek considers and uses EBITDA as a supplemental measure of its operating performance. The Company defines EBITDA as earnings before interest expense, taxes, depreciation and amortization. Newtek uses EBITDA as a supplemental measure to revie
Slide 35: Cash Position
Cash Position In thousands of dollars Balance at Balance at December 31, 2010 December 31, 2009 Cash and cash equivalents $10,382 $12,581 Restricted cash $10,747 $6,739 Broker receivable $12,058 $6,467 Total $33,187 $25,787 Bank notes payable $28,053 $16,298 35
Slide 36: FY 2010 Actual vs. FY 2009 Actual
FY 2010 Actual vs. FY 2009 Actual In millions of dollars Revenue For Revenue For Pretax Net Pretax Net EBITDA For The EBITDA For The Year Ended The Year Ended Income (Loss) Income (Loss) Year Ended The Year Ended December 31, December 31, For The Year For The Year December 31, December 31, 2010 Actu
Slide 37: FY 2010 Guidance vs. FY 2010 Actual
FY 2010 Guidance vs. FY 2010 Actual In millions of dollars Revenue Revenue Pretax Net Pretax Net EBITDA EBITDA Guidance Actual Income (Loss) Income (Loss) Guidance Actual Guidance Actual Electronic 81.0 – 81.2 80.936 5.5 – 5.7 5.718 7.1 – 7.3 7.354 Payment Processing Web Hosting 19.2 – 19.4 19.168 4
Slide 38: 2011 Current Segment Guidance
2011 Current Segment Guidance In millions of dollars Electronic Small Payment Web Business All Corporate Processing Hosting Finance Other Activities Low High Low High Low High Low High Low High 2011 Full Year Revenue 79.1 82.5 19.9 20.7 17.1 18.5 1.6 1.8 1.0 1.0 Pretax Net Income (Loss) 5.8 6.3 4.7
Slide 39: 2011 Previous Segment Guidance
2011 Previous Segment Guidance In millions of dollars Electronic Small Payment Web Business All Corporate Processing Hosting Finance Other Activities Low High Low High Low High Low High Low High 2011 Full Year Revenue 86.7 90.3 19.9 20.7 14.2 15.8 1.8 2.2 1.2 1.2 Pretax Net Income (Loss) 5.8 6.3 4.7
Slide 40: Going Forward: 2011
Going Forward: 2011 Barry Sloane - CEO
Slide 41: Questions & Answers
Questions & Answers ae ee __ THE SMALL BUSINESS
Slide 42: Addendum
Addendum ae —_- THE SMALL BUSINESS
Slide 43: EBITDA Reconciliation
EBITDA Reconciliation EBITDA Reconciliation from Net Income (Loss) In millions of dollars For the year ended December 31, 2010 Pretax Income Interest Expense Depreciation and 2010 (Loss) for 2010 for 2010 amortization for 2010 EBITDA Electronic Payment 5.718 0.004 1.632 7.354 Processing Web Hosting
Newtek Business Services — FY2010 Earnings Presentation on 6ix