Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q2 2011 Earnings Presentation
54 slides from Newtekone's earnings presentation, Aug 10, 2011
Slide 1: Newtek Business Services Second Quarter 2011 Financial Results Conference Call
Exhibit 99.3 Newtek Business Services, Inc. NASDAQ: NEWT Second Quarter 2011 Financial Results Conference Call August 10, 2011 4:15 PM Hosted By: Barry Sloane, CEO and Chairman Jennifer C. Eddelson, CAO Public Relations Contact: Liz Petrova Rubenstein Public Relations, Inc. (212) 843-9335 lpetrova@r
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 2011 Highlights
Second Quarter 2011 Highlights Announce consolidated pretax income of $136 thousand for the quarter ended June 30, 2011 Versus consolidated pretax income of $514 thousand for the quarter ended June 30, 2010 • The decline between quarters is primarily due to $466 thousand of non- recurring expenses i
Slide 4: Second Quarter 2011 Highlights
Second Quarter 2011 Highlights Announce consolidated net loss of $(287) thousand for the quarter ended June 30, 2011 Versus consolidated net income of $931 thousand for the quarter ended June 30, 2010 • The decrease to a net loss for the second quarter of 2011 was due to $466 thousand in non-recurri
Slide 5: Second Quarter 2011 Highlights
Second Quarter 2011 Highlights Revised 2011 annual guidance range of: $122.0 million to $124.8 million for consolidated revenue range $1.5 million to $4.0 million for consolidated pretax income range Announce 2012 annual guidance range of: $121.9 million to $125.0 million for consolidated revenue ra
Slide 6: Second Quarter 2011 Highlights
Second Quarter 2011 Highlights Announce Q2 2011 consolidated revenue of $32.3 million 15% growth vs. Q2 2010 of $28.0 million Primary Q2 2011 revenue trends in EPP and Managed Technology Solutions exceed Q2 2010 comparisons Combined EPP and Managed Technology Solutions revenue for Q2 2011 is $25.5 m
Slide 7: Second Quarter 2011 Conference Call Agenda
Second Quarter 2011 Conference Call Agenda Q2 2011 financial performance, cash position, balance sheet, commentary, business trends, 2011 and 2012 guidance Strategic mission as The Small Business Authority New website launched: www.thesba.com (January 2011) 7
Slide 8: Second Quarter 2011 Financial Results
Second Quarter 2011 Financial Results Q2 2011 vs. Q2 2010 core operating segment revenue: Electronic Payment Processing: $20.7 million - up 2% from Q2 2010 Managed Technology Solutions: $4.8 million – down 1% from Q2 2010 Small Business Finance: $6.3 million – up 224% from Q2 2010 Q2 2011 vs. Q2 201
Slide 9: Cash Position
Cash Position $29.1 million in cash and cash equivalents, restricted cash, and broker receivable at June 30, 2011, down from $33.2 million at December 31, 2010. Equates to $0.33 cash per share. Equates to $0.82 cash per share when including restricted cash and the broker receivable, which we receive
Slide 10: Developments in EPP
Developments in EPP Q2 2011 versus Q2 2010: Revenue up 2% Pretax income down 2% EBITDA down 2% Six months June 30, 2011 versus six months June 30, 2010: Revenue up 4% Pretax income up 4% EBITDA up 1% Cash flow positive business Significant operating leverage EPP segment does not have any debt eComme
Slide 11: Managed Technology Solutions Initiatives
Managed Technology Solutions Initiatives Q2 2011 versus Q2 2010: Revenue down 1% Pretax income down 16% EBITDA down 18% Six months June 30, 2011 versus six months June 30, 2010: Revenue flat Pretax income up 5% EBITDA down 4% Continue to evaluate expenditures versus productivity, particularly in mar
Slide 12: Cloud Computing
Cloud Computing What is it? Outsourcing of hardware, software, personnel, storage, data security and responsibility and accountability for IT in whole or in part. Why is it relevant? Cost containment and efficiencies Better service and management of resources More security More functionality 12
Slide 13: Cloud Computing
Cloud Computing Competition Amazon Microsoft Other hosting companies and IT providers like Rackspace Hosting (RAX) Thesba has real U.S. 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 13
Slide 14: 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? 14
Slide 15: Cloud Computing
Cloud Computing 250 Cumulative Cloud VPS Instances Sold 200 150 # of instances 100 50 0 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 15
Slide 16: Cloud Computing
Cloud Computing 60 Cloud VPS Instances Sold Monthly 50 40 # of instances 30 20 10 0 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 16
Slide 17: 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 110 to 114 pricing on governments FDIC contract We are an S&P
Slide 18: Small Business Finance
Small Business Finance Servicing Portfolio (in thousands): 6/30/11 3/31/11 12/31/10 Servicing for loans we originated $ 254,741 $ 236,363 $ 223,049 Servicing for others 75,087 75,365 73,062 Total servicing portfolio $ 329,828 $ 311,728 $ 296,111 We expect future growth in this business area. 18
Slide 19: 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 19
Slide 20: Balance Sheet Items to Discuss
Balance Sheet Items to Discuss (in millions of dollars) 6/30/2011 3/31/2011 12/31/2010 SBA loans transferred, subject to premium recourse 1.4 16.9 31.2 Credits in lieu of cash 25.1 29.0 35.5 Total assets 129.4 144.2 165.0 Liability on SBA loan transferred, subject to premium recourse 1.4 16.5 30.8 N
Slide 21: 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) 21
Slide 22: 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 amounts needed to reach 100% for those Capcos close to being able to voluntarily decertify. % Investment $ Investments needed Capco thresh
Slide 23: 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 24: 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 25: Traffic Statistics for www.thesba.com
Traffic Statistics for www.thesba.com Unique Visitors Per Month Since 2011 Launch 18,000 13,990 14,094 13,125 TheSBA 10,882 10,862 12,000 10,131 9,750 6,000 NBS 3,613 3,102 3,053 2,207 2,912 2,979 2,974 0 JAN FEB MAR APR MAY JUN JUL 25
Slide 26: Traffic Statistics for www.thesba.com
Traffic Statistics for www.thesba.com Average Weekly Unique Visitors - 2011 3,850 3,677 3,637 3,496 3,315 3,450 3,029 3,050 2,638 TheSBA 2,556 2,650 2,250 1,850 1,450 NBS 1,050 795 803 763 737 726 734 764 650 250 JAN FEB MAR APR MAY JUN JUL 26
Slide 27: Current General Statistics
Current General Statistics 600 absolute unique visitors per day Average time on site is 3 minutes and 2 seconds 54% Bounce Rate 27
Slide 28: Small Business Authority Branding Achievements
Small Business Authority Branding Achievements Forbes publishes The Small Business Authority Blog daily which can be viewed at http://blogs.forbes.com/thesba/ To date we have published 7 blogs since June 15, 2011 and we try to update the blog weekly Our introductory post which explains what our blog
Slide 29: Small Business Authority Branding Achievements
Small Business Authority Branding Achievements Small Business Authority Hour All of the following shows podcast on thesba.com and wabcradio.com: 2/5/11 – Business Entrepreneurship 3/5/11 – Healthcare and Health Insurance effects on small businesses 4/2/11 – Small Business Lending 5/7/11 – eCommerce
Slide 30: 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 31: 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 Wolf broadcast sports from the SBAS several times each morning Backdrop Microphone flags See Bernard McGirk broadcast his “Bernie Briefing” from the SB AS se
Slide 32: 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 55,000 in distribution Available on our website now
Slide 33: 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 34: 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 35: Marketing Focus
Marketing Focus ee in astinane THE SMALL BUSINESS
Slide 36: 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 T
Slide 37: 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 38: In Conclusion
In Conclusion =e hn THE SMALL BUSINESS
Slide 39: Annual Pretax Income Trend
Annual Pretax Income Trend in millions $(17.5) $(13.1) $(4.0) $0.9 $2.7 $4.5 $6 $0 Pretax Income (Loss) -$6 -$12 -$18 2007 2008 2009 2010 2011 2012 Actual Actual Actual Actual Forecast Forecast Midpoint Midpoint 39
Slide 40: 2011 Revised Segment Guidance
2011 Revised Segment Guidance In millions of dollars Electronic Managed Small Payment Technology Business All Corporate Processing Solutions Finance Other Activities Low High Low High Low High Low High Low High 2011 Full Year Revenue 80.5 81.5 19.2 19.6 20.1 21.1 1.4 1.6 1.0 1.0 Pretax Income (Loss)
Slide 41: 2012 Segment Guidance
2012 Segment Guidance In millions of dollars Electronic Managed Small Payment Technology Business All Corporate Processing Solutions Finance Other Activities Low High Low High Low High Low High Low High 2012 Full Year Revenue 78.7 79.2 19.9 20.4 21.9 23.4 1.5 2.0 0.5 0.5 Pretax Income (Loss) 6.5 7.0
Slide 42: 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 $2.7 midpoint) 2012 (Forecast range $4.5 midpoint) 42
Slide 43: Financial Review
Financial Review Jennifer C. Eddelson – CAO
Slide 44: 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 45: Selected Balance Sheet Items
Selected Balance Sheet Items In thousands of dollars Balance at Balance at June 30, 2011 December 31, 2010 Cash and cash equivalents $11,701 $10,382 Restricted cash 8,580 10,747 Broker receivable 8,796 12,058 SBA loans held for sale, at fair value 2,448 1,014 Total short term liquidity $31,525 $34,2
Slide 46: Q2 2011 Actual vs. Q2 2010 Actual
Q2 2011 Actual vs. Q2 2010 Actual In millions of dollars Revenue For Revenue For Pretax Income Pretax Income EBITDA For EBITDA For The Quarter The Quarter (Loss) For The (Loss) For The The Quarter The Quarter Ended Ended Quarter Ended Quarter Ended Ended Ended June 30, 2011 June 30, 2010 June 30, 20
Slide 47: 2011 Revised Segment Guidance
2011 Revised Segment Guidance In millions of dollars Electronic Managed Small Payment Technology Business All Corporate Processing Solutions Finance Other Activities Low High Low High Low High Low High Low High 2011 Full Year Revenue 80.5 81.5 19.2 19.6 20.1 21.1 1.4 1.6 1.0 1.0 Pretax Income (Loss)
Slide 48: 2011 Previous Segment Guidance
2011 Previous Segment Guidance In millions of dollars Electronic Managed Small Payment Technology Business All Corporate Processing Solutions 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 Income (Loss
Slide 49: 2012 Segment Guidance
2012 Segment Guidance In millions of dollars Electronic Managed Small Payment Technology Business All Corporate Processing Solutions Finance Other Activities Low High Low High Low High Low High Low High 2012 Full Year Revenue 78.7 79.2 19.9 20.4 21.9 23.4 1.5 2.0 0.5 0.5 Pretax Income (Loss) 6.5 7.0
Slide 50: Going Forward: 2011
Going Forward: 2011 Barry Sloane - CEO
Slide 51: Questions & Answers
Questions & Answers ae ee __ THE SMALL BUSINESS
Slide 52: Addendum
Addendum ae ee __ THE SMALL BUSINESS
Slide 53: EBITDA Reconciliation
EBITDA Reconciliation EBITDA Reconciliation from Pretax Income (Loss) In millions of dollars For the three months ended June 30, 2011 Pretax Income Interest Expense Depreciation and Q2 2011 (Loss) for Q2 2011 for Q2 2011 amortization for Q2 2011 EBITDA Electronic Payment Processing 1.344 - 0.380 1.7
Slide 54: EBITDA Reconciliation
EBITDA Reconciliation EBITDA Reconciliation from Pretax Income (Loss) In millions of dollars For the six months ended June 30, 2011 Pretax Income Interest Expense Depreciation and YTD (Loss) for YTD for YTD amortization for YTD June 30, 2011 June 30, 2011 June 30, 2011 June 30, 2011 EBITDA Electroni
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