Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q1 2013 Earnings Presentation
40 slides from Newtekone's earnings presentation, May 8, 2013
Slide 1: Newtek Business Services, Inc. First Quarter 2013 Financial Results Conference Call
Exhibit 99.2 www.thesba.com Newtek Business Services, Inc. “The Small Business Authority®” First Quarter 2013 Financial Results Conference Call May 8, 2013 4:15pm ET Hosted by: Barry Sloane, President & CEO NASDAQ: NEWT Jennifer Eddelson, EVP & CAO www.thesba.com Investor Relations Public Relations
Slide 2: Safe Harbor Statement
www.thesba.com 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
Slide 3: First Quarter 2013 Conference Call Agenda
www.thesba.com First Quarter 2013 Conference Call Agenda First Quarter 2013 Consolidated Financial Performance Segment Performance and Strategy Reaffirmation of 2013 Guidance Newtek Growth Strategy Marketing Initiatives Future Initiatives Investment Merits 3
Slide 4: Consolidated Earnings Performance
www.thesba.com Consolidated Earnings Performance $4.4 $3.1 $2.2 $1.6 $1.5 $1.0 Pre-Tax Income Net Income Modified EBITDA* Q1 2012 Q1 2013 Pretax income of $2.2 million, an increase of $569 thousand, or 34.8%, compared to Q1 2012 Net income of $1.5 million, an increase of $433 thousand, or 42.5%, com
Slide 5: Consolidated Earnings Performance: Earnings per Diluted Share
www.thesba.com Consolidated Earnings Performance Earnings per Diluted Share $0.04 $0.04 $0.03 $0.02 $0.00 Earnings Per Diluted Share Q1 2012 Q1 2013 33.3% increase year over year in fully diluted EPS 5
Slide 6: 2013 Consolidated Financial Guidance
www.thesba.com 2013 Consolidated Financial Guidance Diluted Earnings Per Share Pretax Income ($ in millions) $0.18 $0.15 $11.5 $9.4 $0.09 $0.04 $2.0 $1.0 2010 2011 2012 2013 Forecasted 2010 2011 2012 2013 Forecasted Midpoint Midpoint Expect FY 2013 diluted EPS midpoint of $0.18 per share and pretax
Slide 7: Consolidated Balance Sheet
www.thesba.com Consolidated Balance Sheet Selected Items Balance Balance $ in thousands March 31, 2013 Dec 31, 2012 Total Cash & Cash Equivalents* $27,108 $22,685 Total Assets $166,758 $152,742 Total Liabilities $96,210 $83,840 Total Equity $70,548 $68,902 Major Balance Sheet changes: • Increase of
Slide 8: Consolidated Cash Position
www.thesba.com Consolidated Cash Position Cash & Cash Equivalents* $27.1 $22.7 12/31/2012 3/31/2013 BetweenDecember31, 2012andMarch31,2013: Cash and cash equivalents* increased by $4.4 million Cash per diluted share increased from $0.63 to $0.72 8 *Includes restricted cash of $15.1 million at March
Slide 9: Operating Segment Performance
www.thesba.com Operating Segment Performance For the First Quarter 2012 vs. 2013: Small Business Lending: • Revenue increased by 53.9% over Q1 2012 to $7.4 million • Pretax income increased by 48.4% over Q1 2012 to $2.2 million Electronic Payment Processing: • Revenue increased by 5.1% over Q1 2012,
Slide 10: Small Business Finance
www.thesba.com Small Business Finance Q12013 TotalOperatingRevenue:$34.1million SBF Revenue Trend $8 $7.4 $7 $6 $5.1 $4.8 SBF $5 $4 $7.4M $3 $2 $1.3 $1 $- Q1' 10 Q1' 11 Q1' 12 Q1' 13 Q1 2013 SBF revenue was 21.8% of total operating revenue Q1 2013 SBF revenue increased by 53.9% to $7.4 million fromm
Slide 11: Small Business Finance: Loan Sale Transaction Example
www.thesba.com Small Business Finance DirectRevenue/ Expenseof a LoanSaleTransaction– An Example Key Variables in Loan Sale Transaction Resulting Revenue (Expense) Loan Amount $1,000,000 Associated Premium** $93,750 Guaranty Percent 75% Servicing Asset*** $18,630 Guaranteed Balance $750,000 Total Pr
Slide 12: Small Business Finance Total Pipeline
www.thesba.com Small Business Finance Total – Pipeline $252.5 $92.9 $58.3 $39.2 $25.9 $33.4 $13.0 $11.0 Open Referrals Prequalified In Underwriting ApprovedPending - Closing 3/31/2012 3/31/2013 As of March 31, 2013, the total Small Business Lending Total Pipeline* has increased by $225.5 million, or
Slide 13: Comparative Loan Portfolio Data
www.thesba.com Comparative Loan Portfolio Data (12/31/10 vs. 3/31/2013) Loan Characteristic As of 12/31/10 As of 3/31/13 Business Type: Existing Businesses 53.93% 81.88% Business Acquisition 25.89% 11.28% Start-Ups 20.18% 6.84% Primary Collateral: Commercial RE 45.33% 50.53% Machinery & Equipment 22
Slide 14: Small Business Finance: Loans Funded
www.thesba.com Small Business Finance Loans Funded $40 $34.8 $35 $30 $24.5 $25 $20 $15 $10 $5 $- Loans Funded Q1 2012 Q1 2013 Funded $34.8 million in loans in Q1 2013, a 42.2% increase over Q1 2012 During the 3 months ended March 31, 2013, the Lender funded loans, 35 totaling $34.8 million, vs. 19 l
Slide 15: Servicing Portfolio
www.thesba.com Servicing Portfolio $546.4 $431.8 $379.2 $295.9 $167.2 $135.9 NEWT Loans* Servicing Other Loans* Total Loans* 31-Mar-12 31-Mar-13 The SBF servicing portfolioMarch – 31, 2013 vs. 2012: • NEWT portfolio increased by 28.1%; third-party servicing portfolio increased by 23.1% • Relatedserv
Slide 16: Electronic Payment Processing
www.thesba.com Electronic Payment Processing Q12013 TotalOperatingRevenue:$34.1million EPP Revenue Trend $25 $21.7 $20.1 $20.6 $18.8 EPP $20 Revenue $15 $21.7M $10 $5 $0 Q1' 10 Q1' 11 Q1' 12 Q1' 13 Q1 2013 EPP revenue was 63.5% of total operating revenue Q1 2013 pretax income increased by 15.1% to $
Slide 17: Electronic Payment Processing: ISO Contribution
www.thesba.com Electronic Payment Processing Independent Sales Organization (ISO) Contribution Expect a significant increase in revenue in the EPP segment in the second half of 2013 through anticipated uptick in contracts with ISOs The Louisville, KY group will focus on adding significant ISO contra
Slide 18: Managed Technology Solutions
www.thesba.com Managed Technology Solutions Q1 2013TotalOperatingRevenue:$34.1million MTS Revenue Trend $6 $4.8 $4.8 $4.7 $5 $4.4 MTS $4 $4.4M $3 $2 $1 Q1 2013 MTS revenue was 12.9% of total operating revenue $- Q1' 10 Q1' 11 Q1' 12 Q1' 13 Q1 2013 MTS revenue decreased by 6.4% to $4.4 million from $
Slide 19: Shift to Linux-based Platforms
www.thesba.com Shift to Linux-based Platforms Recently upgraded Linux Apache and Linux Nginx platforms • Should capture additional market opportunities • NTS created associated control panels, service support and billing, which allows NTS to participate in growth of 100% of the market of new web des
Slide 20: Invested for the Future: Linux and Cloud
www.thesba.com Invested for the Future Linux and Cloud Growth in New Shared Linux Accounts in Growth in Total Cloud Services Cloud Environment 25,000 21,809 500 430 20,000 16,285 16,861 17,182 400 318 15,000 300 251 190 10,000 200 100 5,000 0 0 December January February March December January Februa
Slide 21: Cloud Computing
www.thesba.com Cloud Computing 21
Slide 22: MTS Referral Trends
www.thesba.com MTS Referral Trends Q1 2012 vs. Q1 2013 Total MTS Referrals Total Closed MTS Referrals 3,983 4,000 4,000 3,196 2,928 3,000 3,000 2,217 2,000 2,000 1,000 1,000 0 0 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 vs. Q1 2013 • Total MTS referrals increased by 24.6% to 3,983 • Total closed refer
Slide 23: Managed Technology Solutions: Average Revenue per User
www.thesba.com Managed Technology Solutions Upward Trend in Average Revenue per User Q1 2012 vs. Q1 2013 Shared Dedicated $19.3 $352.8 $20 $18.1 $331.6 $350 $16 $280 $12 $210 $8 $140 $4 $70 $0 $0 Q1 2012 Q1 2013 Q1 2012 Q1 2013 6.6% quarter-over-quarter increase 6.4% quarter-over-quarter increase Cl
Slide 24: Reaffirming 2013 Guidance
www.thesba.com Reaffirming 2013 Guidance Operating Revenue: • Midpoint of $148.2 million, with a range of $145.1 million and $151.2 million • Increase of 12.1% over 2012 revenue of $131.1 million Pretax Income: • Midpoint of $11.5 million, with a range of $10.0 million and $13.0 million • Increase o
Slide 25: 2013 Segment Guidance
www.thesba.com 2013 Segment Guidance Revenue by Segment Electronic Payment Processing Revenue: $90.4$94.1M - Managed Technology Solutions PretaxIncome:$8.2- $9.0M Revenue: $18.4 - $19.2M Modified EBITDA*:$8.5- $9.3M Pretax Income: $3.9 - $4.7M Modified EBITDA*: $5.5 - $6.3M EPP MTS SBF Small Busines
Slide 26: 2013 Segment Guidance
www.thesba.com 2013 Segment Guidance Electronic Small Managed Total Inter- Payment Business Technology All Corporate Business CAPCO Company Processing Finance Solutions Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High Low High 2013 F
Slide 27: Growth Strategy
www.thesba.com Growth Strategy Increased • Remain #1 in Non-bank advertising Government Guaranteed Cross sell Lender and cross budget by • Grow Newtek Advantage 50% market Platform • Grow revenues between 9-11% organically Grow brand Continue to organically & via grow alliance www.thesba.com channel
Slide 28: Marketing Campaign – National Television Commercials
www.thesba.com Marketing CampaignNational – Television Commercials On average, 190 or more monthly commercials which have aired on the following properties: • CNN • MSNBC • Fox News • Headline News • Fox Business • The Outdoor Channel CommercialscheduleprimarilyMondayto Thursdayfrom 5am- 11pm Improv
Slide 29: Visitor Trend to www.thesba.com
www.thesba.com Visitor Trend to www.thesba.com Total Visitors and Unique Visitors for Q1 2012 vs. Q1 2013 160,000 138,374 140,000 120,000 100,000 80,785 80,000 73,903 60,000 49,871 40,000 20,000 0 Q1 2012 Q1 2013 Unique Vistors Total Visitors As a result of our Direct Marketing Initiatives: • Total
Slide 30: The Newtek Advantage™
www.thesba.com The Newtek Advantage™ Mobile real-time SMB management platform; puts all of a business’ critical transactions and economic, eCommerce and web site traffic data on a smartphone, tablet, laptop or PC Provides intelligence that businesses require, giving them the advantage to succeed All
Slide 31: Comparable Company Statistics
www.thesba.com Comparable Company Statistics On Deck Capital$500 – million market valuation Lending Club $–1.55 billion market valuation DigitalRiver(DRIV)announcespurchaseof LMLPaymentSystems(LMLP) Universal Business Payment Solutions (UBPS) announced $179 million planned acquisition of credit/debi
Slide 32: Investment Summary
www.thesba.com Investment Summary Publicly traded Company since 2000 Management’s interests aligned with shareholders • CEO alone owns over 14.5% of outstanding shares* Trades at slightly more than 3x 2013 forecasted Modified EBITDA** • 2013 forecasted Modified EBITDA** of $20.9 million, an increase
Slide 33: Key Statistics NASDAQ: NEWT
www.thesba.com Key StatisticsNASDAQ: – NEWT ShareStatistics (USD) Financial Highlights** ------------------------------------------------------------- ------------------------------------------------------------- Stock Price (at 5/6/13) $2.05 Revenue $148.2M 52-Week Range $1.14-$2.21 Pre-tax Income
Slide 34: Financial Review
www.thesba.com Financial Review Jennifer C. Eddelson CAO -
Slide 35: Non-GAAP Financial Measures
www.thesba.com 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 before income from tax credits, interest expense, taxes, depreciation and amortizat
Slide 36: Q1 2013 Actual vs. Q1 2012 Actual
www.thesba.com Q1 2013 Actual vs. Q1 2012 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 March 31, 2013 March 31, 2012
Slide 37: 2013 Segment Guidance
www.thesba.com 2013 Segment Guidance Electronic Small Managed Total Inter- Payment Business Technology All Corporate Business CAPCO Company Processing Finance Solutions Other Activities Segments Segment Eliminations Total Low High Low High Low High Low High Low High Low High Low High Low High 2013 F
Slide 38: Addenda
Newtek “The Small Business Authority’” www.thesba.com Addenda
Slide 39: Modified EBITDA Reconciliation (Q1 2013)
www.thesba.com Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the three months ended March 31, 2013 Net Change in Fair Value of Credits in Lieu of Cash First and Notes Amortization of Quarter Pretax Income Payable in Deferred 2011 Lease Depreciation 2013
Slide 40: Modified EBITDA Reconciliation (Q1 2012)
www.thesba.com Modified EBITDA Reconciliation Modified EBITDA Reconciliation from Pretax Income (Loss) For the three months ended March 31, 2012 Net Change in Fair Value of Credits in Lieu of Cash First and Notes Amortization of Quarter Pretax Income Payable in Deferred 2011 Lease Depreciation 2012
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