Newtekone, Inc. · NASDAQ:NEWT
Newtekone — Newtek Business Services — Q1 2008 Earnings Presentation
29 slides from Newtekone's earnings presentation, May 9, 2008
Slide 1: Newtek Business Services, Inc. First Quarter 2008 Financial Results Conference Call
Exhibit 99.1 Newtek Business Services, Inc. NASDAQ: NEWT First Quarter 2008 Financial Results Conference Call May 8, 2008, 4:15 PM Hosted By: Barry Sloane, CEO and Chairman Seth A. Cohen, CFO Investor Relations Contact: Jayne L. Cavuoto 212-273-8193 jcavuoto@newtekbusinessservices.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: Q1 2008 Conference Call Agenda
Q1 2008 Conference Call Agenda Financial Results Snapshot Newtek’s Value Proposition Adoption of SFAS No. 159 Reduction in Cash Borrowings Momentum in EPP Segment Web Hosting Initiatives Small Business Finance Initiatives Insurance Agency Initiatives Cost Reduction Measures Financial Review 2008 Out
Slide 4: Q1 2008 Financial Results
Q1 2008 Financial Results Q1 2008 v. Q1 2007 core operating segment revenue increased 10% Electronic Payment Processing: $15.2 million - up 21% over Q1 2007 Web Hosting: $4.3 million - up 10% over Q1 2007 Small Business Finance: $1.9 million - down (38)% over Q1 2007 Q1 2008 pre-tax loss of $3.9 mil
Slide 5: Financial Strength & Liquidity
Financial Strength & Liquidity Financial strength (at March 31, 2007) $30.9 million in cash and cash equivalents, and restricted cash • Equates to $0.86 cash per share Very little quantifiable debt Liquidity (at March 31, 2007) GE line of credit: $50 million total capacity for small business lending
Slide 6: Newtek Business Service Suite
Newtek™ Business Service Suite 6
Slide 7: Newtek Insurance Portal
Select from our menu of business services below and a Business Specialist will assist you in achieving your business goals. Homeowners Group Benefits Employment Specialty Practices Coverages ‘Coverage: far year hore Pactewpats in 9 group Protect yourse * fran Gaver a wide riage of nak csuraise veads
Slide 8: Adoption of SFAS No.159
Adoption of SFAS No.159 Adopted Fair Market Value (FMV) accounting for Capco segment as of January 1, 2008. SFAS 159 became effective for financial statements issued for fiscal years beginning after November15, 2007 Realigns revenues and expenses, enabling us to significantly reduce the expected non
Slide 9: Adoption of SFAS No.159
Adoption of SFAS No.159 Without the Adoption of SFAS With Adoption of SFAS 159 159 Capco Non-Cash Loss Expectation Pro-forma Non-Cash Loss Without Adoption of SFAS 159 Assumes Adoption of SFAS 159 2007 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 $2.0 $2.0 0.012 0.102 0.076 $0.0 $0.0 -0.645 -0.
Slide 10: Deferred Tax Liability
Deferred Tax Liability Reduced deferred tax liability by $9.6 million. Deferred tax liability created through mismatch of GAAP and tax earnings 10
Slide 11: Reduction of Cash Borrowings
Reduction of Cash Borrowings For the year ended March 31, 2008, total cash borrowings were reduced by $6.8 million Paid TICC Note: $1.0 million Paid down payables: $1.0 million Paid AI Credit: $4.8 million 11
Slide 12: Momentum in EPP Business
Momentum in EPP Business Increase in processing volume and active processing merchants over Q1 2007 Added over 2,000 new processing merchants in the previous six-month period (October 2007-March 2008) Cash flow positive business EBITDA margin of 10.8% for Q1 2008 Significant operating leverage Poten
Slide 13: Web Hosting Initiatives
Web Hosting Initiatives Continue to invest in Web Hosting segment to support future growth Continue to evaluate expenditures versus productivity, particularly in marketing, in the Web Hosting segment seeking additional cost savings where applicable Currently at 50% capacity in our data center Antici
Slide 14: Small Business Finance
Small Business Finance Q1 2008 revenue decreased by 38% to $1.9 million over Q1 2007 primarily as a result of: Decrease in loan originations due to tighter underwriting standards Sold fewer guaranteed loans in Q1 2008 vs. Q1 2007 In Q1 2008, the average premium received on the sale of guaranteed loa
Slide 15: Small Business Finance Initiatives
Small Business Finance Initiatives Recruiting new lending personnel Reevaluation of primary loan origination sources Increasing alliances and lending partners Actively bidding on both performing and non-performing loan portfolios SBA lending expertise and in-house SBA servicing capabilities Ability
Slide 16: Value of USDA Loan Program
Value of USDA Loan Program USDA loans are primarily not agricultural loans; program to support the rural community USDA loans will allow us to expand our product offering beyond solely SBA loans Greater flexibility than under the 7a program Offer loans up to $25 million Offer multiple rate options f
Slide 17: Insurance Agency Initiatives
Insurance Agency Initiatives Currently have alliance partner relationships with brand- recognized-names such as AIG, Navy Federal Credit Union and CEFCU Actively exploring new major alliance deals Constantly reevaluating and upgrading our processing capabilities NewTracker™ works well with the Insur
Slide 18: Cost Reduction Measures
Cost Reduction Measures Continue to reduce headcount and salary-related expenses at the Holding Company (Newtek Business Services, Inc.) Plan to review other segments to recognize additional cost reductions Seek to close and consolidate certain company facilities throughout the U.S. to realize addit
Slide 19: Financial Review
Financial Review Seth A. Cohen - CFO 19
Slide 20: Q1 2008 Actual vs. Q1 2007 Actual
Q1 2008 Actual vs. Q1 2007 Actual In millions of dollars Revenue Revenue Pretax Net Pretax Net EBITDA EBITDA Q1 2008 Q1 2007 Income (Loss) Income (Loss) Q1 2008 Q1 2007 Actual Actual Q1 2008 Q1 2007 Actual Actual Actual Actual Electronic 15.211 12.557 1.080 0.921 1.642 1.369 Payment Processing Web H
Slide 21: Q1 2008 Guidance vs. Q1 2008 Actual
Q1 2008 Guidance vs. Q1 2008 Actual In millions of dollars Revenue Revenue Pretax Net Pretax Net EBITDA EBITDA Guidance Actual Income (Loss) Income (Loss) Guidance Actual Guidance Actual Electronic 14.8 – 15.0 15.211 0.9 – 1.0 1.080 1.4 – 1.6 1.642 Payment Processing Web Hosting 4.2 – 4.4 4.282 0.6
Slide 22: Cash Flows from Operating Activities
Cash Flows from Operating Activities Cash Flows from Operating Activities by Segment For The Three Months Ended March 31, 2008 22
Slide 23: Going Forward: 2008
Going Forward: 2008 Barry Sloane - CEO 23
Slide 24: 2008 Segment Guidance
2008 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 2008 Full Year Revenue 65.5 66.1 18.0 18.5 10.5 11.0 2.5 3.0 3.5 4.0 Pretax Net Income 4.3 4.8 2.9 3.3 (2.0) (1.5)
Slide 25: 2008 Segment Guidance
2008 Segment Guidance In millions of dollars Total Business CAPCO Intercompany Segments Segment Eliminations Total Low High Low High Low High 2008 Full Year Revenue 100.0 102.6 6.1 6.1 (4.6) 101.5 104.1 Pretax Net Income (6.7) (4.3) (5.3) (5.3) - (12.0) (9.6) 2008 2nd Quarter Revenue 23.7 24.5 1.5 1
Slide 26: Questions & Answers
Questions & Answers 26
Slide 27: Addendums
Addendums 27
Slide 28: EBITDA Reconciliation
EBITDA Reconciliation EBITDA Reconciliation to Net Income (Loss) In millions of dollars For The Three Months Ended March 31, 2008 Pretax Income Interest Expense for Depreciation and Q1 2008 EBITDA (Loss) for Q1 2008 Q1 2008 amortization for Q1 2008 Electronic Payment 1.080 - 0.562 1.642 Processing W
Slide 29: 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
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