NewtekOne, Inc. · NASDAQ:NEWT
NewtekOne — Newtek Business Services — FY2006 Earnings Presentation
47 slides from NewtekOne's earnings presentation, Mar 26, 2007
Slide 1: Conference Call - 2006 Annual Shareholder
Conference Call March 22, 2007 Barry Sloane – CEO/Chairman Michael J. Holden - CFO 2006 Annual Shareholder Exhibit 99.2
Slide 2: 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 1995. All forward-look
Slide 3: Mission Statement
• Newtek is quickly becoming the Premier distributor of Business Services and Financial Products To The Small and Medium Sized Business Market • In excess of 75,000 business accounts at 12/31/06 • Adding 2,200 new clients per month • Newtek TM is a one stop shop Mission Statement
Slide 4: Mission Statement
Mission Statement We want the SMB market to view NEWTEK TM as “THE Company” to go to for all their business services needs. IMPLICATION IMPLICATION
Slide 5: Product & Process are Linked
PRODUCT PROCESS CUSTOMER and/or MARKET CONTINUAL ASSESMENT and CORRECTION NEWTEK CAN START AT ANY POINT Product & Process are Linked
Slide 6: Newtek Business Services: We do it better
A ‘ pees Business Services, Inc. AIG Small Business: We do it better
Slide 7: Newtek Business Services: We do it better
Newtek Business Services, Inc. We do it better NewAlliance Investments Inc. ‘Commerc Gener te ‘yal ear enpoyess a rorereacrreemor a SRE) pet area apunee "“tyecymmengetiaty.” “eakelenny plein peasnaien errand use Satanorpna aS powered by Newtek”
Slide 8: Business Lending and Services
• Business Lending – Business loans to start up, acquire or expand a business • Electronic Payment Processing: Credit card, debit card, check conversion, and ACH solutions • Insurance Services: Nationwide commercial and personnel lines of insurance • Outsourced Digital Bookkeeping: Bookkeeping and r
Slide 9: Newtek Annual 06 Highlights
• Growing revenues in Web Hosting and EPP • Growing profitability in Web Hosting and EPP • SBA Lender posts annual profit of $317,000 up from a ‘05 loss of $28,000 • Growing EBITDA across 3 key businesses • $43 million in cash = cash per share $1.21 (cash, cash equivalents and U.S. Treasuries) • $87
Slide 10: Newtek Business Services Financial Highlights During 2006
• Web Hosting segment revenue increased by 28% during 2006 • Electronic Payment Processing segment revenue increased by 33% during 2006 • Web Hosting EBITDA increased 9% during 2006 • Electronic Payment Processing EBITDA increased 41 % during • SBA Lending EBITDA increased 34% 2006 • Total Non-Capco
Slide 11: Newtek Business Services Financial Strength
• As of 2006 $43 million in cash, cash equivalents, and restricted cash US Treasuries • As of 2006 $87 million in shareholders equity • As of 2006 $2.45 in book value per share Newtek Business Services Financial Strength
Slide 12: Is Newtek Over Leveraged?
Assets as of Dec 31, 2006 Credits in Lieu of cash $106 million Small Business Loans $30 million Liabilities as of Dec 31,2006 Notes payable in credits in lieu of cash $86 million GE Facility $16 million Shareholder Equity as of Dec 31, 2006 $87 million • Newtek paid off $7 million to TICC during 200
Slide 13: Remaining Debt
• TICC – $1 million • Notes payable AI Credit – $6 million • Deferred Tax Liability - $24 million • This liability (DTL) should decline in the future Remaining Debt
Slide 14: What is Newtek?
• It is a major play into owning a distribution company whose target is the national small to medium-sized business market place – 26 million potential clients – 51% of GDP – 9 out of 10 U.S. businesses • It is achieving its goals and quickly becoming the premier provider of business services and fi
Slide 15: How is Newtek Accomplishing its Goal?
• By utilizing state-of-the-art web-based proprietary technology • Web-based Referral Systems – Allow referrals from alliance partners giving them a window into our back office operation • Web-based applications as an in-house tool to make our employees and associates efficient, smart & productive –
Slide 16: Who Uses Our Technology? Who Has Endorsed Its Use?
• Merrill Lynch – 15,500 Financial Advisors • Morgan Stanley- 8,100 Financial Advisors • AIG • New Alliance Bank ($7 Billion in Assets) • CUNA – 8,300 credit unions • NAVY Federal Credit Union • UBS – 7,600 Financial Advisors • Daimler Chrysler Minority Auto Dealers Association • GM Auto Minority De
Slide 17: Newtek Comparisons
• We are a difficult company for industry comparisons. • Wal-mart - one stop shop • Progressive – centralized processing of web-based software. • Unique distribution in basic service industries. Newtek Comparisons
Slide 18: Number of EPP Customers by Year - Organic Growth
Number of EPP Customers by Year – Organic Growth (Ex. Acquisitions)
Slide 19: Number of EPP Customers by Year - Including Acquisitions
Number of EPP Customers by Year – (Including Acquisitions)
Slide 20: Number of Hosting Customers by Year
8,385 14,785 24,394 35,217 47,301 59,094 10,000 20,000 30,000 40,000 50,000 60,000 # of Customers 2006* Year Number of Hosting Customers by Year
Slide 21: Shareholders' Equity per Share by Year
$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 Shareholders’ Equity per Share by Year
Slide 22: Operations Cash Flow
• Positive cash flow from operations in • CAPCO is a Non-Contributor and a drain on earnings per share Operations Cash Flow
Slide 23: Capco Drag On Earnings For 2006
$21.5 million Non-Cash Income ($0.4million) Non-Cash loss $3.0 million $2.6 million Non-Cash Insurance Amortization $13.0 million $12.6 million Non-Cash Interest accretion expense $15.6 million $36.7 million Non- Cash Income from tax credits Capco Drag On Earnings For 2006
Slide 24: Future Capco Non Cash Drag on GAAP Earnings
Total Thereafter ($34,351) ($3,082) ($2,739) ($4,372) ($6,334) ($8,371) ($9,453) Non-Cash (loss) (13,980) (2,022) (1,462) (2,053) (2,546) (2,938) (2,959) Amortization of prepaid insurance (39,691) (2,596) (2,937) (4,926) (7,343) (10,081) (11,808) Accretion of interest expense $19,320 $1,536 $1,660 $
Slide 25: New 2006 Technology Launches
• New Website Launch • Establish Newtek Direct • Establish V-Rep Concept • Establish Further Penetration into Alliance Relationships • Utilize Same Technology Platform for 3 distribution channels creates nice operating leverage New 2006 Technology Launches
Slide 26: Newtek Business Services.COM
Newtek Business Services. COM
Slide 27: www.newtekbizpro.com/masta
www.newtekbizpro.com/masta
Slide 28: Newtek Business Services, Inc. We do it better
Newtek Business Services, Inc. We do it better
Slide 29: Web Hosting 2006 Highlights
• Good Revenue Growth • Good EBITDA Growth • Good Customer Growth • Minimal debt with ability to borrow for opportunistic acquisitions • Working on new marketing initiatives • Industry outlook is strong • Market position is strong • Good adjustment to ownership and management transition Web Hosting
Slide 30: Web Hosting Segments - EBITDA for 2006
6.229 6.815 5.90 6.00 6.10 6.20 6.30 6.40 6.50 6.60 6.70 6.80 6.90 EBITDA In Millions of Dollars % Growth = 9.4 Web Hosting Segments – EBITDA for 2006
Slide 31: Web Hosting - Income Segments Before Taxes 2006
3.646 3.769 3.58 3.6 3.62 3.64 3.66 3.68 3.7 3.72 3.74 3.76 3.78 % Growth = 3.4 In Millions of Dollars 2006 has $270,000 in expenses that won’t reoccur in 2007 Web Hosting-Income Segments Before Taxes 2006
Slide 32: Electronic Payment Processing Highlights
• $2.5 million – Portfolio acquisition closed in 2 nd Quarter • Significant revenue growth • Great operating leverage and capacity to grow without additional capital or capex • Out performing industry competitors • Significant ability to leverage balance sheet Electronic Payment Processing Highlight
Slide 33: EPP Segment Revenue for 2006
% Growth = 33 32.8 43.6 In Millions of Dollars EPP Segment Revenue for 2006
Slide 34: EPP Segment Pretax Net Income for 2006
2.205 2.936 0.5 1.5 2.5 Pretax Net Income % Growth = 33 In Millions of Dollars Includes one time gains of $1,600,000 % Growth without one time gain 385% EPP Segment Pretax Net Income for 2006
Slide 35: Lending Highlights
• Originations are down but break even rate is lower • Average loan size is down and company is more efficient at processing • Referrals are up and the lender is more selective • Great operating leverage exists • Cost of capital needs to improve • Regained profitable 3 out of its 4 years in existenc
Slide 36: Small Business Lending 2006 EBITDA
3.0 4.0 0.50 1.00 1.50 2.00 2.50 3.00 3.50 In Millions of Dollars % Growth = 33% Small Business Lending 2006 EBITDA
Slide 37: Small Business Lending 2006 Pre-Tax Income
.0 .3 0.00 0.05 0.10 0.15 0.20 0.25 0.30 In Millions of Dollars Small Business Lending 2006 Pre-Tax Income
Slide 38: Hotel Concentrations through 2006
28% 19% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% Hotel Concentrations through 2006
Slide 39: Percentage Portfolio CCC through 2006
33% 23% 0% 5% 10% 15% 20% 25% 30% 35% Percentage Portfolio CCC through 2006
Slide 40: Average Loan Approval 2006
50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 359,880 272,367 Average Loan Approval 2006
Slide 41: 2006 Annual Segment Financials vs. Guidance
(5.0) (4.8) Interco Eliminations (4.9) (5.5) - (5.3) 4.5 4.5 Corporate Activities (2.3) (3.9) - (2.8) 89.1 90.8 -91.6 Total (.9) 0 - .1 4.5 7.2 -7.3 All Others (4.5) (5.0) - (4.8) 17.2 17.0 -17.1 CAPCO 4.0 3.8 - 4.0 .3 0.0 - .3 9.5 9.3 -9.4 SBA Lending 6.8 6.7 -6.9 3.8 3.6 -3.8 13.6 13.5 -13.6 Web H
Slide 42: 2007 Annual Segment Guidance
(18.8) –(17.1) 90.5-92.5 Total (11.8) – (10.8) After Tax Net Income (4.4) –(4.4) Interco Eliminations (6.0) – (6.0) 4.8-4.9 Corporate Activities (.33) - (3.0) E.P.S Guidance (per share) (3.4) –(3.0) 4.2 -4.6 All Others (16.0) –(16.0) 6.4-6.8 CAPCO 3.5-4.0 0.0 - 0.5 10.3 -10.5 SBA Lending 7.1-7.5 3.6
Slide 43: Net Cash Provided Used in Operations
$0.0 $- $ (6.4) $6.4 Net Cash provided used in operations $ (5.8) $ (2.0) $7.3 $5.2 $1.7 $ (10.1) $ (5.3) $7.3 $11.8 $ (7.0) $0.7 $(1.1) $- $- $3.0 $0.7 $ - $- $- $- $- $- $- $- $- $- $- $ (9.6) $(5.3) $0.1 $11.8 $(6.4) $- $- $- $- $3.0 $- $ (0.5) $- $7.2 $- $(0.6) $0.7 $(1.1) $- $- $- $ 0.7 Net inc
Slide 44: Operational Summation
1. Newtek is capitalized, positioned and built to become the unique provider to small business • Technological Platform • Personnel • Cap Ex • Infrastructure • Finance • Business model, strategic vision and systems 2. Tremendous operational leverages exists 3. Newtek believes it can grow in multiple
Slide 45: Financial Summation
• 2 Key segments, Web Hosting and Electronic Payment Processing are valuable and have 1 million dollars of combined debt • Negative effects from Capco effectively adjust book value • Cash flow from operations are slightly positive but improved by 7million over 2006 from 2005 • Holding company costs
Slide 46: Management Discussion and Analysis
Management Discussion and Analysis Michael J. Holden - CFO
Slide 47: Newtek Business Services, Inc. We do it better
Newtek Business Services, Inc. We do it better
Newtek Business Services — FY2006 Earnings Presentation on 6ix