Newtek Business Services Corp. Reports Full Year 2016 Financial Results
Full Year 2016 Highlights:
- Net asset value ("NAV") of
$209.1 million, or $14.30per share, at December 31, 2016; an increase of 2.6% over NAV of $203.9 million, or $14.06per share, at December 31, 2015.
- Total investment income of
$31.0 million; an 18.8% increase over $26.1 millionfor the year ended December 31, 2015.
- Total investment portfolio increased by 29.3% to
$345.2 millionat December 31, 2016, from $266.9 millionat December 31, 2015.
- Debt-to-equity ratio of 82% at
December 31, 2016.
investment loss of
$(9.3) million, or $(0.64)per share, for the year ended December 31, 2016, compared to $(6.2) million, or $(0.57)per share, for the year ended December 31, 2015.
- Adjusted net investment income1 of
$23.2 million, or $1.60per share, for the year ended December 31, 2016.
- Completed seventh and largest securitization resulting in the issuance and sale of
$53.4 millionof notes, rated by Standard and Poor's Financial Services, LLC.
- Completed investment in banc-serv
Partners, LLC, a new wholly owned controlled portfolio company.
Loan Funding Highlights:
$309.1 millionof SBA 7(a) loans in 2016; an increase of 27.5% over last year.
- Newtek Business Credit Solutions, a portfolio company, closed
$7.3 millionof SBA 504 loans in 2016.
$8.5 billionin loan referrals in 2016; a 67% increase over the same period last year.
- In the fourth quarter 2016, the Company received
$2.8 billionin loan referrals; a 100% increase over fourth quarter 2015.
January 2017, received $932.8 millionin loan referrals; a 79% increase over the same period last year.
December 31, 2016, SBA 7(a) loans in the pipeline were $176.1 million; a 77% increase over the same period last year.
- Anticipate funding approximately
$400 millionin SBA 7(a) and SBA 504 loans in 2017, which would represent an approximate 26% increase in SBA loan fundings over 2016.
2016 and 2017 Dividend Forecast and Payments:
- Paid fourth quarter 2016 dividend of
$0.402 per share on December 30, 2016to shareholders of record as of December 15, 2016.
- Declared and paid
$22.2 million, or $1.53per share, in cash dividends in 2016, which represented 94% of the Company's 2016 estimated taxable income.
- Forecasts paying an annual cash dividend of
$1.572 per share in 2017, representing a 2.6% increase over the 2016 annual dividend of $1.53per share.
- The Company closed an underwritten offering of 2,587,500 shares of common stock at a public offering price of
$15.25per share, with Keefe, Bruyette & Woods, A Stifel Company, Raymond James & Associates, Inc.and UBS Investment Bankacting as joint bookrunners. Newtek Small Business Finance, LLC, the Company's nationally licensed SBA lender subsidiary, signed a letter of intent to increase its existing revolving credit facility through Capital One, N.A.by $25 millionto $75 million, as well as reduce the borrowing rate. The upsize of the credit facility and rate reduction are subject to final documentation and approval from the U.S. Small Business Administration.
- The Company announced that approximately 53.0% of the regular quarterly cash dividends paid in 2016 will be reported as ordinary income, 34.8% will be reported as qualified dividends and 12.2% will be reported as long-term capital gains.
Investor Conference Call and Webcast
A conference call to discuss the full year 2016 results will be hosted by
In addition, a live audio webcast of the call with the corresponding presentation will be available in the ‘Events & Presentations' section of the Investor Relations portion of Newtek's website at http://investor.newtekbusinessservices.com/events.cfm. A replay of the webcast with the corresponding presentation will be available on Newtek's website shortly following the live presentation and will remain available for 90 days following the live presentation.
Use of Non-GAAP Financial Measures -
In evaluating its business,
The term Adjusted net investment income is not defined under
1Adjusted net investment income (loss) is a non-GAAP financial measure. Adjusted net investment income (loss) equals Net investment income (loss), plus Net realized gains (losses) recognized from the sale of guaranteed portions of SBA 7(a) loans, plus Loss on lease expense plus stock based compensation (added back in third quarter of 2016 only and will not be included prospectively as it is anticipated to be a reoccurring expense), plus the net realized gains on controlled investments (beginning in 2016 as it is anticipated this will be reoccurring income).
2Amount and timing of dividends, if any, remain subject to the discretion of the Company's Board of Directors.
3As per Bloomberg. Total one-year return includes dividends reinvested in
Note regarding Dividend Payments: The Company's Board of Directors expects to maintain a dividend policy with the objective of making quarterly distributions in an amount that approximates 90 - 100% of the Company's annual taxable income. The determination of the tax attributes of the Company's distributions is made annually as of the end of the Company's fiscal year based upon its taxable income for the full year and distributions paid for the full year.
Newtek's and its portfolio companies' products and services include: Business Lending, SBA Lending Solutions, Electronic Payment Processing, Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval), eCommerce, Accounts Receivable Financing & Inventory Financing, The Secure Gateway, The Newtek Advantage™, Insurance Solutions, Web Services, and Payroll and Benefits Solutions.
Note Regarding Forward Looking Statements
This press release contains certain forward-looking statements. Words such as "believes," "intends," "expects," "projects,"
"anticipates," "forecasts," and "future" or similar expressions are intended to identify forward-looking statements. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the plans, intentions and expectations reflected in or suggested by the forward-looking statements. Such risks and uncertainties include, among others, intensified competition, operating problems and their impact on revenues and profit margins, anticipated future business strategies and financial performance, anticipated future number of customers, business prospects, legislative developments and similar matters. Risk factors, cautionary statements and other conditions, which could cause Newtek's actual results to differ from management's current expectations, are contained in Newtek's filings with the
|CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES|
|(In Thousands, except for Per Share Data)|
|Investments, at fair value|
|SBA unguaranteed non-affiliate investments (cost of
|SBA guaranteed non-affiliate investments (cost of ||11,512||2,284|
|Controlled investments (cost of ||121,302||104,376|
|Non-control/non-affiliate investments (cost of ||904||1,824|
|Investments in money market funds (cost of ||35||35|
|Total investments at fair value||345,224||266,874|
|Cash and cash equivalents||2,051||4,308|
|Due from related parties||3,748||3,056|
|Servicing assets, at fair value||16,246||13,042|
|Credits in lieu of cash, at fair value||—||860|
|LIABILITIES AND |
|Bank notes payable||$||5,100||$||29,100|
|Notes due 2022||7,853||7,770|
|Notes due 2021||38,767||—|
|Notes payable - Securitization trusts||118,122||89,244|
|Note payable - related parties||1,400||5,647|
|Due to related parties||1,227||256|
|Notes payable in credits in lieu of cash, at fair value||—||860|
|Deferred tax liabilities||5,983||857|
|Accounts payable, accrued expenses and other liabilities||13,904||8,945|
|Commitments and contingencies|
|Preferred stock (par value ||—||—|
|Common stock (par value ||293||290|
|Additional paid-in capital||188,472||189,031|
|Undistributed net investment income||8,092||4,437|
|Net unrealized appreciation, net of deferred taxes||13,008||8,062|
|Net realized (losses) gains||(771||)||2,129|
|Total net assets||209,094||203,949|
|Total liabilities and net assets||$||401,450||$||352,430|
|Net asset value per common share||$||14.30||$||14.06|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|(In Thousands, except for Per Share Data)|
|As a Business Development Company||Prior to becoming a Business Development Company|
|Year ended ||Year ended |
|From non-affiliate investments:|
|Total investment income from non-affiliate investments||20,032||15,464||1,908||—|
|From controlled investments:|
|Total investment income from controlled investments||10,933||10,606||68||—|
|Total investment income||30,965||26,070||1,976||—|
|Electronic payment processing||$||—||$||—||$||—||$||79,527|
|Web hosting and design||—||—||—||13,730|
|Servicing fee income - NSBF portfolio||—||—||—||3,111|
|Servicing fee income - external portfolios||—||—||—||6,142|
|Income from tax credits||—||—||—||48|
|Total operating revenues||—||—||—||131,847|
|Net change in fair value of:|
|Credits in lieu of cash and notes payable in credits in lieu of cash||—||—||—||(5||)|
|Total net change in fair value||—||—||—||(3,668||)|
|Electronic payment processing costs||—||—||—||67,011|
|Salaries and benefits||15,234||12,753||1,458||23,373|
|Depreciation and amortization||296||326||43||3,140|
|Provision for loan losses||—||—||—||(53||)|
|Other general and administrative costs||16,255||12,697||2,236||18,536|
|Net investment loss before income tax||(9,260||)||(6,185||)||(2,329||)||—|
|Provision for income tax - post BDC||—||—||194||—|
|Net investment loss||(9,260||)||(6,185||)||(2,523||)||—|
|Net realized and unrealized gains (losses):|
|Net realized gains on non-affiliate investments||31,512||28,386||595||—|
|Net realized gains on controlled investments||108||5,473||—||—|
|Net unrealized (depreciation) appreciation on SBA guaranteed non-affiliate investments||1,035||(3,215||)||3,007||—|
|Net unrealized appreciation (depreciation) on SBA unguaranteed non-affiliate investments||18||1,183||(274||)||—|
|Net unrealized appreciation on controlled investments||11,337||12,250||—||—|
|Provision for deferred taxes on unrealized appreciation on investments||(5,128||)||(857||)||—||—|
|Net unrealized depreciation on non-control/non-affiliate investments||(43||)||(24||)||—||—|
|Net unrealized depreciation on servicing assets||(2,269||)||(1,268||)||(120||)||—|
|Net unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu of cash||(5||)||(7||)||(4||)||—|
|Net realized and unrealized gains||36,565||41,921||3,204||—|
|Income before income taxes||—||—||—||7,143|
|Net increase in net assets||$||27,305||$||35,736||$||681||$||—|
|Provision for income taxes||—||—||—||3,935|
|Net loss attributable to non-controlling interests||—||—||—||85|
|Net income attributable to ||$||—||$||—||$||—||$||3,293|
|Weighted average common shares outstanding:|
|Basic income per share||$||—||$||—||$||—||$||0.45|
|Diluted income per share||$||—||$||—||$||—||$||0.45|
|Net increase in net assets per share||$||1.88||$||3.32||$||(0.33||)||$||—|
|Net investment loss per share||$||(0.64||)||$||(0.57||)||$||0.09||$||—|
|Dividends and distributions declared per share||$||1.53||$||4.45||$||—||$||—|
|Weighted average shares outstanding||14,541||10,770||7,620||—|
|ADJUSTED NET INVESTMENT INCOME RECONCILIATION:|
(in thousands, except per share amounts)
|Year ended ||Per share|
|Net investment loss||$||(9,260||)||$||(0.64||)|
|Net realized gain on non-affiliate debt investments||31,512||2.17|
|Loss on lease||604||0.04|
|Net realized gains on controlled investments||108||0.01|
|Adjusted Net investment income||$||23,190||$||1.60|
Investor Relations & Public Relations Contact:
Jayne CavuotoTelephone: (212) 273-8179 / firstname.lastname@example.org
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