Newtek Business Services Corp. Reports Second Quarter 2017 Financial Results
Second Quarter 2017 Financial Highlights
- Net asset value ("NAV") of
$250.2 million, or $14.36per share, at June 30, 2017; an increase of 22.4% and 19.7%, respectively, over NAV at June 30, 2016, and December 31, 2016.
- Net investment loss of
$(1.7) million, or $(0.10)per share, for the three months ended June 30, 2017, compared to a net investment loss of $(4.1) million, or $(0.28)per share, for the three months ended June 30, 2016.
- Adjusted Net Investment Income ("ANII")1 of
$7.2 million, or $0.41per share, for the three months ended June 30, 2017; an increase of 44.9% over ANII of $4.9 million, or $0.34per share, for the three months ended June 30, 2016.
- Total investment income of
$9.9 millionfor the three months ended June 30, 2017; an increase of 37.1% over total investment income of $7.2 millionfor the three months ended June 30, 2016.
- Debt-to-equity ratio of 81.4% at
June 30, 2017.
- Total investment portfolio increased by 13.6% to
$392.3 millionat June 30, 2017, from $345.2 millionat December 31, 2016.
Financial Highlights - Six Months Ended
- Net investment loss of
$(3.8) million, or $(0.22)per share for the six months ended June 30, 2017, compared to a net investment loss of $(5.5) million, or $(0.38)per share, for the six months ended June 30, 2016.
- ANII of
$13.7 million, or $0.81per share, for the six months ended June 30, 2017; an increase of 38.6% over ANII of $9.8 million, or $0.68per share, for the six months ended June 30, 2016.
- Total investment income of
$18.9 millionfor the six months ended June 30, 2017; an increase of 34.8% over total investment income of $14.0 millionfor the six months ended June 30, 2016.
Additional Second Quarter 2017 Highlights
- The Company closed its investment in a new wholly owned controlled portfolio company, IPM, an information technology consulting company.
- Certain of Newtek's wholly owned controlled portfolio companies increased the aggregate principal amount of the term loan facility with
Goldman Sachs Bank USAto $50.0 millionfrom $38.0 millionand received a reduction in the interest rate of between 1.0% and 2.0%. Newtek Small Business Finance, LLC("NSBF") increased its existing revolving credit facility through Capital One, National Association, by $50.0 millionto $100.0 millionand received a reduction in the interest rate of 1.125% to fund the unguaranteed portion of SBA 7(a) loans and 1.25% to fund the guaranteed portion of SBA 7(a) loans.
- S&P Global Ratings raised its rating on the Company's SBA 7(a) loan securitization Class A Notes issued by Newtek Small Business Loan Trust 2014-1, from A to A+.
- NSBF's servicing portfolio was approximately
$1.1 billionat June 30, 2017, an increase of 24.8% over the same period one year ago.
- The Company launched its newly redesigned website, www.newtekone.com, with enhanced user experience, expanded content, new features and improved navigation.
SBA Loan Origination Highlights
- NSBF originated
$159.2 millionof SBA 7(a) loans during the six months ended June 30, 2017; an increase of 20.7% compared to $131.9 millionfor the six months ended June 30, 2016.
- Newtek Business Credit
Solutions ("NBC"), a controlled portfolio company, originated
$4.8 millionof SBA 504 loans for the six months ended June 30, 2017.
- Increased 2017 SBA loan origination guidance to approximately
$415.0 millionin SBA 7(a) loans (by NSBF) and SBA 504 loans (by NBC), which would represent an approximate 31% increase in total SBA loan originations over 2016.
2017 Dividend Forecast and Payments
- Paid a second quarter 2017 cash dividend of
$0.40per share on June 30, 2017to shareholders of record as of May 31, 2017.
- Forecast paying an annual cash dividend of
$1.572 per share in 2017.
Investor Conference Call and Webcast
A conference call to discuss second quarter 2017 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.
1Use of Non-GAAP Financial Measures -
In evaluating its business, Newtek considers and uses ANII as a measure of its operating performance. ANII includes short-term capital gains from the sale of the guaranteed portions of SBA 7(a) loans, and beginning in 2016, capital gain distributions from controlled portfolio companies, which are reoccurring events. The Company defines ANII as Net investment income (loss) plus Net realized gains recognized from the sale of guaranteed portions of SBA 7(a) loan investments less realized losses on non-affiliate investments, plus or minus loss on lease adjustment, plus the net realized gains on controlled investments.
The term ANII is not defined under
2Note Regarding Dividend Payments
Amount and timing of dividends, if any, remain subject to the discretion of the Company's Board of Directors. 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,
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
CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands, except for Per Share Data)
|Investments, at fair value|
|SBA unguaranteed non-affiliate investments (cost of ||$||239,757||$||211,471|
|SBA guaranteed non-affiliate investments (cost of ||12,224||11,512|
|Controlled investments (cost of ||137,005||121,302|
|Non-control/non-affiliate investments (cost of ||3,255||904|
|Investments in money market funds (cost of ||35||35|
|Total investments at fair value||392,276||345,224|
|Cash and cash equivalents||3,550||2,051|
|Due from related parties||3,345||3,748|
|Servicing assets, at fair value||18,124||16,246|
|LIABILITIES AND |
|Bank notes payable||$||40,045||$||5,100|
|Notes due 2022||7,895||7,853|
|Notes due 2021||38,939||38,767|
|Notes payable - Securitization trusts||101,108||118,122|
|Notes payable - related parties||15,741||1,400|
|Due to related parties||275||1,227|
|Deferred tax liabilities||5,575||5,983|
|Accounts payable, accrued expenses and other liabilities||15,073||13,904|
|Commitments and contingencies|
|Preferred stock (par value ||—||—|
|Common stock (par value ||349||293|
|Additional paid-in capital||229,891||188,472|
|(Distributions in excess of)/undistributed net investment income||(1,877||)||8,092|
|Net unrealized appreciation, net of deferred taxes||12,017||13,008|
|Net realized gains/(losses)||9,864||(771||)|
|Total net assets||250,244||209,094|
|Total liabilities and net assets||$||474,895||$||401,450|
|Net asset value per common share||$||14.36||$||14.30|
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)|
|(In Thousands, except for Per Share Data)|
|Three Months Ended ||Three Months Ended ||Six Months Ended ||Six Months Ended |
|From non-affiliate investments:|
|Total investment income from non-affiliate investments||7,254||4,653||13,800||9,072|
|From controlled investments:|
|Total investment income from controlled investments||2,650||2,570||5,097||4,945|
|Total investment income||9,904||7,223||18,897||14,017|
|Salaries and benefits||4,980||3,629||9,631||6,973|
|Depreciation and amortization||96||85||185||125|
|Origination and servicing||1,269||1,392||2,653||2,653|
|Other general and administrative costs||2,020||3,269||3,605||4,552|
|Net investment loss||(1,680||)||(4,081||)||(3,773||)||(5,461||)|
|Net realized and unrealized gains (losses):|
|Net realized gain on non-affiliate investments||8,914||7,534||17,599||13,820|
|Net unrealized (depreciation) appreciation on SBA guaranteed non-affiliate investments||(63||)||706||50||768|
|Net unrealized appreciation (depreciation) on SBA unguaranteed non-affiliate investments||1,817||478||1,261||(549||)|
|Net unrealized (depreciation) appreciation on controlled investments||(2,674||)||2,034||(1,743||)||5,724|
|Provision for deferred taxes on unrealized appreciation on controlled investments||976||(833||)||410||(2,441||)|
|Net unrealized depreciation on non-control/non-affiliate investments||—||(27||)||—||(43||)|
|Net unrealized depreciation on servicing assets||(360||)||(438||)||(969||)||(841||)|
|Net unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu of cash||—||(1||)||—||(1||)|
|Net realized and unrealized gains||8,610||9,453||16,608||16,437|
|Net increase in net assets||$||6,930||$||5,372||$||12,835||$||10,976|
|Net increase in net assets per share||$||0.40||$||0.37||$||0.76||$||0.76|
|Net investment loss per share||$||(0.10||)||$||(0.28||)||$||(0.22||)||$||(0.38||)|
|Dividends declared per common share||$||0.40||$||0.35||$||0.76||$||0.70|
|Weighted average shares outstanding||17,345||14,481||16,867||14,495|
|ADJUSTED NET INVESTMENT INCOME RECONCILIATION:|
(in thousands, except per share amounts)
|Three months ended ||Per share||Three months ended ||Per share|
|Net investment loss||$||(1,680||)||$||(0.10||)||$||(4,081||)||$||(0.28||)|
|Net realized gain on non-affiliate debt investments||8,914||0.51||7,534||0.52|
|Loss on lease||(74||)||(0.00||)||1,487||0.10|
|Adjusted Net investment income||$||7,160||$||0.41||$||4,940||$||0.34|
(in thousands, except per share amounts)
|Six months ended ||Per share||Six months ended ||Per share|
|Net investment loss||$||(3,773||)||$||(0.22||)||$||(5,461||)||$||(0.38||)|
|Net realized gain on non-affiliate debt investments||17,599||1.04||13,820||0.95|
|Loss on lease||(175||)||(0.01||)||1,487||0.10|
|Adjusted Net investment income||$||13,651||$||0.81||$||9,846||$||0.68|
|Note: Amounts may not foot due to rounding|
Investor Relations & Public Relations Contact:
Jayne CavuotoTelephone: (212) 273-8179 / email@example.com
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