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Newtek Business Services Reports Third Quarter 2009 Net Income of $782 Thousand, or $0.02 Per Share
NEW YORK, Nov 11, 2009 (GlobeNewswire via COMTEX News Network) -- Newtek Business Services, Inc. (Nasdaq:NEWT) (www.newtekbusinessservices.com), a provider of business services and financial products to the small- and medium-sized business market, reported today its financial results for the three and nine months ended September 30, 2009.
Third Quarter 2009 Overview
-- The Company had net income in the third quarter of $782 thousand;
an increase of $3.5 million over the same period last year.
-- The Company is revising its full year 2009 guidance based on
improved operating performance to revenues of between $103.5
million and $104.1 million, and a pretax loss of between $(5.1)
million and $(4.7) million, an improvement from its original
guidance of a pretax loss of between $(7.4) million to $(5.2)
million.
-- Pretax net loss decreased by $1.7 million or 61% to $(1.1)
million for the third quarter of 2009 from $(2.8) million for the
third quarter of 2008 due to our cost cutting efforts and
increased revenues.
-- Total revenue for the Electronic payment processing segment for
the quarter increased by 13% over the third quarter of 2008.
-- Total revenue for the Web hosting segment for the quarter
increased by 3% over the third quarter of 2008.
-- The Company signed a contract with the FDIC to service SBA loans.
-- Louisiana and Wisconsin Capco notes were paid in full by AISLIC
as scheduled.
-- 2010 guidance of consolidated pretax net income (loss) for the
Company is expected to be between $(2.4) million and $2.3
million.
Barry Sloane, Chairman and Chief Executive Officer of Newtek Business Services, Inc., said, "This has been a remarkable quarter for Newtek. It is ironic that as the economic downturn continues to wreak havoc on businesses across the country and globally, we have delivered steady results with improved cash flow and are positioned in the right businesses at the right time with little or no leverage. Our growth in electronic payment processing and web hosting revenues continues. Our expense reductions have provided steady increases in cash flow for our holding company needs. Our lending business is again originating but at vastly improved market pricing and we forecast a materially reduced loss in Q4 2009 from our Small business finance segment; new contracted servicing opportunities will improve our Small business finance segment income and cash flow in 2010. We have improved our guidance for 2009 results to an expected pretax loss range of $(5.1) million to $(4.7) million and have offered guidance for 2010 which gives us a range from $(2.4) million to $2.3 million in pretax income (loss). Since 2007 when we had a pretax loss of $(17.1) million, giving mid guidance of breakeven for 2010 we feel is quite an accomplishment and we look forward to the future reported performance."
Third Quarter 2009 Financial Results
For the three months ended September 30, 2009, the Company had a loss before income taxes of $(1.1) million, compared to a loss before income taxes of $(2.8) million, for the same period last year. For the nine months ended September 30, 2009, the Company had a loss before income taxes of ($4.0) million, compared to ($9.5) million for the same period one year ago.
The Company had net income of $782 thousand, or $0.02 per share, in the third quarter of 2009, compared to a net loss of $(2.7) million, or $(0.08) per share, in the third quarter of 2008. For the nine months ended September 30, 2009, the Company had a net loss of ($831) thousand, or ($0.02) per share, compared to ($7.4) million, or ($0.21) per share, for the same period one year ago.
For the three months ended September 30, 2009, total revenue increased by $2.6 million, or 11%, to $26.8 million compared to $24.2 million one year ago. Total revenue from the three core business services segments (electronic payment processing, web hosting and small business finance) increased to $24.3 million, or 10%, in the third quarter of 2009 compared with $22.2 million in the third quarter of 2008. These three segments represented approximately 89% and 91% of total revenue in 2009 and 2008, respectively.
Revised Outlook for 2009
The Company is revising its 2009 consolidated revenues to be between $103.5 million to $104.1 million and a loss before income taxes of between $(5.1) million and $(4.7) million. Annual guidance by segment for revenue, income (loss) before income taxes, and EBITDA will be provided in the conference call presentation today Wednesday, November 11, 2009 at 4:15 p.m. ET and will be available in the 'Events & Presentation' section of the Investor Relations portion of Newtek's website at www.newtekbusinessservices.com.
Outlook for 2010
The Company expects 2010 consolidated revenues to be between $110.2 million and $115.8 million. In 2010, it expects income (loss) before income taxes of between ($2.4) million and $2.3 million. Annual guidance by segment for revenue, income (loss) before income taxes, and EBITDA will be provided in the conference call presentation today Wednesday, November 11, 2009 at 4:15 p.m. ET and will be available in the 'Events & Presentation' section of the Investor Relations portion of Newtek's website at www.newtekbusinessservices.com.
Cautionary Statement
2009 and 2010 Guidance information contained in this press release is based on management's current expectations. These statements are forward looking and actual results may differ materially. See "Note Regarding Forward-Looking Statements" below.
Use of 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 review and assess its operating performance. The Company also presents EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.
The term EBITDA is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income (loss), operating performance or liquidity presented in accordance with U.S. GAAP. EBITDA has limitations as an analytical tool and, when assessing the Company's operating performance, investors should not consider EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, EBITDA does not reflect the Company's actual cash expenditures. Other companies may calculate similar measures differently than Newtek, limiting their usefulness as comparative tools. Newtek compensates for these limitations by relying primarily on its GAAP results supplemented by EBITDA.
Third Quarter 2009 Conference Call and Webcast
A conference call to discuss these results will be hosted by Barry Sloane, Chairman and Chief Executive Officer, and Seth Cohen, Chief Financial Officer, today Wednesday, November 11, 2009 at 4:15 p.m. ET. The live conference call can be accessed by dialing (866) 816-1982 (domestic) or (913) 312-0658 (international).
A live audio webcast of the call and the corresponding presentation will be available in the 'Events & Presentation' section of the Investor Relations portion of Newtek's website at www.newtekbusinessservices.com. A replay of the webcast with the corresponding presentation will be available on Newtek's website shortly following the live presentation. The telephone replay can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international), and using the replay passcode 9819224. Both web-based and telephonic replays will be available through midnight November 17, 2009.
About Newtek Business Services, Inc.
Newtek Business Services, Inc. is a direct distributor of a wide range of business services and financial products to the small- and medium-sized business market under the Newtek(TM) brand. Since 1999, Newtek has helped small- and medium-sized business owners realize their potential by providing them with the essential tools needed to manage and grow their businesses and to compete effectively in today's marketplace. Newtek provides one or more of its services to over 100,000 business accounts and has positioned the Newtek(TM) brand as a one-stop-shop provider of such business services. According to the U.S. Small Business Administration, there are over 29.6 million small businesses in the United States, which in total represent 99.7% of all employer firms.
Newtek's business service lines include:
-- Electronic Payment Processing: Electronic solutions to accept
non-cash payments, including credit and debit cards, check
conversion, remote deposit capture, ACH processing, and
electronic gift and loyalty card programs.
-- Web Hosting: Full-service web host which offers shared and
dedicated web hosting and related services including domain
registration and online shopping cart tools.
-- Business Lending: Broad array of lending products including SBA
7(a), conventional commercial real estate and SBA 504 loans,
business lines of credit, and business credit cards.
-- Insurance Services: Commercial and personal lines of insurance,
including health and employee benefits in all 50 states, working
with over 40 insurance carriers.
-- Web Services: Customized web design and development services.
-- Data Backup, Storage and Retrieval: Fast, secure, off-site data
backup, storage and retrieval designed to meet the specific
regulatory and compliance needs of any business.
-- Accounts Receivable Financing: Receivable purchasing and
financing services.
-- Payroll: Complete payroll management and processing services.
Note Regarding Forward-Looking Statements
Statements in this press release including statements regarding 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-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 Securities and Exchange Commission and available through http://www.sec.gov.
For more information, please visit www.newtekbusinessservices.com.
NEWTEK BUSINESS SERVICES, INC. AND SUBSIDIARIES
-----------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
----------------------------------------------------------
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
---------------------------------------------------------------
(In Thousands, except for Per Share Data)
---------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Operating revenues $ 26,812 $ 24,243 $ 78,010 $ 72,393
--------- --------- --------- ---------
Operating expenses:
Electronic payment
processing costs 15,370 13,075 42,424 38,224
Salaries and
benefits 4,410 5,052 13,717 17,616
Interest 2,668 2,333 8,790 6,816
Depreciation and
amortization 1,313 1,772 4,532 5,348
Provision for loan
losses 387 711 1,320 1,622
Other general and
administrative
costs 3,797 4,026 12,223 12,218
--------- --------- --------- ---------
Total operating
expenses 27,945 26,969 83,006 81,844
--------- --------- --------- ---------
Operating loss
before fair market
value adjustment
and benefit
(provision) for
income taxes (1,133) (2,726) (4,996) (9,451)
Net change in fair
market value of
credits in lieu
of cash and notes
payable in credits
in lieu of cash 34 (74) 1,044 (13)
--------- --------- --------- ---------
Loss before benefit
(provision) for
income taxes (1,099) (2,800) (3,952) (9,464)
Benefit (provision)
for income taxes 1,244 (56) 2,389 1,706
--------- --------- --------- ---------
Net income (loss) 145 (2,856) (1,563) (7,758)
Net loss
attributable to
noncontrolling
interests 637 109 732 335
--------- --------- --------- ---------
Net income (loss)
attributable to
Newtek Business
Services, Inc. $ 782 $ (2,747) $ (831) $ (7,423)
========= ========= ========= =========
Weighted average
common shares
outstanding - basic 35,631 35,628 35,625 35,771
--------- --------- --------- ---------
Weighted average
common shares
outstanding -
diluted 35,756 35,628 35,625 35,771
--------- --------- --------- ---------
Earnings (loss)
per share - basic
and diluted $ 0.02 $ (0.08) $ (0.02) $ (0.21)
========= ========= ========= =========
NEWTEK BUSINESS SERVICES, INC. AND SUBSIDIARIES
-----------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
----------------------------------------
(In Thousands, except for Per Share Data)
---------------------------------------
Sept. 30, Dec. 31,
2009 2008
---- ----
ASSETS
------
Cash and cash equivalents $ 15,572 $ 16,852
Restricted cash 8,548 8,366
Credits in lieu of cash 53,230 70,559
SBA loans held for investment (net of
reserve for loan losses of $4,014 and
$3,420, respectively) 23,408 26,912
Accounts receivable (net of allowance
of $563 and $192, respectively) 5,524 5,175
SBA loans held for sale -- 6,133
Prepaid expenses and other assets
(net of accumulated amortization of
deferred financing costs of $2,423
and $2,122, respectively) 9,966 9,998
Servicing asset (net of accumulated
amortization and allowances of $4,351
and $3,756, respectively) 2,422 2,282
Fixed assets (net of accumulated
depreciation and amortization of
$11,591 and $9,477, respectively) 3,861 5,062
Intangible assets (net of accumulated
amortization of $13,840 and $12,113,
respectively) 4,649 6,096
Goodwill 12,092 12,092
------------------------
Total assets $ 139,272 $ 169,527
========================
LIABILITIES AND EQUITY
----------------------
Liabilities:
------------
Accounts payable and accrued expenses $ 8,841 $ 9,344
Notes payable 16,801 25,998
Deferred revenue 1,964 2,203
Notes payable in credits in lieu of
cash 53,230 70,559
Deferred tax liability 3,833 5,344
------------------------
Total liabilities 84,669 113,448
------------------------
Commitments and contingencies
Equity:
------
Newtek Business Services, Inc.
stockholders' equity:
Preferred stock (par value $0.02 per
share; authorized 1,000 shares, no
shares issued and outstanding) -- --
Common stock (par value $0.02 per
share; authorized 54,000 shares,
36,657 and 36,667 issued,
respectively; 35,631 and 35,649
outstanding, respectively, not
including 97 and 394 shares held in
escrow, respectively) 733 733
Additional paid-in capital 58,324 58,232
Accumulated deficit (5,377) (4,545)
Treasury stock, at cost (1,026 shares) (649) (649)
------------------------
Total Newtek Business Services, Inc.
stockholders' equity 53,031 53,771
Noncontrolling interests 1,572 2,308
------------------------
Total equity 54,603 56,079
------------------------
Total liabilities and equity $ 139,272 $ 169,527
========================
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Newtek Business Services Inc.
CONTACT: Newtek Business Services, Inc. Barry Sloane, Chairman and CEO 212-356-9500 bsloane@newtekbusinessservices.com
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