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Newtek Business Services Reports First Quarter 2007
Total consolidated revenues were $21.8 million which was higher than previously given guidance of $20.3 - $20.8 million. The Company outperformed (or met) previous guidance of revenues, pretax net income and EBITDA across its Electronic Payment Processing, Web Hosting, and Small Business Lending operating segments. Our losses from the CAPCO segment as reported were $3.5 million, most of which is a non-cash expense. As previously reported, these losses from the CAPCO segment will continue to decline over time. The company has increased its guidance in the Electronic Payment Processing segment to revenues of $55.4 to $56.0 million, pretax net income of $3.5 to $3.9 million and EBITDA of $5.3 to $5.6 million. This is an improvement of $2.0 to $2.1 million in revenues and $.5 million in pretax net income and EBITDA.
CEO and Chairman Barry Sloane said, "We are very pleased that the company was able to outperform previously established company guidance in its three key operating segments. Our revenues continue to grow and we are confident that reinvesting our cash flow and resources in our business model will provide anticipated attractive returns. We continue to significantly improve our guidance and performance in the electronic payment processing space and are increasing our guidance by $500,000 in pretax income for 2007. Our Web Hosting business is positioning itself for long term sustainable growth and increased its pretax income annual guidance for 2007 by $150,000. Our small business lending unit is also increasing its pretax income annual guidance by $350,000. We will discuss on our call today our operations and our execution and implementation plan to grow our company for many years to come."
Newtek has posted a PowerPoint presentation on its website, www.newtekbusinessservices.com which will help investors follow along at the shareholder conference call scheduled for 4:15 p.m. today, May 9, 2007.
The conference call will be accessible via a toll free number by dialing 1-866-638-5495 and providing the pass code 37269931. Listeners are encouraged to ask any questions that they may have during the call. The conference call will also be broadcast over the internet through Newtek's website at www.newtekbusinessservices.com. To listen to the call live, please go to Newtek's website approximately 15 minutes prior to the call to download any audio software which may be necessary. For those who miss the live broadcast, a replay will be available on the website approximately one hour after the call. The online archive of the web cast will be available for ninety days following the call.
About Newtek Business Services, Inc.
Newtek Business Services, Inc. is a direct distributor to the small to medium-sized business market under the Newtek TM brand. According to the U.S. Small Business Administration, there are over 25.8 million small businesses in the United States, which in total represent 99.7% of all employer firms, generate 60 - 80% of all new jobs annually and create more than 50% of non- farm private GDP. Since 1999, Newtek has helped these business owners realize their potential by providing them with the essential tools needed to manage and grow their businesses. Newtek focuses on providing its 78,000 business accounts with access to financial, management and technological resources that enable them to better grow and compete in today's marketplace. Newtek's products and services include:
-- 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 personal lines of
insurance
-- Outsourced Digital Bookkeeping: Bookkeeping and recordkeeping at a
fraction of the cost of in-house staff
-- Web Hosting: Full service web host including domain registration and
online shopping cart tools
-- Web Design and Development: Customized web design and development
services for a powerful web presence
-- Tax Preparation and Advisory Services: Expert tax planning and
consultation for your business
-- Data Backup, Storage and Retrieval: Fast, secure, off-site data
backup, storage and retrieval
-- Business Plan Preparation: Professional business plan assistance
providing a roadmap for success
-- Payroll: Payroll management processing and employee tax filing
For more information, go to www.newtekbusinessservices.com.
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.
Contacts:
Newtek Business Services
Barry Sloane
Chairman of the Board & CEO
212-356-9500
bsloane@newtekbusinessservices.com
2007 First Quarter - Actual Results
(In millions of dollars)
Pretax Net Income
Revenue (Loss) EBITDA
Electronic Payment Processing 12.6 0.8 1.3
Web Hosting 3.9 1.0 1.8
SBA Lending 2.3 0.0 0.8
CAPCO 1.6 (3.5)
All Other 1.5 (0.4)
Corporate Activities 1.1 (2.0)
Interco Eliminations (1.2)
Total 21.8 (4.1)
2007 Segment Guidance Second Quarter
(In millions of dollars)
Pretax Net Income
Revenue (Loss) EBITDA
Electronic Payment Processing 13.3 - 13.5 0.8 - 0.9 1.3 - 1.4
Web Hosting 3.9 - 4.0 0.9 - 1.0 1.8 - 1.9
SBA Lending 2.8 - 2.8 0.2 - 0.3 1.1 - 1.2
CAPCO 1.6 - 1.7 (4.0) - (4.0)
All Other 1.0 - 1.1 (0.9) - (0.8)
Corporate Activities 1.2 - 1.2 (1.5) - (1.5)
Interco Eliminations (1.1) - (1.1)
Total 22.7 - 23.2 (4.5) - (4.1)
2007 Segment Guidance Third Quarter
(In millions of dollars)
Pretax Net Income
Revenue (Loss) EBITDA
Electronic Payment Processing 14.1 - 14.3 0.9 - 1.0 1.3 - 1.4
Web Hosting 4.0 - 4.1 0.9 - 1.0 1.8 - 1.9
SBA Lending 2.5 - 2.6 (0.1) - 0.0 0.8 - 0.9
CAPCO 1.6 - 1.7 (4.0) - (4.0)
All Other 1.1 - 1.2 (0.8) - (0.7)
Corporate Activities 1.2 - 1.2 (1.5) - (1.5)
Interco Eliminations (1.1) - (1.1)
Total 23.4 - 24.0 (4.6 ) - (4.2)
2007 Segment Guidance Fourth Quarter
(In millions of dollars)
Pretax Net Income
Revenue (Loss) EBITDA
Electronic Payment Processing 15.4 - 15.6 1.0 - 1.1 1.4 - 1.5
Web Hosting 4.1 - 4.2 1.0 - 1.1 1.9 - 2.0
SBA Lending 2.9 - 3.0 0.3 - 0.5 1.2 - 1.4
CAPCO 1.6 - 1.7 (4.0) - (4.0)
All Other 1.2 - 1.3 (0.8) - (0.7)
Corporate Activities 1.2 - 1.2 (1.5) - (1.5)
Interco Eliminations (1.1) - (1.1)
Total 25.3 - 25.9 (4.0) - (3.4)
2007 Annual Segment Guidance
(In millions of dollars)
Pretax Net Income
Revenue (Loss) EBITDA
Electronic Payment Processing 55.4 - 56.0 3.5 - 3.9 5.3 - 5.6
Web Hosting 15.9 - 16.2 3.8 - 4.1 7.3 - 7.6
SBA Lending 10.5 - 10.7 0.4 - 0.8 3.9 - 4.3
CAPCO 6.4 - 6.7 (15.5) - (15.5)
All Other 4.8 - 5.1 (2.9) - (2.6)
Corporate Activities 4.7 - 4.7 (6.5) - (6.5)
Interco Eliminations (4.5) - (4.5)
Total 93.2 - 94.9 (17.2) - (15.8)
NEWTEK BUSINESS SERVICES, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(In Thousands, except for Per Share Data)
2007 2006
Revenue:
Electronic payment processing $12,517 $9,432
Web hosting 3,877 3,164
Interest income 1,492 1,413
Income from tax credits 1,301 1,258
Premium income 716 614
Servicing fee 444 499
Insurance commissions 238 244
Other income 1,224 522
Total revenue 21,809 17,146
Expenses:
Electronic payment processing costs 8,970 6,907
Consulting, payroll and benefits 5,513 4,046
Interest 3,722 4,308
Professional fees 1,819 2,054
Depreciation and amortization 1,728 1,355
Insurance 813 863
Provision for loan losses 167 119
Other general and administrative costs 3,267 2,359
Total expenses 25,999 22,011
Loss from continuing operations before
minority interest, benefit for income taxes,
and discontinued operations (4,190) (4,865)
Minority interest 124 233
Loss from continuing operations before
benefit for income taxes and
discontinued operations (4,066) (4,632)
Benefit for income taxes 1,372 1,607
Loss from continuing operations before
discontinued operations (2,694) (3,025)
Discontinued operations, net of taxes (205) 297
Net loss $(2,899) $(2,728)
Weighted average common shares outstanding:
Basic 35,651 34,834
Diluted 35,815 34,834
Loss per share from continuing operations:
Basic and diluted $(0.07) $(0.09)
(Loss) income per share from discontinued
operations, net of taxes:
Basic and diluted (0.01) 0.01
Basic and diluted loss per share $(0.08) $(0.08)
NEWTEK BUSINESS SERVICES, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2007 AND DECEMBER 31, 2006
(In Thousands, except for Per Share Data)
March 31, December 31,
2007 2006
Unaudited (Note 1)
ASSETS
Cash and cash equivalents $29,866 $26,685
Restricted cash 8,576 11,275
U.S. Treasury notes 4,684 5,016
Asset held for sale - 1,530
Credits in lieu of cash 103,898 106,425
SBA loans receivable (net of reserve for loan
losses of $2,448 and $2,332, respectively) 28,609 27,746
Accounts receivable (net of allowance of
$275 and $23, respectively) 5,935 1,568
SBA loans held for sale 4,308 1,786
Accrued interest receivable 531 519
Investments in qualified businesses -
cost method investments 523 542
Investments in qualified businesses -
held to maturity debt investments 2,699 5,301
Prepaid and structured insurance 16,807 17,497
Prepaid expenses and other assets
(net of accumulated amortization of deferred
financing costs of $999 and $832, respectively) 6,101 7,682
Servicing assets (net of accumulated
amortization and allowances of $2,318 and
$2,081, respectively) 3,110 2,991
Fixed assets (net of accumulated depreciation
and amortization of $4,661 and
$4,065, respectively) 4,630 4,458
Intangible assets (net of accumulated
amortization of $6,603 and
$5,919, respectively) 8,577 9,141
Goodwill 12,323 10,575
Total assets $241,177 $240,737
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $9,646 $8,509
Notes payable 11,453 10,651
Bank notes payable 20,556 16,391
Deferred revenue 2,046 2,761
Notes payable in credits in lieu of cash 85,556 86,332
Deferred tax liability 22,839 24,428
Total liabilities 152,096 149,072
Minority interest 4,152 4,596
Commitments and contingencies
Shareholders' 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, issued and
outstanding 34,856 and 34,809 not
including 583 shares held in escrow) 717 710
Additional paid-in capital 55,701 54,949
Retained earnings 28,565 31,464
Treasury stock, at cost (32 shares
at March 31, 2007) (54) (54)
Total shareholders' equity 84,929 87,069
Total liabilities and
shareholders' equity $241,177 $240,737
SOURCE Newtek Business Services, Inc.
Barry Sloane, Chairman of the Board & CEO of Newtek Business Services, +1-212-356-9500, or bsloane@newtekbusinessservices.com
http://www.newtekbusinessservices.com/
