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Newtek Business Services Earns $.11 in Q4
Three Key Operating Segments Profitable for Year
Highlights for 2006:
- Revenues from our three major operating segments (Electronic Payment
Processing, Web Hosting and SBA Lending) increased 23% to
$66.7 million dollars.
- Pretax Net Income from major operating segments increased 21% to
$7 million dollars.
- The company is cash flow positive ($1.8 million dollars) for the first
time since becoming a public company.
- CAPCO segments revenue decreased by 55% to $17 million dollars.
- Prepaid $7,000,000 of the $8,000,000 note payable to TICC which was
incurred in 2005 in conjunction with the purchase of CrystalTech Web
Hosting, Inc.
- Filed a patent covering the Newtracker™ referral system with the
United States Patent Office.
NEW YORK, March 22 /PRNewswire-FirstCall/ -- Newtek Business Services, Inc. (Nasdaq: NEWT) (www.newtekbusinessservices.com), a direct distributor to the small to medium sized business market announced today that is has reported earnings for the fourth quarter of 2006. Newtek reported revenues of $29.8 million, net income of $3.9 million and earnings of $.11 per share for the fourth quarter of 2006.
CEO and Chairman Barry Sloane said, "We are pleased with our annual results for 2006. For the first time in our company's history we are cash flow positive from operations. This marks an important step in our development as a platform for developing and marketing business services and financial products and services aimed at the small-and medium-sized business markets. Although we will continue to manage the CAPCO business and make additional qualified investments, we do not see any CAPCO's that the company will create or programs that it will participate in the foreseeable future. Our EBITDA from our three primary business segments has grown from $12.4 million dollars in 2005 to $15.2 million in 2006(1). This represents a 23% increase over 2005. Our revenues in Electronic Payment Processing and Web Hosting segments grew in excess of 27% per year from 2005 to 2006. We have business customer accounts in excess of 75,000 and are adding approximately 2,200 new clients every month."
Mr. Sloane continued: "We have $43 million in cash on our balance sheet as of 12/31/06 and have a book value per share of $2.45. 2007 will be a year to grow our company to scale so that we can become the entity that small to medium sized businesses come to for most of their business and financial service needs. We have forecasted our financial results for 2007 and included them in this release. We will discuss in our conference call today our transition away from the CAPCO model and provide a financial forecast of our operating businesses with a focus on cash flow from operations from our core operating businesses.
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, March 22, 2007.
The conference call will be accessible via a toll free number by dialing 1-866-383-8009 and providing the pass code 95154873. 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 75,000 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.
(1) The EBITDA calculation excludes interest on the General Electric debt
facility which finances SBA loans.
Contacts:
Newtek Business Services
Barry Sloane
Chairman of the Board & CEO
212-356-9500
bsloane@newtekbusinessservices.com
NEWTEK BUSINESS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
(In Thousands)
2006 2005 2004
Revenue:
Electronic payment
processing $43,341 $31,128 $18,131
Income from tax credits 15,607 36,669 33,565
Web hosting 13,535 10,627 4,428
Interest income 6,237 4,844 3,834
Premium income 3,023 4,409 4,533
Servicing fee 1,932 1,950 1,717
Insurance commissions 916 1,203 560
Other income 3,314 5,040 3,412
Total revenue 87,905 95,870 70,180
Expenses:
Electronic payment
processing costs 31,125 22,928 12,842
Consulting, payroll
and benefits 16,986 16,184 10,843
Interest 16,281 15,997 14,039
Professional fees 6,302 7,802 5,183
Depreciation and amortization 6,148 4,508 2,459
Insurance 3,316 3,117 2,818
Provision for loan losses 405 2,258 205
Goodwill impairment - 878 -
Other than temporary decline
in value of investments - 395 -
Other general and
administrative costs 10,986 8,626 5,599
Total expenses 91,549 82,693 53,988
(Loss) income from continuing
operations before minority
interest and benefit
(provision) for income tax (3,644) 13,177 16,192
Minority interest 435 792 890
(Loss) income from continuing
operations before benefit
(provision) for income taxes (3,209) 13,969 17,082
Benefit (provision) for
income taxes 581 (6,548) (6,467)
(Loss) income from
continuing operations (2,628) 7,421 10,615
Discontinued operations,
net of taxes (Note 3) 508 306 -
Net (loss) income $(2,120) $ 7,727 $10,615
Weighted average common
shares outstanding
Basic 34,875 34,241 30,068
Diluted 34,875 34,280 30,379
(Loss) income per share from
continuing operations before
discontinued operations
Basic and diluted $ (0.08) $0.22 $0.35
Income per share from
discontinued operations,
net of tax
Basic and diluted 0.02 0.01 -
Basic and diluted earnings
per share $ (0.06) $0.23 $0.35
NEWTEK BUSINESS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
(In Thousands, except for Per Share Data)
2006 2005
ASSETS
Cash and cash equivalents $ 26,685 $ 23,940
Restricted cash 11,275 20,067
Certificates of Deposit - 4,000
U.S. Treasury Notes 5,016 4,449
Marketable securities - 10,350
Asset held for sale 1,530 -
Credits in lieu of cash 106,425 109,475
SBA loans held for investment
(net of reserve for loan losses of
$2,332 and $2,304 respectively) 27,746 32,028
Accounts receivable (net of allowance
of $23 and $50, respectively) 1,568 2,109
SBA loans held for sale 1,786 1,155
Accrued interest receivable 519 416
Investments in qualified businesses --
cost method investments 542 150
Investments in qualified businesses --
held to maturity debt investments 5,301 3,596
Prepaid and structured insurance 17,497 20,323
Prepaid expenses and other assets
(net of accumulated amortization of
deferred financing costs of $832 and
$805, respectively) 7,682 7,036
Servicing asset (net of accumulated
amortization and allowances of $2,081 and
$952, respectively) 2,991 3,197
Fixed assets (net of accumulated
depreciation and amortization
of $4,065 and $2,302, respectively) 4,458 6,587
Intangible assets (net of accumulated
amortization of $5,919 and $3,460,
respectively) 9,141 6,697
Goodwill 10,575 9,438
Total assets $240,737 $265,013
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $8,509 $ 10,313
Notes payable 10,651 23,077
Bank notes payable 16,391 21,287
Deferred revenue 2,761 1,459
Notes payable in credits in lieu of cash 86,332 92,048
Deferred tax liability 24,428 24,271
Total liabilities 149,072 172,455
Minority interest 4,596 5,033
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 35,479 and 34,809 not including
583 shares held in escrow and 473 held
by an affiliate) 710 696
Additional paid-in capital 54,949 53,737
Unearned compensation - (492)
Retained earnings 31,464 33,584
Treasury stock, at cost (32 shares
in December 2006) (54) -
Total shareholders' equity 87,069 87,525
Total liabilities and
shareholders' equity $240,737 $265,013
2007 Segment Guidance First Quarter
(In millions of dollars except E.P.S. guidance)
Revenue Pretax Net Income EBITDA
Electronic Payment Processing 11.8-12.0 0.6-0.7 1.1-1.2
Web Hosting 3.8-3.9 0.8-0.9 1.6-1.7
SBA Lending 2.1-2.1 (0.4)-(0.3) 0.4-0.5
CAPCO 1.6-1.7 (4.0)-(4.0)
All Other 0.9-1.0 (0.9)-(0.8)
Corporate Activities 1.2-1.2 (1.5)-(1.5)
Interco Eliminations (1.1)-(1.1)
Total 20.3-20.8 (5.4)-(5.0)
2007 Segment Guidance Second Quarter
(In millions of dollars except E.P.S. guidance)
Revenue Pretax Net Income EBITDA
Electronic Payment Processing 12.9-13.0 0.7-0.8 1.2-1.3
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 1.2-1.3 (1.5)-(1.5)
Interco Eliminations (1.1)-(1.1)
Total 22.3-22.8 (4.6)-(4.2)
2007 Segment Guidance Third Quarter
(In millions of dollars except for E.P.S. guidance)
Revenue Pretax Net Income EBITDA
Electronic Payment Processing 13.8-13.9 0.8-0.9 1.2-1.3
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 23.1-23.6 (4.7)-(4.3)
2007 Segment Guidance Fourth Quarter
(In millions of dollars except E.P.S. guidance)
Revenue Pretax Net Income EBITDA
Electronic Payment Processing 14.9-15.0 0.9-1.0 1.3-1.4
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 24.8-25.3 (4.1)-(3.6)
2007 Annual Segment Guidance
(In millions of dollars except for E.P.S. guidance)
Revenue Pretax Net Income EBITDA
Electronic Payment Processing 53.4-53.9 3.0-3.4 4.8-5.2
Web Hosting 15.8-16.2 3.6-4.0 7.1-7.5
SBA Lending 10.3-10.5 0.0-0.5 3.5-4.0
CAPCO 6.4-6.8 (16.0)-(16.0)
All Other 4.2-4.6 (3.4)-(3.0)
Corporate Activities 4.8-4.9 (6.0)-(6.0)
Interco Eliminations (4.4)-(4.4)
Total 90.5-92.5 (18.8)-(17.1)
After Tax Net Income (11.8)-(10.8)
E.P.S Guidance (per share) (.33)-(.30)
NEWTEK BUSINESS SERVICES INC. AND SUBSIDIARIES
Cash Flows from operating activates by Segment - Estimated
For the year ended December 31, 2007 (In millions)
SBA Electronic Web All Corporate
Lending Payment Hosting Other Activities
Processing
Net Revenue $10.5 $53.9 $16.2 $4.6 $4.8
Total Expenses $10.0 $50.5 $12.2 $7.6 $10.8
Net Income $0.5 $2.0 $2.4 $ (1.8) $ (3.6)
Non Cash
Income From Tax Credits - - - - -
Depreciation and
Amortization $1.6 $1.8 $3.3 $0.3 $0.2
Accretion of
interest expense - - - - -
Deferred Income Taxes - $1.4 $1.6 $ (1.2) $ (2.4)
Provision for
loan losses $0.7 - - - -
Capitalization of
servicing assets $ (1.1) - - - -
Other Non Cash - net - - - - -
Change in assets
and liabilities
Proceeds from sale of
SBA loans over
originations - - - - -
Prepaid Insurance - - - - -
Other Net - - - $0.7 -
Net cash provided /
(used in) operations $1.7 $5.2 $7.3 $ (2.0) $ (5.8)
Total CAPCO Eliminations Total
Business
Services
Segment Segment
Net Revenue $90.0 $6.8 $ (4.4) $92.4
Total Expenses $91.1 $22.8 $ (4.4) $109.5
Net Income $ (0.5) $ (9.6) - $ (10.1)
Non Cash
Income From Tax Credits - $ (5.3) - $ (5.3)
Depreciation and
Amortization $7.2 $0.1 - $7.3
Accretion of
interest expense - $11.8 - $11.8
Deferred Income
Taxes $ (0.6) $ (6.4) - $(7.0)
Provision for
loan losses $0.7 - - $0.7
Capitalization of
servicing assets $(1.1) - - $(1.1)
Other Non Cash - net - - - -
Change in assets
and liabilities
Proceeds from sale
of SBA loans
over originations - - - -
Prepaid Insurance - $3.0 - $3.0
Other Net $0.7 - - $0.7
Net cash provided /
(used in) operations $6.4 $(6.4) - $0.0
SOURCE Newtek Business Services, Inc.
-0- 03/22/2007
/CONTACT: Barry Sloane, Chairman of the Board & CEO of Newtek Business
Services, Inc., +1-212-356-9500, or bsloane@newtekbusinessservices.com /
/Web site: http://www.newtekbusinessservices.com /
(NEWT)
CO: Newtek Business Services, Inc.
ST: New York
IN: FIN
SU: ERN CCA
BE-FB
-- CLTH274 --
2140 03/22/2007 16:42 EDT http://www.prnewswire.com
