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Newtek Reports 43% Increase In First Quarter 2013 Net Income

Today, Newtek reported its financial results for the quarter ended March 31, 2013.

First Quarter 2013 Consolidated Highlights:

  • Consolidated pretax income was $2.2 million; an increase of $569 thousand, or 34.8%, from $1.6 million in the first quarter of 2012.
  • Net income attributable to Newtek Business Services, Inc. was $1.5 million; an increase of $433 thousand, or 42.5%, from $1.0 million in the first quarter of 2012.
  • Modified EBITDA was $4.4 million; an increase of $1.3 million, or 41.9%, from $3.1 million in the first quarter of 2012.
  • Diluted earnings per share (“EPS”) were $0.04, a 33.3% increase over $0.03 per share in the first quarter of 2012.
  • Operating revenues were $34.1 million; an increase of $3.4 million, or 11.1%, from $30.7 million in the first quarter of 2012.

First Quarter 2013 Operating Segment Highlights:

  • Small business finance segment pretax income was $2.2 million, an increase of 48.4% from $1.5 million in the first quarter of 2012.
  • Servicing fee income generated through the Small business finance segment grew 35.0% to $1.5 million, compared to $1.1 million in the first quarter of 2012.
  • Our SBA lender funded $34.8 million in loans during the first quarter of 2013, an increase of 42.2% over $24.5 million in the first quarter of 2012.
  • Electronic payment processing segment pretax income was $1.8 million, an increase of 15.1% over $1.6 million in the first quarter of 2012.

Reaffirmation of 2013 Guidance:

  • Consolidated 2013 full-year guidance:
    • Diluted EPS midpoint is forecast at $0.18 per share, with a range of $0.17 and $0.19, which represents an increase of 20.0% over 2012 diluted EPS.
    • Revenue midpoint is forecast at $148.2 million, with a range of $145.1 million and $151.2 million, which represents an increase of 12.1% over 2012 revenue.
    • Pretax income midpoint is forecast at $11.5 million, with a range of $10.0 million and $13.0 million, which represents an increase of 22.3% over 2012 pretax income.
    • Modified EBITDA midpoint is forecast at $20.9 million, with a range of $19.3 million and $22.4 million, which represents an increase of 26.7% over 2012 Modified EBITDA.
  • The Company expects to fund between $150 million and $200 million of SBA 7(a) loans in 2013.

Barry Sloane, Chairman, President and Chief Executive Officer said, “Our solid first quarter financial results are a precursor to our future success, bringing us one step closer to reporting our fourth consecutive year of growth and accelerating net income.  As a result, we are pleased to reaffirm our previous 2013 guidance including a 20% growth in diluted earnings per share over last year.”

Mr. Sloane commented, “Over the past several quarters, we have taken steps to reposition our Managed Technology Solutions segment for future growth. In an effort to capture additional market opportunities, we recently upgraded all of our Linux-based platforms, which broaden our capabilities and, we believe, will attract additional customers.  Linux-based platforms and open-architecture software is currently the dominant choice in the market and is experiencing robust growth.  Although we pride ourselves in our Microsoft roots, under new leadership we have responded to the shift in this market and now offer our signature competitive product mix with historic premier service under Linux- and cloud-based service offerings.  Furthermore, we are focused on expanding our revenues and margins through higher-service offerings to our customers.  As a result of these measures, we are proud to report positive trends in this segment during the first quarter, including an over 125 percent increase in new Linux accounts within our cloud environment.  Additionally, we experienced a 34 percent increase in cloud accounts, and a 17 percent increase in our cloud-computing instances, signifying growth of our cloud environment.  Finally, we have also seen a 25 percent increase in total referrals in this segment with a 32 percent increase in closed referrals over the first quarter of 2012.”

Mr. Sloane continued, “We look forward to further improving the overall growth in our Electronic Payment Processing segment.  Under the direction of our recently hired Executive Vice President of Business Development, Randy Sagar, and his team in Louisville, Kentucky, we anticipate a significant uptick in contracts with Independent Sales Organizations (ISOs) in this segment. We are currently projecting to close between 30 and 50 contracts with multiple ISOs by December 31, 2013, which will significantly boost revenue in this segment in the second half of 2013.”

Mr. Sloane concluded, “All of our business lines are well positioned for growth and offer the best product mix to meet the current demands and trends in the small- to medium-sized business market.   We continue to satisfy the diverse needs of the independent business owner.  Whether it’s cloud-computing solutions, secure mobile electronic payments, or financing, Newtek offers the best business solutions, consistently evidenced by our top and bottom line growth.  The small- to medium-sized business market is an economic force, and our Small Business Authority® brand is becoming the leading choice for independent business owners seeking state-of-the-art solutions and financing to foster their own success in the market.  We will continue to capitalize on the opportunities the market has to offer and, as such, anticipate delivering improving results to our shareholders as well as unlocking the value in our share price.”

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