NEW YORK, Nov. 3, 2015 /PRNewswire/ -- Newtek Business
Services Corp. ("Newtek" or the "Company"), (NASDAQ: NEWT), an
internally managed business development company ("BDC"), announced
today its financial results for the three and nine months ended
September 30, 2015.
Third Quarter 2015 Highlights:
- Adjusted net investment income1 for the three and
nine months ended September 30, 2015
was $5.1 million, or $0.50 per share, and $15.4
million, or $1.50 per share,
respectively.
- Net asset value ("NAV") was $174.7
million, or $16.88 per share,
at September 30, 2015 compared with
NAV of $166.4 million, or
$16.31 per share, at December 31, 2014.
- The Company's Board of Directors adjusted NAV to $135.6 million, or $13.10 per share, on October 1, 2015 as a result of the declaration of
the $34.0 million special
dividend.
- Funded $64.2 million of SBA 7(a)
loans in the third quarter of 2015; an increase of 32.0% over the
third quarter of 2014.
- Reaffirm loan funding forecast of between $230 million and $270 million of SBA 7(a) loans
in 2015, which represents an approximate 23.6% increase over
2014.
- At September 30, 2015 the
Company's:
- Total investment portfolio was $249.1
million.
- Debt-to-equity ratio was approximately 84.3%.
- Completed sixth securitization of $40.8
million of Standard and Poor's AA rated Unguaranteed SBA
7(a) Loan-Backed Notes, the Company's largest securitization to
date. The Notes were priced and sold to investors at a yield of
2.5%, which represents an approximate 100 basis point improvement
in the overall yield since the Company's last securitization.
- Completed public offering of $8.3
million in aggregate principal amount of 7.5% Notes due
2022. The Notes trade on the Nasdaq Global Market under the trading
symbol "NEWTZ."
- On October 15, 2015, the Company
closed an underwritten offering of 2.3 million shares of common
stock at a public offering price of $16.50 per share for total gross proceeds of
approximately $38.0 million.
Portfolio Company Highlights:
- Acquired Premier Payments LLC, one of the nation's leading
electronic payment processors with forecasted 2015 double-digit
revenue and EBITDA year-over-year percentage growth, for
approximately $16.5 million in cash
and newly issued restricted shares of Newtek Common Stock.
Dividend Distributions:
- On November 3, 2015, the Company
paid its third quarterly cash dividend of $0.50 per share.
- Through November 3, 2015, the
Company has paid a total of $1.36 per
share in cash dividends, which represents approximately 91% of
adjusted net investment income1 of $1.50 per share for the nine months ended
September 30, 2015.
- On October 15, 2015, the Company
increased its forecast for its annual dividend for 2015, and
currently expects to pay approximately $20.9
million, or $1.822 per share (based on 12.6
million shares of common stock currently outstanding; does not
include the yet-to-be determined number of shares to be issued on
December 31, 2015 in connection with
the special dividend), which represents an approximate
$2.3 million increase in the
anticipated full year 2015 dividend payments compared to the
previous forecast of $18.6 million,
or $1.822 per share (based
on the 10.3 million shares outstanding at time of forecast).
- On October 1, 2015, the Company's
Board declared a special dividend of approximately $34.0 million, payable on December 31, 2015 to common shareholders of
record as of November 18, 2015, in
the amount of $2.69 per share based
on 12.6 million shares of common stock outstanding (as adjusted for
the October 15 closing of the 2.3
million share common stock offering).
The Company's Board of Directors expects to maintain a dividend
policy with the objective of distributing quarterly distributions
in an amount that approximates at least 90% to 98% 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.
1Adjusted net
investment income (loss) = Net investment income (loss) + Net
realized gains.
2Amount and timing of dividends, if any, remain subject
to the discretion of The Company's board of directors.
Barry Sloane, Chairman, President
and Chief Executive Officer commented, "We are proud of our
continued solid performance this quarter. Our financial
results for the third quarter of 2015, with adjusted net investment
income of $0.50 per share, continue
to be indicative of the execution of our strategy. We
continue to consistently return these earnings to our shareholders
and, through today, have paid a total of $1.36 per share in cash dividends in 2015, which
equates to approximately 91% of our adjusted net investment income
of $1.50 per share for the nine
months ended September 30,
2015. We recently increased our forecast for our 2015 annual
cash dividend, and currently expect to pay a total of approximately
$20.9 million, or $1.82 per share, based on the current
outstanding share count of 12.6 million shares. This revised
guidance represents an overall approximate $2.3 million increase compared to the previously
issued full year 2015 dividend forecast."
Mr. Sloane continued, "We are pleased that the market has taken
notice of and participated in our continued success. Our
stock has performed well and, in fact, over the last 12 months,
including dividends and appreciation, our stock price has realized
an approximate 29% return. We continue to prove our ability to
access the capital markets and were able to successfully complete
both a public debt offering of 7.5% Notes, and a public equity
offering of a 2.3 million shares, raising capital to invest in the
continued growth of our business. In addition, we further
broadened our institutional shareholder base and obtained
additional research coverage from Compass Point Research &
Trading, LLC and Raymond James and
Associates, Inc. Newtek currently has five independent
research analysts covering the Company, compared to one independent
research analyst covering the Company one year ago.
Furthermore, we completed our sixth and largest
securitization to date of $40.8
million, securing a 100 basis point improvement in the
overall yield since the Company's last securitization. We
believe the above-mentioned accomplishments are all testament to
the market's confidence in our ability to execute on our strategy
to continue to expand our business and deliver attractive returns
to our shareholder base."
Mr. Sloane added, "We continued to build and expand our business
services footprint as well as added new products to further broaden
our existing product lines. We announced last quarter that we
acquired Premier Payments LLC, one of the leading electronic
payment processors in the nation, as a wholly owned portfolio
company, for approximately 6x 2015 forecasted EBITDA. As
expected, this acquisition has been accretive to our third quarter
of 2015 earnings as Premier Payments recorded a close to 20% pro
forma increase in revenue during the third quarter of 2015 over the
same period last year. We expect to continue to look for
opportunities in the market as we expand our presence in the
business services arena. In November
2015, one of our portfolio companies is expected to close
its first SBA 504 loan, leveraging our 12-year experience in the
SBA loan market. We are excited about the opportunities in
this particular lending market as we believe that sales of these
loans can yield attractive returns on investment of approximately
40%, and we expect will complement our flourishing SBA 7(a) loan
business, which is currently on track to fund between $230 million and $270 million of SBA 7(a) loans
in 2015, an approximate 23.6% increase over 2014. We expect
our portfolio companies to continue the expansion of the SBA
504 program, as well as the accounts receivable and inventory
financing businesses, as part of our strategy of building on our
portfolio companies' existing product lines to maximize our overall
profitability."
Mr. Sloane concluded, "As our one-year anniversary of converting
to a BDC approaches on November 12,
2015, we believe we have accomplished all of our near-term
goals and strategically positioned the Company to effectuate its
long-term strategy of delivering continued growth,
profitability and market performance. We look forward
to continuing on this path and appreciate the market's confidence
in our ability to achieve continued success."
Investor Conference Call and Webcast
A conference call to discuss the third quarter 2015 results will
be hosted by Barry Sloane, Chairman,
President and Chief Executive Officer, and Jennifer Eddelson,
Executive Vice President and Chief Accounting Officer, tomorrow,
Wednesday, November 4, 2015 at
8:30 a.m. ET. The live
conference call can be accessed by dialing (877) 303-6993 or (760)
666-3611.
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.
Use of Non-GAAP Financial Measures
In evaluating its business, Newtek considers and uses adjusted
net investment income as a measure of its operating
performance. Adjusted net investment income includes
short-term capital gains from the sale of the guaranteed portions
of SBA 7(a) loans, which is a reoccurring event. The Company
defines Adjusted net investment income (loss) as Net investment
income (loss) plus Net realized gains (losses).
The Company defines Adjusted EBITDA as earnings before, interest
expense, taxes, depreciation and amortization, corporate overhead
allocation, unrealized gains and losses and stock compensation
expense. Newtek uses Adjusted EBITDA as a supplemental
measure to review and assess the operating performance of its
portfolio companies. The Company also presents the
Adjusted EBITDA of its portfolio companies because it believes it
is frequently used by securities analysts, investors and other
interested parties as a measure of financial performance.
The terms Adjusted net investment income and Adjusted EBITDA,
are not defined under U.S. generally accepted accounting
principles, or U.S. GAAP, and are not a measure of operating
income, operating performance or liquidity presented in accordance
with U.S. GAAP. Adjusted net investment income and Adjusted
EBITDA, have limitations as analytical tools and, when assessing
the Company's operating performance, and that of its portfolio
companies, investors should not consider Adjusted net investment
income and Adjusted EBITDA in isolation, or as a substitute for net
investment income (loss), or other consolidated income statement
data prepared in accordance with U.S. GAAP. Among other
things, Adjusted net investment income and Adjusted EBITDA do not
reflect the Company's, or its portfolio companies', actual cash
expenditures. Other companies may calculate similar measures
differently than Newtek, limiting their usefulness as comparative
tools. The Company compensates for these limitations by
relying primarily on its GAAP results supplemented by Adjusted net
investment income and Adjusted EBITDA.
About Newtek Business Services Corp.
Newtek Business Services Corp., The Small Business
Authority®, is an internally managed BDC,
which along with its controlled portfolio companies, provides a
wide range of business services and financial products under the
Newtek® brand to the small- and medium-sized business
("SMB") market. Since 1999, Newtek has provided
state-of-the-art, cost-efficient products and services and
efficient business strategies to over 100,000 SMB accounts across
all 50 States to help them grow their sales, control their expenses
and reduce their risk.
Newtek's products and services include: Business Lending,
Electronic Payment Processing, Managed Technology Solutions
(Cloud Computing), eCommerce, Accounts Receivable Financing, The
Secure Gateway, The Newtek Advantage™, Insurance
Services, Web Services, Data Backup, Storage and Retrieval and
Payroll.
The Small Business Authority® is a
registered trade mark of Newtek Business Services Corp., and
neither are a part of, or endorsed by the U.S. Small Business
Administration.
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
Securities and Exchange Commission and available through
http://www.sec.gov/. Newtek cautions you
that forward-looking statements are not guarantees of future
performance and that actual results or developments may differ
materially from those projected or implied in these
statements.
Investor Relations
Contact: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@thesba.com
Public Relations
Contact: Simrita Singh
Telephone: (212) 356-9566 / ssingh@thesba.com
NEWTEK BUSINESS
SERVICES CORP. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In Thousands,
except for Per Share Data)
|
|
September 30,
2015
|
|
December 31,
2014
|
ASSETS
|
(Unaudited)
|
|
|
Investments, at fair
value
|
|
|
|
SBA unguaranteed
non-affiliate investments (cost of $155,537 and $131,093,
respectively; includes $138,426 and $120,990, respectively, related
to securitization
trust VIE)
|
$
|
144,290
|
|
|
$
|
121,477
|
|
Controlled
investments (cost of $28,675 and $18,065, respectively)
|
100,726
|
|
|
77,499
|
|
SBA guaranteed
non-affiliate investments (cost of $1,700 and $28,057,
respectively)
|
1,920
|
|
|
31,486
|
|
Non-control/Non-affiliate investments (cost of $2,116
and $0, respectively)
|
2,116
|
|
|
—
|
|
Investments in money
market funds (cost of $36 and $3,000, respectively)
|
36
|
|
|
3,000
|
|
Total investments at
fair value
|
249,088
|
|
|
233,462
|
|
Cash and cash
equivalents
|
3,098
|
|
|
17,813
|
|
Restricted
cash
|
26,722
|
|
|
15,389
|
|
Broker
receivable
|
22,238
|
|
|
—
|
|
Due from related
parties
|
4,707
|
|
|
3,190
|
|
Servicing assets, at
fair value
|
11,895
|
|
|
9,483
|
|
Credits in lieu of
cash
|
1,207
|
|
|
2,229
|
|
Other assets
(includes $2,599 and $2,550, respectively, related to
securitization trust VIE)
|
12,916
|
|
|
20,266
|
|
Total
assets
|
$
|
331,871
|
|
|
$
|
301,832
|
|
LIABILITIES AND
NET ASSETS
|
|
|
|
Liabilities:
|
|
|
|
Bank notes
payable
|
$
|
21,849
|
|
|
$
|
43,023
|
|
Notes due
2022
|
8,200
|
|
|
—
|
|
Notes payable -
Securitization trust VIE
|
97,930
|
|
|
79,520
|
|
Notes payable -
related parties
|
18,121
|
|
|
—
|
|
Due to related
parties
|
1,751
|
|
|
2,867
|
|
Notes payable in
credits in lieu of cash
|
1,207
|
|
|
2,229
|
|
Accounts payable,
accrued expenses and other liabilities
|
8,080
|
|
|
7,775
|
|
Total
liabilities
|
157,138
|
|
|
135,414
|
|
Commitments and
contingencies
|
|
|
|
Net
Assets:
|
|
|
|
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 200,000 shares, 10,353 and 10,206
issued and outstanding at September 30, 2015 and December 31, 2014,
respectively, not including 17 shares held in escrow as of December
31, 2014)
|
207
|
|
|
205
|
|
Additional paid-in
capital
|
163,005
|
|
|
165,532
|
|
Distributions in
excess of net investment income
|
(8,786)
|
|
|
(2,523)
|
|
Net unrealized
appreciation on investments
|
6,840
|
|
|
2,609
|
|
Net realized gains on
investments
|
13,467
|
|
|
595
|
|
Total net
assets
|
174,733
|
|
|
166,418
|
|
Total liabilities and
net assets
|
$
|
331,871
|
|
|
$
|
301,832
|
|
Net asset value per
common share (see above for NAV as of October 1)
|
$
|
16.88
|
|
|
$
|
16.31
|
|
NEWTEK BUSINESS
SERVICES CORP. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, except for Per Share Data)
|
|
|
As a Business
Development
Company
|
|
Prior to
becoming a
Business
Development
Company
|
|
As a Business
Development
Company
|
|
Prior to
becoming a
Business
Development
Company
|
|
Three Months
Ended
September 30,
2015
|
|
Three Months
Ended
September 30,
2014
|
|
Nine Months
Ended
September 30,
2015
|
|
Nine Months
Ended
September 30,
2014
|
Investment
income:
|
|
|
|
|
|
|
|
From non-affiliate
investments:
|
|
|
|
|
|
|
|
Interest
income
|
$
|
2,153
|
|
|
$
|
—
|
|
|
$
|
6,509
|
|
|
$
|
—
|
|
Servicing
income
|
1,262
|
|
|
—
|
|
|
3,373
|
|
|
—
|
|
Other
income
|
472
|
|
|
—
|
|
|
1,331
|
|
|
—
|
|
Total investment
income from non-affiliate investments
|
3,887
|
|
|
—
|
|
|
11,213
|
|
|
—
|
|
From controlled
investments:
|
|
|
|
|
|
|
|
Interest
income
|
58
|
|
|
—
|
|
|
202
|
|
|
—
|
|
Dividend
income
|
3,093
|
|
|
—
|
|
|
5,967
|
|
|
—
|
|
Other
income
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
Total investment
income from controlled investments
|
3,151
|
|
|
—
|
|
|
6,181
|
|
|
—
|
|
Total investment
income
|
7,038
|
|
|
—
|
|
|
17,394
|
|
|
—
|
|
Operating
revenues:
|
|
|
|
|
|
|
|
Electronic payment
processing
|
—
|
|
|
22,777
|
|
|
—
|
|
|
67,467
|
|
Web hosting and
design
|
—
|
|
|
3,739
|
|
|
—
|
|
|
11,840
|
|
Premium
income
|
—
|
|
|
5,801
|
|
|
—
|
|
|
15,930
|
|
Interest
income
|
—
|
|
|
1,689
|
|
|
—
|
|
|
4,818
|
|
Servicing fee income
– NSBF portfolio
|
—
|
|
|
915
|
|
|
—
|
|
|
2,661
|
|
Servicing fee income
– external portfolios
|
—
|
|
|
1,711
|
|
|
—
|
|
|
5,248
|
|
Income from tax
credits
|
—
|
|
|
11
|
|
|
—
|
|
|
39
|
|
Insurance
commissions
|
—
|
|
|
471
|
|
|
—
|
|
|
1,272
|
|
Other
income
|
—
|
|
|
1,052
|
|
|
—
|
|
|
3,106
|
|
Total operating
revenues
|
—
|
|
|
38,166
|
|
|
—
|
|
|
112,381
|
|
Net change in fair
value of:
|
|
|
|
|
|
|
|
SBA loans
|
—
|
|
|
(493)
|
|
|
—
|
|
|
(1,640)
|
|
Credits in lieu of
cash and notes payable in credits in lieu of cash
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
Total net change in
fair value
|
—
|
|
|
(495)
|
|
|
—
|
|
|
(1,642)
|
|
Expenses:
|
|
|
|
|
|
|
|
Electronic payment
processing costs
|
—
|
|
|
19,147
|
|
|
—
|
|
|
57,084
|
|
Salaries and
benefits
|
3,444
|
|
|
6,481
|
|
|
9,600
|
|
|
19,782
|
|
Interest
|
1,864
|
|
|
1,330
|
|
|
4,948
|
|
|
6,555
|
|
Depreciation and
amortization
|
87
|
|
|
917
|
|
|
257
|
|
|
2,668
|
|
Provision for loan
losses
|
—
|
|
|
14
|
|
|
—
|
|
|
(52)
|
|
Other general and
administrative costs
|
3,134
|
|
|
5,259
|
|
|
8,851
|
|
|
15,674
|
|
Total
expenses
|
8,529
|
|
|
33,148
|
|
|
23,656
|
|
|
101,711
|
|
Net investment
loss
|
(1,491)
|
|
|
—
|
|
|
(6,262)
|
|
|
—
|
|
Net realized and
unrealized gains (losses):
|
|
|
|
|
|
|
|
Net realized gain on
non-affiliate investments
|
6,620
|
|
|
—
|
|
|
21,659
|
|
|
—
|
|
Net unrealized
depreciation on SBA guaranteed non-affiliate investments
|
(48)
|
|
|
—
|
|
|
(3,210)
|
|
|
—
|
|
Net unrealized
depreciation on SBA unguaranteed non-affiliate
investments
|
(531)
|
|
|
—
|
|
|
(1,667)
|
|
|
—
|
|
Net unrealized
appreciation on controlled investments
|
770
|
|
|
—
|
|
|
10,289
|
|
|
—
|
|
Net unrealized
depreciation on servicing assets
|
(565)
|
|
|
—
|
|
|
(1,177)
|
|
|
—
|
|
Net unrealized
depreciation on credits in lieu of cash and notes payable in
credits in lieu of cash
|
(6)
|
|
|
—
|
|
|
(4)
|
|
|
—
|
|
Net realized and
unrealized gains
|
6,240
|
|
|
—
|
|
|
25,890
|
|
|
—
|
|
Income before income
taxes
|
—
|
|
|
4,523
|
|
|
—
|
|
|
9,028
|
|
Net increase in net
assets
|
$
|
4,749
|
|
|
$
|
—
|
|
|
$
|
19,628
|
|
|
$
|
—
|
|
Provision for income
taxes
|
—
|
|
|
1,934
|
|
|
—
|
|
|
3,694
|
|
Net income
|
—
|
|
|
2,589
|
|
|
—
|
|
|
5,334
|
|
Net loss attributable
to non-controlling interests
|
—
|
|
|
55
|
|
|
—
|
|
|
95
|
|
Net income
attributable to Newtek Business Services Corp.
|
$
|
—
|
|
|
$
|
2,644
|
|
|
$
|
—
|
|
|
$
|
5,429
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
—
|
|
|
7,463
|
|
|
—
|
|
|
7,220
|
|
Diluted
|
—
|
|
|
7,699
|
|
|
—
|
|
|
7,688
|
|
Basic income per
share
|
$
|
—
|
|
|
$
|
0.35
|
|
|
$
|
—
|
|
|
$
|
0.75
|
|
Diluted income per
share
|
$
|
—
|
|
|
$
|
0.34
|
|
|
$
|
—
|
|
|
$
|
0.71
|
|
Net increase in net
assets per share
|
$
|
0.46
|
|
|
$
|
—
|
|
|
$
|
1.92
|
|
|
$
|
—
|
|
Net investment loss
per share
|
$
|
(0.14)
|
|
|
$
|
—
|
|
|
$
|
(0.61)
|
|
|
$
|
—
|
|
Dividends and
distributions declared per common share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.86
|
|
|
$
|
—
|
|
Weighted average
shares outstanding
|
10,318
|
|
|
—
|
|
|
10,244
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEWTEK BUSINESS
SERVICES CORP. AND SUBSIDIARIES
ADJUSTED NET
INVESTMENT INCOME RECONCILIATION
|
|
|
|
|
|
|
|
For the three months
ended September 30,
2015
|
Per
share
|
|
For the nine
months
ended September 30,
2015
|
Per
share
|
Net investment loss
|
$
(1,491)
|
$ (0.14)
|
|
$
(6,262)
|
$ (0.61)
|
Net realized gain on non-affiliate
investments
|
6,620
|
0.64
|
|
21,659
|
2.11
|
Adjusted net investment income
|
$
5,129
|
$ 0.50
|
|
$
15,397
|
$ 1.50
|
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SOURCE Newtek Business Services Corp.