Newtek
Business Services Reports Record Revenue & Net Income
for 2004 [March 2, 2005]
NEW
YORK, March 2, 2005 /PRNewswire-FirstCall via COMTEX/
-- Newtek Business Services, Inc. (NKBS) http://www.newtekbusinessservices.com),
a direct distributor to the small to medium-sized business
market, today announced earnings of $0.35 per diluted
share for the year ended December 31, 2004, compared
to $0.37 per diluted share in 2003. After tax net income
increased from $9.6 million in 2003 to $10.6 million
in 2004. Excluding extraordinary gains, the company
earned $0.35 per diluted share for the year ended December
31, 2004, compared to $0.36 per diluted share in 2003.
Revenue for the year increased 15.9% to $70.1 million
from $60.5 million in the prior year. The decline in
EPS was caused by the sale of 6.9 million shares through
a secondary registered stock offering.
Barry Sloane, chairman and CEO, stated,
"Revenues increased by 15.9% from 2003 to 2004
with revenues in our underlying business segments also
growing strongly. Merchant services and small business
lending revenues both grew by 204%, and 40%. Web hosting,
small business lending and merchant services earned
pre-tax income of $2.1 million, $2.6 million and $1.2
million respectively, up from a loss of $169,000 the
year prior. Newtek's reported EPS of $.35 per share
exceeding Wall Street consensus EPS estimate of $.32
per share by 9%.
"Putting aside the financial success,
we are most satisfied with the progress of our underlying
businesses. We are at the beginning of our business
model and do not believe we are close to displaying
our potential. This growth has created a smooth transition
into our business model as a direct distributor of business
services and financial products into the small to medium-sized
business market. Using SBA estimates and demographics,
we believe this market is 23 million clients and growing.
We look forward to developing our brand beyond its current
45,000 small to medium-sized business clients."
The company will discuss its results
in more detail, including guidance for 2005, during
its shareholder conference call this afternoon at 4:10
EST, which is accessible by dialing 1-800-659-2037 and
providing the pass code 61536308. Listeners are encouraged
to ask any questions that they may have during the call.
A PowerPoint presentation has been added to the company's
homepage. The conference call will also be broadcast
over the Internet through our website at http://www.newtekbusinessservices.com.
To listen to the webcast 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.
About
Newtek Business Services, Inc.
Newtek
Business Services, Inc. is a direct distributor to the
small to medium-sized business market. According to
the SBA, there are over 23 million small businesses
in the United States which in total represent 99.7%
of all employers, generate 60 - 80 percent of all new
jobs annually and generate more than 50% of non-farm
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 45,000 customers 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:
* Newtek Small Business Finance: U.S.
government-guaranteed small
business lending services;
* Newtek Merchant Solutions: electronic
merchant payment processing
solutions;
* Newtek Insurance Agency: customized
insurance products provided
through Keyosk;
* Newtek IT Services: complete information
technology solutions;
* CrystalTech Web Hosting: comprehensive
web site services;
* Newtek Financial Information Systems:
outsourced digital bookkeeping;
and
* Newtek Tax Services: tax filing, preparation
and advisory services.
The statements in this release may contain forward looking
statements relating to such matters as anticipated future
business strategies and financial performance, anticipated
future number of customers, business prospects, legislative
developments and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor
for forward looking statements. In order to comply with
the terms of the safe harbor, Newtek Business Services,
Inc. notes that a variety of factors could cause its
actual results to differ materially from the anticipated
results expressed in the Company's forward looking statements
such as intensified competition and/or operating problems
and their impact on revenues and profit margins or additional
factors as described in Newtek Business Services' 2003
annual report on Form 10-K and subsequently filed registration
statements.
Contacts:
Newtek Business Services
Barry Sloane
Chairman of the Board & CEO
212-356-9500
bsloane@newtekbusinessservices.com
Dave Gentry
Aurelius Consulting Group, Inc.
407-644-4256
dave@aurcg.com
NEWTEK BUSINESS SERVICES, INC., AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
December 31, December 31,
2004 2003
A S S E T S
Cash and cash equivalents $50,921,982
$33,444,611
Restricted cash 2,181,675 2,107,471
Credits in lieu of cash 88,883,335 71,294,083
SBA loans receivable, net of
reserve for loan losses 34,186,047 52,050,725
Accounts receivable (net of allowances
of $72,062 and $96,480, respectively) 1,561,252 469,768
Receivable from bank 1,799,537 2,670,353
SBA loans held for sale 2,262,035 3,619,582
Accrued interest receivable 375,411 281,072
Investments in qualified businesses -
equity method investments 300,000 300,000
Investments in qualified businesses -
held to maturity investments 2,909,097 1,420,179
Structured insurance product 3,216,112 3,054,705
Prepaid insurance 15,505,326 13,282,630
Prepaid expenses and other assets (net
of accumulated amortization of deferred
financing costs and other intangibles
of $404,105 and $0, respectively) 4,708,865 1,907,132
Capitalized servicing assets (net of
accumulated amortization of
$486,799 and $24,545, respectively) 2,084,763 754,064
Furniture, fixtures and equipment
(net of accumulated depreciation of
$1,025,672 and $390,011, respectively) 1,958,927 670,715
Customer merchant accounts
(net of accumulated amortization of
$1,226,741 and $269,380, respectively) 3,850,776 3,024,298
Goodwill 11,692,776 1,832,621
Total assets $228,397,916 $192,184,009
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses
$9,788,804 $6,095,440
Notes payable - certified investors 3,823,434 3,829,973
Notes payable - insurance 7,877,195 4,115,136
Notes payable - other 520,000 1,000,000
Bank notes payable 27,987,696 51,990,047
Deferred revenue 1,160,286 -
Notes payable in credits in lieu of cash 76,360,830
65,697,050
Mandatorily redeemable preferred stock 1,500,000 -
Deferred tax liability 16,626,577 10,815,790
Total liabilities 145,644,822 143,543,436
Minority interest 5,720,950 8,393,151
Commitments and contingencies
Shareholders' equity:
Preferred stock (par value $0.02 per
share; authorized 1,000,000 shares,
no shares issued and outstanding - -
Common stock (par value $0.02 per share;
authorized 39,000,000 shares, issued and
outstanding 33,873,333 and 26,209,211, not
including 582,980 shares held in escrow) 677,467 524,184
Additional paid-in capital 52,858,400 26,588,400
Unearned compensation (2,297,459) (2,106,588)
Retained earnings 25,793,736 15,241,426
Total shareholders' equity 77,032,144 40,247,422
Total liabilities and shareholders'
equity $228,397,916 $192,184,009
NEWTEK BUSINESS SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
2004 2003 2002
Revenue:
Income from tax credits $33,564,626 $44,933,405 $30,603,046
Electronic payment processing 19,141,434 6,297,246 1,584,476
Servicing fee and premium income 5,981,576 2,701,842
-
Web hosting 4,428,141 - -
Insurance commissions 559,450 - -
Interest and dividend income 3,834,194 4,059,321 900,127
Other income 2,582,400 2,500,986 1,581,978
Total revenue 70,091,821 60,492,800 34,669,627
Expenses:
Interest 14,039,315 13,878,956 11,485,367
Payroll and consulting fees 10,842,688 8,407,347 4,564,954
Electronic payment
processing costs 12,036,282 3,684,962 632,024
Professional fees 5,988,223 5,327,789 3,145,246
Insurance 2,818,307 2,468,835 1,951,248
Other than temporary decline
in value of investments - 1,996,040 1,602,365
Equity in net losses
of affiliates - - 729,109
Provision for loan losses 205,022 473,418 -
Goodwill impairment - 1,435,232 -
Depreciation and amortization 2,459,381 504,175 147,681
Other 5,511,274 4,246,309 2,893,657
Total expenses 53,900,492 42,423,063 27,151,651
Income before minority
interest, provision for
income taxes and
extraordinary items 16,191,329 18,069,737 7,517,976
Minority interest 890,352 (1,598,040)
(335,324)
Income before provision for
income taxes and
extraordinary items 17,081,681 16,471,697 7,182,652
Provision for income taxes (6,529,371) (7,089,639) (2,657,410)
Income before
extraordinary items 10,552,310 9,382,058 4,525,242
Extraordinary gain on
acquisition of minority interests - - 907,766
Extraordinary gain on
acquisition of a business - 186,729 2,735,243
Net income $10,552,310 $9,568,787 $8,168,251
Weighted average common
shares outstanding
Basic 30,067,737 25,777,147 24,183,501
Diluted 30,378,697 26,177,274 24,293,540
Income per share after
extraordinary gain
Basic $.35 $.37 $.34
Diluted $.35 $.37 $.34
Income per share before
extraordinary gain
Basic $.35 $.36 $.19
Diluted $.35 $.36 $.19
NEWTEK BUSINESS SERVICES, INC., AND
SUBSIDIARIES
SEGMENT FOOTNOTE
For the For the For the
year ended year ended year ended
December 31, December 31, December 31,
2004 2003 2002
Revenue
SBA Lending $ 10,337,820 $ 7,390,079 $ -
Electronic payment
processing 19,141,434 6,297,246 1,584,476
Web hosting 4,428,141 - -
Capco & other 36,184,426 46,805,475 33,115,151
Total $ 70,091,821 $ 60,492,800 $ 34,669,627
Income (loss) before
provision for
income taxes and
extraordinary items
SBA Lending $ 2,615,650 $ 751,287 $ -
Electronic payment
processing 1,238,578 (920,469) (1,258,665)
Web hosting 2,077,394 - -
Capco & other 11,150,059 16,640,879 8,441,317
Total $ 17,081,681 $ 16,471,697 $ 7,182,652
Depreciation and
Amortization
SBA Lending $ 836,682 $ 50,740 $ -
Electronic payment
processing 705,036 312,836 58,299
Web hosting 587,006 - -
Capco & other 330,657 140,599 89,382
Total $ 2,459,381 $ 504,175 $ 147,681
INTERCOMPANY Revenue
eliminated above
SBA Lending $ - $ - $ -
Electronic payment
processing 805,591 485,633 86,092
Web hosting - - -
Capco & other 2,223,626 1,551,503 1,157,655
Total $ 3,029,217 $ 2,037,136 $ 1,243,747
INTERCOMPANY Expenses
eliminated above
SBA Lending $ 889,674 $ 256,320 $ -
Electronic payment
processing 1,349,069 950,874 495,159
Web hosting - - -
Capco & other 790,474 709,459 748,588
Total $ 3,029,217 $ 1,916,653 $ 1,243,747
At December 31, At December 31, At December
31,
Identifiable Assets 2004 2003 2002
SBA Lending $ 48,839,937 $ 64,738,750
$ -
Electronic payment
processing 3,507,162 7,308,940 5,119,864
Web hosting 12,367,893 - -
Capco & other 163,682,924 120,136,319 163,934,874
Total $228,397,916 $192,184,009 $169,054,738
SOURCE Newtek Business Services, Inc.
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