- Net asset value ("NAV") of $208.2 million, or $14.26 per share, at September 30, 2016; an increase of 1.9% over NAV of $204.4 million, or $14.11 per share, at June 30, 2016 and an increase of 2.1% over NAV of $203.9 million, or $14.06 per share, at December 31, 2015.
- Total investment income of $7.9 million; an 11.6% increase over $7.0 million for the quarter ended September 30, 2015.
- Total investment portfolio increased by 22.5% to $326.9 million at September 30, 2016, from $266.9 million at December 31, 2015.
- Net investment loss of $(2.1) million, or $(0.15) per share, compared to $(1.5) million, or $(0.14) per share, for the three months ended September 30, 2015.
- Adjusted net investment income 1 of $6.7 million, or $0.46 per share; a 31.4% increase over $5.1 million, or $0.49 per share, for the three months ended September 30, 2015.
- Debt-to-equity ratio was approximately 85.3% at September 30, 2016.
- Funded $85.9 million of SBA 7(a) loans in the third quarter of 2016; an increase of a 33.7% over the same period one year ago.
- For the nine months ended September 30, 2016, SBA 7(a) loan fundings increased by 29.8% to $217.8 million compared to $167.8 million for the same period one year ago.
- Reaffirmed 2016 loan funding forecast of approximately $320 million in SBA 7(a) and SBA 504 loans (note: SBA 504 loans are funded by Newtek Business Credit Solutions ("NBC"), one of Newtek's controlled portfolio companies), which would represent an approximate 32% increase over 2015.
- As of October 31, 2016, there were approximately $20 million of SBA 504 loans in the pipeline.
- Paid third quarter 2016 dividend of $0.43 2 per share, on September 30, 2016 to shareholders of record as of September 20, 2016.
- Reaffirmed 2016 annual cash dividend forecast of approximately $22.2 million, or 1.53 2 per share.
- The Company forecasts paying an annual cash dividend of $1.57 2 per share in 2017, a 2.6% increase over the 2016 annual dividend forecast of $1.53 per share.
"Our history of growing dividends and NAV is predicated on our unique and strategic business model which has consistently demonstrated strong growth and increases in referral volume across all of our businesses. In particular, continued demand for our loan products coupled with increased efficiencies in our lending business operations have materialized into robust year-over-year funding growth of nearly 34% in the third quarter of 2016, without sacrificing our focus on the credit quality of the loans we originate. We are currently on track to meet our annual loan funding forecast and are excited about future growth opportunities. Specifically, we have a full pipeline of business services investment candidates which we believe could be accretive to our 2017 dividend forecast. We will continue to publicly highlight the differences inherent to our BDC model, compared to the typical BDC model, which we strongly believe places us in a competitively advantageous position in the market, as well as supports our goal of continuing to deliver above-market returns to our shareholders," concluded Mr. Sloane.Investor Conference Call and Webcast A conference call to discuss the third quarter 2016 results will be hosted by Barry Sloane, Chairman, Chief Executive Officer, and Jennifer Eddelson, Executive Vice President and Chief Accounting Officer, Thursday, November 3, 2016 at 8:30 a.m. ET. The live conference call can be accessed by dialing (877) 303-6993 or (760) 666-3611. In addition, 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 and will remain available for 90 days following the live presentation. Use of Non-GAAP Financial Measures - Newtek Business Services Corp. and Subsidiaries: 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) recognized from the sale of guaranteed portions of SBA 7(a) loan investments plus Loss on lease expense plus stock-based compensation.
The term Adjusted net investment income is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Adjusted net investment income has limitations as an analytical tool and, when assessing the Company's operating performance, investors should not consider Adjusted net investment income 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 does not reflect the Company's 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.1Adjusted net investment income (loss) is a non-GAAP financial measure. Adjusted net investment income (loss) equals Net investment income (loss), plus Net realized gains (losses) recognized from the sale of guaranteed portions of SBA 7(a) loans, plus Loss on lease expense plus stock based compensation. 2Amount and timing of dividends, if any, remain subject to the discretion of the Company's Board of Directors. The Company's 2016 dividend forecast is based on the number of shares of Company common stock outstanding at September 30, 2016. Note regarding Dividend Payments: The Company's Board of Directors expects to maintain a dividend policy with the objective of making quarterly distributions in an amount that approximates at least 90% 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. About Newtek Business Services Corp. Newtek Business Services Corp., Your Business Solutions Company ® , 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 SMB accounts across all 50 states to help them grow their sales, control their expenses and reduce their risk. Newtek's and its portfolio companies' products and services include: Business Lending , SBA Lending Solutions, Electronic Payment Processing, Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval), eCommerce, Accounts Receivable Financing & Inventory Financing, The Secure Gateway, The Newtek Advantage ™ , Insurance Solutions, Web Services, and Payroll and Benefits Solutions. Newtek ® and Your Business Solutions Company ® are registered trademarks of Newtek Business Services Corp. 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.
|NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (In Thousands, except for Per Share Data)|
|September 30, 2016||December 31, 2015|
|Investments, at fair value|
|SBA unguaranteed non-affiliate investments (cost of $204,459 and $166,752, respectively; includes $135,075 and $146,463, respectively, related to securitization trusts)||$||196,624||$||158,355|
|SBA guaranteed non-affiliate investments (cost of $7,849 and $2,069, respectively)||8,754||2,284|
|Controlled investments (cost of $41,094 and $35,781, respectively)||120,420||104,376|
|Non-control/non-affiliate investments (cost of $1,020 and $1,847, respectively)||1,020||1,824|
|Investments in money market funds (cost of $35 and $35, respectively)||35||35|
|Total investments at fair value||326,853||266,874|
|Cash and cash equivalents||2,718||4,308|
|Due from related parties||3,012||3,056|
|Servicing assets, at fair value||15,619||13,042|
|Credits in lieu of cash, at fair value||216||860|
|LIABILITIES AND NET ASSETS|
|Bank notes payable||$||49,919||$||29,100|
|Notes due 2022||7,832||7,770|
|Notes due 2021||38,680||—|
|Notes payable - Securitization trusts||73,471||89,244|
|Notes payable - related parties||7,400||5,647|
|Due to related parties||1,191||256|
|Notes payable in credits in lieu of cash, at fair value||216||860|
|Deferred tax liability||5,327||857|
|Accounts payable, accrued expenses and other liabilities||12,641||8,945|
|Commitments and contingencies|
|Preferred stock (par value $0.02 per share; authorized 1,000 shares, no shares issued and outstanding)||—||—|
|Common stock (par value $0.02 per share; authorized 200,000 shares, 14,594 and 14,509 issued and outstanding, respectively)||292||290|
|Additional paid-in capital||188,647||189,031|
|Undistributed net investment income||(3,150||)||4,437|
|Net unrealized appreciation, net of deferred taxes||14,128||8,062|
|Net realized gains||8,255||2,129|
|Total net assets||208,172||203,949|
|Total liabilities and net assets||$||404,849||$||352,430|
|Net asset value per common share||$||14.26||$||14.06|
|NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In Thousands, except for Per Share Data)|
|Three Months Ended September 30, 2016||Three Months Ended September 30, 2015||Nine Months Ended September 30, 2016||Nine Months Ended September 30, 2015|
|From non-affiliate investments:|
|Total investment income from non-affiliate investments||4,826||3,887||13,898||11,213|
|From controlled investments:|
|Total investment income from controlled investments||3,025||3,151||7,970||6,181|
|Total investment income||7,851||7,038||21,868||17,394|
|Salaries and benefits||3,439||3,444||10,412||9,600|
|Depreciation and amortization||84||87||209||257|
|Loss on lease||(152||)||(74||)||1,335||(218||)|
|Other general and administrative costs||4,038||3,208||11,468||9,069|
|Net investment loss||(2,125||)||(1,491||)||(7,586||)||(6,262||)|
|Net realized and unrealized gains (losses):|
|Net realized gain on non-affiliate investments||8,716||6,620||22,536||21,659|
|Net unrealized (depreciation) appreciation on SBA guaranteed non-affiliate investments||(78||)||(48||)||690||(3,210||)|
|Net unrealized appreciation (depreciation) on SBA unguaranteed non-affiliate investments||1,418||(531||)||869||(1,667||)|
|Net unrealized appreciation on controlled investments||4,638||770||10,362||10,289|
|Provision for deferred taxes on unrealized appreciation on controlled investments||(2,028||)||—||(4,469||)||—|
|Net unrealized depreciation on non-control/non-affiliate investments||—||—||(43||)||—|
|Net unrealized depreciation on servicing assets||(500||)||(565||)||(1,341||)||(1,177||)|
|Net unrealized depreciation on credits in lieu of cash and notes payable in credits in lieu of cash||(1||)||(6||)||(2||)||(4||)|
|Net realized and unrealized gains||12,165||6,240||28,602||25,890|
|Net increase in net assets||$||10,040||$||4,749||$||21,016||$||19,628|
|Net increase in net assets per share||$||0.69||$||0.46||$||1.45||$||1.92|
|Net investment loss per share||$||(0.15||)||$||(0.14||)||$||(0.52||)||$||(0.61||)|
|Dividends declared per common share||$||0.43||$||—||$||1.13||$||0.86|
|Weighted average shares outstanding||14,556||10,318||14,515||10,244|
|NEWTEK BUSINESS SERVICES CORP. AND SUBSIDIARIES ADJUSTED NET INVESTMENT INCOME RECONCILIATION:|
|(in thousands, except per share amounts)||Three monthsendedSeptember 30,2016||Per share||Three monthsendedSeptember 30,2015||Per share|
|Net investment loss||$||(2,125||)||$||(0.15||)||$||(1,491||)||$||(0.15||)|
|Net realized gain on non-affiliate debt investments||8,712||0.60||6,620||0.65|
|Loss on lease||(152||)||(0.01||)||(74||)||(0.01||)|
|Adjusted Net investment income||$||6,661||$||0.46||$||5,055||$||0.49|
Investor Relations & Public RelationsContact: Jayne Cavuoto Telephone: (212) 273-8179 / firstname.lastname@example.org