Cardtronics, the world’s largest non-bank owner of
ATMs, has announced its financial and operational results for the
quarter ended March 31, 2010.
Key financial and operational statistics related to the quarter include:
Consolidated revenues of $127.8 million, up 11% from the first quarter
of 2009 (9% on a constant currency basis)
Revenue growth of approximately 11% on a constant currency basis for the
Company’s core business operations, which include the Company’s domestic
company-owned large-account ATM placement and branding business and the
Company’s international operations
Gross margins of 31%, up from 27% in the first quarter of 2009
Adjusted EBITDA of $29.3 million, up approximately 30% from $22.5
million in the first quarter of 2009
Adjusted Net Income per Share of $0.19, up from $0.09 in the first
quarter of 2009
GAAP Net Income of $4.0 million compared to a $5.1 million GAAP Net Loss
in the first quarter of 2009
Continued improvements in several key operating metrics when compared to
the first quarter of 2009:
– Total cash withdrawal transactions increased by 6%
– Cash withdrawal transactions per ATM increased by 4%
– Total transactions per ATM increased by 7%
– ATM operating gross profit per ATM increased by 25%
Please refer to the “Disclosure of Non-GAAP Financial Information”
contained later in this release for definitions of Adjusted EBITDA,
Adjusted Net Income, Free Cash Flow, and amounts presented on a constant
currency basis. For additional financial information, including
reconciliations to comparable GAAP measures, please refer to the
supplemental schedules of selected financial information at the end of
this release.
“The strong operating trends that Cardtronics experienced during 2009,
especially in the United States, continued during the first quarter of
2010,” commented Steve Rathgaber, Cardtronics’ Chief Executive Officer.
“Since joining Cardtronics in February, I am even more confident in the
unique value proposition that Cardtronics has to offer and in the
Company’s ability to leverage its existing asset base to drive future
transaction and revenue growth.”
RECENT HIGHLIGHTS
Successful completion of a secondary offering in March 2010 of 8,050,000
shares of existing common stock by selling shareholders at a price to
the public of $12 per share. The offering, which consisted entirely of
already outstanding common shares held by the Company’s long-time
private equity investors, The CapStreet Group and TA Associates,
increased the size of the Company’s public float by over 40%.
Cardtronics did not receive any proceeds from the sale of such shares.
Expansion of the Company’s managed services product offerings through
the execution of multi-year ATM managed services agreements with
Travelex, the world’s largest retail foreign exchange specialist, and
Pacific Convenience& Fuels, LLC, the largest licensee of the Circle K
brand. Under the agreements, Cardtronics will provide transaction
processing and ATM management services for these customers.
Continued strong liquidity and access to capital, with over $170 million
in available borrowing capacity under the Company’s revolving credit
facility with leading financial institutions, after taking into
consideration outstanding letters of credit. As of March 31, 2010, the
Company’s ratio of total debt to Adjusted EBITDA for the trailing twelve
months was 2.6 to 1.
FIRST QUARTER RESULTS
For the first quarter of 2010, consolidated revenues totaled $127.8
million, representing an 11% increase (9% on a constant currency basis,
which is defined in the “Disclosure of Non-GAAP Financial Information”
below) from the $115.3 million in revenues generated during the first
quarter of 2009. This increase reflects 13% revenue growth (11% on a
constant currency basis) in the Company’s core business operations,
which include the Company’s higher-margin domestic large-account ATM
placement and international businesses, that was offset slightly by a
decline in the Company’s lower-margin merchant-owned account base. The
increase in core revenues was driven by a combination of strong
transaction trends in the Company’s United States and Mexico operating
segments, year-over-year surcharge rate increases in the United States,
and continued unit growth within the Company’s United Kingdom operating
segment. Additionally, the Company continued to see increased bank
branding and surcharge-free network revenues in the United States due to
the continued growth of its surcharge-free offerings.
The Company generated Adjusted EBITDA of $29.3 million during the first
quarter of 2010, compared to $22.5 million during the first quarter of
2009, and Adjusted Net Income of $7.6 million ($0.19 per diluted share),
compared to $3.4 million ($0.09 per diluted share) during the first
quarter of 2009. These increases were primarily attributable to higher
gross margins, which increased from 27% during the first quarter of 2009
to 31% during the first quarter of 2010, primarily as a result of the
increase in revenues (noted above), the continued shift of revenues from
lower-margin revenues to higher-margin interchange and surcharge-free
network and bank branding revenues, and the Company’s ability to
leverage its fixed cost infrastructure to generate strong margins from
those higher revenues. In particular, the Company experienced declines
in its maintenance and armored expenses during the first quarter of 2010
when compared to the first quarter of 2009 due to the renegotiation of
the Company’s primary domestic maintenance and armored courier service
agreements during the second quarter of 2009. Specific costs excluded
from Adjusted EBITDA and Adjusted Net Income are detailed in a
reconciliation included at the end of this press release.
GAAP Net Income for the first quarter of 2010 totaled $4.0 million,
compared to a $5.1 million GAAP Net Loss during the same quarter in
2009. The year-over-year improvement was primarily attributable to the
factors identified above in the discussion of Adjusted EBITDA and
Adjusted Net Income. However, the Net Loss for the first quarter of
2009 included $1.2 million in severance costs associated with the
departure of the Company’s former Chief Executive Officer in March 2009
and $2.1 million of losses on the disposal of assets due to certain
optimization efforts undertaken by the Company, which did not recur in
2010.
2010 GUIDANCE
The Company is updating the guidance it previously issued regarding its
anticipated full-year 2010 results, and now expects the following:
Revenues of $520 million to $530 million;
Overall gross margins of approximately 31% to 31.5%;
Adjusted EBITDA of $120 million to $125 million;
Depreciation and accretion expense of $42 million;
Cash interest expense of $29.5 million;
Adjusted Net Income of $0.75 to $0.85 per diluted share, based on
approximately 41.5 million weighted average diluted shares outstanding; and
Capital expenditures of approximately $45 million, net of noncontrolling
interests.
The above guidance excludes the impact of certain one-time items as well
as approximately $6.5 million of anticipated stock-based compensation
expense and approximately $14 million to $15 million of intangible asset
amortization expense. Additionally, the above guidance is based on
estimated average foreign currency exchange rates of $1.50 U.S. to £1.00
U.K. and $12.50 Mexican pesos to $1.00 U.S.
LIQUIDITY
The Company continues to maintain a very strong liquidity position. The
Company’s $175.0 million revolving credit facility does not expire until
May 2012 and is led by a syndicate of leading banks. As of March 31,
2010, the Company had no amounts outstanding under the facility.
Additionally, the Company was, and continues to be, in compliance with
the covenants contained within this facility and will continue to be in
compliance even in the event of substantially higher borrowings or
substantially lower Adjusted EBITDA amounts. As a result, the Company
has access to $170.6 million in available, committed funding, after
taking into account the $4.4 million in letters of credit posted under
the facility. The Company’s remaining indebtedness as of March 31, 2010
included $0.1 million of capital leases in the United States, $9.8
million of equipment loans in Mexico, and $297.4 million in senior
subordinated notes, net of discounts. The fixed rate senior subordinated
notes require no amortization prior to their August 2013 maturity date
and contain no maintenance covenants and only limited incurrence
covenants under which the Company has considerable flexibility.
The continued generation of pre-tax operating profits could subject the
Company to increased federal, state and local income tax cash
obligations in many of its jurisdictions. However, the Company currently
has in excess of $38.0 million of domestic federal net operating loss
carryforwards that can be utilized to help offset such future cash tax
obligations, subject to certain restrictions and limitations.
DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION
EBITDA, Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and
amounts presented on a constant currency basis are non-GAAP financial
measures provided as a complement to results prepared in accordance with
accounting principles generally accepted within the United States of
America and may not be comparable to similarly titled measures reported
by other companies. Management believes that the presentation of these
measures and the identification of unusual, non-recurring, or non-cash
items enhance an investor’s understanding of the underlying trends in
the Company’s business and provide for better comparability between
periods in different years.
Adjusted EBITDA excludes depreciation, accretion, and amortization
expense as these amounts can vary substantially from company to company
within the Company’s industry depending upon accounting methods and book
values of assets, capital structures and the method by which the assets
were acquired. Additionally, Adjusted EBITDA and Adjusted Net Income
exclude certain non-recurring or non-cash items and therefore, may not
be comparable to similarly titled measures employed by other companies.
Free Cash Flow is cash provided by operating activities less payments
for capital expenditures. Finally, amounts provided on a constant
currency basis are calculated by applying the foreign exchange rate in
effect for the applicable prior period to the current year amounts
denominated in the respective local currencies. The non-GAAP financial
measures presented herein should not be considered in isolation or as a
substitute for operating income, net income, cash flows from operating,
investing, or financing activities, or other income or cash flow
statement data prepared in accordance with GAAP.
A reconciliation of Net Income (Loss) Attributable to Controlling
Interests to EBITDA, Adjusted EBITDA, and Adjusted Net Income and a
calculation of Free Cash Flow are presented in tabular form at the end
of this press release.
CONFERENCE CALL INFORMATION
The Company will host a conference call today, Thursday, April 29, 2010,
at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its
financial results for the quarter ended March 31, 2010. To access the
call, please call the conference call operator at:
Dial in: (877) 303-9205
Alternate dial-in: (760) 536-5226
Please call in fifteen minutes prior to the scheduled start time and
request to be connected to the “Cardtronics First Quarter Earnings
Conference Call.” Additionally, a live audio webcast of the conference
call will be available online through the investor relations section of
the Company’s website athttp://www.cardtronics.com.
A digital replay of the conference call will be available through
Friday, May 14, 2010, and can be accessed by calling (800) 642-1687 or
(706) 645-9291 and entering 67810681 for the conference ID. A replay of
the conference call will also be available online through the Company’s
website subsequent to the call through May 31, 2010.
ABOUT CARDTRONICS
Headquartered in Houston, Texas, Cardtronics is the world’s largest
non-bank owner of ATMs. Cardtronics operates over 33,700 ATMs across its
portfolio, with ATMs in every major market in the United States and in
the U.S. territories of Puerto Rico and the U.S. Virgin Islands, over
2,700 ATMs throughout the United Kingdom, and over 2,800 ATMs throughout
Mexico. Included in Cardtronics’ portfolio are approximately 2,200
multi-function financial services kiosks that, in addition to
traditional ATM functions, perform other automated consumer financial
services. Major merchant clients include 7-Eleven®, Chevron®, Costco®,
CVS®/pharmacy, ExxonMobil®, Rite Aid®, Safeway®, Target®, and
Walgreens®. Complementing its ATM operations, Cardtronics works with
financial institutions of all sizes to provide their customers with
convenient cash access and deposit capabilities through ATM branding and
surcharge-free programs, with currently over 11,700 Cardtronics owned
and operated ATMs featuring bank brands. More recently, Cardtronics
started offering a managed services solution to retailers and financial
institutions that are looking to outsource some or all of the
operational aspects associated with operating and maintaining their ATM
fleets. For more information, please visithttp://www.cardtronics.com.
