Cardtronics, Inc. (Nasdaq:CATM) (the "Company"), the world's
largest non-bank owner of ATMs, today announced its financial and
operational results for the quarter ended September 30, 2010.
Key financial and operational statistics related to the quarter
include:
- Consolidated revenues of $136.6 million, up over 6% from the
third quarter of 2009
- Revenue growth of approximately 10% for the Company's core
business operations, which include the Company's domestic
Company-owned ATM placement, surcharge-free and managed services
businesses as well as its international operations
- Adjusted EBITDA of $34.9 million, up approximately 8% from the
third quarter of 2009
- Adjusted Net Income per diluted share of $0.28, up from $0.25
in the third quarter of 2009
- GAAP Net Income of $17.4 million compared to $6.4 million in
the third quarter of 2009. GAAP Net Income for the current quarter
reflects the recognition of $14.5 million of pre-tax non-recurring
losses related to the early extinguishment of debt and the
refinancing of the Company's credit facility as well as the
reversal of previously-recognized valuation allowances on the
Company's domestic deferred tax assets, resulting in an income tax
benefit during the current quarter of $20.7 million.
- Growth of the Company's managed services business, to which 882
ATMs were added under this type of arrangement since the end of the
second quarter
- Gross margins of 33.1%, up from 31.8% in the third quarter of
2009
- Continued improvements in several key operating metrics when
compared to the third quarter of 2009. Amounts presented exclude
the impact of the Company's managed services offerings:
- Total transactions increased by over 8%;
- Total transactions per ATM increased by 7%; and
- ATM operating gross profit per ATM increased by 7%
Please refer to the "Disclosure of Non-GAAP Financial
Information" contained later in this release for definitions of
Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow. 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 record third quarter revenue and Adjusted net income per
share results were driven by the successful execution of several of
our key strategic initiatives, including continued organic growth
of machine count and transactions within our core business,
expansion of our managed services business, and our continued
ability to manage our operating costs and leverage our fixed
costs," commented Steven Rathgaber, the Company's Chief Executive
Officer. "With our network of premier ATM locations and recent
organization changes designed to better capitalize on traditional
growth engines as well as new complementary services, we believe
the Company is well-positioned to continue to generate solid
revenue and earnings growth."
RECENT HIGHLIGHTS
- Execution of a new bank branding agreement with Scotiabank, one
of the world's leading financial institutions, to provide
surcharge-free ATM access to Scotiabank's cardholders at over 200
ATMs in high-profile retail locations throughout Puerto Rico. The
long-term deal is the first between the Company and Scotiabank and
the first bank branding arrangement for the Company covering ATMs
located in Puerto Rico.
- Execution of an exclusive alliance with MasterCard Worldwide
under which the Company will provide prepaid MasterCard issuers and
program managers the opportunity to expand their ATM footprints
through the Company's Allpoint Network.
- Expansion of the Company's Allpoint Network into Australia
through a partnership with Customers Limited, the largest
owner/operator of ATMs in Australia. This expansion increases
Allpoint's coverage by more than 5,000 locations, to over 40,000
ATMs, and provides surcharge-free access to both United States and
Australian participating financial institution cardholders.
- Expansion of the Company's bank branding relationship with
Huntington Bank, which renewed its existing branding agreement for
122 locations and will be placing its brand on 50 additional
locations in Ohio, Kentucky, and Indiana.
- Completion of a series of financing transactions designed to
extend the maturity of the Company's debt facilities and reduce its
long-term borrowing costs, including (1) the execution of a new
$175.0 million bank credit facility; (2) the redemption of the
Company's $200.0 million 9.25% senior subordinated notes – Series A
and its $100.0 million 9.25% senior subordinated notes – Series B,
both of which were due in 2013; and (3) the issuance of $200.0
million 8.25% senior subordinated notes due 2018. -Please refer to
the "Liquidity" section below for additional details on these
transactions.
- Successful completion of a secondary offering in August 2010 of
over 7.6 million shares of existing common stock by selling
shareholders at a price to the public of $14 per share. The
offering consisted entirely of already outstanding common shares
held by the Company's long-time private equity investors, The
CapStreet Group and TA Associates, who, after this offering, own
approximately 10% of the Company's outstanding shares on a combined
basis.
- Adoption of certain strategic organizational changes, which the
Company believes will better align the management structure with
its key business and strategic initiatives and provide the
additional focus and resources needed for the Company to meet and
exceed expected revenue and profit growth targets.
THIRD QUARTER RESULTS
For the third quarter of 2010, consolidated revenues totaled
$136.6 million, representing a 6.2% increase from the $128.6
million in revenues generated during the third quarter of
2009. The 6.2% year-over-year increase reflects 10% revenue
growth in the Company's core business operations, which was driven
by a combination of increases in transactions per machine,
year-over-year surcharge rate increases implemented in the United
States, and unit growth in the Company's United Kingdom and Mexico
operating segments. 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. Partially offsetting these increases was a decline
in revenues from the Company's lower-margin merchant-owned account
base.
Adjusted EBITDA for the third quarter of 2010 totaled $34.9
million, compared to $32.4 million during the third quarter of
2009, and Adjusted Net Income totaled $11.4 million ($0.28 per
diluted share) compared to $9.9 million ($0.25 per diluted share)
during the third quarter of 2009. These increases were
primarily attributable to the increase in revenues (discussed
above), the continued shift of revenues from lower-margin revenues
earned under merchant-owned accounts to higher-margin Company-owned
and surcharge-free network and bank branding revenues, as well as
the Company's ability to leverage its fixed-cost infrastructure to
generate strong margins from those higher revenues. 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 third quarter of 2010 totaled $17.4
million, compared to $6.4 million during the same quarter in
2009. The year-over-year increase was attributable to the
factors identified above in the discussion of Adjusted EBITDA and
Adjusted Net Income and the release of valuation allowances related
to the Company's domestic deferred tax assets, which resulted in a
net income tax benefit for the quarter of $20.7
million. Partially offsetting the non-recurring tax benefit
was approximately $14.5 million in pre-tax non-recurring charges
associated with the Company's early retirement of its senior
subordinated notes and the refinancing of its $175.0 million credit
facility, as explained further in the "Liquidity" section
below.
NINE MONTH RESULTS
Revenues totaled $397.3 million for the nine months ended
September 30, 2010, representing a 7.8% increase over the $368.6
million in revenues recorded during the same period in
2009. As was the case with the Company's quarterly results,
the year-over-year increase in revenues was primarily attributable
to revenue growth in its core business operations, slightly offset
by a decline in the Company's merchant-owned account base.
Adjusted EBITDA totaled $98.0 million for the nine months ended
September 30, 2010, representing an 18.4% increase over the $82.8
million in Adjusted EBITDA for the same period in 2009, and
Adjusted Net Income totaled $30.2 million ($0.74 per diluted share)
for the first nine months of 2010, which represented a 48.8%
increase from the $20.3 million ($0.51 per diluted share) generated
during the same period in 2009. Increases in both Adjusted
EBITDA and Adjusted Net Income were primarily due to the same
factors noted above for the Company's quarterly results, in
addition to reduced operating costs per unit compared to the same
period in the prior year.
GAAP Net Income for the nine months ended September 30, 2010
totaled $29.6 million, compared to $3.8 million during the same
period last year. As was the case with the quarterly results,
the results for the nine-month period ended September 30, 2010
include certain non-recurring items associated with the Company's
financing activities and reversal of deferred tax valuation
allowances. Excluding these one-time effects, the improvement
in the Company's GAAP results was primarily driven by the same
factors outlined above with respect to Adjusted EBITDA and Adjusted
Net Income.
GUIDANCE
Update of Full-Year 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 $528.0 million to $529.5 million, at the higher end
of the range of the previous guidance;
- Overall gross margins of approximately 32.1% to 32.2%, up from
31.5% to 32.0% in the previous guidance;
- Adjusted EBITDA of $127.0 million to $129.0 million, up from
$123.0 million to $127.0 million in the previous guidance;
- Depreciation and accretion expense of $41.5 million to $42.0
million, up from the previous guidance of $40.5 million to 41.0
million;
- Cash interest expense of $26.0 million to $26.3 million, down
from $26.5 million to $27.0 million in the previous guidance;
- Adjusted Net Income of $0.95 to $0.98 per diluted share, based
on approximately 41.5 million weighted average diluted shares
outstanding, up from $0.87 to $0.93 per diluted share in the
previous guidance; and
- Capital expenditures of approximately $48.0 million, net of
noncontrolling interests, up from the previous guidance of
approximately $45.0 million.
The above guidance excludes the impact of certain one-time
items, such as the refinancing charges incurred by the company
during the third quarter, as well as approximately $6.1 million of
anticipated stock-based compensation expense and approximately
$15.2 million of intangible asset amortization expense.
Preliminary 2011 Guidance
The Company is also providing the following preliminary
high-level guidance for financial performance in 2011:
- Revenues of $559.0 million to $569.0 million;
- Adjusted EBITDA of $136.0 million to $141.0 million; and
- Adjusted Net Income of $1.14 to $1.20 per diluted share.
The above preliminary 2011 guidance is based on average foreign
currency exchange rates of $1.50 U.S. to £1.00 U.K. and $13.00
Mexican pesos to $1.00 U.S. Additional details will be
provided during the Company's 2010 year-end earnings conference
call, which is expected to occur in February 2011.
LIQUIDITY
The Company continues to maintain a very strong liquidity
position, with $97.7 million in available borrowing capacity under
the Company's $175.0 million revolving credit facility as of
September 30, 2010. The Company's outstanding indebtedness as
of September 30, 2010 consisted of $200.0 million in senior
subordinated notes due 2018, $73.0 million in borrowings under its
revolving credit facility, and $9.2 million in equipment financing
notes associated with its majority-owned Mexico subsidiary.
During the third quarter of 2010, the Company undertook a series
of actions to modify its debt structure. Specifically, the Company:
(1) refinanced its existing $175.0 million revolving credit
facility and extended its term from 2012 to 2015, (2) redeemed its
$100.0 million 9.25% Senior Subordinated Notes – Series B due 2013,
(3) redeemed its $200.0 million 9.25% Senior Subordinated Notes –
Series A due 2013, and (4) issued $200.0 million 8.25% Senior
Subordinated Notes due 2018. As a result of these
transactions, the Company extended the maturity on the majority of
its debt from three years to eight years, reduced its overall level
of debt outstanding, and converted its long-term capital structure
to one with lower risk and more financial flexibility.
Additionally, the Company now expects to save approximately $8.6
million in annual pre-tax interest costs on a go-forward basis.
DISCLOSURE OF NON-GAAP FINANCIAL
INFORMATION
EBITDA, Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow
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 ("GAAP") 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. During the
three and nine month periods ended September 30, 2010, as a result
of certain financing activities, the Company recorded a $7.2
million charge associated with the early extinguishment of debt and
a $7.3 million charge to write off certain unamortized
deferred financing costs and bond discounts related to the
instruments retired. These charges have been excluded from EBITDA,
Adjusted EBITDA, and Adjusted Net Income as the Company views these
charges as one-time, non-recurring events specifically related to
the Company's decision to improve its capital structure and
financial flexibility and not related to the Company's ongoing
operations. Furthermore, management feels the inclusion of
such a charge in EBITDA would not contribute to management's
understanding of the operating results and effectiveness of its
business. Since Adjusted EBITDA and Adjusted Net Income
exclude certain non-recurring or non-cash items, these measures 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, including those
financed through direct debt. 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 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, Tuesday, November
2, 2010, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to
discuss its financial results for the quarter ended September 30,
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 Third 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 at
http://www.cardtronics.com.
A digital replay of the conference call will be available
through Tuesday, November 16, 2010, and can be accessed by calling
(800) 642-1687 or (706) 645-9291 and entering 18722693 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 December 2, 2010.
ABOUT CARDTRONICS
Cardtronics (Nasdaq:CATM) is the world's largest non-bank owner
of ATMs. We operate over 33,500 ATMs in the United States, the
United Kingdom, Mexico, and the Caribbean, primarily in well-known
retailers such as 7-Eleven®, Chevron®, Costco®,
CVS®/pharmacy, ExxonMobil®, Hess®, Rite Aid®, Safeway®, Target®,
and Walgreens®. We also assist in the operation of over 2,900
ATMs under managed services contracts with customers such as
Kroger®, Travelex®, and Circle K®. Cardtronics also provides
services to large and small banks, credit unions, and prepaid card
issuers by allowing them to place their brands on over 11,700
Cardtronics' ATMs, and by providing surcharge-free access through
Cardtronics' Allpoint network. For more information, visit
http://www.cardtronics.com.
The Cardtronics logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=991
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements give the Company's current
expectations or forecasts of future events, future financial
performance, strategies, expectations, competitive environment,
regulation, and availability of resources. The forward-looking
statements contained in this release include, among other things,
statements concerning projections, predictions, expectations,
estimates or forecasts as to the Company's business, financial and
operational results and future economic performance, and statements
of management's goals and objectives and other similar expressions
concerning matters that are not historical facts. These
statements are subject to risks and uncertainties that could cause
actual performance or results to differ materially from those
expressed in or suggested by the forward-looking
statements. These risks and uncertainties include, but are not
limited to, the following:
- the Company's financial outlook and the financial outlook of
the ATM industry;
- the Company's ability to respond to recent and future
regulatory changes that may impact the ATM and financial services
industries;
- the Company's ability to respond to potential reductions in the
amount of interchange fees that it receives from global and
regional debit networks for transactions conducted on its
ATMs;
- the Company's ability to provide new ATM solutions to financial
institutions;
- the Company's ATM vault cash rental needs, including potential
liquidity issues with its vault cash providers;
- the implementation of the Company's corporate strategy,
including successful implementation of certain strategic
organizational changes that were recently initiated;
- the Company's ability to compete successfully with new and
existing competitors;
- the Company's ability to renew and strengthen its existing
customer relationships and add new customers;
- the Company's ability to meet the service levels required by
its service level agreements with its customers;
- the Company's ability to pursue and successfully integrate
acquisitions;
- the Company's ability to successfully manage its existing
international operations and to continue to expand
internationally;
- the Company's ability to prevent security breaches;
- the Company's ability to manage the risks associated with its
third-party service providers failing to perform their contractual
obligations;
- the Company's ability to manage concentration risks with key
vendors and service providers;
- changes in interest rates and foreign currency rates; and
- the additional risks the Company is exposed to in its armored
transport business.
Other factors that could cause the Company's actual performance
or results to differ from its projected results are described in
its filings with the Securities and Exchange Commission, including
its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and
Current Reports on Form 8-K. You should not read forward-looking
statements as a guarantee of future performance or
results. They will not necessarily be accurate indications of
the times at or by which such performance or results will be
achieved. Forward-looking statements speak only as of the date
the statements are made and are based on information available at
the time those statements are made and/or management's good faith
belief as of that time with respect to future events. The
Company assumes no obligation to update forward-looking statements
to reflect actual results, changes in assumptions or changes in
other factors affecting forward-looking information.
Consolidated Statements
of Operations For the Three and Nine Months Ended
September 30, 2010 and 2009
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands, except share and
per share information) |
Revenues: |
|
|
|
|
ATM operating revenues |
$ 134,090 |
$ 126,194 |
$ 390,337 |
$ 361,136 |
ATM product sales and other revenues |
2,515 |
2,409 |
6,992 |
7,460 |
Total revenues |
136,605 |
128,603 |
397,329 |
368,596 |
Cost of revenues: |
|
|
|
|
Cost of ATM operating revenues (exclusive of
depreciation, accretion, and amortization shown separately
below) |
89,026 |
85,083 |
262,319 |
251,287 |
Cost of ATM product sales and other
revenues |
2,425 |
2,678 |
6,932 |
7,645 |
Total cost of revenues |
91,451 |
87,761 |
269,251 |
258,932 |
Gross profit |
45,154 |
40,842 |
128,078 |
109,664 |
Operating expenses: |
|
|
|
|
Selling, general, and administrative expenses
(1) |
11,519 |
9,210 |
32,934 |
30,649 |
Depreciation and accretion expense |
10,865 |
9,986 |
31,351 |
29,560 |
Amortization expense |
3,823 |
4,405 |
11,567 |
13,436 |
Loss on disposal of assets |
368 |
1,047 |
1,840 |
4,831 |
Total operating expenses |
26,575 |
24,648 |
77,692 |
78,476 |
Income from operations |
18,579 |
16,194 |
50,386 |
31,188 |
Other expense: |
|
|
|
|
Interest expense, net |
7,064 |
7,473 |
21,696 |
22,828 |
Amortization of deferred financing costs and
bond discounts |
546 |
606 |
1,818 |
1,777 |
Write-off of deferred financing costs and
bond discounts |
7,296 |
— |
7,296 |
— |
Redemption costs for early extinguishment of
debt |
7,193 |
— |
7,193 |
— |
Other (income) expense |
(207) |
339 |
(173) |
(788) |
Total other expense |
21,892 |
8,418 |
37,830 |
23,817 |
(Loss) income before income taxes |
(3,313) |
7,776 |
12,556 |
7,371 |
Income tax (benefit) expense (2) |
(20,652) |
1,251 |
(17,261) |
3,284 |
Net income |
17,339 |
6,525 |
29,817 |
4,087 |
Net (loss) income attributable to
noncontrolling interests |
(108) |
127 |
202 |
269 |
Net income attributable to controlling
interests and available to common shareholders |
$ 17,447 |
$ 6,398 |
$ 29,615 |
$ 3,818 |
|
|
|
|
|
Net income per common share – basic |
$ 0.42 |
$ 0.16 |
$ 0.71 |
$ 0.09 |
Net income per common share – diluted |
$ 0.41 |
$ 0.15 |
$ 0.70 |
$ 0.09 |
|
|
|
|
|
Weighted average shares outstanding –
basic |
40,529,280 |
39,356,013 |
40,119,310 |
39,123,738 |
Weighted average shares outstanding –
diluted |
41,207,238 |
40,117,598 |
40,790,504 |
39,768,708 |
|
|
|
|
|
|
|
|
|
|
(1) Selling, general, and
administrative expenses for the three and nine month periods ended
September 30, 2010 include $0.3 million and $1.0 million,
respectively, of costs associated with the preparation and filing
of a shelf registration statement and the completion of two
secondary equity offerings, approximately $0.4 million and $1.2
million, respectively, in incremental stock-based compensation
expense (when compared to the same period in the prior year), and
$0.7 million in accrued severance costs associated with the
Company's recent management reorganization. The nine month
period ended September 30, 2009 includes $1.2 million in severance
costs associated with the departure of the Company's former Chief
Executive Officer in March 2009. |
(2) Income tax (benefit) expense
for the three and nine month periods ended September 30, 2010
includes $27.2 million in benefits related to the reversal of
previously-established valuation allowances on the Company's
domestic deferred tax assets. |
|
Condensed Consolidated
Balance Sheets As of September 30, 2010 and
December 31, 2009 |
|
|
|
|
September 30,
2010 |
December 31,
2009 |
|
(Unaudited) |
|
|
(In thousands) |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 2,623 |
$ 10,449 |
Accounts and notes receivable,
net |
23,254 |
27,700 |
Inventory |
2,170 |
2,617 |
Restricted cash,
short-term |
3,091 |
3,452 |
Current portion of deferred tax
asset, net |
1,640 |
— |
Prepaid expenses, deferred
costs, and other current assets |
9,569 |
8,850 |
Total current assets |
42,347 |
53,068 |
Property and equipment, net |
157,077 |
147,348 |
Intangible assets, net |
78,856 |
89,036 |
Goodwill |
164,858 |
165,166 |
Deferred tax asset, net |
6,222 |
— |
Prepaid expenses, deferred costs, and other
assets |
4,460 |
5,786 |
Total assets |
$ 453,820 |
$ 460,404 |
|
|
|
Liabilities and Stockholders' Equity
(Deficit) |
|
|
Current liabilities: |
|
|
Current portion of long-term
debt and notes payable |
$ 2,829 |
$ 2,122 |
Capital lease obligations |
— |
235 |
Current portion of other
long-term liabilities |
25,374 |
26,047 |
Accounts payable and other
accrued and current liabilities |
65,571 |
73,608 |
Total current liabilities |
93,774 |
102,012 |
Long-term liabilities: |
|
|
Long-term debt, net of related
discounts |
279,362 |
304,930 |
Deferred tax liability,
net |
30 |
12,250 |
Asset retirement
obligations |
25,682 |
24,003 |
Other long-term
liabilities |
33,080 |
18,499 |
Total liabilities |
431,928 |
461,694 |
Stockholders' equity (deficit) |
21,892 |
(1,290) |
Total liabilities and
stockholders' equity (deficit) |
$ 453,820 |
$ 460,404 |
SELECTED INCOME STATEMENT DETAIL:
Total revenues by segment:
|
Three
Months Ended September
30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands) |
United States |
$ 108,785 |
$ 104,019 |
$ 316,345 |
$ 303,056 |
United Kingdom |
21,737 |
19,987 |
60,701 |
52,795 |
Mexico |
6,083 |
4,597 |
20,283 |
12,745 |
Total revenues |
$ 136,605 |
$ 128,603 |
$ 397,329 |
$ 368,596 |
Breakout of ATM operating revenues:
|
Three
Months Ended September
30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands) |
Surcharge revenues |
$ 67,900 |
$ 65,890 |
$ 201,856 |
$ 192,340 |
Interchange revenues |
41,073 |
39,329 |
118,390 |
110,853 |
Bank branding and surcharge-free network
revenues. |
20,842 |
17,839 |
59,975 |
49,965 |
Other revenues |
4,275 |
3,136 |
10,116 |
7,978 |
Total ATM operating
revenues |
$ 134,090 |
$ 126,194 |
$ 390,337 |
$ 361,136 |
Total cost of revenues by segment (exclusive of
depreciation, accretion, and amortization):
|
Three
Months Ended September
30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands) |
United States |
$ 70,239 |
$ 71,314 |
$ 207,980 |
$ 212,458 |
United Kingdom |
16,506 |
13,171 |
45,758 |
36,963 |
Mexico |
4,706 |
3,276 |
15,513 |
9,511 |
Total cost of revenues |
$ 91,451 |
$ 87,761 |
$ 269,251 |
$ 258,932 |
Breakout of cost of ATM operating revenues (exclusive of
depreciation, accretion, and amortization):
|
Three
Months Ended September
30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands) |
Merchant commissions |
$ 42,160 |
$ 40,563 |
$ 125,280 |
$ 118,062 |
Vault cash rental expense |
9,902 |
8,733 |
28,783 |
25,186 |
Other costs of cash |
11,513 |
10,471 |
34,522 |
32,981 |
Repairs and maintenance |
8,929 |
9,736 |
26,822 |
29,543 |
Communications |
3,972 |
3,795 |
11,574 |
11,200 |
Transaction processing |
956 |
1,617 |
4,075 |
4,919 |
Stock-based compensation |
226 |
207 |
594 |
590 |
Other expenses |
11,368 |
9,961 |
30,669 |
28,806 |
Total cost of ATM operating
revenues |
$ 89,026 |
$ 85,083 |
$ 262,319 |
$ 251,287 |
Breakout of selling, general, and administrative
expenses:
|
Three
Months Ended September
30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands) |
Employee costs |
$ 6,647 |
$ 5,382 |
$ 18,651 |
$ 17,439 |
Stock-based compensation |
1,481 |
1,050 |
4,009 |
2,786 |
Professional fees |
1,220 |
967 |
4,086 |
3,575 |
Other |
2,171 |
1,811 |
6,188 |
6,849 |
Total selling, general, and
administrative expenses |
$ 11,519 |
$ 9,210 |
$ 32,934 |
$ 30,649 |
Depreciation and accretion expense by
segment:
|
Three
Months Ended September
30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands) |
United States |
$ 6,843 |
$ 6,675 |
$ 20,173 |
$ 20,238 |
United Kingdom |
3,179 |
2,865 |
9,065 |
8,028 |
Mexico |
843 |
446 |
2,113 |
1,294 |
Total depreciation and
accretion expense |
$ 10,865 |
$ 9,986 |
$ 31,351 |
$ 29,560 |
SELECTED BALANCE SHEET DETAIL:
Long-term debt and capital lease
obligations:
|
September 30,
2010 |
December 31,
2009 |
|
(In thousands) |
8.25% senior subordinated notes |
$ 200,000 |
$ — |
9.25% senior subordinated notes, net of
discounts |
— |
297,242 |
Revolving credit facility |
73,000 |
— |
Equipment financing notes |
9,191 |
9,810 |
Capital lease obligations |
— |
235 |
Total long-term debt and
capital lease obligations |
$ 282,191 |
$ 307,287 |
Share count rollforward:
Total shares outstanding as of December 31,
2009 |
40,900,532 |
Shares repurchased |
(137,550) |
Shares issued – restricted stock grants and
stock options exercised |
1,405,212 |
Shares forfeited – restricted stock |
(48,750) |
Total shares outstanding
as of September 30, 2010 |
42,119,444 |
SELECTED CASH FLOW DETAIL:
Selected cash flow statement amounts:
|
Three
Months Ended September
30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands) |
Cash provided by operating activities |
$ 20,392 |
$ 15,179 |
$ 72,993 |
$ 47,884 |
Cash used in investing activities |
(18,947) |
(8,275) |
(39,959) |
(19,074) |
Cash used in financing activities |
(38,782) |
(7,234) |
(41,148) |
(26,566) |
Effect of exchange rate changes on cash |
(129) |
(21) |
288 |
473 |
Net (decrease) increase in cash
and cash equivalents |
$ (37,466) |
$ (351) |
$ (7,826) |
$ 2,717 |
Cash and cash equivalents at beginning of
period |
40,089 |
6,492 |
10,449 |
3,424 |
Cash and cash equivalents at end of
period |
$ 2,623 |
$ 6,141 |
$ 2,623 |
$ 6,141 |
|
Key Operating
Metrics For the Three and Nine Months Ended
September 30, 2010 and 2009
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
Average number of transacting
ATMs: |
|
|
|
|
United States: Company-owned |
18,125 |
18,156 |
18,178 |
18,201 |
United States: Merchant-owned |
9,587 |
10,054 |
9,690 |
10,110 |
United Kingdom |
2,878 |
2,630 |
2,796 |
2,581 |
Mexico |
2,916 |
2,155 |
2,843 |
2,125 |
Average number of transacting
ATMs: ATM deployer services |
33,506 |
32,995 |
33,507 |
33,017 |
United States: Managed services (1) |
2,340 |
1,621 |
2,057 |
1,390 |
Total average number of
transacting ATMs |
35,846 |
34,616 |
35,564 |
34,407 |
|
|
|
|
|
Total transactions (in
thousands): |
|
|
|
|
ATM deployer services |
108,119 |
99,794 |
309,333 |
285,647 |
Managed services |
3,771 |
2,428 |
9,541 |
6,718 |
Total transactions |
111,890 |
102,222 |
318,874 |
292,365 |
|
|
|
|
|
Total cash withdrawal transactions
(in thousands): |
|
|
|
|
ATM deployer services |
65,363 |
63,558 |
191,268 |
183,169 |
Managed services |
2,814 |
2,005 |
7,419 |
5,592 |
Total cash withdrawal transactions |
68,177 |
65,563 |
198,687 |
188,761 |
|
|
|
|
|
Per ATM per month amounts (excludes
managed services): |
|
|
|
|
Cash withdrawal transactions |
650 |
642 |
634 |
616 |
|
|
|
|
|
ATM operating revenues |
$ 1,326 |
$ 1,275 |
$ 1,291 |
$ 1,215 |
Cost of ATM operating revenues (2) |
880 |
860 |
867 |
846 |
ATM operating gross profit
(2) (3) |
$ 446 |
$ 415 |
$ 424 |
$ 369 |
|
|
|
|
|
ATM operating gross margin (2) (3) |
33.6% |
32.5% |
32.8% |
30.4% |
|
|
|
|
|
Capital expenditures (in thousands) (4) |
$ 18,947 |
$ 8,718 |
$ 40,501 |
$ 19,517 |
Capital expenditures, net of noncontrolling
interests (in thousands) (4) |
$ 18,537 |
$ 7,806 |
$ 38,872 |
$ 18,304 |
|
|
|
|
|
(1) Includes 1,736 and 1,714 ATMs
for the three and nine months ended September 30, 2010,
respectively, and all ATMs for the three and nine months ended
September 30, 2009, for which the Company only provided EFT
transaction processing services. |
(2) Amounts presented exclude the
effect of depreciation, accretion, and amortization expense, which
is presented separately in the Company's consolidated statements of
operations. |
(3) ATM operating gross profit
and ATM operating gross margin are measures of profitability that
use only the revenues and expenses that relate to operating ATMs in
the Company's portfolio. Revenues and expenses from managed
services and ATM equipment sales and other ATM-related services are
not included. |
(4) Capital expenditures include
amounts financed by direct debt for the nine month period ended
September 30, 2010 and for the three and nine month periods ended
September 30, 2009. |
|
Reconciliation of Net
Income Attributable to Controlling Interest to EBITDA, Adjusted
EBITDA, and Adjusted Net Income For the Three and
Nine Months Ended September 30, 2010 and 2009
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands, except share and
per share amounts) |
Net income attributable to
controlling interests |
$ 17,447 |
$ 6,398 |
$ 29,615 |
$ 3,818 |
Adjustments: |
|
|
|
|
Interest expense, net |
7,064 |
7,473 |
21,696 |
22,828 |
Amortization of deferred
financing costs and bond discounts |
546 |
606 |
1,818 |
1,777 |
Write-off of deferred financing
costs and bond discounts |
7,296 |
— |
7,296 |
— |
Redemption costs for early
extinguishment of debt |
7,193 |
— |
7,193 |
— |
Income tax (benefit)
expense |
(20,652) |
1,251 |
(17,261) |
3,284 |
Depreciation and accretion
expense |
10,865 |
9,986 |
31,351 |
29,560 |
Amortization expense |
3,823 |
4,405 |
11,567 |
13,436 |
EBITDA |
$ 33,582 |
$ 30,119 |
$ 93,275 |
$ 74,703 |
|
|
|
|
|
Add back: |
|
|
|
|
Loss on disposal of assets
(1) |
368 |
1,047 |
1,840 |
4,831 |
Other (income) expense (2) |
(247) |
339 |
(244) |
(788) |
Noncontrolling interests
(3) |
(530) |
(381) |
(1,402) |
(947) |
Stock-based compensation
expense (4) |
1,699 |
1,257 |
4,575 |
3,376 |
Other adjustments to cost of
ATM operating revenues |
— |
— |
— |
154 |
Other adjustments to selling,
general, and administrative expenses (5) |
— |
— |
— |
1,463 |
Adjusted EBITDA |
$ 34,872 |
$ 32,381 |
$ 98,044 |
$ 82,792 |
Less: |
|
|
|
|
Interest expense, net (4) |
6,949 |
7,389 |
21,338 |
22,592 |
Depreciation and accretion
expense (4) |
10,452 |
9,767 |
30,315 |
28,926 |
Income tax expense (at
35%) |
6,115 |
5,329 |
16,237 |
10,946 |
Adjusted Net Income |
$ 11,356 |
$ 9,896 |
$ 30,154 |
$ 20,328 |
|
|
|
|
|
Adjusted Net Income per
share |
$ 0.28 |
$ 0.25 |
$ 0.75 |
$ 0.52 |
Adjusted Net Income per diluted
share |
$ 0.28 |
$ 0.25 |
$ 0.74 |
$ 0.51 |
|
|
|
|
|
Weighted average shares outstanding –
basic |
40,529,280 |
39,356,013 |
40,119,310 |
39,123,738 |
Weighted average shares outstanding –
diluted |
41,207,238 |
40,117,598 |
40,790,504 |
39,768,708 |
|
|
|
|
|
(1) Primarily comprised of losses
on the disposal of fixed assets that were incurred with the
deinstallation of ATMs during the periods. The higher amounts
during 2009 were primarily the result of certain optimization
efforts taken during that year. |
(2) Amounts exclude unrealized
(gains) losses related to derivatives not designated as hedging
instruments. |
(3) Noncontrolling interests
adjustment made such that Adjusted EBITDA includes only the
Company's 51% ownership interest in the Adjusted EBITDA of its
Mexico subsidiary. |
(4) Amounts exclude 49% of the
expenses incurred by the Company's Mexico subsidiary as such
amounts are allocable to the noncontrolling interest
shareholders. |
(5) For the nine month period
ended September 30, 2009, other adjustments to selling, general,
and administrative expenses primarily consisted of severance costs
associated with the departure of the Company's former Chief
Executive Officer in March 2009. |
|
Reconciliation of Free
Cash Flow For the Three and Nine Months Ended
September 30, 2010 and 2009
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
|
(In thousands) |
Cash provided by operating activities |
$ 20,392 |
$ 15,179 |
$ 72,993 |
$ 47,884 |
Payments for capital expenditures: |
|
|
|
|
Cash used in investing
activities |
(18,947) |
(8,275) |
(39,959) |
(19,074) |
Fixed assets financed by direct
debt |
— |
(443) |
(542) |
(443) |
Total payments for capital
expenditures |
(18,947) |
(8,718) |
(40,501) |
(19,517) |
Free cash flow |
$ 1,445 |
$ 6,461 |
$ 32,492 |
$ 28,367 |
|
Reconciliation of
Estimated Net Income to EBITDA, Adjusted EBITDA, and Adjusted Net
Income For the Year Ending December 31,
2010 (Unaudited) |
|
|
Estimated
Range Full Year 2010 |
|
(In millions) |
Net income |
$ 38.3 |
- |
$ 40.5 |
Adjustments: |
|
|
|
Interest expense, net |
26.3 |
- |
26.0 |
Amortization of deferred
financing costs and bond discounts |
2.0 |
- |
2.0 |
Write-off of deferred financing
costs and bond discounts |
7.3 |
- |
7.3 |
Redemption costs for early
extinguishment of debt |
7.2 |
- |
7.2 |
Income tax expense |
(16.6) |
- |
(17.0) |
Depreciation and accretion
expense |
41.5 |
- |
42.0 |
Amortization expense |
15.2 |
- |
15.2 |
EBITDA |
$ 121.2 |
- |
$ 123.2 |
|
|
|
|
Add back: |
|
|
|
Noncontrolling interests |
(2.1) |
- |
(2.1) |
Loss on disposal of assets |
1.8 |
- |
1.8 |
Stock-based compensation
expense |
6.1 |
- |
6.1 |
Adjusted EBITDA |
$ 127.0 |
- |
$ 129.0 |
Less: |
|
|
|
Interest expense, net (1) |
25.9 |
- |
25.5 |
Depreciation and accretion
expense (1) |
40.2 |
- |
40.7 |
Income tax expense (at
35%) |
21.3 |
- |
22.0 |
Adjusted Net Income |
$ 39.6 |
- |
$ 40.8 |
|
|
|
|
Adjusted Net Income per diluted
share |
$ 0.95 |
- |
$ 0.98 |
|
|
|
|
Weighted average shares outstanding –
diluted |
41.5 |
- |
41.5 |
|
|
|
|
(1) Amounts exclude 49% of the
expenses to be incurred by the Company's Mexico subsidiary as such
amounts are allocable to the noncontrolling interest
shareholders. |
Reconciliation of
Estimated Net Income to EBITDA, Adjusted EBITDA, and Adjusted Net
Income For the Year Ending December 31,
2011 (Unaudited) |
|
|
|
|
|
Estimated
Range Full Year 2011 |
|
(In millions) |
|
|
|
|
Net income |
$ 35.4 |
- |
$ 39.1 |
Adjustments: |
|
|
|
Interest expense, net |
19.0 |
- |
19.0 |
Amortization of deferred
financing costs |
1.0 |
- |
1.0 |
Income tax expense |
12.0 |
- |
13.3 |
Depreciation and accretion
expense |
45.6 |
- |
45.6 |
Amortization expense |
15.0 |
- |
15.0 |
EBITDA |
$ 128.0 |
- |
$ 133.0 |
|
|
|
|
Add back: |
|
|
|
Noncontrolling interests |
(2.1) |
- |
(2.1) |
Loss on disposal of assets |
2.0 |
- |
2.0 |
Stock-based compensation
expense |
8.1 |
- |
8.1 |
Adjusted EBITDA |
$ 136.0 |
- |
$ 141.0 |
Less: |
|
|
|
Interest expense, net (1) |
18.5 |
- |
18.5 |
Depreciation and accretion
expense (1) |
44.1 |
- |
44.1 |
Income tax expense (at
35%) |
25.7 |
- |
27.4 |
Adjusted Net Income |
$ 47.7 |
- |
$ 51.0 |
|
|
|
|
Adjusted Net Income per diluted
share |
$ 1.14 |
- |
$ 1.20 |
|
|
|
|
Weighted average shares outstanding –
diluted |
41.9 |
- |
42.6 |
|
|
|
|
(1) Amounts exclude 49% of the
expenses to be incurred by the Company's Mexico subsidiary as such
amounts are allocable to the noncontrolling interest
shareholders. |
CONTACT: Cardtronics, Inc.
Investors:
Chris Brewster, Chief Financial Officer
832-308-4128
cbrewster@cardtronics.com
Media:
Joel Antonini, Vice President - Marketing
832-308-4131
joel.antonini@cardtronics.com
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