Cardtronics plc (Nasdaq: CATM) (“Cardtronics” or the “Company”),
the world’s largest ATM owner/operator, announced today its
financial and operational results for the quarter ended
September 30, 2020.
“We continued to see recovery in our transactions and revenues
across most of our business units during the third quarter, with
the U.S., our largest market, returning to near prior year levels,”
said Ed West, CEO of Cardtronics. “We generated strong free cash
flow during the third quarter, as we continue to improve our
operating efficiency and capitalize on this period of payments
transformation."
“Over the past two years, we have made important investments in
technology, which are enabling new business opportunities and
transforming our capital efficiency. During the third quarter, we
made significant progress in the deployment of this technology
across our estate. In addition, we entered into several new and
expanded partnerships with leading financial institutions and
Fintechs, including U.S. Bank and Chime, demonstrating the unique
value of our unparalleled network and our important position within
the payments ecosystem,” concluded West.
Third Quarter 2020 Financial Highlights:
The Company has seen transaction recoveries across its
geographies despite the continued impact of the COVID-19 pandemic.
However, pandemic-related restrictions continue to be dynamic and
impact consumer activity and transaction levels.
- Total revenues of $279.4 million, down 20.5% from $351.5
million in the prior year, and down 21.2% on a constant-currency
basis.
- ATM operating revenues of $267.3 million, down 19.8% from
$333.4 million in the prior year, and down 20.5% on a
constant-currency basis.
- GAAP Net income of $5.7 million, or $0.13 per diluted share,
compared to Net Income of $20.9 million, or $0.46 per diluted share
in the prior year.
- Adjusted Net Income per diluted share of $0.49 compared to
$0.79 in the prior year.
- Adjusted EBITDA of $71.9 million, down 17.5% from $87.1 million
in the prior year, and down 18.7% on a constant-currency basis,
positively impacted by business rate recoveries in the U.K. of
approximately $11.8 million
- Adjusted EBITDA margin of 25.7% compared to 24.8% in the prior
year.
- A decrease in restricted cash and corresponding liabilities
caused reported net cash provided by operating activities to be
$98.4 million compared to $176.5 million in the prior year.
Adjusted net cash provided by operating activities, which excludes
the impact of restricted cash settlement activity, was $86.9
million compared to $83.5 million in the prior year.
- Adjusted free cash flow of $55.6 million compared to $48.2
million in the prior year.
- Net Debt reduction of $53.4 million during the quarter.
Recent Business Highlights:
- Signed several Fintechs to the Allpoint ATM network of
convenient and surcharge-free ATMs, including Chime, Credit Karma,
MoCaFi, and Central Payments.
- Expanded relationship with U.S. Bank, providing a full managed
service solution to approximately 70 ATMs.
- Expanded relationship with ScotiaBank in Mexico to manage 400
additional ATMs in 2020 and 2021.
- New branding agreements with several financial institutions to
brand over 600 ATMs at Casey’s General Stores.
- Successful roll out of proprietary neoterm terminal management
software, now on more than 15,000 ATMs in the U.S.
See Disclosure of Non-GAAP Financial Information in this
earnings release for definitions of Adjusted Gross Profit, Adjusted
Gross Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted Net Income, Adjusted Net Income per diluted share (may
also be referred to by the Company as "Adjusted EPS"), Adjusted Net
Cash Provided by Operating Activities, Adjusted Free Cash Flow, Net
Debt and certain other financial measures recognized under
generally accepted accounting principles in the U.S. (“U.S. GAAP”
or “GAAP”) and other non-GAAP measures that are used by management
on a constant-currency basis. For additional information, including
reconciliations to the most directly comparable GAAP measure, see
the supplemental schedules of selected financial information in
this earnings release.
The Company may also refer to revenue or profit growth as being
organic. When providing growth measures on an organic basis, the
Company aims to exclude the estimated impact from any acquired or
divested businesses that may be included or partially included in
one period but not another. The Company may further adjust organic
performance measures for the impacts of currency movements in order
to have a consistent performance comparison across periods for the
business, excluding movements in exchange rates.
Conference Call Information
The Company will host a conference call today, October 29, at
4:30 p.m. Central Time (5:30 p.m. Eastern Time) to provide a
business update and to discuss its financial results for the
quarter ended September 30, 2020.
To access the call, please call the conference call operator at
(877) 303-9205 or the alternate dial-in at (760) 536-5226, 15
minutes prior to the scheduled start time, and request connection
to the "Cardtronics Third Quarter 2020 Earnings Conference Call."
Additionally, a live audio webcast of the conference call will be
available online through the investor relations section of
Cardtronics' website at www.cardtronics.com.
Additional detailed disclosures regarding the Company’s
quarterly performance have been included in the Earnings
Supplement, which is available on the Company’s website.
A digital replay of the conference call will be available
through Thursday, November 5, 2020, and can be accessed by calling
(855) 859-2056 or (404) 537-3406 and entering 9994414 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 November 26, 2020. Prior to the conference call,
the Company will post supplemental financial information to its
website at www.cardtronics.com.
About Cardtronics (Nasdaq: CATM)
Cardtronics is the trusted leader in financial self-service,
enabling cash transactions at over 285,000 ATMs across 10 countries
in North America, Europe, Asia-Pacific, and Africa. Leveraging our
unmatched scale, expertise and innovation, top-tier merchants and
businesses of all sizes use our ATM solutions to drive growth,
in-store traffic, and retail transactions. Financial services
providers rely on Cardtronics to deliver superior service at their
own ATMs, on Cardtronics ATMs where they place their brand, and
through Cardtronics' Allpoint Network, the world’s largest retail
based surcharge-free ATM network, with over 55,000 locations. As
champions of cash, Cardtronics converts digital currency into
physical cash, driving payments choice for businesses and consumers
alike. Learn more about Cardtronics by visiting
www.cardtronics.com, and by following us on LinkedIn and
Twitter.
Contact Information
Investor
RelationsBrad Conrad832-308-4000ir@cardtronics.com |
Media
RelationsLisa
Albiston832-308-4000corporatecommunications@cardtronics.com |
Cautionary Statement Regarding Forward-Looking
Statements
This earnings release contains “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995, as amended and are intended to be covered by the safe
harbor provisions thereof. Forward-looking statements can be
identified by words such as "project," "believe," "estimate,"
"expect," "future," "anticipate," "intend," "contemplate,"
"foresee," "would," "could," "plan," and similar expressions that
are intended to identify forward-looking statements, which are
generally not historical in nature. These forward-looking
statements are based on management’s current expectations and
beliefs concerning future developments and their potential effect
on the Company and there can be no assurance that future
developments affecting the Company will be those that are
anticipated. All comments concerning the Company’s expectations for
future revenues and operating results are based on its estimates
for its existing operations and do not include the potential impact
of any future acquisitions. The Company’s forward-looking
statements involve significant risks and uncertainties (some of
which are beyond its control) and assumptions that could cause
actual results to differ materially from its historical experience
and present expectations or projections. Risk factors are described
in the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2019, as updated by the Company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2020, and
those set forth from time-to-time in other filings with the
Securities and Exchange Commission. Readers are cautioned not to
place undue reliance on forward-looking statements contained in
this earnings release, which speak only as of the date of this
earnings release. Except as required by applicable law, the Company
undertakes no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as
a result of new information, future events, or otherwise.
Disclosure of Non-GAAP Financial
Information
In order to assist readers of our consolidated financial
statements in understanding the operating results that Management
uses to evaluate the business and for financial planning purposes,
the Company presents the following non-GAAP measures as a
complement to financial results prepared in accordance with U.S.
GAAP: Adjusted Gross Profit, Adjusted Gross Margin, EBITDA,
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income,
Adjusted Tax Rate, Adjusted Net Income per diluted share, Adjusted
Net Cash Provided by Operating Activities, Adjusted Free Cash Flow,
and certain other results presented on a constant-currency basis.
Management believes that the presentation of these measures and the
identification of notable, non-cash, non-operating costs, and/or
(if applicable in a particular period) certain costs not
anticipated to occur in future periods enhance an investor’s
understanding of the underlying trends in the Company’s business
and provide for better comparability between periods in different
years. In addition, Management presents Net Debt as a measure of
our financial condition. Management believes that these
measures are relevant and provide useful information widely used by
analysts, investors and other interested parties in the Company’s
industry to provide a baseline for evaluating and comparing our
operating performance, financial condition and, in the case of free
cash flow, our liquidity results. Management uses these non-GAAP
financial measures in managing and measuring the performance of the
business, including setting and measuring incentive-based
compensation for management.
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 measures prepared in
accordance with GAAP. Reconciliations of the non-GAAP financial
measures used herein to the most directly comparable GAAP financial
measures are presented in tabular form at the end of this earnings
release. In addition, the non-GAAP measures that are used by
the Company are not defined in the same manner by all companies and
therefore may not be comparable to other similarly titled measures
of other companies.
The Company is unable to reconcile the forward-looking non-GAAP
measures, Adjusted EBITDA and Adjusted EBITDA margin, discussed
during today’s Third Quarter 2020 Earnings Conference Call because
not all of the information necessary for a quantitative
reconciliation of these forward-looking non-GAAP measures to the
most directly comparable GAAP financial measure is available to the
Company without unreasonable efforts. For the same reasons, the
Company is unable to address the significance of the unavailable
information; however, the GAAP measures could be materially
different than the non-GAAP measures.
Adjusted Gross Profit and Adjusted Gross
Margin
Adjusted Gross Profit represents total revenues less the total
cost of revenues, excluding depreciation, accretion, and
amortization of intangible assets. Adjusted Gross Margin is
calculated by dividing Adjusted Gross Profit by total revenues.
EBITDA, Adjusted EBITDA and Adjusted EBITDA
Margin
EBITDA adds net interest expense, income tax expense (benefit),
depreciation and accretion, amortization of deferred financing
costs and note discounts, amortization of intangible assets, and
certain costs not anticipated to occur in future periods to net
income. Adjusted EBITDA and Adjusted EBITDA Margin exclude the
items excluded from EBITDA as well as share-based compensation
expense, certain other income and expense amounts, acquisition
related expenses, gains or losses on disposal and impairment of
assets, certain non-operating expenses (if applicable in a
particular period), and includes an adjustment for noncontrolling
interests. Depreciation and accretion expense and amortization of
intangible assets are excluded from Adjusted EBITDA and Adjusted
EBITDA margins as these amounts can vary substantially from company
to company within our industry depending upon accounting methods
and book values of assets, capital structures, and the methods by
which the assets were acquired. Adjusted EBITDA margin is
calculated as Adjusted EBITDA divided by total revenues.
Adjusted Net Income, Adjusted Net Income per Diluted
Share and Adjusted Tax Rate
Adjusted Net Income represents net income computed in accordance
with U.S. GAAP, before amortization of intangible assets, deferred
financing costs and note discount, gains or losses on disposal and
impairment of assets, share-based compensation expense, certain
other income and expense amounts, acquisition related expenses,
certain non-operating expenses, and (if applicable in a particular
period) certain costs not anticipated to occur in future periods
(together, the “Adjustments”). The non-GAAP tax rate used to
calculate Adjusted Net Income was approximately 19.8% and 19.1% for
the three and nine months ended September 30, 2020,
respectively, and 23.7% and 23.4% for the three and nine months
ended September 30, 2019, respectively. The non-GAAP tax rates
represent the U.S. GAAP tax rate for the period as adjusted by the
estimated tax impact of the items adjusted from the measure.
Adjusted Net Income per diluted share is calculated by dividing
Adjusted Net Income by weighted average diluted shares
outstanding.
Adjusted Net Cash Provided by Operating Activities and
Adjusted Free Cash Flow
Adjusted Net Cash Provided by Operating Activities is defined as
cash provided by operating activities less the impact of changes in
restricted cash due to the timing of payments of restricted cash
liabilities.
Adjusted Free Cash Flow is defined as Adjusted Net Cash Provided
by Operating Activities less payments for capital expenditures,
including those financed through direct debt, but excluding
acquisitions. The Adjusted Free Cash Flow measure does not take
into consideration certain financing activities and other
non-discretionary cash requirements such as mandatory principal
payments on portions of the Company’s long-term debt.
Net Debt
Net Debt represents the principal amount of current and
long-term debt outstanding less cash and cash equivalents. The
carrying value of current and long-term debt is reconciled to the
principal amount by adding the unamortized debt issuance costs and
discounts.
Constant-Currency
Management calculates certain GAAP as well as non-GAAP measures
on a constant-currency basis using the average foreign currency
exchange rates applicable in the corresponding period of the
previous year and applying these rates to the measures in the
current reporting period to assess performance and eliminate the
effect foreign currency exchange rates have on comparability
between periods.
|
|
|
|
|
Consolidated Statements of OperationsFor
the Three and Nine Months Ended September 30, 2020 and
2019(In thousands, excluding share, per share
amounts, and percentages)(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
ATM operating revenues |
|
$ |
267,320 |
|
|
$ |
333,384 |
|
|
(19.8 |
)% |
|
$ |
781,998 |
|
|
$ |
959,067 |
|
|
(18.5 |
)% |
ATM product sales and other revenues |
|
12,078 |
|
|
18,123 |
|
|
(33.4 |
) |
|
37,194 |
|
|
51,531 |
|
|
(27.8 |
) |
Total revenues |
|
279,398 |
|
|
351,507 |
|
|
(20.5 |
) |
|
819,192 |
|
|
1,010,598 |
|
|
(18.9 |
) |
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of ATM operating revenues (excludes depreciation, accretion,
and amortization of intangible assets reported separately
below) |
|
165,265 |
|
|
208,860 |
|
|
(20.9 |
) |
|
510,014 |
|
|
623,099 |
|
|
(18.1 |
) |
Cost of ATM product sales and other revenues |
|
7,842 |
|
|
14,922 |
|
|
(47.4 |
) |
|
27,522 |
|
|
41,148 |
|
|
(33.1 |
) |
Total cost of revenues |
|
173,107 |
|
|
223,782 |
|
|
(22.6 |
) |
|
537,536 |
|
|
664,247 |
|
|
(19.1 |
) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses |
|
40,373 |
|
|
46,257 |
|
|
(12.7 |
) |
|
115,609 |
|
|
131,912 |
|
|
(12.4 |
) |
Restructuring expenses |
|
2,008 |
|
|
3,583 |
|
|
(44.0 |
) |
|
6,557 |
|
|
7,046 |
|
|
(6.9 |
) |
Depreciation and accretion expense |
|
33,063 |
|
|
33,466 |
|
|
(1.2 |
) |
|
97,346 |
|
|
99,644 |
|
|
(2.3 |
) |
Amortization of intangible assets |
|
7,900 |
|
|
12,404 |
|
|
(36.3 |
) |
|
25,162 |
|
|
37,407 |
|
|
(32.7 |
) |
Loss on disposal and impairment of assets |
|
814 |
|
|
637 |
|
|
27.8 |
|
|
1,847 |
|
|
3,101 |
|
|
(40.4 |
) |
Total operating expenses |
|
84,158 |
|
|
96,347 |
|
|
(12.7 |
) |
|
246,521 |
|
|
279,110 |
|
|
(11.7 |
) |
Income from operations |
|
22,133 |
|
|
31,378 |
|
|
(29.5 |
) |
|
35,135 |
|
|
67,241 |
|
|
(47.7 |
) |
Other expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
11,132 |
|
|
6,751 |
|
|
64.9 |
|
|
26,362 |
|
|
20,265 |
|
|
30.1 |
|
Amortization of deferred financing costs and note discount |
|
2,341 |
|
|
3,377 |
|
|
(30.7 |
) |
|
10,226 |
|
|
9,999 |
|
|
2.3 |
|
Loss on extinguishment of convertible notes |
|
— |
|
|
— |
|
|
n/m |
|
|
3,018 |
|
|
— |
|
|
n/m |
|
Other income |
|
(7,116 |
) |
|
(3,703 |
) |
|
n/m |
|
|
(9,651 |
) |
|
(9,454 |
) |
|
n/m |
|
Total other expenses |
|
6,357 |
|
|
6,425 |
|
|
(1.1 |
) |
|
29,955 |
|
|
20,810 |
|
|
43.9 |
|
Income before income
taxes |
|
15,776 |
|
|
24,953 |
|
|
(36.8 |
) |
|
5,180 |
|
|
46,431 |
|
|
(88.8 |
) |
Income tax expense
(benefit) |
|
10,049 |
|
|
4,086 |
|
|
n/m |
|
|
(4,375 |
) |
|
10,780 |
|
|
n/m |
|
Effective tax rate |
|
63.7 |
% |
|
16.4 |
% |
|
|
|
|
(84.5 |
)% |
|
23.2 |
% |
|
|
|
Net income |
|
5,727 |
|
|
20,867 |
|
|
(72.6 |
) |
|
9,555 |
|
|
35,651 |
|
|
(73.2 |
) |
Net (loss) income attributable to
noncontrolling interests |
|
(5 |
) |
|
3 |
|
|
n/m |
|
|
(10 |
) |
|
(3 |
) |
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to
controlling interests and available to common shareholders |
|
$ |
5,732 |
|
|
$ |
20,864 |
|
|
(72.5 |
) |
|
$ |
9,565 |
|
|
$ |
35,654 |
|
|
(73.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share –
basic |
|
$ |
0.13 |
|
|
$ |
0.46 |
|
|
|
|
|
$ |
0.21 |
|
|
$ |
0.77 |
|
|
|
|
Net income per common share –
diluted |
|
$ |
0.13 |
|
|
$ |
0.46 |
|
|
|
|
|
$ |
0.21 |
|
|
$ |
0.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding – basic |
|
|
44,506,874 |
|
|
|
45,058,226 |
|
|
|
|
|
|
44,557,103 |
|
|
|
46,040,027 |
|
|
|
|
Weighted average shares
outstanding – diluted |
|
|
45,209,696 |
|
|
|
45,504,165 |
|
|
|
|
|
|
45,382,687 |
|
|
|
46,475,353 |
|
|
|
|
|
Condensed Consolidated Balance SheetsAs of
September 30, 2020 and December 31,
2019(In thousands) |
|
|
|
September 30, 2020 |
|
December 31, 2019 |
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
263,490 |
|
|
$ |
30,115 |
|
Accounts and notes receivable, net |
|
76,287 |
|
|
95,795 |
|
Inventory, net |
|
6,450 |
|
|
10,618 |
|
Restricted cash |
|
96,740 |
|
|
87,354 |
|
Prepaid expenses, deferred costs, and other current assets |
|
72,869 |
|
|
84,639 |
|
Total current assets |
|
515,836 |
|
|
308,521 |
|
Property and equipment,
net |
|
423,578 |
|
|
461,277 |
|
Operating lease assets |
|
62,418 |
|
|
76,548 |
|
Intangible assets, net |
|
88,036 |
|
|
113,925 |
|
Goodwill |
|
739,179 |
|
|
752,592 |
|
Deferred tax assets, net |
|
17,420 |
|
|
13,159 |
|
Prepaid expenses, deferred
costs, and other noncurrent assets |
|
20,411 |
|
|
37,936 |
|
Total assets |
|
$ |
1,866,878 |
|
|
$ |
1,763,958 |
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Current portion of long-term debt |
|
$ |
119,694 |
|
|
$ |
— |
|
Current portion of other long-term liabilities |
|
63,620 |
|
|
53,144 |
|
Accounts payable and other accrued liabilities |
|
367,083 |
|
|
381,240 |
|
Total current liabilities |
|
550,397 |
|
|
434,384 |
|
Long-term liabilities: |
|
|
|
|
Long-term debt |
|
773,857 |
|
|
739,475 |
|
Asset retirement obligations |
|
54,607 |
|
|
55,494 |
|
Deferred tax liabilities, net |
|
48,636 |
|
|
46,878 |
|
Operating lease liabilities |
|
58,782 |
|
|
69,531 |
|
Other long-term liabilities |
|
46,264 |
|
|
37,870 |
|
Total liabilities |
|
1,532,543 |
|
|
1,383,632 |
|
Shareholders' equity |
|
334,335 |
|
|
380,326 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,866,878 |
|
|
$ |
1,763,958 |
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Detail:
Current and Long-Term
Debt: |
|
September 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
(In thousands) |
|
|
(Unaudited) |
|
|
Revolving credit facility due September 2024 |
|
$ |
— |
|
|
$ |
167,227 |
|
Term Loan Facility due June
2027 (1) |
|
481,827 |
|
|
— |
|
5.50% Senior Notes due May
2025 (2) |
|
297,030 |
|
|
296,545 |
|
1.00% Convertible Senior Notes
due December 2020 (3) |
|
114,694 |
|
|
275,703 |
|
Total Current and Long-term
Debt |
|
893,551 |
|
|
739,475 |
|
Less: Current portion |
|
(119,694 |
) |
|
— |
|
Total Long-term debt |
|
$ |
773,857 |
|
|
$ |
739,475 |
|
Net
Debt: |
|
September 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
(In thousands) |
|
|
(Unaudited) |
|
|
Total Current and Long-term Debt |
|
$ |
893,551 |
|
|
$ |
739,475 |
|
Add: Unamortized discounts and
capitalized debt issuance costs |
|
20,767 |
|
|
15,252 |
|
Less: Cash and cash
equivalents |
|
(263,490 |
) |
|
(30,115 |
) |
Net Debt |
|
$ |
650,828 |
|
|
$ |
724,612 |
|
(1) |
|
The Term Loan Facility due June 2027 (the "Term Loan") with a face
value of $498.7 million is presented net of unamortized
discounts and capitalized debt issuance costs of $16.9 million
as of September 30, 2020. Mandatory payments in the next
twelve months total $5.0 million and are presented in the Current
portion of long-term debt line of the Company's Consolidated
Balance Sheet as of September 30, 2020. The Company entered into
the Term Loan in June 2020 and a portion of the proceeds were used
to repay outstanding borrowings under the Company’s revolving
credit facility. |
|
|
|
(2) |
|
The 5.50% Senior Notes due May 2025 with a face value of
$300.0 million are presented net of unamortized capitalized
debt issuance costs of $3.0 million and $3.5 million as
of September 30, 2020 and December 31, 2019,
respectively. |
|
|
|
(3) |
|
The 1.00% Convertible Senior Notes due December 2020 (the
"Convertible Notes") with a face value of $115.6 million and
$287.5 million as of September 30, 2020 and December 31, 2019,
respectively, are presented net of unamortized discounts and
capitalized debt issuance costs of $0.9 million and
$11.8 million as of September 30, 2020 and
December 31, 2019, respectively. These notes are presented in
the Current portion of long-term debt line of the Company's
Consolidated Balance Sheet as of September 30, 2020. In
accordance with GAAP, the estimated fair value of the conversion
feature within the Convertible Notes was recorded as additional
paid-in capital within Shareholders' equity at issuance. The
Convertible Notes are being accreted over the term of the notes to
the outstanding principal amount of $115.6 million. In June
2020, the Company repurchased and cancelled $171.9 million in
principal amount of Convertible Notes. |
|
|
|
|
|
Reconciliation of Net Income Attributable to Controlling
Interests and Available to Common Shareholders to
EBITDA, Adjusted EBITDA, and Adjusted Net
IncomeFor the Three and Nine Months Ended
September 30, 2020 and 2019(In thousands,
excluding share and per share
amounts)(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income attributable to controlling interests and
available to common shareholders |
|
$ |
5,732 |
|
|
$ |
20,864 |
|
|
$ |
9,565 |
|
|
$ |
35,654 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Interest expense, net |
|
11,132 |
|
|
6,751 |
|
|
26,362 |
|
|
20,265 |
|
Amortization of deferred financing costs and note discount |
|
2,341 |
|
|
3,377 |
|
|
10,226 |
|
|
9,999 |
|
Loss on extinguishment of convertible notes |
|
— |
|
|
— |
|
|
3,018 |
|
|
— |
|
Income tax expense (benefit) |
|
10,049 |
|
|
4,086 |
|
|
(4,375 |
) |
|
10,780 |
|
Depreciation and accretion expense |
|
33,063 |
|
|
33,466 |
|
|
97,346 |
|
|
99,644 |
|
Amortization of intangible assets |
|
7,900 |
|
|
12,404 |
|
|
25,162 |
|
|
37,407 |
|
EBITDA |
|
$ |
70,217 |
|
|
$ |
80,948 |
|
|
$ |
167,304 |
|
|
$ |
213,749 |
|
|
|
|
|
|
|
|
|
|
Add back: |
|
|
|
|
|
|
|
|
Loss on disposal and impairment of assets |
|
814 |
|
|
637 |
|
|
1,847 |
|
|
3,101 |
|
Other income (1) |
|
(7,116 |
) |
|
(3,703 |
) |
|
(9,651 |
) |
|
(9,454 |
) |
Noncontrolling interests (2) |
|
14 |
|
|
15 |
|
|
42 |
|
|
46 |
|
Share-based compensation expense |
|
5,921 |
|
|
5,633 |
|
|
16,143 |
|
|
15,367 |
|
Restructuring expenses (3) |
|
2,008 |
|
|
3,583 |
|
|
6,557 |
|
|
7,046 |
|
Adjusted
EBITDA |
|
$ |
71,858 |
|
|
$ |
87,113 |
|
|
$ |
182,242 |
|
|
$ |
229,855 |
|
Less: |
|
|
|
|
|
|
|
|
Depreciation and accretion expense (4) |
|
33,063 |
|
|
33,466 |
|
|
97,346 |
|
|
99,644 |
|
Interest expense, net |
|
11,132 |
|
|
6,751 |
|
|
26,362 |
|
|
20,265 |
|
Adjusted pre-tax income |
|
27,663 |
|
|
46,896 |
|
|
58,534 |
|
|
109,946 |
|
Income tax expense (5) |
|
5,477 |
|
|
11,114 |
|
|
11,177 |
|
|
25,748 |
|
Adjusted Net
Income |
|
$ |
22,186 |
|
|
$ |
35,782 |
|
|
$ |
47,357 |
|
|
$ |
84,198 |
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
per share – basic |
|
$ |
0.50 |
|
|
$ |
0.79 |
|
|
$ |
1.06 |
|
|
$ |
1.83 |
|
Adjusted Net Income
per share – diluted |
|
$ |
0.49 |
|
|
$ |
0.79 |
|
|
$ |
1.04 |
|
|
$ |
1.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding – basic |
|
44,506,874 |
|
|
45,058,226 |
|
|
44,557,103 |
|
|
46,040,027 |
|
Weighted average shares
outstanding – diluted |
|
45,209,696 |
|
|
45,504,165 |
|
|
45,382,687 |
|
|
46,475,353 |
|
(1) |
|
Includes foreign currency translation gains/losses, the revaluation
of the estimated acquisition related contingent consideration, and
other non-operating costs. |
(2) |
|
Noncontrolling interest adjustment made such that Adjusted EBITDA
includes only the Company’s ownership interest in the Adjusted
EBITDA of one of the Company's Mexican subsidiaries. |
(3) |
|
For the three and nine months ended September 30, 2020, our
restructuring expenses included costs incurred in conjunction with
facility closures, workforce reductions and other related charges.
For the three and nine months ended September 30, 2019, our
restructuring expenses included professional fees and costs
incurred in conjunction with facility closures and workforce
reductions. |
(4) |
|
Amounts exclude a portion of the expenses incurred by one of the
Company's Mexican subsidiaries to account for the amounts allocable
to the noncontrolling interest shareholders. |
(5) |
|
For the three and nine month periods ended September 30, 2020,
the non-GAAP tax rates used to calculate Adjusted Net Income were
19.8% and 19.1%, respectively. For the three and nine months
ended September 30, 2019, the non-GAAP tax rates used to
calculate Adjusted Net Income were 23.7% and 23.4%, respectively.
These figures represent the Company’s GAAP tax rate as adjusted for
the net tax effects related to the items excluded from Adjusted Net
Income. |
|
Reconciliation of U.S. GAAP Revenue to Constant-Currency
RevenueFor the Three and Nine Months Ended
September 30, 2020 and 2019(In thousands,
excluding percentages)(Unaudited) |
|
Consolidated revenue: |
|
|
Three Months Ended |
|
|
September 30, |
|
|
2020 |
|
2019 |
|
% Change |
|
|
U.S. GAAP |
|
ForeignCurrencyImpact |
|
Constant -Currency |
|
U.S. GAAP |
|
U.S. GAAP |
|
Constant -Currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
ATM operating revenues |
|
$ |
267,320 |
|
$ |
(2,408 |
) |
|
$ |
264,912 |
|
$ |
333,384 |
|
(19.8 |
)% |
|
(20.5 |
)% |
ATM product sales and other
revenues |
|
12,078 |
|
14 |
|
|
12,092 |
|
18,123 |
|
(33.4 |
) |
|
(33.3 |
) |
Total revenues |
|
$ |
279,398 |
|
$ |
(2,394 |
) |
|
$ |
277,004 |
|
$ |
351,507 |
|
(20.5 |
)% |
|
(21.2 |
)% |
|
|
Nine Months Ended |
|
|
September 30, |
|
|
2020 |
|
2019 |
|
% Change |
|
|
U.S. GAAP |
|
ForeignCurrencyImpact |
|
Constant -Currency |
|
U.S. GAAP |
|
U.S. GAAP |
|
Constant -Currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
ATM operating revenues |
|
$ |
781,998 |
|
$ |
4,761 |
|
|
$ |
786,759 |
|
$ |
959,067 |
|
(18.5 |
)% |
|
(18.0 |
)% |
ATM product sales and other
revenues |
|
37,194 |
|
|
345 |
|
|
37,539 |
|
51,531 |
|
(27.8 |
) |
|
(27.2 |
) |
Total revenues |
|
$ |
819,192 |
|
$ |
5,106 |
|
|
$ |
824,298 |
|
$ |
1,010,598 |
|
(18.9 |
)% |
|
(18.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Gross Profit Inclusive of Depreciation,
Accretion, and Amortization of Intangible Assets
to Adjusted Gross ProfitFor the Three and Nine
Months Ended September 30, 2020 and 2019 (In
thousands, excluding
percentages)(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
|
September 30, |
|
September 30, |
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Total
revenues |
|
$ |
279,398 |
|
|
$ |
351,507 |
|
|
$ |
819,192 |
|
|
$ |
1,010,598 |
|
Total cost of
revenues (1) |
|
173,107 |
|
|
223,782 |
|
|
537,536 |
|
|
664,247 |
|
Total
depreciation, accretion, and amortization of intangible assets
excluded from total cost of revenues |
|
33,526 |
|
|
37,303 |
|
|
97,568 |
|
|
112,297 |
|
Gross profit (inclusive of depreciation, accretion, and
amortization of intangible assets) |
|
72,765 |
|
|
90,422 |
|
|
184,088 |
|
|
234,054 |
|
Gross Margin (inclusive of depreciation, accretion, and
amortization of intangible assets) |
|
26.0 |
% |
|
25.7 |
% |
|
22.5 |
% |
|
23.2 |
% |
Total
depreciation, accretion, and amortization of intangible assets
excluded from gross profit |
|
33,526 |
|
|
37,303 |
|
|
97,568 |
|
|
112,297 |
|
Adjusted Gross Profit (exclusive of depreciation, accretion, and
amortization of intangible assets) |
|
$ |
106,291 |
|
|
$ |
127,725 |
|
|
$ |
281,656 |
|
|
$ |
346,351 |
|
Adjusted Gross
Margin (exclusive of depreciation, accretion, and amortization of
intangible assets) |
|
38.0 |
% |
|
36.3 |
% |
|
34.4 |
% |
|
34.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Company presents the Total cost of revenues in the Company’s
Consolidated Statements of Operations exclusive of depreciation,
accretion, and amortization of intangible assets. |
|
Reconciliation of Adjusted EBITDA, Adjusted Net Income, and
Adjusted Net Income per diluted share on a
Non-GAAP basis to Constant-CurrencyFor the Three
and Nine Months Ended September 30, 2020 and
2019(In thousands, excluding per share amounts and
percentages)(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
September 30, |
|
|
2020 |
|
2019 |
|
% Change |
|
|
Non -GAAP
(1) |
|
ForeignCurrencyImpact |
|
Constant -Currency |
|
Non -GAAP
(1) |
|
Non -GAAP
(1) |
|
Constant -Currency |
Adjusted EBITDA |
|
$ |
71,858 |
|
$ |
(1,069 |
) |
|
$ |
70,789 |
|
$ |
87,113 |
|
(17.5 |
)% |
|
(18.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
22,186 |
|
$ |
(509 |
) |
|
$ |
21,677 |
|
$ |
35,782 |
|
(38.0 |
)% |
|
(39.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per share
– diluted (2) |
|
$ |
0.49 |
|
$ |
(0.01 |
) |
|
$ |
0.48 |
|
$ |
0.79 |
|
(38.0 |
)% |
|
(39.2 |
)% |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
2020 |
|
2019 |
|
% Change |
|
|
|
Non -GAAP
(1) |
|
ForeignCurrencyImpact |
|
Constant -Currency |
|
Non -GAAP
(1) |
|
Non -
GAAP (1) |
|
Constant -Currency |
Adjusted
EBITDA |
$ |
182,242 |
|
$ |
402 |
|
|
$ |
182,644 |
|
$ |
229,855 |
|
(20.7 |
)% |
|
(20.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income |
$ |
47,357 |
|
$ |
(362 |
) |
|
$ |
46,995 |
|
$ |
84,198 |
|
(43.8 |
)% |
|
(44.2 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income
per share – diluted (2) |
$ |
1.04 |
|
— |
|
|
$ |
1.04 |
|
$ |
1.81 |
|
(42.5 |
)% |
|
(42.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As reported on the schedule entitled Reconciliation of Net Income
Attributable to Controlling Interests and Available to Common
Shareholders to EBITDA, Adjusted EBITDA, and Adjusted Net Income.
See Disclosure of Non-GAAP Financial Information in this earnings
release for further discussion. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
Adjusted Net Income per diluted share is calculated by dividing
Adjusted Net Income by the weighted average diluted shares
outstanding of 45,209,696 and 45,504,165 for the three months ended
September 30, 2020 and 2019, respectively, and 45,382,687 and
46,475,353 for the nine months ended September 30, 2020 and
2019, respectively. |
|
|
|
|
|
|
Reconciliation of Adjusted Net Cash Provided by Operating
Activities and Adjusted Free Cash FlowFor the Three and
Nine Months Ended September 30, 2020 and 2019 (In
thousands)(Unaudited) |
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net cash provided
by operating activities |
$ |
98,350 |
|
|
$ |
176,462 |
|
|
$ |
188,201 |
|
|
$ |
231,692 |
|
Restricted cash
settlement activity (1) |
(11,418 |
) |
|
(92,983 |
) |
|
(10,673 |
) |
|
(22,629 |
) |
Adjusted net cash
provided by operating activities |
86,932 |
|
|
83,479 |
|
|
177,528 |
|
|
209,063 |
|
Net cash used in
investing activities, excluding acquisitions (2) |
(31,290 |
) |
|
(35,266 |
) |
|
(61,094 |
) |
|
(90,319 |
) |
Adjusted free cash flow |
$ |
55,642 |
|
|
$ |
48,213 |
|
|
$ |
116,434 |
|
|
$ |
118,744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Restricted cash settlement activity represents the change in our
restricted cash excluding the portion of the change that is
attributable to foreign exchange and disclosed as part of the
effect of exchange rate changes on cash, cash equivalents, and
restricted cash in our Consolidated Statements of Cash Flows.
Restricted cash largely consists of amounts collected on behalf of,
but not yet remitted to, certain of the Company’s merchant
customers or third-party service providers that are pledged for a
particular use or restricted to support these obligations. These
amounts can fluctuate significantly period to period based on the
number of days for which settlement to the merchant has not yet
occurred or day of the week on which a quarter ends. |
|
|
|
|
(2) |
|
Capital expenditure amounts include payments made for property and
equipment, exclusive license agreements, site acquisition costs,
and other assets. Additionally, capital expenditure amounts for one
of our Mexican subsidiaries are reflected gross of any
noncontrolling interest amounts. |
|
|
|
Cardtronics is a registered trademark of
Cardtronics plc and its subsidiaries.All other trademarks are the
property of their respective owners.
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