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 and year ended
December 31, 2020.
“During a year filled with unique challenges,
our team continued to execute on our strategic priorities and
evolve the business to deliver expanded solutions for our
customers,” said Ed West, CEO of Cardtronics. “We secured major new
partnerships with leading retailers, financial institutions, and
Fintechs demonstrating the increasing importance and value of our
trusted network and managed services capabilities. Through
continued operational execution and technology enhancements, we
generated strong free cash flows and positioned the business for
long-term growth in revenues and profits.”
“We believe that 2020 is an inflection point
from which Cardtronics has emerged well-positioned to gain
transaction share and grow revenues and profits. Our end-to-end
platform continues to drive new business opportunities with
financial institutions and Fintechs, providing customized,
scalable, and cost-effective cash solutions. Our proprietary
solutions are designed to drive more store traffic to our leading
retailers. As the fallout from the pandemic continues to unfold and
the trend of bank branch transformation accelerates, many leading
retail banks are reducing their physical footprints even further,
making Cardtronics ideally positioned to capitalize on the changes
occurring in retail consumer finance.”
“The execution of our strategy has positioned
the Company well, and we are excited about our recent announcement
of a definitive acquisition agreement reached with NCR. Our
customers’ needs and expectations are growing and evolving, and we
believe by combining our capabilities, we are better positioned to
offer our customers an even broader range of financial solutions,
enhanced level of services, and greater overall value,” concluded
West.
Fourth Quarter 2020 Financial
Highlights:
Pandemic-related restrictions continue to be
dynamic and impact consumer activity and transaction levels across
the Company's footprint. Adverse impacts from government-mandated
lockdown restrictions for certain geographies, in particular the
operations in the U.K., Canada, Germany, and Spain, accelerated
during the second half of the fourth quarter. These restrictions
are continuing into the first quarter of 2021, which is also
typically the seasonally lowest transacting quarter of the
year.
- Total revenues of
$274.8 million, down 18.9% from $338.8 million in the prior year,
and down 19.7% on a constant-currency basis.
- ATM operating revenues of $259.0
million, down 19.6% from $322.0 million in the prior year, and down
20.4% on a constant-currency basis.
- GAAP Net income of $9.6 million, or
$0.21 per diluted share, compared to GAAP Net income of $12.6
million, or $0.28 per diluted share in the prior year.
- Adjusted Net income per diluted
share of $0.64 compared to $0.70 in the prior year.
- Adjusted EBITDA of $81.4 million,
up 4.2% from $78.1 million in the prior year, and up 3.2% on a
constant-currency basis, positively impacted by business rate
(property tax) recoveries in the U.K. of approximately $23.3
million during the fourth quarter.
- Adjusted EBITDA margin of 29.6%
compared to 23.1% in the prior year.
- An increase in restricted cash and
corresponding liabilities caused reported net cash provided by
operating activities to be $94.1 million compared to net cash used
in operating activities of $27.0 million in the prior year.
Adjusted net cash provided by operating activities, which excludes
the impact of restricted cash settlement activity, was $55.3
million compared to $66.1 million in the prior year.
- Adjusted free cash flow of $25.2
million compared to $31.5 million in the prior year.
- Net Debt reduction of $27.6 million
during the quarter.
Recent Business Highlights:
- Added several Fintechs to the
Allpoint ATM network of convenient and surcharge-free ATMs,
including Ahead Financials, a LendUp Global company; Clair; and
Marqeta.
- Signed new managed services
agreement with First Midwest Bank to operate approximately 160
ATMs, including branch and off-premise ATMs.
- Expanded branding relationship with
Citizens Bank for nearly 200 ATMs at CVS locations in the Detroit
area.
- Deployed over 2,500 new ATMs in Q4,
including over 1,500 in the U.S. and over 300 in South Africa.
- Enabled proprietary neotermTM
software on over 20,000 ATMs by the end of 2020.
Full-Year 2020 Financial
Highlights:
- Total revenues of
$1.09 billion, down 18.9% from $1.35 billion in the prior year, and
down 18.8% on a constant-currency basis.
- ATM operating revenues of $1.04
billion, down 18.8% from $1.28 billion in the prior year, and down
18.6% on a constant-currency basis.
- GAAP Net income of $19.1 million,
or $0.42 per diluted share, compared to GAAP Net income of $48.3
million, or $1.05 per diluted share in the prior year.
- Adjusted Net income per diluted
share of $1.69 compared to $2.52 in the prior year.
- Adjusted EBITDA of $263.6 million,
down 14.4% from $308.0 million in the prior year, and down 14.5% on
a constant-currency basis, positively impacted by business rate tax
recoveries in the U.K. of approximately $35.1 million.
- Adjusted EBITDA margin of 24.1%
compared to 22.8% in the prior year.
- An increase in restricted cash and
corresponding liabilities caused reported net cash provided by
operating activities to be $282.3 million compared to $204.7
million in the prior year. Adjusted net cash provided by operating
activities, which excludes the impact of restricted cash settlement
activity, was $232.8 million compared to $275.1 million in the
prior year.
- Adjusted free cash flow of $141.7
million compared to $150.2 million in the prior year.
- Net Debt reduction of $101.4
million during the year.
Proposed Transaction with NCR Corporation
and Upcoming Investor Communications
As previously announced on January 25, 2021, the
Company entered into an acquisition agreement with NCR Corporation
("NCR") pursuant to which NCR will acquire all outstanding shares
of Cardtronics for $39.00 per share in cash. The transaction, which
was approved by the board of directors of both companies, is
expected to close in mid-2021, subject to the satisfaction of
customary closing conditions, including regulatory approvals and
approvals by holders of Cardtronics' outstanding common shares. In
light of the pending transaction, Cardtronics does not expect to
hold quarterly earnings conference calls but does expect to issue a
quarterly earnings release and to provide additional financial and
business information in an earnings supplement posted on the
Company's website.
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.
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. With our 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 certain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, 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. While management believes that
these forward-looking statements are reasonable as and when made,
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. Known material factors that could cause actual results
to differ materially from those in the forward-looking statements
include:
- the Company’s ability to respond to
business cycles, seasonality, and other outside factors such as
extreme weather, natural disasters, health emergencies, including
the COVID-19 outbreak, that has adversely affect our business, and
may in the future have a material adverse impact on our
business;
- the Company’s financial outlook and
the financial outlook of the automated teller machines and
multi-function financial services kiosks (collectively, “ATMs”)
industry and the continued usage of cash by consumers at rates near
historical patterns;
- the impact of macroeconomic
conditions, including the future impacts of the COVID-19 outbreak
on global economic conditions, which is highly uncertain and
difficult to predict;
- the Company’s ability to respond to
recent and future network and regulatory changes;
- the Company’s ability to manage
cybersecurity risks and protect against cyber-attacks and manage
and prevent cyber incidents, data breaches or losses, or other
business disruptions;
- the Company’s ability to respond to
changes implemented by networks and how they determine interchange,
scheduled and potential reductions in the amount of net interchange
that it receives from global and regional debit networks due to
pricing changes implemented by those networks as well as changes in
how issuers route their ATM transactions over those networks;
- the Company’s ability to renew its
existing merchant relationships on comparable or improved economic
terms and add new merchants;
- changes in interest rates and
foreign currency rates;
- the Company’s ability to
successfully manage its existing international operations and to
continue to expand internationally;
- the Company’s ability to manage
concentration risks with and changes in the mix of key customers,
merchants, vendors, and service providers;
- the Company’s ability to maintain
appropriate liquidity;
- the Company’s ability to prevent
thefts of cash and maintain adequate insurance;
- the Company’s ability to provide
new ATM solutions to retailers and financial institutions including
the demand for any such new ATM solutions as well as its ability to
place additional banks’ brands on ATMs currently deployed;
- the Company’s ATM vault cash rental
needs, including potential liquidity issues with its vault cash
providers and its ability to continue to secure vault cash rental
agreements in the future and once secured, on reasonable economic
terms;
- 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 renew its
existing third-party service provider relationships on comparable
or improved economic terms;
- the Company’s ability to
successfully implement and evolve its corporate strategy;
- the Company’s ability to compete
successfully with new and existing competitors;
- the Company’s ability to meet the
service levels required by its service level agreements with its
customers;
- the additional risks the Company is
exposed to in its United Kingdom (“U.K.”) cash-in-transit
business;
- the Company’s ability to pursue,
complete, and successfully integrate acquisitions, strategic
alliances, or joint ventures;
- the impact of changes in laws,
including tax laws that could adversely affect the Company’s
business and profitability;
- the impact of, or uncertainty
related to, the U.K.’s exit from the European Union, including any
material adverse effect on the tax, tax treaty, currency,
operational, legal, human, and regulatory regime and macro-economic
environment to which it will be subject to as a U.K. company;
- the Company’s ability to adequately
maintain and upgrade its ATM fleet to address changes in industry
standards, regulations and consumer behavior patterns;
- the Company’s ability to retain its
key employees and maintain good relations with its employees;
and
- the Company’s ability to manage the
fluctuation of its operating results, including as a result of the
foregoing and other risk factors included 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.
In addition, actual results may vary materially
from those expressed or implied by forward-looking statements based
on a number of factors related to the proposed acquisition of the
Company by NCR Corporation, including, without limitation:
- statements regarding the Company’s
plans to manage its business through the COVID-19 pandemic and the
health and safety of its customers and employees;
- the expected impact of the COVID-19
pandemic on the Company’s operating goals and actions to manage
these goals;
- expectations regarding cost and
revenue synergies; expectations regarding the Company’s cash flow
generation, cash reserve, liquidity, financial flexibility and
impact of the COVID-19 pandemic on the Company’s employee
base;
- expectations regarding the
Company’s ability to capitalize on market opportunities;
- the Company’s financial
outlook;
- the effect of the announcement of
the proposed transaction on the ability of the Company to retain
and hire key personnel and maintain relationships with customers,
suppliers and others with whom the Company does business, or on the
Company's operating results and business generally;
- risks that the proposed transaction
disrupts current plans and operations and the potential
difficulties in employee retention as a result of the proposed
transaction;
- the outcome of any legal
proceedings related to the proposed transaction;
- the occurrence of any event, change
or other circumstances that could give rise to the termination of
the acquisition agreement;
- the ability of the parties to
consummate the proposed transaction on a timely basis or at
all;
- the satisfaction of the conditions
precedent to consummation of the proposed transaction, including
the ability to secure regulatory and shareholder approvals on the
terms expected, at all or in a timely manner;
- the ability of the Company to
implement its plans, forecasts and other expectations with respect
to its business after the completion of the proposed transaction
and realize expected benefits;
- business disruption following the
proposed transaction;
- and the potential benefits of an
acquisition of the Company.
For additional information regarding known
material factors that could cause the Company’s actual results to
differ from its projected results, see Part I. Item 1A. Risk
Factors 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 document, 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.
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, 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 16.3% and 18.0% for the three and
twelve months ended December 31, 2020, and 22.4% and 23.1% for
the three and twelve months ended December 31, 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 and excluding non-recurring impacts
of tax rate changes and valuation allowances. 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 Twelve Months Ended
December 31, 2020 and 2019(In thousands,
excluding share, per share amounts, and
percentages)(Unaudited)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2020 |
|
2019 |
|
% Change |
|
2020 |
|
2019 |
|
% Change |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
ATM operating revenues |
|
$ |
259,020 |
|
|
|
$ |
322,039 |
|
|
|
(19.6 |
)% |
|
$ |
1,040,779 |
|
|
|
$ |
1,281,106 |
|
|
|
(18.8 |
)% |
ATM product sales and other revenues |
|
15,787 |
|
|
|
16,768 |
|
|
|
(5.9 |
) |
|
53,220 |
|
|
|
68,299 |
|
|
|
(22.1 |
) |
Total revenues |
|
274,807 |
|
|
|
338,807 |
|
|
|
(18.9 |
) |
|
1,093,999 |
|
|
|
1,349,405 |
|
|
|
(18.9 |
) |
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of ATM operating revenues (excludes depreciation, accretion,
and amortization of intangible assets reported separately
below) |
|
143,052 |
|
|
|
207,260 |
|
|
|
(31.0 |
) |
|
652,906 |
|
|
|
830,359 |
|
|
|
(21.4 |
) |
Cost of ATM product sales and other revenues |
|
12,063 |
|
|
|
13,472 |
|
|
|
(10.5 |
) |
|
39,745 |
|
|
|
54,620 |
|
|
|
(27.2 |
) |
Total cost of revenues |
|
155,115 |
|
|
|
220,732 |
|
|
|
(29.7 |
) |
|
692,651 |
|
|
|
884,979 |
|
|
|
(21.7 |
) |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses |
|
44,444 |
|
|
|
45,562 |
|
|
|
(2.5 |
) |
|
160,053 |
|
|
|
177,474 |
|
|
|
(9.8 |
) |
Restructuring expenses |
|
2,886 |
|
|
|
1,882 |
|
|
|
53.3 |
|
|
9,443 |
|
|
|
8,928 |
|
|
|
5.8 |
|
Acquisition related expenses |
|
8,836 |
|
|
|
— |
|
|
|
n/m |
|
8,836 |
|
|
|
— |
|
|
|
n/m |
Depreciation and accretion expense |
|
35,864 |
|
|
|
31,032 |
|
|
|
15.6 |
|
|
133,210 |
|
|
|
130,676 |
|
|
|
1.9 |
|
Amortization of intangible assets |
|
6,712 |
|
|
|
11,854 |
|
|
|
(43.4 |
) |
|
31,874 |
|
|
|
49,261 |
|
|
|
(35.3 |
) |
Loss on disposal and impairment of assets |
|
2,297 |
|
|
|
8,552 |
|
|
|
(73.1 |
) |
|
4,144 |
|
|
|
11,653 |
|
|
|
(64.4 |
) |
Total operating expenses |
|
101,039 |
|
|
|
98,882 |
|
|
|
2.2 |
|
|
347,560 |
|
|
|
377,992 |
|
|
|
(8.1 |
) |
Income from operations |
|
18,653 |
|
|
|
19,193 |
|
|
|
(2.8 |
) |
|
53,788 |
|
|
|
86,434 |
|
|
|
(37.8 |
) |
Other expenses (income): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
10,735 |
|
|
|
6,339 |
|
|
|
69.3 |
|
|
37,097 |
|
|
|
26,604 |
|
|
|
39.4 |
|
Amortization of deferred financing costs and note discount |
|
1,935 |
|
|
|
3,448 |
|
|
|
(43.9 |
) |
|
12,161 |
|
|
|
13,447 |
|
|
|
(9.6 |
) |
Redemption costs for early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
n/m |
|
3,018 |
|
|
|
— |
|
|
|
n/m |
Other income, net |
|
(8,426 |
) |
|
|
(8,950 |
) |
|
|
n/m |
|
(18,077 |
) |
|
|
(18,404 |
) |
|
|
n/m |
Total other expenses |
|
4,244 |
|
|
|
837 |
|
|
|
407.0 |
|
|
34,199 |
|
|
|
21,647 |
|
|
|
58.0 |
|
Income before income taxes |
|
14,409 |
|
|
|
18,356 |
|
|
|
(21.5 |
) |
|
19,589 |
|
|
|
64,787 |
|
|
|
(69.8 |
) |
Income tax expense |
|
4,827 |
|
|
|
5,742 |
|
|
|
n/m |
|
452 |
|
|
|
16,522 |
|
|
|
n/m |
Effective tax rate |
|
33.5 |
|
% |
|
31.3 |
|
% |
|
|
|
2.3 |
|
% |
|
25.5 |
|
% |
|
|
Net income |
|
9,582 |
|
|
|
12,614 |
|
|
|
(24.0 |
) |
|
19,137 |
|
|
|
48,265 |
|
|
|
(60.4 |
) |
Net income (loss) attributable to noncontrolling interests |
|
3 |
|
|
|
(6 |
) |
|
|
n/m |
|
(7 |
) |
|
|
(9 |
) |
|
|
n/m |
Net income attributable to controlling interests and available to
common shareholders |
|
$ |
9,579 |
|
|
|
$ |
12,620 |
|
|
|
(24.1 |
) |
|
$ |
19,144 |
|
|
|
$ |
48,274 |
|
|
|
(60.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share – basic |
|
$ |
0.22 |
|
|
|
$ |
0.28 |
|
|
|
|
|
$ |
0.43 |
|
|
|
$ |
1.06 |
|
|
|
|
Net income per common share – diluted |
|
$ |
0.21 |
|
|
|
$ |
0.28 |
|
|
|
|
|
$ |
0.42 |
|
|
|
$ |
1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding – basic |
|
44,490,234 |
|
44,619,307 |
|
|
|
44,537,467 |
|
45,514,703 |
|
|
Weighted average shares outstanding – diluted |
|
45,396,522 |
|
45,288,321 |
|
|
|
45,397,494 |
|
46,015,334 |
|
|
Condensed Consolidated Balance
SheetsAs of December 31, 2020 and
December 31, 2019(In thousands)
|
|
December 31, 2020 |
|
December 31, 2019 |
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
174,242 |
|
|
$ |
30,115 |
|
Accounts and notes receivable, net |
|
89,867 |
|
|
95,795 |
|
Inventory, net |
|
6,598 |
|
|
10,618 |
|
Restricted cash |
|
137,353 |
|
|
87,354 |
|
Prepaid expenses, deferred costs, and other current assets |
|
53,953 |
|
|
84,639 |
|
Total current assets |
|
462,013 |
|
|
308,521 |
|
Property and equipment, net |
|
429,842 |
|
|
461,277 |
|
Operating lease assets |
|
60,368 |
|
|
76,548 |
|
Intangible assets, net |
|
84,629 |
|
|
113,925 |
|
Goodwill |
|
759,102 |
|
|
752,592 |
|
Deferred tax assets, net |
|
17,382 |
|
|
13,159 |
|
Prepaid expenses, deferred costs, and other noncurrent assets |
|
18,109 |
|
|
37,936 |
|
Total assets |
|
$ |
1,831,445 |
|
|
$ |
1,763,958 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
Current liabilities: |
|
|
|
|
Current portion of long-term debt |
|
$ |
5,000 |
|
|
$ |
— |
|
Current portion of other long-term liabilities |
|
64,799 |
|
|
53,144 |
|
Accounts payable and accrued liabilities |
|
406,186 |
|
|
381,240 |
|
Total current liabilities |
|
475,985 |
|
|
434,384 |
|
Long-term liabilities: |
|
|
|
|
Long-term debt |
|
773,177 |
|
|
739,475 |
|
Asset retirement obligations |
|
56,973 |
|
|
55,494 |
|
Deferred tax liability, net |
|
51,484 |
|
|
46,878 |
|
Operating lease liabilities |
|
56,683 |
|
|
69,531 |
|
Other long-term liabilities |
|
37,727 |
|
|
37,870 |
|
Total liabilities |
|
1,452,029 |
|
|
1,383,632 |
|
Shareholders' equity |
|
379,416 |
|
|
380,326 |
|
Total liabilities and shareholders’ equity |
|
$ |
1,831,445 |
|
|
$ |
1,763,958 |
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Detail:
Current and Long-Term Debt: |
|
December 31, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
(In thousands) |
|
|
(Unaudited) |
|
|
Revolving credit facility due September 2024 |
|
$ |
— |
|
|
$ |
167,227 |
|
Term Loan Facility due June 2027 (1) |
|
480,985 |
|
|
— |
|
5.50% Senior Notes due May 2025 (2) |
|
297,192 |
|
|
296,545 |
|
1.00% Convertible senior notes due December 2020 (3) |
|
— |
|
|
275,703 |
|
Total Current and Long-term Debt |
|
778,177 |
|
|
739,475 |
|
Less: Current portion |
|
(5,000 |
) |
|
— |
|
Total Long-term debt |
|
$ |
773,177 |
|
|
$ |
739,475 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Current and Long-Term Debt to Net
Debt: |
|
December 31, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
(In thousands) |
|
|
(Unaudited) |
|
|
Total Current and Long-term Debt |
|
$ |
778,177 |
|
|
$ |
739,475 |
|
Add: Unamortized discounts and capitalized debt issuance costs |
|
19,323 |
|
|
15,252 |
|
Less: Cash and cash equivalents |
|
(174,242 |
) |
|
(30,115 |
) |
Net Debt |
|
$ |
623,258 |
|
|
$ |
724,612 |
|
|
|
|
|
|
|
|
|
|
(1) |
The Term Loan Facility due June 2027 (the "Term Loan") with a
face value of $497.5 million is presented net of unamortized
discounts and capitalized debt issuance costs of $16.5 million
as of December 31, 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 December 31, 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 and retire the 1.00% Convertible Senior Notes. |
(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 $2.8 million
and $3.5 million as of December 31, 2020 and
December 31, 2019, respectively. |
(3) |
The 1.00% Convertible Senior
Notes due December 2020 (the "Convertible Notes") with a face value
of $287.5 million as of December 31, 2019, are presented net of
unamortized discounts and capitalized debt issuance costs of
$11.8 million as of December 31, 2019. During the quarter
ended June 30, 2020, the Company repurchased and cancelled $171.9
million in principal amount of Convertible Notes. On November 30,
2020, the Company repaid the remaining $115.6 million outstanding
principal balance. |
Reconciliation of Net Income Attributable
to Controlling Interests and Available to Common
Shareholders to EBITDA, Adjusted EBITDA, and Adjusted Net
IncomeFor the Three and Twelve Months Ended
December 31, 2020 and 2019(In thousands,
excluding share and per share
amounts)(Unaudited)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income attributable to controlling interests and
available to common shareholders |
|
$ |
9,579 |
|
|
|
$ |
12,620 |
|
|
|
$ |
19,144 |
|
|
|
$ |
48,274 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Interest expense, net |
|
10,735 |
|
|
|
6,339 |
|
|
|
37,097 |
|
|
|
26,604 |
|
|
Amortization of deferred financing costs and note discount |
|
1,935 |
|
|
|
3,448 |
|
|
|
12,161 |
|
|
|
13,447 |
|
|
Redemption costs for early extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
3,018 |
|
|
|
— |
|
|
Income tax expense |
|
4,827 |
|
|
|
5,742 |
|
|
|
452 |
|
|
|
16,522 |
|
|
Depreciation and accretion expense |
|
35,864 |
|
|
|
31,032 |
|
|
|
133,210 |
|
|
|
130,676 |
|
|
Amortization of intangible assets |
|
6,712 |
|
|
|
11,854 |
|
|
|
31,874 |
|
|
|
49,261 |
|
|
EBITDA |
|
$ |
69,652 |
|
|
|
$ |
71,035 |
|
|
|
$ |
236,956 |
|
|
|
$ |
284,784 |
|
|
|
|
|
|
|
|
|
|
|
Add back: |
|
|
|
|
|
|
|
|
Loss on disposal and impairment of assets (1) |
|
2,297 |
|
|
|
8,552 |
|
|
|
4,144 |
|
|
|
11,653 |
|
|
Other income, net (2) |
|
(8,426 |
) |
|
|
(8,950 |
) |
|
|
(18,077 |
) |
|
|
(18,404 |
) |
|
Noncontrolling interests (3) |
|
17 |
|
|
|
12 |
|
|
|
59 |
|
|
|
58 |
|
|
Share-based compensation expense |
|
6,121 |
|
|
|
5,595 |
|
|
|
22,264 |
|
|
|
20,962 |
|
|
Acquisition related expenses (4) |
|
8,836 |
|
|
|
— |
|
|
|
8,836 |
|
|
|
— |
|
|
Restructuring expenses (5) |
|
2,886 |
|
|
|
1,882 |
|
|
|
9,443 |
|
|
|
8,928 |
|
|
Adjusted EBITDA (6) |
|
$ |
81,383 |
|
|
|
$ |
78,126 |
|
|
|
$ |
263,625 |
|
|
|
$ |
307,981 |
|
|
Less: |
|
|
|
|
|
|
|
|
Depreciation and accretion expense (7) |
|
35,864 |
|
|
|
31,031 |
|
|
|
133,210 |
|
|
|
130,675 |
|
|
Interest expense, net |
|
10,735 |
|
|
|
6,339 |
|
|
|
37,097 |
|
|
|
26,604 |
|
|
Adjusted pre-tax income |
|
34,784 |
|
|
|
40,756 |
|
|
|
93,318 |
|
|
|
150,702 |
|
|
Income tax expense (8) |
|
5,670 |
|
|
|
9,130 |
|
|
|
16,817 |
|
|
|
34,877 |
|
|
Adjusted Net Income |
|
$ |
29,114 |
|
|
|
$ |
31,626 |
|
|
|
$ |
76,501 |
|
|
|
$ |
115,825 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per share – basic |
|
$ |
0.65 |
|
|
|
$ |
0.71 |
|
|
|
$ |
1.72 |
|
|
|
$ |
2.54 |
|
|
Adjusted Net Income per share – diluted |
|
$ |
0.64 |
|
|
|
$ |
0.70 |
|
|
|
$ |
1.69 |
|
|
|
$ |
2.52 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding – basic |
|
44,490,234 |
|
44,619,307 |
|
44,537,467 |
|
45,514,703 |
Weighted average shares outstanding – diluted |
|
45,396,522 |
|
45,288,321 |
|
45,397,494 |
|
46,015,334 |
(1) For the three and twelve months ended
December 31, 2019, includes a goodwill impairment of $7.3 million
on the Canada reporting unit.(2) Includes foreign currency
translation gains/losses, the revaluation of the estimated
acquisition related contingent consideration, and other
non-operating costs.(3) 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.(4) For the three and twelve months ended December 31,
2020, costs include investment banking, legal and professional
fees and certain other administrative costs incurred in
connection with the proposed acquisition of the Company.(5) For the
three and twelve months ended December 31, 2020, our restructuring
expenses included costs incurred in conjunction with facility
closures, workforce reductions and other related charges. For the
three and twelve months ended December 31, 2019, our
restructuring expenses included workforce reductions, costs
incurred in conjunction with facility closures, professional fees
and other related charges.(6) The results for the three and twelve
month periods ended December 31, 2020, include business rate
tax recoveries of $23.3 million and $35.1 million, respectively,
classified as a cost reduction within Cost of ATM operating
revenues.(7) 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.(8)
For the three and twelve month periods ended December 31,
2020, the non-GAAP tax rates used to calculate Adjusted Net Income
were 16.3% and 18.0%, respectively. For the three and twelve months
ended December 31, 2019, the non-GAAP tax rates used to
calculate Adjusted Net Income were 22.4% and 23.1%, 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 and excluding non-recurring impacts of tax rate changes and
valuation allowances.
Reconciliation of U.S. GAAP Revenue to
Constant-Currency RevenueFor the Three and Twelve
Months Ended December 31, 2020 and 2019(In
thousands, excluding
percentages)(Unaudited)
Consolidated revenue: |
|
|
|
Three Months Ended |
|
|
|
December 31, |
|
|
|
2020 |
|
2019 |
|
% Change |
|
|
U.S. GAAP |
|
Foreign Currency Impact |
|
Constant - Currency |
|
U.S. GAAP |
|
U.S. GAAP |
|
Constant - Currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATM operating revenues |
|
$ |
259,020 |
|
|
$ |
(2,719 |
) |
|
|
$ |
256,301 |
|
|
$ |
322,039 |
|
|
(19.6 |
) |
% |
|
|
(20.4 |
) |
% |
|
ATM product sales and other revenues |
|
15,787 |
|
|
(166 |
) |
|
|
15,621 |
|
|
16,768 |
|
|
(5.9 |
) |
|
|
|
(6.8 |
) |
|
|
Total revenues |
|
$ |
274,807 |
|
|
$ |
(2,885 |
) |
|
|
$ |
271,922 |
|
|
$ |
338,807 |
|
|
(18.9 |
) |
% |
|
|
(19.7 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
|
|
2020 |
|
2019 |
|
% Change |
|
|
U.S. GAAP |
|
Foreign Currency Impact |
|
Constant - Currency |
|
U.S. GAAP |
|
U.S. GAAP |
|
Constant - Currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATM operating revenues |
|
$ |
1,040,779 |
|
|
$ |
2,041 |
|
|
$ |
1,042,820 |
|
|
$ |
1,281,106 |
|
|
(18.8 |
) |
% |
|
|
(18.6 |
) |
% |
|
ATM product sales and other revenues |
|
53,220 |
|
|
180 |
|
|
53,400 |
|
|
68,299 |
|
|
(22.1 |
) |
|
|
|
(21.8 |
) |
|
|
Total revenues |
|
$ |
1,093,999 |
|
|
$ |
2,221 |
|
|
$ |
1,096,220 |
|
|
$ |
1,349,405 |
|
|
(18.9 |
) |
% |
|
|
(18.8 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Gross Profit Inclusive
of Depreciation, Accretion, and Amortization of
Intangible Assets to Adjusted Gross ProfitFor the
Three and Twelve Months Ended December 31, 2020 and
2019 (In thousands, excluding
percentages)(Unaudited)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Total revenues |
|
$ |
274,807 |
|
|
$ |
338,807 |
|
|
$ |
1,093,999 |
|
|
$ |
1,349,405 |
|
Total cost of revenues (1) |
|
155,115 |
|
|
220,732 |
|
|
692,651 |
|
|
884,979 |
|
Total depreciation, accretion, and amortization of intangible
assets excluded from total cost of revenues |
|
35,547 |
|
|
34,088 |
|
|
133,115 |
|
|
146,385 |
|
Gross profit (inclusive of depreciation, accretion, and
amortization of intangible assets) |
|
84,145 |
|
|
83,987 |
|
|
268,233 |
|
|
318,041 |
|
Gross Margin (inclusive of depreciation, accretion, and
amortization of intangible assets) |
|
30.6 |
% |
|
24.8 |
% |
|
24.5 |
% |
|
23.6 |
% |
Total depreciation, accretion, and amortization of intangible
assets excluded from gross profit |
|
35,547 |
|
|
34,088 |
|
|
133,115 |
|
|
146,385 |
|
Adjusted Gross Profit (exclusive of depreciation, accretion, and
amortization of intangible assets) |
|
$ |
119,692 |
|
|
$ |
118,075 |
|
|
$ |
401,348 |
|
|
$ |
464,426 |
|
Adjusted Gross Margin (exclusive of depreciation, accretion, and
amortization of intangible assets) |
|
43.6 |
% |
|
34.9 |
% |
|
36.7 |
% |
|
34.4 |
% |
(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 Twelve Months
Ended December 31, 2020 and 2019(In
thousands, excluding per share amounts and
percentages)(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
December 31, |
|
|
2020 |
|
2019 |
|
% Change |
|
|
Non -
GAAP (1) |
|
Foreign Currency Impact |
|
Constant - Currency |
|
Non -
GAAP (1) |
|
Non -
GAAP (1) |
|
Constant - Currency |
Adjusted EBITDA |
|
$ |
81,383 |
|
|
$ |
(788 |
) |
|
|
$ |
80,595 |
|
|
$ |
78,126 |
|
|
4.2 |
|
% |
|
3.2 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
29,114 |
|
|
$ |
(188 |
) |
|
|
$ |
28,926 |
|
|
$ |
31,626 |
|
|
(7.9 |
) |
% |
|
(8.5 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per share – diluted (2) |
|
$ |
0.64 |
|
|
$ |
— |
|
|
|
$ |
0.64 |
|
|
$ |
0.70 |
|
|
(8.6 |
) |
% |
|
(8.6 |
) |
% |
|
|
Twelve Months Ended |
|
|
December 31, |
|
|
2020 |
|
2019 |
|
% Change |
|
|
Non -
GAAP (1) |
|
Foreign Currency Impact |
|
Constant - Currency |
|
Non -
GAAP (1) |
|
Non -
GAAP (1) |
|
Constant - Currency |
Adjusted EBITDA |
|
$ |
263,625 |
|
|
$ |
(386 |
) |
|
|
$ |
263,239 |
|
|
$ |
307,981 |
|
|
(14.4 |
) |
% |
|
(14.5 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income |
|
$ |
76,501 |
|
|
$ |
(550 |
) |
|
|
$ |
75,951 |
|
|
$ |
115,825 |
|
|
(34.0 |
) |
% |
|
(34.4 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income per share – diluted (2) |
|
$ |
1.69 |
|
|
$ |
(0.02 |
) |
|
|
$ |
1.67 |
|
|
$ |
2.52 |
|
|
(32.9 |
) |
% |
|
(33.7 |
) |
% |
(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 45,396,522 and
45,288,321 for the three months ended December 31, 2020 and
2019, respectively, and 45,397,494 and 46,015,334 for the twelve
months ended December 31, 2020 and 2019, respectively. |
Reconciliation of Adjusted Net Cash
Provided by Operating Activities and Adjusted Free Cash
FlowFor the Three and Twelve Months Ended
December 31, 2020 and 2019 (In
thousands)(Unaudited)
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net cash provided by (used in) operating activities |
|
$ |
94,148 |
|
|
|
$ |
(27,033 |
) |
|
|
$ |
282,349 |
|
|
|
$ |
204,659 |
|
|
Restricted cash settlement activity (1) |
|
(38,861 |
) |
|
|
93,111 |
|
|
|
(49,534 |
) |
|
|
70,482 |
|
|
Adjusted net cash provided by operating activities |
|
55,287 |
|
|
|
66,078 |
|
|
|
232,815 |
|
|
|
275,141 |
|
|
Net cash used in investing activities, excluding acquisitions
(2) |
|
(30,048 |
) |
|
|
(34,587 |
) |
|
|
(91,142 |
) |
|
|
(124,906 |
) |
|
Adjusted free cash flow |
|
$ |
25,239 |
|
|
|
$ |
31,491 |
|
|
|
$ |
141,673 |
|
|
|
$ |
150,235 |
|
|
(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 expenditures are primarily related to organic growth
projects, including the purchase of ATMs for both new and existing
ATM management agreements, technology and product development,
investments in infrastructure, ongoing refreshment of ATMs and
operational assets and other related type activities in the normal
course of business. 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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