Cardtronics Announces Third Quarter 2012 Results

Thu Nov 1, 2012 4:01pm EDT

* Reuters is not responsible for the content in this press release.

HOUSTON, Nov. 1, 2012 (GLOBE NEWSWIRE) -- Cardtronics, Inc. (Nasdaq:CATM) (the "Company"), the world's largest retail ATM owner, today announced its financial and operational results for the quarter ended September 30, 2012.

Key financial statistics in the third quarter of 2012 as compared to the third quarter of 2011 include:

  • Consolidated revenues of $199.0 million, up 21%, comprised of 10% organic growth and 11% growth from acquisitions.
  • Adjusted Net Income per diluted share of $0.43, up 10% from $0.39.
  • Adjusted EBITDA of $49.5 million, up 15% from $43.0 million.
  • GAAP net income of $12.9 million or $0.28 per diluted share, compared to $46.9 million or $1.05 per diluted share in the third quarter of 2011, which included a $37.0 million non-recurring income tax benefit.

"We continued our recent success of delivering strong revenue growth, with revenues up 21% in the quarter, driven by almost equal components of organic growth and growth from acquisitions," commented Steve Rathgaber, chief executive officer. "Our revenue growth continues to drive solid bottom line increases as well, and we expect to drive further bottom line improvements as our newly deployed ATMs become fully-optimized and we continue to realize acquisition synergies."

RECENT HIGHLIGHTS

  • Acquisition on August 7, 2012 of the assets of ATM Network, a Minnesota-based ATM operator of approximately 6,200 primarily merchant-owned ATMs.
  • Inclusion of First Midwest Bank in Allpoint Network, America's largest surcharge-free network, expanding First Midwest Bank's fee-free ATM network from 130 cash machines in Illinois, Indiana and Iowa to now more than 50,000 nationwide through Allpoint.
  • Launch of FeeAlert, a new product that enables financial institutions to help their customers save money by steering them toward nearby in-network, surcharge-free ATMs and away from machines that charge them ATM fees.
  • The branding of over 1,350 new ATM locations in the quarter.
  • Net addition of over 870 new deployed Company-owned ATMs during the quarter.

Effects of foreign currency exchange rate movements had an insignificant impact on reported consolidated revenues, Adjusted EBITDA and Adjusted Net Income per diluted share during the quarter.

Please refer to the "Disclosure of Non-GAAP Financial Information" contained later in this release for definitions of Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share 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 press release.

THIRD QUARTER RESULTS

For the third quarter of 2012, consolidated revenues totaled $199.0 million, representing a 21% increase from the $165.1 million in consolidated revenues generated during the third quarter of 2011. Organic growth in the quarter accounted for 10% of the growth and was attributable to the following: (1) increased transactions per ATM in the Company's United States and United Kingdom operations; (2) unit growth expansion; (3) increased revenues from managed services agreements; (4) increased bank branding revenues from financial institution partners; and (5) growth in Allpoint. Partially offsetting the increases in organic revenue was a decline in our interchange revenue per transaction as a result of rate reductions by a major network that became effective during the previous quarter and transaction volume shifts to networks that pay lower interchange rates. The remaining 11% of revenue growth was driven by businesses acquired during the second half of 2011 and during 2012.

Adjusted EBITDA for the third quarter of 2012 totaled $49.5 million, compared to $43.0 million during the third quarter of 2011, and Adjusted Net Income totaled $18.8 million ($0.43 per diluted share) compared to $16.9 million ($0.39 per diluted share) during the third quarter of 2011. The increases in Adjusted EBITDA and Adjusted Net Income per diluted share were positively affected by the incremental revenues attributable to ATMs acquired during the second half of 2011, as well as our organic revenue growth. 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 2012 totaled $12.9 million, compared to $46.9 million during the same quarter in 2011. GAAP Net Income for the third quarter of 2011 included a non-recurring $37.0 million income tax benefit, which related to certain tax reporting and structuring changes the Company implemented with respect to its United Kingdom operations in that period. GAAP Net Income before income taxes increased $3.9 million from the third quarter of 2011 due to the same factors impacting Adjusted EBITDA discussed above and as a result of a gain recognized during the third quarter of 2012 from the reduction of a liability associated with renegotiating acquired unfavorable contracts.

NINE MONTHS RESULTS

For the nine months ended September 30, 2012, consolidated revenues totaled $582.1 million, representing a 29% increase from the $450.4 million in consolidated revenues generated during the same period in 2011. Growth from acquisitions accounted for 16% of the growth in the nine month period. Organic growth of 13% was attributable to a combination of increases in transactions per ATM, unit growth expansion, increased revenues from managed services agreements, higher bank branding revenues, growth in Allpoint, and higher equipment sales. As was the case with the quarterly results, the increases in organic revenue during the nine months ended September 30, 2012 was partially offset by the interchange rate reductions discussed above.

Adjusted EBITDA totaled $139.4 million for the nine months ended September 30, 2012, representing a 22% increase over the $114.4 million in Adjusted EBITDA for the same period in 2011, and Adjusted Net Income totaled $52.3 million ($1.19 per diluted share) for the first nine months of 2012, up 18% on a per share basis from $42.9 million ($1.01 per diluted share) during the same period in 2011. The increases in Adjusted EBITDA and Adjusted Net Income were primarily due to the same factors noted above for the Company's quarterly results.

GAAP Net Income for the nine months ended September 30, 2012 totaled $32.4 million, compared to $62.1 million during the same period in 2011. The year-over-year decrease is primarily attributable to the non-recurring $37.0 million income tax benefit recorded in the third quarter of 2011. Income before income taxes for the nine months ended September 30, 2012 was up 20% over the corresponding period in 2011.

Update of Full-Year 2012 Guidance

The Company is updating the financial guidance it provided in July 2012 regarding its anticipated full-year 2012 results, and now expects the following:

  • Revenues of $768.0 million to $775.0 million;
  • Overall gross margins of approximately 31.1% to 31.3%;
  • Adjusted EBITDA of $187.0 million to $189.0 million;
  • Depreciation and accretion expense of approximately $59.0 million, net of noncontrolling interests;
  • Cash interest expense of approximately $21.1 million to $21.3 million, net of noncontrolling interests;
  • Adjusted Net Income of $1.58 to $1.61 per diluted share, based on approximately 43.9 million weighted average diluted shares outstanding; and
  • Capital expenditures of approximately $85.0 million, net of noncontrolling interests.

The Adjusted EBITDA and Adjusted Net Income guidance excludes the impact of certain expenses, as outlined in the reconciliation provided at the end of this press release. Additionally, this guidance is based on average foreign currency exchange rates for the remainder of the year of $1.60 U.S. to £1.00 U.K., $13.00 Mexican pesos to $1.00 U.S., and $1.00 Canadian dollar to $1.00 U.S.

LIQUIDITY

The Company believes that it continues to maintain a strong liquidity position, with $70.4 million in available borrowing capacity under its $250.0 million revolving credit facility as of September 30, 2012. In addition, the size of the amended credit facility can be increased to $325.0 million under certain conditions. The Company's outstanding indebtedness as of September 30, 2012 consisted of $200.0 million in senior subordinated notes due 2018, $177.5 million in borrowings under its revolving credit facility due 2016, and $3.4 million in equipment financing notes associated with its majority-owned Mexico subsidiary.

DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION

Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share 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. Adjusted EBITDA also excludes acquisition-related costs, certain other non-operating costs, loss on asset disposal, our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures, and an adjustment for noncontrolling interest. Adjusted Net Income represents net income computed in accordance with GAAP, before amortization expense, loss on disposal of assets, stock-based compensation expense and certain other expense (income) and acquisition-related costs, and using an assumed 35% tax rate, with certain adjustments for noncontrolling interests. Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by average weighted diluted shares outstanding calculated in accordance with GAAP. Free Cash Flow is defined as cash provided by operating activities less payments for capital expenditures, including those financed through direct debt but excluding acquisitions. The measure of Free Cash Flow does not take into consideration certain other non-discretionary cash requirements such as, for example, mandatory principal payments on portions of the Company's long-term 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 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 press release.

CONFERENCE CALL INFORMATION

The Company will host a conference call today, Thursday, November 1, 2012, at 4:30 p.m. Central Time (5:30 p.m. Eastern Time) to discuss its financial results for the quarter ended September 30, 2012. 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 www.cardtronics.com.

A digital replay of the conference call will be available through Thursday, November 15, 2012, and can be accessed by calling (855) 859-2056 or (404) 537-3406 and entering 44803508 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 1, 2012.

ABOUT CARDTRONICS (Nasdaq:CATM)

Making ATM cash access convenient where people shop, work and live their lives, Cardtronics is at the convergence of retailers, financial institutions, prepaid card programs and the customers they share. Cardtronics owns/operates approximately 61,700 retail ATMs in U.S. and international locales. Whether Cardtronics is driving foot traffic for America's most relevant retailers, enhancing ATM brand presence for card issuers or expanding card holders' surcharge-free cash access on the local, national or global scene, Cardtronics is convenient access to cash, when and where consumers need it. Cardtronics is where cash meets commerce.

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;
  • the Company's ability to respond to potential reductions in the amount of net interchange fees that it receives from global and regional debit networks for transactions conducted on its ATMs 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 provide new ATM solutions to retailers and financial institutions;
  • the Company's ATM vault cash rental needs, including potential liquidity issues with its vault cash providers;
  • the continued implementation of the Company's corporate strategy;
  • 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 customers, vendors and service providers;
  • changes in interest rates and foreign currency rates;
  • the additional risks the Company is exposed to in its U.K. armored transport business; and
  • the Company's ability to retain its key employees.

Additional information regarding known material 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, 2012 and 2011
(Unaudited)
         
  Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
  (In thousands, except share and per share information)
Revenues:        
ATM operating revenues  $ 191,469  $ 157,636  $ 550,849  $ 432,164
ATM product sales and other revenues 7,560 7,423 31,240 18,230
Total revenues 199,029 165,059 582,089 450,394
Cost of revenues:        
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization shown separately below) 130,064 103,727 374,312 285,630
Cost of ATM product sales and other revenues 6,665 6,501 27,925 16,062
Total cost of revenues 136,729 110,228 402,237 301,692
Gross profit 62,300 54,831 179,852 148,702
Operating expenses:        
Selling, general, and administrative expenses 15,292 13,772 47,956 39,701
Acquisition-related expenses 381 956 1,858 1,299
Depreciation and accretion expense 15,758 12,197 44,243 35,004
Amortization expense 5,565 4,946 16,452 12,240
(Gain) loss on disposal of assets (28) 117 784 280
Total operating expenses 36,968 31,988 111,293 88,524
Income from operations 25,332 22,843 68,559 60,178
Other expense (income):        
Interest expense, net 5,269 5,243 15,966 14,810
Amortization of deferred financing costs 225 351 669 775
Other (income) expense (1,037) 318 (1,088) 258
Total other expense 4,457 5,912 15,547 15,843
Income before income taxes 20,875 16,931 53,012 44,335
Income tax expense (benefit) 8,169 (29,869) 20,684 (17,765)
Net income 12,706 46,800 32,328 62,100
Net (loss) income attributable to noncontrolling interests (191) (85) (62) 20
Net income attributable to controlling interests and available to common stockholders $ 12,897 $ 46,885 $ 32,390 $ 62,080
         
Net income per common share – basic $ 0.29 $ 1.06 $ 0.72 $ 1.42
Net income per common share – diluted $ 0.28 $ 1.05 $ 0.71 $ 1.40
         
Weighted average shares outstanding – basic 43,669,756 42,570,137 43,333,407 42,001,624
Weighted average shares outstanding – diluted 44,045,021 43,195,554 43,783,534 42,727,446
 
Condensed Consolidated Balance Sheets
As of September 30, 2012 and December 31, 2011 
     
  September 30, 2012 December 31, 2011
  (Unaudited)  
  (In thousands)
Assets    
Current assets:    
Cash and cash equivalents   $ 11,097  $ 5,576
Accounts and notes receivable, net  47,931 40,867
Inventory  5,867 3,517
Restricted cash, short-term  3,668 4,512
Current portion of deferred tax asset, net  15,964 26,902
Prepaid expenses, deferred costs, and other current assets  14,156 13,056
Total current assets  98,683 94,430
Property and equipment, net  237,757 191,331
Intangible assets, net  110,548 111,603
Goodwill  280,764 271,562
Deferred tax asset, net  34,859 23,101
Prepaid expenses, deferred costs, and other assets  17,623 20,774
Total assets   $ 780,234  $ 712,801
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Current portion of long-term debt and notes payable   $ 1,598  $ 2,317
Current portion of other long-term liabilities  24,943 25,101
Accounts payable and other accrued and current liabilities  99,534 112,212
Total current liabilities  126,075 139,630
Long-term liabilities:    
Long-term debt  379,254 368,632
Asset retirement obligations  43,036 34,517
Other long-term liabilities  102,615 56,877
Total liabilities  650,980 599,656
Stockholders' equity  129,254 113,145
Total liabilities and stockholders' equity   $ 780,234  $ 712,801
         
SELECTED INCOME STATEMENT DETAIL:        
         
Total revenues by segment:        
         
  Three Months Ended
September 30, 
Nine Months Ended 
September 30, 
  2012 2011 2012 2011
  (In thousands)
         
United States  $ 157,633  $ 132,861  $ 471,549  $ 358,890
United Kingdom 30,887 26,060 84,419 72,129
Other International 10,509 6,138 26,121 19,375
Total revenues $ 199,029 $ 165,059 $ 582,089 $ 450,394
         
Breakout of ATM operating revenues:        
         
  Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
  (In thousands)
         
Surcharge revenues  $ 91,392  $ 76,579  $ 262,651  $ 211,940
Interchange revenues 61,863 50,695 177,891 135,407
Bank branding and surcharge-free network revenues 30,299 24,399 86,919 67,952
Managed services revenues 4,146 3,025 12,000 7,275
Other revenues 3,769 2,938 11,388 9,590
Total ATM operating revenues  $191,469  $ 157,636  $ 550,849  $ 432,164
         
Total cost of revenues by segment:        
         
  Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
  (In thousands)
         
United States  $104,260  $ 85,834  $ 314,926  $ 232,034
United Kingdom 24,097 19,666 66,828 54,957
Other International 8,372 4,728 20,483 14,701
Total cost of revenues  $ 136,729  $ 110,228  $ 402,237  $ 301,692
         
Breakout of cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization):
         
  Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
  (In thousands)
         
Merchant commissions  $ 63,559  $ 49,018  $ 180,868  $ 133,813
Vault cash rental expense 12,402 10,381 36,880 29,194
Other costs of cash 17,055 14,377 50,329 39,345
Repairs and maintenance 13,921 10,882 39,763 29,659
Communications 5,613 4,619 15,803 12,728
Transaction processing 2,175 1,362 6,145 3,367
Stock-based compensation 231 251 754 769
Other expenses 15,108 12,837 43,770 36,755
Total cost of ATM operating revenues  $ 130,064  $ 103,727  $ 374,312  $ 285,630
         
Breakout of selling, general, and administrative expenses:        
     
  Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
  (In thousands)
         
Employee costs  $ 7,839 $ 7,061 $ 24,457 $ 20,386
Stock-based compensation  2,452 2,122 7,937 6,227
Professional fees  1,731 1,917 5,521 4,943
Other  3,270 2,672 10,041 8,145
Total selling, general, and administrative expenses  $ 15,292 $ 13,772 $ 47,956 $ 39,701
         
Depreciation and accretion expense by segment:        
     
  Three Months Ended
September 30, 
Nine Months Ended 
September 30, 
  2012 2011 2012 2011
  (In thousands)
         
United States $ 9,787 $ 7,238 $ 27,466 $ 20,792
United Kingdom 4,916 4,183 14,140 11,860
Other International 1,055 776 2,637 2,352
Total depreciation and accretion expense $ 15,758 $ 12,197 $ 44,243 $ 35,004
     
SELECTED BALANCE SHEET DETAIL:    
     
Long-term debt:    
     
  September 30,
2012
December 31,
2011
  (In thousands)
8.25% senior subordinated notes   $ 200,000  $ 200,000
Revolving credit facility  177,500 166,000
Equipment financing notes  3,352 4,949
Total long-term debt   $ 380,852  $ 370,949
     
     
Share count rollforward:    
     
Total shares outstanding as of December 31, 2011 43,999,443
Shares repurchased  (164,097)
Shares issued – restricted stock granted and converted and stock options exercised  608,766
Shares forfeited – restricted stock  (5,850)
Total shares outstanding as of September 30, 2012   44,438,262
         
SELECTED CASH FLOW DETAIL:        
         
Selected cash flow statement amounts:        
     
  Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
  (In thousands)
         
Cash provided by operating activities  $ 38,404  $ 38,313  $ 94,325  $ 69,352
Cash used in investing activities (43,011) (155,290) (98,477) (180,687)
Cash provided by financing activities 8,914 118,042 10,008 113,371
Effect of exchange rate changes on cash (254) 143 (335) (19)
Net increase in cash and cash equivalents 4,053 1,208 5,521 2,017
Cash and cash equivalents at beginning of period 7,044 3,998 5,576 3,189
Cash and cash equivalents at end of period  $ 11,097  $ 5,206  $ 11,097  $ 5,206
 
Key Operating Metrics – Excluding Acquisitions in All Periods Presented
For the Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
         
The following table excludes the effect of the acquisitions of EDC, Access to Money, Mr. Cash, and ATM Network that were completed in the periods presented for comparative purposes. Note that for the EDC acquisition, only the results from January through July have been excluded, as all periods presented include results from this acquisition for the months of August and September:
         
EXCLUDING ACQUISITIONS Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
Average number of transacting ATMs:        
United States: Company-owned  23,414 21,288 21,584 19,881
United Kingdom  4,175 3,341 3,906 3,187
Mexico  2,768 2,902 2,814 2,906
Canada 431 178
Subtotal  30,788 27,531 28,482 25,974
United States: Merchant-owned  7,177 8,080 7,273 8,192
Average number of transacting ATMs: ATM operations  37,965 35,611 35,755 34,166
         
United States: Managed services (1) 5,153 4,525 5,178 4,191
United Kingdom: Managed services  21 21 21 17
Average number of transacting ATMs: Managed services  5,174 4,546 5,199 4,208
         
Total average number of transacting ATMs  43,139 40,157 40,954 38,374
         
Total transactions (in thousands):        
ATM operations  169,030 136,928 456,139 366,727
Managed services  9,127 7,404 26,925 18,934
Total transactions  178,157 144,332 483,064 385,661
         
Total cash withdrawal transactions (in thousands):        
ATM operations  105,657 84,237 284,001 225,202
Managed services  5,781 4,832 16,829 12,641
Total cash withdrawal transactions  111,438 89,069 300,830 237,843
         
Per ATM per month amounts (excludes managed services):      
Cash withdrawal transactions  928 788 883 732
         
ATM operating revenues   $ 1,497  $ 1,447  $ 1,458  $ 1,382
Cost of ATM operating revenues (2) 1,006 948 970 910
ATM operating gross profit  (2) (3)  $ 491  $ 499  $ 488  $ 472
         
ATM operating gross margin  (2) (3)  32.8 % 34.5 % 33.5 % 34.2 %
___________________        
         
(1)  Includes 2,719 and 2,519 ATMs for the three months ended September 30, 2012 and 2011, respectively, and 2,658 and 2,508 ATMs for the nine months ended September 30, 2012 and 2011, respectively, 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 profit margin are measures of profitability that are calculated based on only the revenues and expenses that relate to operating ATMs in the Company's portfolio. Revenues and expenses relating to managed services and ATM equipment sales and other ATM-related services are not included.
 
Key Operating Metrics – Including Acquisitions in All Periods Presented
For the Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
         
     
INCLUDING ACQUISITIONS Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
Average number of transacting ATMs:        
United States: Company-owned  26,436 21,905 25,658 20,128
United Kingdom  4,175 3,341 3,906 3,187
Mexico  2,768 2,902 2,814 2,906
Canada 1,003 720
Subtotal  34,382 28,148 33,098 26,221
United States: Merchant-owned  19,006 8,080 16,977 8,192
Average number of transacting ATMs: ATM operations  53,388 36,228 50,075 34,413
         
United States: Managed services (1) 5,967 4,525 5,899 4,191
United Kingdom: Managed services  21 21 21 17
Average number of transacting ATMs: Managed services  5,988 4,546 5,920 4,208
         
Total average number of transacting ATMs  59,376 40,774 55,995 38,621
         
Total transactions (in thousands):        
ATM operations  184,393 136,928 513,984 366,727
Managed services  10,051 7,404 29,620 18,934
Total transactions  194,444 144,332 543,604 385,661
         
Total cash withdrawal transactions (in thousands):        
ATM operations  117,070 84,237 326,343 225,202
Managed services  6,446 4,832 18,791 12,641
Total cash withdrawal transactions  123,516 89,069 345,134 237,843
         
Per ATM per month amounts (excludes managed services):        
Cash withdrawal transactions  731 775 724 727
         
ATM operating revenues   $ 1,170  $ 1,423  $ 1,196  $ 1,372
Cost of ATM operating revenues (2) 791 931 809 903
ATM operating gross profit  (2) (3)  $ 379  $ 492  $ 387  $ 469
         
ATM operating gross margin  (2) (3)  32.4 % 34.6 % 32.4 % 34.2 %
___________________        
         
(1)  Includes 2,719 and 2,519 ATMs for the three months ended September 30, 2012 and 2011, respectively, and 2,658 and 2,508 ATMs for the nine months ended September 30, 2012 and 2011, respectively, 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 profit margin are measures of profitability that are calculated based on only the revenues and expenses that relate to operating ATMs in the Company's portfolio. Revenues and expenses relating to managed services and ATM equipment sales and other ATM-related services are not included.
 
Key Operating Metrics – Ending Machine Count
As of September 30, 2012 and 2011
(Unaudited)
     
  As of September 30,  
Ending number of transacting ATMs: 2012 2011
United States: Company-owned  26,654 23,295
United Kingdom  4,264 3,421
Mexico  2,762 2,897
Canada  1,055
Subtotal  34,735 29,613
United States: Merchant-owned  20,930 7,932
Ending number of transacting ATMs: ATM operations  55,665 37,545
     
United States: Managed services (1) 6,017 4,687
United Kingdom: Managed services  21 21
Ending number of transacting ATMs: Managed services  6,038 4,708
     
Total ending number of transacting ATMs  61,703 42,253
___________________    
     
(1)  Includes 2,762 and 2,529 ATMs as of September 30, 2012 and 2011, respectively for which the Company only provided EFT transaction processing services. Also includes 817 ATMs that as of December 31, 2011, were reported in the United States Merchant-owned category. 
 
Reconciliation of Net Income Attributable to Controlling Interests to EBITDA, Adjusted EBITDA, and Adjusted Net Income 
For the Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
         
  Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
  (In thousands, except share and per share amounts)
Net income attributable to controlling interests  $ 12,897  $ 46,885  $ 32,390  $ 62,080
Adjustments:        
Interest expense, net 5,269 5,243 15,966 14,810
Amortization of deferred financing costs 225 351 669 775
Income tax expense (benefit) 8,169 (29,869) 20,684 (17,765)
Depreciation and accretion expense 15,758 12,197 44,243 35,004
Amortization expense 5,565 4,946 16,452 12,240
EBITDA   $ 47,883  $ 39,753  $ 130,404  $ 107,144
         
Add back:        
(Gain) loss on disposal of assets (1) (28) 117 784 280
Other (income) expense (2) (1,040) 328 (1,098) 221
Noncontrolling interests (3) (355) (471) (1,217) (1,466)
Stock-based compensation expense (4) 2,675 2,363 8,664 6,968
Acquisition-related costs (5) 381 956 1,858 1,299
Adjusted EBITDA  $ 49,516  $ 43,046  $ 139,395  $ 114,446
Less:        
Interest expense, net (4) 5,231 5,163 15,829 14,528
Depreciation and accretion expense (4) 15,372 11,818 43,126 33,852
Adjusted pre-tax income 28,913 26,065 80,440 66,066
Income tax expense (at 35%) (6) 10,120 9,123 28,154 23,123
Adjusted Net Income  $ 18,793  $ 16,942  $ 52,286  $ 42,943
         
Adjusted Net Income per share  $ 0.43  $ 0.40  $ 1.21  $ 1.02
Adjusted Net Income per diluted share  $ 0.43  $ 0.39  $ 1.19  $ 1.01
         
Weighted average shares outstanding - basic 43,669,756 42,570,137 43,333,407 42,001,624
Weighted average shares outstanding - diluted 44,045,021 43,195,554 43,783,534 42,727,446
         
_______________        
         
(1)  Primarily comprised of losses on the disposal of fixed assets that were incurred with the deinstallation of ATMs during the periods. 
(2)  Amounts exclude unrealized and realized (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 stockholders.
(5)  Acquisition-related costs include non-recurring costs incurred for professional and legal fees and certain transition and integration-related costs, related to recent acquisitions. 
(6)  35% represents the Company's estimated long-term, cross-jurisdictional effective cash tax rate.    
 
Reconciliation of Free Cash Flows 
For the Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
         
  Three Months Ended
September 30, 
Nine Months Ended
September 30, 
  2012 2011 2012 2011
  (In thousands)
Cash provided by operating activities  $ 38,404  $ 38,313  $ 94,325  $ 69,352
Payments for capital expenditures:        
Cash used in investing activities, excluding acquisitions (25,376) (11,663) (80,592) (37,060)
Free cash flow  $ 13,028  $ 26,650  $ 13,733  $ 32,292
 
Reconciliation of Estimated Net Income to EBITDA, Adjusted EBITDA, and Adjusted Net Income
For the Year Ending December 31, 2012
(Unaudited)
       
  Estimated Range
Full Year 2012
       
  (In millions, except per share information)
       
Net income  $ 43.0 -- $ 44.2
Adjustments:      
Interest expense, net  21.5 -- 21.7
Amortization of deferred financing costs  0.9 -- 0.9
Income tax expense  26.3 -- 26.9
Depreciation and accretion expense  60.5 -- 60.5
Amortization expense  22.0 -- 22.0
EBITDA  $ 174.2 -- $ 176.2
       
Add back:      
Noncontrolling interests  (1.7) -- (1.7)
Loss on disposal of assets  1.0 -- 1.0
Stock-based compensation expense  11.5 -- 11.5
Acquisition-related costs  2.0 -- 2.0
Adjusted EBITDA  $ 187.0 -- $ 189.0
Less:       
Interest expense, net (1) 21.1 -- 21.3
Depreciation and accretion expense (1) 59.0 -- 59.0
Income tax expense (at 35%) (2) 37.4 -- 38.0
Adjusted Net Income  $ 69.5 -- $ 70.7
       
Adjusted Net Income per diluted share  $ 1.58 -- $ 1.61
       
Weighted average shares outstanding – diluted  43.9 -- 43.9
 __________________      
       
(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. 
(2) 35% represents the Company's estimated long-term, cross-jurisdictional effective cash tax rate.
     
Contact Information:    
     
Cardtronics — Media   Cardtronics — Investors
Nick Pappathopoulos   Chris Brewster
Director – Public Relations   Chief Financial Officer
832-308-4396   832-308-4128
npappathopoulos@cardtronics.com   cbrewster@cardtronics.com

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