HOUSTON, Feb. 22, 2006 (PRIMEZONE) -- Cardtronics, Inc. ("Cardtronics" or the "Company"), the world's largest independent owner/operator of ATMs, today announced its financial results for the quarter and year ended December 31, 2005.
FOURTH QUARTER RESULTS
Financial information:
For the fourth quarter of 2005, revenues totaled $69.8 million, representing a 12.6% increase over the $62.0 million in revenues recorded during the fourth quarter of 2004. The Company incurred a net loss for the fourth quarter of 2005 of approximately $0.9 million, compared to net income of approximately $1.5 million for the same period in 2004. The year-over-year increase in revenues was primarily due to a number of acquisitions consummated during 2005, including the BAS Communications, Inc. ATM portfolio in March 2005, the Neo Concepts, Inc. ATM portfolio in April 2005, and Bank Machine Limited in the United Kingdom in May 2005. The decrease in net income was primarily due to the additional interest, depreciation and amortization expense amounts associated with the aforementioned acquisitions, higher selling, general and administrative costs resulting from the Company's growth, higher vault cash rental costs due to rising interest rates, and the impact of replacing lower-cost bank debt with higher-cost senior subordinated notes as we put a more permanent capital structure in place. The accelerated roll out of ATMs in Walgreens and CVS locations throughout the United States during 2005 also continued to negatively impact the Company's current period results, as such machines are still in the process of ramping to profitable transaction levels.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") totaled $11.4 million for the fourth quarter of 2005, representing a 37.3% increase over the $8.3 million in EBITDA recorded during the fourth quarter of 2004. Adjusted EBITDA, which represents EBITDA adjusted for the items described in the tables included in this release and as provided for by the Company's bank credit facility, totaled $11.9 million for the fourth quarter of 2005, representing a 15.5% increase over the $10.3 million in Adjusted EBITDA for the same period in 2004. The increases in EBITDA and Adjusted EBITDA were primarily due to the year-over-year revenue growth resulting primarily from the Company's various acquisitions during the past year, as highlighted above, and by continued growth in the Company's bank and network branding revenues, partially offset by cost increases in certain areas, including vault cash rental and SG&A costs.
EBITDA and Adjusted EBITDA are non-GAAP measures of financial performance. We are required by the terms of our bank credit facility to comply with certain covenants that are based on Adjusted EBITDA. Reference is made to the tables at the end of this release for a reconciliation of these items to net income.
Key Statistics:
Average transacting ATMs for the fourth quarter of 2005 totaled 26,411, representing an increase of 6.7% when compared to the 24,741 average transacting ATMs during the same period in 2004. Cash withdrawal transactions increased 13.3% to 30.7 million during the fourth quarter of 2005 from 27.1 million during the same period in 2004. Such increases were primarily due to the acquisitions consummated during 2005, as previously discussed, and the continued roll out of company-owned ATMs in Walgreens and CVS locations throughout the United States.
Average cash withdrawal transactions per ATM per month during the fourth quarter of 2005 increased 6.3% to 388 from 365 during the same period in 2004. This increase was due to the acquisition of Bank Machine Limited in the United Kingdom in May 2005, which has higher average transaction volumes than the Company's domestic operations. Average revenues per ATM per month in the fourth quarter of 2005 increased 9.2% to $846 from $775 in the same period in 2004, due to the Bank Machine acquisition and the growth of the Company's bank and network branding revenues in the United States.
"We are pleased with our growth in revenues and EBITDA and the progress we made during the year on our key strategic initiatives," remarked Jack Antonini, Chief Executive Officer of Cardtronics. "We believe that the investments we've made and continue to make in our bank and network branding initiatives, including the accelerated roll out of ATMs in key domestic retail locations, our acquisition of the Allpoint surcharge-free network, and the signing of the MasterCard surcharge-free alliance, provide a solid platform for future growth as financial institutions of all sizes look for convenient and cost-effective ways to attract and retain customers."
FULL YEAR RESULTS
Financial information:
For the year ended December 31, 2005, revenues totaled $269.0 million, representing an increase of 39.5% over the $192.9 million in revenues recorded during year ended December 31, 2004. Net income for the year ended December 31, 2005, totaled $0.9 million, compared to $4.6 million for the same period in 2004. The year-over-year increase in revenues was due primarily to the full year effect of the E-TRADE ATM portfolio acquisition consummated in June 2004, and the additional acquisitions consummated during 2005, as previously discussed. The year-over-year decrease in net income was largely due to the additional interest, depreciation and amortization expense amounts associated with the aforementioned acquisitions, higher selling, general and administrative costs, the continuing impact of the accelerated Walgreens and CVS ATM roll outs, and the higher cost of debt, as previously discussed.
EBITDA totaled $43.5 million for year ended December 31, 2005, representing a 60.5% increase over the $27.1 million in EBITDA recorded during the same period in 2004. Adjusted EBITDA totaled $45.2 million for the year ended December 31, 2005, representing a 34.9% increase over the $33.5 million in Adjusted EBITDA for the same period in 2004. As was the case with the quarterly results, the increases in EBITDA and Adjusted EBITDA were driven by the Company's recent acquisitions and, to a lesser degree, increased revenues associated with the Company's bank and network branding initiatives.
Key Statistics:
Average transacting ATMs for the year ended December 31, 2005 totaled 26,175 machines, representing an increase of 45.9% when compared to the 17,936 average transacting machines during the same period in 2004. Total cash withdrawal transactions increased 37.1% to 119.0 million during the year ended December 31, 2005 from 86.8 million during the same period in 2004. Such increases were primarily due to the full year effect of the E-TRADE ATM portfolio acquisition consummated in June 2004, the additional acquisitions consummated during 2005, and the continued roll out of company-owned ATMs in Walgreens and CVS locations throughout the United States. Average cash withdrawal transactions per ATM per month for the year ended December 31, 2005 decreased 6.0% to 379 from 403 during the same period in 2004. This decrease was primarily due to the acquisition of the E-TRADE ATM portfolio in June 2004, which is primarily composed of merchant-owned ATMs that typically have lower transaction counts than the Company's owned machines. Average revenues per ATM per month in 2005 decreased 2.9% to $824 from $849 in the same period in 2004 due to the effect of the E-TRADE acquisition, partially offset by the effect of the Bank Machine acquisition and the growth of the Company's bank and network branding revenues in the United States.
The 2005 full year results are not fully reflective of the operations of the acquired BAS Communications, Inc. and Neo Concepts, Inc. portfolios (which were in transition to the Company's operating platform during the first and second quarter of 2005, respectively), or of Bank Machine Limited, which has only been included in the Company's financial results since May of 2005.
KEY HIGHLIGHTS
Recent key highlights include the following:
-- The acquisition of ATM National, Inc., the owner and operator of the Allpoint surcharge-free network, for consideration consisting of approximately $4.0 million in cash and assumed liabilities, plus an additional amount of Cardtronics' common stock. With access to over 32,000 ATMs serving 2.6 million participating cardholders from over 250 financial institutions, Allpoint is the nation's largest surcharge-free ATM network. It is a major component of the Company's strategy to profitably participate in the market for surcharge-free ATM transactions, which we believe represent 70 to 75% of the total US ATM transaction marketplace. -- The purchase of a majority interest in an ATM operator in Mexico in February 2006. This business, which is jointly owned by Cardtronics and two Mexican partners, is well-positioned to capitalize on the anticipated growth in off-premise ATMs as a result of Mexico's recent decision to allow surcharging. It currently operates approximately 285 ATMs, primarily in retail stores, in Mexico. -- The amendment of the Company's existing bank credit facility to remove and amend certain restrictive covenants and to reduce the total borrowing capacity under the facility from $150.0 million to $125.0 million. The amendments, which were done to reduce cost and to increase the Company's overall liquidity and financial flexibility, reflect the expectation that the Company's future capital needs will be focused primarily on organic growth initiatives as opposed to acquisitions, as has been the case in the past. After taking into consideration the recent amendment, the Company now has approximately $43.6 million in borrowing capacity under its bank credit facility. -- The filing of a registration statement on Form S-4 in January 2006 with the Securities and Exchange Commission ("SEC") to register the Company's senior subordinated notes.
GUIDANCE FOR 2006
The Company expects revenues of $270-290 million and adjusted EBITDA of $46 to $50 million for the year ending December 31, 2006.
REGISTRATION OF SENIOR SUBORDINATED NOTES
As mentioned above, the Company has filed a registration statement with the SEC to register the senior subordinated notes that it issued in August of 2005. On February 16, 2006, the Company received a letter from the SEC outlining certain comments based on the SEC's initial review of that filing. Such letters are part of the normal review process employed by the SEC with respect to the registration of securities, and the Company is in the process of responding to the SEC's comments. One such comment relates to the Company's policy with respect to how it amortizes acquired customer contract related intangible assets. The Company's policy, which has remained consistent and has been disclosed in its audited financial statements, is to amortize such assets on a straight-line basis over estimated useful lives ranging from four to ten years. The SEC has requested that the Company amortize such assets on an accelerated basis (i.e., higher amortization amounts in the early years and lower amounts in the later years), based on an assumption that the economic benefits associated with such assets decrease over time as the underlying contracts are terminated. The Company believes that its policy is appropriate and adequately reflects the method in which the economic benefits of the contracts will be realized in accordance with generally accepted accounting principles ("GAAP") and intends to discuss the appropriateness of this accounting treatment with the SEC. If as a result of these discussions, the SEC concludes that amortization on an accelerated basis is required by GAAP, the Company may be required to restate its financial information for all periods up through December 31, 2005 to reflect this change in amortization methodology. Any such change would consist of a non-cash adjustment. Such changes to the Company's historical financial information resulting from this comment would not change the Company's previously disclosed EBITDA or Adjusted EBITDA figures, but could reduce the Company's previously reported pre-tax and after-tax income amounts. At this time, the Company is unable to determine the potential magnitude of such a modification.
Non-GAAP Financial Information
EBITDA and Adjusted EBITDA are not intended to represent cash flows from operations as defined by GAAP in the United States and should not be used as an alternative to net income as an indicator of operating performance or to cash flow as a measure of liquidity. While EBITDA is frequently used as a measure of operating performance and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to potential inconsistencies in the methods of calculation. Adjusted EBITDA, as presented herein, is calculated in the manner similar to that in our bank credit facility and, as such, is not comparable to other similarly titled captions of other companies. The Company believes that referencing EBITDA and Adjusted EBITDA will be helpful to our investors, as we believe it is used by the lenders under our bank credit facility in their evaluation of the Company. A reconciliation of EBITDA and Adjusted EBITDA to net income is included elsewhere in this press release.
Cautionary Note Regarding Forward-Looking Statements
The information in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give our current expectations or forecasts of future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources. They include, among other things, proposed new programs; expectations that regulatory developments or other matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity; trends within the ATM industry; statements concerning projections, predictions, expectations, estimates or forecasts as to our 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. Such 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, including risks and uncertainties relating to reliance on third parties for cash management services; increased regulation and regulatory uncertainty; trends in ATM usage; decreases in the number of ATMs we can place with our top merchants; increased industry competition; our ability to continue to execute our growth strategies; risks associated with the acquisition of other ATM networks; changes in interest rates; declines in, or system failures that interrupt or delay, ATM transactions; changes in the ATM transaction fees we receive; changes in ATM technology; changes in foreign currency rates; and general and economic conditions.
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. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information.
About Cardtronics
Headquartered in Houston, Texas, Cardtronics is the world's largest owner/operator of ATMs with a nationwide U.S. network of more than 26,000 locations operating in every major market and in all 50 states as well as over 1,000 locations throughout the UK. Major merchant-clients include A&P(R), Albertson's(R), Amerada Hess(R), Barnes & Noble(R) College Bookstores, BP(R) Amoco, Chevron(R), Costco(R), CVS(R)/pharmacy, ExxonMobil(R), Duane Reade(R), Rite Aid(R), SSP/Circle K(R), Sunoco(R), Target(R) and Walgreens(R). Cardtronics also works closely with financial institutions across the U.S. to brand ATMs in these major merchants to provide convenient access for their customers and to preserve and expand their markets. For more information about Cardtronics, please visit http://www.cardtronics.com/.
The Cardtronics logo is available at: http://www.primezone.com/newsroom/prs/?pkgid=991
Cardtronics, Inc. and Subsidiaries Consolidated Statements of Operations Three and Twelve Months Ended December 31, 2005 and 2004 (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------ ------------------ 2005 2004 2005 2004 -------- -------- -------- -------- Revenues: ATM operating revenues $ 67,023 $ 57,541 $258,754 $182,711 ATM product sales and other revenues 2,754 4,433 10,211 10,204 -------- -------- -------- -------- Total revenues 69,777 61,974 268,965 192,915 Cost of revenues: Cost of ATM operating revenues 51,064 45,293 199,592 143,504 Cost of ATM product sales and other revenues 2,709 3,706 9,685 8,703 -------- -------- -------- -------- Total cost of revenues 53,773 48,999 209,277 152,207 Gross profit 16,004 12,975 59,688 40,708 Operating expenses: Selling, general and administrative expenses 4,653 4,720 16,205 13,571 Depreciation and accretion expense 4,421 2,528 12,951 6,785 Amortization expense 2,136 1,416 7,825 5,508 -------- -------- -------- -------- Total operating expenses 11,210 8,664 36,981 25,864 Income from operations 4,794 4,311 22,707 14,844 Other expenses: Interest expense 5,506 1,732 15,531 4,156 Amortization and write-off of deferred financing costs 325 107 4,524 2,894 Minority interest in subsidiary (2) 10 15 19 Other 103 (19) 968 209 -------- -------- -------- -------- Total other expenses 5,932 1,830 21,038 7,278 Income (loss) before income taxes (1,138) 2,481 1,669 7,566 Income tax provision (benefit) (250) 1,025 722 2,956 -------- -------- -------- -------- Net income (loss) (888) 1,456 947 4,610 Preferred stock dividends and accretion expense 67 603 1,395 2,312 -------- -------- -------- -------- Net income (loss) available to common stockholders $ (955) $ 853 $ (448) $ 2,298 ======== ======== ======== ======== Cardtronics, Inc. and Subsidiaries Condensed Consolidated Balance Sheets As of December 31, 2005 and 2004 (in thousands) December 31, ---------------------- 2005 2004 --------- --------- (unaudited) Assets Current assets: Cash and cash equivalents $ 1,699 $ 1,412 Accounts and notes receivable, net 9,746 11,473 Inventory 2,747 2,609 Prepaid, deferred costs, and other current assets 8,533 2,503 Deferred tax asset -- 2,412 --------- --------- Total current assets 22,725 20,409 Property and equipment, net 74,151 44,992 Intangible assets, net 73,446 43,077 Goodwill 157,873 84,977 Prepaid and other assets 12,099 1,854 --------- --------- Total assets $ 340,294 $ 195,309 ========= ========= Liabilities and Stockholders' Deficit Current liabilities: Current portion of long-term debt and notes payable $ 3,126 $ 15,000 Current portion of other long-term liabilities 2,293 1,176 Accounts payable, accrued liabilities and other current liabilities 42,282 24,814 --------- --------- Total current liabilities 47,701 40,990 Long-term liabilities: Long-term debt, net of current portion 244,456 113,541 Deferred tax liability 7,880 6,231 Other long-term liabilities and minority interest in subsidiary 14,393 13,077 --------- --------- Total liabilities 314,430 173,839 --------- --------- Redeemable preferred stock 76,329 23,634 Stockholders' deficit (50,465) (2,164) --------- --------- Total liabilities and stockholders' deficit $ 340,294 $ 195,309 ========= ========= Cardtronics, Inc. and Subsidiaries Key Operating Metrics Three and Twelve Months Ended December 31, 2005 and 2004 (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ---------------------- ------------------------ 2005 2004 2005 2004 ---------- ---------- ----------- ----------- Average number of transacting ATMs 26,411 24,741 26,175 17,936 Monthly with- drawal trans- actions per ATM 388 365 379 403 Total withdrawal transactions 30,739,718 27,074,116 118,960,461 86,820,781 Total transactions 41,698,961 34,865,152 156,851,207 111,576,931 Per ATM amounts (per month): Operating revenues $ 846 $ 775 $ 824 $ 849 Operating expenses 645 610 635 667 ---------- ---------- ----------- ----------- ATM operating gross profit $ 201 $ 165 $ 189 $ 182 ========== ========== =========== =========== ATM operating gross margin 23.8% 21.3% 22.9% 21.4% Capital expenditures (000s) $ 4,698 $ 7,352 $ 32,102 $ 20,641 Cardtronics, Inc. and Subsidiaries Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA Three and Twelve Months Ended December 31, 2005 and 2004 (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------ ----------------- 2005 2004 2005 2004 ------- ------- ------- ------- Net income (loss) $ (888) $ 1,456 $ 947 $ 4,610 Interest expense 5,831 1,839 20,055 7,050 Income tax expense (benefit) (250) 1,025 722 2,956 Depreciation and accretion expense 4,421 2,528 12,951 6,785 Amortization expense 2,136 1,416 7,825 5,508 Other (income) loss 101 (9) 983 228 ------- ------- ------- ------- EBITDA 11,351 8,255 43,483 27,137 Stock compensation expense 131 147 563 2,854 Acquisition related transition costs 216 370 937 1,587 Initial public offering costs -- 1,449 22 1,844 Other 210 52 205 52 ------- ------- ------- ------- Adjusted EBITDA $11,908 $10,273 $45,210 $33,474 ======= ======= ======= =======