HOUSTON, Nov. 14, 2007 (PRIME NEWSWIRE) -- Cardtronics, Inc. ("Cardtronics" or the "Company"), the world's largest owner/operator of ATMs, today announced its financial results for the quarter ended September 30, 2007.
THIRD QUARTER RESULTS
Financial Information
For the third quarter of 2007, revenues totaled $110.6 million, representing a 45% increase over the $76.4 million in revenues recorded during the third quarter of 2006. While revenues from the Company's international operations and branding revenues from the Company's pre-existing domestic operations (defined below) exhibited strong growth, the year-over-year increase was primarily attributable to the July 2007 acquisition of the financial services business of 7-Eleven, Inc. (the "7-Eleven ATM Transaction"), which contributed $30.1 million of revenues in the third quarter of 2007. The increase in year-over-year revenues was further attributable to 55% growth in revenues from the Company's international operations as a result of additional ATM deployments, 50% growth in bank and network branding revenues generated by the Company's pre-existing domestic business (i.e., the Company's domestic portfolio prior to the 7-Eleven ATM Transaction), and higher overall withdrawal transactions per ATM when compared to the same period in 2006. These revenue increases were partially offset by lower revenues from the Company's pre-existing domestic operations, which experienced a slight year-over-year decline in ATM operating revenues as a result of a decrease in the average number of merchant-owned ATMs operating within the United States.
The Company's adjusted earnings before interest, income taxes, depreciation, accretion, and amortization expense ("Adjusted EBITDA"), which represents EBITDA adjusted for certain non-recurring items, totaled $18.4 million for the third quarter of 2007, representing a 32% increase from the $13.9 million in Adjusted EBITDA for the same period in 2006. This year-over-year increase was primarily attributable to the 7-Eleven ATM Transaction. The 2007 results include the benefit of 70 days of operation of the acquired 7-Eleven financial services business, offset by a $2.1 million loss from operations for the advanced functionality "Vcom" portion of this business. Costs excluded from Adjusted EBITDA include costs related to the Company's in-house transaction processing conversion efforts and other acquisition related costs, as detailed in the reconciliation of net loss to Adjusted EBITDA below.
Adjusted EBITDA is a non-GAAP measure of financial performance presented in this press release to help enhance an investor's understanding of the underlying trends in the Company's business and to provide for better comparability between periods in different years. A reconciliation of net loss to Adjusted EBITDA is presented in tabular form below.
The Company recorded a net loss for the third quarter of 2007 of $10.7 million, which compares to a net loss of $0.3 million for the same period in 2006. The 2007 net loss amount reflects (i) the increase in selling, general, and administrative expenses associated with higher employee-related costs incurred to support the Company's growth initiatives, primarily on the sales and marketing side of the business, and our Sarbanes-Oxley compliance efforts, (ii) the incremental costs associated with the Company's in-house processing conversion efforts, (iii) higher vault cash costs as a result of higher average per-transaction cash withdrawal amounts and higher overall vault cash balances in our bank-branded ATMs, (iv) the increased interest, depreciation, accretion, and amortization expenses attributable to the 7-Eleven ATM Transaction, and (v) higher depreciation expense associated with recent ATM deployments in the United Kingdom and Mexico, which have yet to achieve the higher consistent recurring transaction levels seen in the Company's more mature ATMs. Additionally, the 2007 net loss amount includes $5.1 million (pre-tax) of impairment charges related to the unamortized intangible asset value associated with a single merchant contract acquired in 2004, and also reflects a charge recorded in the income tax provision line to reserve for a portion of the Company's existing tax asset amounts. The Company is currently not a cash taxpayer for U.S. Federal income tax purposes. The 2006 quarterly results include $0.5 million in other income related to a contract termination payment received from one of the Company's merchant customers. Such payment has been excluded from Adjusted EBITDA.
Key Statistics
Average transacting ATMs for the third quarter of 2007 totaled 29,880, which represents an increase of 16% when compared to the 25,726 average transacting ATMs during the same period in 2006. This increase was primarily due to the 7-Eleven ATM Transaction and ATM growth in the United Kingdom and Mexico, partially offset by year-over-year declines in the average number of merchant-owned ATMs operating within the United States. Cash withdrawal transactions in the third quarter of 2007 increased over 54% to 49.7 million from 32.2 million during the same period in 2006. In addition, average cash withdrawal transactions per ATM per month during the third quarter of 2007 increased 33% to 555 from 418 during the same period in 2006, and average revenues per ATM per month in the third quarter of 2007 increased 26% to $1,185 from $944 in the same period in 2006. These increases were primarily due to the 7-Eleven ATM Transaction and the Company's United Kingdom operations, which contribute significantly higher cash withdrawals and revenues per ATM than Cardtronics' pre-existing domestic operations. Capital expenditures during the quarter totaled $20.2 million, net of minority interest, and exclude payments for the 7-Eleven ATM Transaction. These expenditures were primarily to fund the purchase of additional ATMs.
NINE MONTH RESULTS
Financial Information
Revenues totaled $262.3 million for the nine months ended September 30, 2007, representing a 20% increase over the $218.8 million in revenues recorded during the first nine months of 2006. As was the case with the Company's quarterly results, the year-over-year increase in revenues was primarily attributable to the 7-Eleven ATM Transaction, an 81% increase in bank and network branding revenues from the Company's pre-existing domestic operations, and a 62% increase in ATM operating revenues from the Company's United Kingdom and Mexico operations as a result of our focus on international growth. These increased revenues were partially offset by lower revenues from the Company's pre-existing domestic operations as a result of the previously discussed decrease in the average number of merchant-owned ATMs operating within the United States.
The Company's Adjusted EBITDA totaled $42.7 million for the nine months ended September 30, 2007, representing a 10% increase over the $39.0 million in Adjusted EBITDA for the same period in 2006. The Company incurred a net loss of $19.7 million for the nine months ended September 30, 2007, which compares to a net loss of $2.7 million for the same period in 2006. As discussed in the Company's quarterly results, the year-to-date 2007 net loss amount reflects an increase in selling, general, and administrative expenses, the incremental development costs associated with the Company's in-house processing conversion efforts, increases in vault cash expenses, increases in interest expense, depreciation, accretion, and amortization attributable to the 7-Eleven ATM Transaction, and higher depreciation expense associated with additional ATM deployments in the United Kingdom and Mexico. The year-to-date 2007 net loss also includes $5.3 million (pre-tax) of impairment charges taken during 2007, the majority of which related to the unamortized intangible asset value associated with a single merchant contract acquired in 2004, and higher income tax expense due to the reserves recorded in 2007.
Key Statistics
Average transacting ATMs for the nine months ended September 30, 2007 totaled 27,149, which represents an increase of 5% when compared to the 25,913 average transacting ATMs during the same period in 2006. This increase was primarily due to the 7-Eleven ATM Transaction and to an increase in the number of transacting ATMs in the United Kingdom and Mexico, partially offset by year-over-year declines in the average number of merchant-owned ATMs operating within the United States. Cash withdrawal transactions during the nine months ended September 30, 2007 increased 21% to 113.9 million from 93.8 million during the same period in 2006. In addition, average cash withdrawal transactions per ATM per month during the nine months ended September 30, 2007 increased 16% to 466 from 402 during the same period in 2006, and average revenues per ATM per month for the nine months ended September 30, 2007 increased 15% to $1,031 from $898 in the same period in 2006. These increases were primarily due to the 7-Eleven ATM Transaction and the Company's United Kingdom operations, which contribute significantly higher cash withdrawals and revenues per ATM than Cardtronics' pre-existing domestic operations. Capital expenditures during the nine months totaled $44.2 million, net of minority interest, and exclude payments for the 7-Eleven ATM Transaction. These expenditures were primarily to fund the purchase of additional ATMs.
KEY HIGHLIGHTS
Recent highlights include the following:
* On September 7, 2007, the Company filed a registration statement on Form S-1 for a proposed initial public offering. Due to restrictions on publicity during the pendency of that registration statement, the Company will not host its typical quarterly earnings conference call to discuss its third quarter results. * The public announcement of two significant branding arrangements to brand pharmacy locations in Texas. On August 20, 2007, JPMorgan Chase announced it will be placing its brand on over 400 ATMs in Walgreens drugstores throughout Texas, and on September 6, 2007, Washington Mutual announced an agreement with Cardtronics to place its brand on over 300 ATMs in CVS/pharmacy locations in Texas' major metropolitan areas. * Net growth during the quarter of over 260 machines, or 16%, in its high-volume United Kingdom ATM fleet, representing a substantial increase in the Company's growth rate in this important market. * The successful rollout of over 275 additional ATMs in Mexico, the majority of which were deployed under our long-term agreement with OXXO. * The conversion of over 4,000 additional company-owned ATMs to the Company's in-house transaction processing platform, bringing the total number of machines for which the Company is processing transactions to approximately 10,000 as of October 31, 2007.
NON-GAAP FINANCIAL INFORMATION
EBITDA and Adjusted EBITDA are non-GAAP measures provided as a complement to results prepared in accordance with accounting principles generally accepted within the United States of America ("GAAP"). Management believes Adjusted EBITDA is useful because it allows them to more effectively evaluate the Company's operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure or one-time charges. Additionally, the Company excludes depreciation, accretion, and amortization expense as these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA excludes certain non-recurring items and may not be comparable to similarly titled measures employed by other companies. Therefore, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows from operations, investing, and financing cash flows or other income or cash flow statement data prepared in accordance with GAAP.
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. Many of the forward-looking statements contained in this release relate to our third quarter financial results and the underlying business events which generated those results. They include, among other things, trends within the ATM industry; proposed new programs and initiatives; expectations that regulatory developments or other matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity; 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 trends in ATM usage and alternative payment options; changes in the ATM transaction fees the Company receives; decreases in the number of ATMs that can be placed with the Company's top merchants; the Company's reliance on third parties for cash management and other key outsourced services; changes in interest rates; declines in, or system failures that interrupt or delay, ATM transactions; the Company's ability to continue to execute its growth strategies; risks associated with the acquisition of other ATM networks; increased industry competition; increased regulation and regulatory uncertainty; 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. We operate over 31,500 ATMs and have locations in every major U.S. market, at approximately 1,900 locations throughout the UK, and over 1,000 locations in Mexico. Major merchant-clients include 7-Eleven(r), A&P(r), Albertson's(r), BP(r) Amoco, Chevron(r), Costco(r), CVS(r)/pharmacy, Duane Reade(r), ExxonMobil(r), Hess Corporation(r), Rite Aid(r), Sunoco(r), Target(r), and Walgreens(r). Cardtronics also works closely with financial institutions across the United States, including HSBC(r), JPMorgan Chase(r), Sovereign Bank(r), and Wachovia(r), to place their brands on Cardtronics-owned and operated ATMs at major merchant locations. These branded ATMs provide surcharge-free cash access for the financial institution's customers while also increasing brand awareness for the financial institutions. For more information about Cardtronics, please visit http://www.cardtronics.com/.
The Cardtronics logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=991
Cardtronics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2007 and 2006
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues:
ATM operating revenues $ 106,234 $ 72,887 $ 251,854 $ 209,542
Vcom operating revenues 685 -- 685 --
ATM product sales and
other revenues 3,668 3,478 9,805 9,218
--------- --------- --------- ---------
Total revenues 110,587 76,365 262,344 218,760
Cost of revenues:
Cost of ATM operating
revenues 79,966 54,280 191,046 157,225
Cost of Vcom operating
revenues 2,644 -- 2,644 --
Cost of ATM product sales
and other revenues 3,111 3,105 9,196 8,142
--------- --------- --------- ---------
Total cost of revenues 85,721 57,385 202,886 165,367
Gross profit 24,866 18,980 59,458 53,393
Operating expenses:
Selling, general and
administrative expenses:
Stock-based compensation 297 240 721 600
Other selling, general
and administrative
expenses 7,324 5,571 20,264 15,109
Depreciation and accretion
expense 6,961 5,214 18,541 14,072
Amortization expense 9,204 2,263 14,062 9,610
--------- --------- --------- ---------
Total operating expenses 23,786 13,288 53,588 39,391
Income from operations 1,080 5,692 5,870 14,002
Other (income) expense:
Interest expense, net 8,545 5,871 20,437 17,193
Amortization and write-off
of deferred financing
costs and bond discounts 439 362 1,155 1,576
Minority interest in
subsidiary (174) (71) (286) (128)
Other (income) loss 678 (83) 1,037 (740)
--------- --------- --------- ---------
Total other expense 9,488 6,079 22,343 17,901
Loss before income taxes (8,408) (387) (16,473) (3,899)
Income tax provision
(benefit) 2,275 (60) 3,212 (1,217)
--------- --------- --------- ---------
Net loss $ (10,683) $ (327) $ (19,685) $ (2,682)
========= ========= ========= =========
Cardtronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
As of September 30, 2007 and December 31, 2006
(In thousands)
(unaudited)
September December
30, 2007 31, 2006
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 6,118 $ 2,718
Accounts and notes receivable, net 24,076 14,891
Inventory 5,294 4,444
Prepaid, deferred costs, and other current assets 11,955 16,334
--------- ---------
Total current assets 47,443 38,387
Property and equipment, net 138,324 86,668
Intangible assets, net 134,690 67,763
Goodwill 236,488 169,563
Prepaid and other assets 5,256 5,375
--------- ---------
Total assets $ 562,201 $ 367,756
========= =========
Liabilities and Stockholders' Deficit
Current liabilities:
Current portion of long-term debt $ 529 $ 194
Current portion of capital lease obligations 1,098 --
Current portion of other long-term liabilities 12,552 2,501
Accounts payable and other accrued and
current liabilities 79,018 51,256
--------- ---------
Total current liabilities 93,197 53,951
Long-term liabilities:
Long-term debt, net of current portion 406,100 252,701
Capital lease obligations 1,183 --
Deferred tax liability, net 9,943 7,625
Asset retirement obligations 16,392 9,989
Other long-term liabilities and minority
interest in subsidiary 17,921 4,064
--------- ---------
Total liabilities 544,736 328,330
Redeemable convertible preferred stock 76,794 76,594
Stockholders' deficit (59,329) (37,168)
--------- ---------
Total liabilities and stockholders' deficit $ 562,201 $ 367,756
========= =========
Cardtronics, Inc. and Subsidiaries
Key Operating Metrics
Three and Nine Months Ended September 30, 2007 and 2006
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Average number of
transacting ATMs 29,880 25,726 27,149 25,913
Monthly withdrawal
transactions per ATM 555 418 466 402
Total withdrawal
transactions 49,710,199 32,241,478 113,934,112 93,756,420
Total transactions 73,007,386 44,736,076 166,183,014 128,539,488
Per ATM amounts
(per month):
Operating
revenues $ 1,185 $ 944 $ 1,031 $ 898
Operating
expenses 892 703 782 674
---------- ---------- ---------- ----------
ATM operating
gross profit $ 293 $ 241 $ 249 $ 224
========== ========== ========== ==========
ATM operating
gross margin 24.7% 25.5% 24.1% 24.9%
Adjusted per
ATM amounts
(per month):
Operating
revenues $ 1,185 $ 944 $ 1,031 $ 898
Operating
expenses (1) 884 701 772 673
---------- ---------- ---------- ----------
Adjusted ATM
operating gross
profit $ 301 $ 243 $ 259 $ 225
========== ========== ========== ==========
Adjusted ATM operating
gross margin 25.4% 25.7% 25.1% 25.1%
Capital expenditures,
excluding
acquisitions
(000s) $ 20,185 $ 14,680 $ 44,230 $ 25,913
--------------------
(1) Amounts reflect the same operating expense adjustments as those
used to calculate Adjusted EBITDA.
Cardtronics, Inc. and Subsidiaries
Reconciliation of Net Loss to EBITDA and Adjusted EBITDA
Three and Nine Months Ended September 30, 2007 and 2006
(In thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Net loss $ (10,683) $ (327) $ (19,685) $ (2,682)
Interest expense
(including amortization
and write-off of
deferred financing
costs and bond
discounts) 8,984 6,233 21,592 18,769
Income tax provision
(benefit) 2,275 (60) 3,212 (1,217)
Depreciation and
accretion expense 6,961 5,214 18,541 14,072
Amortization expense 9,204 2,263 14,062 9,610
---------- ---------- ---------- ----------
EBITDA 16,741 13,323 37,722 38,552
Stock compensation
expense (includes
amounts reflected
in cost of ATM
operating revenues) 313 255 768 635
Acquisition related
transition costs 105 -- 249 110
Other (income) loss (1) 678 (83) 1,037 (740)
Minority interest (152) (39) (67) (39)
Other adjustments (2) 705 435 2,941 526
---------- ---------- ---------- ----------
Adjusted EBITDA $ 18,390 $ 13,891 $ 42,650 $ 39,044
========== ========== ========== ==========
---------------------
(1) Other (income) loss for the three and nine months ended
September 30, 2007, consists primarily of $0.6 million and $1.5
million, respectively, in losses incurred in connection with the
deinstallation and subsequent sale of used ATMs during the period.
During the nine months ended September 30, 2007, these losses were
partially offset by $0.6 million in gains on the sale of equity
securities awarded to the Company pursuant to the bankruptcy plan
of reorganization of Winn-Dixie Stores, Inc., one of the Company's
merchant customers. Both the losses associated with the asset
disposals and the gains attributable to the bankruptcy proceeds
have been excluded from the calculation of Adjusted EBITDA, as
shown above.
(2) Other adjustments for the three and nine month periods ended
September 30, 2007 consist primarily of $0.6 million and $1.7
million, respectively, of costs incurred related to the Company's
efforts to convert its ATM portfolio over to its in-house
transaction processing switch. Additional adjustments for the
nine month period ended September 30, 2007 include $0.5 million
of inventory adjustments related to our Triple-DES upgrade
efforts and $0.7 million of costs related to litigation
settlements.