Cardtronics Announces Fourth Quarter and Full-Year 2013 Results

HOUSTON, Feb. 6, 2014 (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 and year ended December 31, 2013.

Key financial statistics in the fourth quarter of 2013 as compared to the fourth quarter of 2012 include:

• Total revenues of $241.9 million, up 22% from $198.4 million.
• ATM operating revenues of $234.6 million, up 22% from $192.8 million.
• Adjusted Net Income per diluted share of $0.49, up 20% from $0.41.
• Adjusted EBITDA of $57.3 million, up 14% from $50.1 million.
• GAAP net income of $7.5 million or $0.16 per diluted share, compared to $11.2 million net income or $0.25 per diluted share. GAAP net income was negatively impacted in the fourth quarter of 2013 by acquisition integration-related costs associated with the Company's acquisition of Cardpoint Limited ("Cardpoint") completed in August 2013.

Steve Rathgaber, the company's chief executive officer commented, "Our fourth quarter results were once again driven by strong contributions from our recent acquisitions and continued organic growth. For the full year 2013, we grew our ATM operating revenues by 15% and Adjusted Net Income per diluted share by 20%, while making investments to sustain continued growth and to further diversify our revenues and profits. Looking forward to 2014, the Company is well positioned to continue its success of delivering double-digit revenue and earnings growth."

RECENT HIGHLIGHTS

• Multi-year extension of the contract covering over 3,200 ATMs in Walgreen's pharmacies.
• Execution of bank branding agreements to brand over 300 ATMs in H-E-B grocery stores, with BBVA Compass and Frost Bank.
• Successful private offering of $287.5 million of convertible senior notes due 2020.
• Execution of an agreement with a major UK supermarket brand to place approximately 115 ATMs in its stores.
• Long-term extension of a contract with Roadchef, a major motorway service area operator in the U.K., to continue operating ATMs in approximately 70 locations.
• Addition of Blackhawk Network to the Allpoint Network, providing surcharge-free access to T-Mobile customers through their T-Mobile Visa Prepaid Card and Mobile Money app.
• The announcement of the acquisition of the assets of Automated Financial, a Chandler, Arizona-based operator of approximately 2,100 ATMs.

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 press release for definitions of Adjusted EBITDA, Adjusted Net Income, Adjusted Gross Profit Margin, 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.

FOURTH QUARTER RESULTS

Consolidated revenues totaled $241.9 million for the fourth quarter of 2013, representing a 22% increase from the $198.4 million in consolidated revenues generated during the fourth quarter of 2012. Our ATM operating revenues were also up 22% from the fourth quarter of 2012. The increase in ATM operating revenues was primarily driven by revenues attributable to businesses acquired over the past year, accounting for seventeen percentage points of the 22% ATM operating revenue growth. The remaining 5% is attributable to organic growth with new and existing merchants and financial institution customers.

Adjusted EBITDA for the fourth quarter of 2013 totaled $57.3 million, compared to $50.1 million during the fourth quarter of 2012, and Adjusted Net Income totaled $21.7 million ($0.49 per diluted share) compared to $18.3 million ($0.41 per diluted share) during the fourth quarter of 2012. The increases in Adjusted EBITDA and Adjusted Net Income per diluted share were driven by the factors discussed above that impacted the Company's 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 fourth quarter of 2013 totaled $7.5 million, compared to GAAP net income of $11.2 million during the same quarter in 2012. The decrease in GAAP net income from the fourth quarter of 2012 was primarily due to acquisition and integration-related costs during the quarter associated with the Company's recent Cardpoint acquisition that was completed in August 2013. The Cardpoint acquisition also drove an increase in intangible asset amortization as a result of fair value adjustments, primarily related to customer relationship intangible assets. Additionally, our loss on disposal of assets increased year-over-year primarily as a result of de-installing certain underperforming ATMs in Mexico.

Partially offsetting these higher expenses were the same positive factors impacting Adjusted EBITDA and Adjusted Net Income, as discussed above.

FULL-YEAR RESULTS

For the year ended December 31, 2013, consolidated revenues totaled $876.5 million, representing a 12% increase from the $780.4 million in consolidated revenues generated during the same period in 2012. Of the 12% year-over-year increase, 8% was driven by revenues attributable to businesses acquired over the past year, with the remaining 4% increase attributable to a combination of increases in transactions per ATM, unit growth, increased revenues from higher bank branding and network branding revenues, and growth in Allpoint, partly offset by a $14.5 million reduction in ATM product sales and other revenues. ATM operating revenues, which exclude the decrease in ATM product sales and other revenues, were up 15% (6% on an organic basis) for the year ended December 31, 2013. The year-over-year decline in ATM product sales is attributable to decreased equipment sales associated with updated requirements under the Americans with Disabilities Act (ADA), which became effective in the first quarter of 2012 and caused continued demand for new ATM equipment even after the first quarter 2012 deadline. As the Company's ATM product sales are generally much lower margin revenues than its ATM operating revenues, the $14.5 million revenue decline from 2012 did not have a significant impact on the Company's profitability in the current year's results.

Adjusted EBITDA totaled $218.8 million for the year ended December 31, 2013, representing a 15% increase over the $189.5 million in Adjusted EBITDA for the same period in 2012, and Adjusted Net Income totaled $86.2 million ($1.93 per diluted share) for the year ended December 31, 2013, up 20% on a per share basis from $70.6 million ($1.61 per diluted share) during the same period in 2012. The increases in both Adjusted EBITDA and Adjusted Net Income were primarily due to the same factors discussed above for the Company's quarterly results.

GAAP net income for the year ended December 31, 2013 totaled $23.8 million, compared to $43.6 million during the same period in 2012. The decrease in GAAP net income from the year ended December 31, 2012 was due to several factors, including higher acquisition-related expenses, primarily associated with the Cardpoint acquisition, which were up $12.1 million. Additionally, certain nonrecurring charges taken in the year including $8.7 million related to U.K. property taxes and $13.8 million in income tax expense related to the restructuring of the Company's U.K. business negatively impacted GAAP net income. These effects were partially offset by the same positive factors impacting Adjusted EBITDA and Adjusted Net Income discussed above.

2014 GUIDANCE

Below is the Company's financial guidance for the year ending December 31, 2014:

• Revenues of $980.0 million to $1 billion;
• Adjusted Gross Profit Margin of approximately 33.0% to 33.5%;
• Adjusted EBITDA of $236.0 million to $243.0 million;
• Depreciation and accretion expense of approximately $74.5 million to $76.5 million, net of noncontrolling interests;
• Cash interest expense of approximately $17.0 million to $17.5 million, net of noncontrolling interests;
• Adjusted Net Income of $2.20 to $2.27 per diluted share, based on approximately 44.7 million weighted average diluted shares outstanding; and
• Capital expenditures of approximately $95.0 million to $100.0 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., $1.00 Canadian dollar to $0.95 U.S., and €1.00 Euros to $1.37 U.S.

LIQUIDITY

The Company continues to maintain a strong liquidity position, with $300.4 million in available borrowing capacity under its $375.0 million revolving credit facility as of December 31, 2013 and $86.9 million in cash. The Company's outstanding indebtedness as of December 31, 2013 consisted of $200.0 million in senior subordinated notes due 2018, the newly issued $287.5 million convertible senior notes due 2020 (of which $216.6 million is recorded as long-term debt on our balance sheet, with the remaining balance in additional paid-in capital), $72.5 million in borrowings under its revolving credit facility due 2016, and $1.3 million in equipment financing notes associated with its majority-owned Mexico subsidiary.

DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION

Adjusted EBITDA, Adjusted Net Income, Adjusted Gross Profit Margin, 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, nonrecurring, 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 expenses, certain other non-operating and nonrecurring costs, loss on disposal of assets, the Company's obligations for the payment of income taxes, interest expense and 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, certain other expense (income) amounts, nonrecurring expenses, and acquisition-related expenses, and using an assumed tax rate of 35% through June 30, 2013 and 33.5% thereafter, with certain adjustments for noncontrolling interests. Adjusted Gross Profit Margin is calculated excluding certain nonrecurring costs from the cost of ATM operating revenues. Adjusted EBITDA %, Adjusted Pre-tax Income %, and Adjusted Net Income % are calculated by taking the respective non-GAAP financial measures over GAAP total revenues. Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by average weighted diluted shares outstanding. 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, February 6, 2014, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its financial results for the quarter and year ended December 31, 2013. To access the call, please call the conference call operator at:

Please call in fifteen minutes prior to the scheduled start time and request to be connected to the "Cardtronics Fourth 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, February 20, 2014, and can be accessed by calling (855) 859-2056 or (404) 537-3406 and entering 31099145 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 March 7, 2014.

ABOUT CARDTRONICS (NASDAQ: CATM)

Making ATM cash access convenient where people shop, work and live, Cardtronics is at the convergence of retailers, financial institutions, prepaid card programs and the customers they share. Cardtronics owns/operates approximately 80,600 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.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give the Company's current expectations, beliefs, assumptions or forecasts of future events, future financial performance, strategies, expectations, competitive environment, regulation, and availability of resources. The forward-looking statements contained in this press 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 network and regulatory changes, including requirements surrounding Europay, MasterCard and Visa ("EMV") security standards;
• 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 renew and strengthen its existing customer relationships and add new customers;
• the Company's ability to pursue and successfully integrate acquisitions, including the acquisition of Cardpoint that was completed in August 2013;
• 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 and its ability to continue to secure vault cash rental agreements in the future;
• the Company's ability to successfully manage its existing international operations and to continue to expand internationally;
• the Company's ability to prevent thefts of cash and data 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 Company's ability to successfully implement 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 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.

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