Cardtronics Announces Third Quarter 2005 Financial Results

Houston, Texas, UNITED STATES


HOUSTON, Nov. 1, 2005 (PRIMEZONE) -- Cardtronics, Inc. ("Cardtronics" or the "Company"), the world's largest independent owner/operator of ATMs, today announced its financial results for the quarter ended September 30, 2005.

For the third quarter of 2005, revenues totaled $71.7 million, representing a 13.3% increase over the $63.3 million in revenues recorded during the third quarter of 2004. The Company incurred a net loss for the third quarter of 2005 of approximately $0.2 million, compared to net income of approximately $2.0 million for the same period in 2004. The 2005 quarterly net loss figure includes the write-off of approximately $0.6 million (net of tax) in deferred financing costs in connection with the issuance of the Company's senior subordinated notes and subsequent repayment of other outstanding debt obligations in August 2005. 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, as well as higher selling, general and administrative costs resulting from the Company's growth. The accelerated rollout of ATMs in Walgreens and CVS locations throughout the United States during the second and third quarters of 2005 also negatively impacted 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 $11.0 million for the third quarter of 2005, representing a 26.4% increase over the $8.7 million in EBITDA recorded during the third 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 $11.5 million for the third quarter of 2005, representing a 17.3% increase over the $9.8 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 to a lesser extent, continued growth in the Company's bank and network branding initiatives.

EBITDA and Adjusted EBITDA are non-GAAP measures of financial performance. We are required by the terms of our bank credit facility to maintain specified levels of debt to Adjusted EBITDA. Reference is made to the tables at the end of this release for a reconciliation of these items to net income.

Average transacting ATMs for the third quarter of 2005 totaled 26,393 machines, representing an increase of 5.4% when compared to the 25,043 average transacting machines during the same period in 2004. Such increase was 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. Total transactions increased 15.9% to 42.2 million during the third quarter of 2005 from 36.4 million during the same period in 2004. Such increase was primarily due to the 2005 acquisitions, including the acquired Bank Machine ATM portfolio in the United Kingdom, which has higher transacting ATMs, on average, than the Company's domestic ATM portfolio.

For the nine months ended September 30, 2005, revenues totaled $199.2 million, representing an increase of 52.2% over the $130.9 million in revenues recorded during the first nine months of 2004. Net income for the nine months ended September 30, 2005, totaled $1.8 million, compared to $3.2 million for the same period in 2004. The year-over-year increase in revenues was due primarily to 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, as well as higher selling, general and administrative costs, as previously discussed. Additionally, the accelerated Walgreens and CVS ATM rollouts mentioned above negatively impacted the year-over-year comparisons.

EBITDA totaled $31.3 million for nine months ended September 30, 2005, representing a 68.3% increase over the $18.6 million in EBITDA recorded during the same period in 2004. Adjusted EBITDA totaled $32.4 million for the nine months ended September 30, 2005, representing a 40.9% increase over the $23.0 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.

Average transacting ATMs for the nine months ended September 30, 2005 totaled 26,099 machines, representing an increase of 51.6% when compared to the 17,216 average transacting machines during the same period in 2004. Such increase was primarily due to the E*TRADE ATM portfolio acquisition consummated in June 2004, the additional acquisitions consummated during 2005, and the and the continued rollout of company-owned ATMs in Walgreens and CVS locations throughout the United States. Total transactions increased 50.2% to 115.2 million during the nine months ended September 30, 2005 from 76.7 million during the same period in 2004. As was the case with the quarterly figures, such increase was primarily due to the 2005 acquisitions, including the acquired Bank Machine ATM portfolio in the United Kingdom.

The 2005 year-to-date 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 this year.

"While our financial results for the quarter were lower than what we originally anticipated, we were pleased with the progress that was made with respect to our key initiatives during the quarter, especially on the domestic front," remarked Jack Antonini, Chief Executive Officer of Cardtronics. "The September announcement of the creation of a nationwide surcharge-free ATM network between MasterCard(R) and Cardtronics further validates the Company's network and bank-branding strategy. By placing ATMs in well-known, high consumer traffic retail locations throughout the United States, such as Walgreens and CVS stores, Cardtronics has created a unique and valuable network for financial institutions and debit card issuers to reach and better serve their dispersed customer base."

Key Highlights

Recent key highlights include the following:



  -- The signing of an agreement with MasterCard International to
     create a surcharge-free ATM program throughout the United States.
     Issuers of MasterCard(R), Maestro(R) and Cirrus(R) branded debit
     cards are now able to offer their cardholders surcharge-free cash
     withdrawals at 25,000 plus Cardtronics' ATM locations throughout
     the United States, further validating the Company's network
     branding strategy.

  -- The roll out of over 1,000 ATMs at Walgreens and CVS locations
     throughout the United States. Although these locations typically
     result in negative gross margins during the first six to twelve
     months following their deployment, such locations are considered
     to be long-term investments that are integral to the Company's
     bank and network branding initiatives.

  -- The successful launch of the bank branding program between
     JPMorgan Chase and the Company with respect to the company-owned
     ATMs located in Duane Reade drug store locations throughout New
     York City. Withdrawal transactions have increased more than 80%,
     on average, since the ATMs were re-branded in June 2005.

  -- The signing of a multi-year contract with TM Retail, a leading
     independent neighborhood retailer with 1,300 locations in the
     United Kingdom. The agreement allows for Bank Machine to place
     ATMs in selected high-traffic news and convenience stores located
     throughout the United Kingdom.

  -- The signing of a contract with Spar, a leading convenience
     store group with over 2,700 locations throughout the United
     Kingdom. The agreement allows for Bank Machine to be the
     preferred supplier of ATMs for the Spar locations.

Non-GAAP Financial Information

EBITDA and Adjusted EBITDA are not intended to represent cash flows from operations as defined by generally accepted accounting principles ("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; 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 25,000 locations operating in every major market and in all 50 states as well as 1,000 locations throughout the United Kingdom. Major U.S. merchant-clients include A&P, Albertson's, Amerada Hess, Barnes & Noble College Bookstores, BP Amoco, Chevron, Costco, CVS/pharmacy, ExxonMobil, Duane Reade, Rite Aid, SSP/Circle K, Sunoco, Target and Walgreens. Cardtronics' unique ATM footprint enables it to offer ATM branding opportunities to financial institutions across the USA. Branded ATMs deployed at Cardtronics' major merchant-clients increase account access convenience for the depositors of these financial institutions as well as customer foot traffic for the merchant-clients. 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
   Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
        Three and Nine Months Ended September 30, 2005 and 2004
                            (in thousands)
                              (unaudited)

                               Three Months Ended    Nine Months Ended
                                  September 30,        September 30,
                               -------------------  ------------------
                                 2005       2004      2005      2004
                               --------   --------  --------  --------
 Revenues:
  ATM revenues                 $ 69,604   $ 60,529  $191,731  $125,169
  ATM product sales
   and other revenues             2,130      2,752     7,457     5,772
                               --------   --------  --------  --------
    Total revenues               71,734     63,281   199,188   130,941
 Cost of revenues:
  Cost of ATM revenues           53,612     49,812   148,528    98,211
  Cost of ATM product sales
   and other revenues             2,173      2,301     6,976     4,997
                               --------   --------  --------  --------
    Total cost of revenues       55,785     52,113   155,504   103,208
    Gross profit                 15,949     11,168    43,684    27,733
 Operating expenses:
  Selling, general and
   administrative expenses        4,512      2,334    11,552     8,851
  Depreciation and accretion
   expense                        3,388      1,767     8,530     4,257
  Amortization expense            1,981      1,806     5,689     4,092
                               --------   --------  --------  --------
    Total operating expenses      9,881      5,907    25,771    17,200
 Income from operations           6,068      5,261    17,913    10,533
 Other expenses:
  Interest expense                4,914      1,669    10,646     2,424
  Amortization and write-off
   of deferred financing
   costs                          1,136        104     3,578     2,787
  Minority interest in
   subsidiary                         1         10        17         9
  Other                             435        135       865       228
                               --------   --------  --------  --------
    Total other expenses          6,486      1,918    15,106     5,448
 Income (loss) before
  income taxes                     (418)     3,343     2,807     5,085
 Income tax provision (benefit)    (200)     1,302       972     1,931
                               --------   --------  --------  --------
 Net income (loss)                 (218)     2,041     1,835     3,154
 Preferred stock dividends
  and accretion expense              66        588     1,328     1,709
                               --------   --------  --------  --------
 Net income (loss) available
  to common stockholders       $   (284)  $  1,453  $    507  $  1,445
                               ========   ========  ========  ========

                  Cardtronics, Inc. and Subsidiaries
                      Consolidated Balance Sheets
            As of September 30, 2005 and December 31, 2004
                            (in thousands)

                                            September 30,  December 31,
                                                2005          2004
                                             ---------      ---------
 Assets                                     (unaudited)
 Current assets:
  Cash and cash equivalents                  $   2,517      $   1,412
  Accounts and notes receivable, net             8,746         11,473
  Inventory                                      4,271          2,609
  Prepaid, deferred costs, and
   other current assets                          6,956          2,503
  Deferred tax asset                             3,999          2,412
                                             ---------      ---------
 Total current assets                           26,489         20,409
 Property and equipment, net                    71,622         44,992
 Intangible assets, net                         74,792         43,077
 Goodwill                                      160,555         84,977
 Prepaid and other assets                        7,048          1,854
                                             ---------      ---------
 Total assets                                $ 340,506      $ 195,309
                                             =========      =========

 Liabilities and Stockholders' Deficit
 Current liabilities:
  Current portion of long-term debt
   and notes payable                         $   3,146      $  15,000
  Current portion of other long-term
   liabilities                                   2,251          1,176
  Accounts payable and accrued liabilities      41,752         24,814
                                             ---------      ---------
 Total current liabilities                      47,149         40,990

 Long-term liabilities:
  Long-term debt, net of current portion       240,421        113,541
  Deferred tax liability                        10,991          6,231
  Other long-term liabilities and minority
   interest in subsidiary                       14,855         13,077
                                             ---------      ---------
 Total liabilities                             313,416        173,839
                                             ---------      ---------
 Redeemable preferred stock                     76,263         23,634
 Stockholders' deficit:
  Subscriptions receivable
   (at face value)                              (1,476)        (1,862)
  Additional paid-in capital                       809             --
  Accumulated other comprehensive
   income (loss), net                              124            886
  Retained earnings/accumulated deficit            245           (329)
  Treasury stock                               (48,875)          (859)
                                             ---------      ---------
 Total stockholders' deficit                   (49,173)        (2,164)
                                             ---------      ---------
 Total liabilities and
  stockholders' deficit                      $ 340,506      $ 195,309
                                             =========      =========

                  Cardtronics, Inc. and Subsidiaries
                         Key Operating Metrics
        Three and Nine Months Ended September 30, 2005 and 2004
                              (unaudited)

                       Three Months Ended       Nine Months Ended
                         September 30,             September 30,
                    -----------------------   ------------------------
                       2005         2004         2005          2004
                    ----------   ----------   -----------   ----------
 Average number of
  transacting ATMs      26,393       25,043        26,099       17,216
 Surcharge
  transactions
  per ATM                1,059        1,068         3,063        3,295
 Total surcharge
  transactions      27,951,737   26,755,141    79,942,959   56,733,099
 Total
  transactions      42,202,003   36,404,980   115,152,246   76,711,779

 Per surcharge
  transaction
  amounts:
   Transaction
    revenue         $     2.49   $     2.26   $      2.40   $     2.21
   Transaction
    expenses              1.92         1.86          1.86         1.73
                    ----------   ----------   -----------   ----------
 Transaction gross
  profit            $     0.57   $     0.40   $      0.54   $     0.48
                    ==========   ==========   ===========   ==========

 Transaction gross
  margin                  22.9%        17.7%         22.5%        21.7%

 Capital
  expenditures
  (000s)            $   16,695   $    5,924   $    27,397   $   13,289

                  Cardtronics, Inc. and Subsidiaries
  Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
       Three and Nine Months Ended September 30, 2005 and 2004
                            (in thousands)
                             (unaudited)

                                Three Months Ended    Nine Months Ended 
                                   September 30,        September 30,
                                ------------------   ------------------
                                  2005       2004      2005      2004      
                                -------    -------   -------    -------
 Net income (loss)              $  (218)   $ 2,041   $ 1,835    $ 3,154
 Interest expense                 6,050      1,773    14,224      5,211
 Income tax expense
  (benefit)                        (200)     1,302       972      1,931
 Depreciation and accretion
  expense                         3,388      1,767     8,530      4,257
 Amortization expense             1,981      1,806     5,689      4,092
                                -------    -------   -------    -------
 EBITDA                          11,001      8,689    31,250     18,645
 Stock compensation expense         131        219       432      2,707
 Acquisition related
  transition costs                  266        881       721      1,217
 Initial public offering costs       --         --        22        395
 Other                               69         --        (5)        --
                                -------    -------   -------    -------
 Adjusted EBITDA                $11,467    $ 9,789   $32,420    $22,964
                                =======    =======   =======    =======


        

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