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/
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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 ======= ======= ======= =======