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Cardtronics Announces First Quarter 2013 Results

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, May 2, 2013, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its financial results for the quarter ended March 31, 2013. To access the call, please call the conference call operator at:

Dial in: (877) 303-9205
Alternate dial-in: (760) 536-5226

Please call in fifteen minutes prior to the scheduled start time and request to be connected to the "Cardtronics First 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, May 16, 2013, and can be accessed by calling (855) 859-2056 or (404) 537-3406 and entering 35990860 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 June 2, 2013.

ABOUT CARDTRONICS (Nasdaq:CATM)

Making ATM cash access convenient where people shop, work and live their lives, Cardtronics is at the convergence of retailers, financial institutions, prepaid card programs and the customers they share. Cardtronics owns/operates approximately 62,600 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 Private Securities Litigation Reform Act of 1995. Forward-looking statements give the Company's current expectations 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 regulatory changes;
  • 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 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;
  • the continued implementation of the Company's corporate strategy;
  • the Company's ability to compete successfully with new and existing competitors;
  • the Company's ability to renew and strengthen its existing customer relationships and add new customers;
  • the Company's ability to meet the service levels required by its service level agreements with its customers;
  • the Company's ability to pursue and successfully integrate acquisitions;
  • the Company's ability to successfully manage its existing international operations and to continue to expand internationally;
  • the Company's ability to prevent 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 additional risks the Company is exposed to in its United Kingdom 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.

Consolidated Statements of Operations
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands, except share and per share information)
Revenues:    
ATM operating revenues  $ 193,360  $ 177,813
ATM product sales and other revenues 4,378 13,227
Total revenues 197,738 191,040
Cost of revenues:    
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization shown separately below) 129,560 120,627
Cost of ATM product sales and other revenues 4,129 11,781
Total cost of revenues 133,689 132,408
Gross profit 64,049 58,632
Operating expenses:    
Selling, general, and administrative expenses 18,989 16,075
Acquisition-related expenses 2,822 1,087
Depreciation and accretion expense 16,285 13,750
Amortization expense 5,748 5,475
Loss on disposal of assets 203 548
Total operating expenses 44,047 36,935
Income from operations 20,002 21,697
Other expense (income):    
Interest expense, net 5,066 5,365
Amortization of deferred financing costs 229 220
Other income (421) (77)
Total other expense 4,874 5,508
Income before income taxes 15,128 16,189
Income tax expense 5,980 6,146
Net income 9,148 10,043
Net (loss) income attributable to noncontrolling interests (282) 214
Net income attributable to controlling interests and available to common stockholders  $ 9,430  $ 9,829
     
Net income per common share – basic and diluted  $ 0.21  $ 0.22
     
Weighted average shares outstanding – basic 44,247,098 43,058,215
Weighted average shares outstanding – diluted 44,479,366 43,562,618
 
Condensed Consolidated Balance Sheets
As of March 31, 2013 and December 31, 2012
     
  March 31, 2013 December 31, 2012
  (Unaudited)  
  (In thousands)
Assets    
Current assets:    
Cash and cash equivalents   $ 26,126  $ 13,861
Accounts and notes receivable, net  49,704 45,135
Inventory  4,200 4,389
Restricted cash, short-term  3,936 8,298
Current portion of deferred tax asset, net  13,271 13,086
Prepaid expenses, deferred costs, and other current assets  15,587 30,980
Total current assets  112,824 115,749
Property and equipment, net  226,357 236,238
Intangible assets, net  101,719 102,573
Goodwill  293,042 285,696
Deferred tax asset, net  21,340 26,468
Prepaid expenses, deferred costs, and other assets  2,897 2,168
Total assets  $ 758,179 $ 768,892
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Current portion of long-term debt and notes payable   $ 1,582  $ 1,467
Current portion of other long-term liabilities  25,547 24,386
Accounts payable and other accrued and current liabilities  93,792 102,884
Total current liabilities  120,921 128,737
Long-term liabilities:    
Long-term debt  352,407 353,352
Asset retirement obligations  39,211 44,696
Deferred tax liability, net 177 182
Other long-term liabilities  82,213 93,121
Total liabilities  594,929 620,088
Stockholders' equity  163,250 148,804
Total liabilities and stockholders' equity   $ 758,179  $ 768,892
 
SELECTED INCOME STATEMENT DETAIL:
     
Total revenues by segment:
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands)
     
United States  $ 157,139  $ 157,919
United Kingdom 29,499 25,191
Other International 11,100 7,930
Total revenues  $ 197,738  $ 191,040
     
Breakout of ATM operating revenues:
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands)
     
Surcharge revenues  $ 88,740  $ 83,897
Interchange revenues 61,789 57,846
Bank branding and surcharge-free network revenues 34,119 28,269
Managed services revenues 4,459 3,810
Other revenues 4,253 3,991
Total ATM operating revenues  $ 193,360  $ 177,813
     
Total cost of revenues by segment:
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands)
     
United States  $ 101,031  $ 106,191
United Kingdom 23,420 20,208
Other International 9,238 6,009
Total cost of revenues  $ 133,689  $ 132,408
     
Breakout of cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization):
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands)
     
Merchant commissions  $ 62,363  $ 57,322
Vault cash rental expense 11,937 12,424
Other costs of cash 18,881 16,379
Repairs and maintenance 12,094 13,503
Communications 5,637 4,960
Transaction processing 2,088 1,853
Stock-based compensation 207 203
Other expenses 16,353 13,983
Total cost of ATM operating revenues  $ 129,560  $ 120,627
 
Breakout of selling, general, and administrative expenses:
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands)
     
Employee costs   $ 9,518  $ 8,492
Stock-based compensation  2,960 2,357
Professional fees  2,145 1,896
Other  4,366 3,330
Total selling, general, and administrative expenses   $ 18,989  $ 16,075
     
Depreciation and accretion expense by segment:
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands)
     
United States  $ 10,042  $ 8,502
United Kingdom 5,076 4,465
Other International 1,167 783
Total depreciation and accretion expense  $ 16,285  $ 13,750
     
SELECTED BALANCE SHEET DETAIL:
     
Long-term debt:
     
  March 31, 2013 December 31, 2012
  (In thousands)
8.25% senior subordinated notes   $ 200,000  $ 200,000
Revolving credit facility  151,400 152,000
Equipment financing notes  2,589 2,819
Total long-term debt   $ 353,989  $ 354,819
     
Share count rollforward:
     
Total shares outstanding as of December 31, 2012   44,641,224
Shares repurchased    (147,036)
Shares issued – restricted stock grants and conversions and stock options exercised    111,836
Shares vested – restricted stock units   261,000
Shares forfeited – restricted stock awards   (10,000)
Total shares outstanding as of March 31, 2013   44,857,024
 
SELECTED CASH FLOW DETAIL:
     
Selected cash flow statement amounts:
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands)
     
Cash provided by operating activities  $ 41,380  $ 18,741
Cash used in investing activities (28,524) (21,936)
Cash (used in) provided by financing activities (810) 3,876
Effect of exchange rate changes on cash 219 (44)
Net increase in cash and cash equivalents 12,265 637
Cash and cash equivalents at beginning of period 13,861 5,576
Cash and cash equivalents at end of period  $ 26,126  $ 6,213
 
Key Operating Metrics – Excluding Acquisitions in All Periods Presented
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
     
The following table excludes the effect of acquisitions completed during 2012 in the three month period ended March 31, 2013 for comparative purposes :
     
EXCLUDING ACQUISITIONS    
  Three Months Ended March 31, 
  2013 2012
Average number of transacting ATMs:    
United States: Company-owned  27,529 24,859
United Kingdom  4,314 3,628
Mexico  2,705 2,843
Canada 1,036 514
Subtotal  35,584 31,844
United States: Merchant-owned  14,024 15,798
Average number of transacting ATMs: ATM operations  49,608 47,642
     
United States: Managed services (1) 6,106 5,797
United Kingdom: Managed services  21 21
Canada: Managed services   —  —
Average number of transacting ATMs: Managed services  6,127 5,818
     
Total average number of transacting ATMs  55,735 53,460
     
Total transactions (in thousands):    
ATM operations  186,547 158,885
Managed services  9,995 9,451
Total transactions  196,542 168,336
     
Total cash withdrawal transactions (in thousands):    
ATM operations  114,303 100,886
Managed services  6,342 6,082
Total cash withdrawal transactions  120,645 106,968
     
Per ATM per month amounts (excludes managed services):    
Cash withdrawal transactions  768 706
     
ATM operating revenues   $ 1,252  $ 1,217
Cost of ATM operating revenues (2) 842 822
ATM operating gross profit  (2) (3)  $ 410  $ 395
     
ATM operating gross profit margin  (2) (3) 32.7% 32.5%
___________________  
     
(1)   Includes 2,789 and 2,603 ATMs for the three months ended March 31, 2013 and 2012, respectively, for which the Company only provided EFT transaction processing services. 
(2)   Amounts presented exclude the effect of depreciation, accretion, and amortization expense, which is presented separately in the Company's consolidated statements of operations. 
(3)   ATM operating gross profit and ATM operating gross profit margin are measures of profitability that are calculated based on only the revenues and expenses that relate to operating ATMs in the Company's portfolio. Revenues and expenses relating to managed services and ATM equipment sales and other ATM-related services are not included.
 
Key Operating Metrics – Including Acquisitions in All Periods Presented
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
     
     
     
INCLUDING ACQUISITIONS    
  Three Months Ended March 31, 
  2013 2012
Average number of transacting ATMs:    
United States: Company-owned  27,582 24,859
United Kingdom  4,314 3,628
Mexico  2,705 2,843
Canada 1,539 514
Subtotal  36,140 31,844
United States: Merchant-owned  20,067 15,798
Average number of transacting ATMs: ATM operations  56,207 47,642
     
United States: Managed services (1) 6,106 5,797
United Kingdom: Managed services  21 21
Canada: Managed services  305
Average number of transacting ATMs: Managed services  6,432 5,818
     
Total average number of transacting ATMs  62,639 53,460
     
Total transactions (in thousands):    
ATM operations  190,372 158,885
Managed services  10,220 9,451
Total transactions  200,592 168,336
     
Total cash withdrawal transactions (in thousands):    
ATM operations  117,309 100,886
Managed services  6,567 6,082
Total cash withdrawal transactions  123,876 106,968
     
Per ATM per month amounts (excludes managed services):    
Cash withdrawal transactions  696 706
     
ATM operating revenues  1,118 1,217
Cost of ATM operating revenues (2) 746 822
ATM operating gross profit  (2) (3)  $ 372  $ 395
     
ATM operating gross profit margin  (2) (3) 33.3% 32.5%
___________________    
     
(1)   Includes 3,094 and 2,603 ATMs for the three months ended March 31, 2013 and 2012, respectively, for which the Company only provided EFT transaction processing services. 
(2)   Amounts presented exclude the effect of depreciation, accretion, and amortization expense, which is presented separately in the Company's consolidated statements of operations. 
(3)   ATM operating gross profit and ATM operating gross profit margin are measures of profitability that are calculated based on only the revenues and expenses that relate to operating ATMs in the Company's portfolio. Revenues and expenses relating to managed services and ATM equipment sales and other ATM-related services are not included.
 
Key Operating Metrics – Ending Machine Count
As of March 31, 2013 and 2012
(Unaudited)
     
  As of March 31, 
Ending number of transacting ATMs: 2013 2012
United States: Company-owned  27,590 25,138
United Kingdom  4,301 3,756
Mexico  2,684 2,855
Canada  1,544 518
Subtotal  36,119 32,267
United States: Merchant-owned  19,987 15,687
Ending number of transacting ATMs: ATM operations  56,106 47,954
     
United States: Managed services (1) 6,133 5,942
United Kingdom: Managed services  21 21
Canada: Managed services  315
Ending number of transacting ATMs: Managed services  6,469 5,963
     
Total ending number of transacting ATMs  62,575 53,917
___________________    
     
(1)   Includes 3,149 and 2,617 ATMs as of March 31, 2013 and 2012, respectively, for which the Company only provided EFT transaction processing services. 
 
Reconciliation of Net Income Attributable to Controlling Interests to EBITDA, Adjusted EBITDA, and Adjusted Net Income 
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
     
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands, except share and per share amounts)
Net income attributable to controlling interests  $ 9,430  $ 9,829
Adjustments:    
Interest expense, net 5,066 5,365
Amortization of deferred financing costs 229 220
Income tax expense 5,980 6,146
Depreciation and accretion expense 16,285 13,750
Amortization expense 5,748 5,475
EBITDA   $ 42,738  $ 40,785
     
Add back:    
Loss on disposal of assets 203 548
Other income (421) (77)
Noncontrolling interests (1) (419) (410)
Stock-based compensation expense (2) 3,157 2,551
Acquisition-related costs (3) 2,822 1,087
Other adjustments to selling, general, and administrative expenses (4) 446  —
Adjusted EBITDA  $ 48,526  $ 44,484
Less:    
Interest expense, net (2) 5,037 5,310
Depreciation and accretion expense (2) 15,869 13,380
Adjusted pre-tax income 27,620 25,794
Income tax expense (at 35%) (5) 9,667 9,028
Adjusted Net Income  $ 17,953  $ 16,766
     
Adjusted Net Income per share  $ 0.41  $ 0.39
Adjusted Net Income per diluted share  $ 0.40  $ 0.38
     
Weighted average shares outstanding - basic 44,247,098 43,058,215
Weighted average shares outstanding - diluted 44,479,366 43,562,618
_______________    
(1)   Noncontrolling interests adjustment made such that Adjusted EBITDA includes only the Company's 51% ownership interest in the Adjusted EBITDA of its Mexico subsidiary.
(2)   Amounts exclude 49% of the expenses incurred by the Company's Mexico subsidiary as such amounts are allocable to the noncontrolling interest stockholders.
(3)   Acquisition-related costs include non-recurring costs incurred for professional and legal fees and certain transition and integration-related costs, related to recent acquisitions. 
(4)   Represents non-recurring severance related costs associated with management of Company's U.K. operation.
(5)   35% represents the Company's estimated long-term, cross-jurisdictional effective cash tax rate.
 
Reconciliation of Free Cash Flows 
For the Three Months Ended March 31, 2013 and 2012
(Unaudited)
     
  Three Months Ended March 31, 
  2013 2012
  (In thousands)
Cash provided by operating activities  $ 41,380  $ 18,741
Payments for capital expenditures:    
Cash used in investing activities, excluding acquisitions (15,937) (21,686)
Free cash flow  $ 25,443  $ (2,945)
 
Reconciliation of Estimated Net Income to EBITDA, Adjusted EBITDA, and Adjusted Net Income
For the Year Ending December 31, 2013
(Unaudited)
       
  Estimated Range
  Full Year 2013
       
  (In millions, except per share information)
       
Net income  $46.3 -- $48.7
Adjustments:      
Interest expense, net  20.2 -- 20.7
Amortization of deferred financing costs  0.9 -- 0.9
Income tax expense  30.3 -- 31.8
Depreciation and accretion expense  65.5 -- 67.0
Amortization expense  24.0 -- 24.0
EBITDA  $187.2 -- $193.1
       
Add back:      
Noncontrolling interests  (1.8) -- (1.7)
Loss on disposal of assets  1.0 -- 1.0
Stock-based compensation expense  12.0 -- 13.0
Acquisition-related costs  3.5 -- 3.5
Other expense, net (0.4) -- (0.4)
Other adjustments 0.5 -- 0.5
Adjusted EBITDA  $202.0 -- $209.0
Less:       
Interest expense, net (1) 20.0 -- 20.5
Depreciation and accretion expense (1) 64.0 -- 65.5
Income tax expense (at 35%) (2) 41.3 -- 43.0
Adjusted Net Income  $76.7 -- $80.0
       
Adjusted Net Income per diluted share  $1.72 -- $1.79
       
Weighted average shares outstanding – diluted  44.7 -- 44.7
__________________      
       
(1)Amounts exclude 49% of the expenses to be incurred by the Company's Mexico subsidiary as such amounts are allocable to the noncontrolling interest shareholders. 
(2) 35% represents the Company's estimated long-term, cross-jurisdictional effective cash tax rate.
 
Contact Information:
   
Cardtronics — Media Cardtronics — Investors
Nick Pappathopoulos Chris Brewster
Director – Public Relations Chief Financial Officer
832-308-4396 832-308-4128
npappathopoulos@cardtronics.com cbrewster@cardtronics.com

Cardtronics and Allpoint are registered trademarks of Cardtronics, Inc.

All other trademarks are the property of their respective owners.  

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