HOUSTON, Oct. 27, 2016 (GLOBE NEWSWIRE) -- Cardtronics plc (Nasdaq:CATM) ("Cardtronics" or the "Company"), the world's largest ATM owner/operator, announced today its financial and operational results for the quarter ended September 30, 2016.

Key financial statistics in the third quarter of 2016 as compared to the third quarter of 2015 include:
  • Total revenues of $328.3 million, up 6% from $311.4 million (up 11% on a constant-currency basis).
  • ATM operating revenues of $314.8 million, up 6% from $296.8 million (up 11% on a constant-currency basis).
  • Gross margin of 36.6%, up from 36.1% in 2015.
  • GAAP Net Income of $27.5 million, or $0.60 per diluted share, up from $22.0 million, or $0.48 per diluted share.
  • Adjusted Net Income per diluted share of $0.98, up 20% from $0.82 (up 26% on a constant-currency basis).
  • Adjusted EBITDA of $86.6 million, up 6% from $81.7 million (up 12% on a constant-currency basis).
  • Cash flows from operating activities of $89.3 million, up 48% from $60.5 million. For the nine months ended September 30, 2016, cash flows from operating activities were $213.9 million, up 45% from $147.1 million.

"The third quarter was exceptionally productive for our shareholders. Seven percent constant currency organic revenue growth, combined with solid execution in our classic business drivers, delivered a quarter of which the team can be proud. Allpoint sales, 1,300 new retail ATM locations, several long-term renewals, and the entry into Spain were key highlights. These activities were complemented by our first significant deal expanding our model beyond retail sites to financial institution branch locations. And then we ended the quarter announcing the acquisition of DirectCash Payments, the largest in our history, driving scale in Canada, the U.K., and Mexico, as well as adding Australia and New Zealand as new markets in the growing international roster of countries we serve," commented Steve Rathgaber, Cardtronics' chief executive officer.

RECENT HIGHLIGHTS

  • Secured ATM operating contracts representing over 1,000 locations in North America and Europe. These wins included placements at various retail and transit locations, including over 450 high-traffic convenience store locations.
  • Renewed our relationships with Kroger and Albertsons/Safeway, entering into long-term extensions to continue serving nearly 1,800 locations across the two grocery chains.
  • Added a total of 22 new financial institutions for participation in our Allpoint Network, adding nearly 670,000 cards that will have surcharge-free ATM access to our network, including an agreement with First Tennessee Bank, a top 50 bank and the largest financial institution headquartered in Tennessee.
  • Secured an outsourcing arrangement for both on-premise and off-premise ATMs with PenFed Credit Union for over 140 ATM locations.
  • Entered into an agreement to expand our bank-branding relationship with TD Bank for an additional 189 Walgreens locations in Florida.
  • Acquired over 300 off-branch ATM sites from a major financial institution in the U.K.
  • Launched our ATM business in Spain, including a relationship with the EURO 6000 ATM network and pilots with two major retailers.
  • Announced the planned acquisition of DirectCash Payments Inc. ("DCPayments"), a leading operator of approximately 25,000 ATMs across Australia, Canada, the U.K., New Zealand, and Mexico. The acquisition is subject to the DCPayments shareholder vote and other closing conditions and is expected to close early in the first quarter of 2017.

THIRD QUARTER RESULTS

Consolidated revenues totaled $328.3 million for the third quarter of 2016, representing a 6% increase from $311.4 million in the third quarter of 2015. ATM operating revenues were up 6% from the third quarter of 2015. Adjusting for movements in currency exchange rates, ATM operating revenues were up approximately 11% from the third quarter of 2015, the majority of which was driven by organic growth.

ATM operating revenues in North America were up 9% for the third quarter of 2016, driven by a mix of acquisition and organic growth. ATM operating revenues in Europe, as reported in U.S. dollars, were approximately flat compared to the same period in 2015, but increased 16% on a constant-currency basis, driven mostly by organic growth. The recent strong appreciation in the U.S. dollar relative to the British pound significantly impacted the Company's reported revenues and profits in the third quarter. The British pound was on average 15% weaker relative to the U.S. dollar during the third quarter of 2016 compared to the same period a year ago.

GAAP Net Income in the third quarter of 2016 totaled $27.5 million, compared to GAAP Net Income of $22.0 million during the third quarter of 2015. The increase in GAAP Net Income for the third quarter of 2016 was the result of continued revenue growth and a lower tax rate, partially offset by incremental professional services costs of $2.7 million associated with the Company's acquisition activities and $1.0 million associated with the Company's redomicile of its parent company to the U.K. These costs are reported in the acquisition and divestiture-related expenses and redomicile-related expenses line items, respectively, in the Company's results from operations and have been excluded from the Company's calculation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share in the third quarter of 2016. The Company's U.S. GAAP tax rate was 23.4% for the third quarter of 2016 compared to 36.8% in the same period in 2015, with the decrease mostly attributable to benefits from its recently completed redomicile to the U.K.

Adjusted EBITDA for the third quarter of 2016 totaled $86.6 million, representing a 6% increase (12% on a constant-currency basis) over the $81.7 million of Adjusted EBITDA during the third quarter of 2015. Adjusted Net Income totaled $44.7 million ($0.98 per diluted share or $1.03 on a constant-currency basis) for the third quarter of 2016, compared to $37.2 million ($0.82 per diluted share) during the third quarter of 2015. The increases in Adjusted EBITDA and Adjusted Net Income were both driven by the Company's revenue growth. Adjusted Net Income was also higher as a result of a lower non-GAAP tax rate. Adjusted EBITDA and Adjusted Net Income are detailed in a reconciliation included at the end of this press release.

NINE MONTH RESULTS

Consolidated revenues totaled $955.5 million for the nine months ended September 30, 2016, representing a 7% increase from $897.0 million in consolidated revenues during the same period of 2015. ATM operating revenues were up 9% from the nine months ended September 30, 2015. Adjusting for movements in currency exchange rates, ATM operating revenues were up approximately 12% for the nine months ended September 30, 2016, driven by organic growth and contributions from acquisitions. The $17.4 million decrease in ATM product sales and other revenues in the nine months ended September 30, 2016 was attributable to the Company's 2015 divestiture of the retail cash-in-transit component of its previously acquired Sunwin business in the U.K., which was included in the Company's 2015 results. Cost of ATM product sales and other revenues decreased correspondingly by $16.3 million from the same period in 2015.

ATM operating revenues in North America were up 8% for the nine months ended September 30, 2016, driven by a combination of recent acquisitions and organic growth. ATM operating revenues in Europe were up 7% for the nine months ended September 30, 2016 (18% on a constant-currency basis), driven by strong organic growth, and to a lesser extent, acquisition-related growth.

GAAP Net Income for the nine months ended September 30, 2016 totaled $63.0 million, compared to GAAP Net Income of $52.2 million during the same period in 2015. The increase in GAAP Net Income for the nine months of 2016 was the result of continued revenue growth and margin expansion, partially offset by incremental professional services costs of $4.9 million associated with the Company's acquisition activities and $12.2 million associated with the Company's redomicile of its parent company to the U.K. These costs are reported in the acquisition and divestiture-related expenses and redomicile-related expenses line items, respectively, in the Company's results from operations and have been excluded from the Company's calculation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share in the nine months ended September 30, 2016.

Adjusted EBITDA for the nine months ended September 30, 2016 totaled $241.4 million, representing an 8% increase from the same period in 2015. Adjusted Net Income totaled $112.8 million ($2.47 per diluted share) for the nine months ended September 30, 2016, compared to $98.6 million ($2.17 per diluted share) during the same period in 2015. The increases in Adjusted EBITDA and Adjusted Net Income were primarily due to the same factors discussed above, including the Company's revenue growth and margin improvement relative to the nine months ended September 30, 2015. For the nine months ended September 30, 2016, cash flows from operating activities were $213.9 million, up 45% from $147.1 million.

2016 GUIDANCE

The Company is updating the financial guidance it provided in July 2016 regarding its anticipated results for the full year 2016 results:
  • Revenues of $1.25 billion to $1.265 billion;
  • Gross profit margin of 35.5% to 35.7%;
  • GAAP Net Income of $84 million to $85 million;
  • Adjusted EBITDA of $317 million to $319 million;
  • Depreciation and accretion expense of $91 million to $92 million;
  • Cash interest expense $17.5 million;
  • Adjusted Net Income per diluted share of $3.21 to $3.26, based on approximately 45.8 million weighted average diluted shares outstanding; and
  • Capital expenditures of $120 million to $130 million.

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. This guidance is based on average foreign currency exchange rates for the remainder of the year of £1.00 U.K. to $1.20 U.S., $20.00 Mexican pesos to $1.00 U.S., $1.00 Canadian dollar to $0.76 U.S., and €1.00 Euros to $1.10 U.S. Additionally, this guidance is based on an estimated tax rate of approximately 29% for the last three months of 2016.

LIQUIDITY

The Company had no outstanding borrowings under its $375 million revolving credit facility due in 2021 and $60 million in cash on hand as of September 30, 2016. The revolving credit facility was amended July 1, 2016 to extend the maturity date from April 2019 to July 2021. The Company's outstanding indebtedness as of September 30, 2016 consisted of $250 million in Senior Notes due 2022 and $288 million Convertible Senior Notes due 2020. The Senior Notes and Convertible Senior Notes have carrying balances of $247 million and $238 million, respectively, and are reflected as long-term debt on the balance sheet, net of unamortized discount and capitalized debt issuance costs.

As previously reported, the Company entered into a definitive agreement on October 3, 2016 to acquire all of the outstanding shares of DCPayments. Inclusive of amounts needed to repay the estimated outstanding indebtedness of DCPayments, the Company expects the total purchase price will be approximately CAD$605 million (approximately $460 million), excluding any associated transaction-related costs. The Company is currently assessing options for financing the acquisition and has secured commitments from financial institutions in its existing revolving credit facility to provide the borrowing capacity needed to complete the acquisition. The acquisition is expected to close early in the first quarter of 2017, subject to the DCPayments shareholder vote and other closing conditions.

CONFERENCE CALL INFORMATION

The Company will host a conference call today, Thursday, October 27, 2016, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its financial results for the quarter ended September 30, 2016. To access the call, please call the conference call operator at:
       
    Dial in:   (877) 806-7890
  Alternate dial-in:     (973) 935-8713

Please call in fifteen minutes prior to the scheduled start time and request to be connected to the "Cardtronics Third Quarter 2016 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, November 10, 2016, and can be accessed by calling (855) 859-2056 or (404) 537-3406 and entering 94694053 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 November 30, 2016.

DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION

EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share, Free Cash Flow, and certain U.S. GAAP as well as non-GAAP measures on a constant-currency basis represent non-GAAP financial measures provided as a complement to results prepared in accordance with U.S. GAAP and may not be comparable to similarly-titled measures reported by other companies. The Company uses these non-GAAP financial measures in managing and measuring the performance of its business, including setting and measuring incentive based compensation for management. Management believes that the presentation of these measures and the identification of notable, non-cash, and/or (if applicable in a particular period) certain costs not anticipated to occur in future periods 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 of intangible assets 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 methods by which the assets were acquired. Adjusted EBITDA also excludes stock-based compensation expense, acquisition and divestiture-related expenses, certain non-operating expenses, certain costs not anticipated to occur in future periods (if applicable in a particular period), gains or losses on disposal of assets, the Company's obligations for the payment of income taxes, interest expense, and other obligations such as capital expenditures, and includes an adjustment for noncontrolling interests. Adjusted Net Income represents net income computed in accordance with U.S. GAAP, before amortization of intangible assets, gains or losses on disposal of assets, stock-based compensation expense, certain other expense amounts, acquisition and divestiture-related expenses, certain non-operating expenses, and (if applicable in a particular period) certain costs not anticipated to occur in future periods (together, the "Adjustments"). Prior to June 30, 2016, Adjusted Net Income was calculated using an estimated long-term, cross-jurisdictional effective cash tax rate of 32%. Subsequent to the redomicile of the Company's parent company to the U.K., the Company has revised the process for determining its non-GAAP tax rate and now utilizes a non-GAAP tax rate derived from the U.S. GAAP tax rate adjusted for the net tax effects of the identified Adjustments, based on the nature and geography of the Adjustments. For the three month period ended September 30, 2016, the non-GAAP tax rate used to calculate Adjusted Net Income was approximately 24.2%. For the nine months ended September 30, 2016, the Company used 24.2% for the quarter ended September 30, 2016 and for the six months ended June 30, 2016, its previous estimated long-term cross-jurisdictional tax rate of 32%. For the three and nine months ended September 30, 2015, the Company used its previous estimated long-term cross-jurisdictional tax rate of 32%. Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by weighted average 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 Free Cash Flow measure does not take into consideration certain other non-discretionary cash requirements such as mandatory principal payments on portions of the Company's long-term debt. Management calculates certain U.S. GAAP as well as non-GAAP measures on a constant-currency basis using the average foreign currency exchange rates applicable in the corresponding period of the previous year and applying these rates to the measures. Management uses U.S. GAAP as well as non-GAAP measures on a constant-currency basis to assess performance and eliminate the effect foreign currency exchange rates have on comparability between periods.

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 U.S. GAAP. Reconciliations of the non-GAAP financial measures used herein to the most directly comparable U.S. GAAP financial measures are presented in tabular form at the end of this press release.

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 provides services to over 200,000 ATMs in North America and Europe. Whether Cardtronics is driving foot traffic for North America and Europe's top retailers, enhancing ATM brand presence for card issuers or expanding card holders' surcharge-free cash access, Cardtronics is convenient access to cash, when and where consumers need it. Cardtronics is where cash meets commerce.

CAUTIONARY STATEMENT 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 can be identified by words such as "project," "believe," "estimate," "expect," "future," "anticipate," "intend," "contemplate," "foresee," "would," "could," "plan," and similar expressions that are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on management's current expectations and beliefs concerning future developments and their potential effect on the Company. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Company will be those that are anticipated. All comments concerning the Company's expectations for future revenues and operating results are based on the Company's estimates for its existing operations and do not include the potential impact of any future acquisitions. The Company's forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company's control) and assumptions that could cause actual results to differ materially from the Company's historical experience and present expectations or projections. Known material factors that could cause actual results to differ materially from those in the forward-looking statements include:
  • the Company's financial outlook and the financial outlook of the ATM industry and the continued usage of cash by consumers at rates near historical patterns;
  • 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 renew its existing customer relationships on comparable economic terms and add new customers;
  • the Company's ability to pursue, complete, and successfully integrate acquisitions, including the acquisition of DirectCash;
  • changes in interest rates and foreign currency rates;
  • the Company's ability to successfully manage its existing international operations and to continue to expand internationally;
  • the Company's ability to manage concentration risks with key customers, vendors, and service providers;
  • the Company's ability to prevent thefts of cash;
  • the Company's ability to manage cybersecurity risks and prevent data breaches;
  • 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 including placing additional banks' brands on ATMs currently deployed;
  • 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 manage the risks associated with its third-party service providers failing to perform their contractual obligations;
  • the Company's ability to successfully implement and evolve 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;
  • the impact of changes in U.S. or non-U.S. laws, including tax laws, that could reduce or eliminate the benefits expected to be achieved from the Company's recent change of its parent company from the U.S. to the U.K.;
  • the impact of, or uncertainty related to, the U.K.'s planned exit from the European Union, including any material adverse effect on the tax, tax treaty, currency, operational, legal, and regulatory regime and macro-economic environment to which the Company will be subject to as a U.K. company; and
  • the Company's ability to retain its key employees and maintain good relations with its employees.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS (CONTINUED)

Forward-looking statements also are affected by the risk factors described in the Company's Annual Report on Form 10- K for the year ended December 31, 2015, as amended, the information set forth under Risk Factors in the Company's Proxy Statement, dated May 19, 2016, and those set forth from time-to-time in other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements contained in this press release, which speak only as of the date of this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.
 
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2016 and 2015
(In thousands, excluding share, per share amounts, and percentages)
(Unaudited)
 
    Three Months Ended   Nine Months Ended
    September 30,    September 30, 
    2016   % Change   2015   2016   % Change   2015
Revenues:                                 
ATM operating revenues   $    314,788        6.0     $    296,836     $    918,207        9.0     $    842,295  
ATM product sales and other revenues        13,546        (6.7 )        14,514          37,335        (31.7 )        54,702  
Total revenues        328,334        5.5          311,350          955,542        6.5          896,997  
Cost of revenues:                                
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets shown separately below.)        195,737        5.7          185,142          580,520        8.1          537,183  
Cost of ATM product sales and other revenues        12,453        (10.4 )        13,892          33,873        (32.5 )        50,193  
Total cost of revenues        208,190        4.6          199,034          614,393        4.6          587,376  
Gross profit        120,144        7.0          112,316          341,149        10.2          309,621  
Gross profit %       36.6 %           36.1 %       35.7 %           34.5 %
Operating expenses:                                
Selling, general, and administrative expenses        40,194        12.4          35,759          115,505        14.6          100,829  
Redomicile-related expenses        951       n/m                  12,201       n/m          
Acquisition and divestiture-related expenses        2,680        (79.8 )        13,289          4,938        (76.7 )        21,207  
Depreciation and accretion expense        23,308        5.3          22,127          69,085        7.7          64,142  
Amortization of intangible assets        9,175        (8.7 )        10,048          28,129        (3.1 )        29,040  
Loss (gain) on disposal of assets        469       n/m          (12,139 )        (475 )     n/m          (12,425 )
Total operating expenses        76,777        11.1          69,084          229,383        13.1          202,793  
Income from operations        43,367        0.3          43,232          111,766        4.6          106,828  
Other expense:                                
Interest expense, net        4,269        (15.2 )        5,033          13,227        (8.8 )        14,496  
Amortization of deferred financing costs and note discount        2,872        0.5          2,859          8,636        2.1          8,455  
Other expense        360        (66.3 )        1,067          748        (74.0 )        2,882  
Total other expense        7,501        (16.3 )        8,959          22,611        (12.5 )        25,833  
Income before income taxes        35,866        4.6          34,273          89,155        10.1          80,995  
Income tax expense        8,388        (33.6 )        12,629          26,204        (12.2 )        29,837  
Effective tax rate       23.4 %           36.8 %       29.4 %           36.8 %
Net income        27,478        27.0          21,644          62,951        23.1          51,158  
Net loss attributable to noncontrolling interests        (12 )     n/m          (365 )        (71 )     n/m          (1,081 )
Net income attributable to controlling interests and available to common stockholders   $    27,490        24.9   %  $    22,009     $    63,022        20.6   %  $    52,239  
                                 
Net income per common share - basic   $    0.61         $    0.49     $    1.39         $    1.17  
Net income per common share - diluted   $    0.60         $    0.48     $    1.38         $    1.15  
                                 
Weighted average shares outstanding - basic        45,252,869              44,833,117          45,175,604              44,769,661  
Weighted average shares outstanding - diluted        45,850,061              45,391,667          45,765,235              45,323,784  
                                                 

 
Condensed Consolidated Balance Sheets
As of September 30, 2016 and December 31, 2015
(In thousands)
 
    September 30, 2016   December 31, 2015
    (Unaudited)      
ASSETS            
Current assets:            
Cash and cash equivalents   $  59,521   $  26,297
Accounts and notes receivable, net      73,140      72,009
Inventory, net      11,151      10,675
Restricted cash      35,802      31,565
Current portion of deferred tax asset, net      —      16,300
Prepaid expenses, deferred costs, and other current assets      64,039      56,678
Total current assets      243,653      213,524
Property and equipment, net      374,820      375,488
Intangible assets, net      128,743      150,780
Goodwill      537,334      548,936
Deferred tax asset, net      8,612      11,950
Prepaid expenses, deferred costs, and other noncurrent assets        19,964      19,257
Total assets   $  1,313,126   $  1,319,935
             
LIABILITIES AND STOCKHOLDERS' EQUITY            
Current liabilities:            
Current portion of other long-term liabilities   $  32,970   $  32,732
Accounts payable and other accrued and current liabilities      279,889      244,908
Total current liabilities      312,859      277,640
Long-term liabilities:            
Long-term debt      485,647      568,331
Asset retirement obligations      47,196      51,685
Deferred tax liability, net      13,088      21,829
Other long-term liabilities      47,708      30,657
Total liabilities      906,498      950,142
Stockholders' equity      406,628      369,793
Total liabilities and stockholders' equity   $  1,313,126   $  1,319,935
             

SELECTED INCOME STATEMENT DETAIL:
                                       
Total revenues by segment: Three Months Ended   Nine Months Ended
  September 30,    September 30, 
  2016   % Change   2015   2016   % Change   2015
  (In thousands, excluding percentages)
North America                                      
ATM operating revenues $    214,960          8.7     $    197,733     $    625,716          7.8     $    580,569  
ATM product sales and other revenues      12,001          24.6            9,629          31,804          16.8            27,228  
North America total revenues      226,961          9.5            207,362          657,520          8.2            607,797  
Europe                                      
ATM operating revenues      94,154          (0.1 )          94,218          276,452          7.3            257,549  
ATM product sales and other revenues      1,409          (70.6 )          4,795          4,206          (84.6 )          27,384  
Europe total revenues      95,563          (3.5 )          99,013          280,658          (1.5 )          284,933  
Corporate & Other                                      
ATM operating revenues      12,131          7.3            11,305          34,744          61.1            21,567  
ATM product sales and other revenues      136          51.1            90          1,325          1,372.2            90  
Corporate & Other total revenues      12,267          7.7            11,395          36,069          66.5            21,657  
                                       
Eliminations      (6,457 )        0.6            (6,420 )        (18,705 )        7.6            (17,390 )
                                       
Total ATM operating revenues      314,788          6.0            296,836          918,207          9.0            842,295  
Total ATM product sales and other revenues        13,546          (6.7 )          14,514          37,335          (31.7 )          54,702  
Total revenues $    328,334          5.5   %     $    311,350     $    955,542          6.5   %     $    896,997  

                                       
Breakout of ATM operating Three Months Ended   Nine Months Ended
revenues: September 30,    September 30, 
  2016   % Change   2015   2016   % Change   2015
  (In thousands, excluding percentages)
Surcharge revenues $  126,490        5.1   %   $  120,323   $  369,658      6.1 %   $  348,255
Interchange revenues    118,186        6.2          111,246      343,121      9.6        312,963
Bank-branding and surcharge-free network revenues      48,292        11.7          43,236      141,699      10.5        128,205
Managed services revenues    8,522        (2.9 )        8,778      26,246      2.2        25,693
Other revenues    13,298        0.3          13,253      37,483      37.9        27,179
Total ATM operating revenues $  314,788        6.0   %     $  296,836   $  918,207      9.0   $  842,295

                                       
Total gross profit by segment:   Three Months Ended   Nine Months Ended
  September 30,    September 30, 
  2016   % Change   2015   2016   % Change   2015
  (In thousands, excluding percentages)
North America $  80,175        6.8   %     $  75,052   $  228,963      5.0 %     $  218,074
Europe    36,656        8.8          33,704      102,102      17.7        86,774
Corporate & Other    3,313        (6.9 )        3,560      10,084      111.3        4,773
Total gross profit $  120,144        7.0   %   $  112,316   $  341,149      10.2 %   $  309,621

                                       
Breakout of cost of ATM operating 
revenues (exclusive of depreciation, 
accretion, and amortization of Three Months Ended   Nine Months Ended
intangible assets): September 30,    September 30, 
  2016   % Change   2015   2016   % Change   2015
  (In thousands, excluding percentages)
Merchant commissions $  94,136        5.4   %     $  89,346   $  277,088        8.1   %     $  256,361
Vault cash rental    17,904        2.0          17,553      53,764        4.1          51,622
Other costs of cash    18,421        5.0          17,551      59,321        9.2          54,321
Repairs and maintenance    19,846        14.4          17,351      56,097        7.4          52,253
Communications    7,694        (4.1 )        8,027      23,305        1.4          22,978
Transaction processing    3,982        4.1          3,827      11,727        0.8          11,635
Stock-based compensation    249        (10.1 )        277      636        (17.9 )        775
Employee costs    16,525        1.8          16,232      50,666        14.3          44,308
Other expenses    16,980        13.4          14,978      47,916        11.6          42,930
Total cost of ATM operating revenues   $  195,737        5.7   %   $  185,142   $  580,520        8.1   %   $  537,183

                                       
Breakout of selling, general, and Three Months Ended   Nine Months Ended
administrative expenses: September 30,    September 30, 
  2016   % Change   2015   2016   % Change   2015
  (In thousands, excluding percentages)
Employee costs $  21,022      14.1   $  18,432   $  61,234      15.5   $  53,000
Stock-based compensation    6,393      31.1        4,876      15,144      12.3        13,488
Professional fees    4,592      0.6        4,564      14,353      28.1        11,206
Other expenses    8,187      3.8        7,887      24,774      7.1        23,135
Total selling, general, and administrative expenses   $  40,194      12.4 %   $  35,759   $  115,505      14.6 %   $  100,829

                                       
Depreciation and accretion by Three Months Ended   Nine Months Ended
segment: September 30,    September 30, 
  2016   % Change   2015   2016   % Change   2015
  (In thousands, excluding percentages)
North America $  12,341      4.3   $  11,837   $  36,343      3.1   $  35,239
Europe    9,148      3.7        8,824      27,605      7.2        25,759
Corporate & Other    1,819      24.1        1,466      5,137      63.4        3,144
Total depreciation and accretion expense   $  23,308      5.3 %   $  22,127   $  69,085      7.7 %   $  64,142
                                       

SELECTED BALANCE SHEET DETAIL:
           
Long-term debt: September 30, 2016   December 31, 2015
  (In thousands)
Revolving credit facility $  —   $  90,835
5.125% Senior notes (1)    247,211      246,742
1.00% Convertible senior notes (1)      238,436      230,754
Total long-term debt $  485,647   $  568,331

(1) The Company's 5.125% Senior Notes due 2022 with a face value of $250.0 million are presented net of capitalized debt issuance costs of $2.8 million and $3.3 million as of September 30, 2016 and December 31, 2015, respectively. The Company's 1.00% Convertible Senior Notes due 2020 with a face value of $287.5 million are presented net of the unamortized discount and capitalized debt issuance costs of $49.1 million and $56.7 million as of September 30, 2016 and December 31, 2015, respectively. In accordance with U.S. GAAP the estimated fair value of the conversion feature within the Convertible Senior Notes was recorded as additional paid-in capital within equity at issuance. The Convertible Senior Notes are being accreted over the term of the notes to the full principal amount ($287.5 million).

Share count rollforward:
     
Total shares outstanding as of December 31, 2015      44,953,620  
Shares repurchased      (128,405 )
Shares forfeited      (5,842 )
Shares issued - stock options exercised      54,051  
Shares vested - restricted stock units      426,740  
Total shares outstanding as of September 30, 2016        45,300,164  

SELECTED CASH FLOW DETAIL:

Selected cash flow statement amounts:
                         
    Three Months Ended   Nine Months Ended
    September 30,    September 30, 
    2016   2015   2016   2015
    (In thousands)
Cash provided by operating activities   $    89,346     $    60,525     $    213,931     $    147,112  
Cash used in investing activities        (41,635 )        (98,325 )        (86,403 )        (171,090 )
Cash (used in) provided by financing activities        (7,285 )        34,988          (93,135 )        13,297  
Effect of exchange rate changes on cash        (557 )        (3,494 )        (1,169 )        (2,711 )
Net increase (decrease) in cash and cash equivalents          39,869          (6,306 )        33,224          (13,392 )
Cash and cash equivalents as of beginning of period        19,652          24,789          26,297          31,875  
Cash and cash equivalents as of end of period   $    59,521     $    18,483     $    59,521     $    18,483  
                                         

 
Key Operating Metrics - Including Acquisitions in All Periods Presented
For Three and Nine Months Ended September 30, 2016 and 2015
(Unaudited)
 
    Three Months Ended   Nine Months Ended
    September 30,    September 30, 
    2016     2015   2016     2015
Average number of transacting ATMs:                                    
United States: Company-owned      43,216          38,510        41,366          38,310  
United Kingdom and Ireland      16,540          15,582        16,151          14,762  
Mexico      1,329          1,432        1,366          1,558  
Canada      1,825          1,915        1,846          1,757  
Germany and Poland      1,242          1,048        1,177          987  
Subtotal      64,152          58,487        61,906          57,374  
United States: Merchant-owned (1)      14,970          19,609        16,297          20,301  
Average number of transacting ATMs - ATM operations      79,122          78,096        78,203          77,675  
                                     
Managed Services and Processing:                                    
United States: Managed services - Turnkey      1,911          2,201        2,078          2,185  
United States: Managed services - Processing Plus and Processing operations        118,862          107,326        115,029          61,421  
Canada: Managed services      1,761          1,120        1,659          1,011  
Average number of transacting ATMs - Managed services and processing      122,534          110,647        118,766          64,617  
                                     
Total average number of transacting ATMs      201,656          188,743        196,969          142,292  
                                     
Total transactions (in thousands):                                    
ATM operations      359,731          327,269        1,014,803          926,921  
Managed services and processing, net      179,072          170,896        526,949          239,701  
Total transactions      538,803          498,165        1,541,752          1,166,622  
                                     
Cash withdrawal transactions (in thousands):                                    
ATM operations      225,178          197,365        633,461          564,072  
                                     
Per ATM per month amounts (excludes managed services and processing):         % Change                 % Change        
Cash withdrawal transactions      949     12.7      842        900     11.5      807  
                                     
ATM operating revenues   $  1,258     4.9 %   $  1,199     $  1,235     7.1 %   $  1,153  
Cost of ATM operating revenues (2)      784     4.1 %      753        784     6.1 %      739  
ATM operating gross profit (2) (3)   $  474     6.3 %   $  446     $  451     8.9 %   $  414  
                                     
ATM operating gross profit margin (2) (3)      37.7 %          37.2 %        36.5 %          35.9 %

(1) Certain ATMs previously reported in this category are now included in the United States: Managed services - Processing Plus and Processing operations and United States: Company-owned categories. (2) Amounts presented exclude the effect of depreciation, accretion, and amortization of intangible assets, which is presented separately in the Company's Consolidated Statements of Operations. (3) Revenues and expenses relating to managed services, processing, ATM equipment sales, and other ATM-related services are not included in this calculation.
 
Key Operating Metrics - Ending Machine Count
As of September 30, 2016 and 2015
(Unaudited)
 
    As of September 30, 
    2016   2015
Ending number of transacting ATMs:        
United States: Company-owned    44,688    38,661
United Kingdom and Ireland    16,665    15,682
Mexico    1,267    1,433
Canada    1,835    1,910
Germany and Poland    1,279    1,069
Total Company-owned    65,734    58,755
United States: Merchant-owned    13,961    19,279
Ending number of transacting ATMs - ATM operations    79,695    78,034
         
United States: Managed services - Turnkey    1,087    2,212
United States: Managed services - Processing Plus and Processing operations      120,704    108,728
Canada: Managed services    1,832    1,223
Ending number of transacting ATMs - Managed services and processing    123,623    112,163
         
Total ending number of transacting ATMs    203,318    190,197
         

 
Reconciliation of Net Income Attributable to Controlling Interests and Available to Common Stockholders to
EBITDA, Adjusted EBITDA, and Adjusted Net Income
For the Three and Nine Months Ended September 30, 2016 and 2015
(Unaudited)
 
    Three Months Ended   Nine Months Ended
    September 30,    September 30, 
    2016   2015   2016   2015
    (In thousands, excluding share and per share amounts)
Net income attributable to controlling interests and available to common stockholders     $    27,490     $    22,009     $    63,022     $    52,239  
Adjustments:                        
Interest expense, net        4,269          5,033          13,227          14,496  
Amortization of deferred financing costs and note discount        2,872          2,859          8,636          8,455  
Income tax expense        8,388          12,629          26,204          29,837  
Depreciation and accretion expense        23,308          22,127          69,085          64,142  
Amortization of intangible assets        9,175          10,048          28,129          29,040  
EBITDA    $    75,502     $    74,705     $    208,303     $    198,209  
                         
Add back:                        
Loss (gain) on disposal of assets        469          (12,139 )        (475 )        (12,425 )
Other expense (1)        360          1,067          748          2,882  
Noncontrolling interests (2)        (15 )        (336 )        (50 )        (1,047 )
Stock-based compensation expense (3)        6,642          5,147          15,780          14,360  
Acquisition and divestiture-related expenses (4)        2,680          13,289          4,938          21,207  
Redomicile-related expenses (5)        951                  12,201          
Adjusted EBITDA   $    86,589     $    81,733     $    241,445     $    223,186  
Less:                        
Interest expense, net (3)        4,269          5,033          13,227          14,493  
Depreciation and accretion expense (6)        23,301          22,014          69,063          63,767  
Adjusted pre-tax income   $    59,019     $    54,686     $    159,155     $    144,926  
Income tax expense (7)        14,271          17,500          46,314          46,376  
Adjusted Net Income   $    44,748     $    37,186     $    112,841     $    98,550  
                         
Adjusted Net Income per share   $    0.99     $    0.83     $    2.50     $    2.20  
Adjusted Net Income per diluted share   $    0.98     $    0.82     $    2.47     $    2.17  
                         
Weighted average shares outstanding - basic        45,252,869          44,833,117          45,175,604          44,769,661  
Weighted average shares outstanding - diluted        45,850,061          45,391,667          45,765,235          45,323,784  

(1) Includes foreign currency translation gains/losses and other non-operating costs. (2) Noncontrolling interests adjustment made such that Adjusted EBITDA includes only the Company's ownership interest in the Adjusted EBITDA of its Mexico subsidiary. In December 2015, the Company increased its ownership interest in its Mexico subsidiary from 51% to 95.7%. (3) For the three and nine months ended September 30, 2015, amounts exclude a portion of the expenses incurred by the Company's Mexico subsidiary to account for the amounts allocable to the noncontrolling interest stockholders. The Company's Mexico subsidiary recognized no stock-based compensation expense or interest expense, net for the three and nine months ended September 30, 2016. (4) Acquisition and divestiture-related expenses include costs incurred for professional and legal fees and certain other transition and integration-related costs. (5) Expenses associated with the Company's redomicile of its parent company to the U.K., which was completed on July 1, 2016. (6) Amounts exclude a portion of the expenses incurred by the Company's Mexico subsidiary to account for the amounts allocable to the noncontrolling interest stockholders. In December 2015, the Company increased its ownership interest in its Mexico subsidiary. (7) Calculated using an effective tax rate of approximately 24.2% for the three months ended September 30, 2016, which represents the Company's U.S. GAAP tax rate as adjusted for the tax effects related to the items excluded from Adjusted Net Income. For the nine months ended September 30, 2016, the Company used 24.2% for the quarter ended September 30, 2016 and for the six months ended June 30, 2016, its previous estimated long-term cross-jurisdictional tax rate of 32%. For the three and nine months ended September 30, 2015, the Company used its previous estimated long-term cross-jurisdictional tax rate of 32%. See Disclosure of Non-GAAP Financial Information in this earnings release for further discussion.
 
Reconciliation of U.S. GAAP Revenue to Constant-Currency Revenue
For the Three and Nine Months Ended September 30, 2016 and 2015
(Unaudited)
 
Europe revenue:   Three Months Ended
    September 30, 
    2016   2015   % Change
    U.S. GAAP   Foreign Currency Impact   Constant   - Currency   U.S. GAAP   U.S. GAAP     Constant   - Currency
    (In thousands)            
ATM operating revenues   $  94,154   $  15,561   $  109,715   $  94,218      (0.1 ) %     16.4   %
ATM product sales and other revenues        1,409      220      1,629      4,795      (70.6 )        (66.0 )  
Total revenues   $  95,563   $  15,781   $  111,344   $  99,013      (3.5 ) %     12.5   %

                                     
    Nine Months Ended
    September 30, 
    2016   2015   % Change
    U.S. GAAP   Foreign Currency Impact   Constant   - Currency   U.S. GAAP   U.S. GAAP     Constant   - Currency
    (In thousands)            
ATM operating revenues   $  276,452   $  26,161   $  302,613   $  257,549      7.3   %      17.5   %
ATM product sales and other revenues        4,206      393      4,599      27,384      (84.6 )        (83.2 )  
Total revenues   $  280,658   $  26,554   $  307,212   $  284,933      (1.5 ) %      7.8   %

                                     
Consolidated revenue:   Three Months Ended
    September 30, 
    2016   2015   % Change
    U.S. GAAP   Foreign Currency Impact   Constant   - Currency   U.S. GAAP   U.S. GAAP     Constant   - Currency
    (In thousands)            
ATM operating revenues   $  314,788   $  15,926   $  330,714   $  296,836      6.0   %     11.4   %
ATM product sales and other revenues        13,546      222      13,768      14,514      (6.7 )        (5.1 )  
Total revenues   $  328,334   $  16,148   $  344,482   $  311,350      5.5   %     10.6   %

                                     
    Nine Months Ended
    September 30, 
    2016   2015   % Change
    U.S. GAAP   Foreign Currency Impact   Constant   - Currency   U.S. GAAP   U.S. GAAP     Constant   - Currency
    (In thousands)            
ATM operating revenues   $  918,207   $  28,612   $  946,819   $  842,295      9.0   %      12.4   %
ATM product sales and other revenues        37,335      442      37,777      54,702      (31.7 )        (30.9 )  
Total revenues   $  955,542   $  29,054   $  984,596   $  896,997      6.5   %      9.8   %
                                             

 
Reconciliation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share on a 
Non-GAAP basis to Constant-Currency
For the Three and Nine Months Ended September 30, 2016 and 2015
(Unaudited)
 
    Three Months Ended
    September 30, 
    2016   2015   % Change
    Non   - GAAP (1)   Foreign Currency Impact   Constant   - Currency   Non   - GAAP (1)   Non   - GAAP (1)     Constant   - Currency  
    (In thousands)            
Adjusted EBITDA   $  86,589   $  4,621   $  91,210   $  81,733    5.9 %   11.6 %
                                     
Adjusted Net Income   $  44,748   $  2,478   $  47,226   $  37,186    20.3 %   27.0 %
                                     
Adjusted Net Income per diluted share (2)     $  0.98   $  0.05   $  1.03   $  0.82    19.5 %   25.6 %

(1) As reported on the Company's Reconciliation of Net Income Attributable to Controlling Interests and Available to Common Stockholders to EBITDA, Adjusted EBITDA, and Adjusted Net Income, see Disclosure of Non-GAAP Financial Information in this earnings release for further discussion. (2) Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of 45,850,061 and 45,391,667 for the three months ended September 30, 2016 and 2015, respectively.
                                     
    Nine Months Ended
    September 30, 
    2016   2015   % Change
    Non   - GAAP (1)   Foreign Currency Impact   Constant   - Currency   Non   - GAAP (1)   Non   - GAAP (1)     Constant   - Currency  
    (In thousands)            
Adjusted EBITDA   $  241,445   $  7,425   $  248,870   $  223,186    8.2 %   11.5 %
                                     
Adjusted Net Income   $  112,841   $  3,403   $  116,244   $  98,550    14.5 %   18.0 %
                                     
Adjusted Net Income per diluted share (2)     $  2.47   $  0.07   $  2.54   $  2.17    13.8 %   17.1 %

(1) As reported on the Company's Reconciliation of Net Income Attributable to Controlling Interests and Available to Common Stockholders to EBITDA, Adjusted EBITDA, and Adjusted Net Income, see Disclosure of Non-GAAP Financial Information in this earnings release for further discussion. (2) Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of 45,765,235 and 45,323,784 for the nine months ended September 30, 2016 and 2015, respectively.
 
Reconciliation of Free Cash Flow
For the Three and Nine Months Ended September 30, 2016 and 2015
(Unaudited)
 
    Three Months Ended   Nine Months Ended
    September 30,    September 30, 
    2016   2015   2016   2015
    (In thousands)
Cash provided by operating activities   $    89,346     $    60,525     $    213,931     $    147,112  
Payments for capital expenditures:                        
Cash used in investing activities, excluding acquisitions and divestitures          (36,479 )        (47,459 )        (76,050 )        (103,877 )
Free cash flow   $    52,867     $    13,066     $    137,881     $    43,235  
                                         

 
Reconciliation of Estimated Net Income to EBITDA, Adjusted EBITDA, and Adjusted Net Income
For the Year Ending December 31, 2016
(In millions, excluding share and per share amounts)
(Unaudited)
 
    Estimated Range Full Year 2016
Net Income   $  83.6   $  85.4
Adjustments:            
Interest expense, net      17.5      17.5
Amortization of deferred financing costs and note discount      11.5      11.5
Income tax expense      34.2      34.9
Depreciation and accretion expense (1)      92.0      91.0
Amortization of intangible assets      37.0      37.0
EBITDA    $  275.8   $  277.3
             
Add Back:            
Other      1.0      1.0
Stock-based compensation expense      22.5      22.5
Redomicile-related expenses      12.7      12.7
Acquisition and divestiture-related expenses      5.0      5.5
Adjusted EBITDA   $  317.0   $  319.0
Less:            
Interest expense, net      17.5      17.5
Depreciation and accretion expense      92.0      91.0
Income tax expense (2)      60.3      61.1
Adjusted Net Income   $  147.2   $  149.4
             
Adjusted Net Income per diluted share   $  45.80   $  45.80
             
Weighted average shares outstanding - diluted      3.21      3.26

(1) Noncontrolling interests adjustment made such that Adjusted EBITDA includes only the Company's interest of its Mexico subsidiary. (2) Calculated using the Company's previous estimated long-term cross-jurisdictional effective cash tax rate of 32% for the six months ending June 30, 2016 and its estimated U.S. GAAP tax rate, as adjusted for items excluded from Adjusted Net Income, in the six month period ending December 31, 2016.
Contact Information:  
   
Media RelationsNick PappathopoulosDirector - Public Relations832-308-4396 npappathopoulos@cardtronics.com        Investor RelationsPhillip ChinEVP Corporate Development & Investor Relations832-308-4975 ir@cardtronics.com
   

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