Cardtronics, ("Cardtronics" or the "Company"), the world's largest non-bank owner/operator of ATMs, today announced its financial results for the quarter ended December 31, 2006.
Fourth Quarter Results
For the fourth quarter of 2006, revenues totaled $74.8 million, representing a 7.2% increase over the $69.8 million in revenues recorded during the fourth quarter of 2005. The Company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which represents EBITDA adjusted for certain items as provided for by the Company's bank credit facility, totaled $13.9 million for the fourth quarter of 2006, representing a 16.8% increase over the $11.9 million in adjusted EBITDA for the same period in 2005. The year-over-year increase in revenues was primarily attributable to an increase in ATM operating revenues in the Company's United Kingdom operations as a result of additional ATM deployments and higher withdrawal transactions per ATM when compared to the same period in 2005. The increase in adjusted EBITDA was primarily due to the growth in the Company's United Kingdom operations, as noted above, and year-over-year growth in the Company's bank and network branding programs. Such increases were partially offset by cost increases in certain areas, including higher selling, general, and administrative costs resulting from the Company's year-over-year growth and various developmental activities.
Adjusted EBITDA is a non-GAAP measure of financial performance. We are required by the terms of our bank credit facility to comply with certain covenants that are based on it.
The Company recorded net income for the fourth quarter of 2006 of $2.4 million, which compares to a net loss of $1.6 million for the same period in 2005. The fourth quarter 2006 results include the recognition of $4.8 million ($3.0 million after-tax) in other income primarily related to settlement proceeds received from Winn-Dixie Stores, Inc., one of the Company's merchant customers, as part of Winn-Dixie's successful emergence from bankruptcy. This amount is not included in the adjusted EBITDA figure quoted above. In connection with this settlement, the Company's ATM operating agreement with Winn-Dixie was amended and extended through January 2016. The terms and conditions of the new ATM operating agreement with Winn-Dixie are confidential but compare favorably with those seen in the Company's other domestic turnkey ATM operating agreements.
Key Statistics (Fourth Quarter)
Average transacting ATMs for the fourth quarter of 2006 totaled 25,417, which represents a decrease of 3.7% when compared to the 26,399 average transacting ATMs during the same period in 2005. This decrease was primarily due to a year-over-year decline in the average number of transacting ATMs operating within the United States (primarily on the merchant-owned side of the business), offset slightly by ATM growth in the United Kingdom and Mexico. Cash withdrawal transactions increased 1.9% to 31.3 million during the fourth quarter of 2006 from 30.7 million during the same period in 2005. This increase was primarily due to higher withdrawal transactions associated with the Company's United Kingdom operations and incremental withdrawal transactions associated with the Company's operations in Mexico, offset somewhat by lower year-over-year withdrawal transactions in the United States as a result of the aforementioned decline in merchant-owned ATMs.
Average cash withdrawal transactions per ATM per month during the fourth quarter of 2006 increased 5.9% to 411 from 388 during the same period in 2005. This increase was primarily due to increased activity in the Company's United Kingdom operations, which have higher average transaction volumes than the Company's domestic operations. Average revenues per ATM per month in the fourth quarter of 2006 increased 10.4% to $937 from $849 in the same period in 2005. This increase was primarily due to growth in our United Kingdom operations and additional growth in the Company's domestic bank and network branding programs. Capital expenditures during the quarter totaled $8.7 million.
Full Year Results
Revenues totaled $293.6 million for the year ended December 31, 2006, representing an increase of 9.1% over the $269.0 million in revenues recorded during the year ended December 31, 2005. Adjusted EBITDA totaled $52.9 million for the year ended December 31, 2006, representing a 17.0% increase over the $45.2 million in adjusted EBITDA for the same period in 2005. The year-over-year increases in revenues and adjusted EBITDA were primarily driven by the Company's acquisition of Bank Machine Limited in May 2005, as well as continued growth in the number of ATMs and higher overall withdrawal transactions per ATM associated with the Company's United Kingdom operations. Additionally, increased revenues associated with the Company's bank and network branding programs contributed to the year-over-year increases in revenues and adjusted EBITDA.
The Company incurred a net loss of $0.3 million for the year ended December 31, 2006, compared to a net loss of $2.4 million for the same period in 2005. The decreased loss in 2006 was primarily due to the aforementioned settlement received from Winn-Dixie, which was partially offset by additional interest, depreciation, and amortization expense amounts associated with the Company's 2005 acquisitions, as well as higher operating and selling, general and administrative costs, as previously discussed.
Key Statistics (Full Year)
Average transacting ATMs for the year ended December 31, 2006 totaled 25,778, which represents a decrease of approximately 1.5% when compared to the 26,164 average transacting ATMs during the same period in 2005. Cash withdrawal transactions increased 5.1% to 125.1 million for the year ended December 31, 2006 from 119.0 million during the same period in 2005. The decline in the year-over-year ATM count was the result of a decrease in the average number of transacting ATMs operating within the United States (primarily on the merchant-owned side of the business), as previously noted, which was partially offset by an increase in average transacting ATMs in the Company's operations in the United Kingdom and Mexico. The increase in year-to-date cash withdrawal transactions was primarily driven by the same factors that contributed to the quarterly year-over-year increase, as noted above, and the fact that the prior year withdrawal transactions for the Company's United Kingdom operations only included transactions subsequent to the May 2005 Bank Machine acquisition date.
Average cash withdrawal transactions per ATM per month for the year ended December 31, 2006 increased 6.6% to 404 from 379 during the same period in 2005. This increase was primarily due to the Company's United Kingdom operations, which have higher average transaction volumes than the Company's domestic operations and were in place for the full year-to-date period in 2006. Average revenues per ATM per month for the year ended December 31, 2006 increased 10.1% to $908 from $825 in the same period in 2005. This increase was primarily driven by the growth in our United Kingdom operations, as well as our domestic bank and network branding programs, as previously noted. Capital expenditures during the year ended December 31, 2006 totaled $34.7 million.
``By all accounts, 2006 was a very successful year for Cardtronics,'' commented Jack Antonini, Chief Executive Officer of Cardtronics. ``Domestically, we gained a tremendous amount of acceptance in the financial community with respect to our bank and network branding offerings, more than doubling the number of bank branded ATMs in our portfolio and increasing the number of financial institutions participating in the Allpoint surcharge-free network by over 90%. Internationally, we increased our ATM count in the United Kingdom by nearly 30% in 2006, which helped pave the way for the record financial results that we realized from those operations during the year. Additionally, we entered the Mexico ATM market in February 2006 and have since added a number of high-profile retail accounts to our Mexico operations, which provide very attractive growth opportunities in that market. Looking ahead, we expect 2007 to be another year of significant investment for Cardtronics as we look to take advantage of these trends in each of our respective markets.''
Events since the Company's third quarter earnings release include the following:
- The signing of ING Direct, the nation's largest direct bank and fourth-largest thrift bank with $65.0 billion in assets under management, to the Allpoint nationwide surcharge-free network.
- The successful resolution of the Winn-Dixie bankruptcy contingency, including the receipt of nearly $5.0 million in bankruptcy settlement proceeds and the commencement of a new long-term ATM placement agreement between the parties.
- The signing of a multi-year bank branding agreement with HSBC to brand 33 ATMs in Walgreens locations in Connecticut.
- The successful rollout of over 50 new ATM locations in Mexico.
- The addition of two seasoned executives to the Company's Financial Services division, including Bob Colabrese as Senior Vice President of Sales and Bill Knoll as Senior Vice President of Business Development and Product Management.
Guidance for Fiscal 2007
The Company currently expects revenues of $310.0 to $325.0 million, gross profits of $79.0 to $83.0 million, and adjusted EBITDA of $53.0 to $57.0 million for the year ending December 31, 2007. This EBITDA range reflects an anticipated increase of approximately $5.0 million in selling, general, and administrative (SG&A) expenses as the Company looks to bring on additional personnel and incur additional costs during 2007 to support future growth initiatives. The Company will launch a series of new initiatives in 2007 with the general objective of becoming a more important retail marketing and distribution partner to major banks. These new initiatives are expected to further expand the Company's bank branding efforts and should provide a foundation for new revenue streams, including those from potential bank outsourcing arrangements. The centerpiece of this effort is the development of in-house ATM transaction processing capabilities, and also includes the expansion of the Company's sales force to effectively market and sell the Company's anticipated new offerings. While the Company anticipates incremental cost savings from moving its transaction processing capabilities in-house, such savings are expected to be more than offset in 2007 by the incremental personnel costs associated with the Company's new initiatives. Included in the planned increase in SG&A costs is approximately $2.0 million associated with certain regulatory and IT infrastructure improvement projects, including Sarbanes-Oxley compliance.
The Company expects capital expenditures to total approximately $55.0 million in 2007, net of minority interest. This amount reflects growth capital spending in the United States that is similar to last year's, and a significant increase in growth spending in the rapidly-growing United Kingdom and Mexico markets. The 2007 capital expenditure range referenced above also includes $14.0 million in one-time Triple DES compliance upgrade costs in the United States, which will conclude the Company's Triple DES upgrade efforts.
Non-GAAP Financial Information
Adjusted EBITDA is not intended to represent cash flows from operations as defined by 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 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.
Read the consolidated statement here:Download the document now 12.8 kb (Adobe Acrobat Document)