Cardtronics (NasdaqGM:CATM), the world's largest non-bank operator of ATMs, today announced its financial and operational results for the quarter ended March 31, 2009.
Key financial and operational statistics related to the quarter include:
- Consolidated revenues of $115.3 million, down 4% from the first quarter of 2008. Excluding the impact of negative foreign currency exchange rate movements, consolidated revenues were up over 1% from the first quarter of 2008.
- Adjusted EBITDA of $22.5 million, up 19% from the first quarter of 2008
- Adjusted Net Income of $3.4 million, up from $1.5 million in the first quarter of 2008
- GAAP Net Loss of $5.1 million compared to $4.6 million in the first quarter of 2008
- Continued improvements in several key operating metrics versus the first quarter of 2008:
- Average number of transacting ATMs increased by 2%
- Total transactions increased by 7%
- Total cash withdrawal transactions increased by 7%
- Cash withdrawal transactions per ATM per month increased by 5%
Recent highlights include:
- The announcement that Costco Wholesale Corporation ("Costco") and Cardtronics extended their ATM placement agreement, making Cardtronics ATMs available in 97% of the 400 Costco locations throughout the U.S.
- The deployment of 120 ATMs in high-transacting locations under the Company's contract with Welcome Break, a leading operator of motorway rest stops in the United Kingdom.
- The continued transitioning of the Company's domestic ATM portfolio over to its in-house electronic funds transfer ("EFT") transaction processing platform. Additionally, during the first quarter, the Company began converting its ATMs located in Mexico over to its EFT processing platform and expects to complete this initiative by the end of the second quarter. As of March 31, 2009, the Company was processing transactions for over 28,750 ATMs.
- The continued transitioning of the Company's ATMs in the United Kingdom over to its in-house armarmored courier operation. As of today, this operation is servicing approximately 500 of the Company's ATMs in that market.
- Continued strong liquidity and access to capital, with over $118 million in available borrowing capacity under the Company's revolving credit facility with leading financial institutions.
"Our first quarter operating results continued to demonstrate the stability and resiliency of our operating model," commented Fred Lummis, Cardtronics' Chairman of the Board and interim Chief Executive Officer. "In what is traditionally our weakest quarter of the year, all of our operating segments generated stronger than expected results, continuing the trend that we saw at the end of 2008. While we are clearly mindful of the macroeconomic challenges currently facing all companies, including ourselves, we are encouraged by the relative strength that we continue to see in our business."
FIRST QUARTER RESULTS
For the first quarter of 2009, revenues totaled $115.3 million, representing a 4% decrease from the $120.6 million in revenues generated during the first quarter of 2008. This decrease was primarily driven by unfavorable foreign currency exchange rate movements from 2008 to 2009 and a decline in equipment sales related to the Company's domestic operations, as merchants and financial institutions appeared less willing to spend capital in the current economic environment. Although the decline in equipment sales negatively impacted the year-over-year revenue comparison, the gross profit impact of such decline was negligible. Excluding the impact of foreign currency exchange rate movements, year-over-year revenues would have increased by approximately 1%.
Adjusted EBITDA totaled $22.5 million for the first quarter of 2009, compared to $19.0 million for the first quarter of 2008, and Adjusted Net Income totaled $3.4 million ($0.09 per diluted share), compared to Adjusted Net Income of $1.5 million ($0.04 per diluted share) for the first quarter of 2008. These increases were primarily attributable to lower costs of revenues incurred by the Company's United States and United Kingdom operations. Significant items contributing to the decline in costs of revenues included (1) foreign currency exchange rate movements, (2) lower vault cash rental costs due to lower benchmark interest rates, (3) lower domestic merchant fees due to the slight decline in the average number of transacting ATMs in the United States, and (4) the continued conversion of the Company's ATM portfolio to its in-house EFT processing platform, which resulted in lower processing costs. Specific costs excluded from Adjusted EBITDA and Adjusted Net Income are detailed in a reconciliation included at the end of this press release.
The GAAP net loss for the first quarter totaled $5.1 million, compared to the net loss of $4.6 million during the same period last year. The net loss for the first quarter of 2008 includes $1.2 million in severance costs associated with the departure of the Company's former Chief Executive Officer in March 2009 and $2.1 million of losses on the disposal of assets due to certain optimization efforts undertaken by the Company. These optimization efforts resulted in the identification and deinstallation of numerous underperforming ATMs, which are expected to be redeployed under separate ATM operating agreements.
2009 GUIDANCE
At this time, the Company is not altering the guidance it previously issued regarding its anticipated full-year 2009 results, which was:
- Revenues of $460 million to $470 million,
- Overall gross margins of approximately 24% to 24.5%,
- Adjusted EBITDA of $75 million to $80 million,
- Depreciation and accretion expense of $37 million to $38 million,
- Cash interest expense of $30 million to $31 million,
- Adjusted Net Income of $0.12 to $0.22 per diluted share, based on approximately 39 million diluted shares outstanding (which does not reflect the potential impact of the Company's share repurchase program), and
- Capital expenditures of approximately $25 million, net of minority interest.
The above guidance excludes the impact of certain one-time items as well as $5.0 million of anticipated stock-based compensation expense and approximately $17.0 million of intangible asset amortization expense. Additionally, the above guidance is based on average foreign currency exchange rates of $1.40 U.S. to GBP1.00 U.K. and $14.00 Mexican pesos to $1.00 U.S. during 2009.
LIQUIDITY AND SHARE REPURCHASE PROGRAM
The Company continues to maintain a very strong liquidity position despite the weaknesses seen in the broader economy and financial markets. The Company's $175.0 million revolving credit facility does not expire until May 2012 and is led by a syndicate of leading banks. As of March 31, 2009, the Company had $48.5 million of debt outstanding under this facility and $8.1 million in letters of credit posted under the facility, leaving $118.4 million in available, committed funding. The Company is currently in compliance with the covenants contained within this facility and would continue to be in compliance even in the event of substantially higher borrowings or substantially lower Adjusted EBITDA amounts. The Company's remaining indebtedness includes $0.8 million of capital leases in the United States, $5.5 million of equipment loans in Mexico, and $296.8 million in senior subordinated notes, net of discount. These fixed rate notes require no amortization prior to their August 2013 maturity date and contain no maintenance covenants and only limited incurrence covenants under which the Company has considerable flexibility.
Given the financial flexibility outlined above and the free cash flow expected to be generated by the Company during 2009, in February 2009, the Company's board of directors approved a share repurchase program authorizing up to $10.0 million in share repurchases with an expiration date of March 31, 2010. However, because the approval of the share repurchase program occurred in such close proximity to the date the trading window closed for insider transactions, the Company has not yet repurchased any shares pursuant to this program.