Global Axcess sees 2007 as a year of change. Under the leadership of a new chief executive, and armed with a new corporate vision, the United States' sixth-largest independent ATM sales organization hopes to turn its predicament around.
It's a bold undertaking, given the state of struggling ISO competitors like Portland, Ore.-based TRM Corp., which on Nov. 14 posted a $101.2 million loss for the third quarter of the year. But, says newly named GAXC president and chief executive George McQuain, it's a move the Ponte Vedra Beach, Fla.-based company is confident it can make.
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"We believe Global has a healthy customer base and dedicated employees," GAXC's chief financial officer, Michael Loiacono, said earlier this month during a call with investors. "The company should be capable of consistent earnings as the ATM industry moves forward."
So rather than pursuing a sale, GAXC is honing its position in the ATM marketplace with a renewed focus on its core business - ATM placements.
"In a fragmented industry, lacking strategic discipline or overreaction to new products is a dangerous thing," McQuain said. "We've grown pretty rapidly, and we weren't always smart. I don't think the growth hurt us, per se; but not being smart about it and losing our focus did."
Global Axcess reported a net loss of $3.6 million for the third quarter, which ended Sept. 30. That was up from the $80,000 loss reported during the same period in 2005.
But company heads are calling the third quarter "transitional," one that struck the company's bottom line because of a shareholder lawsuit, restructuring costs and personnel changes, to name a few.
Restructuring and impairment charges cost the company about $2.6 million during the quarter, and the shareholder lawsuit tacked on an additional $200,000 charge. Loiacono said GAXC does not foresee any hefty transitional charges cropping up in future quarters.
"Now we believe we will have consistency from quarter to quarter," he said.
 Credibility is paramount. While I will not offer excuses, I do apologize on behalf of our board of directors and management team. Some errors were made; and we cannot change that. We are working to resolve them. - George McQuain, Global Axcess Corp. |
Over the last quarter, GAXC has decreased its core ATM staff from 60 employees to 51, and it is evaluating more reductions, McQuain said. The most recent and notable shifts came from the top, with the resignations of former CEO Michael Dodak and former president David Fann. Bob Colabrese, the company's former head of ATM sales who is now with Houston-based Cardtronics LP, also left during the third quarter.
"We believe that we are in the midst of a turnaround," McQuain said. "While we've been going through all these issues that we've been going through, we've still been delivering good service to our customers, and we believe that we can deliver good service to customers going forward. The other thing is, the folks we have here now are dedicated and excited about the prospects for the future."
The company's new leadership has been lauded for its corporate-turnaround experience, and McQuain said he expects that leadership to restore GAXC's image.
"Credibility is paramount," he said. "While I will not offer excuses, I do apologize on behalf of our board of directors and management team. Some errors were made, and we cannot change that. We are working to resolve them."
Focusing on the core
Going forward, McQuain says GAXC will have a renewed interest in organic growth and efforts to re-energize its network of between 85 and 90 distributors. It's opted to focus its attentions, once again, on promoting the Nationwide Money Services brand - the brand best known by the financial institutions and retail chains with which GAXC works.
And that strategy has some bright spots.
It wasn't all about losses during the third quarter. From the 4,600 ATMs GAXC owns and operates, it pulled 3.5 million surcharge transactions, up 900,000 from the 2.6 million that came in during 3Q last year. Revenue also was up, from $4.8 million last year to $5.6 million.
During the quarter, the company wrote off the sale of its payroll-card subsidiary, EasyGreen Cash Card, and finalized the sale of its South African subsidiary, Cash Axcess Corp. GAXC also in December 2005 closed its software subsidiary, Axcess Technology Corp., and earlier in the year moved to outsource its ATM transaction processing. EFT Integration Inc., GAXC's processing center, still handles a few existing contracts.
"The company invested a significant amount there (in software development); we were trying to develop our own switching software," McQuain said. "But it is fair to say that you can buy off-the-shelf products much cheaper. It's kind of a dual-edged sword - you have the cost of maintaining it going forward in addition to the cost of developing the software. It's the ongoing expenses that are hard to justify."
