There's big money in free ATMs. In an earnings call late last week, surcharge-free retail ATM network operator Cardtronics Inc. announced double-digit increases both quarter-over-quarter and year-over year.

4th quarter

  • Consolidated revenues were up 14 percent to $198.4 million, including 11 percent organic growth and 3 percent growth from acquisitions.
  • Adjusted net income per diluted share was $0.41, up 14 percent from $0.36.
  • Adjusted EBITDA was $50.1 million, up 20 percent from $41.9 million.
  • Gross margin was 32.5 percent, up from 32.0 percent.
  • Free cash flow was $29.9 million compared to $14.1 million.

"The fourth quarter capped off a really solid year in which we grew our revenues by 25 percent, with over half of that growth being organic," said Cardtronics CEO Steve Rathgaber. "Our business model is evolving as we are increasingly building products and executing strategies that will drive ATM transaction volume and thereby benefit all of our partners."

Rathgaber cited a number of reasons for the company's Q4 success:

  • further expansion of Canadian operations through the acquisition of Can-Do-Cash, a Canadian ATM operator of approximately 800 ATMs;
  • execution of a bank branding agreement with BBVA Compass to brand approximately 300 ATMs in premier retail chains in Colorado and Texas;
  • bank branding of more than 800 other new ATMs;
  • net addition of over 1,170 new deployed company-owned ATMs during the quarter;
  • execution of a contract to place about 40 high-transacting ATMs in some of the U.K.'s busiest train stations.

Organic growth in the quarter accounted for 11 percent of growth and was primarily attributable to several factors:

  • increased transactions per ATM in the company's U.S. and U.K. operations;
  • unit growth expansion;
  • increased revenues from managed services agreements;
  • increased bank branding revenues from financial institution partners;
  • growth of the Allpoint network.

Increases in organic revenue were partially offset by a decline in interchange revenue per transaction due to rate reductions by a major interbank network and transaction volume shifts to networks that pay lower interchange rates, and to lower equipment sales revenues.

Full year

For the full year, Cardtronics consolidated revenues totaled $780.4 million — a 25 percent increase from $624.6 million in 2011. Growth from acquisitions accounted for 12 percent of the increase, while organic growth of 13 percent was attributable to a combination of factors:

  • growth in transactions per ATM;
  • unit growth expansion;
  • increased revenues from managed services agreements;
  • higher bank branding revenues;
  • growth in Allpoint;
  • higher equipment sales.

For the year ending Dec. 31, 2013, Cardtronics issued the following guidance:

  • revenues of $835.0 million to $850.0 million;
  • overall gross margins of approximately 32.0 percent to 32.3 percent;
  • adjusted EBITDA of $202.0 million to $209.0 million;
  • adjusted net income of $1.72 to $1.79 per diluted share, based on approximately 44.7 million weighted average diluted shares outstanding;
  • capital expenditures of approximately $70.0 million, net of non-controlling interests.

"Looking to the year ahead, we are well-positioned for another strong organic revenue and earnings growth year, and we also expect to continue to grow through strategic acquisitions, although we remain disciplined in our approach to these transactions," Rathgaber said.

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