Cardtronics earnings: Knocking it out of the park
As the Boys of Summer burned up the bats in the 2015 MLB World Series, Cardtronics Inc. announced a few homeruns of its own on Oct. 29, reporting financial and operational results for the quarter ended Sept. 30.
The company recorded year-over-year stats for Q3 that included:
- total revenues of $311.4 million, up 17 percent from $265.8 million (21 percent on a constant currency basis);
- ATM operating revenues of $296.8 million, up 16 percent from $256.8 million (20 percent in constant currency);
- gross margin of 36.1 percent, up from 33.7 percent in 2014;
- adjusted net income per diluted share of 82 cents, up 28 percent from 64 cents;
- adjusted EBITDA of $81.7 million, up 23 percent from $66.6 million;
- GAAP net income of $22.0 million, or 48 cents per diluted share, compared to GAAP net income of $8.1 million, or 18 cents per diluted share; and
- cash flows from operating activities of $60.5 million, up 31 percent from $46.2 million.
"I am pleased with yet another quarter of strong execution in our core business, with revenues up 21 percent on a currency-adjusted basis and adjusted EPS up an impressive 28 percent," said Cardtronics CEO Steve Rathgaber. "This was accomplished alongside the completion of two M&A transactions the acquisition of Columbus Data Services and the disposal of a non-core portion of our U.K. cash-in-transit operation in early July. The business that we sold came to us by way of the Sunwin Services Group acquisition in late 2014. These transactions set the stage for further improvements in our results."
Rathgaber provided a reckoning of the coompany's notable wins for the quarter:
- reached agreements to brand nearly 600 ATMs across North American retailers, expanding relationships with our banking partners, including:
- new bank branding relationship to install Capital One branded ATMs with deposit-taking capabilities throughout Target stores in Massachusetts;
- expanded relationship with TCF Bank to brand ATMs in more than 200 Target stores in Michigan and Minnesota, as welll as suburban Chicago.
- entered agreements with 24 new financial institutions for participation in the Allpoint Network, adding another 490,000 cards with surcharge-free ATM access to the network;
- established a new relationship with two of the top 50 credit unions in the U.S., together representing more than 700,000 members.
Allpoint is now being promoted by 25 of the top 100 credit unions in the U.S., Rathgaber said.
"On a global basis, we had a solid quarter of new ATM installations," Rathgaber said. "Over 1800 ATMs were installed across our six-country footprint. About 65 percent were in Europe, with the balance in North America. This brings our installation activity for the year to more than 4,500 units."
To offer some "contextual perspective" to that figure, Rathgaber said that the 4,500 installed ATMs nearly equaly the number of active branches operated by the second largest U.S. bank (i.e., Bank of America), "and it's more ATMs installed in just nine months than several top 10 banks have in total."
Growth in the UK ...
Rathgaber said that another significant milestone was the fact that, for the first time, the company's U.K. business drove more transactions during the quarter than its comparable U.S. business.
"Our double-digit organic growth in the U.K. business, which is currently about half the size of our U.S. business in terms of revenues, generated about 111 million withdrawal transactions in the third quarter, while the ATMs we operate in the U.S. generated approximately 102 million transactions," he said, but noted that the U.S. number excluded third-party transaction processing by newly acquired CDS.
"These volumes could represent every U.K. citizen — man, woman and child — making almost two withdrawals at our ATMs during the third quarter alone," Rathgaber said. "We have an important network in the U.K., and are clearly providing a service that is of tremendous value to consumers and retailers alike."
And on The Continent
Cardtronics also recorded progress in Continental Europe with expansion of its ATM business in Germany and Poland. The company now operates 100 ATMs in the Polish market, Rathgaber said, and recently landed its first contract as a second ATM supplier to a chain of stores in Poland.
"Geographic expansion remains a key part of our growth strategy," Rathgaber said. "We are active in our geographic expansion activities, and we are investing in both people and infrastructure. I look forward to sharing future progress reports on this subject."
Consolidated revenues totaled $311.4 million for the three months ended Sept. 30, 2015, representing a 17 percent increase from $265.8 million in the same period of 2014. ATM operating revenues were up 16 percent for the period year over year. Adjusting for unfavorable movements in currency exchange rates, ATM operating revenues were up approximately 20 percent for the period, driven by acquisitions and organic revenue growth.
Adjusted EBITDA for the period totaled $81.7 million, representing a 23 percent year-over-year increase from adjusted EBITDA of $66.6 million. Adjusted net income was $37.2 million (82 cents per diluted share) for the quarter, compared with $28.9 million (64 per diluted share) during the same period in 2014. Increases in adjusted EBITDA and adjusted net income were driven primarily by the company's revenue growth and margin expansion.
GAAP net income for the third quarter totaled $22.0 million, compared with GAAP Net Income of $8.1 million for the same period in 2014. The increase was the result of the revenue growth and margin expansion and also a net gain recognized on the sale of the company's noncore retail cash-in-transit operation in the U.K., offset by acquisition and divestiture-related costs incurred during the period.
The company updated the financial guidance it provided in Q2; current expectations are for:
- revenues of $1.185 billion to $1.20 billion;
- gross profit margin of 34.4 percent to 34.7 percent;
- adjusted EBITDA of $297 million to $302 million;
- adjusted net income of $2.86 to $2.90 per diluted share, based on approximately 45.4 million weighted average diluted shares outstanding; and
- capital expenditures of $130 million to $140 million, net of noncontrolling interests.
(Guidance is based on average foreign currency exchange rates (to U.S. dollars) for the remainder of the year of 1 pound U.K. to $1.52; 17 Mexican pesos to $1; 1 Canadian dollar to 75 cents; and 1 euro to $1.10.)
Suzanne Cluckey / Suzanne’s editorial career has spanned three decades and encompassed all B2B and B2C communications formats. Her award-winning work has appeared in trade and consumer media in the United States and internationally. She is now the editor of ATMmarketplace.com and BlockChainTechNews.com