News

TRM losses continue to climb; profit plummets 40%

August 6, 2006

PORTLAND, Ore. - TRM Corp. again reported losses from 2005 in ATM and photocopier sales, but saw a slight increase from the first quarter of 2006.

The company reported second-quarter consolidated sales of $52.8 million, down 12 percent from $60.1 million in 2Q 2005 but up 2 percent from $51.9 million in 1Q '06. Sales reflect reduced attrition rates and increased withdrawals in the ATM business, TRM said.

Net sales for the quarter were down to $27.5 million, from $32.1 million last year and $28.1 million in the first quarter. The year-over-year decline in net sales reflects a decline in ATM units and cash withdrawals, as well as a decline in the average number of photocopies per machine, TRM said.

Profit for the quarter also dropped, from $11.5 million in 1Q '06 and $15.9 in 2Q '05 to $9.5 million. The company operated at a loss of $2.2 million during the quarter, compared to operating income of $226,000 in 1Q '06 and $5.1 million in 2Q '05.

Net loss was $4.5 million, or a negative 26 cents per share, compared to a net loss of $1.5 million, a negative 9 cents per share, in 1Q '06 and net income of $2.9 million, 19 cents per share, a year ago.

ATMs

ATM sales increased 1 percent from $43.8 million in 1Q '06 to $44.2 million, and monthly withdrawal transactions per unit increased 6 percent. Total withdrawals increased 4 percent. This improvement in volume reflects consumers' continued demand for cash despite a net decline in TRM's unit count, the company said.

The results reflect some success in the company's efforts to reduce ATM attrition during the quarter. Attrition contributed to a unit decline of 361 average transacting terminals during the quarter, down from a unit decline of 941 average transacting terminals in 1Q '06  - a 62 percent improvement.

At the end of the quarter, TRM had 17,960 transacting ATMs.

Net sales declined to $20.4 million from $21.3 million last year, a product of U.S.-based customer conversion to the merchant-owned program, which commands a higher discount rate, TRM said.

TRM's German subsidiary, TRM ATM Deutschland GmbH, has signed a contract to provide exclusive ATM services at up to 334 German military barracks over the following 12 months. The first installations are expected within two months.

Photocopiers

Photocopy sales improved 6 percent from the first quarter of the year, hitting $8.6 million, but fell from 2Q '05 by 13 percent. Net sales hit $7.1 million - excluding results from TRM Copy Centres Ltd., which the company sold in June - a 12 percent drop from last year but a 4 percent improvement from the first quarter. Profit for the segment hit $2.3 million, up 35 percent from 1Q '06 but down 32 percent from last year.

The sale of TRM Copy Centres Ltd. allows TRM to focus on its U.K. operation on the ATM side of the business and is part of an overall effort to increase shareholder value across the organization, TRM said.

As of June 30, 2006, the company had 20,338 photocopy units throughout North America.

On June 6, 2006, TRM refinanced its debt of $109.5 million. The required annual debt has declined to $9.8 million from roughly $16.2 million.