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Cardtronics Announces Second Quarter 2016 Results

HOUSTON, July 28, 2016 (GLOBE NEWSWIRE) -- Cardtronics plc (Nasdaq:CATM) (“Cardtronics” or the “Company”), the world’s largest ATM owner/operator, today announced its financial and operational results for the quarter ended June 30, 2016.

Key financial statistics in the second quarter of 2016 as compared to the second quarter of 2015 include:

  • Total revenues of $324.0 million, up 7% from $303.7 million (9% on a constant-currency basis).
  • ATM operating revenues of $311.3 million, up 9% from $285.4 million (11% on a constant-currency basis).
  • Gross margin of 35.1%, up from 34.0% in 2015.
  • GAAP Net Income of $20.1 million, or $0.44 per diluted share, compared to GAAP Net Income of $15.0 million, or $0.33 per diluted share.
  • Adjusted Net Income per diluted share of $0.80, up 13% from $0.71.
  • Adjusted EBITDA of $81.7 million, up 10% from $74.0 million.
  • Cash flows from operating activities of $79.9 million, up 43% from $55.7 million.

“We had a solid second quarter, with our core ATM operating revenues up approximately 11% on a constant-currency basis, driven by near equal contributions from internal growth and acquisitions. The quarter also showed healthy growth and balance between new ATM placements at retail locations and a record number of financial institutions signed to the Allpoint surcharge-free network. Looking forward, we remain confident about our growth opportunities,” commented Steve Rathgaber, Cardtronics’ chief executive officer.

RECENT HIGHLIGHTS

  • Secured ATM operating contracts representing over 1,200 locations in North America and Europe. These wins included placements at college campuses, transit, and retail locations.
  • Entered into agreements with 29 new financial institutions, including Fifth Third Bancorp, a top 15 U.S. retail bank, for participation in our Allpoint Network, adding over 2.5 million cards that will seek surcharge-free ATM access to our network.
  • Secured an ATM off-premise outsourcing arrangement with TD Bank for 141 ATM locations in the U.S. and Canada.
  • Commenced operation of nearly 2,600 ATMs acquired from JPMorgan Chase in April 2016.
  • On July 1, 2016, Cardtronics completed its previously announced transaction to redomicile to the U.K.

SECOND QUARTER RESULTS

Consolidated revenues totaled $324.0 million for the second quarter of 2016, representing a 7% increase from $303.7 million in the second quarter of 2015. ATM operating revenues were up 9% from the second quarter of 2015. Adjusting for movements in currency exchange rates, ATM operating revenues were up approximately 11% from the second quarter of 2015, driven by organic growth and contributions from recent acquisitions. The $5.7 million decrease in ATM product sales and other revenues in the second quarter of 2016 was attributable to the Company’s 2015 divestiture of the retail cash-in-transit component of its previously acquired Sunwin business in the U.K. Cost of ATM product sales and other revenues decreased correspondingly by $5.5 million in the second quarter of 2016.

ATM operating revenues in North America were up 8% for the second quarter of 2016, driven by acquisition growth. ATM operating revenues in Europe were up 5% for the second quarter of 2016 (11% on a constant-currency basis), driven mostly by organic growth.

GAAP Net Income for the second quarter of 2016 totaled $20.1 million, compared to GAAP Net Income of $15.0 million during the second quarter of 2015. The increase in GAAP Net Income for the second quarter of 2016 was the result of continued revenue growth, partially offset by incremental professional services costs of approximately $5.2 million associated with the Company’s redomicile of its parent company to the U.K. These costs are reported in the redomicile-related expenses category in the Company’s results from operations and have been excluded from the Company’s calculation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share in the second quarter of 2016.

Adjusted EBITDA for the second quarter of 2016 totaled $81.7 million, representing a 10% increase over the $74.0 million of Adjusted EBITDA during the second quarter of 2015. Adjusted Net Income totaled $36.8 million ($0.80 per diluted share) for the second quarter of 2016, compared to $32.3 million ($0.71 per diluted share) during the second quarter of 2015. The increases in Adjusted EBITDA and Adjusted Net Income were primarily driven by the Company’s revenue growth. Adjusted EBITDA and Adjusted Net Income are detailed in a reconciliation included at the end of this press release.

SIX MONTH RESULTS

Consolidated revenues totaled $627.2 million for the six months ended June 30, 2016, representing a 7% increase from $585.6 million in consolidated revenues generated during the same period of 2015. ATM operating revenues were up 11% from the six months ended June 30, 2015. Adjusting for movements in currency exchange rates, ATM operating revenues were up approximately 13% for the six months ended June 30, 2016, driven by organic growth and contributions from acquisitions. The $16.4 million decrease in ATM product sales and other revenues in the six months ended June 30, 2016 was attributable to the Company’s 2015 divestiture of the retail cash-in-transit component of its previously acquired Sunwin business in the U.K. Cost of ATM product sales and other revenues decreased correspondingly by $14.9 million in the same period in 2015.

ATM operating revenues in North America were up 7% for the six months ended June 30, 2016, driven by a combination of recent acquisitions and organic growth. ATM operating revenues in Europe were up 12% for the six months ended June 30, 2016 (18% on a constant-currency basis), driven by a combination of strong organic growth and to a limited extent, acquisition-related growth.

GAAP Net Income for the six months ended June 30, 2016 totaled $35.5 million, compared to GAAP Net Income of $30.2 million during the same period in 2015. The increase in GAAP Net Income for the six months of 2016 was the result of continued revenue growth and margin expansion, partially offset by incremental professional services costs of approximately $11.3 million associated with the Company’s redomicile of its parent company to the U.K. These costs are reported in the Company’s results from operations under the redomicile-related expense category and have been excluded from the Company’s calculation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share in the six months ended June 30, 2016.

Adjusted EBITDA for the six months ended June 30, 2016 totaled $154.9 million, representing a 9% increase from the same period in 2015. Adjusted Net Income totaled $68.1 million ($1.49 per diluted share) for the six months ended June 30, 2016, compared to $61.4 million ($1.36 per diluted share) during the same period in 2015. The increases in both Adjusted EBITDA and Adjusted Net Income were primarily due to the same factors discussed above, including the Company’s revenue growth and margin improvement relative to the six months ended June 30, 2016.

2016 GUIDANCE

The Company is updating the financial guidance it provided in April 2016 regarding its anticipated results for the full year 2016 results:

  • Revenues of $1.25 billion to $1.27 billion;
  • Gross Profit Margin of 35.0% to 35.5%;
  • GAAP Net Income of $87 million to $91 million;
  • Adjusted EBITDA of $320 million to $324 million;
  • Depreciation and accretion expense of $93.5 million to $94.5 million
  • Cash interest expense of $17.5 to $18.5 million;
  • Adjusted Net Income per diluted share of $3.20 to $3.30, based on approximately 45.85 million weighted average diluted shares outstanding; and
  • Capital expenditures of $130 million to $140 million.

The Adjusted EBITDA and Adjusted Net Income guidance excludes the impact of certain expenses, as outlined in the reconciliation provided at the end of this press release. This guidance is based on average foreign currency exchange rates for the remainder of the year of £1.00 U.K. to $1.30 U.S., $18.00 Mexican pesos to $1.00 U.S., $1.00 Canadian dollar to $0.77 U.S., and €1.00 Euros to $1.10 U.S. Additionally, this guidance is based on an estimated tax rate of 26.5% for the last six months of 2016.

LIQUIDITY

The Company had $367 million in available borrowing capacity under its $375 million revolving credit facility due in 2019 and $20 million in cash on hand as of June 30, 2016. This revolving credit facility was amended July 1, 2016 to extend the maturity date from April 2019 to July 2021. The Company’s outstanding indebtedness as of June 30, 2016 consisted of $250 million in Senior Notes due 2022, $288 million Convertible Senior Notes due 2020, and $8 million in borrowings under its revolving credit facility due 2019. The Senior Notes and Convertible Senior Notes have carrying balances of $247 million and $236 million, respectively, and are reflected as long-term debt on the balance sheet, net of issuance costs and unamortized discounts.

CONFERENCE CALL INFORMATION

The Company will host a conference call today, Thursday, July 28, 2016, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its financial results for the second quarter ended June 30, 2016. To access the call, please call the conference call operator at:

Dial in: (877) 303-9205
Alternate dial-in: (760) 536-5226


Please call in fifteen minutes prior to the scheduled start time and request to be connected to the “Cardtronics Second Quarter Earnings Conference Call.” Additionally, a live audio webcast of the conference call will be available online through the investor relations section of the Company’s website at www.cardtronics.com.

A digital replay of the conference call will be available through Thursday, August 11, 2016, and can be accessed by calling (855) 859-2056 or (404) 537-3406 and entering 46626340 for the conference ID. A replay of the conference call will also be available online through the Company’s website subsequent to the call through August 31, 2016.

DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION

EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share, Free Cash Flow, and Revenue on a constant-currency basis are non-GAAP financial measures provided as a complement to results prepared in accordance with U.S. GAAP and may not be comparable to similarly-titled measures reported by other companies. The Company uses these non-GAAP financial measures in managing and measuring the performance of its business, including setting and measuring incentive based compensation for management. Management believes that the presentation of these measures and the identification of certain notable, and/or certain costs not anticipated to occur in future periods (if applicable in a particular period), and non-cash items enhance an investor’s understanding of the underlying trends in the Company’s business and provide for better comparability between periods in different years.

Adjusted EBITDA excludes depreciation, accretion, and amortization of intangible assets as these amounts can vary substantially from company to company within the Company’s industry depending upon accounting methods and book values of assets, capital structures, and the method by which the assets were acquired. Adjusted EBITDA also excludes stock-based compensation expense, acquisition and divestiture-related expenses, certain non-operating expenses, certain costs not anticipated to occur in future periods (if applicable in a particular period), gains or losses on disposal of assets, the Company’s obligations for the payment of income taxes, interest expense, and other obligations such as capital expenditures, and includes an adjustment for noncontrolling interests.

Adjusted Net Income represents net income computed in accordance with U.S. GAAP, before amortization of intangible assets, gains or losses on disposal of assets, stock-based compensation expense, certain other expense amounts, acquisition and divestiture-related expenses, certain non-operating expenses, and certain costs not anticipated to occur in future periods (if applicable in a particular period). Adjusted Net Income is calculated using an estimated long-term, cross-jurisdictional effective cash tax rate of 32.0% for the three and six months ended June 30, 2016 and 2015, with certain adjustments for noncontrolling interests. Related to guidance in future periods in 2016 and in conjunction with the Company’s recently announced redomicile to the U.K., the Company has used its expected GAAP tax rate for the remainder of 2016 in calculating the effective tax rate for Adjusted Net Income for the periods from July 2016 through December 2016. Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by weighted average diluted shares outstanding. Free Cash Flow is defined as cash provided by operating activities less payments for capital expenditures, including those financed through direct debt but excluding acquisitions. The Free Cash Flow measure does not take into consideration certain other non-discretionary cash requirements for example, mandatory principal payments on portions of the Company’s long-term debt. Management calculates Revenue on a constant-currency basis using the average foreign exchange rates applicable in the corresponding period of the previous year and applying these rates to foreign-denominated revenue of the current period. The difference between revenue calculated based on these foreign exchange rates and revenue calculated in accordance with U.S. GAAP is referred to as the foreign exchange impact on revenue. Management uses Revenue on a constant-currency basis to eliminate the effect foreign currency has on comparability between periods.

The non-GAAP financial measures presented herein should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing, or financing activities, or other income or cash flow measures prepared in accordance with U.S. GAAP. Reconciliations of the non-GAAP financial measures used herein to the most directly comparable U.S. GAAP financial measures are presented in tabular form at the end of this press release.

ABOUT CARDTRONICS (NASDAQ:CATM)

Making ATM cash access convenient where people shop, work and live, Cardtronics is at the convergence of retailers, financial institutions, prepaid card programs and the customers they share. Cardtronics provides services to approximately 200,000 ATMs in North America and Europe. Whether Cardtronics is driving foot traffic for North America and Europe’s top retailers, enhancing ATM brand presence for card issuers or expanding card holders’ surcharge-free cash access, Cardtronics is convenient access to cash, when and where consumers need it. Cardtronics is where cash meets commerce.

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “project,” “believe,” “estimate,” “expect,” “future,” “anticipate,” “intend,” “contemplate,” “foresee,” “would,” “could,” “plan,” and similar expressions that are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effect on the Company. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting the Company will be those that are anticipated. All comments concerning the Company’s expectations for future revenues and operating results are based on the Company’s estimates for its existing operations and do not include the potential impact of any future acquisitions. The Company’s forward-looking statements involve significant risks and uncertainties (some of which are beyond the Company’s control) and assumptions that could cause actual results to differ materially from the Company’s historical experience and present expectations or projections. Known material factors that could cause actual results to differ materially from those in the forward-looking statements include:

  • the Company’s financial outlook and the financial outlook of the ATM industry and the continued usage of cash by consumers at rates near historical patterns;
  • the Company’s ability to respond to recent and future network and regulatory changes, including forthcoming requirements surrounding Europay, MasterCard, and Visa (“EMV”) security standards;
  • the Company’s ability to renew its existing customer relationships on comparable economic terms and add new customers;
  • the Company’s ability to pursue and successfully integrate acquisitions;
  • changes in interest rates and foreign currency rates;
  • the Company’s ability to successfully manage its existing international operations and to continue to expand internationally;
  • the Company’s ability to manage concentration risks with key customers, vendors, and service providers;
  • the Company’s ability to prevent thefts of cash;
  • the Company’s ability to manage cybersecurity risks and prevent data breaches;
  • the Company’s ability to respond to potential reductions in the amount of net interchange fees that it receives from global and regional debit networks for transactions conducted on its ATMs due to pricing changes implemented by those networks as well as changes in how issuers route their ATM transactions over those networks;
  • the Company’s ability to provide new ATM solutions to retailers and financial institutions including placing additional banks’ brands on ATMs currently deployed;
  • the Company’s ATM vault cash rental needs, including potential liquidity issues with its vault cash providers and its ability to continue to secure vault cash rental agreements in the future;
  • the Company’s ability to manage the risks associated with its third-party service providers failing to perform their contractual obligations;
  • the Company’s ability to successfully implement and evolve its corporate strategy;
  • the Company’s ability to compete successfully with new and existing competitors;
  • the Company’s ability to meet the service levels required by its service level agreements with its customers;
  • the additional risks the Company is exposed to in its U.K. armored transport business;
  • the impact of changes in U.S. or non-U.S. laws, including tax laws, that could reduce or eliminate the benefits expected to be achieved from the Company’s recent change of its parent company from the U.S. to the U.K.;
  • the impact of, or uncertainty related to, the U.K.’s planned exit from the European Union, including any material adverse effect on the tax, tax treaty, currency, operational, legal, and regulatory regime and macro-economic environment to which the Company will be subject to as a U.K. company; and
  • the Company’s ability to retain its key employees and maintain good relations with its employees.

Forward-looking statements also are affected by the risk factors described in the Company’s Annual Report on Form 10- K for the year ended December 31, 2015, as amended, the information set forth under Risk Factors in our Proxy Statement, dated May 19, 2016, and those set forth from time-to-time in other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements contained in this press release, which speak only as of the date of this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.


Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2016 and 2015
(In thousands, excluding share and per share amounts and percentages)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 %
Change
2015 2016 %
Change
2015
Revenues:
ATM operating revenues $ 311,331 9.1 % $ 285,436 $ 603,419 10.6 % $ 545,459
ATM product sales and other revenues 12,630 (31.0) 18,310 23,789 (40.8) 40,188
Total revenues 323,961 6.7 303,746 627,208 7.1 585,647
Cost of revenues:
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets shown separately below.) 198,843 8.3 183,533 384,783 9.3 352,041
Cost of ATM product sales and other revenues 11,487 (32.5) 17,009 21,420 (41.0) 36,301
Total cost of revenues 210,330 4.9 200,542 406,203 4.6 388,342
Gross profit 113,631 10.1 103,204 221,005 12.0 197,305
Gross profit % 35.1% 34.0% 35.2% 33.7%
Operating expenses:
Selling, general, and administrative expenses 37,912 10.9 34,190 75,311 15.7 65,070
Redomicile-related expenses 5,214 n/m 11,250 n/m
Acquisition and divestiture-related expenses 674 (87.9) 5,560 2,258 (71.5) 7,918
Depreciation and accretion expense 23,100 5.5 21,903 45,777 9.0 42,015
Amortization of intangible assets 9,691 2.1 9,495 18,954 (0.2) 18,992
(Gain) loss on disposal of assets (1,326) n/m 247 (944) n/m (286)
Total operating expenses 75,265 5.4 71,395 152,606 14.1 133,709
Income from operations 38,366 20.6 31,809 68,399 7.6 63,596
Other expense:
Interest expense, net 4,466 (6.0) 4,753 8,958 (5.3) 9,463
Amortization of deferred financing costs and note discount 2,982 5.9 2,817 5,764 3.0 5,596
Other expense 943 24.9 755 388 (78.6) 1,815
Total other expense 8,391 0.8 8,325 15,110 (10.5) 16,874
Income before income taxes 29,975 27.6 23,484 53,289 14.1 46,722
Income tax expense 9,861 12.8 8,744 17,816 3.5 17,208
Net income 20,114 36.5 14,740 35,473 20.2 29,514
Net loss attributable to noncontrolling interests (34) n/m (257) (59) n/m (716)
Net income attributable to controlling interests and available to common stockholders $ 20,148 34.3 % $ 14,997 $ 35,532 17.5 % $ 30,230
Net income per common share – basic $ 0.45 $ 0.33 $ 0.79 $ 0.67
Net income per common share – diluted $ 0.44 $ 0.33 $ 0.78 $ 0.67
Weighted average shares outstanding – basic 45,199,450 44,807,829 45,136,553 44,737,413
Weighted average shares outstanding – diluted 45,748,570 45,319,363 45,704,474 45,280,588


Condensed Consolidated Balance Sheets
As of June 30, 2016 and December 31, 2015
(In thousands)
June 30, 2016 December 31, 2015
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 19,652 $ 26,297
Accounts and notes receivable, net 72,089 72,009
Inventory, net 8,372 10,675
Restricted cash 29,157 31,565
Current portion of deferred tax asset, net 16,300
Prepaid expenses, deferred costs, and other current assets 63,157 56,678
Total current assets 192,427 213,524
Property and equipment, net 370,904 375,488
Intangible assets, net 133,170 150,780
Goodwill 540,055 548,936
Deferred tax asset, net 12,283 11,950
Prepaid expenses, deferred costs, and other noncurrent assets 18,072 19,257
Total assets $ 1,266,911 $ 1,319,935
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of other long-term liabilities $ 30,736 $ 32,732
Accounts payable and other accrued and current liabilities 259,901 244,908
Total current liabilities 290,637 277,640
Long-term liabilities:
Long-term debt 491,282 568,331
Asset retirement obligations 53,557 51,685
Deferred tax liability, net 4,169 21,829
Other long-term liabilities 57,018 30,657
Total liabilities 896,663 950,142
Stockholders’ equity 370,248 369,793
Total liabilities and stockholders’ equity $ 1,266,911 $ 1,319,935


SELECTED INCOME STATEMENT DETAIL:

Total revenues by segment:Three Months Ended Six Months Ended
June 30, June 30,
2016 % Change 2015 2016 % Change 2015
(In thousands, excluding percentages)
North America
ATM operating revenues$ 210,302 8.1 % $ 194,593 $ 410,756 7.3 % $ 382,836
ATM product sales and other revenues 10,165 6.3 9,565 19,803 12.5 17,599
North America total revenues 220,467 8.0 204,158 430,559 7.5 400,435
Europe
ATM operating revenues 95,713 4.9 91,209 182,298 11.6 163,331
ATM product sales and other revenues 1,402 (84.0) 8,745 2,797 (87.6) 22,589
Europe total revenues 97,115 (2.8) 99,954 185,095 (0.4) 185,920
Corporate & Other
ATM operating revenues 11,601 n/m 5,461 22,613 n/m 10,262
ATM product sales and other revenues 1,063 n/m 1,189 n/m
Corporate & Other total revenues 12,664 n/m 5,461 23,802 n/m 10,262
Eliminations (6,285) 7.9 (5,827) (12,248) 11.6 (10,970)
Total ATM operating revenues 311,331 9.1 285,436 603,419 10.6 545,459
Total ATM product sales and other revenues 12,630 (31.0) 18,310 23,789 (40.8) 40,188
Total revenues$ 323,961 6.7 % $ 303,746 $ 627,208 7.1 % $ 585,647


Breakout of ATM operatingThree Months Ended Six Months Ended
revenues:June 30, June 30,
2016 % Change 2015 2016 % Change 2015
(In thousands, excluding percentages)
Surcharge revenues$ 126,322 7.5% $ 117,499 $ 243,168 6.7% $ 227,932
Interchange revenues 117,905 8.1 109,059 224,935 11.5 201,717
Bank-branding and surcharge-free network revenues 46,198 7.2 43,085 93,407 9.9 84,969
Managed services revenues 8,885 4.7 8,487 17,724 4.8 16,915
Other revenues 12,021 64.5 7,306 24,185 73.7 13,926
Total ATM operating revenues$ 311,331 9.1% $ 285,436 $ 603,419 10.6% $ 545,459


Total gross profit by segment:Three Months Ended Six Months Ended
June 30, June 30,
2016 % Change 2015 2016 % Change 2015
(In thousands, excluding percentages)
North America$ 74,834 2.1% $ 73,321 $ 148,788 4.0% $ 143,022
Europe 35,331 21.3 29,133 65,446 23.3 53,070
Corporate & Other 3,466 n/m 750 6,771 n/m 1,213
Total gross profit$ 113,631 10.1% $ 103,204 $ 221,005 12.0% $ 197,305


Breakout of cost of ATM operatingThree Months Ended Six Months Ended
revenues (exclusive of depreciation, accretion,June 30, June 30,
and amortization of intangible assets):2016 % Change 2015 2016 % Change 2015
(In thousands, excluding percentages)
Merchant commissions$ 94,557 7.9% $ 87,666 $ 182,952 9.5 % $ 167,015
Vault cash rental 18,587 7.5 17,293 35,860 5.3 34,068
Other costs of cash 20,631 10.6 18,646 40,900 11.2 36,770
Repairs and maintenance 18,948 8.9 17,404 36,251 3.9 34,903
Communications 7,999 3.7 7,710 15,611 4.4 14,950
Transaction processing 4,143 6.3 3,897 7,745 (0.8) 7,808
Stock-based compensation 270 32.4 204 387 (28.1) 538
Employee costs 16,939 10.5 15,333 34,141 21.6 28,076
Other expenses 16,769 9.0 15,380 30,936 10.8 27,913
Total cost of ATM operating revenues$ 198,843 8.3% $ 183,533 $ 384,783 9.3 % $ 352,041


Breakout of selling, general, andThree Months Ended Six Months Ended
administrative expenses:June 30, June 30,
2016 % Change 2015 2016 % Change 2015
(In thousands, excluding percentages)
Employee costs$ 19,547 11.9% $ 17,476 $ 40,212 16.3% $ 34,569
Stock-based compensation 5,700 20.1 4,745 8,751 1.6 8,612
Professional fees 4,047 2.1 3,963 9,761 46.9 6,643
Other expenses 8,618 7.6 8,006 16,587 8.8 15,246
Total selling, general, and administrative expenses$ 37,912 10.9% $ 34,190 $ 75,311 15.7% $ 65,070


Depreciation and accretion by segment:Three Months Ended Six Months Ended
June 30, June 30,
2016 % Change 2015 2016 % Change 2015
(In thousands, excluding percentages)
North America$ 12,006 0.1% $ 11,995 $ 24,002 2.6% $ 23,402
Europe 9,361 4.9 8,924 18,457 9.0 16,935
Corporate & Other 1,733 76.1 984 3,318 97.7 1,678
Total depreciation and accretion expense$ 23,100 5.5% $ 21,903 $ 45,777 9.0% $ 42,015


SELECTED BALANCE SHEET DETAIL:

Long-term debtJune 30, 2016 December 31, 2015
(In thousands)
Revolving credit facility$ 8,400 $ 90,835
5.125% Senior notes (1) 247,044 246,742
1.00% Convertible senior notes (1) 235,838 230,754
Total long-term debt$ 491,282 $ 568,331

(1) Our 5.125% Senior Notes due 2022 with a face value of $250.0 million are presented net of capitalized debt issuance costs of $3.0 million and $3.3 million as of June 30, 2016 and December 31, 2015, respectively. Our 1.00% Convertible Senior Notes due 2020 with a face value of $287.5 million are presented net of the unamortized discount and capitalized debt issuance costs of $51.7 million and $56.7 million as of June 30, 2016 and December 31, 2015, respectively. In accordance with U.S. GAAP the estimated fair value of the conversion feature within the Convertible Senior Notes was recorded as additional paid-in capital within equity at issuance. The Convertible Senior Notes are being accreted over the term of the notes to the full principal amount ($287.5 million).

Share count rollforward:

Total shares outstanding as of December 31, 2015 44,953,620
Shares repurchased (128,405)
Shares forfeited (5,842)
Shares issued – stock options exercised 13,860
Shares vested – restricted stock units 385,942
Total shares outstanding as of June 30, 2016 45,219,175


SELECTED CASH FLOW DETAIL:

Selected cash flow statement amounts:

Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
(In thousands)
Cash provided by operating activities $ 79,932 $ 55,714 $ 124,587 $ 86,586
Cash used in investing activities (33,011) (32,952) (44,767) (72,764)
Cash used in financing activities (51,809) (17,920) (85,850) (21,689)
Effect of exchange rate changes on cash (509) 2,752 (615) 781
Net (decrease) increase in cash and cash equivalents (5,397) 7,594 (6,645) (7,086)
Cash and cash equivalents as of beginning of period 25,049 17,195 26,297 31,875
Cash and cash equivalents as of end of period $ 19,652 $ 24,789 $ 19,652 $ 24,789


Key Operating Metrics – Including Acquisitions in All Periods Presented
For Three and Six Months Ended June 30, 2016 and 2015
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Average number of transacting ATMs:
United States: Company-owned 41,450 38,383 40,413 38,214
United Kingdom and Ireland 16,063 15,117 15,936 14,394
Mexico 1,381 1,433 1,387 1,610
Canada 1,861 1,784 1,856 1,690
Germany and Poland 1,155 985 1,142 956
Subtotal 61,910 57,702 60,734 56,864
United States: Merchant-owned (1) 16,613 20,202 17,063 20,648
Average number of transacting ATMs – ATM operations 78,523 77,904 77,797 77,512
Managed Services and Processing
United States: Managed services – Turnkey 2,178 2,188 2,186 2,179
United States: Managed services – Processing Plus and Processing operations, net (2) 115,518 31,606 113,141 30,997
Canada: Managed services 1,707 987 1,611 954
Average number of transacting ATMs – Managed services and processing 119,403 34,781 116,938 34,130
Total average number of transacting ATMs 197,926 112,685 194,735 111,642
Total transactions (in thousands):
ATM operations 341,941 321,424 655,072 599,652
Managed services and processing, net (2) 176,998 35,405 347,877 68,805
Total transactions 518,939 356,829 1,002,949 668,457
Cash withdrawal transactions (in thousands):
ATM operations 216,197 197,238 408,283 366,708
Per ATM per month amounts (excludes managed services and processing): % Change % Change
Cash withdrawal transactions 918 8.8% 844 875 11.0% 788
ATM operating revenues$ 1,250 6.2% $ 1,177 $ 1,220 8.0% $ 1,130
Cost of ATM operating revenues (3) 803 5.9% 758 784 7.3% 731
ATM operating gross profit (3) (4)$ 447 6.7% $ 419 $ 436 9.3% $ 399
ATM operating gross profit margin (3) (4) 35.8% 35.6% 35.7% 35.3%

(1) Certain ATMs previously reported in this category are now included in the United States: Managed services - Processing Plus and Processing operations, net category below.
(2) The increase in the United States: Managed services - Processing Plus and Processing operations, net category is mostly attributable to the July 1, 2015 acquisition of Columbus Data Services, L.L.C. (“ CDS”) and the incremental number of transacting ATMs for which CDS provides processing services.
(3) Amounts presented exclude the effect of depreciation, accretion, and amortization of intangible assets, which is presented separately in the Company’s Consolidated Statements of Operations.
(4) Revenues and expenses relating to managed services, processing, ATM equipment sales, and other ATM-related services are not included in this calculation.


Key Operating Metrics – Ending Machine Count
As of June 30, 2016 and 2015
(Unaudited)
As of June 30,
2016 2015
Ending number of transacting ATMs:
United States: Company-owned 42,097 38,439
United Kingdom and Ireland 16,203 15,464
Mexico 1,364 1,426
Canada 1,833 1,925
Germany and Poland 1,193 1,013
Total Company-owned 62,690 58,267
United States: Merchant-owned 16,353 19,964
Ending number of transacting ATMs: ATM operations 79,043 78,231
United States: Managed services – Turnkey 2,165 2,195
United States: Managed services – Processing Plus and Processing operations, net 117,144 32,074
Canada: Managed services 1,724 1,047
Ending number of transacting ATMs: Managed services and processing, net 121,033 35,316
Total ending number of transacting ATMs 200,076 113,547



Reconciliation of Net Income Attributable to Controlling Interest and Available to Common Stockholders to
EBITDA, Adjusted EBITDA, and Adjusted Net Income
For the Three and Six Months Ended June 30, 2016 and 2015
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Net income attributable to controlling interests and available to common stockholders $ 20,148 $ 14,997 $ 35,532 $ 30,230
Adjustments:
Interest expense, net 4,466 4,753 8,958 9,463
Amortization of deferred financing costs and note discount 2,982 2,817 5,764 5,596
Income tax expense 9,861 8,744 17,816 17,208
Depreciation and accretion expense 23,100 21,903 45,777 42,015
Amortization of intangible assets 9,691 9,495 18,954 18,992
EBITDA $ 70,248 $ 62,709 $ 132,801 $ 123,504
Add back:
(Gain) loss on disposal of assets (1,326) 247 (944) (286)
Other expense (1) 943 755 388 1,815
Noncontrolling interests (2) (17) (286) (35) (711)
Stock-based compensation expense (3) 5,970 5,015 9,138 9,211
Acquisition and divestiture-related expenses (4) 674 5,560 2,258 7,918
Redomicile-related expenses (5) 5,214 11,250
Adjusted EBITDA $ 81,706 $ 74,000 $ 154,856 $ 141,451
Less:
Interest expense, net (3) 4,466 4,753 8,958 9,460
Depreciation and accretion expense (6) 23,093 21,699 45,762 41,754
Adjusted pre-tax income $ 54,147 $ 47,548 $ 100,136 $ 90,237
Income tax expense (7) 17,327 15,216 32,043 28,876
Adjusted Net Income $ 36,820 $ 32,332 $ 68,093 $ 61,361
Adjusted Net Income per share $ 0.81 $ 0.72 $ 1.51 $ 1.37
Adjusted Net Income per diluted share $ 0.80 $ 0.71 $ 1.49 $ 1.36
Weighted average shares outstanding – basic 45,199,450 44,807,829 45,136,553 44,737,413
Weighted average shares outstanding – diluted 45,748,570 45,319,363 45,704,474 45,280,588

(1) Includes foreign currency translation gains/losses, other non-operating costs, and in the three and six months ended June 30, 2016, approximately $0.4 million related to the effective termination of an interest rate swap.
(2) Noncontrolling interests adjustment made such that Adjusted EBITDA includes only the Company’s ownership interest in the Adjusted EBITDA of its Mexico subsidiary. In December 2015, the Company increased its ownership interest in its Mexico subsidiary from 51.0% to 95.7%.
(3) For the three and six months ended June 30, 2015, amounts exclude a portion of the expenses incurred by the Company’s Mexico subsidiary to account for the amounts allocable to the noncontrolling interest stockholders. The Company’s Mexico subsidiary recognized no stock-based compensation expense or interest expense, net for the three and six months ended June 30, 2016.
(4) Acquisition and divestiture-related expenses include costs incurred for professional and legal fees and certain transition and integration-related costs, including employee-related severance costs related to specific transactions.
(5) For the three and six months ended June 30, 2016, the Company incurred $5.2 million and $11.3 million, respectively, in expenses associated with its redomicile of its parent company to the U.K., which was completed on July 1, 2016.
(6) Amounts exclude a portion of the expenses incurred by the Company’s Mexico subsidiary to account for the amounts allocable to the noncontrolling interest stockholders. In December 2015, the Company increased its ownership interest in its Mexico subsidiary.
(7) Calculated using the Company’s estimated long-term, cross-jurisdictional effective cash tax rate of 32.0% prior to its redomicile of its parent company to the U.K., which was completed on July 1, 2016.


Reconciliation of U.S. GAAP Revenue to Constant-Currency Revenue
For the Three and Six Months Ended June 30, 2016 and 2015
(Unaudited)
Europe revenue: Three Months Ended
June 30,
2016 2015 % Change
U.S.
GAAP
Foreign
Currency
Impact
Constant -
Currency
U.S.
GAAP
U.S.
GAAP
Constant -
Currency
(In thousands)
ATM operating revenues $ 95,713 $ 5,859 $ 101,572 $ 91,209 4.9 % 11.4 %
ATM product sales and other revenues 1,402 92 1,494 8,745 (84.0) (82.9)
Total revenues $ 97,115 $ 5,951 $ 103,066 $ 99,954 (2.8)% 3.1 %


Six Months Ended
June 30,
2016 2015 % Change
U.S.
GAAP
Foreign
Currency
Impact
Constant -
Currency
U.S.
GAAP
U.S.
GAAP
Constant -
Currency
(In thousands)
ATM operating revenues $ 182,298 $ 10,706 $ 193,004 $ 163,331 11.6 % 18.2 %
ATM product sales and other revenues 2,797 172 2,969 22,589 (87.6) (86.9)
Total revenues $ 185,095 $ 10,878 $ 195,973 $ 185,920 (0.4)% 5.4 %


Consolidated revenue: Three Months Ended
June 30,
2016 2015 % Change
U.S.
GAAP
Foreign
Currency
Impact
Constant -
Currency
U.S.
GAAP
U.S.
GAAP
Constant -
Currency
(In thousands)
ATM operating revenues $ 311,331 $ 6,693 $ 318,024 $ 285,436 9.1 % 11.4 %
ATM product sales and other revenues 12,630 111 12,741 18,310 (31.0) (30.4)
Total revenues $ 323,961 $ 6,804 $ 330,765 $ 303,746 6.7 % 8.9 %


Six Months Ended
June 30,
2016 2015 % Change
U.S.
GAAP
Foreign Currency Impact Constant - Currency U.S.
GAAP
U.S.
GAAP
Constant - Currency
(In thousands)
ATM operating revenues $ 603,419 $ 12,773 $ 616,192 $ 545,459 10.6 % 13.0 %
ATM product sales and other revenues 23,789 223 24,012 40,188 (40.8) (40.3)
Total revenues $ 627,208 $ 12,996 $ 640,204 $ 585,647 7.1 % 9.3 %



Reconciliation of Free Cash Flow
For the Three and Six Months Ended June 30, 2016 and 2015
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
(In thousands)
Cash provided by operating activities $ 79,932 $ 55,714 $ 124,587 $ 86,586
Payments for capital expenditures:
Cash used in investing activities, excluding acquisitions and divestitures (23,120) (24,740) (39,571) (56,418)
Free cash flow $ 56,812 $ 30,974 $ 85,016 $ 30,168



Reconciliation of Estimated Net Income to EBITDA, Adjusted EBITDA, and Adjusted Net Income
For the Year Ending December 31, 2016
(In millions, excluding share and per share amounts)
(Unaudited)
Estimated Range
Full Year 2016
Net Income $ 87.0 $ 91.0
Adjustments:
Interest expense, net 18.5 17.5
Amortization of deferred financing costs and note discount 11.5 11.5
Income tax expense 34.2 36.0
Depreciation and accretion expense (1) 94.5 93.5
Amortization of intangible assets 39.0 39.0
EBITDA $ 284.7 $ 288.5
Add Back:
Stock-based compensation expense 21.3 21.5
Redomicile-related expense 11.5 11.5
Acquisition and divestiture-related costs 2.5 2.5
Adjusted EBITDA $ 320.0 $ 324.0
Less:
Interest expense, net 18.5 17.5
Depreciation and accretion expense 94.5 93.5
Income tax expense (2) 60.1 61.9
Adjusted Net Income $ 146.9 $ 151.1
Adjusted Net Income per diluted share $ 3.20 $ 3.30
Weighted average shares outstanding - diluted 45.85 45.85

(1) Noncontrolling interests adjustment made such that Adjusted EBITDA includes only the Company’s interest of its Mexico subsidiary.
(2) Calculated using the Company’s previous estimated long-term, cross-jurisdictional effective cash tax rate of 32.0% during the six months ended June 30, 2016 and post completion of the Company’s redomicile to the U.K. an average estimated effective U.S. GAAP tax rate on Adjusted Net Income of approximately 26.5% for the six months ending December 31, 2016.

Contact Information:

Media Relations
Nick Pappathopoulos
Director – Public Relations
832-308-4396
npappathopoulos@cardtronics.com
Investor Relations
Phillip Chin
EVP Corporate Development & Investor Relations
832-308-4975
ir@cardtronics.com

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All other trademarks are the property of their respective owners.



Source:Cardtronics, Inc.