EX-99.1 2 a18-39352_2ex99d1.htm EX-99.1

Exhibit 99.1

 

 

CARDTRONICS ANNOUNCES THIRD QUARTER 2018 RESULTS

 

Continued Strong Transaction Growth in U.S. driven by the Allpoint Network and Bank-Branding

Company Raises Full Year Outlook

 

HOUSTON, November 1, 2018 — Cardtronics plc (Nasdaq: CATM) (“Cardtronics” or the “Company”), the world’s largest ATM owner/operator, announced today its financial and operational results for the quarter ended September 30, 2018.

 

Third Quarter 2018 Highlights:

 

·                  Total revenues of $340.2 million, down 15% from $402.0 million in the prior year.

·                  Total revenues were down 1% after excluding the impact from the removal of ATMs at 7-Eleven locations in the U.S. and on a constant-currency basis.

·                  Growth in North America ATM operating revenues of 3% for the quarter, excluding the 7-Eleven impact and on a constant-currency basis, was offset by lower revenues in the U.K. and Australia.

·                  Same-store withdrawal transactions in the U.S. were up 6% compared to the prior year.

·                  ATM operating revenues of $329.8 million, down 15% from $390.1 million in the prior year and approximately flat after excluding the impact from the removal of ATMs at 7-Eleven locations in the U.S. and on a constant-currency basis.

·                  Adjusted gross margin of 33.7% compared to 35.3% in the prior year, impacted by the removal of ATMs at 7- Eleven locations in the U.S.

·                  GAAP Net Income of $8.8 million, or $0.19 per diluted share, compared to GAAP Net Loss of $(175.6) million, or $(3.84) per diluted share in the prior year. The prior year result was impacted by non-cash impairment charges related to the Company’s Australia operation.

·                  Adjusted EBITDA of $77.4 million, down 22% from $99.9 million in the prior year, primarily impacted by the removal of ATMs at 7-Eleven locations in the U.S.

·                  Adjusted Net Income per diluted share of $0.62 compared to $0.96 in the prior year, impacted by the removal of ATMs at 7-Eleven locations in the U.S.

·                  Adjusted free cash flow of $47.8 million, up from $38.1 million in the prior year.

 

“The third quarter results were driven by solid operational execution and continued transaction strength in the U.S., resulting in strong growth in cash flow. Increased Allpoint and bank-branded transactions across many of our retailers drove 3% growth in our North America business, excluding the impact from 7-Eleven. We are enthusiastic about the opportunities ahead as financial institutions are increasingly recognizing the value of our broad and scalable network to help drive consumer growth and engagement strategies,” commented Edward H. West, Cardtronics’ chief executive officer.

 

Note Regarding Third Quarter 2018 Results Compared to Prior Year:

 

The Company had a long-standing relationship with 7-Eleven in the U.S. that ended during the quarter ended March 31, 2018. In previous periods, this relationship accounted for a material portion of the Company’s consolidated revenues and profits. The Company began a transition to 7-Eleven’s new service provider during the third quarter of 2017 and that transition was completed in February 2018. As a result, the Company’s relationship with 7-Eleven in the U.S. did not account for any of its reported revenues during the third quarter of 2018. The Company estimates that 7-Eleven in the U.S. accounted for approximately 13% of the Company’s consolidated revenues during the third quarter of 2017 and had an incremental adjusted gross margin of approximately 40%. 7-Eleven in the U.S. accounted for approximately 12.5% of the Company’s consolidated revenues for the year ended 2017 and the Company expects that 7-Eleven in the U.S. will account for less than 1% of its consolidated revenues in 2018.

 

1


 

See Disclosure of Non-GAAP Financial Information in this earnings release for definitions of Adjusted Gross Profit, Adjusted Gross Margin, EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted Free Cash Flow, and certain other GAAP and non-GAAP measures on a constant-currency basis. For additional information, including reconciliations to the most directly comparable financial measure recognized under generally accepted accounting principles in the U.S. (“U.S. GAAP” or “GAAP”), see the supplemental schedules of selected financial information in this earnings release.

 

The Company may also refer to revenue or profit growth as being organic. When providing growth measures on an organic basis, the Company aims to exclude the estimated impact from any acquired or divested businesses that may be included or partially included in one period but not another. The Company may further adjust organic performance measures for the impacts of currency movements, in order to have a consistent performance comparison across periods for the business, excluding movements in exchange rates. Due to the significance of the Company’s 7-Eleven relationship in the U.S., which accounted for 12.5% of consolidated revenues in 2017 and is expected to account for less than 1% of consolidated revenues in 2018, the Company may also report certain performance measures excluding the estimated contribution of this relationship to enable more comparable analysis of the business across periods excluding this relationship.

 

2018 UPDATED OUTLOOK

 

Below is the Company’s updated financial outlook for the full year 2018:

 

·                  Revenues of $1.31 billion to $1.34 billion;

·                  GAAP Net Income of $8.8 million to $11.1 million;

·                  Adjusted EBITDA of $283.0 million to $290.0 million;

·                  Depreciation and accretion expense of $123.8 million to $125.1 million;

·                  Cash interest expense of $36.0 million;

·                  Adjusted Net Income of $92.8 million to $95.4 million;

·                  Adjusted Net Income per diluted share of $2.00 to $2.05, based on approximately 46.5 million average diluted shares outstanding; and

·                  Capital expenditures of approximately $115 million.

 

The Adjusted EBITDA and Adjusted Net Income outlook excludes the impact of certain expenses, as outlined in the reconciliation provided at the end of this earnings release. See Disclosure of Non-GAAP Financial Information in this earnings release for definitions of these Non-GAAP measures. This outlook is based on average foreign currency exchange rates for the remainder of the year of £1.00 U.K. to $1.27 U.S., $20.00 Mexican pesos to $1.00 U.S., $1.00 Canadian dollar to $0.77 U.S., €1.00 Euros to $1.15 U.S., $1.00 Australian dollar to $0.71 U.S., and R15 South African Rand to $1.00 U.S.

 

CONFERENCE CALL INFORMATION

 

The Company will host a conference call today, Thursday, November 1, 2018, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its financial results for the quarter ended September 30, 2018. 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 15 minutes prior to the scheduled start time and request to be connected to the “Cardtronics Third Quarter 2018 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, November 8, 2018, and can be accessed by calling (855) 859-2056 or (404) 537-3406 and entering 2070838 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 November 30, 2018. Prior to the conference call, the Company will post supplemental financial information to its website at www.cardtronics.com.

 

2


 

ABOUT CARDTRONICS (Nasdaq: CATM)

 

Cardtronics is the trusted leader in financial self-service, enabling cash transactions at approximately 230,000 ATMs across 10 countries in North America, Europe, Asia-Pacific, and Africa.  Leveraging our unmatched scale, expertise and innovation, top-tier merchants and businesses of all sizes use our ATM solutions to drive growth, in-store traffic, and retail transactions.  Financial services providers rely on Cardtronics to deliver superior service at their own ATMs, on Cardtronics ATMs where they place their brand, and through Cardtronics’ Allpoint Network, the world’s largest surcharge-free ATM network, with over 55,000 locations.  As champions of cash, Cardtronics converts digital currency into physical cash, driving payments choice for businesses and consumers alike.

 

CONTACT INFORMATION

 

EVP - Treasurer

Corporate Communications Manager

Brad Conrad

Susannah Moore Griffin

832-308-4000

832-308-4392

ir@cardtronics.com

sgriffin@cardtronics.com

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This earnings release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended and are intended to be covered by the safe harbor provisions thereof. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effect on the Company and 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 its 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 its control) and assumptions that could cause actual results to differ materially from its historical experience and present expectations or projections. Risk factors are described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, 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 earnings release, which speak only as of the date of this earnings release. Except as required by applicable law, 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.

 

DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION

 

Adjusted Gross Profit, Adjusted Gross Margin, EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted Free Cash Flow, and certain GAAP and non-GAAP measures on a constant-currency basis represent non-GAAP financial measures provided as a complement to financial results prepared in accordance with 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 notable, non-cash, and/or (if applicable in a particular period) certain costs not anticipated to occur in future periods 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 Gross Profit represents total revenues less the total cost of revenues, excluding depreciation, accretion, and amortization of intangible assets. Adjusted Gross Margin is calculated by dividing Adjusted Gross Profit by total revenues. 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 methods by which the assets were acquired. Adjusted EBITDA also excludes share-based compensation expense, acquisition and divestiture-related expenses, certain non-operating expenses, (if applicable in a particular period) certain costs not anticipated to occur in future periods, gains or losses on disposal and impairment 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 GAAP, before amortization of intangible assets, gains or losses on disposal and impairment of assets, share-based compensation expense, certain other expense amounts, acquisition and divestiture-

 

3


 

related expenses, certain non-operating expenses, and (if applicable in a particular period) certain costs not anticipated to occur in future periods (together, the “Adjustments”). The non-GAAP tax rate used to calculate Adjusted Net Income was approximately 24.6% and 24.9% for the three and nine months ended September 30, 2018, respectively, and 26.8% and 27.4% for the three and nine months ended September 30, 2017, respectively. The non-GAAP tax rates represent the GAAP tax rate for the period as adjusted by the estimated tax impact of the items adjusted from the measure. Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by weighted average diluted shares outstanding. Adjusted Free Cash Flow is defined as cash provided by operating activities less the impact of changes in restricted cash due to the timing of settlements and less payments for capital expenditures, including those financed through direct debt, but excluding acquisitions. The Adjusted Free Cash Flow measure does not take into consideration certain other non-discretionary cash requirements such as mandatory principal payments on portions of the Company’s long-term debt. Management calculates certain GAAP as well as non-GAAP measures on a constant-currency basis using the average foreign currency exchange rates applicable in the corresponding period of the previous year and applying these rates to the measures in the current reporting period. Management uses GAAP as well as non-GAAP measures on a constant-currency basis to assess performance and eliminate the effect foreign currency exchange rates have 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 GAAP. Reconciliations of the non-GAAP financial measures used herein to the most directly comparable GAAP financial measures are presented in tabular form at the end of this earnings release.

 

4


 

Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2018 and 2017

(In thousands, excluding share, per share amounts, and percentages)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2018

 

% Change

 

2017

 

2018

 

% Change

 

2017

 

Revenues: 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATM operating revenues

 

$

329,837

 

(15.5

)%

$

390,143

 

$

978,789

 

(11.4

)%

$

1,105,191

 

ATM product sales and other revenues

 

10,338

 

(12.4

)

11,807

 

38,557

 

(2.2

)

39,443

 

Total revenues

 

340,175

 

(15.4

)

401,950

 

1,017,346

 

(11.1

)

1,144,634

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets reported separately below.)

 

216,849

 

(13.7

)

251,136

 

647,692

 

(11.2

)

729,547

 

Cost of ATM product sales and other revenues

 

8,680

 

(2.7

)

8,920

 

31,528

 

(9.1

)

34,671

 

Total cost of revenues

 

225,529

 

(13.3

)

260,056

 

679,220

 

(11.1

)

764,218

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

41,896

 

(9.2

)

46,132

 

124,564

 

(5.3

)

131,551

 

Redomicile-related expenses

 

 

n/m

 

22

 

 

n/m

 

782

 

Restructuring expenses

 

1,058

 

n/m

 

 

5,534

 

(32.9

)

8,243

 

Acquisition and divestiture-related expenses

 

 

n/m

 

2,889

 

2,633

 

(82.8

)

15,338

 

Goodwill and intangible asset impairment

 

 

n/m

 

194,521

 

 

n/m

 

194,521

 

Depreciation and accretion expense

 

30,647

 

2.8

 

29,807

 

93,453

 

5.4

 

88,683

 

Amortization of intangible assets

 

12,994

 

(13.4

)

14,996

 

40,263

 

(11.4

)

45,423

 

Loss on disposal and impairment of assets

 

466

 

(97.9

)

22,307

 

15,583

 

(40.5

)

26,170

 

Total operating expenses

 

87,061

 

(72.0

)

310,674

 

282,030

 

(44.8

)

510,711

 

Income (loss) from operations

 

27,585

 

(116.3

)

(168,780

)

56,096

 

(143.1

)

(130,295

)

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

8,852

 

(9.1

)

9,743

 

27,185

 

5.5

 

25,760

 

Amortization of deferred financing costs and note discount

 

3,397

 

6.3

 

3,195

 

10,060

 

8.0

 

9,317

 

Other income

 

(1,297

)

(38.1

)

(2,095

)

(1,324

)

(23.5

)

(1,730

)

Total other expense

 

10,952

 

1.0

 

10,843

 

35,921

 

7.7

 

33,347

 

Income (loss) before income taxes

 

16,633

 

(109.3

)

(179,623

)

20,175

 

(112.3

)

(163,642

)

Income tax expense (benefit)

 

7,854

 

(293.8

)

(4,053

)

10,409

 

(545.8

)

(2,335

)

Effective tax rate

 

47.2

%

 

 

2.3

%

51.6

%

 

 

1.4

%

Net income (loss)

 

8,779

 

(105.0

)

(175,570

)

9,766

 

(106.1

)

(161,307

)

Net loss attributable to noncontrolling interests

 

(2

)

(77.8

)

(9

)

(14

)

n/m

 

(3

)

Net income (loss) attributable to controlling interests and available to common shareholders

 

$

8,781

 

(105.0

)%

$

(175,561

)

$

9,780

 

(106.1

)%

$

(161,304

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share — basic

 

$

0.19

 

 

 

$

(3.84

)

$

0.21

 

 

 

$

(3.54

)

Net income (loss) per common share — diluted

 

$

0.19

 

 

 

$

(3.84

)

$

0.21

 

 

 

$

(3.54

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

46,073,739

 

 

 

45,662,543

 

45,945,728

 

 

 

45,597,558

 

Weighted average shares outstanding — diluted

 

46,476,787

 

 

 

45,662,543

 

46,386,523

 

 

 

45,597,558

 

 

5


 

Condensed Consolidated Balance Sheets

As of September 30, 2018 and December 31, 2017

(In thousands)

 

 

 

September 30, 2018

 

December 31, 2017

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

40,428

 

$

51,370

 

Accounts and notes receivable, net

 

87,150

 

105,245

 

Inventory, net

 

15,317

 

14,283

 

Restricted cash

 

73,870

 

48,328

 

Prepaid expenses, deferred costs, and other current assets

 

106,497

 

96,106

 

Total current assets

 

323,262

 

315,332

 

Property and equipment, net

 

457,350

 

497,902

 

Intangible assets, net

 

164,480

 

209,862

 

Goodwill

 

759,191

 

774,939

 

Deferred tax asset, net

 

7,412

 

6,925

 

Prepaid expenses, deferred costs, and other noncurrent assets

 

72,386

 

57,756

 

Total assets

 

$

1,784,081

 

$

1,862,716

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of other long-term liabilities

 

$

19,690

 

$

31,370

 

Accounts payable and other accrued and current liabilities

 

352,602

 

351,180

 

Total current liabilities

 

372,292

 

382,550

 

Long-term liabilities:

 

 

 

 

 

Long-term debt

 

835,790

 

917,721

 

Asset retirement obligations

 

55,705

 

59,920

 

Deferred tax liability, net

 

48,812

 

37,130

 

Other long-term liabilities

 

59,744

 

75,002

 

Total liabilities

 

1,372,343

 

1,472,323

 

Shareholders’ equity

 

411,738

 

390,393

 

Total liabilities and shareholders’ equity

 

$

1,784,081

 

$

1,862,716

 

 

6


 

SELECTED BALANCE SHEET DETAIL:

 

Long-term debt:

 

 

 

September 30, 2018

 

December 31, 2017

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

 

 

Revolving credit facility

 

$

30,930

 

$

122,461

 

1.00% Convertible senior notes (1)

 

260,563

 

251,973

 

5.125% Senior notes (1)

 

248,562

 

248,038

 

5.50% Senior notes (1)

 

295,735

 

295,249

 

Total long-term debt

 

$

835,790

 

$

917,721

 

 


(1)             The 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 $26.9 million and $35.5 million as of September 30, 2018 and December 31, 2017, respectively. In accordance with 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). The 5.125% Senior Notes due 2022 with a face value of $250.0 million are presented net of capitalized debt issuance costs of $1.4 million and $2.0 million as of September 30, 2018 and December 31, 2017, respectively. The 5.50% Senior Notes due 2025 with a face value of $300.0 million are presented net of capitalized debt issuance costs of $4.3 million and $4.8 million as of September 30, 2018 and December 31, 2017, respectively.

 

SELECTED CASH FLOW DETAIL (Unaudited):

 

Selected cash flow statement amounts:

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

(In thousands)

 

Net cash provided by operating activities

 

$

74,807

 

$

76,105

 

$

184,582

 

$

172,434

 

Net cash used in investing activities

 

(26,675

)

(41,556

)

(73,357

)

(596,026

)

Net cash (used in) provided by financing activities

 

(48,239

)

(29,053

)

(96,225

)

427,284

 

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

 

1,154

 

(435

)

(404

)

(4,178

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

1,047

 

5,061

 

14,596

 

(486

)

Cash, cash equivalents, and restricted cash as of beginning of period

 

113,366

 

100,200

 

99,817

 

105,747

 

Cash, cash equivalents, and restricted cash as of end of period

 

$

114,413

 

$

105,261

 

$

114,413

 

$

105,261

 

 

7


 

Reconciliation of Net Income (Loss) Attributable to Controlling Interests and Available to Common Shareholders to EBITDA, Adjusted EBITDA, and Adjusted Net Income

For the Three and Nine Months Ended September 30, 2018 and 2017

(In thousands, excluding share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2018

 

2017

 

2018

 

2017

 

Net income (loss) attributable to controlling interests and available to common shareholders

 

$

8,781

 

$

(175,561

)

$

9,780

 

$

(161,304

)

Adjustments:

 

 

 

 

 

 

 

 

 

Interest expense, net

 

8,852

 

9,743

 

27,185

 

25,760

 

Amortization of deferred financing costs and note discount

 

3,397

 

3,195

 

10,060

 

9,317

 

Income tax expense (benefit)

 

7,854

 

(4,053

)

10,409

 

(2,335

)

Depreciation and accretion expense

 

30,647

 

29,807

 

93,453

 

88,683

 

Amortization of intangible assets

 

12,994

 

14,996

 

40,263

 

45,423

 

EBITDA 

 

$

72,525

 

$

(121,873

)

$

191,150

 

$

5,544

 

 

 

 

 

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

Loss on disposal and impairment of assets

 

466

 

22,307

 

15,583

 

26,170

 

Other (income) (1)

 

(1,297

)

(2,095

)

(1,324

)

(1,730

)

Noncontrolling interests (2)

 

12

 

(9

)

31

 

(19

)

Share-based compensation expense

 

4,669

 

4,151

 

10,627

 

9,971

 

Restructuring expenses (3)

 

1,058

 

22

 

5,534

 

9,025

 

Acquisition and divestiture-related expenses (4)

 

 

2,889

 

2,633

 

15,338

 

Goodwill and intangible asset impairment (5)

 

 

194,521

 

 

194,521

 

Adjusted EBITDA

 

$

77,433

 

$

99,913

 

$

224,234

 

$

258,820

 

Less:

 

 

 

 

 

 

 

 

 

Interest expense, net

 

8,852

 

9,743

 

27,185

 

25,760

 

Depreciation and accretion expense (6)

 

30,646

 

29,805

 

93,451

 

88,677

 

Adjusted pre-tax income

 

$

37,935

 

$

60,365

 

$

103,598

 

$

144,383

 

Income tax expense (7)

 

9,332

 

16,178

 

25,789

 

39,595

 

Adjusted Net Income

 

$

28,603

 

$

44,187

 

$

77,809

 

$

104,788

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income per share — basic

 

$

0.62

 

$

0.97

 

$

1.69

 

$

2.30

 

Adjusted Net Income per share — diluted

 

$

0.62

 

$

0.96

 

$

1.68

 

$

2.27

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

46,073,739

 

45,662,543

 

45,945,728

 

45,597,558

 

Weighted average shares outstanding — diluted

 

46,476,787

 

46,197,178

 

46,386,523

 

46,238,070

 

 


(1)             Includes foreign currency translation gains/losses, the revaluation of the estimated acquisition-related contingent consideration, and other non-operating costs.

(2)             Noncontrolling interests adjustment made such that Adjusted EBITDA includes only the Company’s ownership interest in the Adjusted EBITDA of one of its Mexican subsidiaries.

(3)             For the three and nine months ended September 30, 2018 and 2017, expenses include employee severance and other costs incurred in conjunction with a corporate reorganization and cost reduction initiative. For the three and nine months ended September 30, 2017, expenses also include amounts associated with the Company’s redomicile of its parent company to the U.K., that occurred on July 1, 2016.

(4)             Acquisition and divestiture-related expenses include costs incurred for professional and legal fees and certain other transition and integration-related costs. Expenses include employee severance and lease termination costs related to DCPayments acquisition integration in the nine months ended September 30, 2018.

(5)             Goodwill and intangible asset impairments related to the Company’s Australia & New Zealand segment.

(6)             Amounts exclude a portion of the expenses incurred by one of its Mexican subsidiaries to account for the amounts allocable to the noncontrolling interest shareholders.

 

8


 

(7)             For the three and nine months ended September 30, 2018, the non-GAAP tax rate used to calculate Adjusted Net Income was approximately 24.6% and 24.9%, respectively, and 26.8% and 27.4% for the three and nine months ended September 30, 2017, which represents the Company’s GAAP tax rate as adjusted for the net tax effects related to the items excluded from Adjusted Net Income.

 

Reconciliation of GAAP Revenue to Constant-Currency Revenue

For the Three and Nine Months Ended September 30, 2018 and 2017

(In thousands, excluding percentages)

(Unaudited)

 

Consolidated revenue:

 

 

 

Three Months Ended

 

 

 

September 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

U.S.
GAAP

 

Foreign
Currency
Impact

 

Constant -
Currency

 

U.S.
GAAP

 

U.S.
GAAP

 

Constant -
Currency

 

ATM operating revenues

 

$

329,837

 

$

4,836

 

$

334,673

 

$

390,143

 

(15.5

)%

(14.2

)%

ATM product sales and other revenues

 

10,338

 

56

 

10,394

 

11,807

 

(12.4

)

(12.0

)

Total revenues

 

$

340,175

 

$

4,892

 

$

345,067

 

$

401,950

 

(15.4

)%

(14.2

)%

 

 

 

Nine Months Ended

 

 

 

September 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

U.S.
GAAP

 

Foreign
Currency
Impact

 

Constant -
Currency

 

U.S.
GAAP

 

U.S.
GAAP

 

Constant -
Currency

 

ATM operating revenues

 

$

978,789

 

$

(17,120

)

$

961,669

 

$

1,105,191

 

(11.4

)%

(13.0

)%

ATM product sales and other revenues

 

38,557

 

(409

)

38,148

 

39,443

 

(2.2

)

(3.3

)

Total revenues

 

$

1,017,346

 

$

(17,529

)

$

999,817

 

$

1,144,634

 

(11.1

)%

(12.7

)%

 

9


 

Reconciliation of Gross Profit Inclusive of Depreciation, Accretion, and Amortization of Intangible Assets to Adjusted Gross Profit

For the Three and Nine Months Ended September 30, 2018 and 2017

(In thousands, excluding percentages)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2018

 

2017

 

2018

 

2017

 

Total revenues

 

$

340,175

 

$

401,950

 

$

1,017,346

 

$

1,144,634

 

Total cost of revenues (1)

 

225,529

 

260,056

 

679,220

 

764,218

 

Total depreciation, accretion, and amortization of intangible assets excluded from total cost of revenues

 

35,456

 

37,176

 

109,137

 

111,911

 

Gross profit inclusive of depreciation, accretion, and amortization of intangible assets

 

$

79,190

 

$

104,718

 

$

228,989

 

$

268,505

 

Gross Margin (inclusive of depreciation, accretion, and amortization of intangible assets)

 

23.3

%

26.1

%

22.5

%

23.5

%

Total depreciation, accretion, and amortization of intangible assets excluded from gross profit

 

$

35,456

 

$

37,176

 

$

109,137

 

$

111,911

 

Adjusted Gross Profit exclusive of depreciation, accretion, and amortization of intangible assets

 

$

114,646

 

$

141,894

 

$

338,126

 

$

380,416

 

Adjusted Gross Margin (exclusive of depreciation, accretion, and amortization of intangible assets)

 

33.7

%

35.3

%

33.2

%

33.2

%

 


(1)             The Company presents the Total cost of revenues in the Company’s Consolidated Statements of Operations exclusive of depreciation, accretion, and amortization of intangible assets.

 

10


 

Reconciliation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share on a Non-GAAP basis to Constant-Currency

For the Three and Nine Months Ended September 30, 2018 and 2017

(In thousands, excluding per share amounts and percentages)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

September 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

Non -
GAAP 
(1) 

 

Foreign
Currency
Impact

 

Constant -
Currency

 

Non -
GAAP 
(1) 

 

Non -
GAAP 
(1) 

 

Constant -
Currency

 

Adjusted EBITDA

 

$

77,433

 

$

994

 

$

78,427

 

$

99,913

 

(22.5

)%

(21.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

 

$

28,603

 

$

429

 

$

29,032

 

$

44,187

 

(35.3

)%

(34.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income per share — diluted (2)

 

$

0.62

 

$

 

$

0.62

 

$

0.96

 

(35.4

)%

(35.4

)%

 

 

 

Nine Months Ended

 

 

 

September 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

Non -
GAAP 
(1)

 

Foreign
Currency
Impact

 

Constant -
Currency

 

Non -
GAAP 
(1)

 

Non -
GAAP 
(1)

 

Constant -
Currency

 

Adjusted EBITDA

 

$

224,234

 

$

(5,059

)

$

219,175

 

$

258,820

 

(13.4

)%

(15.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

 

$

77,809

 

$

(2,042

)

$

75,767

 

$

104,788

 

(25.7

)%

(27.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income per share — diluted (2)

 

$

1.68

 

$

(0.05

)

$

1.63

 

$

2.27

 

(26.0

)%

(28.2

)%

 


(1)             As reported on the Company’s Reconciliation of Net Income (Loss) Attributable to Controlling Interests and Available to Common Shareholders to EBITDA, Adjusted EBITDA, and Adjusted Net Income, see Disclosure of Non-GAAP Financial Information in this earnings release for further discussion.

 

(2)             Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of 46,476,787 and 46,197,178 for the three months ended September 30, 2018 and 2017, respectively, and 46,386,523 and 46,238,070 for the nine months ended September 30, 2018 and 2017, respectively.

 

Reconciliation of Adjusted Free Cash Flow

For the Three and Nine Months Ended September 30, 2018 and 2017

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30, 

 

September 30, 

 

 

 

2018

 

2017

 

2018

 

2017

 

Net cash provided by operating activities

 

$

74,807

 

$

76,105

 

$

184,582

 

$

172,434

 

Restricted cash settlement activity (1)

 

(361

)

3,598

 

(25,709

)

(8,151

)

Adjusted net cash provided by operating activities

 

74,446

 

79,703

 

158,873

 

164,283

 

Net cash used in investing activities, excluding acquisitions and divestitures (2)

 

(26,675

)

(41,556

)

(73,357

)

(111,424

)

Adjusted free cash flow

 

$

47,771

 

$

38,147

 

$

85,516

 

$

52,859

 

 


(1)    Restricted cash settlement activity represents the change in the Company’s restricted cash excluding the portion of the change that is attributable to foreign exchange and disclosed as part of the effect of exchange rate changes on cash, cash equivalents, and restricted cash in the accompanying Consolidated Statements of Cash Flows.

 

(2)    Capital expenditure amounts include payments made for exclusive license agreements, site acquisition costs, and other assets. Additionally, capital expenditure amounts for one of our Mexican subsidiaries are reflected gross of any noncontrolling interest amounts.

 

11


 

Reconciliation of Estimated Net Income to EBITDA, Adjusted EBITDA, and Adjusted Net Income

For the Year Ending December 31, 2018

(In millions, excluding per share amounts)

(Unaudited)

 

 

 

Estimated Range
Full Year 2018 
(1)

 

Net Income

 

$

8.8

 

$

11.1

 

Adjustments:

 

 

 

 

 

Interest expense, net

 

36.0

 

36.0

 

Amortization of deferred financing costs and note discount

 

13.4

 

13.4

 

Income tax expense

 

9.5

 

12.9

 

Depreciation and accretion expense

 

123.8

 

125.1

 

Amortization of intangible assets

 

53.3

 

53.3

 

EBITDA 

 

$

244.8

 

$

251.8

 

 

 

 

 

 

 

Add Back:

 

 

 

 

 

Loss on disposal and impairment of assets

 

15.6

 

15.6

 

Share-based compensation expense

 

14.4

 

14.4

 

Acquisition-related expenses

 

2.7

 

2.7

 

Restructuring expenses

 

5.5

 

5.5

 

Adjusted EBITDA

 

$

283.0

 

$

290.0

 

Less:

 

 

 

 

 

Interest expense, net

 

36.0

 

36.0

 

Depreciation and accretion expense

 

123.8

 

125.1

 

Income tax expense (2)

 

30.4

 

33.5

 

Adjusted Net Income

 

$

92.8

 

$

95.4

 

 

 

 

 

 

 

Adjusted Net Income per share — diluted

 

$

2.00

 

$

2.05

 

 

 

 

 

 

 

Weighted average shares outstanding — diluted

 

46.5

 

46.5

 

 


(1)             See Disclosure of Non-GAAP Financial Information in this earnings release for definitions of the non-GAAP measures included in this table.

(2)             Calculated using the Company’s estimated non-GAAP tax rate of approximately 25% to 26%, as adjusted for items excluded from Adjusted Net Income, see Disclosure of Non-GAAP Financial Information in this earnings release for further discussion.

 

Cardtronics is a registered trademark of Cardtronics plc and its subsidiaries.

All other trademarks are the property of their respective owners.

 

###

 

12