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Jul 28, 2016
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

Cardtronics is a registered trademark of Cardtronics plc
All other trademarks are the property of their respective owners.


 


  
      
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