NEWS RELEASE

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Nov 1, 2018
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, Nov. 01, 2018 (GLOBE NEWSWIRE) -- 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, 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.

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.

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
Brad Conrad
832-308-4000
ir@cardtronics.com
Corporate Communications Manager
Susannah Moore Griffin
832-308-4392
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-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.

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  
                                             
                                             

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


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  



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.
(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 ) %
                                           
                                           

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.
       

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.

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.
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Cardtronics

Source: Cardtronics USA, Inc.

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