UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): August 2, 2018

 

Cardtronics plc

(Exact name of registrant as specified in its charter)

 

England and Wales

 

001-37820

 

98-1304627

(State or other jurisdiction of
incorporation)

 

(Commission File Number)

 

(IRS Employer Identification
No.)

 

3250 Briarpark Drive, Suite 400, Houston, Texas

 

77042

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (832) 308-4000

 


 

Not Applicable

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 



 

Item 2.02. Results of Operations and Financial Condition.

 

On August 2, 2018, Cardtronics plc issued a press release regarding its financial results for the quarter ended June 30, 2018. A copy of the press release has been attached hereto as Exhibit 99.1 and is incorporated herein by reference. This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and pursuant to Item 2.02 of Form 8-K, will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1

 

Press release dated August 2, 2018

 

2



 

EXHIBIT INDEX

 

Exhibit
Number

 

Description of the Exhibit

99.1

 

Press release dated August 2, 2018

 

3



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

CARDTRONICS PLC

 

 

 

 

 

By:

/s/ Paul A. Gullo

 

 

Paul A. Gullo

 

 

Chief Accounting Officer

 

 

 

Dated: August 2, 2018

 

 

 

4


Exhibit 99.1

 

CARDTRONICS ANNOUNCES SECOND QUARTER 2018 RESULTS

 

Same-store Transaction Growth in the U.S. and Strong Operational Execution Worldwide

Company Raises Full Year Outlook

 

HOUSTON, August 2, 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 June 30, 2018.

 

Second Quarter 2018 Highlights:

 

·                  Total revenues of $341.0 million, down 12% from $385.1 million in the prior year and up 3% after excluding the impact from the removal of ATMs at 7-Eleven locations in the U.S.

·                  ATM operating revenues of $329.2 million, down 12% from $373.3 million in the prior year and up 3% after excluding the impact from the removal of ATMs at 7-Eleven locations in the U.S.

·                  Adjusted gross margin of 33.9%, up 80 basis points compared to the prior year.

·                  GAAP Net Income of $3.8 million, or $0.08 per diluted share, compared to $15.2 million, or $0.33 per diluted share in the prior year, driven by the removal of ATMs at 7-Eleven locations in the U.S. and an asset write-down in the second quarter of 2018.

·                  Adjusted EBITDA of $78.1 million, down 11% from $87.7 million in the prior year, impacted by the removal of ATMs at 7-Eleven locations in the U.S.

·                  Adjusted Net Income per diluted share of $0.61 compared to $0.76 in the prior year, impacted by the removal of ATMs at 7-Eleven locations in the U.S.

·                  Same-store withdrawal transactions in the U.S. were up 8% in the second quarter; adjusted for estimated 7-Eleven Allpoint volume retention, same-store transactions were up approximately 4%.

·                  Recent favorable announcement by LINK in the U.K. regarding previously scheduled future interchange rate reductions on surcharge-free withdrawal transactions.

 

“The second quarter was solid and marked by focused operational execution and continued consumer demand for our convenient services, resulting in strong adjusted free cash flow and an increase in our adjusted gross margin. Another highlight for the quarter was the growth in our same-store withdrawal transactions in the U.S., which were at their highest quarterly level in over six years. This transaction growth was driven by the power of our network of conveniently located ATMs, including our surcharge-free Allpoint network, and reflects the value that we provide to retailers, financial institutions, and consumers. We also saw positive signs in the U.K. in recent months, with improving transactions and more clarity and improvement on future pricing on the majority of our revenues in that region,” commented Edward H. West, Cardtronics’ chief executive officer.

 

Mr. West continued, “Looking ahead, we are encouraged by recent developments across our markets and our ability to further leverage our unmatched platform of conveniently located ATM assets.”

 

Note Regarding Second 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 second quarter of 2018. The Company estimates that 7-Eleven in the U.S. accounted for approximately 14% of the Company’s consolidated revenues during the second 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 $1.28 billion to $1.32 billion;

·                  GAAP Net Income of $1.2 million to $5.0 million;

·                  Adjusted EBITDA of $270 million to $280 million;

·                  Depreciation and accretion expense of $126.5 million to $127.5 million;

·                  Cash interest expense of $36.5 million;

·                  Adjusted Net Income of $79 million to $86 million;

·                  Adjusted Net Income per diluted share of $1.70 to $1.85, 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 $1.30 U.S., $20.00 Mexican pesos to $1.00 U.S., $1.00 Canadian dollar to $0.78 U.S., €1.00 Euros to $1.15 U.S., $1.00 Australian dollar to $0.77 U.S., and R13 South African Rand to $1.00 U.S.

 

CONFERENCE CALL INFORMATION

 

The Company will host a conference call today, Thursday, August 2, 2018, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its financial results for the quarter ended June 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 Second 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, August 9, 2018, and can be accessed by calling (855) 859-2056 or (404) 537-3406 and entering 1946179 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, 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)

 

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 230,000 ATMs in North America, Europe, Asia-Pacific, and Africa. Whether Cardtronics is driving foot traffic for top retailers, enhancing ATM brand presence for card issuers or expanding cardholders’ surcharge-free cash access, Cardtronics is convenient access to cash, when and where consumers need it. Cardtronics is where cash meets commerce.

 

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 2017 Form 10-K, 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 24.5% and 25.1% for the three and six months ended June 30, 2018, respectively, and 27.7% and 27.9%

 

3



 

for the three and six months ended June 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 Six Months Ended June 30, 2018 and 2017

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

(Unaudited)

 

 

 

Three Months Ended
June 30, 

 

Six Months Ended
June 30, 

 

 

 

2018

 

% Change

 

2017

 

2018

 

% Change

 

2017

 

Revenues: 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATM operating revenues

 

$

329,221

 

(11.8

)%

$

373,260

 

$

648,952

 

(9.2

)%

$

715,048

 

ATM product sales and other revenues

 

11,766

 

(0.7

)

11,852

 

28,219

 

2.1

 

27,636

 

Total revenues

 

340,987

 

(11.5

)

385,112

 

677,171

 

(8.8

)

742,684

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

215,353

 

(12.6

)

246,484

 

430,843

 

(9.9

)

478,411

 

Cost of ATM product sales and other revenues

 

10,086

 

(9.3

)

11,116

 

22,848

 

(11.3

)

25,751

 

Total cost of revenues

 

225,439

 

(12.5

)

257,600

 

453,691

 

(10.0

)

504,162

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

40,928

 

(5.8

)

43,470

 

82,668

 

(3.2

)

85,419

 

Redomicile-related expenses

 

 

n/m

 

 

 

n/m

 

760

 

Restructuring expenses

 

2,063

 

n/m

 

 

4,476

 

(45.7

)

8,243

 

Acquisition and divestiture-related expenses

 

913

 

(77.1

)

3,993

 

2,633

 

(78.8

)

12,449

 

Depreciation and accretion expense

 

31,764

 

6.8

 

29,755

 

62,806

 

6.7

 

58,876

 

Amortization of intangible assets

 

13,498

 

(11.5

)

15,247

 

27,269

 

(10.4

)

30,427

 

Loss on disposal and impairment of assets

 

9,697

 

n/m

 

669

 

15,117

 

n/m

 

3,863

 

Total operating expenses

 

98,863

 

6.2

 

93,134

 

194,969

 

(2.5

)

200,037

 

Income from operations

 

16,685

 

(51.5

)

34,378

 

28,511

 

(25.9

)

38,485

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

9,159

 

(3.2

)

9,460

 

18,333

 

14.5

 

16,017

 

Amortization of deferred financing costs and note discount

 

3,355

 

6.6

 

3,146

 

6,663

 

8.8

 

6,122

 

Other (income) expense

 

(2,187

)

n/m

 

1,945

 

(27

)

n/m

 

365

 

Total other expense

 

10,327

 

(29.0

)

14,551

 

24,969

 

11.0

 

22,504

 

Income before income taxes

 

6,358

 

(67.9

)

19,827

 

3,542

 

(77.8

)

15,981

 

Income tax expense

 

2,586

 

(44.6

)

4,670

 

2,555

 

48.7

 

1,718

 

Effective tax rate

 

40.7

%

 

 

23.6

%

72.1

%

 

 

10.8

%

Net income

 

3,772

 

(75.1

)

15,157

 

987

 

(93.1

)

14,263

 

Net income (loss) attributable to noncontrolling interests

 

5

 

n/m

 

(1

)

(12

)

n/m

 

6

 

Net income attributable to controlling interests and available to common shareholders

 

$

3,767

 

(75.1

)%

$

15,158

 

$

999

 

(93.0

)%

$

14,257

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share — basic

 

$

0.08

 

 

 

$

0.33

 

$

0.02

 

 

 

$

0.31

 

Net income per common share — diluted

 

$

0.08

 

 

 

$

0.33

 

$

0.02

 

 

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

45,927,732

 

 

 

45,637,778

 

45,880,661

 

 

 

45,564,527

 

Weighted average shares outstanding — diluted

 

46,378,813

 

 

 

46,222,112

 

46,357,776

 

 

 

46,272,191

 

 

5



 

Condensed Consolidated Balance Sheets

As of June 30, 2018 and December 31, 2017

(In thousands)

 

 

 

June 30, 2018

 

December 31, 2017

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

40,252

 

$

51,370

 

Accounts and notes receivable, net

 

88,355

 

105,245

 

Inventory, net

 

14,516

 

14,283

 

Restricted cash

 

72,997

 

48,328

 

Prepaid expenses, deferred costs, and other current assets

 

106,484

 

96,106

 

Total current assets

 

322,604

 

315,332

 

Property and equipment, net

 

461,210

 

497,902

 

Intangible assets, net

 

177,553

 

209,862

 

Goodwill

 

760,780

 

774,939

 

Deferred tax asset, net

 

6,708

 

6,925

 

Prepaid expenses, deferred costs, and other noncurrent assets

 

71,481

 

57,756

 

Total assets

 

$

1,800,336

 

$

1,862,716

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of other long-term liabilities

 

$

22,039

 

$

31,370

 

Accounts payable and other accrued and current liabilities

 

339,458

 

351,180

 

Total current liabilities

 

361,497

 

382,550

 

Long-term liabilities:

 

 

 

 

 

Long-term debt

 

878,423

 

917,721

 

Asset retirement obligations

 

56,715

 

59,920

 

Deferred tax liability, net

 

42,250

 

37,130

 

Other long-term liabilities

 

64,480

 

75,002

 

Total liabilities

 

1,403,365

 

1,472,323

 

Shareholders’ equity

 

396,971

 

390,393

 

Total liabilities and shareholders’ equity

 

$

1,800,336

 

$

1,862,716

 

 

6



 

SELECTED BALANCE SHEET DETAIL:

 

Long-term debt:

 

 

 

June 30, 2018

 

December 31, 2017

 

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

(Unaudited)

 

 

 

Revolving credit facility

 

$

76,805

 

$

122,461

 

1.00% Convertible senior notes (1)

 

257,659

 

251,973

 

5.125% Senior notes (1)

 

248,385

 

248,038

 

5.50% Senior notes (1)

 

295,574

 

295,249

 

Total long-term debt

 

$

878,423

 

$

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 $29.8 million and $35.5 million as of June 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 $1.6 million and $2.0 million as of June 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 $4.4 million and $4.8 million as of June 30, 2018 and December 31, 2017, respectively.

 

SELECTED CASH FLOW DETAIL (Unaudited):

 

Selected cash flow statement amounts:

 

 

 

Three Months Ended
June 30, 

 

Six Months Ended
June 30,

 

 

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

Net cash provided by operating activities

 

$60,342

 

$73,621

 

$109,775

 

$96,329

 

Net cash used in investing activities

 

(25,943

)

(31,307

)

(46,682

)

(554,470

)

Net cash (used in) provided by financing activities

 

(38,591

)

(26,864

)

(47,986

)

456,337

 

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

 

(2,242

)

(2,580

)

(1,558

)

(3,743

)

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

 

(6,434

)

12,870

 

13,549

 

(5,547

)

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

 

119,800

 

87,330

 

99,817

 

105,747

 

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

 

$113,366

 

$100,200

 

$113,366

 

$100,200

 

 

7



 

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

For the Three and Six Months Ended June 30, 2018 and 2017

(In thousands, excluding share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended
June 30, 

 

Six Months Ended
June 30, 

 

 

 

2018

 

2017

 

2018

 

2017

 

Net income attributable to controlling interests and available to common shareholders

 

$

3,767

 

$

15,158

 

$

999

 

$

14,257

 

Adjustments:

 

 

 

 

 

 

 

 

 

Interest expense, net

 

9,159

 

9,460

 

18,333

 

16,017

 

Amortization of deferred financing costs and note discount

 

3,355

 

3,146

 

6,663

 

6,122

 

Income tax expense

 

2,586

 

4,670

 

2,555

 

1,718

 

Depreciation and accretion expense

 

31,764

 

29,755

 

62,806

 

58,876

 

Amortization of intangible assets

 

13,498

 

15,247

 

27,269

 

30,427

 

EBITDA 

 

$

64,129

 

$

77,436

 

$

118,625

 

$

127,417

 

 

 

 

 

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

Loss on disposal and impairment of assets

 

9,697

 

669

 

15,117

 

3,863

 

Other (income) expense (1)

 

(2,187

)

1,945

 

(27

)

365

 

Noncontrolling interests (2)

 

18

 

(6

)

19

 

(10

)

Share-based compensation expense

 

3,513

 

3,623

 

5,958

 

5,820

 

Restructuring expenses (3)

 

2,063

 

 

4,476

 

9,003

 

Acquisition and divestiture-related expenses (4)

 

913

 

3,993

 

2,633

 

12,449

 

Adjusted EBITDA

 

$

78,146

 

$

87,660

 

$

146,801

 

$

158,907

 

Less:

 

 

 

 

 

 

 

 

 

Interest expense, net

 

9,159

 

9,460

 

18,333

 

16,017

 

Depreciation and accretion expense (5)

 

31,764

 

29,754

 

62,805

 

58,872

 

Adjusted pre-tax income

 

$

37,223

 

$

48,446

 

$

65,663

 

$

84,018

 

Income tax expense (6)

 

9,120

 

13,418

 

16,481

 

23,449

 

Adjusted Net Income

 

$

28,103

 

$

35,028

 

$

49,182

 

$

60,569

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income per share — basic

 

$

0.61

 

$

0.77

 

$

1.07

 

$

1.33

 

Adjusted Net Income per share — diluted

 

$

0.61

 

$

0.76

 

$

1.06

 

$

1.31

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding — basic

 

45,927,732

 

45,637,778

 

45,880,661

 

45,564,527

 

Weighted average shares outstanding — diluted

 

46,378,813

 

46,222,112

 

46,357,776

 

46,272,191

 

 


(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)

Includes employee severance and other costs incurred in conjunction with a corporate reorganization and cost reduction initiative, and in the six months ended June 30, 2017, expenses associated with the Company’s redomicile of its parent company to the U.K., which was completed 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 six months ended June 30, 2018.

(5)

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.

(6)

For the three and six months ended June 30, 2018, the non-GAAP tax rate used to calculate Adjusted Net Income was approximately 24.5% and 25.1%, respectively, and 27.7% and 27.9% for the three and six months ended June 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.

 

8



 

Reconciliation of GAAP Revenue to Constant-Currency Revenue

For the Three and Six Months Ended June 30, 2018 and 2017

(In thousands, excluding percentages)

(Unaudited)

Consolidated revenue:

 

 

 

Three Months Ended
June 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

U.S.
GAAP

 

Foreign
Currency
Impact

 

Constant -
Currency

 

U.S.
GAAP

 

U.S.
GAAP

 

Constant -
Currency

 

ATM operating revenues

 

$

329,221

 

$

(7,977

)

$

321,244

 

$

373,260

 

(11.8

)%

(13.9

)%

ATM product sales and other revenues

 

11,766

 

(175

)

11,591

 

11,852

 

(0.7

)

(2.2

)

Total revenues

 

$

340,987

 

$

(8,152

)

$

332,835

 

$

385,112

 

(11.5

)%

(13.6

)%

 

 

 

Six Months Ended
June 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

U.S.
GAAP

 

Foreign
Currency
Impact

 

Constant -
Currency

 

U.S.
GAAP

 

U.S.
GAAP

 

Constant -
Currency

 

ATM operating revenues

 

$

648,952

 

$

(21,527

)

$

627,425

 

$

715,048

 

(9.2

)%

(12.3

)%

ATM product sales and other revenues

 

28,219

 

(498

)

27,721

 

27,636

 

2.1

 

0.3

 

Total revenues

 

$

677,171

 

$

(22,025

)

$

655,146

 

$

742,684

 

(8.8

)%

(11.8

)%

 

Europe & Africa revenue:

 

 

 

Three Months Ended
June 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

U.S.
GAAP

 

Foreign
Currency
Impact

 

Constant -
Currency

 

U.S.
GAAP

 

U.S.
GAAP

 

Constant -
Currency

 

ATM operating revenues

 

$

105,809

 

$

(6,444

)

$

99,365

 

$

100,946

 

4.8

%

(1.6

)%

ATM product sales and other revenues

 

2,041

 

(116

)

1,925

 

2,208

 

(7.6

)

(12.8

)

Total revenues

 

$

107,850

 

$

(6,560

)

$

101,290

 

$

103,154

 

4.6

%

(1.8

)%

 

 

 

Six Months Ended
June 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

U.S.
GAAP

 

Foreign
Currency
Impact

 

Constant -
Currency

 

U.S.
GAAP

 

U.S.
GAAP

 

Constant -
Currency

 

ATM operating revenues

 

$

201,990

 

$

(17,354

)

$

184,636

 

$

186,330

 

8.4

%

(0.9

)%

ATM product sales and other revenues

 

4,304

 

(359

)

3,945

 

4,071

 

5.7

 

(3.1

)

Total revenues

 

$

206,294

 

$

(17,713

)

$

188,581

 

$

190,401

 

8.3

%

(1.0

)%

 

Australia & New Zealand revenue:

 

 

 

Three Months Ended
June 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

U.S.
GAAP

 

Foreign
Currency
Impact

 

Constant -
Currency

 

U.S.
GAAP

 

U.S.
GAAP

 

Constant -
Currency

 

ATM operating revenues

 

$

29,024

 

$

(235

)

$

28,789

 

$

32,891

 

(11.8

)%

(12.5

)%

ATM product sales and other revenues

 

97

 

(1

)

96

 

74

 

31.1

 

29.7

 

Total revenues

 

$

29,121

 

$

(236

)

$

28,885

 

$

32,965

 

(11.7

)%

(12.4

)%

 

9



 

 

 

Six Months Ended
June 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

U.S.
GAAP

 

Foreign
Currency
Impact

 

Constant -
Currency

 

U.S.
GAAP

 

U.S.
GAAP

 

Constant -
Currency

 

ATM operating revenues

 

$

59,661

 

$

(1,325

)

$

58,336

 

$

64,384

 

(7.3

)%

(9.4

)%

ATM product sales and other revenues

 

155

 

(3

)

152

 

159

 

(2.5

)

(4.4

)

Total revenues

 

$

59,816

 

$

(1,328

)

$

58,488

 

$

64,543

 

(7.3

)%

(9.4

)%

 

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

For the Three and Six Months Ended June 30, 2018 and 2017

(In thousands, excluding percentages)

(Unaudited)

 

 

 

Three Months Ended
June 30, 

 

Six Months Ended
June 30, 

 

 

 

2018

 

2017

 

2018

 

2017

 

Total revenues

 

$

340,987

 

$

385,112

 

$

677,171

 

$

742,684

 

Total cost of revenues (1)

 

225,439

 

257,600

 

453,691

 

504,162

 

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

 

36,535

 

37,571

 

73,681

 

74,735

 

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

 

$

79,013

 

$

89,941

 

$

149,799

 

$

163,787

 

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

 

23.2

%

23.4

%

22.1

%

22.1

%

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

 

$

36,535

 

$

37,571

 

$

73,681

 

$

74,735

 

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

 

$

115,548

 

$

127,512

 

$

223,480

 

$

238,522

 

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

 

33.9

%

33.1

%

33.0

%

32.1

%

 


(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 Six Months Ended June 30, 2018 and 2017

(In thousands, excluding per share amounts and percentages)

(Unaudited)

 

 

 

Three Months Ended
June 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

Non -
GAAP
(1)

 

Foreign
Currency
Impact

 

Constant -
Currency

 

Non -
GAAP
(1)

 

Non -
GAAP
(1)

 

Constant -
Currency

 

Adjusted EBITDA

 

$

78,146

 

$

(2,263

)

$

75,883

 

$

87,660

 

(10.9

)%

(13.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

 

$

28,103

 

$

(944

)

$

27,159

 

$

35,028

 

(19.8

)%

(22.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income per share — diluted (2)

 

$

0.61

 

$

(0.02

)

$

0.59

 

$

0.76

 

(19.7

)%

(22.4

)%

 

 

 

 

Six Months Ended
June 30, 

 

 

 

2018

 

2017

 

% Change

 

 

 

Non -
GAAP
(1)

 

Foreign
Currency
Impact

 

Constant -
Currency

 

Non -
GAAP
(1)

 

Non -
GAAP
(1)

 

Constant -
Currency

 

Adjusted EBITDA

 

$

 146,801

 

$

 (5,895)

 

$

 140,906

 

$

 158,907

 

 (7.6)

%

 (11.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income

 

$

 49,182

 

$

 (2,333)

 

$

 46,849

 

$

 60,569

 

 (18.8)

%

 (22.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income per share — diluted (2)

 

$

 1.06

 

$

 (0.05)

 

$

 1.01

 

$

 1.31

 

 (19.1)

%

 (22.9

)%

 


(1)

As reported on the Company’s Reconciliation of Net Income 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 46,378,813 and 46,222,112 for the three months ended June 30, 2018 and 2017, respectively, and 46,357,776 and 46,272,191 for the six months ended June 30, 2018 and 2017, respectively.

 

Reconciliation of Adjusted Free Cash Flow

For the Three and Six Months Ended June 30, 2018 and 2017

(In thousands)

(Unaudited)

 

 

 

Three Months Ended
June 30, 

 

Six Months Ended
June 30, 

 

 

 

2018

 

2017

 

2018

 

2017

 

Net cash provided by operating activities

 

$

60,342

 

$

73,621

 

$

109,775

 

$

96,329

 

Restricted cash settlement activity

 

(1,111

)

510

 

(25,349

)

(11,749

)

Adjusted net cash provided by operating activities

 

59,231

 

74,131

 

84,426

 

84,580

 

Net cash used in investing activities, excluding acquisitions and divestitures

 

(25,943

)

(31,307

)

(46,682

)

(69,868

)

Adjusted free cash flow

 

$

33,288

 

$

42,824

 

$

37,744

 

$

14,712

 

 

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

 

$

1.2

 

$

5.0

 

Adjustments:

 

 

 

 

 

Interest expense, net

 

36.5

 

36.5

 

Amortization of deferred financing costs and note discount

 

13.4

 

13.4

 

Income tax expense

 

1.2

 

5.2

 

Depreciation and accretion expense

 

126.5

 

127.5

 

Amortization of intangible assets

 

53.6

 

54.0

 

EBITDA 

 

$

232.4

 

$

241.6

 

 

 

 

 

 

 

Add Back:

 

 

 

 

 

Loss on disposal and impairment of assets

 

15.1

 

15.1

 

Share-based compensation expense

 

14.4

 

15.2

 

Acquisition-related expenses

 

2.6

 

2.6

 

Restructuring expenses

 

5.5

 

5.5

 

Adjusted EBITDA

 

$

270.0

 

$

280.0

 

Less:

 

 

 

 

 

Interest expense, net

 

36.5

 

36.5

 

Depreciation and accretion expense

 

126.5

 

127.5

 

Income tax expense (2)

 

27.8

 

30.2

 

Adjusted Net Income

 

$

79.2

 

$

85.8

 

 

 

 

 

 

 

Adjusted Net Income per share — diluted

 

$

1.70

 

$

1.85

 

 

 

 

 

 

 

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 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