May 3, 2017
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Cardtronics Announces First Quarter 2017 Results

HOUSTON, May 03, 2017 (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 March 31, 2017.

Key financial statistics in the first quarter of 2017 as compared to the first quarter of 2016 include:

"The completion of the largest acquisition in our history contributed to 22% constant-currency revenue growth in the quarter. However, first quarter revenue and earnings were negatively impacted by a series of transitory operating challenges. The operating issues were directly related to software and system conversions in the U.S. and Australia. The results were broadly anticipated, and we believe that we are beginning to move past these challenges. Completing the acquisitions of DCPayments and Spark ATM Systems builds a more diversified business across geographies and customers, and accelerates our journey into expanding services to financial institutions in the year that we exit the U.S. portion of our 7-Eleven relationship. These acquisitions, in combination with other ongoing initiatives, provide the foundation for creating growth and long term shareholder value. We view the first quarter as the most challenging of the year from a financial perspective and reaffirm guidance for the full year," commented Steve Rathgaber, Cardtronics' chief executive officer.

RECENT HIGHLIGHTS

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

FIRST QUARTER RESULTS

Consolidated revenues totaled $357.6 million for the first quarter of 2017, representing an 18% increase from $303.2 million in the first quarter of 2016, driven by acquisitions completed during the first quarter. ATM operating revenues were up 17% from the first quarter of 2016. Adjusting for movements in currency exchange rates, ATM operating revenues were up 21% from the first quarter of 2016.

ATM operating revenues in North America decreased 1% in the first quarter of 2017, while ATM operating revenues in Europe & Africa decreased 8% compared to the same period in 2016, adversely impacted by movements in foreign currency exchange rates. On a constant-currency basis, ATM operating revenues in Europe & Africa increased 5%, or 4% excluding acquisitions. The appreciation in the U.S. dollar relative to the British pound significantly impacted the Company's reported revenues and profits in the first quarter. The British pound was on average 13% weaker relative to the U.S. dollar during the first quarter of 2017 compared to the same period a year ago.

The DCPayments acquisition, which includes its operations in Australia, New Zealand, Canada, the U.K., and Mexico, contributed $58.9 million in ATM operating revenues and $18.5 million in gross profit to the quarterly results from the acquisition date of January 6, 2017.

GAAP Net Loss in the first quarter of 2017 was $0.9 million compared to GAAP Net Income of $15.4 million during the first quarter of 2016. The GAAP Net Loss was the result of the incurrence of $8.2 million of restructuring expenses during the quarter, as these costs related mostly to employee severance costs, in conjunction with the Company's cost reduction initiative. Additionally, the Company incurred $8.5 million during the first quarter related primarily to professional services associated with the completion and integration of the acquisitions that closed during the first quarter. Also, related to the recently completed acquisitions, the Company's amortization of intangible assets expense was up $5.9 million from the first quarter 2016. Finally, the Company recognized impairments on certain of its long-lived assets and disposals during the quarter, resulting in $3.2 million of loss being recorded. The intangible asset amortization expense along with the restructuring, asset impairment and acquisition-related expenses have been excluded from the Company's calculation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share in the first quarter of 2017. The Company's GAAP tax rate was 76.8% for the first quarter of 2017 compared to 34.1% in the same period in 2016. The tax rate in the first quarter of 2017 is significantly higher than the same period in 2016 due to $2.4 million of excess tax benefits recognized related to share-based compensation when applied to the Loss before income taxes of $3.8 million.

Adjusted EBITDA for the first quarter of 2017 totaled $71.2 million ($74.0 million on a constant-currency basis) compared to $73.2 million of Adjusted EBITDA during the first quarter of 2016. The decrease in Adjusted EBITDA was driven by changes in currency exchange rates and lower revenues in the U.S., coupled with higher operating costs primarily associated with the Company's U.S. fleet upgrade. The contributions from the acquisition of DCPayments and Spark partially offset these decreases. Adjusted Net Income totaled $25.5 million ($0.55 per diluted share or $0.57 on a constant-currency basis) for the first quarter of 2017, compared to $31.3 million ($0.68 per diluted share) during the first quarter of 2016. The decrease in Adjusted Net Income was largely attributable to the factors discussed above and increased depreciation expense associated with the recent acquisitions and the Company's U.S. fleet upgrade, and incremental interest expense as a result of the additional borrowings under the revolving credit facility in conjunction with the recently completed acquisitions.

LIQUIDITY

The Company had outstanding borrowings of approximately $505 million, resulting in approximately $95 million in available borrowing capacity under its $600 million revolving credit facility due in 2021. Additionally, the Company had $40 million in cash as of March 31, 2017. The Company's other outstanding indebtedness as of March 31, 2017 included $250 million in Senior Notes due 2022 and $288 million Convertible Senior Notes due 2020. The Senior Notes and Convertible Senior Notes had carrying balances of $247 million and $244 million, respectively, and are reflected as long-term debt on the balance sheet, net of unamortized discount and capitalized debt issuance costs.

As of March 31, 2017, the Company's outstanding borrowings under the revolving credit facility increased due to additional borrowings that were used to fund the DCPayments acquisition in January 2017. Subsequent to the end of the quarter, on April 4, 2017, in a private placement offering, the Company issued $300 million in aggregate principal amount of 5.50% Senior Notes due 2025 (the "2025 Notes"). The net proceeds received from the offering of the 2025 Notes, after the payment of the related expenses, were used to repay a portion of the outstanding borrowings under the revolving credit facility. Subsequent to the issuance of the 2025 Notes, the revolving credit facility was amended to decrease the borrowing capacity from $600 million to $400 million. The revolving credit facility was also amended to include an accordion provision enabling an additional potential borrowing capacity of approximately $100 million under certain conditions.

2017 GUIDANCE

Below is the Company's financial guidance for the full year 2017:

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 earnings release. This guidance is based on average foreign currency exchange rates for the year of £1.00 U.K. to $1.20 U.S., $20.00 Mexican pesos to $1.00 U.S., $1.00 Canadian dollar to $0.76 U.S., €1.00 Euros to $1.05 U.S., $1.00 Australian dollar to $0.74 U.S., and R14.29 South African Rand to $1.00 U.S. Additionally, this guidance is based on an estimated non-GAAP tax rate of approximately 28% for the remainder of 2017.

Included in the guidance above is the assumption that the deinstallations of the ATMs at 7-Eleven locations in the U.S. will begin during the third quarter of 2017 and be substantially complete by the end of the year, with a small number of units expected to continue to operate into the first quarter of 2018. Additionally, the guidance assumes that Allpoint and the Citibank brand will come off the 7-Eleven ATMs during the second half of 2017. 7-Eleven in the U.S. accounted for approximately 18% of the Company's consolidated revenues for the year ended 2016. The Company estimates that the incremental gross margin associated with these revenues is approximately 45%, compared to the Company's reported consolidated gross margin of 36% in 2016. While the ATM deinstallation schedule remains subject to change as of the date of this earnings release, the Company currently estimates that the approximate revenue impact associated with the deinstallations is approximately $50 million to $70 million and the approximate impact to gross margin will be approximately $30 million to $35 million in 2017.

CONFERENCE CALL INFORMATION

The Company will host a conference call today, Wednesday, May 3, 2017, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its financial results for the quarter ended March 31, 2017. 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 First Quarter 2017 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 Wednesday, May 17, 2017, and can be accessed by calling (855) 859-2056 or (404) 537-3406 and entering 2108926 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 May 31, 2017.

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 233,000 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 card holders' surcharge-free cash access, Cardtronics is convenient access to cash, when and where consumers need it. Cardtronics is where cash meets commerce.

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

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 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. 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 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 2016 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. 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

EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share, Free Cash Flow, and certain GAAP as well as 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 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 (loss) 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"). Prior to June 30, 2016, Adjusted Net Income was calculated using an estimated long-term, cross-jurisdictional effective cash tax rate of 32%. Subsequent to the redomicile of the Company's parent company to the U.K., the Company revised the process for determining its non-GAAP tax rate and now utilizes a non-GAAP tax rate derived from the GAAP tax rate adjusted for the net tax effects of the Adjustments, based on the nature and geography of the Adjustments. For the quarter ended March 31, 2017, the non-GAAP tax rate used to calculate Adjusted Net Income was approximately 28.2%. For the quarter ended March 31, 2016, the Company used its previous estimated long-term cross-jurisdictional tax rate of 32%. 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 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 (loss) 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 Months Ended March 31, 2017 and 2016
(In thousands, excluding share, per share amounts, and percentages)
         
  Three Months Ended
  March 31, 
  2017  % Change 2016 
  (Unaudited)
Revenues:         
ATM operating revenues $ 341,788  17.0 %$ 292,088 
ATM product sales and other revenues   15,784  41.4    11,159 
Total revenues   357,572  17.9    303,247 
Cost of revenues:        
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets reported separately below.)   231,927  24.7    185,940 
Cost of ATM product sales and other revenues   14,635  47.3    9,933 
Total cost of revenues   246,562  25.9    195,873 
Gross profit   111,010  3.4    107,374 
Gross profit %  31.0%    35.4%
Operating expenses:        
Selling, general, and administrative expenses   41,949  12.2    37,399 
Redomicile-related expenses   760  (87.4)   6,036 
Restructuring expenses   8,243  n/m   — 
Acquisition and divestiture-related expenses   8,456  433.8    1,584 
Depreciation and accretion expense   29,121  28.4    22,677 
Amortization of intangible assets   15,180  63.9    9,263 
Loss on disposal and impairment of assets   3,194  736.1    382 
Total operating expenses   106,903  38.2    77,341 
Income from operations   4,107  (86.3)   30,033 
Other expense:        
Interest expense, net   6,557  46.0    4,492 
Amortization of deferred financing costs and note discount   2,976  7.0    2,782 
Other income   (1,580) 184.7    (555)
Total other expense   7,953  18.4    6,719 
(Loss) income before income taxes   (3,846) (116.5)   23,314 
Income tax (benefit) expense   (2,952) (137.1)   7,955 
Effective tax rate  76.8%    34.1%
Net (loss) income   (894) (105.8)   15,359 
Net income (loss) attributable to noncontrolling interests   7  n/m   (25)
Net (loss) income attributable to controlling interests and available to common shareholders $ (901) (105.9)%$ 15,384 
         
Net (loss) income per common share — basic $ (0.02)   $ 0.34 
Net (loss) income per common share — diluted $ (0.02)   $ 0.34 
         
Weighted average shares outstanding — basic   45,490,461      45,073,654 
Weighted average shares outstanding — diluted   45,490,461      45,703,488 
           


Condensed Consolidated Balance Sheets
As of March 31, 2017 and December 31, 2016
(In thousands)
       
  March 31, 2017 December 31, 2016
  (Unaudited)   
ASSETS      
Current assets:      
Cash and cash equivalents $ 40,245 $ 73,534
Accounts and notes receivable, net   99,113   84,156
Inventory, net   13,323   12,527
Restricted cash   46,977   32,213
Prepaid expenses, deferred costs, and other current assets   73,364   67,107
Total current assets   273,022   269,537
Property and equipment, net   480,959   392,735
Intangible assets, net   297,926   121,230
Goodwill   883,221   533,075
Deferred tax asset, net   8,916   13,004
Prepaid expenses, deferred costs, and other noncurrent assets   38,824   35,115
Total assets $ 1,982,868 $ 1,364,696
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities:      
Current portion of other long-term liabilities $ 27,283 $ 28,237
Accounts payable and other accrued and current liabilities   328,908   285,583
Total current liabilities   356,191   313,820
Long-term liabilities:      
Long-term debt   996,172   502,539
Asset retirement obligations   53,263   45,086
Deferred tax liability, net   52,100   27,625
Other long-term liabilities   65,874   18,691
Total liabilities   1,523,600   907,761
Shareholders' equity   459,268   456,935
Total liabilities and shareholders' equity $ 1,982,868 $ 1,364,696
       


SELECTED STATEMENT OF OPERATIONS DETAIL:
(Unaudited)
          
Total revenues by segment:Three Months Ended
 March 31, 
 2017  % Change 2016 
 (In thousands, excluding percentages)
North America         
ATM operating revenues$ 197,827    (1.3)% $ 200,454 
ATM product sales and other revenues  10,226    6.1     9,638 
North America total revenues  208,053    (1.0)    210,092 
Europe & Africa         
ATM operating revenues  79,704    (7.9)    86,585 
ATM product sales and other revenues  1,529    9.6     1,395 
Europe & Africa total revenues  81,233    (7.7)    87,980 
DCPayments         
ATM operating revenues  58,861   n/m    — 
ATM product sales and other revenues  3,770   n/m    — 
DCPayments total revenues  62,631   n/m    — 
Corporate & Other         
ATM operating revenues  10,071    (8.5)    11,012 
ATM product sales and other revenues  290    130.2     126 
Corporate & Other total revenues  10,361    (7.0)    11,138 
          
Eliminations  (4,706)   (21.1)    (5,963)
          
Total ATM operating revenues  341,788    17.0     292,088 
Total ATM product sales and other revenues  15,784    41.4     11,159 
Total revenues$ 357,572    17.9 % $ 303,247 
             


          
Breakout of ATM operating revenues:Three Months Ended
 March 31, 
 2017 % Change 2016
 (In thousands, excluding percentages)
Surcharge revenues$ 154,255   32.0 % $ 116,837
Interchange revenues  113,651   6.2     107,042
Bank-branding and surcharge-free network revenues  46,407   (1.2)    46,963
Managed services revenues  15,616   76.7     8,839
Other revenues  11,859   (4.4)    12,407
Total ATM operating revenues$ 341,788   17.0 % $ 292,088
           


          
Total gross profit by segment:Three Months Ended
 March 31, 
 2017 % Change 2016
 (In thousands, excluding percentages)
North America$ 63,491   (14.1)% $ 73,954
Europe & Africa  27,000   (10.3)    30,115
DCPayments  18,530  n/m    —
Corporate & Other  1,989   (39.8)    3,305
Total gross profit$ 111,010   3.4 % $ 107,374
           


          
Breakout of cost of ATM operating revenues         
(exclusive of depreciation, accretion, and amortization of intangible assets):Three Months Ended
 March 31, 
 2017 % Change 2016
 (In thousands, excluding percentages)
Merchant commissions$ 114,107   29.1% $ 88,395
Vault cash rental  18,652   8.0    17,273
Other costs of cash  28,571   41.0    20,269
Repairs and maintenance  21,309   23.2    17,303
Communications  9,144   20.1    7,612
Transaction processing  6,004   66.7    3,602
Employee costs  18,947   7.6    17,606
Other expenses  15,193   9.5    13,880
Total cost of ATM operating revenues$ 231,927   24.7% $ 185,940
          


          
Breakout of selling, general, and administrative expenses:Three Months Ended
 March 31, 
 2017 % Change 2016
 (In thousands, excluding percentages)
Employee costs$ 24,815   20.1 % $ 20,665
Share-based compensation expense  2,240   (26.6)    3,051
Professional fees  5,947   4.1     5,714
Other expenses  8,947   12.3     7,969
Total selling, general, and administrative expenses$ 41,949   12.2 % $ 37,399
           


          
Depreciation and accretion expense by segment:Three Months Ended
 March 31, 
 2017 % Change 2016
 (In thousands, excluding percentages)
North America$ 13,768   14.8% $ 11,996
Europe & Africa  9,238   1.6    9,096
DCPayments  4,231  n/m    —
Corporate & Other  1,884   18.9    1,585
Total depreciation and accretion expense$ 29,121   28.4% $ 22,677
          


SELECTED BALANCE SHEET DETAIL:
(Unaudited, excluding December 31, 2016)
      
Long-term debt:March 31, 2017 December 31, 2016
 (In thousands)
Revolving credit facility$ 504,900 $ 14,100
1.00% Convertible senior notes (1)  243,737   241,068
5.125% Senior notes (1)  247,535   247,371
Total long-term debt$ 996,172 $ 502,539
      
(1) The Company's 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 $43.8 million and $46.4 million as of March 31, 2017 and December 31, 2016, 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 Company's 5.125% Senior Notes due 2022 with a face value of $250.0 million are presented net of capitalized debt issuance costs of $2.5 million and $2.6 million as of March 31, 2017 and December 31, 2016, respectively.
      


Share count rollforward:  
   
Total shares outstanding as of December 31, 2016  45,326,430
Shares issued — stock options exercised  400
Shares vested — restricted stock units  298,944
Total shares outstanding as of March 31, 2017  45,625,774


SELECTED CASH FLOW DETAIL:
(Unaudited)
       
Selected cash flow statement amounts: Three Months Ended
  March 31, 
  2017  2016 
  (In thousands)
Cash provided by operating activities $ 10,449  $ 44,654 
Cash used in investing activities   (525,638)   (11,756)
Cash provided by (used in) financing activities   483,201    (34,041)
Effect of exchange rate changes on cash   (1,301)   (105)
Net decrease in cash and cash equivalents   (33,289)   (1,248)
Cash and cash equivalents as of beginning of period   73,534    26,297 
Cash and cash equivalents as of end of period $ 40,245  $ 25,049 
         


Key Operating Metrics — Including Acquisitions in All Periods Presented
For Three Months Ended March 31, 2017 and 2016
(Unaudited)
          
  Three Months Ended
  March 31, 
  2017  2016
Average number of transacting ATMs:         
United States   45,166     39,295 
DCPayments   18,645     — 
United Kingdom and Ireland   16,323     15,808 
South Africa   2,333     — 
Canada   1,781     1,853 
Germany, Poland, and Spain   1,425     1,127 
Mexico   860     1,391 
Total Company-owned   86,533     59,474 
United States (1)   12,620     17,455 
DCPayments   3,553     — 
Total Merchant-owned   16,173     17,455 
Average number of transacting ATMs — ATM operations   102,706     76,929 
          
Managed Services and Processing:         
United States   123,576     113,129 
DCPayments   3,070     — 
Canada   2,004     1,524 
Average number of transacting ATMs — Managed services and processing   128,650     114,653 
          
  Total average number of transacting ATMs   231,356     191,582 
          
Total transactions (in thousands):         
ATM operations   362,314     313,131 
Managed services and processing, net   246,581     170,879 
Total transactions   608,895     484,010 
          
Total cash withdrawal transactions (in thousands):         
ATM operations   234,244     192,086 
          
Per ATM per month amounts (excludes managed services and processing):    % Change    
Cash withdrawal transactions   760 -8.7%   832 
          
ATM operating revenues (2) $ 1,035 -14.9% $ 1,216 
Cost of ATM operating revenues (3)   714 -9.6%   790 
ATM operating gross profit (2) (3) $ 321 -24.6% $ 426 
          
ATM operating gross profit margin (2) (3)   31.0%    35.0%
          
(1) Certain ATMs previously reported in this category are now included in the United States: Managed services and processing or United States: Company-owned categories.
(2) ATM operating revenues and Cost of ATM operating revenues relating to managed services, processing, ATM equipment sales, and other ATM-related services are not included in this calculation.
(3) Amounts presented exclude the effect of depreciation, accretion, and amortization of intangible assets, which is reported separately in the Company's Consolidated Statements of Operations.
          


Key Operating Metrics — Excluding Acquisitions in All Periods Presented
For Three Months Ended March 31, 2017 and 2016
(Unaudited)
          
  Three Months Ended
  March 31, 
  2017  2016
Average number of transacting ATMs:         
United States   42,786     39,295 
United Kingdom and Ireland   16,323     15,808 
Canada   1,781     1,853 
Germany, Poland, and Spain   1,425     1,127 
Mexico   860     1,391 
Total Company-owned   63,175     59,474 
United States (1)   12,620     17,455 
Total Merchant-owned   12,620     17,455 
Average number of transacting ATMs — ATM operations   75,795     76,929 
          
Managed Services and Processing:         
United States   123,576     113,129 
Canada   2,004     1,524 
Average number of transacting ATMs — Managed services and processing   125,580     114,653 
          
  Total average number of transacting ATMs   201,375     191,582 
          
Total transactions (in thousands):         
ATM operations   312,504     313,131 
Managed services and processing, net   163,442     170,879 
Total transactions   475,946     484,010 
          
Total cash withdrawal transactions (in thousands):         
ATM operations   195,288     192,086 
          
Per ATM per month amounts (excludes managed services and processing):    % Change    
Cash withdrawal transactions   859 3.2%   832 
          
ATM operating revenues (2) $ 1,133 -6.8% $ 1,216 
Cost of ATM operating revenues (3)   753 -4.7%   790 
ATM operating gross profit (2) (3) $ 380 -10.8% $ 426 
          
ATM operating gross profit margin (2) (3)   33.5%    35.0%
          
(1) Certain ATMs previously reported in this category are now included in the United States: Managed services and processing or United States: Company-owned categories.
(2) ATM operating revenues and Cost of ATM operating revenues relating to managed services, processing, ATM equipment sales, and other ATM-related services are not included in this calculation.
(3) Amounts presented exclude the effect of depreciation, accretion, and amortization of intangible assets, which is reported separately in the Company's Consolidated Statements of Operations.
          


Key Operating Metrics — Ending Machine Count
As of March 31, 2017 and 2016
(Unaudited)
     
  March 31, 2017 March 31, 2016
Ending number of transacting ATMs:    
United States  45,119  40,088
DCPayments  18,503  —
United Kingdom and Ireland  16,405  15,928
South Africa  2,342  —
Canada  1,775  1,862
Germany, Poland, and Spain  1,483  1,130
Mexico  636  1,380
Total Company-owned  86,263  60,388
United States  12,437  16,828
DCPayments  3,597  —
Total Merchant-owned  16,034  16,828
Ending number of transacting ATMs — ATM operations  102,297  77,216
     
United States  125,596  116,011
DCPayments  3,152  —
Canada  2,084  1,648
Ending number of transacting ATMs — Managed services and processing  130,832  117,659
     
Total ending number of transacting ATMs  233,129  194,875
     


Reconciliation of Net (Loss) Income Attributable to Controlling Interests and Available to Common Shareholders to EBITDA, Adjusted EBITDA, and Adjusted Net Income
For the Three Months Ended March 31, 2017 and 2016
 (Unaudited) 
       
  Three Months Ended
  March 31, 
  2017  2016 
  (In thousands, excluding share and per share amounts)
Net (loss) income attributable to controlling interests and available to common shareholders $ (901) $ 15,384 
Adjustments:      
Interest expense, net   6,557    4,492 
Amortization of deferred financing costs and note discount   2,976    2,782 
Income tax (benefit) expense   (2,952)   7,955 
Depreciation and accretion expense   29,121    22,677 
Amortization of intangible assets   15,180    9,263 
EBITDA  $ 49,981  $ 62,553 
       
Add back:      
Loss on disposal and impairment of assets   3,194    382 
Other income (1)   (1,580)   (555)
Noncontrolling interests (2)   (4)   (18)
Share-based compensation expense   2,197    3,168 
Acquisition and divestiture-related expenses (3)   8,456    1,584 
Redomicile-related expenses (4)   760    6,036 
Restructuring expenses (5)   8,243    — 
Adjusted EBITDA $ 71,247  $ 73,150 
Less:      
Interest expense, net   6,557    4,492 
Depreciation and accretion expense (6)   29,118    22,669 
  Adjusted pre-tax income $ 35,572  $ 45,989 
Income tax expense (7)   10,031    14,716 
Adjusted Net Income $ 25,541  $ 31,273 
       
Adjusted Net Income per share $ 0.56  $ 0.69 
Adjusted Net Income per diluted share $ 0.55  $ 0.68 
       
Weighted average shares outstanding — basic   45,490,461    45,073,654 
Weighted average shares outstanding — diluted (8)   46,226,190    45,703,488 
         
(1) Includes foreign currency translation gains/losses 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) Acquisition and divestiture-related expenses include costs incurred for professional and legal fees and certain other transition and integration-related costs.
(4) Expenses associated with the Company's redomicile of its parent company to the U.K., which was completed on July 1, 2016.
(5) Restructuring expenses primarily related to employee severance costs associated with a corporate reorganization and broad initiative to reduce costs.
(6) Amounts exclude a portion of the expenses incurred by one of the Company's Mexican subsidiaries to account for the amounts allocable to the noncontrolling interest shareholders.
(7) Calculated using an effective tax rate of approximately 28.2% for the three months ended March 31, 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. For the three months ended March 31, 2016, the Company used its previous estimated long-term cross-jurisdictional tax rate of 32%. See Disclosure of Non-GAAP Financial Information in this earnings release for further discussion.
(8) Consistent with the positive Adjusted Net Income, the Adjusted Net Income per diluted share amounts have been calculated using the diluted shares outstanding that would have resulted from positive GAAP Net Income.
         


Reconciliation of GAAP Revenue to Constant-Currency Revenue
For the Three Months Ended March 31, 2017 and 2016
(Unaudited)
                   
Europe & Africa revenue: Three Months Ended
  March 31, 
  2017 2016 % Change
  U.S.
GAAP
 Foreign
Currency
Impact
 Constant -
Currency
 U.S.
GAAP
 U.S.
GAAP
 Constant -
Currency
  (In thousands)      
ATM operating revenues $ 79,704 $ 11,471 $ 91,175 $ 86,585  (7.9)% 5.3%
ATM product sales and other revenues   1,529   198   1,727   1,395  9.6   23.8 
Total revenues $ 81,233 $ 11,669 $ 92,902 $ 87,980  (7.7)% 5.6%
                    


                   
Consolidated revenue: Three Months Ended
  March 31, 
  2017 2016 % Change
  U.S.
GAAP
 Foreign
Currency
Impact
 Constant -
Currency
 U.S.
GAAP
 U.S.
GAAP
 Constant -
Currency
  (In thousands)      
ATM operating revenues $ 341,788 $ 11,460 $ 353,248 $ 292,088  17.0%  20.9%
ATM product sales and other revenues   15,784   198   15,982   11,159  41.4   43.2 
Total revenues $ 357,572 $ 11,658 $ 369,230 $ 303,247  17.9%  21.8%
                   


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 Months Ended March 31, 2017 and 2016
 (Unaudited) 
   
  Three Months Ended
  March 31, 
  2017 2016 % Change
  Non -
GAAP (1)
 Foreign
Currency
Impact
 Constant -
Currency
 Non -
GAAP (1)
 Non -
GAAP (1)
 Constant -
Currency
  (In thousands)      
Adjusted EBITDA $ 71,247 $ 2,731 $ 73,978 $ 73,150  (2.6)%  1.1 %
                   
Adjusted Net Income $ 25,541 $ 1,031 $ 26,572 $ 31,273  (18.3)%  (15.0)%
                   
Adjusted Net Income per diluted share (2) $ 0.55 $ 0.02 $ 0.57 $ 0.68  (19.1)%  (16.2)%
                     
(1) As reported on the Company's Reconciliation of Net (Loss) 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 46,226,190 and 45,703,488 for the three months ended March 31, 2017 and 2016, respectively. Consistent with the positive Adjusted Net Income, the Adjusted Net Income per diluted share amounts have been calculated using the diluted shares outstanding that would have resulted from positive GAAP Net Income.
                     


Reconciliation of Free Cash Flow
For the Three Months Ended March 31, 2017 and 2016
(Unaudited)
       
  Three Months Ended
  March 31, 
  2017  2016 
  (In thousands)
Cash provided by operating activities $ 10,449  $ 44,654 
Payments for capital expenditures:      
Cash used in investing activities, excluding acquisitions and divestitures   (38,561)   (16,451)
Free cash flow $ (28,112) $ 28,203 
         


Reconciliation of Estimated Net Income to EBITDA, Adjusted EBITDA, and Adjusted Net Income
For the Year Ending December 31, 2017
(In millions, excluding share and per share amounts)
(Unaudited)
       
  Estimated Range
Full Year 2017 (1)
Net Income $  $ 
Adjustments:   45.0   50.0
Interest expense, net   35.0   34.0
Amortization of deferred financing costs and note discount   13.0   13.0
Income tax expense   14.0   16.0
Depreciation and accretion expense (2)   110.0   113.0
Amortization of intangible assets   67.0   70.0
EBITDA  $ 284.0 $ 296.0
       
Add Back:      
Share-based compensation expense   18.0   20.0
Restructuring expenses   8.2   8.2
Redomicile-related expenses   0.8   0.8
Acquisition-related expenses   10.0   10.0
Loss on disposal and impairment of assets   4.0   5.0
Adjusted EBITDA $ 325.0 $ 340.0
Less:      
Interest expense, net   35.0   34.0
Depreciation and accretion expense   110.0   113.0
Income tax expense (3)   50.4   54.0
Adjusted Net Income $ 129.6 $ 139.0
       
Adjusted Net Income per diluted share $ 2.80 $ 3.00
       
Weighted average shares outstanding — diluted   46.35   46.35
       
(1) See Disclosure of Non-GAAP Financial Information in this earnings release for definitions of the non-GAAP measures included in this table.
(2) Noncontrolling interests adjustment made such that Adjusted EBITDA includes only the Company's ownership interest in the Adjusted EBITDA of its Mexico subsidiary.
(3) Calculated using the Company's estimated non-GAAP tax rate of approximately 28%, as adjusted for items excluded from Adjusted Net Income, see Disclosure of Non-GAAP Financial Information in this earnings release for further discussion.
       

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