If Cardtronics Inc. was a sports franchise, its owners would be singing the praises of the team’s “balanced attack” on offense and how it translates to victories.
In its actual business case, the Houston-based ATM independent sales organization can point to a balanced earnings report that produced solid first-quarter revenues.
ATM deals that unfolded during the second half of 2011 accounted for more than half of the 38% increase in first-quarter revenue Cardtronics generated this year, company executives told analysts during an April 30 earnings conference call.
But that balance came into play with “really strong” U.S. same-store ATM-transaction growth that the company viewed as the primary driver behind the quarter’s solid revenue numbers, Chris Brewster, Cardtronics chief financial officer, said during the call.
Cardtronics experienced 11% growth in U.S. same-store ATM withdrawals for the quarter from a year earlier, Brewster noted. When considering the company’s U.S. portfolio accounts for 80% of total revenues, the transaction-volume increase is significant, he added.
“That’s the highest growth rate we’ve reported on a same-store basis since we began tracking the statistic over seven years ago,” Brewster said.
The first-quarter transaction growth was six percentage points higher than a 5% increase reported in the fourth quarter of 2011, he noted. In breaking down that six-point increase, a few factors worked in Cardtronics’ favor, Brewster said.
He attributed a 2.5% increase to the mild winter across most of the country, a 1% increase to the extra day in February because of Leap Year, and a 1.5% increase to more consumers using ATMs to secure federal tax refunds loaded into prepaid card accounts.
Taking those factors into account, the “fundamental transaction trend may have improved about a percentage point” from the end of last year into the first quarter, Brewster surmised.
Among the key ATM deals in the second half of last year included Valero Energy Corp. and 7-Eleven locations in Canada.
The combination of growth in same-store transactions and revenue gains from acquisitions is “indicative of a healthy and respectable balanced approach to creating shareholder value” at Cardtronics, company CEO Steve Rathgaber said during the call.
Noting that the first-quarter earnings “exceeded expectations,” Rathgaber said the company is not prepared to view the increases as “a new normal,” citing Brewster’s explanation of how the numbers may have spiked to open 2012.
The first quarter demonstrated the strength of Cardtronics’ global sales engine, Rathgaber noted. Cardtronics continues to install ATMs at 900 Valero stores, at more than 500 7-Eleven locations in Canada, and at more than 600 locations for a gas-station franchise in the United Kingdom, he added.
In addition, Cardtronics made its first entry into the Dominican Republic this quarter in landing a deal to provide ATMs in post offices throughout the country, Rathgaber said.
Cardtronics reported $191 million in revenues for the quarter ended March 31, up 38.4% from $138 million a year earlier. Net income rose 53.8%, to $10 million from $6.5 million (see report).
ATM operating revenue rose 33.7%, to $177.8 million from $133 million, while ATM product sales and other revenues rose 169%, to $13.2 million from $4.9 million.
By segment, U.S. revenues totaled $157.9 million, up 43.2% from $110.3 million; United Kingdom revenues rose 19.5%, to $25.1 million from $21 million; and other international revenues rose 19.7%, to $7.9 million from $6.6 million.
Cardtronics has lowered expenses by locking in lower interest rates on the money it borrows from banks to supply cash for the ATMs, Brewster said. In addition, the company continues to prepare for the U.S. EMV smart card conversion by ensuring new ATMs can adapt to the new technology and existing units can be upgraded, he added.
ATM companies in general are doing well because banks are attempting to get consumer transactions out of bank branches and into more ATM locations, Gil Luria, analyst with Los Angeles-based Wedbush Securities, tells PaymentsSource.
“Banks are making deals with companies like Cardtronics because transactions are more expensive at the bank than at an ATM, so it’s an underlying trend,” Luria says.
In addition, consumers accepting tax refunds on prepaid cards represents another emerging trend, Luria notes. “People used to get tax refunds as a check, then they would go to the bank to cash it,” Luria says. “Now, they get it on a card, and go to the ATM to withdraw cash as needed.”
What do you think about this? Send us your feedback. Click Here.