Cardtronics Q207 Net Loss of $5.6 Million Due to Operational Expenses

Implications: Cardtronics net loss is due in part to higher depreciation expenses associated with additional ATM deployments in the United Kingdom and Mexico, as well as startup costs for its in-house transaction processing operation and expenses associated with strengthening its bank branding marketing program. Cardtronics average number of transacting ATMs totaled 25,484 machines which is down by 1.1% from 25,756 transacting ATMs in Q206. With the acquisition of the 7-Eleven portfolio of 5,500 ATMs and financial services kiosks for $135 million, Cardtronics owns and or operates approximately 30,728 machines in the U.S., Mexico and the U.K. Expenses associated with the 7-Eleven acquisition will continue to impact Cardtronics bottom line over the next 12-18 months, as Cardtronics works towards upgrading its ATMs for Triple-DES compliance and to replace older ATMs within its legacy fleet. Cardtronics ATM network ownership has increased with the 7-Eleven acquisition from 52%  to 61%. 

Analysis: Comments/Perspective:

Cardtronics is growing stronger through acquisitions and owns and or operates approximately 30,728 ATMs and financial services kiosks as a result of the 7-Eleven portfolio acquisition. Cardtronics also inked a 10-year replacement deal with 7-Eleven, which gives Cardtronics rights to install and operate ATMs and Vcom units (financial services kiosks) in existing 7-Eleven stores in the U.S., as well as new or acquired stores opened by 7-Eleven in the U.S.

1.  Due to increased transaction activity in Cardtronics Mexico and United Kingdom operations, Cardtronics average cash withdrawal transactions per ATM per month increased during Q207 and average revenues per ATM per month increased in Q207

2.  Cardtronics owns Cardtronics Mexico, Bank Machine Ltd. in the U.K. and the Allpoint surcharge-free ATM network in the U.S. Bank Machine Ltd. and Allpoint has teamed up to offer surcharge-free ATM access to Americans traveling in Europe

3.  Cardtronics has also inked several ATM branding deals with Chase, PNC, ING, Wells Fargo and other banks to provide surcharge-free ATM access to customers of Chase, PNC, ING, Wells Fargo and other clients

Cardtronics is positioning itself to grow its ATM network, benefit from its acquisition of the 7-Eleven portfolio and make investments in its legacy ATM fleet as well as invest in financial services kiosks, which will serve as a conduit to reach unbanked/underserved consumers in the future, for  bill payment transactions, mobile phone top-ups, check cashing, cash dispensing, prepaid card purchases and prepaid card reloads in a single integrated kiosk.