By Jeffrey Green (@epaymentsguy)
New-business acquisition in Europe, coupled with U.S. organic growth that was offset by the impact of severe weather conditions during the period, helped propel double-digit first-quarter revenue growth for ATM owner and manager Cardtronics Inc.
Total revenues for the period ended March 31 were $245.1 million, up 24 percent from $197.7 million during the same period last year. Net income attributable to controlling interests was up 2.1 percent, to $9.6 million from $9.4 million.
Cardtronics has found an ability to sell its services to issuers and merchants by showing how participation in its Allpoint surcharge-free ATM network and its ATM-branding option can help issuers drive more point-of-sale debit-interchange revenue. During a conference call with analysts to discuss the company’s first-quarter earnings, Steve Rathgaber, Cardtronics CEO, noted that debit card use and cash “go hand in hand,” and he provided two examples to illustrate the point.
One financial institution that signed up for Allpoint, he said, was able to drive both ATM and point-of-sale activity simultaneously. At first, the deal drove ATM transactions from “almost nothing” to more than 2,000 withdrawals per month, Rathgaber said.
However, in-store spend on purchases among the issuer’s debit cardholders rose to $275,000 per month from $31,500 previously,” Rathgaber said, noting the undisclosed issuer had a small card base. “While this is just a snapshot from one program, it illustrates that Cardtronics ATMs and products drive new traffic and incremental sales,” he said.
In another example he provided during the call, a regional bank branded 700 ATMs in one convenience-store chain, and in just over a year, the issuer’s cardholder spending in the chain increased to $3.25 million per month from $1.85 million, Rathgaber said. “This is a 76 percent increase in sales at the point of sale, from a card base that, absent our branding product, simply would not have happened in those store locations,” he said. “And that only tracks debit card spend, not cash or credit card spend, both of which would clearly lift the metrics.”
During the quarter, Cardtronics executed a contract with the East of England Co-op, a leading grocery store chain in the United Kingdom that deploys more than 100 ATMs. And it extended its deal with Tedeschi Food Shops, a leading U.S. convenience store chain, with the addition of 56 new store locations, bringing the total number of ATMs under the relationship to 186, the company noted in its earnings release.
The company formed a new ATM-branding relationship with CIBC, under which the bank will brand more than 100 ATMs at Pioneer Energy locations throughout Ontario, Canada. And it extended and expanded its relationship with Pioneer Energy in Canada, becoming Pioneer’s exclusive, full-service ATM provider. It previously provided ATM processing services to the petroleum retailer.
And earlier this quarter, Cardtronics renewed its ATM contract with Walgreens and its more than 3,000 locations, many of which carry a financial institution’s brand, Rathgaber noted on the call.
During the first quarter, Cardtronics’ ATM operating revenues totaled $238.1 million, up 23.1 percent from $193.4 million during the same period last year. ATM product sales and other revenues were $6.9 million, up 60.5 percent from $4.3 million, according to the company’s earnings release.
By region, U.S. revenues were up 9.4 percent, to $174 million from $159 million, while Europe revenues jumped 118 percent, to $64.4 million from $29.5 million. Other international revenues totaled $8.9 million, down 19.8 percent from $11.1 million, affected mainly by Mexico and Canada, whose sales-pipeline timing should improve in the second quarter, Rathgaber said on the call.
Surcharge revenues totaled $108.4 million, up 22.2 percent from $88.7 million, while interchange revenues rose 30.1 percent, to $80.4 million from $61.8 million. Bank-branding and surcharge-free network revenues totaled $37.6 million, up 10 percent from $34.1 million, while managed services revenues rose 15.6 percent to $5.2 million from $4.5 million.
The average number of transacting ATMs during the quarter was 55,599, down 1.1 percent from 56,207. Company-owned U.S. ATMs averaged 28,900, up 4.8 percent from 27,582, while merchant-owned ATMs in the region totaled 18,297, down 8.8 percent from 20,067. The average number of transacting ATMs in the UK was 4,638, up 1.3 percent from 4,314; in Mexico, 2,138, down 21 percent from 2,705; and Canada, 1,626, up 5.7 percent from 1,539.
Including new acquisitions during the quarter, the average number of transacting ATMs during the quarter was 67,818, up 20.7 percent from 56,207. Company-owned U.S. ATMs averaged 29,483, up 6.9 percent from 27,582, while merchant-owned ATMs in the region totaled 22,058, up 9.9 percent from 20,067. The average number of transacting ATMs in the UK was 11,653, up 170 percent from 4,314. Totals in Mexico and Canada remained unchanged.
Total transactions from ATM operations was 205.9 million, up 8.3 percent from 190.1 million, while managed services transaction totaled 13.5 million, up 126 percent from 10.4 million. Total transactions during the period were $219.4 million, up 9.4 percent from 200.6 million. Cash-withdrawal totaled 129.6 million, up 4.6 percent from 123.9 million.
When including new acquisitions, total transactions from ATM operations was 243.5 million, up 28.1 percent from 190.1 million, while managed services transaction totaled 17.5 million, up 68.3 percent from 10.4 million. Total transactions during the period were $261.1 million, up 30.2 percent from 200.6 million. Cash-withdrawal totaled 155.4 million, up 25.4 percent from 123.9 million.