Global Axcess Corp Announces Third Quarter 2010 Financial Results
JACKSONVILLE, Fla., Nov. 9, 2010 /PRNewswire-FirstCall/ -- Global Axcess Corp (OTC Bulletin Board: GAXC; the "Company"), an independent provider of self-service kiosk solutions, today announced the financial results for the third quarter ended September 30, 2010.
Financial highlights for the quarter ended September 30, 2010 included:
|
$5.8 million |
|
|
$5.4 million |
|
|
$359,000 |
|
|
$350,000 |
|
|
$(446,000) |
|
|
$632,000 |
|
|
$42,000 |
|
|
$(96,000) |
|
|
$0.00 |
|
Financial highlights for the nine month period ended September 30, 2010 included:
|
$16.7 million |
|
|
$16.2 million |
|
|
$462,000 |
|
|
$1.2 million |
|
|
$(865,000) |
|
|
$2.3 million |
|
|
$814,000 |
|
|
$343,000 |
|
|
$0.01 |
|
Mr. George McQuain, Chief Executive Officer of the Company, stated, "We grew our top-line revenue by 8.5% primarily as a result of the response to our completed deployment of new DVD kiosks for the major grocery chain with whom Global Axcess signed a three-year contract to initially install 323 DVD kiosk locations. All 323 kiosks have been activated and are renting DVDs to customers and we are encouraged with the early rental volume even though marketing activity is not commencing until mid-November. DVD revenues increased 498% sequentially to approximately $359,000, albeit from a small base of approximately $60,000 in the second quarter 2010. Our heavy investments to complete the initial DVD kiosk installations, which included creating a temporary DVD infrastructure to operationally handle the launch, and to establish a robust DVD library resulted in a small net loss in the third quarter overall, which was not unexpected. However, the DVD business produced a positive gross margin during September and we expect the DVD business to be EBITDA positive by the end of 2010 and net income positive heading into 2011, in-line with our growth plans. Since the end of the quarter, we have begun to combine and integrate the DVD services infrastructure, overlaying these operations on top of our permanent ATM operations. These efforts will result in reduced operating expenses going forward. The major grocery store chain's current annual revenue run-rate is approximately $3.2 million and is ramping up on a weekly basis. With the majority of the initial expenditures behind us, we look forward to leveraging our investments as we grow our DVD business."
Third Quarter 2010 Financial Results
The Company reported revenues from continuing operations of $5.8 million for the three-month period ended September 30, 2010 an 8.7% increase compared to $5.3 million for the three-month period ended September 30, 2009. Core ATM revenue was approximately $5.4 million and revenues generated from the DVD rental kiosks were $359,105. Gross profit from continuing operations was $2.3 million, or 39.9% gross margin, for the third quarter of 2010 compared to $2.5 million, or 47.5% gross margin, for the same period of 2009. Approximately $417,000 of the increase in cost of revenues year over year related to the DVD business.
Operating expenses for the third quarter ended September 30, 2010 increased 18.9% to $2.3 million from $1.9 million in the year-ago period. The increase in SG&A expenses was mainly due to $285,953 of expenses incurred in connection with the DVD rental kiosk initiative. Depreciation expense increased due to increased ATM and DVD kiosks purchased during 2009 and 2010 to support new business in both business lines.
Operating income from continuing operations was $42,081 for the quarter ended September 30, 2010 compared to $623,343 in the year-ago period. During the third quarter of 2010, the Company recorded net interest expense of $137,915 compared to net interest expense of $147,299 for the same period in 2009. EBITDA (earnings before net interest, taxes, depreciation and amortization) for the third quarter of 2010 was $631,906, compared to $1.1 million in the third quarter of 2009. Adjusted EBITDA (EBITDA before stock compensation expenses and loss on early extinguishment of debt) was $686,194 for the third quarter of 2010 from $1.2 million for the third quarter of 2009. EBITDA represents a non-GAAP (Generally Accepted Accounting Principles) financial measure. A table reconciling this measure to the appropriate GAAP measure is included in this release.
Net loss for the third quarter ended September 30, 2010 was $95,834, or $0.00 per share (based on 22.0 million basic and diluted weighted average shares outstanding), which compares to net income of $476,044, or $0.02 per share (based on 21.9 million basic and 23.5 million diluted weighted average shares outstanding, respectively), for the same period of 2009.
Year-to-Date 2010 Financial Results
For the nine month period ended September 30, 2010, total revenue was $16.7 million, an increase of 3.5%, compared to $16.1 million for the same period of 2009. Core ATM revenue was approximately $16.2 million and revenues generated from DVD rental kiosks were $461,920. Gross profit for the nine month period ended September 30, 2010, was $7.3 million, reflecting a gross margin of 44.0%, compared to gross profit of $7.6 million, or a gross margin of 47.5%, for the comparable 2009 period. Approximately $577,000 of the increase in cost of revenues year over year related to the DVD business. Operating income from continuing operations for the nine months was $814,321, compared to $2.1 million for the same period of 2009. Net income for the nine months ended September 30, 2010, was $343,367, or $0.02 per basic share (based on 21.9 million basic weighted average shares outstanding) and $0.01 per diluted share (based on 23.5 million diluted weighted average shares outstanding), compared to net income for the same period of 2009 of $1.1 million, or $0.05 per share (based on 21.6 million basic and 22.4 million diluted weighted average shares outstanding, respectively). EBITDA was $2.3 million for the nine months ended September 30, 2010, as compared to $3.1 million for the nine months ended September 30, 2009. Adjusted EBITDA was $2.6 million for the nine months ended September 30, 2010, as compared to $3.6 million for the nine months ended September 30, 2009.
"The pipeline for our core ATM business continues to grow as well," Mr. McQuain continued. "The addition of another ATM salesperson during the previous quarter has allowed us to further penetrate this market as we continue to deliver our unparalleled level of service and quality to new, existing and expanded ATM customer relationships."
Balance Sheet and Cash Flows
Net cash provided by continuing operating activities during the nine-month period ended September 30, 2010 was $2.2 million compared to net cash provided by continuing operating activities of $3.3 million in the year-ago period. Shareholders' equity increased 3% to $17.1 million from $16.6 million at December 31, 2009.
Conference Call Information
Anyone interested in participating in the conference call scheduled for Wednesday, November 10, 2010 at 10 a.m. ET should call 800-723-6751 and enter pass code 1741255 if calling within the United States, or 785-830-7980 and pass code 1741255 if calling internationally, approximately 5 to 10 minutes prior to 10 a.m. There will be a playback available until November 18, 2010. To listen to the playback, please call 888-203-1112 if calling within the United States or 719-457-0820 if calling internationally. Please use pass code 1741255 for the replay. A transcript of the conference call will be available on the Company's website on August 16, 2010 or by calling Brett Maas of Hayden IR at 646-536-7331.
About Global Axcess Corp
Headquartered in Jacksonville, Florida, Global Axcess Corp was founded in 2001 with a mission to emerge as the leading independent provider of self-service kiosk services in the United States. The Company provides turnkey ATM and other self-service kiosk management solutions that include cash and inventory management, project and account management services. Global Axcess Corp currently owns, manages or operates more than 4,900 ATMs and other self-service kiosks in its national network spanning 43 states. For more information on the Company, please visit http://www.globalaxcess.biz. For more information on Nationwide Money Services, please visit http://www.nationwidemoney.com.
Investor Relations Contacts: |
|
Sharon Jackson: 904-395-1149 |
|
Hayden IR: |
|
Brett Maas or Jeff Stanlis: (646) 536-7331 |
|
This press release may contain forward-looking statements. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as: "believes," "expects," "may," "will," "should," or "anticipates," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Various important risks and uncertainties may cause the Company's actual results to differ materially from the results indicated by these forward-looking statements. For a list and description of the risks and uncertainties the Company faces, please refer to Part I, Item 1 of the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 3, 2010, and other filings that have been filed with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, and such statements are current only as of the date they are made.
- tables follow -
GLOBAL AXCESS CORP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(Unaudited) |
(Audited) |
||||||
September 30, 2010 |
December 31, 2009 |
||||||
ASSETS |
|||||||
Current assets |
|||||||
Cash and cash equivalents |
$ 2,285,290 |
$ 2,007,860 |
|||||
Automated teller machine vault cash |
250,000 |
250,000 |
|||||
Accounts receivable, net of allowance of $3,678 in 2010 and $12,616 in 2009 |
831,638 |
845,000 |
|||||
Inventory, net of allowance for obsolescence of $82,572 in 2010 and $94,572 in 2009 |
982,231 |
308,031 |
|||||
Deferred tax asset - current |
868,848 |
868,848 |
|||||
Prepaid expenses and other current assets |
202,966 |
132,100 |
|||||
Total current assets |
5,420,973 |
4,411,839 |
|||||
Fixed assets, net |
9,067,043 |
5,299,661 |
|||||
Other assets |
|||||||
Merchant contracts, net |
10,190,858 |
10,665,613 |
|||||
Intangible assets, net |
4,166,740 |
4,095,911 |
|||||
Deferred tax asset - non-current |
813,618 |
813,618 |
|||||
Restricted cash |
- |
800,000 |
|||||
Other assets |
72,807 |
30,307 |
|||||
Total assets |
$ 29,732,039 |
$ 26,116,949 |
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Current liabilities |
|||||||
Accounts payable and accrued liabilities |
$ 3,960,330 |
$ 2,983,583 |
|||||
Automated teller machine vault cash payable |
250,000 |
250,000 |
|||||
Notes payable - related parties - current portion, net |
28,955 |
26,722 |
|||||
Notes payable - current portion |
21,222 |
19,803 |
|||||
Senior lenders' notes payable - current portion, net |
1,980,412 |
1,828,572 |
|||||
Capital lease obligations - current portion |
444,740 |
667,233 |
|||||
Total current liabilities |
6,685,659 |
5,775,913 |
|||||
Long-term liabilities |
|||||||
Notes payable - related parties - long-term portion, net |
51,254 |
72,690 |
|||||
Notes payable - long-term portion |
57,132 |
73,120 |
|||||
Senior lenders' notes payable - long-term portion, net |
5,652,933 |
3,300,000 |
|||||
Capital lease obligations - long-term portion |
216,866 |
329,314 |
|||||
Total liabilities |
12,663,844 |
9,551,037 |
|||||
Stockholders' equity |
|||||||
Preferred stock; $0.001 par value; 5,000,000 shares |
|||||||
authorized, no shares issued and outstanding |
- |
- |
|||||
Common stock; $0.001 par value; 45,000,000 shares authorized, |
|||||||
22,237,861 and 21,931,786 shares issued and 22,084,836 and 21,883,924 shares |
|||||||
outstanding at 09/30/10 and 12/31/09, respectively |
22,133 |
21,932 |
|||||
Additional paid-in capital |
23,129,595 |
22,900,880 |
|||||
Accumulated deficit |
(6,001,567) |
(6,344,934) |
|||||
Treasury stock; 153,025 and 47,862 shares of common stock at cost |
|||||||
at 09/30/10 and 12/31/09, respectively |
(81,966) |
(11,966) |
|||||
Total stockholders' equity |
17,068,195 |
16,565,912 |
|||||
Total liabilities and stockholders' equity |
$ 29,732,039 |
$ 26,116,949 |
|||||
GLOBAL AXCESS CORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||
For the Three Months Ended |
||||||
September 30, 2010 |
September 30, 2009 |
|||||
Revenues |
$ 5,779,313 |
$ 5,314,857 |
||||
Cost of revenues |
3,473,994 |
2,787,699 |
||||
Gross profit |
2,305,319 |
2,527,158 |
||||
Operating expenses |
||||||
Depreciation expense |
382,160 |
303,864 |
||||
Amortization of intangible merchant contracts |
207,665 |
201,790 |
||||
Selling, general and administrative |
1,619,125 |
1,367,182 |
||||
Stock compensation expense |
54,288 |
30,979 |
||||
Total operating expenses |
2,263,238 |
1,903,815 |
||||
Operating income from continuing operations |
||||||
before items shown below |
42,081 |
623,343 |
||||
Interest expense, net |
(137,915) |
(147,299) |
||||
Net Income (loss) |
$ (95,834) |
$ 476,044 |
||||
Income (loss) per common share - basic: |
||||||
Net Income (loss) per common share |
0.00 |
$ 0.02 |
||||
Income (loss) per common share - diluted: |
||||||
Net Income (loss) per common share |
0.00 |
$ 0.02 |
||||
Weighted average common shares outstanding: |
||||||
Basic |
21,954,030 |
21,883,924 |
||||
Diluted |
21,954,030 |
23,471,284 |
||||
GLOBAL AXCESS CORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
||||||
For the Nine Months Ended |
||||||
September 30, 2010 |
September 30, 2009 |
|||||
Revenues |
$ 16,666,296 |
$ 16,098,699 |
||||
Cost of revenues |
9,328,022 |
8,457,522 |
||||
Gross profit |
7,338,274 |
7,641,177 |
||||
Operating expenses |
||||||
Depreciation expense |
1,013,260 |
863,206 |
||||
Amortization of intangible merchant contracts |
606,329 |
590,474 |
||||
Selling, general and administrative |
4,747,697 |
3,994,416 |
||||
Stock compensation expense |
156,667 |
86,064 |
||||
Total operating expenses |
6,523,953 |
5,534,160 |
||||
Operating income from continuing operations |
||||||
before items shown below |
814,321 |
2,107,017 |
||||
Interest expense, net |
(368,808) |
(509,789) |
||||
Loss on early extinguishment of debt |
(102,146) |
(467,391) |
||||
Net Income |
$ 343,367 |
$ 1,129,837 |
||||
Income per common share - basic: |
||||||
Net Income per common share |
$ 0.02 |
$ 0.05 |
||||
Income per common share - diluted: |
||||||
Net Income per common share |
$ 0.01 |
$ 0.05 |
||||
Weighted average common shares outstanding: |
||||||
Basic |
21,930,267 |
21,579,475 |
||||
Diluted |
23,481,861 |
22,442,190 |
||||
GLOBAL AXCESS CORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|||||||
For the Nine Months Ended |
|||||||
September 30, 2010 |
September 30, 2009 |
||||||
Cash flows from operating activities: |
|||||||
Income from continuing operations |
$ 343,367 |
$ 1,129,837 |
|||||
Adjustments to reconcile net income from continuing operations |
|||||||
to net cash provided by continuing operating activities: |
|||||||
Stock based compensation |
156,667 |
86,064 |
|||||
Stock options issued to consultants in lieu of cash compensation |
- |
16,063 |
|||||
Loss on early extinguishment of debt |
61,508 |
467,391 |
|||||
Depreciation expense |
1,013,260 |
863,206 |
|||||
Amortization of intangible merchant contracts |
606,329 |
590,474 |
|||||
Amortization of capitalized loan fees |
25,250 |
21,706 |
|||||
Allowance for doubtful accounts |
12,824 |
(1,707) |
|||||
Allowance for inventory obsolescence |
(12,000) |
47,227 |
|||||
Non-cash interest income on swap agreement with senior lender |
- |
(7,921) |
|||||
Accretion of discount on notes payable |
- |
47,211 |
|||||
Changes in operating assets and liabilities: |
|||||||
Change in automated teller machine vault cash |
- |
(250,000) |
|||||
Change in accounts receivable |
538 |
47,728 |
|||||
Change in inventory |
(722,804) |
(247,818) |
|||||
Change in prepaid expenses and other current assets |
(70,866) |
40,186 |
|||||
Change in other assets |
(42,500) |
(21,075) |
|||||
Change in intangible assets, net |
(157,587) |
(70,696) |
|||||
Change in accounts payable and accrued liabilities |
976,747 |
247,533 |
|||||
Change in automated teller machine vault cash payable |
- |
250,000 |
|||||
Net cash provided by continuing operating activities |
2,190,733 |
3,255,409 |
|||||
Cash flows from investing activities: |
|||||||
Costs of acquiring merchant contracts |
(131,574) |
(81,141) |
|||||
Purchase of property and equipment |
(4,459,354) |
(628,365) |
|||||
Net cash used in investing activities |
(4,590,928) |
(709,506) |
|||||
Cash flows from financing activities: |
|||||||
Proceeds from issuance of common stock |
2,249 |
9,100 |
|||||
Proceeds from senior lenders' notes payable |
8,083,407 |
5,000,000 |
|||||
Proceeds from notes payable |
710,533 |
69,905 |
|||||
Change in restricted cash |
800,000 |
(800,000) |
|||||
Principal payments on senior lenders' notes payable |
(5,578,634) |
(5,814,286) |
|||||
Principal payments on notes payable |
(725,102) |
(7,208) |
|||||
Principal payments on notes payable - related parties |
(19,203) |
(17,139) |
|||||
Principal payments on capital lease obligations |
(595,625) |
(648,702) |
|||||
Net cash provided by (used in) financing activities |
2,677,625 |
(2,208,330) |
|||||
Increase in cash |
277,430 |
337,573 |
|||||
Cash, beginning of period |
2,007,860 |
1,560,910 |
|||||
Cash, end of the period |
$ 2,285,290 |
$ 1,898,483 |
|||||
Cash paid for interest |
$ 345,942 |
$ 447,764 |
|||||
The following table sets forth a reconciliation of net income (loss) from continuing operations to EBITDA from continuing operations for the three months ended September 30, 2010 and 2009:
For the Three Months Ended |
||||
September 30, 2010 |
September 30, 2009 |
|||
Net income (loss) from continuing operations |
$ (95,834) |
$ 476,044 |
||
Interest expense, net |
137,915 |
147,299 |
||
Depreciation expense |
382,160 |
303,864 |
||
Amortization of intangible merchant contracts |
207,665 |
201,790 |
||
EBITDA from continuing operations |
$ 631,906 |
$ 1,128,997 |
||
The following table sets forth a reconciliation of net income from continuing operations to EBITDA from continuing operations for the nine months ended September 30, 2010 and 2009:
For the Nine Months Ended |
||||
September 30, 2010 |
September 30, 2009 |
|||
Net income from continuing operations |
$ 343,367 |
$ 1,129,837 |
||
Interest expense, net |
368,808 |
509,789 |
||
Depreciation expense |
1,013,260 |
863,206 |
||
Amortization of intangible merchant contracts |
606,329 |
590,474 |
||
EBITDA from continuing operations |
$ 2,331,764 |
$ 3,093,306 |
||
The following table sets forth a reconciliation of net income (loss) from continuing operations to EBITDA from continuing operations before stock compensation expense ("Adjusted EBITDA") for the three months ended September 30, 2010 and 2009:
For the Three Months Ended |
||||
September 30, 2010 |
September 30, 2009 |
|||
Net income (loss) from continuing operations |
$ (95,834) |
$ 476,044 |
||
Interest expense, net |
137,915 |
147,299 |
||
Depreciation expense |
382,160 |
303,864 |
||
Amortization of intangible merchant contracts |
207,665 |
201,790 |
||
Stock compensation expense |
54,288 |
30,979 |
||
Adjusted EBITDA |
$ 686,194 |
$ 1,159,976 |
||
The following table sets forth a reconciliation of net income from continuing operations to EBITDA from continuing operations before stock compensation expense and loss on early extinguishment of debt ("Adjusted EBITDA") for the nine months ended September 30, 2010 and 2009:
For the Nine Months Ended |
||||
September 30, 2010 |
September 30, 2009 |
|||
Net income from continuing operations |
$ 343,367 |
$ 1,129,837 |
||
Interest expense, net |
368,808 |
509,789 |
||
Depreciation expense |
1,013,260 |
863,206 |
||
Amortization of intangible merchant contracts |
606,329 |
590,474 |
||
Stock compensation expense |
156,667 |
86,064 |
||
Loss on early extinguishment of debt |
102,146 |
467,391 |
||
Adjusted EBITDA |
$ 2,590,577 |
$ 3,646,761 |
||
The following table summarizes our revenue, gross profit, SG&A, depreciation and amortization, operating income, net income and EBITDA by segment for the periods indicated:
For the Three Months Ended |
For the Nine Months Ended |
|||||||
September 30, 2010 |
September 30, 2009 |
September 30, 2010 |
September 30, 2009 |
|||||
Revenue: |
||||||||
ATM Services |
$ 5,420,208 |
$ 5,309,319 |
$ 16,204,376 |
$ 16,093,161 |
||||
DVD Services |
359,105 |
5,538 |
461,920 |
5,538 |
||||
Consolidated revenue |
$ 5,779,313 |
$ 5,314,857 |
$ 16,666,296 |
$ 16,098,699 |
||||
Gross profit: |
||||||||
ATM Services |
$ 2,373,072 |
$ 2,531,236 |
$ 7,468,870 |
$ 7,651,255 |
||||
DVD Services |
(67,753) |
(4,078) |
(130,596) |
(10,078) |
||||
Consolidated gross profit |
$ 2,305,319 |
$ 2,527,158 |
$ 7,338,274 |
$ 7,641,177 |
||||
SG&A: |
||||||||
ATM Services |
$ 1,333,172 |
$ 1,302,815 |
$ 4,146,725 |
$ 3,928,516 |
||||
DVD Services |
285,953 |
64,367 |
600,972 |
65,900 |
||||
Consolidated SG&A |
$ 1,619,125 |
$ 1,367,182 |
$ 4,747,697 |
$ 3,994,416 |
||||
Depreciation & Amortization: |
||||||||
ATM Services |
$ 497,223 |
$ 500,351 |
$ 1,486,529 |
$ 1,448,377 |
||||
DVD Services |
92,602 |
5,303 |
133,060 |
5,303 |
||||
Consolidated depreciation & amortization |
$ 589,825 |
$ 505,654 |
$ 1,619,589 |
$ 1,453,680 |
||||
Operating income (loss): |
||||||||
ATM Services |
$ 488,389 |
$ 697,091 |
$ 1,678,949 |
$ 2,188,298 |
||||
DVD Services |
(446,308) |
(73,748) |
(864,628) |
(81,281) |
||||
Consolidated operating income |
$ 42,081 |
$ 623,343 |
$ 814,321 |
$ 2,107,017 |
||||
Net income (loss): |
||||||||
ATM Services |
$ 350,474 |
$ 549,792 |
$ 1,207,995 |
$ 1,211,118 |
||||
DVD Services |
(446,308) |
(73,748) |
(864,628) |
(81,281) |
||||
Consolidated net income (loss) |
$ (95,834) |
$ 476,044 |
$ 343,367 |
$ 1,129,837 |
||||
EBITDA: |
||||||||
ATM Services |
$ 985,612 |
$ 1,197,442 |
$ 3,063,332 |
$ 3,169,284 |
||||
DVD Services |
(353,706) |
(68,445) |
(731,568) |
(75,978) |
||||
Consolidated EBITDA |
$ 631,906 |
$ 1,128,997 |
$ 2,331,764 |
$ 3,093,306 |
||||
(Unaudited) |
(Audited) |
|||||||
September 30, |
December 31, |
|||||||
2010 |
2009 |
|||||||
Assets: |
||||||||
ATM Services |
$ 24,720,353 |
$ 25,627,067 |
||||||
DVD Services |
5,011,686 |
489,882 |
||||||
Consolidated assets |
$ 29,732,039 |
$ 26,116,949 |
||||||
SOURCE Global Axcess Corp
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