Global Axcess Corp Reports Fourth Quarter and Full-Year 2010 Revenues

JACKSONVILLE, Fla., March 29, 2011 /PRNewswire/ -- Global Axcess Corp (OTC Bulletin Board: GAXC; the "Company"), an independent provider of self-service kiosk solutions, today announced the financial results for the fourth quarter and fiscal year ended December 31, 2010.  The Company also is providing an update on the strategic initiatives put in place by new management and an outlook for the first quarter 2011 results.

"2010 results were disappointing and not acceptable," commented Michael I. Connolly, Co-Chief Executive Officer. "The outlook for 2011 is positive and, excluding severance and acquisition charges, will show a strong improvement in operating and financial results."

Lock Ireland, Vice Chairman of the Board of Directors and Co-Chief Executive Officer, commented, "The 2010 results we report today are in-line with our preliminary expectations announced in early March and are not satisfactory in the eyes of the board of directors. Given the 2010 results, we decided to undertake a number of actions to improve performance and profitability. The strategic initiatives we have put in place should increase the profitability of our ATM services business and accelerate the revenue from the DVD services business in the near term.  An internal program was developed in early March to revisit all contracts, recurring costs and revenues. In summary, I remain convinced that we are close to realizing the benefits of our strategic investments made to date."

Update on strategic and operational initiatives and first quarter performance:

• Update on ATM transactions: First quarter 2011 surcharge transactions are expected to be 8% above fourth quarter 2010 surcharge transactions.  January ATM surcharge transactions were 1% below December; February surcharge transactions were 11% above January; March surcharge transactions are anticipated to be 9% above February.
• The Company increased ATM surcharge fees to select ATMs to meet industry levels. The average surcharge fees per company-owned ATM after the increase was $2.80 per surcharged transaction compared to $2.58 prior to the increase.
• DVD services revenue from the Tejas acquisition is expected to contribute approximately $1,070,000 for the quarter.
• Total DVD services revenue for the first quarter of 2011 is expected to be a 52% increase over total fiscal year 2010 revenues in the DVD services business.
• Total ATM services revenue for the first quarter of 2011 is expected to be the highest quarterly revenue the Company has reported for its ATM services business.
• EBITDA contributed by the ATM acquisition in December 2010 is expected to be over $100,000 for the first quarter of 2011.
• Management executed a plan aimed at reducing field service costs which is expected to result in savings of $80,000 beginning the first quarter of 2011.

Michael Connolly added, "We are moving forward aggressively to optimize our DVD operations. One example is the deployment of higher capacity kiosks at the Tejas locations. We are also removing kiosks at unprofitable locations at the major grocery store chain and redeploying to maximize our kiosk returns. We are pleased to see the initial indicators of improving performance during the first quarter and we expect to report even stronger progress for the second quarter.  We expect March will yield us positive net income and expect those results to be a springboard for stronger operating and financial results for the second quarter."

Fourth Quarter 2010 Financial Results

The Company reported consolidated revenues of $6.1 million for the fourth quarter ended December 31, 2010, compared to $5.4 million for the fourth quarter ended December 31, 2009. This 12.6% increase was mainly due to approximately $790,000 of DVD rental revenue for the fourth quarter of 2010 compared to approximately $33,000 in the year-ago period. Gross profit was $2.0 million, or 33.7% gross margin, for the fourth quarter ended December 31, 2010, compared to gross profit of $2.5 million, or 47% gross margin, for the same period of 2009.

During the fourth quarter of 2010, the Company reported an impairment of long-lived assets charge of approximately $482,000 from the accelerated depreciation on the company's first generation branded DVD kiosks that the company has determined will be taken out of service and sold by December 31, 2011.

Operating loss was $1.2 million for the fourth quarter ended December 31, 2010, compared to net income from operations of approximately $548,000 for the fourth quarter ended December 31, 2009. During the fourth quarter of 2010, the Company recorded net interest expense of approximately $153,000, compared to net interest expense of approximately $136,000 for the same period of 2009. The increase was mainly due to an increase in debt. EBITDA (earnings before net interest, taxes, depreciation and amortization) for the fourth quarter of 2010 was approximately $(416,000), compared to $1.1 million for the fourth quarter of 2009.

Adjusted EBITDA (EBITDA before stock compensation expenses, impairment of assets and loss on early extinguishment of debt) was approximately $126,000 for the fourth quarter of 2010 compared to $1.1 million for the fourth quarter of 2009. EBITDA and adjusted EBITDA represent non-GAAP (Generally Accepted Accounting Principles) financial measures. A table reconciling these measures to the appropriate GAAP measures is included in this release.

Net loss for the fourth quarter ended December 31, 2010 was $1.2 million, or $0.05 loss per basic and diluted share, respectively (based on 22.1 million basic and diluted weighted average shares outstanding), which compares to net income of $1.7 million, or $0.08 per basic and $0.07 per diluted share (based on 21.9 million basic and 23.6 million diluted weighted average shares outstanding, respectively), for the same period of 2009. Excluding the income tax benefit, net income would have been approximately $405,000 in the same period in 2009.  

Fiscal Year 2010 Financial Results

For the fiscal year ended December 31, 2010, total revenue was $22.7 million, an increase of 5.8%, compared to $21.5 million for the same period of 2009. Gross profit for the fiscal year ended December 31, 2010 was $9.4 million, or 41.3% gross margin, compared to $10.2 million, reflecting a gross margin of 47.4% for the comparable 2009 period. Operating loss from operations for the full year of 2010 was approximately $434,000 compared to operating income of $2.7 million for the same period of 2009. Net loss for the fiscal year ended December 31, 2010 was approximately $854,000, or $(0.04) loss per basic and diluted share (based on 22.0 million basic and diluted weighted average shares outstanding) compared to net income of $2.8 million, or $0.13 and $0.12 per basic and diluted share (based on 21.7 and 22.8 million basic and diluted weighted average shares outstanding, respectively) for the fiscal year ended December 31, 2009. Excluding a $1.3 million income tax benefit, net income would have been $1.5 million for fiscal year 2009. EBITDA decreased to $1.9 million for the fiscal year ended December 31, 2010 from $4.1 million for the fiscal year ended December 31, 2009. Adjusted EBITDA decreased to $2.7 million for the fiscal year ended December 31, 2010 from $4.7 million for the fiscal year ended December 31, 2009.

Balance Sheet and Cash Flows

The Company ended fiscal 2010 with $1.7 million in cash, compared to $2.8 million of cash and restricted cash at the end of fiscal 2009.

Net cash provided by operating activities during the fiscal year ended December 31, 2010 was $2.4 million, compared to net cash provided by operating activities of $4.4 million during the fiscal year ended December 31, 2009. Shareholders' equity decreased 3.8% to $15.9 million from $16.6 million at December 31, 2009.

Disclosure of Non-GAAP Financial Information

EBITDA, Adjusted EBITDA and Adjusted EPS are non-GAAP financial measures provided as a complement to results prepared in accordance with accounting principles generally accepted within the United States of America ("GAAP") and may not be comparable to similarly-titled measures reported by other companies. Management believes that the presentation of these measures and the identification of unusual, non-recurring, or non-cash items enhance an investor's understanding of the underlying trends in the Company's business and provide for better comparability between periods in different years.  However, non-GAAP net income should not be construed as an alternative to GAAP as an indicator of our operating performance because the items excluded from the non-GAAP measures often have a material impact on results of operations. Therefore, management uses - and investors should use - non-GAAP measures in conjunction with our reported GAAP results.

EBITDA excludes interest expense, income tax benefit, depreciation expenses and amortization expenses.  Adjusted EBITDA excludes impairment of long-lived assets, stock compensation expenses, loss on early extinguishment of debt, severance and restructuring charges, acquisition costs and other income.  Adjusted EPS excludes severance and restructuring charges, acquisition costs and other income.  Since Adjusted EBITDA and Adjusted EPS exclude certain non-recurring or non-cash items, these measures may not be comparable to similarly-titled measures employed by other companies. The non-GAAP financial measures presented herein should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing, or financing activities, or other income or cash flow statement data prepared in accordance with GAAP.

Conference Call Information

The Company has scheduled a conference call on Wednesday, March 30, 2011 at 10 a.m. ET to discuss financial results for the year ended December 31, 2010. Anyone interested in participating should call 888-293-6960 and enter pass code 8186703 if calling within the United States, or 719-325-2100 and pass code 8186703 if calling internationally, approximately 5 to 10 minutes prior to 10 a.m.  There will be a playback available until April 6, 2011. 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 8186703 for the replay.  A transcript of the conference call will be available on the Company's website on April 1, 2011 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 5,300 ATMs and DVD 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
   [email protected]

   Hayden IR:
   Brett Maas or Jeff Stanlis: (646) 536-7331
   [email protected] / [email protected]

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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.  Forward-looking statements give the Company's current expectations or forecasts of future events, future financial performance, strategies, expectations, competitive environment, regulation, and availability of resources. The forward-looking statements contained in this release include, among other things, statements concerning projections, predictions, expectations, estimates or forecasts as to the Company's business, financial and operational results and future economic performance, and statements of management's goals and objectives and other similar expressions concerning matters that are not historical facts. These statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Other factors that could cause the Company's actual performance or results to differ from its projected results are described in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. You should not read forward-looking statements as a guarantee of future performance or results. They will not necessarily be accurate indications of the times at or by which such performance or results will be achieved. Forward-looking statements speak only as of the date the statements are made and are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information.

- tables follow –

The following table sets forth a reconciliation of net income (loss) from operations to EBITDA from operations for the three months ended December 31, 2010 and 2009:

The following table sets forth a reconciliation of net income from operations to EBITDA from operations for the year ended December 31, 2010 and 2009:

The following table sets forth a reconciliation of net income (loss) from operations to EBITDA from operations before stock compensation expense, impairment of assets and loss on early extinguishment of debt ("Adjusted EBITDA") for the three months ended December 31, 2010 and 2009:

The following table sets forth a reconciliation of net income (loss) from operations to EBITDA from operations before stock compensation expense, impairment of assets and loss on early extinguishment of debt ("Adjusted EBITDA") for the year ended December 31, 2010 and 2009:

SOURCE Global Axcess Corp