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Global Axcess Corp Announces First Quarter 2010 Financial Results
May 04, 2010 (04:05 PM EDT)
JACKSONVILLE, Fla., May 4 /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 first quarter ended March 31, 2010.
Mr. George McQuain, Chief Executive Officer of the Company, stated, "We are pleased to report another profitable quarter, once again validating our business plan and demonstrating the financial strength of the company. We achieved this profit despite the weather-related slowdown in ATM usage in our operating footprint and the accelerating investment in our DVD kiosk initiative. Despite the severe weather issues, our ATM transactions increased 2% over the first quarter of 2009 and 4% over the fourth quarter of 2009. We experienced lower non-transactional revenue such as ATM sales and cash management fees during the quarter which caused our first quarter revenue to be flat year over year."
Mr. McQuain continued, "The investments in our DVD kiosk initiative have begun paying off, as demonstrated by the recent announcement that we have signed a three-year agreement with a major grocery chain. The estimated $7 million per year in revenue from this agreement equates to more than 30% growth over our total 2009 revenues. We expect to roll out the DVD program beginning in July 2010, with a target completion of the end of the third quarter. We will deploy 300 new DVD rental kiosk locations at the outset, and this can grow by 20% or more within the contract time frame. We anticipate revenue of approximately $2.5 to $3 million from this agreement during 2010. The grocery chain has been an ATM client of the Company and due to our operational excellence and other core competencies, we unseated the incumbent."
First Quarter 2010 Financial Results
The Company reported revenues from continuing operations of $5.4 million for the three-month period ended March 31, 2010 essentially flat compared to $5.4 million for the three-month period ended March 31, 2009. Gross profit from continuing operations was $2.5 million, or 46.9% gross margin, for the first quarter 2010 compared to $2.6 million, or 47.3% gross margin, for the same period of 2009. The Company experienced a slight increase in cost of revenues related to cash replenishment activities that were impacted by the severe winter weather.
Operating expenses for the first quarter ended March 31, 2010 increased 16.9% to $2.1 million from $1.8 million in the same period of 2009. This increase primarily resulted from higher SG&A and depreciation expenses. During the first quarter of 2010, the Company hired consultants and employees with industry expertise to spearhead efforts in its DVD rental kiosk initiative. These expenses and other expenses related to the DVD kiosk initiative were the largest single component, contributing approximately $94,000 or 40% of the increase in SG&A expenses. Depreciation expense increased due to increased ATM and DVD kiosks purchased during 2009 to support new business in both business lines.
Income from continuing operations was $439,899 for the quarter ended March 31, 2010 compared to $776,770 in the same period of 2009. During the first quarter of 2010, the Company recorded net interest expense of $121,331 compared to net interest expense of $212,617 for the same period in 2009. The decrease was mainly due to a decrease in debt balances and refinancing the debt to a lower interest rate. EBITDA (earnings before net interest, taxes, depreciation and amortization) for the first quarter of 2010 was $949,126, compared to $772,490 in the first quarter of 2009. Adjusted EBITDA (EBITDA before stock compensation expenses and loss on early extinguishment of debt) was $996,281 for the first quarter of 2010 from $1.3 million for the first 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 income for the first quarter ended March 31, 2010 was $318,568, or $0.02 and $0.01 per basic and diluted share, respectively (based on 21.9 and 23.8 million basic and diluted weighted average shares outstanding, respectively), which compares to net income of $96,762, or $0.01 per basic and diluted share (based on 21.0 million basic and diluted weighted average shares outstanding, respectively), for the same period of 2009. First quarter 2009 net income included non-cash expenses of $467,391 related to the payoff of debt balances with two senior lenders and related parties.
Mr. McQuain continued, "While we continue to invest in our emerging DVD business, we remain excited about the potential of our core ATM business. Our ATM sales pipeline remains robust and we expect to continue to close business throughout the remainder of the year. On the DVD side, as more consumers embrace the convenience of the self-service model, we believe additional opportunities will present themselves to grow this aspect of our business. Additionally, existing ATM customers and potential customers are reevaluating their DVD kiosk business as their initial programs are coming up for renewal, and we expect to actively participate in the competitive bidding process. In summary, we are optimistic about our ability to grow both sides of our business organically."
Balance Sheet and Cash Flows
Net cash provided by continuing operating activities during the three-month period ended March 31, 2010 was $919,176 compared to net cash provided by continuing operating activities of $1.1 million in the same period of 2009. Stockholders' equity increased 2.2% to $16.9 million from $16.6 million at December 31, 2009.
Michael J. Loiacono, Chief Financial Officer of the Company, stated, "We continue to see the positive results of eliminating and refinancing our debt during 2009, and our stronger balance sheet and consistent free cash flow enabled us to accelerate our growth by aggressively investing in our DVD kiosk initiative."
Conference Call Information
Anyone interested in participating should call 888-715-1402 and enter pass code 8472981 if calling within the United States, or 913-312-1513 and pass code 8472981 if calling internationally, approximately 5 to 10 minutes prior to 10 a.m. There will be a playback available until May 13, 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 8472981 for the replay. A transcript of the conference call will be available on the Company's website on May 10, 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 4,500 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.
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.
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SOURCE Global Axcess Corp