Eye on Earnings: Cardtronics, TIO, Online Resources

Key operating metrics posted solid gains in recent quarterly reports from two of the payment industry's specialty providers, non-bank ATM network operator Cardtronics Inc. and expedited bill-payment provider TIO Networks Corp. Houston-based Cardtronics, however, still posted a $57.9 million fourth-quarter loss, most of which originated with a one-time charge involving its fleet of 2,527 ATMs in the United Kingdom. And bill-pay technology provider Online Resources Corp. is trying to regroup after losing several large clients in late 2007 and early 2008. Nonetheless, several of Cardtronics' core measures headed upward. The average number of transacting ATMs rose 3.6% to 33,064 compared with 31,923 in 2007's fourth quarter. The count includes 12,348 company-owned and 10,392 merchant-owned machines in the U.S. Cardtronics has another 5,727 ATMs or advanced-function machines called Vcoms at 7-Eleven Inc. convenience stories, up from 5,608 at the end of 2007. And besides the U.K. ATMs, Cardtronics has 2,070 machines in Mexico. Total fourth-quarter transactions increased 9.6% to 88.1 million from 80.4 million in the year-earlier period. Cash-withdrawal transactions?the ones that generate surcharge revenue or compensating revenues from banks on bank-branded machines?rose 8.2% to 56.6 million from 52.3 million in 2007's fourth quarter. The average ATM handled 571 cash withdrawals per month, up 4.6% from 546 a year earlier. About 10,100 Cardtronics-managed ATMs feature bank brands. Meanwhile, the company continues to convert its ATMs to its new, in-house processing system; some 26,700 are now on the platform. Cardtronics is finally seeing some returns on its July 2007 acquisition of 7-Eleven's ATM fleet that included the Vcoms. The machines can handle bill payments, imaged deposits, and other functions besides cash dispensing and account balances but early on produced poor returns. Cardtronics attempted to remedy that through various steps that included replacing a Vcom with a regular ATM in lower-traffic sites and concentrating its marketing in larger metro areas (Digital Transactions News, Feb. 29, 2008). Vcom operating revenues totaled $1.24 million in the fourth quarter, up 120% from $566,000 a year earlier. And for the year, Vcom operating revenues were up 320% to $5.26 million from 2007's $1.25 million. Total fourth-quarter revenues grew 1.9% to $118.2 million from $116.0 million in the prior-year quarter, though ATM operating revenues grew only 0.5% to $112.8 million. In the U.K., lower average surcharge transactions, higher operating costs and “adverse market conditions” produced lower results than Cardtronics expected, the company said, leading to a $50 million non-cash goodwill impairment charge. In other Cardtronics news, the company announced Thursday that retailer Costco Wholesale Corp. has extended its existing ATM placement agreement to include 41 locations throughout Oregon and Washington. Cardtronics ATMs will now be available in 97% of the 400-plus U.S. Costco locations. Meanwhile, Burnaby, B.C.-based TIO Networks reported that its transaction count for its second fiscal 2009 quarter ended in January hit 1.67 million, up 8.7% from 1.54 million in the year-earlier period. Transaction revenues for the respective quarters grew 32.9% to U.S. $4.27 million from $3.21 million. TIO now claims 11,000 endpoints in its payments network, the newest of which is the San Antonio (Texas) Water System. Customers can now pay their water bills at any time via self-serve TIO-connected kiosks at 27 convenience stores in the metropolitan area. They also can make expedited payments in 55 other attended locations through the network. Another bill-payment technology provider, Chantilly, Va.-based Online Resources, on Thursday reported processing 39.4 million bill-pay transactions in the fourth quarter for its bank clients, down 5.7% from 418 million transactions in the year-earlier quarter. Fourth-quarter revenues of $37.2 million were down 2.5% from $38.1 million a year earlier, and net income available to common stockholders fell 90% to $1.27 million from $12.1 million in the year-earlier quarter. The company says the departure of three large clients?Branch Banking & Trust Co., Jack Henry & Associates Inc., and Corporate Network eCom LLC–in late 2007 and early 2008 continued to negatively affect year-on-year comparisons. Chairman and chief executive Matthew P. Lawlor said Online Resources is diversifying its client base through the signing of five major deals and the extension of 11 client contracts in the fourth quarter. He said Online Resources re-signed all the large banks whose contracts came up for renewal in the fourth quarter.