Welcome!

Microsoft Cloud Authors: Janakiram MSV, Pat Romanski, Steven Mandel, John Basso, Liz McMillan

News Feed Item

DirectCash Payments Inc. Announces Results of Operations for the Three and Nine Months Ended September 30, 2012

CALGARY, ALBERTA -- (Marketwire) -- 11/14/12 -- DirectCash Payments Inc. ("DirectCash" or the "Company") (TSX:DCI) today announced consolidated financial results for the three and nine months ended September 30, 2012.

Financial and Operational Highlights:


--  Increased the three month EBITDA 82% to $18.1 million and the nine month
    EBITDA 34% to $38.2 million 
--  Increased the three month Revenue 135% to $67.0 million and the nine
    month Revenue 49% to $127.0 million 
--  Business continues to generate solid financial results with Funds from
    Operations payout ratio of 59% 
--  Gained market share in the United Kingdom, becoming the 2nd largest non-
    bank ATM deployer with 5,298 ATMs 
--  Closed acquisition of Customers Limited in Australia and began
    integration process 
--  Syndicated and expanded the Company's credit facilities 
--  Issued 2,800,000 new shares to the public at $23.35 per share for gross
    proceeds of $65.4 million 
--  Issued $125 million aggregate principle amount of 7-year senior
    unsecured notes bearing interest at 8.125% per annum 
--  Subsequent to the quarter, acquired 100% of the shares of New Zealand
    ATM Services Limited

Management's Commentary

"We are pleased with our results in the third quarter which incorporated our transformative acquisitions of Customers and InfoCash. Our initial results have been very promising and we are pleased with our ability to generate synergies in the business and we look forward to driving shareholder value through the operation of our businesses" said Jeffrey Smith, DirectCash's President and Chief Executive Officer.

As expected in the early stages of the integration process following the very significant Australian acquisition, SG&A and operating costs incurred in Q3 2012 included non- recurring expenditures. Personnel costs included approximately $1.0 million in severance costs to streamline operations. This is expected to result in annual cost savings of approximately $3.1 million. The Company also internalized technician services during the quarter which will be reflected in lower costs for the balance of the year. Additionally, to address Australian ATM transaction processing costs we recently successfully renegotiated the contract effecting per transaction fee reductions of approximately 50%, representing annual savings in excess of $1.5 million, and extending the term of the contract.

DirectCash will continue to seek to increase efficiencies and to pursue growth through additional accretive acquisitions as opportunities arise. DirectCash's stable, contracted revenue stream and dominant market positions will continue to provide consistent cash dividends to DirectCash's Shareholders.

Summary financial and operating results for the three and nine months ended September 30, 2012 are set forth below and complete copies of the Company's Financial Statements and Management's Discussion & Analysis ("MD&A") are available on SEDAR at (www.sedar.com).


                                 Three months ended       Nine months ended 
                                       September 30               September 
                                   2012        2011        2012        2011 
----------------------------------------------------------------------------
Summary operating results                                                   
----------------------------------------------------------------------------
Number of machines                                                          
Active ATM terminals(1)          19,423       7,848      19,423       7,848 
Number of transactions                                                      
ATM transactions             27,929,616   9,013,934  47,732,637  25,998,143 
Other transactions            4,386,524   4,947,649  13,584,552  14,419,444 
----------------------------------------------------------------------------
Summary financial results                                                   
(thousands, except for per                                                  
 share amounts)                                                             
----------------------------------------------------------------------------
Revenue                          67,017      28,466     126,977      85,251 
EBITDA(2)                        18,095       9,931      38,246      28,634 
  EBITDA margin(3)                 27.0%       34.9%       30.1%       33.6%
Net Income (Loss)                (2,468)      4,380       4,656      11,774 
Net Income (Loss)                                                           
 attributable to common                                                     
 shareholders                    (2,096)      4,380       5,028      11,774 
  Per share, basic                (0.14)       0.32        0.35        0.86 
  Per share, diluted              (0.14)       0.32        0.35        0.85 
Funds from operations(3)          8,704       8,854      25,033      26,163 
  Funds from operations per                                                 
   share, basic(3)                 0.57        0.64        1.75        1.90 
  Funds from operations per                                                 
   share, diluted(3)               0.56        0.64        1.74        1.89 
Dividends declared                5,418       4,775      14,968      14,324 
Dividends declared per                                                      
 share(4)                          0.35        0.35        1.04        1.04 
Funds from operations payout                                                
 ratio(4)                          62.2%       53.9%       59.8%       54.7%
Total assets                    436,252     157,774     436,252     157,774 
Total long-term debt            199,112           -     199,112           - 
Common shares outstanding,                                                  
 end of period                   16,639      13,839      16,639      13,839 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1.  DirectCash has included statistics only for sites that recoded a        
    transaction in the last calendar month of the period indicated.         
2.  An additional GAAP measure which is defined in the Additional GAAP      
    Measure section of this press release.                                  
3.  A non-GAAP measure which is defined in the Non-GAAP Measures section of 
    this press release.                                                     
4.  See Dividends section of this press release.                            

Customers Limited Acquisition

On July 4, 2012 the Company successfully completed its acquisition of Customers Limited ("Customers") (ASX: CUS), whereby DirectCash acquired all of the outstanding shares of Customers for $1.27 Australian dollars per diluted share in cash.

As a result of the acquisition of Customers, the largest deployer of ATMs in Australia, a total of approximately 6,600 ATM sites and related contracts were acquired by DirectCash in Australia and New Zealand. The acquisition provides the opportunity to grow the Customers ATM business platform in Australia and capitalize on the less mature Australian market, where transactions and gross profits per ATM are significantly greater than in the mature Canadian ATM market.

On August 8, 2012 DirectCash issued $125 million aggregate principal amount of seven year senior unsecured notes (the "Notes"). The Notes are direct senior unsecured obligations ranking pari passu with all other present and future senior unsecured indebtedness of DirectCash and bear interest at 8.125 % per annum, payable semi- annually in arrears. The net proceeds were used to repay the bond bridge loan drawn in respect of the Customers acquisition.

On August 9, 2012 DirectCash completed a private placement of 2,800,000 common shares of the Company for $23.35 per common share. The net proceeds from the issue were used to repay the equity bridge loan, drawn in respect of the Customers acquisition, with the remainder of the proceeds added to working capital.

Outlook

DirectCash believes it is well positioned with a strong balance sheet and a steady cash flow stream based on long term contracts. DirectCash' focus for the balance of 2012 will be to integrate the acquisitions of Customers and InfoCash, as well as to continue to grow the business in a reasonable and sustainable manner by maintaining current customer relationships and managing our cost structures. In the ATM business, emphasis continues to be on the streamlining of DirectCash's operations as well as continuing to pursue quality accretive acquisitions and additional organic growth within DirectCash's international operations. With the completion of regulatory mandated security upgrade changes in Canada, DirectCash will be positioned to refocus its efforts on growth through quality accretive acquisitions and additional organic growth.

As a result of the acquisition of Customers, the largest deployer of ATMs in Australia, a total of approximately 6,600 ATM sites and related contracts were acquired by DirectCash in Australia and New Zealand. The acquisition provides the opportunity to grow the Customers ATM business platform in Australia and capitalize on the less mature Australian market, where transactions and gross profits per ATM are significantly greater than in the mature Canadian ATM market.

As a result of the acquisition of InfoCash, a total of approximately 4,700 ATM sites and related contracts were acquired by DirectCash in the United Kingdom. Since the acquisition, DirectCash has grown organically, adding 598 ATMs for a total of 5,298 as at September 30, 2012. This growth positions DirectCash as the second largest deployer of ATMs in the United Kingdom. DirectCash's focus in this market moving forward is to continue to grow the ATM business in Europe through quality accretive acquisitions and organic growth.

In the prepaid products line of business DirectCash will strive to increase diversification, both in terms of product offerings such as MasterCard prepaid cards, bank accounts and related financial services through DirectCash's strategic alliance with DirectCash Bank, and in terms of the number of customers DirectCash serves in order to reduce DirectCash's dependence on a small group of large volume customers.

DirectCash will continue to organically grow the debit terminal business via cross selling to existing customers and through the pursuit of new customer relationships. Quality accretive acquisitions will be pursued as opportunities arise.

At the time of acquisition by the Company, Customers held a 47.75% interest in New Zealand ATM Services Limited ("NZ ATM"), which represented a control position. The results of NZ ATM have been consolidated with the results of the Company.

On November 12, 2012 the founding shareholders of NZ ATM, NZ ATM and DC Payments Pty Limited ("DC Payments") entered into a Deed of Settlement and Release whereby the founding shareholders sold to DC Payments their 52.25% shareholdings in NZ ATM plus shareholder loans for NZ$1.2 million (approximately $1.0 million) effective immediately. As part of this transaction the Put and Call arrangement between the founding shareholders and DC Payments has been eliminated for no consideration.

On November 9, 2012, DirectCash in addition to The CashStore Financial Services Inc. ("CashStore") and DC Bank were named in a class action lawsuit as it relates to payday loans and related fees in the province of Manitoba. DirectCash is indemnified by CashStore and in turn has indemnified DC Bank. DirectCash has retained counsel on this matter.

Additional GAAP Measure:

DirectCash has presented earnings before interest, taxes, depreciation and amortization ("EBITDA") as a subtotal in its condensed consolidated interim statement of operations. EBITDA is an important measure utilized by management in assessing the financial performance of the Company relative to its operating plans and budgets. It is also the primary measurement utilized by the holders of our long term debt. The Company has presented EBITDA prior to the deduction for acquisition-related expenses. These expenses relate to the acquisitions of Customers and InfoCash, which resulted in the expansion of the Company into two new primary geographical segments and are non-recurring expenditures. The Company has also presented EBITDA prior to unrealized foreign exchange gains and losses which is consistent with the Company's financial covenants. The Company's EBITDA may differ from similar computations as reported by other issuers and, accordingly, may not be comparable to EBITDA as reported by such issuers. EBITDA is reconciled to net income (loss) in the Company's MD&A for the three and nine months ended September 30, 2012 and 2011.

Non-GAAP Measures:

There are a number of financial calculations that are not defined performance measurements under GAAP but which DirectCash believes are useful and accepted performance measurements utilized by the investing public in assessing the overall financial performance of the Company and to compare cash flows between entities.

EBITDA margin: EBITDA margin means EBITDA expressed as a percentage of total revenue.

Funds from operations and funds from operations per share: DirectCash calculates funds from operations as net income (loss) plus or minus depreciation, amortization, deferred income taxes and unrealized foreign exchange losses (gains) and after provision for productive capital maintenance capital expenditures (see discussion below). Readers are cautioned that funds from operations cannot be assured to continue at equivalent levels in the future. DirectCash's funds from operations and funds from operations per share may differ from similar computations as reported by other issuers and, accordingly, may not be comparable to funds from operations and funds from operations per share as reported by such issuers. Funds from operations is reconciled to net income (loss) in the Company's MD&A for the three and nine months ended September 30, 2012 and 2011.

Funds from operations payout ratio: Funds from operations payout ratio means dividends declared expressed as a percentage of total funds from operations.

Productive capital maintenance expenditures: DirectCash differentiates capital expenditures between growth and productive capital maintenance ("Maintenance Capital"). There is no such distinction under GAAP. However, DirectCash believes it is important to differentiate between them as maintenance capital expenditures represent an adjustment to funds from operations while growth capital does not.

Maintenance capital expenditures are defined as expenditures required to service and maintain DirectCash's existing productive capacity, while growth capital is expended to increase DirectCash's productive capacity by adding additional sources of revenue not currently in existence. Current measures of productive capacity that DirectCash utilizes include ATMs and debit terminals under contract (see "Operational Highlights"), software and hardware upgrades to existing infrastructure, ATM and debit terminal equipment upgrades necessary to meet changing regulatory requirements, contract extension incentives, and fleet vehicle purchases and upgrades. Examples of growth capital expenditures include the acquisition of a competitor's assets, the cost of an ATM in a new location, or technology costs related to new sources of revenue.

Readers are cautioned that the Company's computation of productive maintenance capital expenditure may differ from similar computations as reported by other issuers and, accordingly, may not be comparable to productive maintenance capital expenditures as reported by such issuers.

Dividends:

Beginning January 1, 2011 (starting with the January 31, 2011 record date), shareholders of DirectCash have received monthly payments in the form of dividends, with the initial monthly dividend set at $0.115 per Common Share. All dividends are eligible dividends for the purpose of the Income Tax Act (Canada) unless indicated otherwise. Dividends are funded by the generation of funds from operations of the business. As of January 1, 2011, all of the income generated at the level of the various subsidiaries of the Company is taxed by applicable government authorities with the remaining after-tax funds either being retained by the subsidiary or distributed up to the Company where it can be made available for payment of dividends by DirectCash. Continued future distribution of dividends (and the amount of any dividends) is subject to DirectCash's Board of Directors approval. DirectCash's Board of Directors is not obligated to distribute all net available cash as dividends to shareholders.

Forward Looking Information:

This MD&A offers our assessment of DirectCash's future plans and operations and contains "forward-looking information" relating to future events as defined under applicable Canadian securities legislation. DirectCash's actual results or performance could differ materially from those expressed in, or implied by, this forward-looking information. DirectCash can give no assurance that any of the events anticipated will transpire or occur or, if any of them do, what benefits or costs we will derive from them. Forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond DirectCash's ability to control, including but not limited to general economic conditions, interest rates, foreign currency rates, consumer spending, borrowing trends and regulatory changes to name a few. Additional risk and uncertainties are described in DirectCash's Annual information Form for the year ended December 31, 2011 which is available at www.SEDAR.com and in the "Key Business Risks" section of the Company's MD&A for the three and nine months ended September 30, 2012.

The forward-looking information contained in this MD&A is expressly qualified by this cautionary statement. Certain statements that contain words such as "could", "believe", "expects", "expected", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words relating to matters that are not historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities legislation.

Forward-looking information and statements contained in this MD&A include statements related to DirectCash's projected growth in international operations in the Americas, Australasia and Europe in the ATM business, projected growth in the prepaid and debit terminal business, ability to complete accretive acquisitions on a go forward basis, expansion of DirectCash's merchant base through new and innovative products, impact of acquisitions in United Kingdom and Australia including realizing on expected synergies, ability to continue to acquire long-term recurring services contracts and negotiate renewals thereof in advance of their expiry, ability to maintain current customer relationships, ability to obtain improved supplier terms and manage cost structures internationally, ability to increase our product offerings in Australia and the United Kingdom and expected increase in capital expenditures due to regulatory mandated security upgrade changes.

Readers are cautioned that our expectations, estimates, projections and assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. With respect to forward-looking statements contained within this MD&A, expectations are based on our current strategic plan and management forecasts, the historical financial performance and operational data of acquired entities, our existing contracts schedule, forecast and budget and projections of increased capital expenditure requirements based on our view of the mandated regulatory security upgrade requirements and age of capital assets currently in use by DirectCash.

The assumptions and estimates relating to the forward-looking information referred to above are updated quarterly and except as required by law, we do not undertake to update any other forward-looking information.

Additional information about DirectCash is available on SEDAR (www.sedar.com) or DirectCash's website at www.directcash.net.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@ThingsExpo Stories
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Identity is in everything and customers are looking to their providers to ensure the security of their identities, transactions and data. With the increased reliance on cloud-based services, service providers must build security and trust into their offerings, adding value to customers and improving the user experience. Making identity, security and privacy easy for customers provides a unique advantage over the competition.
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, will deep dive into best practices that will ensure a successful smart city journey.
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
There is growing need for data-driven applications and the need for digital platforms to build these apps. In his session at 19th Cloud Expo, Muddu Sudhakar, VP and GM of Security & IoT at Splunk, will cover different PaaS solutions and Big Data platforms that are available to build applications. In addition, AI and machine learning are creating new requirements that developers need in the building of next-gen apps. The next-generation digital platforms have some of the past platform needs a...
SYS-CON Events announced today Telecom Reseller has been named “Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
I wanted to gather all of my Internet of Things (IOT) blogs into a single blog (that I could later use with my University of San Francisco (USF) Big Data “MBA” course). However as I started to pull these blogs together, I realized that my IOT discussion lacked a vision; it lacked an end point towards which an organization could drive their IOT envisioning, proof of value, app dev, data engineering and data science efforts. And I think that the IOT end point is really quite simple…
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Pulzze Systems was happy to participate in such a premier event and thankful to be receiving the winning investment and global network support from G-Startup Worldwide. It is an exciting time for Pulzze to showcase the effectiveness of innovative technologies and enable them to make the world smarter and better. The reputable contest is held to identify promising startups around the globe that are assured to change the world through their innovative products and disruptive technologies. There w...
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abil...
Is the ongoing quest for agility in the data center forcing you to evaluate how to be a part of infrastructure automation efforts? As organizations evolve toward bimodal IT operations, they are embracing new service delivery models and leveraging virtualization to increase infrastructure agility. Therefore, the network must evolve in parallel to become equally agile. Read this essential piece of Gartner research for recommendations on achieving greater agility.
SYS-CON Events announced today that Venafi, the Immune System for the Internet™ and the leading provider of Next Generation Trust Protection, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Venafi is the Immune System for the Internet™ that protects the foundation of all cybersecurity – cryptographic keys and digital certificates – so they can’t be misused by bad guys in attacks...
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.