DirectCash Payments Inc.

DirectCash Payments Inc.

May 15, 2013 07:30 ET

DirectCash Payments Inc. Announces Results of Operations for the Three Months Ended March 31, 2013

CALGARY, ALBERTA--(Marketwired - May 15, 2013) - DirectCash Payments Inc. (TSX:DCI) ("DirectCash" or the "Company") today announced consolidated financial results for the three months ended March 31, 2013.

Financial and Operational Highlights:

  • Increased the three month Revenue 110% to $58.6 million
  • Increased the three month Gross Profit 122% to $30.7 million
  • Increased the three month EBITDA 97% to $17.2 million
  • Increased the three month Funds from Operations per share 19% to $0.64
  • Business continues to generate solid financial results with Funds from Operations payout ratio of 55%
  • Integration of Customers Limited in Australia and InfoCash Holdings Limited in the United Kingdom underway

Management's Commentary

"The first quarter of 2013 has generated strong financial results for DirectCash with significant improvements in EBITDA and Gross Profit over the same period last year.

We are pleased with our results and our demonstrated ability to streamline costs and integrate our acquired businesses. We look forward to continuing to generate shareholder value throughout 2013," said Jeffrey Smith, DirectCash's President and Chief Executive Officer.

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 months ended March 31, 2013 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 (

Summary Operating and Financial Results

Three months ended
March 31
2013 2012
Summary operating results
Number of machines
Active ATM terminals(1) 19,381 7,624
Number of transactions
ATM transactions 25,884,951 7,946,406
Other Transactions 3,790,742 4,624,795
Summary financial results
($ thousands, except for per share amounts)
Revenue $ 58,621 $ 27,882
EBITDA(2) 17,241 8,756
EBITDA margin(3) 29.4 % 31.4 %
Net income (loss) (731 ) 3,220
Net income (loss) attributable to common shareholders (722 ) 3,220
Per share, basic (0.04 ) 0.23
Per share, diluted (0.04 ) 0.23
Funds from operations(3) 10,512 7,461
Funds from operations per share, basic 0.64 0.54
Funds from operations per share, diluted 0.63 0.54
Dividends declared 5,741 4,775
Dividends declared per share(4) 0.35 0.35
Funds from operations payout ratio(3) 54.6 % 64.0 %
Total assets 428,579 151,086
Total long-term debt $ 196,340 $ -
Common shares outstanding, end of period 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.


DirectCash believes it is well positioned with a strong balance sheet and a steady cash flow stream based on long term contracts. The Company's focus for the balance of 2013 will be to continue to integrate the Australasia and Europe divisions, driving efficiencies as well as to continue to grow the business in a reasonable and sustainable manner. 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. DirectCash's international ATM operations are focused on adding ATM assets through organic growth, quality accretive acquisitions as they become available and maintaining existing customer relationships. In addition, DirectCash is implementing operating standards and capitalizing on organizational efficiencies between the divisions. With the completion of regulatory mandated security upgrade changes in Canada in 2012, DirectCash is positioned to refocus its efforts on maintaining existing customer relationships and improving service delivery.

DirectCash's objective in the ATM business in Canada is to continue to maintain existing customer relationships, add sites and grow aggregate transactions through accretive acquisitions and to maximize site profitability through cost and quality control.

DirectCash is the largest deployer of ATMs in Australia and operates ATM business in New Zealand. As at March 31, 2013 DirectCash had 6,474 ATMs in Australia and New Zealand. The Company actively seeks growth opportunities through the existing ATM business platform and capitalizes on the less mature Australian market, where transactions and gross profits per ATM are significantly greater than in the mature Canadian ATM market.

Since the acquisition in the United Kingdom in May 2012, DirectCash has grown to be the second largest deployer of non bank branded ATMs in the United Kingdom and has added 777 ATMs. As at March 31, 2013 DirectCash had 5,477 ATMs in 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, while adding other product offerings to its Europe division.

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 in certain market segments.

Additional GAAP Measure:

DirectCash has presented earnings before interest, taxes, depreciation and amortization ("EBITDA") as a subtotal in its consolidated 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 in the Company's MD&A for the three months ended March 31, 2013 and 2012.

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 plus or minus depreciation, amortization, deferred income taxes, non-cash finance costs and unrealized foreign exchange losses (gains) and after provision for productive capital maintenance capital expenditures (see discussion below). Funds from Operations per share is calculated on the same basis as net income (loss) per share, utilizing the basic and diluted weighted coverage number of common shares outstanding during the period presented. 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 in the Company's MD&A for the three months ended March 31, 2013 and 2012.

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. 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. Maintenance capital expenditures include software and hardware upgrades to existing infrastructure, ATM and debit terminal equipment upgrades necessary to meet changing regulatory requirements, contract extension incentives including replacement of equipment under existing or renewed contracts, 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.


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. 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 Press Release 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, 2012 which is available at

The forward-looking information contained in this Press Release 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 Press Release and the Company's MD&A include statements related to DirectCash's projected growth in operations in the Americas, Australasia and Europe, ability to complete accretive acquisitions on a go forward basis, ability to grow organically though our sales force, expansion of DirectCash's merchant base through new and innovative products and services, 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, ability to diversity into new industry segments or to increase diversification in terms of product offerings and the number of customers we serve and the possible increase in capital expenditures for technology and infrastructure or 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 Press Release, 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 budgeted projections of increased capital expenditure requirements based on our view of the 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 ( or DirectCash's website at

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