SOURCE: DirectCash Payments Inc.

DirectCash Payments Inc.

March 26, 2015 19:48 ET

DirectCash Payments Inc. Announces Results of Operations for the Three Months and Year Ended December 31, 2014

CALGARY, AB--(Marketwired - March 26, 2015) - DirectCash Payments Inc. ("DCPayments" or the "Company") (TSX: DCI) today announced consolidated financial results for the three months and year ended December 31, 2014.

Financial and Operational Highlights:

  • Increased annual Operating Cash Flow by 22% to $73.1 million
  • Increased the full year EBITDA by 9% to $74.0 million
  • Improved funds from operations payout ratio to 52% for the year ended December 31, 2014 (56% prior to the Australia GST recovery)
  • Materially reduced Net Debt by 19% ($47.3 million) compared to December, 2013
  • Increased annual dividend to $1.44 per share from $1.38 per share
  • Successfully completed the acquisition and integration ongoing of the ATM business of Ezeatm Limited, adding approximately 1,325 ATM sites and related contracts to DCPayments' existing dominant market position in Australia
  • Successfully renewed the prepaid card contract with H&R Block Canada Inc., expanding on product offerings through DCPayments' strategic relationship with DC Bank
  • Subsequent to the year end, purchased the deployed ATMs of Morrison's stores from HSBC Bank Plc in the United Kingdom, adding ATM transaction volume and approximately 220 ATM sites
  • Subsequent to the year end, promoted Mr. Todd Schneider to Chief Operating Officer of the Canadian business unit. In addition, created a new role for specialized treasury and tax to complement the complex global nature of the business.

Management's Commentary
"2014 was another successful year for DCPayments, in which we continued to generate positive returns for our shareholders and grow our payments and transaction processing business profitably. Our fourth quarter was highlighted by the successful completion of the acquisition of Eze, which has expanded our existing Australian operations. We are very excited about the addition of Eze and expect improved positive contributions as we continue to integrate this business. DCPayments will pursue growth through additional accretive acquisitions at reasonable multiples as opportunities arise. DCPayments' stable and contracted revenue stream in our various geographic markets will continue to provide consistent cash dividends to DCPayments' Shareholders. Our business continues to provide consistent cash flow with reasonable prospects for growth, and we will continue to execute our plans to drive shareholder value," said Jeffrey Smith, DCPayments' President and Chief Executive Officer. 

Summary financial and operating results for the three months and year ended December 31, 2014 are set forth below and complete copies of the Company's audited consolidated Financial Statements and Management's Discussion & Analysis ("MD&A") are available on SEDAR at (

Summary Operating and Financial Results

  Three months ended Year ended
  December 31 December 31
  2014 2013 2014 2013
Summary operating results        
Number of machines        
Active ATM terminals(1) 21,103 20,333 21,103 20,333
ATM transactions, thousands 31,796 30,136 123,634 111,341
Summary financial results        
($ thousands, except for per share amounts)        
Gross profit(2) $33,437 $32,633 $141,514 $121,141
Gross profit margin(3) 49.0% 49.7% 51.1% 50.3%
EBITDA(4) 17,836 17,909 74,039 67,686
 EBITDA margin(5) 26.2% 27.3% 26.7% 28.0%
Net income (loss) 1,113 (1,268) 3,665 85
Net income (loss) attributable to common shareholders 1,113 (1,276) 3,665 59
 Per share, basic 0.06 (0.07) 0.21 0.00
 Per share, diluted 0.06 (0.07) 0.21 0.00
Funds from operations(5) $9,331 $8,301 $47,814 $37,910
 Funds from operations per share, basic(5) 0.53 0.49 2.73 2.27
 Funds from operations per share, diluted(5) 0.53 0.49 2.72 2.26
Dividends declared 6,332 5,959 24,714 23,181
 Dividends declared per share 0.36 0.35 1.41 1.38
Funds from operations payout ratio(5) 67.9% 71.8% 51.7% 61.1%
Total assets $383,427 $444,398 $383,427 $444,398
Total debt(6) 202,557 251,497 202,557 251,497
Cash (4,988) (6,630) (4,988) (6,630)
Net debt(7) $197,569 $244,867 $197,569 $244,867
Common shares outstanding, end of period 17,589 17,589 17,589 17,589

1DCPayments has included statistics only for sites that recorded a transaction in the last calendar month of the period indicated
2Gross profit is calculated as Revenue less Cost of sales
3Gross profit margin means gross profit expressed as a percentage of Revenue
4An additional GAAP measure -- see definition under "Additional GAAP Measure"
5A non-GAAP measure -- see definition under "Non-GAAP Measures"
6Total debt is calculated as long-term debt including current portion, but excluding unamortized transaction costs, as at the end of the period
7Net debt is calculated as total debt less cash

DCPayments continues to be the largest deployer of ATMs in Canada, with 7,696 transacting ATMs as at December 31, 2014, and is one of Canada's leading independent providers of end-to-end transaction processing and payment solutions. The Threshold Acquisition has strengthened DCPayments strategic position in the payments business and has given the Company a significant presence in the highly strategic credit union and financial institution payments processing services segment and ATM outsourcing business. In addition, the acquisition added approximately 1,000 transacting ATMs to the DCPayments network in Canada. In the ATM business in Canada, emphasis continues to be on maintaining existing customer relationships. With the addition of Threshold we expect to increase our ability to service the existing and acquired customer relationships and increase our sales presence with other clients in Canada.

DCPayments is the largest deployer of ATMs in Australia and New Zealand with 7,539 transacting ATMs as at December 31, 2014. The Company actively seeks growth opportunities through the existing ATM business platform and to capitalize on the less mature Australian market, where transactions and gross profits per ATM are significantly greater than in the more mature Canadian ATM market. We have been very successful in managing our costs, integrating the Australian acquisitions, and adding management depth. DCPayments' focus in this market moving forward is to drive growth and improve margins.

On October 31, 2014 the Company announced that it had successfully completed the Eze acquisition. This tuck-in acquisition offers significant economies of scale, cost savings and bolsters DCPayments existing position in the Australian marketplace as the largest independent network of branded ATMs. The acquisition of Eze adds approximately 1,325 ATM sites and related contracts to DCPayments' Australian network. Integration is underway and we expect this acquisition to be accretive to funds from operations per share in the first fiscal year following the transaction.

Since the acquisition in the United Kingdom in May 2012, DCPayments has grown to be the third largest deployer of non-bank branded ATMs in the United Kingdom and has added approximately 862 ATMs. As at December 31, 2014 DCPayments had 5,562 transacting ATMs in the United Kingdom. DCPayments' focus in this market moving forward is to continue to grow the ATM business in Europe through quality accretive acquisitions and organic growth, adding other product offerings to its Europe division and increasing our margins.

Subsequent to the quarter, Cash Store Financial Services Inc. ("CashStore"), a significant customer that was granted protection from its creditors under the Companies' Creditors Arrangement Act ("CCAA") during 2014, sold a large number of its locations to National Money Mart Company ("Money Mart"). Effective February 6, 2015, DCPayments has a transitional service agreement with Money Mart for a three month period ending April 30, 2015 to provide processing and ATM services in approximately 150 Money Mart locations. The contract will be automatically extended on a month to month basis unless terminated with 30 days prior written notice.

The Other Services line of business is broadly comprised of transaction processing services, card provisioning, payments processing, reporting and settlement, fraud management, ATM cash and fleet management and project-based consulting services for financial institutions and credit unions. In this line of business our objective is diversification domestically and expansion internationally, to reduce historical reliance on a small group of large volume customers in certain market segments. The Threshold Acquisition provides DCPayments with greater diversification in the other services business in terms of both customer base and product offering. In January 2014 the Company launched a Prepaid Visa card offering, adding scale and choice for our clients.

We continue to focus on the efficient management and operation of our businesses. DCPayments is well positioned with a strong balance sheet and a steady cash flow stream from its payments and transaction processing operations based on long term contracts, geographically diversity and across a number of industries to drive long term shareholder value.

Conference Call
A conference call will be held on Friday, March 27, 2015 at 9:00 a.m. Mountain Standard Time (MST) to review fourth quarter and full year 2014 results. Jeffrey J. Smith, President & CEO, Brenda G. Hughes, Chief Financial Officer, and Amanda J. Gallacher, Vice President, Investments, will host the call.

DCPayments invites participants to listen to the conference call by calling toll-free 1-888-818-4097 or locally 1-416-340-8527. A replay of the conference call will be available until April 7, 2015 by dialing toll-free 1-800-408-3053 or locally 1-905-694-9451 and entering passcode 6740879.

Additional GAAP Measure:
DCPayments 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 measurement utilized by the holders of the Company's long-term debt, as described in note 12 to the consolidated financial statements, in calculating financial covenants. The Company has presented EBITDA prior to unrealized foreign exchange gains and losses and non-recurring other gains. The Company utilizes this presentation of EBITDA because it is consistent with the definitions under DCPayments' credit facility agreement. DCPayments has also presented EBITDA prior to the deduction for acquisition-related expenses. These expenses relate only to business combinations which are complex, require the pre-approval of the Company's lenders and are financed utilizing long-term debt or the issue of equity or a combination thereof. Costs incurred on recurring asset acquisitions are not considered acquisition-related expenses and are included with other expenses in the consolidated statement of operations.. 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. The Company has provided a reconciliation between EBITDA and net income (loss) in the MD&A for the three months and year ended December 31, 2014.

Non-GAAP Measures:
There are a number of financial calculations that are not defined performance measurements under GAAP but which DCPayments 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 Revenue.

EBITDA per share:
EBITDA per share is calculated on the same basis as net income (loss) per share, utilizing the basic and diluted weighted average number of common shares outstanding during the period presented.

Funds from operations and funds from operations per share:
DCPayments calculates funds from operations as net income (loss) plus or minus depreciation, amortization, deferred income taxes expense (benefit), non-cash finance costs,unrealized foreign exchange gains and losses and other non-cash charges and after provision for productive capital maintenance 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 average 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. DCPayments' 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. The Company has provided a reconciliation between funds from operations and net income (loss) in the MD&A for the three months and year ended December 31, 2014.

Productive capital maintenance expenditures:
DCPayments differentiates capital expenditures between growth and productive capital maintenance. There is no such distinction under GAAP, however DCPayments 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 DCPayments' existing productive capacity, while growth capital is expended to increase DCPayments' productive capacity by adding additional sources of revenue not currently in existence. Current measures of productive capacity that DCPayments 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 maintenance capital expenditures may differ from similar computations as reported by other issuers and, accordingly, may not be comparable to productive capital maintenance expenditures as reported by such issuers.

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

Non-cash working capital:
Non-cash working capital is not a defined GAAP measure. DCPayments calculates changes in non-cash working capital as changes during a reporting period in current assets (excluding cash, cash in circulation and restricted funds) and current liabilities (excluding bank overdraft, restricted funds and current portion of long-term debt).

Shareholders of DCPayments receive monthly payments in the form of dividends. 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 DCPayments. Continued future distribution of dividends (and the amount of any dividends) is subject to DCPayments' Board of Directors approval. DCPayments' 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 DCPayments' future plans and operations and contains "forward-looking information" relating to future events as defined under applicable Canadian securities legislation. The Company's actual results or performance could differ materially from those expressed in, or implied by, this forward-looking information. DCPayments 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 DCPayments' 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 risks and uncertainties are described in DCPayments' Annual Information Form for the year ended December 31, 2014 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", "may", "believe", "should", "expect", "will", "intends", "plan", "anticipates", "potential", "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 include statements related to DCPayments' projected growth in operations in the Americas, Australasia and Europe, ability to complete quality accretive acquisitions at reasonable multiples on a go forward basis, ability to provide consistent cash dividends, ability to drive growth and increase our margins, expansion of DCPayments' merchant base through new and innovative products and services, impact of acquisitions in the United Kingdom, Australia and Canada including realizing on expected synergies and ability to realize significant economies of scale and cost savings, 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 add product offerings in the markets we operate in, ability to diversify both domestically and internationally ability to increase the servicing of the Threshold acquired customer relationships and increase our sales presence with other clients, ability to close the DC Bank acquisition, the expectation that the Eze acquisition will be accretive to funds from operations per share in the first fiscal year following the transaction, or at all,the costs of the Toronto and Calgary office upgrades and the possible increase in capital expenditures for technology and infrastructure or due to regulatory mandated security upgrade changes, including the EMV upgrades in Australia and the sufficiency of funds generated from operations to fund the same.

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 budgeted projections of increased capital expenditures required based on management's view of the age of capital assets currently in use by DCPayments.

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 DCPayments is available on SEDAR ( or DCPayments' website at

Contact Information

  • For further information please contact:

    Amanda J. Gallacher
    Vice President
    Corporate Strategy & Acquisitions
    Direct Telephone: (403) 387-2158
    Fax: (403) 451-3058


    Brenda G. Hughes
    Chief Financial Officer
    Direct Telephone: (403) 387-2103
    Fax: (403) 451-3003