DirectCash Payments Inc.

DirectCash Payments Inc.

March 21, 2013 23:12 ET

DirectCash Payments Inc. Announces Results of Operations for the Three Months and Year Ended December 31, 2012

CALGARY, ALBERTA--(Marketwire - March 21, 2013) - DirectCash Payments Inc. (TSX:DCI) ("DirectCash" or the "Company") today announced consolidated financial results for the three months and year ended December 31, 2012.

Financial and Operational Highlights:

  • Increased the three month EBITDA 128% to $18.3 million and the full year EBITDA 54% to $56.6 million
  • Increased the three month Revenue 140% to $65.1 million and the full year Revenue 71% to $192.1 million
  • 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
  • Acquired 100% of the shares of New Zealand ATM Services Limited
  • Acquired $3.3 million (£2.1 million) of ATM assets in the U.K., including residual contract rights for 484 ATM locations on December 7, 2012

Management's Commentary

"We are very pleased with our 2012 results and our demonstrated ability to generate synergies in the recently acquired businesses of Customers and InfoCash. We look forward to continuing to generate shareholder value and integrate the transformative acquisitions we made in 2012" 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 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 year which will be reflected in lower costs for 2013. Additionally, to address Australian ATM transaction processing costs we 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 is very pleased at the speed in which the global DirectCash team has been able to streamline costs and integrate the business in Australia and the United Kingdom.

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 and year ended December 31, 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 (

Three months ended Year ended
December 31 December 31
2012 2011 2012 2011
Summary operating results
Number of machines
Active ATM terminals1 19,398 7,863 19,398 7,863
Number of transactions
ATM transactions 24,857,906 8,437,848 72,590,543 34,435,991
Other transactions 3,853,810 4,580,171 17,438,362 18,999,615
Summary financial results
(thousands, except for per share amounts)
Revenue 65,143 27,091 192,120 112,342
EBITDA2 18,318 8,036 56,564 36,670
EBITDA margin3 28.1 % 29.7 % 29.4 % 32.6 %
Net Income 1,672 8,549 6,328 20,322
Net Income attributable to common shareholders 1,829 8,549 6,857 20,322
Per share, basic 0.11 0.62 0.46 1.48
Per share, diluted 0.11 0.62 0.46 1.47
Funds from operations3 13,127 7,890 37,771 34,378
Funds from operations per share, basic3 0.79 0.57 2.54 2.49
Funds from operations per share, diluted3 0.79 0.57 2.53 2.48
Dividends declared 5,741 4,775 20,708 19,100
Dividends declared per share4 0.35 0.35 1.38 1.38
Funds from operations payout ratio4 43.7 % 60.5 % 54.8 % 55.6 %
Total assets 442,738 166,302 442,738 166,302
Total long-term debt 197,889 - 197,889 -
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.


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 2013 will be to continue to integrate the acquisitions of Customers Limited ("Customers") and InfoCash Holdings Limited ("InfoCash"), driving efficiencies 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 in Canada.

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. DirectCash has rationalized its New Zealand business, removing unprofitable ATMs. As at December 31, 2012 DirectCash had 6,432 ATMs 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 4,700 ATM sites and related contracts were acquired by DirectCash in the United Kingdom. Since the acquisition, DirectCash has grown organically, adding 798 ATMs for a total of 5,489 as at December 31, 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, while adding other product offerings to InfoCash.

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 ("DC 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.

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 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 non-recurring other gains and 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 and years ended December 31, 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 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). 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 and years ended December 31, 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. 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"). 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.


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 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 and in the "Key Business Risks" section of the Company's MD&A for the three months and year ended December 31, 2012.

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 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 ( or DirectCash's website at

Contact Information