Cardtronics plc (Form: 8-K, Received: 08/01/2019 16:10:16)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): July 31, 2019

Cardtronics plc

(Exact name of registrant as specified in its charter)

England and Wales

001-37820

98-1304627

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification Number)


2050 West Sam Houston Parkway South, Suite 1300, Houston, Texas						77042
(Address of principal executive offices)						Zip Code

(832) 308-4000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Schedule 13(a) of the Exchange Act. ☐


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, nominal value $0.01 per share	CATM	NASDAQ Stock Market

Item 2.02 Results of Operations and Financial Condition.

On August 1, 2019, Cardtronics plc (the “Company”) issued a press release regarding its financial results for the quarter ended June 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. This information is not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and pursuant to Item 2.02 of Form 8-K, will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 31, 2019, the Company entered into an amendment (the “Amendment”) to the employment agreement with Gary Ferrera, the Company’s chief financial officer, dated as of November 16, 2017 (as amended, the “Employment Agreement”), to conform the terms of the separation payments to which Mr. Ferrera is entitled upon a termination of employment and the definition of “Change in Control” to the terms and definition applicable to the Company’s other executive officers. Capitalized terms used but not defined herein have such meanings as set forth in the Employment Agreement.

Following the Amendment, the Employment Agreement provides the following:

•If Mr. Ferrera’s employment is terminated due to death or disability, for Cause, or Mr. Ferrera’s voluntary resignation without Good Reason or election not to renew the agreement, he will be entitled to receive unpaid base salary, accrued but unused vacation, unreimbursed expenses (including incurred but unreimbursed relocation expenses unless he is terminated for Cause) and benefits to which Mr. Ferrera is entitled as of his termination.

•If Mr. Ferrera’s employment is terminated due to death, disability or Mr. Ferrera’s voluntary resignation without Good Reason, he is also entitled to receive his unpaid annual bonus for the year prior to termination and the pro-rated bonus for the year in which the termination occurs.

•If Mr. Ferrera’s employment is terminated due to death or disability, unless the applicable award agreement is more favorable, Mr. Ferrera will also be entitled to accelerated vesting of: time-based equity awards that would have vested in the 12 months following termination, a pro-rata amount of performance-based equity awards at target if the termination occurs during the performance period, the full amount of earned performance-based equity awards if termination occurs following the performance period and the unvested portion of Mr. Ferrera’s sign-on incentive stock award.

•If Mr. Ferrera’s employment is terminated due to his resignation for Good Reason or by action of the Company to terminate or not renew the Employment Agreement (other than for Cause), in addition to the payment of the unpaid Annual Bonus, the Annual Bonus for the year in which the termination occurs and two-times the sum of Mr. Ferrera’s base salary plus Average Annual Bonus and the availability of 18-months of COBRA coverage, Mr. Ferrera will also be entitled to, unless the applicable award agreement is more favorable, accelerated vesting of: any sign-on or one-time special equity awards, time-based equity awards that would have vested in the 12 months following termination, and, if the termination date is after the initial 12 month vesting period, but before the end of the performance period, a pro-rated amount of performance-based equity awards based on the actual level of performance through the termination date or, if the termination date is after the end of the performance period, the full amount of the earned award.

•If Mr. Ferrera’s employment is terminated due to his resignation for Good Reason or by action of the Company to terminate or not renew the Employment Agreement, in either case, within 24 months following a Change in Control, Mr. Ferrera will be entitled to receive, unless the applicable award agreement is more favorable accelerated vesting of sign-on or one-time special equity awards and time-based equity awards that would have vested in the 12 months immediately following the termination date, and, in respect of performance-based equity award, for a termination during the performance period, the equity awards are deemed earned at the greater of actual or target and any time-vesting conditions are satisfied as of termination and, for a termination following the end of a performance period, any awards that would have vested following the termination, fully vest as of the date of termination.

All separation payments not required by law are subject to the execution by Mr. Ferrera of an irrevocable release of claims in favor of the Company and related parties.

The foregoing summary is qualified in its entirety by the full text of the Employment Agreement.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The Exhibit Index is incorporated by reference herein.

EXHIBIT INDEX


Exhibit						Description of the Exhibit
Number
10.1						Amendment to Employment Agreement by and between Cardtronics USA, Inc. and Gary Ferrera, dated as of July 31, 2019.
99.1						Press release dated August 1, 2019

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	CARDTRONICS PLC

	By:	/s/ Paul A. Gullo
		Paul A. Gullo
		Chief Accounting Officer
August 1, 2019

AMENDMENT TO EMPLOYMENT AGREEMENT

THIS AMENDMENT (this “Amendment”), dated as of July 31, 2019, is entered into by and between Cardtronics USA, Inc., a Delaware corporation (the “Company”), a Delaware corporation, and Gary W. Ferrera (the “Executive”).

WHEREAS, the Company and Executive are parties to an Employment Agreement, dated November 16, 2017 (the “Employment Agreement”);

WHEREAS, the Company and Executive desire to enter into this Amendment to amend certain terms of the Employment Agreement; and

WHEREAS, capitalized terms that are not defined herein shall have the same meaning as set forth in the Employment Agreement, unless specified to the contrary.

NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Section 1.6 of the Employment Agreement is deleted in its entirety and replaced with the following:

“Change in Control” shall mean and shall be deemed to have occurred if any event set forth in any one of the following paragraphs shall have occurred:

(a)the consummation of a merger of, or other business combination by, the Parent Company with or involving another entity; a reorganization, reincorporation, amalgamation, scheme of arrangement or consolidation involving the Parent Company; or the sale of all or substantially all of the Parent Company’s or the Company’s Assets to another entity (any of which, a “Corporate Transaction”); unless, following such Corporate Transaction, (a) the holders of equity securities of the Parent Company immediately prior to such transaction beneficially own, directly or indirectly, immediately after such transaction, equity securities of the resulting or surviving parent entity, the transferee entity or any new direct or indirect parent entity of the Parent Company resulting from or surviving any such transaction (such entity, the “Successor Entity”) entitled to 70% or more of the votes then eligible to be cast in the election of directors generally (or comparable governing body) of the Successor Entity in substantially the same proportion that they owned the equity securities of the Parent Company immediately prior to such transaction or (b) at least a majority of the members of the board of directors (or comparable governing body) of the Successor Entity immediately following the Corporate Transaction were Incumbent Directors (defined below) at the time of the execution of the initial agreement providing for such Corporate Transaction;

(b)upon the dissolution or liquidation of the Parent Company, other than a liquidation or dissolution into any entity in which the holders of equity securities of the Parent Company immediately prior to such liquidation or dissolution beneficially own, directly or indirectly, immediately after such liquidation or dissolution equity securities of the entity into which the Parent Company was liquidated or dissolved entitled to 70% or more of the votes then eligible to be cast in the election of directors generally (or comparable governing body) of such entity, in substantially the same proportion that they owned the equity securities of the Parent Company immediately prior to such liquidation or dissolution;

(c)when any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Exchange Act, but excluding any employee benefit plan sponsored by the Parent Company (or any related trust thereto), acquires or gains ownership or control (including, without limitation, power to vote) of more than 30% of the combined voting power of the outstanding equity securities of the Parent Company, other than any entity in which the holders of equity securities of the Parent Company immediately prior to such acquisition beneficially own, directly or indirectly, immediately after such acquisition, equity securities of the acquiring entity entitled to 70% or more of the votes then eligible to be cast in the election of directors generally (or comparable governing body) of the acquiring entity, in substantially the same proportion that they owned the equity securities of the Parent Company immediately prior to such acquisition or any employee benefit plan sponsored by any such entity (or any related trust thereto); or

(d)during any period of twelve consecutive months the following individuals (the “Incumbent Directors”) cease for any reason to constitute a majority of the number of directors then serving on the Board: individuals who, on the Effective Date, constitute the Board and any new director whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least a majority of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended (other than such new director whose initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to, a consent or proxy solicitation, relating to the election of directors of the Company by or on behalf of a Person other than the Board).

2.Section 7.1(a) of the Employment Agreement is deleted in its entirety and replaced with the following:

“If Executive’s employment hereunder shall terminate for any reason described in Sections 3.2(a), 3.2(b) or 3.2(c), pursuant to Executive’s resignation for other than Good Reason, or by Executive’s election not to renew the Initial Term or any Renewal Term in accordance with Section 3.1, then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that Executive shall be entitled to (i) payment of all accrued and unpaid Base Salary accrued but unused vacation and unreimbursed expenses to the Date of Termination, (ii) except in the case of a termination under Section 3.2(c) or by Executive’s election not to renew the Initial Term or any Renewal Term in accordance with Section 3.1, any unpaid Annual Bonus for the calendar year ending prior to the Date of Termination, which amount shall be payable in a lump-sum on or before the date such annual bonuses are paid to executives who have continued employment with the Company (but in no event later than March 15 of the calendar year following the calendar year to which such Annual Bonus relates), (iii) reimbursement for all incurred but unreimbursed expenses for which Executive is entitled to reimbursement in accordance with Section 4.5, (iv) except in the case of a termination under Section 3.2(c), to the extent not already paid, any reimbursement of relocation costs to which the Executive is otherwise entitled in accordance with Section 4.9, and (v) benefits

to which Executive is entitled under the terms of any applicable benefit plan or program other than any severance plan or program. In addition, if Executive’s employment hereunder is terminated pursuant to Sections 3.2(a) or 3.2(b), subject to the Executive’s or Executive’s representative’s or estate’s, as applicable, delivery, within 30 days (or 45 days if the Company determines necessary and set forth in the Release (defined below)) after the date of such termination of employment, of the executed release substantially in the form of the release attached as Appendix A (the “Release”) and subject to Executive’s or Executive’s representative’s or estate’s, as applicable, compliance with all of the surviving provisions of this Agreement and non-revocation of the Release, (i) the Executive’s outstanding Annual Equity Awards shall be treated as follows, unless the applicable award agreement provides for more favorable treatment: (A) any annual equity awards granted under the Stock Incentive Plan that vest solely based on continued employment or service that would have, but for the termination of the Executive’s employment, vested in the 12 months immediately following the Date of Termination, shall vest as of the Date of Termination, and (B) awards that vest solely or in part based on performance goals, (1) for a termination of employment during the performance period, such awards shall be deemed earned at the target level of performance and a pro-rata number of awards shall vest based on the number of full and partial months the Executive was employed within the performance period over the number of total months in the performance period and (2) for a termination of employment following the end of a performance period applicable to an award, any awards earned during the performance period shall fully vest, (ii) the unvested portions of the Sign-On Incentive Stock Award will be 100% fully accelerated and settled within 10 days following the Date of Termination, and (iii) if Executive’s employment is terminated by the Company due to death or Disability, Executive shall receive a bonus for the year in which the Date of Termination occurs, calculated on a pro-rata basis to the Date of Termination and paid when other bonuses for such fiscal year are paid.”

3.The following Section 7.1(b)(v) is hereby added to the Employment Agreement after Section 7.1(b)(iv):

“(v) notwithstanding anything to the contrary in the applicable award agreement, unless the applicable award agreement provides for more favorable treatment:

(A)any sign-on or one-time special equity awards granted under the Stock Incentive Plan that were not awarded to the Executive as part of the annual equity award program, shall fully vest as of the Date of Termination,

(B)any annual equity awards granted under the Stock Incentive Plan that vest solely based on continued employment or service that would have, but for the termination of the Executive’s employment, vested in the 12 months immediately following the Date of Termination, shall vest as of the Date of Termination,

(C)any annual equity awards granted under the Stock Incentive Plan that vest solely or in part based on performance goals,

(I)for a termination of employment during the first 12 calendar months of a performance period applicable to an award, such awards shall be forfeited;

(II)for a termination of employment following the end of the first 12 calendar months of a performance period, but prior to end of that performance period, such awards shall be earned at the actual level of performance and a pro-rata number of awards based on the number of full and partial months the Executive was employed within the performance period over the number of total months in the performance period shall vest in accordance with the terms of the relevant award; and

(III)for a termination of employment following the end of the performance period applicable to an award, any awards earned during that performance period shall fully vest as of the Date of Termination;

provided that, if such termination is within 24 months following a Change in Control, notwithstanding anything to the contrary in the applicable award agreement, unless the applicable award agreement provides for more favorable treatment and provided the applicable Stock Incentive Plan allows: (A) any sign-on or one-time special equity awards granted under the Stock Incentive Plan that were not awarded to the Executive as part of the annual equity award program, shall fully vest as of the Date of Termination, (B) any annual equity awards granted under the Stock Incentive Plan that vest solely based on continued employment or service that would have, but for the termination of the Executive’s employment, vested following the Date of Termination, shall fully vest as of the Date of Termination, (C) any annual equity awards granted under the Stock Incentive Plan that vest solely or in part based on performance goals, (1) for a termination of employment during the performance period applicable to an award, such awards shall be deemed earned at the greater of actual or target level of performance and any time-vesting condition shall be satisfied as of the Date of Termination and (2) for a termination of employment following the end of the performance period applicable to an award, any awards earned during the performance period, and that would have, but for the termination of the Executive’s employment, vested following the Date of Termination, shall fully vest as of the Date of Termination. In the event the applicable Stock Incentive Plan does not allow for vesting of any award as outlined herein, Executive shall be entitled to the most favorable treatment for vesting of that award available under the applicable Stock Incentive Plan.

4.References. All references in the Employment Agreement to “Agreement” and any other references of similar import shall hereinafter refer to the Employment Agreement as amended by this Amendment.

5.Remaining Provisions. Except as expressly modified by this Amendment, the Employment Agreement shall remain in full force and effect. This Amendment embodies the entire agreement and understanding of the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings, oral or written, relative thereto.

6.Governing Law. This Amendment and all claims, causes of action or proceedings (whether in contract, in tort, at law or otherwise) that may be based upon, arise out of or relate to this Amendment will be governed by the internal laws of the State of Texas, without regard to conflicts of laws principles thereof.

7.Amendment Effective Date. This Amendment shall be effective as of the date first listed above.

8.Counterparts. This Amendment may be executed by either of the parties hereto in counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and effective as of the day and year written below.

Cardtronics USA, Inc.

By:

/s/ Edward West

Name:

Edward West

Title:

Chief Executive Officer

/s/ Gary W. Ferrera

Gary W. Ferrera

DATE:

July 31, 2019

CARDTRONICS ANNOUNCES SECOND QUARTER 2019 RESULTS

Returns to Organic Growth

Increased Margins, Driven by Incremental Transactions and Operational Execution

Increasing Outlook for 2019

HOUSTON, August 1, 2019 – Cardtronics plc (Nasdaq: CATM) (“Cardtronics” or the “Company”), the world’s largest ATM owner/operator, announced today its financial and operational results for the quarter ended June 30, 2019.

Second Quarter 2019 Highlights:

•Total revenues of $340.8 million, effectively flat from $341.0 million in the prior year, up 3% on a constant-currency basis.

•ATM operating revenues of $323.1 million, down 2% from $329.2 million in the prior year and up 1% on a constant-currency basis.

•GAAP net income of $10.5 million, or $0.22 per diluted share, compared to GAAP net income of $3.8 million, or $0.08 per diluted share in the prior year.

•Adjusted EBITDA of $81.7 million, up 5% from $78.1 million in the prior year, and up 8% on a constant- currency basis.

•Adjusted EBITDA margin of 24.0%, up 110 basis points from the prior year.

•Adjusted net income per diluted share of $0.69, up 16% on a constant-currency basis.

•Cash flow from operations of $77.0 million compared to $60.3 million in the prior year and adjusted free cash flow of $50.1 million compared to $33.3 million in the prior year.

•U.S. same-store withdrawal transaction growth of 3%.

•Executed agreements to place approximately 1,500 ATMs.

•Acquired ATM processing contracts for over 62,000 ATMs in the U.S.

•Repurchased over one million shares between May and July, over 2% of shares outstanding.

“We had a great second quarter, one in which we grew both the top line and bottom line on an organic and constant-currency basis, representing an important turning point for the organization. Significant changes in the consumer financial services industry continue to be a catalyst for growth, as we deliver our unmatched suite of ATM solutions for retailers and financial institutions alike. The strong quarterly performance was marked by solid execution on our business transformation plans across our segments, and as a result, we are raising our performance expectations for the year. We also opportunistically repurchased over one million of our shares since May, enabling further value-enhancing opportunities for our shareholders,” commented Edward H. West, Cardtronics' chief executive officer.

See Disclosure of Non-GAAP Financial Information in this earnings release for definitions of Adjusted Gross Profit, Adjusted Gross Margin, EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share (may also be referred to by the Company as "Adjusted EPS"), Adjusted Free Cash Flow, and certain other financial measures recognized under generally accepted accounting principles in the U.S. (“U.S. GAAP” or “GAAP”) and other non-GAAP measures that are used by management on a constant-currency basis. For additional information, including reconciliations to the most directly comparable GAAP measure, see the supplemental schedules of selected financial information in this earnings release.

The Company may also refer to revenue or profit growth as being organic. When providing growth measures on an organic basis, the Company aims to exclude the estimated impact from any acquired or divested businesses that may be included or partially included in one period but not another. The Company may further adjust organic performance measures for the impacts of currency movements, in order to have a consistent performance comparison across periods for the business, excluding movements in exchange rates.

2019 Outlook

The Company is increasing its financial outlook for the year ending December 31, 2019 and now expects the following:

•Revenues of $1.33 billion to $1.36 billion;

•GAAP net income of $41 million to $44 million;

•Adjusted EBITDA of $300 million to $310 million;

•Depreciation and accretion expense of $137 million to $139 million;

•Cash interest expense of $27 million to $28 million;

•Adjusted net income of $104 million to $109 million;

•Adjusted net income per diluted share of $2.24 to $2.36 based on approximately 46.3 million average diluted shares outstanding; and

•Capital expenditures of approximately $135 million.

The Adjusted EBITDA and Adjusted Net Income outlook excludes the impact of certain expenses, as outlined in the reconciliation provided at the end of this earnings release. See Disclosure of Non-GAAP Financial Information in this earnings release for definitions of these Non-GAAP measures. This outlook is based on average foreign currency exchange rates for the remainder of 2019 of £1.00 U.K. to $1.25 U.S., $19.50 Mexican pesos to $1.00 U.S., $1.00 Canadian dollar to $0.75 U.S., €1.00 Euros to $1.13 U.S., $1.00 Australian dollar to $0.69 U.S., and R15.00 South African Rand to $1.00 U.S.

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CONFERENCE CALL INFORMATION

The Company will host a conference call today, Thursday, August 1, 2019, at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) to discuss its financial results for the quarter ended June 30, 2019. To access the call, please call the conference call operator at:


Dial in:						(877) 303-9205
Alternate dial-in:						(760) 536-5226

Please call in 15 minutes prior to the scheduled start time and request to be connected to the “Cardtronics Second Quarter 2019 Earnings Conference Call.” Additionally, a live audio webcast of the conference call will be available online through the investor relations section of the Company’s website at www.cardtronics.com.

A digital replay of the conference call will be available through August 8, 2019, and can be accessed by calling (855) 859-2056 or (404) 537-3406 and entering 3180538 for the conference ID. A replay of the conference call will also be available online through the Company’s website subsequent to the call through August 31, 2019. Prior to the conference call, the Company will post supplemental financial information to its website at www.cardtronics.com.

ABOUT CARDTRONICS (Nasdaq: CATM)

Cardtronics is the trusted leader in financial self-service, enabling cash transactions at over 290,000 ATMs across 10 countries in North America, Europe, Asia-Pacific, and Africa. Leveraging our unmatched scale, expertise and innovation, top-tier merchants and businesses of all sizes use our ATM solutions to drive growth, in-store traffic, and retail transactions. Financial services providers rely on Cardtronics to deliver superior service at their own ATMs, on Cardtronics ATMs where they place their brand, and through Cardtronics' Allpoint Network, the world’s largest surcharge-free ATM network, with over 55,000 locations. As champions of cash, Cardtronics converts digital currency into physical cash, driving payments choice for businesses and consumers alike.

CONTACT INFORMATION


EVP - Treasurer Brad Conrad 832-308-4000 ir@cardtronics.com			SVP - Marketing Joel Antonini 832-308-4000 joel.antonini@cardtronics.com

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This earnings release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended and are intended to be covered by the safe harbor provisions thereof. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effect on the Company and there can be no assurance that future developments affecting the Company will be those that are anticipated. All comments concerning the Company’s expectations for future revenues and operating results are based on its estimates for its existing operations and do not include the potential impact of any future acquisitions. The Company’s forward-looking statements involve significant risks and uncertainties (some of which are beyond its control) and assumptions that could cause actual results to differ materially from its historical experience and present expectations or projections. Risk factors are described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and those set forth from time-to-time in other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements contained in this earnings release, which speak only as of the date of this earnings release. Except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION

In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, the Company presents the following non-GAAP measures as a complement to financial results prepared in accordance with U.S. GAAP: Adjusted Gross Profit, Adjusted Gross Margin, EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Tax Rate, Adjusted Net Income per share, Adjusted Free Cash Flow, and certain other results presented on a constant-currency basis. Management believes that the presentation of these measures and the identification of notable, non-cash, non-operating costs, and/or (if applicable in a particular period) certain costs not anticipated to occur in future periods enhance an investor’s understanding of the underlying trends in the Company’s business and provide for better comparability between periods in different years. Management also believes that these measures are relevant and provide useful information widely used by analysts, investors and other interested parties in the Company’s industry to provide a baseline for evaluating and comparing our operating performance and, in the case of free cash flow, our liquidity results. Management uses these non-GAAP financial measures in managing and measuring the performance of the business, including setting and measuring incentive based compensation.

The non-GAAP financial measures presented herein should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing, or financing activities, or other income or cash flow measures prepared in accordance with GAAP. Reconciliations of the non-GAAP financial measures used herein to the most directly comparable GAAP financial measures are presented in tabular form at the end of this earnings release. In addition, the non-GAAP measures that are used by the Company are not defined in the same manner by all companies and therefore may not be comparable to other similarly titled measures of other companies. Furthermore, the non-GAAP measures presented herein should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing or financing activities, or other income or cash flow measures contained within our financial statements.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit represents total revenues less the total cost of revenues, excluding depreciation, accretion, and amortization of intangible assets. Adjusted Gross Margin is calculated by dividing Adjusted Gross Profit by total revenues.

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EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

EBITDA is calculated by adding interest expense, income tax expense, depreciation and accretion and amortization to net income. EBITDA and Adjusted EBITDA exclude these items as these amounts can vary substantially from company to company within the Company’s industry depending upon capital structures, tax jurisdictions, accounting methods, the book values of assets and the methods by which the assets were acquired. Adjusted EBITDA also excludes certain non-cash, non-operating costs and/or (if applicable in a particular period) certain costs not anticipated to occur in future periods. These excluded items consist of share-based compensation expense, acquisition and divestiture-related expenses, restructuring expenses, gains or losses on disposal and impairment of assets and other income and expense. Adjusted EBITDA is also calculated to exclude amounts attributable to noncontrolling interests. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues.

Adjusted Net Income, Adjusted Net Income per Diluted Share and Adjusted Tax Rate

Adjusted Net Income represents net income computed in accordance with GAAP, before amortization of intangible assets and deferred financing costs, gains or losses on disposal and impairment of assets, share-based compensation expense, certain other income and expense amounts, acquisition and divestiture-related expenses, certain non-operating expenses, and (if applicable in a particular period) certain costs not anticipated to occur in future periods (together, the “Adjustments”). The non-GAAP tax rate used to calculate Adjusted Net Income was approximately 22.7% and 23.2% for the three and six months ended June 30, 2019, respectively, and 24.5% and 25.1% for three and six months ended June 30, 2018, respectively. The non-GAAP tax rates represent the GAAP tax rate for the period as adjusted by the estimated tax impact of the items adjusted from the measure. Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by weighted average diluted shares outstanding.

Adjusted Free Cash Flow

Adjusted Free Cash Flow is defined as cash provided by operating activities less the impact of changes in restricted cash due to the timing of payments of restricted cash liabilities and less payments for capital expenditures, including those financed through direct debt, but excluding acquisitions. The Adjusted Free Cash Flow measure does not take into consideration certain other non-discretionary cash requirements such as mandatory principal payments on portions of the Company’s long-term debt.

Constant-Currency

Management calculates certain GAAP as well as non-GAAP measures on a constant-currency basis using the average foreign currency exchange rates applicable in the corresponding period of the previous year and applying these rates to the measures in the current reporting period to assess performance and eliminate the effect foreign currency exchange rates have on comparability between periods.

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Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2019 and 2018

(In thousands, excluding share, per share amounts, and percentages)

(Unaudited)


	Three Months Ended													Six Months ended
	June 30,													June 30,
	2019			2018			% Change	2019			2018			% Change
Revenues:
ATM operating revenues	$	323,081		$	329,221		(1.9)%	$	625,683		$	648,952		(3.6)%
ATM product sales and other revenues	17,740			11,766			50.8	33,408			28,219			18.4
Total revenues	340,821			340,987			—	659,091			677,171			(2.7)
Cost of revenues:
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets reported separately below)	208,081			215,353			(3.4)	414,239			430,843			(3.9)
Cost of ATM product sales and other revenues	14,301			10,086			41.8	26,226			22,848			14.8
Total cost of revenues	222,382			225,439			(1.4)	440,465			453,691			(2.9)
Operating expenses:
Selling, general, and administrative expenses	41,995			40,928			2.6	85,655			82,668			3.6
Restructuring expenses	3,463			2,063			67.9	3,463			4,476			(22.6)
Acquisition related expenses	—			913			n/m	—			2,633			n/m
Depreciation and accretion expense	33,205			31,764			4.5	66,178			62,806			5.4
Amortization of intangible assets	12,591			13,498			(6.7)	25,003			27,269			(8.3)
Loss on disposal and impairment of assets	1,496			9,697			(84.6)	2,464			15,117			(83.7)
Total operating expenses	92,750			98,863			(6.2)	182,763			194,969			(6.3)
Income from operations	25,689			16,685			54.0	35,863			28,511			25.8
Other expenses:
Interest expense, net	6,871			9,159			(25.0)	13,514			18,333			(26.3)
Amortization of deferred financing costs and note discount	3,330			3,355			(0.7)	6,622			6,663			(0.6)
Other expense (income)	1,456			(2,187)			n/m	(5,751)			(27)			n/m
Total other expenses	11,657			10,327			12.9	14,385			24,969			(42.4)
Income before income taxes	14,032			6,358			n/m	21,478			3,542			n/m
Income tax expense	3,565			2,586			37.9	6,694			2,555			n/m
Effective tax rate	25.4		%	40.7		%		31.2		%	72.1		%
Net income	10,467			3,772			n/m	14,784			987			n/m
Net (loss) income attributable to noncontrolling interests	(4)			5			n/m	(6)			(12)			(50.0)
Net income attributable to controlling interests and available to common shareholders	$	10,471		$	3,767		n/m	$	14,790		$	999		n/m

Net income per common share – basic	$	0.23		$	0.08			$	0.32		$	0.02
Net income per common share – diluted	$	0.22		$	0.08			$	0.32		$	0.02

Weighted average shares outstanding – basic	46,180,161			45,927,732				46,201,842			45,880,661
Weighted average shares outstanding – diluted	46,601,488			46,378,813				46,620,147			46,357,776

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Condensed Consolidated Balance Sheets

As of June 30, 2019 and December 31, 2018

(In thousands)


	June 30, 2019		December 31, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	33,495	$	39,940
Accounts and notes receivable, net	85,707		75,643
Inventory, net	9,049		11,392
Restricted cash	86,431		155,470
Prepaid expenses, deferred costs, and other current assets	91,090		84,386
Total current assets	305,772		366,831
Property and equipment, net	455,757		460,187
Intangible assets, net	136,673		150,847
Goodwill	753,859		749,144
Operating lease assets	81,355		—
Deferred tax asset, net	11,544		8,658
Prepaid expenses, deferred costs, and other noncurrent assets	33,049		51,677
Total assets	$	1,778,009	$	1,787,344

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of other long-term liabilities	$	52,347	$	20,266
Accounts payable and other accrued and current liabilities	365,801		408,470
Total current liabilities	418,148		428,736
Long-term liabilities:
Long-term debt	778,551		818,485
Asset retirement obligations	54,227		54,413
Noncurrent operating lease liabilities	73,246		—
Deferred tax liability, net	37,325		41,198
Other long-term liabilities	54,639		67,740
Total liabilities	1,416,136		1,410,572
Shareholders' equity	361,873		376,772
Total liabilities and shareholders’ equity	$	1,778,009	$	1,787,344

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SELECTED BALANCE SHEET DETAIL:


Long-term debt:	June 30, 2019		December 31, 2018
	(In thousands)
	(Unaudited)
Revolving credit facility	$	212,811	$	259,081
1.00% Convertible senior notes ⁽¹⁾	269,520		263,507
5.50% Senior notes ⁽¹⁾	296,220		295,897

Total long-term debt	$	778,551	$	818,485

⁽¹⁾The 1.00% Convertible Senior Notes due 2020 with a face value of $287.5 million are presented net of the unamortized discount and capitalized debt issuance costs of $18.0 million and $24.0 million as of June 30, 2019 and December 31, 2018, respectively. In accordance with GAAP, the estimated fair value of the conversion feature within the Convertible Senior Notes was recorded as additional paid-in capital within equity at issuance. The Convertible Senior Notes are being accreted over the term of the notes to the full principal amount ($287.5 million). The 5.50% Senior Notes due 2025 with a face value of $300.0 million are presented net of capitalized debt issuance costs of $3.8 million and $4.1 million as of June 30, 2019 and December 31, 2018, respectively.

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Reconciliation of Net Income Attributable to Controlling Interests and Available to Common Shareholders to EBITDA, Adjusted EBITDA, and Adjusted Net Income

For the Three and Six Months Ended June 30, 2019 and 2018

(In thousands, excluding share and per share amounts)

(Unaudited)


	Three Months Ended						Six Months ended
	June 30,						June 30,
	2019		2018		2019		2018
Net income attributable to controlling interests and available to common shareholders	$	10,471	$	3,767	$	14,790	$	999
Adjustments:
Interest expense, net	6,871		9,159		13,514		18,333
Amortization of deferred financing costs and note discount	3,330		3,355		6,622		6,663
Income tax expense	3,565		2,586		6,694		2,555
Depreciation and accretion expense	33,205		31,764		66,178		62,806
Amortization of intangible assets	12,591		13,498		25,003		27,269
EBITDA	70,033		64,129		132,801		118,625

Add back:
Loss on disposal and impairment of assets	1,496		9,697		2,464		15,117
Other expense (income)⁽¹⁾	1,456		(2,187)		(5,751)		(27)
Noncontrolling interests ⁽²⁾	16		18		31		19
Share-based compensation expense	5,250		3,513		9,734		5,958
Restructuring expenses ⁽³⁾	3,463		2,063		3,463		4,476
Acquisition related expenses ⁽⁴⁾	—		913		—		2,633
Adjusted EBITDA	81,714		78,146		142,742		146,801
Less:
Interest expense, net	6,871		9,159		13,514		18,333
Depreciation and accretion expense ⁽⁵⁾	33,205		31,764		66,178		62,805
Adjusted pre-tax income	41,638		37,223		63,050		65,663
Income tax expense ⁽⁶⁾	9,452		9,120		14,634		16,481
Adjusted Net Income	$	32,186	$	28,103	$	48,416	$	49,182

Adjusted Net Income per share – basic	$	0.70	$	0.61	$	1.05	$	1.07
Adjusted Net Income per share – diluted	$	0.69	$	0.61	$	1.04	$	1.06

Weighted average shares outstanding – basic	46,180,161		45,927,732		46,201,842		45,880,661
Weighted average shares outstanding – diluted	46,601,488		46,378,813		46,620,147		46,357,776

(1)Includes foreign currency translation gains/losses, the revaluation of the estimated acquisition related contingent consideration, and other non-operating costs.

⁽²⁾Noncontrolling interest adjustment made such that Adjusted EBITDA includes only the Company’s ownership interest in the Adjusted EBITDA of one of its Mexican subsidiaries.

⁽³⁾For the three and six months ended June 30, 2019, expenses include professional fees, employee severance costs, and facility costs related to a planned reorganization. For the three and six months ended June 30, 2018, expenses include employee severance and other costs incurred in conjunction with a corporate reorganization and cost reduction initiative.

⁽⁴⁾For the three and six months ended June 30, 2018, expenses primarily include employee severance cost and lease termination costs related to the DCPayments acquisition.

⁽⁵⁾Amounts exclude a portion of the expenses incurred by one of its Mexican subsidiaries to account for the amounts allocable to the noncontrolling interest shareholders.

⁽⁶⁾For the three and six months ended June 30, 2019, the non-GAAP tax rate used to calculate Adjusted Net Income was 22.7% and 23.2%, respectively. For the three and six months ended June 30, 2018, the non-GAAP tax rate used to calculate Adjusted Net Income was 24.5% and 25.1%, respectively. These figures represent the Company’s GAAP tax rates as adjusted for the net tax effects related to the items excluded from Adjusted Net Income.

- 9 -

Reconciliation of U.S. GAAP Revenue to Constant-Currency Revenue

For the Three and Six Months Ended June 30, 2019 and 2018

(In thousands, excluding percentages)

(Unaudited)


Consolidated revenue:
	Three Months Ended
	June 30,
	2019										2018			% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP					Constant - Currency

ATM operating revenues	$	323,081	$	9,528	$	332,609	$	329,221	(1.9)	%		1.0	%
ATM product sales and other revenues	17,740		226		17,966		11,766		50.8			52.7
Total revenues	$	340,821	$	9,754	$	350,575	$	340,987	—	%		2.8	%


	Six Months Ended
	June 30,
	2019										2018			% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP					Constant - Currency

ATM operating revenues	$	625,683	$	20,655	$	646,338	$	648,952	(3.6)	%		(0.4)	%
ATM product sales and other revenues	33,408		517		33,925		28,219		18.4			20.2
Total revenues	$	659,091	$	21,172	$	680,263	$	677,171	(2.7)	%		0.5	%

- 10 -

Reconciliation of Gross Profit Inclusive of Depreciation, Accretion, and Amortization of Intangible Assets to Adjusted Gross Profit

For the Three and Six Months Ended June 30, 2019 and 2018

(In thousands, excluding percentages)

(Unaudited)


	Three Months Ended									Six Months ended
	June 30,									June 30,
	2019			2018			2019			2018
Total revenues	$	340,821		$	340,987		$	659,091		$	677,171
Total cost of revenues ⁽¹⁾	222,382			225,439			440,465			453,691
Total depreciation, accretion, and amortization of intangible assets excluded from total cost of revenues	37,975			36,535			74,994			73,681
Gross profit inclusive of depreciation, accretion, and amortization of intangible assets	80,464			79,013			143,632			149,799
Gross Margin (inclusive of depreciation, accretion, and amortization of intangible assets)	23.6		%	23.2		%	21.8		%	22.1		%
Total depreciation, accretion, and amortization of intangible assets excluded from gross profit	37,975			36,535			74,994			73,681
Adjusted Gross Profit exclusive of depreciation, accretion, and amortization of intangible assets	$	118,439		$	115,548		$	218,626		$	223,480
Adjusted Gross Margin (exclusive of depreciation, accretion, and amortization of intangible assets)	34.8		%	33.9		%	33.2		%	33.0		%

⁽¹⁾The Company presents the Total cost of revenues in the Company’s Consolidated Statements of Operations exclusive of depreciation, accretion, and amortization of intangible assets.

- 11 -

Reconciliation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share on a Non-GAAP basis to Constant-Currency

For the Three and Six Months Ended June 30, 2019 and 2018

(In thousands, excluding per share amounts and percentages)

(Unaudited)


	Three Months Ended
	June 30,
	2019										2018		% Change
	Non - GAAP⁽¹⁾		Foreign Currency Impact		Constant - Currency		Non - GAAP⁽¹⁾		Non - GAAP⁽¹⁾		Constant - Currency
Adjusted EBITDA	$	81,714	$	2,340	$	84,054	$	78,146	4.6	%	7.6	%

Adjusted Net Income	$	32,186	$	911	$	33,097	$	28,103	14.5	%	17.8	%

Adjusted Net Income per share – diluted ⁽²⁾	$	0.69	$	0.02	$	0.71	$	0.61	13.1	%	16.4	%


	Six Months Ended
	June 30,
	2019										2018		% Change
	Non - GAAP⁽¹⁾		Foreign Currency Impact		Constant - Currency		Non - GAAP⁽¹⁾		Non - GAAP⁽¹⁾		Constant - Currency
Adjusted EBITDA	$	142,742	$	4,400	$	147,142	$	146,801	(2.8)	%	0.2	%

Adjusted Net Income	$	48,416	$	1,413	$	49,829	$	49,182	(1.6)	%	1.3	%

Adjusted Net Income per share – diluted ⁽²⁾	$	1.04	$	0.03	$	1.07	$	1.06	(1.9)	%	0.9	%

⁽¹⁾As reported on the Company’s Reconciliation of Net Income Attributable to Controlling Interests and Available to Common Shareholders to EBITDA, Adjusted EBITDA, and Adjusted Net Income, see Disclosure of Non-GAAP Financial Information in this earnings release for further discussion.

⁽²⁾Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of 46,601,488 and 46,378,813 for the three months ended June 30, 2019 and 2018, respectively, and 46,620,147 and 46,357,776 for the six months ended June 30, 2019 and 2018, respectively.

- 12 -

Reconciliation of Adjusted Free Cash Flow

For the Three and Six Months Ended June 30, 2019 and 2018

(In thousands)

(Unaudited)


	Three Months Ended						Six Months ended
	June 30,						June 30,
	2019		2018		2019		2018
Net cash provided by operating activities	$	77,035	$	60,342	$	55,230	$	109,775
Restricted cash settlement activity ⁽¹⁾	(1,167)		(1,111)		70,354		(25,349)
Adjusted net cash provided by operating activities	75,868		59,231		125,584		84,426
Net cash used in investing activities, excluding acquisitions ⁽²⁾	(25,746)		(25,943)		(55,053)		(46,682)
Adjusted free cash flow	$	50,122	$	33,288	$	70,531	$	37,744

⁽¹⁾Restricted cash settlement activity represents the change in our restricted cash excluding the portion of the change that is attributable to foreign exchange and disclosed as part of the effect of exchange rate changes on cash, cash equivalents, and restricted cash in our Consolidated Statements of Cash Flows. Restricted cash largely consists of amounts collected on behalf of, but not yet remitted to, certain of the Company’s merchant customers or third-party service providers that are pledged for a particular use or restricted to support these obligations.

⁽²⁾Capital expenditure amounts include payments made for exclusive license agreements, site acquisition costs, and other assets. Additionally, capital expenditure amounts for one of our Mexican subsidiaries are reflected gross of any noncontrolling interest amounts.

- 13 -

Reconciliation of Estimated Net Income to EBITDA, Adjusted EBITDA, and Adjusted Net Income

For the Year Ending December 31, 2019

(In millions, excluding per share amounts)

(Unaudited)


	Estimated Range
	Full Year 2019⁽¹⁾
Net Income	$	41.1	$	44.4
Adjustments:
Interest expense, net	26.5		27.5
Amortization of deferred financing costs and note discount	13.0		13.0
Income tax expense	13.7		16.4
Depreciation and accretion expense	137.0		139.0
Amortization of intangible assets	49.0		49.5
EBITDA	280.3		289.8

Add Back:
Loss on disposal of assets and other, net	2.5		2.5
Other income	(5.8)		(5.8)
Share-based compensation expense	19.5		20.0
Restructuring expenses	3.5		3.5
Adjusted EBITDA	300.0		310.0
Less:
Interest expense, net	26.5		27.5
Depreciation and accretion expense	137.0		139.0
Income tax expense ⁽²⁾	32.8		34.4
Adjusted Net Income	$	103.7	$	109.1

Adjusted Net Income per share – diluted	$	2.24	$	2.36

Weighted average shares outstanding – diluted	46.3		46.3

⁽¹⁾See Disclosure of Non-GAAP Financial Information in this earnings release for definitions of the non-GAAP measures included in this table.

⁽²⁾Calculated using the Company’s estimated non-GAAP tax rate of approximately 24% as adjusted for items excluded from Adjusted Net Income, see Disclosure of Non-GAAP Financial Information in this earnings release for further discussion.

Cardtronics is a registered trademark of Cardtronics plc and its subsidiaries.

All other trademarks are the property of their respective owners.

###

- 14 -