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Why Shares of Cardtronics Dropped Today

By Timothy Green – May 4, 2017 at 4:01PM

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The ATM operator got a revenue boost from a major acquisition, but its earnings fell short of expectations.

What happened

Shares of ATM operator Cardtronics (CATM) fell 11% on Thursday after the company reported mixed first-quarter results. Revenue came in ahead of analyst expectations, but the bottom line missed by a significant margin.

So what

Cardtronics reported first-quarter revenue of $357.6 million, up 18% year over year and about $8 million higher than the average analyst estimate. Adjusted for currency, revenue increased by 22%. This growth was driven by the acquisition of DCPayments, which contributed $58.9 million in revenue. ATM operating revenue in North America slumped 1% year over year.

A sign for a 24 hour ATM.

Image source: Cardtronics.

Non-GAAP net income came in at $0.55 per share, down from $0.68 in the prior-year period and $0.08 below analyst expectations. Cardtronics posted a GAAP net loss of $0.02 per share, negatively affected by a restructuring charge, acquisition-related costs, and asset impairment charges.

Cardtronics CEO Steve Rathgaber tried to explain the mixed results:

However, first quarter revenue and earnings were negatively impacted by a series of transitory operating challenges. The operating issues were directly related to software and system conversions in the U.S. and Australia. The results were broadly anticipated, and we believe that we are beginning to move past these challenges.

Now what

Cardtronics expects to produce revenue of $1.45 billion to $1.5 billion during 2017, along with non-GAAP EPS between $2.80 and $3.00. This guidance includes the effects of the planned de-installations of ATMs at 7-Eleven locations in the U.S., which is set to begin during the third quarter and be mostly complete by the end of the year. Cardtronics produced revenue of $1.265 billion and non-GAAP EPS of $3.26 in 2016.

With Cardtronics' profit taking a hit during the first quarter due to various factors, and with earnings expected to decline in 2017, it's no surprise investors pushed the stock lower.

Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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