Update: Global Axcess Corp Announces Record Net Income for Fiscal Year 2009
- Quarterly Revenue, Gross Profit, Gross Margin and Net Income Increase -
-Record Net Income for the Year of $2.8 Million Included Recognition of Deferred Tax Assets of $1.3 Million; Net Income Excluding Tax Benefit is a Record $1.5 Million -
JACKSONVILLE, Fla., March 3, 2010 /PRNewswire-FirstCall/ -- Global Axcess Corp (OTC Bulletin Board: GAXC; the "Company"), an independent provider of self-service kiosk solutions, today announced the financial results for the fourth quarter and fiscal year ended December 31, 2009.
Financial highlights for the fourth quarter ended December 31, 2009 included:
|
$5.4 million |
|
|
$1.1 million |
|
|
$1.1 million |
|
|
$404,500 |
|
|
$1.7 million |
|
|
$0.07 |
|
Financial highlights for the fiscal year ended December 31, 2009 included:
|
$21.5 million |
|
|
$4.1 million |
|
|
$4.7 million |
|
|
$1.5 million |
|
|
$2.8 million |
|
|
$0.12 |
|
*excluding recognition of deferred tax asset
**EBITDA before stock compensation expense and loss on early extinguishment of debt
Mr. George McQuain, Chief Executive Officer of the Company, stated, "This was a year of tremendous progress, as we position the Company for continued revenue and net income growth in 2010. During 2009, we increased our gross margin and operating income, and reported a new record net income for the year, demonstrating our ability to expand the Company's profitability. We believe our focus on higher volume locations and managing our expenses, particularly our interest expense, has positioned us for additional acceleration of net income in 2010."
Fourth Quarter 2009 Financial Results
The Company reported revenues from continuing operations of $5.4 million for the fourth quarter ended December 31, 2009, compared to $5.1 million for the fourth quarter ended December 31, 2008. This 4.9% increase was mainly due to increased focus on higher volume locations. Gross profit from continuing operations was $2.5 million, or 47.0% gross margin, for the fourth quarter ended December 31, 2009, compared to $2.4 million, or 46.2% gross margin, for the same period of 2008.
The recognition of deferred tax assets added $1.3 million of net income to the pre-tax operating profit of $404,481 and $1.5 million for the fourth quarter and fiscal year ended December 31, 2009, respectively. Deferred tax assets represent future potential tax deductions, which are a result of timing differences between tax laws and generally accepted accounting principles ("GAAP"). In order to recognize a deferred tax asset, GAAP requires evidence of sufficient future taxable income. Accounting practice typically views a history of profitability of eight to 12 consecutive quarters as sufficient evidence. In addition, a loss on the extinguishment of debt of $7,569 was recognized in the fourth quarter.
Operating income from continuing operations, excluding interest, the recognition of a deferred tax asset and the loss on the extinguishment of debt, was $548,019 for the fourth quarter ended December 31, 2009, compared to $571,102 for the same period of 2008. During the fourth quarter of 2009, the Company recorded net interest expense of $135,969, compared to net interest expense of $264,006 for the same period of 2008. The decrease was mainly due to a decrease in debt and refinancing outstanding debt at a lower interest rate. EBITDA (earnings before net interest, taxes, depreciation and amortization) for the fourth quarter of 2009 was $1.1 million, compared to $1.1 million for the fourth quarter of 2008. Adjusted EBITDA (EBITDA before stock compensation expenses and loss on early extinguishment of debt) was $1.1 million for the fourth quarter of 2009 from $1.1 million for the fourth quarter of 2008. EBITDA and adjusted EBITDA represent non-GAAP (Generally Accepted Accounting Principles) financial measures. A table reconciling these measures to the appropriate GAAP measures is included in this release.
Inclusive of the recognition of deferred tax assets, net income for the fourth quarter ended December 31, 2009 was $1.7 million, or $0.08 and $0.07 per basic and diluted share, respectively (based on 21.9 and 23.6 million basic and diluted weighted average shares outstanding, respectively), which compares to net income of $330,968, or $0.02 per share (based on 21.0 million basic and diluted weighted average shares outstanding, respectively), for the same period of 2008. The tax benefit represented $0.06 in earnings per share and, excluding the tax benefit, net income would have been $404,481.
Mr. McQuain added, "We continued to strengthen our operating metrics and increased net income for the quarter by 22%, compared to the same period of 2008, excluding the income tax benefit, on a revenue increase of 4.9%. Also key to increasing profitability was the refinancing of our debt which resulted in a 48% reduction in interest expense compared to the fourth quarter last year. As a result of our ongoing efforts to minimize expenses and focus on higher margin opportunities, we have achieved 13 continuous quarters of net income. During the fourth quarter of 2009, we continued to expand our ATM customer base, providing a larger base of predictable revenue as we move into 2010. We believe this positions us to deliver consistent profitability and allows us to move aggressively into the DVD kiosk marketplace, where revenue, gross margin and growth opportunities are substantially higher. As part of this move, we reached an agreement with self-service kiosk industry consultant Michelle Macpherson to help us define and implement our strategy to drive our national DVD kiosk expansion."
Mr. McQuain continued, "We are firmly focused on leveraging our expertise in the self-service kiosk segment to capture market share in the emerging DVD kiosk marketplace. We have established InstaFlix, a Nationwide Ntertainment Services Inc. business line and a subsidiary of the Company, to solidify our growing presence. To date, we have deployed 24 DVD kiosk locations. We will have another 10 of our InstaFlix-branded DVD kiosk locations installed by mid-March of 2010 and expect to have another 18 kiosks delivered and installed during April and May of 2010. This schedule is consistent with our expectation of rolling out between five and 10 per month through the first half of 2010, and accelerating to 15 to 20 in the second half of the year. Along with this deployment schedule, we will also be opportunistic and aggressive in going after larger deals in the DVD kiosk marketplace should they present themselves. Our growing presence in this marketplace is being applauded and embraced by retailers and other potential partners that are eager to participate in the rapidly expanding self-service, on-demand model, but have been frustrated by current service options. They recognize that our reputation for superior operational excellence, industry leading customer service, and up-time and on-time residual payments will help them generate additional traffic and revenues in their retail locations with a DVD self-service kiosk opportunity."
Fiscal Year 2009 Financial Results
For the fiscal year ended December 31, 2009, total revenue was $21.5 million, a decrease of 3.0%, compared to $22.2 million for the same period of 2008. Gross profit for the fiscal year ended December 31, 2009 was $10.2 million, reflecting a gross margin of 47.4%, compared to gross profit of $9.8 million, or a gross margin of 44.3%, for the comparable 2008 period. Operating income from continuing operations for the year, excluding interest, loss on early extinguishment of debt and the recognition of the deferred tax asset, was $2.7 million, compared to $2.2 million for the same period of 2008. Net income for the fiscal year ended December 31, 2009 was $2.8 million, or $0.13 and $0.12 per basic and diluted share (based on 21.7 and 22.8 million basic and diluted weighted average shares outstanding, respectively), compared to net income for the same period of 2008 of $1.2 million, or $0.06 per share (based on 21.0 million basic and diluted weighted average shares outstanding). Excluding a $1.3 million income tax benefit, net income would have been $1.5 million for the fiscal year. EBITDA decreased to $4.1 million for the fiscal year ended December 31, 2009 from $4.4 million for the fiscal year ended December 31, 2008. Adjusted EBITDA increased to $4.7 million for the fiscal year ended December 31, 2009 from $4.6 million for the fiscal year ended December 31, 2008.
Mr. McQuain continued, "We increased the profitability during 2009 and positioned the Company for further acceleration of net income in 2010. During 2009, the Company generated $4.4 million in net cash by continuing operating activities, an increase of 49.2% compared to 2008. We also generated adjusted EBITDA of $4.7 million and $1.5 million of net income. We completed 2009 with more than $2 million in cash and reduced our working capital requirements for 2010 by refinancing outstanding debt at a lower interest rate, without any pre-payment penalty. As a result, we expect approximately $40,000 in 2010 interest savings due to the lower interest rate of the loan. We have significantly reduced our working capital requirements and improved our resources, positioning the Company for continued revenue growth and expanded profitability in 2010."
Balance Sheet and Cash Flows
Net cash provided by continuing operating activities during the fiscal year ended December 31, 2009 was $4.4 million, compared to net cash provided by continuing operating activities of $3.0 million during the fiscal year ended December 31, 2008, representing a 49.2% increase. Shareholders' equity increased 23.0% to $16.6 million from $13.5 million at December 31, 2008.
Michael J. Loiacono, Chief Financial Officer of the Company, stated, "We continued to expand our profitability and significantly increased our cash flow from continuing operations for 2009. As a result of our profitability, we believed the timing was right to recognize deferred tax assets, which is reflected in our fourth quarter and fiscal year results. As we completed our analysis of deferred tax assets in connection with filing of the Company's Form 10-K for 2009, we realized we met the standards for recognition of these assets in the fourth quarter of 2009. GAAP requires evidence of sufficient future profitability, taxable income, to realize the benefit of the deferred tax asset. We delayed recognition of this tax benefit for as long as was appropriate."
Outlook:
"Assuming similar transaction levels in 2010 compared to 2009, and based on what we believe to be is a stable base of predictable revenue, we are targeting 5% to 10% organic growth from our ATM business," Mr. McQuain concluded. "Our DVD kiosk business will provide upside to this guidance, and we expect this new and emerging segment to add 5% to 10% in incremental revenue for calendar 2010. As we continue to carefully manage our expenses and focus on higher volume locations and higher margin opportunities, we anticipate accelerating our profitability in 2010 compared to 2009."
Conference Call Information
Anyone interested in participating should call 888-215-6899 and enter pass code 7617144 if calling within the United States, or 913-312-0945 and pass code 7617144 if calling internationally, approximately 5 to 10 minutes prior to 10 a.m. today. There will be a playback available until March 11, 2010. To listen to the playback, please call 888-203-1112 if calling within the United States or 719-457-0820 if calling internationally. Please use pass code 7617144 for the replay. A transcription of the call can be accessed at the Company's website at http://www.GlobalAxcess.biz.
About Global Axcess Corp
Headquartered in Jacksonville, Florida, Global Axcess Corp was founded in 2001 with a mission to emerge as the leading independent provider of self-service kiosk services in the United States. The Company provides turnkey ATM and other self-service kiosk management solutions that include cash and inventory management, project and account management services. Global Axcess Corp currently owns, manages or operates more than 4,500 ATMs and other self-service kiosks in its national network spanning 43 states. Â For more information on the Company, please visit http://www.globalaxcess.biz.
This press release may contain forward-looking statements. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as: "believes," "expects," "may," "will," "should," or "anticipates," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Various important risks and uncertainties may cause the Company's actual results to differ materially from the results indicated by these forward-looking statements. For a list and description of the risks and uncertainties the Company faces, please refer to Part I, Item 1A of the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 3, 2009, and other filings that have been filed with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, and such statements are current only as of the date they are made.
- tables follow -
GLOBAL AXCESS CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31,
------------------------
2009 2008
------ ------
ASSETS
Current assets
Cash and cash equivalents $2,007,860 $1,560,910
Automated teller machine vault cash 250,000 -
Accounts receivable, net of
allowance of $12,616 in 2009
and $9,799 in 2008 845,000 848,373
Inventory, net of allowance for
obsolescence of $94,572 in 2009
and $54,033 in 2008 308,031 276,731
Deferred tax asset - current 868,848 615,332
Prepaid expenses and other
current assets 132,100 164,968
------- -------
Total current assets 4,411,839 3,466,314
Fixed assets, net 5,299,661 4,723,138
Other assets
Merchant contracts, net 10,665,613 11,331,126
Intangible assets, net 4,095,911 4,118,426
Deferred tax asset - non-current 813,618 -
Restricted cash 800,000 -
Other assets 30,307 9,232
------- -------
Total assets $26,116,949 $23,648,236
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued
liabilities $2,983,583 $2,527,396
Automated teller machine
vault cash payable 250,000 -
Notes payable - related parties
- current portion, net 26,722 24,010
Notes payable - current portion 19,803 -
Senior lenders' notes payable
- current portion, net 1,828,572 606,705
Capital lease obligations
- current portion 667,233 779,990
------- -------
Total current liabilities 5,775,913 3,938,101
Long-term liabilities
Notes payable - related parties
- long-term portion, net 72,690 1,304,595
Notes payable - long-term portion 73,120 -
Senior lenders' notes payable
- long-term portion, net 3,300,000 4,240,086
Capital lease obligations
- long-term portion 329,314 425,582
Deferred tax liability
- long-term portion - 275,532
------- -------
Total liabilities 9,551,037 10,183,896
--------- ----------
Stockholders' equity
Preferred stock; $0.001 par value;
5,000,000 shares authorized, no
shares issued and outstanding - -
Common stock; $0.001 par value;
45,000,000 shares authorized,
21,931,786 and 21,021,786 shares
issued and 21,883,924 and 20,973,924
shares outstanding at 12/31/09
and 12/31/08, respectively 21,932 21,022
Additional paid-in capital 22,900,880 22,613,424
Accumulated deficit (6,344,934) (9,158,140)
Treasury stock; 47,862 shares of
common stock at cost (11,966) (11,966)
------- -------
Total stockholders' equity 16,565,912 13,464,340
---------- ----------
Total liabilities and stockholders'
equity $26,116,949 $23,648,236
=========== ===========
GLOBAL AXCESS CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Fiscal Years Ended
December 31,
--------------------------
2009 2008
------ ------
Revenues $21,494,867 $22,171,072
Cost of revenues 11,316,919 12,347,991
---------- ----------
Gross profit 10,177,948 9,823,081
---------- ----------
Operating expenses
Depreciation expense 1,178,927 1,411,360
Amortization of intangible
merchant contracts 786,173 770,270
Selling, general and
administrative 5,437,624 5,288,959
Stock compensation expense 120,188 159,840
---------- ----------
Total operating expenses 7,522,912 7,630,429
---------- ----------
Operating income from
continuing operations before
items shown below 2,655,036 2,192,652
---------- ----------
Interest expense, net (645,758) (1,046,287)
Gain (loss) on sale or
disposal of assets - 23,872
Loss on early extinguishment of debt (474,960) -
---------- ----------
Income from continuing operations
before income tax benefit 1,534,318 1,170,237
Income tax benefit 1,278,888 -
---------- ----------
Income from continuing operations $2,813,206 $1,170,237
---------- ----------
Net Income $2,813,206 $1,170,237
========== ==========
Income per common share - basic:
Income from continuing operations $0.13 $0.06
Income from discontinued operations $- $-
---------- ----------
Net Income per common share $0.13 $0.06
========== ==========
Income per common share - diluted:
Income from continuing operations $0.12 $0.06
Income from discontinued operations $- $-
---------- ----------
Net Income per common share $0.12 $0.06
========== ==========
Weighted average common shares
outstanding:
Basic 21,654,554 20,973,924
Diluted 22,845,241 20,973,924
GLOBAL AXCESS CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
December 31, December 31,
2009 2008
------------ ------------
Revenues $5,396,168 $5,144,607
Cost of revenues 2,859,397 2,769,439
--------- ---------
Gross profit 2,536,771 2,375,168
--------- ---------
Operating expenses
Depreciation expense 315,721 303,042
Amortization of intangible
merchant contracts 195,699 192,768
Selling, general and administrative 1,443,208 1,300,981
Stock compensation expense 34,124 7,276
--------- ---------
Total operating expenses 1,988,752 1,804,067
--------- ---------
Operating income from
continuing operations
before items shown below 548,019 571,101
--------- ---------
Interest expense, net (135,969) (264,006)
Gain on sale or disposal of assets - 23,872
Loss on early extinguishment of debt (7,569) -
--------- ---------
Income from continuing
operations before provision for
income taxes 404,481 330,967
Income tax benefit 1,278,888 -
--------- ---------
Net Income $1,683,369 $330,967
========== =========
Income per common share - basic:
--------- ---------
Net Income per common share $0.08 $0.02
========= =========
Income per common share - diluted:
--------- ---------
Net Income per common share $0.07 $0.02
========= =========
Weighted average common shares
outstanding:
Basic 21,883,924 20,973,924
Diluted 23,606,552 20,973,924
GLOBAL AXCESS CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended
December 31,
--------------------------
2009 2008
------ ------
Cash flows from operating activities:
Income from continuing operations $2,813,206 $1,170,237
Adjustments to reconcile net income
from continuing operations to net
cash provided by continuing
operating activities:
Stock based compensation 120,188 159,840
Stock options issued to
consultants in lieu of cash
compensation 23,999 -
Loss on early extinguishment
of debt 474,960 -
Depreciation expense 1,178,927 1,411,360
Amortization of intangible
merchant contracts 786,173 770,270
Amortization of capitalized
loan fees 26,756 46,431
Allowance for doubtful accounts 2,883 (14,201)
Allowance for inventory obsolescence 40,539 54,033
Non-cash interest expense (income)
on swap agreement with senior lender (7,921) 40,985
Accretion of discount on notes payable 50,066 165,988
(Gain) loss on sale or disposal
of assets - (23,872)
Changes in operating assets and
liabilities:
Change in automated teller
machine vault cash (250,000) -
Change in accounts receivable 490 90,457
Change in inventory (112,270) 116
Change in prepaid expenses and
other current assets 26,468 (23,620)
Change in other assets (21,075) 5,907
Change in intangible assets, net (80,734) 634
Change in deferred taxes (1,342,666) -
Change in accounts payable and
accrued liabilities 464,108 (875,224)
Change in automated teller
machine vault cash payable 250,000 -
--------- ---------
Net cash provided by continuing
operating activities 4,444,097 2,979,341
--------- ---------
Cash flows from investing activities:
Insurance proceeds on disposal of
fixed assets - 72,681
Costs of acquiring merchant
contracts (120,660) (43,758)
Purchase of property and equipment (1,051,494) (290,304)
--------- ---------
Net cash used in investing
activities (1,172,154) (261,381)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common
stock 9,100 -
Proceeds from senior lenders'
notes payable 6,200,000 39,028
Proceeds from notes payable 69,905 -
Change in restricted cash (800,000) -
Principal payments on senior
lenders' notes payable (6,171,429) (704,177)
Principal payments on notes
payable (11,833) (25,000)
Principal payments on notes
payable - related parties (1,248,186) (20,695)
Principal payments on capital
lease obligations (872,550) (986,367)
--------- ---------
Net cash used in financing
activities (2,824,993) (1,697,211)
--------- ---------
Increase in cash 446,950 1,020,749
Cash, beginning of period 1,560,910 540,161
--------- ---------
Cash, end of the period $2,007,860 $1,560,910
========== ==========
Cash paid for interest $555,969 $786,697
The following table sets forth a reconciliation of net income from continuing operations to EBITDA from continuing operations for the fourth quarter ended December 31, 2009 and 2008:
For the Three Months Ended
December 31, December 31,
2009 2008
------------ -----------
Net income from continuing operations $1,683,369 $330,967
Income tax benefit (1,278,888) -
Interest expense, net 135,969 264,006
Depreciation expense 315,721 303,042
Amortization of intangible merchant
contracts 195,699 192,768
------- -------
EBITDA from continuing operations $1,051,870 $1,090,783
========== ==========
The following table sets forth a reconciliation of net income from continuing operations to EBITDA from continuing operations for the fiscal year ended December 31, 2009 and 2008:
For the Twelve Months Ended
December 31, December 31,
2009 2008
------------ -----------
Net income from continuing operations $2,813,206 $1,170,237
Income tax benefit (1,278,888) -
Interest expense, net 645,758 1,046,287
Depreciation expense 1,178,927 1,411,360
Amortization of intangible merchant
contracts 786,173 770,270
------- -------
EBITDA from continuing operations $4,145,176 $4,398,154
========== ==========
The following table sets forth a reconciliation of net income from continuing operations to EBITDA from continuing operations before stock compensation expense and loss on early extinguishment of debt ("Adjusted EBITDA") for the fourth quarter ended December 31, 2009 and 2008:
For the Three Months Ended
December 31, December 31,
2009 2008
------------ -----------
Net income from continuing operations $1,683,369 $330,967
Income tax benefit (1,278,888) -
Interest expense, net 135,969 264,006
Depreciation expense 315,721 303,042
Amortization of intangible merchant
contracts 195,699 192,768
Stock compensation expense 34,124 7,276
Loss on early extinguishment of debt 7,569 -
------- -------
Adjusted EBITDA $1,093,563 $1,098,059
========== ==========
The following table sets forth a reconciliation of net income from continuing operations to EBITDA from continuing operations before stock compensation expense and loss on early extinguishment of debt ("Adjusted EBITDA") for the fiscal year ended December 31, 2009 and 2008:
For the Twelve Months Ended
December 31, December 31,
2009 2008
------------ -----------
Net income from continuing operations $2,813,206 $1,170,237
Income tax benefit (1,278,888) -
Interest expense, net 645,758 1,046,287
Depreciation expense 1,178,927 1,411,360
Amortization of intangible merchant
contracts 786,173 770,270
Stock compensation expense 120,188 159,840
Loss on early extinguishment of debt 474,960 -
------- -------
Adjusted EBITDA $4,740,324 $4,557,994
========== ==========
SOURCE Global Axcess Corp
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