Published:
TRM Corporation Announces Full Year and Fourth Quarter 2007 Financial Results
PORTLAND, Ore., March 31 /PRNewswire-FirstCall/ -- TRM Corporation
(Nasdaq: TRMM) today announced fourth quarter and full year 2007 financial
results. The Company filed its Form 10-K for the year today.
Richard Stern, President and CEO of TRM Corporation, stated, "2007 was a
transitional year for TRM as a company. We began the year addressing our
balance sheet issues and finished the year focused on our income statement and
operational results. Towards that end, I am pleased with all that we
accomplished. Most importantly, we experienced improved operating results,
largely as a result of our ongoing restructuring effort. In addition, we
completed the Triple DES compliance project that was undertaken throughout
2007 and we continue to optimize our ATM operations and contracts."
($ in Millions) FY 2007 FY 2006 % Change
Sales $90.4 $107.7 (16.0%)
Discounts 56.7 65.6 (13.5%)
Net Sales 33.7 42.1 (20.0%)
Cost of Sales 22.9 23.5 (2.6%)
Gross Profit 10.8 18.6 (41.9%)
Gross Margin (% net sales) 32.1% 44.2%
Selling, General & Administrative $16.5 $30.5 (46.0%)
Restructuring Charges /Equipment
Write-Offs 2.8 0.6
Operating Loss (8.5) (55.8)
Discontinued Operations 5.3 (66.5)
Net Loss (8.4) (120.1)
Adjusted EBITDA from continuing
operations (2.8) (3.6)
Adjusted EBITDA from continuing operations is a non-GAAP term. Please
refer to the attached reconciliation between our GAAP net income and Adjusted
EBITDA from continuing operations.
Financial Results for the Fiscal Year Ended December 31, 2007
In 2007, gross sales were $90.4 million and net sales were $33.7 million.
Revenue performance reflects a consistent level of transactions per unit with
fewer ATM units in the field. The average number of transacting ATMs was
10,253 during 2007 compared to an average of 12,378 during 2006. The decrease
is primarily the result of attrition in ATM contracts acquired from eFunds in
2004. The Company expects the number of ATMs will continue to decrease in
2008 unless the Company executes on its previously announced desire to seek
acquisition-led growth. During 2007, the Company added 1,000 new ATM units,
including 57 in the fourth quarter of 2007.
Mr. Stern continued, "We continued to experience improved operating
results stemming from the continued vigilance regarding our cost structure.
In the fourth quarter, we reported net income and positive Adjusted EBITDA
from continuing operations, and we expect that trend to continue in 2008. We
are also further encouraged by the fact that our average withdrawals per unit
per month have been maintained at a level consistent with 2006, which points
to our focus on maintaining the quality of our existing estate."
Cost of sales in 2007 decreased 2.6% to $22.9 million from $23.5 million
in 2006, despite a one-time inventory write-down in the 3rd quarter of 2007 as
well as increases in August and September 2007 vault cash costs reflecting
increased volatility in the commercial paper market. The Company would have
seen a decrease of approximately 4.7% excluding the inventory write-down and
elevated vault cash costs. Going forward, the Company expects to benefit from
improved vault cash costs commensurate with stability in the commercial paper
market and the Company's continued focus on the primary cost drivers including
processing, armored car, maintenance and telecommunication costs.
For the year, selling, general and administrative expense decreased 46% to
$16.5 million from $30.5 million in 2006. This decrease is primarily the
result of the Company's restructuring efforts and its continued focus on
expense reductions and optimizing efficiency.
TRM Corporation reported an operating loss of $8.5 million and loss from
continuing operations of $13.7 million for the full year 2007. This compares
to an operating loss of $55.8 million and loss from continuing operations of
$53.6 million in 2006. The Company notes that 2006 results were largely
influenced by impairment charges of goodwill and intangible assets of
$43.3 million. The Company notes that 2007 operating performance was
negatively impacted by approximately $2.8 million of costs for the following
items:
-- Equipment write-off of approximately $1.9 million related to three
merchant contracts that were terminated and the consolidation of its
service centers across the country
-- Restructuring cost for termination of leased office and warehouse space
and severance of approximately $963,000
Michael Dolan, Chief Financial Officer of the Company, stated, "We
continued to recognize costs associated with our restructuring efforts in
2007, but I am pleased to see a sequential improvement in our operating loss
in the fourth quarter. This modest improvement reflects the initial steps we
have taken through the year to aggressively adjust our cost structure and
renegotiate our vendor contracts. We also focused on improving our
profitability on a unit by unit basis."
The Company believes that Adjusted EBITDA from continuing operations is
the most accurate reflection of ongoing operations as well as recent
efficiencies in the cost structure. On a sequential basis, TRM's 2007
Adjusted EBITDA from continuing operations was ($2.8) million compared to
($3.6) million in 2006. A positive indicator that the Company's performance
is experiencing the effects of the restructuring and cost containment efforts
is the positive $1.5 million of Adjusted EBITDA from continuing operations in
the fourth quarter compared to ($4.7) million Adjusted EBITDA from continuing
operations in the fourth quarter of 2006. Our operating results for the
fourth quarter and full year 2007 include a $2.0 million credit to expense
relating to termination of an agreement with one of our vendors.
For the year, the Company reported a net loss of $8.4 million.
Financial Results for the Fourth Quarter Ended December 31, 2007
-- Net sales of $7.9 million versus $9.7 million in the fourth quarter of
2006
-- Adjusted EBITDA from continuing operations of $1.5 million in the
fourth quarter 2007 compared to ($4.7) million in the prior year
period
-- A narrowing of operating loss in the fourth quarter 2007 to ($215,000)
from ($5.4) million in the prior year period
-- A narrowing of loss from continuing operations in the fourth quarter
2007 to ($797,000) from ($5.5) million in the prior year period
-- Net income for the fourth quarter 2007 of $906,000 compared with a net
loss of ($15.2) million in the prior year period
Balance Sheet
The Company had cash and cash equivalents of $3.9 million at December 31,
2007, compared to $4.8 million at December 31, 2006. As of December 31, 2007,
the Company had $2.1 million of term loans outstanding.
About TRM Corporation
The Company is a consumer services company that provides convenience ATM
services in high-traffic consumer environments. TRM's ATM customer base is
widespread, with retailers throughout theUnited States. TRM operates the
second largest non-bank ATM network in theUnited States.
FORWARD LOOKING STATEMENTS
Statements made in this news release that are not historical facts are
forward-looking statements. Actual results may differ materially from those
projected in any forward-looking statement. Specifically, there are a number
of important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, such as consumer demand
for our services; access to capital; changes in interest rates; maintaining
satisfactory relationships with our banking partners; our ability to continue
to reduce attrition in our existing ATM estate and to add new ATMs;
technological change; our ability to control costs and expenses; competition
and our ability to successfully implement our acquisition strategy.
Additional information on these factors, which could affect our financial
results, is included in our annual report on Form 10-K for the fiscal year
ended December 31, 2007 under the caption "Risk Factors" and elsewhere in such
report. Finally, there may be other factors not mentioned above or included
in our SEC filings that could cause actual results to differ materially from
those contained in any forward-looking statement. Undue reliance should not
be placed on any forward-looking statement, which reflects management's
analysis only as of the date of the statement. We assume no obligation to
update any forward-looking statements as a result of new information, future
events or developments, except as required by applicable law.
- Attachments 1,2,3 -
Attachment 1
TRM CORPORATION
Consolidated Results of Operations
(in thousands, except per share data)
(unaudited)
Three months ended Twelve months ended
12-31-06 12-31-07 12-31-06 12-31-07
Sales $24,173 $20,614 $107,656 $90,386
Less discounts 14,444 12,704 65,576 56,711
Net sales 9,729 7,910 42,080 33,675
Cost of sales:
Cost of vault cash 1,659 1,215 6,482 5,399
Other 4,934 4,106 16,990 17,465
Gross profit 3,136 2,589 18,608 10,811
Selling, general and
administrative expense 8,012 2,144 30,541 16,482
Impairment charges - - 43,311 -
Restructuring charges - - - 963
Equipment write-offs 505 660 579 1,876
Operating income (loss) (5,381) (215) (55,823) (8,510)
Interest expense and
amortization of debt
issuance costs 1 188 1 464
Loss on early extinguishment
of debt - 750 3,105 4,809
Other expense (income), net 759 (297) (169) (57)
Loss from continuing operations
before income taxes (6,141) (856) (58,760) (13,726)
Benefit for income taxes (596) (59) (5,194) -
Loss from continuing operations (5,545) (797) (53,566) (13,726)
Discontinued operations:
Income (loss) from operations (9,098) 1,841 (65,948) 5,437
Provision for income taxes 597 138 577 138
Income (loss) from
discontinued operations (9,695) 1,703 (66,525) 5,299
Net income (loss) $(15,240) $906 $(120,091) $(8,427)
BASIC AND DILUTED PER SHARE
INFORMATION:
Weighted average common shares
outstanding 17,113 17,212 17,034 17,178
Basic and diluted income (loss)
per share:
Continuing operations $(0.32) $(0.05) $(3.14) $(0.80)
Discontinued operations (0.57) 0.10 (3.91) 0.31
Net income (loss) $(0.89) $0.05 $(7.05) $(0.49)
Attachment 2
TRM Corporation
Consolidated Balance Sheet
(in thousands)
(unaudited)
December 31, December 31,
Assets 2006 2007
Current assets:
Cash $4,784 $3,859
Restricted cash - 3,073
Accounts receivable, net 4,328 2,611
Income taxes receivable 215 -
Inventories 674 50
Prepaid expenses and other 1,579 369
Deferred financing costs 5,270 172
Restricted cash - TRM Inventory
Funding Trust 73,701 61,805
Assets held for sale 106,081 -
Total current assets 196,632 71,939
Equipment, less accumulated depreciation
and amortization 11,646 4,222
Goodwill 16,748 16,748
Intangible assets, less accumulated
amortization 585 585
Other assets 833 795
Total assets $226,444 $94,289
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $5,988 $6,099
Accrued expenses 8,744 9,929
Income taxes payable 67 36
Term loans and line of credit 99,318 2,051
TRM Inventory Funding Trust note payable 71,697 58,505
Liabilities related to assets
held for sale 13,437 -
Total current liabilities 199,251 76,620
Settlement agreement due after one year - 3,009
Total liabilities 199,251 79,629
Minority interest 1,500 1,500
Shareholders' equity:
Common stock 135,595 136,181
Additional paid-in capital 63 63
Accumulated other comprehensive income 4,692 -
Accumulated deficit (114,657) (123,084)
Total shareholders' equity 25,693 13,160
Total liabilities and
shareholders' equity $226,444 $94,289
Attachment 3
TRM Corporation
Adjusted EBITDA Reconciliation
(in thousands - USD)
(unaudited)
Three months ended Twelve months ended
12-31-06 12-31-07 12-31-06 12-31-07
Continuing Operations:
Loss from continuing
operations $(5,545) $(797) $(53,566) $(13,726)
Add:
Interest expense 1 188 1 464
Loss on early
extinguishment of debt - 750 3,105 4,809
Benefit for income taxes (596) (59) (5,194) -
Depreciation and
amortization 883 601 7,089 2,541
Equipment write-offs 505 660 579 1,876
Inventory write down - - - 399
Non-recurring charges - - - 350
Impairment charges - - 43,311 -
Non-cash stock
compensation expense 97 158 1,051 509
Adjusted EBITDA - continuing
operations $(4,655) $1,501 $(3,624) $(2,778)
Discontinued Operations:
Income (loss) from discontinued
operations (9,695) 1,703 (66,525) 5,299
Add:
Interest expense 4,327 - 13,001 1,289
Loss on early extinguishment
of debt - - 372 -
Provision for income taxes 597 138 577 138
Depreciation and
amortization 2,092 - 10,983 -
Equipment write-offs 282 500 21,894 500
Impairment charges - - 31,348 2,701
Adjusted EBITDA - discontinued
operations $(2,397) $2,341 $11,650 $9,927
Note: Our Adjusted EBITDA calculation is based upon the definition of
EBITDA in the loan documents governing our loan facility entered
into in June 2006.
SOURCE TRM Corporation
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