Cardtronics Finds Banks To Fill Part of Its Chase ATM Void

Leading retail ATM network owner Cardtronics Inc. has already found banks ready to put their brands on 40% of the Cardtronics ATMs that until recently bore the JPMorgan Chase & Co. brand, chief executive Steve Rathgaber told analysts Wednesday.

Chase informed Houston-based Cardtronics about three months ago that it planned to end its 11-year relationship with Cardtronics. With about 2,700 machines bearing its brand, according to the bank, Chase was the second-largest bank partner in a Cardtronics program that as of the end of 2013 had more than 20,000 bank-branded, Cardtronics-owned ATMs in stores, enabling the banks’ customers to withdraw cash without paying a surcharge. The banks then pay Cardtronics fees to compensate for the foregone surcharges. Cardtronics’ biggest bank partner is Citigroup Inc., which has Citi-branded ATMs in many 7-Eleven Inc. convenience stores, Cardtronics’ biggest merchant customer.

“We are in advanced discussion on more than 40% of the [Chase] sites with multiple new branding partners, and we’ve already re-branded a subset of those,” Rathgaber said during Cardtronics’ fourth-quarter earnings call. He said he was “pleasantly surprised” by the strong bank interest and is hopeful that ultimately all of the former Chase ATMs will be rebranded.

Many of the Chase-branded machines are in busy retail locations such as Walgreens and CVS drug stores and Hess Express and Speedway gas stations/convenience stores in a number of states. A Chase spokesperson says the bank is seeking to “simplify our business” and notes that most of the affected machines are within a five-minute drive of a Chase branch or ATM. Chase has more than 18,000 ATMs in its nationwide network, more than any other bank, according to the spokesperson.

An active buyer of retail ATM operators both in the United States and abroad, Cardtronics serviced an average of 110,841 ATMs in the fourth quarter, up 37% from 80,751 a year earlier. The fleet includes 37,989 company-owned and 23,500 merchant-owned ATMs in the United States. Cardtronics also has major operations in the United Kingdom, Mexico, Canada, and Germany. The company plans to enter more countries in the coming years, Rathgaber said, including one in Europe very soon.

Chief financial officer Chris Brewster reported that Cardtronics would spend $20 million this year preparing its U.S. ATMs to accept Europay-MasterCard-Visa (EMV) chip cards.

Boosted in part by its recent acquisitions, Cardtronics reported fourth-quarter revenues of $283.9 million, up 17% from $241.9 million a year earlier. For the year, Cardtronics surpassed $1 billion in revenues for the first time, hitting $1.05 billion, an increase of 20% from $876.5 million in 2013.

Combined revenues from the bank-branding program and Cardtronics’ Allpoint surcharge-free network totaled $42.2 million in the fourth quarter, up 15% from $36.6 million a year earlier.

Fourth-quarter net income fell 27% to $5.5 million from $7.5 million a year earlier mainly because of amortization expenses stemming from acquisitions and a higher income tax rate, the company said.