Global Axcess Upbeat on Rental Kiosks, Despite Loss31 Mar, 2011 By: Erik Gruenwedel
Company posts $1.2M fourth-quarter loss
ATM operator Global Axcess Corp. is expecting big things in 2011 from its nascent movie rental kiosk operation, including a first-quarter revenue projection approaching $2 million.
The Jacksonville, Fla.-based company is expediting its disc rental business after posting a fourth quarter (ended Dec. 31) loss of $1.2 million, compared with net income of $1.7 million during the previous-year period. Net loss for the fiscal year was $854,000, compared with net income of $2.8 million in 2009.
Global Axcess attributed the decline to internal cost structures across all business units and a Q4 impairment of long-lived assets charge of about $482,000 from the accelerated depreciation on the company's first-generation branded DVD kiosks that it said will be taken out of service and sold by the end of the year.
“[The] 2010 results were disappointing and not acceptable,” said co-CEO Michael Connolly. "The outlook for 2011 is positive and, excluding severance and acquisition charges, will show a strong improvement in operating and financial results.”
Indeed, Global Axcess projects total DVD rental revenue for the first quarter of 2011 to increase 52% from the same period last year. Specifically, the company expects to generate more than $1 million in quarterly revenue from new kiosks installed at Tejas convenience stores. Pre-tax earnings in the quarter should top $25,000.
Separately, the Q1 pre-tax profit on ATMs is projected to reach $1.4 million on revenue of $5.9 million. Global Axcess operates 5,300 ATMs and DVD kiosks in 43 states.
“We are moving forward aggressively to optimize our DVD operations,” Connolly said. “We are also removing kiosks at unprofitable locations at the major grocery store chain and redeploying to maximize our kiosk returns. We are pleased to see the initial indicators of improving performance during the first quarter and we expect to report even stronger progress for the second quarter.”
Connolly said he expects March results to be a springboard for stronger operating and financial results for the second quarter.