TRM Corp. blamed its fourth-quarter loss on problems with integrating the automated teller machines it bought last year from eFunds Corp., as well as a U.K. deal that fell through.
The Portland, Ore., deployer of merchant ATMs said last week that it had canceled plans to acquire Travelex UK Ltd., which operates more than 1,100 machines in the United Kingdom, mostly at convenience stores and gas stations.
TRM, which announced in September that it would buy Travelex for $78 million, said in December that it would renegotiate the deal by April 1.
Pulling out of the deal led to a $4.8 million charge for the fourth quarter.
Jeffrey F. Brotman, TRM’s president and chief executive, said Thursday during a conference call with analysts, “While we don’t like at all to have to abandon that much cost, it’s a heck of a lot less, and a heck of a lot better for the company, than to try to pursue an acquisition that would not be a positive acquisition for the company.”
TRM reported a net loss of $13.7 million for the quarter, compared with a profit of $541,000 a year earlier. Sales were almost unchanged at $26.7 million.
“We’re very disappointed with our financial performance in the fourth quarter,” Mr. Brotman said. He was the president of a Philadelphia law firm until TRM hired him March 14, after Kenneth L. Tepper resigned for personal reasons.
For the full year, TRM posted a loss of $8.8 million, despite a 34.6% gain in sales, to $124.6 million. It reported a $7.9 million profit for 2004.
Reed A. Anderson, the director of research for Miller Johnson Steichen Kinnard Inc., said in an interview that TRM was smart not to be distracted by an acquisition at this time. “The Travelex business has not performed as it was appearing to perform six or 12 months ago,” when TRM first considered the deal.
Mr. Anderson upgraded the company’s stock to “outperform,” from “neutral.”
“The vast majority of bad news is sufficiently priced into the stock at current levels,” he wrote in a note issued Friday. “While significant challenges remain and execution is critical, recent results firmly support our belief that TRM still has a sizable business that generates relatively high levels of cash flow.”
Mr. Brotman said that the integration of eFunds’ portfolio of 17,000 ATMs, which TRM acquired for $150 million in cash in November 2004, had not progressed in the way his company had anticipated. “We are focused on getting the portfolio operating at performance levels acceptable here.”
TRM reported $2.7 million of integration costs for the machines during the quarter. It also said the number of its ATMs in the field shrank by 6% last year, because of lost eFunds customers.
Mr. Brotman said he did not expect the integration problems to continue this year. “We are engaged in ongoing discussions with eFunds regarding past difficulties, improving future performance and mutual opportunities, as well as the structure of the management services agreement we entered into at the time of the acquisition.”
Despite some of the problems, TRM’s legacy machines, excluding the eFunds ATMs, performed well last year, he said. Average monthly transaction volume per site rose 6.4%, to 400, and the number of ATM locations grew 23%, to 6,091.
