Cardtronics plc
Q1 2017 Earnings Call Transcript

Published: 4 May 2017

[Operator:]

Good day, ladies and gentlemen, and welcome to the Cardtronics' First Quarter 2017 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Mr. Phil Chin, Executive Vice President, Corporate Development and Investor Relations. Sir, you may begin.

[Phillip Chin:]

Thank you. Good afternoon, and welcome to Cardtronics' first quarter conference call. On the call, we have Steve Rathgaber, Chief Executive Officer, and Ed West, CFO and Chief Operations Officer. We will start with prepared remarks by Steve and Ed, and then take questions. Before we begin, a cautionary statement regarding forward-looking information. During the course of this call, we will make certain forward-looking statements regarding future events, results or performance. Any forward-looking statements made on this call are subject to risks and uncertainties including, but not limited to, events, market conditions and other risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release and our reports filed with the SEC, including our Form 10-K for the year ended December 31, 2016, our Form 10-Q for the quarter ended March 31, 2017, and other factors set forth from time-to-time in our other filings, including the definitive proxy statement filed on March 31 of 2017, which more fully describe forward-looking statements and risk factors and other events that could impact future results. The statements on this call are made as of the date of this call and based on current information and maybe outdated at the time of any replay of this call. We assume no obligation to update any forward-looking statements made today to reflect events that occur or circumstances that exist after the date on which they were made. In addition, during the course of this call, we will reference certain non-GAAP financial performance measures. Our opinion regarding the usefulness of such measures, together with the reconciliation of such measures is included in the earnings release issued this afternoon and available on our website. With that, I will turn the call over to Steve.

[Steven A. Rathgaber:]

Thank you, Phil, and welcome, everyone. I would like to focus my comments today on three themes. First, I would like to pick up on our commentary from the Q4 call in February, about 2017 setting up to be a choppier year than usual. Second, I'll provide an update on the important projects we are executing on in 2017. And third, despite the transitory crosscurrents we are experiencing, I want to remind you that we are making the investments to make our business stronger, more geographically diverse and more capable. These actions will allow us to return to our traditional growth profile in 2018 and beyond. Starting with choppiness in performance, due to a number of factors this year, many of which are transitory, our financial results will be a bit bumpy in the quarters. Q1 demonstrated this in spades, so let me go through what we saw in Q1 and set expectations for the remainder of the year. This past quarter we faced a number of adversities. The primary challenge we faced in the U.S. was the continuation of the software stability issues that began in Q4 and carried over into Q1. You may recall that we described these issues to you in our year-end call three months ago as we worked to set expectations for this challenging quarter. The software issues led to two separate but related impacts on our performance. First, we experienced elevated levels of ATM downtime, which are reflected in our weaker than usual organic growth and same-store growth numbers. Second, it slowed the pacing of our EMV upgrades, which led us to absorb more fraud liability and operating expenses associated with maintenance visits to the ATMs. These operating issues in combination with an unrelated vendor software issue with PIN Pads and the timing of a branding transition effectively trimmed $0.14 of EPS from the quarter. Not helping the year-over-year comparison was a tough compare. We did not have the benefit of a couple of material tailwinds that lifted our Q1 results last year. Now the good news is that several of these factors have passed. And we expect that we are through the most challenging period of the year. We have substantially addressed our software stability issues and are now tracking to our traditional availability levels prior to the onset of those issues. This in turn enables us to push ahead on our EMV upgrades towards completion in Q3. Getting the EMV rollout completed provides two important benefits for Cardtronics. First, it limits the exposure to fraud losses. We have not yet closed the door on EMV liability exposure, so that will linger into the next quarter or two. But second and more importantly, it also allows us to ramp up our sales activities for multibank branding services once the technical capability is available on all of our owned ATMs in the third quarter. For the remainder of 2017 we have a full agenda of execution opportunities in front of us. Let's start with the integration of DCPayments. There are several things to keep in mind as we integrate the largest acquisition in our corporate history. The first is that this feels more like four acquisitions in that it spans five countries and three continents. We have to combine our Canadian operations, our UK operations, our Mexican operations and our Australia/New Zealand operations. The second point to remember is that in Australia we acquired a business, DCPayments, which had just acquired another business in Australia, Cashcard. And we have to finish integrating both of those as we also work to inject the Cardtronics success formula into that newly combined Australian/New Zealand business. My third observation is that this is a two-year process and progress will be different in each country based on integration conditions. Through the first quarter, we are on track with progress in Canada and Australia. Our two Canada businesses are coming together organizationally and operationally quite well. We are working towards addressing this market as one cohesive team with one product set. In Australia, we continue to integrate the acquired Cashcard business into the DCPayments base business. Now it is no secret that same-store transaction declines are a reality of the market in Australia and one that we understood when we made the investment in DCPayments. This will present growth challenges in the near-term, not too dissimilar from what we faced in 2013 with our Cardpoint acquisition in the UK, which was also experiencing near double digit declines in volume. We leveraged the scale and people in Cardpoint to transform the UK into a double digit revenue and earnings grower in 2016, excluding currency impacts. We can succeed in challenging market conditions because these markets effectively help us tell our story to the financial institutions. In a market with declining volumes banks and credit unions need relief on the course of operating ATMs. We can serve our bank clients by being the trusted consolidator of volumes with our retail placements, branding services and surcharge-free offerings. And as the scale ATM specialist in the market, we are best prepared to help banks migrate to a lower cost solution. ATMs have the interesting distinction of being absolutely necessary for financial institutions to serve their customers, but they are no longer strategic and therefore, the FIs are better served relying on Cardtronics. Now to close out on Australia, I'm pleased to report that the Australian Competition and Consumer Commission, the ACCC, has announced the completion of its review of DCPayments acquisition of the Cashcard ATM business without any action. As Cardtronics was not previously in the market, there was never a concern about our acquisition of DCPayments. Now, in the UK, we have not yet begun the integration process due to the ongoing CMA review of the combination. However, we were notified just this morning that we were referred to a Phase 2 investigation. Cardtronics fully supports the Competition and Markets Authority merger inquiry process. We are in the process of reviewing the detail of the CMA's decision and will continue to be an active participant in the review process. At this time and in accordance with the CMA merger inquiry directives, the Cardtronics and DCPayments brands and operations remain wholly distinct in the United Kingdom pending completion of the CMA review classes. Let me continue now with several other initiatives. I talked in February about continued investment in providing managed services to the in-branch ATM market. We continue to be encouraged by the early pipeline with potential customers and partners. These sales are expected to be longer in their cycle times to signing and conversion, but we are well-positioned to be a leader in this very real opportunity. We do have to fortify our capabilities in some areas that are of particular importance to banks. In past calls, I referred to this concept as becoming bank-grade in multiple dimensions of our service delivery. An example of this is in the area of information security. We want banks and credit unions to know that Cardtronics is the safest place to put their ATMs, because we aim to be the most secure environment for ATMs. As a sign of our commitment to world-class information security, earlier this week, we announced the hiring of our new Chief Information Security Officer, Dan Antilley, who previously ran information security operations for Bank of America. He will ensure we deliver on that bank-grade promise and he can represent the needs of financial institutions with his 16 years of experience at Bank of America. In combination with our other recent hires from Chase and NCR, you can see we are building a team of key executives who can drive our movement into the financial institution sector. On the 7-Eleven wind down, we stand ready to commence the de-conversion in Q3 and more importantly, we have taken steps to restructure our costs, so we can minimize earnings impact when that customer comes off. Ed will update you on our considerable progress in this area. Now, let's shift gears to how we are executing on the fundamentals of our business away from all the transitory factors we've just discussed. We had a couple of notable wins in the course of Q1, both of these are very much on point with our growth strategy with FIs. First on Allpoint, we added another top 25 FI to the roster of over 1,300 issuers that participate in our surcharge-free network. BMO Harris is now on Allpoint, complementing the expanse of long-term branding relationship we have had with this great bank. That now makes one top 50 bank joining Allpoint in each of the last four quarters. In the area of in-branch managed services, we will be managing 200 ATMs with in-branches for Bank of Queensland in Australia. This is a tangible delivery on the strategy we are undertaking in Australia with our strong footprint of over 10,000 ATMs out of a total market of 32,000 ATMs. We want to enable the banking market to migrate to a more efficient model of cash distribution by turning to the leading specialized operator in the market, Cardtronics, to further improve customer convenience while lowering their total cost of serving their cardholders. Aside from these two notable deals, we demonstrated solid execution on other drumbeat growth in the business. In the quarter, we secured contracts representing over 1,200 new ATM locations worldwide. This is a very solid start to the year. And consistent with our geographic diversification plans, these came through six of our markets. We signed an additional 13 new issuers in the Allpoint Network including BMO Harris, and we are on cost in implementing the renewed Citi branding relationship that we announced last quarter, which will stand 1,900 ATMs in key metropolitan markets. We remain focused on our goal of being the most convenient and cost efficient physical network through which banks will direct more of their customer's activities. I am as confident as ever in our positioning to capitalize on opportunities that are emerging as the banking world evolves how they interact with customers. The financial benefits from this strategy will become evident once we get back to more normalized environment in 2018 and beyond. In the meantime, the team has a strong handle on the ins and outs of 2017 and we are confident in reiterating our guidance for the year. With that, I will turn it over to Ed.

[Edward H. West:]

Great. Thank you, Steve. My comments today will focus on the following three areas. First, as expected, the first quarter results were impacted by several transitory factors that are now on the other side in most of them. Second, we remain on track to achieve our full-year 2017 guidance. And finally, we are executing on the systems and operational improvements to drive improved effectiveness and cost efficiencies in a post 7-Eleven environment. Before I get into the results, one item of note regarding our segment reporting for Q1. We have broken out DCPayments as its own segment for Q1 given that the business was initially managed as a separate entity before we started the integration in North America and Australia. Beginning in Q2, DCPayments will be reported within our existing geographical reporting segments. Now, let's go through some of the aspects of our Q1 performance. Total revenue growth was 18% or 22% on a constant currency basis. On an organic constant currency basis, revenue growth was down 2% for the quarter. If we adjust from transitory headwinds in the quarter, this growth would have been a positive 2%. Most of these headwinds will sound familiar from our Q4 call when we anticipated that these issues will come up. First, on a relative year-over-year basis, the tough compare to last year was caused by an extra day in the quarter from leap year and a large Powerball jackpot in the U.S., which together added 2% to last year's growth. Secondly, ATM availability was negatively impacted by the software rollout in the U.S. and the NCR PIN Pad issue that we mentioned last quarter. Lastly, a transition in branding locations with one of our major branding banks led to a temporary dip in branding revenue. The software and PIN Pad issues combined with the branding transition impacted revenue by about another 2%. All of these factors resulted in a 4% head to revenue growth and are now behind us. Regarding the performance items, we are now back to par on ATM uptime. In Q1, ATM operating revenues in North America, excluding DCPayments were down 1%, while the European segment was up 5% in constant currency terms, again, excluding DCPayments. Looking at the underlying U.S. same-store withdrawal transaction growth, it was down approximately 5% for the quarter. We estimate that normalized for the Powerball, leap year and the software issues, same-store transactions would have been down about 1% to 2% in the quarter. In the UK, our same-store withdrawal rate was down 3%, which is just slightly below levels we have recently experienced. We saw unusual weakness in volume in the months of January and February, but which stabilized in the month of March. Gross margin in the quarter was 31% compared to 35.4% in the prior year. There were three main drivers of this decline. First, the decline in U.S. revenue had a significant impact to margin totaling approximately 150 basis points. This will self-correct as we get back to more normalized revenue (15

[Operator:]

Thank you. And our first question comes from Ramsey El-Assal from Jefferies. Your line is open.

[Ramsey El-Assal:]

Hi, guys. Let me take a step back and basically get your take on your sort of most updated thoughts on. Given all the puts and takes with your growth rate here in Q1, you stripped some of the kind of transitory impacts out, it still felt like same-store sales is a little softer, maybe U.S. revenue is a little soft. Can you update us on your sort of perception of the organic growth profile of the business, maybe total business and also just the U.S. business?

[Steven A. Rathgaber:]

Well, what I can say, Ramsey, is that with all the moving parts in the quarter, it's hard to see some of these things as clearly as we would like. The company remains committed to the organic growth goals that we have historically enjoyed. I can declare that. And we do have pipelines that are looking reasonable from that perspective. But with all the noise in the quarter, it's just very difficult to focus on the organic growth rate alone in this particular quarter, because of the adverse effects of the transaction challenges with the software. But Ed, did you want to talk to any more detail on that? Okay. So our goal remains the same. We believe we will get back to that goal and it will be a bit more challenging, because there is some same-store pressure that is evolving it seems. The first quarter, we wondered about the retailer's experiences in January and February post-holiday. There was a lot of talk about retailer volume being down, and we believe we felt some impact from that on a same-store basis. But our revenue growth is going to come from new sales, new transactions coming from banks and credit unions, new ATMs coming from retail locations around the world and we believe we can have a solid growth rate organically from that material.

[Edward H. West:]

The only other thing I would add there is, as Steve was pointing out, the first two months were quite negative, particularly in the U.S. but we actually saw that in other countries around the world as well and that did stabilize in March, which was encouraging. You just have so much other noise going on from a transaction, particularly in the U.S., and then now we'll combine that with 7-Eleven de-conversion in the back half of the year, which will further cloud that. Separately, if you focus on the European segment, actual same-store and thinking about the overall organic growth where we had approximately 5% on a constant currency terms was attractive in Europe.

[Ramsey El-Assal:]

And that's Europe ex-UK or inclusive of UK?

[Edward H. West:]

Inclusive.

[Ramsey El-Assal:]

Okay.

[Edward H. West:]

In the European segment as we've...

[Ramsey El-Assal:]

Okay. I see, okay, thank you. One more the – you've commented on the UK regulatory decision today and respecting your need to be kind of cautious when talking about these types of things that are in process. When I read the documentation there, it sounded like the regulators are most concerned about surcharge machines, which as I understand is a relative minority of the business that you do in that market, although I'm a little less clear about the percentage of surcharge machines in the DCPayments footprint. But is that a fair characterization of what they're primarily interested in and as the implication does that, they're not really talking about the sort of, the large majority of the revenue that you have over there, but rather some kind of more sort of peripheral placements?

[Steven A. Rathgaber:]

Yeah. I think, while it's – we do have to be cautious in commenting on that material. I think your plain reading of the document, it does reflect a reasonable point of view. And for Cardtronics, the pay-as-you-go – the non-free ATMs in the UK, the pay-to-use guys are like 2% of the volume – of the transactions in the UK. So, it's a very small piece of the market, and quite frankly, we're working with them to talk through why they are concerned about it and see where we get.

[Ramsey El-Assal:]

Got it, okay. And lastly for me, any update on LINK and the negotiations ongoing there? Any further updates or timelines or expectations you could update us on would be terrific.

[Steven A. Rathgaber:]

Again, difficult to comment on those sort of closed industry wings there, but the LINK process for interchange formulation has continued through this year on a normal course. There are other discussions going on about how to adjust it, but I think that it's fair to say that that process will continue for several more months before we have any clarity. But we are not expecting and a theme that seems to be consistent, so we're not expecting any dramatic changes in the near term.

[Ramsey El-Assal:]

Okay, great. Thanks. That's all from me.

[Operator:]

And our next question comes from Kartik Mehta from Northcoast Research. Your line is open.

[Kartik Mehta:]

Hey, good evening, gentlemen. Steve, I think you indicated during your prepared remarks that there was a $0.14 headwind because some of the issues, yet you maintained your guidance. Is that the reflection of other businesses that are doing well or you anticipate doing well or your recent acquisition as a part maybe that wasn't included in the original guidance. Be interested in your thoughts on that?

[Steven A. Rathgaber:]

Well, I think what you're alluding to is, we had a different view going into the quarter of what expectations were regarding Street level estimates. But given that we had that view, we're backing – we're boxing back to the prior year's quarter. But it wasn't that we were terribly surprised by these numerics. We expected and try to set the stage for that in our fourth quarter commentary. Does that help?

[Edward H. West:]

Yeah, I would just say, most everything that we walked through and as Steve mentioned and discussed through there was anticipated in the range that was provided, and yes, we did have the acquisition of Spark ATM Systems in South Africa were included in that for what Steve went through.

[Steven A. Rathgaber:]

Yeah, so no real surprises there.

[Kartik Mehta:]

And then, in the UK, as far as the CMA review is concerned, is the next step that you will offer them a solution or is it that you negotiate a solution or they offer you a solution? What's the next step in the process?

[Steven A. Rathgaber:]

Well, the process as outlined in the documentation indicates that there is a period where the company can offer a solution, and then there's a period of review. There's also an opportunity to travel in a Phase 2 investigation to go deeper into it with the CMA office, so they can understand different points of view, like one that might suggest there isn't – doesn't need to be a concern. So there are multiple ways to go at it. It's a pretty standard process, but we expect it will take several months to work through as we get into this Phase 2 part.

[Kartik Mehta:]

And Steve, just a last question, you're talking about being committed to your organic growth goals, yet maybe I notice some hesitation and I was wondering if you've seen anything in this quarter or maybe what's happened so far that might give you pause as to what's happening in the industry or did those – it's a misinterpretation on my end?

[Steven A. Rathgaber:]

I think it's a misinterpretation. We are working to build the pipelines and to execute on a six-plus percentage organic growth rate, and it's just been a challenging couple of quarters with the operating problems. But the pipelines, the team we've put in place, the product sets that we're building, we feel good about it. And we will return to that number. The hesitation if there's any that you're hearing is that we weren't better this quarter. And that's particularly frustrating to the team. So it is in that vein that we're concerned. And it will take us time to ramp that back up through the year. But that's why I commented on 2018 being the point of strong return to that.

[Kartik Mehta:]

Thank you very much. I really appreciate it.

[Operator:]

And our next question comes from Andrew Jeffrey from SunTrust. Your line is open.

[Andrew Jeffrey:]

Hi, guys Good afternoon.

[Steven A. Rathgaber:]

Good afternoon.

[Andrew Jeffrey:]

I'd like to just point – start with a point of clarification regarding the 7-Eleven de-conversion timing. To the extent that it's going to slip into the first quarter of 2018, does your 2017 EBITDA guidance, has that changed such that now it includes some 7-Eleven revenue that you might not have previously? I just want to clarify we're talking apples-to-apples in the guidance?

[Edward H. West:]

We are talking apples-to-apples roughly. There's a range and we still support the range that was in there. And yes, we have finalized with all the parties, with 7-Eleven, their new provider as well as mutual third party that we will be working with to coordinate everything. And the de-conversion as scheduled now does go into the early part of Q1 of next year. Then I would just say, based on the schedule and the estimates on that, we believe the revenue flow through into 2018 based on what we know right now represents less than $5 million.

[Andrew Jeffrey:]

Okay.

[Edward H. West:]

So it's not a big change, it's in the bands that we previously provided.

[Andrew Jeffrey:]

Okay. Steve, can you talk a little bit about some of the nice wins you've had in Allpoint in terms of I guess, one, how they might affect normalized organic revenue growth this year? And then as we get into next year, it sounds like a little bit that your outlook for organic revenue growth is shifting a little bit toward some drivers like in-branch managed services and Allpoint, away explicitly from transactions. So I guess two parts to the question. One, am I right in that perception? And two, maybe the discussion of kind of how Allpoint contributes to the total organic revenue profile of the company?

[Steven A. Rathgaber:]

Sure. Sure. Well, let me step back and remind you that for years, the Cardtronics growth story has been powered by multiple tracks of growth, new ATM placements, branding sales, Allpoint participation. And we expect those multiple tracks to continue to be fully functional, and which is why we've expanded into now 11 markets so we can deploy those ATMs and bring in 3,000 or 4,000 or 5,000 ATMs a year to feed that part of organic growth. On the Allpoint side, we have had, as I've indicated, a number of nice wins over the last four quarters. With the larger financial institutions, because there is some ramping up period, and that they have to integrate it into their product offering. But we're already seeing some examples of increases in volume that are quite nice at some of the locations, where some of the bigger banks have access to Allpoint ATMs. In terms of the overall growth though, it's going to be as it has been in the past, a broad suite of our products. We're going to have a multi-bank branding product, is one that has been stalled by the EMV rollout in the U.S. And the fact that we're going to be close to having that fully complete in the third quarter, that's going to be a source for pulling in transactions going forward. Certainly, the same-store trends might be shaping up as a bit more challenging. I don't think that's an untruth. But when we get cleared and our availability is back to normal, as we believe it is now, we'll look to see what some of these same-store trends are doing. To the extent that they run a little lighter than we're used to, we'll hopefully be poised to pour more volume in from the relationships we're building with Allpoint customers for our sales and to Allpoint customers for products like multibank branding at 1,300 financial institutions that we can do more with. So that will play into the total growth profile.

[Andrew Jeffrey:]

Okay. That's helpful. Thanks. And if I can just circle back to the question Ramsey asked about UK or European, I guess, organic revenue growth, which I think you said was 5% despite a 3% decline in UK same-store sales, did I get that right?

[Edward H. West:]

It's actually just shy of 5% and it's the European segment and its overall organic constant currency growth. So remember, we had a year-over-year impact of I think it was roughly 13% in GBP impact exchange rate. So when you put it in constant currency, it does look more attractive. And that's versus just same-store transaction growth, what you're thinking of, which was down in the UK of about 3%.

[Andrew Jeffrey:]

Okay. So directionally I got that right, I guess, the implication is you had pretty good unit count growth, I guess?

[Edward H. West:]

Yes.

[Andrew Jeffrey:]

I'm wondering how sustainable that is and if the dynamics of that pretty meaningful spread between underlying revenue growth and same-store sales growth is sustainable or if that's kind of what we should expect, I guess?

[Edward H. West:]

The team continues to do a great job and continues to have unit growth. We've also had unit growth in other parts within Europe as you'll see in our press release by country. Also, as branches pull back, that gives us the opportunity in the UK to have more locations as well. I will say there's a little bit of a headwind this year from a LINK standpoint, as you know LINK is a cost base model and there's more of a headwind where last year, we had a tailwind from a LINK cost to the formula.

[Andrew Jeffrey:]

Okay. Thank you.

[Operator:]

And our next question comes from Cris Kennedy from William Blair. Your line is open.

[Cris D. Kennedy:]

Hey, guys. Thanks for taking the question. I know it's very early, but on the last call, you kind of alluded that EBITDA in 2018 would exceed 2016. Are you more confident than that or any color on that would be great? Thank you.

[Edward H. West:]

Sure, good afternoon. Yeah, we put that out there just kind of walking through, because there's so much activity going on this year from a standpoint of a 7-Eleven coming out, which overall, 7-Eleven represents as we've talked about last quarter about $100 million in EBITDA. And then you have the flow in of DCPayments and now integrating that acquisition. And in addition – additionally, we discussed the notion of implementing overall cost improvement programs, efficiency and restructuring, which we really had some excellent strides on that and in full force and earnest there and expect to realize the $35 million. And in fact, in the guidance, there's an excess of $20 million in savings of that, that we would expect this year in 2017. When you factor in all those matters, we feel good about being able to exceed last year's EBITDA of the $319 million. That's not guidance. And it's our focus to do better than that. And so we'll update you all towards the latter part of the year and then going into our guidance for 2018 with more color on that.

[Cris D. Kennedy:]

Great. Thank you.

[Edward H. West:]

Thank you.

[Operator:]

And our next question comes from Reggie Smith from JPMorgan. Your line is open.

[Reginald Lawrence Smith:]

Hey, guys. Thanks for taking my question. I guess, follow-up on an earlier question, you guys have talked about I think a $0.14 drag from some of these trends and issues. Just curious, where that came in relative to your expectations? And then, kind of, what's the expectation for kind of 2Q and when does that actually go away, if you guys had any further color on that?

[Edward H. West:]

Sure, it's a host of different things. And as Steve mentioned there was roughly at a $0.14, and frankly, just one more item, just to put on top of that, which was non-recurring is the tough compare from prior year, which is the Powerball and leap day, and that adds actually another $0.05 on top of that. With respect to the availability issues, of software and EPP and frankly the branding transition, those have worked out. Those were timing. We feel very good about the software stability now. We have uptime performance. That's equal to if not better than where we were before the rollout of the new software stack. Obviously, the EPP was resolved. So that's done and moving on. Another large item of this was the EMV chargebacks and maintenance costs. When you combine those two together, that's roughly $5 million EBITDA impact and about $0.08 combined together. That's going to continue on until we finalize the roll out. We're moving an earnest now in terms of enablement. We have the majority of the fleet is enabled now on the EMV and transaction, EMV announced just continuing to move through and slogging through to get that done, but we'll still be exposed to EMV chargebacks in the maintenance during this period of time. I would say that that may have been a little bit higher, but that will ebb throughout the balance of the year.

[Reginald Lawrence Smith:]

Got it. And then, just kind of check on my notes, I had down $35 million in savings in 2018. And just kind of reading the press release, it's – the language that – I don't know if it was changed or modified, was it always at least $35 million or are you – or were you signaling that it could be greater than that in 2018?

[Edward H. West:]

Well, it can be greater than that. And so our confidence – like I said, we've made great strides on that. Team is doing a terrific job. Operations globally are having efficiency, opportunities day in and day out and continue to do more all up and down the P&L and performance, and this is both direct cost as well as overhead items. So we feel good about the progress there. And as I said, already in this year, we believe we'll be in excess of $20 million for this year.

[Reginald Lawrence Smith:]

Got it. If I could ask one last one. I'm going to try here. I guess, you guys gave a EPS range three months ago, just curious if you are shading towards the high end, low end, I mean, I know a lot has happened. You had the first quarter go by and then 7-Eleven pushed out a little bit like, are you still anchored at the middle or can you give us any color on which way you may be leaning there?

[Edward H. West:]

Like you said, we would try. I would just say, as we've said before, as you would expect, we feel like it's a balanced range on all of these and we'll continue to give you updates and color.

[Reginald Lawrence Smith:]

Perfect. Thank you, guys.

[Edward H. West:]

Okay, thank you.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.

[Steven A. Rathgaber:]

Thank you.

[Edward H. West:]

Thank you.