EFTA01378336.pdf

INTERNAL USE ONLY DO NOT DISTRIBUTE IN PART OR IN WHOLE Corporate Credit > U.S. High Yield Cardtronics Inc. Updated: November 6, 2015 Trade Idea: 0 Buy 5.125% 2022 Bonds Investment Rationale: Cardtronics operates a network of automated teller machines across the US, Canada, UK, parts of Mexico and has recently entered Germany. Though small, the company's growth has been impressive. Revenues have grown in the low teens, and the company says that organic revenue growth is running 9%. Revenues in the 2008-09 period flat-lined, but did not drop, so it did well during the recession/credit crisis. o Management intends to keep Net Debt/EBITDA at 2 to 2.5X (EBITDA adds back transaction costs and the company regularly does add-on acquisitions). The company says that for occasional larger acquisitions, leverage may go to 2.7X or 3.1X, but the addition of new EBITDA generally reduces this quickly. Leverage is 2.3X on affirmed 2015 EBITDA guidance. Although the company recently announced that 7- Eleven would not be renewing its agreement with the company to run ATMs in its convenience stores, we believe that the company will be able to grow and diversify away from this significant client (as a % of revenues business had been declining yearly and was 17% of revenues in 2014) by mid-2017 when the contract expires. Additionally, the company maintains more than adequate access to liquidity. We believe that the bonds are higher quality than the overall index based on ratings and factors mentioned above, so that bonds will perform better in more difficult conditions, thus they have a +1 rating. Recommendation(s): Ratings Issue Cash View Trade Horizon Ticker Cpn Maturity S&P Moody's Ccy Size Y1W OAS Price Target Loss ISIN 12 months CATM 5.125% 8/1/2022 Ba3 88. USD 250 5.35% 325 98.75 101.0 95.0 US14161HA.177 • Levels as of 11/06/2015 Deutsche Asset .15 & Weah Management CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075505 CONFIDENTIAL SDNY_GM_00221689 EFTA01378336