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Coinstar, Inc. Announces 2010 First Quarter Results

Strong Revenue Growth Drives Earnings

Coinstar, Inc. today announced financial results for the first quarter ended March 31, 2010.

"We are very pleased with our outstanding first quarter results that underscore the strength in our DVD and Coin businesses," said Paul Davis, chief executive officer of Coinstar, Inc. "We have made significant progress in strengthening and enhancing our relationships with retailers and suppliers, and extending our value proposition to existing and new consumers. Our achievements give us confidence that we have the right strategy in place to lead in automated retail."

  Financial highlights for the quarter ended March 31, 2010, included:




  --  Revenue                                            $350.1  million
  -- Adjusted EBITDA from continuing operations (See
   Appendix A)                                            $58.6  million
  --  Income from operations                              $20.5  million
  --  Income from continuing operations                    $6.4  million
  --  Net income attributable to Coinstar, Inc.            $6.4  million
  -- Diluted earnings per share attributable to
   Coinstar, Inc.                                         $0.21
  -- Net cash provided by operating activities from
   continuing operations                                  $65.7  million
  -- Free cash flow from continuing operations (See
   Appendix A)                                            $33.3  million


"Solid execution in our core businesses drove our strong financial results across the board," said J. Scott Di Valerio, chief financial officer of Coinstar, Inc. "We invested in the business to support our growth initiatives and at the same time generated $33 million in free cash flow, a substantial increase over last year. The traction we gained in the first quarter indicates we are well-positioned for continued success in our DVD business, renewed growth in Coin and increased profitability."

Revenue for the first quarter of 2010 was $350.1 million, an increase of 46.6% compared with revenue of $238.8 million in the first quarter of 2009. The increase is primarily due to the growth in DVD revenue, which was $263.2 million in the first quarter of 2010, an increase of 70.1% compared with $154.7 million in the first quarter of 2009.

Income from operations for the first quarter of 2010 was $20.5 million, which resulted in an operating margin of 5.9%, including pre-tax charges totaling approximately $7.9 million primarily from the accelerated depreciation on the company's first generation coffee and DVDXpress branded DVD kiosks that the company has determined will be taken out of service and not redeployed, as well as a pre-tax charge of approximately $5.4 million related to the settlement of Coinstar's litigation with ScanCoin. This is compared with income from operations of $16.8 million and an operating margin of 7.0% in the first quarter of 2009. The decrease in operating margin was partially offset by results for the DVD business segment which experienced an increase in segment operating profit of over 100% to $44.8 million in the first quarter of 2010 and an operating margin of 17.0%, compared with 13.4% in the first quarter of 2009. The improvement in operating margin reflects the ongoing improvement in leverage we are seeing as we scale the business and expand our footprint.

Net income attributable to Coinstar, Inc. for the first quarter of 2010 was $6.4 million, or $0.21 per diluted share, including a loss of ($0.15) per share primarily from the accelerated depreciation on the company's first generation coffee and DVDXpress branded DVD kiosks that the company has determined will be taken out of service and not redeployed, as well as a loss of ($0.10) per share related to the settlement of Coinstar's litigation with ScanCoin. This is compared with $2.0 million, or $0.07 per diluted share which included a loss of approximately ($0.06) per diluted share related to discontinued operations in the first quarter of 2009 and ($0.12) associated with the company's non-controlling interest in Redbox.

Other Information

Cash paid for capital expenditures for the first quarter of 2010 was $32.3 million, compared with $36.0 million in the first quarter of 2009, with the decrease primarily due to the timing of purchases and installations related to our ongoing investment in DVD kiosks during the first quarter of 2010.

2010 Full Year and Second Quarter Guidance

Coinstar management updated guidance for the full year 2010 from what was previously provided on February 23, 2010.

For 2010, management expects revenue in the range of $1.530 billion to $1.630 billion, EBITDA in the range of $275 million to $290 million and GAAP EPS attributable to Coinstar, Inc. in the range of $1.82 to $1.94 on a fully diluted basis.

For the second quarter of 2010, management expects revenue in the range of $370.0 million to $390.0 million, EBITDA in the range of $58.0 million to $63.0 million and GAAP EPS attributable to Coinstar, Inc. in the range of $0.30 to $0.34 on a fully diluted basis.

Guidance for 2010 and for the second quarter of 2010 includes the impact on revenue and costs related to the impact of the company's agreements with studios, as well as the number and timing of planned kiosk installations.

Conference Call

Paul Davis, Coinstar's chief executive officer, and J. Scott Di Valerio, Coinstar's chief financial officer, will host a conference call today at 2:00 p.m. PDT (5:00 p.m. EDT) to review the first quarter results and discuss guidance. The conference call will be webcast live on the Investor Relations section of Coinstar's website at www.coinstar.com, where it will be archived. A recording of the call will be available approximately two hours after the call ends through May 13, 2010, at 1-888-286-8010 or 1-617-801-6888, passcode 64421253.

About Coinstar, Inc.

Coinstar, Inc. is a leading provider of automated retail solutions offering convenient services that make life easier for consumers and drive incremental traffic and revenue for its retailers. The company's core automated retail businesses are self-service coin counting and self-service DVD rental. Other Coinstar services include e-payment and money transfer services. The company's services can be found at more than 95,000 points of presence including supermarkets, drug stores, mass merchants, financial institutions, convenience stores, restaurants, and money transfer agents. For more information, visit www.coinstar.com.

Safe Harbor for Forward-Looking Statements

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "estimate," "expect," "intend," "anticipate," "goals," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. The forward-looking statements in this release include statements regarding Coinstar, Inc.'s anticipated growth and future operating results. Forward-looking statements are not guarantees of future performance and actual results may vary materially from the results expressed or implied in such statements. Differences may result from actions taken by Coinstar, Inc., as well as from risks and uncertainties beyond Coinstar, Inc.'s control. Such risks and uncertainties include, but are not limited to, the termination, non-renewal or renegotiation on materially adverse terms of our contracts with our significant retailers, payment of increased service fees to retailers, the inability to receive delivery of DVDs on the date of their initial release to the general public, or shortly thereafter, for home entertainment viewing, the effective management of our DVD inventory, the ability to attract new retailers, penetrate new markets and distribution channels and react to changing consumer demands, the ability to achieve the strategic and financial objectives for our entry into or expansion of new businesses, the ability to adequately protect our intellectual property, and the application of substantial federal, state, local and foreign laws and regulations specific to our business. The foregoing list of risks and uncertainties is illustrative, but by no means exhaustive. For more information on factors that may affect future performance, please review "Risk Factors" described in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission. These forward-looking statements reflect Coinstar, Inc.'s expectations as of the date of this release. Coinstar, Inc. undertakes no obligation to update the information provided herein.

                       (Financial Statements Follow)



                                 Appendix A
                               (in thousands)


  Non-GAAP Measures

Non-GAAP measures may be provided as a complement to results provided in accordance with United States generally accepted accounting principles ("GAAP"). Non-GAAP measures are not a substitute for measures computed in accordance with GAAP. The definitions of such non-GAAP measures are provided below to allow the reader to reconcile non-GAAP data to that presented in accordance with GAAP. Our non-GAAP measures may be different from the presentation of financial information by other companies.

Adjusted EBITDA from continuing operations is defined as earnings before net interest expense, income taxes, depreciation, amortization and certain other non-cash charges including the write-off from early retirement of debt, goodwill impairment, and stock-based compensation and share-based expenses from continuing operations. We believe adjusted EBITDA from continuing operations is an important non-GAAP measure as it provides useful information to investors regarding our ability to service, incur or pay down indebtedness. In addition, management uses this non-GAAP measure internally to evaluate performance and manage operations. See below for reconciliation of the most comparable GAAP measure, income from continuing operations, to adjusted EBITDA from continuing operations.

                                             Three-Month
                                               Periods
                                          Ended March 31,
                                          ---------------
                                          2010        2009
                                          ----        ----

   Income from continuing operations    $6,442      $7,309
   Depreciation, amortization and
    other                               35,374      22,539
   Interest expense, net                 9,253       6,402
   Income taxes                          4,226       2,960
   Stock-based compensation and
    share-based expense                  3,302       2,795
   Adjusted EBITDA from continuing
    operations                         $58,597     $42,005
                                       =======     =======



Free cash flow from continuing operations is defined as net cash provided by operating activities after cash paid for capital expenditures for continuing operations. We believe free cash flow is an important non-GAAP measure as it provides useful cash flow information regarding our ability to service, incur or pay down indebtedness and repurchase our common stock. See below for reconciliation of the most comparable GAAP measure, net cash provided by operating activities from continuing operations, to free cash flow from continuing operations.

                                                          Three-Month
                                                            Periods
                                                       Ended March 31,
                                                       ---------------
                                                        2010           2009
                                                        ----           ----

   Net cash provided (used) by operating
    activities from continuing operations            $65,692       $(14,684)
   Purchase of property and equipment                (32,351)       (35,980)
   Free cash flow from continuing operations         $33,341       $(50,664)
                                                     =======       ========



                              Coinstar, Inc.
                   Consolidated Statements of Net Income
                   (in thousands, except per share data)
                                (unaudited)

                                                   Three-Month Periods
                                                     Ended March 31,
                                                     ---------------
                                                    2010          2009
                                                     ---           ---

  REVENUE                                       $350,061      $238,768
  EXPENSES:
      Direct operating                           244,930       161,463
      Marketing                                    4,187         5,101
      Research and development                     1,424         1,257
      General and administrative                  38,289        30,313
      Depreciation and other                      33,481        20,588
      Amortization of intangible assets            1,893         1,951
      Litigation settlement and write-off of
       acquisition costs                           5,379         1,262
                                                   -----         -----
       Income from operations                     20,478        16,833
  OTHER INCOME (EXPENSE):
      Foreign currency loss and other, net          (557)         (162)
      Interest income                                 17           108
      Interest expense                            (9,270)       (6,510)
                                                  ------        ------
       Income from continuing operations before
        income taxes                              10,668        10,269
      Income tax expense                          (4,226)       (2,960)
                                                  ------        ------
  Income from continuing operations                6,442         7,309
  Loss from discontinued operations, net of
   tax                                                 -        (1,719)
                                                     ---        ------
  Net income                                       6,442         5,590
      Less: Net income attributable to non-
       controlling interests                           -        (3,627)
                                                     ---        ------
  NET INCOME ATTRIBUTABLE TO COINSTAR, INC.       $6,442        $1,963
                                                  ======        ======


  BASIC EARNINGS PER SHARE:
  Basic earnings per share from continuing
   operations attributable to Coinstar,
   Inc.                                            $0.21         $0.13
  Basic loss per share from discontinued
   operations attributable to Coinstar,
   Inc.                                                -         (0.06)
                                                     ---         -----
      Basic earnings per share attributable to
       Coinstar, Inc.                              $0.21         $0.07
                                                   =====         =====

  DILUTED EARNINGS PER SHARE:
  Diluted earnings per share from
   continuing operations attributable to
   Coinstar, Inc.                                  $0.21         $0.13
  Diluted loss per share from discontinued
   operations attributable to Coinstar,
   Inc.                                                -         (0.06)
                                                     ---         -----
      Diluted earnings per share attributable
       to Coinstar, Inc.                           $0.21         $0.07
                                                   =====         =====

  WEIGHTED SHARES OUTSTANDING:
      Basic                                       30,950        28,933
      Diluted                                     31,217        29,212



                                   Coinstar, Inc.
                             Consolidated Balance Sheets
                          (in thousands, except share data)
                                     (unaudited)

                                                              December
                                                 March 31,       31,
                                                       2010        2009
                                                       ----        ----

                           ASSETS
   CURRENT ASSETS:
     Cash and cash equivalents                     $100,333     $61,280
     Cash in machine or in transit                   50,625      57,141
     Cash being processed                            67,700      73,875
     Accounts receivable, net of allowance for
      doubtful accounts of $4,283 and $4,379
      at                                             64,893      61,371
        March 31, 2010 and December 31, 2009,
         respectively
     DVD library and inventory                       93,478     104,367
     Deferred income taxes                           13,186      12,350
     Prepaid expenses and other current assets       23,726      20,364
        Total current assets                        413,941     390,748
   PROPERTY AND EQUIPMENT, NET                      405,262     400,289
   DEFERRED INCOME TAXES                             95,217      99,195
   OTHER ASSETS                                      17,966      17,172
   INTANGIBLE ASSETS, NET                            26,628      30,893
   GOODWILL                                         282,788     284,502
   TOTAL ASSETS                                  $1,241,802  $1,222,799
                                                 ==========  ==========

                   LIABILITIES AND EQUITY
   CURRENT LIABILITIES:
     Accounts payable                              $133,752    $118,918
     Accrued payable to retailers and agents        137,814     131,103
     Other accrued liabilities                       87,591      91,413
     Current portion of long-term debt                7,014       6,812
     Current portion of capital lease
      obligations                                    25,253      26,396
        Total current liabilities                   391,424     374,642
   LONG-TERM DEBT AND OTHER                         409,305     409,423
   CAPITAL LEASE OBLIGATIONS                         21,261      26,326
   DEFERRED TAX LIABILITY                                17          17
   TOTAL LIABILITIES                                822,007     810,408

   EQUITY:
     Preferred stock, $0.001 par
      value-Authorized, 5,000,000 shares; no
      shares issued                                       -           -
        and outstanding at March 31, 2010 and
         December 31, 2009
     Common stock, $0.001 par
      value-Authorized, 45,000,000 shares;
      33,435,772 and                                411,654     406,333
        33,002,865 issued and 31,509,691 and
         31,076,784 shares outstanding at March
         31,
        2010 and December 31, 2009, respectively
     Retained earnings                               57,413      50,971
     Treasury stock                                 (40,831)    (40,831)
     Accumulated other comprehensive loss            (8,441)     (4,082)
        Total stockholders' equity                  419,795     412,391
                                                    -------     -------
   TOTAL LIABILITIES AND EQUITY                  $1,241,802  $1,222,799
                                                 ==========  ==========



                                  Coinstar, Inc.
                       Consolidated Statements of Cash Flows
                                  (in thousands)
                                    (unaudited)

                                                  Three-Month Periods
                                                    Ended March 31,
                                                    ---------------
                                                   2010           2009
                                                    ---            ---

  OPERATING ACTIVITIES:
    Net income                                   $6,442         $5,590
    Adjustments to reconcile net income to
     net cash provided (used) by operating
       activities from continuing operations:
       Depreciation and other                    33,481         20,588
       Amortization of intangible assets and
        deferred financing fees                   2,401          1,951
       Write-off of acquisition costs                 -          1,428
       Non-cash stock-based compensation for
        employees                                 2,710          2,795
       Share-based payments for DVD agreement       592              -
       Excess tax benefit on share-based
        awards                                     (748)           (33)
       Deferred income taxes                      4,043          1,742
       Loss from discontinued operations, net
        of tax                                        -          1,719
       Non-cash interest on convertible debt      1,459              -
       Other                                        108            235
    Cash provided (used) by changes in
     operating assets and liabilities  from
     continuing                                  15,204        (50,699)
       operations:
      Net cash provided  (used) by operating
       activities from continuing operations     65,692        (14,684)
  INVESTING ACTIVITIES:
       Purchase of property and equipment       (32,351)       (35,980)
       Proceeds from sale of fixed assets            38             93
      Net cash used by investing activities
       from continuing operations               (32,313)       (35,887)
  FINANCING ACTIVITIES:
       Principal payments on capital lease
        obligations and other debt               (8,696)        (5,838)
       Net borrowings on credit facility              -         55,000
       Financing costs associated with
        revolving line of credit and
        convertible debt                              -         (1,905)
       Cash used to purchase remaining non-
        controlling interests in Redbox               -        (10,083)
       Excess tax benefit on share-based
        awards                                      748             33
       Proceeds from exercise of stock options    2,227            418
      Net cash (used) provided by financing
       activities from continuing operations     (5,721)        37,625

  Effect of exchange rate changes on cash        (1,296)        (1,041)

  NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS, CASH IN MACHINE OR               26,362        (13,987)
      IN TRANSIT, AND CASH BEING PROCESSED
       FROM CONTINUING OPERATIONS

  CASH FLOWS FROM DISCONTINUED OPERATIONS:
       Operating cash flows                           -          2,914
       Investing cash flows                           -         (1,223)
       Financing cash flows                           -           (933)
                                                    ---           ----
                                                      -            758

  NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS, CASH IN MACHINE OR               26,362        (13,229)
     IN TRANSIT, AND CASH BEING PROCESSED

  CASH AND CASH EQUIVALENTS, CASH IN
   MACHINE OR IN
     TRANSIT, AND CASH BEING PROCESSED:
       Beginning of period                      192,296        192,035
       End of period                           $218,658       $178,806
                                               ========       ========





                                  Coinstar, Inc.
                Segment Revenue and Operating Income (Loss) Before
          Depreciation, Amortization and Stock-Based Compensation/Shared-
                                   Based Payments
                                  (in thousands)
                                    (unaudited)


Segment Reporting: As a complement to our Consolidated Statements of Net Income, we are providing the following information related to our business segments:

                                  Three-Month Periods
                                    Ended March 31,
                                   2010          2009
                                    ---           ---
                                    (in thousands)
    Revenue:
      DVD services             $263,130      $154,697
      Coin services              59,935        57,987
      Money transfer services    21,425        19,931
      E-payment services          5,571         6,153


    Consolidated revenue       $350,061      $238,768
                               ========      ========




                                                   Three-Month
                                                     Periods
                                                 Ended March 31,
                                                  2010           2009
                                                   ---            ---
                                                 (in thousands)
   Operating income before depreciation/
    amortization and stock-based compensation/
    share-based payments:
     DVD services                              $44,834        $20,830
     Coin services                              14,334         21,995
     Money transfer services                    (1,665)        (2,261)
     E-payment services                          1,651          1,603
            Subtotal                            59,154         42,167

     Depreciation, amortization and other      (35,374)       (22,539)

     Stock-based compensation and share-based
      payments                                  (3,302)        (2,795)


   Consolidated income from operations         $20,478        $16,833
                                               =======        =======

First Call Analyst:
FCMN Contact:

SOURCE: Coinstar, Inc.

CONTACT: Media, Marci Maule, Director of Public Relations,
+1-425-943-8277, marci.maule@coinstar.com, or Investors, Rosemary Moothart,
Director of Investor Relations, +1-425-943-8140,
rosemary.moothart@coinstar.com, both of Coinstar, Inc.