Coinstar, Inc. Announces 2012 Fourth Quarter And Full Year Results Consolidated Annual Revenue Over $2.2 Billion and Solid Execution Drive Strong Earnings Growth PR Newswire BELLEVUE, Wash., Feb. 7, 2013 BELLEVUE, Wash., Feb. 7, 2013 /PRNewswire/ --Coinstar, Inc. (Nasdaq: CSTR) today announced financial results for the fourth quarter and full year ended December 31, 2012. "We are pleased with our performance in 2012, which drove annual revenue of more than $2 billion for the first time," said Paul Davis, chief executive officer of Coinstar, Inc. "Our ongoing commitment to creating value for our consumers, our partners and, ultimately, our shareholders drove substantial progress on several growth initiatives that we outlined at the beginning of 2012, including Redbox Instant by Verizon, the launch of the Redbox Tickets pilot, Rubi coffee kiosks and our expansion into Canada. We made strategic investments across our business this year that we believe will generate new opportunities for growth as we move through 2013 and beyond." Financial highlights for the 2012 fourth quarter and full year included: 2012 Fourth Quarter 2012 Full Year · Consolidated revenue $ 564.1 million $ 2,202.0 million · Operating income $ 47.8 million $ 262.8 million · Core adjusted EBITDA from continuing $ 101.5 million $ 469.7 million operations* (See Appendix A) · Diluted earnings per share from $ 0.75 $ 4.67 continuing operations · Core diluted earnings per share* $ 0.93 $ 4.83 (See Appendix A) · Net cash flows from operating $ 152.2 million $ 463.9 million activities from continuing operations · Free cash flow from continuing $ 77.3 million $ 255.9 million operations* (See Appendix A) *Refer to Appendix A for a discussion of non-GAAP financial measures, including the exclusion of certain non-core items. "Our Q4 and full year results demonstrate our ability to effectively manage growth through challenges and continue to drive earnings and free cash flow," said J. Scott Di Valerio, chief financial officer of Coinstar, Inc. "In 2012 we continued to make the investments, build the organization and refine the processes that are paving the way for additional growth in the long term. We are more focused than ever on executing on our plans to drive success for our company and our shareholders." Revenue for the fourth quarter of 2012 increased 8.4% to $564.1 million compared with the fourth quarter of 2011, driven primarily by Redbox revenue growth of 9.6% to $488.3 million primarily reflecting new kiosk installations. Coin revenue remained relatively flat at $74.5 million. Operating income for the fourth quarter of 2012 was $47.8 million, which resulted in an operating margin of 8.5%, compared with operating income of $54.7 million and an operating margin of 10.5% in the fourth quarter of 2011. The decrease in operating margin was primarily driven by the operating results from the kiosks acquired as part of our NCR asset acquisition. Income from continuing operations for the fourth quarter of 2012 was $22.9 million, or diluted earnings per share from continuing operations of $0.75, a decrease in diluted earnings per share of 25.0% compared with $31.5 million, or $1.00 per share, in the fourth quarter of 2011. Core diluted earnings per share from continuing operations for the fourth quarter of 2012 was $0.93, excluding non-core adjustments of $0.18 per share, compared with $1.03, excluding non-core adjustments of $0.03 per share in the fourth quarter of 2011. Coinstar's fourth quarter 2012 results include a negative impact of $6.4 million before taxes, or $0.13 on core diluted earnings per share from continuing operations attributable to the operating results of the kiosks acquired as part of the NCR asset acquisition. For the 2012 full year revenue was $2.2 billion, an increase of 19.3% compared with 2011. Operating income for 2012 was $262.8 million, which resulted in an operating margin of 11.9%, compared with operating income of $209.9 million and an operating margin of 11.4% in 2011. Income from continuing operations for 2012 was $150.2 million, or $4.67 per diluted share, compared with income from continuing operations of $115.0 million, or $3.61 per diluted share, in 2011, an increase in diluted earnings per share of 29.4%. Core diluted earnings per share from continuing operations for the full year 2012 was $4.83, excluding non-core adjustments of $0.16 per share, compared with $3.67 per diluted share, excluding non-core adjustments of $0.06 per share in 2011. For the full year, results include a negative impact of $14.5 million before taxes, or $0.28 on core diluted earnings per share from continuing operations attributable to the operating results of the kiosks acquired as part of the NCR asset acquisition. Net cash flows from operating activities from continuing operations in the fourth quarter of 2012 was $152.2million, compared with $144.9 million in the fourth quarter of 2011. Cash paid for capital expenditures for continuing operations for the fourth quarter of 2012 was $74.9 million, compared with $44.5 million in the fourth quarter of 2011. Free cash flow from continuing operations for the fourth quarter of 2012 was $77.3 million, compared with $100.4 million in the fourth quarter of 2011, bringing the total to $255.9 million for the full year of 2012. During the fourth quarter of 2012, the company repurchased approximately $76.7 million of its common stock representing 1.57 million shares at an average price of $48.71 per share. Of the total amount repurchased, $75.0 million was completed through an accelerated share repurchase agreement entered into on November 1 and concluded on December 28, 2012 and the remaining $1.7 million was completed through open market repurchases. During 2012, the company repurchased approximately $139.7 million of its common stock representing 2.80 million shares at an average price of $49.92 per share through a combination of a previously announced 10b5-1 plan, accelerated share repurchase agreements, and open market purchases. On December31, 2012, there was $133.6 million remaining under the current Board authorization for stock repurchases. In January 2013, Coinstar's board authorized the repurchase of an additional $250 million, plus the amount of cash proceeds received by the company from the exercise of stock options by its officers, directors and employees. Guidance For the 2013 full year, Coinstar management expects: oConsolidated revenue between $2.375 billion and $2.555 billion; oCore adjusted EBITDA from continuing operations between $473 million and $513 million; oCore diluted EPS from continuing operations between $4.91 and $5.51; and oFree cash flow from continuing operations between $180 million and $200 million. For the 2013 first quarter, Coinstar management expects: oConsolidated revenue between $568 million and $593 million; oCore adjusted EBITDA from continuing operations between $95 million and $105 million; and oCore diluted EPS from continuing operations between $0.77 and $0.92. Additional Information Coinstar has provided additional comments on guidance in prepared remarks that also review the company's 2012 fourth quarter and full year operating and financial results. The prepared remarks are posted on the Investor Relations section of the corporate website at www.coinstarinc.com along with this press release. The 2012 fourth quarter Segment Supplement, which provides historical data in Excel format, is also posted on the website. Conference Call Paul Davis and J. Scott Di Valerio will host a conference call today at 2:00 p.m. PST (5:00 p.m. EST) to answer questions related to the company's business performance, financial results, guidance, and recent announcements. The conference call will be webcast live and archived on the Investor Relations section of Coinstar's website www.coinstarinc.com. A recording of the call will be available approximately two hours after the call ends through February 21, 2013, at 888‑843‑7419 or 630‑652‑3042, passcode 34052768#. About Coinstar, Inc. Coinstar, Inc. (NASDAQ: CSTR) is a leading provider of automated retail solutions offering convenient services that make life easier for consumers and drive incremental traffic and revenue for retailers. The company's core automated retail businesses include the well-known Redbox® self-service movie and video game rental and Coinstar® self-service coin-counting brands. The company has approximately 43,700 DVD kiosks and 20,300 coin-counting kiosks in supermarkets, drug stores, mass merchants, financial institutions, convenience stores, and restaurants. Redbox also offers DVD rentals through additional kiosks acquired from NCR Corporation in June 2012. For more information, visit www.coinstarinc.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, including 2013 first quarter and 2013 full year 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. and Redbox, as well as from risks and uncertainties beyond Coinstar, Inc.'s control. Such risks and uncertainties include, but are not limited to, ocompetition from other digital entertainment providers, othe ability to achieve the strategic and financial objectives for our entry into a new business, oour limited ability to direct the management or policies of the new joint venture with Verizon Communications, ofailure to receive the expected benefits of the NCR relationship, othe termination, non-renewal or renegotiation on materially adverse terms of our contracts with our significant retailers and suppliers, opayment of increased fees to retailers, suppliers and other third-party providers, including financial service providers, othe inability to receive delivery of DVDs on the date of their initial release to the general public, or shortly thereafter, or in sufficient quantity, for home entertainment viewing, onoteholders electing to convert our convertible notes, othe effective management of our content library, othe ability to attract new retailers, penetrate new markets and distribution channels and react to changing consumer demands, othe ability to achieve the strategic and financial objectives for our entry into or expansion of new businesses, othe ability to adequately protect our intellectual property, and othe 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 any subsequent Quarterly Reports 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 Non-GAAP Financial Measures Non-GAAP measures may be provided as a complement to results provided in accordance with United States generally accepted accounting principles ("GAAP"). We use the following non-GAAP financial measures to evaluate our financial results: oCore adjusted EBITDA from continuing operations; oCore diluted earnings per share ("EPS") from continuing operations; and oFree cash flow from continuing operations. These measures, the definitions of which are presented below, are non-GAAP because they exclude certain amounts which are included in the most directly comparable measure calculated and presented in accordance with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for our GAAP financial measures and may not be comparable with similarly titled measures of other companies. Core and Non-Core Results We distinguish our core activities, those associated with our primary operations, from non-core activities. Non-core activities are primarily nonrecurring events or events we do not control. Our non-core adjustments include i) deal fees primarily related to the NCR Asset Acquisition, ii) income or loss from equity method investments, which represents our share of income or loss from entities we do not consolidate or control, and iii) a gain on the grant of a license to use certain Redbox trademarks to Redbox Instant by Verizon ("Non-Core Adjustments"). We believe investors should consider our core results because they are more indicative of our ongoing performance and trends and are more consistent with how management evaluates our operational results and trends. Core Adjusted EBITDA from Continuing Operations Our non-GAAP financial measure core adjusted EBITDA from continuing operations is defined as earnings before depreciation, amortization and other; interest expense, net; income taxes; share-based payments expense; and Non-Core Adjustments. A reconciliation of core adjusted EBITDA from continuing operations to income from continuing operations, the most comparable GAAP financial measure, is presented in the following table: Three Months Ended Twelve Months Ended December 31, December 31, Dollars in thousands 2012 2011 2012 2011 Income from continuing $ 22,885 $ 31,522 $ 150,230 $ 114,951 operations Depreciation, 47,616 39,245 184,525 148,218 amortization, and other Interest expense, net 4,615 4,944 15,648 23,822 Income taxes 10,908 17,862 91,516 69,777 Share-based payments 6,218 6,849 19,362 16,211 expense^(1) Adjusted EBITDA from continuing 92,242 100,422 461,281 372,979 operations Non-core adjustments: Deal fees - 1,122 3,235 1,603 Loss from equity method 9,278 711 24,684 1,591 investments Gain on formation of - - (19,500) - Redbox Instant by Verizon Core adjusted EBITDA from continuing $ 101,520 $ 102,255 $ 469,700 $ 376,173 operations (1) Includes non-cash share-based compensation for executives, non-employee directors and employees as well as share-based payments for content arrangements. Core Diluted EPS from Continuing Operations Our non-GAAP financial measure core diluted EPS from continuing operations is defined as diluted earnings per share from continuing operations excluding Non-Core Adjustments, net of applicable taxes. A reconciliation of core diluted EPS from continuing operations to diluted EPS from continuing operations, the most comparable GAAP financial measure, is presented in the following table: Three Months Ended Twelve Months Ended December 31, December 31, 2012 2011 2012 2011 Diluted EPS from continuing $ 0.75 $ 1.00 $ 4.67 $ 3.61 operations Non-core adjustments, net of tax:^(1) Deal fees - 0.02 0.06 0.03 Loss from equity method 0.18 0.01 0.48 0.03 investments Gain on formation of Redbox - - (0.38) - Instant by Verizon Core diluted EPS from continuing $ 0.93 $ 1.03 $ 4.83 $ 3.67 operations (1) Non-Core Adjustments are presented after-tax using the applicable effective tax rate for the respective periods. Free Cash Flow from Continuing Operations Our non-GAAP financial measure free cash flow from continuing operations is defined as net cash provided by operating activities from continuing operations after capital expenditures. We believe free cash flow from continuing operations is an important non-GAAP measure as it provides additional information to users of the financial statements regarding our ability to service, incur or pay down indebtedness and repurchase our common stock. The table below provides a reconciliation of net cash provided by operating activities from continuing operations, the most comparable GAAP financial measure, to free cash flow from continuing operations: Three Months Ended Twelve Months Ended December 31, December 31, Dollars in thousands 2012 2011 2012 2011 Net cash provided by operating activities from continuing $ 152,212 $ 144,877 $ 463,906 $ 406,516 operations Purchase of property and (74,873) (44,457) (208,054) (179,236) equipment Free cash flow from $ 77,339 $ 100,420 $ 255,852 $ 227,280 continuing operations COINSTAR, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, except per share data) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2012 2011 2012 2011 Revenue $ 564,082 $ 520,455 $ 2,202,043 $ 1,845,372 Expenses: Direct operating 404,227 365,664 1,502,977 1,283,351 Marketing 7,555 8,307 27,635 29,004 Research and development 3,229 4,018 13,913 11,557 General and administrative 53,626 48,562 210,235 163,357 Depreciation and other 45,568 38,560 179,147 145,478 Amortization of intangible 2,048 685 5,378 2,740 assets Total expenses 516,253 465,796 1,939,285 1,635,487 Operating income 47,829 54,659 262,758 209,885 Other income (expense): Income (loss) from equity (9,278) (711) (5,184) (1,591) method investments, net Interest expense, net (4,615) (4,944) (15,648) (23,822) Other, net (143) 380 (180) 256 Total other income (expense) (14,036) (5,275) (21,012) (25,157) Income from continuing 33,793 49,384 241,746 184,728 operations before income taxes Income tax expense (10,908) (17,862) (91,516) (69,777) Income from continuing 22,885 31,522 150,230 114,951 operations Loss from discontinued - - - (11,068) operations, net of tax Net income 22,885 31,522 150,230 103,883 Other comprehensive income: Foreign currency translation (294) (133) 1,048 (255) adjustment Reclassification of interest rate hedges to interest - - - 896 expense Loss on short-term investments - - - (20) Income tax expense related to items of other comprehensive - - - (342) income Other comprehensive income, net (294) (133) 1,048 279 of tax Comprehensive income $ 22,591 $ 31,389 $ 151,278 $ 104,162 Basic earnings (loss) per share: Continuing operations $ 0.78 $ 1.04 $ 4.96 $ 3.76 Discontinued operations - - - (0.36) Basic earnings per share $ 0.78 $ 1.04 $ 4.96 $ 3.40 Diluted earnings (loss) per share: Continuing operations $ 0.75 $ 1.00 $ 4.67 $ 3.61 Discontinued operations - - - (0.35) Diluted earnings per share $ 0.75 $ 1.00 $ 4.67 $ 3.26 Weighted average shares used in 29,380 30,261 30,305 30,520 basic per share calculations Weighted average shares used in 30,619 31,605 32,174 31,869 diluted per share calculations COINSTAR, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) December 31, 2012 2011 Assets Current Assets: Cash and cash equivalents $ 282,894 $ 341,855 Accounts receivable, net of allowances of $2,003 and 58,331 41,246 $1,586 Content library 177,409 142,386 Deferred income taxes 7,187 84,228 Prepaid expenses and other current assets 29,686 25,274 Total current assets 555,507 634,989 Property and equipment, net 571,358 499,178 Notes receivable 26,731 24,374 Deferred income taxes 1,373 647 Goodwill and other intangible assets 358,829 274,583 Other long-term assets 47,927 17,066 Total assets $ 1,561,725 $ 1,450,837 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 250,588 $ 175,550 Accrued payable to retailers 138,413 127,450 Other accrued liabilities 146,125 148,996 Current portion of long-term debt 15,529 13,986 Current portion of capital lease obligations 13,350 12,057 Total current liabilities 564,005 478,039 Long-term debt and other long-term liabilities 341,179 359,288 Capital lease obligations 15,702 11,768 Deferred tax liabilities 91,751 87,840 Total liabilities 1,012,637 936,935 Commitments and contingencies Stockholders' Equity: Preferred stock, $0.001 par value - 5,000,000 shares authorized; no shares issued or outstanding - - Common stock, $0.001 par value - 60,000,000 authorized; 35,797,592 and 35,251,932 shares issued; 28,626,323 and 30,879,778 shares 504,881 481,249 outstanding Treasury stock (293,149) (153,425) Retained earnings 338,979 188,749 Accumulated comprehensive loss (1,623) (2,671) Total stockholders' equity 549,088 513,902 Total liabilities and stockholders' equity $ 1,561,725 $ 1,450,837 COINSTAR, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, 2012 2011 2012 2011 Operating Activities: Net income $ 22,885 $ 31,522 $ 150,230 $ 103,883 Adjustments to reconcile net income to net cash flows from operating activities from continuing operations: Depreciation and other 45,568 38,560 179,147 145,478 Amortization of intangible assets and 2,579 1,216 7,504 5,182 deferred financing fees Share-based payments 6,218 6,849 19,362 16,211 expense Excess tax benefits on (67) (40) (5,740) (2,471) share-based payments Deferred income taxes 14,383 13,161 87,573 60,076 Loss from discontinued - - - 11,068 operations, net of tax Loss from equity method 9,278 711 5,184 1,591 investments, net Non-cash interest on 1,839 1,694 7,109 6,551 convertible debt Other 7 635 (4,100) (95) Cash flows from changes in operating assets and liabilities from continuing 49,522 50,569 17,637 59,042 operations Net cash flows from operating activities 152,212 144,877 463,906 406,516 from continuing operations Investing Activities: Purchases of property and (74,873) (44,457) (208,054) (179,236) equipment Proceeds from sale of 312 143 1,131 695 property and equipment Proceeds from sale of - (4,001) - 8,220 businesses, net Acquisition of NCR DVD - - (100,000) - kiosk business Equity investments - (2,592) (39,727) (4,912) Net cash flows from investing activities (74,561) (50,907) (346,650) (175,233) from continuing operations Financing Activities: Principal payments on capital lease obligations (3,190) (6,057) (16,392) (28,202) and other debt Borrowings from term loan - - - 175,000 Principal payments on term loan and repurchase of (23,845) (2,188) (31,513) (4,375) convertible debt Net payments on credit - - - (150,000) facility Financing costs associated - - - (4,196) with credit facility Excess tax benefits related 67 40 5,740 2,471 to share-based payments Repurchases of common stock (76,654) - (139,724) (63,349) and ASR program Proceeds from exercise of 558 1,079 4,592 3,261 stock options Net cash flows from financing activities (103,064) (7,126) (177,297) (69,390) from continuing operations Effect of exchange rate (151) (289) 1,080 (454) changes on cash Increase (decrease) in cash and cash equivalents from (25,564) 86,555 (58,961) 161,439 continuing operations Cash flows from discontinued operations: Operating cash flows - - - 9,678 Investing cash flows - - - (12,678) Net cash flows from discontinued - - - (3,000) operations Increase (decrease) in cash (25,564) 86,555 (58,961) 158,439 and cash equivalents Cash and cash equivalents: Beginning of period 308,458 255,300 341,855 183,416 End of period $ 282,894 $ 341,855 $ 282,894 $ 341,855 Coinstar, Inc. Business Segment Information (in thousands) (unaudited) As a complement to our Consolidated Statements of Comprehensive Income, we are providing the following information related to our business segments, which includes segment operating income (loss). Management, including our chief executive officer, evaluates the performances of our business segments primarily on segment revenue and segment operating income from continuing operations before depreciation, amortization and other, and certain share-based payments ("segment operating income"). We utilize segment revenue and segment operating income because we believe they provide useful information for effectively allocating resources among business segments, evaluating the health of our business segments based on metrics that management can actively influence, and gauging our investments and our ability to service, incur or pay down debt. Three Months Ended Twelve Months Ended December December 31, 31, Dollars in 2012 2011 2012 2011 thousands Revenue: Redbox $ 488,325 $ 445,591 $ 1,908,773 $ 1,561,598 Coin 74,464 74,448 290,761 282,382 New Ventures 1,293 416 2,509 1,392 Consolidated $ 564,082 $ 520,455 $ 2,202,043 $ 1,845,372 revenue Segment operating income reconciled to GAAP operating income Three Months Ended Twelve Months Ended December 31, December 31, Dollars in thousands 2012 2011 2012 2011 Segment operating income (loss)^(1) Redbox^(2) $ 80,012 $ 76,595 $ 386,753 $ 284,932 Coin 26,300 25,678 99,261 100,966 New Ventures (7,169) (6,068) (25,484) (17,815) Subtotal 99,143 96,205 460,530 368,083 Depreciation, amortization and other: Redbox 38,812 30,062 148,068 115,430 Coin 8,520 9,176 36,108 31,922 New Ventures 284 7 349 866 Total depreciation, 47,616 39,245 184,525 148,218 amortization and other Share-based 3,698 2,301 13,247 9,980 compensation expense Operating income (loss): Redbox 41,200 46,533 238,685 169,502 Coin 17,780 16,502 63,153 69,044 New Ventures (7,453) (6,075) (25,833) (18,681) Share-based (3,698) (2,301) (13,247) (9,980) compensation expense Total operating $ 47,829 $ 54,659 $ 262,758 $ 209,885 income (1) Operating income (loss) before depreciation, amortization and other, and share-based compensation expense (2) Share-based payments expense related to our content arrangements have been allocated to our Redbox segment SOURCE Coinstar, Inc. Website: http://www.coinstarinc.com Contact: Media: Marci Maule, Director of Public Relations, +1-425-943-8277, email@example.com; Financial Analysts and Investors: Rosemary Moothart, Director of Investor Relations, +1-425-943-8140, firstname.lastname@example.org
Coinstar, Inc. Announces 2012 Fourth Quarter And Full Year Results
Press spacebar to pause and continue. Press esc to stop.