Coinstar releases Q3 2009 results
Bellevue, Wash., Nov. 5, 2009 -- Coinstar, Inc. (NASDAQ:CSTR) today announced financial results for the third quarter and nine-month period ended September 30, 2009, which reflect the sale of its entertainment services business on September 8, 2009.
As a result of the sale, Coinstar recorded income from discontinued operations, net of tax, of $31.7 million, or $1.03 per diluted share, for the third quarter. The $31.7 million included a loss from the operations of the discontinued business for the third quarter of $0.7 million, or a loss of $0.02 per share. In addition, Coinstar recorded a pre-tax loss on disposal of $49.8 million and a one-time tax benefit of $82.2 million on the sale of the entertainment services business, netting to $32.4 million, or $1.05 per share. All prior period results have been adjusted to reflect the results of the entertainment services business as discontinued operations.
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Financial results for the third quarter of 2009 included the following:
Revenue for the third quarter of 2009 totaled $296.0 million, an increase of 45.5 percent compared with revenue of $203.5 million in the third quarter of 2008.
Income from operations for the quarter was $27.1 million, resulting in a 9.2 percent operating margin, compared with income from operations of $20.2 million and a 9.9 percent operating margin in the third quarter of 2008.
Income from continuing operations for the quarter was $9.7 million, or $0.31 per diluted share, an increase of 22.5 percent compared with income from continuing operations of $7.9 million, or $0.27 per diluted share, in the third quarter of 2008.
Net income attributable to Coinstar for the quarter was $41.4 million, or $1.34 per diluted share, compared with net income attributable to Coinstar of $4.5 million, or $0.16 per diluted share, in the third quarter of 2008.
“In the third quarter, our core DVD rental and coin-counting businesses continued to produce solid results at both the top and bottom line,” said Paul Davis, chief executive officer of Coinstar, Inc. “Our performance reflects Coinstar’s strength in self-service automated retail and our consistent ability to deliver value and convenience to our consumers and retailers.”
Other Information
On September 16, 2009, Coinstar completed a debt offering of $200 million of convertible senior notes and raised $193.3 million, net of expenses. The net proceeds of the convertible offering were used to pay the outstanding balance of the company's Term Loan under its senior secured credit facility, which was $87.5 million. The company used the remaining proceeds of $105.8 million to pay down part of its existing credit facility.
Cash paid for capital expenditures for the third quarter ended September 30, 2009 was $29.6 million, compared with $49.5 million in the third quarter of 2008.
At September 30, 2009, Coinstar had federal and state cumulative net operating loss carryforwards of approximately $248.6 million and $242.3 million, respectively. In addition, Coinstar had foreign net operating loss carryforwards of approximately $33.6 million. The state and foreign loss carryforwards are subject to certain limitations that may prevent or delay utilization of the losses against future income. Although Coinstar recorded $6.8 million in tax expense for the continuing operations for the quarter, cash paid for taxes during the quarter totaled $0.3 million.
Full Year 2009 Guidance
Guidance provided by management reflects the sale of the entertainment services business and the increased GAAP interest expense from the convertible debt offering. For 2009, management expects revenue in the range of $1.115 to $1.165 billion. Management expects adjusted EBITDA from continuing operations in the range of $200 to $210 million. In addition, management announced that for 2009, on a fully diluted basis, it expects GAAP EPS from continuing operations in the range of $0.98 to $1.04 and GAAP EPS attributable to Coinstar, Inc. in the range of $1.90 to $1.96.
Conference Call
Coinstar management will host a conference call today at 2:00 p.m. PST (5:00 p.m. EST) to review the results. A live webcast of the conference call will be accessible on the Investor Relations section of Coinstar’s website at www.coinstar.com, where it will be archived. A telephonic replay of the call will be available approximately two hours after the call ends through November 19, 2009, at 1-888-286-8010 or 1-617-801-6888, passcode 88829130.
About Coinstar, Inc.
Coinstar, Inc. (NASDAQ:CSTR) is a leading provider of automated retail solutions offering convenient products and 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 products and services include e-payment products – such as gift cards, prepaid debit cards and other prepaid products – and money transfer services. The company's products and services can be found at more than 90,000 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 ability to attract new retailers, penetrate new markets and distribution channels, cross-sell our products and services 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
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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 definition of adjusted EBITDA from continuing operations, a non-GAAP measure, is provided below to allow the reader to reconcile non-GAAP data to that presented in accordance with GAAP. Our non-GAAP measure may be different from the presentation of financial information by other companies.
Adjusted EBITDA from continuing operations, as defined, represents earnings before net interest expense, income taxes, depreciation, amortization and certain other non-cash charges including the write-off from early retirement of debt, 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.
Source: Company press release.