Redbox mom & daughter

Redbox parent company Coinstar released its fourth quarter earnings today, and it looks like it may want to pick up a pint of ice cream and a movie to watch tonight to forget this day happened.

Despite enjoying its first annual revenue amount of more than $2 billion, the fourth quarter was far from being a help to Coinstar. Net income declined from the fourth quarter of 2011's $31.5 million, or $1 a share, by 27 percent to land at $22.9 million, or 75 cents a share. Overall sales rose 8.4 percent to $564.1 million, but was well below the estimate of $580.2 million.

Several issues appear to have contributed to the issues the company faced. The kiosks acquired from Blockbuster last February are not performing well was definitely high on the list, followed by a lack of content to put in the machines. During Jan. 2012 Redbox has 23 new films to place in its kiosks, but that number dropped to a mere 12 this year. Perhaps it's time to rethink that rental window agreement the company has with studios such as Warner Brothers.

Lastly, according to Bloomberg, the company is going to be increasing the capacity of its machines from 600 discs to 680. Due to the current capacity, popular films quite often have to be removed to make room for new releases. Each kiosk usually stocks around 100 titles, and this new capacity will allow popular films to hang around for just a little bit longer.

The future may be a bit brighter with Redbox Instant currently being tested, the addition of ticket sales and an expansion into coffee kiosks, but that isn't stopping the stock from taking a significant drop in after hours trading.

Considering how Redbox has been helping the demise of video rental stores, you would think it's on top of the world, but obviously some more work to be done.

Show Press Release

Coinstar, Inc. Announces 2012 Fourth Quarter And Full Year Results
Consolidated Annual Revenue Over $2.2 Billion and Solid Execution Drive Strong Earnings Growth
BELLEVUE, Wash.,Feb. 7, 2013/PRNewswire/ — Coinstar, Inc.(Nasdaq: CSTR) today announced financial results for the fourth quarter and full year endedDecember 31, 2012. "We are pleased with our performance in 2012, which drove annual revenue of more than$2 billionfor the first time," saidPaul Davis, chief executive officer ofCoinstar, 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 byVerizon, the launch of the Redbox Tickets pilot, Rubi coffee kiosks and our expansion intoCanada. 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 operations* (See Appendix A) $ 101.5 million $ 469.7 million
·  Diluted earnings per share from continuing operations $ 0.75 $ 4.67
·  Core diluted earnings per share*  (See Appendix A) $ 0.93 $ 4.83
·  Net cash flows from operating activities from continuing operations $ 152.2 million $ 463.9 million
·  Free cash flow from continuing operations* (See Appendix A) $ 77.3 million $ 255.9 million
*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," saidJ. Scott Di Valerio, chief financial officer ofCoinstar, 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 millioncompared with the fourth quarter of 2011, driven primarily by Redbox revenue growth of 9.6% to$488.3 millionprimarily 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 millionand 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$1.00per 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$0.18per share, compared with$1.03, excluding non-core adjustments of$0.03per share in the fourth quarter of 2011. Coinstar's fourth quarter 2012 results include a negative impact of$6.4 millionbefore taxes, or$0.13on 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 millionand an operating margin of 11.4% in 2011. Income from continuing operations for 2012 was$150.2 million, or$4.67per diluted share, compared with income from continuing operations of$115.0 million, or$3.61per 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$0.16per share, compared with$3.67per diluted share, excluding non-core adjustments of$0.06per share in 2011. For the full year, results include a negative impact of$14.5 millionbefore taxes, or$0.28on 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$152.2 million, compared with$144.9 millionin 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 millionin 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 millionin the fourth quarter of 2011, bringing the total to$255.9 millionfor the full year of 2012. During the fourth quarter of 2012, the company repurchased approximately$76.7 millionof its common stock representing 1.57 million shares at an average price of$48.71per share. Of the total amount repurchased,$75.0 millionwas completed through an accelerated share repurchase agreement entered into onNovember 1and concluded onDecember 28, 2012and the remaining$1.7 millionwas completed through open market repurchases. During 2012, the company repurchased approximately$139.7 millionof its common stock representing 2.80 million shares at an average price of$49.92per share through a combination of a previously announced 10b5-1 plan, accelerated share repurchase agreements, and open market purchases. On December 31, 2012, there was$133.6 millionremaining under the current Board authorization for stock repurchases. InJanuary 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,Coinstarmanagement expects:
  • Consolidated revenue between$2.375 billion and $2.555 billion;
  • Core adjusted EBITDA from continuing operations between$473 million and $513 million;
  • Core diluted EPS from continuing operations between$4.91 and $5.51; and
  • Free cash flow from continuing operations between$180 million and $200 million.
For the 2013 first quarter,Coinstarmanagement expects:
  • Consolidated revenue between$568 million and $593 million;
  • Core adjusted EBITDA from continuing operations between$95 million and $105 million; and
  • Core diluted EPS from continuing operations between$0.77 and $0.92.