News

Coinstar: redbox is leading DVD Rentals

October 27, 2011

Coinstar Inc. today announced financial results for the third quarter and nine months ended Sept. 30, 2011.

"We delivered another strong quarter with growth at the top and bottom line," said Paul Davis, CEO of Coinstar Inc. "Our redbox business alone passed $1 billion dollars in revenue year to date and became the leading renter of DVDs by staying focused on delivering great value and convenience to our consumers."

Davis also said that the coin business gained traction in initiatives to engage consumers and generate growth and that its New Ventures segment is moving forward with new automated retail concepts.

Revenue

Revenue for the third quarter of 2011 increased 22.5 percent to $465.6 million compared with the third quarter of 2010, driven primarily by redbox revenue growth of 27.7 percent to $389.8 million reflecting new kiosk installations and growth in same store sales. Coin revenue grew 1.1 percent to $75.5 million, primarily due to an increase in the average transaction size.

For the first nine months of 2011 revenue was $1,324.9 million, an increase of 26.7 percent compared with the first nine months of 2010. Operating income for the first nine months of 2011 was $155.2 million, which resulted in an operating margin of 11.7 percent, compared with operating income of $100.1 million and an operating margin of 9.6 percent in the first nine months of 2010.

Net income for the first nine months of 2011 was $72.4 million, or diluted earnings per share of $2.26, compared with net income of $39.3 million, or $1.22 per share, in the first nine months of 2010.

Operating income

Operating income for the third quarter of 2011 was $65.6 million, which resulted in an operating margin of 14.1 percent, compared with operating income of $46.2 million and an operating margin of 12.1 percent in the third quarter of 2010.

Income from continuing operations for the third quarter of 2011 was $37.1 million, or diluted earnings per share from continuing operations of $1.18, compared with $21.4 million, or $0.66 per share, in the third quarter of 2010.

Redbox price increase

The company also announced that effective Oct. 31, 2011, the price for renting a redbox standard definition DVD would increase to a $1.20 daily rate from $1. The prices for Blu-ray format movie rentals and for video game rentals will not change, and the daily rates will continue to be $1.50 and $2, respectively.

"This marks the first price increase for a redbox standard definition DVD rental in eight years," David said. "The change is primarily due to the increase in operating expenses, including the recent increase in debit card interchange fees as a result of the Durbin Amendment."

Coinstar's strong results reflect solid execution across the board, said J. Scott Di Valerio, chief financial officer of Coinstar Inc.

"Our business continues to benefit from improved processes and operations, investments in infrastructure and strategic investments in growth, which are particularly important as certain operating costs continue to increase. We remain focused on initiatives that strengthen our position to drive growth at the top and bottom line."

2011 Q4

Coinstar management expects:

• Consolidated revenue between $485 million and $510 million.
• Adjusted EBITDA from continuing operations between $81 million and $88 million.
• And GAAP EPS from continuing operations between $0.57 and $0.67 on a fully diluted basis.

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