EX-99.1 3 dex991.htm PRESS RELEASE DATED MAY 1, 2003 Press Release dated May 1, 2003

 

Exhibit 99.1

 

Contact:

     

Rich Stillman

      

Chief Operating Officer

      

425-943-8240

 

COINSTAR REPORTS FIRST QUARTER 2003 RECORD RESULTS

 

BELLEVUE, Wash.—May 1, 2003—Coinstar Inc. (Nasdaq: CSTR) today announced results for the three-month period ended March 31, 2003.

 

Highlights for the first quarter of 2003 were as follows:

 

  •   Revenue growth of 14.6%
  •   EBITDA1 increase of 23.5% to $12.9 million (see Appendix A)
  •   EBITDA1 margin increase of 240 basis points to 34% (see Appendix A)
  •   Free cash flow2 of $6.0 million (see Appendix A)
  •   Total debt decreased by 7.1% to $34.1 million since year end
  •   Repurchased 189,000 shares at an average price of $15.82

 

For the first quarter of 2003, Coinstar Inc. reported consolidated revenues of $38.0 million, and consolidated net income of $3.9 million, or $0.18 per diluted share. This compares to first quarter 2002 consolidated revenues of $33.2 million and a net loss of $286,000, or ($0.01) per diluted share. Net loss for the year-ago period includes the effect of a $2.5 million charge related to the early retirement of $25 million of high-yield debt.

 

Dave Cole, chief executive officer of Coinstar Inc. stated, “We are pleased once again with the strength of our operating results which exhibited solid growth in both revenues and earnings per share despite geopolitical uncertainties, a soft economy, and unusually severe weather conditions in key regions. It’s a testament to our market leadership, the corresponding economies of scale, and our strong execution during the quarter.”

 

EBITDA increased 23.5 percent to $12.9 million, or 34 percent of revenue, in the first quarter from $10.4 million, or 31 percent of revenue, in the year-ago period. Driving the absolute growth and margin improvement in EBITDA was continued revenue expansion and tightened expense controls.

 

RECENT DEVELOPMENTS

 

The Company announced on February 6, 2003, that it had acquired certain assets of Prizm Technology Inc. Prizm’s automated transaction processing technology, branded TOP-UP™ services, allows consumers to quickly and easily conduct a range of automated transactions from any TOP-UP enabled terminal.

 

During the quarter ended March 31, 2003, the Company repurchased 189,000 shares of its common stock at an aggregate value of $3.0 million or $15.82 per share. Under its current plan, Coinstar Inc. is authorized to repurchase an additional $4.5 million in common stock during the remainder of this fiscal year, and $7.5 million in common stock during 2004, plus proceeds from its equity compensation programs. The company can purchase an additional $7.5 million in common stock through the end of 2004 so long as it pays down debt on a one-for-one basis. Coinstar Inc.’s ability to repurchase stock may be limited by certain financial covenants under its credit agreements.

 

Dave Cole continued, “As we’ve stated in the past, Coinstar continues to pursue a multi-faceted and balanced approach to enhancing shareholder value. We will continue to invest in our core business by adding new Coinstar units while prudently allocating capital to new initiatives that will allow us to leverage our multi-national network of almost 11,000 units. As part of this fully integrated approach, Coinstar also expects to utilize its free cash flow to repurchase shares and reduce debt as appropriate.”

 

The Company also confirmed today that Frances M. Conley, a member of Coinstar’s board of directors since August 2001, resigned from the board effective at the close of business on April 28, 2003, to devote more time to other professional obligations. Keith Grinstein, Coinstar’s chairman of the board of directors commented, “Coinstar has seen significant growth and achieved many milestones during Fran’s term. We greatly appreciate her dedication and the considerable contributions she has made. We will miss her professionalism and counsel and wish her well.”

 

CONSOLIDATED OUTLOOK

 

The Company is confirming consolidated guidance for 2003. As previously stated, management expects revenues of $176 to $184 million, with EBITDA3 in the $57.5 to $64 million range. With regard to earnings, the Company’s $141 million in net operating losses (NOLs) will eliminate cash payments for income taxes for the foreseeable future – other than those required by some states and the alternative minimum tax (AMT). Fully diluted earnings per share on a fully taxed basis are expected to be $0.83 to $0.97.

 

For the second quarter of 2003, Coinstar expects revenues of $42 to $43.5 million, EBITDA4 of $12 to $13.5 million and income before income tax expense of $5.3 to $6.8 million. On a fully taxed basis, Coinstar expects net income to range from $3.3 to $4.3 million with fully diluted earnings per share in the $0.15 to $0.19 range.

 

Note: Coinstar will conduct a conference call to discuss first-quarter 2003 results today at 4:30 p.m. Eastern/1:30 p.m. Pacific time. The call will be simulcast on the company’s Web site at www.coinstar.com.

 

About Coinstar Inc.

 

Coinstar Inc. owns and operates the only multi-national network of supermarket-based machines that offer self-service coin counting and other electronic services. The company has more than 10,000 machines linked by a sophisticated interactive network throughout the United States, as well as in Canada and the United Kingdom.

 

# # #

 

This press release contains forward-looking statements relating to Coinstar’s anticipated growth and future operating results that involve a number of risks and uncertainties. These are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “intend,” “anticipate,” variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Forward-looking statements in this press release include statements relating to Coinstar’s financial performance for the second quarter and full year of 2003. Actual results may vary significantly from the results expressed or implied in such statements. Factors that could cause or contribute to such varying results include, but are not limited to, the ability to bring new and repeat customers to Coinstar machines, the ability to obtain new agreements with potential retail partners for the installation of Coinstar units and the retention of the current agreements with our existing retail partners on terms that are not materially adverse to the company, the successful deployment and operation of our coin processing network, additional potential competitors, legal or governmental regulatory action and uncertainties relating to the ultimate success of new business initiatives, including but not limited to the ability to attract customers and reach agreements with retail and other partners. These and other risks are more fully described under the caption “Risk Factors” included in the most recent reports filed with the Securities and Exchange Commission by Coinstar Inc. These forward-looking statements reflect Coinstar’s expectations as of May 1, 2003. Coinstar undertakes no duty or obligation to update the information provided herein.

 

Coinstar is a registered trademark of Coinstar Inc. TOP-UP is a trademark of Pukka Inc., a subsidiary of Coinstar Inc.

 

Appendix A

 

Pro Forma Results

 

Pro forma results are provided as a complement to results provided in accordance with accounting principles generally accepted in the United States (“GAAP”). Definitions of such pro forma measurements are provided below. These definitions are provided to allow the reader to reconcile pro forma data and GAAP.

 

1) EBITDA represents earnings before net interest expense, income taxes, depreciation, amortization and other income/expense. We believe EBITDA is an important non-GAAP measure as it provides useful cash flow information regarding our ability to service, incur or pay down indebtedness, repurchase our common stock and for purposes of calculating certain debt covenants. In addition, management uses such pro forma measures internally to evaluate the Company’s performance and manage its operations. See the final page of this document for reconciliation of most comparable GAAP measurements to EBITDA.

 

2) 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. Free cash flow may be reconciled from net cash provided by operations, the most directly comparable GAAP measure, as follows:

 

    

Quarter ended

March 31, 2003

  

Net cash provided by operations

   

$

1,467

 

Changes in operating assets and liabilities

   

 

11,097

 

Capital expenditures

   

 

(6,569

)

    

Free cash flow

   

$

5,995

 

    

 

3) Full year 2003

 

    

Guidance Range

  
    

$57.5 million

     

—

   

$64.0 million

  

Net cash provided by continuing operations

   

$

67,196

 

        

$

73,596

 

Changes in operating assets and liabilities

   

 

(10,746

)

        

 

(10,746

)

Other non-cash income (expense)

   

 

50

 

        

 

50

 

Net interest and other expense

   

 

1,100

 

        

 

1,100

 

    
       

EBITDA

   

$

57,500

 

        

$

64,000

 

    
       

 

4) Second quarter 2003

 

    

Guidance Range

  
    

$12.0 million

     

—

   

$13.5 million

  

Net cash provided by continuing operations

   

$

23,393

 

        

$

24,993

 

Changes in operating assets and liabilities

   

 

(11,743

)

        

 

(11,743

)

Other non-cash income (expense)

   

 

(50

)

        

 

(50

)

Net interest and other expense

   

 

300

 

        

 

300

 

    
       

EBITDA

   

$

12,000

 

        

$

13,500

 

    
       

 

Coinstar, Inc.

Consolidated Statements of Operations1

(in thousands, except per share data)

(unaudited)

 

    

Three months ended

  
    

March 31, 2003

     

March 31, 2002

  

Revenue

   

$

37,997

 

   

$

33,165

 

Expenses:

                  

Direct operating

   

 

17,284

 

   

 

15,189

 

Regional sales and marketing

   

 

704

 

   

 

534

 

Product research and development

   

 

1,293

 

   

 

1,234

 

Selling, general and administrative

   

 

5,833

 

   

 

5,774

 

Depreciation and amortization

   

 

6,380

 

   

 

6,610

 

    
  

Income from operations

   

 

6,503

 

   

 

3,824

 

Other income (expense):

                  

Interest income

   

 

71

 

   

 

93

 

Interest expense

   

 

(358

)

   

 

(1,701

)

Early retirement of debt

   

 

—  

 

   

 

(2,472

)

Other

   

 

61

 

   

 

(30

)

    
  

Income (loss) before income tax expense

   

 

6,277

 

   

 

(286

)

Income tax expense

   

 

(2,335

)

   

 

—  

 

    
  

Net income (loss)

   

$

3,942

 

   

$

(286

)

    
  

Net income (loss) per share:

                  

Basic

   

$

0.18

 

   

$

(0.01

)

Diluted

   

$

0.18

 

   

$

(0.01

)

Weighted shares outstanding:

                  

Basic

   

 

21,766

 

   

 

21,539

 

Diluted

   

 

22,148

 

   

 

21,539

 

Capital Expenditures

              

Consolidated capital expenditures

   

$

6,569

 

   

$

4,462

 

 

 

1These consolidated statements of operations are prepared in accordance with accounting principles generally accepted in the United States of America.

 

Coinstar, Inc.

Consolidated Balance Sheets

(in thousands)

 

    

March 31, 2003

     

December 31, 2002

  

Assets

   

(unaudited)

         

Current assets:

                  

Cash and cash equivalents

   

$

34,337

 

   

$

41,560

 

Cash due to retailers

   

 

56,950

 

   

 

61,283

 

Deferred income taxes

   

 

10,096

 

   

 

10,096

 

Prepaid expenses and other current assets

   

 

5,044

 

   

 

2,409

 

    
  

Total current assets

   

 

106,427

 

   

 

115,348

 

Property and equipment:

                  

Coinstar units

   

 

161,423

 

   

 

156,182

 

Computers

   

 

9,389

 

   

 

8,882

 

Office furniture and equipment

   

 

1,299

 

   

 

1,291

 

Leased vehicles

   

 

4,464

 

   

 

4,314

 

Leasehold improvements

   

 

681

 

   

 

681

 

    
  

Total property and equipment

   

 

177,256

 

   

 

171,350

 

Accumulated depreciation

   

 

(116,282

)

   

 

(110,807

)

    
  

Total property and equipment, net

   

 

60,974

 

   

 

60,543

 

Deferred income taxes

   

 

37,214

 

   

 

39,719

 

Other assets, net

   

 

1,694

 

   

 

1,026

 

    
  

Total assets

   

$

206,309

 

   

$

216,636

 

    
  

Liabilities and Stockholders’ Equity

              

Current liabilities:

                  

Accounts payable

   

$

1,964

 

   

$

3,176

 

Accrued liabilities payable to retailers

   

 

56,950

 

   

 

61,283

 

Accrued liabilities

   

 

6,986

 

   

 

10,180

 

Current portion of long-term debt and capital lease obligations

   

 

16,019

 

   

 

14,916

 

    
  

Total current liabilities

   

 

81,919

 

   

 

89,555

 

Long-term debt and capital lease obligations

   

 

18,114

 

   

 

21,830

 

    
  

Total liabilities

   

 

100,033

 

   

 

111,385

 

Stockholders’ equity:

                  

Common stock

   

 

187,896

 

   

 

187,473

 

Accumulated deficit

   

 

(71,411

)

   

 

(75,353

)

Treasury stock

   

 

(10,486

)

   

 

(7,496

)

Accumulated other comprehensive income

   

 

277

 

   

 

627

 

    
  

Total stockholders’ equity

   

 

106,276

 

   

 

105,251

 

    
  

Total liabilities and stockholders’ equity

   

$

206,309

 

   

$

216,636

 

    
  

 

 

1These consolidated balance sheets are prepared in accordance with accounting principles generally accepted in the United States of America.

 

Coinstar, Inc.

Selected Consolidated Quarterly Financial Data

(in thousands, except per share and unit data)

(unaudited)

 

    

Three months ended

  
    

Mar. 31, 2001

     

June 30, 2001

     

Sept. 30, 2001

     

Dec. 31, 2001

     

Mar. 31, 2002

  

Number of new Coinstar units installed, net

   

 

95

 

   

 

252

 

   

 

134

 

   

 

586

 

   

 

278

 

Installed base of Coinstar units at end of period

   

 

8,604

 

   

 

8,856

 

   

 

8,990

 

   

 

9,576

 

   

 

9,854

 

Designated marketing areas

   

 

127

 

   

 

129

 

   

 

132

 

   

 

142

 

   

 

143

 

Average age of network for the period (months)

   

 

29.6

 

   

 

31.7

 

   

 

33.5

 

   

 

34.7

 

   

 

36.0

 

Average units installed

   

 

8,539

 

   

 

8,667

 

   

 

8,917

 

   

 

9,314

 

   

 

9,669

 

Dollar value of coins processed

   

$

305,845

 

   

$

351,476

 

   

$

396,200

 

   

$

402,864

 

   

$

374,377

 

Revenue

   

$

27,200

 

   

$

31,245

 

   

$

35,176

 

   

$

35,731

 

   

$

33,165

 

Annualized revenue per average installed unit

   

 

12,741

 

   

 

14,422

 

   

 

15,780

 

   

 

15,346

 

   

 

13,720

 

Direct operating expense

   

 

12,878

 

   

 

13,798

 

   

 

15,667

 

   

 

15,729

 

   

 

15,189

 

Regional sales and marketing

   

 

370

 

   

 

2,501

 

   

 

3,176

 

   

 

3,141

 

   

 

534

 

Product research and development

   

 

997

 

   

 

989

 

   

 

1,108

 

   

 

1,068

 

   

 

1,234

 

Selling, general and administrative

   

 

4,968

 

   

 

5,946

 

   

 

5,400

 

   

 

5,931

 

   

 

5,774

 

EBITDA1, 2

   

$

7,987

 

   

$

8,011

 

   

$

9,825

 

   

$

9,862

 

   

$

10,434

 

EBITDA margin (%)3

   

 

29.4

%

   

 

25.6

%

   

 

27.9

%

   

 

27.6

%

   

 

31.5

%

Depreciation and amortization

   

 

6,763

 

   

 

6,483

 

   

 

6,394

 

   

 

6,709

 

   

 

6,610

 

Interest and other expense, net

   

 

1,899

 

   

 

1,873

 

   

 

1,862

 

   

 

1,961

 

   

 

1,638

 

Early retirement of debt

   

 

—  

 

   

 

—  

 

   

 

—  

 

   

 

—  

 

   

 

2,472

 

Income (loss) from continuing operations before income tax benefit (expense)

   

$

(675

)

   

$

(345

)

   

$

1,569

 

   

$

1,192

 

   

$

(286

)

Income (loss) per share from continuing operations before income tax benefit (expense):

                                             

Basic

   

$

(0.03

)

   

$

(0.02

)

   

$

0.07

 

   

$

0.05

 

   

$

(0.01

)

Diluted

   

$

(0.03

)

   

$

(0.02

)

   

$

0.07

 

   

$

0.05

 

   

$

(0.01

)

1Reconciliation of GAAP measurement to EBITDA:

                                             

Net cash provided by operating activities from continuing operations

   

$

5,117

 

   

$

15,130

 

   

$

12,375

 

   

$

12,751

 

   

$

5,726

 

Changes in operating assets and liabilities

   

 

1,000

 

   

 

(8,929

)

   

 

(4,235

)

   

 

(4,798

)

   

 

3,706

 

Other non-cash items

   

 

(29

)

   

 

(63

)

   

 

(177

)

   

 

(52

)

   

 

(636

)

Net interest and other expense

   

 

1,899

 

   

 

1,873

 

   

 

1,862

 

   

 

1,961

 

   

 

1,638

 

    
  
  
  
  

EBITDA

   

$

7,987

 

   

$

8,011

 

   

$

9,825

 

   

$

9,862

 

   

$

10,434

 

 

2For discussion and use of these measures, see above under “Pro Forma Results.”

3EBITDA margin represents EBITDA as a percentage of Revenue.

 

Coinstar, Inc.

Selected Consolidated Quarterly Financial Data

(in thousands, except per share and unit data)

(unaudited)

 

    

Three months ended

  
    

June 30, 2002

     

Sept. 30, 2002

     

Dec. 31, 2002

     

Mar. 31, 2003

  

Number of new Coinstar units installed, net

   

 

251

 

   

 

267

 

   

 

334

 

   

 

138

 

Installed base of Coinstar units at end of period

   

 

10,105

 

   

 

10,372

 

   

 

10,706

 

   

 

10,844

 

Designated marketing areas

   

 

145

 

   

 

146

 

   

 

150

 

   

 

153

 

Average age of network for the period (months)

   

 

37.5

 

   

 

39.0

 

   

 

40.6

 

   

 

42.6

 

Average units installed

   

 

9,938

 

   

 

10,244

 

   

 

10,551

 

   

 

10,782

 

Dollar value of coins processed

   

$

428,689

 

   

$

486,259

 

   

$

472,155

 

   

$

430,775

 

Revenue

   

$

37,918

 

   

$

42,941

 

   

$

41,651

 

   

$

37,997

 

Annualized revenue per average installed unit

   

 

15,261

 

   

 

16,768

 

   

 

15,791

 

   

 

14,095

 

Direct operating expense

   

 

16,448

 

   

 

18,141

 

   

 

18,010

 

   

 

17,284

 

Regional sales and marketing

   

 

2,789

 

   

 

2,711

 

   

 

3,239

 

   

 

704

 

Product research and development

   

 

1,344

 

   

 

1,170

 

   

 

1,249

 

   

 

1,293

 

Selling, general and administrative

   

 

5,572

 

   

 

5,284

 

   

 

5,510

 

   

 

5,833

 

EBITDA1, 2

   

$

11,765

 

   

$

15,635

 

   

$

13,643

 

   

$

12,883

 

EBITDA margin (%)3

   

 

31.0

%

   

 

36.4

%

   

 

32.8

%

   

 

33.9

%

Depreciation and amortization

   

 

6,363

 

   

 

6,409

 

   

 

6,428

 

   

 

6,380

 

Interest and other expense, net

   

 

930

 

   

 

468

 

   

 

365

 

   

 

226

 

Early retirement of debt

   

 

3,836

 

   

 

—  

 

   

 

—  

 

   

 

—  

 

Income (loss) from continuing operations before income tax benefit (expense)

   

$

636

 

   

$

8,758

 

   

$

6,850

 

   

$

6,277

 

Income (loss) per share from continuing operations before income tax benefit (expense):

                                    

Basic

   

$

0.03

 

   

$

0.40

 

   

$

0.31

 

   

$

0.29

 

Diluted

   

$

0.03

 

   

$

0.38

 

   

$

0.30

 

   

$

0.28

 

1Reconciliation of GAAP measurement to EBITDA:

                                    

Net cash provided by operating activities from continuing operations

   

$

16,842

 

   

$

10,775

 

   

$

17,334

 

   

$

1,467

 

Changes in operating assets and liabilities

   

 

(5,728

)

   

 

4,434

 

   

 

(4,094

)

   

 

11,097

 

Other non-cash items

   

 

(279

)

   

 

(42

)

   

 

38

 

   

 

93

 

Net interest and other expense

   

 

930

 

   

 

468

 

   

 

365

 

   

 

226

 

    
  
  
  

EBITDA

   

$

11,765

 

   

$

15,635

 

   

$

13,643

 

   

$

12,883

 

 

2For discussion and use of these measures, see above under “Pro Forma Results.”

3EBITDA margin represents EBITDA as a percentage of Revenue.