cash flow positive...just like I've been saying...
13.6 million up from 10.5 last quarter...
This thing is starting to do pyramid type revenue gains...
Coinstar Turns Cash Flow Positive On RecordRevenue and Direct Contribution Margin Growth for the Third Quarter
October 20, 1998 04:03 PM
BELLEVUE, Wash.--(BUSINESS WIRE)--Oct. 20, 1998--Coinstar, Inc. CSTR today announced record results for the third quarter ended
September 30, 1998. Coinstar reported record revenue of $13.6 million for the third quarter of 1998, an increase of 74% from $7.8 million for the
same period of 1997. For the first nine months of 1998, the Company reported revenue of $32.9 million, up 92% from $17.1 million for the same
period of last year. The significant growth in revenue was a result of both increased customer use of Coinstar's coin processing units and
continued expansion of Coinstar's network. For the first time since the Company began deploying its network, Coinstar generated positive cash
flow from operations as measured by earnings before interest, tax, depreciation and amortization (EBITDA). EBITDA was $1.1 million or 8% of
revenue in the third quarter, up 142% from a loss of $2.6 million or 34% of revenue in the same period of 1997. The significant improvement in
EBITDA was a result of continued improvement in the operating leverage, including efficiencies gained from investments made in the network
and the Company's back office infrastructure. In the quarter, the Company also achieved a record direct contribution of $6.4 million or 47% of
revenue, up from $2.5 million or 32% of revenue for the third quarter of 1997. The 156% growth in direct contribution can be attributed to
continued revenue growth as well as continued improvements in Coinstar's operating leverage. Direct contribution is defined as revenue less
direct operating expenses. During the quarter, Coinstar installed 405 units. This resulted in 4,437 units in operation as of September 30, 1998,
a 62% increase compared to 2,735 units at the end of the third quarter of 1997. The Coinstar network processed coins worth a total of $186.3
million during the third quarter, up from $103.4 million in the same period of 1997. To date, the network has processed over $929.9 million.
Coinstar expanded its network into 8 new regional markets during the third quarter, which resulted in a presence in 57 regional markets, up
from 35 at the end of the third quarter of 1997. This expansion added 2 new retail distribution partners, bringing the total to 107 partners at the
end of June 1998. The Company's expansion included new installations in Kroger Stores in Dallas, Texas; Stop & Shop supermarkets in
Connecticut and Rhode Island; H.E. Butt stores in San Antonio, Texas; Lucky Stores in Southern California; and BI-LO stores in various
southeastern markets. The Company's positive EBITDA was offset by non-cash items such as depreciation, amortization and interest expense.
For the third quarter, the net loss was $5.0 million or $0.33 per share, compared to a net loss of $6.7 million or $0.47 per share for the third
quarter of 1997. The net loss for the first nine months was $19.3 million or $1.28 per share, compared to $22.3 million or $1.96 per share for the
same period in 1997. During the third quarter, the Company also announced that the U.S. Patent and Trademark Office issued Coinstar's fourth
patent. The latest patent protects Coinstar's multiple coin-cleaning steps that enable the machine to remove dirt and debris from the coins prior
to discrimination. The technology is critical for the quick and reliable processing of coins. "In the third quarter we achieved a major milestone for
the Company by generating positive operating cash flow," said Jens Molbak, Chief Executive Officer. "We are continuing to execute our growth
strategy, rapidly growing the size of our network, significantly increasing our revenue base and operating more effectively every day. At the
same time, we have improved our operating leverage even faster than anticipated, resulting in a stronger contribution margin and positive
operating cash flow." Coinstar develops, owns and operates a network of automated, self-service coin counting and processing machines that
provide consumers with a convenient means to convert loose coins into cash. The Company currently has over 4,400 units operating in
supermarkets throughout the U.S. Coinstar has 270 full-time employees and is headquartered in Bellevue, WA. In addition to historical
information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. The Company's future
actual results could differ materially from the forward-looking statements discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, success in the timely deployment of a substantial number of additional Coinstar units, consumer
awareness and demand for the Company's coin processing service, success in expanding its network and managing its growth and the
Company's ability to protect its patents and proprietary rights as well as other risks discussed under "Risk Factors" included in the Company's
Registration Statement, as amended, on Form S-1 (NO. 333-26843), Registration Statement, as amended, on Form S-4 (NO. 333-33233), the
Company's Annual Report on Form 10-K and the Company's other reports filed with the Securities and Exchange Commission. (Tables to
follow)
Coinstar Inc.
Selected Financial and Other Data
(In thousands, except per share and other data)
Three months ended Nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
Statement of Operations Data:
Revenue $13,576 $7,762 $32,871 $17,051
Expenses
Direct operating 7,141 5,276 19,107 12,691
Regional sales and
marketing 930 798 2,701 2,400
Product research and
development 867 1,637 3,606 4,717
Selling, general and
administrative 3,531 2,669 10,533 7,827
Depreciation and
amortization 3,635 2,297 9,568 6,140
Loss from operations (2,528) (4,915) (12,644) (16,724)
Other income (expense)
Interest income 273 710 1,161 1,730
Interest expense (2,758) (2,499) (7,990) (7,258)
Other Income 59 162
Net loss (4,954) (6,704) (19,311) (22,252)
Net Loss per share, basic
and diluted ($0.33) ($0.47) ($1.28) ($1.96)
Weighted shares outstanding,
basic and diluted 15,187 14,200 15,128 11,371
Other Data:
Number of new Coinstar units
installed in period 405 400 1,233 1,235
Installed base of Coinstar units
at end of period 4,437 2,735 4,437 2,735
Number of regional
markets 57 35 57 35
Dollar volume of coins
processed (millions)$186,313 $103,442 $442,838 $226,792
Capital expenditures
(millions) 7,331 8,040 18,753 23,432
Direct contribution (1)
(millions) 6,435 2,486 13,764 4,359
EBITDA (2) (millions) 1,106 (2,618) (3,076) (10,585)
International Development
costs (thousands) 116 -- 385 --
Annualized revenue per average
installed unit 12,703 12,284 11,586 10,729
Annualized direct contribution per
average installed unit 6,021 3,935 4,831 2,743
Average units
installed (3) 4,275 2,527 3,798 2,119
Average age of network
for the period (months) 15.8 10.6 13.8 9.4
(1) Direct contribution (loss) is defined as revenue less direct
operating expenses. The company uses direct contribution (loss) as a
measure of operating performance to assist in understanding its
operating results. Direct contribution (loss) is not a measure of
financial performance under generally accepted accounting principles
("GAAP") and should not be considered in isolation or an alternative
to gross margin, income (loss) from operations, net income (loss), or
any other measure of performance under GAAP.
(2) EBITDA is defined as earnings before interest expense,
interest income, income taxes, depreciation, amortization and other
income/expense. The company uses EBITDA as a measure of operating
performance to assist in understanding its operating results. EBITDA
is not a measure of financial performance under generally accepted
accounting principles ("GAAP") and should not be considered in
isolation or an alternative to income (loss) from operations, cash
flow from operations, net income (loss) or and other measure of
performance under GAAP.
(3) Based on monthly averages of units in operation over the
applicable period.
Coinstar Inc.
Balance Sheets
(Unaudited)
Sept. 30, Dec. 31,
1998 1997
Assets
Current Assets:
Cash and cash equivalents $28,496 $20,200
Short term investments
available for sale 12,664 36,603
Prepaid expenses and other
current assets 1,265 1,022
-------- --------
Total current assets 42,425 57,825
Property and equipment, net 52,751 42,928
Other assets 2,544 2,793
-------- --------
Total $97,720 $103,546
========= =========
Liabilities and Stockholders' Equity (deficit)
Current Liabilities:
Accounts payable $3,566 $3,238
Accrued liabilities 23,833 18,253
Current portion of long-term debt 1,762 1,612
-------- --------
Total current liabilities 29,161 23,103
Long-term obligations 83,934 77,333
Total stockholders' equity (deficit) (15,375) 3,110
-------- --------
Total $97,720 $103,546
========= =========
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