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Coinstar Announces 121% Growth in Revenue and 450% Improvement in Direct Contribution for the First Quarter
April 28, 1998 04:01 PM
BELLEVUE, Wash.--(BUSINESS WIRE)--April 28, 1998--Coinstar, Inc. CSTR today announced record results for the first quarter ended March
31, 1998. Coinstar reported record revenue of $8.8 million for the first quarter of 1998, an increase of 121% from $4.0 million for the same period
of 1997. The significant growth in revenue was a result of continued expansion of Coinstar's network and increased customer use of Coinstar's
coin processing units. The Company also achieved a record direct contribution of $3.0 million resulting in a margin of 34% of revenue, an
increase of 450% from $545,000, or 14% of revenue for the first quarter of 1997. The growing contribution margin is indicative of continued
improvement in Coinstar's operating leverage and significant growth in the Coinstar network. The Coinstar network processed coins worth a total
of $117.3 million during the first quarter, up from $52.7 million in the first quarter of 1997. To date, the network has processed over $585 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) improved significantly during the first quarter, to a loss of $2.6 million,
a decrease of 36% from a loss of $4.1 million in the first quarter of 1997. This improvement to 30% of revenue during the first quarter of 1998,
from 101% of revenue during the same period of 1997, resulted from the continued improvement in the operating leverage and efficiencies due to
the investments made in the network and back office infrastructure. During the first quarter, Coinstar installed 327 units, compared to 428 units
installed in the same period of last year. The lower number of installations during the first quarter of 1998 was primarily due to a six week delay
in installations for one customer. Without this delay, the Company would have installed approximately 470 units during the quarter. Customer
related delays often affect the timing of installations. As of March 31, 1998 the Company had 3,531 units in operation, an increase of 83%
compared to 1,929 units at the end of the first quarter of 1997. Coinstar expanded its network into 2 new regional markets in the first quarter,
which resulted in a presence in 42 regional markets, up from 27 at the end of the first quarter of 1997. This expansion, along with expansion in
existing regions included agreements with 13 new retail distribution partners, bringing the total to 89 partners at the end of March 1998. The
Company's expansion included new installations in Shop'n Save stores in Pennsylvania and significantly expanded installations at Vons stores
in Southern California. The average revenue per unit on an annualized basis increased to $10,597, up from $9,433 for the first quarter of 1997 as
the average age of the units in service increased to 13.4 months compared to 8.3 months at the end of the first quarter of 1997. In general, coin
processing volumes per unit have increased with the length of time a unit has been in operation. However, volumes have historically been higher
in the summer months and lower during the other times of the year. Future unit volumes may also be affected by other factors including public
relations, weather, advertising and other promotional activities. For the first quarter, the net loss was $7.4 million or $0.49 per share and 84% of
revenue, compared to a net loss of $7.5 million or $8.31 per share and 188% of revenue for the first quarter of 1997. Over 70% of the Company's
first quarter 1998 net loss was generated from non-cash items such as increasing depreciation and interest expense.
During the first quarter, the Company announced completion of its new coin counting mechanism and operating system. The reliability of the
new technology is expected to increase productivity of Coinstar's field service organization thus lowering the Company's per unit operating
expense, and in addition, it is expected to be less costly to manufacture than the existing technology. Coinstar's innovative, new coin counting
technology can be calibrated to count coins from a wide array of countries and different denominations. The adaptability of this technology will
enhance the Company's ability to expand internationally.
To support its continued growth, the Company also expanded its senior management team during the quarter. Mr. Dan Gerrity was promoted to
President and COO, responsible for day-to-day operating performance. Mr. Mike Parks was named Vice President of Field Operations,
responsible for more than 130 field service personnel across the country who provide regional service for the Company's network. These
appointments will allow Mr. Jens Molbak, Chairman and CEO of Coinstar, to continue to focus on the Company's retail partnerships, new
product development and long-term growth opportunities.
"Overall, we are pleased with our accomplishments and continued progress for the quarter," said Mr. Molbak. "We completed work on our new
technology and continued to execute our growth strategy. We grew the size of our network and improved our operating leverage, resulting in
increased revenue and contribution margin and improved operating cash flow as we drive toward generating cash flow from operations." 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 3,600 units operating in supermarkets throughout the U.S.
Coinstar has 280 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 for per share and other data)
Three months ended
-------------- -------------
March 31, March 31,
1998 1997
-------------- -------------
Statement of Operations Data:
Revenue $8,823 $3,995
Expenses
Direct Operating 5,823 3,450
Regional sales and marketing 917 630
Product research and development 1,410 1,441
Selling, general and administrative 3,276 2,528
Depreciation and amortization 2,813 1,684
Loss from operations (5,416) (5,738)
Other income (expense)
Other income 39 -
Interest income 501 580
Interest expense (2,571) (2,344)
Net Loss (7,447) (7,502)
Loss per share, basic
and diluted ($0.49) ($8.31)(1)
Weighted shares outstanding,
basic and diluted 15,080 903(1)
Other Data:
Number of new Coinstar
units installed in period 327 428
Installed base of Coinstar
units at end of period 3,531 1,929
Number of regional markets 42 27
Dollar volume of coins
processed (millions) $117.3 $52.7
Capital expenditures
(millions) $4.7 $7.7
Direct contribution(2)
(millions) $3.0 $0.5
Annualized revenue per
average installed unit $10,597 $9,433
Annualized direct
contribution per average
installed unit $3,601 $1,283
Average units installed 3,331 1,694
Average age of network for
the period (months) 13.4 8.3
(1) Amounts previously released have been restated in accordance with
SEC Staff Accounting Bulletin No. 98, which requires companies to
restate earnings per share for all prior periods presented, including
those prior to an initial public offering, in accordance with
Statement of Financial Accounting Standard No. 128, "Earnings Per
Share."
(2) 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 principals
("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.
Coinstar, Inc.
Balance Sheets
(In thousands, unaudited)
Three months ended
------------- ---------------
March 31, March 31,
1998 1997
------------- ---------------
Assets
Current Assets:
Cash and cash equivalents $ 17,058 $ 16,301
Short term investments
available for sale 31,968 31,883
Prepaid expenses and
other current assets 1,110 1,436
-------------- ---------------
Total current assets 50,136 49,620
Property and equipment, net 45,117 28,519
Other assets 2,690 3,399
============== ===============
Total $ 97,943 $ 81,538
============== ===============
Liabilities and stockholders' equity (deficit)
Current Liabilities:
Accounts payable $ 3,719 $ 2,656
Accrued liabilities 16,998 11,171
Current portion of
long-term debt 1,661 1,208
-------------- ---------------
Total current liabilities 22,378 15,035
Long-term obligations 79,472 70,980
Manditorily redeemable
preferred stock 0 24,972
Total stockholders'
equity (deficit) (3,907) (29,449)
-------------- ---------------
Total $ 97,943 $ 81,538
============== ===============
Coinstar, Inc.
Selected Quarterly Financial Data
(Dollars in thousands except per unit data)
Three Months Ended
---------------------------------------------
June, 30 Sept. 30, Dec. 31, March 31,
1996 1996 1996 1997
Number of new
Coinstar units
installed in period 364 413 292 428
Installed Base of
Coinstar units
at end of period 796 1,209 1,501 1,929
Average age of
network for the
period (months) 6.4 6.1 7.0 8.3
Dollar volume of
coins processed $20,692 $37,637 $44,841 $52,724
Revenue $1,388 $2,830 $3,349 $3,995
Annualized
revenue per
average installed
unit $9,269 $11,021 $9,623 $9,433
Direct Contribution $67 $720 $409 $545
Direct Contribution
Margin (%) 5% 25% 12% 14%
Annualized direct
contribution per
average installed
unit $449 $2,804 $1,175 $1,287
EBITDA (1) ($2,169) ($2,115) ($3,605) ($4,054)
As a percent of
revenue (156%) (75%) (108%) (101%)
Depreciation and
Amortization $796 $1,098 $1,741 $1,684
Interest (Income)
Expense, net $73 $313 $1,500 $1,764
Net Loss ($3,037) ($3,526) ($7,094) ($7,502)
As percent of
revenue (219%) (125%) (212%) (188%)
Three Months Ended
-------------------------------------------
June 30, Sept. 30, Dec. 31, March 31,
1997 1997 1997 1998
Number of new
Coinstar units
installed in period 406 400 469 327
Installed Base of
Coinstar units
at end of period 2,335 2,735 3,204 3,531
Average age of
network for the
period (months) 9.3 10.6 11.7 13.4
Dollar volume of
coins processed $70,626 $103,442 $105,676 $117,298
Revenue $5,294 $7,762 $7,957 $8,823
Annualized
revenue per
average installed
unit $9,939 $12,284 $10,907 $10,597
Direct Contribution $1,328 $2,487 $2,749 $3,000
Direct Contribution
Margin (%) 25% 32% 35% 34%
Annualized direct
contribution per
average installed
unit $2,494 $3,935 $3,768 $3,601
EBITDA (1) ($3,913) ($2,617) ($2,836) ($2,603)
As a percent of
revenue (74%) (34%) (36%) (30%)
Depreciation and
Amortization $2,158 $2,297 $2,539 $2,813
Interest (Income)
Expense, net $1,975 $1,789 $1,966 $2,070
Net Loss ($8,047) ($6,704) ($7,341) ($7,447)
As percent of
revenue (152%) (86%) (92%) (84%)
(1) 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.
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