BELLEVUE, Wash., Oct. 29,
2015 /PRNewswire/ -- Outerwall Inc. (Nasdaq: OUTR) today
reported financial results for the third quarter ended
September 30, 2015.
(Logo -
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"Our performance in the third quarter underscores our ability to
drive the bottom-line," said Erik E.
Prusch, Outerwall's chief executive officer. "Redbox was
challenged by the lowest theatrical box office in four years for
Redbox titles and revenue was lower than we expected. However, we
continued to control costs and create efficiencies as our Redbox
and Coinstar businesses generated solid margins and cash flow. We
remain focused on moving ecoATM to profitability as quickly as
possible and made progress in a number of key operational areas due
to our deliberate efforts to reduce costs. We are also determined
to prudently drive top-line performance and are working on multiple
fronts to make that happen."
|
2015
|
|
2014
|
|
Change
|
|
Third
Quarter
|
|
Third
Quarter
|
|
%
|
|
GAAP
Results
|
|
|
|
|
|
|
• Consolidated
revenue
|
$
|
512.1
|
million
|
|
$
|
549.9
|
million
|
|
(6.9)
|
%
|
|
• Income from
continuing operations
|
$
|
37.6
|
million
|
|
$
|
22.1
|
million
|
|
69.9
|
%
|
|
• Net
income
|
$
|
37.3
|
million
|
|
$
|
17.9
|
million
|
|
108.7
|
%
|
|
• Diluted earnings
from continuing operations per common share*
|
$
|
2.12
|
|
|
$
|
1.12
|
|
|
89.3
|
%
|
|
• Net cash provided
by operating activities
|
$
|
85.6
|
million
|
|
$
|
49.6
|
million
|
|
72.4
|
%
|
|
|
|
|
|
|
|
Core
Results**
|
|
|
|
|
|
|
• Core adjusted
EBITDA from continuing operations
|
$
|
119.7
|
million
|
|
$
|
115.9
|
million
|
|
3.3
|
%
|
|
• Core diluted EPS
from continuing operations*
|
$
|
2.21
|
|
|
$
|
1.67
|
|
|
32.3
|
%
|
|
• Free cash
flow
|
$
|
65.6
|
million
|
|
$
|
30.3
|
million
|
|
116.3
|
%
|
|
|
*Beginning in the
first quarter of 2015, the company applied the two-class method of
calculating earnings per share for its GAAP results because the
impact of unvested restricted shares as a percentage of total
common shares outstanding became more dilutive given the level of
stock repurchases over the prior year. Core diluted EPS from
continuing operations continues to be reported under the treasury
stock method.
|
|
**Refer to Appendix A
for a discussion of Use of Non-GAAP Financial Measures and Core and
Non-Core Results.
|
Highlights from the third quarter 2015 include:
- The company continued to focus on effectively managing expenses
across the enterprise, delivering 3.3% year-over-year growth in
core adjusted EBITDA from continuing operations despite revenue
decreasing 6.9%
- Core diluted EPS from continuing operations increased 32.3% to
$2.21 reflecting increased
profitability and a lower share count
- Repurchased 938,586 shares of common stock for $60.8 million
- Generated 116.3% growth in free cash flow (FCF) to $65.6 million bringing the year-to-date total to
$206.6 million
"Our continued focus on operational excellence drove strong
third quarter results, with significant year-over-year increases in
free cash flow, core adjusted EBITDA and core diluted EPS," said
Galen C. Smith, Outerwall's chief
financial officer. "We generated more than $65.6 million in free cash flow during the
quarter, an increase of 116.3 percent from the third quarter
last year. We continued our balanced approach to capital allocation
and repurchased more than 900,000 shares in the quarter, or
5.2 percent of shares outstanding. We remain on track to
uphold our commitment of returning 75 to 100 percent of annual free
cash flow to shareholders directly through share repurchases and
quarterly cash dividends."
Smith continued: "Our performance in the quarter demonstrates
our ability to continue delivering strong financial results despite
exceptionally weak content that impacted revenue and rentals in our
Redbox business. We will continue driving Outerwall's
financial performance, managing expenses and improving
profitability to both reinvest in the business and enhance the
bottom-line."
CONSOLIDATED RESULTS
GAAP Results
Consolidated revenue for the third quarter of 2015 was
$512.1 million compared with
$549.9 million in the third quarter
of 2014. The $37.8 million decrease
was due primarily to a $39.7 million
decrease in revenue from Redbox driven by a decline in rentals and
the removal of underperforming kiosks, partially offset by the
price increases for movie content implemented in December 2014. Movie rentals were impacted
primarily by lower total box office of movie titles released
including seven fewer titles, the timing of the release slate, a
higher impact from secular decline in the physical market and lower
demand from price-sensitive customers following the price increases
which is heightened in periods of weak content. Revenue from the
ecoATM and Coinstar segments increased by $1.2 million and $0.6 million, respectively, in the third
quarter of 2015 compared with the third quarter of 2014.
Income from continuing operations for the third quarter of 2015
was $37.6 million, or $2.12 of diluted earnings from continuing
operations per common share, compared with income from continuing
operations of $22.1 million, or
$1.12 of diluted earnings from
continuing operations per common share, in the third quarter of
2014. The increases were primarily due to an increase in operating
income from the Redbox and Coinstar segments, as a result of lower
direct operating expenses, lower kiosk related depreciation, and
ongoing cost reduction initiatives.
Net cash provided by operating activities increased 72.4% to
$85.6 million in the third quarter of
2015, compared with $49.6 million in
the third quarter of 2014. The increase was primarily due to a
decrease in net cash outflows from changes in working capital.
Cash capital expenditures for the third quarter of 2015
increased 3.4% to $19.9 million,
compared with $19.3 million in the
third quarter of 2014, as the result of timing of ongoing
investments in the businesses.
Core Results
Core adjusted EBITDA from continuing operations for the third
quarter of 2015 was $119.7 million,
an increase of $3.8 million, or 3.3%,
compared with $115.9 million for the
third quarter of 2014. The increase was primarily due to increased
segment operating income from the Redbox and Coinstar segments.
Core diluted EPS from continuing operations for the third
quarter of 2015 was $2.21, an
increase of 32.3% compared with $1.67
per diluted share in the third quarter of 2014. The increase was
primarily attributable to increased segment operating income from
the Redbox and Coinstar segments, and a reduction in the number of
weighted average shares used in the diluted per share calculation
due to stock repurchases. Non-core adjustments in the third quarter
of 2015 totaled $0.05 compared with
$0.51 in the third quarter of
2014.
Free cash flow for the third quarter of 2015 was $65.6 million, an increase of $35.3 million, or 116.3%, compared with
$30.3 million in the third quarter of
2014, primarily driven by higher net operating cash flow.
SEGMENT RESULTS
Redbox
Redbox segment revenue for the third quarter of 2015 was
$395.4 million compared with
$435.1 million in the third quarter
of 2014. The decrease of $39.7
million reflects $35.8 million
attributed to a decline in total disc rentals and $3.9 million related to a decrease in revenue
from kiosks removed subsequent to the third quarter of 2014 as a
result of continued efforts to optimize the network by removing
underperforming kiosks.
Redbox generated approximately 132.6 million rentals in the
third quarter of 2015, down from approximately 170.8 million
rentals in the third quarter of 2014. The decline in rentals was
driven by several factors, including a substantially lower box
office which was 45.3% lower and included seven fewer titles than
the third quarter of 2014, the timing of the release slate, a
higher impact from secular decline in the physical market, lower
demand from price-sensitive customers following the price increases
implemented in December 2014 and
January 2015, which is heightened
during periods of weak content, and a decline in video game rentals
due to consumer transition to new generation platforms and the
limited new release titles available for the new platforms.
Net revenue per rental was $2.96
in the third quarter of 2015, an increase of $0.42, or 16.5%, from $2.54 in the third quarter of 2014. The increase
in net revenue per rental was primarily the result of the impact of
the increase in daily rental prices, partially offset by the
expected increase in single night rental activity and lower demand
from price-sensitive customers as a result of the price increases;
a decrease in Blu-ray revenue primarily as a result of fewer
Blu-ray releases; and a decrease in video game revenue resulting
from the consumer transition to new generation platforms and a lack
of new release content availability related to the transition and
seasonality of publisher release schedules.
Redbox segment operating income in the third quarter of 2015 was
$90.4 million, an increase of
$2.1 million or 2.4%, compared with
$88.3 million in the third quarter of
2014. Segment operating margin increased 260 basis points to 22.9%
in the third quarter of 2015, compared with segment operating
margin of 20.3% in the third quarter of 2014, primarily
attributable to an improvement in gross margin related to the price
increases and lower spending on content in the third quarter of
2015 due to fewer movie releases and weak content, lower games
purchases due to the consumer transition to new generation
platforms, and lower cost per title driven by studio mix, as well
as reductions in direct operating, general and administrative and
marketing expenses as the business continues to focus on operating
efficiencies and aligning its cost structure with physical rental
demand.
Coinstar
Coinstar segment revenue was $85.7
million, an increase of $0.6
million compared with $85.1
million in the third quarter of 2014, primarily due to an
increase in the number of Coinstar Exchange kiosks and transactions
and higher revenue for Coinstar in the U.S. due to increased
volume.
Coinstar revenue in the U.K. and Canada in the third quarter of 2015 was
negatively impacted by unfavorable exchange rates due to the
strengthening of the U.S. dollar versus the British pound and
Canadian dollar compared with the prior year, and largely offset
the impact of the increased coin voucher product transaction fee
from 8.9% to 9.9% implemented in the U.K. in August 2014.
Coinstar segment operating income was $34.5 million in the third quarter of 2015, an
increase of $1.1 million, or 3.1%,
compared with $33.4 million in the
third quarter of 2014. Coinstar segment operating margin increased
100 basis points to 40.3% for the third quarter of 2015, compared
with 39.3% in the third quarter of 2014, as the business continues
to actively manage expenses and identify additional opportunities
to reduce costs.
ecoATM
Revenue in the ecoATM segment was $31.0
million in the third quarter of 2015, an increase of
$1.2 million, or 4.1%, compared with
$29.7 million in the third quarter of
2014. This increase was primarily due to an increase in the number
of ecoATM installed kiosks, increased collections and an increase
in the number of value devices sold, partially offset by a lower
average selling price of value devices sold, primarily due to a
lower mix of higher value devices and lower collections of value
devices per kiosk due to sustained carrier marketing of alternative
recycling options.
While the number of overall devices sold increased 38.5% and the
number of value devices sold increased 35.1% in the third quarter
of 2015 compared with the third quarter of 2014, the collection of
value devices on a per kiosk basis, as well as the number of higher
value devices collected, declined as a result of alternative
recycling options marketed by the carriers. The average selling
price of value devices sold was $59.15 in the third quarter of 2015 compared with
$75.95 in the third quarter of
2014.
Segment operating loss increased to $3.1
million in the third quarter of 2015, compared with
$2.0 million in the third quarter of
2014, primarily due to an increase in direct operating expenses
related to costs associated with the increased installed ecoATM
kiosk base.
The number of installed ecoATM kiosks were 2,210 in the third
quarter of 2015, an increase of 700 compared with the third quarter
of 2014. As a result of the company's optimization efforts in the
third quarter of 2015, ecoATM removed approximately 250
underperforming kiosks, primarily from the grocery channel, and
redeployed approximately 180 kiosks into retailer locations, with
the majority in the mall and mass merchant channels, for a net
reduction of 50 kiosks from the second quarter.
CAPITAL ALLOCATION
On October 27, 2015, the company's
board of directors declared a quarterly cash dividend of
$0.30 per share expected to be paid
on December 8, 2015, to all
stockholders of record as of the close of business on November 23, 2015.
During the third quarter of 2015, the company repurchased
938,586 shares of common stock at an average price per share of
$64.73 for a total of $60.8 million. As of September 30, 2015, there was approximately
$292.7 million remaining under the
company's stock repurchase authorization.
2015 ANNUAL GUIDANCE
The following table presents Outerwall's updated full-year 2015
guidance and reflects the company's third quarter results and
current outlook on the remainder of the year:
|
2015 FULL-YEAR
GUIDANCE
|
As
of
|
|
Dollars in
millions, except per share data
|
October 29,
2015
|
|
Consolidated
results
|
|
|
Revenue
|
$2,205 —
$2,240
|
|
Core adjusted EBITDA
from continuing operations(1)
|
$490 —
$510
|
|
Core diluted EPS from
continuing operations(1)(2)
|
$8.82 —
$9.52
|
|
Free cash
flow(1)
|
$252 —
$282
|
|
Weighted average
diluted shares outstanding(2)
|
17.67 —
17.73
|
|
Core effective tax
rate
|
35.5% —
37.5%
|
|
Segment
revenue
|
|
|
Redbox
|
$1,790 —
$1,815
|
|
Coinstar
|
$315 —
$320
|
|
ecoATM
|
$100 —
$105
|
|
Capital
expenditures
|
|
|
Redbox
|
$15 — $18
|
|
Coinstar
|
$12 — $14
|
|
ecoATM
|
$25 — $31
|
|
Corporate
|
$19 — $23
|
|
Total
CAPEX
|
$71 — $86
|
|
Net kiosk
installations
|
|
|
Redbox
|
(1,500) —
(1,700)
|
|
Coinstar
|
(150) —
(175)
|
|
ecoATM
|
400 — 450
|
|
|
|
1
|
Refer to Appendix A
for a discussion of Use of Non-GAAP Financial Measures and Core and
Non-Core Results
|
|
2
|
Excludes the impact
of any potential share repurchases for the remainder of
2015
|
ADDITIONAL INFORMATION
Additional information regarding the company's 2015 third
quarter operating and financial results and guidance is included in
the company's prepared remarks, which, as well as this press
release, are posted on the Investor Relations section of the
corporate website at ir.outerwall.com.
CONFERENCE CALL
The company will host a conference call today at 2:30 p.m. PDT (5:30 p.m.
EDT) to discuss third quarter 2015 earnings results and an
update to 2015 guidance. The conference call will be webcast live
and archived on the Investor Relations section of Outerwall's
website at ir.outerwall.com. A recording of the call will be
available approximately two hours after the call ends through
November 12, 2015, at 1-855-859-2056
or 1-404-537-3406, using conference ID 46780582.
ABOUT OUTERWALL INC.
Outerwall Inc. (Nasdaq: OUTR) has more than 20 years of
experience creating some of the most profitable spaces for their
retail partners. The company delivers breakthrough kiosk
experiences that delight consumers and generate revenue for
retailers. As the company that brought consumers Redbox®
entertainment, Coinstar® money services, and
ecoATM® electronics recycling kiosks, Outerwall is
leading the next generation of automated retail and paving the way
for inventive, scalable businesses. Outerwall™ kiosks are in
neighborhood grocery stores, drug stores, mass merchants, malls,
and other retail locations in the United
States, Canada,
Puerto Rico, the United Kingdom, and Ireland. Learn more at www.outerwall.com.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Certain statements in this press release are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. The words "believe," "estimate," "expect,"
"intend," "will," "anticipate," "goals," variations of such words,
and similar expressions identify forward-looking statements, but
their absence does not mean that the statement is not
forward-looking. The forward-looking statements in this release
include statements regarding Outerwall Inc.'s anticipated growth
and future operating results, including 2015 full year results.
Forward-looking statements are not guarantees of future performance
and actual results may vary materially from the results expressed
or implied in such statements. Differences may result from actions
taken by Outerwall Inc. or its subsidiaries, as well as from risks
and uncertainties beyond Outerwall Inc.'s control. Such risks and
uncertainties include, but are not limited to,
- competition from other entertainment providers,
- the ability to achieve the strategic and financial
objectives for our entry into new businesses, including ecoATM and
SAMPLEit,
- our ability to repurchase stock and the availability of an
open trading window,
- our declaration and payment of dividends, including our
board's discretion to change the dividend policy,
- the termination, non-renewal or renegotiation on materially
adverse terms of our contracts with our significant retailers and
suppliers,
- payment of increased fees to retailers, suppliers and other
third-party providers, including financial service
providers,
- the timing of new DVD releases and the inability to receive
delivery of DVDs on the date of their initial release to the
general public, or shortly thereafter, or in sufficient quantity,
for home entertainment viewing,
- the effective management of our content library,
- the timing of the release slate and the relative
attractiveness of titles in a particular quarter or year,
- the ability to attract new retailers, penetrate new markets
and distribution channels and react to changing consumer
demands,
- loss of key personnel or the inability of replacements to
quickly and successfully perform in those new roles,
- the ability to generate sufficient cash flow to timely and
fully service indebtedness and adhere to certain covenants and
restrictions,
- the ability to adequately protect our intellectual property,
and
- the application of substantial federal, state, local and
foreign laws and regulations specific to our business.
The foregoing list of risks and uncertainties is
illustrative, but by no means exhaustive. For more information on
factors that may affect future performance, please review "Risk
Factors" described in our most recent Annual Report on Form 10-K
and any subsequent Quarterly Reports on Form 10-Q filed with the
Securities and Exchange Commission. These forward-looking
statements reflect Outerwall Inc.'s expectations as of the date of
this press release. Outerwall Inc. undertakes no obligation to
update the information provided herein.
(Consolidated Financial Statements, Business
Segment Information and Appendix A Follow)
|
OUTERWALL
INC.
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
(in thousands,
except per share data)
|
|
(unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Revenue
|
$
|
512,055
|
|
|
$
|
549,899
|
|
|
$
|
1,666,060
|
|
|
$
|
1,694,188
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Direct
operating(1)
|
340,199
|
|
|
379,442
|
|
|
1,115,002
|
|
|
1,180,818
|
|
|
Marketing
|
7,131
|
|
|
9,143
|
|
|
23,598
|
|
|
25,272
|
|
|
Research and
development
|
1,514
|
|
|
2,999
|
|
|
5,637
|
|
|
9,885
|
|
|
General and
administrative
|
47,818
|
|
|
47,586
|
|
|
145,157
|
|
|
148,790
|
|
|
Restructuring and
lease termination costs
|
—
|
|
|
—
|
|
|
15,851
|
|
|
557
|
|
|
Depreciation and
other
|
39,880
|
|
|
46,380
|
|
|
127,740
|
|
|
142,134
|
|
|
Amortization of
intangible assets
|
3,308
|
|
|
3,665
|
|
|
9,926
|
|
|
11,347
|
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
85,890
|
|
|
—
|
|
|
Total
expenses
|
439,850
|
|
|
489,215
|
|
|
1,528,801
|
|
|
1,518,803
|
|
|
Operating
income
|
72,205
|
|
|
60,684
|
|
|
137,259
|
|
|
175,385
|
|
|
Other expense,
net:
|
|
|
|
|
|
|
|
|
Loss from equity
method investments, net
|
(328)
|
|
|
(11,352)
|
|
|
(593)
|
|
|
(31,261)
|
|
|
Interest expense,
net
|
(11,973)
|
|
|
(12,465)
|
|
|
(36,227)
|
|
|
(35,045)
|
|
|
Other, net
|
(1,384)
|
|
|
(1,352)
|
|
|
(3,088)
|
|
|
(386)
|
|
|
Total other expense,
net
|
(13,685)
|
|
|
(25,169)
|
|
|
(39,908)
|
|
|
(66,692)
|
|
|
Income from
continuing operations before income taxes
|
58,520
|
|
|
35,515
|
|
|
97,351
|
|
|
108,693
|
|
|
Income tax
expense
|
(20,928)
|
|
|
(13,392)
|
|
|
(64,955)
|
|
|
(35,131)
|
|
|
Income from
continuing operations
|
37,592
|
|
|
22,123
|
|
|
32,396
|
|
|
73,562
|
|
|
Loss from
discontinued operations, net of tax
|
(256)
|
|
|
(4,233)
|
|
|
(5,077)
|
|
|
(10,744)
|
|
|
Net income
|
37,336
|
|
|
17,890
|
|
|
27,319
|
|
|
62,818
|
|
|
Foreign currency
translation adjustment(2)
|
(1,651)
|
|
|
(695)
|
|
|
1,676
|
|
|
(156)
|
|
|
Comprehensive
income
|
$
|
35,685
|
|
|
$
|
17,195
|
|
|
$
|
28,995
|
|
|
$
|
62,662
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations attributable to common shares:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
36,462
|
|
|
$
|
21,384
|
|
|
$
|
31,491
|
|
|
$
|
71,268
|
|
|
Diluted
|
$
|
36,462
|
|
|
$
|
21,392
|
|
|
$
|
31,491
|
|
|
$
|
71,309
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per common share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
2.12
|
|
|
$
|
1.14
|
|
|
$
|
1.77
|
|
|
$
|
3.43
|
|
|
Discontinued
operations
|
(0.02)
|
|
|
(0.23)
|
|
|
(0.28)
|
|
|
(0.52)
|
|
|
Basic earnings per
common share
|
$
|
2.10
|
|
|
$
|
0.91
|
|
|
$
|
1.49
|
|
|
$
|
2.91
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per common share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
2.12
|
|
|
$
|
1.12
|
|
|
$
|
1.77
|
|
|
$
|
3.37
|
|
|
Discontinued
operations
|
(0.02)
|
|
|
(0.22)
|
|
|
(0.29)
|
|
|
(0.51)
|
|
|
Diluted earnings per
common share
|
$
|
2.10
|
|
|
$
|
0.90
|
|
|
$
|
1.48
|
|
|
$
|
2.86
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares used in basic and diluted per share
calculations:
|
|
|
|
|
|
|
|
|
Basic
|
17,220
|
|
|
18,798
|
|
|
17,775
|
|
|
20,792
|
|
|
Diluted
|
17,229
|
|
|
19,021
|
|
|
17,789
|
|
|
21,186
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per common share
|
$
|
0.30
|
|
|
$
|
—
|
|
|
$
|
0.90
|
|
|
$
|
—
|
|
|
|
|
(1)
|
"Direct operating"
excludes "Depreciation and other" of $28.7 million and $86.7
million for the three and nine months ended September 30,
2015, respectively, and $31.2 million and $94.3 million for the
three and nine months ended September 30, 2014,
respectively.
|
|
|
|
(2)
|
Foreign currency
translation adjustment had no tax effect for the three and nine
months ended September 30, 2015 and 2014,
respectively.
|
|
OUTERWALL
INC.
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(in thousands,
except share data)
|
|
(unaudited)
|
|
|
September 30,
2015
|
|
December 31,
2014
|
|
Assets
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
195,603
|
|
|
$
|
242,696
|
|
|
Accounts receivable,
net of allowances of $816 and $2,223
|
23,748
|
|
|
48,590
|
|
|
Content
library
|
126,769
|
|
|
180,121
|
|
|
Prepaid expenses and
other current assets
|
42,406
|
|
|
39,837
|
|
|
Total current
assets
|
388,526
|
|
|
511,244
|
|
|
Property and
equipment, net
|
341,002
|
|
|
428,468
|
|
|
Deferred income
taxes
|
2,712
|
|
|
11,378
|
|
|
Goodwill and other
intangible assets, net
|
528,138
|
|
|
623,998
|
|
|
Other long-term
assets
|
6,443
|
|
|
8,231
|
|
|
Total
assets
|
$
|
1,266,821
|
|
|
$
|
1,583,319
|
|
|
Liabilities and
Stockholders' Equity (Deficit)
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
119,148
|
|
|
$
|
168,633
|
|
|
Accrued payable to
retailers
|
101,101
|
|
|
126,290
|
|
|
Other accrued
liabilities
|
147,908
|
|
|
137,126
|
|
|
Current portion of
long-term debt and other long-term liabilities
|
17,868
|
|
|
20,416
|
|
|
Deferred income
taxes
|
9,501
|
|
|
21,432
|
|
|
Total current
liabilities
|
395,526
|
|
|
473,897
|
|
|
Long-term debt and
other long-term liabilities
|
856,275
|
|
|
973,669
|
|
|
Deferred income
taxes
|
17,071
|
|
|
38,375
|
|
|
Total
liabilities
|
1,268,872
|
|
|
1,485,941
|
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders' Equity
(Deficit):
|
|
|
|
|
Preferred stock,
$0.001 par value - 5,000,000 shares authorized; no shares issued or
outstanding
|
—
|
|
|
—
|
|
|
Common stock, $0.001
par value - 60,000,000 authorized;
|
|
|
|
|
36,710,717 and
36,600,166 shares issued;
|
|
|
|
|
17,246,475 and
18,926,242 shares outstanding;
|
481,281
|
|
|
473,592
|
|
|
Treasury
stock
|
(1,116,205)
|
|
|
(996,293)
|
|
|
Retained
earnings
|
631,507
|
|
|
620,389
|
|
|
Accumulated other
comprehensive income (loss)
|
1,366
|
|
|
(310)
|
|
|
Total stockholders'
equity (deficit)
|
(2,051)
|
|
|
97,378
|
|
|
Total liabilities and
stockholders' equity (deficit)
|
$
|
1,266,821
|
|
|
$
|
1,583,319
|
|
|
OUTERWALL
INC.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(in
thousands)
|
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
Net income
|
$
|
37,336
|
|
|
$
|
17,890
|
|
|
$
|
27,319
|
|
|
$
|
62,818
|
|
|
Adjustments to
reconcile net income to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
other
|
39,880
|
|
|
47,898
|
|
|
133,598
|
|
|
146,156
|
|
|
Amortization of
intangible assets
|
3,308
|
|
|
3,671
|
|
|
9,970
|
|
|
11,366
|
|
|
Share-based payments
expense
|
4,829
|
|
|
3,249
|
|
|
12,021
|
|
|
10,093
|
|
|
Windfall excess tax
benefits related to share-based payments
|
(29)
|
|
|
(35)
|
|
|
(715)
|
|
|
(1,988)
|
|
|
Deferred income
taxes
|
(21,741)
|
|
|
(2,404)
|
|
|
(25,680)
|
|
|
(17,408)
|
|
|
Restructuring and
lease termination costs(2)
|
—
|
|
|
—
|
|
|
1,680
|
|
|
—
|
|
|
Loss from equity
method investments, net
|
328
|
|
|
11,352
|
|
|
593
|
|
|
31,261
|
|
|
Amortization of
deferred financing fees and debt discount
|
693
|
|
|
901
|
|
|
2,078
|
|
|
3,423
|
|
|
Loss from early
extinguishment of debt
|
—
|
|
|
55
|
|
|
—
|
|
|
2,018
|
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
85,890
|
|
|
—
|
|
|
Other
|
315
|
|
|
(313)
|
|
|
(501)
|
|
|
(1,477)
|
|
|
Cash flows from
changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
9,655
|
|
|
12,133
|
|
|
24,732
|
|
|
17,464
|
|
|
Content
library
|
18,546
|
|
|
1,314
|
|
|
53,205
|
|
|
48,800
|
|
|
Prepaid expenses and
other current assets
|
17,188
|
|
|
1,044
|
|
|
(4,894)
|
|
|
23,047
|
|
|
Other
assets
|
84
|
|
|
611
|
|
|
406
|
|
|
1,647
|
|
|
Accounts
payable
|
(28,383)
|
|
|
(26,011)
|
|
|
(46,080)
|
|
|
(97,006)
|
|
|
Accrued payable to
retailers
|
(12,777)
|
|
|
(21,099)
|
|
|
(24,287)
|
|
|
(27,822)
|
|
|
Other accrued
liabilities
|
16,327
|
|
|
(629)
|
|
|
17,439
|
|
|
(5,345)
|
|
|
Net cash flows
from operating activities(1)
|
85,559
|
|
|
49,627
|
|
|
266,774
|
|
|
207,047
|
|
|
Investing
Activities:
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment
|
(19,947)
|
|
|
(19,295)
|
|
|
(60,164)
|
|
|
(72,311)
|
|
|
Proceeds from sale of
property and equipment
|
128
|
|
|
42
|
|
|
3,068
|
|
|
1,835
|
|
|
Cash paid for equity
investments
|
—
|
|
|
(14,000)
|
|
|
—
|
|
|
(24,500)
|
|
|
Net cash flows
used in investing activities(1)
|
(19,819)
|
|
|
(33,253)
|
|
|
(57,096)
|
|
|
(94,976)
|
|
|
Financing
Activities:
|
|
|
|
|
|
|
|
|
Proceeds from
issuance of senior unsecured notes
|
—
|
|
|
—
|
|
|
—
|
|
|
295,500
|
|
|
Proceeds from new
borrowing on Credit Facility
|
35,000
|
|
|
130,000
|
|
|
147,000
|
|
|
635,000
|
|
|
Principal payments on
Credit Facility
|
(72,813)
|
|
|
(86,875)
|
|
|
(258,563)
|
|
|
(621,250)
|
|
|
Financing costs
associated with Credit Facility and senior unsecured
notes
|
(9)
|
|
|
(824)
|
|
|
(9)
|
|
|
(2,906)
|
|
|
Settlement and
conversion of convertible debt
|
—
|
|
|
(33,425)
|
|
|
—
|
|
|
(51,149)
|
|
|
Repurchases of common
stock
|
(60,758)
|
|
|
(70,598)
|
|
|
(123,489)
|
|
|
(545,078)
|
|
|
Dividends
paid
|
(5,139)
|
|
|
—
|
|
|
(16,158)
|
|
|
—
|
|
|
Principal payments on
capital lease obligations and other debt
|
(2,660)
|
|
|
(3,516)
|
|
|
(8,938)
|
|
|
(10,597)
|
|
|
Windfall excess tax
benefits related to share-based payments
|
29
|
|
|
35
|
|
|
715
|
|
|
1,988
|
|
|
Withholding tax paid
on vesting of restricted stock net of proceeds from exercise of
stock options
|
(45)
|
|
|
(59)
|
|
|
(1,246)
|
|
|
(1,084)
|
|
|
Net cash flows
used in financing activities(1)
|
(106,395)
|
|
|
(65,262)
|
|
|
(260,688)
|
|
|
(299,576)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Effect of exchange
rate changes on cash
|
(1,450)
|
|
|
563
|
|
|
3,917
|
|
|
969
|
|
|
Change in cash and
cash equivalents
|
(42,105)
|
|
|
(48,325)
|
|
|
(47,093)
|
|
|
(186,536)
|
|
|
Cash and cash
equivalents:
|
|
|
|
|
|
|
|
|
Beginning of
period
|
237,708
|
|
|
233,226
|
|
|
242,696
|
|
|
371,437
|
|
|
End of
period
|
$
|
195,603
|
|
|
$
|
184,901
|
|
|
$
|
195,603
|
|
|
$
|
184,901
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
$
|
12,151
|
|
|
$
|
12,614
|
|
|
$
|
34,997
|
|
|
$
|
29,824
|
|
|
Cash paid during the
period for income taxes, net
|
$
|
17,551
|
|
|
$
|
14,594
|
|
|
$
|
84,447
|
|
|
$
|
23,783
|
|
|
Supplemental
disclosure of non-cash investing and financing
activities:
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment financed by capital lease obligations
|
$
|
994
|
|
|
$
|
1,901
|
|
|
$
|
1,971
|
|
|
$
|
7,414
|
|
|
Purchases of property
and equipment included in ending accounts payable
|
$
|
3,422
|
|
|
$
|
5,869
|
|
|
$
|
3,422
|
|
|
$
|
5,869
|
|
|
Common stock issued
on conversion of callable convertible debt
|
$
|
—
|
|
|
$
|
14,057
|
|
|
$
|
—
|
|
|
$
|
24,255
|
|
|
Non-cash debt issue
costs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,500
|
|
|
|
|
(1)
|
During the first
quarter of 2015 we discontinued our Redbox operations in Canada.
2014 also includes the wind-down process of certain new ventures
that were discontinued during 2013. Cash flows from these
discontinued operations are not segregated from cash flows from
continuing operations in all periods presented.
|
|
|
|
(2)
|
The non-cash
restructuring and lease termination costs in the nine months ended
September 30, 2015 of $1.7 million is composed of $6.9 million
in impairments of lease related assets partially offset by a $5.2
million benefit resulting from the lease termination.
|
OUTERWALL INC.
BUSINESS SEGMENT AND
ENTERPRISEWIDE INFORMATION
(unaudited)
Changes in our Organizational
Structure
During the first quarter of 2015, we added ecoATM, our
electronic device recycling business, as a separate reportable
segment. Previously, the results of ecoATM along with those of
other self-service concepts were included in our New Ventures
segment. The combined results of the other self-service concepts,
which include product sampling kiosk concept SAMPLEit, are now
included in the All Other reporting category in the reconciliation
below as they do not meet quantitative thresholds to be reported as
a separate segment. All goodwill previously allocated to the New
Ventures segment has been allocated to the ecoATM segment.
Comparability of Segment Results
We have recast prior period results for the following:
- Discontinued operations, consisting of our Redbox operations in
Canada which we shut down during
the first quarter of 2015; and
- The addition of our ecoATM segment and an All Other reporting
category, which we added during the first quarter of 2015.
Our analysis and reconciliation of our segment information to
the consolidated financial statements that follows covers our
results of operations, which consists of our Redbox, Coinstar and
ecoATM segments, Corporate Unallocated expenses and All Other. All
Other includes the results of other self-service concepts, which we
regularly assess to determine whether continued funding or other
alternatives are appropriate.
|
OUTERWALL
INC.
|
|
BUSINESS SEGMENT
AND ENTERPRISEWIDE INFORMATION
|
|
(unaudited)
|
|
|
Dollars in
thousands
|
|
|
Three Months Ended
September 30, 2015
|
Redbox
|
|
Coinstar
|
|
ecoATM
|
|
All
Other
|
|
Corporate
Unallocated
|
|
Total
|
|
Revenue
|
$
|
395,372
|
|
|
$
|
85,677
|
|
|
$
|
30,965
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
512,055
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
269,022
|
|
|
41,249
|
|
|
28,583
|
|
|
786
|
|
|
559
|
|
|
340,199
|
|
|
Marketing
|
4,180
|
|
|
1,439
|
|
|
1,134
|
|
|
262
|
|
|
116
|
|
|
7,131
|
|
|
Research and
development
|
—
|
|
|
—
|
|
|
1,201
|
|
|
—
|
|
|
313
|
|
|
1,514
|
|
|
General and
administrative
|
31,788
|
|
|
8,502
|
|
|
3,105
|
|
|
933
|
|
|
3,490
|
|
|
47,818
|
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Segment operating
income (loss)
|
90,382
|
|
|
34,487
|
|
|
(3,058)
|
|
|
(1,940)
|
|
|
(4,478)
|
|
|
115,393
|
|
|
Less: depreciation,
amortization and other
|
(27,754)
|
|
|
(7,942)
|
|
|
(6,788)
|
|
|
(704)
|
|
|
—
|
|
|
(43,188)
|
|
|
Operating income
(loss)
|
62,628
|
|
|
26,545
|
|
|
(9,846)
|
|
|
(2,644)
|
|
|
(4,478)
|
|
|
72,205
|
|
|
Loss from equity
method investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(328)
|
|
|
(328)
|
|
|
Interest expense,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,973)
|
|
|
(11,973)
|
|
|
Other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,384)
|
|
|
(1,384)
|
|
|
Income (loss) from
continuing operations before income taxes
|
$
|
62,628
|
|
|
$
|
26,545
|
|
|
$
|
(9,846)
|
|
|
$
|
(2,644)
|
|
|
$
|
(18,163)
|
|
|
$
|
58,520
|
|
|
Dollars in
thousands
|
|
|
Three Months Ended
September 30, 2014
|
Redbox
|
|
Coinstar
|
|
ecoATM
|
|
All
Other
|
|
Corporate
Unallocated
|
|
Total
|
|
Revenue
|
$
|
435,083
|
|
|
$
|
85,074
|
|
|
$
|
29,733
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
549,899
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
308,123
|
|
|
42,428
|
|
|
26,411
|
|
|
577
|
|
|
1,903
|
|
|
379,442
|
|
|
Marketing
|
5,419
|
|
|
1,834
|
|
|
973
|
|
|
239
|
|
|
678
|
|
|
9,143
|
|
|
Research and
development
|
15
|
|
|
64
|
|
|
1,360
|
|
|
728
|
|
|
832
|
|
|
2,999
|
|
|
General and
administrative
|
33,249
|
|
|
7,313
|
|
|
3,027
|
|
|
858
|
|
|
3,139
|
|
|
47,586
|
|
|
Segment operating
income (loss)
|
88,277
|
|
|
33,435
|
|
|
(2,038)
|
|
|
(2,393)
|
|
|
(6,552)
|
|
|
110,729
|
|
|
Less: depreciation,
amortization and other
|
(36,685)
|
|
|
(8,989)
|
|
|
(4,297)
|
|
|
(74)
|
|
|
—
|
|
|
(50,045)
|
|
|
Operating income
(loss)
|
51,592
|
|
|
24,446
|
|
|
(6,335)
|
|
|
(2,467)
|
|
|
(6,552)
|
|
|
60,684
|
|
|
Loss from equity
method investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,352)
|
|
|
(11,352)
|
|
|
Interest expense,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,465)
|
|
|
(12,465)
|
|
|
Other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,352)
|
|
|
(1,352)
|
|
|
Income (loss) from
continuing operations before income taxes
|
$
|
51,592
|
|
|
$
|
24,446
|
|
|
$
|
(6,335)
|
|
|
$
|
(2,467)
|
|
|
$
|
(31,721)
|
|
|
$
|
35,515
|
|
|
OUTERWALL
INC.
|
|
BUSINESS SEGMENT
AND ENTERPRISEWIDE INFORMATION
|
|
(unaudited)
|
|
|
Dollars in
thousands
|
|
|
Nine Months Ended
September 30, 2015
|
Redbox
|
|
Coinstar
|
|
ecoATM
|
|
All
Other
|
|
Corporate
Unallocated
|
|
Total
|
|
Revenue
|
$
|
1,353,881
|
|
|
$
|
235,286
|
|
|
$
|
76,776
|
|
|
$
|
117
|
|
|
$
|
—
|
|
|
$
|
1,666,060
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
913,401
|
|
|
117,870
|
|
|
78,616
|
|
|
3,055
|
|
|
2,060
|
|
|
1,115,002
|
|
|
Marketing
|
13,271
|
|
|
3,849
|
|
|
5,013
|
|
|
840
|
|
|
625
|
|
|
23,598
|
|
|
Research and
development
|
—
|
|
|
—
|
|
|
4,206
|
|
|
(84)
|
|
|
1,515
|
|
|
5,637
|
|
|
General and
administrative
|
99,859
|
|
|
24,065
|
|
|
7,167
|
|
|
6,084
|
|
|
7,982
|
|
|
145,157
|
|
|
Restructuring and
lease termination costs
|
15,174
|
|
|
550
|
|
|
127
|
|
|
—
|
|
|
—
|
|
|
15,851
|
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
85,890
|
|
|
—
|
|
|
—
|
|
|
85,890
|
|
|
Segment operating
income (loss)
|
312,176
|
|
|
88,952
|
|
|
(104,243)
|
|
|
(9,778)
|
|
|
(12,182)
|
|
|
274,925
|
|
|
Less: depreciation,
amortization and other
|
(92,424)
|
|
|
(24,197)
|
|
|
(18,995)
|
|
|
(2,050)
|
|
|
—
|
|
|
(137,666)
|
|
|
Operating income
(loss)
|
219,752
|
|
|
64,755
|
|
|
(123,238)
|
|
|
(11,828)
|
|
|
(12,182)
|
|
|
137,259
|
|
|
Loss from equity
method investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(593)
|
|
|
(593)
|
|
|
Interest expense,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,227)
|
|
|
(36,227)
|
|
|
Other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,088)
|
|
|
(3,088)
|
|
|
Income (loss) from
continuing operations before income taxes
|
$
|
219,752
|
|
|
$
|
64,755
|
|
|
$
|
(123,238)
|
|
|
$
|
(11,828)
|
|
|
$
|
(52,090)
|
|
|
$
|
97,351
|
|
|
Dollars in
thousands
|
|
|
Nine Months Ended
September 30, 2014
|
Redbox
|
|
Coinstar
|
|
ecoATM
|
|
All
Other
|
|
Corporate
Unallocated
|
|
Total
|
|
Revenue
|
$
|
1,390,970
|
|
|
$
|
233,707
|
|
|
$
|
69,478
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
1,694,188
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
989,100
|
|
|
120,354
|
|
|
64,729
|
|
|
1,421
|
|
|
5,214
|
|
|
1,180,818
|
|
|
Marketing
|
15,412
|
|
|
4,397
|
|
|
2,568
|
|
|
620
|
|
|
2,275
|
|
|
25,272
|
|
|
Research and
development
|
41
|
|
|
486
|
|
|
4,535
|
|
|
2,035
|
|
|
2,788
|
|
|
9,885
|
|
|
General and
administrative
|
105,642
|
|
|
21,479
|
|
|
9,470
|
|
|
2,352
|
|
|
9,847
|
|
|
148,790
|
|
|
Restructuring and
lease termination costs
|
534
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
557
|
|
|
Segment operating
income (loss)
|
280,241
|
|
|
86,968
|
|
|
(11,824)
|
|
|
(6,395)
|
|
|
(20,124)
|
|
|
328,866
|
|
|
Less: depreciation,
amortization and other
|
(114,872)
|
|
|
(26,473)
|
|
|
(11,821)
|
|
|
(315)
|
|
|
—
|
|
|
(153,481)
|
|
|
Operating income
(loss)
|
165,369
|
|
|
60,495
|
|
|
(23,645)
|
|
|
(6,710)
|
|
|
(20,124)
|
|
|
175,385
|
|
|
Loss from equity
method investments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,261)
|
|
|
(31,261)
|
|
|
Interest expense,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35,045)
|
|
|
(35,045)
|
|
|
Other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(386)
|
|
|
(386)
|
|
|
Income (loss) from
continuing operations before income taxes
|
$
|
165,369
|
|
|
$
|
60,495
|
|
|
$
|
(23,645)
|
|
|
$
|
(6,710)
|
|
|
$
|
(86,816)
|
|
|
$
|
108,693
|
|
APPENDIX A
Non-GAAP Financial Measures
Non-GAAP measures may be provided as a complement to results
provided in accordance with United
States generally accepted accounting principles
("GAAP").
We use the following non-GAAP financial measures to evaluate our
financial results:
- Core adjusted EBITDA from continuing operations;
- Core diluted earnings per share ("EPS") from continuing
operations;
- Free cash flow; and
- Net debt and net leverage ratio.
These measures, the definitions of which are presented below,
are non-GAAP because they exclude certain amounts which are
included in the most directly comparable measure calculated and
presented in accordance with GAAP. Our non-GAAP financial measures
are not meant to be considered in isolation or as a substitute for
our GAAP financial measures and may not be comparable with
similarly titled measures of other companies.
Core and Non-Core Results
We distinguish our core activities, those associated with our
primary operations which we directly control, from non-core
activities. Non-core activities are primarily nonrecurring events
or events we do not directly control. Our non-core adjustments for
the periods presented include i) goodwill impairment, ii)
restructuring costs (including severance and early lease
termination costs and related impairment of assets) associated with
actions to reduce costs in our continuing operations across the
Company, iii) compensation expense for rights to receive cash
issued in conjunction with our acquisition of ecoATM and
attributable to post-combination services as they are fixed amount
acquisition related awards and not indicative of the directly
controllable future business results, iv) income or loss from
equity method investments, which represents our share of income or
loss from entities we do not consolidate or control, v) tax
benefits related to a net operating loss adjustment, and vi) tax
benefit related to worthless stock deduction ("Non-Core
Adjustments").
We believe investors should consider our core results because
they are more indicative of our ongoing performance and trends, are
more consistent with how management evaluates our operational
results and trends, provide meaningful supplemental information to
investors through the exclusion of certain expenses which are
either nonrecurring or may not be indicative of our directly
controllable business operating results, allow for greater
transparency in assessing our performance, help investors better
analyze the results of our business and assist in forecasting
future periods.
Core Adjusted EBITDA from continuing operations
Our non-GAAP financial measure core adjusted EBITDA from
continuing operations is defined as earnings from continuing
operations before depreciation, amortization and other; interest
expense, net; income taxes; share-based payments expense; and
Non-Core Adjustments.
A reconciliation of core adjusted EBITDA from continuing
operations to net income from continuing operations, the most
comparable GAAP financial measure, is presented in the following
table:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
Dollars in
thousands
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Net income from
continuing operations
|
$
|
37,592
|
|
|
$
|
22,123
|
|
|
$
|
32,396
|
|
|
$
|
73,562
|
|
|
Depreciation,
amortization and other
|
43,188
|
|
|
50,045
|
|
|
137,666
|
|
|
153,481
|
|
|
Interest expense,
net
|
11,973
|
|
|
12,465
|
|
|
36,227
|
|
|
35,045
|
|
|
Income
taxes
|
20,928
|
|
|
13,392
|
|
|
64,955
|
|
|
35,131
|
|
|
Share-based payments
expense(1)
|
4,864
|
|
|
3,249
|
|
|
12,125
|
|
|
10,093
|
|
|
Adjusted EBITDA from
continuing operations
|
118,545
|
|
|
101,274
|
|
|
283,369
|
|
|
307,312
|
|
|
Non-Core
Adjustments:
|
|
|
|
|
|
|
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
85,890
|
|
|
—
|
|
|
Restructuring
costs
|
—
|
|
|
—
|
|
|
15,851
|
|
|
469
|
|
|
Rights to receive
cash issued in connection with the acquisition of ecoATM
|
854
|
|
|
3,274
|
|
|
3,779
|
|
|
10,033
|
|
|
Loss from equity
method investments, net
|
328
|
|
|
11,352
|
|
|
593
|
|
|
31,261
|
|
|
Core adjusted EBITDA
from continuing operations
|
$
|
119,727
|
|
|
$
|
115,900
|
|
|
$
|
389,482
|
|
|
$
|
349,075
|
|
|
|
|
(1)
|
Includes both
non-cash share-based compensation for executives, non-employee
directors and employees as well as share-based payments for content
arrangements.
|
Core Diluted EPS from continuing operations
Our non-GAAP financial measure core diluted EPS from continuing
operations is defined as diluted earnings per share from continuing
operations utilizing the treasury stock method excluding non-core
adjustments, net of applicable taxes.
A reconciliation of core diluted EPS from continuing operations
to diluted EPS from continuing operations, the most comparable GAAP
financial measure, is presented in the following table:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Diluted EPS from
continuing operations per common share (two-class
method)
|
$
|
2.12
|
|
|
$
|
1.12
|
|
|
$
|
1.77
|
|
|
$
|
3.37
|
|
|
Adjustment from
participating securities allocation and share differential to
treasury stock method(1)
|
0.04
|
|
|
0.04
|
|
|
0.03
|
|
|
0.07
|
|
|
Diluted EPS from
continuing operations (treasury stock method)
|
2.16
|
|
|
1.16
|
|
|
1.80
|
|
|
3.44
|
|
|
Non-Core Adjustments,
net of tax:(1)
|
|
|
|
|
|
|
|
|
Goodwill
impairment
|
—
|
|
|
—
|
|
|
4.78
|
|
|
—
|
|
|
Restructuring
costs
|
—
|
|
|
—
|
|
|
0.54
|
|
|
0.01
|
|
|
Rights to receive
cash issued in connection with the acquisition of ecoATM
|
0.04
|
|
|
0.14
|
|
|
0.14
|
|
|
0.37
|
|
|
Loss from equity
method investments, net
|
0.01
|
|
|
0.36
|
|
|
0.02
|
|
|
0.89
|
|
|
Tax benefit from net
operating loss adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.04)
|
|
|
Tax benefit of
worthless stock deduction
|
—
|
|
|
0.01
|
|
|
—
|
|
|
(0.10)
|
|
|
Core diluted EPS from
continuing operations
|
$
|
2.21
|
|
|
$
|
1.67
|
|
|
$
|
7.28
|
|
|
$
|
4.57
|
|
|
|
|
(1)
|
Non-Core Adjustments
are presented after-tax using the applicable effective tax rate for
the respective periods.
|
A reconciliation of amounts used in calculating core diluted EPS
from continuing operations in the table above is presented in the
following table:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
In
thousands
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Income from
continuing operations attributable to common shares
|
$
|
36,462
|
|
|
$
|
21,392
|
|
|
$
|
31,491
|
|
|
$
|
71,309
|
|
|
Add: income from
continuing operations allocated to participating
securities
|
1,130
|
|
|
731
|
|
|
905
|
|
|
2,253
|
|
|
Income from
continuing operations
|
$
|
37,592
|
|
|
$
|
22,123
|
|
|
$
|
32,396
|
|
|
$
|
73,562
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares
|
17,229
|
|
|
19,021
|
|
|
17,789
|
|
|
21,186
|
|
|
Add: diluted common
equivalent shares of participating securities
|
142
|
|
|
126
|
|
|
182
|
|
|
186
|
|
|
Weighted average
diluted shares (treasury stock method)
|
17,371
|
|
|
19,147
|
|
|
17,971
|
|
|
21,372
|
|
Free Cash Flow
Our non-GAAP financial measure free cash flow is defined as net
cash provided by operating activities after capital expenditures.
We believe free cash flow is an important non-GAAP measure as it
provides additional information to users of the financial
statements regarding our ability to service, incur or pay down
indebtedness and repurchase our securities. A reconciliation of
free cash flow to net cash provided by operating activities, the
most comparable GAAP financial measure, is presented in the
following table:
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
|
Dollars in
thousands
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Net cash provided by
operating activities
|
$
|
85,559
|
|
|
$
|
49,627
|
|
|
$
|
266,774
|
|
|
$
|
207,047
|
|
|
Purchase of property
and equipment
|
(19,947)
|
|
|
(19,295)
|
|
|
(60,164)
|
|
|
(72,311)
|
|
|
Free cash
flow
|
$
|
65,612
|
|
|
$
|
30,332
|
|
|
$
|
206,610
|
|
|
$
|
134,736
|
|
Net Debt and Net Leverage Ratio
Our non-GAAP financial measure net debt is defined as the total
face value of outstanding debt, including capital leases, less cash
and cash equivalents held in financial institutions domestically.
Our non-GAAP financial measure net leverage ratio is defined as net
debt divided by core adjusted EBITDA from continuing operations for
the last twelve months (LTM). We believe net debt and net leverage
ratio are important non-GAAP measures because they:
- are used to assess the degree of leverage by management;
- provide additional information to users of the financial
statements regarding our ability to service, incur or pay down
indebtedness and repurchase our securities as well as additional
information about our capital structure; and
- are reported quarterly to support covenant compliance under our
credit agreement.
A reconciliation of net debt to total outstanding debt including
capital leases, the most comparable GAAP financial measure, is
presented in the following table:
|
September 30,
2015
|
|
December 31,
2014
|
|
Dollars in
thousands
|
|
|
Senior unsecured
notes
|
$
|
650,000
|
|
|
$
|
650,000
|
|
|
Term loans
|
139,688
|
|
|
146,250
|
|
|
Revolving line of
credit
|
55,000
|
|
|
160,000
|
|
|
Capital
leases
|
8,177
|
|
|
15,391
|
|
|
Total principal value
of outstanding debt including capital leases
|
852,865
|
|
|
971,641
|
|
|
Less domestic cash
and cash equivalents held in financial institutions
|
(33,909)
|
|
|
(66,546)
|
|
|
Net debt
|
818,956
|
|
|
905,095
|
|
|
LTM Core adjusted
EBITDA from continuing operations(1)
|
$
|
537,227
|
|
|
$
|
496,820
|
|
|
Net leverage
ratio
|
1.52
|
|
|
1.82
|
|
|
|
|
(1)
|
LTM Core Adjusted
EBITDA from continuing operations for the twelve months ended
September 30, 2015 and December 31, 2014 was determined
as follows:
|
|
|
|
Dollars in
thousands
|
|
|
Core adjusted EBITDA
from continuing operations for the nine months ended September 30,
2015
|
$
|
389,482
|
|
|
Add: Core adjusted
EBITDA from continuing operations for the twelve months ended
December 31, 2014(1)
|
496,820
|
|
|
Less: Core adjusted
EBITDA from continuing operations for the nine months ended
September 30, 2014
|
(349,075)
|
|
|
LTM Core adjusted
EBITDA from continuing operations for the twelve months ended
September 30, 2015
|
$
|
537,227
|
|
|
|
|
(1)
|
Core adjusted EBITDA
from continuing operations for the twelve months ended December 31,
2014 is obtained from our Form 8-K filed on May 8, 2015 for the
period ended December 31, 2014, where it is reconciled to net
income from continuing operations, the most comparable GAAP
financial measure, and represents the LTM core adjusted EBITDA from
continuing operations we use in our calculation of net leverage
ratio as of December 31, 2014.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/outerwall-inc-announces-2015-third-quarter-results-300169044.html
SOURCE Outerwall Inc.