BELLEVUE, Wash., Dec. 7, 2015 /PRNewswire/ -- Outerwall Inc.
(Nasdaq: OUTR) today provided an update on its financial
expectations for the full year 2015. The revised outlook reflects
lower Redbox segment revenue than expected for the fourth quarter
of 2015 based on preliminary results through the end of November
and expectations for December, as well as the expected write-off of
certain capitalized assets associated with its SampleIt concept,
which the company has decided to discontinue.
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For the full year 2015, the company now expects:
- Redbox revenue between $1.750 billion
and $1.765 billion, compared with the prior range of
$1.790 billion to $1.815
billion;
- Consolidated revenue between $2.165
billion and $2.190 billion, compared with the prior range of
$2.205 billion to $2.240
billion;
- Core adjusted EBITDA from continuing operations* between
$460 million and $475 million,
compared with the prior range of $490
million to $510 million;
- Core diluted EPS from continuing operations* between
$7.65 and $8.15 on a fully diluted
basis, compared with the prior range of $8.82 to $9.52;
- Free cash flow* between $235 million and
$255 million, compared with the prior range of $252 million to $282 million.
* Refer to Appendix A for a discussion of Use of Non-GAAP
Financial Measures and Core and Non-Core results.
The expected impact to profitability for the fourth quarter
reflects the company's increased promotional spend and additional
content purchases to encourage consumers to return to normal rental
patterns. Since the content was already purchased, there was less
opportunity to offset the lower revenue. Outerwall is maintaining
its outlook for its Coinstar and ecoATM segments.
While Redbox has driven improvements in both unique customers
and total rentals during the first two months of the fourth quarter
relative to the third quarter, the business has not met the
company's performance expectations and continues to remain
challenged by the historically low box office during the third
quarter, which was the worst theatrical box office in Redbox kiosks
in four years. The company continues to focus on optimizing Redbox
and is committed to taking the necessary actions to build upon its
strong brand and foundation and position the business for continued
success.
Outerwall expects to provide guidance for the full year 2016
when it reports the company's fourth quarter and full year 2015
results.
Redbox Leadership Transition
Outerwall also announced
today that Mark Horak is leaving the
company. Erik Prusch,
Outerwall's chief executive officer, will serve as
interim president of Redbox until the position is filled. The
company will initiate a search process to fill the role.
"We appreciate Mark's contributions to the company and remain
confident in Redbox's position," said Prusch. "While consumers'
rental patterns have not returned to the levels we had expected by
this time, Redbox continues to be a compelling, valuable
entertainment option as the largest movie transaction service in
America. Today, we remain focused on driving increases in both
unique customers and rentals and driving improved top-line
performance while controlling costs and creating efficiencies."
Discontinuation of SampleIt
Outerwall has also made
the decision to discontinue its SampleIt concept. After conducting
a thorough review, the company did not expect sufficient returns to
justify allocating additional capital to SampleIt. As a result of
this decision, Outerwall expects to recognize a one-time non-cash
charge for accelerated depreciation in the fourth quarter of 2015
of approximately $4.5 million, which
equates to approximately $0.16 of
core diluted earnings per share from continuing
operations impact. The wind-down process is expected to be
substantially complete by the end of January
2016.
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 and Redbox'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
Gazelle,
- 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.
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; and
- Free cash flow.
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.
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.
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.
Outerwall will provide a reconciliation of these Non-GAAP
financial measures for the full year 2015 when it has finalized and
reports full financial results.
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SOURCE Outerwall Inc.