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Coinstar Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 25, 2012 09:34PM
Coinstar Inc. (CSTR) filed Quarterly Report for the period ended 2012-09-30. Coinstar, Inc. has a market cap of $1.37 billion; its shares were traded at around $41.6 with a P/E ratio of 9.1 and P/S ratio of 0.7. Coinstar, Inc. had an annual average earning growth of 18.4% over the past 10 years. GuruFocus rated Coinstar, Inc. the business predictability rank of 5-star.
Highlight of Business Operations:Coin segment and an increased operating loss in our New Ventures segment. The operating income as a percentage of revenue for our Redbox segment was 13.0% during the third quarter of 2012 as compared with 13.5% in 2011; the decrease was partially driven by the additional depreciation and amortization expenses, approximately $4.9 million, resulting from the NCR kiosks acquired in the second quarter of 2012. The increase in the operating income as a percentage of revenue for our Redbox segment during the nine month periods was primarily driven by the increase in revenue per rental effective during the fourth quarter of 2011 which affected the nine-month results in 2012 rather than 2011.
We also review same store sales, which we calculate for our segments on a location basis. Most of our locations have a single kiosk, but in locations with a high-performing kiosk, we may add additional kiosks to drive incremental revenue and provide a broader product offering. Same store sales reflects the change in revenue from locations that have been operating for more than 13 months by the end of the reporting period compared with the same locations in the same period of the prior year.
$170.4 million increase in direct operating expenses primarily due to a $90.8 million increase in product costs related to higher DVD content purchases resulting from growth in the installed kiosk base and increased Games purchases as compared to 2011 when our national launch of Games did not occur until June 2011, as well as increased share-based payments for content arrangements due to the higher market price of our common stock during the period. Product costs totaled $571.8 million, an increase from $481.0 million in the prior period. In addition, we had increases in revenue share expense and payment card processing fees directly attributable to the revenue growth, higher kiosk field operating costs, allocated expenses from our shared services support function due to the growth in the installed kiosk base, and certain costs incurred to service the kiosks under the transition services agreement with NCR. Due to the price increase mentioned above and ongoing investments in process improvements, direct operating expenses as a percent of revenue for 2012 was 68.9%, down 350 basis points from 72.4% in 2011;
Stocks Discussed: CSTR,