Outerwall Shares Rise On Q4 Results, Stock Buyback

(RTTNews) - Shares of automated retail solutions provider Outerwall Inc. (OUTR), previously known as Coinstar Inc., gained almost 10 percent in extended trades on Thursday after the company reported an increase in fourth-quarter income from continuing operations on higher revenues.

The Bellevue, Washington-based company also increased its share repurchase authorization by $500 million. In connection with the increased share repurchase authorization, the company announced its intent to purchase $350 million of its common stock through modified 'Dutch auction' tender offer.

Separately, Outerwall said that Mark Horak, most recently president the Americas at Warner Bros. Home Entertainment, Inc., will join Redbox as its new president on March 17.

Outerwall's net income for the fourth quarter was $22.68 million or $0.82 per share, compared to $22.89 million or $0.75 per share in the prior-year period. Income from continuing operations increased to $42.88 million or $1.55 per share from $25.54 million or $0.83 per share in the year-ago quarter.

Core earnings per share from continuing operations was $1.68 for the quarter, compared to $1.01 per share in the same period last year. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $1.22 per share for the quarter. Analysts' estimates typically exclude special items.

Revenue for the quarter increased 5 percent to $593.70 million from $563.08 million in the same period last year. Analysts had a consensus revenue estimate of $596.09 million for the quarter.

Redbox segment revenue for the quarter increased 2 percent from the prior-year period to $496.40 million. The segment generated 192.0 million rentals in the quarter, up 2 percent from last year. Net revenue per rental edged up 0.4 percent to $2.58.

Coinstar segment revenue rose 8 percent from the year-ago period to $80.70 million. Same-store sales increased 5.9 percent, compared with a decline of 1.2 percent last year, primarily due to the price increase for all U.S. grocery retail locations for the coin voucher product implemented on October 1, 2013. The average transaction size increased 5.8 percent to $43.82.

New Ventures segment reported a surge in revenue to $16.61 million from $293,000 in the year-ago period, with the increase primarily due to the acquisition of the ecoATM business completed in July 2013. During the fourth quarter, ecoATM expanded its pilot in the mass channel and ended the year with approximately 880 kiosks.

For fiscal 2013, Outerwall's net income was $174.79 million or $6.16 per share, up from $150.23 million or $4.67 per share in the previous year. Core earnings per share from continuing operations was $5.92, compared with $5.15 per share in the prior year.

Revenue for the year rose 5 percent to $2.31 billion from $2.20 billion last year.

Street expected the company to report earnings of $5.02 per share for the year on revenues of $2.31 billion.

On January 30, 2014, Outerwall's board increased the share repurchase authorization by $500 million, bringing the total available for repurchases to approximately $650 million.

In connection with this increased authorization, the board has authorized a tender offer for $350 million of Outerwall's common stock through a modified Dutch auction that is expected to launch on February 7, 2014. The company expects to launch with a price range based on a 5 percent to 20 percent premium over the last reported sale price on February 6.

Looking ahead to the first quarter, Outerwall forecasts core earnings per share from continuing operations between $0.77 and $0.97, and consolidated revenue of $570 million to $600 million. Analysts expect the company to report earnings of $1.29 per share for the quarter on revenue of $607.06 million.

For fiscal 2014, Outerwall forecast core earnings per share from continuing operations between $5.16 and $5.76, and consolidated revenue in a range of $2.358 billion to $2.498 billion. Analysts expect the company to report earnings per share of $5.77 for the year on revenue of $2.45 billion.

In a separate statement, Outerwall announced three executive leadership moves within its Redbox, Coinstar and ecoATM businesses. Mark Horak, most recently president the Americas at Warner Bros. Home Entertainment, Inc., plans to join Redbox as its new president on March 17.

Coinstar operations executive James Gaherity will transition to president of Coinstar as Mike Skinner has decided to leave the company for another opportunity after nine years of service. Maria Stipp, having served as chief new ventures officer and concurrently interim president of ecoATM since October 2013, has been named president of the ecoATM business.

OUTR closed Thursday's regular trading session at $63.64, up $0.47 or 0.74 percent on a volume of 958,681 shares. In after-hours, the stock further gained $6.36 or 9.99 percent to $70.00.