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Executives

Rosemary Moothart - Director of Investor Relations

Paul D. Davis - Chief Executive Officer and Director

J. Scott Di Valerio - Chief Financial Officer and Interim President of Redbox Automated Retail LLC

Analysts

Darren Aftahi - Northland Capital Markets, Research Division

Michael J. Olson - Piper Jaffray Companies, Research Division

Steven B. Frankel - Dougherty & Company LLC, Research Division

Eric Wold - B. Riley & Co., LLC, Research Division

Andy Hargreaves - Pacific Crest Securities, Inc., Research Division

Coinstar (CSTR) Q4 2012 Earnings Call February 7, 2013 5:00 PM ET

Operator

Hello, and welcome to the 2012 Fourth Quarter Earnings Conference Call. My name is Maisha, and I will be your operator for today's call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the call over to Rosemary Moothart. Please go ahead.

Rosemary Moothart

Good afternoon, and welcome to Coinstar's 2012 Fourth Quarter Earnings Call. Our call today will be hosted by CEO, Paul Davis; and CFO, Scott Di Valerio. We will follow the same pattern as last quarter, with Paul and Scott making introductory remarks, followed by Q&A. The Q4 earnings release is posted on the Investor Relations section of our website, coinstarinc.com. We have also posted the prepared remarks, which include additional information related to Q4 results, full year results and our guidance for Q1 and full year 2013. We've also posted the segment supplement, which provides historical data in Excel downloadable format.

During this call, Paul and Scott may reference non-GAAP financial measures. A reconciliation of differences between GAAP and non-GAAP financial measures is provided in the appendix of the earnings release, which as I mentioned, is posted in our website. Also, during this call, various remarks we make about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from expectations, plans and prospects contemplated in these forward-looking statements as a result of various factors, including those discussed in our latest 10-K and subsequent 10-Q filings with the SEC.

And now I'll turn the call over to Paul.

Paul D. Davis

Thanks, Rosemary. Coinstar has experienced ongoing success by remaining committed to delighting consumers, growing revenue for our retailers and driving shareholder value. I'm pleased to report that our results in 2012 reflect this commitment.

We reached $2.2 billion in annual consolidated revenue in 2012, achieving a significant financial milestone, surpassing $2 billion for the first time. That's quite an achievement for the team. We've nearly quadrupled our revenue in 5 years, and have been acknowledged 3 years running as one of Fortune Magazine's 100 fastest-growing companies. In addition, we grew core diluted EPS from continuing operations by 32% over the prior year period, and generated nearly $256 million in free cash flow from continuing operations.

Another milestone in 2012 was the 10-year anniversary of Redbox. During our first decade in business, we focused on providing consumers with a convenient way to access new release movie rentals at a value. We've quickly built out our international footprint which, today, is over 43,000 kiosks. Our customers are a true asset to our business and have demonstrated their loyalty by renting 2.6 billion movies since our service began, resulting in the 45% market share that we have today in the physical rental space. Physical rentals remained strong as consumers continue to have an appetite for this format, equating to approximately a $6 billion market size. Redbox has nearly 5 million Facebook fans, 48 million email addresses and 40 million unique credit cards. Our goal is to build even stronger one-to-one relationships with our consumer base, to drive demand as we become their entertainment destination.

2012 is another busy year for the Redbox business. We announced our digital partnership with Verizon in February. And before the year ended, the Redbox Instant by Verizon beta began rolling out to consumers. We now have tens of thousands of consumers using Redbox Instant in beta, with hundreds of thousands more requesting access to the beta. Our team continues to listen to consumer feedback and enhance the offering, and we are on track to make the service available to all consumers in the first quarter.

Just this week, Redbox Instant added Xbox 360. We're delighted with this addition given the popularity of the Xbox and the opportunity to give consumers another choice for enjoying movies in their living rooms. We're confident in the offering as it provides flexibility in how consumers access, pay for and watch movies, and ensures movie lovers can meet their needs all in one place.

As we continue to add more value to the kiosk and position Redbox as an entertainment destination, we are exploring new products. Redbox Tickets rolled out in Philadelphia last October and in Los Angeles late last month. This business has shown encouraging signs as we prove out the model and consumer interest in the service. Redbox also secured multiyear studio agreements with Sony, Universal and Warner Bros. in 2012. We value our studio partners and continually strive to maintain mutually beneficial relationships.

Turning to the Coin business. While the business remained flat in 2012, we made positive progress in a couple areas. First, we announced a successful test with PayPal, giving consumers the opportunity to load Coin and currency onto their PayPal accounts or withdraw funds in the form of a cash voucher. We're pleased with the traction made in Coin's gift card product, driven by strong partners such as Amazon, Lowe's, iTunes, Starbucks. The business also added 5 new well-known partners last year, including Dell, Marriott, Nike, Sears and Xbox, increasing the average transaction size and providing a broader product assortment for consumers.

On the new ventures front, the primary focus in 2013 will be on the Rubi business. The rollout process for the Rubi coffee kiosk did not meet our forecast in Q4, as the finalization of the production kiosk shifted out several months. However, this business continues to be a major area of focus, given its growth potential, and we plan to begin the rollout in Q2. We continue to be pleased with the performance of the Rubi coffee kiosk we have in market. In fact, our latest generation unit is outperforming previous models. It's clearly a win with consumers and with our retail partners.

Before I turn the call over to Scott for his remarks, I'd like to share my views on automated retail, and why I believe Coinstar will continue to lead in this growing space. What I love about automated retail is that it makes sense for all of our audiences. Consumers love it because it makes their lives easier and they're in control. Retailers love it because it increases traffic and revenue and helps them stay competitive, and shareholders love it because it's an enduring business that has ongoing growth potential. Over the past several years, since I've had the privilege of leading the Coinstar team, we've created a very solid foundation for the future growth of the company. We've divested nonstrategic or underperforming businesses, refocused on what we know and do best, and have rededicated ourselves to finding a new and innovative ways to delight consumers. When I think about all that's been accomplished, what I'm most proud of is the team and growth opportunities here at Coinstar. As I prepare to step down, I can think of -- I can't think of anyone more capable of leading this team through the company's next growth phase than Scott Di Valerio. Scott and I have worked side by side over the last 3 years, and I'm confident that he will continue building on our automated retail strategy, and lead the company to many more accomplishments in the future. Scott?

J. Scott Di Valerio

Thanks, Paul. Let me touch on a few key highlights from our 2012 results before I discuss guidance. So look at 2012, we have solid growth at the top line, at 19% growth, and very solid growth on the bottom line, at over 30%. We drove free cash flow of $256 million and bought back just shy of $140 million of common stock. Very strong year overall, certainly firing on cylinders with our Redbox business, as well as our Coin business, and beginning to get our new business ventures in a position to begin the rollout of the coffee business in the second quarter of 2013.

Looking at Q4, revenue grew at 8.4% to $564 million, and our core EPS was $0.93, which does include an impact of NCR of about $0.13 per diluted share.

I want to spend a little bit of time on Redbox specifically. Redbox revenue grew 9.6% while we lapped the price increase this quarter. We also were working very hard about recovering our highest frequency consumers that we had lost during Q3, due to a lack of any -- lack of good product. By December, our highest frequency renters have come back, and we're very excited about the opportunity to continue to drive that part of the business as we move into 2013.

Kiosk rentals were up 6% year-over-year and we've had an impressive growth on our Blu-ray, bringing it up to 12.5% of revenue, nearly double the percentage we had in Q4 of 2011. The other key factors we focus throughout the year is on video games, and we've driven increased profitability in video games, and we're focusing on continuing to maximize our revenue and our profit generation on our video games, as we move into 2013.

We also, during Q4 took a look -- had to work through the U-recovery, based off of our results in Q3. And our same-store sales were down about 4% as we overlapped a price increase. We also had an impact of a very large installation, during the second half of the year, of kiosks, as we built out the NCR replacement of Blockbuster Express machines, in both Safeway and Publix. Those kiosks are ramping nicely and in line with what we had expected, but we did get a bit more cannibalization in the kiosks around them as they begin to ramp. But we're expecting to see that come back as we move through '13.

The great news is that physical rentals remained strong. As we talked about last quarter, according to DEG, as brick-and-mortar business continues to decline, the physical rental space is sitting at around $5.5 billion, and is expected to grow to $6 billion over the next couple of years. There isn't a company that's better positioned than Coinstar, and Redbox in particular, to take advantage of that space, and continue to leverage the great relationships we have with our consumers, our retail partners and our studios, to able to do that.

When we look at -- move into 2013, we take -- we're expecting rent per kiosk to be down during the first 6 months, and to come up to 2012 levels. For many of the -- as we hit the back half of the year, for many of the reasons, as Paul discussed. And revenue per kiosk should be in line in the first half of the year with our 2011 levels, and then move up to exceed our 2012 levels in the second half of the year.

I'd like to spend a minute on capital allocation. The board authorized an increase in our share buyback authorization of $250 million. We will continue to be opportunistic in buying our shares back, as evidenced by the $45 million we purchased, to date, this year. We also balance that with the investments we need to grow our overall core business, balancing out our short-, mid- and long-term growth objectives, as well as returning investments to our shareholders.

If you look at the Q1 guidance. For Q1, Redbox last year, was an amazing quarter. We had 2/3 of our new unique customers show up in Q1 2012. This year, we're expecting to see continued growth in our consumers, but one of the challenges we're facing as we move into the quarter is content, particularly in January. January, this year, we have 12 new release titles, where last year we had 23 new release titles in January alone. As we move into February and March, the titles come -- start to be coming in, so where we have about the same amount of titles in Q1 this year as we did last year. But, certainly, if they're coming in, in the later part of the quarter, which challenges the start-up like we had in Q1 of last year. Our profitability in the first quarter will be impacted by several factors. First, last year we had a special rate on interchange that we don't have this year. We have increased our investments that, really, will enhanced our second half of the year. These investments include our expansion into Canada, our work on digital, as well as our Tickets business. And so we expect those to turn in, as well as our work that we're doing around CRM, in order to continue to increase our overall personalization and drive end demand in our Redbox business. We also have an impact -- our NCR impact in the first quarter of about $6 million or $0.13 that we didn't have previously.

If we look at the full year 2013 guidance, we had strong growth, again, for the full year. At the midpoint, approximately 12%. Redbox continues to see strong opportunities to grow the business as we move through the year, as we put in the number of initiatives that we're doing, as well as continue that U-shape curve return. In Coin, a little pressure on margins, but it certainly is a great growth opportunity and synergies as we lever the Coin field with the Alula business, and the operational excellence there to be able to drive that business and continue to move it into a larger number of kiosks. We're going to stay focused, as Paul said, on Rubi, and getting production kiosks put together, and really beginning to rollout in the second quarter of 2011.

Our CapEx. As we bring down CapEx for Redbox, our CapEx, overall, for the company will be lower. And we're still driving very strong free cash flows, between $180 million and $200 million, which is inclusive of about $90 million to $105 million of cash taxes that we'll pay this year, that we have not had to pay in years past due to utilization of NOLs.

So, overall, strong guidance for 2013 as we build out through the year. Certainly, the first quarter begins a bit slow, but we're very confident in our ability to continue to drive the business, and very pleased with the overall results of the company.

Before I turn it over to Q&A, one, I want to really thank Paul for his great leadership as CEO of Coinstar. We've had the pleasure of working together for the last 3 years, and as Paul mentioned, work and set strategies stride by -- strategies side-by-side with the team. I think the accomplishments that Paul and the team had made have been unbelievable. And I am very pleased about being able to work with the team and work with a company that is, really, positioned to continue to grow in a way that we've done in the past, and continue to innovate and bring great new products to the marketplace, for our consumers, our retail partners and our overall investors. So very excited about Coinstar, I'm very excited about our path forward. And, really, want to thank Paul for his great leadership and we certainly will miss you. And with that, let's move to Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is from Darren Aftahi with Northland Securities.

Darren Aftahi - Northland Capital Markets, Research Division

I guess, congratulations is in order, on your retirement, Paul. Just 2 quick ones. Number one, I think in the prepared remarks you talked about 1Q investment in Redbox Instant, but can you give an annual year number? And then the second question, probably more for Scott, if your 2012 fully diluted EPS number was I think $4.83. If that included the dilutive impact from the NCR transaction of, what have you, $0.40 or maybe you can clarify what the number is for people on the call. It seems like the midpoint of your EPS guidance for 2013 implies kind of a similar level of modest growth. I'm just trying to understand if I'm reading that right, if there's a level of conservatism in the '13 guidance?

J. Scott Di Valerio

Darren. Yes, I'll take the -- we are making an investment of $14 million into the Redbox Instant joint venture, here in the first quarter. We don't typically talk about what future investments might be. However, we're very excited about moving into general availability and beginning to build subscribers, and more paying subscribers, onto the service. And as we talked about the way that business model works, since we're paying on a per subscriber basis for content, we're gross margin positive as we move out of each subscriber that comes on. And as they build up, certainly, it'll be able to cover below the product cost line and cover out those costs. But we'll continue to look to see how that plays out over the year. And again, it should begin to generate cash flow, and all that, as we move toward the back half of the year. So we won't be talking about how much we're going to invest into it this year. But, again, we're not expecting it to be large dollar amount as we move through the year. Your second question was around our EPS guidance and the impact of NCR in the Blockbuster Express kiosks. As we talked about -- we do have an impact in the first quarter of the Blockbuster Express kiosks, and we'll have an impact on in the second quarter as well. We're certainly in the process of removing those kiosks, and we'll have that impact until we get them out of the marketplace. But we are pleased about is the kiosks that we have replaced with Redbox kiosks are performing as we had expected them to. They're ramping up like we expected them to. And we expect, overall, that the NCR acquisition will be accretive in 2013. So, overall, we're pleased with where we're at and certainly we're focused on continuing to drive what we have done in the past, which is growing the top line and bottom line.

Operator

Next question is from Mike Olson with Piper Jaffray.

Michael J. Olson - Piper Jaffray Companies, Research Division

I think one question is related to the kind of rents per kiosk, and it sounds like you're expecting to be down in the first half. If you looked at it on a kind of organic basis, excluding the NCR kiosks. And maybe it's hard to do that. But if you did or were able to, how would that look as far as potential for kind of growth or decline in rents per kiosk? Would it still be down because of the title release schedules, choppy in Q1, or any thoughts on that?

Paul D. Davis

Yes, Mike, I'll answer the front part of the question. As you look at Q1, I mean, clearly, it's the -- on a same-store sales, it's lower than what we've experienced historically. But when you go back, Scott mentioned in his opening remarks, we had a record number of new installs in Q3. That shifted a lot of the rents from the kiosk, in the base, to new installs. So, that record number was -- we've never had that number of installed in a single quarter. But when you look at the balance of the year, and what gives us a lot of optimism, there's a lot of things to point to, that are happening, that will unfold over the course of the year. First off will be, Blu-ray, as a percentage of total, will continue to grow. We saw a significant jump in Q4. We ended at kind of the strongest position for the full year in December, and that's good on a number for us. Secondly, Scott also mentioned our focus on CRM implementation. And that will only continue to make this sharper and sharper. As we get better at marketing to consumers, consumer segments, I think we'll continue to really see those benefits really start to unfold in the second half of the year. And then the things that we've been working on, like Redbox Instant and Tickets, and expansion to Canada, will all continue to add to the revenue growth. The last thing worth mentioning would be we're making some changes to our kiosk. Internally, we call it the VMZ. So it's vertical merchandising zones, is what it's an acronym for. But, in essence, allows us to add 80 discs to the capacity of our kiosk. And we have some in the market right now, but we'll be able to continue to fill that out over the -- kind of coast-to-coast, balance of the year. And what's great about that is, before we used be pulling discs out while they were still renting, to thin it out just to make room for the new stuff. And in this instance, we'll be able to keep them in and hopefully get another turn or 2, which is really, really good. All the while, not causing us to increase our product cost. It's just all about better utilization of inventories. So that's a very long-winded answer to kind of give you some insight as to why we're positive about what you see in Q1 will continue to get better in the latter 3 quarters. Scott, was there anything else you wanted to add?

J. Scott Di Valerio

No. I think you -- that was good.

Michael J. Olson - Piper Jaffray Companies, Research Division

Okay. And then just -- I don't know if you can say. But, as far as Canada, what are you expected to rollout for Canada this year now? And on the coffee side, if there's any guidance you can give as far as number of kiosks by the end of the year.

Paul D. Davis

Yes, I'll start with Canada. The short answer is, we expect to install 1,500 to 2,000 kiosks in Canada, in 2013. But a bit more color on that. We like the Canadian market. It's the third best video rental market in the world, and it's all about having presence and brand recognition, and we're still in the early days there. The selling cycle has been a bit slower than what we first anticipated, but we are beginning to gain some real nice traction. We signed up Walmart Canada, Loblaw's which is Canada's largest grocery chain, and Shoppers Drug Mart, just to name a few, represent the 3 channels. And so we're getting great acceptance there. We think, just given the collapse of the brick-and-mortar players up there, that we're well positioned to carve out a nice market share. So that's the answer relative to Canada. On coffee, the full year, I think we detailed this.

J. Scott Di Valerio

It's 1000 to 2,300 for new ventures, Mike, for new ventures. And, certainly, Rubi or coffee is one that's going out nationally, is in the full rollout. So that would be a good chunk of those kiosks that are going out. We haven't given the exact number for Rubi, but certainly it'll be a big chunk of those.

Paul D. Davis

Yes. The other thing worth mentioning. Granted we had a bit slower rollout in Q4, and I mentioned it in my opening remarks. We hit some production issues before we were ready to go, kind of hit the production line and start punching out thousands, we had a bit of an issue around regulatory and performance standpoint, which we are fixing. We think we're in a really good spot now. We'll start to roll it out in Q2. The great thing is, is it's winning with the consumers. We're finding results that are absolutely hitting our expectations on the ones that we have in market. This new generation kiosk is actually outperforming our earlier generation kiosk. And the retailers are, hands up, ready to go. So we've had no issue in sell-in. So there are no issues with the consumer proposition nor the retail acceptance.

Operator

Next question is from Steven Frankel with Dougherty & Company.

Steven B. Frankel - Dougherty & Company LLC, Research Division

I want to go back to the rentals per kiosk. So if I look at it, we're talking about 5 consecutive quarters of down year-on-year, rentals per kiosk, by the time we get to midyear. What's your confidence that, that isn't also a sign that the consumer is finding other alternatives, whether it's watching episodic television or streaming content from Netflix, and they're finding movies on physical disc less desirable?

J. Scott Di Valerio

Stephen, I think we have a lot of confidence that the physical business is going to be here for a while and still continue to be a thriving business. We talk it as a $5.5 billion, $6 billion -- the physical rental business itself is about that range. In the home and entertainment space, the physical side is around $14 billion. That would be in the sell-in, plus the rental side. So we have a lot of confidence that there's still a lot of demand and a lot of opportunity to grow the business around that, in order to be able to grow, overall, Redbox. Now, clearly, the work that we're doing in continuing to refine and enhance our CRM systems, in order to be able to allow consumers to know more of what's in the kiosk -- and more personalized, what Paul talked about, on the VMZ. Where we'll be able to have more discs in the kiosk for a longer period of time, allows us to drive both top line revenue. And when you get to the kiosk, your first, second or third choice is there more often. And we were able to do that without having to increase product cost, which is something that I think is really important. So we do have good confidence that we'll be able to continue to capture that market and grow that market, and we will stay focused on doing that. As well as optimizing our kiosk network in order to make sure that the kiosks that are in market, that are underperforming today -- and the group of those that are underperforming our standards are still profitable and generating cash flow, positive cash flow. But we're really focusing the teams -- as we've slowed down the kiosk ramp of 500 to 1,000. We're focusing the teams on optimizing the network by moving kiosks that are underperforming, for our standards, and moving them into higher purpose locations. And that'll be a key focus this year. That'll allow us not only to drive revenue per kiosk up, but allow us to drive rents back up as well. So we feel good about that, and clearly, we're doing some other things with the Redbox business to keep it in the growth mode. Our partnership with Verizon on Redbox Instant, as well as the tests that we're doing in tickets. So, overall, we feel very confident with the overall growth.

Steven B. Frankel - Dougherty & Company LLC, Research Division

And on the slowdown in new installs in the U.S. Is that a strategic decision to kind of pause before you might accelerate again or does that say that you've hit all the best locations and we should expect, going forward in future years, a declining install rate?

J. Scott Di Valerio

I think that what you will see, what you ought to expect is the -- this kind of install rate that we're at is probably where we're at. We're going to be very strategic about where we put additional kiosks and we're going to be really focused about getting the 500 to 1,000 in this year in the right locations, and then getting the underperforming kiosks and getting them into higher performing places. It'll be much more about optimizing the network versus further expansion at this point. Clearly, as we take a look over the next couple of years, if there's opportunities or geographies that we need to go into, we will do that. But we're going to stay focused on optimizing the network and really driving the overall business through the items that we talked about previously.

Operator

Our next question is from Eric Wold with B. Riley.

Eric Wold - B. Riley & Co., LLC, Research Division

First question, on the accounting for the Redbox Instant joint venture. I know it's in the non-core segment now. I guess, at what point does it ever become core? Does that change when it actually publicly launches later this quarter? And then, two, do the top line -- the top line revenue that you get to pull out of the JV, are those considered non-core or are any of those, right now, in your guidance for the year?

J. Scott Di Valerio

Eric, the JV currently is accounted as non-core because it's in the startup phase. It'll likely remain in non-core through 2013, as it builds up, and we'll make a decision around that for 2014. So it'll be in the non-core results. The equity portion of that'll be in the non-core result through '13, as it stands right now. As it relates to revenue, we do get paid revenues for the kiosk nights that is part of the subscription-base. And there is in our revenue projections, there are -- that particular payment, because the subscribers there -- and that's when the subscribers they come on and that had the package, the $8 or the $9 package, and what the transfer rate is we do have that in the revenue for this year.

Eric Wold - B. Riley & Co., LLC, Research Division

Okay. And secondly, lastly, any thoughts on the ecoATM this morning announcing the $40 million mezz financing. Is that something that was offered that Coinstar passed on, and your reason why you would not want to maybe maintain the same level equity stake that you had, or is it an issue not wanting to go above a 20% threshold?

J. Scott Di Valerio

We're very pleased with where ecoATM is. And certainly, with their financing, we're well aware of that. It's a mezzanine financing, with very little equity side and we're very pleased with where they're at and with our relationship. We don't typically comment on secret negotiations.

Operator

[Operator Instructions] Our next question is from Andy Hargreaves with Pacific Crest Securities.

Andy Hargreaves - Pacific Crest Securities, Inc., Research Division

I'm just wondering if you could comment on Redbox gross margin a little bit. And specifically, in the quarter if you can give us any sense for what the negative -- what the drag was from the Blockbuster kiosks? And then, just going forward, there's a lot of moving parts there now, with Blu-ray, and games, and Time Warner and all this stuff. Can you give us any sense for how you're expecting that to progress through the year?

J. Scott Di Valerio

When you're asking about the margins, you're talking about the margins in Q1 or are you talking about the margin in Q4 of 2012?

Andy Hargreaves - Pacific Crest Securities, Inc., Research Division

Yes. Asking on the margin in Q4, just specifically what the Blockbuster impact was. And then looking forward, just more generally, how you guys are thinking that might progress.

J. Scott Di Valerio

Right. Yes, I mean the Blockbuster Express, as we talked about, operate at a loss and their margins are lower than ours, and so they did have a slight impact on -- had an impact on our margins in Q4. But we also, in Q4, made a decision to bring our high-frequency consumers back, to increase what our product costs in there, and drive additional copy depth in there. So the combination of those 2 things that really impacted margin as we went through the fourth quarter. As you look into the end of Q1 and for 2013, we expect to get our margins moving back into a more normal pace for us. But certainly not -- if you're trying to compare it to Q3, where we really optimized for margin because we didn't have any great content, it's going to get into more of our normal pace as we move through the year. But it'll take us a couple of quarters to get there as we are moving the deeper content out and through the kiosk, and as we're really trying to manage that, that U-shape curve, back into our overall consumer base. So we feel good about where we're at with our margins, and we'll continue to manage those product costs as we move through the year. All in all, we should see strengthening margins as we move throughout the year.

Andy Hargreaves - Pacific Crest Securities, Inc., Research Division

And then just a clarification, I apologize if I missed this, but does the 500,000 U.S. kiosk install number include NCR conversions that are left?

J. Scott Di Valerio

Yes it does.

Operator

We have no further questions at this time. I would like to turn it back to Paul Davis, Coinstar's CEO, for closing remarks.

Paul D. Davis

Okay. Thank you, everyone. I've enjoyed our time together for many of you that I worked with over the past 5 years. Once again, I just want to reiterate my confidence in the business, the growth opportunities and the strength of this team. I have a ton of confidence in Scott and his capabilities, and the team that he's built around him. So with that, I look forward to seeing many of you at our Analyst Day coming up in a few weeks. And otherwise, have a terrific day. Thank you.

Operator

Thank you, ladies and gentlemen, this concludes today's conference. Thank you, all, for participating. You may now disconnect.

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