Outerwall Inc (OUTR) Management Discusses Q2 2013 Results - Earnings Call Transcript

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 |  About: Outerwall Inc. (OUTR)
by: SA Transcripts

Outerwall Inc (NASDAQ:OUTR)

Q2 2013 Earnings Call

July 25, 2013 5:00 pm ET

Executives

Rosemary Moothart - Director of Investor Relations

J. Scott Di Valerio - Chief Executive Officer and Director

Galen C. Smith - Chief Financial Officer

Analysts

Michael J. Olson - Piper Jaffray Companies, Research Division

Eric C. Wold - B. Riley Caris, Research Division

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

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division

Darren Aftahi - Northland Capital Markets, Research Division

Operator

Welcome to the Outerwall Inc. Quarter 2 Earnings Conference Call. My name is Adrienne, and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded. I'll now turn the call over to Rosemary Moothart, Director of Investor Relations. Rosemary Moothart, you may begin.

Rosemary Moothart

Thanks, Adrienne. Good afternoon, and welcome to Outerwall's 2013 second quarter earnings call. The call today will be hosted by our CEO, Scott Di Valerio; and CFO, Galen Smith. Scott and Galen will make introductory remarks and the majority of the time will be allotted to Q&A.

In terms of Q2 documents, the earnings release and prepared remarks, as well as supplementary slides are posted on our IR site, are also contained in the 8-K that we posted just after the market closed.

During this call, Scott and Galen 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 is posted on the IR site. 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 Scott.

J. Scott Di Valerio

Thanks, Rosemary. Well, we've been busy the first half of 2013, so I'm going to spend a few minutes to highlight some key items in our lines of business that position the company for continued growth and improve our results over the remainder of 2013 and throughout 2014.

First, let's discuss Redbox. We continue to focus on reigniting our high-frequency renter base and increasing understanding of our entire customer base. We made solid progress on both fronts. We've held our high-frequency renter base at 25% this quarter, in line with our expectations. Traditionally, you would see a dropoff of demand from the first quarter to the second quarter. Our CRM system has launched to drive consumer behavior using adaptive offers in Friday e-mails and personalized title recommendations based on rental of history, and our customized SMS promotions sent to customers on the day they are most likely to respond with an incremental rent.

We expanded our customer base with unique credit cards reaching 41 million, weekly customer e-mails growing 28% year-over-year to 28.6 million and SMS subscribers surpassing 5 million.

We also increased Blu-ray revenue to 15.6% in the second quarter and we'll continue to focus on this product for both customer satisfaction and revenue generation.

Our top retailers and partners continue to show confidence in the Redbox model and the physical DVD rental market. We signed a 5-year agreement with Walgreens, and our studio relationships have never been better with Universal extending in Q1 and Fox agreement continuing on 'til April 2015.

Although our pilot in the tickets business did not meet expectations, we learned consumers see Redbox as the destination for entertainment in various forms. We expect to explore different business models to participate in this space.

Turning to Coinstar. We installed 350 TD Canada Trust-branded kiosks, which are performing well with larger-than-average transaction sizes. We added the PayPal option to over 3,400 kiosks and we're moving ahead with marketing programs to increase consumer awareness of this product in conjunction with PayPal. And we expanded the number of kiosks and our gift card exchange business pilot seeing strong results today.

Looking at new ventures, which is a key to our growth strategy, we've acquired the remaining outstanding shares of ecoATM, significantly enhancing our portfolio with a compelling business in the electronics sector. We've made a number of key structural changes to refocus the continuing ventures on speed to market and profitability.

Orango was not meeting the high bar we set for our new venture businesses, so we've discontinued that business and are looking to monetize the assets. And finally, as you know, Rubi is a key business for us. However, the kiosk is not performing to our high standards, so we're reducing the 2013 installs and fast-tracking the design and production of the Rubi kiosk, setting us up for a success in 2014.

And at the corporate level, we executed on a number of key financial initiatives, including completing our high-yield debt offering, repurchasing a significant amount of our convertible notes and repurchasing shares under our buyback program. Galen will discuss these in more detail in a minute.

Finally, we rebranded the company, which reflects a number of innovative, automated retail businesses reframed to consumers and our retail partners under our 2 great core brands, Redbox and Coinstar, and our up and coming brands as well.

We've accomplished much in the first half of 2013 and are positioned to drive results in the second half. As we integrate ecoATM, we expect to see a lift in revenue immediately. The CRM process that Redbox is rolling out this quarter should drive incremental rents through more targeted messaging and promotions while allowing us to grow and retain our customer base. We've been working closely at Redbox Instant by Verizon. And with the device lift and [ph] firmly established and growing, we intend to leverage the marketing asset and customer bases of both parent companies to drive a solid subscriber base.

Coinstar continues to execute and be focused on activating PayPal and Blackhawk programs, while extending the footprint of the gift card exchange business. We are, and will continue to stay focused on relentless execution in driving both growth and return for our partners and shareholders.

With that, let me turn it over to Galen.

Galen C. Smith

Thanks, Scott. This quarter, we generated approximately $554 million in consolidated revenues. This was slightly lower than expected due to a lower average check at Redbox from a higher level of single night rentals and additional promotions, which accounted for $7.6 million of revenue and fewer rents towards the end of April were then expected. We saw strong rental performance in June, recording our third highest rental month of all time.

We generated $124.5 million in core adjusted EBITDA and $1.91 of core diluted earnings per share, which included $21.7 million pretax benefit from an update to our method for amortizing content cost in the Redbox business and a $0.62 tax benefit from the disposition of NCR kiosk to the sale of a wholly owned subsidiary, which was offset by approximately $0.09 of impact from the early retirement of convertible notes and the sale of those kiosks relative to book value.

Our free cash flow was negative $5.9 million for the quarter and was impacted by timing items, including changes in working capital, specifically AP, as well as an increase in cash taxes paid during the quarter. We still expect to generate over $200 million of free cash flow during the remainder of the year.

A few key financial takeaways in addition to the tax benefit include Redbox rentals grew 3.7% year-over-year, after flat rental growth in Q1 2013. Growth was driven by Blu-ray rentals up 74.3% and video game rentals up 40.4%.

Second, we retired a total of $86.6 million in face value of our September 2014 convertible notes including repurchases of $48.4 million, which leaves us with $53.7 million in face value outstanding. We also repurchased $24.9 million of our common stock, bringing us to $71.4 million year-to-date towards our target of $100 million. We provided context for our guidance in our prepared remarks. But for Q3, including the impact of ecoATM, we expect consolidated revenue between $604 million and $630 million, is up 12% to 17%; core adjusted EBITDA between $129 million and $139 million, up 10% to 18%; and quarterly diluted EPS between $1.36 and $1.51, up 8% to 20%.

Core diluted EPS in Q3 includes the impact of $0.07 per diluted share related to kiosk depreciation and a preliminary estimate of the purchase price accounting impact for ecoATM. For the full year, we brought down the top and low end of the revenue range to reflect the slower and fewer kiosk install plan in Canada, the pause we are taking in tickets and the reduced install plan on Rubi, which in total accounts for $62 million. This is partially offset by the inclusion of ecoATM within our new venture segment, which is adding $27 million to $30 million for the remainder of the year. Core adjusted EBITDA is expected to improve based on the change in Q2 for content cost with the low end of the range increasing by $24 million and the top end by $20 million.

We raised the low end, top end of quarterly diluted EPS guidance by $0.71 to reflect the tax and the content cost benefit, which is partially offset by the loss and retirement of convertible notes, the sales in NCR kiosks based on the updated purchase price accounting in addition to $0.20 related to kiosk depreciation and the preliminary estimate of the purchase price accounting impact for ecoATM.

Finally, we increased our free cash flow guidance to $211 million to $227 million as we lowered our planned capital expenditures for the year from reduced kiosk and infrastructure spend by $28 million to $30 million.

Despite slightly lower revenue than expected, we are pleased with our execution and financial performance this quarter. The company continues to be in a strong financial position and we'll continue to invest in the business in a disciplined way while creating value and returning capital to shareholders.

With that, we'll turn it over to Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] We have Mike Olson from Piper Jaffray on line with a question.

Michael J. Olson - Piper Jaffray Companies, Research Division

The Redbox specific revenue looks like the fiscal year guidance came down by, I think, around $62.5 million at the midpoint. I have not read the transcript yet, but can you explain what portion of that is Canada, what portion of that is tickets and what portion may be just slower kind of organic Redbox revenue than expected?

Galen C. Smith

Yes, I'll take that, Mike. In Canada, we brought down revenue expectations for the year by $41 million, based on the slower ramp of rolling those kiosks out as well as reducing the total number. We also reduced our revenue expectations for $14 million related to tickets. And then we did have, as I mentioned in my remarks, a little bit softer Q2. We saw softer average check, which you can equate to $6 -- $7.6 million of lower revenue, as well as we had fewer rentals at the end of April than expected. So those are the components that add to that $62 million.

Michael J. Olson - Piper Jaffray Companies, Research Division

Okay. So not to put words in your mouth, but if you kind of factor all that in, are you implying that the Redbox revenue guidance for the back half of the year is unchanged from where it previously was?

Galen C. Smith

So for revenue for the rest of the year, we adjusted average check in Q3 to be in line with what we've seen on the single night rentals and promotional activity. We've got a better view now into content and what's there, and we think we can continue to drive that. So if you don't feel comfortable with the numbers that we have and the various activities between CRM, VMZ to really drive those numbers in the back half.

Michael J. Olson - Piper Jaffray Companies, Research Division

Okay, I got it. So not to beat a dead horse, but excluding Canada and tickets and what the miss in Q2 was, you're effectively not changing kind of your expectations for organic Redbox revenue. Is that fair to say?

Galen C. Smith

That's fair. I mean, we feel very strong about the core. We continue to think there is great opportunity for us to continue to grow. We had 50% market share this past quarter. We had our third best month ever in June. So there's a lot of continued momentum that the team -- that Redbox has continued to monetize. And we got better visibility into the second half in terms of content and when that's going to hit. And we feel comfortable with our rentals and just the adjustment for average check that we've baked in.

Michael J. Olson - Piper Jaffray Companies, Research Division

Okay. And then what's going on with the VMZ initiative? How many have been done so far? Are you still expecting something like 39,000 by the end of this year?

Galen C. Smith

Yes, we're on track. We feel we've put about 90% of our base would get the VMZ, Mike. And we have about 20,000 of those kiosks that have been retrofitted by the end of June. So we're on track to have that project completed by Q4.

Operator

We have Eric Wold from B. Riley on line with a question.

Eric C. Wold - B. Riley Caris, Research Division

A couple questions. Just a follow up on the last one on VMZ, can you get -- with 20,000 in there, can you give us a sense of what you're seeing with the results when you get that -- those installed in terms of incremental turns from the titles that kept them longer or revenue lift per kiosk?

J. Scott Di Valerio

It's still early days, Eric. We've just got 20,000 in and some of those obviously are getting put in all the way through the second quarter. But I will say is what we're seeing in results is in line with what we had expected coming out of the gate. Again, it's early days, but we are pleased with how that -- how the VMZ is producing and what they're doing, and again, we'll continue to track that as we get a couple quarters underneath of our belt with this kind of base and we can be a bit more definitive. But we track it on a weekly basis and a monthly basis and it is performing the way that we had expected it to.

Eric C. Wold - B. Riley Caris, Research Division

Is the installation of the VMZ disruptive enough such that your retailers are going to want you to get those in there prior to the holiday season in Q4?

J. Scott Di Valerio

Yes, we're going to -- we always have a blackout period from when people want us in there messing around in the front end of the store. So we will get it done within that blackout period. And like I said, we're on track to get that 90% of our base installed, which is the target base that we wanted in.

Eric C. Wold - B. Riley Caris, Research Division

Okay, and then just 2 quick questions on ecoATM. One, you gave kind of the look at where you see revenues and cash flow kind of panning out. Where do you see EBITDA margins for ecoATM kiosk kind of in the long run? And then give us a sense of what you see when ecoATM kiosks is installed in terms of average transaction size and kind of usage trends in terms of what's going into the kiosk. I mean, do people tend to dump out their drawers when it's initially installed or is it any kind of a lag? Or is it kind of just ramp up slowly like a coin may have?

J. Scott Di Valerio

Well, it ramps relatively quickly. It's ramped in 6 to 8 months. And so when you certainly see people have the initial drawer that they need to clear out and a lot of those aren't necessarily smartphones or high-value phones. But then you have 175 million phones that are getting purchased each year and 20% or so of those are getting turned in. And even if you think back a few years back, and you add that $175 million a year for the past 2 or 3 years, a big majority of those are smartphones that are probably sitting in the drawers. So there's a lot of opportunity both picking up stuff that hasn't got converted as well as new products as people buy during the year. And again, you operate cash flows in 0 to 3 months -- the kiosks do and the CapEx pays back in 14 to 22 months. So it's a very good model as we've seen it come into play. And I think -- I don't know if anyone's had a chance to read through and I know Galen gave some facts around that but $100,000 to $120,000 a year in annual revenue. So we'll talk more as the business continues to scale and all that, provide more insight on the EBITDA margins and all that. But as you can tell, it's a very nice business.

Operator

We have Andy Hargreaves from Pacific Crest on line with a question.

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

Just on the change in accounting, can you explain a little bit more what the change was and what prompted it?

Galen C. Smith

Sure. So one more -- when you're looking at your accounting policy, you always want to make sure that it's in line with the business. And so we looked at was how our product cost in line with our revenue. What we saw with that, they were a bit out of alignment. So what this does is it actually brings the 2 back together and makes sure that you follow that title curve in terms of when you recognize the revenue and when you recognize the expense. So really in terms of the timing, it was just -- we've been working on this for some time. We got it done this quarter. We didn't know when the timing would be and so it wasn't included. But we wanted to clearly call it out as a specific item that hit this quarter just so that, again, there was great clarity around that change. And again, we think this is a improvement in terms of our estimation for when that product cost is recognized.

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

And just so I understand, so you guys used to have kind of an accelerated amortization schedule. Is it still accelerated or it just doesn't go as fast?

Galen C. Smith

It's definitely still accelerated. I mean, we'll recognize most of the cost in the first few weeks. What we found is it was a bit too steep in terms of that curve, so we want to make sure that it's in line with what we're seeing in revenue.

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

Okay. And then just in terms of Redbox and kind of the kiosks themselves, can you give us an update, and I apologize if I just missed it, but what the -- you guys are expecting for net installs both for Canada and the U.S. this year now?

Galen C. Smith

Yes. So we took the U.S. down to 0 to 500. As you'll see, when you have a chance to look at the remarks, we had net negative installs this quarter. That's really determined by when we're taking kiosks out from an optimization perspective and then when we're redeploying those kiosks. For Canada, we brought them down from 1,000 to 2,000 to 500 to 1,000. We have signed some great retailers. We just signed Sobeys yesterday. So continue to expand the footprint. It's just taking a bit longer for us to get those kiosks installed in the market. So we brought those both down, which is reducing the expected CapEx then in the Redbox business.

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

Okay. And then just on Rubi, can you talk a little bit more about what the plan is going forward and what kind of happened versus your expectations?

J. Scott Di Valerio

Yes. We have a lot of confidence in the Rubi business. The consumers liked the product. The retail partners liked the product. What we haven't -- what I'm not pleased with, frankly, with the kiosk is it's not producing a consistent cup of coffee at the levels that we would want to, and that's a combination of uptime on the kiosk as well as actual delivery of the coffee. Now the team's been working really hard over the past couple of months to put software adjustments in and patches in as well as hardware fixes on the current beta machines in order to stabilize that kiosk, so we can continue to expand out and test and work the product while delivering a good customer experience. As we've taken a look at how the kiosk is set up and designed, we felt like moving to a more rapid design and production model that has a little less complexity in it, would allow us to get into 2000 and move it into 2014 to get a production kiosk that would allow us to get to the thousands of kiosks that we think this business really can bring. So we're working that very hard, the team is working very hard. They've made a lot of good progress on stabilizing the current data machine, as well as in parallel pathing, getting a machine that can get designed and produced in a much more rapid fashion and in a much more steady state fashion.

Operator

[Operator Instructions] We have Steve Dyer from Craig-Hallum in line with the question.

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division

Most of mine have been asked and answered. You deactivated or removed a pretty decent number of Redbox kiosks in the quarter. Has that sort of been the plan all along? Or are you seeing some locations start to underperform maybe quicker than you had anticipated?

J. Scott Di Valerio

I think we've been very focused to see our upside [ph] optimized in the network. And some of this is a bit of timing in terms of when you're taking them out and when you're putting that back in. We always want to make sure that we've got the right kiosk in, in terms of making sure that we're generating the right level of return to the kiosk. And if they're not, redeploying them in more attractive locations, but I wouldn't read into it that we're seeing some kind of shift in terms of how they're producing.

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division

Okay. And then as it relates to NCR, now that some time has passed and the dust has kind of settled, you've deactivated some kiosks, moved some, sold some, what's sort of your postmortem on that? I mean, has that delivered sort of what you're anticipating? Or in hindsight, was it -- is it more of a defensive move? Or how do you think about that kind of a year after the fact?

J. Scott Di Valerio

So the way that I look at it is I think it actually performed a lot better than we expected. As we announced this quarter, we've sold kiosks to a number of parties, some of which closed in the quarter, some which will close to the end of the year, and that was about $17 million, $18 million of benefit. We also were able to monetize through the way that we restructured it this quarter -- about another $17.8 million tax benefit this quarter. So if you think about that effectively bringing down the purchase price by $35 million, $40 million, plus we've still got several thousand kiosks that we're looking to sell, it makes it for a very attractive return. And then you look at what we were able to do in terms of the clients that we picked up, so we take a Safeway or Publix. Those are incredible retail partners and we love working with them for the Redbox business. Those are -- returning a greater return than what our amortization is on the intangibles, and so it's accretive now this quarter. So all in all, it's been a great transaction, and we're really pleased with it.

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division

Great. Just a couple more, on the -- just another question on the amortization. I recall it seems like 1.5 years or 2 years ago, you brought the amortization schedule the other way from longer to shorter. Is this sort of like a goodwill impairment type of a thing where it's going to be kind of once a year, you kind of match up the trends and you may see kind of a one-time adjustment here and there? Or is this sort of probably the end of it?

Galen C. Smith

No, this is really it. So again, this is the first time that we've taken a systematic look. We've been doing at the same way for the last 5 to 10 years in the Redbox business. What changes from time to time is the length of the amortization schedule based on your contracts. So if you have one that's a 26-week contract and then it goes to 52 weeks, then it may stretch out as you -- bring your inventory through that curve. But there hasn't been any change to these curves until this quarter.

J. Scott Di Valerio

When going from contracts to studios -- and going into contracts with studios, I think we amortized over a little longer period when we didn't have a contract because we didn't have a destruction time period on that, if I remember correctly.

Steven L. Dyer - Craig-Hallum Capital Group LLC, Research Division

Okay, that's helpful. And then last question, as it relates to the ecoATM, and it's probably a while before we have to worry about this, but do you have any sense for what kind of the demand for phones, recycled phones is? Obviously, 175 new ones are sold a year. I mean, is there any sense for the appetite for how many of those that sort of the secondary market will bear?

J. Scott Di Valerio

Yes, the secondary market, we did a lot of work around that. The secondary market is very strong for phones that -- secondhand phones, particularly when you look international and developing countries that need smartphones and don't have the same subsidies that we do here in the U.S. around that, as well as over into Europe, there's great opportunities there. Certainly, here in the U.S., as the insurance companies and the like, love to get these phones in order to either to be able to deal on a warranty basis, or also kind of overall merchant -- so there's a great market for those secondhand phones. And as the prepaid market continues to get larger, I think that will certainly play into that market. So we feel good about the market and good about the opportunities to continue to grow out the ecoATM business. On top of that, the newer ecoATM machines will take, will also accept tablets and MP3 players, which further expands out the ability to take back electronics and get them to be put back into the marketplace, so we feel very good about the overall business.

Operator

And we have Darren Aftahi for Northland Securities in line with a question.

Darren Aftahi - Northland Capital Markets, Research Division

Just a couple. First, maybe asked a different way, is -- are the VMZs you're seeing and the ones you've installed having a positive impact on a percentage basis in terms of turns in your kiosks?

J. Scott Di Valerio

Yes. Yes, they are. And again, they are doing that in relationship to what we had expected them to do. And again, early days, but they are positive.

Darren Aftahi - Northland Capital Markets, Research Division

And then on eco, so the 110,000 to 120,000, can you kind of help us understand of the 650 that have been installed to date, which of those can kind of accept tablets and does that kind of ASP range, kind of take that tablets into account, because I would assume the revenue of the consumer would be higher than the traditional feature of smartphones.

J. Scott Di Valerio

So the ability to take tablets and MP3 players is relatively new, so it's not on a wide range of the kiosks that have been installed. But it is obviously, the capability is going on the ones that are being done now. So there may be upside, and you're absolutely right. I mean, as you see things like mix shift to higher value phones or tablets, there's an opportunity for that to grow over time. I think we feel very comfortable with these numbers to be able to drive as we continue to scale the business.

Darren Aftahi - Northland Capital Markets, Research Division

And then, 2 more things related to that. One, do you see the ecoATM as a global opportunity? And then two, what sort of risk do you see to potential carriers doing trade-in program? Or is that an avenue where you think you can partner with constituencies like that?

J. Scott Di Valerio

Well, we think -- we certainly think there's international opportunities with ecoATM at the right time. And certainly, we'll be looking to scale the business here in the U.S. while also taking a look and seeing what the right time and opportunity to bring it across internationally. Now there's a lot of talk about 175 million phones getting purchased each year, 20% of those are actually getting turned in. We think there's -- the market's very disaggregated right now. Clearly, some of the carriers are operating some return programs and that, though it's not something that they -- is in core and something that they probably want to be doing a lot of. What it does do is increase the awareness that you can monetize your phone. As you begin to scale out ecoATM, we think that also help us in making awareness of ecoATM the ability to monetize your phone. So we certainly will continue to work. We built that into what we're thinking about in the business. We've built it into the strategy that we'll be doing with ecoATM. And again, believe that it's all a good part of what we think the business will do and how we'll be able to monetize it.

Darren Aftahi - Northland Capital Markets, Research Division

And then in terms of carriers, what are your general views as vis-à-vis ecoATM? Is it friend or foe?

J. Scott Di Valerio

Well, I think, again, I think there's lots of opportunities to partner up and do different things with the carriers. And it's early days in this space. It's a very disaggregated space. And so there's going to be opportunities across the stack right now. We're focusing on obviously the Mall channel where the majority of the ecoATM machines are and then looking at some of our more traditional channels in mass and grocery as to the -- if that -- moving them in there, we'll continue to broaden out and look -- see where there are folks that might make sense though to work with in order to expand out the footprint.

Darren Aftahi - Northland Capital Markets, Research Division

And then one last for Galen. Looks like your free cash flow guidance went up $24 million at the midpoint of 12%. You're obviously reducing coffee and Canadian CapEx. I mean, is that money that's earmarked for those kiosks going forward? Or is that something that you potentially -- management and the board could have the disposition to increase buybacks or debt repurchase?

Galen C. Smith

We take a very balanced approach to how we allocate capital. And so we obviously look at ways to grow the business. That's going to be our first preference. And so, as we take Canada, we still expect to get the 2,500 installs in total. It's just going to be pushed out into next year. So that may be one of timing. Same with Rubi, we want to make sure that we're installing machines that can produce that great cup of coffee, that Scott talked about before. So those are probably ones of timing. We're always looking for ways to generate obviously, as much cash flow as possible and then put it to good use. And so it could be invested in the business, it could be an acquisition like eco, which we're incredibly excited about or it could be returning capital to shareholders like we did this quarter both through share repurchases, as well as rebuying the convert as well.

Operator

[Operator Instructions] And we have no further questions at this time.

J. Scott Di Valerio

Great. Well, thank you for joining us on the call today. Outerwall delivers breakthrough solutions to drive our growth and profitability. Outerwall is in the best position to deliver automated retail solutions that bring value, convenience and simplicity to our consumers as we've done with our 2 core brands, Redbox and Coinstar. Our acquisition of the remaining shares of ecoATM sets up well to address the large consumer need to recycle smartphones, tablets and MP3 players, and we will drive speed to market and profitability in our organic venture businesses. As I said in my opening remarks, we will remain focused on relentless execution, growth and return for our shareholders and partners. We look forward to updating you next quarter.

Operator

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

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