Outerwall Needs To Shut Down EcoATM And Needs Balanced Capital Allocation
Adib Motiwala • 39 Comments
Adib Motiwala • 39 Comments
Outerwall: EcoATM Segment Faces Severe Headwinds
John Zhang • 10 Comments
John Zhang • 10 Comments
Mon, Jul. 25, 9:17 AM
Fri, Jun. 3, 5:36 PM
Thu, Apr. 28, 5:22 PM
- Outerwall (OUTR -5%) came out of a halt jumping 8.5% after hours, following an easy beat in Q1 earnings and a substantial hike in full-year guidance.
- For 2016, the company now expects EPS of $5.35-$6.55 (up from $5.00-$6.30, and vs. $5.45 consensus). And it forecasts EBITDA from continuing operations of $340M-$380M (vs. expected $349M).
- Revenues of $536M fell nearly 12% but beat expectations by more than 5%. And net income rose 8% to $38.5M.
- Sales by segment: Redbox, $421.49M (down 18.9%); Coinstar, $72.38M (up 4.4%); ecoATM, $42.1M (up 113.1%).
- Of Redbox's $98M revenue decline, $87.8M was in same-store sales and a $10.2M drop came from removed/relocated kiosks. The unit generated 137.7M rentals, down from a year-ago 173M rentals, amid an 18% decline in total disc rentals at same-store kiosks.
- Net revenue per rental was $3.06, up from a year-ago $3.00.
- Regarding its recent efforts to explore strategic and financial alternatives, that "is well under way. The Board is involved in a comprehensive process and is committed to acting in the best interest of all shareholders."
- Conference call to come at 5:30 p.m. ET.
- Press Release
Tue, Apr. 12, 10:26 AM
- Kiosk company Outerwall (NASDAQ:OUTR) is up 1.7% after a deal with activists at Engaged Capital has it adding three directors to its board.
- Jeffrey Brown, chief of Brown Equity Partners, is joining the board immediately. Outerwall will also add two new independent directors nominated by Engaged Capital to the board likely before Aug. 1.
- Those moves will bring the board to a maximum of nine directors. Engaged Capital -- Outerwall's second-largest shareholder, beneficially owning about 14.6% -- agrees to vote its shares in favor of the company's nominees and agrees to standstill provisions.
- The moves bring some peace to what was sharp criticism from Engaged over governance at the company and a call for a bigger dividend.
- Now read Outerwall Still Has Room To Run »
Thu, Mar. 24, 2:17 PM
- Citing multiple sources and screenshot/logo leaks, Variety reports Outerwall (OUTR +5.3%) plans to launch a streaming service called Redbox Digital. One source states a closed beta test may be available soon.
- Whereas the shuttered Redbox Instant streaming JV with Verizon aimed to fully challenge Netflix (which had major edges in content selection, hardware support, and consumer awareness), Redbox Digital is said to be a video-on-demand store similar to iTunes or Google Play, through which consumers will be able to rent or buy movies and TV shows. The service will reportedly integrate with Redbox's loyalty program and mobile apps.
- The report comes ten days after Outerwall said it will explore strategic alternatives, and less than two months after activist Engaged Capital disclosed a position. With both subscription and on-demand streaming services taking a toll, Outerwall's Redbox revenue fell 17% Y/Y in Q4 to $407M, with movie rentals declining 24% to 135.8M.
Tue, Mar. 15, 12:13 PM
- Outerwall (NASDAQ:OUTR) is up 8.2% today, echoing an after-hours gain yesterday when the company said it was exploring strategic alternatives and doubling its dividend.
- The stock's gone positive for 2016, hitting its highest point since Dec. 30. And Roth Capital Partners has upgraded shares to Neutral from Sell. Its price target is $35 -- 1.8% above yesterday's close and baked into the gain today.
- “We believe logical alternatives could include shutdown of EcoATM, sale of Coin, or outright sale of the entire company, among others,” says Roth's Darren Aftahi.
- He's not necessarily a fan of the dividend hike, though; free cash flow supports it, but he's rather see further deleveraging. The company carries total debt of $885.6M, with $222.6M of cash on the balance sheet.
Mon, Mar. 14, 5:43 PM
Mon, Mar. 14, 4:12 PM
- Outerwall (NASDAQ:OUTR) says it will explore strategic and financial alternatives which may lead to an increase in shareholder value. Morgan Stanley is being brought in to assist in the process.
- The company doesn't plan to offer any more insight on its plan until the process plays out.
- OUTR +9.04% AH to $37.50.
Mon, Mar. 14, 4:11 PM
- Outerwall (NASDAQ:OUTR) has leapt in postmarket trading, +9%, after the kiosk company says it will explore strategic alternatives and is boosting its quarterly dividend to $0.60, from $0.30.
- That moves the company's forward yield to 6.98%, based on today's closing price of $34.39.
- It's hired Morgan Stanley to serve as financial adviser, and Perkins Cole for legal.
- The company will pay that new dividend June 21, to shareholders of record June 7.
Wed, Mar. 2, 9:42 AM
- Outerwall (NASDAQ:OUTR) is higher in early trading on word that ITG Investment Research is out with a positive take. Analyst Steven Weinstein covers Outerwall for the research firm.
- On Seeking Alpha, Money Investor tips that a massive short covering rally could be lurking.
- Short interest report on OUTR
- OUTR +6.1% to $33.23.
Fri, Feb. 26, 12:40 PM
- Battleground stock Outerwall (NASDAQ:OUTR) is up 7% and has rounded off a 26% gain since hitting a 52-week low earlier this month.
- Wall Street has been relatively quiet on Outerwall recently, with investment firms mainly just backing their entrenched positions. SA contributors have posted some fresh insight that factors in the activist investor wildcard.
- Related: Outerwall, Buybacks, And Activists (Feb. 23 2016)
- Related: An Open Letter To Engaged Capital And The Outerwall Board(Feb. 24 2016)
- Related: Outerwall Is Too Cheap To Ignore (Feb. 24 2016)
Thu, Feb. 18, 11:34 AM
- Engaged Capital issues a sharp letter to the board at Outerwall (NASDAQ:OUTR) in which it pushes for strategic changes.
- Recommendations from the activist investor: "1) Manage both Redbox and Coinstar for cash flow by aggressively cutting costs; 2) Shut down or sell ecoATM; 3) Discontinue the current share repurchase program (and retire all treasury shares); 4) Limit the potential uses of free cash flow to (a) paying a large dividend and (b) reducing debt."
- Shares of Outerwall are up 7% on the day, but trade at less than half of what they did a year ago.
- Full Engaged Capital letter (.pdf)
Tue, Feb. 16, 10:45 AM
- Outerwall (NASDAQ:OUTR) is up 11% in early trading as investor sentiment swings back to the favorable side after Engaged Capital took a noteworthy stake last week.
- Continued volatility on Outerwall is anticipated as the formidable short interest position in the stock is worked out.
- SA contributor Terrier Investing warns that Outerwall needs to pay down debt at a faster clip to take some risk off the table, presumably Engaged Capital will have some say on the debt predicament if a buyout can't be worked out.
- Previously: Bloomberg: Engaged Capital amassing stake at Outerwall (Feb. 08 2016)
- Previously: Engaged Capital confirms Outerwall position (Feb. 08 2016)
Mon, Feb. 8, 9:01 AM
Mon, Feb. 8, 8:02 AM| Mon, Feb. 8, 8:02 AM | 1 Comment
Fri, Feb. 5, 11:59 AM
- Outerwall (NASDAQ:OUTR) is down 15.5% as analysts react to an earnings report where the company noted Redbox rentals crashing 24%, which paced an overall revenue drop of nearly 12%.
- Roth Capital has gone to Sell on the company, while Piper Jaffray downgraded to Neutral from its previous Overweight rating. Piper's cut its price target to $32, from a previous $57; shares are trading today at $27.64.
- “Redbox faces secular headwinds, and while we do not expect a 'fall off a cliff' scenario, we believe the trend is accelerating and will continue to drive Y/Y revenue and EPS decline,” says Piper's Michael Olson. “Given lack of visibility on the Redbox content slate and pace of secular decline, the company is no longer providing revenue guidance.”
- EPS guidance provided was well below consensus, but Olson notes there could be upside in share buybacks that aren't accounted for. The company expects to return 75-100% of free cash flow to shareholders this year.
- Wedbush and JPMorgan Chase both slashed price targets today; Wedbush dropped its target to $40, from $59, while JPMorgan cut its target to $29, from $48.
- Previously: Outerwall call: Price hikes still on table; Olympics presses guidance (Feb. 04 2016)
- Previously: Outerwall sinks 14% after Q4 revenues slide (Feb. 04 2016)
Outerwall, Inc. engages in the provision of automated retail solutions offering convenient products and services that drive incremental retail traffic for retailers. It operates through the following segments: Redbox, Coinstar, and New Ventures. The Redbox segment operates self-service Redbox... More
Sector: Consumer Goods
Industry: Business Equipment
Country: United States