CSTR - Coinstar

[Picasso]

Hi,

 

Below are my thoughts on why Outerwall's shares are undervalued. I apologise for the lengthiness and would appreciate your feedback. Thank you.

 

At current price, market assumes at least 40-45% drop in Redbox’s revenue. Even if this scenario does pan out eventually, the risk of a falling share price would be mitigated by management’s commitment to buy back shares using 75-100% of free cash flow.

 

Redbox is able to charge the lowest price for movie entertainment; a position that is unlikely to be challenged. Majority of Redbox’s customers are from lower-income households with large families and cost is a major factor in the discretionary spending decisions of this income group. For the 23 million households in the U.S. with less than $20,000 annual income, a dollar or two cost savings (renting from Redbox as opposed to digital download) could go a long way in providing significant financial relief. Redbox customers are also transactional in nature and the transition to binge watching is unlikely, rendering streaming services with subscription-fee models less of a threat.

 

Many people forget that DVDs are not the product itself, but a medium to deliver movie entertainment, and demand for movie entertainment is likely to remain stable in the future. If DVD rental at Redbox can provide the lowest price for movie entertainment (as compared to other alternatives like going to the theatre and streaming), demand is likely to sustain. Also, in order for studios to abandon DVDs, it has to make business sense. Typically, studios generate most of their profits from DVD sales and have been finding it difficult to replace them. DVDs, due to their high margins, will remain an avenue for studios to sell and/or license their movie content. In addition, DVDs provide wholesale (higher volume) and distribution advantages (wider penetration) which digital sales could not.

 

The current scenario of 40-45% fall in Redbox’s revenue would imply $100-115 million of adjusted free cash flow. $100-115 million of free cash flow is achievable, considering the assumptions used are very conservative. If Redbox’s revenue eventually decreases 40-45% within three years, Outerwall’s share price would be $76 if management remains committed to buying back shares. Due to reasons above, sustainable free cash flow could very well end up above $100-115 million. A fair value based on $150 million sustainable free cash flow would imply a share price of $89 after one year of share repurchase, and $110 after three years.

 

Although not central to the investment thesis, there are some signs that imply existing cash flows are sustainable: One, management has declared cash dividends for the first time ever in their history; Two, management has taken on debt to repurchase shares (not prudent but it somewhat shows management’s confidence); Three, studios have accepted stock of Outerwall as part of the licensing agreement which could imply studios’ belief in the profitability of Outerwall’s business.

 

Nice outline of your thesis. 

 

I am short quite a lot of OUTR so I will give my take on your points.  Take that for what you will since I view the stock in a more negative light.

 

I think you are looking at the stock as a FCF to price or some multiple of earnings to price?  The debt you mention is pushing the enterprise value to around $2 billion.  If you privately owned the business today at $2 billion, what would you be getting?  At $100 million of FCF that is already around a 5% yield on something which may or may not be a melting ice cube.  There are a lot of other melting ice cubes or ice cubes waiting to start melting that trade at 15-20% FCF yields in the market today. 

 

If you look at a fall in Redbox revenue of 40-45%, you assume their debt burden will still only have a 6% cost of capital.  Coinstar alone can barely support the debt so I assume that can quickly eat up your free cash flow estimates. 

 

Also, even if they buy up a ton of shares you assume that the multiple will not contract.  Like I mentioned there are a lot of high FCF melting ice cubes out there.  Probably a close one to this would be WU.  They have been eating up shares for years and the stock has still seen contracting multiples and they also deal in an area that deals with transactional, low income customers with a high barrier to entry.  So a lower share count shouldn't imply a higher fair value.  I would also think that each year that goes by, you have the increasing chance of a rapid decline in Redbox revenues.

 

And the management that made the debt and dividends decisions are either gone or will be replaced in the near future.  I am not sure I put much stock in those decisions as a barometer of their confidence. 

 

The funny thing is, I get about $100-150 million of FCF in my high probability scenario and that is why I am short the stock.  Always interesting how people can view the same data in different ways.  ;D

[frommi]

Ah finally someone from the other side. Funny thing is in my high probability scenario FCF/owner earnings are nearly 3-4 times as high as yours. Have you added back growth capex for ecoatm, redbox canada savings, and calculated the influence of the price increase?

Have you noticed that 2014 was a very weak box office year and therefore the revenue decline was a one time effect?

Do you realize that the median online bandwidth in the us is barely enough to stream high quality content?

 

[Picasso]

How does 2014 being a weak box office year have anything to do with the value of OUTR?  You are paying $2 billion today for all of its future earnings.  So 2015 may be a big year for the box office, yeah everyone knows that already.  What about 2016, 2017, 2018, etc?  You will keep running into the issue of figuring out whether the box office will be so good that customers will be willing to stand in the cold outside a 7-11 or CVS in the hopes they 1) won't get robbed or 2) not get a scratched up or round piece of paper that was a photo copy of the disc someone stole.  And when something goes wrong from the rental, there is no customer support for it.

 

My view is that without ecoATM, this investment had a shot.  But after blowing so much value on that acquisition you removed a good year of time (at least) for OUTR to build a more sustainable business.  At least they are paying out a dividend to get some cash out of the business, but I have a feeling that was to primarily push some shorts out of the stock.

 

Even if you think there will be $400 million of FCF, the question is then for how long?  Does anyone really believe that in ten years there are still going to be Redbox machines spitting out DVD's for $2-3 dollars?

 

I would probably burn $2 of gas making two trips to some grocery store to rent the movie, pay that $2 for the Blu-Ray just to save a dollar over streaming?  That will sound even more silly in a few more years.

 

Either one of two things will happen with the ecoATM capex.  Either management realizes it's a bust and they write-down that business in a big way (which is not good for the stock) or they keep spending it and eventually they figure out they wasted that money (which is probably worse).  I don't see the point of adding back the growth capex and slapping a multiple to make the stock look cheaper.  But that is because I think ecoATM is a joke.

 

Redbox Canada savings will be very small.

 

The price increase effect is to be determined in my view.  There are more factors at play there than simply creating an offset to weaker demand.  I don't think anyone will have a good idea of that until we see a couple more quarters.

[Guest chok.sing.ping]

 

Nice outline of your thesis. 

 

I am short quite a lot of OUTR so I will give my take on your points.  Take that for what you will since I view the stock in a more negative light.

 

I think you are looking at the stock as a FCF to price or some multiple of earnings to price?  The debt you mention is pushing the enterprise value to around $2 billion.  If you privately owned the business today at $2 billion, what would you be getting?  At $100 million of FCF that is already around a 5% yield on something which may or may not be a melting ice cube.  There are a lot of other melting ice cubes or ice cubes waiting to start melting that trade at 15-20% FCF yields in the market today. 

 

If you look at a fall in Redbox revenue of 40-45%, you assume their debt burden will still only have a 6% cost of capital.  Coinstar alone can barely support the debt so I assume that can quickly eat up your free cash flow estimates. 

 

Also, even if they buy up a ton of shares you assume that the multiple will not contract.  Like I mentioned there are a lot of high FCF melting ice cubes out there.  Probably a close one to this would be WU.  They have been eating up shares for years and the stock has still seen contracting multiples and they also deal in an area that deals with transactional, low income customers with a high barrier to entry.  So a lower share count shouldn't imply a higher fair value.  I would also think that each year that goes by, you have the increasing chance of a rapid decline in Redbox revenues.

 

And the management that made the debt and dividends decisions are either gone or will be replaced in the near future.  I am not sure I put much stock in those decisions as a barometer of their confidence. 

 

The funny thing is, I get about $100-150 million of FCF in my high probability scenario and that is why I am short the stock.  Always interesting how people can view the same data in different ways.  ;D

 

Thanks for your reply Picasso.

 

This is how I derived the scenario of 40-45% fall in Redbox's revenue - 40% fall in Redbox's revenue would have FCF at $115 mn. Let's say FCF falls to $115 mn immediately in 1 year. At 10% FCF yield (a reasonable multiple in my view), that will give a fair market value of $1.15 bn and at a share price of ~$60 without share repurchases. After using 75% of 2014 adjusted FCF to buy back shares, share price would be equivalent to current price. No one knows if revenue would fall 40-45% in 1 year, although I think that is unlikely.

 

My 2014 adjusted FCF is such:

Redbox gross profits $393.4 mn

Coinstar gross profits $120.5 mn

- unallocated expenses ($25.3 mn)

- capital expenditure ($97.9 mn)

- interest expense ($47.6 mn)

= adjusted cash flow before tax $343.1 mn

Adjusted cash flow after tax of 36% = $219.6 mn

 

Coinstar may not be able to support the debt alone but if unallocated expenses and capital expenditure is reduced (likely if Redbox operations and new ventures are scaled back), I don't think it will be a problem covering interest payments.

 

Of course, the key is to identify what cash flows are sustainable, and how much Redbox revenue would fall. 40-45% drop is possible, but my research leads me to think the number of people renting DVDs/ blu-rays at Redbox could be much stickier.

 

You are right in saying that management's dividend and share buyback policy may not continue, but I see more advantages in buying back shares instead of holding it in cash, besides they have enough for capex purposes. After all that's said, Outerwall is a good opportunity, but not one which i'm willing to risk more than 20% of my capital in.

 

I think if we are ultra conservative, we may let many good opportunities slip by. We have to be 'realistically' conservative and see if the risk-rewards are in our favour. This is of course, very difficult.

[frommi]

But ecoATM growth capex will fall away in 1 or 2 years, by not adding it back you assume that they will increase the number of machines forever. When you do that you should probably also factor in that these machines will provide additional fcf sometime in the future.

[frommi]

And Redbox canada  was -17 million fcf in 2014, i don't think this is immaterial. This + growth capex are already 290 million fcf in 2014, and the price increase has the potential for 70-100 million additional fcf in 2015. This is still zero value for ecoatm and no box office improvement in 2015+ over 2014. So they earn the whole enterprise value in around 6 years when fcf declines every year after 2015. I still think redbox+coinstar will live longer than that.

[rsmehta]

Picasso,

 

  Let's all agree that there is a fairly big market for movie rentals for new releases after they come out in theaters.

 

 

    As long as the VOD/Apple TV costs 3x as much as redbox, I don't think redbox isn't going anywhere. In addition, cinema tickets are going to be increasing their prices as well this summer, making it even more unaffordable for the majority of America.

 

 

    WU is a lot more expensive than PayPal/ACH payments/venmo as well as being a lot less convinient and a worse business model. I don't think this is a valid comparison.

 

 

      70% of post box-office revenue still comes from dvd's. Media companies will not want to give this up.

 

    In the next two years, I see management eating up another 8 million shares with their buybacks, leaving the outstanding float at 10 million shares. FCF of 250 million in 2017 equates to $25/share in this scenario.

 

    I am long a lot of shares. Let the chips fall as they may.

[S2S]

This is how I derived the scenario of 40-45% fall in Redbox's revenue - 40% fall in Redbox's revenue would have FCF at $115 mn. Let's say FCF falls to $115 mn immediately in 1 year. At 10% FCF yield (a reasonable multiple in my view), that will give a fair market value of $1.15 bn and at a share price of ~$60 without share repurchases. After using 75% of 2014 adjusted FCF to buy back shares, share price would be equivalent to current price. No one knows if revenue would fall 40-45% in 1 year, although I think that is unlikely.

 

You guys are arguing past one another. Picasso thinks of FCF yield as percentage of Enterprise Value whereas chok.sing.ping uses (Equity) Market Cap as the denominator instead. Neither approach is wrong; though I tend to agree with the former view that 5% FCF/EV is hardly impressive.

[frommi]

This is how I derived the scenario of 40-45% fall in Redbox's revenue - 40% fall in Redbox's revenue would have FCF at $115 mn. Let's say FCF falls to $115 mn immediately in 1 year. At 10% FCF yield (a reasonable multiple in my view), that will give a fair market value of $1.15 bn and at a share price of ~$60 without share repurchases. After using 75% of 2014 adjusted FCF to buy back shares, share price would be equivalent to current price. No one knows if revenue would fall 40-45% in 1 year, although I think that is unlikely.

 

You guys are arguing past one another. Picasso thinks of FCF yield as percentage of Enterprise Value whereas chok.sing.ping uses (Equity) Market Cap as the denominator instead. Neither approach is wrong; though I tend to agree with the former view that 5% FCF/EV is hardly impressive.

 

Of course this is not impressive, and if this would be the true number nobody here would even consider this investment. But it trades at a 15-20% FCF/EV yield and i know of no other stock in the US that trades in a similar range.

[Guest chok.sing.ping]

This is how I derived the scenario of 40-45% fall in Redbox's revenue - 40% fall in Redbox's revenue would have FCF at $115 mn. Let's say FCF falls to $115 mn immediately in 1 year. At 10% FCF yield (a reasonable multiple in my view), that will give a fair market value of $1.15 bn and at a share price of ~$60 without share repurchases. After using 75% of 2014 adjusted FCF to buy back shares, share price would be equivalent to current price. No one knows if revenue would fall 40-45% in 1 year, although I think that is unlikely.

 

You guys are arguing past one another. Picasso thinks of FCF yield as percentage of Enterprise Value whereas chok.sing.ping uses (Equity) Market Cap as the denominator instead. Neither approach is wrong; though I tend to agree with the former view that 5% FCF/EV is hardly impressive.

 

My FCF calculation is more owners' earnings:

(EBITDA - unallocated expenses - capex - interest expense) x (1-36% tax)

 

Using EV assumes that a prospective buyer would pay down all the company's debt when acquiring the company. This is realistic if the company is not able to generate enough cash flow to cover interest payments. Then again, if that is the case, based on the basis of cash flow generation, there is no reason to use EV because the company wouldn't be an attractive acquisition unless for strategic reasons.

 

For Outerwall, cash flow generation is still high and they are likely to cover interest payments. I think it is ok to use market cap instead of EV to calculate FCF yield.

[philly value]

I won't comment directly on valuation because I don't know enough about OUTR. But the principal that you can ignore EV if a company can currently cover its interest payments is not a good way to think IMO. The key question is, what would somebody pay to own the current business, and how does that compare to the current debt plus market cap? It's very possible, particularly in a low interest rate environment, that a company could produce enough cash flow to cover its current interest payments, yet would fail to be able to refinance its current debt load or find a buyer at the current enterprise value.

[TwoCitiesCapital]

I won't comment directly on valuation because I don't know enough about OUTR. But the principal that you can ignore EV if a company can currently cover its interest payments is not a good way to think IMO. The key question is, what would somebody pay to own the current business, and how does that compare to the current debt plus market cap? It's very possible, particularly in a low interest rate environment, that a company could produce enough cash flow to cover its current interest payments, yet would fail to be able to refinance its current debt load or find a buyer at the current enterprise value.

 

+1

 

I agree that you can't ignore the EV. An appropriate shorthand calc would be to do what many have done here and zero out the value of coinstar against the debt and be left with simply the equity value of redbox. Whatever cash flows red box generates, ex maintenance CapEx, could be compared to the current equity market cap for return figures with the knowledge that the cash flows won't continue forever. This, of course, ignores the current cash drain of new ventures as well as the future value that it could bring. I leave that adjustment up to people better at forecasting than me, but since the plug could be pulled on the unprofitable new ventures at any time I'm only focusing on redbox.

 

I think this is a good value for the following reasons:

1) I believe that the reports of Redbox's death have been largely exaggerated.

2) It's so cheap that large price hikes do not appear to affect marginal purchases (meaning much of the increase flows to bottom line).

3) 1 to 2 big box office seasons is all that it takes to pay you back a large portion of your investment especially on the tail end of a large price hike.

 

 

 

 

 

[yadayada]

I think a good way of thinking about this is taking coinstar, and figure out what a good amount of debt is for coinstar. Since they generate about 70-80m$ in FCF , they can carry like 300m$ of debt? And a 10x multiple would be fair? So that would take 1.2bn$ out of EV.

 

So that leaves equity value of 400m$ and debt 700m$ for redbox and new ventures.

 

Or roughly 1.1bn$ for about 220m$ of FCF (since coinstar and Redbox do roughly 300m$ without new ventures costs). This is a 5x multiple. If you give it a 8x multiple, then you would need a 105$ share price roughly right now.

 

Then you have to make a guess on volume decrease this year. Since price was increased 25%, you have to see how that affects that 220m$. In 2014 they did this on rougly 1.9bn$, and in 2013 on about 2 bn$ of revenue for redbox.

 

So if none of that 25% flows through (meaning a 25% volume decline) then you will see the same amount of revenue with the same cash flow this year. And Im not so sure how cheap OUTR really is. Probably somewhat cheap.

 

But if only 10% of that extra 500m$ flows through, that is already 50m$. If all of it would flow through, you would see 720m$ in FCF just for redbox!

 

Let's say only 1/5 of that increase flows through, that is still a 100m$. that is 320m$. Giving that a 8x EV multiple, you would get 2.5bn$ + 1.2bn$ for coinstar and you get 142$ share price.

 

If they could pay back debt and buy back shares at roughly current prices that would put steroids on your return. Especially if redbox revenue stays stable for a year or two.

 

I think if you assume a 6.5-8x multiple, that assumes that FCF of redbox will decline between 5-15% a year on average, and stabilize somewhere much lower. And then the business will exist as a niche, just like phone books still somehow exist as a niche today. And you could argue redbox offers much more value then phone books. This kind of also assumes new ventures will roughly break even. So if you are pessimistic there, subtract several 100m$.

 

Since redbox has very low break even costs, I think it could exist in a much smaller form and still generate like 20m$ 10-15 years from now.

 

Your out of your mind if you short this imo, with the FCF they have, and the buybacks. You could argue it is somewhat risky, but there is a possibility this year is a major cash bonanza, and then the share price will definitely jump a lot.

 

What is interesting is movies in 4k resolution. They could be read by current bluray players (at least in the console ones) and they are much too large to download.

[frommi]

Your out of your mind if you short this imo, with the FCF they have, and the buybacks. You could argue it is somewhat risky, but there is a possibility this year is a major cash bonanza, and then the share price will definitely jump a lot.

 

Short ratio has gone up a lot in the past 3 months, now already 52% of float without the shareprice going down. Could get funny when the shorts realize that there are no shares left to cover.

 

Settlement Date Short Interest Avg Daily Share Volume Days To Cover

3/31/2015 8,121,295 398,543 20.377462

3/13/2015 8,067,606 456,500 17.672740

2/27/2015 8,002,356 581,097 13.771119

2/13/2015 7,679,779 658,437 11.663650

1/30/2015 7,041,917 1,129,515 6.234461

 

This are around 9 million shares that won`t sell that easily:

 

Holder Shares Report Date % of Shares Outstanding % of Total Assets Managed Market Value

Vanguard Group, Inc. 1,909,766 2015-03-31 10.07 0.00 126,273,728

Fine Capital Partners, L.p. 1,077,189 2014-12-31 5.69 6.77 81,026,000

BlackRock Fund Advisors 1,043,765 2014-12-31 5.51 0.02 78,512,000

Jana Partners LLC 997,041 2014-04-08 4.89 0.00 72,285,472

Arlington Value Capital, LLC 978,694 2014-12-31 5.17 13.04 73,617,000

Fisher Asset Management, LLC 932,191 2014-12-31 4.93 0.14 70,119,000

Gotham Asset Management, LLC 819,029 2014-12-31 4.33 0.50 61,607,000

Owl Creek Asset Management, L.p. 612,615 2014-12-31 3.24 2.92 46,081,000

Lombardia Capital Partners, LLC 604,484 2014-12-31 3.19 1.31 45,469,000

 

And there are just 16 million shares free float, so we are already at the point where there are not enough shares to cover without any of the big boys wanting out.

[yadayada]

yeah it is beyond stupid to short this now lol. i mean if you look purely at risk/reward, actually owning the stock is a much better deal then shorting it. Even if you are not that optimistic.

 

It would pretty much have to start falling of a cliff with like 20-30% declines in FCF in the redbox segment for this to be a somewhat decent short. And I have not yet heard one good argument on why that would somehow start to happen. Or debunk the long arguments.

 

It is interesting to compare yellow pages to this. I think the physical yellow pages are actually mostly redundant now. Much more so then redbox. They offer zero upside compared to something like google. Yet even they are not declining that fast. You really have to wonder why people were using redbox last year, and the year before that. But somehow collectively decide to start renting 30-40% less this year. And you would also have to answer where they will get their new releases from then. Will everyone suddenly stop caring about new releases? Demand will stay.

[Picasso]

I agree a bit more with you optimistic bulls and decided to cover my short this morning.  Not a lot of liquidity on the buy to cover and I think there are better shorts out there.

 

I still don't think shares are as cheap as they look on the surface but I hope it works out for you guys.

[Travis Wiedower]

70% of post box-office revenue still comes from dvd's. Media companies will not want to give this up.

 

Do you have source for this 70% number? Obviously DVDs are a major source of revenue for them, just haven't seen a reliable source that actually breaks it down.

[krazeenyc]

Your out of your mind if you short this imo, with the FCF they have, and the buybacks. You could argue it is somewhat risky, but there is a possibility this year is a major cash bonanza, and then the share price will definitely jump a lot.

 

Short ratio has gone up a lot in the past 3 months, now already 52% of float without the shareprice going down. Could get funny when the shorts realize that there are no shares left to cover.

 

Settlement Date Short Interest Avg Daily Share Volume Days To Cover

3/31/2015 8,121,295 398,543 20.377462

3/13/2015 8,067,606 456,500 17.672740

2/27/2015 8,002,356 581,097 13.771119

2/13/2015 7,679,779 658,437 11.663650

1/30/2015 7,041,917 1,129,515 6.234461

 

This are around 9 million shares that won`t sell that easily:

 

Holder Shares Report Date % of Shares Outstanding % of Total Assets Managed Market Value

Vanguard Group, Inc. 1,909,766 2015-03-31 10.07 0.00 126,273,728

Fine Capital Partners, L.p. 1,077,189 2014-12-31 5.69 6.77 81,026,000

BlackRock Fund Advisors 1,043,765 2014-12-31 5.51 0.02 78,512,000

Jana Partners LLC 997,041 2014-04-08 4.89 0.00 72,285,472

Arlington Value Capital, LLC 978,694 2014-12-31 5.17 13.04 73,617,000

Fisher Asset Management, LLC 932,191 2014-12-31 4.93 0.14 70,119,000

Gotham Asset Management, LLC 819,029 2014-12-31 4.33 0.50 61,607,000

Owl Creek Asset Management, L.p. 612,615 2014-12-31 3.24 2.92 46,081,000

Lombardia Capital Partners, LLC 604,484 2014-12-31 3.19 1.31 45,469,000

 

And there are just 16 million shares free float, so we are already at the point where there are not enough shares to cover without any of the big boys wanting out.

 

pretty sure jana doesn't own any outerwall shares.

[rsmehta]

70% of post box-office revenue still comes from dvd's. Media companies will not want to give this up.

 

Do you have source for this 70% number? Obviously DVDs are a major source of revenue for them, just haven't seen a reliable source that actually breaks it down.

 

70% figure came from Allan Mecham bullish case on OUTR, link below.

 

http://www.valuewalk.com/2015/02/allan-mecham-investments/

 

 

[frommi]

pretty sure jana doesn't own any outerwall shares.

 

You are right, i copied that from gurufocus, a better overview is here: https://www.holdingschannel.com/bystock/?symbol=outr

I really hope the company bought back a lot of stock in Q1 after the CEO announcement. In theory we could already be down to ~16 million shares outstanding.

[frommi]

http://degonline.org/wp-content/uploads/2015/04/Q1-2015-DEG-Home-Entertainment-Report.pdf

 

Q1 2015 Rental Kiosk Revenue +7.7% vs. Q1 2014, while VOD had a decline of 5%. Looks like box office in Q1 2015 was pretty weak.

[TwoCitiesCapital]

http://degonline.org/wp-content/uploads/2015/04/Q1-2015-DEG-Home-Entertainment-Report.pdf

 

Q1 2015 Rental Kiosk Revenue +7.7% vs. Q1 2014, while VOD had a decline of 5%. Looks like box office in Q1 2015 was pretty weak.

 

http://www.boxofficemojo.com/quarterly/?chart=byquarter&quarter=Q1&view=releasedate

It was pretty weak. Q2 will be where it's at - Avengers is seriously anticipated around the globe. The first one pulled in over $620M globally and this one is expected to do better. Just to put that into context, if it simply matches the first one, we've already accounted for 1/3 of the Q1 box office total with the one film...I don't have a model for how that translates into profits at redbox, but I do know that many people will opt to wait a few weeks and pay a dollar or two as opposed to having to pre-order tickets for $20+ apiece.

[yadayada]

Using that site you can basically predict Q earnings before they come out. Thanks for posting.

 

Kiosk rental is basically exactly the same as last years in the Q1 filings (if you back out VOD).

 

So this quarter, revenue will be 535m$. Assuming 345m$ direct costs, 7m$ marketing, and 30m$ G&A , I get about 160m$ in ebitda for redbox alone in Q1 . or 640m$ in 2015. Capex will be about 60-70m$. And taxes another 150m$ (they are partially shielded by depreciation)?

 

That is 420m$ in FCF just for redbox. or 100m$ of FCF for redbox alone in Q1 lol. 500m$ for redbox + coinstar minus roughly 50-100m$ for new ventures.

 

[krazeenyc]

http://degonline.org/wp-content/uploads/2015/04/Q1-2015-DEG-Home-Entertainment-Report.pdf

 

Q1 2015 Rental Kiosk Revenue +7.7% vs. Q1 2014, while VOD had a decline of 5%. Looks like box office in Q1 2015 was pretty weak.

 

http://www.boxofficemojo.com/quarterly/?chart=byquarter&quarter=Q1&view=releasedate

It was pretty weak. Q2 will be where it's at - Avengers is seriously anticipated around the globe. The first one pulled in over $620M globally and this one is expected to do better. Just to put that into context, if it simply matches the first one, we've already accounted for 1/3 of the Q1 box office total with the one film...I don't have a model for how that translates into profits at redbox, but I do know that many people will opt to wait a few weeks and pay a dollar or two as opposed to having to pre-order tickets for $20+ apiece.

 

When do you think Avengers will be available on RedBox?

[gfp]

Anyone want to handicap the odds they massively overpay for MinuteKey - the start-up key cutting kiosks in Walmart and Lowe's?

 

https://www.minutekey.com/