The stock is down 3.9% in initial after-hours trading. The maker of the Redbox DVD rental kiosks says that CEO Paul Davis — who has held the top job since 2009 — will retire in March, and be replaced by CFO J. Scott Di Valerio. The change comes as the company, in a joint venture with Verizon, begins to roll out a streaming service called Redbox Instant that aims to compete with Netflix and Amazon. The announcement about Davis’ departure also notes that Coinstar expects to hit its full-year and Q4 forecasts for revenue and cash flow growth with earnings from continuing operations at the high end of a range it provided. But that’s “primarily due to lower company G&A expenses and certain tax benefits at Redbox” — not necessarily strong results from the core business. Here’s the release:
BELLEVUE, Wash.—January 3, 2013—Coinstar, Inc. (Nasdaq: CSTR), a leading provider of automated retail solutions, today announced that the Coinstar Board of Directors has appointed J. Scott Di Valerio, currently Coinstar’s chief financial officer, as the company’s next chief executive officer, effective April 1, 2013. Di Valerio was also appointed to the Coinstar Board of Directors effective at that time. Di Valerio will succeed Paul Davis, 55, who is retiring on March 31, 2013. Davis will remain a member of the Coinstar Board of Directors through March.
Di Valerio, 50, has served as Coinstar’s CFO since 2010, and, in addition to his leadership of the finance organization, has overseen Coinstar’s corporate information technology and supply chain functions.
“Scott’s appointment as CEO is a direct result of the Board’s long-time focus on developing a deep management team and ensures that Coinstar will continue to benefit from strong leadership following Paul’s retirement,” said Deborah Bevier, chair of the Coinstar Board of Directors. “Scott is a proven leader at Coinstar and a seasoned executive with more than 25 years of management, operations and finance experience. Coinstar has a clear and focused growth strategy, and the Board is confident that Scott is the right person to lead the company through its next phase of development.”
Bevier continued, “On behalf of the Coinstar Board and the entire organization, I would like to thank Paul for his outstanding leadership of the company. For nearly four years as Coinstar’s CEO, Paul has successfully guided the company to tremendous growth and profitability through a wide range of initiatives, including refocusing Coinstar on organic growth through its core businesses, shedding underperforming businesses, and growing Redbox from 6,000 kiosks to the 42,000 kiosks we have today. Thanks to his strong leadership, Coinstar is well positioned for future growth. We wish him the very best in his retirement.”
Davis said, “I am extremely proud of the many accomplishments we have achieved at Coinstar and look forward to teaming with Scott and the entire management team to ensure a smooth transition in the months ahead. I have been fortunate to have worked closely with Scott during the past three years, and I can attest firsthand that he is the right executive with the right experience and background to lead Coinstar forward. I believe that under Scott’s leadership, Coinstar will continue to expand on its market-leading position and in new venture opportunities to drive future growth and value creation for our shareholders.”
Added Di Valerio, “I am honored by the confidence the Board has in me to lead Coinstar through its next chapter of growth and share Paul’s enthusiasm for Coinstar’s automated retail businesses and the opportunities we have to deliver value to our shareholders. I am excited to continue our work and lead our talented team in growing the business through the strategic initiatives and new ventures under way and in development.”
Coinstar also announced today that Galen C. Smith, senior vice president of finance at Redbox Automated Retail, LLC, Coinstar’s wholly-owned subsidiary, will succeed Di Valerio as chief financial officer. Smith, 36, joined Coinstar in 2009 and has served in his current role leading the finance function at Redbox since 2011, and prior as corporate VP, finance and treasurer for Coinstar. The company has started the process to identify a successor for the Redbox finance leadership role.
Di Valerio added, “Galen is a valuable leader and proven executive in the Coinstar organization. His extensive financial experience as well as his knowledge of Coinstar will contribute significantly to the company’s continued growth and financial strength. Galen’s broad and comprehensive understanding of our businesses will be a valuable asset as we continue to execute on our strategy and work to enhance value for all Coinstar stakeholders.”
Coinstar expects to report 2012 fourth quarter and full year revenue and core adjusted EBITDA from continuing operations within the ranges provided on October 25, 2012, with core diluted EPS from continuing operations trending at or above the high end of the range primarily due to lower company G&A expenses and certain tax benefits at Redbox.