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Rural/Metro Reports Fiscal 2009 First Quarter Results SCOTTSDALE, AZ--(MARKET WIRE)--Nov 10, 2008 -- Rural/Metro Corporation (NasdaqCM:RURL - News) First Quarter Highlights:
-- Net revenue up 6% to $124.4 million, compared to $117.4 million in
prior year
-- Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) from continuing operations up 20% to $14.4 million, compared to
$12.0 million in prior year
-- Operating income up 22% to $11.6 million, compared to $9.5 million in
prior year
-- Diluted Earnings Per Share (EPS) of $0.03, compared to prior-year EPS
of $0.02
-- Average Patient Charge (APC) of $361 per transport, a $13-per-
transport increase over prior-year quarterly APC of $348
-- Days' Sales Outstanding (DSO) of 59 days, a 5-day improvement over
prior year
Rural/Metro Corporation (NasdaqCM:RURL - News), a leading provider of ambulance and private fire protection services, announced results today for its fiscal 2009 first quarter ended September 30, 2008, highlighting continued growth in revenue, EBITDA and operating income, as well as positive trends in key operating metrics. Jack Brucker, President and Chief Executive Officer, said, "Our steady revenue and profit margin growth, gains in market share through recent new contract awards, and the ongoing success of our strategies to strengthen collections further demonstrate our ability to operate in today's challenging economy." Mr. Brucker continued, "We were pleased to achieve a significant increase in APC in the first quarter when compared to the same period last year and to come in above our expectations. Of the $13 year-over-year improvement, more than half was due to improved collections. We believe opportunity remains for continued improvement as we continue to work diligently to reduce denials from insurance payers." Results of Operations for the First Quarter Ended September 30, 2008 Consolidated net revenue for the first quarter ended September 30, 2008 increased 6.0 percent, or $7.0 million, to $124.4 million, compared to $117.4 million for the same period in fiscal 2008. Ambulance services revenue increased 5.9 percent, or $5.8 million, to $105.3 million, compared to $99.5 million for the same prior-year period. Other services revenue, which includes fire protection services, increased 6.9 percent, or $1.2 million, to $19.1 million, compared to $17.9 million for the same prior-year period. Consolidated quarterly net revenue growth was driven primarily by increases in same-service area revenue, which included improvements to APC and higher transport volume; new contract revenue derived primarily from non-emergency ambulance contracts in the Tennessee and Washington markets; and increases in fire subscription revenue and master fire contract fees. Payroll and employee benefits for the first quarter were $76.4 million, or 61.4 percent of net revenue, compared to $74.1 million, or 63.2 percent of net revenue, in the same prior-year period. The dollar increase was driven primarily by cost-of-living employee pay raises, an executive severance accrual, and higher ambulance unit hours in the Tennessee market. These increases were offset in part by a decrease in employee health insurance expenses. Other operating expenses for the first quarter were $29.8 million, or 23.9 percent of net revenue, an increase of $2.9 million when compared to $26.9 million, or 22.9 percent of net revenue, in fiscal 2008. The dollar increase was primarily driven by a $1.5 million increase in fuel. During the first quarter, the Company also increased its reserve related to ongoing negotiations with the State of Ohio regarding certain Medicare claims by an additional $1.0 million, of which $0.6 million was recorded in continuing operations and $0.4 million was recorded to discontinued operations. These increases were partly offset by a $1.2 million decrease in professional fees. General and auto liability expense in the first quarter was $3.5 million, a decrease of $0.3 million when compared to general and auto liability expense of $3.8 million for the same prior-year period. Net income for the first quarter was $0.8 million, or EPS of $0.03 per diluted share, compared to net income of $0.4 million, or EPS of $0.02 per diluted share, for the same prior-year period. First-quarter net cash provided by operating activities was $12.6 million, compared to $7.9 million for the same period a year ago. EBITDA from continuing operations for the first quarter increased 20.0 percent, or $2.4 million, to $14.4 million when compared to $12.0 million in EBITDA from continuing operations for the same prior-year period. EBITDA from continuing operations is a key indicator used by management to evaluate operating performance. While EBITDA from continuing operations is not intended to replace presentations included in the Company's consolidated financial statements under generally accepted accounting principles (GAAP) and should not be considered an alternative to operating performance or an alternative to cash flow as a measure of liquidity, the Company believes this measure is useful to investors in assessing the Company's ability to meet future debt service, capital expenditure and working capital requirements. This calculation may differ in the method of calculation from similarly titled measures used by other companies. A reconciliation of EBITDA to income/(loss) from continuing operations and discontinued operations for the three months ended September 30, 2008 and 2007 is included with this press release and the related current report on Form 8-K. Quarterly Operating Statistics First-quarter operating statistics trended as follows when compared to the same prior-year period:
-- Medical transports increased by 6,679 transports, or 2.5 percent, with
the increase driven nearly equally by same-service area and new transport
growth.
-- Average patient charge (APC) increased to $361 per transport from $348
per transport for the same period of the prior year. Of the $13 increase,
slightly more than half was due to continuing improvement in collections,
with the balance attributable to rate increases and changes in service
level mix.
-- Days' sales outstanding (DSO) decreased by five days, a factor of
billing and collections improvements coupled with reductions in
uncompensated care as a percentage of gross revenue. Uncompensated care as
a percentage of gross revenue was 14.2 percent in the first quarter,
compared to 15.0 percent in the same period a year ago.The following table sets forth information with respect to medical transports, APC, and DSO during each of the five most recent quarters:
Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09
(9/30/07) (12/31/07) (3/31/08) (6/30/08) (9/30/08)
---------- ---------- ---------- ---------- ----------
Medical
Transports (1) 264,728 265,369 282,737 269,899 271,407
---------- ---------- ---------- ---------- ----------
Average Patient
Charge (APC) (2) $ 348 $ 352 $ 350 $ 368 $ 361
---------- ---------- ---------- ---------- ----------
Days Sales
Outstanding
(DSO) (3) 64 64 62 60 59
---------- ---------- ---------- ---------- ----------
(1) Defined as emergency and non-emergency medical patient transports from
continuing operations.
(2) Net medical transport APC is defined as gross ambulance transport
revenue less provisions for contractual allowances applicable to
Medicare, Medicaid and other third-party payers and uncompensated care
divided by medical transports from continuing operations.
(3) DSO is calculated using the average accounts receivable balance on a
rolling 13-month basis and net revenue on a rolling 12-month basis and
has not been adjusted to eliminate discontinued operations.Fiscal 2009 Financial Guidance Confirmed The Company confirmed its guidance for the fiscal year ending June 30, 2009, expecting EBITDA from continuing operations to be in the range of $54.0 million to $58.0 million and capital expenditures to be in the range of $15.0 million to $18.0 million. Conference Call to Discuss Results The Company will discuss results in a conference call today beginning at 8 a.m. Pacific/9 a.m. Mountain/11 a.m. Eastern. To access the conference call, dial 800-949-2165 (domestic) or 719-234-0008 (international). The call will be broadcast live on the Company's web site at www.ruralmetro.com. A telephone replay will be available from approximately 2 p.m. (Eastern) today through midnight (Eastern) November 11, 2008. To access the replay, dial 888-203-1112. From international locations, dial 719-457-0820. The required pass code is 8243927. An archived webcast will be available following the call at www.ruralmetro.com. About Rural/Metro Rural/Metro Corporation provides emergency and non-emergency ambulance services and private fire protection services in 22 states and approximately 400 communities throughout the United States. For more information, visit the Company's web site at www.ruralmetro.com. SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS The foregoing reflects the Company's views about its future financial condition, performance and other matters that constitute "forward-looking" statements as such term is defined by the federal securities laws. Many of these statements can be found by looking for words such as "may," "will," "expect," "anticipate," "believe," "estimate," "should," "continue," "predict," "preliminary" and similar words used herein in connection with any discussions of future operating or financial performance or business prospects. We may also make forward-looking statements in our earnings reports filed with the Securities and Exchange Commission (SEC), earnings calls and other investor communications. These forward-looking statements are subject to the safe harbor protection provided by federal securities laws. These forward-looking statements are subject to numerous risks, uncertainties and assumptions, including those relating to the Company's future business prospects, working capital, cash flow, EBITDA, capital expenditures, payroll expense, repayment of debt, insurance coverage and claim reserves, unexpected governmental investigations, capital needs, operating results and compliance with debt facilities. In addition, the Company may face risks and uncertainties related to uncompensated care and its ability to collect its accounts receivable and other factors that are listed in its periodic reports filed under the Securities Exchange Act. Although the Company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, because the statements are subject to risks and uncertainties, the Company can give no assurance that its expectations will be attained or that actual developments and results will not materially differ from those expressed or implied by the forward-looking statements. Readers are cautioned not to place undue reliance on the statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
RURAL/METRO CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
September 30, June 30,
2008 2008
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 17,349 $ 15,907
Accounts receivable, net 75,692 76,131
Inventories 8,471 8,456
Deferred income taxes 24,998 22,263
Prepaid expenses and other 19,238 18,946
----------- -----------
Total current assets 145,748 141,703
Property and equipment, net 48,142 46,938
Goodwill 37,700 37,700
Deferred income taxes 47,467 50,773
Insurance deposits 941 989
Other assets 15,703 16,108
----------- -----------
Total assets $ 295,701 $ 294,211
=========== ===========
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 14,614 $ 16,147
Accrued liabilities 61,866 55,139
Deferred revenue 22,253 21,901
Current portion of long-term debt 370 374
----------- -----------
Total current liabilities 99,103 93,561
Long-term debt, net of current portion 274,251 279,017
Other long-term liabilities 28,897 29,536
----------- -----------
Total liabilities 402,251 402,114
----------- -----------
Minority interest 2,493 1,966
----------- -----------
Stockholders' deficit:
Common stock, $0.01 par value, 40,000,000 shares
authorized, 24,822,726 shares issued and
outstanding at September 30, 2008 and
June 30, 2008 248 248
Additional paid-in capital 154,963 154,918
Treasury stock, 96,246 shares at both September
30, 2008 and June 30, 2008 (1,239) (1,239)
Accumulated other comprehensive loss (430) (439)
Accumulated deficit (262,585) (263,357)
----------- -----------
Total stockholders' deficit (109,043) (109,869)
----------- -----------
Total liabilities, minority interest and
stockholders' deficit $ 295,701 $ 294,211
=========== ===========
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)
Three Months Ended
September 30,
--------------------
2008 2007
--------- ---------
Net revenue $ 124,426 $ 117,351
--------- ---------
Operating expenses:
Payroll and employee benefits 76,433 74,128
Depreciation and amortization 3,394 3,051
Other operating expenses 29,764 26,890
General/auto liability insurance expense 3,470 3,800
Loss on sale of assets (196) 3
--------- ---------
Total operating expenses 112,865 107,872
--------- ---------
Operating income 11,561 9,479
Interest expense (7,813) (7,750)
Interest income 115 142
--------- ---------
Income from continuing operations before income
taxes and minority interest 3,863 1,871
Income tax provision (2,239) (966)
Minority interest (527) (505)
--------- ---------
Income from continuing operations 1,097 400
Income (loss) from discontinued operations, net of
income taxes (325) 11
--------- ---------
Net income $ 772 $ 411
========= =========
Income (loss) per share:
Basic -
Income from continuing operations $ 0.04 $ 0.02
Income (loss) from discontinued operations (0.01) 0.00
--------- ---------
Net income $ 0.03 $ 0.02
========= =========
Diluted -
Income from continuing operations $ 0.04 $ 0.02
Income (loss) from discontinued operations (0.01) 0.00
--------- ---------
Net income $ 0.03 $ 0.02
========= =========
Average number of common shares outstanding - Basic 24,823 24,738
========= =========
Average number of common shares outstanding -
Diluted 24,915 24,988
========= =========
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months Ended
September 30,
------------------
2008 2007
-------- --------
Cash flows from operating activities:
Net income $ 772 $ 411
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 3,396 3,140
Accretion of 12.75% Senior Discount Notes 2,328 2,080
Deferred income taxes 565 566
Amortization of deferred financing costs 614 541
Loss on disposal of property and equipment 1 14
Earnings of minority shareholder 527 505
Stock based compensation expense 45 -
Change in assets and liabilities -
Accounts receivable 439 (4,421)
Inventories (15) (63)
Prepaid expenses and other 694 459
Insurance deposits 48 (485)
Other assets (248) 2,840
Accounts payable (2,009) 988
Accrued liabilities 5,741 1,084
Deferred revenue 352 97
Other liabilities (639) 191
-------- --------
Net cash provided by operating activities 12,611 7,947
-------- --------
Cash flows from investing activities:
Purchases of short-term investments - (5,000)
Sales of short-term investments - 2,500
Capital expenditures (4,071) (2,313)
Proceeds from the sale of property and
equipment - 3
-------- --------
Net cash used in investing activities (4,071) (4,810)
-------- --------
Cash flows from financing activities:
Repayment of debt (7,098) (5,009)
Distributions to minority shareholders - (300)
-------- --------
Net cash used in financing activities (7,098) (5,309)
-------- --------
Increase (decrease) in cash and cash
equivalents 1,442 (2,172)
Cash and cash equivalents, beginning of
period 15,907 6,181
-------- --------
Cash and cash equivalents, end of period $ 17,349 $ 4,009
======== ========
Supplemental disclosure of non-cash operating
activities:
Increase in current assets and accrued
liabilities for general liability insurance claim $ 986 $ -
======== ========
Increase in accumulated deficit, other
liabilities and decrease in deferred taxes upon
adoption of FIN 48 $ - $ 12,826
======== ========
Supplemental disclosure of non-cash investing
activities:
Property and equipment funded by liabilities $ 1,368 $ 12
======== ========
RURAL/METRO CORPORATION
RECONCILIATION OF INCOME FROM
CONTINUING AND DISCONTINUED OPERATIONS TO EBITDA
(unaudited)
(in thousands)
Three Months Ended
September 30,
------------------
2008 2007
-------- --------
Income from continuing operations $ 1,097 $ 400
Add (deduct)
Depreciation and amortization 3,394 3,051
Interest expense 7,813 7,750
Interest income (115) (142)
Income tax provision 2,239 966
-------- --------
EBITDA from continuing operations 14,428 12,025
-------- --------
Income from discontinued operations (325) 11
Add (deduct)
Depreciation and amortization 2 89
Income tax provision (301) 10
-------- --------
EBITDA from discontinued operations (624) 110
-------- --------
Total EBITDA $ 13,804 $ 12,135
======== ========(RURL/F) Contact: CONTACT:
Liz Merritt
Rural/Metro Corporation
(480) 606-3337
Sharrifah Al-Salem
FD Ashton Partners
(415) 293-4414
Source: Rural/Metro Corporation
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