Rural/Metro Reports Fiscal 2009 Fourth Quarter and Full Year Financial Results
- Press Release
- Source: Rural/Metro Corporation
- On 7:00 am EDT, Wednesday September 9, 2009
SCOTTSDALE, AZ--(Marketwire - 09/09/09) - Rural/Metro Corporation (NASDAQ:RURL - News)
Highlights:
�
-- Company makes $10 million principal payment to reduce senior debt.
-- Net revenue increased 3.5% to $498.8 million for the full year; up
3.7% to $129.1 million in the fourth quarter.
-- Net income increased 22.7% to $5.0 million for the full year; up 50.0%
to $2.2 million in the fourth quarter.
-- Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) from continuing operations increased 11.4% to $58.5 million for
the full year; up 3.6% to $15.0 million in the fourth quarter.
-- Average Patient Charge (APC) increased $14 per transport to $370 for
the full year; up $11 per transport to $380 in the fourth quarter.
-- Net cash provided by operating activities up 49.6% to $52.1 million
for the full year.
Rural/Metro Corporation (NASDAQ:RURL - News), a leading provider of ambulance and private fire protection services, announced results today for its fiscal 2009 fourth quarter and full year, highlighting strong cash-flow generation, growth in profitability, and further progress in reducing uncompensated care.
Jack Brucker, President and Chief Executive Officer, said, "Quarterly and full-year results demonstrated the continued effectiveness of our strategy to capitalize on a successful business model that focuses on delivering high-quality services and best-in-class patient care. Solid results this quarter and throughout fiscal 2009 were driven primarily by our ability to grow the business, successfully manage uncompensated care, improve operating efficiencies and advance our technology initiatives."
The Company announced today that it made a $10.0 million principal payment to further reduce the outstanding principal balance of its senior Term Loan B to $56.0 million, from the original issue of $135.0 million in 2005. "We remain committed to deleveraging the balance sheet, as strong cash flows support our ability to reduce debt and enhance the long-term enterprise value for our stockholders," Mr. Brucker said.
Results of Operations for the Fiscal Year Ended June 30, 2009
Consolidated net revenue for fiscal 2009 increased 3.5 percent, or $16.6 million, to $498.8 million, compared to $482.2 million in fiscal 2008. Ambulance services revenue increased 3.7 percent, or $15.0 million, to $423.4 million, compared to $408.4 million in the prior year. Other services revenue, which includes fire protection services, increased 2.3 percent, or $1.7 million, to $75.4 million, compared to $73.7 million for the prior year. Consolidated net revenue growth was driven primarily by increases in APC and new ambulance contracts.
Payroll and employee benefits for fiscal 2009 were $309.9 million, or 62.1 percent of net revenue, compared to $298.4 million, or 61.9 percent of net revenue, in fiscal 2008. The year-over-year increase in payroll dollars was driven primarily by increases in workers' compensation and employee health insurance expenses, as well as cost-of-living wage increases.
Other operating expenses for fiscal 2009 were $117.6 million, or 23.6 percent of net revenue, compared to $117.5 million, or 24.4 percent of net revenue, in fiscal 2008. These results included a reduction in professional fees and fuel expenses offset by an increase in vehicle, equipment and station expenses.
General and auto liability expense for fiscal 2009 was $11.8 million, a decrease of $2.6 million when compared to general and auto liability expense of $14.4 million in fiscal 2008. The decrease was related to a reduction in current-year premium and claims expense.
The income tax provision for fiscal 2009 reflects a $1.0 million wage tax credit identified by the Company that reduced the overall provision and resulted in a fiscal 2009 effective income tax rate of 49.6 percent, compared to an effective income tax rate of 50.9 percent for fiscal 2008. Cash taxes paid in fiscal 2009 were $1.2 million.
Income from continuing operations for fiscal 2009 was $5.9 million, or diluted earnings per share (EPS) of $0.24, compared to income from continuing operations of $3.7 million, or diluted EPS of $0.15, in fiscal 2008. Net income from all operations for fiscal 2009 was $5.0 million, or diluted EPS of $0.20, compared to net income from all operations of $4.1 million, or diluted EPS of $0.16 in fiscal 2008.
EBITDA from continuing operations for fiscal 2009 increased 11.4 percent, or $6.0 million, to $58.5 million compared to $52.5 million for fiscal 2008.
EBITDA from continuing operations is a key indicator management uses 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 its 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 and 12 months ended June 30, 2009 and 2008 is included with this press release and the related current report on Form 8-K.
Net cash provided by operating activities remained strong in fiscal 2009, increasing by 49.6 percent to $52.1 million, compared to $34.8 million in fiscal 2008. Capital expenditures for fiscal 2009 were $16.7 million.
Results of Operations for the Fourth Quarter Ended June 30, 2009
Consolidated net revenue for the fiscal fourth quarter 2009 increased 3.7 percent, or $4.6 million, to $129.1 million, compared to $124.5 million for the same period in fiscal 2008. Ambulance services revenue increased 3.7 percent, or $3.9 million, to $109.9 million, compared to $106.0 million for the same prior-year period. Other services revenue, which includes fire protection services, increased 3.8 percent, or $0.7 million, to $19.2 million, compared to $18.5 million for the same prior-year period. Consolidated quarterly net revenue growth was driven primarily by increases in APC and new ambulance contracts.
Payroll and employee benefits for the fiscal fourth quarter 2009 were $81.4 million, or 63.0 percent of net revenue, compared to $75.2 million, or 60.4 percent of net revenue, in the same prior-year period. The quarter-over-quarter increase in payroll dollars was driven primarily by increases in workers' compensation and employee health insurance expenses, as well as an increase in ambulance unit hours due to higher transport volume.
Other operating expenses for the fourth quarter ended June 30, 2009 were $31.5 million, or 24.4 percent of net revenue, compared to $30.5 million, or 24.5 percent of net revenue, for the same prior-year period. The difference was due primarily to an increase in vehicle, equipment and station expenses, offset in part by lower fuel expenses.
General and auto liability expense in the fiscal fourth quarter 2009 was $1.1 million, a decrease of $3.5 million when compared to general and auto liability expense of $4.6 million for the same prior-year period. The decrease was related primarily to net positive changes in actuarial adjustments from year to year.
As noted above, the income tax provision reflects a $1.0 million wage tax credit identified by the Company that reduced the overall provision and resulted in a fiscal fourth-quarter 2009 effective income tax rate of 29.7 percent compared to an effective income tax rate of 50.2 percent for the same period of the prior year.
Income from continuing operations for the fiscal fourth quarter 2009 was $2.5 million, or diluted EPS of $0.10, compared to income from continuing operations of $1.6 million, or diluted EPS of $0.07 for the same prior-year period. Net income from all operations for the fourth quarter was $2.2 million, or diluted EPS of $0.09, compared to net income from all operations of $1.5 million, or diluted EPS of $0.06 in fiscal 2008.
EBITDA from continuing operations for the fourth quarter ended June 30, 2009 increased 3.6 percent, or $0.6 million, to $15.0 million compared to $14.4 million for the same prior-year period.
Fourth-Quarter Operating Statistics
The following table provides results for medical transports, APC, and DSO during each of the five most recent quarters.
�
-- Increases in fourth-quarter transport volume were related primarily to
new contracts and expansion in existing markets, offset partly by
discontinued contracts in Tempe, Arizona, and unincorporated Orange County,
Florida.
-- APC continued to increase on a year-over-year and sequential quarterly
comparison, with the improvement driven equally by increases in rates and
reductions in uncompensated care.
-- Improvements in DSO continued to be driven by the ongoing
effectiveness and efficiency of the company's billing and collections
process.
�
Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09
(6/30/08) (9/30/08) (12/31/08) (3/31/09) (6/30/09)
---------- ---------- ---------- ---------- ----------
Medical Transports
(1) 266,926 269,044 261,041 268,515 269,567
Average Patient
Charge (APC) (2) $ 369 $ 362 $ 364 $ 374 $ 380
Days Sales
Outstanding (DSO)
(3) 60 59 57 55 52
(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 2010 Financial Guidance
The Company announced financial guidance for the fiscal year ending June 30, 2010, with EBITDA from continuing operations expected to be in the range of $60.0 million to $63.0 million and capital expenditures expected to be in the range of $16.0 million to $19.0 million.
Mr. Brucker concluded, "Our goals in 2010 will target growth through new contracts and same-service-area expansion, as we strive to improve key metrics, advance important technology projects and increase profitability. We believe our guidance reflects the investments we will make to support the highest levels of service quality while also striving to achieve optimal operating efficiencies."
Conference Call to Discuss Results
The Company will discuss results in a conference call today beginning at 8 a.m. Pacific/11 a.m. Eastern. To access the conference call, dial 877-419-6596 (domestic) or 719-325-4846 (international). The call also will be broadcast and archived 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) Sept. 11, 2009. To access the replay, dial 888-203-1112. From international locations, dial 719-457-0820. The required pass code is 4689985.
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 "believe", "anticipate," "expect", "plan", "intend", "may", "should", "will likely result", "continue", "estimate", "project", "goals", or 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, uncompensated care, working capital, accounts receivable collection, liquidity, cash flow, EBITDA, capital expenditures, insurance coverage and claim reserves, capital needs, key operating metrics, future growth plans, future operating results and future compliance with covenants in our debt facilities or instruments. In addition, the Company may face risks and uncertainties related to 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.
(RURL/F)
�
RURAL/METRO CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, June 30,
2009 2008
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 37,108 $ 15,907
Accounts receivable, net 64,355 76,131
Inventories 8,535 8,456
Deferred income taxes 25,032 22,263
Prepaid expenses and other 19,895 18,946
---------- ----------
Total current assets 154,925 141,703
Property and equipment, net 49,096 46,938
Goodwill 37,700 37,700
Deferred income taxes 41,678 50,773
Insurance deposits 716 989
Other assets 10,840 16,108
---------- ----------
Total assets $ 294,955 $ 294,211
========== ==========
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 14,883 $ 16,147
Accrued liabilities 57,588 55,139
Deferred revenue 21,585 21,901
Current portion of long-term debt 199 374
---------- ----------
Total current liabilities 94,255 93,561
Long-term debt, net of current portion 277,110 279,017
Other liabilities 28,497 29,536
---------- ----------
Total liabilities 399,862 402,114
---------- ----------
Minority interest 1,825 1,966
---------- ----------
Stockholders' deficit:
Common stock, $0.01 par value, 40,000,000
shares authorized, 24,852,726 and 24,822,726
shares issued and outstanding at
June 30, 2009 and 2008, respectively 248 248
Additional paid-in capital 155,187 154,918
Treasury stock, 96,246 shares at both
June 30, 2009 and 2008 (1,239) (1,239)
Accumulated other comprehensive income (loss) (2,597) (439)
Accumulated deficit (258,331) (263,357)
---------- ----------
Total stockholders' deficit (106,732) (109,869)
---------- ----------
Total liabilities, minority interest and
stockholders' deficit $ 294,955 $ 294,211
========== ==========
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net revenue $ 129,103 $ 124,535 $ 498,808 $ 482,167
--------- --------- --------- ---------
Operating expenses:
Payroll and employee
benefits 81,398 75,219 309,894 298,395
Depreciation and
amortization 3,822 3,316 14,588 12,736
Other operating expenses 31,537 30,510 117,611 117,523
General/auto liability
insurance expense 1,056 4,552 11,766 14,421
Gain on sale of assets (138) (108) (551) (1,386)
Gain on property insurance
settlement - - - (70)
--------- --------- --------- ---------
Total operating expenses 117,675 113,489 453,308 441,619
--------- --------- --------- ---------
Operating income 11,428 11,046 45,500 40,548
Interest expense (7,518) (7,983) (30,843) (31,731)
Interest income 69 67 324 374
--------- --------- --------- ---------
Income from continuing
operations before income
taxes and minority interest 3,979 3,130 14,981 9,191
Income tax provision (1,181) (1,570) (7,427) (4,674)
Minority interest (291) 84 (1,609) (812)
--------- --------- --------- ---------
Income from continuing
operations 2,507 1,644 5,945 3,705
Income (loss) from
discontinued operations,
net of income taxes (312) (181) (919) 392
--------- --------- --------- ---------
Net income $ 2,195 $ 1,463 $ 5,026 $ 4,097
========= ========= ========= =========
Income (loss) per share:
Basic -
Income from continuing
operations $ 0.10 $ 0.07 $ 0.24 $ 0.15
Income (loss) from
discontinued operations $ (0.01) $ (0.01) $ (0.04) $ 0.02
--------- --------- --------- ---------
Net income $ 0.09 $ 0.06 $ 0.20 $ 0.17
========= ========= ========= =========
Diluted -
Income from continuing
operations $ 0.10 $ 0.07 $ 0.24 $ 0.15
Income (loss) from
discontinued operations $ (0.01) $ (0.01) $ (0.04) $ 0.01
--------- --------- --------- ---------
Net income $ 0.09 $ 0.06 $ 0.20 $ 0.16
========= ========= ========= =========
Average number of common
shares outstanding - Basic 24,845 24,823 24,834 24,787
========= ========= ========= =========
Average number of common
shares outstanding - Diluted 24,938 24,920 24,915 24,952
========= ========= ========= =========
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended June 30, 2009 and 2008
(in thousands)
2009 2008
---------- ----------
Cash flows from operating activities:
Net income $ 5,026 $ 4,097
Adjustments to reconcile net income to
net cash provided by operating activities -
Depreciation and amortization 14,697 12,983
Non-cash adjustments to insurance claims
reserves (4) (6,260)
Accretion of 12.75% Senior Discount Notes 9,968 8,809
Deferred income taxes 7,622 3,493
Tax benefit from the exercise of
stock options (9) (72)
Amortization of deferred financing costs 2,089 2,105
Loss on sale of property and equipment 76 358
Earnings of minority shareholder 1,609 812
Stock based compensation expense (benefit) 241 12
Proceeds from property insurance settlement - (70)
Change in assets and liabilities -
Accounts receivable 11,776 2,182
Inventories (79) 326
Prepaid expenses and other 559 (422)
Insurance deposits 273 879
Other assets 175 2,532
Accounts payable (872) 31
Accrued liabilities 221 3,106
Deferred revenue (316) (3,058)
Other liabilities (971) 2,978
---------- ----------
Net cash provided by operating activities 52,081 34,821
---------- ----------
Cash flows from investing activities:
Purchases of short-term investments - (5,000)
Sales of short-term investments - 5,000
Capital expenditures (16,692) (13,327)
Proceeds from the sale/disposal of
property and equipment 46 26
Proceeds from property insurance settlement - 70
---------- ----------
Net cash used in investing activities (16,646) (13,231)
---------- ----------
Cash flows from financing activities:
Repayment of debt (12,512) (13,987)
Issuance of debt - 3,800
Cash paid for debt issuance costs - (857)
Tax benefit from the exercise of
stock options 9 72
Issuance of common stock 19 58
Distributions to minority shareholders (1,750) (950)
---------- ----------
Net cash used in financing activities (14,234) (11,864)
---------- ----------
Increase in cash and cash equivalents 21,201 9,726
Cash and cash equivalents, beginning of year 15,907 6,181
---------- ----------
Cash and cash equivalents, end of year $ 37,108 $ 15,907
========== ==========
Supplemental disclosure of non-cash operating
activities:
Increase in accumulated deficit, other
liabilities and decrease in deferred
income taxes upon adoption of FIN 48 $ - $ 12,826
Increase in other current assets and
accrued liabilities for general liability
insurance claim 1,508 -
Supplemental disclosure of non-cash investing
and financing activities:
Property and equipment funded by liabilities $ 962 $ 892
Note payable incurred for software licenses - 396
Supplemental cash flow information:
Cash paid for interest $ 19,360 $ 20,890
Cash paid for income taxes, net 1,181 1,748
RURAL/METRO CORPORATION
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING
AND DISCONTINUED OPERATIONS TO EBITDA
(in thousands)
Three Months Ended Twelve Months Ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Income from continuing
operations $ 2,507 $ 1,644 $ 5,945 $ 3,705
Add (deduct):
Depreciation and
amortization 3,822 3,316 14,588 12,736
Interest expense 7,518 7,983 30,843 31,731
Interest income (69) (67) (324) (374)
Income tax provision 1,181 1,570 7,427 4,674
--------- --------- --------- ---------
EBITDA from continuing
operations 14,959 14,446 58,479 52,472
--------- --------- --------- ---------
Income (loss) from discontinued
operations (312) (181) (919) 392
Add (deduct):
Depreciation and
amortization 3 38 108 247
Income tax provision
(benefit) (159) (164) (543) 232
--------- --------- --------- ---------
EBITDA from discontinued
operations (468) (307) (1,354) 871
--------- --------- --------- ---------
Total EBITDA $ 14,491 $ 14,139 $ 57,125 $ 53,343
========= ========= ========= =========
Contact:
CONTACT:
Liz Merritt
Rural/Metro Corporation
(480) 606-3337
Sharrifah Al-Salem, FD
(415) 293-4414
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