Published:
Rural/Metro Reports Fiscal 2010 First Quarter Results
Rural/Metro Corporation (NASDAQ: RURL)
First-Quarter Highlights:
-- Net revenue increased 6.8% to $132.0 million, compared to $123.6
million in the prior year.
-- Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) from continuing operations increased 24.0% to $17.8 million,
compared to $14.4 million in the prior year.
-- Average Patient Charge (APC) increased $27 per transport to $389,
compared to $362 in the prior year.
-- Days Sales Outstanding (DSO) improved by 10 days, from 59 in the prior
year to 49 in the fiscal 2010 first quarter.
-- Cash flow from operations was $17.6 million in the quarter, up 39.3%
compared to the fiscal 2009 first quarter.
Rural/Metro Corporation (NASDAQ: RURL), a leading provider of ambulance and
private fire protection services, announced results today for its fiscal
2010 first quarter, reporting continued growth in net revenue, strong cash
flows, and further improvements in key operating statistics.
"First-quarter results demonstrated the continued effectiveness of our
ongoing efforts to increase revenue and profitability by gaining market
share in existing communities, selectively targeting new contract
opportunities and proactively managing our exposure to uncompensated care,
said Jack Brucker, President and Chief Executive Officer. "We were very
pleased to generate further improvements in key operating statistics,
including both sequential and year-over-year improvements in APC and DSO,
and to sustain strong cash-flow momentum throughout the quarter."
Results of Operations for the Fiscal 2010 First Quarter Ended September 30,
2009
Consolidated net revenue for the first quarter increased 6.8 percent, or
$8.4 million, to $132.0 million, compared to $123.6 million in fiscal 2009.
Ambulance services revenue increased 8.1 percent, or $8.5 million, to
$113.3 million, compared to $104.8 million in the prior year. Other
services revenue, which includes fire protection services was $18.7 million
compared to $18.8 million for the prior year. Consolidated quarterly net
revenue growth was driven primarily by increases in same-service-area APC
and transport volume, as well as new ambulance contracts in Colorado,
Tennessee and Oregon.
Payroll and employee benefits for the first quarter were $81.9 million, or
62.1 percent of net revenue, compared to $75.8 million, or 61.3 percent of
net revenue, in the first quarter of fiscal 2009. The year-over-year
increase in payroll dollars was driven by increases in employee health
insurance and workers' compensation insurance expenses, as well as
additional labor hours related to higher transport volume.
Mr. Brucker explained, "We have experienced a rise in employee health
insurance expense due to an increase in the frequency of high-cost claims,
which were driven primarily by advanced specialty care. We anticipate
employee health insurance expense will continue to be influenced by this
trend."
Other operating expenses for the first quarter were $28.3 million, or 21.4
percent of net revenue, compared to $29.7 million, or 24.0 percent of net
revenue, in fiscal 2009. The difference was driven primarily by a reduction
in fuel expenses in the first quarter compared to the same quarter of the
prior year.
Income from continuing operations for the first quarter was $3.6 million,
compared to $1.6 million for the same period in fiscal 2009. Net income
attributable to Rural/Metro, excluding net income attributable to
noncontrolling interest, was $2.9 million, or diluted EPS of $0.12,
compared to $0.8 million, or diluted EPS of $0.03 for same period in fiscal
2009.
EBITDA from continuing operations for the first quarter increased 24.0
percent, or $3.4 million, to $17.8 million compared to $14.4 million for
the same period in fiscal 2009.
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 months ended September 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 the first
quarter, increasing 39.3 percent to $17.6 million, compared to $12.6
million for the same period in fiscal 2009. Capital expenditures for the
first quarter were $2.2 million.
First-Quarter Operating Statistics
The following table provides results for medical transports, APC, and DSO
during each of the five most recent quarters.
-- Increases in first-quarter transport volume were related primarily to
new contracts and expansion in existing markets, offset partly by a
discontinued contract in unincorporated Orange County, Florida.
-- APC continued to increase on a year-over-year and sequential quarterly
comparison, with the improvement primarily due to increases in rates and
reductions in uncompensated care. APC represents average cash collected
per ambulance transport for the period.
-- The 10-day improvement in DSO was driven by continued efficiencies
within the billing and collections process, as well as the continued
implementation of the Company's electronic patient care record (ePCR)
system.
Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10
(9/30/08)(12/31/08) (3/31/09) (6/30/09) (9/30/09)
--------- --------- --------- --------- ---------
Medical Transports (1) 269,044 261,041 268,515 269,597 272,025
Average Patient Charge
(APC) (2) $ 362 $ 364 $ 374 $ 380 $ 389
Days Sales Outstanding
(DSO) (3) 59 57 55 52 49
(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 Reiterated
The Company reiterated 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.
Refinancing Activities
On November 6, 2009, the Company launched a tender offer and consent
solicitation for its outstanding 9.875% Senior Subordinated Notes due 2015
(the "Notes"). The tender offer will expire at midnight, New York City
time, on December 7, 2009, unless extended. A consent payment will be paid
to holders who tender Notes and deliver consents on or prior to 5:00 p.m.,
New York City time, on November 20, 2009, unless extended.
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
800-263-8506 (domestic) or 719-457-2640 (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 1 p.m. Eastern
today through 11:59 p.m. Eastern November 12, 2009. To access the replay,
dial 888-203-1112. From international locations, dial 719-457-0820. The
required pass code is 4524714.
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, future compliance with covenants in our debt facilities
or instrument, and the ability to successfully complete its refinancing
transaction. 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)
September 30, June 30,
2009 2009
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 42,013 $ 37,108
Accounts receivable, net 63,420 64,355
Inventories 8,219 8,535
Deferred income taxes 25,621 25,032
Prepaid expenses and other 20,868 19,895
------------ ------------
Total current assets 160,141 154,925
Property and equipment, net 47,413 49,096
Goodwill 37,700 37,700
Deferred income taxes 38,671 41,678
Insurance deposits 637 716
Other assets 10,160 10,840
------------ ------------
Total assets $ 294,722 $ 294,955
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 11,752 $ 14,883
Accrued liabilities 64,294 57,588
Deferred revenue 21,709 21,585
Current portion of long-term debt 109 199
------------ ------------
Total current liabilities 97,864 94,255
Long-term debt, net of current portion 269,747 277,110
Other liabilities 28,639 28,497
------------ ------------
Total liabilities 396,250 399,862
------------ ------------
Rural/Metro Stockholders' deficit:
Common stock, $0.01 par value, 40,000,000
shares authorized,
24,884,001 and 24,852,726 shares issued and
outstanding
at September 30, 2009 and June 30, 2009,
respectively 249 248
Additional paid-in capital 155,292 155,187
Treasury stock, 96,246 shares at both
September 30, 2009 and June 30, 2009 (1,239) (1,239)
Accumulated other comprehensive loss (2,548) (2,597)
Accumulated deficit (255,412) (258,331)
------------ ------------
Total Rural/Metro stockholders' deficit (103,658) (106,732)
Noncontrolling interest 2,130 1,825
------------ ------------
Total stockholders' deficit (101,528) (104,907)
------------ ------------
Total liabilities and stockholders'
deficit $ 294,722 $ 294,955
============ ============
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
September 30,
--------------------
2009 2008
--------- ---------
Net revenue $ 131,981 $ 123,573
--------- ---------
Operating expenses:
Payroll and employee benefits 81,938 75,808
Depreciation and amortization 3,879 3,390
Other operating expenses 28,268 29,661
General/auto liability insurance expense 3,442 3,418
Gain on sale of assets (167) (195)
--------- ---------
Total operating expenses 117,360 112,082
--------- ---------
Operating income 14,621 11,491
Interest expense (7,470) (7,813)
Interest income 82 115
--------- ---------
Income from continuing operations before income taxes 7,233 3,793
Income tax provision (3,657) (2,222)
Income from continuing operations 3,576 1,571
Income (loss) from discontinued operations, net of
income taxes 48 (272)
--------- ---------
Net income $ 3,624 $ 1,299
========= =========
Net income attributable to noncontrolling interest (705) (527)
--------- ---------
Net income attributable to Rural/Metro $ 2,919 $ 772
========= =========
Income (loss) per share:
Basic -
Income from continuing operations attributable to
Rural/Metro $ 0.12 $ 0.04
Income (loss) from discontinued operations
attributable to Rural/Metro $ 0.00 (0.01)
--------- ---------
Net income attributable to Rural/Metro $ 0.12 $ 0.03
========= =========
Diluted -
Income from continuing operations attributable to
Rural/Metro $ 0.12 $ 0.04
Income (loss) from discontinued operations
attributable to Rural/Metro $ 0.00 (0.01)
--------- ---------
Net income attributable to Rural/Metro $ 0.12 $ 0.03
========= =========
Average number of common shares outstanding - Basic 24,858 24,823
========= =========
Average number of common shares outstanding -
Diluted 25,204 24,915
========= =========
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended September 30, 2009 and 2008
(in thousands)
2009 2008
-------- --------
Cash flows from operating activities:
Net income $ 3,624 $ 1,299
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 3,879 3,396
Non-cash adjustments to insurance claims reserves 798 -
Accretion of 12.75% Senior Discount Notes 2,664 2,328
Deferred income taxes 2,425 565
Excess tax benefit from share-based compensation (36) -
Amortization of deferred financing costs 570 614
Loss on disposal of property and equipment 7 1
Share-based compensation expense 136 45
Change in assets and liabilities -
Accounts receivable 935 439
Inventories 316 (15)
Prepaid expenses and other (799) 694
Insurance deposits 79 48
Other assets 56 (248)
Accounts payable (3,104) (2,009)
Accrued liabilities 6,465 5,741
Deferred revenue 124 352
Other liabilities (578) (639)
-------- --------
Net cash provided by operating activities 17,561 12,611
-------- --------
Cash flows from investing activities:
Capital expenditures (2,180) (4,071)
Proceeds from the sale/disposal of property and
equipment 4 -
-------- --------
Net cash used in investing activities (2,176) (4,071)
-------- --------
Cash flows from financing activities:
Repayment of debt (10,117) (7,098)
Excess tax benefit from share-based compensation 36 -
Issuance of common stock 1 -
Distributions to noncontrolling interest (400) -
-------- --------
Net cash used in financing activities (10,480) (7,098)
-------- --------
Increase in cash and cash equivalents 4,905 1,442
Cash and cash equivalents, beginning of year 37,108 15,907
-------- --------
Cash and cash equivalents, end of year $ 42,013 $ 17,349
======== ========
Supplemental disclosure of non-cash operating
activities:
Increase in other current assets and accrued
liabilities for
general liability insurance claim 174 986
Supplemental disclosure of non-cash investing and
financing activities:
Property and equipment funded by liabilities $ 473 $ 1,368
Supplemental cash flow information:
Cash paid for interest $ 7,242 $ 7,951
Cash paid for income taxes, net $ 311 $ 170
RURAL/METRO CORPORATION
RECONCILIATION OF INCOME (LOSS) FROM CONTINUING AND DISCONTINUED OPERATIONS
TO EBITDA
(in thousands)
Three Months Ended September 30,
------------------------------
2009 2008
-------------- --------------
Income from continuing operations $ 3,576 $ 1,571
Add (deduct):
Depreciation and amortization 3,879 3,390
Interest expense 7,470 7,813
Interest income (82) (115)
Income tax provision 3,657 2,222
Noncontrolling interest (705) (527)
-------------- --------------
EBITDA from continuing operations 17,795 14,354
-------------- --------------
Income (loss) from discontinued operations 48 (272)
Add (deduct):
Depreciation and amortization - 5
Income tax provision (benefit) 37 (283)
-------------- --------------
EBITDA from discontinued operations 85 (550)
-------------- --------------
Total EBITDA $ 17,880 $ 13,804
============== ==============
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