Exhibit 99.1
RESCARE FOURTH QUARTER AND FULL YEAR 2013 RESULTS
Fourth Quarter 2013 Financial Results
Revenues for the fourth quarter of 2013 were $421.0 million, which was a 3.9% increase over prior year period revenues of $405.0 million. Increased revenues from acquisitions in our Residential and HomeCare segments since the third quarter of 2012 were partially offset by contract losses and modifications in contracts for Workforce Services and other segments.
Net income was $16.9 million for the fourth quarter of 2013, compared with $18.2 million in the same period of 2012. The decrease is primarily attributable to higher legal expenses in the fourth quarter of 2013. Adjusted EBITDA for the fourth quarter of 2013 was $43.2 million versus $45.9 million in the prior year quarter.
Full Year 2013 Financial Results
Revenues for full year 2013 increased 1% over 2012 to $1.62 billion. Net income was $49.8 million in 2013 compared with $41.0 million in 2012. Adjusted EBITDA for 2013 was $141.0 million versus $146.7 million in 2012. Reconciliation of non-GAAP financial measures follows on page 2 of this release.
RES-CARE, INC.
Unaudited Financial Highlights
(In thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
| Income Statement Data: | ||||||||||||||||
| Revenues | $ | 421,012 | $ | 405,027 | $ | 1,616,633 | $ | 1,599,109 | ||||||||
| Cost of services | 309,601 | 298,074 | 1,204,568 | 1,194,494 | ||||||||||||
| Gross profit | 111,411 | 106,953 | 412,065 | 404,615 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Operational general and administrative | 59,753 | 57,426 | 238,685 | 233,838 | ||||||||||||
| Corporate general and administrative | 17,829 | 12,713 | 69,657 | 61,618 | ||||||||||||
| Total operating expenses | 77,582 | 70,139 | 308,342 | 295,456 | ||||||||||||
| Operating income | 33,829 | 36,814 | 103,723 | 109,159 | ||||||||||||
| Interest expense, net | 8,525 | 8,182 | 32,867 | 35,257 | ||||||||||||
| Loss on extinguishment of debt | — | — | — | 7,129 | ||||||||||||
| Income before income taxes | 25,304 | 28,632 | 70,856 | 66,773 | ||||||||||||
| Income tax expense | 8,400 | 10,397 | 21,083 | 25,760 | ||||||||||||
| Net income | 16,904 | 18,235 | 49,773 | 41,013 | ||||||||||||
| Net loss – noncontrolling interest | — | (25 | ) | (110 | ) | (110 | ) | |||||||||
| Net income – Res-Care, Inc. | $ | 16,904 | $ | 18,260 | $ | 49,883 | $ | 41,123 | ||||||||
| Other comprehensive income: | ||||||||||||||||
| Foreign currency translation adjustments | (221 | ) | (88 | ) | (579 | ) | 206 | |||||||||
| Comprehensive income attributable to Res-Care, Inc. | $ | 16,683 | $ | 18,172 | $ | 49,304 | $ | 41,329 | ||||||||
| Total comprehensive income | $ | 16,683 | $ | 18,147 | $ | 49,194 | $ | 41,219 | ||||||||
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RES-CARE, INC.
Unaudited Financial Highlights (continued)
(In thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net income to EBITDA and Adjusted EBITDA: | ||||||||||||||||
| Net income | $ | 16,904 | $ | 18,235 | $ | 49,773 | $ | 41,013 | ||||||||
| Add: Interest, net | 8,525 | 8,182 | 32,867 | 35,257 | ||||||||||||
| Loss on extinguishment of debt | — | — | — | 7,129 | ||||||||||||
| Depreciation and amortization | 8,860 | 8,163 | 34,395 | 33,371 | ||||||||||||
| Income tax expense | 8,400 | 10,397 | 21,083 | 25,760 | ||||||||||||
EBITDA (1) | 42,689 | 44,977 | 138,118 | 142,530 | ||||||||||||
| Add: Share-based compensation | 541 | 891 | 2,917 | 3,836 | ||||||||||||
| Acquisition costs | — | — | — | 339 | ||||||||||||
Adjusted EBITDA (1) | $ | 43,230 | $ | 45,868 | $ | 141,035 | $ | 146,705 | ||||||||
December 31, 2013 | December 31, 2012 | |||||||
| Balance Sheet Data: | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 29,997 | $ | 50,134 | ||||
| Accounts receivable, net | 241,873 | 228,377 | ||||||
| Other current assets | 46,241 | 39,705 | ||||||
| Total current assets | 318,111 | 318,216 | ||||||
Property and equipment, net (2) | 101,021 | 97,030 | ||||||
| Goodwill | 308,350 | 288,265 | ||||||
| Other intangible assets, net | 333,613 | 321,293 | ||||||
| Other assets | 25,182 | 27,154 | ||||||
| $ | 1,086,277 | $ | 1,051,958 | |||||
| LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||
| Current liabilities | $ | 175,699 | $ | 175,174 | ||||
| Other long-term liabilities | 155,227 | 162,722 | ||||||
| Long-term debt | 359,230 | 370,052 | ||||||
| Shareholder’s equity | 396,121 | 344,010 | ||||||
| $ | 1,086,277 | $ | 1,051,958 | |||||
| (1) | EBITDA is defined as net income before depreciation and amortization, net interest expense, loss on extinguishment of debt and income taxes. Adjusted EBITDA is defined as EBITDA before share-based compensation and acquisition costs. EBITDA and Adjusted EBITDA should not be considered as measures of financial performance under accounting principles generally accepted in the United States of America. The items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance. Management routinely calculates and presents EBITDA and Adjusted EBITDA because it believes that EBITDA and Adjusted EBITDA are useful to investors and are used as analytical indicators within the industry to evaluate performance, measure leverage capacity and debt service ability, and to estimate current or prospective enterprise value. EBITDA is also used in measurements under certain covenants contained in the Company’s credit agreement and incentive compensation plan. |
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RES-CARE, INC.
Unaudited Financial Highlights (continued)
(In thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
| Cash Flow Data: | ||||||||||||||||
| Net income | $ | 16,904 | $ | 18,235 | $ | 49,773 | $ | 41,013 | ||||||||
| Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 8,860 | 8,163 | 34,395 | 33,371 | ||||||||||||
| Amortization of discount and deferred debt issuance costs | 869 | 870 | 3,481 | 2,961 | ||||||||||||
| Share-based compensation | 541 | 891 | 2,917 | 3,836 | ||||||||||||
| Deferred income taxes, net | 6,129 | 2,440 | 7,609 | 4,062 | ||||||||||||
| Provision for losses on accounts receivable | 575 | 1,442 | 5,005 | 5,679 | ||||||||||||
| Loss on extinguishment of debt, net of original issue discount paid | — | — | — | 6,400 | ||||||||||||
| Loss on sale of assets | 13 | 162 | 94 | 238 | ||||||||||||
| Changes in operating assets and liabilities | (28,037 | ) | 5,863 | (41,972 | ) | (17,239 | ) | |||||||||
| Cash provided by operating activities | 5,854 | 38,066 | 61,302 | 80,321 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Proceeds from sale of assets | 191 | 86 | 535 | 166 | ||||||||||||
| Purchases of property and equipment | (5,603 | ) | (4,161 | ) | (20,610 | ) | (15,485 | ) | ||||||||
| Acquisitions of businesses, net of cash acquired | (19,323 | ) | (8,613 | ) | (39,318 | ) | (30,690 | ) | ||||||||
| Cash used in investing activities | (24,735 | ) | (12,688 | ) | (59,393 | ) | (46,009 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Debt repayments, net | (2,279 | ) | (4,165 | ) | (21,915 | ) | (5,752 | ) | ||||||||
| Debt issuance costs | — | (1 | ) | (2 | ) | (4,008 | ) | |||||||||
| Cash used in financing activities | (2,279 | ) | (4,166 | ) | (21,917 | ) | (9,760 | ) | ||||||||
| Effect of exchange rate on cash and cash equivalents | (33 | ) | (162 | ) | (129 | ) | (69 | ) | ||||||||
| (Decrease) increase in cash and cash equivalents | $ | (21,193 | ) | $ | 21,050 | $ | (20,137 | ) | $ | 24,483 | ||||||
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RES-CARE, INC.
Unaudited Financial Highlights (continued)
(Dollars in thousands)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
| Segment Data: | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Residential Services | $ | 233,650 | $ | 218,901 | $ | 886,262 | $ | 851,279 | ||||||||
| ResCare HomeCare | 94,967 | 87,358 | 365,919 | 336,975 | ||||||||||||
| Education & Training Services | 32,791 | 36,589 | 133,283 | 150,647 | ||||||||||||
| Workforce Services | 40,233 | 46,843 | 161,904 | 195,956 | ||||||||||||
| Pharmacy Services | 19,371 | 15,336 | 69,265 | 64,252 | ||||||||||||
| Consolidated | $ | 421,012 | $ | 405,027 | $ | 1,616,633 | $ | 1,599,109 | ||||||||
Operating Income(1): | ||||||||||||||||
| Residential Services | $ | 32,648 | $ | 33,746 | $ | 111,069 | $ | 117,510 | ||||||||
| ResCare HomeCare | 9,260 | 7,377 | 28,433 | 23,852 | ||||||||||||
| Education & Training Services | 3,162 | 2,370 | 10,763 | 11,915 | ||||||||||||
| Workforce Services | 4,788 | 4,366 | 17,377 | 12,117 | ||||||||||||
| Pharmacy Services | 1,931 | 1,563 | 6,379 | 5,280 | ||||||||||||
| Corporate | (17,960 | ) | (12,608 | ) | (70,298 | ) | (61,515 | ) | ||||||||
| Consolidated | $ | 33,829 | $ | 36,814 | $ | 103,723 | $ | 109,159 | ||||||||
Operating Margin(1): | ||||||||||||||||
| Residential Services | 14.0 | % | 15.4 | % | 12.5 | % | 13.8 | % | ||||||||
| ResCare HomeCare | 9.8 | % | 8.4 | % | 7.8 | % | 7.1 | % | ||||||||
| Education & Training Services | 9.6 | % | 6.5 | % | 8.1 | % | 7.9 | % | ||||||||
| Workforce Services | 11.9 | % | 9.3 | % | 10.7 | % | 6.2 | % | ||||||||
| Pharmacy Services | 10.0 | % | 10.2 | % | 9.2 | % | 8.2 | % | ||||||||
| Corporate | (4.3 | %) | (3.1 | %) | (4.3 | %) | (3.8 | %) | ||||||||
| Consolidated | 8.0 | % | 9.1 | % | 6.4 | % | 6.8 | % | ||||||||
| (1) | Other (expense) income, which is included with corporate general and administrative expenses per the Income Statement Data on page 1, has been allocated for purposes of segment reporting. |
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