EXHIBIT 99.1
CONTACT: | Liz Merritt, Rural/Metro Corporation | |||||||||||||||||||||||||
(480) 606-3337 | ||||||||||||||||||||||||||
Financial Dynamics, Investor Relations | ||||||||||||||||||||||||||
Jim Byers (Investors) | ||||||||||||||||||||||||||
(415) 439-4504 | ||||||||||||||||||||||||||
Christopher Katis (Media) | ||||||||||||||||||||||||||
(415) 439-4518 |
For immediate release
RURAL/METRO ANNOUNCES FIRST-QUARTER INCOME
FROM CONTINUTING OPERATIONS OF $1.3 MILLION;
6% INCREASE IN NET REVENUE
SCOTTSDALE, Ariz.(Nov. 14, 2003)—Rural/Metro Corporation (Nasdaq: RURLC), a leading national provider of medical transportation and fire protection services, announced today the results of its fiscal 2004 first quarter ended September 30, 2003.
The company reported net revenue applicable to continuing operations of $133.8 million for the three months ended September 30, 2003, a $7.5 million or a 6.0% increase, compared to $126.3 million for the three months ended September 30, 2002. Medical transportation and related services revenue increased $8.1 million, or 7.7%, from $105.7 million for the three months ended September 30, 2002 to $113.8 million for the three months ended September 30, 2003. The company attributed the gain primarily to growth in new and existing service areas, as well as rate increases in certain of its service areas.
Same-service-area revenue growth for the first quarter of fiscal 2004 increased 7.1%, or $7.4 million, over fiscal 2003 levels. The company attributed progress in this area to its ongoing efforts to extend market share in established local and regional service areas, as well as increases related to new contracts, including the company’s exclusive 911 agreement in Dona Ana County (greater Las Cruces), New Mexico.
The company reported income from continuing operations of $1.3 million for the three months ended September 30, 2003 compared with a loss from continuing operations of $257,000 in the comparable period in fiscal 2003. Net income for the three months ended September 30, 2003 totaled $642,000 after considering a loss of $676,000 relating to service areas closed during the period which have been classified as discontinued operations, compared with net income of $12.8 million in the same period in fiscal 2003. Net income in the fiscal 2003 period included a $12.5 million gain attributable to the disposition of the Company’s Latin American operations. The Company reported a net loss per diluted share of $0.03 in the first quarter of fiscal 2004 compared with net income per diluted share of $0.72 in the first quarter of fiscal 2003. The per share amount in fiscal 2004 includes an accretion charge of $1.2 million relating to the
Company’s Series B redeemable preferred stock while the fiscal 2003 amount includes $0.78 relating to the gain on the disposition of the Company’s Latin American operations.
Cash used in operating activities totaled $5.5 million and $1.8 million in the three months ended September 30, 2003 and 2002, respectively. Both periods were affected by the $5.9 million semi-annual interest payment on the company’s Senior Notes due September 15, 2003. For the three months ended September 30, 2003, the company generated $12.0 million in earnings before interest, taxes, depreciation and amortization (EBITDA), compared to $22.1 million for the same period of the prior year, which included a $12.5 million gain from the disposal of the company’s former Latin American operations. Excluding the gain, the company attributed the remaining improvement in EBITDA performance primarily to increases in operating income.
The company regards EBITDA, which is widely used by analysts, investors, creditors, and other interested parties, as relevant and useful information. The company provides this information to permit a more comprehensive analysis of its ability to meet future debt service, capital expenditure, and working capital requirements. Additionally, the company’s management uses this information to evaluate the performance of its operating units. EBITDA is not intended to represent cash provided by operating activities as defined by generally accepted accounting principles and it should not be considered as an indicator of operating performance or an alternative to cash provided by operating activities as a measure of liquidity. The company has provided a reconciliation of EBITDA to cash provided by operating activities in the accompanying table.
Jack Brucker, President and Chief Executive Officer, said, “Our results for the first quarter reflect our ongoing commitment to building the company’s financial strength as we carry out our strategic objective to grow the business in local and regional markets. We have demonstrated solid performance early in the fiscal year and look forward to further enhancing results as we continue to execute on our plan.”
Contracting activities during the first quarter resulted in renewals of several existing agreements, including a five-year commitment to provide emergency medical services and transportation to the Indianapolis Motor Speedway, a five-year agreement to provide exclusive medical transportation services in Shelby County (greater Memphis), Tennessee, and three-year renewal for airport fire protection services at the Morristown (New Jersey) Municipal Airport. In recent weeks, the company also has been awarded new and renewal medical transportation contracts in Cleveland, Ohio; Tucson, Arizona; and Franklin County, Tennessee.
The company’s cash-flow performance remained consistent throughout the first quarter, with daily cash deposits averaging $1.8 million, compared to $1.7 million per day for the same period of the prior year. Cash collections during the first three months of fiscal 2004 were 1.5 percent higher than the comparable period in fiscal 2003, increasing from $111.2 million to $112.9 million.
Brucker continued, “We continue to see improvement in our operating statistics, particularly when we focus on the company’s cash metrics. We believe these trends support
ongoing progress as we focus on the company’s tactical objectives for fiscal 2004 and long-term strategic goals.”
The company reported continuing improvement in several key operating statistics. On a fully consolidated basis, the company reported average EMS patient charge increased by 8% to $304 for the first quarter ended September 30, 2003, compared to $281 for the same period of the prior year. Additionally, the company reported average days’ sales outstanding of 42 days, down from an average of 45 days a year ago.
A summary of certain of the company’s key operating statistics follows:
Q1 ‘03 (9/30/02) | Q2 ‘03 (12/31/02) | Q3 ‘03 (3/31/03) | Q4 ‘03 (6/30/03) | Q1 ‘04 (9/30/03) | |||||||||||
EMS TRANSPORTS (1) | 269,056 | 262,768 | 267,847 | 266,424 | 269,239 | ||||||||||
AVERAGE EMS Patient Charge (2) | $ | 281 | $ | 289 | $ | 295 | $ | 297 | $ | 304 | |||||
AVERAGE DSO (YTD) (3) | 45 | 47 | 44 | 44 | 42 |
(1) | EMS transports are defined as actual patient transports, including those under capitated contract arrangements. |
(2) | Average Emergency Medical Services (EMS) Patient Charge is defined as gross EMS transport revenue minus provisions for Medicare, Medicaid and contractual discounts and doubtful accounts divided by EMS transports. For the purpose of this calculation, revenue and transports related to capitated contracts is excluded. |
(3) | Average year-to-date DSO is defined as average accounts receivable divided by net revenue per day, as calculated on a year-to-date basis. |
Rural/Metro Corporation provides emergency and non-emergency medical transportation, fire protection, and other safety services in 24 states and more than 400 communities throughout the United States. For more information, visit the company’s web site atwww.ruralmetro.com.
Except for historical information herein, this press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, among others, the company’s ability to collect its accounts receivable; competitors’ actions; litigation matters; and the company’s ability to sustain operating cash flow, secure new contracts, retain existing contracts, improve earnings and operating margins, further enhance the efficiency of the collection process, and effectively manage collateral requirements and costs related to its insurance coverage. Additional factors that could affect the
company are described in its Form 10-K, as amended, for the fiscal year ended June 30, 2003 under the caption “Risk Factors” in the Management’s Discussion and Analysis section, and other factors as described from time to time in the company’s SEC filings. The company disclaims any obligation to update its forward-looking statements.
###
(Tables to Follow)
RURAL/METRO CORPORATION
CONSOLIDATED BALANCE SHEET
(in thousands)
September 30 2003 | June 30, 2003 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 4,279 | $ | 12,561 | ||||
Accounts receivable, net of allowance for doubtful accounts of $54,307 and $48,422 at September 30, 2003 and June 30, 2003, respectively | 64,521 | 60,428 | ||||||
Inventories | 11,696 | 11,504 | ||||||
Prepaid expenses and other | 6,968 | 7,511 | ||||||
Total current assets | 87,464 | 92,004 | ||||||
Property and equipment, net | 41,310 | 43,010 | ||||||
Goodwill | 41,167 | 41,167 | ||||||
Insurance deposits | 8,274 | 7,937 | ||||||
Other assets | 14,632 | 12,048 | ||||||
$ | 192,847 | $ | 196,166 | |||||
LIABILITIES, MINORITY INTEREST, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 10,658 | $ | 13,778 | ||||
Accrued liabilities | 52,274 | 57,698 | ||||||
Deferred revenue | 18,552 | 17,603 | ||||||
Current portion of long-term debt | 1,384 | 1,329 | ||||||
Total current liabilities | 82,868 | 90,408 | ||||||
Long-term debt, net of current portion | 305,122 | 305,310 | ||||||
Other liabilities | 105 | 181 | ||||||
Deferred income taxes | 650 | 650 | ||||||
Total liabilities | 388,745 | 396,549 | ||||||
Minority interest | 2,258 | 1,984 | ||||||
Series B redeemable preferred stock | 8,994 | 7,793 | ||||||
Series C redeemable preferred stock | 3,436 | — | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity (deficit) | ||||||||
Common stock | 168 | 166 | ||||||
Additional paid-in capital | 134,371 | 135,405 | ||||||
Treasury stock | (1,239 | ) | (1,239 | ) | ||||
Accumulated deficit | (343,886 | ) | (344,492 | ) | ||||
Total stockholders’ equity (deficit) | (210,586 | ) | (210,160 | ) | ||||
$ | 192,847 | $ | 196,166 | |||||
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For The Three Months Ended September 30, 2003 and 2002
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 30, | ||||||||||||||
2003 | % of Net Revenue | 2002 (As Restated*) | % of Net Revenue | |||||||||||
Net revenue | $ | 133,838 | 100.0 | % | $ | 126,256 | 100.0 | % | ||||||
Operating expenses: | ||||||||||||||
Payroll and employee benefits | 71,874 | 53.7 | % | 69,343 | 54.9 | % | ||||||||
Provision for doubtful accounts | 21,498 | 16.1 | % | 20,815 | 16.5 | % | ||||||||
Depreciation and amortization | 2,932 | 2.2 | % | 3,394 | 2.7 | % | ||||||||
Other operating expenses | 27,903 | 20.8 | % | 26,144 | 20.7 | % | ||||||||
Total operating expenses | 124,207 | 92.8 | % | 119,696 | 94.8 | % | ||||||||
Operating income | 9,631 | 7.2 | % | 6,560 | 5.2 | % | ||||||||
Interest expense | (8,014 | ) | -6.0 | % | (5,911 | ) | -4.7 | % | ||||||
Interest income | 29 | 0.0 | % | 27 | 0.0 | % | ||||||||
Income from continuing operations before income taxes and minority interest | 1,646 | 1.2 | % | 676 | 0.5 | % | ||||||||
Income tax provision | (90 | ) | -0.1 | % | (55 | ) | 0.0 | % | ||||||
Minority interest | (274 | ) | -0.2 | % | (878 | ) | -0.7 | % | ||||||
Income (loss) from continuing operations | 1,282 | 1.0 | % | (257 | ) | -0.2 | % | |||||||
Income (loss) from discontinued operations (including gain on the disposition of Latin American operations of $12,488 in 2002) | (676 | ) | -0.5 | % | 13,010 | 10.3 | % | |||||||
Net income | 606 | 0.5 | % | 12,753 | 10.1 | % | ||||||||
Less: Accretion of redeemable preferred stock | (1,201 | ) | -0.9 | % | — | 0.0 | % | |||||||
Net income (loss) applicable to common stock | $ | (595 | ) | -0.4 | % | $ | 12,753 | 10.1 | % | |||||
Income (loss) per share | ||||||||||||||
Basic— | ||||||||||||||
Income (loss) from continuing operations after accretion of redeemable preferred stock | $ | 0.00 | $ | (0.02 | ) | |||||||||
Income (loss) from discontinued operations | (0.04 | ) | 0.81 | |||||||||||
Net income (loss) | $ | (0.04 | ) | $ | 0.79 | |||||||||
Diluted— | ||||||||||||||
Income (loss) from continuing operations after accretion of redeemable preferred stock | $ | 0.00 | $ | (0.02 | ) | |||||||||
Income (loss) from discontinued operations | (0.03 | ) | 0.81 | |||||||||||
Net income (loss) | $ | (0.03 | ) | $ | 0.79 | |||||||||
Average number of shares outstanding—Basic | 16,399 | 15,994 | ||||||||||||
Average number of shares outstanding—Diluted | 17,286 | 15,994 | ||||||||||||
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Three Months Ended September 30, 2003 and 2002
(Unaudited)
(In Thousands)
2003 | 2002 | |||||||
(As Restated*) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 606 | $ | 12,753 | ||||
Adjustments to reconcile net income to cash used in operating activities— | ||||||||
Non-cash portion of gain on disposition of Latin American operations | — | (13,732 | ) | |||||
Depreciation and amortization | 3,363 | 3,448 | ||||||
(Gain) loss on sale of property and equipment | 22 | (172 | ) | |||||
Provision for doubtful accounts | 21,852 | 21,538 | ||||||
Earnings of minority shareholder | 274 | 878 | ||||||
Amortization of deferred financing costs | 735 | 446 | ||||||
Amortization of debt discount | 6 | 6 | ||||||
Change in assets and liabilities— | ||||||||
Increase in accounts receivable | (25,945 | ) | (19,844 | ) | ||||
(Increase) decrease in inventories | (192 | ) | 493 | |||||
Decrease in prepaid expenses and other | 542 | 37 | ||||||
Increase in insurance deposits | (337 | ) | (154 | ) | ||||
Decrease in other assets | 156 | 2,019 | ||||||
Decrease in accounts payable | (3,120 | ) | (1,918 | ) | ||||
Decrease in accrued liabilities and other liabilities | (4,365 | ) | (8,318 | ) | ||||
Increase in deferred revenue | 949 | 711 | ||||||
Net cash used in operating activities | (5,454 | ) | (1,809 | ) | ||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (1,241 | ) | (2,011 | ) | ||||
Proceeds from the sale of property and equipment | 33 | 214 | ||||||
Net cash used in investing activities | (1,208 | ) | (1,797 | ) | ||||
Cash flows from financing activities: | ||||||||
Repayments on credit facility | (1,000 | ) | — | |||||
Repayment of debt and capital lease obligations | (274 | ) | (356 | ) | ||||
Cash paid for debt modification costs | (515 | ) | (391 | ) | ||||
Issuance of common stock | 169 | 156 | ||||||
Net cash used in financing activities | (1,620 | ) | (591 | ) | ||||
Effect of currency exchange rate changes on cash | — | (21 | ) | |||||
Decrease in cash | (8,282 | ) | (4,218 | ) | ||||
Cash, beginning of period | 12,561 | 10,677 | ||||||
Cash, end of period | $ | 4,279 | $ | 6,459 | ||||
RURAL/METRO CORPORATION
RECONCILIATION OF EBITDA
TO CASH FLOW USED IN OPERATING ACTIVITIES
For the three months ended September 30, 2003 and 2002
2003 | 2002 | |||||||
Net income | $ | 606 | $ | 12,753 | ||||
Add back: | ||||||||
Depreciation and amortization | 3,363 | 3,448 | ||||||
Interest expense | 8,014 | 5,911 | ||||||
Interest income | (29 | ) | (27 | ) | ||||
Income tax provision | 90 | 55 | ||||||
EBITDA | 12,044 | 22,140 | ||||||
Increase (decrease): | ||||||||
Interest expense | (8,014 | ) | (5,911 | ) | ||||
Interest income | 29 | 27 | ||||||
Income tax provision (benefit) | (90 | ) | (55 | ) | ||||
(Gain) loss on sale of property and equipment | 22 | (172 | ) | |||||
Non-cash portion of gain on disposal of Latin American operations | — | (13,732 | ) | |||||
Provision for doubtful accounts | 21,852 | 21,538 | ||||||
Earnings of minority shareholder | 274 | 878 | ||||||
Amortization of deferred financing costs | 735 | 446 | ||||||
Amortization of debt discount | 6 | 6 | ||||||
Changes in operating assets and liabilities | (32,312 | ) | (26,974 | ) | ||||
Cash flow used in operating activities | $ | (5,454 | ) | $ | (1,809 | ) | ||
The company regards EBITDA, which is widely used by analysts, investors, creditors, and other interested parties, as relevant and useful information. The company provides this information to permit a more comprehensive analysis of its ability to meet future debt service, capital expenditure, and working capital requirements. Additionally, the company’s management uses this information to evaluate the performance of its operating units. EBITDA is not intended to represent cash provided by operating activities as defined by generally accepted accounting principles and it should not be considered as an indicator of operating performance or an alternative to cash provided by operating activities as a measure of liquidity.