Exhibit 99.1
RURAL/METRO
CORPORATION
50 Years of Serving Others
CONTACT: Liz Merritt, Rural/Metro Corporation
(480) 606-3337
Financial Dynamics, Investor Relations
Jim Byers (Investors)
(415) 439-4504
FOR IMMEDIATE RELEASE
- ---------------------
RURAL/METRO REPORTS STRONG THIRD QUARTER REVENUE
AND OPERATING PERFORMANCE
COMPANY ANNOUNCES $7 MILLION UNSCHEDULED DEBT PAYMENT
SCOTTSDALE, ARIZ. (May 16, 2005) - Rural/Metro Corporation (Nasdaq/SC: RURL), a
leading provider of medical transportation and private fire protection services,
today announced financial results for its fiscal 2005 third quarter ended March
31, 2005.
Net revenue for the fiscal 2005 third quarter increased 8.2% to $145.2 million,
compared to $134.3 million in the prior year's third quarter. Net revenue for
the nine months ended March 31, 2005 increased 6.4% to $418.9 million, compared
to $393.8 million for the same period a year ago. Fiscal 2005 third-quarter and
year-to-date revenue growth primarily reflects a combination of an increase in
the number of medical transports and higher billing rates in both the company's
medical transportation and fire protection businesses.
For the fiscal 2005 third quarter, the company reported a loss of $3.0 million,
or a loss of $0.13 per diluted share, compared to net income of $2.2 million, or
$0.00 per diluted share for the prior year's third quarter. Third-quarter fiscal
2005 results include a loss on the early extinguishment of debt of $8.2 million,
which represents an after-tax loss of $0.32 per diluted share. This loss is
comprised of non-cash write-offs of $5.6 million in debt issuance costs and
$0.1 million in unamortized discounts, as well as $2.5 million related to cash
redemption premiums.
Net income for the fiscal 2005 nine-month period was $4.5 million, or $0.19 per
diluted share, compared to net income of $4.9 million, or $0.04 per diluted
share for the same period a year ago. Fiscal 2005 nine-month results include a
loss on the early extinguishment of debt of $8.2 million, which represents an
after-tax loss of $0.32 per diluted share. The loss per share for the fiscal
2004 period included the impact of allocating net income to the company's former
Series B and Series C preferred stock, as well as a related accretion charge.
Rural/Metro today also announced that it made a $7.0 million unscheduled payment
to reduce the principal balance of its Term Loan B from $135.0 million to $128.0
million. The company anticipates a resulting interest savings of approximately
$350,000 per year.
Jack Brucker, President and Chief Executive Officer, said, "We are pleased with
our ongoing efforts to extend our presence in high-growth service areas and
generate solid and consistent revenue growth. At the same time, we are deriving
benefits from ongoing improved operating efficiencies that provide greater
flexibility to selectively enter new markets. Each of these factors enable us to
make progress toward our goal to improve the company's long-term liquidity
through debt reduction."
REVENUE BY SEGMENT
- ------------------
Medical Transportation and Related Services: Same-service-area medical
transportation revenue increased 7.3% for the third quarter ended March 31, 2005
and 5.5% year-to-date compared to the same prior year periods. Net revenue in
this segment for the fiscal 2005 third quarter increased 7.9% to $125.1 million,
compared to $115.9 million in the prior year's third quarter. For the nine
months ended March 31, 2005, net revenue increased 5.9% to $358.5 million,
compared to $338.4 million for the prior year period. The company attributed the
growth in the segment to higher transport volume and increases in rates.
Fire and Other: Fire and other revenue for the fiscal 2005 third quarter
increased 9.7% to $20.1 million, compared to $18.4 million in 2004. For the nine
months ended March 31, 2005, fire and other revenue increased 9.0% to $60.5
million, compared to $55.4 million for the prior year nine-month period. Revenue
growth in the fire and other segment primarily reflects general rate increases
and an increase in the number of new fire subscription customers.
DEBT REFINANCING
- ----------------
During the third quarter, the company refinanced its former amended credit
facility and senior notes. The company entered into a new senior secured credit
facility, consisting of a $135.0 million Term Loan B due 2011; a $20.0 million,
undrawn revolving credit facility due 2010; and a $35.0 million letter of credit
facility due 2011. Concurrently, the company issued $125.0 million of 9.875%
senior subordinated notes due 2015 and the company issued $93.5 million
aggregate principal amount at maturity (gross proceeds of $50.2 million) of
12.75% senior discount notes due 2016.
Mr. Brucker continued, "With improved cash flows and an improving balance sheet,
we have established a solid foundation to capitalize on the growing demand for
our services and we believe our long-term business prospects are positive. Our
new debt structure provides greater strength and flexibility to expand our
operations in existing service areas and select new markets that are consistent
with our strategic growth objectives."
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EBITDA RESULTS
- --------------
For the third quarter ended March 31, 2005, earnings before interest, taxes,
depreciation and amortization ("EBITDA") was $6.9 million, compared to $12.3
million for the prior-year comparable period. Third-quarter fiscal 2005 EBITDA
includes the $8.2 million loss on early extinguishment of debt.
For the nine months ended March 31, 2005, EBITDA was $35.5 million, compared to
$36.7 million for the same period a year ago. Fiscal 2005 nine-month EBITDA
includes the $8.2 million loss on early extinguishment of debt.
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 additional analysis of its ability
to meet future debt service, capital expenditures, 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 net
income to EBITDA in the attached tables.
OPERATING METRICS
- -----------------
The company's key operating metrics continued to trend positively in the fiscal
2005 third quarter. Medical transport volume grew 5.0% to 279,312 transports,
compared to 266,064 in last year's third quarter. Additionally, net/net EMS
average patient charge ("net/net EMS APC") grew 5.8%, or $18 per transport, to
$330 compared to $312 for the third quarter of 2004. The company considers
net/net EMS APC its best approximation of cash collected per transport. For the
fiscal 2005 third quarter, average quarterly days sales outstanding ("DSO")
dropped to 43 days compared to 45 days in the prior year's third quarter.
Mr. Brucker continued, "We are committed to building on the positive momentum we
have created in these and other key performance areas and we continue to focus
on high-quality, low-risk growth in existing and select new markets while
further enhancing our operational efficiencies and billing effectiveness."
Following is a summary of certain of the company's key operating statistics.
Medical transports and net/net EMS APC statistics have been adjusted to
eliminate discontinued operations for all periods presented:
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- -------------------------- --------------------- ------------------- -------------------- --------------- ----------------
Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05
(3/31/04) (6/30/04) (9/30/04) (12/31/04) (3/31/05)
- -------------------------- --------------------- ------------------- -------------------- --------------- ----------------
MEDICAL TRANSPORTS (1) 266,064 259,953 265,045 264,724 279,312
- -------------------------- --------------------- ------------------- -------------------- --------------- ----------------
NET/NET EMS APC (2) $312 $312 $317 $324 $330
- -------------------------- --------------------- ------------------- -------------------- --------------- ----------------
DSO (QTD) (3) 45 45 45 45 43
- -------------------------- --------------------- ------------------- -------------------- --------------- ----------------
(1) Medical transports from continuing operations are defined as actual
emergency and non-emergency medical transports, excluding those under
fixed-fee arrangements.
(2) Net/net EMS APC is defined as gross medical transport revenue minus
provisions for Medicare, Medicaid and other third-party payers, and
doubtful accounts, divided by emergency and non-emergency transports
from continuing operations. For purposes of this calculation, revenue
and transports related to fixed-fee arrangements are excluded.
(3) DSO is defined as average accounts receivable divided by consolidated
net revenue per day, as calculated on a quarter-to-date basis.
Rural/Metro Corporation provides emergency and non-emergency medical
transportation, fire protection, and other safety services in 22 states and
approximately 365 communities throughout the United States. For more
information, visit the company's web site at www.ruralmetro.com.
The company will discuss these results in a conference call May 16, 2005,
beginning at 8 a.m. Pacific/11 a.m. Eastern. The call will be broadcast live on
the company's web site at www.ruralmetro.com. A replay will be available from 2
p.m. Eastern today through midnight June 13, 2005. The number to call for the
replay is (888) 203-1112. From international locations, (719) 457-0820. The
required pass code to access the replay is 6414742. An archived webcast also
will be available at www.ruralmetro.com.
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 and regulatory matters;
and the company's ability to sustain operating cash flow, secure new contracts,
retain existing contracts, improve earnings and operating margin. Additional
factors that could affect the company are described in its Form 10-K for the
year ended June 30, 2004 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)
4
RURAL/METRO CORPORATION
CONSOLIDATED BALANCE SHEET
(unaudited)
(in thousands, except share data)
MARCH 31, JUNE 30,
2005 2004
----------------- ----------------
ASSETS
Current assets:
Cash $ 10,663 $ 16,372
Accounts receivable, net of allowance for doubtful accounts of $65,584 and
$59,430 at March 31, 2005 and June 30, 2004 respectively 71,681 65,348
Accounts receivable from insurers 8,280 9,966
Inventories 11,858 11,738
Prepaid expenses and other current assets 6,271 8,512
----------------- ----------------
Total current assets 108,753 111,936
Property and equipment, net 44,237 40,283
Goodwill 40,850 41,100
Insurance deposits 6,356 9,244
Other assets 20,360 12,644
----------------- ----------------
$ 220,556 $ 215,207
================= ================
LIABILITIES, MINORITY INTEREST
AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 12,372 $ 13,833
Accrued liabilities 57,928 67,239
Deferred revenue 18,002 17,249
Current portion of long-term debt 2,520 1,495
----------------- ----------------
Total current liabilities 90,822 99,816
Long-term debt, net of current portion 310,235 304,057
Other liabilities 3,240 1,401
Deferred income taxes 650 650
----------------- ----------------
Total liabilities 404,947 405,924
----------------- ----------------
Minority interest 1,549 1,509
----------------- ----------------
Stockholders' deficit:
Common stock, $.01 par value 40,000,000 shares authorized, 23,135,290 and 21,890,816
shares issued and outstanding at March 31, 2005 and June 30, 2004, respectively 231 219
Additional paid-in capital 148,860 147,075
Accumulated deficit (333,792) (338,281)
Treasury stock (1,239) (1,239)
----------------- ----------------
Total stockholders' deficit (185,940) (192,226)
----------------- ----------------
$ 220,556 $ 215,207
================= ================
5
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
% OF % OF
2005 NET REVENUE 2004 NET REVENUE
-------------------------- -------------------------
Net revenue $ 145,226 100.0% $ 134,252 100.0%
------------- ------------
Operating expenses
Payroll and employee benefits 75,021 51.7% 69,998 52.1%
Provision for doubtful accounts 22,522 15.5% 22,856 17.0%
Depreciation and amortization 2,835 2.0% 3,130 2.3%
Other operating expenses 32,564 22.4% 29,349 21.9%
------------- ------------
Total operating expenses 132,942 91.5% 125,333 93.4%
------------- ------------
Operating income 12,284 8.5% 8,919 6.6%
Interest expense (7,205) -5.0% (6,898) -5.1%
Interest income 48 0.0% 16 0.0%
Loss on early extinguishment of debt (8,170) -5.6% - 0.0%
------------- ------------
Income (loss) from continuing operations before income taxes and
minority interest (3,043) -2.1% 2,037 1.5%
Income tax benefit (provision) 126 0.1% (88) -0.1%
Minority interest (68) 0.0% 65 0.0%
------------- ------------
Income (loss) from continuing operations (2,985) -2.1% 2,014 1.5%
Income from discontinued operations - 0.0% 153 0.1%
------------- ------------
Net income (loss) (2,985) -2.1% 2,167 1.6%
Less: Net income allocated to redeemable nonconvertible participating
preferred stock under the two-class method - (495)
Less: Accretion of redeemable nonconvertible participating preferred stock - (1,706)
------------- ------------
Net loss applicable to common stock $ (2,985) $ (34)
============= ============
Income (loss) per share:
Basic -
Loss from continuing operations applicable to common stock $ (0.13) $ (0.01)
Income from discontinued operations applicable to common stock - 0.01
------------- ------------
Net loss $ (0.13) $ -
============= ============
Diluted -
Loss from continuing operations applicable to common stock $ (0.13) $ (0.01)
Income from discontinued operations applicable to common stock - 0.01
------------- ------------
Net loss $ (0.13) $ -
============= ============
Average number of common shares outstanding - Basic 23,019 16,750
============= ============
Average number of common shares outstanding - Diluted 23,019 16,750
============= ============
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RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS For The
Nine Months Ended March 31, 2005 and 2004
(unaudited)
(in thousands, except per share amounts)
% OF % OF
2005 NET REVENUE 2004 NET REVENUE
-------------------------- -------------------------
Net revenue $ 418,906 100.0% $ 393,811 100.0%
-------------- --------------
Operating expenses
Payroll and employee benefits 221,170 52.8% 207,729 52.7%
Provision for doubtful accounts 64,576 15.4% 64,306 16.3%
Depreciation and amortization 8,512 2.0% 8,733 2.2%
Other operating expenses 89,647 21.4% 85,587 21.7%
-------------- --------------
Total operating expenses 383,905 91.6% 366,355 93.0%
-------------- --------------
Operating income 35,001 8.4% 27,456 7.0%
Interest expense (22,039) -5.3% (22,106) -5.6%
Interest income 227 0.1% 67 0.0%
Loss on early extinguishment of debt (8,170) -2.0% - 0.0%
-------------- --------------
Income from continuing operations before income taxes and minority interest 5,019 1.2% 5,417 1.4%
Income tax provision (397) -0.1% (277) -0.1%
Minority interest (40) 0.0% (398) -0.1%
-------------- --------------
Income from continuing operations 4,582 1.1% 4,742 1.2%
Income (loss) from discontinued operations (93) 0.0% 206 0.1%
-------------- --------------
Net income 4,489 1.1% 4,948 1.3%
Less: Net income allocated to redeemable nonconvertible participating
preferred stock under the two-class method - (964)
Less: Accretion of redeemable nonconvertible participating preferred stock - (4,613)
-------------- --------------
Net income (loss) applicable to common stock $ 4,489 $ (629)
============== ==============
Income (loss) per share:
Basic -
Income (loss) from continuing operations applicable to common stock $ 0.20 $ (0.05)
Income from discontinued operations applicable to common stock - 0.01
-------------- --------------
Net income (loss) $ 0.20 $ (0.04)
============== ==============
Diluted -
Income (loss) from continuing operations applicable to common stock $ 0.19 $ (0.05)
Income from discontinued operations applicable to common stock - 0.01
-------------- --------------
Net income (loss) $ 0.19 $ (0.04)
============== ==============
Average number of common shares outstanding - Basic 22,406 16,557
============== ==============
Average number of common shares outstanding - Diluted 23,837 16,557
============== ==============
7
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2005 AND 2004
(UNAUDITED)
(IN THOUSANDS)
2005 2004
-------------------- --------------------
Cash flows from operating activities:
Net income $ 4,489 $ 4,948
Adjustments to reconcile net income to cash provided by
operating activities -
Provision for doubtful accounts 64,601 68,175
Depreciation and amortization 8,762 9,423
Non-cash portion of loss on early extinguishment of debt 5,668 -
Amortization of deferred financing costs 1,932 2,083
Accretion of 12.75% Senior Discount Notes 480 -
Tax benefit related to the exercise of stock options 159 -
Loss on sale of property and equipment 126 104
Earnings of minority shareholder 40 398
Amortization of debt discount 17 19
Change in assets and liabilities -
Increase in accounts receivable (70,934) (75,047)
Decrease (increase) in accounts receivable from insurers 1,686 (5,001)
(Increase) decrease in inventories (120) 221
Decrease in prepaid expenses and other current assets 2,241 1,761
Decrease (increase) in insurance deposits 2,888 (362)
Increase in other assets (3,850) (797)
Decrease in accounts payable (1,461) (1,581)
Decrease in accrued liabilities (9,311) (393)
Increase in deferred revenue 753 732
Increase in other liabilities 11 83
-------------------- --------------------
Net cash provided by operating activities 8,177 4,766
-------------------- --------------------
Cash flows from investing activities:
Capital expenditures (10,327) (6,182)
Proceeds from the sale of property and equipment 14 92
-------------------- --------------------
Net cash used in investing activities (10,313) (6,090)
-------------------- --------------------
Cash flows from financing activities:
Repayments on credit facility due December 2006 (152,555) (1,000)
Repayments of 7.875% Senior Notes due March 2008 (150,000) -
Cash provided under Term Loan B 135,000 -
Cash provided by issuance of 9.875% Senior Subordinated Notes 125,000 -
Cash provided by issuance of 12.75% Senior Discount Notes 50,209 -
Repayment of debt and capital lease obligations (1,027) (931)
Cash paid for debt issuance costs (11,838) (515)
Proceeds from the issuance of common stock 1,638 462
-------------------- --------------------
Net cash used in financing activities (3,573) (1,984)
-------------------- --------------------
Decrease in cash (5,709) (3,308)
Cash, beginning of period 16,372 12,561
-------------------- --------------------
Cash, end of period $ 10,663 $ 9,253
==================== ====================
Non-cash investing activities:
Landlord funded leasehold improvements for new
corporate headquarters $ 1,828 $ -
==================== ====================
8
RURAL/METRO CORPORATION
RECONCILIATION OF EBITDA TO CASH FLOW
PROVIDED BY OPERATING ACTIVITIES
(unaudited)
(in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MARCH 31, MARCH 31,
--------- ---------
2005 2004 2005 2004
--------------- --------------- -------------- -------------
Net income (loss) $ (2,985) $ 2,167 $ 4,489 $ 4,948
Add back:
Depreciation and amortization 2,835 3,202 8,762 9,423
Interest expense 7,205 6,898 22,039 22,106
Interest income (48) (16) (227) (67)
Income tax (benefit) provision (126) 91 400 289
--------------- --------------- -------------- -------------
EBITDA 6,881 12,342 35,463 36,699
Increase (decrease):
Interest expense (7,205) (6,898) (22,039) (22,106)
Interest income 48 16 227 67
Income tax benefit (provision) 126 (91) (400) (289)
Provision for doubtful accounts 22,522 23,619 64,601 68,175
Non-cash portion of loss on early extinguishment of debt 5,668 - 5,668 -
Amortization of deferred financing costs 593 669 1,932 2,083
Accretion of 12.75% Senior Discount Notes 480 - 480 -
Tax benefit related to the exercise of stock options 30 - 159 -
Loss on sale of property and equipment 49 94 126 104
Earnings (losses) of minority shareholder 68 (65) 40 398
Amortization of debt discount 4 6 17 19
Changes in operating assets and liabilities (21,253) (28,056) (78,097) (80,384)
--------------- --------------- -------------- -------------
Net cash provided by operating actvities $ 8,011 $ 1,636 $ 8,177 $ 4,766
=============== =============== ============== =============
9