EX-99.1 2 exh_991.htm EXHIBIT 99.1 exh_991.htm
Exhibit 99.1
 
 
RESCARE FIRST QUARTER 2014 RESULTS

First Quarter 2014 Financial Results

Revenues for the first quarter of 2014 were $421.5 million, which was an 8.2% increase over prior year period revenues of $389.5 million.  The increase in revenue is due to acquisitions in our Residential and HomeCare segments since the first quarter of 2013 and organic growth in our Residential, HomeCare and Pharmacy segments.

Net income was $4.7 million for the first quarter of 2014, compared with $11.3 million in the same period of 2013 and tax benefits for jobs tax credits in the first quarter of 2013.  The decrease is primarily attributable to higher legal expenses in the first quarter of 2014.  Adjusted EBITDA for the first quarter of 2014 was $25.6 million versus $30.1 million in the prior year quarter.


RES-CARE, INC.
Unaudited Financial Highlights
(In thousands)

   
Three Months Ended
March 31,
  
   
2014
    
2013
  
Income Statement Data:
            
Revenues
   $ 421,483     $ 389,454  
Cost of services
     317,598       294,343  
Gross profit
     103,885       95,111  
Operating expenses:
                
Operational general and administrative
     59,710       55,036  
Corporate general and administrative
     27,960       18,877  
Total operating expenses
     87,670       73,913  
                 
Operating income
     16,215       21,198  
                 
Interest expense, net
     8,074       8,537  
Income before income taxes
     8,141       12,661  
Income tax expense
     3,466       1,365  
Net income
     4,675       11,296  
Net loss – noncontrolling interest
     —       (36 )
Net income – Res-Care, Inc.
   $ 4,675     $ 11,332  
                 
Other comprehensive income:
                
Foreign currency translation adjustments
     (264 )     (191 )
Comprehensive income attributable to Res-Care, Inc.
   $ 4,411     $ 11,141  
Total comprehensive income
   $ 4,411     $ 11,105  
 
 
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RES-CARE, INC.
Unaudited Financial Highlights (continued)
(In thousands)

   
Three Months Ended
March 31,
  
   
2014
    
2013
  
Net income to EBITDA and Adjusted EBITDA:
            
Net income
   $ 4,675     $ 11,296  
Add:  Interest, net
     8,074       8,537  
Depreciation and amortization
     8,955       8,195  
Income tax expense
     3,466       1,365  
EBITDA (1)
     25,170       29,393  
Add:  Share-based compensation
     469       704  
Adjusted EBITDA (1)
   $ 25,639     $ 30,097  


   
March 31,
2014
    
December 31,
2013
  
Balance Sheet Data:
            
ASSETS
  
             
Cash and cash equivalents
   $ 32,463     $ 29,997  
Accounts receivable, net
     253,675       241,873  
Other current assets
     46,502       46,241  
Total current assets
     332,640       318,111  
Property and equipment, net (2)
     100,983       101,021  
Goodwill
     308,491       308,350  
Other intangible assets, net
     331,777       333,613  
Other assets
     24,636       25,182  
    $ 1,098,527     $ 1,086,277  
                 
LIABILITIES AND SHAREHOLDER’S EQUITY
  
                 
Current liabilities
   $ 185,635     $ 175,699  
Other long-term liabilities
     156,752       155,227  
Long-term debt
     355,139       359,230  
Shareholder’s equity
     401,001       396,121  
    $ 1,098,527     $ 1,086,277  

(1)
EBITDA is defined as net income before depreciation and amortization, net interest expense and income taxes.  Adjusted EBITDA is defined as EBITDA before share-based compensation.  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
March 31,
  
   
2014
    
2013
  
Cash Flow Data:
            
Net income
   $ 4,675     $ 11,296  
Adjustments to reconcile net income to cash provided by (used in) operating activities:
                
Depreciation and amortization
     8,955       8,195  
Amortization of discount and deferred debt issuance costs
     870       870  
Share-based compensation
     469       704  
Deferred income taxes, net
     (2,944 )     1,964  
Provision for losses on accounts receivable
     2,604       1,818  
Loss on sale of assets
     38       102  
Changes in operating assets and liabilities
     (3,073 )     (15,779 )
Cash provided by operating activities
     11,594       9,170  
                 
Cash flows from investing activities:
                
Proceeds from sale of assets
     103       81  
Purchases of property and equipment
     (4,563 )     (4,103 )
Acquisitions of businesses, net of cash acquired
     (543 )     (7 )
Cash used in investing activities
     (5,003 )     (4,029 )
                 
Cash flows from financing activities:
                
Debt repayments, net
     (4,037 )     (8,498 )
Debt issuance costs
     —       (8 )
Cash used in financing activities
     (4,037 )     (8,506 )
Effect of exchange rate on cash and cash equivalents
     (88 )     (66 )
Increase (decrease) in cash and cash equivalents
   $ 2,466     $ (3,431 )
 
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RES-CARE, INC.
Unaudited Financial Highlights (continued)
(Dollars in thousands)

   
Three Months Ended
March 31,
  
   
2014
    
2013
  
Segment Data:
            
Revenues:
            
Residential Services
   $ 233,832     $ 212,527  
ResCare HomeCare
     93,579       87,432  
Education & Training Services
     34,124       34,490  
Workforce Services
     39,807       39,818  
Pharmacy Services
     20,141       15,187  
Consolidated
   $ 421,483     $ 389,454  
                 
Operating Income (1):
                
Residential Services
   $ 28,095     $ 26,212  
ResCare HomeCare
     7,672       6,705  
Education & Training Services
     2,821       2,656  
Workforce Services
     3,733       3,796  
Pharmacy Services
     1,748       1,028  
Corporate
     (27,854 )     (19,199 )
Consolidated
   $ 16,215     $ 21,198  
                 
Operating Margin (1):
                
Residential Services
     12.0 %     12.3 %
ResCare HomeCare
     8.2 %     7.7 %
Education & Training Services
     8.3 %     7.7 %
Workforce Services
     9.4 %     9.5 %
Pharmacy Services
     8.7 %     6.8 %
Corporate
     (6.6 %)     (4.9 %)
Consolidated
     3.8 %     5.4 %

(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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