EX-99.1 2 exh_991.htm EXHIBIT 99.1

Exhibit 99.1

RESCARE THIRD QUARTER 2014 RESULTS

Third Quarter 2014 Financial Results

Revenues for the third quarter of 2014 were $437.8 million, which was a 6.8% increase over prior year period revenues of $409.9 million. The increase in revenue is primarily due to acquisitions in our Residential and HomeCare segments since the third quarter of 2013 and organic growth in all segments.

Net income was $6.5 million for the third quarter of 2014, compared with $11.3 million in the same period of 2013. The decrease is primarily attributable to lower operating results in our ResCare HomeCare operating segment and higher legal costs. Adjusted EBITDA for the third quarter of 2014 was $29.6 million versus $34.6 million in the prior year quarter.

RES-CARE, INC.

Unaudited Financial Highlights

(In thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Income Statement Data:
Revenues	$	437,807		$	409,934		$	1,290,724		$	1,195,621
Cost of services		333,809			305,508			978,241			894,958
Gross profit		103,998			104,426			312,483			300,663
Operating expenses:
Operational general and administrative		60,498			55,222			175,704			167,601
Corporate general and administrative		23,898			24,280			81,135			63,168
Total operating expenses		84,396			79,502			256,839			230,769

Operating income		19,602			24,924			55,644			69,894

Interest expense, net		8,571			8,140			25,145			24,342
Loss on extinguishment of debt		-			-			659			-
Income before income taxes		11,031			16,784			29,840			45,552
Income tax expense		4,521			5,450			12,367			12,683
Net income		6,510			11,334			17,473			32,869
Net loss – noncontrolling interest		-			(34	)		-			(110	)
Net income – Res-Care, Inc.	$	6,510		$	11,368		$	17,473		$	32,979

Other comprehensive income:
Foreign currency translation adjustments		(263	)		56			(292	)		(358	)
Comprehensive income attributable to Res-Care, Inc.	$	6,247		$	11,424		$	17,181		$	32,621
Total comprehensive income	$	6,247		$	11,390		$	17,181		$	32,511

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RES-CARE, INC.

Unaudited Financial Highlights (continued)

(In thousands)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Net income to EBITDA and Adjusted EBITDA:
Net income	$	6,510	$	11,334	$	17,473	$	32,869
Add: Interest, net		8,571		8,140		25,145		24,342
Loss on extinguishment of debt		-		-		659		-
Depreciation and amortization		9,421		8,809		27,489		25,535
Income tax expense		4,521		5,450		12,367		12,683
EBITDA ⁽¹⁾		29,023		33,733		83,133		95,429
Add: Share-based compensation		527		824		1,510		2,376
Incentive compensation – options		-		-		7,584		-
Acquisition costs		30		-		30		-
Adjusted EBITDA ⁽¹⁾	$	29,580	$	34,557	$	92,257	$	97,805

	September 30, 2014		December 31, 2013
Balance Sheet Data:
ASSETS

Cash and cash equivalents	$	25,891	$	29,997
Accounts receivable, net		260,952		241,873
Other current assets		56,198		46,241
Total current assets		343,041		318,111
Property and equipment, net		104,618		101,021
Goodwill		313,416		308,350
Other intangible assets, net		336,267		333,613
Other assets		25,536		25,182
	$	1,122,878	$	1,086,277

LIABILITIES AND SHAREHOLDER’S EQUITY

Current liabilities	$	203,783	$	175,699
Other long-term liabilities		165,188		155,227
Long-term debt		461,543		359,230
Shareholder’s equity		292,364		396,121
	$	1,122,878	$	1,086,277

⁽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, incentive compensation-options 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 September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Cash Flow Data:
Net income	$	6,510		$	11,334		$	17,473		$	32,869
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization		9,421			8,809			27,489			25,535
Amortization of deferred debt issuance costs		571			870			1,753			2,612
Share-based compensation		527			824			1,510			2,376
Deferred income taxes, net		(154	)		(867	)		(4,058	)		1,480
Provision for losses on accounts receivable		3,073			1,087			8,214			4,430
Loss on extinguishment of debt		-			-			659			-
Loss (gain) on sale of assets		111			(19	)		207			81
Changes in operating assets and liabilities		(4,083	)		(656	)		7,469			(13,935	)
Cash provided by operating activities		15,976			21,382			60,716			55,448

Cash flows from investing activities:
Proceeds from sale of assets		352			160			555			344
Purchases of property and equipment		(8,004	)		(6,795	)		(17,980	)		(15,007	)
Acquisitions of businesses, net of cash acquired		(14,108	)		(17,761	)		(15,057	)		(19,995	)
Cash used in investing activities		(21,760	)		(24,396	)		(32,482	)		(34,658	)

Cash flows from financing activities:
Debt (repayments) borrowing, net		(5,288	)		(6,857	)		93,420			(19,636	)
Dividends paid		-			-			(122,448	)		-
Debt issuance costs		(13	)		-			(3,631	)		(2	)
Cash used in financing activities		(5,301	)		(6,857	)		(32,659	)		(19,638	)
Effect of exchange rate on cash and cash equivalents		108			(15	)		319			(96	)
(Decrease) increase in cash and cash equivalents	$	(10,977	)	$	(9,886	)	$	(4,106	)	$	1,056

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RES-CARE, INC.

Unaudited Financial Highlights (continued)

(Dollars in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Segment Data:
Revenues:
Residential Services	$	246,209		$	225,407		$	717,968		$	653,464
ResCare HomeCare		93,523			93,061			282,786			270,100
Education & Training Services		31,995			31,074			100,165			100,492
Workforce Services		43,699			42,257			125,887			121,671
Pharmacy Services		22,381			18,135			63,918			49,894
Consolidated	$	437,807		$	409,934		$	1,290,724		$	1,195,621

Operating Income ⁽¹⁾:
Residential Services	$	29,047		$	30,670		$	89,098		$	83,270
ResCare HomeCare		5,714			9,837			22,069			24,858
Education & Training Services		2,598			2,949			8,143			7,846
Workforce Services		4,446			5,096			13,062			13,150
Pharmacy Services		2,014			844			4,894			4,448
Corporate		(24,217	)		(24,472	)		(81,622	)		(63,678	)
Consolidated	$	19,602		$	24,924		$	55,644		$	69,894

Operating Margin ⁽¹⁾:
Residential Services		11.8	%		13.6	%		12.4	%		12.7	%
ResCare HomeCare		6.1	%		10.6	%		7.8	%		9.2	%
Education & Training Services		8.1	%		9.5	%		8.1	%		7.8	%
Workforce Services		10.2	%		12.1	%		10.4	%		10.8	%
Pharmacy Services		9.0	%		4.7	%		7.7	%		8.9	%
Corporate		(5.5	%)		(6.0	%)		(6.3	%)		(5.3	%)
Consolidated		4.5	%		6.1	%		4.3	%		5.8	%

⁽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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