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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