EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

 

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 $5 MILLION IMPROVEMENT IN

FIRST-QUARTER NET INCOME, FULLY DILUTED EPS OF $0.20

 

  Net income of $4.4 million, compared to $664,000 loss in prior year

 

  Net revenue up 6% to $136.5 million

 

  EBITDA up 24% to $14.9 million

 

SCOTTSDALE, Ariz. (Nov. 11, 2004) – Rural/Metro Corporation (OTCBB: RURL), the leading national provider of medical transportation and fire protection services, today reported net income of $4.4 million, or $0.20 cents per fully diluted share, for the fiscal 2005 first quarter ended September 30, 2004. This compares to a net loss of $664,000, or a loss per fully diluted share of $0.04, for the prior year’s first quarter.

 

The company reported fiscal 2005 first-quarter net revenue of $136.5 million, an increase of 6% over net revenue of $128.7 million for the prior year’s first quarter. Medical transportation and related service revenue increased $6.1 million, and fire and other revenue grew to $1.7 million over the prior year. First-quarter net revenue growth reflects a combination of rate increases and same-service-area transport expansion.

 

Jack Brucker, President and Chief Executive Officer, said, “Our strong first-quarter results underscore the benefit of our long-term focus on targeted, quality revenue growth within established regional service areas. We are successfully expanding our markets, effectively leveraging regional infrastructures, and reinforcing our billing and collections results.”

 

For the three months ended September 30, 2004, EBITDA was $14.9 million, representing an increase of 24% over EBITDA of $12.0 million for the same period of the prior year.

 

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 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 EBITDA to cash used in operating activities in a table that accompanies this press release.

 

The company reported total operating expenses as a percent of net revenue of 91.1% for the three months ended September 30, 2004, down from 93.0% percent for the same period a year ago. Additionally, payroll and employee benefits as a percentage of net revenue decreased to 53.1%, compared to 53.9% for the same period a year ago. The company attributed the improvements primarily to an increase in operational efficiencies and a reduction in unscheduled overtime hours.

 

Key operating statistics held steady, and in certain instances trended positively, for the three months ended September 30, 2004:

 

  EMS transports grew by approximately 8,500 over the prior year, attributable to same-service-area expansion efforts as well as demographic growth in these areas.

 

  Net/Net Average EMS Patient Charge (APC) increased to $317, from $308 for the same period of the prior year. The company considers APC to be an approximation of cash collected per transport.

 

  Quarter-to-date days’ sales outstanding (DSO) averaged 45 days.

 

Brucker continued, “We are proud to be the quality leader in our industry. That quality encompasses patient care, employee training, documentation and billing practices, and the technology we develop to support all of these efforts. We believe this approach has contributed to improvements in our financial results and will continue to sustain our performance in the future.”

 

Following is a summary of certain of the company’s key operating statistics. EMS transports and Net/Net Average EMS Patient Charge statistics have been adjusted to eliminate discontinued operations:

 

    

Q1 ‘04

(9/30/03)


  

Q2 ‘04

(12/31/03)


  

Q3 ‘04

(3/31/04)


  

Q4’04

(6/30/04)


  

Q1’05

(9/30/04)


EMS Transports (1)

     256,507      262,586      266,064      259,953      265,045

Net/Net Average EMS Patient Charge (2)

   $ 308    $ 308    $ 312    $ 312    $ 317

Average DSO (QTD) (3)

     42      45      45      45      45

(1) EMS transports from continuing operations are defined as actual patient transports, excluding those under capitated contract arrangements.

 

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(2) Net/Net Average Emergency Medical Services (EMS) Patient Charge is defined as gross EMS transport revenue minus provisions for Medicare, Medicaid and other third-party payers and doubtful accounts divided by EMS transports from continuing operations. For purposes of this calculation, revenue and transports related to capitated contracts are excluded.
(3) Average quarterly DSO is defined as average accounts receivable divided by 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 23 states and more than 400 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 Thursday, November 11, 2004, beginning at 8 a.m. Pacific/9 a.m. Mountain/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 on November 12, 2004 through midnight November 19, 2004. The replay can be accessed by dialing 888-203-1112 (domestic) or 719-457-0820 (international). Please use the confirmation code 967178 when accessing the replay. 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)

 

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RURAL/METRO CORPORATION

CONSOLIDATED BALANCE SHEET

(unaudited)

(in thousands)

 

    

September 30,

2004


   

June 30,

2004


 
ASSETS                 

Current assets:

                

Cash

   $ 7,622     $ 16,372  

Accounts receivable, net of allowance for doubtful accounts of $64,500 and $59,430 at September 30, 2004 and June 30, 2004, respectively

     66,893       65,348  

Inventories

     11,870       11,738  

Prepaid expenses and other assets

     8,722       8,512  
    


 


Total current assets

     95,107       101,970  

Property and equipment, net

     41,311       40,283  

Goodwill

     40,850       41,100  

Insurance deposits

     8,348       9,244  

Other assets

     11,528       12,644  
    


 


     $ 197,144     $ 205,241  
    


 


LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY (DEFICIT)                 

Current liabilities:

                

Accounts payable

   $ 8,643     $ 13,833  

Accrued liabilities

     48,938       57,273  

Deferred revenue

     19,588       18,650  

Current portion of long-term debt

     1,520       1,495  
    


 


Total current liabilities

     78,689       91,251  

Long-term debt, net of current portion

     303,702       304,057  

Deferred income taxes

     650       650  
    


 


Total liabilities

     383,041       395,958  
    


 


Minority interest

     1,818       1,509  
    


 


Stockholders’ equity (deficit):

                

Common stock, $.01 par value 40,000,000 shares authorized, 21,972,169 and 21,890,816 shares issued and outstanding at September 30, 2004 and June 30, 2004, respectively

     220       219  

Additional paid-in capital

     147,168       147,075  

Accumulated deficit

     (333,864 )     (338,281 )

Treasury stock

     (1,239 )     (1,239 )
    


 


Total stockholders’ equity (deficit)

     (187,715 )     (192,226 )
    


 


     $ 197,144     $ 205,241  
    


 


 

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RURAL/METRO CORPORATION

CONSOLIDATED STATEMENT OF INCOME

For The Three Months Ended September 30, 2004 and 2003

(unaudited)

(in thousands, except per share amounts)

 

     Q1 FY ‘05

   

% of

Net revenue


    Q1 FY ‘04

   

% of

Net revenue


 

Net revenue

   $ 136,463     100.0 %   $ 128,656     100.0 %
    


       


     

Operating expenses

                            

Payroll and employee benefits

     72,488     53.1 %     69,398     53.9 %

Provision for doubtful accounts

     21,562     15.8 %     20,237     15.7 %

Depreciation and amortization

     2,988     2.2 %     2,840     2.2 %

Other operating expenses

     27,337     20.0 %     27,176     21.1 %
    


       


     

Total operating expenses

     124,375     91.1 %     119,651     93.0 %
    


       


     

Operating income

     12,088     8.9 %     9,005     7.0 %

Interest expense

     (7,320 )   -5.4 %     (8,014 )   -6.2 %

Interest income

     130     0.1 %     29     0.0 %
    


       


     

Income from continuing operations before income taxes and minority interest

     4,898     3.6 %     1,020     0.8 %

Income tax provision

     (95 )   -0.1 %     (86 )   -0.1 %

Minority interest

     (309 )   -0.2 %     (274 )   -0.2 %
    


       


     

Income from continuing operations

     4,494     3.3 %     660     0.5 %

Loss from discontinued operations

     (77 )   -0.1 %     (54 )   0.0 %
    


       


     

Net income

   $ 4,417     3.2 %   $ 606     0.5 %

Less: Net income allocated to redeemable nonconvertible participating preferred stock under the two-class method

     —               (69 )      

Less: Accretion of redeemable nonconvertible participating preferred stock

     —               (1,201 )      
    


       


     

Net income (loss) applicable to common stock

   $ 4,417           $ (664 )      
    


       


     

Income (loss) per share

                            

Basic -

                            

Income (loss) from continuing operations applicable to common stock

   $ 0.20           $ (0.04 )      

Income (loss) from discontinued operations applicable to common stock

     —               —          
    


       


     

Net income (loss)

   $ 0.20           $ (0.04 )      
    


       


     

Diluted -

                            

Income (loss) from continuing operations applicable to common stock

   $ 0.20           $ (0.04 )      

Income (loss) from discontinued operations applicable to common stock

     —               —          
    


       


     

Net income (loss)

   $ 0.20           $ (0.04 )      
    


       


     

Average number of common shares outstanding - Basic

     21,959             16,399        
    


       


     

Average number of common shares outstanding - Diluted

     22,679             16,399        
    


       


     

 

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RURAL/METRO CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

For The Three Months Ended September 30, 2004 and 2003

(unaudited)

(in thousands)

 

     Q1 FY ‘05

    Q1 FY ‘04

 

Cash flows from operating activities:

                

Net income

   $ 4,417     $ 606  

Adjustments to reconcile net income to cash used in operating activities -

                

Depreciation and amortization

     3,237       3,363  

Loss on sale of property and equipment

     64       22  

Provision for doubtful accounts

     21,588       21,852  

Earnings of minority shareholder

     309       274  

Amortization of deferred financing costs

     670       735  

Amortization of debt discount

     6       6  

Change in assets and liabilities -

                

Increase in accounts receivable

     (23,133 )     (25,945 )

Increase in inventories

     (132 )     (192 )

(Increase) decrease in prepaid expenses and other assets

     (210 )     542  

Decrease (increase) in insurance deposits

     896       (337 )

Decrease in other assets

     68       156  

Decrease in accounts payable

     (5,190 )     (3,120 )

Decrease in accrued liabilities and other liabilities

     (8,335 )     (4,365 )

Increase in deferred revenue

     938       949  
    


 


Net cash used in operating activities

     (4,807 )     (5,454 )
    


 


Cash flows from investing activities:

                

Capital expenditures

     (3,708 )     (1,241 )

Proceeds from the sale of property and equipment

     7       33  
    


 


Net cash used in investing activities

     (3,701 )     (1,208 )
    


 


Cash flows from financing activities:

                

Repayments on credit facility

     —         (1,000 )

Repayment of debt and capital lease obligations

     (336 )     (274 )

Cash paid for debt modification costs

     —         (515 )

Proceeds from the issuance of common stock

     94       169  
    


 


Net cash used in financing activities

     (242 )     (1,620 )
    


 


Decrease in cash

     (8,750 )     (8,282 )

Cash, beginning of period

     16,372       12,561  
    


 


Cash, end of period

   $ 7,622     $ 4,279  
    


 


 

6


RURAL/METRO CORPORATION

RECONCILIATION OF EBITDA

TO CASH FLOW USED IN OPERATING ACTIVITIES

For The Three Months Ended September 30, 2004 and 2003

(unaudited)

(in thousands)

 

     Q1 FY ‘05

    Q1 FY ‘04

 

Net income

   $ 4,417     $ 606  

Add back:

                

Depreciation and amortization

     3,237       3,363  

Interest expense

     7,320       8,014  

Interest income

     (130 )     (29 )

Income tax provision

     95       90  
    


 


EBITDA

     14,939       12,044  

Increase (decrease):

                

Interest expense

     (7,320 )     (8,014 )

Interest income

     130       29  

Income tax provision

     (95 )     (90 )

Loss on sale of property and equipment

     64       22  

Provision for doubtful accounts

     21,588       21,852  

Earnings of minority shareholder

     309       274  

Amortization of deferred financing costs

     670       735  

Amortization of debt discount

     6       6  

Changes in operating assets and liabilities

     (35,098 )     (32,312 )
    


 


Net cash used in operating activities

   $ (4,807 )   $ (5,454 )
    


 


 

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