EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

 

CONTACT:    Liz Merritt, Rural/Metro Corporation
   (480) 606-3337
   Sharrifah Al-Salem, FD Ashton Partners
   (415) 293-4414

RURAL/METRO REPORTS FISCAL 2009 FIRST-QUARTER RESULTS

First-Quarter Highlights:

 

   

Net revenue up 6% to $124.4 million, compared to $117.4 million in prior year

 

   

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) from continuing operations up 20% to $14.4 million, compared to $12.0 million in prior year

 

   

Operating income up 22% to $11.6 million, compared to $9.5 million in prior year

 

   

Diluted Earnings Per Share (EPS) of $0.03, compared to prior-year EPS of $0.02

 

   

Average Patient Charge (APC) of $361 per transport, a $13-per-transport increase over prior-year quarterly APC of $348

 

   

Days’ Sales Outstanding (DSO) of 59 days, a 5-day improvement over prior year

SCOTTSDALE, Ariz. (Nov. 10, 2008) – Rural/Metro Corporation (NASDAQ: RURL), a leading provider of ambulance and private fire protection services, announced results today for its fiscal 2009 first quarter ended September 30, 2008, highlighting continued growth in revenue, EBITDA and operating income, as well as positive trends in key operating metrics.

Jack Brucker, President and Chief Executive Officer, said, “Our steady revenue and profit margin growth, gains in market share through recent new contract awards, and the ongoing success of our strategies to strengthen collections further demonstrate our ability to operate in today’s challenging economy.”

Mr. Brucker continued, “We were pleased to achieve a significant increase in APC in the first quarter when compared to the same period last year and to come in above our expectations. Of the $13 year-over-year improvement, more than half was due to improved collections. We believe opportunity remains for continued improvement as we continue to work diligently to reduce denials from insurance payers.”

Results of Operations for the First Quarter Ended September 30, 2008

Consolidated net revenue for the first quarter ended September 30, 2008 increased 6.0 percent, or $7.0 million, to $124.4 million, compared to $117.4 million for the same period in fiscal 2008. Ambulance services revenue increased 5.9 percent, or $5.8 million, to $105.3 million, compared to $99.5 million for the same prior-year period. Other services revenue, which includes fire protection services, increased 6.9 percent, or $1.2 million, to $19.1 million, compared to $17.9 million for the same prior-year period.


Consolidated quarterly net revenue growth was driven primarily by increases in same-service area revenue, which included improvements to APC and higher transport volume; new contract revenue derived primarily from non-emergency ambulance contracts in the Tennessee and Washington markets; and increases in fire subscription revenue and master fire contract fees.

Payroll and employee benefits for the first quarter were $76.4 million, or 61.4 percent of net revenue, compared to $74.1 million, or 63.2 percent of net revenue, in the same prior-year period. The dollar increase was driven primarily by cost-of-living employee pay raises, an executive severance accrual, and higher ambulance unit hours in the Tennessee market. These increases were offset in part by a decrease in employee health insurance expenses.

Other operating expenses for the first quarter were $29.8 million, or 23.9 percent of net revenue, an increase of $2.9 million when compared to $26.9 million, or 22.9 percent of net revenue, in fiscal 2008. The dollar increase was primarily driven by a $1.5 million increase in fuel. During the first quarter, the Company also increased its reserve related to ongoing negotiations with the State of Ohio regarding certain Medicare claims by an additional $1.0 million, of which $0.6 million was recorded in continuing operations and $0.4 million was recorded to discontinued operations. These increases were partly offset by a $1.2 million decrease in professional fees.

General and auto liability expense in the first quarter was $3.5 million, a decrease of $0.3 million when compared to general and auto liability expense of $3.8 million for the same prior-year period.

Net income for the first quarter was $0.8 million, or EPS of $0.03 per diluted share, compared to net income of $0.4 million, or EPS of $0.02 per diluted share, for the same prior-year period.

First-quarter net cash provided by operating activities was $12.6 million, compared to $7.9 million for the same period a year ago.

EBITDA from continuing operations for the first quarter increased 20.0 percent, or $2.4 million, to $14.4 million when compared to $12.0 million in EBITDA from continuing operations for the same prior-year period.

EBITDA from continuing operations is a key indicator used by management to evaluate operating performance. While EBITDA from continuing operations is not intended to replace presentations included in the Company’s consolidated financial statements under generally accepted accounting principles (GAAP) and should not be considered an alternative to operating performance or an alternative to cash flow as a measure of liquidity, the Company believes this measure is useful to investors in assessing the Company’s ability to meet future debt service, capital expenditure and working capital requirements. This calculation may differ in the method of calculation from similarly titled measures used by other companies. A reconciliation of EBITDA to income/(loss) from continuing operations and discontinued operations for the three months ended September 30, 2008 and 2007 is included with this press release.

 

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Quarterly Operating Statistics

First-quarter operating statistics trended as follows when compared to the same prior-year period:

 

   

Medical transports increased by 6,679 transports, or 2.5 percent, with the increase driven nearly equally by same-service area and new transport growth.

 

   

Average patient charge (APC) increased to $361 per transport from $348 per transport for the same period of the prior year. Of the $13 increase, slightly more than half was due to continuing improvement in collections, with the balance attributable to rate increases and changes in service level mix.

 

   

Days’ Sales Outstanding (DSO) decreased by five days, a factor of billing and collections improvements coupled with reductions in uncompensated care as a percentage of gross revenue. Uncompensated care as a percentage of gross revenue was 14.2 percent in the first quarter, compared to 15.0 percent in the same period a year ago.

The following table sets forth information with respect to medical transports, APC, and DSO during each of the five most recent quarters:

 

     Q1 ‘08
(9/30/07)
   Q2 ‘08
(12/31/07)
   Q3 ‘08
(3/31/08)
   Q4 ‘08
(6/30/08)
   Q1 ‘09
(9/30/08)

Medical Transports (1)

     264,728      265,369      282,737      269,899      271,407

Average Patient Charge (APC) (2)

   $ 348    $ 352    $ 350    $ 368    $ 361

Days Sales Outstanding (DSO) (3)

     64      64      62      60      59

 

(1) Defined as emergency and non-emergency medical patient transports from continuing operations.

 

(2) Net medical transport APC is defined as gross ambulance transport revenue less provisions for contractual allowances applicable to Medicare, Medicaid and other third-party payers and uncompensated care divided by medical transports from continuing operations.

 

(3) DSO is calculated using the average accounts receivable balance on a rolling 13-month basis and net revenue on a rolling 12-month basis and has not been adjusted to eliminate discontinued operations.

Fiscal 2009 Financial Guidance Confirmed

The Company confirmed its guidance for the fiscal year ending June 30, 2009, expecting EBITDA from continuing operations to be in the range of $54.0 million to $58.0 million and capital expenditures to be in the range of $15.0 million to $18.0 million.

Conference Call to Discuss Results

The Company will discuss results in a conference call today beginning at 8 a.m. Pacific/9 a.m. Mountain/11 a.m. Eastern. To access the conference call, dial 800-949-2165 (domestic) or 719-234-0008 (international). The call will be broadcast live on the Company’s web site at www.ruralmetro.com. A telephone replay will be available from approximately 2 p.m. (Eastern) today through midnight

 

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(Eastern) November 11, 2008. To access the replay, dial 888-203-1112. From international locations, dial 719-457-0820. The required pass code is 8243927. An archived webcast will be available following the call at www.ruralmetro.com.

About Rural/Metro

Rural/Metro Corporation provides emergency and non-emergency ambulance services and private fire protection services in 22 states and approximately 400 communities throughout the United States. For more information, visit the Company’s web site at www.ruralmetro.com.

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS

The foregoing reflects the Company's views about its future financial condition, performance and other matters that constitute "forward-looking" statements as such term is defined by the federal securities laws. Many of these statements can be found by looking for words such as "may," "will," "expect," "anticipate," "believe," "estimate," "should," "continue," "predict," "preliminary" and similar words used herein in connection with any discussions of future operating or financial performance or business prospects. We may also make forward-looking statements in our earnings reports filed with the Securities and Exchange Commission (SEC), earnings calls and other investor communications. These forward-looking statements are subject to the safe harbor protection provided by federal securities laws. These forward-looking statements are subject to numerous risks, uncertainties and assumptions, including those relating to the Company’s future business prospects, working capital, cash flow, EBITDA, capital expenditures, payroll expense, repayment of debt, insurance coverage and claim reserves, unexpected governmental investigations, capital needs, operating results and compliance with debt facilities. In addition, the Company may face risks and uncertainties related to uncompensated care and its ability to collect its accounts receivable and other factors that are listed in its periodic reports filed under the Securities Exchange Act. Although the Company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, because the statements are subject to risks and uncertainties, the Company can give no assurance that its expectations will be attained or that actual developments and results will not materially differ from those expressed or implied by the forward-looking statements. Readers are cautioned not to place undue reliance on the statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.

(RURL/F)

###

 

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RURAL/METRO CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

     (Unaudited)        
     September 30,
2008
    June 30,
2008
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 17,349     $ 15,907  

Accounts receivable, net

     75,692       76,131  

Inventories

     8,471       8,456  

Deferred income taxes

     24,998       22,263  

Prepaid expenses and other

     19,238       18,946  
                

Total current assets

     145,748       141,703  

Property and equipment, net

     48,142       46,938  

Goodwill

     37,700       37,700  

Deferred income taxes

     47,467       50,773  

Insurance deposits

     941       989  

Other assets

     15,703       16,108  
                

Total assets

   $ 295,701     $ 294,211  
                

LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ DEFICIT

    

Current liabilities:

    

Accounts payable

   $ 14,614     $ 16,147  

Accrued liabilities

     61,866       55,139  

Deferred revenue

     22,253       21,901  

Current portion of long-term debt

     370       374  
                

Total current liabilities

     99,103       93,561  

Long-term debt, net of current portion

     274,251       279,017  

Other long-term liabilities

     28,897       29,536  
                

Total liabilities

     402,251       402,114  
                

Minority interest

     2,493       1,966  
                

Stockholders’ deficit:

    

Common stock, $0.01 par value, 40,000,000 shares authorized,

    

24,822,726 shares issued and outstanding at September 30, 2008 and June 30, 2008

     248       248  

Additional paid-in capital

     154,963       154,918  

Treasury stock, 96,246 shares at both September 30, 2008 and June 30, 2008

     (1,239 )     (1,239 )

Accumulated other comprehensive loss

     (430 )     (439 )

Accumulated deficit

     (262,585 )     (263,357 )
                

Total stockholders’ deficit

     (109,043 )     (109,869 )
                

Total liabilities, minority interest and stockholders' deficit

   $ 295,701     $ 294,211  
                

 

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RURAL/METRO CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended September 30,  
     2008     2007  

Net revenue

   $ 124,426     $ 117,351  
                

Operating expenses:

    

Payroll and employee benefits

     76,433       74,128  

Depreciation and amortization

     3,394       3,051  

Other operating expenses

     29,764       26,890  

General/auto liability insurance expense

     3,470       3,800  

Loss on sale of assets

     (196 )     3  
                

Total operating expenses

     112,865       107,872  
                

Operating income

     11,561       9,479  

Interest expense

     (7,813 )     (7,750 )

Interest income

     115       142  
                

Income from continuing operations before income taxes and minority interest

     3,863       1,871  

Income tax provision

     (2,239 )     (966 )

Minority interest

     (527 )     (505 )
                

Income from continuing operations

     1,097       400  

Income (loss) from discontinued operations, net of income taxes

     (325 )     11  
                

Net income

   $ 772     $ 411  
                

Income (loss) per share:

    

Basic -

    

Income from continuing operations

   $ 0.04     $ 0.02  

Income (loss) from discontinued operations

     (0.01 )     0.00  
                

Net income

   $ 0.03     $ 0.02  
                

Diluted -

    

Income from continuing operations

   $ 0.04     $ 0.02  

Income (loss) from discontinued operations

     (0.01 )     0.00  
                

Net income

   $ 0.03     $ 0.02  
                

Average number of common shares outstanding - Basic

     24,823       24,738  
                

Average number of common shares outstanding - Diluted

     24,915       24,988  
                

 

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RURAL/METRO CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

 

      Three Months Ended September 30,  
   2008     2007  

Cash flows from operating activities:

    

Net income

   $ 772     $ 411  

Adjustments to reconcile net income to net cash provided by operating activities -

    

Depreciation and amortization

     3,396       3,140  

Accretion of 12.75% Senior Discount Notes

     2,328       2,080  

Deferred income taxes

     565       566  

Amortization of deferred financing costs

     614       541  

Loss on sale of property and equipment

     1       14  

Earnings of minority shareholder

     527       505  

Stock based compensation expense

     45       —    

Change in assets and liabilities -

    

Accounts receivable

     439       (4,421 )

Inventories

     (15 )     (63 )

Prepaid expenses and other

     694       459  

Insurance deposits

     48       (485 )

Other assets

     (248 )     2,840  

Accounts payable

     (2,009 )     988  

Accrued liabilities

     5,741       1,084  

Deferred revenue

     352       97  

Other liabilities

     (639 )     191  
                

Net cash provided by operating activities

     12,611       7,947  
                

Cash flows from investing activities:

    

Purchases of short-term investments

     —         (5,000 )

Sales of short-term investments

     —         2,500  

Capital expenditures

     (4,071 )     (2,313 )

Proceeds from the sale of property and equipment

     —         3  
                

Net cash used in investing activities

     (4,071 )     (4,810 )
                

Cash flows from financing activities:

    

Repayment of debt

     (7,098 )     (5,009 )

Distributions to minority shareholders

     —         (300 )
                

Net cash used in financing activities

     (7,098 )     (5,309 )
                

Increase (decrease) in cash and cash equivalents

     1,442       (2,172 )

Cash and cash equivalents, beginning of period

     15,907       6,181  
                

Cash and cash equivalents, end of period

   $ 17,349     $ 4,009  
                

Supplemental disclosure of non-cash operating activities:

    

Increase in current assets and accrued liabilities for general liability insurance claim

   $ 986     $ —    

Increase in accumulated deficit, other liabilities and decrease in deferred taxes upon adoption of FIN 48

   $ —       $ 12,826  

Supplemental disclosure of non-cash investing activities:

    

Property and equipment funded by liabilities

   $ 1,368     $ 12  

 

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RURAL/METRO CORPORATION

RECONCILIATION OF INCOME FROM CONTINUING AND DISCONTINUED OPERATIONS TO EBITDA

(unaudited)

(in thousands)

 

     Three Months Ended
September 30,
 
     2008     2007  

Income from continuing operations

   $ 1,097     $ 400  

Add (deduct)

    

Depreciation and amortization

     3,394       3,051  

Interest expense

     7,813       7,750  

Interest income

     (115 )     (142 )

Income tax provision

     2,239       966  
                

EBITDA from continuing operations

     14,428       12,025  
                

Income from discontinued operations

     (325 )     11  

Add (deduct)

    

Depreciation and amortization

     2       89  

Income tax provision

     (301 )     10  
                

EBITDA from discontinued operations

     (624 )     110  
                

Total EBITDA

   $ 13,804     $ 12,135  
                

 

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