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

          (415) 293-4414

RURAL/METRO ANNOUNCES STRONG THIRD-QUARTER RESULTS;

Fiscal 2010 Adjusted EBITDA Guidance Raised to $67.0 Million to $69.0 Million

Highlights:

 

   

Quarterly net revenue increased 7.5% over the prior year to $133.1 million; year-to-date net revenue increased 8.8% over the prior year to $396.9 million.

 

   

Quarterly net income attributable to Rural/Metro was $3.8 million, or diluted earnings per share (EPS) of $0.15, including a loss on debt extinguishment of $0.3 million; year-to-date net income attributable to Rural/Metro was $1.9 million, or diluted EPS of $0.08, including a $14.2 million loss on debt extinguishment.

 

   

Quarterly Adjusted EBITDA from continuing operations was $17.9 million, or an increase of 22.5% over the prior-year period; year-to-date Adjusted EBITDA from continuing operations was $52.3 million, an increase of 19.3% from the same prior-year period.

 

   

Fiscal 2010 guidance for Adjusted EBITDA from continuing operations is raised to new range of $67.0 million to $69.0 million; capital expenditures updated to $16.0 million.

SCOTTSDALE, Ariz. (May 10, 2010) – Rural/Metro Corporation (NASDAQ: RURL), a leading provider of ambulance and private fire protection services, today announced strong financial results for its fiscal 2010 third quarter ended March 31, 2010.

“We are pleased to announce solid growth in the third fiscal quarter, supported by reduced uncompensated care, rate increases, growth in transport volume and strong cash flows,” said Conrad A. Conrad, interim President and Chief Executive Officer. “Following strong year-to-date performance, we have raised our fiscal 2010 guidance for Adjusted EBITDA from continuing operations to a range of $67.0 million to $69.0 million from the previous range of $63.0 million to $65.0 million.”

Results of Operations for the Fiscal 2010 Third Quarter Ended March 31, 2010

For the quarter ended March 31, 2010, the Company generated net revenue of $133.1 million, an increase of 7.5%, or $9.2 million, compared to $123.9 million for the same period last year. The increase was attributable primarily to same-service-area growth, which included reductions in uncompensated care and rate increases, as well as a 4.5% increase in total transport volume in the quarter.

Payroll and employee benefits expense for the third fiscal quarter was $80.0 million, or 60.1% of net revenue, compared to $76.0 million, or 61.3% of net revenue, in the same period of the prior year. The year-over-year increase in payroll dollars incurred was driven primarily by additional labor hours deployed in response to the increase in ambulance transport volume and higher expenses for employee health insurance.

 

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Other operating expenses for the third fiscal quarter were $31.4 million, or 23.6% of net revenue, compared to $28.0 million, or 22.6% of net revenue for the same prior-year period. The year-over-year increase is attributable primarily to increases in professional fees and vehicle and equipment expense related to growth in transport volume and fuel prices.

General and auto liability insurance expense for the third fiscal quarter was $3.4 million, or a decrease of $1.5 million, when compared to $4.9 million for the same period of the prior year. There were no actuarial adjustments recorded in the third quarter.

During the third quarter, the Company redeemed $4.0 million of 9.875% Senior Subordinated Notes (the “Notes”) that remained outstanding following the Company’s November 2009 tender offer. The loss on debt extinguishment related to those remaining Notes was $0.3 million.

Including the $0.3 million loss on debt extinguishment, third-quarter net income attributable to Rural/Metro was $3.8 million, or diluted EPS of $0.15, compared to net income of $1.0 million and EPS of $0.04 for the third quarter of the prior year. Excluding the $0.3 million loss on debt extinguishment and its related tax effect, quarterly net income would have been $4.5 million, or diluted EPS of $0.18.

Adjusted EBITDA from continuing operations for the third quarter increased 22.5% to $17.9 million compared to $14.7 million for the same period in fiscal 2009. Adjusted EBITDA from continuing operations excludes the effect of the quarterly loss on debt extinguishment of $0.3 million as well as share-based compensation expense of $87,000.

Results of Operations for the Nine Months Ended March 31, 2010

For the nine months ended March 31, 2010, the Company generated net revenue of $396.9 million, an increase of 8.8% compared to $364.9 million for the same period last year. The increase was attributable primarily to same-service-area growth, which included reductions in uncompensated care and rate increases, as well as a 3.6% increase in total transport volume.

Payroll and employee benefits expense for the nine-month period was $241.8 million, or 60.9% of net revenue, compared to $225.1 million, or 61.7% of net revenue for the same period of the prior year. The year-over-year increase in payroll dollars incurred was driven primarily by additional labor hours driven as a result of increased transport volume, and higher expenses related to employee health and workers’ compensation insurance.

Other operating expenses for the nine-month period were $90.1 million, or 22.7% of net revenue, compared to $84.6 million, or 23.2% of net revenue for the same period of the prior year. The year-over-year difference in actual dollars spent was attributable primarily to increases in operating equipment and supplies related to higher transport volume, as well as additional professional fees. These increases were offset by a year-to-date decrease in fuel expense.

General and auto liability insurance expense for the first nine months of fiscal 2010 was $12.0 million, compared to $10.6 million for the same prior-year period. The year-over-year variance was driven primarily by a $1.1 million increase in current-year claims costs and a $0.3 million net increase in actuarial adjustments.

 

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Net income attributable to Rural/Metro for the first nine months of fiscal 2010 including the $14.2 million loss on debt extinguishment, was $1.9 million, or diluted EPS of $0.08, compared to net income of $2.8 million and diluted EPS of $0.11 in the first nine months of fiscal 2009. Excluding the $14.2 million loss on debt extinguishment, net income for the nine-month period would have been $10.6 million, or diluted EPS of $0.42.

Cash flows for the period remained strong, with year-to-date net cash provided by operating activities of $38.3 million, compared to $37.3 million for the same prior-year period.

Adjusted EBITDA from continuing operations for the first nine months of fiscal 2010 increased 19.3% to $52.3 million, compared to $43.8 million for the same period in fiscal 2009. Adjusted EBITDA from continuing operations excludes the effect of the year-to-date loss on debt extinguishment of $14.2 million as well as share-based compensation expense of $0.4 million.

Adjusted EBITDA from continuing operations, net income and diluted EPS attributable to Rural/Metro, in each instance excluding the loss on debt extinguishment are key indicators management uses to evaluate operating performance. While Adjusted EBITDA from continuing operations, net income and diluted EPS attributable to Rural/Metro, in each instance excluding the loss on debt extinguishment are 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 these measures are useful to investors in assessing its 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 Adjusted EBITDA to income/(loss) from continuing operations and discontinued operations for the three and nine months ended March 31, 2010 and 2009, as well as a reconciliation of net income and diluted EPS attributable to Rural/Metro excluding the loss on debt extinguishment to net loss attributable to Rural/Metro and diluted earnings per share for the three and nine months ended March 31, 2010 and 2009, are included with this press release and the related current report on Form 8-K.

Quarterly Operating Statistics

The table below provides results for medical transports, Average Patient Charge (APC), and Days Sales Outstanding (DSO) during each of the five most recent quarters:

 

   

The quarterly increase in transport volume when compared to the same prior-year period was driven primarily by growth in non-emergency transports.

 

   

APC improvement of $20 per transport when compared to the fiscal 2009 third quarter was primarily due to continued reductions in uncompensated care and rate increases. Uncompensated care as a percentage of gross revenue decreased to 12.9%, as compared to 13.7% for the third quarter of fiscal 2009 and 13.4% for the second quarter of fiscal 2010. APC represents average cash collected per ambulance transport during the period.

 

   

DSO improved by 11 days when compared to the third quarter of fiscal 2009 and two days when compared to the second quarter of fiscal 2010. This improvement was related primarily to the Company’s ongoing national implementation of its electronic patient care record system, as well as overall billing and collections improvements.

 

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     Q3 ’09
(3/31/09)
   Q4 ’09
(6/30/09)
   Q1 ’10
(9/30/09)
   Q2 ’10
(12/31/09)
   Q3 ’10
(3/31/10)

Medical Transports (1)

     265,376      266,357      268,755      271,396      277,276

Average Patient Charge (APC) (2)

   $ 374    $ 378    $ 389    $ 397    $ 394

Days Sales Outstanding (DSO) (3)

     55      52      49      46      44

 

(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 2010 Guidance Raised

Today, the Company raised guidance for Adjusted EBITDA from continuing operations for the 12 months ending June 30, 2010 to a range of $67.0 million to $69.0 million. Guidance for fiscal 2010 capital expenditures was updated to $16.0 million.

Conference Call to Discuss Results

The Company will discuss results in a conference call today beginning at 8 a.m. Pacific/11 a.m. Eastern. To access the conference call, dial 877-383-7417 (domestic) or 678-904-3972 (international). The call also will be broadcast and archived on the Company’s web site at www.ruralmetro.com. A telephone replay will be available approximately two hours after the conclusion of the call through 11:59 p.m. Eastern time on May 13, 2010. To access the replay, dial 800-642-1687. From international locations, dial 706-645-9291. The required pass code is 67520725.

About Rural/Metro

Rural/Metro Corporation provides emergency and non-emergency ambulance services and private fire protection services in 20 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 “believe”, “anticipate”, “expect”, “plan”, “intend”, “may”, “should”, “will likely result”, “continue”, “estimate”, “project”, “goals”, or similar words used herein in connection with any discussions of future operating or financial performance

 

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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, uncompensated care, working capital, accounts receivable collection, liquidity, cash flow, EBITDA, adjusted EBITDA, capital expenditures, insurance coverage and claim reserves, capital needs, key operating metrics, future growth plans, future operating results, and future compliance with covenants in our debt facilities or instruments. In addition, the Company may face risks and uncertainties related to 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

(unaudited)

(in thousands, except share data)

 

     March 31,
2010
    June 30,
2009
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 33,137      $ 37,108   

Accounts receivable, net

     59,788        64,355   

Inventories

     7,802        8,535   

Deferred income taxes

     24,407        25,032   

Prepaid expenses and other

     4,945        19,895   
                

Total current assets

     130,079        154,925   

Property and equipment, net

     48,487        49,096   

Goodwill

     37,700        37,700   

Restricted cash

     17,842        —     

Deferred income taxes

     41,669        41,678   

Other assets

     10,465        11,556   
                

Total assets

   $ 286,242      $ 294,955   
                

LIABILITIES AND DEFICIT

    

Current liabilities:

    

Accounts payable

   $ 16,027      $ 14,883   

Accrued liabilities

     51,322        57,588   

Deferred revenue

     21,323        21,585   

Current portion of long-term debt

     2,675        199   
                

Total current liabilities

     91,347        94,255   

Long-term debt, net of current portion

     266,373        277,110   

Other long-term liabilities

     29,436        28,497   
                

Total liabilities

     387,156        399,862   
                

Rural/Metro Stockholders’ deficit:

    

Common stock, $0.01 par value, 40,000,000 shares authorized, 25,248,400 and 24,852,726 shares issued and outstanding at March 31, 2010 and June 30, 2009, respectively

     252        248   

Additional paid-in capital

     156,533        155,187   

Treasury stock, 96,246 shares at both March 31, 2010 and June 30, 2009

     (1,239     (1,239

Accumulated other comprehensive loss

     (2,592     (2,597

Accumulated deficit

     (256,423     (258,331
                

Total Rural/Metro stockholders’ deficit

     (103,469     (106,732

Noncontrolling interest

     2,555        1,825   
                

Total deficit

     (100,914     (104,907
                

Total liabilities and deficit

   $ 286,242      $ 294,955   
                

 

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RURAL/METRO CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended March 31,     Nine Months Ended March 31,  
     2010     2009     2010     2009  

Net revenue

   $ 133,137      $ 123,865      $ 396,909      $ 364,911   
                                

Operating expenses:

        

Payroll and employee benefits

     79,951        75,980        241,830        225,113   

Depreciation and amortization

     3,814        3,605        11,445        10,514   

Other operating expenses

     31,449        28,033        90,068        84,618   

General/auto liability insurance expense

     3,396        4,856        11,981        10,618   

Gain on sale of assets

     (113     (165     (515     (404
                                

Total operating expenses

     118,497        112,309        354,809        330,459   
                                

Operating income

     14,640        11,556        42,100        34,452   

Interest expense

     (7,116     (7,749     (21,761     (23,325

Interest income

     38        107        169        255   

Loss on debt extinguishment

     (312     —          (14,154     —     
                                

Income from continuing operations before income taxes

     7,250        3,914        6,354        11,382   

Income tax provision

     (2,664     (2,090     (2,315     (6,385

Income from continuing operations

     4,586        1,824        4,039        4,997   

Loss from discontinued operations, net of income taxes

     (232     (260     (501     (848
                                

Net income

   $ 4,354      $ 1,564      $ 3,538      $ 4,149   
                                

Net income attributable to noncontrolling interest

     (595     (577     (1,630     (1,319
                                

Net income attributable to Rural/Metro

   $ 3,759      $ 987      $ 1,908      $ 2,830   
                                

Income (loss) per share:

        

Basic -

        

Income from continuing operations attributable to Rural/Metro

   $ 0.16      $ 0.05      $ 0.10      $ 0.15   

Loss from discontinued operations attributable to Rural/Metro

   $ (0.01     (0.01   $ (0.02     (0.04
                                

Net income attributable to Rural/Metro

   $ 0.15      $ 0.04      $ 0.08      $ 0.11   
                                

Diluted -

        

Income from continuing operations attributable to Rural/Metro

   $ 0.16      $ 0.05      $ 0.10      $ 0.15   

Loss from discontinued operations attributable to Rural/Metro

   $ (0.01     (0.01   $ (0.02     (0.04
                                

Net income attributable to Rural/Metro

   $ 0.15      $ 0.04      $ 0.08      $ 0.11   
                                

Average number of common shares outstanding - Basic

     25,247        24,843        25,057        24,830   
                                

Average number of common shares outstanding - Diluted

     25,450        24,897        25,325        24,907   
                                

 

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RURAL/METRO CORPORATION

RECONCILIATION OF NET INCOME EXCLUDING LOSS ON DEBT EXTINGUISHMENT

(unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended March 31,    Nine Months Ended March 31,
     2010    2009    2010     2009

Net income attributable to Rural/Metro

   $ 3,759    $ 987    $ 1,908      $ 2,830
                            

Loss on debt extinguishment

     312      —        14,154        —  

Tax effect of loss on debt extinguishment

     424      —        (5,441     —  

Adjusted net income attributable to Rural Metro

     4,495      987      10,621        2,830
                            

Income per share:

          

Basic -

          

Net income attributable to Rural/Metro

   $ 0.18    $ 0.04    $ 0.42      $ 0.11
                            

Diluted -

          

Net income attributable to Rural/Metro

   $ 0.18    $ 0.04    $ 0.42      $ 0.11
                            

Average number of common shares outstanding - Basic

     25,247      24,843      25,057        24,830
                            

Average number of common shares outstanding - Diluted

     25,450      24,897      25,325        24,907
                            

 

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RURAL/METRO CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended March 31, 2010 and 2009

(unaudited)

(in thousands)

 

     2010     2009  

Cash flows from operating activities:

    

Net income

   $ 3,538      $ 4,149   

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

    

Depreciation and amortization

     11,566        10,871   

Non-cash adjustments to insurance claims reserves

     2,149        129   

Accretion of 12.75% Senior Discount Notes

     7,769        7,334   

Accretion of Term Loan Due 2014

     325        —     

Deferred income taxes

     1,160        3,790   

Excess tax benefits from share-based compensation

     (529     —     

Amortization of debt issuance costs

     1,280        1,632   

Non-cash loss on debt extinguishment

     2,345        —     

Loss on disposal of property and equipment

     48        58   

Gain on property insurance settlement

     (119     —     

Share-based compensation expense

     391        185   

Change in assets and liabilities -

    

Accounts receivable

     4,567        6,713   

Inventories

     733        (417

Prepaid expenses and other

     1,876        3,240   

Other assets

     (4,053     724   

Accounts payable

     (197     (1,921

Accrued liabilities

     6,346        1,769   

Deferred revenue

     (262     (380

Other liabilities

     (596     (589
                

Net cash provided by operating activities

     38,337        37,287   
                

Cash flows from investing activities:

    

Capital expenditures

     (9,391     (12,485

Proceeds from property insurance settlement

     119        —     

Proceeds from the sale/disposal of property and equipment

     8        —     

Increase in restricted cash

     (17,842     —     
                

Net cash used in investing activities

     (27,106     (12,485
                

Cash flows from financing activities:

    

Payments on Term Loan B

     (66,000     (12,000

Payments on Senior Subordinated Notes

     (125,000     —     

Payments on Term Loan Due 2014

     (450     —     

Payments on other debt and capital leases

     (174     (399

Borrowings under Term Loan Due 2014

     178,200        —     

Debt issuance costs

     (1,837     —     

Excess tax benefits from share-based compensation

     529        —     

Net proceeds from issuance of common stock under share-based compensation plans

     430        2   

Distributions to noncontrolling interest

     (900     (500
                

Net cash used in financing activities

     (15,202     (12,897
                

Increase (decrease) in cash and cash equivalents

     (3,971     11,905   

Cash and cash equivalents, beginning of year

     37,108        15,907   
                

Cash and cash equivalents, end of year

   $ 33,137      $ 27,812   
                

Supplemental disclosure of non-cash operating activities:

    

Increase (decrease) in other current assets and accrued liabilities for general liability insurance claim

   $ (13,073   $ 1,334   

Supplemental disclosure of non-cash investing and financing activities:

    

Property and equipment funded by liabilities

   $ 1,907      $ 1,656   

Supplemental cash flow information:

    

Cash paid for interest

   $ 14,181      $ 17,503   

Cash paid for income taxes, net

   $ 1,538      $ 806   

 

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RURAL/METRO CORPORATION

RECONCILIATION OF INCOME FROM CONTINUING AND DISCONTINUED OPERATIONS TO EBITDA

(unaudited)

(in thousands)

 

     Three Months Ended
March 31,
    Nine Months Ended
March 31,
 
     2010     2009     2010     2009  

Income from continuing operations

   $ 4,586      $ 1,824      $ 4,039      $ 4,997   

Add (deduct):

        

Depreciation and amortization

     3,814        3,605        11,445        10,514   

Interest expense

     7,116        7,749        21,761        23,325   

Interest income

     (38     (107     (169     (255

Income tax provision

     2,664        2,090        2,315        6,385   

Income attributable to noncontrolling interest

     (595     (577     (1,630     (1,319
                                

EBITDA from continuing operations attributable to Rural/Metro

     17,547        14,584        37,761        43,647   
                                

Add (deduct):

        

Share-based compensation expense

     87        68        391        185   

Loss on debt extinguishment

     312        —          14,154        —     
                                

Adjusted EBITDA from continuing operations attributable to Rural/Metro

     17,946        14,652        52,306        43,832   
                                

Loss from discontinued operations

     (232     (260     (501     (848

Add (deduct):

        

Depreciation and amortization

     —          85        121        358   

Income tax benefit

     (65     (53     (339     (524
                                

EBITDA from discontinued operations attributable to Rural/Metro

     (297     (228     (719     (1,014
                                

Total adjusted EBITDA attributable to Rural/Metro

   $ 17,649      $ 14,424      $ 51,587      $ 42,818   
                                

 

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