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 REPORTS STRONG FISCAL 2010 FULL-YEAR

AND FOURTH-QUARTER RESULTS

Fiscal 2010 Highlights:

 

   

7.9% growth in net revenue when compared to fiscal 2009

 

   

17.9% growth in operating income when compared to fiscal 2009

 

   

$3.5 million net income attributable to Rural/Metro, or diluted earnings per share (EPS) of $0.14, including a $14.2 million pre-tax loss on debt extinguishment and a $1.2 million pre-tax goodwill impairment related to a legacy acquisition

 

   

$69.1 million in adjusted EBITDA from continuing operations

SCOTTSDALE, Ariz. (Sept. 8, 2010) – Rural/Metro Corporation (NASDAQ: RURL), a leading national provider of ambulance and private fire protection services, announced strong results for its fiscal 2010 full year and fourth quarter ended June 30, 2010.

Michael P. DiMino, President and Chief Executive Officer, said, “Our results clearly demonstrate the strength of our business strategies as we successfully achieve organic and strategic growth opportunities, leverage our operational and technological expertise to gain margin expansion and generate strong and sustainable cash flow.”

Results of Operations for the Fiscal Year Ended June 30, 2010

For the fiscal year ended June 30, 2010, the Company generated net revenue of $530.8 million, an increase of 7.9% or $39.0 million, compared to $491.8 million for the same prior-year period. Ambulance services revenue was $457.8 million, an increase of 9.6% or $40.0 million, compared to $417.8 million for the same prior-year period. The increase was primarily attributable to $37.4 million in same-service-area revenue growth, which was driven by reductions in uncompensated care, rate increases and a 4.1% increase in ambulance transport volume, as well as $2.6 million from new contract growth. Other services revenue was $72.9 million, a decrease of 1.4% or $1.0 million, compared to $73.9 million for the same prior-year period.

Payroll and employee benefits expense for fiscal 2010 was $324.7 million, or 61.2% of net revenue, compared to $305.3 million, or 62.1% of net revenue for fiscal 2009. The year-over-year decrease as a percentage of net revenue was primarily attributable to improved labor management and higher transport volumes offset slightly by increases in employee health insurance and workers compensation insurance expenses.

 

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Other operating expenses for fiscal 2010 totaled $121.9 million, or 23.0% of net revenue, compared to $115.6 million, or 23.5% of net revenue in fiscal 2009. The year-over-year decrease as a percentage of net revenue was related to higher revenue offset by an increase in professional fees.

General and auto liability insurance expense for fiscal 2010 was $13.9 million, or an increase of $2.3 million, compared with $11.6 million in fiscal 2009. The year-over-year increase was driven primarily by an increase in current-year claims estimates.

Fiscal 2010 net income attributable to Rural/Metro was $3.5 million, or diluted EPS of $0.14, which included a $14.2 million loss on debt extinguishment related to the Company’s December 2009 debt refinancing and a $1.2 million goodwill impairment charge related to a legacy acquisition. Excluding the loss on debt extinguishment, fiscal 2010 net income attributable to Rural/Metro would have been $12.4 million, or diluted EPS of $0.49.

Fiscal 2010 adjusted EBITDA from continuing operations increased 18.3% to $69.1 million compared to $58.4 million in fiscal 2009. Adjusted EBITDA from continuing operations excludes the effect of the $14.2 million loss on debt extinguishment, the $1.2 million goodwill impairment and $0.5 million in share-based compensation expense.

Results of Operations for the Fourth Quarter Ended June 30, 2010

For the quarter ended June 30, 2010, the Company generated net revenue of $133.8 million, an increase of 5.4%, or $6.9 million, compared to net revenue of $126.9 million for the same period last year. Ambulance services revenue was $116.1 million, an increase of 7.4% or $8.0 million, compared to $108.1 million for the same prior-year period. The increase was primarily attributable to $7.1 million in same-service-area revenue growth, which included reductions in uncompensated care, rate increases and a 5.3% increase in transport volume, as well as $0.9 million in new contract growth. Other services revenue was $17.7 million, a decrease of 5.7% or $1.1 million, compared to $18.8 million for the same prior-year period.

Payroll and employee benefits expense for the fourth fiscal quarter was $82.9 million, or 62.0% of net revenue, compared to $80.2 million, or 63.2% of net revenue, in the same period of the prior year. The year-over-year decrease as a percentage of net revenue was primarily attributable to improved labor management, higher transport volumes and lower employee bonus expense, offset slightly by an increase in employee health insurance expenses.

Other operating expenses for the fourth fiscal quarter totaled $31.8 million, or 23.8% of net revenue, compared to $31.0 million, or 24.4% of net revenue for the same prior-year period. The year-over-year decrease as a percentage of net revenue was related to higher revenue, offset in part by higher fuel expense related to increased prices.

Auto and general liability insurance expense for the fourth fiscal quarter was $1.9 million, or an increase of $0.9 million, when compared to $1.0 million for the same period of the prior year. The year-over-year increase was driven primarily by a higher positive adjustment in actuarial claims in the prior year when compared to the current year.

Fourth-quarter net income attributable to Rural/Metro was $1.6 million, or diluted EPS of $0.06, compared to net income of $2.2 million and diluted EPS of $0.09 for the fourth quarter of the prior year.

 

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Adjusted EBITDA from continuing operations for the fourth quarter increased 15.4% to $16.8 million, compared to $14.6 million for the same period in fiscal 2009. Adjusted EBITDA from continuing operations for the three-month period excludes the effect of the $1.2 million goodwill impairment and $0.2 million in share-based compensation expense.

Adjusted EBITDA from continuing operations and net income and diluted EPS attributable to Rural/Metro excluding the loss on debt extinguishment are key indicators management uses to evaluate operating performance. While adjusted EBITDA from continuing operations and net income and diluted EPS attributable to Rural/Metro 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 12 months ended June 30, 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 12 months ended June 30, 2010 and 2009, are included with this press release and the related current report on Form 8-K.

Transaction Technology

The Company’s focus on invoice transaction processing and related technology has resulted in consistent and measurable improvement in areas such as uncompensated care (UC) and days sales outstanding (DSO). Specifically, the national rollout of its electronic patient care reporting (ePCR) system that began in July 2008 has contributed to these improvements. The Company monitors an array of system performance measures, ranging from the impact to uncompensated care to the durability of the hardware installed in each ambulance. At the close of fiscal 2010, ePCR technology was being used in approximately 65% of the Company’s ambulance transports.

 

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“When Rural/Metro designed the electronic patient record system and began the deployment, we strongly believed that the accuracy and efficiency afforded by this technology would complement the enhancements made to our front-end billing and collections processes, Mr. DiMino said.

“In two years, we have achieved not only a solid $12.0 million return on our $8.0 million investment, but also have established our leadership position when it comes to billing and collecting for ambulance services,” he continued. “The ePCR system has more than paid for itself through reductions in uncompensated care and reduced DSO. It is a key component of our success, and will continue to be a part of our strategy to improve invoice-to-cash outcomes in the future.”

Fiscal 2011 Guidance

The Company announced financial guidance for the fiscal year ending June 30, 2011, with adjusted EBITDA from continuing operations expected to be in the range of $74.0 million to $76.0 million and capital expenditures expected to be in the range of $18.0 million to $20.0 million.

Quarterly Operating Statistics

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

 

     Q4 ‘09    Q1 ‘10    Q2 ‘10    Q3 ‘10    Q4 ‘10
     (6/30/09)    (9/30/09)    (12/31/09)    (3/31/10)    (6/30/10)
Medical Transports (1)      266,357      268,755      271,396      277,276      280,574
Average Patient Charge (APC) (2)    $ 378    $ 389    $ 397    $ 394    $ 391
Days Sales Outstanding (DSO) (3)      52      49      46      44      43

 

(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.

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 join the Company’s conference call, dial 877-383-7417 (domestic) or 678-894-3972 (international). A taped replay will be available approximately two hours following the completion of the call through 11:59 p.m. Eastern on September 11, 2010. To access the replay, dial 800-642-1687 (domestic) or 706-645-9291 (international). The required pass code to access the replay is 91751906. An audio webcast also will be available at www.ruralmetro.com the day of the call and will remain on the Company’s website for 90 days thereafter.

 

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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 or business prospects. We may also make forward-looking statements in our financial reports filed with the Securities and Exchange Commission (SEC), investor 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)

 

     June 30,
2010
    June 30,
2009
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 20,228      $ 37,108   

Accounts receivable, net

     63,581        64,355   

Inventories

     8,001        8,535   

Deferred income taxes

     23,737        25,032   

Prepaid expenses and other

     7,907        19,895   
                

Total current assets

     123,454        154,925   

Property and equipment, net

     50,670        49,096   

Goodwill

     36,516        37,700   

Restricted cash

     20,376        —     

Deferred income taxes

     41,538        41,678   

Other assets

     15,908        11,556   
                

Total assets

   $ 288,462      $ 294,955   
                

LIABILITIES AND DEFICIT

    

Current liabilities:

    

Accounts payable

   $ 12,914      $ 14,883   

Accrued liabilities

     48,290        57,588   

Deferred revenue

     21,244        21,585   

Current portion of long-term debt

     6,436        199   
                

Total current liabilities

     88,884        94,255   

Long-term debt, net of current portion

     262,606        277,110   

Other long-term liabilities

     38,130        28,497   
                

Total liabilities

     389,620        399,862   
                

Rural/Metro Stockholders’ deficit:

    

Common stock, $0.01 par value, 40,000,000 shares authorized, 25,254,713 and 24,852,726 shares issued and outstanding at June 30, 2010 and June 30, 2009, respectively

     252        248   

Additional paid-in capital

     156,748        155,187   

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

     (1,239     (1,239

Accumulated other comprehensive loss

     (3,782     (2,597

Accumulated deficit

     (254,823     (258,331
                

Total Rural/Metro stockholders’ deficit

     (102,844     (106,732

Noncontrolling interest

     1,686        1,825   
                

Total deficit

     (101,158     (104,907
                

Total liabilities and deficit

   $ 288,462      $ 294,955   
                


RURAL/METRO CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended June 30,     Twelve Months Ended June 30,  
     2010     2009     2010     2009  

Net revenue

   $ 133,845      $ 126,889      $ 530,754      $ 491,800   
                                

Operating expenses:

        

Payroll and employee benefits

     82,918        80,158        324,748        305,271   

Depreciation and amortization

     4,537        3,744        15,982        14,258   

Other operating expenses

     31,823        31,023        121,891        115,641   

General/auto liability insurance expense

     1,921        1,031        13,902        11,649   

Goodwill impairment

     1,184        —          1,184        —     

Gain on sale of assets and property insurance settlement

     (108     (132     (623     (536
                                

Total operating expenses

     122,275        115,824        477,084        446,283   
                                

Operating income

     11,570        11,065        53,670        45,517   

Interest expense

     (7,335     (7,518     (29,096     (30,843

Interest income

     66        69        235        324   

Loss on debt extinguishment

     —          —          (14,154     —     
                                

Income from continuing operations before income taxes

     4,301        3,616        10,655        14,998   

Income tax provision

     (2,080     (1,048     (4,395     (7,433

Income from continuing operations

     2,221        2,568        6,260        7,565   

Loss from discontinued operations, net of income taxes

     10        (82     (491     (930
                                

Net income

   $ 2,231      $ 2,486      $ 5,769      $ 6,635   
                                

Net income attributable to noncontrolling interest

     (631     (290     (2,261     (1,609
                                

Net income attributable to Rural/Metro

   $ 1,600      $ 2,196      $ 3,508      $ 5,026   
                                

Income (loss) per share:

        

Basic -

        

Income from continuing operations attributable to Rural/Metro

   $ 0.06      $ 0.09      $ 0.16      $ 0.24   

Loss from discontinued operations attributable to Rural/Metro

   $ —          —        $ (0.02     (0.04
                                

Net income attributable to Rural/Metro

   $ 0.06      $ 0.09      $ 0.14      $ 0.20   
                                

Diluted -

        

Income from continuing operations attributable to Rural/Metro

   $ 0.06      $ 0.09      $ 0.16      $ 0.24   

Loss from discontinued operations attributable to Rural/Metro

   $ —        $ —        $ (0.02   $ (0.04
                                

Net income attributable to Rural/Metro

   $ 0.06      $ 0.09      $ 0.14      $ 0.20   
                                

Average number of common shares outstanding - Basic

     25,253        24,845        25,106        24,834   
                                

Average number of common shares outstanding - Diluted

     25,465        24,938        25,351        24,915   
                                


RURAL/METRO CORPORATION

RECONCILIATION OF NET INCOME EXCLUDING LOSS ON DEBT EXTINGUISHMENT

(unaudited)

(in thousands, except per share amounts)

 

     Three Months Ended June 30,    Twelve Months Ended June 30,
     2010    2009    2010     2009

Net income attributable to Rural/Metro

   $ 1,600    $ 2,196    $ 3,508      $ 5,026
                            

Loss on debt extinguishment

     —        —        14,154        —  

Tax effect of loss on debt extinguishment

     192      —        (5,249     —  

Adjusted net income attributable to Rural Metro

     1,792      2,196      12,413        5,026
                            

Income per share:

          

Basic -

          

Net income attributable to Rural/Metro

   $ 0.07    $ 0.09    $ 0.49      $ 0.20
                            

Diluted -

          

Net income attributable to Rural/Metro

   $ 0.07    $ 0.09    $ 0.49      $ 0.20
                            

Average number of common shares outstanding - Basic

     25,253      24,845      25,106        24,834
                            

Average number of common shares outstanding - Diluted

     25,465      24,938      25,351        24,915
                            


RURAL/METRO CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

For the twelve months ended June 30, 2010 and 2009

(in thousands)

 

     2010     2009  

Cash flows from operating activities:

    

Net income

   $ 5,769      $ 6,635   

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

    

Depreciation and amortization

     16,102        14,697   

Non-cash adjustments to insurance claims reserves

     2,517        (4

Accretion of 12.75% Senior Discount Notes

     7,769        9,968   

Accretion of Term Loan Due 2014

     586        —     

Deferred income taxes

     2,647        7,622   

Excess tax benefits from share-based compensation

     (583     (9

Amortization of debt issuance costs

     1,577        2,089   

Non-cash loss on debt extinguishment

     2,345        —     

Loss on disposal of property and equipment and proceeds from property insurance settlement

     (67     76   

Goodwill impairment

     1,184        —     

Share-based compensation expense

     545        241   

Items expensed related to acquisition

     186        —     

Change in assets and liabilities -

    

Accounts receivable

     774        11,776   

Inventories

     552        (79

Prepaid expenses and other

     (1,081     559   

Other assets

     (2,283     448   

Accounts payable

     (2,772     (872

Accrued liabilities

     3,420        221   

Deferred revenue

     (341     (316

Other liabilities

     (1,321     (971
                

Net cash provided by operating activities

     37,525        52,081   
                

Cash flows from investing activities:

    

Capital expenditures

     (15,488     (16,692

Cash paid for acquisition

     (1,400     —     

Proceeds from the sale of property and equipment and property insurance settlement

     148        46   

Increase in restricted cash

     (20,376     —     
                

Net cash used in investing activities

     (37,116     (16,646
                

Cash flows from financing activities:

    

Payments on debt

     (192,272     (12,512

Issuance of debt

     178,200        —     

Debt issuance costs

     (1,837     —     

Excess tax benefits from share-based compensation

     583        9   

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

     437        19   

Distributions of earnings to noncontrolling interest

     (2,400     (1,750
                

Net cash used in financing activities

     (17,289     (14,234
                

(Decrease) increase in cash and cash equivalents

     (16,880     21,201   

Cash and cash equivalents, beginning of year

     37,108        15,907   
                

Cash and cash equivalents, end of year

   $ 20,228      $ 37,108   
                

Supplemental disclosure of non-cash operating activities:

    

(Decrease) increase in other current assets and accrued liabilities for general liability insurance claim

   $ (5,073   $ 1,508   

Supplemental disclosure of non-cash investing and financing activities:

    

Property and equipment funded by liabilities

   $ 1,750      $ 962   

Supplemental cash flow information:

    

Cash paid for interest

   $ 17,944      $ 19,360   

Cash paid for income taxes, net

   $ 1,353      $ 1,181   


RURAL/METRO CORPORATION

RECONCILIATION OF INCOME FROM CONTINUING AND DISCONTINUED OPERATIONS TO EBITDA

(unaudited)

(in thousands)

 

     Three Months Ended
June  30,
    Twelve Months Ended
June  30,
 
     2010     2009     2010     2009  

Income from continuing operations

   $ 2,221      $ 2,568      $ 6,260      $ 7,565   

Add (deduct):

        

Depreciation and amortization

     4,537        3,744        15,982        14,258   

Interest expense

     7,335        7,518        29,096        30,843   

Interest income

     (66     (69     (235     (324

Income tax provision

     2,080        1,048        4,395        7,433   

Income attributable to noncontrolling interest

     (631     (290     (2,261     (1,609
                                

EBITDA from continuing operations attributable to Rural/Metro

     15,476        14,519        53,237        58,166   
                                

Add (deduct):

        

Share-based compensation expense

     154        56        545        241   

Goodwill impairment

     1,184        —          1,184        —     

Loss on debt extinguishment

     —          —          14,154        —     
                                

Adjusted EBITDA from continuing operations attributable to Rural/Metro

     16,814        14,575        69,120        58,407   
                                

Loss from discontinued operations

     10        (82     (491     (930

Add (deduct):

        

Depreciation and amortization

     —          81        121        439   

Income tax provision (benefit)

     48        (26     (292     (550
                                

EBITDA from discontinued operations attributable to Rural/Metro

     58        (27     (662     (1,041
                                

Total adjusted EBITDA attributable to Rural/Metro

   $ 16,872      $ 14,548      $ 68,458      $ 57,366