Attached files
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| 8-K - FORM 8-K - RES CARE INC /KY/ | f8k_110112.htm |
EXHIBIT 99.1
RESCARE THIRD QUARTER 2012 RESULTS
Revenues for the third quarter of 2012 were $396.8 million, which was slightly above prior year period revenues of $396.3 million. Increased revenues from acquisitions in our Residential and HomeCare segments since the third quarter of 2011 were offset by contract losses and modifications in Workforce Services and other segments.
Income from continuing operations was $12.3 million for the third quarter of 2012, compared with $13.6 million in the same period of 2011. The decrease is due to higher share-based compensation, depreciation and income tax expenses, which was partially offset by lower interest expense. Adjusted EBITDA for the third quarter of 2012 was $36.2 million versus $35.6 million in the prior year quarter.
The company ceased providing international workforce services in Europe during the second quarter of 2011. The closure and disposal of these operations have been accounted for as discontinued operations. Accordingly, the results of these operations, net of income taxes, have been classified as discontinued operations for all periods presented.
RES-CARE, INC.
Unaudited Financial Highlights
(In thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
|
2012
|
2011
|
2012
|
2011
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|||||||||||||
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Income Statement Data:
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||||||||||||||||
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Revenues
|
$ | 396,838 | $ | 396,267 | $ | 1,194,082 | $ | 1,181,443 | ||||||||
|
Cost of services
|
296,202 | 297,555 | 896,434 | 890,488 | ||||||||||||
|
Gross profit
|
100,636 | 98,712 | 297,648 | 290,955 | ||||||||||||
|
Operating expenses:
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||||||||||||||||
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Operational general and administrative
|
57,364 | 56,068 | 176,413 | 174,818 | ||||||||||||
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Corporate general and administrative
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14,774 | 11,256 | 48,905 | 39,524 | ||||||||||||
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Total operating expenses
|
72,138 | 67,324 | 225,318 | 214,342 | ||||||||||||
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Operating income
|
28,498 | 31,388 | 72,330 | 76,613 | ||||||||||||
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Interest expense, net
|
7,951 | 10,394 | 26,301 | 31,757 | ||||||||||||
|
Loss on extinguishment of debt
|
— | — | 7,129 | — | ||||||||||||
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Income from continuing operations before income taxes
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20,547 | 20,994 | 38,900 | 44,856 | ||||||||||||
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Income tax expense
|
8,271 | 7,361 | 15,660 | 14,399 | ||||||||||||
|
Income from continuing operations
|
12,276 | 13,633 | 23,240 | 30,457 | ||||||||||||
|
Income from discontinued operations, net of tax
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— | 16,657 | — | 10,441 | ||||||||||||
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Net income
|
12,276 | 30,290 | 23,240 | 40,898 | ||||||||||||
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Net loss – noncontrolling interest
|
(24 | ) | (57 | ) | (85 | ) | (125 | ) | ||||||||
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Net income – Res-Care, Inc.
|
12,300 | 30,347 | 23,325 | 41,023 | ||||||||||||
|
Other comprehensive income:
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||||||||||||||||
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Foreign currency translation adjustments
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265 | (374 | ) | 294 | (685 | ) | ||||||||||
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Comprehensive income attributable to Res-Care, Inc.
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$ | 12,565 | $ | 29,973 | $ | 23,619 | $ | 40,338 | ||||||||
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Total comprehensive income
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$ | 12,541 | $ | 29,916 | $ | 23,534 | $ | 40,213 | ||||||||
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Page 2
RES-CARE, INC.
Unaudited Financial Highlights (continued)
(In thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
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2012
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2011
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2012
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2011
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Income from Continuing Operations to EBITDA and Adjusted EBITDA:
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Income from continuing operations
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$ | 12,276 | $ | 13,633 | $ | 23,240 | $ | 30,457 | ||||||||
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Add: Interest, net
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7,951 | 10,394 | 26,301 | 31,757 | ||||||||||||
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Loss on extinguishment of debt
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— | — | 7,129 | — | ||||||||||||
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Depreciation and amortization
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6,661 | 4,192 | 20,010 | 14,156 | ||||||||||||
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Income tax expense
|
8,271 | 7,361 | 15,660 | 14,399 | ||||||||||||
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EBITDA (1)
|
35,159 | 35,580 | 92,340 | 90,769 | ||||||||||||
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Add: Onex transaction costs
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— | — | — | 1,737 | ||||||||||||
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Share-based compensation
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920 | — | 2,945 | — | ||||||||||||
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Acquisition costs
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75 | — | 339 | 266 | ||||||||||||
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Adjusted EBITDA (1)
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$ | 36,154 | $ | 35,580 | $ | 95,624 | $ | 92,772 | ||||||||
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September 30,
2012
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December 31,
2011
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Balance Sheet Data:
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ASSETS
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Cash and cash equivalents
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$ | 29,084 | $ | 25,651 | ||||
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Accounts receivable, net
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222,786 | 221,089 | ||||||
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Other current assets
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46,374 | 50,316 | ||||||
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Total current assets
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298,244 | 297,056 | ||||||
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Property and equipment, net
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81,386 | 84,893 | ||||||
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Goodwill
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281,569 | 267,697 | ||||||
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Other intangible assets, net
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318,635 | 314,954 | ||||||
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Other assets
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27,811 | 27,658 | ||||||
| $ | 1,007,645 | $ | 992,258 | |||||
|
LIABILITIES AND SHAREHOLDER’S EQUITY
|
||||||||
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Current liabilities
|
$ | 157,550 | $ | 174,337 | ||||
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Other long-term liabilities
|
159,550 | 153,770 | ||||||
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Long-term debt
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365,110 | 365,196 | ||||||
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Shareholder’s equity
|
325,435 | 298,955 | ||||||
| $ | 1,007,645 | $ | 992,258 | |||||
|
(1)
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EBITDA is defined as income from continuing operations before depreciation and amortization, net interest expense, loss on extinguishment of debt and income taxes. Adjusted EBITDA is defined as EBITDA before Onex transaction costs, share-based compensation 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.
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Page 3
RES-CARE, INC.
Unaudited Financial Highlights (continued)
(In thousands)
|
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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|
2012
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2011
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2012
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2011
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Cash Flow Data:
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Net income
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$ | 12,276 | $ | 30,290 | $ | 23,240 | $ | 40,898 | ||||||||
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Adjustments to reconcile net income to cash provided by operating activities:
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||||||||||||||||
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Depreciation and amortization
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6,661 | 4,184 | 20,010 | 14,219 | ||||||||||||
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Amortization of discount and deferred debt issuance costs
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824 | 698 | 2,091 | 2,256 | ||||||||||||
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Share-based compensation
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920 | — | 2,945 | — | ||||||||||||
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Deferred income taxes, net
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998 | 1,675 | 1,622 | 4,272 | ||||||||||||
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Provision for losses on accounts receivable
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1,352 | 1,487 | 4,237 | 4,962 | ||||||||||||
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Write down on assets held for sale
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— | 14 | — | 1,642 | ||||||||||||
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Loss on extinguishment of debt, net of original issue discount paid
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— | — | 6,400 | — | ||||||||||||
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(Gain) loss on sale of assets
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(19 | ) | 203 | 76 | 378 | |||||||||||
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Changes in operating assets and liabilities
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(6,760 | ) | (23,325 | ) | (22,807 | ) | (25,252 | ) | ||||||||
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Cash provided by operating activities
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16,252 | 15,226 | 37,814 | 43,375 | ||||||||||||
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Cash flows from investing activities:
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Proceeds from sale of assets
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37 | (105 | ) | 80 | 217 | |||||||||||
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Purchases of property and equipment
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(3,909 | ) | (3,833 | ) | (11,324 | ) | (9,133 | ) | ||||||||
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Acquisitions of businesses, net of cash acquired
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(13,415 | ) | (9,158 | ) | (22,077 | ) | (17,803 | ) | ||||||||
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Cash used in investing activities
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(17,287 | ) | (13,096 | ) | (33,321 | ) | (26,719 | ) | ||||||||
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Cash flows from financing activities:
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Debt (repayments) borrowings, net
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(3,234 | ) | (1,776 | ) | 2,854 | (33,246 | ) | |||||||||
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Debt issuance costs
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(29 | ) | (3 | ) | (4,007 | ) | (561 | ) | ||||||||
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Funds contributed by co-investors
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— | — | — | 1,400 | ||||||||||||
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Cash used in financing activities
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(3,263 | ) | (1,779 | ) | (1,153 | ) | (32,407 | ) | ||||||||
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Effect of exchange rate on cash and cash equivalents
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84 | (218 | ) | 93 | (137 | ) | ||||||||||
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(Decrease) increase in cash and cash equivalents
|
$ | (4,214 | ) | $ | 133 | $ | 3,433 | $ | (15,888 | ) | ||||||
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Page 4
RES-CARE, INC.
Unaudited Financial Highlights (continued)
(Dollars in thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
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2012
|
2011
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2012
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2011
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Segment Data:
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Revenues:
|
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Residential Services
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$ | 220,950 | $ | 217,012 | $ | 658,916 | $ | 635,840 | ||||||||
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ResCare HomeCare
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82,485 | 79,572 | 249,848 | 237,652 | ||||||||||||
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Youth Services
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44,606 | 46,320 | 136,205 | 137,984 | ||||||||||||
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Workforce Services
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48,797 | 53,363 | 149,113 | 169,967 | ||||||||||||
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Consolidated
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$ | 396,838 | $ | 396,267 | $ | 1,194,082 | $ | 1,181,443 | ||||||||
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Adjusted Operating Income(1):
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Residential Services
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$ | 30,772 | $ | 28,100 | $ | 87,360 | $ | 74,019 | ||||||||
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ResCare HomeCare
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5,477 | 6,279 | 15,654 | 17,218 | ||||||||||||
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Youth Services
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3,602 | 3,342 | 10,473 | 10,908 | ||||||||||||
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Workforce Services
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3,448 | 4,985 | 7,750 | 14,154 | ||||||||||||
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Corporate
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(14,801 | ) | (11,318 | ) | (48,907 | ) | (37,949 | ) | ||||||||
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Consolidated
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$ | 28,498 | $ | 31,388 | $ | 72,330 | $ | 78,350 | ||||||||
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Adjusted Operating Margin(1):
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Residential Services
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13.9 | % | 12.9 | % | 13.3 | % | 11.6 | % | ||||||||
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ResCare HomeCare
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6.6 | % | 7.9 | % | 6.3 | % | 7.2 | % | ||||||||
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Youth Services
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8.1 | % | 7.2 | % | 7.7 | % | 7.9 | % | ||||||||
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Workforce Services
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7.1 | % | 9.3 | % | 5.2 | % | 8.3 | % | ||||||||
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Corporate
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(3.7 | %) | (2.9 | %) | (4.1 | %) | (3.2 | %) | ||||||||
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Consolidated
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7.2 | % | 7.9 | % | 6.1 | % | 6.6 | % | ||||||||
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(1)
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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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Page 5
RES-CARE, INC.
Unaudited Financial Highlights (continued)
(Dollars in thousands)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
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|
2012
|
2011
|
2012
|
2011
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|
Reconciliation of Operating Income to Adjusted Operating Income:
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||||||||||||||||
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Operating Income:
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Residential Services
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$ | 30,772 | $ | 28,100 | $ | 87,360 | $ | 74,019 | ||||||||
|
ResCare HomeCare
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5,477 | 6,279 | 15,654 | 17,218 | ||||||||||||
|
Youth Services
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3,602 | 3,342 | 10,473 | 10,908 | ||||||||||||
|
Workforce Services
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3,448 | 4,985 | 7,750 | 14,154 | ||||||||||||
|
Corporate(1)
|
(14,801 | ) | (11,318 | ) | (48,907 | ) | (39,686 | ) | ||||||||
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Consolidated
|
$ | 28,498 | $ | 31,388 | $ | 72,330 | $ | 76,613 | ||||||||
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Adjustments:
|
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Residential Services
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$ | — | $ | — | $ | — | $ | — | ||||||||
|
ResCare HomeCare
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— | — | — | — | ||||||||||||
|
Youth Services
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— | — | — | — | ||||||||||||
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Workforce Services
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— | — | — | — | ||||||||||||
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Corporate(1)
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— | — | — | 1,737 | ||||||||||||
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Consolidated
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$ | — | $ | — | $ | — | $ | 1,737 | ||||||||
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Adjusted Operating Income:
|
||||||||||||||||
|
Residential Services
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$ | 30,772 | $ | 28,100 | $ | 87,360 | $ | 74,019 | ||||||||
|
ResCare HomeCare
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5,477 | 6,279 | 15,654 | 17,218 | ||||||||||||
|
Youth Services
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3,602 | 3,342 | 10,473 | 10,908 | ||||||||||||
|
Workforce Services
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3,448 | 4,985 | 7,750 | 14,154 | ||||||||||||
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Corporate
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(14,801 | ) | (11,318 | ) | (48,907 | ) | (37,949 | ) | ||||||||
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Consolidated
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$ | 28,498 | $ | 31,388 | $ | 72,330 | $ | 78,350 | ||||||||
|
(1)
|
The nine month period ended September 30, 2011 included $1.7 million related to the Onex transaction costs.
|
-END-