Announces Indiana Workforce Services Contract
Confirms 2010 Guidance
LOUISVILLE, Ky., May 6, 2010 (GLOBE NEWSWIRE) -- ResCare, Inc. (Nasdaq:RSCR) today announced results for the first quarter ended March 31, 2010.
First Quarter 2010 Financial Results
Revenues for the first quarter of 2010 were $389.9 million, essentially unchanged from the prior year period. Increased revenues from acquisitions in our Community Services Group since the first quarter of 2009 were offset by the loss of Job Corps centers and recent rate and service level reductions in certain states.
Net income attributable to common shareholders was $8.1 million, or $0.28 per diluted common share, for the first quarter of 2010, compared with net income attributable to common shareholders of $10.6 million, or $0.37 per diluted common share, in the same period of 2009. EBITDA for the first quarter of 2010 was $25.9 million versus $30.2 million in the prior year quarter.
Announces Indiana Workforce Services Contract
In March, ResCare signed an agreement with Indiana's Family and Social Services Administration to provide welfare-to-work services throughout the state. The contract value is approximately $142 million over seven years through December 2016. Ending the previous workforce services sub-contract in Indiana resulted in a one-time favorable impact in the first quarter of $0.02 per diluted common share, which is included in the Company's annual guidance.
Ralph G. Gronefeld, Jr., president and chief executive officer, said, "We are pleased to be a vital part of Indiana's workforce services solution and look forward to our continued partnership over the next seven years. Our results in the first quarter were solid, but we anticipate continued challenges through the rest of the year and into 2011. In order to continue our mission of providing high-quality services, we have an experienced team that is focused on cost controls, organic growth, selective acquisitions, cash flow and maintaining a strong balance sheet."
2010 Guidance
The Company confirmed its 2010 guidance issued on March 8, 2010, including revenues of approximately $1.6 billion and diluted earnings per common share in the range of $1.05 to $1.15.
A listen only simulcast of ResCare's first quarter 2010 conference call will be available on‑line at www.rescare.com on May 7, 2010, beginning at 9:00 a.m. Eastern Time and a replay available at 11:00 a.m. Eastern Time.
ResCare, with 35 years of experience helping people reach their highest level of independence, is one of the largest providers of home care to the elderly and persons with disabilities. It also offers residential and support services to people with intellectual and developmental disabilities and provides education, vocational training and job placement for people of all ages and skill levels. Based in Louisville, Kentucky, ResCare and its more than 46,000 dedicated employees serve daily more than 65,000 people in 41 states, Washington, D.C., Puerto Rico and in a number of international locations. For more information about ResCare, please visit the Company's website at www.rescare.com.
From time to time, ResCare makes forward-looking statements in its public disclosures, including statements relating to expected financial results, revenues that might be expected from new or acquired programs and facilities, its development and acquisition activities, reimbursement under federal and state programs, financing plans, compliance with debt covenants and other risk factors, and various trends favoring privatization of government programs. In ResCare's filings under the federal securities laws, including its annual, periodic and current reports, the Company identifies important factors that could cause its actual results to differ materially from those anticipated in forward-looking statements. Please refer to the discussion of those factors in the Company's filed reports. Statements related to expected financial results are as of this date only, and ResCare does not assume any responsibility to update these statements.
| RESCARE, INC. | ||
| Unaudited Financial Highlights | ||
| (In thousands, except per share data) | ||
| Three Months Ended | ||
| March 31, | ||
| 2010 | 2009 | |
| Income Statement Data: | ||
| Revenues | $389,861 | $390,827 |
| Facility and program expenses | 354,953 | 351,929 |
| Facility and program contribution | 34,908 | 38,898 |
| Corporate general and administrative | 15,273 | 15,549 |
| Other operating expense (income), net | 140 | (14) |
| Operating income | 19,495 | 23,363 |
| Interest expense, net | 4,831 | 4,323 |
| Income before income taxes | 14,664 | 19,040 |
| Income tax expense | 5,328 | 6,969 |
| Net income including noncontrolling interests | 9,336 | 12,071 |
| Net loss – noncontrolling interests | (82) | (284) |
| Net income – ResCare, Inc. | 9,418 | 12,355 |
| Net income attributable to preferred shareholders | 1,344 | 1,774 |
| Net income attributable to common shareholders | $8,074 | $10,581 |
| Earnings per common share: | ||
| Basic | $0.28 | $0.37 |
| Diluted | $0.28 | $0.37 |
| Weighted average number of common shares: | ||
| Basic | 28,899 | 28,693 |
| Diluted | 28,899 | 28,693 |
| EBITDA (1) | $25,914 | $30,199 |
| (1) EBITDA is defined as net income including noncontrolling interests before depreciation and amortization, net interest expense and income taxes. EBITDA should not be considered as a measure of financial performance under accounting principles generally accepted in the United States of America. The items excluded from EBITDA are significant components in understanding and assessing financial performance. Management routinely calculates and presents EBITDA because it believes that EBITDA is useful to investors and is commonly used as an analytical indicator 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. | ||
| RESCARE, INC. | ||
| Unaudited Financial Highlights (continued) | ||
| (In thousands) | ||
|
Three Months Ended March 31, |
||
| 2010 | 2009 | |
| Reconciliation of Net Income Including Noncontrolling Interests to EBITDA: | ||
| Net income including noncontrolling interests | $9,336 | $12,071 |
| Add: Interest, net | 4,831 | 4,323 |
| Depreciation and amortization | 6,419 | 6,836 |
| Income tax expense | 5,328 | 6,969 |
| EBITDA | $25,914 | $30,199 |
|
March 31, 2010 |
Dec. 31, 2009 |
|
| Balance Sheet Data: | ||
| ASSETS | ||
| Cash and cash equivalents | $16,102 | $20,672 |
| Accounts receivable, net | 226,860 | 211,350 |
| Other current assets | 41,128 | 48,552 |
| Total current assets | 284,090 | 280,574 |
| Property and equipment, net | 78,887 | 81,347 |
| Goodwill | 430,198 | 422,626 |
| Other assets, net | 66,647 | 60,393 |
| $859,822 | $844,940 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities | $163,168 | $156,946 |
| Other long-term liabilities | 62,716 | 59,076 |
| Long-term debt | 192,660 | 196,193 |
| Shareholders' equity | 441,278 | 432,725 |
| $859,822 | $844,940 | |
| RESCARE, INC. | ||
| Unaudited Financial Highlights (continued) | ||
| (In thousands) | ||
|
Three Months ended March 31, |
||
| 2010 | 2009 | |
| Cash Flow Data: | ||
| Net income including noncontrolling interests | $9,336 | $12,071 |
| Adjustments to reconcile net income including noncontrolling interests to cash provided by operating activities: | ||
| Depreciation and amortization | 6,419 | 6,836 |
| Amortization of discount | 408 | 302 |
| Share-based compensation | 845 | 1,271 |
| Deferred income taxes | 1,664 | 1,025 |
| Excess tax expense from share-based compensation | 185 | – |
| Provision for losses on accounts receivable | 1,714 | 1,658 |
| Gain on purchase of business | – | (562) |
| (Gain) loss on sale of assets | (14) | 30 |
| Changes in operating assets and liabilities | (2,915) | 4,933 |
| Cash provided by operating activities | 17,642 | 27,564 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (2,277) | (3,213) |
| Acquisitions of businesses | (11,391) | (1,711) |
| Proceeds from sale of assets | 24 | 120 |
| Cash used in investing activities | (13,644) | (4,804) |
| Cash flows from financing activities: | ||
| Debt repayments, net | (3,757) | (21,526) |
| Debt issuance costs | (4,352) | (14) |
| Excess tax expense from share-based compensation | (185) | – |
| Proceeds received from exercise of stock options | – | 168 |
| Employee withholding payments on share-based compensation | (260) | (506) |
| Cash used in financing activities | (8,554) | (21,878) |
| Effect of exchange rate on cash and cash equivalents | (14) | (233) |
| (Decrease) increase in cash and cash equivalents | $(4,570) | $649 |
| RESCARE, INC. | ||
| Unaudited Financial Highlights (continued) | ||
| (Dollars in thousands) | ||
|
Three Months Ended March 31, |
||
| 2010 | 2009 | |
| Segment Data: | ||
| Revenues: | ||
| Community Services | $287,528 | $281,423 |
| Job Corps Training Services | 31,286 | 40,587 |
| Employment Training Services | 60,791 | 55,066 |
| Other | 10,256 | 13,751 |
| Consolidated | $389,861 | $390,827 |
| Operating Income (Loss)(1): | ||
| Community Services | $27,289 | $32,107 |
| Job Corps Training Services | 2,269 | 3,176 |
| Employment Training Services | 5,623 | 4,603 |
| Other | (186) | (881) |
| Total Operating Expenses | (15,500) | (15,642) |
| Consolidated | $19,495 | $23,363 |
| Operating Margin: | ||
| Community Services | 9.5% | 11.4% |
| Job Corps Training Services | 7.3% | 7.8% |
| Employment Training Services | 9.2% | 8.4% |
| Other | (1.8%) | (6.4%) |
| Total Operating Expenses | (4.0%) | (4.0%) |
| Consolidated | 5.0% | 6.0% |
| (1) Other operating expense (income) (per Income Statement Data on page 3) has been allocated for purposes of segment reporting. | ||