Company Revises Annual Guidance
Names Patrick G. Kelley Chief Operating Officer
LOUISVILLE, Ky., Aug. 6, 2009 (GLOBE NEWSWIRE) -- ResCare, Inc. (Nasdaq:RSCR) today announced results for the second quarter and six months ended June 30, 2009.
Second Quarter 2009 Financial Results
Revenues for the second quarter of 2009 increased 5% over the prior year period to $405 million. Income from continuing operations was $8.2 million, or $0.25 per diluted common share, compared with a loss from continuing operations of $1.6 million, or $0.06 per diluted common share, in the same period of 2008. The second quarter of 2009 included higher than planned pretax workers' compensation insurance costs of approximately $5.7 million ($3.5 million, net of tax, or $0.10 per diluted common share). The second quarter of 2008 included an after-tax charge of $14.9 million, or $0.45 per diluted common share, as a result of an increase in legal reserves.
Ralph G. Gronefeld, Jr., president and chief executive officer said, "We are disappointed that higher than expected workers' compensation insurance costs negatively impacted the second quarter, resulting in a revision to our 2009 guidance. Nevertheless, I am pleased that our core operations are performing well in a challenging environment. Strong cash flow for the first six months of the year enabled us to reduce debt by nearly $25 million. We are not immune to the impact of this economic cycle, but we are managing through it by growing revenue, preserving working capital and protecting our balance sheet, while continuing to be proactive with our payors. We continue to manage responsibly and position our company to take advantage of the opportunities for growth by using our strong cash flow and solid balance sheet. During our conference call, we will discuss the reasons for the increased workers' compensation costs and the manageable impact going forward."
2009 Guidance
The Company is revising its 2009 revenue guidance from the previous range of $1.61 billion to $1.67 billion to $1.60 billion to $1.63 billion, primarily due to the timing of potential acquisitions. The Company also is revising its guidance for diluted earnings per common share from continuing operations from the previous range of $1.52 to $1.58 to $1.30 to $1.34, primarily due to higher workers' compensation costs and lower expected full-year revenues.
Management Changes
The Company also announced today that Patrick G. Kelley, age 44, president of the Company's Community Services Group, will assume the newly created position of chief operating officer of ResCare, effective immediately. In this capacity, Mr. Kelley will oversee the Company's Community Services and Employment Training Services segments.
Mr. Gronefeld said, "Pat has been a part of ResCare for more than 20 years and has been instrumental in our success during that time. I am very excited to have him in this role."
The Company also announced that Paul G. Dunn, president of the Company's Employment Training Services segment, has resigned, effective September 3, 2009.
A listen-only simulcast of ResCare's second quarter 2009 conference call will be available on-line at www.rescare.com on August 7, 2009, 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 39 states, Washington, D.C., Puerto Rico and in a growing 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. Forward-looking Statements in this release 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 Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Income Statement Data:
Revenues $405,263 $385,378 $796,090 $760,777
Facility and program expenses 373,005 368,762 724,934 705,937
-------- -------- -------- --------
Facility and program
contribution 32,258 16,616 71,156 54,840
Corporate general and
administrative 15,282 14,629 30,831 29,450
Other operating expense
(income), net (389) 53 (403) (193)
-------- -------- -------- --------
Operating income 17,365 1,934 40,728 25,583
Interest expense, net 4,180 4,503 8,503 9,097
-------- -------- -------- --------
Income (loss) from
continuing operations before
income taxes 13,185 (2,569) 32,225 16,486
Income tax expense (benefit) 4,977 (1,000) 11,946 5,955
-------- -------- -------- --------
Income (loss) from continuing
operations 8,208 (1,569) 20,279 10,531
Loss from discontinued
operations, net of tax -- (103) -- (157)
-------- -------- -------- --------
Net income (loss) - including
noncontrolling interest 8,208 (1,672) 20,279 10,374
Net loss - noncontrolling
interest (135) -- (419) --
-------- -------- -------- --------
Net income (loss) -
ResCare, Inc. 8,343 (1,672) 20,698 10,374
Net income attributable to
preferred shareholders 1,194 -- 2,966 1,496
-------- -------- -------- --------
Net income attributable to
common shareholders $ 7,149 $ (1,672) $ 17,732 $ 8,878
======== ======== ======== ========
Basic earnings (loss) per
common share:
From continuing operations $ 0.25 $ (0.06) $ 0.62 $ 0.32
From discontinued operations -- -- -- (0.01)
-------- -------- -------- --------
Basic earnings (loss) per
common share $ 0.25 $ (0.06) $ 0.62 $ 0.31
======== ======== ======== ========
Diluted earnings (loss) per
common share:
From continuing operations $ 0.25 $ (0.06) $ 0.62 $ 0.32
From discontinued operations -- -- -- (0.01)
-------- -------- -------- --------
Diluted earnings (loss) per
common share $ 0.25 $ (0.06) $ 0.62 $ 0.31
======== ======== ======== ========
Weighted average number of
common shares:
Basic 28,795 28,466 28,751 28,401
Diluted 28,795 28,466 28,751 28,531
EBITDA (1) $ 23,683 $ 7,541 $ 53,882 $ 36,426
--------------------
(1) EBITDA is defined as income from continuing operations 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. A reconciliation of
income from continuing operations to EBITDA is included on the
next page of this release.
RESCARE, INC.
Unaudited Financial Highlights (continued)
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Reconciliation of Income from
Continuing Operations to
EBITDA:
Income (loss) from continuing
operations $ 8,208 $ (1,569) $ 20,279 $ 10,531
Add: Interest, net 4,180 4,503 8,503 9,097
Depreciation and
amortization 6,318 5,607 13,154 10,843
Income tax expense
(benefit) 4,977 (1,000) 11,946 5,955
-------- -------- -------- --------
EBITDA $ 23,683 $ 7,541 $ 53,882 $ 36,426
======== ======== ======== ========
June 30, Dec. 31,
2009 2008
-------- --------
Balance Sheet Data:
ASSETS
Cash and cash equivalents $ 15,613 $ 13,594
Accounts receivable, net 230,253 230,976
Other current assets 47,379 46,913
-------- --------
Total current assets 293,245 291,483
Property and equipment, net 82,771 84,157
Goodwill 485,984 476,196
Other assets, net 62,137 62,307
-------- --------
$924,137 $914,143
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $155,665 $155,921
Other long-term liabilities 75,717 65,959
Long-term debt 231,817 255,386
Shareholders' equity 460,938 436,877
-------- --------
$924,137 $914,143
======== ========
RESCARE, INC.
Unaudited Financial Highlights (continued)
(In thousands)
Six Months Ended
June 30,
------------------
2009 2008
-------- --------
Cash Flow Data:
Net income - including noncontrolling interest $ 20,279 $ 10,374
Adjustments to reconcile net income, including
noncontrolling interest, to cash provided by
operating activities:
Depreciation and amortization 13,154 10,843
Amortization of discount 606 592
Share-based compensation 2,488 2,233
Deferred income taxes 4,932 (1,997)
Excess tax benefits from share-based compensation -- (851)
Provision for losses on accounts receivable 3,927 3,519
Gain on purchase of business (559) --
Loss (gain) on sale of assets 53 (49)
Changes in operating assets and liabilities 1,939 7,017
-------- --------
Cash provided by operating activities 46,819 31,681
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (7,251) (9,383)
Acquisitions of businesses (12,723) (20,840)
Proceeds from sale of assets 146 535
-------- --------
Cash used in investing activities (19,828) (29,688)
-------- --------
Cash flows from financing activities:
Debt (repayments) borrowings, net (24,677) 8,172
Debt issuance costs (36) (98)
Excess tax benefits from share-based compensation -- 851
Proceeds received from exercise of stock options 360 962
Employee withholding payments on share-based
compensation (1,282) (1,442)
-------- --------
Cash (used in) provided by financing activities (25,635) 8,445
-------- --------
Effect of exchange rate on cash and cash
equivalents 663 (40)
-------- --------
Increase in cash and cash equivalents $ 2,019 $ 10,398
======== ========
RESCARE, INC.
Unaudited Financial Highlights (continued)
(Dollars in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Segment Data:
Revenues:
Community Services $290,627 $273,728 $572,050 $542,600
Job Corps Training Services 40,825 40,623 81,412 82,318
Employment Training Services 59,224 58,426 114,290 111,501
Other 14,587 12,601 28,338 24,358
-------- -------- -------- --------
Consolidated $405,263 $385,378 $796,090 $760,777
======== ======== ======== ========
Operating Income (Loss):
Community Services (1) $ 24,750 $ 4,941 $ 56,857 $ 34,524
Job Corps Training Services 2,930 2,777 6,106 5,862
Employment Training Services 2,999 7,292 7,602 12,210
Other 1,666 1,565 785 2,400
Corporate general and
administrative (14,980) (14,641) (30,622) (29,413)
-------- -------- -------- --------
Consolidated (1) $ 17,365 $ 1,934 $ 40,728 $ 25,583
======== ======== ======== ========
Operating Margin:
Community Services (1) 8.5% 1.8% 9.9% 6.4%
Job Corps Training Services 7.2% 6.8% 7.5% 7.1%
Employment Training Services 5.1% 12.5% 6.7% 11.0%
Other 11.4% 12.4% 2.8% 9.9%
Corporate general and
administrative (3.7%) (3.8%) (3.8%) (3.9%)
Consolidated (1) 4.3% 0.5% 5.1% 3.4%
-----------------
(1) The 2008 periods include a pre-tax charge of $24.4 million,
recorded as a result of the Company's increasing its legal
reserves due to adverse developments on four lawsuits.