SOURCE: Rural/Metro Corporation

Rural/Metro Corporation

September 09, 2009 07:00 ET

Rural/Metro Reports Fiscal 2009 Fourth Quarter and Full Year Financial Results

SCOTTSDALE, AZ--(Marketwire - September 9, 2009) - Rural/Metro Corporation (NASDAQ: RURL)

Highlights:

--  Company makes $10 million principal payment to reduce senior debt.
--  Net revenue increased 3.5% to $498.8 million for the full year; up
    3.7% to $129.1 million in the fourth quarter.
--  Net income increased 22.7% to $5.0 million for the full year; up 50.0%
    to $2.2 million in the fourth quarter.
--  Earnings Before Interest, Taxes, Depreciation and Amortization
    (EBITDA) from continuing operations increased 11.4% to $58.5 million for
    the full year; up 3.6% to $15.0 million in the fourth quarter.
--  Average Patient Charge (APC) increased $14 per transport to $370 for
    the full year; up $11 per transport to $380 in the fourth quarter.
--  Net cash provided by operating activities up 49.6% to $52.1 million
    for the full year.
    

Rural/Metro Corporation (NASDAQ: RURL), a leading provider of ambulance and private fire protection services, announced results today for its fiscal 2009 fourth quarter and full year, highlighting strong cash-flow generation, growth in profitability, and further progress in reducing uncompensated care.

Jack Brucker, President and Chief Executive Officer, said, "Quarterly and full-year results demonstrated the continued effectiveness of our strategy to capitalize on a successful business model that focuses on delivering high-quality services and best-in-class patient care. Solid results this quarter and throughout fiscal 2009 were driven primarily by our ability to grow the business, successfully manage uncompensated care, improve operating efficiencies and advance our technology initiatives."

The Company announced today that it made a $10.0 million principal payment to further reduce the outstanding principal balance of its senior Term Loan B to $56.0 million, from the original issue of $135.0 million in 2005. "We remain committed to deleveraging the balance sheet, as strong cash flows support our ability to reduce debt and enhance the long-term enterprise value for our stockholders," Mr. Brucker said.

Results of Operations for the Fiscal Year Ended June 30, 2009

Consolidated net revenue for fiscal 2009 increased 3.5 percent, or $16.6 million, to $498.8 million, compared to $482.2 million in fiscal 2008. Ambulance services revenue increased 3.7 percent, or $15.0 million, to $423.4 million, compared to $408.4 million in the prior year. Other services revenue, which includes fire protection services, increased 2.3 percent, or $1.7 million, to $75.4 million, compared to $73.7 million for the prior year. Consolidated net revenue growth was driven primarily by increases in APC and new ambulance contracts.

Payroll and employee benefits for fiscal 2009 were $309.9 million, or 62.1 percent of net revenue, compared to $298.4 million, or 61.9 percent of net revenue, in fiscal 2008. The year-over-year increase in payroll dollars was driven primarily by increases in workers' compensation and employee health insurance expenses, as well as cost-of-living wage increases.

Other operating expenses for fiscal 2009 were $117.6 million, or 23.6 percent of net revenue, compared to $117.5 million, or 24.4 percent of net revenue, in fiscal 2008. These results included a reduction in professional fees and fuel expenses offset by an increase in vehicle, equipment and station expenses.

General and auto liability expense for fiscal 2009 was $11.8 million, a decrease of $2.6 million when compared to general and auto liability expense of $14.4 million in fiscal 2008. The decrease was related to a reduction in current-year premium and claims expense.

The income tax provision for fiscal 2009 reflects a $1.0 million wage tax credit identified by the Company that reduced the overall provision and resulted in a fiscal 2009 effective income tax rate of 49.6 percent, compared to an effective income tax rate of 50.9 percent for fiscal 2008. Cash taxes paid in fiscal 2009 were $1.2 million.

Income from continuing operations for fiscal 2009 was $5.9 million, or diluted earnings per share (EPS) of $0.24, compared to income from continuing operations of $3.7 million, or diluted EPS of $0.15, in fiscal 2008. Net income from all operations for fiscal 2009 was $5.0 million, or diluted EPS of $0.20, compared to net income from all operations of $4.1 million, or diluted EPS of $0.16 in fiscal 2008.

EBITDA from continuing operations for fiscal 2009 increased 11.4 percent, or $6.0 million, to $58.5 million compared to $52.5 million for fiscal 2008.

EBITDA from continuing operations is a key indicator management uses to evaluate operating performance. While EBITDA from continuing operations is 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 this measure is 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 EBITDA to income/(loss) from continuing operations and discontinued operations for the three and 12 months ended June 30, 2009 and 2008 is included with this press release and the related current report on Form 8-K.

Net cash provided by operating activities remained strong in fiscal 2009, increasing by 49.6 percent to $52.1 million, compared to $34.8 million in fiscal 2008. Capital expenditures for fiscal 2009 were $16.7 million.

Results of Operations for the Fourth Quarter Ended June 30, 2009

Consolidated net revenue for the fiscal fourth quarter 2009 increased 3.7 percent, or $4.6 million, to $129.1 million, compared to $124.5 million for the same period in fiscal 2008. Ambulance services revenue increased 3.7 percent, or $3.9 million, to $109.9 million, compared to $106.0 million for the same prior-year period. Other services revenue, which includes fire protection services, increased 3.8 percent, or $0.7 million, to $19.2 million, compared to $18.5 million for the same prior-year period. Consolidated quarterly net revenue growth was driven primarily by increases in APC and new ambulance contracts.

Payroll and employee benefits for the fiscal fourth quarter 2009 were $81.4 million, or 63.0 percent of net revenue, compared to $75.2 million, or 60.4 percent of net revenue, in the same prior-year period. The quarter-over-quarter increase in payroll dollars was driven primarily by increases in workers' compensation and employee health insurance expenses, as well as an increase in ambulance unit hours due to higher transport volume.

Other operating expenses for the fourth quarter ended June 30, 2009 were $31.5 million, or 24.4 percent of net revenue, compared to $30.5 million, or 24.5 percent of net revenue, for the same prior-year period. The difference was due primarily to an increase in vehicle, equipment and station expenses, offset in part by lower fuel expenses.

General and auto liability expense in the fiscal fourth quarter 2009 was $1.1 million, a decrease of $3.5 million when compared to general and auto liability expense of $4.6 million for the same prior-year period. The decrease was related primarily to net positive changes in actuarial adjustments from year to year.

As noted above, the income tax provision reflects a $1.0 million wage tax credit identified by the Company that reduced the overall provision and resulted in a fiscal fourth-quarter 2009 effective income tax rate of 29.7 percent compared to an effective income tax rate of 50.2 percent for the same period of the prior year.

Income from continuing operations for the fiscal fourth quarter 2009 was $2.5 million, or diluted EPS of $0.10, compared to income from continuing operations of $1.6 million, or diluted EPS of $0.07 for the same prior-year period. Net income from all operations for the fourth quarter was $2.2 million, or diluted EPS of $0.09, compared to net income from all operations of $1.5 million, or diluted EPS of $0.06 in fiscal 2008.

EBITDA from continuing operations for the fourth quarter ended June 30, 2009 increased 3.6 percent, or $0.6 million, to $15.0 million compared to $14.4 million for the same prior-year period.

Fourth-Quarter Operating Statistics

The following table provides results for medical transports, APC, and DSO during each of the five most recent quarters.

--  Increases in fourth-quarter transport volume were related primarily to
    new contracts and expansion in existing markets, offset partly by
    discontinued contracts in Tempe, Arizona, and unincorporated Orange County,
    Florida.
--  APC continued to increase on a year-over-year and sequential quarterly
    comparison, with the improvement driven equally by increases in rates and
    reductions in uncompensated care.
--  Improvements in DSO continued to be driven by the ongoing
    effectiveness and efficiency of the company's billing and collections
    process.
    

                       Q4 '08     Q1 '09     Q2 '09     Q3 '09     Q4 '09
                     (6/30/08)  (9/30/08)  (12/31/08) (3/31/09)  (6/30/09)
                     ---------- ---------- ---------- ---------- ----------
Medical Transports
 (1)                    266,926    269,044    261,041    268,515    269,567

Average Patient
 Charge (APC) (2)    $      369 $      362 $      364 $      374 $      380

Days Sales
 Outstanding (DSO)
 (3)                         60         59         57         55         52

(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 Financial Guidance

The Company announced financial guidance for the fiscal year ending June 30, 2010, with EBITDA from continuing operations expected to be in the range of $60.0 million to $63.0 million and capital expenditures expected to be in the range of $16.0 million to $19.0 million.

Mr. Brucker concluded, "Our goals in 2010 will target growth through new contracts and same-service-area expansion, as we strive to improve key metrics, advance important technology projects and increase profitability. We believe our guidance reflects the investments we will make to support the highest levels of service quality while also striving to achieve optimal operating efficiencies."

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 877-419-6596 (domestic) or 719-325-4846 (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 from approximately 2 p.m. (Eastern) today through midnight (Eastern) Sept. 11, 2009. To access the replay, dial 888-203-1112. From international locations, dial 719-457-0820. The required pass code is 4689985.

About Rural/Metro

Rural/Metro Corporation provides emergency and non-emergency ambulance services and private fire protection services in 22 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 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, 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)

                          RURAL/METRO CORPORATION
                        CONSOLIDATED BALANCE SHEETS
                    (in thousands, except share data)


                                                    June 30,     June 30,
                                                      2009         2008
                                                   ----------   ----------
ASSETS
Current assets:
Cash and cash equivalents                          $   37,108   $   15,907
Accounts receivable, net                               64,355       76,131
Inventories                                             8,535        8,456
Deferred income taxes                                  25,032       22,263
Prepaid expenses and other                             19,895       18,946
                                                   ----------   ----------
   Total current assets                               154,925      141,703

Property and equipment, net                            49,096       46,938
Goodwill                                               37,700       37,700
Deferred income taxes                                  41,678       50,773
Insurance deposits                                        716          989
Other assets                                           10,840       16,108
                                                   ----------   ----------
   Total  assets                                   $  294,955   $  294,211
                                                   ==========   ==========

LIABILITIES, MINORITY INTEREST AND
 STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable                                   $   14,883   $   16,147
Accrued liabilities                                    57,588       55,139
Deferred revenue                                       21,585       21,901
Current portion of long-term debt                         199          374
                                                   ----------   ----------
   Total current liabilities                           94,255       93,561

Long-term debt, net of current portion                277,110      279,017
Other liabilities                                      28,497       29,536
                                                   ----------   ----------
   Total liabilities                                  399,862      402,114
                                                   ----------   ----------

Minority interest                                       1,825        1,966
                                                   ----------   ----------

Stockholders' deficit:
Common stock, $0.01 par value, 40,000,000
 shares authorized, 24,852,726 and 24,822,726
 shares issued and outstanding at
 June 30, 2009 and 2008, respectively                     248          248
Additional paid-in capital                            155,187      154,918
Treasury stock, 96,246 shares at both
 June 30, 2009 and 2008                                (1,239)      (1,239)
Accumulated other comprehensive income (loss)          (2,597)        (439)
Accumulated deficit                                  (258,331)    (263,357)
                                                   ----------   ----------
   Total stockholders' deficit                       (106,732)    (109,869)
                                                   ----------   ----------
     Total liabilities, minority interest and
      stockholders' deficit                        $  294,955   $  294,211
                                                   ==========   ==========




                          RURAL/METRO CORPORATION
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except per share amounts)


                                 Three Months Ended   Twelve Months Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Net revenue                     $ 129,103  $ 124,535  $ 498,808  $ 482,167
                                ---------  ---------  ---------  ---------
Operating expenses:
  Payroll and employee
   benefits                        81,398     75,219    309,894    298,395
  Depreciation and
   amortization                     3,822      3,316     14,588     12,736
  Other operating expenses         31,537     30,510    117,611    117,523
  General/auto liability
   insurance expense                1,056      4,552     11,766     14,421
  Gain on sale of assets             (138)      (108)      (551)    (1,386)
  Gain on property insurance
   settlement                           -          -          -        (70)
                                ---------  ---------  ---------  ---------
      Total operating expenses    117,675    113,489    453,308    441,619
                                ---------  ---------  ---------  ---------
Operating income                   11,428     11,046     45,500     40,548
  Interest expense                 (7,518)    (7,983)   (30,843)   (31,731)
  Interest income                      69         67        324        374
                                ---------  ---------  ---------  ---------
Income from continuing
 operations before income
 taxes and minority interest        3,979      3,130     14,981      9,191
Income tax provision               (1,181)    (1,570)    (7,427)    (4,674)
Minority interest                    (291)        84     (1,609)      (812)
                                ---------  ---------  ---------  ---------
Income from continuing
 operations                         2,507      1,644      5,945      3,705
Income (loss) from
 discontinued operations,
 net of income taxes                 (312)      (181)      (919)       392
                                ---------  ---------  ---------  ---------
Net income                      $   2,195  $   1,463  $   5,026  $   4,097
                                =========  =========  =========  =========
Income (loss) per share:
  Basic -
    Income from continuing
     operations                 $    0.10  $    0.07  $    0.24  $    0.15
    Income (loss) from
     discontinued operations    $   (0.01) $   (0.01) $   (0.04) $    0.02
                                ---------  ---------  ---------  ---------
      Net income                $    0.09  $    0.06  $    0.20  $    0.17
                                =========  =========  =========  =========

  Diluted -
    Income from continuing
     operations                 $    0.10  $    0.07  $    0.24  $    0.15
    Income (loss) from
     discontinued operations    $   (0.01) $   (0.01) $   (0.04) $    0.01
                                ---------  ---------  ---------  ---------
      Net income                $    0.09  $    0.06  $    0.20  $    0.16
                                =========  =========  =========  =========

  Average number of common
   shares outstanding - Basic      24,845     24,823     24,834     24,787
                                =========  =========  =========  =========
  Average number of common
   shares outstanding - Diluted    24,938     24,920     24,915     24,952
                                =========  =========  =========  =========




                          RURAL/METRO CORPORATION
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Years Ended June 30, 2009 and 2008
                              (in thousands)


                                                      2009         2008
                                                   ----------   ----------
Cash flows from operating activities:
  Net income                                       $    5,026   $    4,097
  Adjustments to reconcile net income to
   net cash provided by operating activities -
    Depreciation and amortization                      14,697       12,983
    Non-cash adjustments to insurance claims
     reserves                                              (4)      (6,260)
    Accretion of 12.75% Senior Discount Notes           9,968        8,809
    Deferred income taxes                               7,622        3,493
    Tax benefit from the exercise of
     stock options                                         (9)         (72)
    Amortization of deferred financing costs            2,089        2,105
    Loss on sale of property and equipment                 76          358
    Earnings of minority shareholder                    1,609          812
    Stock based compensation expense (benefit)            241           12
    Proceeds from property insurance settlement             -          (70)
  Change in assets and liabilities -
    Accounts receivable                                11,776        2,182
    Inventories                                           (79)         326
    Prepaid expenses and other                            559         (422)
    Insurance deposits                                    273          879
    Other assets                                          175        2,532
    Accounts payable                                     (872)          31
    Accrued liabilities                                   221        3,106
    Deferred revenue                                     (316)      (3,058)
    Other liabilities                                    (971)       2,978
                                                   ----------   ----------
  Net cash provided by operating activities            52,081       34,821
                                                   ----------   ----------
  Cash flows from investing activities:
    Purchases of short-term investments                     -       (5,000)
    Sales of short-term investments                         -        5,000
    Capital expenditures                              (16,692)     (13,327)
    Proceeds from the sale/disposal of
     property and equipment                                46           26
    Proceeds from property insurance settlement             -           70
                                                   ----------   ----------
  Net cash used in investing activities               (16,646)     (13,231)
                                                   ----------   ----------
  Cash flows from financing activities:
    Repayment of debt                                 (12,512)     (13,987)
    Issuance of debt                                        -        3,800
    Cash paid for debt issuance costs                       -         (857)
    Tax benefit from the exercise of
     stock options                                          9           72
    Issuance of common stock                               19           58
    Distributions to minority shareholders             (1,750)        (950)
                                                   ----------   ----------
  Net cash used in financing activities               (14,234)     (11,864)
                                                   ----------   ----------
  Increase in cash and cash equivalents                21,201        9,726
Cash and cash equivalents, beginning of year           15,907        6,181
                                                   ----------   ----------
Cash and cash equivalents, end of year             $   37,108   $   15,907
                                                   ==========   ==========

Supplemental disclosure of non-cash operating
 activities:
  Increase in accumulated deficit, other
   liabilities and decrease in deferred
   income taxes upon adoption of FIN 48            $        -   $   12,826
  Increase in other current assets and
   accrued liabilities for general liability
   insurance claim                                      1,508            -

Supplemental disclosure of non-cash investing
 and financing activities:
  Property and equipment funded by liabilities     $      962   $      892
  Note payable incurred for software licenses               -          396

Supplemental cash flow information:
  Cash paid for interest                           $   19,360   $   20,890
  Cash paid for income taxes, net                       1,181        1,748




                          RURAL/METRO CORPORATION
             RECONCILIATION OF INCOME (LOSS) FROM CONTINUING
                  AND DISCONTINUED OPERATIONS TO EBITDA
                              (in thousands)


                                 Three Months Ended   Twelve Months Ended
                                      June 30,              June 30,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------

Income from continuing
 operations                     $   2,507  $   1,644  $   5,945  $   3,705
Add (deduct):
  Depreciation and
   amortization                     3,822      3,316     14,588     12,736
  Interest expense                  7,518      7,983     30,843     31,731
  Interest income                     (69)       (67)      (324)      (374)
  Income tax provision              1,181      1,570      7,427      4,674
                                ---------  ---------  ---------  ---------

  EBITDA from continuing
   operations                      14,959     14,446     58,479     52,472
                                ---------  ---------  ---------  ---------

Income (loss) from discontinued
 operations                          (312)      (181)      (919)       392
Add (deduct):
  Depreciation and
   amortization                         3         38        108        247
  Income tax provision
   (benefit)                         (159)      (164)      (543)       232
                                ---------  ---------  ---------  ---------

  EBITDA from discontinued
   operations                        (468)      (307)    (1,354)       871
                                ---------  ---------  ---------  ---------

  Total EBITDA                  $  14,491  $  14,139  $  57,125  $  53,343
                                =========  =========  =========  =========

Contact Information

  • CONTACT:
    Liz Merritt
    Rural/Metro Corporation
    (480) 606-3337

    Sharrifah Al-Salem, FD
    (415) 293-4414