ResCare Reports Third Quarter 2010 Results
04 Novembro 2010 - 8:13PM
ResCare, Inc. (Nasdaq:RSCR) today announced results for the third
quarter and nine months ended September 30, 2010.
Third Quarter 2010 Financial Results
Revenues for the third quarter of 2010 were $403.7 million, an
increase of 2% over revenues of $395.8 million for the same period
in 2009. During the third quarter of 2010, the Company recorded an
estimated pre-tax, non-cash charge of $65.6 million ($50.1 million,
net of tax, or $1.73 per diluted common share) as a result of the
impairment of goodwill at three of its reporting units. The Company
also incurred pre-tax costs of approximately $2.0 million ($1.2
million, net of tax, or $0.04 per diluted share) related to the
pending transaction with an affiliate of Onex Corporation.
Net loss attributable to common shareholders was $41.9
million, or $1.45 per diluted common share, for the third quarter
of 2010, compared with net income attributable to common
shareholders of $10.0 million, or $0.35 per diluted common share,
in the same period of 2009.
Adjusted net income attributable to common shareholders, which
excludes the aforementioned impairment charge and transaction
costs, was $8.1 million, or $0.28 per diluted common share, in the
third quarter of 2010. Adjusted EBITDA for the third quarter
of 2010 was $26.6 million compared with $29.1 million in the prior
year quarter.
Ralph G. Gronefeld, Jr., president and chief executive officer,
said, "We made progress in the reorganization of our business lines
to better reflect our company's growth initiatives, but it is an
ongoing process. We stood our ground financially in one of
the most challenging economic times that has brought news just
about every week this year of proposed state budget or service
cuts. I must commend our leadership and all our employees for
their continued focus on our mission. We are committed to
being a partner with our customers and to finding the most
effective, efficient ways to provide the much needed services our
constituencies rely upon."
Guidance
Although operations continue to perform in line with ResCare's
expectations, the Company announced that, based on the uncertainty
of potential adjustments to the goodwill impairment charge in the
fourth quarter, it is withdrawing its previously issued earnings
guidance for 2010.
A listen only simulcast of ResCare's third quarter 2010
conference call will be available online at www.rescare.com on
November 5, 2010, beginning at 9:00 a.m. Eastern Time and a replay
available at 11:00 a.m. Eastern Time.
About ResCare
ResCare, with more than 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 nearly 50,000 dedicated employees serve
more than a million people a year in 41 states, Washington, D.C.,
Puerto Rico and 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.
Important Information
This announcement and the description contained herein are for
informational purposes only and are not an offer to purchase or a
solicitation of an offer to sell securities of the Company.
The tender offer in connection with the Onex transaction is
being made only pursuant to the Offer to Purchase, Letter of
Transmittal and related materials that Onex Rescare Acquisition,
LLC filed with the SEC on a combined Tender Offer Statement on
Schedule TO and Transaction Statement on Schedule 13E‑3 on October
7, 2010, as amended. In addition, ResCare filed a
Solicitation/Recommendation Statement on Schedule 14D‑9 and
Transaction Statement on Schedule 13E-3 with respect to the tender
offer on October 7, 2010. ResCare shareholders should read
these materials and any related amendments carefully because these
documents contain important information, including the terms and
conditions of the offer. These documents may be obtained for
free at the SEC's website at www.sec.gov. ResCare
shareholders may also obtain these documents for free by calling
Georgeson Inc., the information agent for the tender offer, at
1-866-203-9357. Shareholders can obtain these documents when
they are filed and become available free of charge from the SEC's
website at www.sec.gov. In addition, copies of the
solicitation/recommendation statement, the proxy statement and
other filings containing information about the Company, the tender
offer and the share exchange may be obtained, if and when
available, without charge, by directing a request to Res-Care, Inc.
Attention: David Miles, Chief Financial Officer at 502-394-2137, or
on the Company's corporate website at www.rescare.com.
RESCARE,
INC. |
Unaudited Financial
Highlights (In thousands, except per share data)
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
Income Statement Data: |
|
|
|
|
Revenues |
$ 403,675 |
$ 395,837 |
$ 1,189,678 |
$ 1,191,927 |
Facility and program expenses |
367,758 |
358,829 |
1,084,126 |
1,083,763 |
Facility and program
contribution |
35,917 |
37,008 |
105,552 |
108,164 |
Corporate general and administrative |
18,141 |
14,196 |
47,538 |
45,027 |
Goodwill impairment charges |
65,577 |
– |
65,577 |
– |
Other operating (income) expense, net |
(334) |
186 |
385 |
(217) |
Operating (loss) income |
(47,467) |
22,626 |
(7,948) |
63,354 |
Interest expense, net |
4,846 |
3,972 |
14,613 |
12,475 |
(Loss) income before income
taxes |
(52,313) |
18,654 |
(22,561) |
50,879 |
Income tax (benefit) expense |
(10,346) |
7,158 |
636 |
19,104 |
Net (loss) income – including noncontrolling
interests |
(41,967) |
11,496 |
(23,197) |
31,775 |
Net loss – noncontrolling interests |
(33) |
(159) |
(156) |
(578) |
Net (loss) income – ResCare, Inc. |
(41,934) |
11,655 |
(23,041) |
32,353 |
Net income attributable to preferred
shareholders |
– |
1,665 |
– |
4,636 |
Net (loss) income attributable to common
shareholders |
$ (41,934) |
$ 9,990 |
$ (23,041) |
$ 27,717 |
|
|
|
|
|
Earnings per common share: |
|
|
|
|
Basic (loss) earnings per
share |
$ (1.45) |
$ 0.35 |
$ (0.80) |
$ 0.96 |
Diluted (loss) earnings per
share |
$ (1.45) |
$ 0.35 |
$ (0.80) |
$ 0.96 |
|
|
|
|
|
Weighted average number of common
shares: |
|
|
|
|
Basic |
29,017 |
28,858 |
28,952 |
28,757 |
Diluted |
29,017 |
28,858 |
28,952 |
28,757 |
RESCARE, INC. Unaudited
Financial Highlights (continued) |
(In thousands, except
per share data) |
|
|
|
|
|
Reconciliation of Net (Loss) Income
to Adjusted Net Income Attributable to Common
Shareholders: |
|
|
|
|
|
Three Months
Ended September 30, |
|
2010 |
2009 |
|
|
Per diluted common
share |
|
Per diluted common
share |
Net (loss) income - ResCare, Inc., as
reported |
$ (41,934) |
$ (1.45) |
$ 11,655 |
$ 0.40 |
Onex transaction costs, net of tax |
1,231 |
0.04 |
– |
– |
Goodwill impairment charge, net of tax |
50,105 |
1.73 |
– |
– |
Adjusted Net Income – ResCare, Inc.(1) |
9,402 |
0.32 |
11,655 |
0.40 |
Adjusted Net Income attributable to preferred
shareholders(2) |
(1,337) |
(0.04) |
(1,665) |
(0.05) |
Adjusted Net Income attributable to common
shareholders(3) |
$ 8,065 |
$ 0.28 |
$ 9,990 |
$ 0.35 |
Weighted average diluted common shares |
29,017 |
|
28,858 |
|
|
Nine Months Ended
September 30, |
|
2010 |
2009 |
|
|
Per diluted common
share |
|
Per diluted common
share |
Net (loss) income - ResCare, Inc., as
reported |
$ (23,041) |
$ (0.80) |
$ 32,353 |
$ 1.12 |
Onex transaction costs, net of tax |
1,231 |
0.04 |
– |
– |
Goodwill impairment charge, net of tax |
50,105 |
1.73 |
– |
– |
Adjusted Net Income – ResCare, Inc.(1) |
28,295 |
0.97 |
32,353 |
1.12 |
Adjusted Net Income attributable to preferred
shareholders(2) |
(4,031) |
(0.13) |
(4,636) |
(0.16) |
Adjusted Net Income attributable to common
shareholders(3) |
$ 24,264 |
$ 0.84 |
$ 27,717 |
$ 0.96 |
Weighted average diluted common shares |
28,952 |
|
28,757 |
|
|
|
|
|
|
1) Adjusted Net Income –
ResCare, Inc. is defined as Net income – ResCare, Inc. before the
estimated goodwill impairment charge and the Onex transaction
costs, net of their related income tax effects. Adjusted Net
Income – ResCare, Inc. and its attribution to preferred and
common shareholders 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 Adjusted Net Income – ResCare, Inc. are significant components
in understanding and assessing financial
performance. Management believes that Adjusted Net Income –
ResCare, Inc. is useful to investors to evaluate performance.
|
|
|
2) Adjusted Net Income
attributable to preferred shareholders is determined based on
Adjusted Net Income – ResCare, Inc. whereby income is attributed to
preferred shareholders. |
|
|
(3) Adjusted Net Income
attributable to common shareholders is determined based on Adjusted
Net Income – ResCare, Inc. whereby income is attributed to common
shareholders. |
|
|
RESCARE,
INC. |
Unaudited Financial
Highlights (continued) |
(In
thousands) |
|
|
|
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2010 |
2009 |
2010 |
2009 |
Reconciliation of (Loss) Income from
Continuing Operations to EBITDA and Adjusted EBITDA: |
|
|
|
|
(Loss) income from continuing operations |
$ (41,967) |
$ 11,496 |
$ (23,197) |
$ 31,775 |
Add: Interest, net |
4,846 |
3,972 |
14,613 |
12,475 |
Depreciation and
amortization |
6,506 |
6,504 |
19,271 |
19,658 |
Income tax (benefit)
expense |
(10,346) |
7,158 |
636 |
19,104 |
EBITDA(1) |
(40,961) |
29,130 |
11,323 |
83,012 |
Onex transaction costs |
1,970 |
– |
1,970 |
– |
Goodwill impairment charge |
65,577 |
– |
65,577 |
– |
Adjusted EBITDA(1) |
$ 26,586 |
$ 29,130 |
$ 78,870 |
$ 83,012 |
|
Sept. 30, 2010 |
Dec. 31, 2009 |
Balance Sheet Data: |
|
|
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$ 10,480 |
$ 20,672 |
Accounts receivable, net |
227,513 |
211,350 |
Other current assets |
40,498 |
48,552 |
Total current assets |
278,491 |
280,574 |
Property and equipment, net |
73,161 |
81,347 |
Goodwill |
370,940 |
422,626 |
Other assets, net |
69,394 |
60,393 |
|
$ 791,986 |
$ 844,940 |
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
|
|
Current liabilities |
$ 177,116 |
$ 156,946 |
Other long-term liabilities |
52,819 |
59,076 |
Long-term debt |
152,180 |
196,193 |
Shareholders' equity |
409,871 |
432,725 |
|
$ 791,986 |
$ 844,940 |
|
|
|
(1) EBITDA is defined as
income from continuing operations before depreciation and
amortization, net interest expense and income taxes. Adjusted
EBITDA is defined as EBITDA before the estimated goodwill
impairment charge and Onex transaction 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 commonly 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. |
RESCARE,
INC. |
Unaudited Financial
Highlights (continued) |
(In
thousands) |
|
|
|
Nine Months
Ended September 30, |
|
2010 |
2009 |
Cash Flow Data: |
|
|
Net (loss) income – including noncontrolling
interests |
$ (23,197) |
$ 31,775 |
Adjustments to reconcile net (loss) income,
including noncontrolling interests, to cash provided by operating
activities: |
|
|
Depreciation and
amortization |
19,271 |
19,658 |
Goodwill impairment charge |
65,577 |
– |
Amortization of discount |
1,340 |
909 |
Share-based compensation |
2,224 |
3,413 |
Deferred income taxes |
(3,548) |
7,384 |
Excess tax expense from
share-based compensation |
583 |
– |
Provision for losses on
accounts receivable |
5,402 |
5,666 |
Gain on purchase of business
|
– |
(559) |
Loss on sale of assets |
12 |
248 |
Changes in operating assets and
liabilities |
(1,030) |
(1,546) |
Cash provided by operating
activities |
66,634 |
66,948 |
|
|
|
Cash flows from investing activities: |
|
|
Proceeds from sale of
assets |
306 |
169 |
Purchases of property and
equipment |
(6,937) |
(12,654) |
Acquisitions of businesses |
(21,213) |
(17,994) |
Cash used in investing
activities |
(27,844) |
(30,479) |
|
|
|
Cash flows from financing activities: |
|
|
Debt repayments, net |
(42,987) |
(44,851) |
Debt issuance costs |
(4,519) |
(38) |
Excess tax expense from
share-based compensation |
(583) |
– |
Employee withholding payments
on share-based compensation |
(881) |
(1,302) |
Proceeds received from exercise
of stock options |
– |
415 |
Cash used in financing
activities |
(48,970) |
(45,776) |
Effect of exchange rate on cash and cash
equivalents |
(12) |
390 |
Decrease in cash and cash equivalents |
$ (10,192) |
$ (8,917) |
RESCARE,
INC. |
Unaudited Financial
Highlights (continued) |
(Dollars in
thousands) |
|
|
|
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
Segment Data: |
|
|
|
|
Revenues: |
|
|
|
|
Community Services |
$ 298,872 |
$ 292,138 |
$ 880,114 |
$ 864,188 |
Job Corps Training
Services |
28,890 |
31,966 |
90,008 |
113,378 |
Employment Training
Services |
67,222 |
61,167 |
190,247 |
175,457 |
Other |
8,691 |
10,566 |
29,309 |
38,904 |
Consolidated |
$ 403,675 |
$ 395,837 |
$ 1,189,678 |
$ 1,191,927 |
|
|
|
|
|
Adjusted Operating Income (Loss)(1): |
|
|
|
|
Community Services |
$ 30,799 |
$ 30,747 |
$ 86,784 |
$ 87,604 |
Job Corps Training
Services |
2,299 |
2,241 |
6,513 |
8,346 |
Employment Training
Services |
4,720 |
5,009 |
14,080 |
12,611 |
Other |
(1,965) |
(1,132) |
(2,037) |
(347) |
Total Operating
Expenses |
(15,773) |
(14,239) |
(45,741) |
(44,860) |
Consolidated |
$ 20,080 |
$ 22,626 |
$ 59,599 |
$ 63,354 |
|
|
|
|
|
Adjusted Operating Margin(1): |
|
|
|
|
Community Services |
10.3% |
10.5% |
9.9% |
10.1% |
Job Corps Training
Services |
8.0% |
7.0% |
7.2% |
7.4% |
Employment Training
Services |
7.0% |
8.2% |
7.4% |
7.2% |
Other |
(22.6%) |
(10.7%) |
(7.0%) |
(0.9%) |
Total Operating
Expenses |
(3.9%) |
(3.6%) |
(3.8%) |
(3.8%) |
Consolidated |
5.0% |
5.7% |
5.0% |
5.3% |
|
|
|
|
|
(1) Adjusted Operating
Income is defined as operating income before the estimated goodwill
impairment charge and Onex transaction costs. Adjusted
Operating Margin is defined as Adjusted Operating Income divided by
Revenues. Adjusted Operating Income 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 Adjusted Operating Income are significant components
in understanding and assessing financial
performance. Management believes that Adjusted Operating
Income is useful to investors to evaluate performance. A
reconciliation of Adjusted Operating Income to GAAP measures is
included in this press release. |
RESCARE,
INC. |
Unaudited Financial
Highlights (continued) |
(Dollars in
thousands) |
|
|
|
|
Three Months
Ended September 30, |
Nine Months
Ended September 30, |
|
2010 |
2009 |
2010 |
2009 |
Reconciliation of Operating (Loss)
Income to Adjusted Operating Income
(Loss): |
|
|
|
|
Operating (Loss) Income(1): |
|
|
|
|
Community Services(2) |
$ (16,090) |
$ 30,747 |
$ 39,895 |
$ 87,604 |
Job Corps Training Services |
2,299 |
2,241 |
6,513 |
8,346 |
Employment Training Services |
4,720 |
5,009 |
14,080 |
12,611 |
Other(3) (4) |
(20,653) |
(1,132) |
(20,725) |
(347) |
Total Operating Expenses (5) |
(17,743) |
(14,239) |
(47,711) |
(44,860) |
Consolidated |
$ (47,467) |
$ 22,626 |
$ (7,948) |
$ 63,354 |
|
|
|
|
|
Adjustments: |
|
|
|
|
Community
Services(2) |
$ 46,889 |
$ – |
$ 46,889 |
$ – |
Job Corps Training
Services |
– |
– |
– |
– |
Employment Training
Services |
– |
– |
– |
– |
Other(3) (4) |
18,688 |
– |
18,688 |
– |
Total Operating Expenses
(5) |
1,970 |
– |
1,970 |
– |
Consolidated |
$ 67,547 |
$ – |
$ 67,547 |
$ – |
|
|
|
|
|
Adjusted Operating Income (Loss): |
|
|
|
|
Community Services |
$ 30,799 |
$ 30,747 |
$ 86,784 |
$ 87,604 |
Job Corps Training
Services |
2,299 |
2,241 |
6,513 |
8,346 |
Employment Training
Services |
4,720 |
5,009 |
14,080 |
12,611 |
Other |
(1,965) |
(1,132) |
(2,037) |
(347) |
Total Operating
Expenses |
(15,773) |
(14,239) |
(45,741) |
(44,860) |
Consolidated |
$ 20,080 |
$ 22,626 |
$ 59,599 |
$ 63,354 |
|
|
|
|
|
(1) Other operating expense
(income) per Income Statement Data on page 3 has been allocated for
purposes of segment reporting. |
(2) Operating loss for the three
month and nine month periods ended September 30, 2010, included an
estimated $46.9 million goodwill impairment charge. |
(3) Operating loss for the three
month and nine month periods ended September 30, 2010, included an
estimated $13.8 million goodwill impairment charge in our
International reporting unit. |
(4) Operating loss for the
three month and nine month periods ended September 30, 2010,
included an estimated $4.9 million goodwill impairment charge
in our Schools reporting unit. |
(5) Operating loss for the
three month and nine month periods ended September 30, 2010,
included a $2.0 million charge related to Onex transaction costs in
our corporate general and administrative expenses. |
CONTACT: ResCare, Inc.
David W. Miles, Chief Financial Officer
502-394-2137
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