LOUISVILLE, Ky. (Business Wire) -- ResCare (NASDAQ: RSCR) today announced results for the second quarter and six months ended June 30, 2008.
Second Quarter 2008 Financial Highlights
Consolidated revenues for the second quarter of 2008 increased 6.2% over the prior year period to $385.4 million. The Company reported a loss from continuing operations of $1.6 million, or $0.06 per diluted common share, which included a charge of $24.4 million ($14.9 million, net of tax, or $0.45 per diluted common share). This charge resulted from the previously announced increase in legal reserves for adverse developments in four lawsuits. Income from continuing operations for the second quarter of 2007 was $10.3 million, or $0.31 per diluted common share.
Ralph G. Gronefeld, Jr., president and chief executive officer, said, "I am pleased with our core operating results during the quarter as we achieved revenue growth in virtually all of our business segments with significant contribution from our Employment Training Services unit, driven by performance incentives and new contracts. Although the legal charge had a negative impact on the second quarter 2008 results, the lawsuits do not affect core business operations or our acquisition strategy. Thanks to the strength of our operations' leadership and commitment from our employees, our underlying business fundamentals were positive in the second quarter, despite a weak economic environment nationally."
In closing, Mr. Gronefeld added, "We will continue to invest in our service lines through strategic acquisitions to build our core businesses such as the acquisition of Caregivers Home Health, which closed in early July 2008."
Guidance for Balance of 2008
The Company is providing guidance for the second half of 2008 for diluted earnings per common share from continuing operations in a range of $0.70 to $0.74 and revenues of $790 million to $825 million. The guidance assumes no reimbursement rate changes for the balance of 2008.
A listen-only simulcast of ResCare's second quarter 2008 conference call will be available on-line at www.rescare.com on August 8, 2008, beginning at 9:00 a.m. Eastern Time and a replay available at 11:00 a.m. Eastern Time.
ResCare, with nearly 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 those 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 44,000 dedicated employees serve daily more than 65,000 people in 38 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. 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 Six Months Ended
June 30, June 30,
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Income Statement Data:
Revenues $385,378 $363,023 $760,777 $701,518
Facility and program expenses
(1) 368,762 327,871 705,937 632,613
--------- --------- --------- ---------
Facility and program
contribution 16,616 35,152 54,840 68,905
Corporate general and
administrative (1) 14,682 14,092 29,257 27,063
--------- --------- --------- ---------
Operating income 1,934 21,060 25,583 41,842
Interest expense, net 4,503 4,835 9,097 9,372
--------- --------- --------- ---------
(Loss) income from continuing
operations before income (2,569) 16,225 16,486 32,470
taxes
Income tax (benefit) expense (1,000) 5,946 5,955 11,900
--------- --------- --------- ---------
(Loss) income from continuing
operations (1,569) 10,279 10,531 20,570
Loss from discontinued
operations, net of taxes (103) (123) (157) (262)
--------- --------- --------- ---------
Net (loss) income (1,672) 10,156 10,374 20,308
Net income attributable to
preferred shareholders -- 1,467 1,496 2,918
--------- --------- --------- ---------
Net (loss) income attributable
to common shareholders $ (1,672) $ 8,689 $ 8,878 $ 17,390
========= ========= ========= =========
Basic (loss) earnings per
common share:
From continuing operations $ (0.06) $ 0.31 $ 0.32 $ 0.63
From discontinued operations (0.00) (0.00) (0.01) (0.01)
--------- --------- --------- ---------
Basic (loss) earnings per
common share $ (0.06) $ 0.31 $ 0.31 $ 0.62
========= ========= ========= =========
Diluted (loss) earnings per
common share:
From continuing operations $ (0.06) $ 0.31 $ 0.32 $ 0.62
From discontinued operations (0.00) (0.01) (0.01) (0.01)
--------- --------- --------- ---------
Diluted (loss) earnings per
common share $ (0.06) $ 0.30 $ 0.31 $ 0.61
========= ========= ========= =========
Weighted average number of
common shares:
Basic 28,466 28,180 28,401 28,143
Diluted 28,466 28,499 28,531 28,495
(1) The Company recorded share-based compensation expense of $1.1
million ($0.03 per diluted common share) and $2.8 million ($0.05 per
diluted common share) for the three months ended June 30, 2008 and
2007, respectively. Of the $1.1 million for the three months ended
June 30, 2008, the Company included $0.6 million in corporate general
and administrative expenses and $0.5 million in facility and program
expenses. Of the $2.8 million recorded for the three months ended
June 30, 2007, the Company included $1.7 million in corporate general
and administrative expenses and $1.1 million in facility and program
expenses. The Company recorded share-based compensation expense of
$2.2 million ($0.04 per diluted common share) and $4.4 million ($0.08
per diluted common share) for the six months ended June 30, 2008 and
2007, respectively. Of the $2.2 million for the six months ended June
30, 2008, the Company included $1.1 million in corporate general and
administrative expenses and $1.1 million in facility and program
expenses. Of the $4.4 million recorded for the six months ended June
30, 2007, the Company included $2.5 million in corporate general and
administrative expenses and $1.9 million in facility and program
expenses.
RESCARE, INC.
Unaudited Financial Highlights (continued)
(In thousands)
June 30, Dec. 31,
2008 2007
-------- --------
Balance Sheet Data:
ASSETS
Cash and cash equivalents $ 21,207 $ 10,809
Accounts receivable, net 219,952 206,529
Other current assets 48,207 42,234
-------- --------
Total current assets 289,366 259,572
Property and equipment, net 83,760 83,336
Goodwill 454,578 443,623
Other assets 59,476 48,012
-------- --------
$887,180 $834,543
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $173,329 $150,025
Other long-term liabilities 64,919 57,158
Long-term debt 230,412 220,491
Shareholders' equity 418,520 406,869
-------- --------
$887,180 $834,543
======== ========
RESCARE, INC.
Unaudited Financial Highlights (continued)
(In thousands)
Six Months Ended
June 30,
------------------
2008 2007
------------------
Cash Flow Data:
Net income $ 10,374 $ 20,308
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 10,843 9,543
Amortization of discount and deferred debt
issuance costs 592 537
Impairment charge -- 332
Deferred income taxes (1,997) 2,530
Excess tax benefits from share-based compensation (851) (1,291)
Provision for losses on accounts receivable 3,519 2,934
Share-based compensation 2,233 4,372
Gain on sale of assets (49) (111)
Changes in operating assets and liabilities 6,977 (3,773)
------------------
Cash provided by operating activities 31,641 35,381
------------------
Cash flows from investing activities:
Proceeds from sale of assets 535 381
Purchases of property and equipment (9,383) (11,160)
Acquisitions of businesses (20,840) (30,338)
------------------
Cash used in investing activities (29,688) (41,117)
------------------
Cash flows from financing activities:
Debt borrowings (payments), net 8,172 (963)
Proceeds from sale and leaseback transactions -- 1,669
Debt issuance costs (98) --
Excess tax benefits from share-based compensation 851 1,291
Employee withholding payments on share-based
compensation (1,442) --
Proceeds received from exercise of stock options 962 1,536
------------------
Cash provided by financing activities 8,445 3,533
------------------
Increase (decrease) in cash and cash equivalents $ 10,398 $ (2,203)
==================
RESCARE, INC.
Unaudited Financial Highlights (continued)
(Dollars in thousands)
Three Months Ended Six Months Ended June
June 30, 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Segment Data:
Revenues:
Community Services $273,728 $266,893 $542,600 $511,502
Job Corps Training
Services 40,623 40,873 82,318 82,552
Employment Training
Services 58,426 49,522 111,501 96,183
Other 12,601 5,735 24,358 11,281
---------- ---------- ---------- ----------
Consolidated $385,378 $363,023 $760,777 $701,518
========== ========== ========== ==========
Operating Income:
Community Services (1) $ 4,941 $ 26,706 $ 34,524 $ 54,490
Job Corps Training
Services 2,777 2,892 5,862 5,809
Employment Training
Services 7,292 4,365 12,210 7,435
Other 1,565 1,360 2,400 1,477
Corporate general and
administrative (14,641) (14,263) (29,413) (27,369)
---------- ---------- ---------- ----------
Consolidated (1) $ 1,934 $ 21,060 $ 25,583 $ 41,842
========== ========== ========== ==========
Operating Margin:
Community Services (1) 1.8% 10.0% 6.4% 10.7%
Job Corps Training
Services 6.8% 7.1% 7.1% 7.0%
Employment Training
Services 12.5% 8.8% 11.0% 7.7%
Other 12.4% 23.7% 9.9% 13.1%
Corporate general and
administrative (3.8%) (3.9%) (3.9%) (3.9%)
Consolidated (1) 0.5% 5.8% 3.4% 6.0%
(1) 2008 includes 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.
ResCare
David W. Miles, 502-394-2137
Chief Financial Officer
or
Derwin A. Wallace, 502-420-2567
Director of Investor Relations
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