Roto-Rooter Inc. Reports Second-Quarter Earnings of $.28 per Share
CINCINNATI--(BUSINESS WIRE)--July 17, 2003--Roto-Rooter Inc. (NYSE:RRR) (OTCBB:CHEQP) today reported net income of $.28 per share for the second quarter, ended June 30, 2003, as compared with net income of $.46 per share in the 2002 second quarter. Net income in the year-ago second quarter included $.11 per share from discontinued operations.
Service revenues and sales from continuing operations for the 2003 second quarter were $77.3 million as compared with $79.1 million in the 2002 second quarter. For the second quarter, net cash provided by operating activities -- that is, cash provided by operations before capital expenditures and other investing and financing activities -- totaled $6.3 million in 2003 versus $11.9 million in 2002 which included $2.3 million from discontinued operations.
Year to date, for the six months ended June 30, 2003, Roto-Rooter's net income was $.54 per share as compared with $.94 per share in the same prior-year period. Net income for year-to-date 2003 included capital gains on the sales of investments of $.22 per share and severance charges of $.24 per share. Net income for the same 2002 period included income from discontinued operations of $.20 per share and capital gains on the sales of investments of $.08 per share.
Service revenues and sales from continuing operations for year-to-date 2003 totaled $154.9 million versus $160.0 million in 2002. Net cash provided by operating activities for the 2003 first half amounted to $11.5 million versus $18.5 million for the same 2002 period which included $2.2 million from discontinued operations.
Commenting on the company's future and its financial health, Roto-Rooter Inc. President and Chief Executive Officer Kevin J. McNamara said, "We're pleased to have taken the corporate name Roto-Rooter Inc., following shareholder approval at the annual meeting May 19. During the past several years, Roto-Rooter has emerged as our flagship subsidiary -- in terms of both revenues and profits -- and this change reflects that.
"Our balance sheet is solid, and cash balances exceed long-term debt. Cash flow, too, is excellent, with our operations generating $11.5 million year to date. Further, our $31.3 million investment in Vitas Healthcare Corporation yields 8% aftertax on our preferred dividend, while representing a potential future source of capital gains or equity earnings. Our financial health is excellent."
Discussing the company's operations, Mr. McNamara continued, "Consistent with the change to the Roto-Rooter name, the company redefined how it reports its business operations to reflect the structure of the company. Roto-Rooter Inc. now reports the Plumbing and Drain Service segment and the Service America segment. Additionally, the company will report Corporate Investing and Financing activities.
"Revenues at the Plumbing and Drain Service business grew 2% to $64.6 million in the 2003 second quarter as compared with the same prior-year quarter. Excluding revenues from the heating and cooling businesses and non-Roto-Rooter-branded operations which Roto-Rooter exited in 2002, revenues increased 5% to $59.6 million in company-owned branches and independent contractor operations. Further, revenues from Roto-Rooter's franchising activities and product and equipment sales increased by 11% to $2.1 million in the 2003 second quarter.
"Net income from the Plumbing and Drain Service business totaled $2.4 million in the 2003 second quarter, 24% below the year-ago second quarter's net income of $3.2 million, as a result of increased investments in marketing and higher general and administrative expenses."
Commenting on the Service America segment, Mr. McNamara said, "Service America, our appliance and heating/air-conditioning repair business, recorded net income of $35,000 in the 2003 second quarter compared with $59,000 in the 2002 second quarter. Revenues at Service America declined from $16.0 million to $12.7 million, as the company continues to reposition its service-agreement business. Through six months ended June 30, 2003, Service America has generated $2.7 million in net cash flow.
"Corporate Investing and Financing activities generated $311,000 of income in the 2003 second quarter, as compared with $179,000 in the prior-year second quarter. The increase is largely attributable to a $142,000 reduction in interest payments on corporate debt."
Concluding, Mr. McNamara said, "Our new name, Roto-Rooter Inc., reflects the company's future as a leader in the commercial and residential maintenance-and-repair-services industry and capitalizes on one of the best-known brands in America. We expect our Plumbing and Drain Service business will benefit from improved economic conditions, and we will increase revenues in this business over the long term."
Reflecting its confidence in Roto-Rooter's solid financial position and future earnings potential, in May, the Board of Directors declared a quarterly dividend of $.12 per share, which was paid in June. This represented Roto-Rooter's 128th consecutive quarterly dividend.
Roto-Rooter Inc. (www.RotoRooter.com), headquartered in Cincinnati, is a New York Stock Exchange-listed corporation operating in the residential and commercial repair-and-maintenance-service industry through two wholly owned subsidiaries. Roto-Rooter is North America's largest provider of plumbing and drain cleaning services. Service America Systems Inc. provides major-appliance and heating/air-conditioning repair, maintenance, and replacement services.
Statements in this press release or in other Roto-Rooter communications may relate to future events or Roto-Rooter's future performance. Such statements are forward-looking statements and are based on present information Roto-Rooter has related to its existing business circumstances. Investors are cautioned that such forward-looking statements are subject to inherent risk that actual results may differ materially from such forward-looking statements. Further, investors are cautioned that Roto-Rooter does not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations.
ROTO-ROOTER, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------- ----------------------
2003 2002 2003 2002
------- ------- -------- --------
Continuing Operations
Service revenues and
sales $77,271 $79,082 $154,916 $159,935
------- ------- -------- --------
Cost of services
provided and goods
sold 45,611 46,624 91,763 95,132
General and
administrative
expenses 14,532 12,508 31,056(a) 25,162
Selling and marketing
expenses 11,339 10,788 22,417 22,781
Depreciation 2,990 3,486 6,042 6,978
------- ------- -------- --------
Total costs and
expenses 74,472 73,406 151,278 150,053
------- ------- -------- --------
Income from
operations 2,799 5,676 3,638 9,882
Interest expense (599) (763) (1,138) (1,536)
Distributions on
preferred securities (268) (271) (536) (541)
Other income--net 2,454 953 6,717(b) 3,542(b)
------- ------- -------- --------
Income before income
taxes 4,386 5,595 8,681(a,b) 11,347(b)
Income taxes (1,594) (2,150) (3,336) (4,097)
------- ------- -------- --------
Income from
continuing
operations 2,792 3,445 5,345(a,b) 7,250(b)
Discontinued Operations - 1,124 - 1,991
------- ------- -------- --------
Net Income $ 2,792 $ 4,569 $ 5,345(a,b) $ 9,241(b)
======= ======= ======== ========
Earnings Per Share
Income from continuing
operations $ 0.28 $ 0.35 $ 0.54(a,b) $ 0.74(b)
======= ======= ======== ========
Net income $ 0.28 $ 0.46 $ 0.54(a,b) $ 0.94(b)
======= ======= ======== ========
Average number of
shares outstanding 9,908 9,857 9,899 9,850
======= ======= ======== ========
Diluted Earnings Per Share
Income from continuing
operations $ 0.28 $ 0.35 $ 0.54(a,b) $ 0.73(b)
======= ======= ======== ========
Net income $ 0.28 $ 0.46 $ 0.54(a,b) $ 0.93(b)
======= ======= ======== ========
Average number of
shares outstanding 9,942 9,898 9,922 9,891
======= ======= ======== ========
-------------------------
(a) Amounts include a pretax charge of $3,627,000 ($2,358,000 aftertax
or $.24 per share) from severance charges in the first quarter of
2003.
(b) Amounts for 2003 include a pretax gain of $3,544,000 ($2,151,000
aftertax or $.22 per share) from the sales of investments in the
first quarter. Amounts for 2002 include a pretax gain of
$1,141,000 ($775,000 aftertax or $.08 per share) from the sales of
investments in the first quarter.
ROTO-ROOTER, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)
June 30,
--------------------
2003 2002
--------- ---------
Assets
Current assets
Cash and cash equivalents $ 45,342 $ 11,914
Accounts receivable less allowances 15,188 14,794
Inventories 8,699 10,070
Statutory deposits 10,095 12,282
Current deferred income taxes 7,424 7,934
Current assets of discontinued operations - 37,826
Prepaid expenses and other current assets 13,682 9,220
--------- ---------
Total current assets 100,430 104,040
Investments of deferred compensation plans held
in trust 16,411 15,833
Other investments 32,789 37,692
Note receivable 12,500 -
Properties and equipment, at cost less
accumulated depreciation 46,906 49,989
Identifiable intangible assets less accumulated
amortization 2,599 3,197
Goodwill less accumulated amortization 112,903 131,179
Noncurrent assets of discontinued operations - 44,158
Other assets 17,196 12,835
--------- ---------
Total Assets $ 341,734 $ 398,923
========= =========
Liabilities
Current liabilities
Accounts payable $ 6,976 $ 7,509
Current portion of long-term debt 473 366
Income taxes 7,451 7,312
Deferred contract revenue 16,795 21,202
Accrued insurance 16,442 16,682
Current liabilities of discontinued
operations - 11,325
Other current liabilities 19,631 20,235
--------- ---------
Total current liabilities 67,768 84,631
Long-term debt 25,715 55,810
Mandatorily redeemable convertible preferred
securities of the Chemed Capital Trust 14,186 14,186
Deferred compensation liabilities 16,395 15,833
Noncurrent liabilities of discontinued
operations - 2,131
Other liabilities 10,955 10,712
--------- ---------
Total Liabilities 135,019 183,303
--------- ---------
Stockholders' Equity
Capital stock 13,451 13,461
Paid-in capital 169,402 168,448
Retained earnings 135,766 146,240
Treasury stock, at cost (110,681) (112,568)
Unearned compensation (3,824) (5,480)
Deferred compensation payable in Company stock 2,310 2,253
Notes receivable for shares sold (926) (939)
Accumulated other comprehensive income 1,217 4,205
--------- ---------
Total Stockholders' Equity 206,715 215,620
--------- ---------
Total Liabilities and
Stockholders' Equity $ 341,734 $ 398,923
========= =========
Book Value Per Share $ 20.80 $ 22.04
========= =========
CONTACT: Roto-Rooter Inc.
Timothy S. O'Toole, 513/762-6702
SOURCE: Roto-Rooter, Inc.