Castle Dental Centers Reports Another Record Quarter; Revenues Increased 72% for Third Quarter 1998.HOUSTON--(BUSINESS WIRE)--Nov. 5, 1998--Castle Dental Centers, Inc. (Nasdaq/NM: CASL CASL Compact Application Solution Language (Feras Information Technologies) CASL Capital Area Soccer League (Raleigh, NC) CASL Chartered Advisor for Senior Living CASL Crosstalk Application Scripting Language ) today announced that revenues for the third quarter ended September 30, 1998, increased 72% to a quarterly record of $20.2 million from $11.7 million for the third quarter of 1997. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the quarter rose 136% to $2.0 million from $835,000 for the comparable period in 1997. Net income for the quarter increased to $1.0 million compared with a net loss before extraordinary item of $30,000 for the third quarter of 1997. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $0.15 for the quarter on 75% more weighted average shares outstanding compared with a loss before extraordinary item of $0.01 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the year-earlier quarter. Results for the 1997 third quarter included an extraordinary charge of $3.7 million, or $0.96 per diluted share, attributable to the early retirement of the Company's 12% Senior Subordinated Notes, and a noncash charge Noncash charge A cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow. That is, this is treated as an accounting expense -- not a real expense that demands cash. of $1.6 million resulting from accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of the redemption value Redemption Value refers to the value that is placed on a party's head after they wrong you in some way. It is seen as the payment you are willing to make to get justice. of its redeemable preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . For the nine months ended September 30, 1998, revenues increased 65% to $54.4 million from $33.1 million for the comparable period in 1997. Operating income for the nine months doubled to $4.8 million from $2.4 million last year. Net income for the period increased to $2.5 million compared with a net loss before extraordinary item of $111,000 for the comparable period in 1997. Diluted earnings per share were $0.38 for the first nine months on 88% more weighted average shares outstanding compared with a loss before extraordinary item of $0.03 per diluted share for the year-earlier period. The increase in weighted average shares outstanding for both periods resulted primarily from the Company's initial public offering in September 1997 in which 2.8 million shares were issued. "We're pleased to report another record quarter marked by strong internal growth as well as the contribution of the acquisitions we have completed in 1998," said Chairman and Chief Executive Officer Jack H. Castle, Jr. "We are particularly pleased with the 270 basis point improvement in our operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: to 9.8% for the quarter, reflecting three key factors: favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. leveraging of our regional infrastructure and advertising expenditures, the continued implementation of our standard operating procedures standard operating procedure Medtalk A technique, method or therapy performed 'by the book,' using a standard protocol meeting internally or externally defined criteria; a formal, written procedure that describes how specific lab operations are to be performed. and management process throughout our dental networks, and fully integrated management information systems in the practice management and accounting functions." During the quarter the Company announced the acquisition of two dental practices Noun 1. dental practice - the practice of dentistry practice - the exercise of a profession; "the practice of the law"; "I took over his practice when he retired" in the Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. area and five dental centers in Florida, with combined annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenues of approximately $4.7 million. The acquisitions included three dental centers in Torrance, Lawndale and Canoga Park, California; three dental centers in the Sarasota, Florida Sarasota is a city located in Sarasota County on the central west coast of Florida, USA. Its official limits include Sarasota Bay and several barrier islands between the bay and the Gulf of Mexico. , area; and two centers in North Fort Lauderdale Fort Lauderdale (lô`dərdāl), residential, commercial, and resort city (1990 pop. 149,377), seat of Broward co., SE Fla., on the Atlantic coast; settled around a fort built (c.1837) in the Seminole War, inc. 1911. and Delray Beach, Florida Delray Beach is a city in Palm Beach County, Florida, USA. As of the 2000 census, the city had a total population of 60,020. As of 2004, the population estimated by the U.S. Census Bureau is 64,150. . "The Los Angeles acquisitions were our first fill-in acquisitions in the high-growth southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, market since we entered that market earlier in 1998 and with the Florida acquisitions, we have expanded Castle's network on the west coast of Florida to 14 offices," Castle said. "We see significant opportunities for growth in each of these markets. "The pace of acquisitions in our industry has slowed largely as a result of recent turbulence in the equity markets. We will continue to look for acquisitions that are accretive and build market mass in existing markets or establish a core platform in a new strategic market. We opened one de novo [Latin, Anew.] A second time; afresh. A trial or a hearing that is ordered by an appellate court that has reviewed the record of a hearing in a lower court and sent the matter back to the original court for a new trial, as if it had not been previously heard nor decided. office in the third quarter for a total of six this year; we expect to open an additional eight de novo offices for a total of 14 by the end of the year, higher than our original de novo expansion plan for 1998." Castle Dental Centers, Inc. develops, manages and operates integrated dental networks through contractual affiliations with general, orthodontic orthodontic (ôr´th  dän´tik),adj and multi-specialty dental practices in the U.S. Including the recently announced acquisitions, Castle manages 66 dental centers with 185 affiliated dentists in Texas, Florida, Tennessee and California with annualized patient revenues of approximately $85 million. Information contained in this press release, other than historical information, may be considered forward-looking in nature and is subject to various risks, uncertainties and assumptions. Among the key factors that may have a direct bearing on the operating results, performance or condition of the Company are fluctuations in the economy, the degree and nature of competition and the demand for the Company's services, changes in laws and regulations affecting the Company's business, the Company's inability at any time to complete acquisitions and integrate the operations of acquired businesses, and numerous other factors discussed in Castle Dental's filings with the Securities and Exchange Commission. -0-
CASTLE DENTAL CENTERS, INC.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
1998 1997 1998 1997
-------- -------- -------- --------
Net patient revenues $ 20,175 $ 11,727 $ 54,395 $ 33,054
Expenses:
Dentist salaries and other
professional costs 5,162 2,936 13,447 7,847
Clinical salaries 4,392 2,504 12,030 7,328
Dental supplies and
laboratory fees 2,013 1,081 5,279 3,047
Rent and lease expense 1,106 641 2,861 1,898
Advertising and marketing 580 520 1,974 1,551
Depreciation and
amortization 1,025 518 2,632 1,482
Other operating expenses 1,938 1,141 5,196 2,925
General and
administrative 1,986 1,551 6,215 4,599
-------- -------- -------- --------
Total expenses 18,202 10,892 49,634 30,677
Operating income 1,973 835 4,761 2,377
Interest expense 560 906 1,178 2,589
Other income, net (82) (22) (51) (33)
-------- -------- -------- --------
Income (loss) before income taxes
and extraordinary item 1,495 (49) 3,634 (179)
Provision (benefit) for
income taxes 474 (19) 1,170 (68)
-------- -------- -------- --------
Net income (loss) before
extraordinary item 1,021 (30) 2,464 (111)
Extraordinary item -- (3,685) -- (3,685)
-------- -------- -------- --------
Net income (loss) $ 1,021 $ (3,715) $ 2,464 $ (3,796)
Preferred stock accretion -- (1,621) -- (1,930)
-------- -------- -------- --------
Income (loss) attributable
to common stock $ 1,021 $ (5,336) $ 2,464 $ (5,726)
======== ======== ======== ========
Income (loss) per common share:
Basic and diluted:
Income (loss) before
extraordinary item $ 0.15 $ (0.01) $ 0.38 $ (0.03)
Extraordinary item -- (0.96) -- (1.06)
-------- -------- -------- --------
Net loss $ 0.15 $ (0.97)(1)$ 0.38 $ (1.09)(1)
======== ======== ======== ========
Weighted average number of common
and common equivalent shares
outstanding
Basic 6,698 3,828 6,535 3,486
======== ======== ======== ========
Diluted 6,718 3,828 6,544 3,486
======== ======== ======== ========
(1) Per share information differs from loss attributable to common
stock divided by weighted average number of common and common
equivalent shares outstanding because accretion of the preferred
stock is added back to the loss attributable to common stock under
the if-converted method of arriving at common and common
equivalent shares outstanding.
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