Chemed Reports Third-Quarter Earnings.Business Editors CINCINNATI--(BUSINESS WIRE)--Oct. 18, 2001 Chemed Corporation (NYSE NYSE See: New York Stock Exchange :CHE) (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :CHEQP) today reported that, for the third quarter, ended September September: see month. 30, 2001, Chemed's earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before capital gains, interest, taxes, depreciation, amortization, and nonrecurring charges Nonrecurring Charge An expense occurring only once on a company's financial statement. Notes: An extraordinary item is an example of a nonrecurring charge. Also known as "nonrecurring item". (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) amounted to $11.3 million versus $15.1 million in the 2000 third quarter. Earnings from continuing operations before capital gains and nonrecurring charges were $.26 per share ($2.5 million) in the 2001 third quarter. Nonrecurring charges comprise $.19 per share ($1.8 million) related to Roto-Rooter's previously announced overtime wage settlement with the Department of Labor and $.06 per share ($620,000) impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss arising from Service America's closing its Tucson, Arizona Tucson (pronounced /ˈtusɑn/, Spanish: Tucsón [tuk'son] , operation in October October: see month. . This closing is one element of a companywide restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiative, which will be fully implemented by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . In the year-ago third quarter, both income from continuing operations ($4.7 million) and net income ($4.6 million), which included a loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $73,000, amounted to $.48 per share. Chemed's service revenues and sales from continuing operations for the 2001 third quarter were $117.5 million as compared with revenues of $121.7 million in the year-ago third quarter. Year to date, for the nine months ended September 30, 2001, income from continuing operations before capital gains and nonrecurring charges amounted to $1.00 per share ($9.8 million) versus $1.40 per share ($13.8 million) for year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 2000. EBITDA totaled $37.8 million for 2001 to date as compared with $44.8 million for the same period of 2000. Year-to-date income from continuing operations of $.83 per share ($8.0 million) for 2001 compares with $1.58 per share ($15.6 million) for 2000. Year-to-date earnings from continuing operations for 2001 include capital gains of $.07 per share ($703,000) and nonrecurring charges of $.24 per share ($2.4 million). For 2000, capital gains were $.18 per share ($1.8 million). Net income for 2001 year to date also includes a loss of $.21 per share ($2.0 million) from the Cadre Computer Resources operation, which was discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: in the second quarter, versus income from Cadre of $37,000 in the first nine months of 2000. Chemed's year-to-date service revenues and sales from continuing operations of $359.5 million for 2001 compare with $364.0 million for 2000. Commenting on the company's results, Chemed President and Chief Executive Officer Kevin KEVIN Keepers of the Eternal Vigilance of the Islamic Nation (fictional, from White Teeth by Zadie Smith) J. McNamara Mc·Na·mar·a , Robert Strange Born 1916. American public official who served as U.S. secretary of defense (1961-1968) during the Kennedy and Johnson administrations. said, "Our Service America and Patient Care Inc. subsidiaries achieved excellent profit results in the third quarter of 2001. Economic trends, however, continued to negatively affect results at our flagship Roto-Rooter subsidiary." Discussing the company's individual operations, Mr. McNamara continued, "For the 2001 third quarter, Roto-Rooter Inc. recorded revenues of $65.4 million, 5 percent below the year-ago third quarter. Year-to-date revenues of $201.0 million were 3 percent below the same prior-year period. Earnings before nonrecurring charges for the 2001 third quarter of $3.1 million and year to date of $10.7 million were 40 percent and 27 percent, respectively, below the year-ago periods. These results notwithstanding, we believe that the business is beginning to turn around as initiatives undertaken by Roto-Rooter in the past several months are starting to take effect. "Roto-Rooter made a significant 45-day push to boost the field service force, resulting in a 6.9% increase in the technician See PC technician and software technician. head count at September 30 versus June 30. As these new service technicians become trained and productive in the long term, we expect growth in revenues and, ultimately, Roto-Rooter's bottom line. "Making a more immediate contribution to results, commercial sales in company-owned Roto-Rooter operations are helping to offset slower residential sales. Roto-Rooter has launched all-out efforts to sell preventive maintenance The routine checking of hardware that is performed by a field engineer on a regularly scheduled basis. See remedial maintenance. preventive maintenance - (PM) To bring down a machine for inspection or test purposes. See provocative maintenance, scratch monkey. services to high repeat users, such as food-service establishments and large retailers. The advantages of preventive maintenance programs over emergency service are significant to this target market, and the recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenues generated by these commercial services should give Roto-Rooter a source of steady, predictable income. "During the 2001 third quarter, Service America, our major-appliance and heating and air-conditioning service subsidiary, achieved excellent results. It continued to reduce its portfolio of less-profitable contracts, while concentrating on increasing lead generation and closing rates in its higher-margin retail sales and service business. Retail air-conditioner sales were solid, relative to economic conditions, off just 4% versus the year-ago third quarter. Additionally, strict expense controls kept costs in line with the planned reduction in contract revenues. Net, net, while revenues for both the third quarter and year to date declined 7%, to $17.2 million and $52.9 million, respectively, earnings before the Tucson closing expenses rose 67% to $310,000 for the 2001 third quarter and 22% to $1.3 million for the year to date. "Patient Care, our home health subsidiary, continued to improve its results by selectively focusing on high-quality relationships with large referral sources and by providing supplemental staffing to meet increasing demand for healthcare personnel, particularly from Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. agencies and assisted-living facilities. Revenues reached $34.9 million in the 2001 third quarter versus $34.5 million in the 2000 third quarter, and year-to-date 2001 revenues grew 5% to $105.7 million. Patient Care achieved net income of $604,000 in the third quarter, 24% above the year-ago third quarter, and year-to-date net income of $1.9 million was up 32% over the same 2000 period." Also during the third quarter, Chemed completed the sale of Cadre Computer Resources, its former Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and computer security services Security services are state institutions for the provision of intelligence, primarily of a strategic nature, but also including protective security intelligence. Examples include the Security Service (MI5) and the Secret Intelligence Service (MI6) in the United Kingdom, and the subsidiary, to the Cadre employees. Chemed is assisting Cadre in transitioning to an independent business. In August, the Board of Directors declared a quarterly dividend of $.11 per share, which was paid in September. This dividend represented the 121st consecutive quarterly dividend paid to Chemed shareholders. Concluding, Mr. McNamara said, "We are extremely pleased with results at Service America and Patient Care year to date and expect them to post solid operating results for the full year. Roto-Rooter is continuing to boost sales and marketing efforts, keep tight control over expenses, and expand the service force, but we expect difficult comparisons for the remainder of the year. Chemed is financially sound, and the balance sheet is extremely healthy. We are streamlining operations for a leaner Chemed going into 2002. We believe our strategy of being the premier provider of essential services to home owners home owner home n → propriétaire occupant and businesses is on-target and will produce shareholder value in the long term." Chemed Corporation (www.chemed.com), headquartered in Cincinnati, is a New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Stock Exchange-listed corporation with strategic positions in plumbing plumbing, piping systems inside buildings for water supply and sewage. The Romans had a highly developed plumbing system; water was brought to Rome by aqueducts and distributed to homes in lead pipes—hence the name plumbing from the Latin word plumbum and drain cleaning; residential appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. and air-conditioning repair; and home healthcare services. Statements in this press release or in other Chemed communications may relate to future events or Chemed's future performance. Such statements are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. and are based on present information Chemed has related to its existing business circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . 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 Chemed does not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations.
Chemed Corporation and Subsidiary Companies
Comparative Results (Unaudited)
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2001 2000 2001 2000
-------- -------- -------- --------
Continuing Operations
Service Revenues
and Sales $117,498 $121,652 $359,487 $363,995
======== ======== ======== ========
Income from
Operations $1,568(a) $7,948 $15,425(a) $24,500
Interest Expense (1,373) (1,664) (4,325) (5,233)
Distributions on
Preferred
Securities (275) (282) (830) (856)
Other Income--Net 165 1,916 2,769(b) 7,104(c)
-------- -------- -------- --------
Income before
Income Taxes 85 7,918 13,039 25,515
Income Taxes 7 (3,210) (5,003) (9,902)
-------- -------- -------- --------
Income from
Continuing
Operations 92 4,708 8,036 15,613
Discontinued
Operations(d) -- (73) (1,973) 37
-------- -------- -------- --------
Net Income $ 92 $ 4,635 $ 6,063 $15,650
======== ======== ======== ========
Earnings Per Share
Income from
Continuing
Operations before
Capital Gains and
Other Charges(e) $ 0.26 $ 0.48 $ 1.00 $ 1.40
======== ======== ======== ========
Income from
Continuing
Operations $ 0.01 $ 0.48 $ 0.83 $ 1.58
======== ======== ======== ========
Net Income $ 0.01 $ 0.48 $ 0.62 $ 1.59
======== ======== ======== ========
Average Number of
Shares Outstanding 9,690 9,742 9,721 9,867
======== ======== ======== ========
Diluted Earnings
Per Share(f)
Income from
Continuing
Operations before
Capital Gains and
Other Charges(e) $ 0.26 $ 0.48 $ 0.99 $ 1.39
======== ======== ======== ========
Income from
Continuing
Operations $ 0.01 $ 0.48 $ 0.82 $ 1.57
======== ======== ======== ========
Net Income $ 0.01 $ 0.47 $ 0.62 $ 1.57
======== ======== ======== ========
Average Number of
Shares Outstanding 9,798 10,253 9,850 10,319
======== ======== ======== ========
--------------------------------------
(a) Amounts include Roto-Rooter's pretax cost of its overtime wage
settlement with the Department of Labor ($3,000,000) and Service
America's pretax impairment loss related to the closing of its
Tucson branch ($1,031,000). The combined aftertax impact of these
charges is $2,420,000 ($.25 per share for the three months; $.24
per share for the nine months).
(b) Amounts for 2001 include pretax gains of $993,000 ($703,000
aftertax or $.07 per share) from the sales of investments.
(c) Amounts for 2000 include pretax gains of $2,662,000 ($1,799,000
aftertax or $.18 per share) from the sales of investments.
(d) Amounts include aftertax operating losses for Cadre Computer. The
amount for the nine months ended September 30, 2001 include an
aftertax loss of $1,540,000 on the sale of Cadre.
(e) Amounts exclude the charges and gains discussed in notes (a), (b)
and (c).
(f) For the three- and nine-month periods ended September 30, 2000,
diluted earnings per share include the impact of outstanding stock
options and nonvested stock awards and assume conversion of the
Preferred Securities. For the three- and nine-month periods ended
September 30, 2001, diluted earnings per share do not assume
conversion of the Preferred Securities because the impact on
diluted earnings per share from continuing operations is
anti-dilutive.
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