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Chemed Reports First-Quarter 2012 Results

Stocks in this article: CHE


Roto-Rooter’s plumbing and drain cleaning business generated sales of $92.1 million for the first quarter of 2012, a decrease of 3.3% over the prior-year quarter. This revenue decline is attributed primarily to unseasonably warm weather in the Northeast and Midwest which resulted in minimal residential repairs related to problems associated with frozen pipes.

Unit-for-unit job count in the first quarter of 2012 declined 4.2% when compared to the prior-year period. During the first quarter of 2012, total residential jobs decreased 7.5%, as residential plumbing jobs declined 2.5% and residential drain cleaning jobs decreased 9.9%, when compared to the first quarter of 2011. Residential jobs represented 69% of total job count in the quarter. Total commercial jobs increased 4.2%, with commercial plumbing/excavation job count increasing 7.6% and commercial drain cleaning increasing 3.1%, when compared to the prior-year quarter. The “All Other” residential and commercial job category, which represents less than 2% of aggregate job count, decreased 5.7%.

Roto-Rooter’s gross margin was 43.7% in the quarter, a 46 basis point decline when compared to the first quarter of 2011. Adjusted EBITDA in the first quarter of 2012 totaled $14.0 million, a decline of 9.9%, and the Adjusted EBITDA margin was 15.3% in the quarter, a decline of 111 basis points, when compared to the prior-year quarter.

Chemed Consolidated Debt and Cash Flows

Chemed had total debt of $169 million at March 31, 2012. This debt is net of the discount taken as a result of convertible debt accounting requirements. Excluding this discount, aggregate debt is $187 million and is due in May 2014. Chemed’s total debt equates to less than one times trailing twelve-month adjusted EBITDA.

In March 2011 Chemed entered into a five-year Credit Agreement that consists of a $350 million revolving credit facility. The interest rate on this Credit Agreement has a floating rate that is currently LIBOR plus 175 basis points. In addition, an expansion feature is included in this Credit Agreement that provides Chemed the opportunity to increase its revolver and/or enter into term loans for an additional $150 million. At March 31, 2012, this facility had approximately $321 million of undrawn borrowing capacity after deducting $29 million for letters of credit issued to secure the Company’s workers’ compensation insurance.

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