Roto-Rooter’s plumbing and drain cleaning business generated sales of $86.4 million for the third quarter of 2012, a decrease of $2.1 million, or 2.4%, over the prior-year quarter. Approximately $1.0 million, or 113 basis points, of this decline is attributed to Roto-Rooter eliminating a small HVAC operation in an East Coast market. This resulted in effectively zero HVAC revenue in the third quarter of 2012.
Unit-for-unit job count in the third quarter of 2012 declined 3.0% when compared to the prior-year period. During the third quarter of 2012, total residential jobs decreased 4.8%, as residential plumbing jobs declined 4.6% and residential drain cleaning jobs decreased 4.9%, when compared to the third quarter of 2011. Residential jobs represented 69% of total job count in the quarter. Total commercial jobs increased 1.1%, with commercial plumbing/excavation job count increasing 5.6% and commercial drain cleaning declining 0.4% when compared to the prior-year quarter. The “All Other” residential and commercial job category, which represents 1.6% of aggregate job count, decreased 8.6%.
Roto-Rooter’s gross margin in the quarter was 44.3%, a 76 basis point decline when compared to the third quarter of 2011. Adjusted EBITDA in the third quarter of 2012 totaled $12.7 million, a decline of 15.3%, and the Adjusted EBITDA margin was 14.7% in the quarter, a decline of 223 basis points.Chemed Consolidated Chemed had total debt of $173 million at September 30, 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 September 30, 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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