USA: Morrison achieves 35% earnings per share growth for second quarter
Morrison Management Specialists, Inc. (NYSE:MHI) reported strong financial results for the second quarter ended November 30, 2000. Diluted earnings per share grew 35% over last year's second quarter. Managed volume and revenue increased 16% and 31%, respectively, over the second quarter last year. The Company also announced that the Board of Directors, at its regularly scheduled meeting on January 9, 2001, declared a cash dividend of $0.04 per share, payable on January 31, 2001 to shareowners of record on January 19, 2001.
Diluted earnings per share grew 35% over last year’s second quarter. Managed volume and revenue increased 16% and 31%, respectively, over the second quarter last year. The Company also announced that the Board of Directors, at its regularly scheduled meeting on January 9, 2001, declared a cash dividend of $0.04 per share, payable on January 31, 2001 to shareowners of record on January 19, 2001.
Second Quarter Highlights (compared to fiscal year 2000’s second
quarter)
— 16% increase in managed volume to $214.8 million. Managed volume is
the amount of total operating costs managed and a very important
indicator of the Company’s financial health.
— 35% growth in diluted earnings per share to $0.35
Year-to-Date Highlights (compared to same period in fiscal year
2000)
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— 18% increase in managed volume to $429.2 million
— 35% gain in revenues to $263.4 million
— 26% increase in net income to $9.0 million
— 28% growth in diluted earnings per share to $0.68
Top-line growth continues to be driven by new business, attributed to the outsourcing trends in the healthcare and senior living industries, coupled with a 94% client retention rate. Central to Morrison’s success is the strength and profitability of its market-driven philosophy as well as its unique customer-centered and profit-focused culture known as “The Morrison Way.”
“We are proud to sustain the healthy momentum in our financial growth,” said Chairman and CEO Glenn Davenport. “Both of our operations, Morrison Healthcare Food Services and Morrison Senior Dining, are performing well as a result of the dedication of our team members in keeping Clients For Life(TM) while focusing on profits.”
In the healthcare sector, hospitals, particularly large healthcare systems, desire to focus on their core missions while achieving cost reductions, efficiencies and improved quality. Since food and nutrition services are typically outside their area of expertise, they seek to outsource these functions. As the only true specialist in healthcare food and nutrition, Morrison has the expertise and resources to guarantee cost reductions while increasing food safety and quality. As a result, the Company continues to win new business and is very successful in retaining clients.
Morrison also continues to be the industry frontrunner in healthcare foodservice innovation with its Advanced Culinary System(TM), which combines cook-chill and centralized food production processes. As the expert and industry leader in cook-chill technology and centralized food production, Morrison provides a productive and efficient way to consolidate food and labor costs without compromising food quality and patient satisfaction, an advantage especially valuable to large healthcare systems.
Morrison’s senior living operations are realizing strong growth. America’s growing population of senior citizens has resulted in a significant increase in the number of senior living communities. These senior living communities seek outsourcing partners who can create innovative, customized dining atmospheres for their residents. Through its team of experts and specialized focus on senior dining, the Company helps clients control costs while promoting resident satisfaction, providing exceptional personnel and delivering economic value. As a result, Morrison sold and opened a significant number of new senior dining accounts during its second quarter. The sales pipeline for senior living is substantial and the Company expects continued significant growth in this area.
The Company’s markets are highly underpenetrated, and as hospitals and senior living communities continue to outsource their food, nutrition and dining services, Morrison expects to win more than its fair share of new business. With superior ability to retain most of its business, the Company believes its financial outlook is promising.
“We are excited about the opportunities that lie ahead for Morrison,” commented Davenport. “With our proven business model and through The Morrison Way, we believe we will continue to be successful.”
For both the second quarter and year-to-date, operating margin as a percent of managed volume was 8.5%, compared to 8.7% and 8.6% for the same periods in fiscal year 2000. Earnings per share growth significantly exceeded managed volume growth for the second quarter and year-to-date. Selling, general and administrative expenses as a percent of managed volume were much lower compared to the second quarter and year-to-date last year. Earnings before interest and taxes in the second quarter increased 36% to $8.6 million compared to $6.4 million in the second quarter last year. Year-to-date, earnings before interest and taxes increased 28% to $16.6 million versus $13.0 million in the same period last year. The Company’s effective interest rate was approximately 6.7% in the second quarter.
Morrison’s balance sheet remains strong. Compared to year-end 2000, assets increased to support the Company’s rapid growth. Collections remain strong, with accounts receivable days below 26. The Company’s leverage is low with debt less than 2 times EBITDA and with interest coverage of over 8.
Morrison Management Specialists, Inc. is the nation’s only company focused exclusively on providing food, nutrition and dining services to the healthcare and senior living markets. Morrison is dedicated to providing its clients with outstanding quality, professional on-site management and cost-effective innovations. The Atlanta-based Company operates through Morrison Healthcare Food Services and Morrison Senior Dining, and serves several of the largest and most prominent integrated healthcare systems, hospitals and senior living communities in the United States.
This news release may contain “forward-looking statements” which represent the Company’s expectations or beliefs concerning future events. The Company cautions that a number of important factors could, individually or in the aggregate, cause actual results to differ materially from such forward-looking statements including, without limitation, the following: healthcare spending trends; the growth of systems and group purchasing organizations; changes in healthcare regulations; increased competition in the healthcare food and nutrition or senior living markets; customer acceptance of the Company’s cost savings programs; and laws and regulations affecting labor and employee benefit costs.
MORRISON MANAGEMENT SPECIALISTS, INC.
(In thousands except per share amounts, unaudited)
FINANCIAL RESULTS Quarter Ended Year-to-Date
Nov 30, Nov 30, Nov 30, Nov 30,
2000 1999 2000 1999
———————– ————————-
Selling, General &
Administrative
Expenses 9,702 9,756 19,682 18,138
———- ———- ———– ———-
Income Before
Interest and
Income Taxes 8,625 6,354 16,609 13,003
Interest Expense,
Net 949 674 1,796 1,303
———- ———- ———– ———-
Income Before
Income Taxes 7,676 5,680 14,813 11,700
Provision for
Federal and State
Income Taxes 3,032 2,232 5,851 4,607
———- ———- ———– ———-
Net Income $ 4,644 $ 3,448 $ 8,962 $ 7,093
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