The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Business Wire

Capital Senior Living Corporation Reports Third Quarter 2012 Results; CFFO Increases over 51% versus Prior Year

Wednesday, November 07, 2012

Capital Senior Living Corporation Reports Third Quarter 2012 Results; CFFO Increases over 51% versus Prior Year16:10 EST Wednesday, November 07, 2012 DALLAS (Business Wire) -- Capital Senior Living Corporation (the “Company”) (NYSE:CSU), one of the country's largest operators of senior living communities, today announced operating results for the third quarter of 2012. Company highlights for the third quarter include: Highlights Adjusted Cash From Facility Operations (“CFFO”) increased 51.6% to $8.9 million, or $0.33 per share in the third quarter of 2012, an increase of $0.11 per share from the third quarter of 2011. Adjusted EBITDAR increased 15.0% to $27.4 million in the third quarter of 2012, an increase of $3.6 million from the third quarter of 2011. EBITDAR margin improved to 35.1% from 34.9% in the third quarter of the prior year. Revenue increased 14.4% to $78.0 million in the third quarter of 2012, an increase of $9.8 million from the third quarter of 2011. Average monthly rent for the consolidated communities increased 2.1% to $2,984 per occupied unit in the third quarter of 2012, an increase of $60 per occupied unit from the third quarter of 2011. Same-community occupancies increased 180 basis points from the third quarter of 2011 and 80 basis points from the second quarter of 2012. Subsequent to the end of the third quarter, the Company completed the acquisition of eight additional senior living communities for a combined purchase price of approximately $72.9 million, increasing the Company's owned portfolio from 38 to 46 communities. “We are very pleased to report continued occupancy growth and strong operating and financial results for the third quarter,” said Lawrence A. Cohen, Chief Executive Officer of the Company. “Successful execution of our strategic plan is significantly enhancing shareholder value through a focus on operations, marketing and accretive growth. Same-community occupancies increased 180 basis points from the comparable quarter of the prior year and 80 basis points sequentially. EBITDAR margin increased by 20 basis points from the third quarter of 2011. We continue to enhance our geographic concentration by acquiring high quality senior living communities that generate meaningful increases in CFFO, earnings and owned real estate. So far this year, we have acquired 15 communities for a combined purchase price of $148.5 million, and we are conducting due diligence on additional communities that we expect to close by year-end. As the value leader in providing quality seniors housing and care at reasonable prices, we are well positioned to make further gains as a substantially all private-pay business in an industry that benefits from need-driven demand and limited new supply.” Recent Investment Activity On October 24, 2012, the Company announced it had completed the acquisition of eight senior living communities for a purchase price of approximately $72.9 million. These communities are in Texas, Indiana and Ohio, enhancing the Company's existing operations in these states. Highlights of this transaction include: - Additional Cash from Facility Operations (“CFFO”) of $3.6 million, or $0.13 per share. - Incremental earnings of $2.0 million, or $0.08 per share. - Increases annual revenue by approximately $20.4 million. - Average occupancy above 95%. - Average monthly rents are approximately $3,200. The eight communities are financed with an aggregate of approximately $50.2 million of non-recourse mortgage debt at a blended average interest rate of approximately 4.50%. The Company is conducting due diligence on additional transactions consisting of high-quality senior living communities in regions with extensive existing operations. Subject to completion of due diligence and customary closing conditions, the Company expects to acquire additional communities in the fourth quarter of 2012. Financial Results For the third quarter of 2012, the Company reported revenue of $78.0 million, compared to revenue of $68.2 million in the third quarter of 2011. Resident and healthcare revenue increased from the third quarter of the prior year by approximately $9.6 million, or 14.4%, largely as a result of acquiring 10 communities since the third quarter of 2011. The number of consolidated communities increased from 78 in the third quarter of 2011 to 88 in the third quarter of 2012. Average monthly rent for the consolidated communities was $2,984 per occupied unit in the third quarter of 2012, an increase of $60, or 2.1%, over the third quarter of 2011. Financial occupancy of the consolidated portfolio averaged 86.1% in the third quarter of 2012, 140 basis points higher than the third quarter of 2011, and 30 basis points higher than the second quarter of 2012. As a percentage of resident and healthcare revenue, operating expenses were 61.1% in the third quarter of 2012, compared to 61.2% in the third quarter of 2011, an improvement of 10 basis points. Margins in the third quarter of the year typically reflect higher utility costs due to the summer heat. Operating expenses for the third quarter of 2012 were $46.8 million, an increase of $5.8 million from the third quarter of 2011, primarily due to 10 additional communities now being consolidated. General and administrative expenses as a percentage of revenues under management were 3.8% for the quarter, excluding transaction costs associated with the Company's acquisition program. Transaction costs for the quarter were approximately $0.2 million. Adjusted EBITDAR for the third quarter of 2012 was approximately $27.4 million, an increase of $3.6 million, or 15.0% from the third quarter of 2011. Adjusted EBITDAR margin was 35.1% for the period, an improvement of 20 basis points from the third quarter of 2011. Adjusted net income for the third quarter of 2012 was $1.8 million, or $0.07 per share, excluding non-recurring or non-economic items reconciled on the final page of this release. This compares to adjusted net income of $1.7 million, or $0.06 per share in the third quarter of 2011. Adjusted CFFO was $8.9 million or $0.33 per share in the third quarter of 2012. Adjusted CFFO exceeded the third quarter of 2011 by $3.0 million, or $0.11 per share. For the first nine months of 2012, the company reported revenue of $227.3 million, compared to revenue of $192.4 million for the first nine months of 2011. Resident and healthcare revenue increased $36.4 million from the first nine months of the prior year. Adjusted EBITDAR for the first nine months of 2012 was $80.8 million, compared to $66.9 million for the first nine months of 2011. The Company earned adjusted net income of $5.8 million or $0.21 per share in the first nine months of 2012, compared to adjusted net income of $4.8 million or $0.18 per share in the first nine months of 2011. Adjusted CFFO was $23.9 million or $0.87 per share in the first nine months of 2012, compared to $17.0 million or $0.63 per share in the first nine months of 2011. Operating Activities At communities under management, same-community revenue in the third quarter of 2012 increased 3.8% versus the third quarter of 2011, excluding one community that had a recent conversion. Same-community expenses increased 2.5% and net operating income increased 5.8% from the third quarter of the prior year. Same-community occupancies were 180 basis points higher than the third quarter of 2011 and 80 basis points higher than the second quarter of 2012. Same-community occupancy during the last year reflects occupancy gains in independent living exceeding those in higher levels of care, resulting in average rents 1.7% higher than the third quarter of 2011 and 0.8% higher than last quarter. Capital expenditures for the third quarter of 2012 were approximately $3.4 million, representing $2.1 million of investment spending and $1.3 million of recurring capital expenditures. If annualized, spending for recurring capital expenditures equaled approximately $500 per unit. Balance Sheet The Company ended the third quarter of 2012 with $57.5 million of cash and cash equivalents, including restricted cash. As of September 30, 2012, the Company financed its 38 owned communities with mortgages totaling $287.6 million at fixed interest rates averaging 5.5%, with no mortgage maturities before the third quarter of 2015. Net debt to third quarter annualized EBITDA was 4.5x and EBITDA to interest coverage was 2.8x in the third quarter. Q3 2012 Conference Call Information The Company will host a conference call with senior management to discuss the Company's third quarter 2012 financial results. The call will be held on Thursday, November 8, 2012 at 11:00 a.m. Eastern Time. The Company's earnings release announcing third quarter 2012 financial results is scheduled to be released to news services the evening of Wednesday, November 7, 2012. The call-in number is 913-312-1500, confirmation code 2458695. A link to a simultaneous webcast of the teleconference will be available at www.capitalsenior.com through Windows Media Player or RealPlayer. For the convenience of the Company's shareholders and the public, the conference call will be recorded and available for replay starting November 8, 2012 at 2:00 p.m. Eastern Time, until November 17, 2012 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 2458695. The conference call will also be made available for playback via the Company's corporate website, www.capitalsenior.com. About the Company Capital Senior Living Corporation is one of the nation's largest operators of residential communities for senior adults. The Company's operating philosophy emphasizes a continuum of care, which integrates independent living, assisted living and home care services, to provide residents the opportunity to age in place. The Company currently operates 99 senior living communities in geographically concentrated regions with an aggregate capacity of approximately 13,300 residents. Safe HarborThe forward-looking statements in this release are subject to certain risks and uncertainties that could cause results to differ materially, including, but not without limitation to, the Company's ability to find suitable acquisition properties at favorable terms, financing, licensing, business conditions, risks of downturns in economic conditions generally, satisfaction of closing conditions such as those pertaining to licensure, availability of insurance at commercially reasonable rates, and changes in accounting principles and interpretations among others, and other risks and factors identified from time to time in our reports filed with the Securities and Exchange Commission.This release contains certain financial information not derived in accordance with generally accepted accounting principles (GAAP), including adjusted EBITDAR, adjusted EBITDAR margin, Adjusted CFFO, Adjusted CFFO per share and other items.The Company believes this information is useful to investors and other interested parties.Such information should not be considered as a substitute for any measures derived in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies.Reconciliation of this information to the most comparable GAAP measures is included as an attachment to this release.   CAPITAL SENIOR LIVING CORPORATION   CONSOLIDATED BALANCE SHEETS(in thousands)           September 30,December 31,20122011(unaudited)ASSETS Current assets: Cash and cash equivalents $ 48,298 $ 22,283 Restricted cash 9,196 9,102 Accounts receivable, net 3,709 4,526 Accounts receivable from affiliates 846 708 Federal and state income taxes receivable — 5,438 Deferred taxes 1,643 1,479 Property tax and insurance deposits 9,322 11,395 Prepaid expenses and other   3,809     6,068   Total current assets 76,823 60,999 Property and equipment, net 435,832 365,459 Deferred taxes 12,044 5,782 Investments in unconsolidated joint ventures 1,050 1,070 Other assets, net   35,636     29,016   Total assets $561,385   $462,326     LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,931 $ 2,297 Accounts payable to affiliates 243 314 Accrued expenses 22,410 19,086 Current portion of notes payable 8,173 8,196 Current portion of deferred income 6,946 8,740 Current portion of capital lease and financing obligations 827 50 Federal and state income taxes payable 3,166 — Customer deposits   1,479     1,530   Total current liabilities 45,175 40,213 Deferred income 20,548 26,175 Capital lease and financing obligations, net of current portion 42,354 31 Other long-term liabilities 1,726 1,826 Notes payable, net of current portion 281,721 224,940 Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value: Authorized shares – 15,000; no shares issued or outstanding — — Common stock, $.01 par value: Authorized shares – 65,000; issued and outstanding shares – 28,189 and 27,699 in 2012 and 2011, respectively 285 280 Additional paid-in capital 137,494 135,301 Retained earnings 33,016 34,494 Treasury stock, at cost – 350 shares   (934)   (934) Total shareholders' equity   169,861     169,141   Total liabilities and shareholders' equity $561,385   $462,326       CAPITAL SENIOR LIVING CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME(unaudited, in thousands, except per share data)         Three Months EndedSeptember 30,Nine Months EndedSeptember 30,2012   20112012   2011 Revenues: Resident and health care revenue $ 76,577 $ 66,928 $ 223,161 $ 186,773 Affiliated management services revenue 176 141 492 738 Community reimbursement revenue   1,259     1,122     3,605     4,839   Total revenues 78,012 68,191 227,258 192,350 Expenses: Operating expenses (exclusive of facility lease expense and depreciationand amortization expense shown below) 46,791 40,975 134,186 112,714 General and administrative expenses 3,288 3,270 10,923 9,557 Facility lease expense 13,819 13,723 41,179 38,767 Stock-based compensation expense 602 430 1,843 1,020 Depreciation and amortization 9,214 4,775 24,970 11,916 Community reimbursement expense   1,259     1,122     3,605     4,839   Total expenses   74,973     64,295     216,706     178,813   Income from operations 3,039 3,896 10,552 13,537 Other income (expense): Interest income 369 18 436 82 Interest expense (4,847 ) (2,978 ) (12,699 ) (8,429 ) (Loss) Gain on disposition of assets, net (14 ) 187 (19 ) 181 Equity in losses of unconsolidated joint ventures, net   (26)   (223)   (241)   (619) (Loss) Income before benefit (provision) for income taxes (1,479 ) 900 (1,971 ) 4,752 Benefit (Provision) for income taxes   542     (390 )   493     (2,073 ) Net (loss) income $(937)$510   $(1,478)$2,679   Per share data: Basic net (loss) income per share $(0.03)$0.02   $(0.05)$0.10   Diluted net (loss) income per share $(0.03)$0.02   $(0.05)$0.10   Weighted average shares outstanding — basic   27,383     27,026     27,331     26,971   Weighted average shares outstanding — diluted   27,383     27,072     27,331     27,050     Comprehensive (loss) income $(937)$510   $(1,478)$2,679       CAPITAL SENIOR LIVING CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in thousands)       Nine Months EndedSeptember 30,2012   2011Operating Activities Net (loss) income $ (1,478 ) $ 2,679 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 24,970 11,917 Amortization of deferred financing charges 518 252 Amortization of deferred lease costs and lease intangibles 452 1,615 Deferred income (2,505 ) (1,632 ) Deferred income taxes (6,426 ) (4,708 ) Loss (Gain) on disposition of assets, net 19 (181 ) Equity in losses of unconsolidated joint ventures 241 619 Provision for bad debts 550 123 Stock based compensation expense 1,843 1,020 Changes in operating assets and liabilities: Accounts receivable 266 (986 ) Accounts receivable from affiliates (138 ) 360 Property tax and insurance deposits 2,073 1,256 Prepaid expenses and other 2,259 866 Other assets 3,117 (4,485 ) Accounts payable (437 ) 71 Accrued expenses 3,324 2,470 Federal and state income taxes receivable/payable 8,604 556 Customer deposits   (51)   359   Net cash provided by operating activities 37,201 12,171 Investing Activities Capital expenditures (9,096 ) (7,137 ) Cash paid for acquisitions (75,595 ) (53,450 ) Proceeds from Spring Meadows Transaction — 15,844 Proceeds from disposition of assets 19 — Contributions to unconsolidated joint ventures (241 ) (471 ) Distributions from unconsolidated joint ventures   21     1,442   Net cash used in investing activities (84,892 ) (43,772 ) Financing Activities Proceeds from notes payable 81,888 38,464 Repayments of notes payable (6,837 ) (5,123 ) Increase in restricted cash (94 ) (2,759 ) Cash payments for capital lease and financing obligations (230 ) (109 ) Cash proceeds from the issuance of common stock 127 985 Excess tax benefits on stock option exercised 228 122 Deferred financing charges paid   (1,376)   (513) Net cash provided by financing activities   73,706     31,067   Increase (Decrease) in cash and cash equivalents 26,015 (534 ) Cash and cash equivalents at beginning of period   22,283     31,248   Cash and cash equivalents at end of period $48,298   $30,714   Supplemental Disclosures Cash paid during the period for: Interest $11,826   $8,136   Income taxes $777   $6,255   Non-cash operating, investing, and financing activities during the period: Intangible assets acquired through capital lease and financing obligations $11,794   $—   Property and equipment acquired through capital lease and financing obligations $13,243   $—   Notes payable assumed through capital lease and financing obligations $18,293   $—                         Capital Senior Living CorporationSupplemental Information       CommunitiesResident CapacityUnitsQ3 12Q3 11Q3 12Q3 11Q3 12Q3 11Portfolio DataI. Community Ownership / Management Consolidated communities Owned 38 29 5,629 4,524 4,625 3,854 Leased 50 49 6,298 6,318 5,039 5,050 Joint Venture communities (equity method) 3   3   674   674   433   433   Total 91 81 12,601 11,516 10,097 9,337   Independent living 7,035 6,743 5,844 5,615 Assisted living 4,851 4,058 3,635 3,104 Continuing Care Retirement Communities 715   715   618   618   Total 12,601 11,516 10,097 9,337   II. Percentage of Operating Portfolio Consolidated communities Owned 41.8 % 35.8 % 44.7 % 39.3 % 45.8 % 41.3 % Leased 54.9 % 60.5 % 50.0 % 54.9 % 49.9 % 54.1 % Joint venture communities (equity method) 3.3 % 3.7 % 5.3 % 5.8 % 4.3 % 4.6 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %   Independent living 55.8 % 58.6 % 57.9 % 60.1 % Assisted living 38.5 % 35.2 % 36.0 % 33.3 % Continuing Care Retirement Communities 5.7 % 6.2 % 6.1 % 6.6 % Total 100.0 % 100.0 % 100.0 % 100.0 %             Capital Senior Living CorporationSupplemental Information   Selected Operating ResultsQ3 12Q3 11I. Owned communities Number of communities 38 29 Resident capacity 5,629 4,524 Unit capacity 4,625 3,854 Financial occupancy (1) 86.1% 86.7% Revenue (in millions) 32.8 23.9 Operating expenses (in millions) (2) 19.8 13.3 Operating margin 40% 44% Average monthly rent 2,695 2,427 II. Leased communities Number of communities 50 49 Resident capacity 6,298 6,318 Unit capacity 5,039 5,050 Financial occupancy (1) 86.1% 83.2% Revenue (in millions) 43.6 43.0 Operating expenses (in millions) (2) 22.0 23.2 Operating margin 50% 46% Average monthly rent 3,245 3,298 III. Consolidated communities Number of communities 88 78 Resident capacity 11,927 10,842 Unit capacity 9,664 8,904 Financial occupancy (1) 86.1% 84.7% Revenue (in millions) 76.5 66.8 Operating expenses (in millions) (2) 41.8 36.5 Operating margin 45% 45% Average monthly rent 2,984 2,924 IV. Communities under management Number of communities 91 81 Resident capacity 12,601 11,516 Unit capacity 10,097 9,337 Financial occupancy (1) 85.7% 83.7% Revenue (in millions) 80.0 69.6 Operating expenses (in millions) (2) 43.8 38.3 Operating margin 45% 45% Average monthly rent 3,001 2,939 V. Same Store communities under management(Excludes 1 community with a conversion) Number of communities 76 76 Resident capacity 10,818 10,818 Unit capacity 8,798 8,798 Financial occupancy (1) 85.6% 83.8% Revenue (in millions) 68.7 66.2 Operating expenses (in millions) (2) 37.3 36.3 Operating margin 46% 45% Average monthly rent 2,988 2,938 VI. General and Administrative expenses as a percent of Total Revenues under Management Third Quarter (3) 3.8% 4.2% First nine months (3) 4.2% 4.4% VII. Consolidated Debt Information (in thousands, except for interest rates)(Excludes insurance premium and auto financing) Total fixed rate mortgage debt 287,623 208,409 Weighted average interest rate 5.5% 5.9%     (1) - Financial occupancy represents actual days occupied divided by total number of available days during the month of the quarter. (2) - Excludes management fees, insurance and property taxes. (3) - Excludes transaction costs incurred by the Company.     CAPITAL SENIOR LIVING CORPORATIONNON-GAAP RECONCILIATIONS (In thousands, except per share data)                       Three Months Ended September 30,Nine Months Ended September 30,2012201120122011   Adjusted EBITDAR Net income from operations $ 3,039 $ 3,896 $ 10,552 $ 13,537 Depreciation and amortization expense 9,214 4,775 24,970 11,916 Stock-based compensation expense 602 430 1,843 1,020 Facility lease expense 13,819 13,723 41,179 38,767 Provision for bad debts 209 123 551 217 Casualty losses 272 368 535 599 Transaction costs   221     500     1,164     844   Adjusted EBITDAR $ 27,376   $ 23,815   $ 80,794   $ 66,900     Adjusted EBITDAR Margin Adjusted EBITDAR $ 27,376 $ 23,815 $ 80,794 $ 66,900 Total revenues   78,012     68,191     227,258     192,350   Adjusted EBITDAR margin   35.1 %   34.9 %   35.6 %   34.8 %   Adjusted net income and net income per share Net income $ (937 ) $ 510 $ (1,478 ) $ 2,679 Casualty losses, net of tax 171 232 337 377 Transaction costs, net of tax 139 315 733 532 Resident lease amortization, net of tax 2,449 738 6,228 1,368 Loss(Gain) on disposition of assets, net of tax   9     (118 )   12     (114 ) Adjusted net income $ 1,831   $ 1,677   $ 5,832   $ 4,842           Adjusted net income per share $ 0.07   $ 0.06   $ 0.21   $ 0.18     Diluted shares outstanding 27,383 27,072 27,331 27,050   Adjusted CFFO and Adjusted CFFO per share Net cash provided by operating activities $ 17,858 $ 454 $ 37,201 $ 12,171 Changes in operating assets and liabilities (8,368 ) 5,577 (19,017 ) (467 ) Recurring capital expenditures (843 ) (766 ) (2,479 ) (2,172 ) Casualty losses, net of tax 171 232 337 377 Transaction costs 221 500 1,164 844 Tax impact of Spring Meadows Transaction (106 ) (106 ) (318 ) 6,248 Tax impact of lease modification   -     -     6,983     -   Adjusted CFFO $ 8,933   $ 5,891   $ 23,871   $ 17,001           Adjusted CFFO per share $ 0.33   $ 0.22   $ 0.87   $ 0.63   Capital Senior Living CorporationRalph A. Beattie, 972-770-5600Chief Financial Officer