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Capital Senior Living Corporation For Immediate Release Contact: Ralph A. Beattie 972/770-5600 CAPITAL SENIOR LIVING CORPORATION REPORTS SECOND QUARTER 2012 RESULTS; CFFO INCREASES NEARLY 55% VERSUS PRIOR YEAR DALLAS (BU

Key Takeaway: For Immediate Release Contact: Ralph A. Beattie 972/770-5600 CAPITAL SENIOR LIVING CORPORATION REPORTS SECOND QUARTER 2012 RESULTS; CFFO INCREASES NEARLY 55% VERSUS PRIOR YEAR DALLAS (BUSINESS WIRE) August 1, 2012 Capital Senior Living Corporation (the Company ) (NYSE:CSU

Full Press Release Details

For Immediate Release Contact: Ralph A. Beattie
972/770-5600
CAPITAL SENIOR LIVING CORPORATION
REPORTS SECOND QUARTER 2012 RESULTS;
CFFO INCREASES NEARLY 55% VERSUS PRIOR YEAR
DALLAS (BUSINESS WIRE)
August 1, 2012 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 second quarter of 2012. Company
highlights for the second quarter include:
pleased to report continued occupancy growth and strong operating and financial results for the second 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 160 basis points from the comparable quarter of the prior year and 20 basis points sequentially. EBITDAR margin increased
by 90 basis points from the second quarter of 2011 and 40 basis points from the previous quarter. We continue to enhance our geographic concentration by acquiring high quality senior living communities that generate meaningful increases in CFFO,
earnings and net asset value. So far this year, we have acquired seven communities for a combined purchase price of $75.6 million, and we are conducting due diligence on communities that should enable us to meet or exceed this level of transactions
in the second half of 2012, with comparable economic benefits. 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
The community was financed with approximately $11.8 million of 10-year fixed rate debt that is non-recourse to the Company with an interest rate of 4.48%.
For the second quarter of 2012, the Company reported revenue of $77.0 million, compared to revenue of $64.3 million in the
second quarter of 2011. Resident and healthcare revenue increased from the second quarter of the prior year by approximately $12.6 million, or 20.1%, largely as a result of acquiring 14 communities since the second half of 2011 and converting the
four Spring Meadows communities previously owned in joint ventures to leased communities. The number of consolidated communities increased from 74 in the second quarter of 2011 to 88 in the second quarter of 2012.
Average monthly rent was $2,968 per occupied unit in the second quarter of 2012, an increase of $75, or 2.6%, over the second quarter of 2011. Financial
occupancy of the consolidated portfolio averaged 85.8% in the second quarter of 2012, 190 basis points higher than the second quarter of 2011, and 10 basis points higher than the first quarter of 2012.
As a percentage of resident and healthcare revenue, operating expenses were 59.4% in the second quarter of 2012, compared to 59.9% in the second quarter
of 2011, an improvement of 50 basis points. Operating expenses for the second quarter of 2012 were $44.9 million, an increase of $7.2 million from the second quarter of 2011, primarily due to 14 additional communities now being consolidated.
General and administrative expenses as a percentage of revenues under management were 4.3% for the quarter, excluding transaction costs
associated with the Company s acquisition program. Transaction costs for the quarter were approximately $0.5 million.
for the second quarter of 2012 was approximately $27.7 million, an increase of $5.1 million, or 22.8% from the second quarter of 2011. Adjusted EBITDAR margin was 36.0% for the period, an improvement of 90 basis points from the second quarter of
2011 and 40 basis points from the previous quarter.
Adjusted net income for the second quarter of 2012 was $2.1 million, or $0.08 per share,
excluding non-recurring or non-economic items reconciled on the final page of this release. This compares to adjusted net income of $1.5 million, or $0.06 per share in the second quarter of 2011.
Adjusted CFFO was $8.1 million, or $0.29 per share in the second quarter of 2012. Adjusted CFFO exceeded the second quarter of 2011 by $2.8 million, or
For the first six months of 2012, the company reported revenue of $149.2 million, compared to revenue of $124.2 million for
the first six months of 2011. Resident and healthcare revenue increased $26.7 million from the first half of the prior year.
for the first six months of 2012 was $53.4 million, compared to $43.1 million for the first six months of 2011. The Company earned adjusted net income of $4.0 million or $0.15 per share in the first six months of 2012, compared to adjusted net
income of $3.2 million or $0.12 per share in the first six months of 2011. Adjusted CFFO was $14.6 million or $0.53 per share in the first six months of 2012, compared to $11.0 million or $0.41 per share in the first six months of 2011.
Operating Activities
communities under management, same-community revenue in the second quarter of 2012 increased 3.9% versus the second quarter of 2011, excluding one community that had a recent conversion. Same-community expenses increased 3.4% and net income
increased 4.6% from the second quarter of the prior year.
Same-community occupancies were 160 basis points higher than the second quarter of
2011 and 20 basis points higher than the first quarter of 2012. Same-community occupancy in the second quarter reflected occupancy gains in independent living exceeding those in higher levels of care, resulting in average rents 1.6% higher than the
second quarter of 2011 and 0.7% higher than last quarter.
Capital expenditures for the second quarter of 2012 were approximately $3.4
million, representing $2.2 million of investment spending and $1.2 million of recurring capital expenditures. If annualized, spending for recurring capital expenditures equaled approximately $500 per unit.
the second quarter of 2012 with $46.0 million of cash and cash equivalents, including restricted cash. During the quarter, approximately $7.4 million of cash was invested as equity in a senior living community. As of June 30, 2012, the Company
financed its 38 owned communities with mortgages totaling $289.0 million at fixed interest rates averaging 5.5%. The Company has no mortgage maturities before the third quarter of 2015. Net debt to second quarter annualized EBITDA was 5.4x and
EBITDA to interest coverage was 3.5x in the second quarter.
The Company s mortgage debt includes supplemental financing on existing
communities with proceeds of $20.2 million that closed in the second quarter with a maturity date of July 2015. Interest on these borrowings is at a fixed rate of 4.39%. Furthermore, the Company has the ability to pursue additional supplemental
financing in the future to fund further acquisitions, reflecting the appreciation in value of the Company s owned communities. Cash on hand, cash flow from operations and proceeds from these supplemental financings are expected to be sufficient
for working capital, prudent reserves and equity to fund the Company s 2012 acquisition program.
Conference Call Information
The Company will host a conference call with senior management to discuss the Company s second
quarter 2012 financial results. The call will be held on Thursday, August 2, 2012 at 11:00 a.m. Eastern Time. The Company s earnings release announcing second quarter 2012 financial results is scheduled to be released to news services the
evening of Wednesday, August 1, 2012. The call-in number is 913-312-1507, confirmation code 4400190. A link to a simultaneous webcast of the teleconference will be available at www.capitalsenior.com through Windows Media Player or
For the convenience of the Company s shareholders and the public, the conference call will be recorded and available for
replay starting August 2, 2012 at 2:00 p.m. Eastern Time, until August 11, 2012 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 4400190. The conference call will also be made available
for playback via the Company s corporate website, www.capitalsenior.com.
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 91 senior living communities in
geographically concentrated regions with an aggregate capacity of approximately 12,600 residents.
The 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.
Contact Ralph A. Beattie, Chief Financial Officer, at 972-770-5600 for more
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 2012 December 31, 2011
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 36,837 $ 22,283
Restricted cash 9,187 9,102
Accounts receivable, net 4,726 4,526
Accounts receivable from affiliates 787 708
Federal and state income taxes receivable 5,438
Deferred taxes 1,588 1,479
Property tax and insurance deposits 8,396 11,395
Prepaid expenses and other 6,391 6,068
Total current assets 67,912 60,999
Property and equipment, net 437,726 365,459
Deferred taxes 12,979 5,782
Investments in unconsolidated joint ventures 1,051 1,070
Other assets, net 40,346 29,016
Total assets $ 560,014 $ 462,326
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities:
Accounts payable $ 2,003 $ 2,297
Accounts payable to affiliates 213 314
Accrued expenses 18,484 19,086
Current portion of notes payable 9,185 8,196
Current portion of deferred income 7,591 8,740
Current portion of capital lease and financing obligations 758 50
Federal and state income taxes payable 1,467
Customer deposits 1,546 1,530
Total current liabilities 41,247 40,213
Deferred income 20,850 26,175
Capital lease and financing obligations, net of current portion 42,626 31
Other long-term liabilities 1,759 1,826
Notes payable, net of current portion 283,190 224,940
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 28,172 and 27,699 in 2012 and 2011, respectively 285 280
Additional paid-in capital 137,038 135,301
Retained earnings 33,953 34,494
Treasury stock, at cost 350 shares (934 ) (934 )
Total shareholders equity 170,342 169,141
Total liabilities and shareholders equity $ 560,014 $ 462,326
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(unaudited, in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2012 2011 2012 2011
Revenues:
Resident and health care revenue $ 75,586 $ 62,946 $ 146,584 $ 119,845
Affiliated management services revenue 162 163 316 597
Community reimbursement revenue 1,278 1,226 2,346 3,717
Total revenues 77,026 64,335 149,246 124,159
Expenses:
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) 44,909 37,684 87,395 71,739
General and administrative expenses 3,858 3,437 7,635 6,287
Facility lease expense 13,865 13,613 27,360 25,044
Stock-based compensation expense 596 332 1,241 590
Depreciation and amortization 9,050 3,583 15,756 7,141
Community reimbursement expense 1,278 1,226 2,346 3,717
Total expenses 73,556 59,875 141,733 114,518
Income from operations 3,470 4,460 7,513 9,641
Other income (expense):
Interest income 41 50 67 64
Interest expense (4,308 ) (2,734 ) (7,852 ) (5,451 )
Loss on disposition of assets, net (7 ) (6 ) (5 ) (6 )
Equity in losses of unconsolidated joint ventures, net (78 ) (208 ) (215 ) (396 )
(Loss) Income before benefit (provision) for income taxes (882 ) 1,562 (492 ) 3,852
Benefit (Provision) for income taxes 198 (691 ) (49 ) (1,683 )
Net (loss) income $ (684 ) $ 871 $ (541 ) $ 2,169
Per share data:
Basic net (loss) income per share $ (0.02 ) $ 0.03 $ (0.02 ) $ 0.08
Diluted net (loss) income per share $ (0.02 ) $ 0.03 $ (0.02 ) $ 0.08
Weighted average shares outstanding basic 27,347 27,002 27,305 26,943
Weighted average shares outstanding diluted 27,347 27,081 27,305 27,038
Comprehensive (loss) income $ (684 ) $ 871 $ (541 ) $ 2,169
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Six Months Ended June 30,
2012 2011
Operating Activities
Net (loss) income $ (541 ) $ 2,169
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 15,756 7,141
Amortization of deferred financing charges 351 165
Amortization of deferred lease costs and lease intangibles 189 1,139
Deferred income (1,558 ) (920 )
Deferred income taxes (7,306 ) (5,101 )
Loss on disposition of assets, net 5 6
Equity in losses of unconsolidated joint ventures 215 396
Provision for bad debts 342 94
Stock based compensation expense 1,241 590
Changes in operating assets and liabilities:
Accounts receivable (542 ) (942 )
Accounts receivable from affiliates (79 ) 436
Property tax and insurance deposits 2,999 2,928
Prepaid expenses and other (323 ) 1,246
Other assets 2,670 (3,929 )
Accounts payable (395 ) (710 )
Accrued expenses (602 ) 879
Federal and state income taxes receivable/payable 6,905 5,752
Customer deposits 16 384
Net cash provided by operating activities 19,343 11,723
Investing Activities
Capital expenditures (5,649 ) (3,612 )
Cash paid for acquisitions (75,595 )
Proceeds from Spring Meadows Transaction 15,844
Proceeds from disposition of assets 19
Contributions to unconsolidated joint ventures (211 ) (464 )
Distributions from unconsolidated joint ventures 15 1,442
Net cash (used in) provided by investing activities (81,421 ) 13,210
Financing Activities
Proceeds from notes payable 81,888 1,079
Repayments of notes payable (4,356 ) (3,779 )
Increase in restricted cash (85 ) (2,584 )
Cash payments for capital lease and financing obligations (27 ) (72 )
Cash proceeds from the issuance of common stock 81 862
Excess tax benefits on stock option exercised 420 260
Deferred financing charges paid (1,289 )
Net cash provided by (used in) financing activities 76,632 (4,234 )
Increase in cash and cash equivalents 14,554 20,699
Cash and cash equivalents at beginning of period 22,283 31,248
Cash and cash equivalents at end of period $ 36,837 $ 51,947
Supplemental Disclosures
Cash paid during the period for:
Interest $ 7,332 $ 5,313
Income taxes $ 734 $ 972
Non-cash operating, investing, and financing activities:
Intangible assets acquired through capital lease and financing obligations $ 10,095 $
Property and equipment acquired through capital lease and financing obligations $ 14,942 $
Notes payable assumption through capital lease and financing obligations $ 18,293 $
Supplemental Information
Communities Resident Capacity Units
Q2 12 Q2 11 Q2 12 Q2 11 Q2 12 Q2 11
Portfolio Data
I. Community Ownership / Management
Consolidated communities
Owned 38 25 5,629 4,052 4,625 3,501
Leased 50 49 6,298 6,318 5,039 5,050
Joint Venture communities (equity method) 3 3 674 674 433 433
Total 91 77 12,601 11,044 10,097 8,984
Independent living 7,035 6,617 5,844 5,515
Assisted living 4,851 3,712 3,635 2,851
Continuing Care Retirement Communities 715 715 618 618
Total 12,601 11,044 10,097 8,984
II. Percentage of Operating Portfolio
Consolidated communities
Owned 41.8 % 32.5 % 44.7 % 36.7 % 45.8 % 39.0 %
Leased 54.9 % 63.6 % 50.0 % 57.2 % 49.9 % 56.2 %
Joint venture communities (equity method) 3.3 % 3.9 % 5.3 % 6.1 % 4.3 % 4.8 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Independent living 55.8 % 59.9 % 57.9 % 61.4 %
Assisted living 38.5 % 33.6 % 36.0 % 31.7 %
Continuing Care Retirement Communities 5.7 % 6.5 % 6.1 % 6.9 %
Total 100.0 % 100.0 % 100.0 % 100.0 %
Supplemental Information
Q2 12 Q2 11
Selected Operating Results
I. Owned communities
Number of communities 38 25
Resident capacity 5,629 4,052
Unit capacity 4,625 3,501
Financial occupancy (1) 87.4 % 84.7 %
Revenue (in millions) 31.4 21.0
Operating expenses (in millions) (2) 17.0 11.6
Operating margin 46 % 45 %
Average monthly rent 2,569 2,367
II. Leased communities
Number of communities 50 49
Resident capacity 6,298 6,318
Unit capacity 5,039 5,050
Financial occupancy (1) 84.3 % 83.2 %
Revenue (in millions) 44.0 41.8
Operating expenses (in millions) (2) 23.1 22.2
Operating margin 47 % 47 %
Average monthly rent 3,338 3,257
III. Consolidated communities
Number of communities 88 74
Resident capacity 11,927 10,370
Unit capacity 9,664 8,551
Financial occupancy (1) 85.8 % 83.9 %
Revenue (in millions) 75.5 62.8
Operating expenses (in millions) (2) 40.2 33.7
Operating margin 47 % 46 %
Average monthly rent 2,968 2,893
IV. Communities under management
Number of communities 91 77
Resident capacity 12,601 11,044
Unit capacity 10,097 8,984
Financial occupancy (1) 85.2 % 82.7 %
Revenue (in millions) 78.7 66.0
Operating expenses (in millions) (2) 42.0 35.6
Operating margin 47 % 46 %
Average monthly rent 2,984 2,917
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) 84.8 % 83.2 %
Revenue (in millions) 67.6 65.1
Operating expenses (in millions) (2) 36.0 35.0
Operating margin 47 % 46 %
Average monthly rent 2,965 2,918
VI. General and Administrative expenses as a percent of Total Revenues under Management
Second quarter (3) 4.3 % 4.8 %
First six months (3) 4.4 % 4.6 %
VII. Consolidated Debt Information (in thousands, except for interest rates)
(Excludes insurance premium and auto financing)
Total fixed rate mortgage debt 288,988 172,011
Weighted average interest rate 5.5 % 6.0 %
CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
(In thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2012 2011 2012 2011
Adjusted EBITDAR
Net income from operations $ 3,470 $ 4,460 $ 7,513 $ 9,641
Depreciation and amortization expense 9,050 3,583 15,756 7,141
Stock-based compensation expense 596 332 1,241 590
Facility lease expense 13,865 13,613 27,360 25,044
Provision for bad debts 153 86 342 94
Casualty losses 90 210 263 231
Transaction costs 503 304 943 344
Adjusted EBITDAR $ 27,727 $ 22,588 $ 53,418 $ 43,085
Adjusted EBITDAR Margin
Adjusted EBITDAR $ 27,727 $ 22,588 $ 53,418 $ 43,085
Total revenues 77,026 64,335 149,246 124,159
Adjusted EBITDAR margin 36.0 % 35.1 % 35.8 % 34.7 %
Adjusted net income and net income per share
Net (loss) income $ (684 ) $ 871 $ (541 ) $ 2,169
Casualty losses, net of tax 57 132 166 145
Transaction costs, net of tax 317 192 594 217
Resident lease amortization, net of tax 2,429 315 3,778 630
Loss on disposition of assets, net of tax 4 4 3 4
Adjusted net income $ 2,123 $ 1,514 $ 4,000 $ 3,165
Adjusted net income per share $ 0.08 $ 0.06 $ 0.15 $ 0.12
Diluted shares outstanding 27,347 27,081 27,305 27,038
Adjusted CFFO and Adjusted CFFO per share
Net cash provided by operating activities $ 10,961 $ 7,755 $ 19,343 $ 11,723
Changes in operating assets and liabilities (9,314 ) (8,470 ) (10,649 ) (6,044 )
Recurring capital expenditures (839 ) (742 ) (1,636 ) (1,406 )
Casualty losses, net of tax 57 132 166 145
Transaction costs, net of tax 317 192 594 217
Tax impact of Spring Meadows Transaction (106 ) 6,354 (212 ) 6,354
Tax impact of lease modification 6,983 6,983
Adjusted CFFO $ 8,059 $ 5,221 $ 14,589 $ 10,989
Adjusted CFFO per share $ 0.29 $ 0.19 $ 0.53 $ 0.41
Last updated: Aug 1, 2012