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Capital Senior Living Corporation For Immediate Release Contact: Ralph A. Beattie 972/770-5600 CAPITAL SENIOR LIVING CORPORATION REPORTS THIRD QUARTER 2012 RESULTS; CFFO INCREASES OVER 51% VERSUS PRIOR YEAR DALLAS (BUSIN

Key Takeaway: For Immediate Release Contact: Ralph A. Beattie 972/770-5600 CAPITAL SENIOR LIVING CORPORATION REPORTS THIRD QUARTER 2012 RESULTS; CFFO INCREASES OVER 51% VERSUS PRIOR YEAR DALLAS (BUSINESS WIRE) November 7, 2012 Capital Senior Living Corporation (the Company ) (NYSE:

Full Press Release Details

For Immediate Release Contact: Ralph A. Beattie
972/770-5600
CAPITAL SENIOR LIVING CORPORATION
REPORTS THIRD QUARTER 2012 RESULTS;
CFFO INCREASES OVER 51% VERSUS PRIOR YEAR
DALLAS (BUSINESS WIRE)
November 7, 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 third quarter of 2012. Company
highlights for the third quarter include:
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:
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%.
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.
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.
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.
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.
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.
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.
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.
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 information.
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2012 2011
(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 CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(unaudited, in thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 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 depreciation and 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 CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Nine Months Ended September 30,
2012 2011
Operating 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 $
Supplemental Information
Communities Resident Capacity Units
Q3 12 Q3 11 Q3 12 Q3 11 Q3 12 Q3 11
Portfolio Data
I. 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 %
Supplemental Information
Selected Operating Results Q3 12 Q3 11
I. 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 %
CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
(In thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
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
Last updated: Nov 7, 2012