Full Press Release Details
| For Immediate Release | Contact: | Ralph A. Beattie | ||
| 972/770-5600 |
CAPITAL SENIOR LIVING CORPORATION
REPORTS FIRST QUARTER 2013 RESULTS;
CFFO INCREASES 45% VERSUS PRIOR YEAR
DALLAS (BUSINESS WIRE) May 6,
2013 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 first quarter of 2013. Company highlights for the
first quarter include:
We are very pleased to report continued strong results for the first quarter, which is typically a
challenging period, said Lawrence A. Cohen, Chief Executive Officer of the Company. Excellent expense management has yielded significant growth in net operating income despite the effects of normal seasonality and an active and prolonged
flu season. First quarter same-community occupancies increased 70 basis points from the comparable quarter of the prior year and CFFO grew by approximately 45%. Recent trends indicate solid growth in occupancy in the second quarter. Our robust
pipeline allows us to continue our disciplined and strategic acquisition program that increases our ownership of high-quality senior living communities in geographically concentrated regions and generates meaningful increases in CFFO, earnings and
real estate value. We differentiate Capital Senior Living as the value leader in providing quality seniors housing and care at reasonable prices. We are well positioned to make meaningful gains in shareholder value as a substantially all private-pay
business in an industry that benefits from need-driven demand, limited new supply, and an improving economy and housing market.
Recent Investment Activity
For the first quarter of 2013, the Company reported revenue of $86.2 million, compared to revenue of $72.2 million in the first quarter of 2012. Resident and healthcare revenue increased from the first
quarter of the prior year by approximately $13.8 million, or 19.4%, largely as a result of acquiring 12 communities since the first quarter of 2012. The number of consolidated communities increased from 87 in the first quarter of 2012 to 99 in the
first quarter of 2013.
Average monthly rent for the consolidated communities was $3,022 per occupied unit in the first quarter of 2013, an
increase of $80, or 2.7%, over the first quarter of 2012. Financial occupancy of the consolidated portfolio averaged 86.7% in the first quarter of 2013, 100 basis points higher than the first quarter of 2012.
As a percentage of resident and healthcare revenue, operating expenses were 59.1% in the first quarter of 2013, compared to 59.8% in the first quarter of
2012, an improvement of 70 basis points. Operating expenses for the first quarter of 2013 were $50.1 million, an increase of $7.6 million from the first quarter of 2012, primarily due to 12 additional communities now being consolidated.
General and administrative expenses as a percentage of revenues under management were 5.1% for the quarter, excluding transaction costs of approximately
$0.4 million. Expenses this quarter were impacted by an abnormally high level of medical claims. The Company is self-insured for the costs of employee and dependent medical benefits and purchases stop-loss protection on an individual and aggregate
basis. This self-insurance program significantly reduces the Company s health insurance costs. Occasionally, expenses are higher than average in a particular quarter as a few claims approach stop-loss insurance thresholds. Health care costs in
the first quarter of 2013 exceeded the first quarter of 2012 by approximately $0.5 million.
Adjusted EBITDAR for the first quarter of 2013
was approximately $30.5 million, an increase of $4.8 million, or 18.5% from the first quarter of 2012. Adjusted EBITDAR margin was 35.3% for the period.
Adjusted net income for the first quarter of 2013 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 equals adjusted net
income of $0.07 per share in the first quarter of 2012.
Adjusted CFFO was $9.7 million or $0.35 per share in the first quarter of 2013.
Adjusted CFFO exceeded the first quarter of 2012 by $3.0 million, or $0.10 per share. In the fourth quarter of 2012, the Company initiated a tax consulting engagement to assist in reviewing the classification of costs incurred for the purchase of
owned assets and improvements to its leased portfolio. The purpose of this study was to determine which costs may qualify for shorter depreciable lives for federal income tax purposes.
Approximately $0.09 per share of CFFO was realized in the fourth quarter of 2012, with an additional
$0.20 per share of CFFO anticipated to be realized in 2013. The CFFO in 2013 is expected to result from tax savings of $5.5 million that will be recognized as nearly $15.0 million of taxable income is offset by this additional depreciation, of which
the Company realized a benefit of approximately $0.6 million, or $0.02 per share, in the first quarter of 2013.
Operating Activities
At communities under management, excluding one community that had a recent conversion, same-community revenue in the first quarter of
2013 increased 3.1% versus the first quarter of 2012. Same-community expenses increased 0.9% and net operating income increased 6.4% from the first quarter of the prior year.
Same-community occupancies were 70 basis points higher than the first quarter of 2012 and 80 basis points lower than the fourth quarter of 2012. Average rents were 2.1% higher than the first quarter of
2012 and 0.6% higher than last quarter. While the first quarter is typically a challenging period, positive trends in the second quarter indicate that occupancies are improving quickly.
Capital expenditures for the first quarter of 2013 were approximately $2.1 million, representing $1.1 million of investment spending and $1.0 million of recurring capital expenditures. If annualized,
spending for recurring capital expenditures equaled approximately $400 per unit.
The Company ended the first quarter of 2013 with $27.9 million of cash and cash equivalents, including restricted cash. As of March 31, 2013, the
Company financed its 49 owned communities with mortgages totaling $364.0 million at fixed interest rates averaging 5.2%. During the first quarter, the Company refinanced a bridge loan associated with a 2012 acquisition with permanent financing. The
Company has no mortgage maturities before the third quarter of 2015.
Q1 2013 Conference Call Information
The Company will host a conference call with senior management to discuss the Company s first quarter 2013 financial results. The call will be held
on Tuesday, May 7, 2013 at 11:00 a.m. Eastern Time. The call-in number is 913-312-0653, confirmation code 6058447. 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 May 7, 2013 at 2:00 p.m. Eastern Time, until May 16, 2013 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 6058447. The conference call will also be made
available for playback via the Company s corporate website, www.capitalsenior.com, beginning May 8, 2013.
Capital Senior Living Corporation is one of the nation s largest operators of residential communities for senior adults. The Company s operating strategy is to provide value to residents by
providing quality senior living services at reasonable prices. Its communities emphasize a continuum of care, which integrates independent living, assisted living and home care services, to provide residents the opportunity to age in place. During
the first quarter of 2013, the Company operated 102 senior living communities in geographically concentrated regions with an aggregate capacity of approximately 13,700 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 information.
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
| March 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 17,723 | $ | 18,737 | ||||
| Restricted cash | 10,185 | 10,179 | ||||||
| Accounts receivable, net | 7,723 | 5,229 | ||||||
| Accounts receivable from affiliates | 393 | 753 | ||||||
| Federal and state income taxes receivable | 4,465 | 3,901 | ||||||
| Deferred taxes | 1,496 | 1,443 | ||||||
| Property tax and insurance deposits | 8,883 | 11,442 | ||||||
| Prepaid expenses and other | 2,466 | 4,758 | ||||||
| Total current assets | 53,334 | 56,442 | ||||||
| Property and equipment, net | 529,124 | 527,159 | ||||||
| Deferred taxes | 9,472 | 9,350 | ||||||
| Investments in unconsolidated joint ventures | 1,035 | 1,074 | ||||||
| Other assets, net | 37,842 | 42,917 | ||||||
| Total assets | $ | 630,807 | $ | 636,942 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,095 | $ | 6,978 | ||||
| Accounts payable to affiliates | 2 | |||||||
| Accrued expenses | 22,965 | 24,445 | ||||||
| Current portion of notes payable | 7,881 | 20,230 | ||||||
| Current portion of deferred income | 7,706 | 8,193 | ||||||
| Current portion of capital lease and financing obligations | 828 | 766 | ||||||
| Customer deposits | 1,543 | 1,540 | ||||||
| Total current liabilities | 43,018 | 62,154 | ||||||
| Deferred income | 19,407 | 19,990 | ||||||
| Capital lease and financing obligations, net of current portion | 41,941 | 42,146 | ||||||
| Other long-term liabilities | 1,659 | 1,692 | ||||||
| Notes payable, net of current portion | 356,649 | 342,366 | ||||||
| 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 28,646 and 28,218 in 2013 and 2012, respectively | 290 | 286 | ||||||
| Additional paid-in capital | 139,478 | 137,867 | ||||||
| Retained earnings | 29,299 | 31,375 | ||||||
| Treasury stock, at cost 350 shares | (934 | ) | (934 | ) | ||||
| Total shareholders equity | 168,133 | 168,594 | ||||||
| Total liabilities and shareholders equity | $ | 630,807 | $ | 636,942 |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME
(unaudited, in thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Revenues: | ||||||||
| Resident and health care revenue | $ | 84,775 | $ | 70,998 | ||||
| Affiliated management services revenue | 185 | 154 | ||||||
| Community reimbursement revenue | 1,265 | 1,068 | ||||||
| Total revenues | 86,225 | 72,220 | ||||||
| Expenses: | ||||||||
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) | 50,120 | 42,486 | ||||||
| General and administrative expenses | 4,922 | 3,777 | ||||||
| Facility lease expense | 14,270 | 13,495 | ||||||
| Stock-based compensation expense | 996 | 645 | ||||||
| Depreciation and amortization expense | 11,889 | 6,706 | ||||||
| Community reimbursement expense | 1,265 | 1,068 | ||||||
| Total expenses | 83,462 | 68,177 | ||||||
| Income from operations | 2,763 | 4,043 | ||||||
| Other income (expense): | ||||||||
| Interest income | 104 | 26 | ||||||
| Interest expense | (5,684 | ) | (3,544 | ) | ||||
| Gain on disposition of assets, net | 1 | 2 | ||||||
| Equity in earnings (losses) of unconsolidated joint ventures, net | 3 | (137 | ) | |||||
| Other income (expense) | 12 | |||||||
| (Loss) Income before benefit (provision) for income taxes | (2,801 | ) | 390 | |||||
| Benefit (Provision) for income taxes | 725 | (247 | ) | |||||
| Net (loss) income | $ | (2,076 | ) | $ | 143 | |||
| Per share data: | ||||||||
| Basic net (loss) income per share | $ | (0.07 | ) | $ | 0.01 | |||
| Diluted net (loss) income per share | $ | (0.07 | ) | $ | 0.01 | |||
| Weighted average shares outstanding basic | 27,584 | 27,262 | ||||||
| Weighted average shares outstanding diluted | 27,584 | 27,314 | ||||||
| Comprehensive (loss) income | $ | (2,076 | ) | $ | 143 |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Operating Activities | ||||||||
| Net (loss) income | $ | (2,076 | ) | $ | 143 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 11,889 | 6,706 | ||||||
| Amortization of deferred financing charges | 365 | 106 | ||||||
| Amortization of deferred lease costs and lease intangibles | 325 | 91 | ||||||
| Deferred income | (1,070 | ) | (747 | ) | ||||
| Deferred income taxes | (175 | ) | (221 | ) | ||||
| Loss (Gain) on disposition of assets, net | (1 | ) | (2 | ) | ||||
| Equity in (earnings) losses of unconsolidated joint ventures, net | (3 | ) | 137 | |||||
| Provision for bad debts | 20 | 189 | ||||||
| Stock based compensation expense | 996 | 645 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,514 | ) | 142 | |||||
| Accounts receivable from affiliates | 360 | 97 | ||||||
| Property tax and insurance deposits | 2,559 | 2,413 | ||||||
| Prepaid expenses and other | 2,292 | 246 | ||||||
| Other assets | (493 | ) | 345 | |||||
| Accounts payable | (4,885 | ) | (822 | ) | ||||
| Accrued expenses | (1,480 | ) | (1,562 | ) | ||||
| Federal and state income taxes receivable | (564 | ) | 504 | |||||
| Customer deposits | 3 | (28 | ) | |||||
| Net cash provided by operating activities | 5,548 | 8,382 | ||||||
| Investing Activities | ||||||||
| Capital expenditures | (2,135 | ) | (2,272 | ) | ||||
| Cash paid for acquisitions | (6,741 | ) | (56,395 | ) | ||||
| Proceeds from disposition of assets | 19 | |||||||
| Contributions to joint ventures | (132 | ) | ||||||
| Distributions from joint ventures | 42 | 15 | ||||||
| Net cash used in investing activities | (8,834 | ) | (58,765 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from notes payable | 16,381 | 48,571 | ||||||
| Repayments of notes payable | (14,447 | ) | (2,236 | ) | ||||
| Increase in restricted cash | (6 | ) | (9 | ) | ||||
| Cash payments for capital lease obligations | (143 | ) | (15 | ) | ||||
| Cash proceeds from the issuance of common stock | 1,271 | 16 | ||||||
| Excess tax benefits on stock options exercised | (652 | ) | 230 | |||||
| Deferred financing charges paid | (132 | ) | (743 | ) | ||||
| Net cash provided by financing activities | 2,272 | 45,814 | ||||||
| Decrease in cash and cash equivalents | (1,014 | ) | (4,569 | ) | ||||
| Cash and cash equivalents at beginning of period | 18,737 | 22,283 | ||||||
| Cash and cash equivalents at end of period | $ | 17,723 | $ | 17,714 | ||||
| Supplemental Disclosures | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 5,150 | $ | 3,400 | ||||
| Income taxes | $ | 23 | $ | 105 |
Capital Senior Living Corporation
Supplemental Information
| Communities | Resident Capacity | Units | ||||||||||||||||||||||
| Q1 13 | Q1 12 | Q1 13 | Q1 12 | Q1 13 | Q1 12 | |||||||||||||||||||
| Portfolio Data | ||||||||||||||||||||||||
| I. Community Ownership / Management | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 49 | 38 | 6,744 | 5,451 | 5,580 | 4,155 | ||||||||||||||||||
| Leased | 50 | 49 | 6,298 | 6,318 | 5,209 | 5,218 | ||||||||||||||||||
| Joint Venture communities (equity method) | 3 | 3 | 674 | 674 | 443 | 440 | ||||||||||||||||||
| Total | 102 | 90 | 13,716 | 12,443 | 11,232 | 9,813 | ||||||||||||||||||
| Independent living | 7,185 | 6,877 | 5,895 | 5,596 | ||||||||||||||||||||
| Assisted living | 5,816 | 4,851 | 4,720 | 3,600 | ||||||||||||||||||||
| Continuing Care Retirement Communities | 715 | 715 | 617 | 617 | ||||||||||||||||||||
| Total | 13,716 | 12,443 | 11,232 | 9,813 | ||||||||||||||||||||
| II. Percentage of Operating Portfolio | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 48.0 | % | 42.2 | % | 49.2 | % | 43.8 | % | 49.7 | % | 42.3 | % | ||||||||||||
| Leased | 49.0 | % | 54.5 | % | 45.9 | % | 50.8 | % | 46.4 | % | 53.2 | % | ||||||||||||
| Joint venture communities (equity method) | 3.0 | % | 3.3 | % | 4.9 | % | 5.4 | % | 3.9 | % | 4.5 | % | ||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
| Independent living | 52.4 | % | 55.3 | % | 52.5 | % | 57.0 | % | ||||||||||||||||
| Assisted living | 42.4 | % | 39.0 | % | 42.0 | % | 36.7 | % | ||||||||||||||||
| Continuing Care Retirement Communities | 5.2 | % | 5.7 | % | 5.5 | % | 6.3 | % | ||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Capital Senior Living Corporation
Supplemental Information
| Selected Operating Results | Q1 13 | Q1 12 | ||||||
| I. Owned communities | ||||||||
| Number of communities | 49 | 38 | ||||||
| Resident capacity | 6,744 | 5,451 | ||||||
| Unit capacity | 5,580 | 4,155 | ||||||
| Financial occupancy (1) | 86.9 | % | 87.9 | % | ||||
| Revenue (in millions) | 40.7 | 27.5 | ||||||
| Operating expenses (in millions) (2) | 23.9 | 15.1 | ||||||
| Operating margin | 41 | % | 45 | % | ||||
| Average monthly rent | 2,799 | 2,507 | ||||||
| II. Leased communities | ||||||||
| Number of communities | 50 | 49 | ||||||
| Resident capacity | 6,298 | 6,318 | ||||||
| Unit capacity | 5,209 | 5,218 | ||||||
| Financial occupancy (1) | 86.4 | % | 83.9 | % | ||||
| Revenue (in millions) | 44.1 | 43.4 | ||||||
| Operating expenses (in millions) (2) | 21.7 | 23.4 | ||||||
| Operating margin | 51 | % | 46 | % | ||||
| Average monthly rent | 3,263 | 3,306 | ||||||
| III. Consolidated communities | ||||||||
| Number of communities | 99 | 87 | ||||||
| Resident capacity | 13,042 | 11,769 | ||||||
| Unit capacity | 10,789 | 9,373 | ||||||
| Financial occupancy (1) | 86.7 | % | 85.7 | % | ||||
| Revenue (in millions) | 84.8 | 70.9 | ||||||
| Operating expenses (in millions) (2) | 45.5 | 38.5 | ||||||
| Operating margin | 46 | % | 46 | % | ||||
| Average monthly rent | 3,022 | 2,942 | ||||||
| IV. Communities under management | ||||||||
| Number of communities | 102 | 90 | ||||||
| Resident capacity | 13,716 | 12,443 | ||||||
| Unit capacity | 11,232 | 9,813 | ||||||
| Financial occupancy (1) | 86.4 | % | 85.0 | % | ||||
| Revenue (in millions) | 88.5 | 74.0 | ||||||
| Operating expenses (in millions) (2) | 47.7 | 40.4 | ||||||
| Operating margin | 46 | % | 45 | % | ||||
| Average monthly rent | 3,038 | 2,958 | ||||||
| V. Same Store communities under management (Excludes 1 community with a conversion) | ||||||||
| Number of communities | 83 | 83 | ||||||
| Resident capacity | 11,598 | 11,598 | ||||||
| Unit capacity | 9,601 | 9,593 | ||||||
| Financial occupancy (1) | 85.8 | % | 85.1 | % | ||||
| Revenue (in millions) | 74.7 | 72.4 | ||||||
| Operating expenses (in millions) (2) | 39.9 | 39.4 | ||||||
| Operating margin | 47 | % | 46 | % | ||||
| Average monthly rent | 3,020 | 2,957 | ||||||
| VI. General and Administrative expenses as a percent of Total Revenues under Management | ||||||||
| First Quarter (3) | 5.1 | % | 4.5 | % | ||||
| VII. Consolidated Debt Information (in thousands, except for interest rates) (Excludes insurance premium and auto financing) | ||||||||
| Total fixed rate debt | 363,956 | 276,600 | ||||||
| Weighted average interest rate | 5.24 | % | 5.60 | % |
CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
(In thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| Adjusted EBITDAR | ||||||||
| Net income from operations | $ | 2,763 | $ | 4,043 | ||||
| Depreciation and amortization expense | 11,889 | 6,706 | ||||||
| Stock-based compensation expense | 996 | 645 | ||||||
| Facility lease expense | 14,270 | 13,495 | ||||||
| Provision for bad debts | 20 | 189 | ||||||
| Casualty losses | 88 | 173 | ||||||
| Transaction costs | 424 | 440 | ||||||
| Adjusted EBITDAR | $ | 30,450 | $ | 25,691 | ||||
| Adjusted EBITDAR Margin | ||||||||
| Adjusted EBITDAR | $ | 30,450 | $ | 25,691 | ||||
| Total revenues | 86,225 | 72,220 | ||||||
| Adjusted EBITDAR margin | 35.3 | % | 35.6 | % | ||||
| Adjusted net income and net income per share | ||||||||
| Net income | $ | (2,076 | ) | $ | 143 | |||
| Casualty losses, net of tax | 55 | 109 | ||||||
| Transaction costs, net of tax | 267 | 277 | ||||||
| Resident lease amortization, net of tax | 3,602 | 1,349 | ||||||
| Gain on disposition of assets, net of tax | (1 | ) | (1 | ) | ||||
| Adjusted net income | $ | 1,847 | $ | 1,877 | ||||
| Adjusted net income per share | $ | 0.07 | $ | 0.07 | ||||
| Diluted shares outstanding | 27,584 | 27,314 | ||||||
| Adjusted CFFO and Adjusted CFFO per share | ||||||||
| Net cash provided by operating activities | $ | 5,548 | $ | 8,382 | ||||
| Changes in operating assets and liabilities | 4,722 | (1,335 | ) | |||||
| Recurring capital expenditures | (948 | ) | (797 | ) | ||||
| Casualty losses, net of tax | 55 | 109 | ||||||
| Transaction costs | 424 | 440 | ||||||
| Tax impact of Spring Meadows Transaction | (106 | ) | (106 | ) | ||||
| Adjusted CFFO | $ | 9,695 | $ | 6,693 | ||||
| Adjusted CFFO per share | $ | 0.35 | $ | 0.25 |