Full Press Release Details
CAPITAL SENIOR LIVING CORPORATION
REPORTS 2019 SECOND QUARTER RESULTS
DALLAS (GLOBE NEWSWIRE) August 8, 2019 Capital Senior Living Corporation (the Company ) (NYSE: CSU), one of the
nation s largest operators of senior housing communities, announced today operating and financial results for the second quarter ended June 30, 2019.
In the second quarter, we continued to focus on initiatives to stabilize and invest in our operations to build a platform for sustainable, profitable
growth. We have assembled a strong, experienced team to lead operations, we have improved our business processes and we are experiencing positive momentum in several metrics, including higher average rents, well-managed operating costs and higher
employee retention, said Kimberly S. Lody, President and Chief Executive Officer. Although conditions remain difficult and the impact of our actions will take time to result in improved financial performance, we are confident our
strategy will establish a solid foundation for long-term value creation.
Operating and Financial Summary (all amounts in this
operating and financial summary exclude two communities undergoing lease-up or significant renovation and conversion, unless otherwise noted; also, see Non-GAAP
Financial Measures below and reconciliation of Non-GAAP measures to the most directly comparable GAAP measure on the final page of this release):
Recent Investment Activity
As previously reported, the Company closed on the sale of its community in Kokomo, Indiana, on May 1, 2019, at a price of $5.0 million. The
transaction resulted in approximately $1.4 million in net cash proceeds. The community had a negative CFFO contribution of approximately $0.2 million in 2018.
Carey P. Hendrickson, the Company s Chief Financial Officer, said: Consistent with our normal business practices, the Company is engaged in various
activities, including the marketing of a limited number of additional owned communities for potential divestiture and the refinancing of existing owned communities. Against a challenging operating environment, we are taking these proactive steps to
strengthen our financial foundation, optimize our asset portfolio, and ultimately, enhance shareholder value.
Financial Results Second Quarter
For the second quarter of 2019, the Company reported revenue of $113.1 million, compared with revenue of $114.6 million in the second quarter of
2018. Revenue for consolidated communities excluding the two communities undergoing significant renovation and conversion, was $111.9 million, a decrease of 1.2%, in the second quarter of 2019 when compared with the second quarter of 2018.
Operating expenses for the second quarter of 2019 were $74.4 million, an increase of $1.5 million, or 2.0%, from the second quarter of 2018.
Operating expenses in the second quarter of 2019 included a $1.2 million business interruption insurance credit related to the Company s two Houston communities impacted by Hurricane Harvey to offset the lost revenues and continuing
expenses, and to restore the communities net income for the second quarter of 2019 based on an approximate average of the communities net income in the seven months of 2017 prior to the hurricane. The business interruption credit was
$1.6 million in the comparable period a year ago.
General and administrative expenses for the second quarter of 2019 were $6.6 million versus
$5.7 million in the second quarter of 2018. Excluding transaction and conversion costs in both periods (including approximately $0.5 million related to separation and placement costs associated with the Company s former CEO and COO),
general and administrative expenses increased $1.3 million in the second quarter of 2019 versus the second quarter of 2018. As a percentage of revenues under management, general and administrative expenses, excluding transaction and conversion
costs, were 5.1% in the second quarter of 2019.
Income from operations for the second quarter of 2019 was $0.2 million. This compares with
$3.6 million in the second quarter of 2018.
The Company s Non-GAAP financial measures exclude two
communities that are undergoing significant renovation and conversion (see Non-GAAP Financial Measures below).
Adjusted EBITDAR for the second quarter of 2019 was $34.0 million, compared with $38.4 million in the second quarter of 2018. Adjusted CFFO was
$5.2 million in the second quarter of 2019 compared to $10.6 million in the second quarter of 2018. CFFO for the second quarter of 2019 includes a negative net impact of $0.5 million related to the Company s adoption of the new
lease accounting standard ( ASC 842 ) effective January 1, 2019. There was no impact on Adjusted EBITDAR related to the adoption of the new lease standard.
Operating Activities
Same community results
exclude two previously noted communities undergoing lease-up or significant renovation and conversion, the two Houston communities impacted by Hurricane Harvey, and the Kokomo community sold on May 1,
2019. Same-community results also exclude certain conversion costs.
Same-community revenue in the second quarter of 2019 decreased 1.7% versus the second quarter of 2018.
Same-community operating expenses increased 1.9% in the second quarter of 2019 versus the second quarter of 2018, excluding conversion costs in all periods.
On the same basis, labor costs, including benefits, increased 0.4% in the second quarter, food costs increased 0.7% and utilities decreased 3.2%, respectively. Same-community net operating income decreased 7.7% in the second quarter of 2019 when
compared with the same period a year ago.
Capital expenditures were $4.5 million for the second quarter of 2019.
The Company ended the second
quarter with $34.8 million of cash and cash equivalents, including restricted cash. As of June 30, 2019, the Company financed its owned communities with mortgages totaling $971.0 million, at interest rates averaging 4.9%. The majority
of the Company s debt is at fixed interest rates excluding a $65 million bridge loan that matures in 2020, an $11 million bridge loan that matures in 2021, and approximately $50 million of long-term variable rate debt under the
Company s Master Credit Facility. The earliest maturity date for the Company s fixed-rate debt is in 2022.
The Company s cash on hand and
cash flow from operations are expected to be sufficient for working capital and to fund the Company s capital expenditures.
The Company will host a conference call with senior management to discuss the Company s 2019 second quarter financial
results on Thursday, August 8, 2019, at 10:00 a.m. Eastern Time. To participate, dial 323-794-2597, and use confirmation code 4040867. A link to a simultaneous
webcast of the teleconference will be available at www.capitalsenior.com.
For the convenience of the Company s shareholders and the public,
the conference call will be recorded and available for replay starting August 8, 2019 at 12:00 p.m. Eastern Time, until August 16, 2019 at 12:00 p.m. Eastern Time. To access the conference call replay, call
719-457-0820, and use confirmation code 4040867. The conference call will also be made available for playback via the Company s corporate website at
Non-GAAP Financial Measures of Operating Performance
Adjusted EBITDAR is a financial valuation measure and Adjusted Net Income/(Loss) and Adjusted CFFO are financial performance measures that are not
calculated in accordance with U.S. generally accepted accounting principles ( GAAP ). Non-GAAP financial measures may have material limitations in that they do not reflect all of the costs associated
with our results of operations as determined in accordance with GAAP. As a result, these non-GAAP financial measures should not be considered a substitute for, nor superior to, financial results and
measures determined or calculated in accordance with GAAP.
Adjusted EBITDAR is a valuation measure commonly used by Company management, research
analysts and investors to value companies in the senior living industry. Since Adjusted EBITDAR excludes interest expense and rent expense, it allows Company management, research analysts and investors to compare the enterprise values of different
companies without regard to differences in capital structures and leasing arrangements.
The Company believes that Adjusted Net Income/(Loss) and Adjusted
CFFO are useful as performance measures in identifying trends in day-to-day operations because they exclude the costs associated with acquisitions and conversions and
other items that do not ordinarily reflect the ongoing operating results of our primary business. Adjusted Net Income/(Loss) and Adjusted CFFO provide indicators to management of progress in achieving both consolidated and individual business unit
operating performance and are used by research analysts and investors to evaluate the performance of companies in the senior living industry.
strongly urges you to review the reconciliation of net loss to Adjusted EBITDAR and the reconciliation of net income/(loss) to Adjusted Net Income/(Loss) and Adjusted CFFO, along with the Company s consolidated balance sheets, statements of
operations, and statements of cash flows. This is included on the last page of this press release.
Dallas-based Capital Senior Living Corporation is one of the nation s largest operators of independent living, assisted living and memory care
communities for senior adults. The Company s 128 communities are home to nearly 12,000 residents across 23 states and provide compassionate, resident-centric service and care as well as engaging programming. Capital Senior Living offers seniors
the freedom and opportunity to successfully, comfortably and happily age in place. For more information, visit www.capitalsenior.com or connect with the Company on Facebook.
The forward-looking statements in
this release are subject to certain risks and uncertainties that could cause the Company s actual results and financial condition to differ materially, including, but not limited to, the Company s ability to generate sufficient cash flow
to satisfy its debt and lease obligations and to fund the Company s capital improvement projects to expand, redevelop, and/or reposition its senior living communities; the Company s ability to obtain additional capital on terms acceptable
to it; the Company s ability to extend or refinance its existing debt as such debt matures; the Company s compliance with its debt and lease agreements; the Company s ability to
complete acquisitions and dispositions upon favorable terms or at all; the risk of oversupply and increased competition in the markets which the Company operates; the risk of increased
competition for skilled workers due to wage pressure and changes in regulatory requirements; the departure of the Company s key officers and personnel; the cost and difficulty of complying with applicable licensure, legislative oversight, or
regulatory changes; the risks associated with a decline in economic conditions generally; the adequacy and continued availability of the Company s insurance policies and the Company s ability to recover any losses it sustains under such
policies; changes in accounting principles and interpretations; and the other risks and factors identified from time to time in the Company s reports filed with the Securities and Exchange Commission.
For information about Capital Senior Living, visit www.capitalsenior.com.
Investor Contact Carey P. Hendrickson, Chief Financial Officer, at
972-770-5600 or chendrickson@capitalsenior.com.
Susan J. Turkell at 303-766-4343 or sturkell@capitalsenior.com.
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except per share data)
| June 30, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 21,698 | $ | 31,309 | ||||
| Restricted cash | 13,053 | 13,011 | ||||||
| Accounts receivable, net | 10,710 | 10,581 | ||||||
| Federal and state income taxes receivable | 152 | 152 | ||||||
| Property tax and insurance deposits | 10,940 | 13,173 | ||||||
| Prepaid expenses and other | 6,404 | 5,232 | ||||||
| Total current assets | 62,957 | 73,458 | ||||||
| Property and equipment, net | 1,012,229 | 1,059,049 | ||||||
| Operating lease right-of-use assets, net | 241,231 | |||||||
| Deferred taxes, net | 152 | 152 | ||||||
| Other assets, net | 11,467 | 16,485 | ||||||
| Total assets | $ | 1,328,036 | $ | 1,149,144 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,012 | $ | 9,095 | ||||
| Accrued expenses | 43,087 | 41,880 | ||||||
| Current portion of notes payable, net of deferred loan costs | 17,973 | 14,342 | ||||||
| Current portion of deferred income | 5,418 | 14,892 | ||||||
| Current portion of financing obligations | 1,695 | 3,113 | ||||||
| Current portion of operating lease liabilities | 45,991 | |||||||
| Federal and state income taxes payable | 179 | 406 | ||||||
| Customer deposits | 1,287 | 1,302 | ||||||
| Total current liabilities | 117,642 | 85,030 | ||||||
| Deferred income | 8,151 | |||||||
| Financing obligations, net of current portion | 10,571 | 45,647 | ||||||
| Operating lease liabilities, net of current portion | 226,909 | |||||||
| Other long-term liabilities | 15,643 | |||||||
| Notes payable, net of deferred loan costs and current portion | 949,871 | 959,408 | ||||||
| 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 31,469 and 31,273 in 2019 and 2018, respectively | 320 | 318 | ||||||
| Additional paid-in capital | 188,537 | 187,879 | ||||||
| Retained deficit | (162,384 | ) | (149,502 | ) | ||||
| Treasury stock, at cost 494 shares in 2019 and 2018 | (3,430 | ) | (3,430 | ) | ||||
| Total shareholders equity | 23,043 | 35,265 | ||||||
| Total liabilities and shareholders equity | $ | 1,328,036 | $ | 1,149,144 |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited, in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenues: | ||||||||||||||||
| Resident revenue | $ | 113,126 | $ | 114,627 | $ | 227,302 | $ | 229,270 | ||||||||
| Expenses: | ||||||||||||||||
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) | 74,430 | 72,968 | 149,835 | 144,668 | ||||||||||||
| General and administrative expenses | 6,642 | 5,712 | 14,212 | 11,734 | ||||||||||||
| Facility lease expense | 14,238 | 14,224 | 28,473 | 28,438 | ||||||||||||
| Stock-based compensation expense | 1,638 | 2,559 | 660 | 4,508 | ||||||||||||
| Depreciation and amortization expense | 15,975 | 15,521 | 31,949 | 30,893 | ||||||||||||
| Total expenses | 112,923 | 110,984 | 225,129 | 220,241 | ||||||||||||
| Income from operations | 203 | 3,643 | 2,173 | 9,029 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 57 | 38 | 114 | 75 | ||||||||||||
| Interest expense | (12,602 | ) | (12,615 | ) | (25,166 | ) | (25,066 | ) | ||||||||
| Write-off of deferred loan costs and prepayment premiums | (97 | ) | (97 | ) | ||||||||||||
| Write-down of assets held for sale | (2,340 | ) | ||||||||||||||
| Gain on disposition of assets, net | 38 | 38 | 3 | |||||||||||||
| Other (expense) income | (16 | ) | 1 | 7 | 2 | |||||||||||
| Loss before provision for income taxes | (12,417 | ) | (8,933 | ) | (25,271 | ) | (15,957 | ) | ||||||||
| Provision for income taxes | (117 | ) | (127 | ) | (247 | ) | (259 | ) | ||||||||
| Net loss | $ | (12,534 | ) | $ | (9,060 | ) | $ | (25,518 | ) | $ | (16,216 | ) | ||||
| Per share data: | ||||||||||||||||
| Basic net loss per share | $ | (0.41 | ) | $ | (0.30 | ) | $ | (0.85 | ) | $ | (0.55 | ) | ||||
| Diluted net loss per share | $ | (0.41 | ) | $ | (0.30 | ) | $ | (0.85 | ) | $ | (0.55 | ) | ||||
| Weighted average shares outstanding basic | 30,279 | 29,831 | 30,191 | 29,730 | ||||||||||||
| Weighted average shares outstanding diluted | 30,279 | 29,831 | 30,191 | 29,730 | ||||||||||||
| Comprehensive loss | $ | (12,534 | ) | $ | (9,060 | ) | $ | (25,518 | ) | $ | (16,216 | ) |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Six Months Ended June 30, | ||||||||
| 2019 | 2018 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | (25,518 | ) | $ | (16,216 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 31,949 | 30,893 | ||||||
| Amortization of deferred financing charges | 857 | 859 | ||||||
| Amortization of deferred lease costs and lease intangibles | 424 | |||||||
| Amortization of lease incentives | (856 | ) | ||||||
| Deferred income | 209 | (344 | ) | |||||
| Operating lease expense adjustment | (2,457 | ) | ||||||
| Write-off of deferred loan costs and prepayment premiums | 97 | |||||||
| Write-down of assets held for sale | 2,340 | |||||||
| Gain on disposition of assets, net | (38 | ) | (3 | ) | ||||
| Provision for bad debts | 1,613 | 1,454 | ||||||
| Stock-based compensation expense | 660 | 4,508 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,744 | ) | (3,080 | ) | ||||
| Property tax and insurance deposits | 2,233 | 3,332 | ||||||
| Prepaid expenses and other | (2,251 | ) | (294 | ) | ||||
| Other assets | (745 | ) | 407 | |||||
| Accounts payable | (7,083 | ) | (1,267 | ) | ||||
| Accrued expenses | 1,207 | (2,404 | ) | |||||
| Other liabilities | (1,908 | ) | ||||||
| Federal and state income taxes receivable/payable | (227 | ) | (211 | ) | ||||
| Deferred resident revenue | (336 | ) | (97 | ) | ||||
| Customer deposits | (15 | ) | (89 | ) | ||||
| Net cash provided by operating activities | 751 | 15,108 | ||||||
| Investing Activities | ||||||||
| Capital expenditures | (7,812 | ) | (10,802 | ) | ||||
| Proceeds from disposition of assets | 4,888 | 4 | ||||||
| Net cash used in investing activities | (2,924 | ) | (10,798 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from notes payable | 5,268 | 1,740 | ||||||
| Repayments of notes payable | (11,905 | ) | (11,167 | ) | ||||
| Cash payments for capital lease and financing obligations | (538 | ) | (1,534 | ) | ||||
| Deferred financing charges paid | (221 | ) | (46 | ) | ||||
| Net cash used in financing activities | (7,396 | ) | (11,007 | ) | ||||
| Decrease in cash and cash equivalents | (9,569 | ) | (6,697 | ) | ||||
| Cash and cash equivalents and restricted cash at beginning of period | 44,320 | 31,024 | ||||||
| Cash and cash equivalents and restricted cash at end of period | $ | 34,751 | $ | 24,327 | ||||
| Supplemental Disclosures | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 23,509 | $ | 24,121 | ||||
| Income taxes | $ | 505 | $ | 543 |
Capital Senior Living Corporation
Supplemental Information