Full Press Release Details
CAPITAL SENIOR LIVING CORPORATION
REPORTS SECOND QUARTER 2015 RESULTS
DALLAS (BUSINESS WIRE) August 4, 2015 Capital Senior Living Corporation (the Company ) (NYSE:CSU), one of the
nation s largest operators of senior living communities, today announced operating and financial results for the second quarter of 2015. Company highlights for the second quarter include:
Operating and Financial Summary (all amounts in this operating and financial summary exclude four communities that are undergoing repositioning,
lease-up or significant renovation and conversion, unless otherwise noted; also, see Non-GAAP Financial Measures below)
We are successfully executing on our strategic plan which resulted in significant growth during the
second quarter in all of our key metrics, including revenue, occupancy, average monthly rent, NOI, Adjusted EBITDAR and Adjusted CFFO as compared to the prior year, said Lawrence A. Cohen, Chief Executive Officer of the Company. Our
same-community NOI grew 4.7%, our Adjusted CFFO increased 22.3% and we reported a record-high second quarter Adjusted EBITDAR margin of 36.8%. We were particularly pleased with the second quarter growth in our same-community occupancy, which
increased 60 basis points from the first quarter of 2015 and 40 basis points from the second quarter of 2014. We continue to see limited new supply and construction in our local markets. Also, our conversions of independent living units to assisted
living and memory care units continue to show timely progress.
Complementing this growth is a robust pipeline that 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 have closed on
six such communities so far this year, and we continue to pursue additional opportunities.
We believe that 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 in our local markets, a strong housing market and an improving economy.
Recent Investment Activity
highlights of the transactions include:
The communities were
financed with an aggregate of approximately $20.3 million of non-recourse 10-year mortgage debt at an average fixed interest rate of 4.68%.
Highlights of the transaction include:
The community was financed
with approximately $9.9 million of non-recourse 10-year mortgage debt at an average fixed rate of 4.25%.
Financial Results Second Quarter
second quarter of 2015, the Company reported revenue of $101.6 million, compared to revenue of $93.4 million in the second quarter of 2014, an increase of 8.7%. Resident and healthcare revenue increased from the second quarter of the prior year by
approximately $10.0 million, or 10.9%, mostly due to the acquisition of 12 communities during or after the second quarter of 2014. As expected, community reimbursement revenue and affiliated management revenue decreased approximately $1.8 million in
the second quarter of 2015 as compared to the second quarter of 2014. The acquisition of three Ohio communities in which the Company previously held a 10% interest as a joint venture on June 30, 2014, resulted in the elimination of these two
revenue items as well as community reimbursement expense.
Operating expenses for the second quarter of 2015 were $60.7 million, an increase of $5.1
million from the second quarter of 2014, primarily due to the acquisition of 12 communities during or after the second quarter of 2014.
administrative expenses for the second quarter of 2015 were $5.7 million, which includes $0.8 million of transaction and other one-time costs. Excluding transaction and other one-time costs, general and administrative expenses increased $0.9 million
in the second quarter of 2015 as compared to the second quarter of 2014. As a percentage of revenues under management, general and administrative expenses, excluding transaction and other one-time costs, were 4.8% in the second quarter of 2015 as
compared to 4.2% in the second quarter of 2014.
The Company s Non-GAAP financial measures exclude four communities that are undergoing
repositioning, lease-up of higher-licensed units or significant renovation and conversion (see Non-GAAP Financial Measures below). Also, as previously noted, beginning in 2015, the Company no longer includes the change in prepaid
resident rent as a component of Adjusted CFFO as it is a non-economic timing item.
Adjusted EBITDAR for the second quarter of 2015 was approximately
$35.7 million, an increase of $3.5 million, or 11.0%, from the second quarter of 2014. This does not include EBITDAR of $0.9 million related to four communities undergoing repositioning, lease-up or significant renovation and conversion. The
Adjusted EBITDAR margin for the second quarter of 2015 was 36.8%, which is a record-high second quarter margin for the Company and an increase of 120 basis points from the second quarter 2014 margin of 35.6%.
The Company recorded a net loss of $5.2 million in the second quarter. Excluding non-recurring or
non-economic items reconciled on the final page of this release, the Company s adjusted net income was $0.2 million, or $0.01 per share, in the second quarter of 2015. Adjusted CFFO was $11.7 million, or $0.41 per share, in the second quarter
of 2015, a 22.3% increase from the second quarter of the prior year. On a comparable basis, Adjusted CFFO was $9.6 million, or $0.34 per share, in the second quarter of 2014.
Operating Activities
Same-community results
exclude the four communities previously noted that are undergoing repositioning, lease-up or significant renovation and conversion, and transaction and other one-time costs.
Same-community revenue in the second quarter of 2015 increased 2.1% versus the second quarter of 2014. Same-community expenses decreased 0.2% from the second
quarter of the prior year. Labor costs, including benefits, increased 0.6%, while food costs decreased 1.5% and utilities decreased 3.3% in the second quarter of 2015 as compared to the second quarter of the prior year. Same-community net operating
income increased 4.7% in the second quarter of 2015 as compared to the second quarter of 2014.
Capital expenditures for the second quarter of 2014 were
$8.0 million, representing approximately $6.6 million of investment spending and approximately $1.4 million of recurring capital expenditures. If annualized, spending for recurring capital expenditures was approximately $495 per unit.
The Company ended the quarter with
$51.7 million of cash and cash equivalents, including restricted cash, a decrease of $11.7 million since March 31, 2015. During the second quarter of 2015, the Company invested $6.6 million of cash as equity to complete the acquisitions of
three communities and spent $8.0 million on capital improvements.
As of June 30, 2015, the Company financed its owned communities with mortgages
totaling $679.8 million at interest rates averaging 4.6%. All of the Company s debt is at fixed interest rates, except for two bridge loans totaling approximately $20.3 million at June 30, 2015, at variable rates averaging 4.3%. The
Company expects to refinance one of the bridge loans that matures during the fourth quarter of 2015 with 10-year fixed-rate debt during the third quarter of 2015. Otherwise, the Company has no mortgage maturities before the second quarter of 2017.
The Company s cash on hand and cash flow from operations are expected to be sufficient for working
capital, prudent reserves and the equity needed to fund the Company s acquisition program.
Q2 2015 Conference Call Information
The Company will host a conference call with senior management to discuss the Company s second quarter 2015 financial results. The call will be held on
Tuesday, August 4, 2015, at 5:00 p.m. Eastern Time. The call-in number is 913-312-0653, confirmation code 2595372. 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 August 4, 2015 at 8:00 p.m. Eastern Time, until August 13, 2015 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 2595372. The conference call will also be made available
for playback via the Company s corporate website, www.capitalsenior.com, beginning August 5, 2015.
Non-GAAP Financial Measures
Adjusted EBITDAR, Adjusted EBITDAR Margin, Adjusted Net Income and Adjusted CFFO are financial measures of operating performance 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 amounts 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. The Company believes that
these non-GAAP measures are useful in identifying trends in day-to-day performance because they exclude items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal operating
performance. In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in the senior living industry. The Company strongly urges you to review the reconciliation of net income
from operations to Adjusted EBITDAR and Adjusted EBITDAR Margin and the reconciliation of net loss to Adjusted Net Income and Adjusted CFFO, along with the Company s consolidated balance sheets, statements of operations, and statements of cash
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. The Company s 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. The Company operates 119 senior living communities in geographically concentrated regions with an aggregate capacity of approximately 15,200 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,
refinancing, community sales, 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.
For information about Capital Senior Living, visit www.capitalsenior.com.
Contact Carey P. Hendrickson, Chief Financial Officer, at 972-770-5600 for more information.
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
| June 30, 2015 | December 31, 2014 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 39,403 | $ | 39,209 | ||||
| Restricted cash | 12,251 | 12,241 | ||||||
| Accounts receivable, net | 7,453 | 5,903 | ||||||
| Accounts receivable from affiliates | 3 | 5 | ||||||
| Federal and state income taxes receivable | 310 | |||||||
| Deferred taxes | 460 | |||||||
| Assets held for sale | 35,761 | |||||||
| Property tax and insurance deposits | 10,698 | 12,198 | ||||||
| Prepaid expenses and other | 5,418 | 6,797 | ||||||
| Total current assets | 75,536 | 112,574 | ||||||
| Property and equipment, net | 811,052 | 747,613 | ||||||
| Other assets, net | 35,386 | 37,514 | ||||||
| Total assets | $ | 921,974 | $ | 897,701 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,055 | $ | 2,540 | ||||
| Accounts payable to affiliates | 7 | |||||||
| Accrued expenses | 29,934 | 32,154 | ||||||
| Notes payable of assets held for sale | 15,076 | |||||||
| Current portion of notes payable | 23,022 | 33,664 | ||||||
| Current portion of deferred income and resident revenue | 13,844 | 14,603 | ||||||
| Current portion of capital lease and financing obligations | 1,074 | 1,054 | ||||||
| Federal and state income taxes payable | 219 | |||||||
| Customer deposits | 1,451 | 1,499 | ||||||
| Total current liabilities | 71,380 | 100,816 | ||||||
| Deferred income | 14,996 | 15,949 | ||||||
| Capital lease and financing obligations, net of current portion | 39,563 | 40,016 | ||||||
| Deferred taxes | 460 | |||||||
| Other long-term liabilities | 1,359 | 1,426 | ||||||
| Notes payable, net of current portion | 660,172 | 597,860 | ||||||
| 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 29,502 and 29,097 in 2015 and 2014, respectively | 299 | 294 | ||||||
| Additional paid-in capital | 155,599 | 151,069 | ||||||
| Retained deficit | (20,460 | ) | (9,255 | ) | ||||
| Treasury stock, at cost 350 shares | (934 | ) | (934 | ) | ||||
| Total shareholders equity | 134,504 | 141,174 | ||||||
| Total liabilities and shareholders equity | $ | 921,974 | $ | 897,701 |
See accompanying notes to unaudited consolidated financial statements.
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, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues: | ||||||||||||||||
| Resident and healthcare revenue | $ | 101,588 | $ | 91,600 | $ | 200,228 | $ | 181,774 | ||||||||
| Affiliated management services revenue | 207 | 415 | ||||||||||||||
| Community reimbursement revenue | 1,618 | 3,093 | ||||||||||||||
| Total revenues | 101,588 | 93,425 | 200,228 | 185,282 | ||||||||||||
| Expenses: | ||||||||||||||||
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) | 60,707 | 55,585 | 120,838 | 111,276 | ||||||||||||
| General and administrative expenses | 5,718 | 4,651 | 10,731 | 9,622 | ||||||||||||
| Facility lease expense | 15,298 | 14,889 | 30,554 | 29,683 | ||||||||||||
| Stock-based compensation expense | 2,717 | 2,717 | 4,444 | 4,077 | ||||||||||||
| Depreciation and amortization | 13,468 | 10,816 | 26,263 | 21,767 | ||||||||||||
| Community reimbursement expense | 1,618 | 3,093 | ||||||||||||||
| Total expenses | 97,908 | 90,276 | 192,830 | 179,518 | ||||||||||||
| Income from operations | 3,680 | 3,149 | 7,398 | 5,764 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 11 | 16 | 24 | 28 | ||||||||||||
| Interest expense | (8,673 | ) | (7,393 | ) | (17,028 | ) | (14,530 | ) | ||||||||
| Write-off of deferred loan costs and prepayment premiums | (6,979 | ) | (871 | ) | (6,979 | ) | ||||||||||
| Joint venture equity investment valuation gain | 1,519 | 1,519 | ||||||||||||||
| Loss on disposition of assets, net | (65 | ) | (14 | ) | (171 | ) | (10 | ) | ||||||||
| Equity in earnings of unconsolidated joint ventures, net | 64 | 105 | ||||||||||||||
| Other income | 9 | 1 | 17 | |||||||||||||
| Loss before provision for income taxes | (5,047 | ) | (9,629 | ) | (10,647 | ) | (14,086 | ) | ||||||||
| Provision for income taxes | (119 | ) | (190 | ) | (558 | ) | (380 | ) | ||||||||
| Net loss | $ | (5,166 | ) | $ | (9,819 | ) | $ | (11,205 | ) | $ | (14,466 | ) | ||||
| Per share data: | ||||||||||||||||
| Basic net loss per share | $ | (0.18 | ) | $ | (0.34 | ) | $ | (0.38 | ) | $ | (0.50 | ) | ||||
| Diluted net loss per share | $ | (0.18 | ) | $ | (0.34 | ) | $ | (0.38 | ) | $ | (0.50 | ) | ||||
| Weighted average shares outstanding basic | 28,705 | 28,298 | 28,636 | 28,222 | ||||||||||||
| Weighted average shares outstanding diluted | 28,705 | 28,298 | 28,636 | 28,222 | ||||||||||||
| Comprehensive loss | $ | (5,166 | ) | $ | (9,819 | ) | $ | (11,205 | ) | $ | (14,466 | ) |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Six Months Ended June 30, | ||||||||
| 2015 | 2014 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | (11,205 | ) | $ | (14,466 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 26,263 | 21,767 | ||||||
| Amortization of deferred financing charges | 582 | 646 | ||||||
| Amortization of deferred lease costs and lease intangibles | 652 | 615 | ||||||
| Deferred income | (131 | ) | (109 | ) | ||||
| Write-off of deferred loan costs and prepayment premiums | 870 | 6,979 | ||||||
| Joint venture equity investment valuation gain | (1,519 | ) | ||||||
| Loss on disposition of assets, net | 171 | 10 | ||||||
| Equity in earnings of unconsolidated joint ventures | (105 | ) | ||||||
| Provision for bad debts | 544 | 372 | ||||||
| Stock-based compensation expense | 4,444 | 4,077 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,090 | ) | (1,554 | ) | ||||
| Accounts receivable from affiliates | 2 | 4 | ||||||
| Property tax and insurance deposits | 1,500 | 1,931 | ||||||
| Prepaid expenses and other | 1,379 | 2,143 | ||||||
| Other assets | 208 | (46 | ) | |||||
| Accounts payable | (492 | ) | (2,790 | ) | ||||
| Accrued expenses | (2,220 | ) | (2,726 | ) | ||||
| Federal and state income taxes receivable/payable | (529 | ) | (278 | ) | ||||
| Customer deposits | (48 | ) | 136 | |||||
| Deferred resident revenue | (1,581 | ) | 153 | |||||
| Net cash provided by operating activities | 18,319 | 15,240 | ||||||
| Investing Activities | ||||||||
| Capital expenditures | (13,540 | ) | (7,887 | ) | ||||
| Cash paid for acquisitions | (74,710 | ) | (98,180 | ) | ||||
| Proceeds from disposition of assets | 35,807 | 4 | ||||||
| Proceeds from SHPIII/CSL Transaction | 2,532 | |||||||
| Distributions from unconsolidated joint ventures | 102 | |||||||
| Net cash used in investing activities | (52,443 | ) | (103,429 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from notes payable | 102,332 | 231,122 | ||||||
| Repayments of notes payable | (66,315 | ) | (125,917 | ) | ||||
| Increase in restricted cash | (10 | ) | (12 | ) | ||||
| Cash payments for capital lease and financing obligations | (433 | ) | (391 | ) | ||||
| Cash proceeds from the issuance of common stock | 42 | 169 | ||||||
| Excess tax benefits on stock option exercised | 49 | (82 | ) | |||||
| Deferred financing charges paid | (1,347 | ) | (2,377 | ) | ||||
| Net cash provided by financing activities | 34,318 | 102,512 | ||||||
| Increase in cash and cash equivalents | 194 | 14,323 | ||||||
| Cash and cash equivalents at beginning of period | 39,209 | 13,611 | ||||||
| Cash and cash equivalents at end of period | $ | 39,403 | $ | 27,934 | ||||
| Supplemental Disclosures | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 16,112 | $ | 13,980 | ||||
| Income taxes | $ | 1,020 | $ | 695 |
Capital Senior Living Corporation
Supplemental Information
| Communities | Average Resident Capacity | Average Units | ||||||||||||||||||||||
| Q2 15 | Q2 14 | Q2 15 | Q2 14 | Q2 15 | Q2 14 | |||||||||||||||||||
| Portfolio Data | ||||||||||||||||||||||||
| I. Community Ownership / Management | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 68 | 63 | 8,744 | 8,363 | 6,608 | 6,626 | ||||||||||||||||||
| Leased | 50 | 50 | 6,333 | 6,333 | 4,907 | 5,000 | ||||||||||||||||||
| Total | 118 | 113 | 15,077 | 14,696 | 11,515 | 11,626 | ||||||||||||||||||
| Independent living | 7,090 | 7,597 | 5,512 | 6,191 | ||||||||||||||||||||
| Assisted living | 7,987 | 7,099 | 6,003 | 5,435 | ||||||||||||||||||||
| Total | 15,077 | 14,696 | 11,515 | 11,626 | ||||||||||||||||||||
| II. Percentage of Operating Portfolio | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 57.6 | % | 55.8 | % | 58.0 | % | 56.9 | % | 57.4 | % | 57.0 | % | ||||||||||||
| Leased | 42.4 | % | 44.2 | % | 42.0 | % | 43.1 | % | 42.6 | % | 43.0 | % | ||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
| Independent living | 47.0 | % | 51.7 | % | 47.9 | % | 53.3 | % | ||||||||||||||||
| Assisted living | 53.0 | % | 48.3 | % | 52.1 | % | 46.7 | % | ||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Capital Senior Living Corporation
Supplemental Information (excludes communities being repositioned/leased up)
Selected Operating Results