Full Press Release Details
CAPITAL SENIOR LIVING CORPORATION
REPORTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS
DALLAS (BUSINESS WIRE) February 25, 2016 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 fourth quarter and full year 2015. Company highlights for the fourth quarter and full year include:
Operating and Financial Summary (all amounts in this operating and financial summary exclude three communities that are undergoing
repositioning, lease-up or significant renovation and conversion, unless otherwise noted; also, see Non-GAAP Financial Measures below)
We continue to demonstrate the advantages of our
clear and differentiated strategy to drive superior shareholder value as we successfully execute on our multiple avenues of growth, said Lawrence A. Cohen, Chief Executive Officer of the Company. Our focused execution produced growth in
all of our key metrics in the fourth quarter, including revenue, occupancy, average monthly rent, NOI, Adjusted EBITDAR and Adjusted CFFO as compared to the prior year. Our conversions of independent living units to assisted living and memory care
units also continue to show timely progress.
Complementing this growth is a robust acquisition pipeline that allows us to increase 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 five such communities in the first two months of 2016, and we continue to
pursue additional opportunities.
We believe that we are well positioned to create long-term shareholder value as a larger company with scale,
competitive advantages and a substantially all private-pay business model in a highly-fragmented industry that benefits from long-term demographics, need-driven demand, limited competitive new supply in our local markets, a strong housing market and
Recent Investment Activity
Combined highlights of the transactions include:
The communities were
financed with an aggregate of approximately $74.3 million of non-recourse 10-year mortgage debt at an average fixed interest rate of 4.35%.
Financial Results - Fourth Quarter
For the fourth quarter of 2015, the Company reported revenue of $107.5 million, compared to revenue of $100.2 million in the fourth quarter of 2014, an
increase of 7.4%. Excluding the revenue of the five communities the Company has sold since the fourth quarter of 2014 from all appropriate periods, revenues increased $10.3 million, or 11.1%, in the fourth quarter of 2015 as compared to the
fourth quarter of 2014, mostly due to the acquisition of 9 communities during 2015. Operating expenses for the fourth quarter of 2015 were $65.1 million, an increase of $5.4 million from the fourth quarter of 2014, also primarily due to the
acquisitions made during 2015.
Revenue for consolidated communities excluding the three communities undergoing repositioning, lease-up or significant
renovation and conversion increased 7.3% in the fourth quarter of 2015 as compared to the fourth quarter of 2014. Net operating income for these communities increased 4.7% in the fourth quarter of 2015 as compared to the fourth quarter of
2014. These increases were achieved with fewer units available for lease in the fourth quarter of 2015 than the fourth quarter of 2014 due to conversion and refurbishment projects currently in progress at certain communities.
General and administrative expenses for the fourth quarter of 2015 were $4.9 million, which includes $0.9 million of transaction and other one-time
costs. Excluding transaction and other one-time costs from both periods, general and administrative expenses decreased $0.2 million in the fourth quarter of 2015 as compared to the fourth quarter of 2014. As a percentage of revenues under
management, general and administrative expenses, excluding transaction and other one-time costs, were 3.7% in the fourth quarter of 2015 as compared to 4.1% in the fourth quarter of 2014.
The Company s Non-GAAP financial measures exclude three communities that are undergoing repositioning, lease-up of higher-licensed units or significant
renovation and conversion (see Non-GAAP Financial Measures below). One community excluded in previous quarters reached 90% stabilized occupancy during the fourth quarter of 2015 and is now included in the Company s Non-GAAP
financial results. 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 fourth quarter of 2015 was approximately $38.2 million, an increase of $2.2 million, or 6.2%, from the fourth quarter of
2014. This does not include EBITDAR of $1.0 million related to three communities undergoing repositioning, lease-up or significant renovation and conversion. The Adjusted EBITDAR margin for the fourth quarter of 2015 was 37.1%.
The Company recorded a net loss of $6.0 million, or $0.21 per share, in the fourth quarter of 2015. Excluding non-recurring or non-economic items
final page of this release, the Company s adjusted net income was $0.8 million, or $0.03 per share, in the fourth quarter of 2015. Adjusted CFFO was $12.8 million, or $0.45 per share, in the
fourth quarter of 2015, a 2.9% increase from the fourth quarter of the prior year. On a comparable basis, Adjusted CFFO was $12.4 million, or $0.44 per share, in the fourth quarter of 2014.
Financial Results Full Year
reported 2015 revenue of $412.2 million compared to revenue of $383.9 million in 2014, an increase of $28.3 million, or 7.4%. 2014 revenue included $3.1 million in community reimbursement revenue and affiliated management revenue associated
with three communities formerly held as a joint venture. Resident and healthcare revenue increased 8.4% versus the prior year. Operating expenses were $248.7 million in 2015, an increase of $18.2 million.
General and administrative expenses in 2015 were $20.4 million compared to $19.6 million in 2014. Excluding transaction and other one-time costs, general
and administrative expenses as a percentage of revenues under management were approximately 4.3% in 2015 compared to 4.6% in 2014.
increased 8.9% to $144.5 million in 2015, an increase of $11.9 million. The Company s Adjusted EBITDAR margin was 36.6% in 2015, a record-high annual margin for the company and a 70 basis point improvement from 2014. Adjusted CFFO for 2015 was
$47.0 million, or $1.64 per share, compared to $1.45 per share in 2014. The Company s net loss for 2015 was $14.3 million, or $0.50 per share. After adjusting for the non-recurring or non-economic items reconciled on the final page of this
release, the Company earned adjusted net income of $2.1 million, or $0.07 per share.
Operating Activities
Same-community results exclude the three 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 fourth quarter of 2015 increased 1.8% versus the fourth quarter of 2014. Due to
conversion and refurbishment projects currently in progress at certain communities, fewer units were available for rent in the fourth quarter of this year than the fourth quarter of last year. With a like number of units available in both
years, same-community revenue would have increased approximately 3.2% in the fourth quarter of 2015 as compared to the fourth quarter of the prior year.
Same-community expenses increased 3.2% from the fourth quarter of the prior year. Labor costs, including benefits, increased 4.0%, primarily due to a
compensation credit in the fourth quarter of 2014 and an increase in the number of employees with healthcare coverage in the fourth quarter of 2015 as compared to the fourth quarter of 2014
related to the continued implementation of the Affordable Care Act. Excluding these items, labor costs increased 2.9% and total same-community expenses increased 2.5%. The Company s two other significant expense categories, food and utilities,
both decreased in the fourth quarter of 2015 as compared to the fourth quarter of 2014; food costs decreased 0.8% and utilities decreased 5.9%. Same-community net operating income increased 0.3% in the fourth quarter of 2015 as compared to the
fourth quarter of 2014. With a like number of units available in both years and excluding the unusual labor items noted above, same-community net operating income would have increased approximately 3.2% from the fourth quarter of the prior year.
Capital expenditures for the fourth quarter of 2015 were $15.1 million, representing approximately $13.6 million of investment spending and approximately
$1.5 million of recurring capital expenditures. Spending in 2015 for recurring capital expenditures equaled $5.5 million, or approximately $475 per unit.
The Company ended the quarter with
$69.2 million of cash and cash equivalents, including restricted cash, an increase of $21.4 million since September 30, 2015. During the fourth quarter of 2015, the Company invested $10.0 million of cash as equity to complete the acquisition of
one community and spent $18.8 million on capital improvements, which includes $3.7 million related to lease incentives for certain tenant leasehold improvements for which the Company expects to be reimbursed by its lessors. The Company received
reimbursements totaling $2.5 million in the fourth quarter and expects to receive the remainder as the projects are completed.
As of December 31, 2015,
the Company financed its owned communities with mortgages totaling $763.4 million at interest rates averaging 4.6%. All of the Company s debt is at fixed interest rates, except for one bridge loan totaling approximately $11.8 million at
December 31, 2015, which was at an average variable rate of approximately 4.65% in the fourth quarter of 2015.
The Company s cash on hand and cash
flow from operations are expected to be sufficient for working capital, prudent reserves, share repurchases and the equity needed to fund the Company s acquisition, conversion and renovation programs.
Q4 2015 Conference Call Information
will host a conference call with senior management to discuss the Company s fourth quarter 2015 financial results. The call will be held on Thursday, February 25, 2016 at 5:00 p.m. Eastern Time. The call-in number is 913-312-1475, confirmation
code 3113420. 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 February 25, 2016 at 8:00 p.m. Eastern Time, until March 5, 2016 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 3113420. The conference call will also be made
available for playback via the Company s corporate website, www.capitalsenior.com, beginning February 26, 2016.
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 126 senior living communities in
geographically concentrated regions with an aggregate capacity of approximately 15,800 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)
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| (In thousands, except per share data) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 56,087 | $ | 39,209 | ||||
| Restricted cash | 13,159 | 12,241 | ||||||
| Accounts receivable, net | 9,252 | 5,903 | ||||||
| Accounts receivable from affiliates | 2 | 5 | ||||||
| Deferred taxes | 460 | |||||||
| Assets held for sale | 35,761 | |||||||
| Property tax and insurance deposits | 14,398 | 12,198 | ||||||
| Prepaid expenses and other | 4,370 | 6,797 | ||||||
| Total current assets | 97,268 | 112,574 | ||||||
| Property and equipment, net | 890,572 | 747,613 | ||||||
| Other assets, net | 31,193 | 31,183 | ||||||
| Total assets | $ | 1,019,033 | $ | 891,370 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,362 | $ | 2,540 | ||||
| Accounts payable to affiliates | 7 | |||||||
| Accrued expenses | 34,300 | 32,154 | ||||||
| Notes payable of assets held for sale | 14,847 | |||||||
| Current portion of notes payable, net of deferred loan costs | 13,634 | 32,538 | ||||||
| Current portion of deferred income | 16,059 | 14,603 | ||||||
| Current portion of capital lease and financing obligations | 1,257 | 1,054 | ||||||
| Federal and state income taxes payable | 111 | 219 | ||||||
| Customer deposits | 1,819 | 1,499 | ||||||
| Total current liabilities | 70,542 | 99,461 | ||||||
| Deferred income | 13,992 | 15,949 | ||||||
| Capital lease and financing obligations, net of current portion | 38,835 | 40,016 | ||||||
| Deferred taxes | 460 | |||||||
| Other long-term liabilities | 4,969 | 1,426 | ||||||
| Notes payable, net of deferred loan costs and current portion | 754,949 | 592,884 | ||||||
| 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 29,539 and 29,097 in 2015 and 2014, respectively | 299 | 294 | ||||||
| Additional paid-in capital | 159,920 | 151,069 | ||||||
| Retained (deficit) earnings | (23,539 | ) | (9,255 | ) | ||||
| Treasury stock, at cost 350 shares in 2015 and 2014 | (934 | ) | (934 | ) | ||||
| Total shareholders equity | 135,746 | 141,174 | ||||||
| Total liabilities and shareholders equity | $ | 1,019,033 | $ | 891,370 |
See accompanying notes to consolidated financial statements.
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands, except per share data)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenues: | ||||||||||||||||
| Resident and health care revenue | $ | 107,529 | $ | 100,160 | $ | 412,177 | $ | 380,400 | ||||||||
| Affiliated management services revenue | 415 | |||||||||||||||
| Community reimbursement revenue | 3,110 | |||||||||||||||
| Total revenues | 107,529 | 100,160 | 412,177 | 383,925 | ||||||||||||
| Expenses: | ||||||||||||||||
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) | 65,122 | 59,744 | 248,736 | 230,495 | ||||||||||||
| General and administrative expenses | 4,869 | 4,485 | 20,351 | 19,622 | ||||||||||||
| Facility lease expense | 15,338 | 14,808 | 61,213 | 59,332 | ||||||||||||
| Provision for bad debts | 319 | 200 | 1,192 | 717 | ||||||||||||
| Stock-based compensation expense | 2,088 | 1,586 | 8,833 | 7,262 | ||||||||||||
| Depreciation and amortization | 14,032 | 13,880 | 53,017 | 49,487 | ||||||||||||
| Community reimbursement expense | 3,110 | |||||||||||||||
| Total expenses | 101,768 | 94,703 | 393,342 | 370,025 | ||||||||||||
| Income from operations | 5,761 | 5,457 | 18,835 | 13,900 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 17 | 12 | 53 | 52 | ||||||||||||
| Interest expense | (9,710 | ) | (8,476 | ) | (35,732 | ) | (31,261 | ) | ||||||||
| Write-off of deferred loan costs and prepayment premiums | (1,793 | ) | (989 | ) | (2,766 | ) | (7,968 | ) | ||||||||
| Joint venture equity investment valuation gain | 1,519 | |||||||||||||||
| (Loss) Gain on disposition of assets, net | (22 | ) | 795 | 6,225 | 784 | |||||||||||
| Equity in earnings of unconsolidated joint ventures, net | 105 | |||||||||||||||
| Write-down of assets held for sale | (561 | ) | (561 | ) | ||||||||||||
| Other income | 1 | 1 | 23 | |||||||||||||
| Loss before provision for income taxes | (5,747 | ) | (3,761 | ) | (13,384 | ) | (23,407 | ) | ||||||||
| Provision for income taxes | (203 | ) | (140 | ) | (900 | ) | (719 | ) | ||||||||
| Net loss | $ | (5,950 | ) | $ | (3,901 | ) | $ | (14,284 | ) | $ | (24,126 | ) | ||||
| Per share data: | ||||||||||||||||
| Basic net loss per share | $ | (0.21 | ) | $ | (0.13 | ) | $ | (0.50 | ) | $ | (0.83 | ) | ||||
| Diluted net loss per share | $ | (0.21 | ) | $ | (0.13 | ) | $ | (0.50 | ) | $ | (0.83 | ) | ||||
| Weighted average shares outstanding basic | 28,749 | 28,387 | 28,688 | 28,301 | ||||||||||||
| Weighted average shares outstanding diluted | 28,749 | 28,387 | 28,688 | 28,301 | ||||||||||||
| Comprehensive loss | $ | (5,950 | ) | $ | (3,901 | ) | $ | (14,284 | ) | $ | (24,126 | ) |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS