Full Press Release Details
CAPITAL SENIOR LIVING CORPORATION
REPORTS FIRST QUARTER 2016 RESULTS
(BUSINESS WIRE) May 3, 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
first quarter 2016. Company highlights for the first quarter 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 first quarter as compared to the prior year, including revenue, occupancy, average monthly rent, NOI, Adjusted EBITDAR and Adjusted CFFO. 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 expect to close on the acquisition of three communities during the second
quarter 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 a growing economy.
Recent Investment Activity
of the transactions include:
The communities were
financed with an aggregate of approximately $46.3 million of non-recourse 10-year mortgage debt at an average fixed interest rate of 4.4%.
Financial Results - First Quarter
For the first quarter of 2016, the Company reported revenue of $109.2 million, compared to revenue of $98.6 million in the first quarter of 2015, an increase
of 10.7%. Excluding the revenue of the five communities the Company sold during or since the first quarter of 2015 from all appropriate periods, revenues increased $12.0 million, or 12.3%, in the first quarter of 2016 as compared to the first
quarter of 2015, mostly due to the acquisition of 14 communities during 2015 and the first quarter of 2016.
Operating expenses for the first
quarter of 2016 were $66.5 million, an increase of $6.4 million from the first quarter of 2015, also primarily due to the acquisitions made during 2015 and the first quarter of 2016.
Revenue for consolidated communities excluding the three communities undergoing repositioning, lease-up or significant renovation and conversion increased
10.7% in the first quarter of 2016 as compared to the first quarter of 2015.
Net operating income for these communities increased 11.7% in the first
quarter of 2016 as compared to the first quarter of 2015. These increases were achieved with fewer units available for lease in the first quarter of 2016 than the first quarter of 2015, exclusive of acquisitions, due to conversion and
refurbishment projects currently in progress at certain communities.
General and administrative expenses for the first quarter of 2016 were $6.2 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 increased $0.8 million in the first quarter of 2016 as compared to the
first quarter of 2015, $0.7 million of which was due to higher medical claims expense. As a percentage of revenues under management, general and administrative expenses, excluding transaction and other one-time costs, were 4.9% in the first
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).
Adjusted EBITDAR for the first quarter of 2016 was
approximately $37.3 million, an increase of $3.2 million, or 9.3%, from the first quarter of 2015. This does not include EBITDAR of $0.8 million related to three communities undergoing repositioning, lease-up or significant renovation and
conversion. The Adjusted EBITDAR margin for the first quarter of 2016 was 35.6%.
Adjusted CFFO was $11.7 million, or $0.41 per share, in the first
quarter of 2016, an 11.0% increase from $10.5 million, or $0.37 per share, in the first quarter of the prior year.
The Company recorded a net loss of
$6.0 million, or $0.21 per share, in the first quarter of 2016. Excluding non-recurring or non-economic items reconciled on the final page of this release, the Company s adjusted net loss was $0.8 million, or $0.03 per share, in the first
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 first quarter of 2016 increased 2.3% versus the first quarter of
2015. Due to conversion and refurbishment projects currently in progress at certain communities, fewer units were available for rent in the first quarter of this year than the first quarter of last year. With a like number of units
available in both years, same-community revenue would have increased approximately 3.5% in the first quarter of 2016 as compared to the first quarter of the prior year.
Same-community expenses increased 1.4% from the first quarter of the prior year. Labor costs, including benefits, increased 2.8% and food costs increased
0.9%, while utilities decreased 9.0%, all as compared to the first quarter of 2015. Same-community net operating income increased 3.7% in the first quarter of 2016 as compared to the first quarter of 2015. With a like number of units
available in both years, same-community net operating income would have increased approximately 5.8% from the first quarter of the prior year.
expenditures for the first quarter of 2016 were $13.8 million, representing approximately $12.5 million of investment spending and approximately $1.3 million of recurring capital expenditures. If annualized, spending for recurring capital
expenditures was approximately $430 per unit.
The Company ended the quarter with $45.0 million of cash and cash equivalents, including restricted cash, a decrease of $24.2 million since December 31,
2015. During the first quarter of 2016, the Company invested $18.1 million of cash as equity to complete the acquisition of three communities and spent $13.8 million on capital improvements, which includes $2.3 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 $0.9 million in the first quarter for capital improvements and expects to receive
additional reimbursements as the remaining projects are completed.
As of March 31, 2016, the Company financed its owned communities with mortgages
totaling $818.3 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 March 31, 2016, which matures in the third quarter of 2017. The
earliest maturity date for the Company s fixed-rate debt is in 2021.
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.
Q1 2016 Conference Call Information
will host a conference call with senior management to discuss the Company s first quarter 2016 financial results. The call will be held on Tuesday, May 3, 2016 at 5:00 p.m. Eastern Time. The call-in number is 913-312-1427, confirmation code
9231614. 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 3, 2016 at
8:00 p.m. Eastern Time, until May 12, 2016 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 9231614. The conference call will also be made available for playback via the Company s corporate
website, www.capitalsenior.com, beginning May 4, 2016.
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 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
Contact Carey P. Hendrickson, Chief Financial Officer, at 972-770-5600 for more information.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
| March 31, | December 31, | |||||||
| 2016 | 2015 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 31,808 | $ | 56,087 | ||||
| Restricted cash | 13,163 | 13,159 | ||||||
| Accounts receivable, net | 10,118 | 9,254 | ||||||
| Property tax and insurance deposits | 9,967 | 14,398 | ||||||
| Prepaid expenses and other | 3,398 | 4,370 | ||||||
| Total current assets | 68,454 | 97,268 | ||||||
| Property and equipment, net | 953,352 | 890,572 | ||||||
| Other assets, net | 31,295 | 31,193 | ||||||
| Total assets | $ | 1,053,101 | $ | 1,019,033 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,575 | $ | 3,362 | ||||
| Accrued expenses | 32,962 | 34,300 | ||||||
| Current portion of notes payable, net of deferred loan costs | 13,480 | 13,634 | ||||||
| Current portion of deferred income and resident revenue | 15,628 | 16,059 | ||||||
| Current portion of capital lease and financing obligations | 1,201 | 1,257 | ||||||
| Federal and state income taxes payable | 289 | 111 | ||||||
| Customer deposits | 1,788 | 1,819 | ||||||
| Total current liabilities | 66,923 | 70,542 | ||||||
| Deferred income | 13,645 | 13,992 | ||||||
| Capital lease and financing obligations, net of current portion | 38,603 | 38,835 | ||||||
| Other long-term liabilities | 7,484 | 4,969 | ||||||
| Notes payable, net of deferred loan costs and current portion | 796,662 | 754,949 | ||||||
| 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 29,940 and 29,539 in 2016 and 2015, respectively | 304 | 299 | ||||||
| Additional paid-in capital | 162,433 | 159,920 | ||||||
| Retained deficit | (29,523 | ) | (23,539 | ) | ||||
| Treasury stock, at cost 494 and 350 shares in 2016 and 2015, respectively | (3,430 | ) | (934 | ) | ||||
| Total shareholders equity | 129,784 | 135,746 | ||||||
| Total liabilities and shareholders equity | $ | 1,053,101 | $ | 1,019,033 |
See accompanying notes to unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Revenues: | ||||||||
| Resident revenue | $ | 109,173 | $ | 98,640 | ||||
| Expenses: | ||||||||
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) | 66,523 | 60,131 | ||||||
| General and administrative expenses | 6,248 | 5,013 | ||||||
| Facility lease expense | 15,205 | 15,256 | ||||||
| Stock-based compensation expense | 2,513 | 1,727 | ||||||
| Depreciation and amortization expense | 14,531 | 12,795 | ||||||
| Total expenses | 105,020 | 94,922 | ||||||
| Income from operations | 4,153 | 3,718 | ||||||
| Other income (expense): | ||||||||
| Interest income | 16 | 13 | ||||||
| Interest expense | (9,985 | ) | (8,355 | ) | ||||
| Write-off of deferred loan costs and prepayment premiums | (871 | ) | ||||||
| Loss on disposition of assets, net | (31 | ) | (106 | ) | ||||
| Other income | 1 | |||||||
| Loss before provision for income taxes | (5,847 | ) | (5,600 | ) | ||||
| Provision for income taxes | (137 | ) | (439 | ) | ||||
| Net loss | $ | (5,984 | ) | $ | (6,039 | ) | ||
| Per share data: | ||||||||
| Basic net loss per share | $ | (0.21 | ) | $ | (0.21 | ) | ||
| Diluted net loss per share | $ | (0.21 | ) | $ | (0.21 | ) | ||
| Weighted average shares outstanding basic | 28,751 | 28,565 | ||||||
| Weighted average shares outstanding diluted | 28,751 | 28,565 | ||||||
| Comprehensive loss | $ | (5,984 | ) | $ | (6,039 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | (5,984 | ) | $ | (6,039 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 14,531 | 12,795 | ||||||
| Amortization of deferred financing charges | 278 | 306 | ||||||
| Amortization of deferred lease costs and lease intangibles | (225 | ) | 316 | |||||
| Deferred income | 82 | (58 | ) | |||||
| Lease incentives | 868 | |||||||
| Write-off of deferred loan costs and prepayment penalties | 871 | |||||||
| Loss on disposition of assets, net | 31 | 106 | ||||||
| Provision for bad debts | 487 | 264 | ||||||
| Stock based compensation expense | 2,513 | 1,727 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 476 | (1,001 | ) | |||||
| Accounts receivable from affiliates | 2 | |||||||
| Property tax and insurance deposits | 4,431 | 3,896 | ||||||
| Prepaid expenses and other | 972 | 1,860 | ||||||
| Other assets | 1,081 | (226 | ) | |||||
| Accounts payable | (1,787 | ) | 1,744 | |||||
| Accrued expenses | (1,301 | ) | (3,599 | ) | ||||
| Federal and state income taxes payable | 178 | 307 | ||||||
| Deferred resident revenue | (860 | ) | (496 | ) | ||||
| Customer deposits | (31 | ) | 10 | |||||
| Net cash provided by operating activities | 15,740 | 12,785 | ||||||
| Investing Activities | ||||||||
| Capital expenditures | (13,767 | ) | (5,503 | ) | ||||
| Cash paid for acquisitions | (64,750 | ) | (47,810 | ) | ||||
| Proceeds from disposition of assets | 35,672 | |||||||
| Net cash used in investing activities | (78,517 | ) | (17,641 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from notes payable | 46,300 | 80,488 | ||||||
| Repayments of notes payable | (4,457 | ) | (62,847 | ) | ||||
| Increase in restricted cash | (4 | ) | (5 | ) | ||||
| Cash payments for capital lease obligations | (288 | ) | (172 | ) | ||||
| Cash proceeds from the issuance of common stock | 5 | 8 | ||||||
| Excess tax benefits on stock options | 111 | |||||||
| Purchases of treasury stock | (2,496 | ) | ||||||
| Deferred financing charges paid | (562 | ) | (863 | ) | ||||
| Net cash provided by financing activities | 38,498 | 16,720 | ||||||
| (Decrease) Increase in cash and cash equivalents | (24,279 | ) | 11,864 | |||||
| Cash and cash equivalents at beginning of period | 56,087 | 39,209 | ||||||
| Cash and cash equivalents at end of period | $ | 31,808 | $ | 51,073 | ||||
| Supplemental Disclosures | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 9,551 | $ | 7,930 | ||||
| Income taxes | $ | 23 | $ | 18 |
Capital Senior Living
Supplemental Information
| Average | ||||||||||||||||||||||||
| Communities | Resident Capacity | Average Units | ||||||||||||||||||||||
| Q1 16 | Q1 15 | Q1 16 | Q1 15 | Q1 16 | Q1 15 | |||||||||||||||||||
| Portfolio Data | ||||||||||||||||||||||||
| I. Community Ownership / Management | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 76 | 65 | 9,436 | 8,500 | 7,114 | 6,542 | ||||||||||||||||||
| Leased | 50 | 50 | 6,333 | 6,333 | 4,912 | 4,983 | ||||||||||||||||||
| Total | 126 | 115 | 15,769 | 14,833 | 12,026 | 11,525 | ||||||||||||||||||
| Independent living | 6,792 | 6,993 | 5,312 | 5,695 | ||||||||||||||||||||
| Assisted living | 8,977 | 7,840 | 6,714 | 5,830 | ||||||||||||||||||||
| Total | 15,769 | 14,833 | 12,026 | 11,525 | ||||||||||||||||||||
| II. Percentage of Operating Portfolio | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 60.3 | % | 56.5 | % | 59.8 | % | 57.3 | % | 59.2 | % | 56.8 | % | ||||||||||||
| Leased | 39.7 | % | 43.5 | % | 40.2 | % | 42.7 | % | 40.8 | % | 43.2 | % | ||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
| Independent living | 43.1 | % | 47.1 | % | 44.2 | % | 49.4 | % | ||||||||||||||||
| Assisted living | 56.9 | % | 52.9 | % | 55.8 | % | 50.6 | % | ||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Capital Senior Living Corporation