Full Press Release Details
CAPITAL SENIOR LIVING CORPORATION
REPORTS SECOND QUARTER 2016 RESULTS
DALLAS (BUSINESS WIRE) August 2, 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 second quarter 2016. Company highlights for the second 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 and reconciliation of Non-GAAP measures to the most directly comparable GAAP measure on the final page of
The Company once again achieved solid growth in our key
performance metrics despite the heavy rain and flooding in Texas and the Midwest that impacted our traffic in May and early June. Our performance continues to demonstrate the advantages of our clear and differentiated strategy to drive superior
shareholder value by successfully executing on our multiple avenues of growth, said Lawrence A. Cohen, Chief Executive Officer of the Company. We achieved a record number of move-ins in the last week of June and expect momentum in
our occupancy to continue to build in the second half of the year, as the third and fourth quarters are seasonally our quarters of greatest occupancy growth.
Complementing our growth is a robust acquisition pipeline that allows us to increase our ownership of high-quality senior living communities in
geographically concentrated regions and generate meaningful increases in our key performance metrics and real estate value. We currently expect to close on the acquisition of three communities during the second half 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
Financial Results - Second Quarter
quarter of 2016, the Company reported revenue of $111.0 million, compared to revenue of $101.6 million in the second quarter of 2015, an increase of 9.3%. Excluding the revenue of the community the Company sold in the third quarter of 2015,
revenues increased $10.0 million, or 10.4%, in the second quarter of 2016 as compared to the second quarter of 2015, mostly due to the acquisition of 12 communities during or since the second quarter of 2015. Revenue for consolidated
communities excluding the three communities undergoing repositioning, lease-up or significant renovation and conversion increased 9.4% in the second quarter of 2016 as compared to the second quarter of 2015. These increases were achieved with
fewer units available for lease in the second quarter of 2016 than the second quarter of 2015, exclusive of acquisitions, due to conversion and refurbishment projects currently in progress at certain communities.
Operating expenses for the second quarter of 2016 were $67.2 million, an increase of $6.5 million from the second quarter of 2015, also primarily due to the
acquisitions of senior living communities made during or since the second quarter of 2015.
General and administrative expenses for the second quarter of
2016 were $5.0 million compared to $5.7 million in the second quarter of 2015. Excluding transaction and conversion costs of $0.4 million from the second quarter of 2016 and $0.8 million from the second quarter of 2015, general and
administrative expenses decreased $0.4 million in the second quarter of 2016 as compared to the second quarter of 2015. As a percentage of revenues under management, general and administrative expenses, excluding transaction and conversion
costs, were 4.1% in the second quarter of 2016 as compared to 4.8% in the second quarter of 2015.
Income from operations for the second
quarter of 2016 was $5.8 million, an increase of $2.1 million, or 57.4%, from the second quarter of 2015. This increase is primarily attributable to the Company s acquisitions of senior living communities made during or since the second
quarter of 2015 and increases in the Company s same-community revenues and occupancies.
The Company recorded a net loss on a GAAP basis of $4.4
million, or $0.15 per share, in the second 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 $0.1 million in the second quarter of 2016.
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 second quarter of 2016 was $39.0 million, an
increase of $3.3 million, or 9.2%, from the second quarter of 2015. The Adjusted EBITDAR margin for the second quarter of 2016 was 36.5%. The three communities undergoing repositioning, lease-up or significant renovation and conversion, not
included in Adjusted EBITDAR, generated an additional $0.8 million of EBITDAR.
Adjusted CFFO was $12.9 million, or $0.45 per share, in the second quarter
of 2016, a 10.0% increase from $11.7 million, or $0.41 per share, in the second quarter of the prior year.
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 second quarter of 2016 increased 1.8% versus the second quarter of 2015. Due to
conversion and refurbishment projects currently in progress at certain communities, fewer units were available for rent in the second quarter of this year than the second quarter of last year. With a like number of units available in both
years, same-community revenue would have increased approximately 2.2% in the second quarter of 2016 as compared to the second quarter of the prior year.
Same-community expenses increased 1.7% from the second quarter of the prior year, excluding a one-time workers compensation credit of $0.4 million from the
second quarter of 2015. On the same basis, labor costs, including benefits, increased 2.1%, food costs increased 0.6% and utilities increased 0.9%, all as compared to the second quarter of 2015, and same-community net operating income increased
second quarter of 2016 as compared to
the second quarter of 2015. With a like number of units available in both years, same-community net operating income would have increased approximately 2.6% from the second quarter of the prior year.
Capital expenditures for the second quarter of 2016 were $16.0 million, representing approximately $14.7 million of investment spending and approximately $1.3
million of recurring capital expenditures. If annualized, spending for recurring capital expenditures was approximately $425 per unit.
The Company ended the quarter with $57.7 million of cash and cash equivalents, including restricted cash, an increase of $12.7 million since
March 31, 2016. During the second quarter of 2016, the Company received net cash proceeds of $19.5 million related to supplemental loans for eight communities and spent $16.0 million on capital improvements, which includes $3.1 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 $3.0 million in the second quarter for capital improvements and expects to
receive additional reimbursements as the remaining projects are completed.
As of June 30, 2016, the Company financed its owned communities with mortgages
totaling $834.4 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 June 30, 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 and the equity needed to fund the Company s acquisition, conversion and renovation programs.
Q2 2016 Conference Call Information
will host a conference call with senior management to discuss the Company s second quarter 2016 financial results. The call will be held on Tuesday, August 2, 2016, at 5:00 p.m. Eastern Time. The call-in number is 913-312-1446,
confirmation code 7836246. 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 2, 2016
at 8:00 p.m. Eastern Time, until August 11, 2016 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 7836246. The conference call will also be made available for playback via the
Company s corporate website, www.capitalsenior.com, beginning August 3, 2016.
Non-GAAP Financial Measures of
Operating Performance
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 of operating performance 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 of operating performance 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 performance measures are useful as they are performance measures used by management in identifying trends in day-to-day performance
because they exclude the costs associated with acquisitions and conversions and items that do not reflect the ordinary performance of our operations and provide indicators to management of progress in achieving both consolidated and business unit
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 on the last
page of this release the reconciliation of 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 flows.
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. 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.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except per share data)
| June 30, | December 31, | |||||||
| 2016 | 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 44,486 | $ | 56,087 | ||||
| Restricted cash | 13,167 | 13,159 | ||||||
| Accounts receivable, net | 10,427 | 9,254 | ||||||
| Federal and state income taxes receivable | 95 | |||||||
| Property tax and insurance deposits | 11,472 | 14,398 | ||||||
| Prepaid expenses and other | 5,386 | 4,370 | ||||||
| Total current assets | 85,033 | 97,268 | ||||||
| Property and equipment, net | 958,123 | 890,572 | ||||||
| Other assets, net | 28,737 | 31,193 | ||||||
| Total assets | $ | 1,071,893 | $ | 1,019,033 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,148 | $ | 3,362 | ||||
| Accrued expenses | 32,559 | 34,300 | ||||||
| Current portion of notes payable, net of deferred loan costs | 17,082 | 13,634 | ||||||
| Current portion of deferred income and resident revenue | 15,794 | 16,059 | ||||||
| Current portion of capital lease and financing obligations | 1,214 | 1,257 | ||||||
| Federal and state income taxes payable | 111 | |||||||
| Customer deposits | 1,698 | 1,819 | ||||||
| Total current liabilities | 69,495 | 70,542 | ||||||
| Deferred income | 13,165 | 13,992 | ||||||
| Capital lease and financing obligations, net of current portion | 38,295 | 38,835 | ||||||
| Other long-term liabilities | 10,372 | 4,969 | ||||||
| Notes payable, net of deferred loan costs and current portion | 812,704 | 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 29,998 and 29,539 in 2016 and 2015, respectively | 305 | 299 | ||||||
| Additional paid-in capital | 164,956 | 159,920 | ||||||
| Retained deficit | (33,969 | ) | (23,539 | ) | ||||
| Treasury stock, at cost 494 and 350 shares in 2016 and 2015, respectively | (3,430 | ) | (934 | ) | ||||
| Total shareholders equity | 127,862 | 135,746 | ||||||
| Total liabilities and shareholders equity | $ | 1,071,893 | $ | 1,019,033 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited, in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenues: | ||||||||||||||||
| Resident revenue | $ | 111,034 | $ | 101,588 | $ | 220,207 | $ | 200,228 | ||||||||
| Expenses: | ||||||||||||||||
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) | 67,162 | 60,707 | 133,685 | 120,838 | ||||||||||||
| General and administrative expenses | 4,972 | 5,718 | 11,220 | 10,731 | ||||||||||||
| Facility lease expense | 15,445 | 15,298 | 30,650 | 30,554 | ||||||||||||
| Stock-based compensation expense | 2,490 | 2,717 | 5,003 | 4,444 | ||||||||||||
| Depreciation and amortization | 15,172 | 13,468 | 29,703 | 26,263 | ||||||||||||
| Total expenses | 105,241 | 97,908 | 210,261 | 192,830 | ||||||||||||
| Income from operations | 5,793 | 3,680 | 9,946 | 7,398 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 19 | 11 | 35 | 24 | ||||||||||||
| Interest expense | (10,345 | ) | (8,673 | ) | (20,330 | ) | (17,028 | ) | ||||||||
| Write-off of deferred loan costs and prepayment premiums | (871 | ) | ||||||||||||||
| Loss on disposition of assets, net | (6 | ) | (65 | ) | (37 | ) | (171 | ) | ||||||||
| Other income | 233 | 233 | 1 | |||||||||||||
| Loss before provision for income taxes | (4,306 | ) | (5,047 | ) | (10,153 | ) | (10,647 | ) | ||||||||
| Provision for income taxes | (140 | ) | (119 | ) | (277 | ) | (558 | ) | ||||||||
| Net loss | $ | (4,446 | ) | $ | (5,166 | ) | $ | (10,430 | ) | $ | (11,205 | ) | ||||
| Per share data: | ||||||||||||||||
| Basic net loss per share | $ | (0.15 | ) | $ | (0.18 | ) | $ | (0.36 | ) | $ | (0.38 | ) | ||||
| Diluted net loss per share | $ | (0.15 | ) | $ | (0.18 | ) | $ | (0.36 | ) | $ | (0.38 | ) | ||||
| Weighted average shares outstanding basic | 28,926 | 28,705 | 28,838 | 28,636 | ||||||||||||
| Weighted average shares outstanding diluted | 28,926 | 28,705 | 28,838 | 28,636 | ||||||||||||
| Comprehensive loss | $ | (4,446 | ) | $ | (5,166 | ) | $ | (10,430 | ) | $ | (11,205 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Six Months Ended June 30, | ||||||||
| 2016 | 2015 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | (10,430 | ) | $ | (11,205 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 29,703 | 26,263 | ||||||
| Amortization of deferred financing charges | 567 | 582 | ||||||
| Amortization of deferred lease costs and lease intangibles | (184 | ) | 651 | |||||
| Deferred income | 44 | (131 | ) | |||||
| Lease incentives | 3,890 | |||||||
| Write-off of deferred loan costs and prepayment premiums | 871 | |||||||
| Loss on disposition of assets, net | 37 | 171 | ||||||
| Provision for bad debts | 809 | 544 | ||||||
| Stock-based compensation expense | 5,003 | 4,444 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (94 | ) | (2,090 | ) | ||||
| Accounts receivable from affiliates | 2 | |||||||
| Property tax and insurance deposits | 2,926 | 1,500 | ||||||
| Prepaid expenses and other | (1,016 | ) | 1,379 | |||||
| Other assets | (566 | ) | 208 | |||||
| Accounts payable | (2,214 | ) | (492 | ) | ||||
| Accrued expenses | (1,704 | ) | (2,220 | ) | ||||
| Federal and state income taxes receivable/payable | (206 | ) | (529 | ) | ||||
| Deferred resident revenue | (1,136 | ) | (1,581 | ) | ||||
| Customer deposits | (121 | ) | (48 | ) | ||||
| Net cash provided by operating activities | 25,308 | 18,319 | ||||||
| Investing Activities | ||||||||
| Capital expenditures | (29,747 | ) | (13,540 | ) | ||||
| Cash paid for acquisitions | (64,750 | ) | (74,710 | ) | ||||
| Proceeds from disposition of assets | 35,807 | |||||||
| Net cash used in investing activities | (94,497 | ) | (52,443 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from notes payable | 69,892 | 102,332 | ||||||
| Repayments of notes payable | (8,183 | ) | (66,315 | ) | ||||
| Increase in restricted cash | (8 | ) | (10 | ) | ||||
| Cash payments for capital lease and financing obligations | (583 | ) | (433 | ) | ||||
| Cash proceeds from the issuance of common stock | 66 | 42 | ||||||
| Excess tax benefits on stock options exercised | (27 | ) | 49 | |||||
| Purchases of treasury stock | (2,496 | ) | ||||||
| Deferred financing charges paid | (1,073 | ) | (1,347 | ) | ||||
| Net cash provided by financing activities | 57,588 | 34,318 | ||||||
| (Decrease) Increase in cash and cash equivalents | (11,601 | ) | 194 | |||||
| Cash and cash equivalents at beginning of period | 56,087 | 39,209 | ||||||
| Cash and cash equivalents at end of period | $ | 44,486 | $ | 39,403 | ||||
| Supplemental Disclosures | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 19,627 | $ | 16,112 | ||||
| Income taxes | $ | 546 | $ | 1,020 |
Capital Senior Living Corporation
Supplemental Information
| Average | ||||||||||||||||||||||||
| Communities | Resident Capacity | Average Units | ||||||||||||||||||||||
| Q2 16 | Q2 15 | Q2 16 | Q2 15 | Q2 16 | Q2 15 | |||||||||||||||||||
| Portfolio Data | ||||||||||||||||||||||||
| I. Community Ownership / Management | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 76 | 68 | 9,436 | 8,744 | 7,251 | 6,608 | ||||||||||||||||||
| Leased | 50 | 50 | 6,333 | 6,333 | 4,918 | 4,907 | ||||||||||||||||||
| Total | 126 | 118 | 15,769 | 15,077 | 12,169 | 11,515 | ||||||||||||||||||
| Independent living | 6,792 | 7,090 | 5,294 | 5,512 | ||||||||||||||||||||
| Assisted living | 8,977 | 7,987 | 6,875 | 6,003 | ||||||||||||||||||||
| Total | 15,769 | 15,077 | 12,169 | 11,515 | ||||||||||||||||||||
| II. Percentage of Operating Portfolio | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 60.3 | % | 57.6 | % | 59.8 | % | 58.0 | % | 59.6 | % | 57.4 | % | ||||||||||||
| Leased | 39.7 | % | 42.4 | % | 40.2 | % | 42.0 | % | 40.4 | % | 42.6 | % | ||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
| Independent living | 43.1 | % | 47.0 | % | 43.5 | % | 47.9 | % | ||||||||||||||||
| Assisted living | 56.9 | % | 53.0 | % | 56.5 | % | 52.1 | % | ||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Capital Senior Living Corporation
Supplemental Information (excludes communities being repositioned/leased up)
Selected Operating Results