Full Press Release Details
CAPITAL SENIOR LIVING CORPORATION
REPORTS FIRST QUARTER 2017 RESULTS
(GLOBE NEWSWIRE) May 2, 2017 Capital Senior Living Corporation (the Company ) (NYSE:CSU), one of the nation s largest operators of senior housing communities, today announced operating and financial results
for the first quarter 2017. 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 and reconciliation of Non-GAAP measures to the most directly comparable GAAP measure on the final page of this release.)
Despite headwinds from a heavy and prolonged flu season which impacted our first quarter occupancy, as we discussed on our fourth quarter and full-year
earnings conference call, the focused execution of our clear and differentiated real-estate strategy in the first quarter yielded increases in key metrics such as revenue, average monthly rent and EBITDAR, as compared to the first quarter of the
previous year, said Lawrence A. Cohen, Chief Executive Officer of the Company. We are keenly focused on rebuilding occupancy across our portfolio following the heavy flu attrition and are encouraged by the strong demand we have
experienced since mid-February as evidenced by excellent above-average deposit-taking over the last 11 weeks and a Company record number of monthly deposits and move-ins
We increased our real estate ownership in the first quarter with the acquisition of four communities we previously leased and made steady
progress on the lease-up of units previously out of service. And, we continue to be well insulated from competitive new supply and significant wage pressure in most of our markets.
We expect the execution of our strategic business plan to produce outstanding growth in all of our key
metrics going forward. In addition to core growth in our operations, our growth will be enhanced by the significant renovations we have made across our portfolio and even greater by the return of a significant number of units currently out of
service due to conversions and repositionings. And, we have a robust acquisition pipeline that will allow us to continue to increase our ownership of high-quality senior housing communities in geographically concentrated regions. As such, 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
The communities were financed with a
36-month, interest-only bridge loan for $65.0 million with an initial variable interest rate of approximately 4.8%. Three of the four communities are currently undergoing renovation and conversion. The
Company plans to obtain permanent financing based on the enhanced cash flow of the communities once the renovations and conversions are completed and occupancy reaches stabilization.
Highlights of this transaction include:
Financial Results - First Quarter
quarter of 2017, the Company reported revenue of $116.0 million, compared to revenue of $109.2 million in the first quarter of 2016, an increase of 6.2%. The increase was mostly due to the acquisition of eight communities during or since
the first quarter of 2016, not including the acquisition of the four previously-leased communities which, as previously noted, did not result in increases to the Company s revenue or expense. Revenue for consolidated communities excluding the
three communities undergoing repositioning, lease-up or significant renovation and conversion increased 6.3% in the first quarter of 2017 as compared to the first quarter of 2016.
Operating expenses for the first quarter of 2017 were $72.8 million, an increase of $6.3 million from the first quarter of 2016, primarily due to
the acquisitions of senior housing communities made during or since the first quarter of 2016.
General and administrative expenses for the first quarter
of 2017 were $6.2 million. This compares to general and administrative expenses of $6.2 million in the first quarter of 2016. Excluding transaction and conversion costs of approximately $0.6 million from the first quarter of 2017 and
$0.9 million from the first quarter of 2016, general and administrative expenses increased $0.3 million in the first quarter of 2017 as compared to the first quarter of 2016. As a percentage of revenues under management, general and
administrative expenses, excluding transaction and conversion costs, were 4.9% in the first quarter of 2017, the same as in the first quarter of 2016.
Income from operations for the first quarter of 2017 was a loss of $9.6 million, which includes the $12.9 million
non-cash lease termination charge. The Company recorded a net loss on a GAAP basis of $21.8 million in the first quarter of 2017. Excluding non-recurring or non-economic items reconciled on the final page of this release, the Company s adjusted net loss was $2.0 million in the first quarter of 2017.
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 2017 was $37.7 million, an increase of $0.4 million, or 1.2%, from the first quarter of 2016. The three
communities undergoing repositioning, lease-up or significant renovation and conversion, not included in Adjusted EBITDAR, generated an additional $0.7 million of EBITDAR.
Adjusted CFFO was $11.0 million in the first quarter of 2017, as compared to $11.7 million in the
first quarter of 2016.
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 2017 increased 0.8% versus the first quarter of 2016. 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.
Same-community operating expenses increased 2.9% from the first quarter of the prior year, excluding conversion costs in both
periods. On the same basis, labor costs, including benefits, increased 2.5%, food costs increased 0.3% and utilities increased 3.7%, all as compared to the first quarter of 2016, and same-community net operating income decreased 2.4% in the first
quarter of 2017 as compared to the first quarter of 2016.
Capital expenditures for the first quarter of 2017 were $12.7 million, representing
approximately $11.4 million of investment spending and approximately $1.3 million of recurring capital expenditures.
The Company ended the quarter with $25.9 million of cash and cash equivalents, including restricted cash. During the first quarter of 2017,
the Company invested $20.0 million in the four communities acquired during the first quarter, and spent $12.7 million on capital improvements. The Company received reimbursements from one of its REIT partners totaling $2.3 million in
the first quarter for capital improvements at certain leased communities and expects to receive additional reimbursements as the remaining projects at leased communities are completed.
As of March 31, 2017, the Company financed its owned communities with mortgages totaling $968.1 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 $76.7 million at March 31, 2017, one of which matures in the third quarter of 2018 and the other in the first quarter of 2020. 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.
Q1 2017 Conference Call Information
The Company will host a conference call with senior management to discuss the Company s first quarter 2017 financial results. The call will be held on
Tuesday, May 2, 2017, at 5:00 p.m. Eastern Time. The call-in number is 323-701-0230, confirmation code 4200636. A link to a
simultaneous webcast of the teleconference will be available at www.capitalsenior.com through Windows Media Player or RealPlayer.
convenience of the Company s shareholders and the public, the conference call will be recorded and available for replay starting May 2, 2017 at 8:00 p.m. Eastern Time, until May 10, 2017 at 8:00 p.m. Eastern Time. To access the
conference call replay, call 719-457-0820, confirmation code 4200636. The conference call will also be made available for playback via the Company s corporate
website, www.capitalsenior.com.
Non-GAAP Financial Measures of Operating Performance
Adjusted EBITDAR is a financial valuation measure and Adjusted Net Income 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 our management, research analysts and
investors to value companies in the senior living industry. Because Adjusted EBITDAR excludes interest expense and rent expense, it allows our 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 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 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.
The Company strongly urges you to
review on the last page of this release the reconciliation of net loss to Adjusted EBITDAR and the reconciliation of net (loss) income to Adjusted Net (Loss) 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 housing 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 129 senior housing communities in geographically concentrated regions with an aggregate capacity of approximately 16,500 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
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except per share data)
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 12,612 | $ | 34,026 | ||||
| Restricted cash | 13,301 | 13,297 | ||||||
| Accounts receivable, net | 9,389 | 13,675 | ||||||
| Property tax and insurance deposits | 10,240 | 14,665 | ||||||
| Prepaid expenses and other | 5,268 | 6,365 | ||||||
| Total current assets | 50,810 | 82,028 | ||||||
| Property and equipment, net | 1,117,291 | 1,032,430 | ||||||
| Other assets, net | 23,328 | 31,323 | ||||||
| Total assets | $ | 1,191,429 | $ | 1,145,781 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 7,165 | $ | 5,051 | ||||
| Accrued expenses | 31,235 | 39,064 | ||||||
| Current portion of notes payable, net of deferred loan costs | 16,625 | 17,889 | ||||||
| Current portion of deferred income and resident revenue | 15,267 | 16,284 | ||||||
| Current portion of capital lease and financing obligations | 2,522 | 1,339 | ||||||
| Federal and state income taxes payable | 360 | 218 | ||||||
| Customer deposits | 1,507 | 1,545 | ||||||
| Total current liabilities | 74,681 | 81,390 | ||||||
| Deferred income | 11,445 | 12,205 | ||||||
| Capital lease and financing obligations, net of current portion | 51,591 | 37,439 | ||||||
| Other long-term liabilities | 13,725 | 15,325 | ||||||
| Notes payable, net of deferred loan costs and current portion | 942,978 | 882,504 | ||||||
| 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 | 308 | 305 | ||||||
| Additional paid-in capital | 173,711 | 171,599 | ||||||
| Retained deficit | (73,580 | ) | (51,556 | ) | ||||
| Treasury stock, at cost 494 shares in 2017 and 2016, respectively | (3,430 | ) | (3,430 | ) | ||||
| Total shareholders equity | 97,009 | 116,918 | ||||||
| Total liabilities and shareholders equity | $ | 1,191,429 | $ | 1,145,781 |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited, in thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenues: | ||||||||
| Resident revenue | $ | 115,990 | $ | 109,173 | ||||
| Expenses: | ||||||||
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) | 72,778 | 66,523 | ||||||
| General and administrative expenses | 6,234 | 6,248 | ||||||
| Facility lease expense | 14,587 | 15,205 | ||||||
| Loss on facility lease termination | 12,858 | |||||||
| Stock-based compensation expense | 1,930 | 2,513 | ||||||
| Depreciation and amortization expense | 17,213 | 14,531 | ||||||
| Total expenses | 125,600 | 105,020 | ||||||
| (Loss) Income from operations | (9,610 | ) | 4,153 | |||||
| Other income (expense): | ||||||||
| Interest income | 18 | 16 | ||||||
| Interest expense | (12,005 | ) | (9,985 | ) | ||||
| Loss on disposition of assets, net | (125 | ) | (31 | ) | ||||
| Other income | 3 | |||||||
| Loss before provision for income taxes | (21,719 | ) | (5,847 | ) | ||||
| Provision for income taxes | (123 | ) | (137 | ) | ||||
| Net loss | $ | (21,842 | ) | $ | (5,984 | ) | ||
| Per share data: | ||||||||
| Basic net loss per share | $ | (0.75 | ) | $ | (0.21 | ) | ||
| Diluted net loss per share | $ | (0.75 | ) | $ | (0.21 | ) | ||
| Weighted average shares outstanding basic | 29,288 | 28,751 | ||||||
| Weighted average shares outstanding diluted | 29,288 | 28,751 | ||||||
| Comprehensive loss | $ | (21,842 | ) | $ | (5,984 | ) |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)