Full Press Release Details
CAPITAL SENIOR LIVING CORPORATION
REPORTS FOURTH QUARTER 2014 RESULTS
DALLAS (BUSINESS WIRE) February 26, 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 fourth quarter and full year 2014. Company highlights for the fourth quarter and full year include:
Operating and Financial Summary (see Non-GAAP Financial Measures below)
Our fourth quarter results reflect the continuing momentum
in our operations. Our revenue increased at the highest rate of the year in the fourth quarter while our expenses declined, resulting in excellent growth in Adjusted EBITDAR and Adjusted CFFO. We also experienced continued solid increases in
occupancy and average monthly rent, said Lawrence A. Cohen, Chief Executive Officer of the Company. Our same-community occupancy increased for the fifth consecutive quarter, gaining 20 basis points from the third quarter of 2014 to the
fourth quarter of 2014. Our same-community average monthly rent increased by 30 basis points in the fourth quarter of 2014 as compared to the third quarter, building on the 70 basis point sequential increases in average monthly rent in the two
previous quarters. We also continue to make steady progress on our work to convert approximately 360 vacant independent living units to assisted living and memory care units, with more than half of the conversions complete at the end of 2014.
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 closed on one such community in the
fourth quarter and have subsequently closed on another community in the first quarter, and we continue to pursue additional opportunities.
successfully executing on our strategic plan, and 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,
and an improving economy and housing market.
Recent Investment Activity
Financial Results - Fourth Quarter
For the fourth quarter of 2014, the Company reported revenue of $100.2 million, compared to revenue of $88.9 million in the fourth quarter of 2013, an increase
of 12.6%. Resident and healthcare revenue increased from the fourth quarter of the prior year by approximately $13.1 million, or 15.0%, mostly due to the acquisition of 14 communities during or after the fourth quarter of 2013. As expected,
community reimbursement revenue and affiliated management revenue decreased approximately $1.9 million in the fourth quarter of 2014 as compared to the fourth quarter of 2013. 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 fourth quarter of 2014 were $59.7 million, an increase of $5.9 million from the fourth quarter of 2013, primarily due to the
acquisition of 14 communities during or after the fourth quarter of 2013.
General and administrative expenses for the fourth quarter of 2014 were $4.5
million, which includes $0.4 million of transaction and other one-time costs. Excluding transaction and other one-time costs, general and administrative expenses decreased $0.4 million in the fourth quarter of 2014 as compared to the fourth quarter
of 2013. As a percentage of revenues under management, general and administrative expenses, excluding transaction and other one-time costs, were 4.1% in the fourth quarter of 2014 as compared to 5.2% in the fourth quarter of 2013.
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.
Adjusted EBITDAR for the fourth quarter of 2014 was approximately $36.0 million, an increase of $6.2 million, or 20.9%, from
the fourth quarter of 2013. This does not include EBITDAR of $0.7 million related to four communities undergoing repositioning, lease-up or significant renovation and conversion. The Adjusted EBITDAR margin for the fourth quarter of 2014 was 37.5%,
a record-high quarterly margin for the Company and an increase of 290 basis points from the fourth quarter 2013 of 34.6%.
The Company recorded a net loss
of $3.9 million in the fourth quarter. Excluding non-recurring or non-economic items reconciled on the final page of this release, the Company earned adjusted net income of $1.5 million, or $0.05 per share, in the fourth quarter of 2014. Adjusted
CFFO was $13.5 million, or $0.48 per share, in the fourth quarter of 2014 versus $0.52 in the fourth quarter of 2013. The fourth quarter of 2013 included tax savings from a cost segregation study of approximately $0.12 per share. On a comparable
basis, Adjusted CFFO increased $0.08 per share, or 20.0%, in the fourth quarter of 2014 versus the fourth quarter of 2013.
Financial Results Full Year
The Company reported 2014 revenue of $383.9 million compared to revenue of $350.4 million in 2013, an increase of $33.6 million, or 9.6%. Revenues in 2014
included a decrease of $3.4 million in community reimbursement revenue and affiliated management revenue related to the acquisition of three communities formerly held as a joint venture, as previously noted. Resident and healthcare revenue increased
10.7% versus the prior year. Operating expenses were $230.5 million in 2014, an increase of $22.8 million.
General and administrative expenses in 2014
were $19.6 million compared to $20.2 million in 2013. Excluding transaction and other one-time costs, general and administrative expenses as a percentage of revenues under management were approximately 4.7% in 2014 compared to 5.2% in 2013.
Adjusted EBITDAR increased 10.9% to $132.6 million in 2014, an increase of $13.0 million. The Company s Adjusted EBITDAR margin was 35.9% in 2014, a 100
basis point improvement from 2013. Adjusted CFFO for 2014 was $42.8 million, or $1.51 per share, compared to $1.54 per share in 2013. Adjusted CFFO in 2013 included approximately $0.14 per share in tax savings from a cost segregation study. The
Company s net loss for 2014 was $24.1 million, or $0.83 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 $2.4 million, or $0.09 per
Operating Activities
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 fourth quarter of 2014 increased 1.9% versus the fourth quarter of 2013. Same-community expenses decreased 0.9% from the fourth
quarter of the prior year. Labor costs, including benefits, increased approximately 0.4%, food costs increased 1.4% and utilities were down 1.7% as compared to the fourth quarter of the prior year. Same-community net operating income increased 5.1%
in the fourth quarter of 2014 as compared to the fourth quarter of 2013.
Same-community results continued to show significant sequential improvement in
the fourth quarter of 2014. Same-community revenues were up sequentially over the third quarter by 0.6%, following sequential improvement over the previous quarter of 0.6% and 1.1% in the second and third quarters, respectively. Same-community
occupancies increased 20 basis points from the third quarter to the fourth quarter and average rent increased 30 basis points from the third quarter to the fourth quarter.
Same-community expenses were $0.3 million lower than the third quarter of 2014. Same-community net operating
income was 2.0% higher than the third quarter of 2014.
Capital expenditures for the fourth quarter of 2014 were $5.3 million, representing approximately
$3.8 million of investment spending and approximately $1.5 million of recurring capital expenditures. Spending in 2014 for recurring capital expenditures equaled $4.7 million, or approximately $400 per unit.
The Company ended the year with
$51.5 million of cash and cash equivalents, including restricted cash. During the fourth quarter of 2014, the Company invested $4.1 million of cash as equity to complete the acquisitions of one community and spent $5.3 million on capital
improvements. For the full year, the Company invested $40.5 million of cash to complete 8 acquisitions and spent $18.7 million on capital improvements.
As of December 31, 2014, the Company financed its 67 owned communities with mortgages totaling $642.5 million at interest rates averaging 4.7%. All of
the Company s debt is at fixed interest rates, except for six bridge loans totaling approximately $65.2 million at December 31, 2014, at variable rates averaging 3.9%. The Company has no mortgage maturities before the third quarter of
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.
Q4 2014 Conference Call Information
The Company will host a conference call with senior management to discuss the Company s fourth quarter and full year financial results. The call will be
held on Thursday, February 26, 2015, at 5:00 p.m. Eastern Time. The call-in number is 913-312-0850, confirmation code 3717091. 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 Thursday, February 26, 2015, at 8:00 p.m. Eastern Time, until Saturday, March 7, 2015, at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 3717091. The
conference call will also be made available for playback via the Company s corporate website, www.capitalsenior.com, beginning February 27, 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 114 senior living communities in
geographically concentrated regions with an aggregate capacity of approximately 15,000 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.
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
| December 31, | ||||||||
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 39,209 | $ | 13,611 | ||||
| Restricted cash | 12,241 | 11,425 | ||||||
| Accounts receivable, net | 5,903 | 3,752 | ||||||
| Accounts receivable from affiliates | 5 | 416 | ||||||
| Federal and state income taxes receivable | 5,123 | |||||||
| Deferred taxes | 460 | 845 | ||||||
| Assets held for sale | 35,761 | |||||||
| Property tax and insurance deposits | 12,198 | 11,036 | ||||||
| Prepaid expenses and other | 6,797 | 6,605 | ||||||
| Total current assets | 112,574 | 52,813 | ||||||
| Property and equipment, net | 747,243 | 651,738 | ||||||
| Investments in unconsolidated joint ventures | 1,010 | |||||||
| Other assets, net | 37,884 | 39,988 | ||||||
| Total assets | $ | 897,701 | $ | 745,549 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,540 | $ | 3,813 | ||||
| Accounts payable to affiliates | 7 | 1 | ||||||
| Accrued expenses | 32,154 | 29,321 | ||||||
| Notes payable of assets held for sale | 15,076 | |||||||
| Current portion of notes payable | 33,664 | 11,918 | ||||||
| Current portion of deferred income | 14,603 | 11,215 | ||||||
| Current portion of capital lease and financing obligations | 1,054 | 948 | ||||||
| Federal and state income taxes payable | 219 | |||||||
| Customer deposits | 1,499 | 1,489 | ||||||
| Total current liabilities | 100,816 | 58,705 | ||||||
| Deferred income | 15,949 | 18,021 | ||||||
| Capital lease and financing obligations, net of current portion | 40,016 | 41,093 | ||||||
| Deferred taxes | 460 | 845 | ||||||
| Other long-term liabilities | 1,426 | 1,559 | ||||||
| Notes payable, net of current portion | 597,860 | 467,376 | ||||||
| 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 29,097 and 28,845 in 2014 and 2013, respectively | 294 | 292 | ||||||
| Additional paid-in capital | 151,069 | 143,721 | ||||||
| Retained (deficit) earnings | (9,255 | ) | 14,871 | |||||
| Treasury stock, at cost 350 shares in 2014 and 2013 | (934 | ) | (934 | ) | ||||
| Total shareholders equity | 141,174 | 157,950 | ||||||
| Total liabilities and shareholders equity | $ | 897,701 | $ | 745,549 |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues: | ||||||||||||||||
| Resident and health care revenue | $ | 100,160 | $ | 87,069 | $ | 380,400 | $ | 343,478 | ||||||||
| Affiliated management services revenue | 211 | 415 | 797 | |||||||||||||
| Community reimbursement revenue | 1,655 | 3,110 | 6,087 | |||||||||||||
| Total revenues | 100,160 | 88,935 | 383,925 | 350,362 | ||||||||||||
| Expenses: | ||||||||||||||||
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) | 59,744 | 53,888 | 230,495 | 207,744 | ||||||||||||
| General and administrative expenses | 4,485 | 5,209 | 19,622 | 20,238 | ||||||||||||
| Facility lease expense | 14,808 | 14,173 | 59,332 | 56,986 | ||||||||||||
| Provision for bad debts | 200 | 167 | 717 | 497 | ||||||||||||
| Stock-based compensation expense | 1,586 | 1,164 | 7,262 | 4,322 | ||||||||||||
| Depreciation and amortization | 13,880 | 10,055 | 49,487 | 43,238 | ||||||||||||
| Community reimbursement expense | 1,655 | 3,110 | 6,087 | |||||||||||||
| Total expenses | 94,703 | 86,311 | 370,025 | 339,112 | ||||||||||||
| Income from operations | 5,457 | 2,624 | 13,900 | 11,250 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 12 | 13 | 52 | 151 | ||||||||||||
| Interest expense | (8,476 | ) | (6,446 | ) | (31,261 | ) | (23,767 | ) | ||||||||
| Write-off of deferred loan costs and prepayment premiums | (989 | ) | (7,968 | ) | ||||||||||||
| Joint venture equity investment valuation gain | 1,519 | |||||||||||||||
| Gain on disposition of assets, net | 795 | 1,442 | 784 | 1,454 | ||||||||||||
| Equity in earnings of unconsolidated joint ventures, net | 57 | 105 | 133 | |||||||||||||
| Write-down of assets held for sale | (561 | ) | (561 | ) | ||||||||||||
| Other income | 1 | 6 | 23 | 34 | ||||||||||||
| Loss before provision for income taxes | (3,761 | ) | (2,304 | ) | (23,407 | ) | (10,745 | ) | ||||||||
| Provision for income taxes | (140 | ) | (91 | ) | (719 | ) | (5,759 | ) | ||||||||
| Net loss | $ | (3,901 | ) | $ | (2,395 | ) | $ | (24,126 | ) | $ | (16,504 | ) | ||||
| Per share data: | ||||||||||||||||
| Basic net loss per share | $ | (0.13 | ) | $ | (0.08 | ) | $ | (0.83 | ) | $ | (0.58 | ) | ||||
| Diluted net loss per share | $ | (0.13 | ) | $ | (0.08 | ) | $ | (0.83 | ) | $ | (0.58 | ) | ||||
| Weighted average shares outstanding basic | 28,387 | 27,949 | 28,301 | 27,815 | ||||||||||||
| Weighted average shares outstanding diluted | 28,387 | 27,949 | 28,301 | 27,815 | ||||||||||||
| Comprehensive loss | $ | (3,901 | ) | $ | (2,395 | ) | $ | (24,126 | ) | $ | (16,504 | ) |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, | ||||||||
| 2014 | 2013 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | (24,126 | ) | $ | (16,504 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 49,487 | 43,238 | ||||||
| Amortization of deferred financing charges | 1,361 | 1,100 | ||||||
| Amortization of deferred lease costs and lease intangibles | 1,230 | 1,164 | ||||||
| Deferred income | 1,316 | 1,053 | ||||||
| Deferred income taxes | 10,793 | |||||||
| Write-off of deferred loan costs and prepayment premiums | 7,968 | |||||||
| Joint venture equity investment valuation gain | (1,519 | ) | ||||||
| Gain on disposition of assets, net | (784 | ) | (1,454 | ) | ||||
| Equity in earnings of unconsolidated joint ventures, net | (105 | ) | (133 | ) | ||||
| Write-down of assets held for sale | 561 | |||||||
| Provision for bad debts | 717 | 497 | ||||||
| Stock-based compensation expense | 7,262 | 4,322 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,868 | ) | 980 | |||||
| Accounts receivable from affiliates | 411 | 337 | ||||||
| Property tax and insurance deposits | (1,162 | ) | 406 | |||||
| Prepaid expenses and other | (192 | ) | (1,847 | ) | ||||
| Other assets | (163 | ) | (1,745 | ) | ||||
| Accounts payable | (1,267 | ) | (3,166 | ) | ||||
| Accrued expenses | 2,833 | 4,876 | ||||||
| Federal and state income taxes receivable/payable | 5,342 | (1,222 | ) | |||||
| Customer deposits | 10 | (51 | ) | |||||
| Net cash provided by operating activities | 46,312 | 42,644 | ||||||
| Investing Activities | ||||||||
| Capital expenditures | (18,742 | ) | (13,562 | ) | ||||
| Cash paid for acquisitions | (160,105 | ) | (150,391 | ) | ||||
| Proceeds from SHPIII/CSL Transaction | 2,532 | |||||||
| Proceeds from disposition of assets | 796 | 1,460 | ||||||
| Contributions to joint ventures | ||||||||
| Distributions from joint ventures | 102 | 197 | ||||||
| Net cash used in investing activities | (175,417 | ) | (162,296 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from notes payable | 300,820 | 140,237 | ||||||
| Repayments of notes payable | (140,950 | ) | (23,539 | ) | ||||
| Cash payments for capital lease and financing obligations | (971 | ) | (871 | ) | ||||
| Increase in restricted cash | (816 | ) | (1,246 | ) | ||||
| Cash proceeds from the issuance of common stock | 170 | 3,163 | ||||||
| Excess tax benefits on stock options exercised | (82 | ) | (1,625 | ) | ||||
| Deferred financing charges paid | (3,468 | ) | (1,593 | ) | ||||
| Net cash provided by financing activities | 154,703 | 114,526 | ||||||
| Increase (Decrease) in cash and cash equivalents | 25,598 | (5,126 | ) | |||||
| Cash and cash equivalents at beginning of year | 13,611 | 18,737 | ||||||
| Cash and cash equivalents at end of year | $ | 39,209 | $ | 13,611 | ||||
| Supplemental Disclosures | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | 28,856 | $ | 21,953 | ||||
| Income taxes | $ | 724 | $ | 702 |
Capital Senior Living Corporation
Supplemental Information