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PRESS CONTACT: Ralph A. Beattie, Chief Financial Officer Phone: 1-972-770-5600 FOR IMMEDIATE RELEASE CAPITAL SENIOR LIVING CORPORATION REPORTS FIRST QUARTER 2014 RESULTS DALLAS (BUSINESS WIRE)

Key Takeaway: PRESS CONTACT: Ralph A. Beattie, Chief Financial Officer Phone: 1-972-770-5600 CAPITAL SENIOR LIVING CORPORATION REPORTS FIRST QUARTER 2014 RESULTS (BUSINESS WIRE) May 6, 2014 Capital Senior Living Corporation (the Company ) (NYSE:CSU), one of the country s largest operato

Full Press Release Details

PRESS CONTACT:
Ralph A. Beattie, Chief Financial Officer
Phone: 1-972-770-5600
CAPITAL SENIOR LIVING CORPORATION
REPORTS FIRST QUARTER 2014 RESULTS
(BUSINESS WIRE) May 6, 2014 Capital Senior Living Corporation (the Company ) (NYSE:CSU), one of the country s largest operators of senior living communities, today announced operating and financial results
for the first quarter of 2014. Company highlights for the first quarter include:
Operating and Financial Summary (see Non-GAAP Financial
We are pleased to report positive results for the first quarter as we continue to recover from high
levels of attrition in 2013, with growth in revenue, EBITDAR and occupancy, said Lawrence A. Cohen, Chief Executive Officer of the Company. These improvements were achieved despite harsh winter weather; however, winter related expenses
negatively impacted first quarter financial results. We are focused on reducing attrition and increasing occupancy by converting approximately 360 vacant independent living units to assisted living and memory care units. Once these converted units
are stabilized, we expect overall occupancy to increase by approximately 300 basis points, to 90%.
Complementing this organic 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 differentiate Capital Senior Living as the value leader in providing quality seniors housing and care at reasonable prices. We 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
Highlights of this transaction include:
Financial Results - First Quarter
For the first quarter of 2014, the Company reported revenue of $91.9 million, compared to revenue of $86.2 million in the first quarter of 2013. Resident and
healthcare revenue increased from the first quarter of the prior year by approximately $5.4 million, or 6.4%, largely as a result of acquiring 11 communities since the first quarter of 2013. The number of consolidated communities increased from 99
in the first quarter of 2013 to 110 in the first quarter of 2014.
During 2013, the Company decided to close the skilled nursing units in its two
CCRC s and convert this space to private-pay use. Excluding the two CCRC s that are being re-positioned, average monthly rent for the consolidated communities was $3,126 per occupied unit in the first quarter of 2014, an increase of $64,
or 2.1%, over the first quarter of 2013. Financial occupancy of the consolidated portfolio averaged 87.1% in the first quarter of 2014.
of resident and healthcare revenue, operating expenses were 61.8% in the first quarter of 2014, compared to 59.1% in the first quarter of 2013. Margins were negatively impacted by a particularly harsh winter, including higher costs for utilities and
snow removal. Margins were also negatively impacted by higher real estate taxes compared to the prior period which reflected multi-year tax adjustments from successful appeals coupled with higher tax assessments in the current quarter that are now
under appeal. Higher move-ins during the quarter resulted in higher referral fees to third parties. The unusual weather-related costs, along with higher real estate taxes and higher referral fees totaled approximately $1.6 million and increased
operating expenses by 1.8% of revenue. Operating expenses for the first quarter of 2014 were $55.7 million, an increase of $5.6 million from the first quarter of 2013, primarily due to 11 additional communities now being consolidated.
General and administrative expenses as a percentage of revenues under management were 4.9% in the first quarter of 2014, excluding transaction costs of
approximately $0.5 million.
Adjusted EBITDAR for the first quarter of 2014 was approximately $31.0 million, an increase of $0.5 million, or 1.7%, from
the first quarter of 2013. Excluding the two CCRC s being re-positioned, EBITDAR margin for the first quarter of 2014 was 34.7%. EBITDAR margin would have been 36.5% if not for the unusual weather-related costs, real estate taxes and referral
fees discussed above.
Adjusted net income for the first quarter of 2014 was $0.2 million, excluding non-recurring or non-economic items reconciled on the
final page of this release. This compares to a net loss of $4.6 million, or $0.16 per share, before adjusting for these non-recurring or non-economic items. Adjusted CFFO was $7.9 million or $0.28 per share in the first quarter of 2014. Adjusted
CFFO would have been approximately $0.07 per share higher if not for the unusual weather-related costs, real estate taxes and referral fees discussed above.
Operating Activities
The Company is well positioned as a substantially all private-pay business and intends to further differentiate itself by enhancing its private-pay revenues.
Two CCRC s are being re-positioned with formerly skilled nursing space being converted to private-pay use. While these communities are being re-positioned, same-community results for these two communities will be excluded.
At communities under management, excluding the communities referenced above, same-community revenue in the first quarter of 2014 increased 0.8% versus the
first quarter of 2013. Same-community expenses increased 5.1% from the first quarter of the prior year. The increase in expenses was primarily due to higher costs from the harsh winter, including heating costs and snow removal, along with real
estate taxes and referral fees. Excluding these unusual items, same community expenses increased 1.0% and net operating income increased 0.8% from the fourth quarter of 2013. Same-community occupancies were 86.9%, a 20 basis point sequential
improvement from the fourth quarter of 2013. Average rents were $3,115 per occupied unit, or 1.2%, higher than the first quarter of the prior year.
Capital expenditures for the first quarter of 2014 were approximately $3.1 million, representing $2.2 million of investment spending and $0.9 million of
recurring capital expenditures. If annualized, spending for recurring capital expenditures was approximately $325 per unit.
The Company ended the quarter with $23.0 million of cash and cash equivalents, including restricted cash. During the quarter, the Company invested
$3.6 million of cash as equity to complete an acquisition and spent $3.1 million on capital improvements.
As of March 31, 2014, the Company financed
its 60 owned communities with mortgages totaling $485.0 million at interest rates averaging 5.25%. All of the Company s debt is at fixed interest rates, except three bridge loans totaling approximately $22.5 million at variable rates averaging
4.24%. The Company has no mortgage maturities before the third quarter of 2015.
The Company s mortgage debt includes a loan portfolio of 15 assets
totaling approximately $112.7 million as of March 31, 2014. Originally structured as 10-year fixed rate mortgages with a maturity date of July 2015, this loan portfolio has a blended fixed rate of 5.96%. The Company is pursuing a refinance of
this loan portfolio to take advantage of lower interest rates and the appreciation in value of the Company s owned communities. Based on current rates, the Company expects to lower the interest rate on this portfolio approximately 150 basis
points. This anticipated refinancing is expected to close at the end of the second quarter of 2014, generating approximately $30 million in additional proceeds and lowering the Company s overall borrowing costs. Additional cash is expected to
be generated upon the planned sale of certain non-core owned communities in the third quarter of 2014. Cash on hand, cash flow from operations, net proceeds from this anticipated refinancing and community sales are expected to be sufficient for
working capital, prudent reserves and equity needed to fund the Company s acquisition program.
Q1 2014 Conference Call Information
The Company will host a conference call with senior management to discuss the Company s first quarter financial results. The call will be held on Tuesday,
May 6, 2014 at 5:00 p.m. Eastern Time. The call-in number is 913-312-1227, confirmation code 3998352. A link to a simultaneous webcast of the teleconference will be available at www.capitalsenior.com through Windows Media Player or
For the convenience of the Company s shareholders and the public, the conference call will be recorded and available for replay starting
May 6, 2014 at 8:00 p.m. Eastern Time, until May 13, 2014 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 3998352. The conference call will also be made available for playback via the
Company s corporate website, www.capitalsenior.com, beginning May 7, 2014.
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 113 senior living communities in
geographically concentrated regions with an aggregate capacity of approximately 14,700 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 Ralph A. Beattie, Chief Financial Officer, at 972-770-5600 for more information.
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2014 2013
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 11,601 $ 13,611
Restricted cash 11,431 11,425
Accounts receivable, net 5,277 3,752
Accounts receivable from affiliates 197 416
Federal and state income taxes receivable 4,941 5,123
Deferred taxes 708 845
Property tax and insurance deposits 7,587 11,036
Prepaid expenses and other 4,372 6,605
Total current assets 46,114 52,813
Property and equipment, net 659,460 649,967
Investments in unconsolidated joint ventures 1,009 1,010
Other assets, net 38,099 41,759
Total assets $ 744,682 $ 745,549
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities:
Accounts payable $ 3,356 $ 3,813
Accounts payable to affiliates 3 1
Accrued expenses 25,996 29,321
Current portion of notes payable 9,974 11,918
Current portion of deferred income 11,418 11,215
Current portion of capital lease and financing obligations 959 948
Customer deposits 1,691 1,489
Total current liabilities 53,397 58,705
Deferred income 17,502 18,021
Capital lease and financing obligations, net of current portion 40,926 41,093
Deferred taxes 708 845
Other long-term liabilities 1,526 1,559
Notes payable, net of current portion 475,888 467,376
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 29,006 and 28,845 in 2014 and 2013, respectively 294 292
Additional paid-in capital 145,151 143,721
Retained earnings 10,224 14,871
Treasury stock, at cost 350 shares (934 ) (934 )
Total shareholders equity 154,735 157,950
Total liabilities and shareholders equity $ 744,682 $ 745,549
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited, in thousands, except per share data)
Three Months Ended March 31,
2014 2013
Revenues:
Resident and health care revenue $ 90,174 $ 84,775
Affiliated management services revenue 208 185
Community reimbursement revenue 1,475 1,265
Total revenues 91,857 86,225
Expenses:
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) 55,691 50,120
General and administrative expenses 4,971 4,922
Facility lease expense 14,794 14,270
Stock-based compensation expense 1,360 996
Depreciation and amortization expense 10,951 11,889
Community reimbursement expense 1,475 1,265
Total expenses 89,242 83,462
Income from operations 2,615 2,763
Other income (expense):
Interest income 12 104
Interest expense (7,137 ) (5,684 )
Gain on disposition of assets, net 4 1
Equity in earnings of unconsolidated joint ventures, net 41 3
Other income 8 12
Loss before (provision) benefit for income taxes (4,457 ) (2,801 )
(Provision) Benefit for income taxes (190 ) 725
Net loss $ (4,647 ) $ (2,076 )
Per share data:
Basic net loss per share $ (0.16 ) $ (0.07 )
Diluted net loss per share $ (0.16 ) $ (0.07 )
Weighted average shares outstanding basic 28,146 27,584
Weighted average shares outstanding diluted 28,146 27,584
Comprehensive loss $ (4,647 ) $ (2,076 )
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Three Months Ended March 31,
2014 2013
Operating Activities
Net loss $ (4,647 ) $ (2,076 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 10,951 11,889
Amortization of deferred financing charges 320 365
Amortization of deferred lease costs and lease intangibles 308 325
Deferred income (316 ) (1,070 )
Deferred income taxes (175 )
Gain on disposition of assets, net (4 ) (1 )
Equity in earnings of unconsolidated joint ventures, net (41 ) (3 )
Provision for bad debts 238 20
Stock based compensation expense 1,360 996
Changes in operating assets and liabilities:
Accounts receivable (1,763 ) (2,514 )
Accounts receivable from affiliates 219 360
Property tax and insurance deposits 3,449 2,559
Prepaid expenses and other 2,233 2,292
Other assets 438 (493 )
Accounts payable (455 ) (4,885 )
Accrued expenses (3,325 ) (1,480 )
Federal and state income taxes receivable 182 (564 )
Customer deposits 202 3
Net cash provided by operating activities 9,349 5,548
Investing Activities
Capital expenditures (3,106 ) (2,135 )
Cash paid for acquisitions (14,600 ) (6,741 )
Proceeds from disposition of assets 4
Distributions from joint ventures 42 42
Net cash used in investing activities (17,660 ) (8,834 )
Financing Activities
Proceeds from notes payable 11,000 16,381
Repayments of notes payable (4,432 ) (14,447 )
Increase in restricted cash (6 ) (6 )
Cash payments for capital lease obligations (156 ) (143 )
Cash proceeds from the issuance of common stock 135 1,271
Excess tax benefits on stock options exercised (63 ) (652 )
Deferred financing charges paid (177 ) (132 )
Net cash provided by financing activities 6,301 2,272
Decrease in cash and cash equivalents (2,010 ) (1,014 )
Cash and cash equivalents at beginning of period 13,611 18,737
Cash and cash equivalents at end of period $ 11,601 $ 17,723
Supplemental Disclosures
Cash paid during the period for:
Interest $ 6,429 $ 5,150
Income taxes $ 44 $ 23
Capital Senior Living Corporation
Supplemental Information
Communities Average Resident Capacity Average Units
Q1 14 Q1 13 Q1 14 Q1 13 Q1 14 Q1 13
Portfolio Data
I. Community Ownership / Management
Consolidated communities
Owned 60 49 7,689 6,744 6,124 5,417
Leased 50 50 6,333 6,298 5,024 5,029
Joint Venture communities (equity method) 3 3 674 674 434 433
Total 113 103 14,696 13,716 11,582 10,879
Independent living 7,597 7,185 6,220 6,180
Assisted living 7,099 5,816 5,362 4,531
Continuing Care Retirement Communities 715 168
Total 14,696 13,716 11,582 10,879
II. Percentage of Operating Portfolio
Consolidated communities
Owned 53.1 % 48.0 % 52.3 % 49.2 % 52.9 % 49.8 %
Leased 44.2 % 49.0 % 43.1 % 45.9 % 43.4 % 46.2 %
Joint Venture communities (equity method) 2.7 % 3.0 % 4.6 % 4.9 % 3.7 % 4.0 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Independent living 51.7 % 52.4 % 53.7 % 56.8 %
Assisted living 48.3 % 42.4 % 46.3 % 41.7 %
Continuing Care Retirement Communities 5.2 % 1.5 %
Total 100.0 % 100.0 % 100.0 % 100.0 %
Capital Senior Living Corporation
Supplemental Information (excludes 2 communities being re-positioned)
Q1 14 Q1 13
Selected Operating Results
I. Owned communities
Number of communities 58 47
Resident capacity 7,144 6,029
Unit capacity 5,675 4,800
Financial occupancy (1) 87.9 % 88.4 %
Revenue (in millions) 42.9 34.9
Operating expenses (in millions) (2) 24.7 19.1
Operating margin 43 % 45 %
Average monthly rent 2,865 2,744
II. Leased communities
Number of communities 50 50
Resident capacity 6,333 6,298
Unit capacity 5,024 5,029
Financial occupancy (1) 86.1 % 86.6 %
Revenue (in millions) 44.5 44.1
Operating expenses (in millions) (2) 22.6 21.7
Operating margin 49 % 51 %
Average monthly rent 3,428 3,372
III. Consolidated communities
Number of communities 108 97
Resident capacity 13,477 12,327
Unit capacity 10,700 9,829
Financial occupancy (1) 87.1 % 87.5 %
Revenue (in millions) 87.4 79.0
Operating expenses (in millions) (2) 47.3 40.8
Operating margin 46 % 48 %
Average monthly rent 3,126 3,062
IV. Communities under management
Number of communities 111 100
Resident capacity 14,151 13,001
Unit capacity 11,133 10,262
Financial occupancy (1) 87.1 % 87.2 %
Revenue (in millions) 91.5 82.7
Operating expenses (in millions) (2) 49.6 42.9
Operating margin 46 % 48 %
Average monthly rent 3,145 3,079
V. Same communities under management
Number of communities 99 99
Resident capacity 12,962 12,932
Unit capacity 10,244 10,245
Financial occupancy (1) 86.9 % 87.2 %
Revenue (in millions) 83.2 82.5
Operating expenses (in millions) (2) 44.6 42.8
Operating margin 46 % 48 %
Average monthly rent 3,115 3,077
VI. General and Administrative expenses as a percent of Total Revenues under Management
First Quarter (3) 4.9 % 5.1 %
VII. Consolidated Mortgage Debt Information (in thousands, except interest rates) (excludes insurance premium and auto financing)
Total fixed rate mortgage debt 462,445 363,956
Total variable rate mortgage debt 22,522
Weighted average interest rate 5.25 % 5.24 %
CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
(in thousands, except per share data)
Three Months Ended March 31,
2014 2013
Adjusted EBITDAR
Net income from operations $ 2,615 $ 2,763
Depreciation and amortization expense 10,951 11,889
Stock-based compensation expense 1,360 996
Facility lease expense 14,794 14,270
Provision for bad debts 238 20
Casualty losses 314 88
Transaction costs 487 424
CCRC s being repositioned 208
Adjusted EBITDAR $ 30,967 $ 30,450
Adjusted EBITDAR Margin
Adjusted EBITDAR $ 30,967 $ 30,450
Total revenues $ 91,857 $ 86,225
CCRC s being repositioned (2,709 )
Adjusted revenues $ 89,148 $ 86,225
Adjusted EBITDAR margin 34.7 % 35.3 %
Adjusted net income and net income per share
Net loss $ (4,647 ) $ (2,076 )
Casualty losses, net of tax 198 55
Transaction costs, net of tax 307 267
Resident lease amortization, net of tax 2,205 3,602
Gain on disposition of assets, net of tax (3 ) (1 )
Deferred tax asset valuation allowance 1,692
CCRC s being repositioned, net of tax 503
Adjusted net income $ 255 $ 1,847
Adjusted net income per share $ 0.01 $ 0.07
Diluted shares outstanding 28,153 27,708
Adjusted CFFO and Adjusted CFFO per share
Net loss $ (4,647 ) $ (2,076 )
Non-cash charges, net 12,816 12,346
Recurring capital expenditures (1,028 ) (948 )
Casualty losses, net of tax 198 55
Transaction costs 487 424
Tax impact of Spring Meadows Transaction (106 ) (106 )
Tax impact of lease modification
CCRC s being repositioned, net of tax 179
Adjusted CFFO $ 7,899 $ 9,695
Adjusted CFFO per share $ 0.28 $ 0.35
Last updated: May 6, 2014