Full Press Release Details
CAPITAL SENIOR LIVING CORPORATION
REPORTS FIRST QUARTER 2012 RESULTS;
CFFO INCREASES 13% VERSUS PRIOR YEAR
DALLAS (BUSINESS WIRE) May 2,
2012 Capital Senior Living Corporation (the Company ) (NYSE:CSU), one of the country s largest operators of senior living communities, today announced operating results for the first quarter of 2012. Company highlights for the
first quarter include:
We are very pleased to report continued occupancy growth and strong results for the first quarter,
which is typically a challenging period, said Lawrence A. Cohen, Chief Executive Officer of the Company. Successful execution of our strategic plan is significantly enhancing shareholder value through a focus on operations, marketing and
accretive growth. Same-community occupancies increased 110 basis points from the comparable quarter of the prior year and 20 basis points sequentially. EBITDAR margin increased by 130 basis points from the first quarter of 2011. We continue to
enhance our geographic concentration by acquiring high quality senior living communities that generate meaningful increases in CFFO, earnings and net asset value. Since the first quarter of last year, we have added 17 communities to our consolidated
total, increasing our ownership by approximately 1,700 units. As the value leader in providing quality seniors housing and care at reasonable prices, we are well positioned to make further gains as a substantially all private-pay business in an
industry that benefits from need-driven demand and limited new supply.
Recent Investment Activity
These seven communities were financed with approximately $54.8 million of 10-year fixed rate debt that is non-recourse to the Company with an average interest rate of 4.63%.
For the first quarter of 2012, the Company reported revenue of $72.2 million, compared to revenue of $59.8 million in the first quarter of 2011. Resident and healthcare revenue increased from the first
quarter of the prior year by approximately $14.1 million, or 24.8%, largely as a result of acquiring 13 communities since the second half of 2011 and converting the four Spring Meadows communities previously owned in joint ventures to leased
communities. The number of consolidated communities increased from 70 in the first quarter of 2011 to 87 in the first quarter of 2012.
Average monthly rent was $2,942 per occupied unit in the first quarter of 2012, an increase of $166, or 6.0%, over the first quarter of 2011. Financial
occupancy of the consolidated portfolio averaged 85.7% in the first quarter of 2012, 10 basis points higher than the fourth quarter of 2011 and 90 basis points higher than the first quarter of 2011.
As a percentage of resident and healthcare revenue, operating expenses were 59.8% in the first quarter of 2012, compared to 59.9% in the first quarter of
2011, an improvement of 10 basis points. Operating expenses for the first quarter of 2012 were $42.5 million, an increase of $8.4 million from the first quarter of 2011, primarily due to 17 additional communities now being consolidated.
General and administrative expenses as a percentage of revenues under management were 4.5% for the quarter, excluding transaction costs associated with
the Company s acquisition program. Transaction costs for the quarter were approximately $0.4 million.
Adjusted EBITDAR for the first
quarter of 2012 was approximately $25.7 million, an increase of $5.2 million, or 25.3% from the first quarter of 2011. Adjusted EBITDAR margin was 35.6% for the period, an improvement of 130 basis points from the first quarter of 2011.
Adjusted net income for the first quarter of 2012 was $1.9 million, or $0.07 per share, excluding non-recurring or non-economic items reconciled on the
final page of this release. This compares to adjusted net income of $1.7 million, or $0.06 per share in the first quarter of 2011.
CFFO was $6.5 million, or $0.24 per share in the first quarter of 2012. Adjusted CFFO exceeded the first quarter of 2011 by $0.8 million, or $0.03 per share.
Operating Activities
At communities under management, excluding one community that
had a recent conversion, same-community revenue in the first quarter of 2012 increased 3.9% versus the first quarter of 2011. Excluding the expenses related to one additional day due to leap year in 2012 for comparability between the periods,
same-community expenses increased 2.7% and net income increased 5.7% from the first quarter of the prior year.
Same-community occupancies were 110 basis points higher than the first quarter of 2011 and 20 basis points
higher than the fourth quarter of 2011. Same-store occupancy in the first quarter reflected occupancy gains in independent living exceeding those in higher levels of care, resulting in average rents 2.2% higher than the first quarter of 2011 and
0.5% higher than last quarter.
Capital expenditures for the first quarter of 2012 were approximately $2.3 million, representing $1.3 million
of investment spending and $1.0 million of recurring capital expenditures. If annualized, spending for recurring capital expenditures equaled approximately $450 per unit.
The Company ended the first quarter of 2012 with $26.8 million of
cash and cash equivalents, including restricted cash. During the quarter, approximately $13.4 million of cash was invested as equity in the acquisition of six senior living communities. As of March 31, 2012, the Company financed its 38 owned
communities with mortgages totaling $276.6 million at fixed interest rates averaging 5.6%. The Company has no mortgage maturities before the third quarter of 2015.
The Company s mortgage debt includes supplemental financing on existing communities with proceeds of $5.6 million that closed in the first quarter with a maturity date of June 2017. Interest on these
borrowings is at a fixed rate of 4.47%. Additional supplemental financing with proceeds of approximately $20.0 million is expected to close in the second quarter of 2012 on similar terms. Cash on hand, cash flow from operations and proceeds from
these supplemental financings are expected to be sufficient for working capital, prudent reserves and equity to fund the Company s 2012 acquisition program. Furthermore, the Company has the ability to pursue additional supplemental financing in
the future to fund further acquisitions, reflecting the appreciation in value of the Company s owned communities.
Conference Call Information
The Company will host a conference call with senior management to discuss the Company s first quarter
2012 financial results. The call will be held on Thursday, May 3, 2012 at 11:00 a.m. Eastern Time. The call-in number is 913-312-1491, confirmation code 4351032. 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, 2012 at 2:00 p.m. Eastern Time, until May 12, 2012 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code
4351032. The conference call will also be made available for playback via the Company s corporate website, www.capitalsenior.com.
Capital Senior Living Corporation is one of the nation s largest operators of residential communities for senior adults. The Company s operating philosophy emphasizes 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 currently operates 91 senior living communities in geographically concentrated regions with an aggregate
capacity of approximately 12,600 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, 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
This release contains certain financial information not derived in accordance with generally accepted accounting
principles (GAAP), including adjusted EBITDAR, adjusted EBITDAR margin, Adjusted CFFO, Adjusted CFFO per share and other items. The Company believes this information is useful to investors and other interested parties. Such information should not be
considered as a substitute for any measures derived in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Reconciliation of this information to the most comparable GAAP measures is included as an
attachment to this release.
Contact Ralph A. Beattie, Chief Financial Officer, at 972-770-5600 for more information.
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
| March 31, 2012 | December 31, 2011 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 17,714 | $ | 22,283 | ||||
| Restricted cash | 9,111 | 9,102 | ||||||
| Accounts receivable, net | 4,195 | 4,526 | ||||||
| Accounts receivable from affiliates | 611 | 708 | ||||||
| Federal and state income taxes receivable | 4,934 | 5,438 | ||||||
| Deferred taxes | 1,533 | 1,479 | ||||||
| Property tax and insurance deposits | 8,982 | 11,395 | ||||||
| Prepaid expenses and other | 5,822 | 6,068 | ||||||
| Total current assets | 52,902 | 60,999 | ||||||
| Property and equipment, net | 413,775 | 365,459 | ||||||
| Deferred taxes | 5,949 | 5,782 | ||||||
| Investments in unconsolidated joint ventures | 1,050 | 1,070 | ||||||
| Other assets, net | 32,811 | 29,016 | ||||||
| Total assets | $ | 506,487 | $ | 462,326 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,656 | $ | 2,297 | ||||
| Accounts payable to affiliates | 133 | 314 | ||||||
| Accrued expenses | 17,524 | 19,086 | ||||||
| Current portion of notes payable | 8,634 | 8,196 | ||||||
| Current portion of deferred income | 9,020 | 8,740 | ||||||
| Current portion of capital lease obligations | 44 | 50 | ||||||
| Customer deposits | 1,502 | 1,530 | ||||||
| Total current liabilities | 38,513 | 40,213 | ||||||
| Deferred income | 25,148 | 26,175 | ||||||
| Capital lease obligations, net of current portion | 22 | 31 | ||||||
| Other long-term liabilities | 1,792 | 1,826 | ||||||
| Notes payable, net of current portion | 270,837 | 224,940 | ||||||
| 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 28,158 and 27,699 in 2012 and 2011, respectively | 285 | 280 | ||||||
| Additional paid-in capital | 136,187 | 135,301 | ||||||
| Retained earnings | 34,637 | 34,494 | ||||||
| Treasury stock, at cost 350 shares | (934 | ) | (934 | ) | ||||
| Total shareholders equity | 170,175 | 169,141 | ||||||
| Total liabilities and shareholders equity | $ | 506,487 | $ | 462,326 |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited, in thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2012 | 2011 | |||||||
| Revenues: | ||||||||
| Resident and health care revenue | $ | 70,998 | $ | 56,899 | ||||
| Affiliated management services revenue | 154 | 434 | ||||||
| Community reimbursement revenue | 1,068 | 2,491 | ||||||
| Total revenues | 72,220 | 59,824 | ||||||
| Expenses: | ||||||||
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) | 42,486 | 34,055 | ||||||
| General and administrative expenses | 3,777 | 2,850 | ||||||
| Facility lease expense | 13,495 | 11,431 | ||||||
| Stock-based compensation expense | 645 | 258 | ||||||
| Depreciation and amortization expense | 6,706 | 3,558 | ||||||
| Community reimbursement expense | 1,068 | 2,491 | ||||||
| Total expenses | 68,177 | 54,643 | ||||||
| Income from operations | 4,043 | 5,181 | ||||||
| Other income (expense): | ||||||||
| Interest income | 26 | 14 | ||||||
| Interest expense | (3,544 | ) | (2,717 | ) | ||||
| Gain on disposition of assets, net | 2 | |||||||
| Equity in losses of unconsolidated joint ventures, net | (137 | ) | (188 | ) | ||||
| Income before provision for income taxes | 390 | 2,290 | ||||||
| Provision for income taxes | (247 | ) | (992 | ) | ||||
| Net income | $ | 143 | $ | 1,298 | ||||
| Per share data: | ||||||||
| Basic net income per share | $ | 0.01 | $ | 0.05 | ||||
| Diluted net income per share | $ | 0.01 | $ | 0.05 | ||||
| Weighted average shares outstanding basic | 27,262 | 26,884 | ||||||
| Weighted average shares outstanding diluted | 27,314 | 26,993 | ||||||
| Comprehensive income | $ | 143 | $ | 1,298 |
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
| Three Months Ended March 31, | ||||||||
| 2012 | 2011 | |||||||
| Operating Activities | ||||||||
| Net income | $ | 143 | $ | 1,298 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 6,706 | 3,558 | ||||||
| Amortization of deferred financing charges | 106 | 83 | ||||||
| Amortization of deferred lease costs and lease intangibles | 91 | 551 | ||||||
| Deferred income | (747 | ) | (218 | ) | ||||
| Deferred income taxes | (221 | ) | 668 | |||||
| Gain on disposition of assets, net | (2 | ) | ||||||
| Equity in losses of unconsolidated joint ventures, net | 137 | 188 | ||||||
| Provision for bad debts | 189 | 8 | ||||||
| Stock based compensation expense | 645 | 258 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 142 | (527 | ) | |||||
| Accounts receivable from affiliates | 97 | 309 | ||||||
| Property tax and insurance deposits | 2,413 | 1,535 | ||||||
| Prepaid expenses and other | 246 | 1,132 | ||||||
| Other assets | 345 | (2,228 | ) | |||||
| Accounts payable | (822 | ) | (680 | ) | ||||
| Accrued expenses | (1,562 | ) | (1,742 | ) | ||||
| Federal and state income taxes receivable | 504 | (192 | ) | |||||
| Customer deposits | (28 | ) | (33 | ) | ||||
| Net cash provided by operating activities | 8,382 | 3,968 | ||||||
| Investing Activities | ||||||||
| Capital expenditures | (2,272 | ) | (1,418 | ) | ||||
| Cash paid for acquisitions | (56,395 | ) | ||||||
| Proceeds from disposition of assets | 19 | |||||||
| Contributions to joint ventures | (132 | ) | (463 | ) | ||||
| Distributions from joint ventures | 15 | 64 | ||||||
| Net cash used in investing activities | (58,765 | ) | (1,817 | ) | ||||
| Financing Activities | ||||||||
| Proceeds from notes payable | 48,571 | |||||||
| Repayments of notes payable | (2,236 | ) | (2,019 | ) | ||||
| Increase in restricted cash | (9 | ) | (2,573 | ) | ||||
| Cash payments for capital lease obligations | (15 | ) | (35 | ) | ||||
| Cash proceeds from the issuance of common stock | 16 | 855 | ||||||
| Excess tax benefits on stock options exercised | 230 | 314 | ||||||
| Deferred financing charges paid | (743 | ) | ||||||
| Net cash provided by (used in) financing activities | 45,814 | (3,458 | ) | |||||
| (Decrease) increase in cash and cash equivalents | (4,569 | ) | (1,307 | ) | ||||
| Cash and cash equivalents at beginning of period | 22,283 | 31,248 | ||||||
| Cash and cash equivalents at end of period | $ | 17,714 | $ | 29,941 | ||||
| Supplemental Disclosures | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 3,400 | $ | 2,642 | ||||
| Income taxes | $ | 105 | $ | 51 |
Capital Senior Living Corporation
Supplemental Information
| Communities | Resident Capacity | Units | ||||||||||||||||||||||
| Q1 12 | Q1 11 | Q1 12 | Q1 11 | Q1 12 | Q1 11 | |||||||||||||||||||
| Portfolio Data | ||||||||||||||||||||||||
| I. Community Ownership / Management | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 38 | 25 | 5,451 | 4,052 | 4,486 | 3,501 | ||||||||||||||||||
| Leased | 49 | 45 | 6,318 | 5,514 | 5,050 | 4,377 | ||||||||||||||||||
| Joint Venture communities (equity method) | 3 | 7 | 674 | 1,434 | 433 | 1,061 | ||||||||||||||||||
| Total | 90 | 77 | 12,443 | 11,000 | 9,969 | 8,939 | ||||||||||||||||||
| Independent living | 6,877 | 6,622 | 5,716 | 5,515 | ||||||||||||||||||||
| Assisted living | 4,851 | 3,663 | 3,635 | 2,806 | ||||||||||||||||||||
| Continuing Care Retirement Communities | 715 | 715 | 618 | 618 | ||||||||||||||||||||
| Total | 12,443 | 11,000 | 9,969 | 8,939 | ||||||||||||||||||||
| II. Percentage of Operating Portfolio | ||||||||||||||||||||||||
| Consolidated communities | ||||||||||||||||||||||||
| Owned | 42.2 | % | 32.5 | % | 43.8 | % | 36.8 | % | 45.0 | % | 39.2 | % | ||||||||||||
| Leased | 54.5 | % | 58.4 | % | 50.8 | % | 50.1 | % | 50.7 | % | 49.0 | % | ||||||||||||
| Joint venture communities (equity method) | 3.3 | % | 9.1 | % | 5.4 | % | 13.0 | % | 4.3 | % | 11.9 | % | ||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||
| Independent living | 55.3 | % | 60.2 | % | 57.3 | % | 61.7 | % | ||||||||||||||||
| Assisted living | 39.0 | % | 33.3 | % | 36.5 | % | 31.4 | % | ||||||||||||||||
| Continuing Care Retirement Communities | 5.7 | % | 6.5 | % | 6.2 | % | 6.9 | % | ||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Capital Senior Living Corporation
Supplemental Information
| Selected Operating Results | Q1 12 | Q1 11 | ||||||
| I. Owned communities | ||||||||
| Number of communities | 38 | 25 | ||||||
| Resident capacity | 5,451 | 4,052 | ||||||
| Unit capacity | 4,486 | 3,501 | ||||||
| Financial occupancy (1) | 87.9 | % | 85.3 | % | ||||
| Revenue (in millions) | 27.5 | 21.0 | ||||||
| Operating expenses (in millions) (2) | 15.1 | 11.7 | ||||||
| Operating margin | 45 | % | 44 | % | ||||
| Average monthly rent | 2,507 | 2,346 | ||||||
| II. Leased communities | ||||||||
| Number of communities | 49 | 45 | ||||||
| Resident capacity | 6,318 | 5,514 | ||||||
| Unit capacity | 5,050 | 4,377 | ||||||
| Financial occupancy (1) | 83.9 | % | 84.5 | % | ||||
| Revenue (in millions) | 43.4 | 35.8 | ||||||
| Operating expenses (in millions) (2) | 23.4 | 19.2 | ||||||
| Operating margin | 46 | % | 46 | % | ||||
| Average monthly rent | 3,306 | 3,109 | ||||||
| III. Consolidated communities | ||||||||
| Number of communities | 87 | 70 | ||||||
| Resident capacity | 11,769 | 9,566 | ||||||
| Unit capacity | 9,536 | 7,878 | ||||||
| Financial occupancy (1) | 85.7 | % | 84.8 | % | ||||
| Revenue (in millions) | 70.9 | 56.8 | ||||||
| Operating expenses (in millions) (2) | 38.5 | 30.9 | ||||||
| Operating margin | 46 | % | 46 | % | ||||
| Average monthly rent | 2,942 | 2,776 | ||||||
| IV. Communities under management | ||||||||
| Number of communities | 90 | 77 | ||||||
| Resident capacity | 12,443 | 11,000 | ||||||
| Unit capacity | 9,969 | 8,939 | ||||||
| Financial occupancy (1) | 85.0 | % | 83.4 | % | ||||
| Revenue (in millions) | 74.0 | 65.3 | ||||||
| Operating expenses (in millions) (2) | 40.4 | 35.5 | ||||||
| Operating margin | 45 | % | 46 | % | ||||
| Average monthly rent | 2,958 | 2,878 | ||||||
| V. Same Store communities under management | ||||||||
| (Excludes 1 community with a conversion) | ||||||||
| Number of communities | 76 | 76 | ||||||
| Resident capacity | 10,818 | 10,818 | ||||||
| Unit capacity | 8,798 | 8,798 | ||||||
| Financial occupancy (1) | 84.6 | % | 83.5 | % | ||||
| Revenue (in millions) | 67.0 | 64.5 | ||||||
| Operating expenses (in millions) (2) | 36.2 | 34.9 | ||||||
| Operating margin | 46 | % | 46 | % | ||||
| Average monthly rent | 2,944 | 2,880 | ||||||
| VI. General and Administrative expenses as a percent of Total Revenues under Management | ||||||||
| First Quarter (3) | 4.5 | % | 4.4 | % | ||||
| VII. Consolidated Debt Information (in thousands, except for interest rates) | ||||||||
| (Excludes insurance premium and auto financing) | ||||||||
| Total fixed rate debt | 276,600 | 181,313 | ||||||
| Weighted average interest rate | 5.6 | % | 6.1 | % |
CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
(In thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2012 | 2011 | |||||||
| Adjusted EBITDAR | ||||||||
| Net income from operations | $ | 4,043 | $ | 5,181 | ||||
| Depreciation and amortization expense | 6,706 | 3,558 | ||||||
| Stock-based compensation expense | 645 | 258 | ||||||
| Facility lease expense | 13,495 | 11,431 | ||||||
| Provision for bad debts | 189 | 8 | ||||||
| Casualty losses | 173 | 21 | ||||||
| Transaction costs | 440 | 40 | ||||||
| Adjusted EBITDAR | $ | 25,691 | $ | 20,497 | ||||
| Adjusted EBITDAR Margin | ||||||||
| Adjusted EBITDAR | $ | 25,691 | $ | 20,497 | ||||
| Total revenues | 72,220 | 59,824 | ||||||
| Adjusted EBITDAR margin | 35.6 | % | 34.3 | % | ||||
| Adjusted net income and net income per share | ||||||||
| Net income | $ | 143 | $ | 1,298 | ||||
| Casualty losses, net of tax | 109 | 13 | ||||||
| Transaction costs, net of tax | 277 | 25 | ||||||
| Resident lease amortization, net of tax | 1,349 | 315 | ||||||
| Gain on disposition of assets, net of tax | (1 | ) | ||||||
| Adjusted net income | $ | 1,877 | $ | 1,651 | ||||
| Adjusted net income per share | $ | 0.07 | $ | 0.06 | ||||
| Diluted shares outstanding | 27,314 | 26,993 | ||||||
| Adjusted CFFO and Adjusted CFFO per share | ||||||||
| Net cash provided by operating activities | $ | 8,382 | $ | 3,968 | ||||
| Changes in operating assets and liabilities | (1,335 | ) | 2,426 | |||||
| Recurring capital expenditures | (797 | ) | (664 | ) | ||||
| Casualty losses, net of tax | 109 | 13 | ||||||
| Transaction costs, net of tax | 277 | 25 | ||||||
| Tax impact of Spring Meadows Transaction | (106 | ) | ||||||
| Adjusted CFFO | $ | 6,530 | $ | 5,768 | ||||
| Adjusted CFFO per share | $ | 0.24 | $ | 0.21 |