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 first
quarter 2016. 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)
- Revenue in the first quarter of 2016,
including all communities, was $109.2 million, a $10.5 million, or
10.7%, increase from the first quarter of 2015.
- Occupancy for the Company’s
consolidated communities was 88.6% in the first quarter of 2016, an
increase of 130 basis points from the first quarter of 2015 and a
decrease of 60 basis points from the fourth quarter of 2015.
Same-community occupancy was 88.5% for the first quarter of 2016, a
110 basis point increase from the first quarter of 2015 and a 40
basis point decrease from the fourth quarter of 2015.
- Average monthly rent for the Company’s
consolidated communities in the first quarter of 2016 was $3,443,
an increase of $150 per occupied unit, or 4.6%, as compared to the
first quarter of 2015. Same-community average monthly rent was
$3,399, an increase of $76 per occupied unit, or 2.3%, from the
first quarter of 2015.
- Adjusted EBITDAR was $37.3 million in
the first quarter of 2016, a 9.3% increase from the first quarter
of 2015. The three communities undergoing repositioning, lease-up
or significant renovation and conversion generated an additional
$0.8 million of EBITDAR. The Company’s Adjusted EBITDAR margin was
35.6% for the first quarter of 2016.
- Adjusted Cash From Facility Operations
(“CFFO”) was $11.7 million, or $0.41 per share, in the first
quarter of 2016 compared to $10.5 million, or $0.37 per share, in
the first quarter of 2015, an increase of 11.0%.
- The Company’s Net Loss for the first
quarter of 2016, including all communities, was $6.0 million, or
$0.21 per share, due mostly to non-cash amortization of resident
leases of $3.5 million associated with communities acquired by the
Company in the previous 12 months. Adjusted Net Loss was $0.8
million, or $0.03 per share, for the first quarter of 2016.
- As previously disclosed, the Company
closed on the acquisition of five communities during the first
quarter of 2016 for a combined purchase price of approximately
$64.4 million. These communities expand the Company’s operations in
Wisconsin and Florida, and are expected to generate incremental
annual CFFO of approximately $0.11 per share.
- Subject to completion of due diligence
and customary closing conditions, acquisitions of three additional
communities totaling approximately $74 million are expected to
close during the second quarter of 2016, which will bring the
Company’s total acquisitions in 2016 to approximately $138.4
million.
“We continue to demonstrate the advantages of our clear and
differentiated strategy to drive superior shareholder value as we
successfully execute on our multiple avenues of growth,” said
Lawrence A. Cohen, Chief Executive Officer of the Company. “Our
focused execution produced growth in all of our key metrics in the
first quarter as compared to the prior year, including revenue,
occupancy, average monthly rent, NOI, Adjusted EBITDAR and Adjusted
CFFO. Our conversions of independent living units to assisted
living and memory care units also continue to show timely
progress.
“Complementing this growth is a robust acquisition pipeline that
allows us to increase our ownership of high-quality senior living
communities in geographically concentrated regions and generates
meaningful increases in CFFO, earnings and real estate value. We
expect to close on the acquisition of three communities during the
second quarter 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 a growing
economy.”
Recent Investment
Activity
Financial Results - First
Quarter
For the first quarter of 2016, the Company reported revenue of
$109.2 million, compared to revenue of $98.6 million in the first
quarter of 2015, an increase of 10.7%. Excluding the revenue of the
five communities the Company sold during or since the first quarter
of 2015 from all appropriate periods, revenues increased $12.0
million, or 12.3%, in the first quarter of 2016 as compared to the
first quarter of 2015, mostly due to the acquisition of 14
communities during 2015 and the first quarter of 2016.
Operating expenses for the first quarter of 2016 were $66.5
million, an increase of $6.4 million from the first quarter of
2015, also primarily due to the acquisitions made during 2015 and
the first quarter of 2016.
Revenue for consolidated communities excluding the three
communities undergoing repositioning, lease-up or significant
renovation and conversion increased 10.7% in the first quarter of
2016 as compared to the first quarter of 2015.
Net operating income for these communities increased 11.7% in
the first quarter of 2016 as compared to the first quarter of 2015.
These increases were achieved with fewer units available for lease
in the first quarter of 2016 than the first quarter of 2015,
exclusive of acquisitions, due to conversion and refurbishment
projects currently in progress at certain communities.
General and administrative expenses for the first quarter of
2016 were $6.2 million, which includes $0.9 million of transaction
and other one-time costs. Excluding transaction and other one-time
costs from both periods, general and administrative expenses
increased $0.8 million in the first quarter of 2016 as compared to
the first quarter of 2015, $0.7 million of which was due to higher
medical claims expense. As a percentage of revenues under
management, general and administrative expenses, excluding
transaction and other one-time costs, were 4.9% in the first
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 first quarter of 2016 was approximately
$37.3 million, an increase of $3.2 million, or 9.3%, from the first
quarter of 2015. This does not include EBITDAR of $0.8 million
related to three communities undergoing repositioning, lease-up or
significant renovation and conversion. The Adjusted EBITDAR margin
for the first quarter of 2016 was 35.6%.
Adjusted CFFO was $11.7 million, or $0.41 per share, in the
first quarter of 2016, an 11.0% increase from $10.5 million, or
$0.37 per share, in the first quarter of the prior year.
The Company recorded a net loss of $6.0 million, or $0.21 per
share, in the first 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 $0.8 million, or $0.03 per
share, 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 2016 increased
2.3% versus the first quarter of 2015. 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. With a
like number of units available in both years, same-community
revenue would have increased approximately 3.5% in the first
quarter of 2016 as compared to the first quarter of the prior
year.
Same-community expenses increased 1.4% from the first quarter of
the prior year. Labor costs, including benefits, increased 2.8% and
food costs increased 0.9%, while utilities decreased 9.0%, all as
compared to the first quarter of 2015. Same-community net operating
income increased 3.7% in the first quarter of 2016 as compared to
the first quarter of 2015. With a like number of units available in
both years, same-community net operating income would have
increased approximately 5.8% from the first quarter of the prior
year.
Capital expenditures for the first quarter of 2016 were $13.8
million, representing approximately $12.5 million of investment
spending and approximately $1.3 million of recurring capital
expenditures. If annualized, spending for recurring capital
expenditures was approximately $430 per unit.
Balance Sheet
The Company ended the quarter with $45.0 million of cash and
cash equivalents, including restricted cash, a decrease of $24.2
million since December 31, 2015. During the first quarter of 2016,
the Company invested $18.1 million of cash as equity to complete
the acquisition of three communities and spent $13.8 million on
capital improvements, which includes $2.3 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 $0.9 million in the first quarter
for capital improvements and expects to receive additional
reimbursements as the remaining projects are completed.
As of March 31, 2016, the Company financed its owned communities
with mortgages totaling $818.3 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 March
31, 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,
share repurchases and the equity needed to fund the Company’s
acquisition, conversion and renovation programs.
Q1 2016 Conference Call
Information
The Company will host a conference call with senior management
to discuss the Company’s first quarter 2016 financial results. The
call will be held on Tuesday, May 3, 2016 at 5:00 p.m. Eastern
Time. The call-in number is 913-312-1427, confirmation code
9231614. 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, 2016 at 8:00 p.m. Eastern Time, until May
12, 2016 at 8:00 p.m. Eastern Time. To access the conference call
replay, call 719-457-0820, confirmation code 9231614. The
conference call will also be made available for playback via the
Company’s corporate website, www.capitalsenior.com, beginning May
4, 2016.
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 flows.
About the Company
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.
Safe Harbor
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.
CAPITAL SENIOR LIVING
CORPORATION CONSOLIDATED BALANCE SHEETS (in
thousands, except per share data) March 31,
December 31, 2016
2015 (unaudited)
ASSETS Current assets: Cash and cash equivalents $ 31,808 $
56,087 Restricted cash 13,163 13,159 Accounts receivable, net
10,118 9,254 Property tax and insurance deposits 9,967 14,398
Prepaid expenses and other
3,398
4,370 Total current assets 68,454 97,268
Property and equipment, net 953,352 890,572 Other assets, net
31,295 31,193
Total assets
$ 1,053,101
$ 1,019,033 LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable
$ 1,575 $ 3,362 Accrued expenses 32,962 34,300 Current portion of
notes payable, net of deferred loan costs 13,480 13,634 Current
portion of deferred income and resident revenue 15,628 16,059
Current portion of capital lease and financing obligations 1,201
1,257 Federal and state income taxes payable 289 111 Customer
deposits
1,788 1,819
Total current liabilities 66,923 70,542 Deferred income
13,645 13,992 Capital lease and financing obligations, net of
current portion 38,603 38,835 Other long-term liabilities 7,484
4,969 Notes payable, net of deferred loan costs and current portion
796,662 754,949 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 29,940 and 29,539 in 2016 and 2015,
respectively
304 299 Additional paid-in capital 162,433 159,920 Retained deficit
(29,523 ) (23,539 ) Treasury stock, at cost – 494 and 350 shares in
2016 and 2015, respectively
(3,430
) (934 ) Total
shareholders' equity
129,784
135,746 Total liabilities and shareholders'
equity
$ 1,053,101 $
1,019,033 See accompanying notes to
unaudited consolidated financial statements.
CAPITAL SENIOR LIVING CORPORATION CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited, in
thousands, except per share data) Three Months
Ended March 31, 2016
2015 Revenues: Resident revenue $ 109,173 $
98,640 Expenses: Operating expenses (exclusive of facility
lease expense and depreciation and amortization expense shown
below) 66,523 60,131 General and administrative expenses 6,248
5,013 Facility lease expense 15,205 15,256 Stock-based compensation
expense 2,513 1,727 Depreciation and amortization expense
14,531 12,795 Total
expenses
105,020
94,922 Income from operations 4,153 3,718 Other
income (expense): Interest income 16 13 Interest expense (9,985 )
(8,355 ) Write-off of deferred loan costs and prepayment premiums —
(871 ) Loss on disposition of assets, net (31 ) (106 ) Other income
— 1 Loss
before provision for income taxes (5,847 ) (5,600 ) Provision for
income taxes
(137 )
(439 ) Net loss
$
(5,984 ) $
(6,039 ) Per share data: Basic net loss
per share
$ (0.21 )
$ (0.21 ) Diluted net loss
per share
$ (0.21 )
$ (0.21 ) Weighted average
shares outstanding — basic
28,751
28,565 Weighted average shares outstanding —
diluted
28,751
28,565 Comprehensive loss
$
(5,984 ) $
(6,039 ) CAPITAL
SENIOR LIVING CORPORATION CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited, in thousands) Three Months
Ended March 31, 2016
2015 Operating Activities Net loss $
(5,984 ) $ (6,039 ) Adjustments to reconcile net loss to net cash
provided by operating activities: Depreciation and amortization
14,531 12,795 Amortization of deferred financing charges 278 306
Amortization of deferred lease costs and lease intangibles (225 )
316 Deferred income 82 (58 ) Lease incentives 868 — Write-off of
deferred loan costs and prepayment penalties — 871 Loss on
disposition of assets, net 31 106 Provision for bad debts 487 264
Stock based compensation expense 2,513 1,727 Changes in operating
assets and liabilities: Accounts receivable 476 (1,001 ) Accounts
receivable from affiliates — 2 Property tax and insurance deposits
4,431 3,896 Prepaid expenses and other 972 1,860 Other assets 1,081
(226 ) Accounts payable (1,787 ) 1,744 Accrued expenses (1,301 )
(3,599 ) Federal and state income taxes payable 178 307 Deferred
resident revenue (860 ) (496 ) Customer deposits
(31 ) 10 Net
cash provided by operating activities 15,740 12,785
Investing
Activities Capital expenditures (13,767 ) (5,503 ) Cash paid
for acquisitions (64,750 ) (47,810 ) Proceeds from disposition of
assets
— 35,672
Net cash used in investing activities (78,517 ) (17,641 )
Financing Activities Proceeds from notes payable 46,300
80,488 Repayments of notes payable (4,457 ) (62,847 ) Increase in
restricted cash (4 ) (5 ) Cash payments for capital lease
obligations (288 ) (172 ) Cash proceeds from the issuance of common
stock 5 8 Excess tax benefits on stock options — 111 Purchases of
treasury stock (2,496 ) — Deferred financing charges paid
(562 ) (863
) Net cash provided by financing activities
38,498 16,720
(Decrease) Increase in cash and cash equivalents (24,279 ) 11,864
Cash and cash equivalents at beginning of period
56,087 39,209 Cash
and cash equivalents at end of period
$
31,808 $ 51,073
Supplemental Disclosures Cash paid during the period
for: Interest
$ 9,551
$ 7,930 Income taxes
$ 23 $
18
Capital Senior
Living Corporation Supplemental Information
Average Communities Resident Capacity
Average Units Q1 16 Q1 15 Q1 16 Q1
15 Q1 16 Q1 15 Portfolio Data I.
Community Ownership / Management Consolidated communities Owned
76 65 9,436 8,500 7,114 6,542 Leased 50 50 6,333
6,333 4,912 4,983 Total 126 115 15,769
14,833 12,026 11,525 Independent living 6,792 6,993 5,312
5,695 Assisted living 8,977 7,840 6,714 5,830
Total 15,769 14,833 12,026 11,525
II.
Percentage of Operating Portfolio Consolidated communities
Owned 60.3 % 56.5 % 59.8 % 57.3 % 59.2 % 56.8 % Leased 39.7 % 43.5
% 40.2 % 42.7 % 40.8 % 43.2 % Total 100.0 % 100.0 % 100.0 % 100.0 %
100.0 % 100.0 % Independent living 43.1 % 47.1 % 44.2 % 49.4
% Assisted living 56.9 % 52.9 % 55.8 % 50.6 % Total 100.0 % 100.0 %
100.0 % 100.0 %
Capital Senior Living
Corporation
Supplemental Information (excludes
communities being repositioned/leased up)
Selected Operating Results Q1 16 Q1 15 I.
Owned communities Number of communities 74 63 Resident capacity
8,891 7,955 Unit capacity (1) 6,712 6,124 Financial occupancy (2)
89.7 % 88.8 % Revenue (in millions) 60.6 50.9 Operating expenses
(in millions) (3) 37.6 32.3 Operating margin 38 % 37 % Average
monthly rent 3,356 3,124
II. Leased communities Number of
communities 49 49 Resident capacity 6,107 6,107 Unit capacity (1)
4,726 4,842 Financial occupancy (2) 86.9 % 85.3 % Revenue (in
millions) 44.0 43.6 Operating expenses (in millions) (3) 24.7 24.3
Operating margin 44 % 44 % Average monthly rent 3,571 3,515
III.
Consolidated communities Number of communities 123 112 Resident
capacity 14,998 14,062 Unit capacity (1) 11,438 10,966 Financial
occupancy (2) 88.6 % 87.3 % Revenue (in millions) 104.6 94.5
Operating expenses (in millions) (3) 62.3 56.6 Operating margin 40
% 40 % Average monthly rent 3,443 3,293
IV. Communities under
management Number of communities 123 112 Resident capacity
14,998 14,062 Unit capacity (1) 11,438 10,966 Financial occupancy
(2) 88.6 % 87.3 % Revenue (in millions) 104.6 94.5 Operating
expenses (in millions) (3) 62.3 56.6 Operating margin 40 % 40 %
Average monthly rent 3,443 3,293
V. Same communities under
management Number of communities 108 108 Resident capacity
13,527 13,527 Unit capacity (1) 10,448 10,568 Financial occupancy
(2) 88.5 % 87.4 % Revenue (in millions) 94.3 92.1 Operating
expenses (in millions) (3) 55.7 54.9 Operating margin 41 % 40 %
Average monthly rent 3,399 3,323
VI. General and Administrative
expenses as a percent of Total Revenues under Management First
quarter (4) 4.9 % 4.6 %
VII. Consolidated Mortgage Debt
Information (in thousands, except interest rates) (excludes
insurance premium and auto financing) Total fixed rate mortgage
debt 806,522 641,676 Total variable rate mortgage debt 11,800
20,272 Weighted average interest rate 4.6 % 4.6 % (1) Due to
conversion and refurbishment projects currently in progress at
certain communities, unit capacity is lower in Q1 16 than Q1 15 for
same communities under management, which affects all groupings of
communities. (2) Financial occupancy represents actual days
occupied divided by total number of available days during the month
of the quarter. (3) Excludes management fees. (Note: Previous
“Supplemental Information” reports also excluded insurance and
property taxes.) (4) Excludes transaction and conversion costs.
CAPITAL SENIOR LIVING CORPORATION NON-GAAP
RECONCILIATIONS (In thousands, except per share data)
Three Months Ended March 31,
2016 2015 Adjusted EBITDAR Net income
from operations $ 4,153 $ 3,718 Depreciation and amortization
expense 14,531 12,795 Stock-based compensation expense 2,513 1,727
Facility lease expense 15,205 15,256 Provision for bad debts 487
264 Casualty losses 265 261 Transaction and conversion costs 985
587 Communities being repositioned/leased up (823 )
(482 ) Adjusted EBITDAR $ 37,316 $ 34,126
Adjusted EBITDAR Margin Adjusted EBITDAR $ 37,316 $ 34,126
Total revenues $ 109,173 $ 98,640 Communities being
repositioned/leased up (4,449 ) (4,356 ) Adjusted
revenues $ 104,724 $ 94,284 Adjusted
EBITDAR margin 35.6 % 36.2 %
Adjusted net
loss and net loss per share Net loss $ (5,984 ) $ (6,039 )
Casualty losses, net of tax 167 164 Transaction and conversion
costs, net of tax 621 370 Resident lease amortization, net of tax
2,211 2,337 Write-off of deferred loan costs and prepayment
premium, net of tax - 549 Loss on disposition of assets, net of tax
20 69 Deferred tax asset valuation allowance 1,891 2,499 Tax impact
of 4 property sale - 282 Communities being repositioned/leased up,
net of tax 290 490 Adjusted net (loss)
income $ (784 ) $ 721 Diluted shares outstanding
28,751 28,568 Adjusted net (loss) income per share $
(0.03 ) $ 0.03
Adjusted CFFO and Adjusted CFFO per
share Net loss $ (5,984 ) $ (6,039 ) Non-cash charges, net
18,565 16,327 Lease incentives (868 ) - Recurring capital
expenditures (1,140 ) (1,087 ) Casualty losses 265 261 Transaction
and conversion costs 985 587 Tax impact of 4 property sale - 282
Tax impact of Spring Meadows Transaction (106 ) (106 ) Communities
being repositioned/leased up, net of tax (42 ) 290
Adjusted CFFO $ 11,675 $ 10,515 Basic
shares outstanding 28,751 28,565 Adjusted CFFO per
share $ 0.41 $ 0.37
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160503006764/en/
Capital Senior Living CorporationCarey Hendrickson,
1-972-770-5600Chief Financial Officer
Capital Senior Living (NYSE:CSU)
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