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 of 2015. Company highlights for the first quarter
include:
Operating and Financial
Summary (all amounts in the summary exclude four
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 2015,
including all communities, was $98.6 million, a $6.8 million, or
7.4%, increase from the first quarter of 2014.
- Occupancy for the Company’s
consolidated communities was 87.3% in the first quarter of 2015, an
increase of 20 basis points from the first quarter of 2014.
Same-community occupancy was 87.1% for the first quarter of 2015, a
30 basis point decrease from the first quarter of 2014.
- Average monthly rent for the Company’s
consolidated communities in the first quarter of 2015 was $3,294,
an increase of $167 per occupied unit, or 5.3%, as compared to the
first quarter of 2014. Same-community average monthly rent was
$3,271, an increase of $58 per occupied unit, or 1.8%, from the
first quarter of 2014, and a 40 basis point improvement from the
fourth quarter of 2014.
- Adjusted EBITDAR was $34.1 million in
the first quarter of 2015, a 10.2% increase from the first quarter
of 2014. The four communities undergoing repositioning, lease-up or
significant renovation and conversion generated an additional $0.5
million of EBITDAR. The Company’s Adjusted EBITDAR margin was 36.2%
for the first quarter of 2015, an increase of 150 basis points
versus the first quarter of the prior year, and a record-high first
quarter margin for the Company.
- Adjusted Cash From Facility Operations
(“CFFO”) was $10.5 million, or $0.37 per share, in the first
quarter of 2015, a 27.6% increase versus the prior year. Beginning
in the first quarter of 2015, the Company no longer includes the
change in prepaid resident rent as a component of Adjusted CFFO as
it is a non-economic timing item. On a comparable basis, Adjusted
CFFO was $8.2 million, or $0.29 per share in the first quarter of
2014.
- The Company’s Net Loss for the first
quarter of 2015, including all communities, was $6.0 million, or
$0.21 per share, due mostly to non-cash amortization of resident
leases of $3.7 million associated with communities acquired by the
Company in the previous 12 months. Adjusted Net Income was $0.7
million, or $0.03 per share, for the first quarter of 2015.
- The Company announced today that on
March 27, 2015, the Company acquired a community in Texas for a
purchase price of approximately $29.6 million. This community is
expected to generate incremental annual CFFO of approximately $0.04
per share.
- As disclosed in its press release dated
January 29, 2015, the Company acquired a senior living community in
mid-January in Wisconsin for a purchase price of approximately
$18.3 million. This community is expected to generate incremental
annual CFFO of approximately $0.02 per share.
- Also as disclosed on January 29, 2015,
the Company sold four non-core communities in January for $36.5
million. The Company received approximately $18.0 million in net
proceeds after relieving the debt associated with the communities
and paying customary transaction and closing costs.
“We are pleased to report significant growth in revenue,
Adjusted EBITDAR and Adjusted CFFO in the first quarter of 2015 as
compared to the prior year. March was the strongest month in the
quarter, providing momentum for the second quarter and the
remainder of 2015," said Lawrence A. Cohen, Chief Executive Officer
of the Company. "Despite a harsh winter and strong flu season which
resulted in high attrition levels and affected our same-community
occupancy and revenue, we were able to achieve a 60 basis point
positive spread between same-community revenue and expense growth,
and achieved a record-high first quarter margin of 36.2%. Move-ins
were up 15% in the first quarter over the prior year due to the
marketing initiatives we have implemented over the last year, which
allowed us to offset most of the attrition by the end of the first
quarter. We achieved a net increase of 89 residents in the month of
March. Also, our conversions of independent living units to
assisted living and memory care units remain on schedule.
“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 two
such communities in the first quarter, and we continue to pursue
additional opportunities.
“We are 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
- In the first quarter of 2015, the
Company completed acquisitions of two senior living communities for
a combined purchase price of $47.9 million, one of which was
previously disclosed. These communities expand the Company’s
operations in Texas and Wisconsin, and are comprised of 207 units
offering independent living, assisted living and memory care
services.
Combined highlights of the transactions
include:
- Increases annual Adjusted CFFO by
approximately $1.9 million, or $0.06 per share.
- Adds approximately $0.8 million to
earnings, or $0.03 per share.
- Increases annual revenue by approximately
$8.9 million.
- Average monthly rents for the communities
are approximately $3,800.
The communities were financed with an
aggregate of approximately $35.5 million of non-recourse 10-year
mortgage debt at an average fixed interest rate of 3.87%.
- Subject to completion of customary
closing conditions, acquisitions totaling approximately $27 million
are expected to close by the end of May 2015. The Company is
conducting due diligence on additional acquisitions of high-quality
senior living communities in states with extensive existing
operations.
Financial Results - First
Quarter
For the first quarter of 2015, the Company reported revenue of
$98.6 million, compared to revenue of $91.9 million in the first
quarter of 2014, an increase of 7.4%. Resident and healthcare
revenue increased from the first quarter of the prior year by
approximately $8.5 million, or 9.4%, mostly due to the acquisition
of 10 communities during or after the first quarter of 2014. As
expected, community reimbursement revenue and affiliated management
revenue decreased approximately $1.7 million in the first quarter
of 2015 as compared to the first quarter of 2014. 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 first quarter of 2015 were $60.1
million, an increase of $4.4 million from the first quarter of
2014, primarily due to the acquisition of 10 communities during or
after the first quarter of 2014.
General and administrative expenses for the first quarter of
2015 were $5.0 million, which includes $0.5 million of transaction
and other one-time costs. Excluding transaction and other one-time
costs, general and administrative expenses decreased $0.1 million
in the first quarter of 2015 as compared to the first quarter of
2014. As a percentage of revenues under management, general and
administrative expenses, excluding transaction and other one-time
costs, were 4.6% in the first quarter of 2015 as compared to 4.9%
in the first quarter of 2014.
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.
Also, as previously noted, beginning in the first quarter of 2015,
the Company no longer includes the change in prepaid resident rent
as a component of Adjusted CFFO as it is a non-economic timing
item.
Adjusted EBITDAR for the first quarter of 2015 was approximately
$34.1 million, an increase of $3.2 million, or 10.2%, from the
first quarter of 2014. This does not include EBITDAR of $0.5
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 36.2%, a
record-high first quarter margin for the Company and an increase of
150 basis points from the first quarter 2014 of 34.7%.
The Company recorded a net loss of $6.0 million in the first
quarter. Excluding non-recurring or non-economic items reconciled
on the final page of this release, the Company’s adjusted net
income was $0.7 million and $0.03 per share in the first quarter of
2015. Adjusted CFFO was $10.5 million, or $0.37 per share, in the
first quarter of 2015, a 27.6% increase from the prior year. On a
comparable basis, Adjusted CFFO was $8.2 million, or $0.29 per
share, in the first quarter of 2014.
Operating Activities
Same-community 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 first quarter of 2015 increased
1.4% versus the first quarter of 2014. Same-community expenses
increased 0.8% from the first quarter of the prior year. Labor
costs, including benefits, increased approximately 1.4%, food costs
increased 0.5% and utilities were down 3.2% as compared to the
first quarter of the prior year. Same-community net operating
income increased 2.0% in the first quarter of 2015 as compared to
the first quarter of 2014.
Capital expenditures for the first quarter of 2014 were $5.5
million, representing approximately $4.4 million of investment
spending and approximately $1.1 million of recurring capital
expenditures. If annualized, spending for recurring capital
expenditures was approximately $380 per unit.
Balance Sheet
The Company ended the quarter with $63.3 million of cash and
cash equivalents, including restricted cash, an increase of $11.9
million since December 31, 2014. During the first quarter of 2015,
the Company generated cash flow from operations of $12.8 million
and received net proceeds from asset sales and debt refinances of
$20.2 million. The Company invested $12.4 million of cash as equity
to complete the acquisitions of two communities and spent $5.5
million on capital improvements.
As of March 31, 2015, the Company financed its owned communities
with mortgages totaling $661.9 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 $20.3 million at March
31, 2015, at variable rates averaging 4.3%. The Company has no
mortgage maturities before the second quarter of 2017.
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 first quarter 2015 financial results. The
call will be held on Tuesday, May 5, 2015, at 5:00 p.m. Eastern
Time. The call-in number is 913-312-0412, confirmation code
9810323. 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 5, 2015 at 8:00 p.m. Eastern Time, until May
14, 2015 at 8:00 p.m. Eastern Time. To access the conference call
replay, call 719-457-0820, confirmation code 9810323. The
conference call will also be made available for playback via the
Company’s corporate website, www.capitalsenior.com, beginning May
6, 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 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 115 senior living communities in geographically
concentrated regions with an aggregate capacity of approximately
15,000 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,
2015 2014
(unaudited) ASSETS Current assets: Cash and cash
equivalents $ 51,073 $ 39,209 Restricted cash 12,246 12,241
Accounts receivable, net 6,640 5,903 Accounts receivable from
affiliates 3 5 Deferred taxes 81 460 Assets held for sale — 35,761
Property tax and insurance deposits 8,302 12,198 Prepaid expenses
and other
4,937
6,797 Total current assets 83,282 112,574
Property and equipment, net 787,988 747,613 Other assets, net
37,779 37,514
Total assets
$ 909,049
$ 897,701 LIABILITIES
AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable
$ 3,854 $ 2,540 Accounts payable to affiliates 437 7 Accrued
expenses 28,555 32,154 Notes payable of assets held for sale —
15,076 Current portion of notes payable 21,953 33,664 Current
portion of deferred income and resident revenue 14,547 14,603
Current portion of capital lease and financing obligations 1,062
1,054 Federal and state income taxes payable 526 219 Customer
deposits
1,509 1,499
Total current liabilities 72,443 100,816 Deferred income
15,451 15,949 Capital lease and financing obligations, net of
current portion 39,836 40,016 Deferred taxes 81 460 Other long-term
liabilities 1,392 1,426 Notes payable, net of current portion
642,865 597,860 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 29,493 and 29,097 in 2015 and 2014,
respectively
298 294 Additional paid-in capital 152,911 151,069 Retained deficit
(15,294 ) (9,255 ) Treasury stock, at cost – 350 shares in 2015 and
2014
(934 )
(934 ) Total shareholders' equity
136,981 141,174
Total liabilities and shareholders' equity
$
909,049 $ 897,701
CAPITAL SENIOR LIVING
CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(in thousands, except per share
data)
Three Months Ended
March 31,
2015 2014
Revenues: Resident and health care revenue $ 98,640 $ 90,174
Affiliated management services revenue — 208 Community
reimbursement revenue
—
1,475 Total revenues 98,640 91,857 Expenses:
Operating expenses (exclusive of facility lease expense and
depreciation and amortization expense shown below) 60,131 55,691
General and administrative expenses 5,013 4,971 Facility lease
expense 15,256 14,794 Stock-based compensation expense 1,727 1,360
Depreciation and amortization expense 12,795 10,951 Community
reimbursement expense
—
1,475 Total expenses
94,922
89,242 Income from operations
3,718 2,615 Other income (expense): Interest income 13 12 Interest
expense (8,355 ) (7,137 ) Write-off of deferred loan costs and
prepayment premium (871 ) — Gain on disposition of assets, net (106
) 4 Equity in earnings of unconsolidated joint ventures, net — 41
Other income
1 8
Loss before (provision) benefit for income taxes (5,600 )
(4,457 ) Benefit (Provision) for income taxes
(439 ) (190
) Net loss
$ (6,039
) $ (4,647 )
Per share data: Basic net loss per share
$
(0.21 ) $ (0.16
) Diluted net loss per share
$
(0.21 ) $ (0.16
) Weighted average shares outstanding — basic
28,565 28,146
Weighted average shares outstanding — diluted
28,565 28,146
Comprehensive loss
$ (6,039
) $ (4,647 )
CAPITAL SENIOR LIVING
CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands)
Three Months Ended
March 31,
2015 2014
Operating Activities Net loss $ (6,039 ) $ (4,647 )
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 12,795 10,951
Amortization of deferred financing charges 306 320 Amortization of
deferred lease costs and lease intangibles 316 308 Deferred income
(58 ) (88 ) Write-off of deferred loan costs and prepayment premium
871 — Loss (Gain) on disposition of assets, net 106 (4 ) Equity in
earnings of unconsolidated joint ventures, net — (41 ) Provision
for bad debts 264 238 Stock based compensation expense 1,727 1,360
Changes in operating assets and liabilities: Accounts receivable
(1,001 ) (1,763 ) Accounts receivable from affiliates 2 219
Property tax and insurance deposits 3,896 3,449 Prepaid expenses
and other 1,860 2,233 Other assets (226 ) 438 Accounts payable
1,744 (455 ) Accrued expenses (3,599 ) (3,325 ) Federal and state
income taxes receivable 307 182 Deferred resident revenue (496 )
(228 ) Customer deposits
10
202 Net cash provided by operating activities
12,785 9,349
Investing Activities Capital expenditures
(5,503 ) (3,106 ) Cash paid for acquisitions (47,810 ) (14,600 )
Proceeds from disposition of assets 35,672 4 Distributions from
joint ventures
— 42
Net cash used in investing activities (17,641 ) (17,660 )
Financing Activities Proceeds from notes payable 80,488
11,000 Repayments of notes payable (62,847 ) (4,432 ) Increase in
restricted cash (5 ) (6 ) Cash payments for capital lease
obligations (172 ) (156 ) Cash proceeds from the issuance of common
stock 8 135 Excess tax benefits on stock options exercised 111 (63
) Deferred financing charges paid
(863
) (177 ) Net cash
provided by financing activities
16,720
6,301 Decrease in cash and cash
equivalents 11,864 (2,010 ) Cash and cash equivalents at beginning
of period
39,209
13,611 Cash and cash equivalents at end of
period
$ 51,073 $
11,601 Supplemental Disclosures Cash
paid during the period for: Interest
$
7,930 $ 6,429
Income taxes
$ 18 $
44
Capital Senior Living Corporation Supplemental
Information Average
Communities Resident Capacity Average Units
Q1 15 Q1 14 Q1 15 Q1 14 Q1 15
Q1 14 Portfolio Data I. Community Ownership /
Management Consolidated communities Owned 65 60 8,500
7,689 6,542 6,125 Leased 50 50 6,333 6,333 4,983 5,024 Joint
Venture communities (equity method) — 3 — 674 — 434 Total 115 113
14,833 14,696 11,525 11,583 Independent living 6,993 7,597
5,695 6,219 Assisted living 7,840 7,099 5,830 5,364 Total 14,833
14,696 11,525 11,583
II. Percentage of Operating
Portfolio Consolidated communities Owned 56.5% 53.1% 57.3%
52.3% 56.8% 52.9% Leased 43.5% 44.2% 42.7% 43.1% 43.2% 43.4% Joint
Venture communities (equity method) — 2.7% — 4.6% — 3.7% Total
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Independent living
47.1% 51.7% 49.4% 53.7% Assisted living 52.9% 48.3% 50.6% 46.3%
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 15 Q1 14 I. Owned
communities Number of communities 62 57 Resident capacity 7,891
7,080 Unit capacity 6,076 5,628 Financial occupancy (1) 88.9% 88.1%
Revenue (in millions) 50.6 42.6 Operating expenses (in millions)
(2) 29.0 24.5 Operating margin 43% 43% Average monthly rent 3,124
2,862
II. Leased communities Number of communities 49 49
Resident capacity 6,107 6,107 Unit capacity 4,842 4,842 Financial
occupancy (1) 85.3% 85.9% Revenue (in millions) 43.6 43.0 Operating
expenses (in millions) (2) 21.8 21.8 Operating margin 50% 49%
Average monthly rent 3,515 3,443
III. Consolidated
communities Number of communities 111 106 Resident capacity
13,998 13,187 Unit capacity 10,918 10,470 Financial occupancy (1)
87.3% 87.1% Revenue (in millions) 94.2 85.6 Operating expenses (in
millions) (2) 50.8 46.2 Operating margin 46% 46% Average monthly
rent 3,294 3,127
IV. Communities under management Number of
communities 111 109 Resident capacity 13,998 13,861 Unit capacity
10,918 10,903 Financial occupancy (1) 87.3% 87.2% Revenue (in
millions) 94.2 89.7 Operating expenses (in millions) (2) 50.8 48.6
Operating margin 46% 46% Average monthly rent 3,294 3,147
V.
Same communities under management Number of communities 104 104
Resident capacity 13,156 13,156 Unit capacity 10,340 10,349
Financial occupancy (1) 87.1% 87.4% Revenue (in millions) 88.4 87.2
Operating expenses (in millions) (2) 47.3 47.0 Operating margin 46%
46% Average monthly rent 3,271 3,213
VI. General and
Administrative expenses as a percent of Total Revenues under
Management First Quarter (3) 4.6% 4.9%
VII. Consolidated
Mortgage Debt Information (in thousands, except interest rates)
(excludes insurance premium and auto financing) Total fixed
rate mortgage debt 644,546 462,445 Total variable rate mortgage
debt 20,272 22,522 Weighted average interest rate 4.63% 5.25%
(1) Financial occupancy represents actual days occupied
divided by total number of available days during the month of the
quarter. (2) Excludes management fees, insurance and property
taxes. (3) Excludes transaction costs.
CAPITAL SENIOR LIVING
CORPORATION
NON-GAAP RECONCILIATIONS (in thousands, except per share
data)
Three Months Ended
March 31, 2015 2014 Adjusted EBITDAR Net
income from operations $ 3,718 $ 2,615 Depreciation and
amortization expense 12,795 10,951 Stock-based compensation expense
1,727 1,360 Facility lease expense 15,256 14,794 Provision for bad
debts 264 238 Casualty losses 261 314 Transaction costs 587 487
Communities being repositioned/leased up (482 ) 208
Adjusted EBITDAR $ 34,126 $ 30,967
Adjusted EBITDAR Margin Adjusted EBITDAR $ 34,126 $ 30,967
Total revenues $ 98,640 $ 91,857 CCRC's being repositioned
(4,356 ) (2,709 ) Adjusted revenues $ 94,284 $
89,148 Adjusted EBITDAR margin 36.2 %
34.7 %
Adjusted net income and net income per
share Net loss $ (6,039 ) $ (4,647 ) Casualty losses, net of
tax 164 198 Transaction costs, net of tax 370 307 Resident lease
amortization, net of tax 2,337 2,205 Write-off of deferred loan
costs and prepayment premium, net of tax 549 — (Gain)Loss on
disposition of assets, net of tax 69 (3 ) Deferred tax asset
valuation allowance 2,499 1,692 Tax impact of Four Property Sale
Transaction 282 — Communities being repositioned/leased up, net of
tax 490 503 Adjusted net income $ 721
$ 255 Adjusted net income per share $
0.03 $ 0.01 Diluted shares outstanding 28,568
28,153
Adjusted CFFO and Adjusted CFFO per share Net
loss $ (6,039 ) $ (4,647 ) Non-cash charges, net 16,327 13,044
Recurring capital expenditures (1,087 ) (1,028 ) Casualty losses,
net of tax 261 314 Transaction costs 587 487 Tax impact of Four
Property Sale Transaction 282 — Tax impact of Spring Meadows
Transaction (106 ) (106 ) Communities being repositioned/leased up
290 179 Adjusted CFFO $ 10,515 $
8,243 Adjusted CFFO per share $ 0.37 $
0.29
Capital Senior Living CorporationCarey P. Hendrickson,
1-972-770-5600Chief Financial Officer
Capital Senior Living (NYSE:CSU)
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