UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 3, 2015
Capital Senior Living Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
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| 1-13445 |
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75-2678809 |
| (Commission File Number) |
|
(IRS Employer Identification No.) |
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| 14160 Dallas Parkway
Suite 300 Dallas,
Texas |
|
75254 |
| (Address of principal executive offices) |
|
(Zip Code) |
(972) 770-5600
(Registrant’s telephone number, including area code)
Not applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| |
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 |
Results of Operations and Financial Condition. |
On November 3, 2015, Capital Senior
Living Corporation (the “Company”) announced its financial results for the third quarter ended September 30, 2015 by issuing a press release. The full text of the press release issued in connection with the announcement is attached
hereto as Exhibit 99.1.
The information being furnished under Item 2.02, Item 7.01, Exhibit 99.1 and Exhibit 99.2 shall not be
deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be
expressly set forth by specific reference in such a filing. The press release and the presentation referenced below contain, and may implicate, forward-looking statements regarding the Company and include cautionary statements identifying important
factors that could cause actual results to differ materially from those anticipated.
In the press release and the presentation referenced
below, the Company’s management utilizes financial measures of operating performance, including adjusted EBITDAR, adjusted EBITDAR margin, adjusted net income and adjusted CFFO, 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 the Company’s 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, each of which is included at the end of the Company’s press release, along with the Company’s consolidated balance sheets, statements of
operations, and statements of cash flows.
| Item 7.01 |
Regulation FD Disclosure. |
Attached hereto as Exhibit 99.2 is an updated slideshow
presentation of the Company.
By filing this Current Report on Form 8-K, the Company does not acknowledge that disclosure of this
information is required by Regulation FD or that the information was material or non-public before the disclosure. The Company assumes no obligation to update or supplement forward-looking statements in this presentation that become untrue because
of new information, subsequent events or otherwise.
| Item 9.01 |
Financial Statements and Exhibits. |
|
|
|
| *99.1 |
|
Press Release dated November 3, 2015. |
|
|
| *99.2 |
|
Capital Senior Living Corporation Updated Slideshow Presentation. |
| * |
These exhibits to this Current Report on Form 8-K are not being filed but are being furnished pursuant to Item 9.01. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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| Date: November 3, 2015 |
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Capital Senior Living Corporation |
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By: |
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/s/ Carey P. Hendrickson |
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Name: |
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Carey P. Hendrickson |
|
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Title: |
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Senior Vice President and Chief Financial
Officer |
EXHIBIT INDEX
|
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|
| *99.1 |
|
Press Release dated November 3, 2015. |
|
|
| *99.2 |
|
Capital Senior Living Corporation Updated Slideshow Presentation. |
| * |
These exhibits to this Current Report on Form 8-K are not being filed but are being furnished pursuant to Item 9.01. |
Exhibit 99.1
|
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PRESS CONTACT:
Carey Hendrickson, Chief Financial Officer
Phone: 1-972-770-5600 |
FOR IMMEDIATE RELEASE
CAPITAL SENIOR LIVING CORPORATION
REPORTS THIRD QUARTER 2015 RESULTS
DALLAS
– (BUSINESS WIRE) – November 3, 2015 – Capital Senior Living Corporation (the “Company”) (NYSE:CSU), one of the nation’s largest operators of senior living communities, today announced operating and financial
results for the third quarter of 2015. Company highlights for the third quarter include:
Operating and Financial Summary (all amounts in
this operating and financial 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 third quarter of 2015, including all communities, was $104.4 million, a $5.9 million, or 6.0%, increase from the third quarter of 2014. |
| |
• |
|
Occupancy for the Company’s consolidated communities was 88.9% in the third quarter of 2015, an increase of 110 basis points from the third quarter of 2014 and 90 basis points from the second quarter of 2015.
Same-community occupancy was 88.6% for the third quarter of 2015, a 60 basis point increase from the third quarter of 2014 and a 70 basis point increase from the second quarter of 2015. |
| |
• |
|
Average monthly rent for the Company’s consolidated communities in the third quarter of 2015 was $3,382, an increase of $171 per occupied unit, or 5.3%, as compared to the third quarter of 2014, and a 50 basis
point improvement from the second quarter of 2015. Same-community average monthly rent was $3,338, an increase of $58 per occupied unit, or 1.8%, from the third quarter of 2014. |
| |
• |
|
Adjusted EBITDAR was $36.4 million in the third quarter of 2015, an 8.7% increase from the third quarter of 2014. The four 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 36.5% for the third quarter of 2015, a record-high third quarter margin for the Company and an increase of 90 basis points versus the third quarter of
the prior year. |
CAPITAL/Page
2
| |
• |
|
Adjusted Cash From Facility Operations (“CFFO”) was $12.0 million, or $0.42 per share, in the third quarter of 2015, a 14.4% increase versus the third quarter of the prior year. Beginning in 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 $10.5 million, or $0.37 per share in the third quarter of 2014. |
| |
• |
|
The Company’s Net Income for the third quarter of 2015, including all communities, was $2.9 million, or $0.10 per share, due mostly to a $6.4 million gain on the sale of a community partially offset by non-cash
amortization of resident leases of $3.0 million associated with communities acquired by the Company in the previous 12 months. Adjusted Net Income was $0.3 million, or $0.01 per share, for the third quarter of 2015. |
| |
• |
|
The Company completed the acquisition of three communities during the third quarter of 2015 for a combined purchase price of approximately $49.8 million. These communities are expected to generate incremental annual
CFFO of approximately $0.07 per share. |
| |
• |
|
The Company announced today that it closed on the acquisition of another community on October 30, 2015, for a purchase price of approximately $38.0 million. This community expands our operations in Virginia and is
expected to generate incremental annual CFFO of approximately $0.04 per share. |
“We continue to demonstrate the advantages of our
differentiated business strategy as we successfully execute on the multiple avenues of growth under our straightforward strategic plan. This produced substantial growth in all of our key metrics in the third quarter, including revenue, occupancy,
average monthly rent, NOI, Adjusted EBITDAR and Adjusted CFFO as compared to the prior year,” said Lawrence A. Cohen, Chief Executive Officer of the Company. “Our occupancy gains continue to outpace the industry, with same-community
occupancy increasing 70 basis points from the second quarter of 2015 and 60 basis points from the third quarter of 2014. We continue to see limited new supply and construction in our local markets. Also, our conversions of independent living units
to assisted living and memory care units continue to show timely progress.
“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
have closed on nine such communities so far this year, and we continue to pursue additional opportunities.
“We believe that we are well positioned
to make sustainable meaningful gains in shareholder value as a substantially all private-pay business in an industry that benefits from need-driven demand, limited new supply in our local markets, a strong housing market and an improving
economy.”
CAPITAL/Page
3
Recent Investment Activity
| |
• |
|
In the third quarter of 2015, the Company completed acquisitions of three senior living communities for a combined purchase price of $49.8 million. These communities expand the Company’s operations in Ohio, Indiana
and Illinois, and are comprised of 270 units offering independent living, assisted living and memory care services. |
Combined
highlights of the transactions include:
| |
• |
|
Increases annual Adjusted CFFO by approximately $2.1 million, or $0.07 per share. |
| |
• |
|
Adds approximately $1.0 million to earnings, or $0.03 per share. |
| |
• |
|
Increases annual revenue by approximately $11.5 million. |
| |
• |
|
Average monthly rents for the communities are approximately $3,850. |
The communities were
financed with an aggregate of approximately $34.3 million of non-recourse 10-year mortgage debt at an average fixed interest rate of 4.39%. Initial funding for one of the acquisitions was purposely limited to accommodate a like-kind exchange
structure for tax purposes related to the Company’s sale of its community in Kansas. Additional funding of approximately $2.6 million is expected in the first half of 2016 at a fixed interest rate of 4.25%.
| |
• |
|
The Company closed on the sale of its only community in Kansas during the third quarter for approximately $14.8 million. The transaction was structured as a like-kind exchange with the net proceeds accretively
reinvested in one of the communities the Company acquired in the third quarter. |
| |
• |
|
In September 2015, the Company refinanced a bridge loan on a community that was originally set to mature in October 2015. The new mortgage is $8.4 million with a 4.7% fixed interest rate and matures in October 2025. The
new mortgage replaced $8.5 million of variable-rate debt with an interest rate of approximately 3.9%. |
| |
• |
|
Subject to completion of due diligence and customary closing conditions, acquisitions of three additional communities totaling approximately $17 million are expected to close by the end of December 2015, which will
bring the Company’s total acquisitions in 2015 to approximately $180 million. The Company is conducting due diligence on additional acquisitions of high-quality senior living communities in states with extensive existing operations.
|
CAPITAL/Page
4
Financial Results - Third
Quarter
For the third quarter of 2015, the Company reported revenue of $104.4 million, compared to revenue of $98.5 million in the third quarter
of 2014, an increase of 6.0%. Excluding the revenue of the five communities the Company has sold since the third quarter of 2014 from all appropriate periods, revenues increased $8.9 million, or 9.4%, in the third quarter of 2015 as compared to the
third quarter of 2014, mostly due to the acquisition of 12 communities during or after the third quarter of 2014. Operating expenses for the third quarter of 2015 were $63.3 million, an increase of $3.5 million from the third quarter of 2014.
Revenue for consolidated communities excluding the four communities undergoing repositioning, lease-up or significant renovation and conversion increased 6.0%
in the third quarter of 2015 as compared to the third quarter of 2014. Net operating income for these communities increased 6.4% in the third quarter of 2015 as compared to the third quarter of 2014. These increases were achieved with less units
available for lease in the third quarter of 2015 than the third quarter of 2014 due to conversion and refurbishment projects currently in progress at certain communities during the third quarter of 2015.
General and administrative expenses for the third quarter of 2015 were $4.8 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 $0.6 million in the third quarter of 2015 as compared to the third quarter of 2014. As a percentage of revenues under management, general and
administrative expenses, excluding transaction and other one-time costs, were 4.1% in the third quarter of 2015 as compared to 4.9% in the third 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 (see “Non-GAAP Financial Measures” below). Also, as previously noted, beginning in 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 third quarter of 2015 was approximately $36.4 million, an increase of $2.9 million, or 8.7%, from the third quarter
of 2014. This does not include EBITDAR of $0.8 million related to four communities undergoing repositioning, lease-up or significant renovation and conversion. The Adjusted EBITDAR margin for the third quarter of 2015 was 36.5%, which is a
record-high third quarter margin for the Company and an increase of 90 basis points from the third quarter 2014 margin of 35.6%.
The Company recorded net
income of $2.9 million in the third quarter. Excluding non-recurring or non-economic items reconciled on the final page of this release, the Company’s adjusted net income was $0.3 million, or $0.01 per share, in the third
CAPITAL/Page
5
quarter of 2015. Adjusted CFFO was
$12.0 million, or $0.42 per share, in the third quarter of 2015, a 14.4% increase from the third quarter of the prior year. On a comparable basis, Adjusted CFFO was $10.5 million, or $0.37 per share, in the third 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 third quarter of 2015 increased 1.5% versus the third quarter of 2014. Due to conversion and refurbishment projects currently in
progress at certain communities, fewer units were available for rent in the third quarter of this year as compared to the third quarter of last year. With a like number of units available in both years, same-community revenue would have increased
approximately 2.5% in the third quarter of 2015 as compared to the third quarter of the prior year. Same-community expenses increased 1.4% from the third quarter of the prior year. Labor costs, including benefits, increased 0.8%, while food costs
decreased 1.5% and utilities increased 1.4% in the third quarter of 2015 as compared to the third quarter of the prior year. Same-community net operating income increased 1.7% in the third quarter of 2015 as compared to the third quarter of 2014.
With a like number of units available in both years, same-community net operating income would have increased approximately 3.5% from the third quarter of the prior year.
Capital expenditures for the third quarter of 2015 were $10.1 million, representing approximately $8.6 million of investment spending and approximately $1.5
million of recurring capital expenditures. If annualized, spending for recurring capital expenditures was approximately $505 per unit.
Balance
Sheet
The Company ended the quarter with $47.8 million of cash and cash equivalents, including restricted cash, a decrease of $3.9 million since
June 30, 2015. During the third quarter of 2015, the Company invested $15.5 million of cash as equity to complete the acquisitions of three communities and spent $10.1 million on capital improvements.
As of September 30, 2015, the Company financed its owned communities with mortgages totaling $709.5 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 September 30, 2015, at a current variable rate of approximately 4.65%. Otherwise, the Company has no mortgage maturities before
the third quarter of 2017.
CAPITAL/Page
6
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.
Q3 2015 Conference Call Information
The Company
will host a conference call with senior management to discuss the Company’s third quarter 2015 financial results. The call will be held on Tuesday, November 3, 2015, at 5:00 p.m. Eastern Time. The call-in number is 913-312-0720,
confirmation code 1077698. 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 November 3,
2015 at 8:00 p.m. Eastern Time, until November 12, 2015 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 1077698. The conference call will also be made available for playback via the
Company’s corporate website, www.capitalsenior.com, beginning November 4, 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
CAPITAL/Page
7
integrates independent living,
assisted living, and home care services, to provide residents the opportunity to age in place. The Company operates 121 senior living communities in geographically concentrated regions with an aggregate capacity of approximately 15,400 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.
Contact Carey P. Hendrickson, Chief Financial Officer, at 972-770-5600 for more information.
CAPITAL/Page
8
CAPITAL SENIOR
LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
| |
|
September 30, |
|
|
December 31, |
|
| |
|
2015 |
|
|
2014 |
|
| |
|
(unaudited) |
|
|
|
|
| ASSETS |
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
34,687 |
|
|
$ |
39,209 |
|
| Restricted cash |
|
|
13,155 |
|
|
|
12,241 |
|
| Accounts receivable, net |
|
|
8,272 |
|
|
|
5,903 |
|
| Accounts receivable from affiliates |
|
|
3 |
|
|
|
5 |
|
| Federal and state income taxes receivable |
|
|
137 |
|
|
|
— |
|
| Deferred taxes |
|
|
129 |
|
|
|
460 |
|
| Assets held for sale |
|
|
— |
|
|
|
35,761 |
|
| Property tax and insurance deposits |
|
|
12,163 |
|
|
|
12,198 |
|
| Prepaid expenses and other |
|
|
4,721 |
|
|
|
6,797 |
|
|
|
|
|
|
|
|
|
|
| Total current assets |
|
|
73,267 |
|
|
|
112,574 |
|
| Property and equipment, net |
|
|
848,019 |
|
|
|
747,613 |
|
| Other assets, net |
|
|
38,117 |
|
|
|
37,514 |
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
$ |
959,403 |
|
|
$ |
897,701 |
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
694 |
|
|
$ |
2,540 |
|
| Accounts payable to affiliates |
|
|
— |
|
|
|
7 |
|
| Accrued expenses |
|
|
34,837 |
|
|
|
32,154 |
|
| Notes payable of assets held for sale |
|
|
— |
|
|
|
15,076 |
|
| Current portion of notes payable |
|
|
14,055 |
|
|
|
33,664 |
|
| Current portion of deferred income and resident revenue |
|
|
14,224 |
|
|
|
14,603 |
|
| Current portion of capital lease and financing obligations |
|
|
1,145 |
|
|
|
1,054 |
|
| Federal and state income taxes payable |
|
|
— |
|
|
|
219 |
|
| Customer deposits |
|
|
1,950 |
|
|
|
1,499 |
|
|
|
|
|
|
|
|
|
|
| Total current liabilities |
|
|
66,905 |
|
|
|
100,816 |
|
| Deferred income |
|
|
14,494 |
|
|
|
15,949 |
|
| Capital lease and financing obligations, net of current portion |
|
|
39,228 |
|
|
|
40,016 |
|
| Deferred taxes |
|
|
129 |
|
|
|
460 |
|
| Other long-term liabilities |
|
|
1,326 |
|
|
|
1,426 |
|
| Notes payable, net of current portion |
|
|
697,687 |
|
|
|
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 – 29,519 and 29,097 in 2015 and 2014, respectively |
|
|
299 |
|
|
|
294 |
|
| Additional paid-in capital |
|
|
157,858 |
|
|
|
151,069 |
|
| Retained deficit |
|
|
(17,589 |
) |
|
|
(9,255 |
) |
| Treasury stock, at cost – 350 shares |
|
|
(934 |
) |
|
|
(934 |
) |
|
|
|
|
|
|
|
|
|
| Total shareholders’ equity |
|
|
139,634 |
|
|
|
141,174 |
|
|
|
|
|
|
|
|
|
|
| Total liabilities and shareholders’ equity |
|
$ |
959,403 |
|
|
$ |
897,701 |
|
|
|
|
|
|
|
|
|
|
CAPITAL/Page
9
CAPITAL SENIOR
LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
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| |
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
| |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Resident and healthcare revenue |
|
$ |
104,420 |
|
|
$ |
98,466 |
|
|
$ |
304,648 |
|
|
$ |
280,240 |
|
| Affiliated management services revenue |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
415 |
|
| Community reimbursement revenue |
|
|
— |
|
|
|
17 |
|
|
|
— |
|
|
|
3,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenues |
|
|
104,420 |
|
|
|
98,483 |
|
|
|
304,648 |
|
|
|
283,765 |
|
| Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) |
|
|
63,649 |
|
|
|
59,992 |
|
|
|
184,487 |
|
|
|
171,268 |
|
| General and administrative expenses |
|
|
4,751 |
|
|
|
5,515 |
|
|
|
15,482 |
|
|
|
15,137 |
|
| Facility lease expense |
|
|
15,321 |
|
|
|
14,841 |
|
|
|
45,875 |
|
|
|
44,524 |
|
| Stock-based compensation expense |
|
|
2,301 |
|
|
|
1,599 |
|
|
|
6,745 |
|
|
|
5,676 |
|
| Depreciation and amortization |
|
|
12,722 |
|
|
|
13,840 |
|
|
|
38,985 |
|
|
|
35,607 |
|
| Community reimbursement expense |
|
|
— |
|
|
|
17 |
|
|
|
— |
|
|
|
3,110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total expenses |
|
|
98,744 |
|
|
|
95,804 |
|
|
|
291,574 |
|
|
|
275,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income from operations |
|
|
5,676 |
|
|
|
2,679 |
|
|
|
13,074 |
|
|
|
8,443 |
|
| Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
12 |
|
|
|
12 |
|
|
|
36 |
|
|
|
40 |
|
| Interest expense |
|
|
(8,994 |
) |
|
|
(8,255 |
) |
|
|
(26,022 |
) |
|
|
(22,785 |
) |
| Write-off of deferred loan costs and prepayment premiums |
|
|
(102 |
) |
|
|
— |
|
|
|
(973 |
) |
|
|
(6,979 |
) |
| Joint venture equity investment valuation gain |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,519 |
|
|
|
|
|
|
| Gain (Loss) on disposition of assets, net |
|
|
6,418 |
|
|
|
(1 |
) |
|
|
6,247 |
|
|
|
(11 |
) |
| Equity in earnings of unconsolidated joint ventures, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
105 |
|
| Other income |
|
|
— |
|
|
|
5 |
|
|
|
1 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income (Loss) before provision for income taxes |
|
|
3,010 |
|
|
|
(5,560 |
) |
|
|
(7,637 |
) |
|
|
(19,646 |
) |
| Provision for income taxes |
|
|
(139 |
) |
|
|
(199 |
) |
|
|
(697 |
) |
|
|
(579 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
2,871 |
|
|
$ |
(5,759 |
) |
|
$ |
(8,334 |
) |
|
$ |
(20,225 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic net income (loss) per share |
|
$ |
0.10 |
|
|
$ |
(0.20 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.70 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted net income (loss) per share |
|
$ |
0.10 |
|
|
$ |
(0.20 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.70 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding — basic |
|
|
28,732 |
|
|
|
28,371 |
|
|
|
28,668 |
|
|
|
28,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding — diluted |
|
|
28,733 |
|
|
|
28,371 |
|
|
|
28,668 |
|
|
|
28,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Comprehensive income (loss) |
|
$ |
2,871 |
|
|
$ |
(5,759 |
) |
|
$ |
(8,334 |
) |
|
$ |
(20,225 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL/Page
10
CAPITAL SENIOR
LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
| |
|
Nine Months Ended
September 30, |
|
| |
|
2015 |
|
|
2014 |
|
| Operating Activities |
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(8,334 |
) |
|
$ |
(20,225 |
) |
| Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
38,985 |
|
|
|
35,607 |
|
| Amortization of deferred financing charges |
|
|
853 |
|
|
|
999 |
|
| Amortization of deferred lease costs and lease intangibles |
|
|
987 |
|
|
|
922 |
|
| Deferred income |
|
|
(308 |
) |
|
|
(220 |
) |
| Write-off of deferred loan costs and prepayment premiums |
|
|
973 |
|
|
|
6,979 |
|
| Joint venture equity investment valuation gain |
|
|
— |
|
|
|
(1,519 |
) |
| (Gain) Loss on disposition of assets, net |
|
|
(6,247 |
) |
|
|
11 |
|
| Equity in earnings of unconsolidated joint ventures |
|
|
— |
|
|
|
(105 |
) |
| Provision for bad debts |
|
|
873 |
|
|
|
517 |
|
| Stock-based compensation expense |
|
|
6,745 |
|
|
|
5,676 |
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts receivable |
|
|
(3,240 |
) |
|
|
(2,481 |
) |
| Accounts receivable from affiliates |
|
|
2 |
|
|
|
410 |
|
| Property tax and insurance deposits |
|
|
35 |
|
|
|
376 |
|
| Prepaid expenses and other |
|
|
2,076 |
|
|
|
3,080 |
|
| Other assets |
|
|
(324 |
) |
|
|
756 |
|
| Accounts payable |
|
|
(1,853 |
) |
|
|
249 |
|
| Accrued expenses |
|
|
2,683 |
|
|
|
3,203 |
|
| Federal and state income taxes receivable/payable |
|
|
(356 |
) |
|
|
(91 |
) |
| Customer deposits |
|
|
(1,526 |
) |
|
|
824 |
|
| Deferred resident revenue |
|
|
451 |
|
|
|
117 |
|
|
|
|
|
|
|
|
|
|
| Net cash provided by operating activities |
|
|
32,475 |
|
|
|
35,085 |
|
| Investing Activities |
|
|
|
|
|
|
|
|
| Capital expenditures |
|
|
(23,665 |
) |
|
|
(13,394 |
) |
| Cash paid for acquisitions |
|
|
(124,460 |
) |
|
|
(145,555 |
) |
| Proceeds from disposition of assets |
|
|
43,460 |
|
|
|
4 |
|
| Proceeds from SHPIII/CSL Transaction |
|
|
— |
|
|
|
2,532 |
|
| Distributions from unconsolidated joint ventures |
|
|
— |
|
|
|
102 |
|
|
|
|
|
|
|
|
|
|
| Net cash used in investing activities |
|
|
(104,665 |
) |
|
|
(156,311 |
) |
| Financing Activities |
|
|
|
|
|
|
|
|
| Proceeds from notes payable |
|
|
150,034 |
|
|
|
267,685 |
|
| Repayments of notes payable |
|
|
(78,705 |
) |
|
|
(128,553 |
) |
| Increase in restricted cash |
|
|
(914 |
) |
|
|
(43 |
) |
| Cash payments for capital lease and financing obligations |
|
|
(697 |
) |
|
|
(630 |
) |
| Cash proceeds from the issuance of common stock |
|
|
42 |
|
|
|
169 |
|
| Excess tax benefits on stock option exercised |
|
|
7 |
|
|
|
(82 |
) |
| Deferred financing charges paid |
|
|
(2,099 |
) |
|
|
(3,115 |
) |
|
|
|
|
|
|
|
|
|
| Net cash provided by financing activities |
|
|
67,668 |
|
|
|
135,431 |
|
|
|
|
|
|
|
|
|
|
| (Decrease) Increase in cash and cash equivalents |
|
|
(4,522 |
) |
|
|
14,205 |
|
| Cash and cash equivalents at beginning of period |
|
|
39,209 |
|
|
|
13,611 |
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents at end of period |
|
$ |
34,687 |
|
|
$ |
27,816 |
|
|
|
|
|
|
|
|
|
|
| Supplemental Disclosures |
|
|
|
|
|
|
|
|
| Cash paid during the period for: |
|
|
|
|
|
|
|
|
| Interest |
|
$ |
24,707 |
|
|
$ |
20,873 |
|
|
|
|
|
|
|
|
|
|
| Income taxes |
|
$ |
1,028 |
|
|
$ |
714 |
|
|
|
|
|
|
|
|
|
|
| Non-cash transactions: |
|
|
|
|
|
|
|
|
| Assumption of debt related to disposition of assets (Sedgwick Sale Transaction) |
|
$ |
6,764 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
CAPITAL/Page
11
Capital Senior Living Corporation
Supplemental Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
| |
|
Communities |
|
|
Resident Capacity |
|
|
Average Units |
|
| |
|
Q3 15 |
|
|
Q3 14 |
|
|
Q3 15 |
|
|
Q3 14 |
|
|
Q3 15 |
|
|
Q3 14 |
|
| Portfolio Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| I. Community Ownership / Management |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated communities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Owned |
|
|
70 |
|
|
|
66 |
|
|
|
8,945 |
|
|
|
8,718 |
|
|
|
6,741 |
|
|
|
6,771 |
|
| Leased |
|
|
50 |
|
|
|
50 |
|
|
|
6,333 |
|
|
|
6,333 |
|
|
|
4,931 |
|
|
|
4,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
120 |
|
|
|
116 |
|
|
|
15,278 |
|
|
|
15,051 |
|
|
|
11,672 |
|
|
|
11,761 |
|
|
|
|
|
|
|
|
| Independent living |
|
|
|
|
|
|
|
|
|
|
6,984 |
|
|
|
7,597 |
|
|
|
5,458 |
|
|
|
6,171 |
|
| Assisted living |
|
|
|
|
|
|
|
|
|
|
8,294 |
|
|
|
7,454 |
|
|
|
6,214 |
|
|
|
5,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
15,278 |
|
|
|
15,051 |
|
|
|
11,672 |
|
|
|
11,761 |
|
|
|
|
|
|
|
|
| II. Percentage of Operating Portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated communities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Owned |
|
|
58.3 |
% |
|
|
56.9 |
% |
|
|
58.5 |
% |
|
|
57.9 |
% |
|
|
57.8 |
% |
|
|
57.6 |
% |
| Leased |
|
|
41.7 |
% |
|
|
43.1 |
% |
|
|
41.5 |
% |
|
|
42.1 |
% |
|
|
42.2 |
% |
|
|
42.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
| Independent living |
|
|
|
|
|
|
|
|
|
|
45.7 |
% |
|
|
50.5 |
% |
|
|
46.8 |
% |
|
|
52.5 |
% |
| Assisted living |
|
|
|
|
|
|
|
|
|
|
54.3 |
% |
|
|
49.5 |
% |
|
|
53.2 |
% |
|
|
47.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
|
|
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
CAPITAL/Page
12
Capital Senior Living Corporation
Supplemental Information (excludes communities being repositioned/leased up)
Selected Operating Results
|
|
|
|
|
|
|
|
|
| |
|
Q3 15 |
|
|
Q3 14 |
|
| I. Owned communities |
|
|
|
|
|
|
|
|
| Number of communities |
|
|
67 |
|
|
|
63 |
|
| Resident capacity |
|
|
8,336 |
|
|
|
8,109 |
|
| Unit capacity (1) |
|
|
6,293 |
|
|
|
6,275 |
|
| Financial occupancy (2) |
|
|
90.3 |
% |
|
|
89.0 |
% |
| Revenue (in millions) |
|
|
55.6 |
|
|
|
50.1 |
|
| Operating expenses (in millions) (3) |
|
|
31.3 |
|
|
|
28.3 |
|
| Operating margin |
|
|
44 |
% |
|
|
44 |
% |
| Average monthly rent |
|
|
3,259 |
|
|
|
2,993 |
|
| II. Leased communities |
|
|
|
|
|
|
|
|
| Number of communities |
|
|
49 |
|
|
|
49 |
|
| Resident capacity |
|
|
6,107 |
|
|
|
6,107 |
|
| Unit capacity (1) |
|
|
4,758 |
|
|
|
4,841 |
|
| Financial occupancy (2) |
|
|
87.0 |
% |
|
|
86.2 |
% |
| Revenue (in millions) |
|
|
44.1 |
|
|
|
43.9 |
|
| Operating expenses (in millions) (3) |
|
|
22.2 |
|
|
|
21.8 |
|
| Operating margin |
|
|
50 |
% |
|
|
50 |
% |
| Average monthly rent |
|
|
3,551 |
|
|
|
3,503 |
|
| III. Consolidated communities |
|
|
|
|
|
|
|
|
| Number of communities |
|
|
116 |
|
|
|
112 |
|
| Resident capacity |
|
|
14,443 |
|
|
|
14,216 |
|
| Unit capacity (1) |
|
|
11,051 |
|
|
|
11,116 |
|
| Financial occupancy (2) |
|
|
88.9 |
% |
|
|
87.8 |
% |
| Revenue (in millions) |
|
|
99.7 |
|
|
|
94.0 |
|
| Operating expenses (in millions) (3) |
|
|
53.5 |
|
|
|
50.1 |
|
| Operating margin |
|
|
46 |
% |
|
|
47 |
% |
| Average monthly rent |
|
|
3,382 |
|
|
|
3,211 |
|
| IV. Communities under management |
|
|
|
|
|
|
|
|
| Number of communities |
|
|
116 |
|
|
|
112 |
|
| Resident capacity |
|
|
14,443 |
|
|
|
14,216 |
|
| Unit capacity (1) |
|
|
11,051 |
|
|
|
11,116 |
|
| Financial occupancy (2) |
|
|
88.9 |
% |
|
|
87.8 |
% |
| Revenue (in millions) |
|
|
99.7 |
|
|
|
94.0 |
|
| Operating expenses (in millions) (3) |
|
|
53.5 |
|
|
|
50.2 |
|
| Operating margin |
|
|
46 |
% |
|
|
47 |
% |
| Average monthly rent |
|
|
3,382 |
|
|
|
3,211 |
|
| V. Same communities under management |
|
|
|
|
|
|
|
|
| Number of communities |
|
|
104 |
|
|
|
104 |
|
| Resident capacity |
|
|
13,074 |
|
|
|
13,074 |
|
| Unit capacity (1) |
|
|
10,184 |
|
|
|
10,275 |
|
| Financial occupancy (2) |
|
|
88.6 |
% |
|
|
88.0 |
% |
| Revenue (in millions) |
|
|
90.4 |
|
|
|
89.0 |
|
| Operating expenses (in millions) (3) |
|
|
47.9 |
|
|
|
47.3 |
|
| Operating margin |
|
|
47 |
% |
|
|
47 |
% |
| Average monthly rent |
|
|
3,338 |
|
|
|
3,280 |
|
| VI. General and Administrative expenses as a percent of Total Revenues under Management |
|
|
|
|
|
|
|
|
| Third Quarter (4) |
|
|
4.1 |
% |
|
|
4.9 |
% |
| First nine months (4) |
|
|
4.5 |
% |
|
|
4.7 |
% |
| VII. Consolidated Mortgage Debt Information (in thousands, except interest rates) (excludes insurance premium and auto
financing) |
|
|
|
|
|
|
|
|
| Total fixed rate mortgage debt |
|
|
697,729 |
|
|
|
558,726 |
|
| Total variable rate mortgage debt |
|
|
11,800 |
|
|
|
65,222 |
|
| Weighted average interest rate |
|
|
4.6 |
% |
|
|
4.7 |
% |
| (1) |
Due to conversion and refurbishment projects currently in progress at certain communities, unit capacity is lower in Q3 15 than Q3 14 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, insurance and property taxes. |
| (4) |
Excludes transaction and conversion costs. |
CAPITAL/Page
13
CAPITAL SENIOR
LIVING CORPORATION
NON-GAAP RECONCILIATIONS
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
| |
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
| Adjusted EBITDAR |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income from operations |
|
$ |
5,676 |
|
|
$ |
2,679 |
|
|
$ |
13,074 |
|
|
$ |
8,443 |
|
| Depreciation and amortization expense |
|
|
12,722 |
|
|
|
13,840 |
|
|
|
38,985 |
|
|
|
35,607 |
|
| Stock-based compensation expense |
|
|
2,301 |
|
|
|
1,599 |
|
|
|
6,745 |
|
|
|
5,676 |
|
| Facility lease expense |
|
|
15,321 |
|
|
|
14,841 |
|
|
|
45,875 |
|
|
|
44,524 |
|
| Provision for bad debts |
|
|
329 |
|
|
|
145 |
|
|
|
873 |
|
|
|
517 |
|
| Casualty losses |
|
|
306 |
|
|
|
167 |
|
|
|
827 |
|
|
|
582 |
|
| Transaction and conversion costs |
|
|
543 |
|
|
|
858 |
|
|
|
2,007 |
|
|
|
2,098 |
|
| Communities being repositioned/leased up |
|
|
(776 |
) |
|
|
(618 |
) |
|
|
(2,127 |
) |
|
|
(971 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDAR |
|
$ |
36,422 |
|
|
$ |
33,511 |
|
|
$ |
106,259 |
|
|
$ |
96,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDAR Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDAR |
|
$ |
36,422 |
|
|
$ |
33,511 |
|
|
$ |
106,259 |
|
|
$ |
96,476 |
|
| Total revenues |
|
$ |
104,420 |
|
|
$ |
98,483 |
|
|
$ |
304,648 |
|
|
$ |
283,765 |
|
| Communities being repositioned/leased up |
|
|
(4,648 |
) |
|
|
(4,370 |
) |
|
|
(13,431 |
) |
|
|
(10,073 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted revenues |
|
$ |
99,772 |
|
|
$ |
94,113 |
|
|
$ |
291,217 |
|
|
$ |
273,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDAR margin |
|
|
36.5 |
% |
|
|
35.6 |
% |
|
|
36.5 |
% |
|
|
35.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted net income and net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
2,871 |
|
|
$ |
(5,759 |
) |
|
$ |
(8,334 |
) |
|
$ |
(20,225 |
) |
| Casualty losses, net of tax |
|
|
193 |
|
|
|
105 |
|
|
|
521 |
|
|
|
367 |
|
| Transaction and conversion costs, net of tax |
|
|
342 |
|
|
|
541 |
|
|
|
1,264 |
|
|
|
1,322 |
|
| Resident lease amortization, net of tax |
|
|
1,908 |
|
|
|
3,250 |
|
|
|
6,827 |
|
|
|
7,447 |
|
| Write-off of deferred loan costs and prepayment premium, net of tax |
|
|
64 |
|
|
|
— |
|
|
|
613 |
|
|
|
4,397 |
|
| Joint venture equity investment valuation gain, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(957 |
) |
| Loss (Gain) on disposition of assets, net of tax |
|
|
(4,043 |
) |
|
|
1 |
|
|
|
(3,936 |
) |
|
|
7 |
|
| Deferred tax asset valuation allowance |
|
|
(1,306 |
) |
|
|
2,068 |
|
|
|
3,044 |
|
|
|
7,463 |
|
| Tax impact of 4 property sale |
|
|
1 |
|
|
|
— |
|
|
|
292 |
|
|
|
— |
|
| Communities being repositioned/leased up, net of tax |
|
|
289 |
|
|
|
485 |
|
|
|
995 |
|
|
|
1,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted net income |
|
$ |
319 |
|
|
$ |
691 |
|
|
$ |
1,286 |
|
|
$ |
870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted net income per share |
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.04 |
|
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted shares outstanding |
|
|
28,733 |
|
|
|
28,374 |
|
|
|
28,670 |
|
|
|
28,277 |
|
| Adjusted CFFO and Adjusted CFFO per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
2,871 |
|
|
$ |
(5,759 |
) |
|
$ |
(8,334 |
) |
|
$ |
(20.225 |
) |
| Non-cash charges, net |
|
|
9,466 |
|
|
|
16,134 |
|
|
|
42,861 |
|
|
|
48,867 |
|
| Recurring capital expenditures |
|
|
(1,109 |
) |
|
|
(1,090 |
) |
|
|
(3,291 |
) |
|
|
(3,155 |
) |
| Casualty losses |
|
|
306 |
|
|
|
167 |
|
|
|
827 |
|
|
|
582 |
|
| Transaction and conversion costs |
|
|
543 |
|
|
|
858 |
|
|
|
2,007 |
|
|
|
2,098 |
|
| Tax impact of 4 property sale |
|
|
1 |
|
|
|
— |
|
|
|
292 |
|
|
|
— |
|
| Tax impact of Spring Meadows Transaction |
|
|
(106 |
) |
|
|
(106 |
) |
|
|
(318 |
) |
|
|
(318 |
) |
| Communities being repositioned/leased up, net of tax |
|
|
(14 |
) |
|
|
246 |
) |
|
|
143 |
|
|
|
683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted CFFO |
|
$ |
11,958 |
|
|
$ |
10,450 |
|
|
$ |
34,187 |
|
|
$ |
28,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted CFFO per share |
|
$ |
0.42 |
|
|
$ |
0.37 |
|
|
$ |
1.19 |
|
|
$ |
1.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
***
Capital Senior Living Company
Presentation Exhibit 99.2
Forward-Looking Statements The
forward-looking statements in this presentation 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 complete the refinancing of
certain of our wholly owned communities, realize the anticipated savings related to such financing, 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 licensures, 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 The Company assumes no obligation to update or supplement forward-looking statements in this presentation that become untrue because of new information,
subsequent events or otherwise.
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, each of which is included at the end of the Company’s earnings releases, along with the Company’s consolidated balance sheets, statements of operations, and statements of cash flows.
Capital Senior Living is Well
Positioned For Sustainable Growth Value leader in geographically concentrated regions providing quality seniors housing and care at reasonable prices Highest percentage of wholly-owned communities among top seniors housing operators generating
strong cash flow Straight forward private-pay business model Executing on disciplined accretive growth initiatives through wholly-owned acquisitions, conversions to higher levels of care, renovations and refurbishments Industry benefits from
need-driven demand, limited new supply and an improving housing market and economy Economic barriers limit new supply in local markets
The Seniors Housing Market is Highly
Fragmented Top 10 Top 25 Source: IBISWorld, Provider Magazine, and Barclays Research Top 10 Top 25 Top 25 Remaining Market Independent Living Companies 75% 20% 25% Assisted Living Companies 63% 29% 37% Top 10
Capital Senior Living Has Highest
Percentage of Wholly-owned Communities of Top U.S. Operators Rank Company Units Operated % Owned 1 Brookdale Senior Living 110,443 33.8% 2 Holiday Retirement 37,657 36.6% 3 LCS 32,172 14.9% 4 Five Star Senior Living 31,267 9.8% 5 Sunrise Senior
Living LLC 22,561 0.0% 6 Erickson Living 20,517 28.2% 7 Senior Lifestyle Corporation 20,334 82.0% * 8 Atria Senior Living Inc. 17,958 0.0% 9 Capital Senior Living Corporation 1 11,632 57.8% 10 Elmcroft Senior Living 8,874 0.0% Source: ASHA 50 2015 *
Mostly minority interests in joint ventures Largest U.S. Seniors Housing Operators 1 As of October 31, 2015 the unit count is 12,378 and the % owned is 57.9%
Capital Senior Living’s
Competitive Advantages in Highly Fragmented Industry Exceptional talent and reputation Economies of scale and operating efficiencies Strong cash flow funds investments in technology, training, systems, conversions, renovations, refurbishments and
accretive acquisitions Enhanced sales and marketing initiatives Quality Assurance Programs Solid reputation and 95% resident satisfaction
Demand Pull/Cost Push Pressures Favor
Senior Living Aging, Demographics, Acuity Levels and Disabilities Rising Penetration Rates Fewer Family Caregivers Social Engagement, Support and Emotional Well-Being Accountable Care Organizations Post Acute Care Collaboration Fee-For-Service
Framework vs. Quality and Value-Based Outcomes (Cost Considerations) Source: 2015 NIC for Seniors Housing & Care Age-Restricted Housing Independent Living Assisted Living Memory Care Skilled Nursing Hospital
Assisted Living Is a Lower Cost
Alternative for Post-Acute Care Higher Average Cost Lower Average Cost Acute Care Post-Acute Care Continuum Hospital $1,819/day Long-Term Care Hospital $1,450/day Inpatient Rehab Facility $1,314/day Skilled Nursing Property $432/day $190/day Home w/
Home Health Care Assisted Living $121/day Sources: Medicare Payment Advisory Committee (MedPAC), Report to Congress, March 2012; American Hospital Association (AHA) Statistics, 2012 Edition; Genworth Financial 2013 Cost of Care Survey; MEDICARE&
MEDICAIDRESEARCH REVIEW/ 2012 Statistical Supplement; NIC MAP® Data Service 1Q 2013
Seniors Housing Yields Consistent
High Investment Returns Source: NCREIF, NIC MAP Data Service NCREIF Annualized Total Investment Returns (1, 3, 5, 10-Year Periods, as of Q2 2015)
Capital Senior Living Geographic
Concentration Capital Senior Living operates 121 communities in geographically concentrated regions with the capacity to serve 15,400 residents AR. 173 AZ. 189 CT. 178 FL. 226 IA. 122 IL. 770 IN. 2,381 MI. 244 MN. 173 MO. 662 MS. 143 NC. 432 SC. 669
NE. 668 NJ. 98 NY. 537 OH. 2,172 TX. 3,870 VA. 455 CA. 408 CA. 408 AZ. 189 Number of residents by State Greater than 2,000 500 - 2,000 Less than 500 As of October 31, 2015 Resident Capacity By State WI. 591 GA. 168 MA. 87
Resident Demographics at CSU
Communities Average age of resident: 85 years Average age of resident moving in: 82 years Average stay period: 2-3 years Percent of female residents: 80% Resident turnover is primarily attributed to death or need for higher care
Independent Living – 45% of
Resident Capacity Average 108 units per IL community with large common areas and amenities Supportive services, wellness programs, social, recreational and educational events Average monthly rate of $2,599 100% private pay Average length of resident
stay is 34 months The Capital Advantage: Senior Living Options
The Capital Advantage: Senior Living
Options Assisted Living- 55% of Resident Capacity Average 69 units per community 80% of communities offer AL Assistance with activities of daily living including medication reminders, bathing, dressing and grooming Average monthly rate of $4,064
Substantially all private pay Average length of resident stay is 27 months
The Capital Advantage: Need Driven
Demand U.S. population 75+ years old is estimated to be 12% of the population by 2030 compared to 6% in 2012 Only 1.3 million units serving a population of 18.9 million seniors Current 6.9% penetration rate implies demand growth of 40,000 units per
year U.S. Seniors Population Trends (75+ years old) (Population in thousands) Source: 2010 Census Summary File 1 and U.S. Census Bureau, Population Division 75% Expected Growth from 2014 to 2030
The Capital Advantage: Increasing
Occupancy and Average Monthly Rate Trends
Economic Barriers Limit New Supply
in Local Markets Capital Senior Living Average Monthly Rents $3,382 Average Construction Cost per Unit $200,000 Annual Per Unit Cash Flow at 90% Occupancy and 30% Margin $10,958 Return on Investment 5.5% Low investment returns on construction at
Capital Senior Living’s average monthly rents limit new supply in local markets
Transformation of Lead Generation
CSU Executive Report/Standing Dog/Matrix Care Total Visits
Capital Senior Living Sales: Closing
Ratios Closing Ratio % Based on Net Deposits/Tours Capital Senior Living Month End Compliance and Occupancy Reports / REPS Industry Trend Source: Bild & Co. IL Industry Average AL Industry Average
The Capital Advantage: Strategy
Focus on our core strengths Capitalize on competitive advantages within each of our regions to maximize the cash flow and value of our communities and our operations Capitalize on the fragmented nature of the senior living industry to strategically
aggregate local and regional operators in geographically concentrated regions Increase levels of care through conversions to Assisted Living or Memory Care units Attract and retain the best talent in the senior living industry
Capital Senior Living’s
Greatest Resource – Our Employees Starts with hiring the right people with a heart for seniors Most important hire is the Executive Director with senior housing experience Community empowerment is essential due to the local nature of the
markets that we serve Empowerment requires Capital Senior Living’s ARA Management Philosophy: A – authority and autonomy R – responsibility A – accountability Regional and corporate team are a support and resource to our
onsite operations
Operations senior management average
32 years of senior housing experience Regional/District Operations Managers average 17 years of senior housing experience 10 of 12 Regional/District Operations Managers were promoted from Capital Senior Living Executive Directors Regional Marketing
Directors average 18 years of senior housing experience 6 of 9 Regional Marketing Directors were promoted from Capital Senior Living Sales Directors Experienced Corporate Operations Team
Multiple Avenues of Growth Core
Growth Conversion of units to higher levels of care Accretive acquisitions of wholly-owned communities Will add back communities currently excluded from non-GAAP financial measures when repositioning is complete
Core Growth Goal is to increase
revenue at a rate 50 to 100 bps higher than expenses Occupancy growth is resulting in pricing power Continue to enhance sales and marketing initiatives Renovations and refurbishments enhance growth prospects Proactive expense management Wage
pressure is not a concern
Conversions: Significant Increases
in Occupancy, Revenue and CFFO Occupancy Prior to Conversions (1) IL AL Total Total Units 6,192 5,434 11,626 Occupied Units 5,287 4,869 10,156 Occupancy % 85.4% 89.6% 87.4% Planned IL to AL Conversions IL AL Vacant Units (225) 225 At 90% Stabilized
Occupancy 203 Incremental Conversions (175) 175 (1) As of June 30, 2014 - excludes CCRC’s , Autumn Glen, and Veranda Club Occupancy After Conversions IL AL Total Total Units 5,792 5,834 11,626 Occupied Units 5,112 5,247 10,359 Occupancy %
88.3% 89.9% 89.1% Annual Financial Impact Incremental CFFO: Approx. $0.20 per share
Significant Occupancy Improvement
After Conversion Occupancy has increased 11.6 percentage points at communities where conversions were completed in 3Q and 4Q 2014
Conversions: Significant Increases
in Occupancy, Revenue, and CFFO 400 units converted at June 30, 2015 Includes 94 units at two of the four communities currently excluded from our Non-GAAP results $0.20 per share of CFFO 100 units to be converted in second half of 2015 $0.03 per
share of CFFO 200 units to be converted in 2016 $0.05 per share of CFFO
The Waterford at Thousand Oaks -
Renovations New Entry Hall New Dining Room Old Entry Hall Old Dining Room
The Waterford on Huebner -
Renovations New Entry Hall New Dining Room Old Entry Hall Old Dining Room
Transformation: Wholly-Owned
Portfolio Growth Owned % 32.5% 58.7% 77 Total Properties 121 Total Properties As of October 31, 2015
Strategic Accretive Acquisitions of
Wholly-Owned Communities *Based on share count at time of transaction (in millions except number of communities) 2011 2012 2013 2014 Jan – Sept 2015 Combined Purchase Price $83.4 $181.3 $150.4 $160.2 $124.5 $699.8 Communities 7 17 11 8 8 51
Units 551 1,367 881 819 680 4,298 Debt $59.3 $129.5 $112.3 $119.7 $92.6 (1) $513.4 Weighted Average Int. Rate 5.1% 4.5% 5.4% 4.5% 4.3% 4.7% Equity $24.1 $51.8 $38.1 $40.5 $31.9 $186.4 First Year Revenue $21.3 $49.1 $35.1 $36.4 $28.4 $170.3 First
Year EBITDAR $7.3 $19.1 $14.1 $15.0 $11.2 $66.7 First Year Cash Flow from Operations (CFFO) $3.4 $9.1 $5.8 $6.7 $5.1 $30.1 First Year CFFO per share* $0.13 $0.34 $0.20 $0.23 $0.18 $1.08 Cash on Cash Return 14.1% 17.6% 15.2% 16.5% 16.0% 16.1%
Strategic acquisitions of high quality senior living communities to enhance geographic concentrations – 16.1% cash on cash returns (1) Includes $2.6 million of additional funding expected in first half of 2016.
Acquisition Activity January 2011
– September 2015 Market Off-Market Tot./Avg. Signed Confidentiality Agreements (CA’s) 189 111 300 Pct. Of Total CA’s Signed 63% 37% 100% Offers Submitted 55 46 101 Pct. of Signed CA’s 29% 41% 34% # of Properties 99 127 226
Offers Accepted 19 28 47 Pct. of Offers Submitted 35% 61% 47% # of Properties 19 56 75 Properties Acquired 15 36 51 Pct. Of Total Properties Acquired 29% 71% 100%
Keys to Off-Market Success Extensive
industry relationships Name recognition and track record of closing acquisitions Certainty in securing financing Reputation for being responsive, fair and “straight-shooters” Owner / operator Sellers deal with one party (i.e., no capital
partner) Continuity of operations post-closing Staff and resident comfort level with Capital Senior Living Keeping transactions confidential
Key Metrics: Consistent Significant
Growth Revenue * Adjusted EBITDAR ($ In Millions) ($ In Millions) 17.9% CAGR * Excludes community reimbursement revenue and management services revenue 17.9% CAGR Adjusted EBITDAR Margin Adjusted CFFO per share * Excludes prepaid resident rents and
tax savings related to cost segregation studies of $0.25 in 2012 and $0.14 in 2013 22.5% CAGR
Comparative Operating and Financial
Metrics Q3 15 YTD Q3 14 YTD % Increase Total Revenues $ 304.6 $ 283.8 7.3% Adjusted EBITDAR $ 106.3 $ 96.5 10.2% % Margin 36.5% 35.3% Adjusted CFFO $ 34.2 $ 28.5 20.0% Adjusted CFFO Per Share $ 1.19 $ 1.01 Note: EBITDAR and CFFO are as adjusted in
press releases.
Balance Sheet As of September 30,
2015 (in millions) ASSETS Cash and Securities $ 47.9 Other Current Assets 25.3 Total Current Assets 73.2 Fixed Assets 848.0 Other Assets 38.1 TOTAL ASSETS $ 959.3 LIABILITIES & EQUITY Current Liabilities $ 66.8 Long-Term Debt 697.7 Other
Liabilities 55.1 Total Liabilities 819.6 Stockholders’ Equity 139.7 TOTAL LIABILITIES & EQUITY $ 959.3
Debt Overview : 100% Mortgage Debt
Debt Maturities Weighted Average Interest Rate (In thousands) Average duration of debt is 8 years, with approximately 94% of all debt maturing in 2021 and after Weighted Average Interest Rate has decreased 137 bps since 2010 * $32 million of this
debt is scheduled to be refinanced in the fourth quarter of 2015. * Ninety-eight percent of existing debt has fixed interest rates
Accelerated CFFO Growth through 2018
CAGR: +22% Note: This chart illustrates the potential financial impact of successful execution of our strategic plan; it is not intended as financial guidance. Please see Capital Senior Living’s disclosure related to forward-looking
statements. EBITDAR would increase approximately 50%, or $75M, through 2018
Investment Highlights Value leader
in geographically concentrated regions Highest percentage of wholly-owned communities among top operators Straight-forward private pay business model Need-driven demand, limited new supply and improving housing market and economy Experienced
management team with demonstrated ability to operate, acquire and create shareholder value Larger company competitive advantages in highly-fragmented industry Multiple avenues of growth Strong cash flow generation Solid balance sheet
Capital Senior Living Company
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Capital Senior Living (NYSE:CSU)
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Capital Senior Living (NYSE:CSU)
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