Leisureworld Senior Care Corporation (TSX:LW) ("Leisureworld" or
"the Company") today announced its financial results for the third
quarter and nine months ended September 30, 2012. The Company also
announced a 5.9% dividend increase, raising its monthly dividend to
$0.075 per share, representing $0.90 per share on an annualized
basis. The increase will be effective for Leisureworld's December
2012 dividend.
Percentage calculations in the following summary of
Leisureworld's third quarter financial results are based on the
numbers in the Financial Statements and/or Management's Discussion
and Analysis, and may not correspond to rounded figures presented
in this release. Full Financial Statements and Management's
Discussion and Analysis are available on the Company's website at
www.leisureworld.ca.
Financial Highlights
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Quarter Quarter Nine months Nine months
$000s except per share ended Sept ended Sept ended Sept ended Sept
data 30, 2012 30, 2011 30, 2012 30, 2011
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Average total occupancy
(LTC) 99.1% 98.9% 98.7% 98.5%
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Average private
occupancy (LTC) 99.0% 97.0% 98.2% 96.6%
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Average occupancy
(retirement and
independent living)(1) 74.8% 59.5% 72.7% 63.4%
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Net Loss (139) (3,320) (7,787) (8,633)
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Net Operating Income
(NOI)(2) 15,393 12,358 41,365 33,872
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Funds from Operations
(FFO)(2) 7,164 5,033 19,374 14,820
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Construction Funding
(Principal) 1,468 1,352 4,266 4,041
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Maintenance Capex (465) (93) (833) (530)
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Adjusted Funds from
Operations
(AFFO)(2)(3) 9,095 7,656 25,731 19,825
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Basic AFFO per share $ 0.3111 $ 0.3135 $ 0.9631 $ 0.8790
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Dividends declared per
share $ 0.2124 $ 0.2124 $ 0.6372 $ 0.6372
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Basic AFFO payout ratio 68.3% 67.8% 66.2% 72.5%
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1. The 2011 retirement and independent living occupancy rates include the
addition of the Kingston and Kanata properties as of April 27, 2011,
which are currently in lease-up and not yet at stabilized occupancy. The
2012 retirement and independent living occupancy rates include the
addition of the BC retirement properties as of May 24, 2012, with one of
the properties (The Royale Astoria) currently in lease-up and not yet at
stabilized occupancy.
2. Net operating income (loss) ("NOI"), funds from operations ("FFO"), and
adjusted funds from operations ("AFFO") are not measures recognized
under IFRS and do not have standardized meanings prescribed by IFRS.
NOI, FFO and AFFO are supplemental measures of a company's performance
and Leisureworld believes that NOI, FFO and AFFO are relevant measures
of its ability to pay dividends on the Company's common shares. The IFRS
measurement most directly comparable to NOI, FFO and AFFO is net income
(loss).
3. AFFO includes adjustments of $0, $65, $52 and $29, respectively, for
HRIS expenses; and $928, $1,299, $2,872 and $2,204, respectively, for
income support.
"We achieved a 24.6% increase in Net Operating Income and an
18.8% increase in Adjusted Funds from Operations, compared to the
third quarter a year ago. Our year-to-date payout ratio is 66.2%.
This strong performance was driven by growth in both our LTC and
retirement residence portfolios. With our continued strong
performance, our board today approved a 5.9% increase to our
shareholder dividend, demonstrating confidence in the
sustainability of Leisureworld's cash flows and growth potential,"
said Dino Chiesa, Interim CEO and Chairman of Leisureworld. "Growth
in our LTC portfolio was driven by increased funding, the
acquisition of the Madonna LTC home in Orleans, Ontario, which we
closed early in the quarter, and disciplined cost management. Our
retirement residence portfolio growth resulted primarily from the
acquisition of the BC retirement properties in our second quarter,
and higher occupancy rates in the Ontario portfolio."
"Looking ahead, our growth strategy remains focused on: ensuring
exceptional quality seniors care and services, supporting and
increasing our occupancy rates, maintaining disciplined cost
management, building our presence across the continuum of seniors
living in Canada, and maintaining a strong balance sheet and
reliable shareholder dividends," added Mr. Chiesa.
During the second quarter, Leisureworld completed the
acquisition of three luxury retirement residences in the Greater
Vancouver Area in British Columbia ("the BC Portfolio"), which
include The Royale Pacifica, The Royale Peninsula and The Royale
Astoria. The BC portfolio purchase consideration included an income
support agreement of $2.0 million for The Royale Astoria, to be
held in escrow as an income guarantee to supplement cash flow
during the lease-up period.
On July 16, 2012, Leisureworld closed the acquisition of the
Madonna LTC home, a 160-bed, "A" Class Long-Term Care (LTC)
residence in Orleans, Ontario. The property's current occupancy
rate is in excess of 97% and includes a 60/40 private/shared
accommodation ratio.
For the quarter ended September 30, 2012, Leisureworld's Net
Operating Income (NOI) increased 24.6% to $15.4 million, compared
to $12.4 million in the third quarter a year ago. The Company's LTC
operations generated NOI of $11.9 million, compared to $11.1
million for the third quarter 2011. The increase was primarily
attributable to the inclusion of NOI from the Madonna acquisition,
increased funding and higher private occupancy rates, partly offset
by higher property operating costs. Leisureworld's retirement
residence portfolio generated a $2.3 million increase in NOI mainly
as a result of the acquisition of the BC Portfolio. NOI for the
Company's Preferred Health Care Services (PHCS) subsidiary
decreased by $80,000 compared to third quarter 2011 results. This
decrease was due to higher staffing costs to accommodate increased
volumes and a temporary increase to operating costs.
Leisureworld generated $7.2 million in Funds from Operations
(FFO) in the third quarter of 2012, an increase of 42.3% from $5.0
million in the third quarter a year ago. The increase reflects
higher NOI in the quarter and a higher transaction costs add-back
of $0.4 million. Increased FFO was partly offset by increased
finance charges of $0.6 million, higher administrative expenses and
current income taxes of $0.5 million and $0.2 million,
respectively. The net finance charges increased due to the debt
assumed in relation to the acquisition of the BC Portfolio and
interest on the mortgage assumed on the Madonna acquisition. This
was partly offset by lower interest charges on the credit facility
related to the acquisition of the Ontario portfolio, as the Company
paid down $20.0 million of this facility during the quarter.
Adjusted Funds from Operations (AFFO) for the third quarter of
2012 increased 18.8% to $9.1 million, compared with $7.7 million in
the third quarter of 2011. Increased AFFO was primarily
attributable to increased FFO in the quarter, partly offset by
lower income support and higher maintenance capital
expenditures.
Dividends declared by Leisureworld in the quarter were $0.2124
per share and Basic AFFO per share was $0.3110, representing a
quarterly payout ratio of 68.3%. Leisureworld's payout ratio in the
third quarter of 2011 was 67.8%.
Leisureworld generated total revenue of $82.9 million for the
quarter ended September 30, 2012, an increase of 13.1% from $73.3
million in the third quarter a year ago. LTC contributed
approximately $4.5 million of the increase, primarily as a result
of the Madonna property acquisition and increased government
funding. Retirement residence revenue accounted for $4.3 million of
the increase, primarily as a result of the addition of the BC
properties acquired late in the second quarter as well as increased
revenues from the Ontario Portfolio due to higher occupancy levels.
PHCS contributed $0.9 million of the revenue increase, primarily
due to a rise in personal support contract volumes.
The Company's net loss was $0.1 million in the third quarter of
2012 compared to a net loss of $3.3 million in the third quarter of
2011. This improvement resulted primarily from higher income from
operations, largely attributable to the retirement portfolio
acquisitions, as well as reduced depreciation and amortization
charges. This was partly offset by a $0.1 million tax expense,
compared to an income tax recovery of $1.1 million in the third
quarter of 2011. The increase in current taxes was primarily driven
by earnings attributable to the Madonna and BC Portfolio
acquisitions.
For the nine months ended September 30, 2012, NOI was $41.4
million, up 22.1% from $33.9 million in the corresponding period in
2011. LTC contributed $2.4 million of the NOI increase, reflecting
increased LTC funding, preferred accommodation premiums, lower
utility costs and higher management fees. The retirement portfolio
contributed a $4.7 million increase in NOI, attributable to
continued lease-up of the Ontario Portfolio and the recent
acquisition of the BC Portfolio. PCHS contributed $0.4 million to
the increase in NOI. AFFO for the first nine months of 2012
increased 29.8% to $25.7 million from $19.8 million in the first
nine months of 2011. Favourable FFO contributed $4.6 million to the
increase, partly offset by higher maintenance capital expenditures.
Other factors contributing to the AFFO increase include higher
income support draws, increased principal portion of construction
funding and the prior year reduction associated with the income tax
book to filing adjustment, which did not recur in the current year.
Dividends declared by Leisureworld in the first nine months of 2012
totaled $0.6372 per share and Basic AFFO per share was $0.9631,
representing a payout ratio of 66.2% for the period.
For the nine months ended September 30, 2012, the Company's net
loss was $7.8 million, compared to $8.6 million in the same period
a year ago. The decreased net loss resulted from higher income from
operations of $6.7 million and from lower expenses related to
depreciation and amortization, partly offset by a $7.0 million
increase in income tax expense over the comparable period last
year, and a one-time $2.7 million impairment loss related to the
write down of the Company's Human Resource Information System in
the second quarter.
For the nine months ended September 30, 2012, total tax expense
was $2.6 million compared to a recovery of $4.4 million last year.
The variance was primarily a result of the rate adjustment in
deferred taxes of $3.8 million as well as the book to filing tax
adjustment in the third quarter of the prior year. The Company also
had higher earnings associated with the performance of the acquired
portfolios.
"Occupancy rates for the Royale Ontario retirement properties in
Kingston and Kanata at quarter end were 71.3% and 68.4%,
respectively. As at September 30, 2012, we had drawn down the full
amount of income support related to these properties. We do not
expect this to have a significant impact on our AFFO or payout
ratio during the remainder of the lease-up period. We continue to
target stabilized occupancy in the second half of 2013," said Manny
DiFilippo, Chief Financial Officer. "As at September 30, 2012, $0.7
million had been drawn down from our $2.0 million in income support
funds related to the Royale Astoria in Port Coquitlam, B.C., which
is in-line with our financial performance expectations related to
the Royale Astoria. We expect this property to reach stabilized
occupancy by early 2014."
As at September 30, 2012, the Company's debt to gross book value
ratio was 52.1%. The debt is represented by: 4.814% Series A Senior
Secured Notes due November 24, 2015, rated "A- (stable)" by
Standard & Poor's Rating Services and "A (stable)" by Dominion
Bond Rating Service Limited; $35.0 million drawn from the $61.5
million available revolving credit facility; a one-year $26.1
million term loan; a two-year $26.0 million term loan; an assumed
$23.7 million mortgage that matures on January 1, 2017 and an
assumed $15.7 million mortgage. Leisureworld had cash and cash
equivalents at quarter end totaling $20.1 million and a further
committed undrawn revolving credit facility with a Canadian
chartered bank of $10.0 million for working capital purposes. As at
September 30, 2012, Leisureworld had 29,272,889 common shares
issued and outstanding.
Conference Call
Dino Chiesa, Chairman and Interim CEO, and Manny DiFilippo, CFO,
will host a conference call for the investment community on
Thursday, November 8, 2012 at 1:00 p.m. (ET). The call-in numbers
for participants are 416-695-6616 or 800-355-4959. The call will be
webcast at: http://www.gowebcasting.com/3946.
A replay of the call will be available until November 22, 2012.
To access the replay, dial 905-694-9451 or 800-408-3053 (pass code:
9211730). The webcast archive will be available via Leisureworld's
website or the web link above.
About Leisureworld
Leisureworld Senior Care Corporation is Canada's fifth largest
operator of seniors' housing and the third largest licensed
long-term care (LTC) provider in Ontario. Leisureworld owns and
operates 27 LTC homes across Ontario with 4,474 beds. The Company
also owns and operates six retirement residences and one
independent living residence, representing 768 suites, in Ontario
and British Columbia. Leisureworld subsidiaries include: Preferred
Health Care Services, an accredited provider of professional
nursing and personal support services; and Ontario Long Term Care,
a provider of purchasing services, and dietary, social work, and
other regulated health professional services. For more information,
please visit the Company's website at www.leisureworld.ca.
Forward-Looking Statements
Certain of the statements contained in this news release are
forward-looking statements and are provided for the purpose of
presenting information about management's current expectations and
plans relating to the future. Readers are cautioned that such
statements may not be appropriate for other purposes. These
statements generally use forward-looking words, such as
"anticipate", "continue", "could", "expect", "may", "will",
"estimate", "believe" or other similar words and include, among
other things, statements related to the Company's financial results
or strategic plans. These statements are subject to significant
known and unknown risks and uncertainties that may cause actual
results or events to differ materially from those expressed or
implied by such statements and, accordingly, should not be read as
guarantees of future performance or results and will not
necessarily be accurate indications of whether or not such results
will be achieved. The forward-looking statements in this news
release are based on information currently available and what
management currently believes are reasonable assumptions, including
the funding of long-term care facilities by government entities.
Other material factors or assumptions that were applied in
formulating the forward-looking statements contained herein include
the assumption that the business and economic conditions affecting
Leisureworld's operations will continue substantially in their
current state, including, with respect to industry conditions,
general levels of economic activity and government regulations.
Although management believes that it has a reasonable basis for
the expectations reflected in these forward-looking statements,
actual results may differ from those suggested by the
forward-looking statements for various reasons. The assumptions,
risks and uncertainties described above are not exhaustive and
other events and risk factors could cause actual results to differ
materially from the results and events discussed in the
forward-looking statements. These forward-looking statements
reflect current expectations of Leisureworld as at the date of this
news release and speak only as at the date of this news release.
Leisureworld does not undertake any obligation to publicly update
or revise any forward-looking statements except as may be required
by applicable law.
Contacts: Leisureworld Senior Care Corporation Manny DiFilippo
Chief Financial Officer (905) 489-0787 www.leisureworld.ca Bruce
Wigle Investor Relations (416) 447-4740 ext. 232