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) August 4, 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) |
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(IRS Employer
Identification No.) |
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14160 Dallas Parkway
Suite 300 Dallas,
Texas |
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75254 |
(Address of principal executive offices) |
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(Zip Code) |
(972) 770-5600
(Registrants 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):
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¨ |
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 August 4, 2015, Capital Senior
Living Corporation (the Company) announced its financial results for the second quarter ended June 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 Companys 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 Companys 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 Companys press release, along with the Companys 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. |
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*99.1 |
Press Release dated August 4, 2015. |
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*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.
Date: August 4, 2015
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Capital Senior Living Corporation |
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By: |
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/s/ Carey P. Hendrickson |
Name: |
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Carey P. Hendrickson |
Title: |
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Senior Vice President and Chief Financial
Officer |
EXHIBIT INDEX
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*99.1 |
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Press Release dated August 4, 2015. |
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*99.2 |
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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 SECOND QUARTER 2015 RESULTS
DALLAS (BUSINESS WIRE) August 4, 2015 Capital Senior Living Corporation (the Company) (NYSE:CSU), one of the
nations largest operators of senior living communities, today announced operating and financial results for the second quarter of 2015. Company highlights for the second 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)
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Revenue in the second quarter of 2015, including all communities, was $101.6 million, an $8.2 million, or 8.7%, increase from the second quarter of 2014. |
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Occupancy for the Companys consolidated communities was 88.0% in the second quarter of 2015, an increase of 70 basis points from the second quarter of 2014 and 70 basis points from the first quarter of 2015.
Same-community occupancy was 87.8% for the second quarter of 2015, a 40 basis point increase from the second quarter of 2014 and a 60 basis point increase from the first quarter of 2015. |
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Average monthly rent for the Companys consolidated communities in the second quarter of 2015 was $3,364, an increase of $207 per occupied unit, or 6.6%, as compared to the second quarter of 2014, and a 210 basis
point improvement from the first quarter of 2015. Same-community average monthly rent was $3,327, an increase of $81 per occupied unit, or 2.5%, from the second quarter of 2014, and a 120 basis point improvement from the first quarter of 2015.
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Adjusted EBITDAR was $35.7 million in the second quarter of 2015, an 11.0% increase from the second quarter of 2014. The four communities undergoing repositioning, lease-up or significant renovation and conversion
generated an additional $0.9 million of EBITDAR. The Companys Adjusted EBITDAR margin was 36.8% for the second quarter of 2015, a record-high second quarter margin for the Company and an increase of 120 basis points versus the second quarter
of the prior year. |
CAPITAL/Page
2
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Adjusted Cash From Facility Operations (CFFO) was $11.7 million, or $0.41 per share, in the second quarter of 2015, a 22.3% increase versus the second 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 $9.6 million, or $0.34 per share in the second quarter of 2014.
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The Companys Net Loss for the second quarter of 2015, including all communities, was $5.2 million, or $0.18 per share, due mostly to non-cash amortization of resident leases of $4.1 million associated with
communities acquired by the Company in the previous 12 months. Adjusted Net Income was $0.2 million, or $0.01 per share, for the second quarter of 2015. |
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The Company completed the acquisition of three communities during the second quarter of 2015 for a combined purchase price of approximately $26.9 million. These communities are expected to generate incremental annual
CFFO of approximately $0.05 per share. |
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The Company announced today that it closed on the acquisition of an additional community in late July for a purchase price of approximately $13.3 million. This community is expected to generate incremental annual CFFO
of approximately $0.02 per share. |
We are successfully executing on our strategic plan which resulted in significant growth during the
second quarter in all of our key metrics, 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
same-community NOI grew 4.7%, our Adjusted CFFO increased 22.3% and we reported a record-high second quarter Adjusted EBITDAR margin of 36.8%. We were particularly pleased with the second quarter growth in our same-community occupancy, which
increased 60 basis points from the first quarter of 2015 and 40 basis points from the second 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
six such communities so far this year, and we continue to pursue additional opportunities.
We 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 in our local markets, a strong housing market and an improving economy.
CAPITAL/Page
3
Recent Investment Activity
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In the second quarter of 2015, the Company completed acquisitions of three senior living communities for a combined purchase price of $26.9 million. These communities expand the Companys operations in Wisconsin
and New York, and are comprised of 203 units offering independent living, assisted living and memory care services. |
Combined
highlights of the transactions include:
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Increases annual Adjusted CFFO by approximately $1.3 million, or $0.05 per share. |
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Adds approximately $0.7 million to earnings, or $0.03 per share. |
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Increases annual revenue by approximately $8.1 million. |
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Average monthly rents for the communities are approximately $3,450. |
The communities were
financed with an aggregate of approximately $20.3 million of non-recourse 10-year mortgage debt at an average fixed interest rate of 4.68%.
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In July 2015, the Company completed the acquisition of a senior living community for a purchase price of approximately $13.3 million. This community expands the Companys operations in Ohio, and is comprised of 68
units offering independent living and assisted living services. |
Highlights of the transaction include:
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Increases annual Adjusted CFFO by approximately $0.5 million, or $0.02 per share. |
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Adds approximately $0.2 million to earnings, or $0.01 per share. |
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Increases annual revenue by approximately $2.5 million. |
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Average monthly rents for the communities are approximately $3,350. |
The community was financed
with approximately $9.9 million of non-recourse 10-year mortgage debt at an average fixed rate of 4.25%.
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The Company expects to close on the sale of its only community in Kansas in August for approximately $14.8 million. The transaction will be structured as a like-kind exchange with the net proceeds accretively reinvested
in another community the Company expects to purchase in August. |
CAPITAL/Page
4
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Subject to completion of due diligence and customary closing conditions, acquisitions of three communities totaling approximately $74.5 million are expected to close by the end of September 2015, which will bring the
Companys total acquisitions in 2015 to $163.4 million. The Company is conducting due diligence on additional acquisitions of high-quality senior living communities in states with extensive existing operations. |
Financial ResultsSecond Quarter
For the
second quarter of 2015, the Company reported revenue of $101.6 million, compared to revenue of $93.4 million in the second quarter of 2014, an increase of 8.7%. Resident and healthcare revenue increased from the second quarter of the prior year by
approximately $10.0 million, or 10.9%, mostly due to the acquisition of 12 communities during or after the second quarter of 2014. As expected, community reimbursement revenue and affiliated management revenue decreased approximately $1.8 million in
the second quarter of 2015 as compared to the second 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 second quarter of 2015 were $60.7 million, an increase of $5.1
million from the second quarter of 2014, primarily due to the acquisition of 12 communities during or after the second quarter of 2014.
General and
administrative expenses for the second quarter of 2015 were $5.7 million, which includes $0.8 million of transaction and other one-time costs. Excluding transaction and other one-time costs, general and administrative expenses increased $0.9 million
in the second quarter of 2015 as compared to the second quarter of 2014. As a percentage of revenues under management, general and administrative expenses, excluding transaction and other one-time costs, were 4.8% in the second quarter of 2015 as
compared to 4.2% in the second quarter of 2014.
The Companys 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 second quarter of 2015 was approximately
$35.7 million, an increase of $3.5 million, or 11.0%, from the second quarter of 2014. This does not include EBITDAR of $0.9 million related to four communities undergoing repositioning, lease-up or significant renovation and conversion. The
Adjusted EBITDAR margin for the second quarter of 2015 was 36.8%, which is a record-high second quarter margin for the Company and an increase of 120 basis points from the second quarter 2014 margin of 35.6%.
CAPITAL/Page
5
The Company recorded a net loss of $5.2 million in the second quarter. Excluding non-recurring or
non-economic items reconciled on the final page of this release, the Companys adjusted net income was $0.2 million, or $0.01 per share, in the second quarter of 2015. Adjusted CFFO was $11.7 million, or $0.41 per share, in the second quarter
of 2015, a 22.3% increase from the second quarter of the prior year. On a comparable basis, Adjusted CFFO was $9.6 million, or $0.34 per share, in the second 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 second quarter of 2015 increased 2.1% versus the second quarter of 2014. Same-community expenses decreased 0.2% from the second
quarter of the prior year. Labor costs, including benefits, increased 0.6%, while food costs decreased 1.5% and utilities decreased 3.3% in the second quarter of 2015 as compared to the second quarter of the prior year. Same-community net operating
income increased 4.7% in the second quarter of 2015 as compared to the second quarter of 2014.
Capital expenditures for the second quarter of 2014 were
$8.0 million, representing approximately $6.6 million of investment spending and approximately $1.4 million of recurring capital expenditures. If annualized, spending for recurring capital expenditures was approximately $495 per unit.
Balance Sheet
The Company ended the quarter with
$51.7 million of cash and cash equivalents, including restricted cash, a decrease of $11.7 million since March 31, 2015. During the second quarter of 2015, the Company invested $6.6 million of cash as equity to complete the acquisitions of
three communities and spent $8.0 million on capital improvements.
As of June 30, 2015, the Company financed its owned communities with mortgages
totaling $679.8 million at interest rates averaging 4.6%. All of the Companys debt is at fixed interest rates, except for two bridge loans totaling approximately $20.3 million at June 30, 2015, at variable rates averaging 4.3%. The
Company expects to refinance one of the bridge loans that matures during the fourth quarter of 2015 with 10-year fixed-rate debt during the third quarter of 2015. Otherwise, the Company has no mortgage maturities before the second quarter of 2017.
CAPITAL/Page
6
The Companys 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 Companys acquisition program.
Q2 2015 Conference Call Information
The Company will host a conference call with senior management to discuss the Companys second quarter 2015 financial results. The call will be held on
Tuesday, August 4, 2015, at 5:00 p.m. Eastern Time. The call-in number is 913-312-0653, confirmation code 2595372. 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 Companys shareholders and the public, the conference call will be recorded and available for
replay starting August 4, 2015 at 8:00 p.m. Eastern Time, until August 13, 2015 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 2595372. The conference call will also be made available
for playback via the Companys corporate website, www.capitalsenior.com, beginning August 5, 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 Companys consolidated balance sheets, statements of operations, and statements of cash
flows.
About the Company
Capital Senior
Living Corporation is one of the nations largest operators of residential communities for senior adults. The Companys operating strategy is to provide value to residents by providing quality senior living services at reasonable
CAPITAL/Page
7
prices. The Companys 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 119 senior living communities in geographically concentrated regions with an aggregate capacity of approximately 15,200 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 Companys 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)
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June 30, 2015 |
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December 31, 2014 |
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
39,403 |
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$ |
39,209 |
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Restricted cash |
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12,251 |
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12,241 |
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Accounts receivable, net |
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7,453 |
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5,903 |
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Accounts receivable from affiliates |
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3 |
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|
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5 |
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Federal and state income taxes receivable |
|
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310 |
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|
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Deferred taxes |
|
|
|
|
|
|
460 |
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Assets held for sale |
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|
|
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35,761 |
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Property tax and insurance deposits |
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10,698 |
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12,198 |
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Prepaid expenses and other |
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5,418 |
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6,797 |
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Total current assets |
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75,536 |
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112,574 |
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Property and equipment, net |
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811,052 |
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747,613 |
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Other assets, net |
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35,386 |
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37,514 |
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Total assets |
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$ |
921,974 |
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$ |
897,701 |
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
2,055 |
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$ |
2,540 |
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Accounts payable to affiliates |
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7 |
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Accrued expenses |
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29,934 |
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32,154 |
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Notes payable of assets held for sale |
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15,076 |
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Current portion of notes payable |
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23,022 |
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33,664 |
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Current portion of deferred income and resident revenue |
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13,844 |
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14,603 |
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Current portion of capital lease and financing obligations |
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1,074 |
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|
1,054 |
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Federal and state income taxes payable |
|
|
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219 |
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Customer deposits |
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1,451 |
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|
|
1,499 |
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Total current liabilities |
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71,380 |
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|
100,816 |
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Deferred income |
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14,996 |
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|
|
15,949 |
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Capital lease and financing obligations, net of current portion |
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39,563 |
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40,016 |
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Deferred taxes |
|
|
|
|
|
|
460 |
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Other long-term liabilities |
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|
1,359 |
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|
|
1,426 |
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Notes payable, net of current portion |
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660,172 |
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|
597,860 |
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Commitments and contingencies |
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Shareholders equity: |
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Preferred stock, $.01 par value: |
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Authorized shares 15,000; no shares issued or outstanding |
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Common stock, $.01 par value: |
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Authorized shares 65,000; issued and outstanding shares 29,502 and 29,097 in 2015 and 2014, respectively |
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|
299 |
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294 |
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Additional paid-in capital |
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|
155,599 |
|
|
|
151,069 |
|
Retained deficit |
|
|
(20,460 |
) |
|
|
(9,255 |
) |
Treasury stock, at cost 350 shares |
|
|
(934 |
) |
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(934 |
) |
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Total shareholders equity |
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134,504 |
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141,174 |
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Total liabilities and shareholders equity |
|
$ |
921,974 |
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|
$ |
897,701 |
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|
|
|
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See accompanying notes to unaudited consolidated financial statements.
CAPITAL/Page
9
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited, in thousands, except per share data)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2015 |
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2014 |
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2015 |
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2014 |
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Revenues: |
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Resident and healthcare revenue |
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$ |
101,588 |
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$ |
91,600 |
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$ |
200,228 |
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$ |
181,774 |
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Affiliated management services revenue |
|
|
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207 |
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|
|
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|
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415 |
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Community reimbursement revenue |
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|
|
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|
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1,618 |
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|
|
|
|
|
|
3,093 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total revenues |
|
|
101,588 |
|
|
|
93,425 |
|
|
|
200,228 |
|
|
|
185,282 |
|
Expenses: |
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|
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Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) |
|
|
60,707 |
|
|
|
55,585 |
|
|
|
120,838 |
|
|
|
111,276 |
|
General and administrative expenses |
|
|
5,718 |
|
|
|
4,651 |
|
|
|
10,731 |
|
|
|
9,622 |
|
Facility lease expense |
|
|
15,298 |
|
|
|
14,889 |
|
|
|
30,554 |
|
|
|
29,683 |
|
Stock-based compensation expense |
|
|
2,717 |
|
|
|
2,717 |
|
|
|
4,444 |
|
|
|
4,077 |
|
Depreciation and amortization |
|
|
13,468 |
|
|
|
10,816 |
|
|
|
26,263 |
|
|
|
21,767 |
|
Community reimbursement expense |
|
|
|
|
|
|
1,618 |
|
|
|
|
|
|
|
3,093 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
97,908 |
|
|
|
90,276 |
|
|
|
192,830 |
|
|
|
179,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
3,680 |
|
|
|
3,149 |
|
|
|
7,398 |
|
|
|
5,764 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
11 |
|
|
|
16 |
|
|
|
24 |
|
|
|
28 |
|
Interest expense |
|
|
(8,673 |
) |
|
|
(7,393 |
) |
|
|
(17,028 |
) |
|
|
(14,530 |
) |
Write-off of deferred loan costs and prepayment premiums |
|
|
|
|
|
|
(6,979 |
) |
|
|
(871 |
) |
|
|
(6,979 |
) |
Joint venture equity investment valuation gain |
|
|
|
|
|
|
1,519 |
|
|
|
|
|
|
|
1,519 |
|
Loss on disposition of assets, net |
|
|
(65 |
) |
|
|
(14 |
) |
|
|
(171 |
) |
|
|
(10 |
) |
Equity in earnings of unconsolidated joint ventures, net |
|
|
|
|
|
|
64 |
|
|
|
|
|
|
|
105 |
|
Other income |
|
|
|
|
|
|
9 |
|
|
|
1 |
|
|
|
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
|
|
(5,047 |
) |
|
|
(9,629 |
) |
|
|
(10,647 |
) |
|
|
(14,086 |
) |
Provision for income taxes |
|
|
(119 |
) |
|
|
(190 |
) |
|
|
(558 |
) |
|
|
(380 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(5,166 |
) |
|
$ |
(9,819 |
) |
|
$ |
(11,205 |
) |
|
$ |
(14,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss per share |
|
$ |
(0.18 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net loss per share |
|
$ |
(0.18 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic |
|
|
28,705 |
|
|
|
28,298 |
|
|
|
28,636 |
|
|
|
28,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding diluted |
|
|
28,705 |
|
|
|
28,298 |
|
|
|
28,636 |
|
|
|
28,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
$ |
(5,166 |
) |
|
$ |
(9,819 |
) |
|
$ |
(11,205 |
) |
|
$ |
(14,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL/Page
10
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
2015 |
|
|
2014 |
|
Operating Activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(11,205 |
) |
|
$ |
(14,466 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
26,263 |
|
|
|
21,767 |
|
Amortization of deferred financing charges |
|
|
582 |
|
|
|
646 |
|
Amortization of deferred lease costs and lease intangibles |
|
|
652 |
|
|
|
615 |
|
Deferred income |
|
|
(131 |
) |
|
|
(109 |
) |
Write-off of deferred loan costs and prepayment premiums |
|
|
870 |
|
|
|
6,979 |
|
Joint venture equity investment valuation gain |
|
|
|
|
|
|
(1,519 |
) |
Loss on disposition of assets, net |
|
|
171 |
|
|
|
10 |
|
Equity in earnings of unconsolidated joint ventures |
|
|
|
|
|
|
(105 |
) |
Provision for bad debts |
|
|
544 |
|
|
|
372 |
|
Stock-based compensation expense |
|
|
4,444 |
|
|
|
4,077 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(2,090 |
) |
|
|
(1,554 |
) |
Accounts receivable from affiliates |
|
|
2 |
|
|
|
4 |
|
Property tax and insurance deposits |
|
|
1,500 |
|
|
|
1,931 |
|
Prepaid expenses and other |
|
|
1,379 |
|
|
|
2,143 |
|
Other assets |
|
|
208 |
|
|
|
(46 |
) |
Accounts payable |
|
|
(492 |
) |
|
|
(2,790 |
) |
Accrued expenses |
|
|
(2,220 |
) |
|
|
(2,726 |
) |
Federal and state income taxes receivable/payable |
|
|
(529 |
) |
|
|
(278 |
) |
Customer deposits |
|
|
(48 |
) |
|
|
136 |
|
Deferred resident revenue |
|
|
(1,581 |
) |
|
|
153 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
18,319 |
|
|
|
15,240 |
|
Investing Activities |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(13,540 |
) |
|
|
(7,887 |
) |
Cash paid for acquisitions |
|
|
(74,710 |
) |
|
|
(98,180 |
) |
Proceeds from disposition of assets |
|
|
35,807 |
|
|
|
4 |
|
Proceeds from SHPIII/CSL Transaction |
|
|
|
|
|
|
2,532 |
|
Distributions from unconsolidated joint ventures |
|
|
|
|
|
|
102 |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(52,443 |
) |
|
|
(103,429 |
) |
Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from notes payable |
|
|
102,332 |
|
|
|
231,122 |
|
Repayments of notes payable |
|
|
(66,315 |
) |
|
|
(125,917 |
) |
Increase in restricted cash |
|
|
(10 |
) |
|
|
(12 |
) |
Cash payments for capital lease and financing obligations |
|
|
(433 |
) |
|
|
(391 |
) |
Cash proceeds from the issuance of common stock |
|
|
42 |
|
|
|
169 |
|
Excess tax benefits on stock option exercised |
|
|
49 |
|
|
|
(82 |
) |
Deferred financing charges paid |
|
|
(1,347 |
) |
|
|
(2,377 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
34,318 |
|
|
|
102,512 |
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents |
|
|
194 |
|
|
|
14,323 |
|
Cash and cash equivalents at beginning of period |
|
|
39,209 |
|
|
|
13,611 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
39,403 |
|
|
$ |
27,934 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
16,112 |
|
|
$ |
13,980 |
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
1,020 |
|
|
$ |
695 |
|
|
|
|
|
|
|
|
|
|
CAPITAL/Page
11
Capital Senior Living Corporation
Supplemental Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communities |
|
|
Average Resident Capacity |
|
|
Average Units |
|
|
|
Q2 15 |
|
|
Q2 14 |
|
|
Q2 15 |
|
|
Q2 14 |
|
|
Q2 15 |
|
|
Q2 14 |
|
Portfolio Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I. Community Ownership / Management |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated communities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned |
|
|
68 |
|
|
|
63 |
|
|
|
8,744 |
|
|
|
8,363 |
|
|
|
6,608 |
|
|
|
6,626 |
|
Leased |
|
|
50 |
|
|
|
50 |
|
|
|
6,333 |
|
|
|
6,333 |
|
|
|
4,907 |
|
|
|
5,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
118 |
|
|
|
113 |
|
|
|
15,077 |
|
|
|
14,696 |
|
|
|
11,515 |
|
|
|
11,626 |
|
Independent living |
|
|
|
|
|
|
|
|
|
|
7,090 |
|
|
|
7,597 |
|
|
|
5,512 |
|
|
|
6,191 |
|
Assisted living |
|
|
|
|
|
|
|
|
|
|
7,987 |
|
|
|
7,099 |
|
|
|
6,003 |
|
|
|
5,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
15,077 |
|
|
|
14,696 |
|
|
|
11,515 |
|
|
|
11,626 |
|
II. Percentage of Operating Portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated communities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned |
|
|
57.6 |
% |
|
|
55.8 |
% |
|
|
58.0 |
% |
|
|
56.9 |
% |
|
|
57.4 |
% |
|
|
57.0 |
% |
Leased |
|
|
42.4 |
% |
|
|
44.2 |
% |
|
|
42.0 |
% |
|
|
43.1 |
% |
|
|
42.6 |
% |
|
|
43.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Independent living |
|
|
|
|
|
|
|
|
|
|
47.0 |
% |
|
|
51.7 |
% |
|
|
47.9 |
% |
|
|
53.3 |
% |
Assisted living |
|
|
|
|
|
|
|
|
|
|
53.0 |
% |
|
|
48.3 |
% |
|
|
52.1 |
% |
|
|
46.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
Q2 15 |
|
|
Q2 14 |
|
I. Owned communities |
|
|
|
|
|
|
|
|
Number of communities |
|
|
65 |
|
|
|
60 |
|
Resident capacity |
|
|
8,135 |
|
|
|
7,103 |
|
Unit capacity |
|
|
6,159 |
|
|
|
5,700 |
|
Financial occupancy (1) |
|
|
89.2 |
% |
|
|
88.4 |
% |
Revenue (in millions) |
|
|
53.1 |
|
|
|
43.8 |
|
Operating expenses (in millions) (2) |
|
|
29.4 |
|
|
|
25.0 |
|
Operating margin |
|
|
45 |
% |
|
|
43 |
% |
Average monthly rent |
|
|
3,221 |
|
|
|
2,899 |
|
II. Leased communities |
|
|
|
|
|
|
|
|
Number of communities |
|
|
49 |
|
|
|
49 |
|
Resident capacity |
|
|
6,107 |
|
|
|
6,107 |
|
Unit capacity |
|
|
4,766 |
|
|
|
4,839 |
|
Financial occupancy (1) |
|
|
86.5 |
% |
|
|
85.9 |
% |
Revenue (in millions) |
|
|
44.0 |
|
|
|
43.3 |
|
Operating expenses (in millions) (2) |
|
|
21.6 |
|
|
|
21.7 |
|
Operating margin |
|
|
51 |
% |
|
|
50 |
% |
Average monthly rent |
|
|
3,555 |
|
|
|
3,469 |
|
III. Consolidated communities |
|
|
|
|
|
|
|
|
Number of communities |
|
|
114 |
|
|
|
109 |
|
Resident capacity |
|
|
14,242 |
|
|
|
13,210 |
|
Unit capacity |
|
|
10,925 |
|
|
|
10,540 |
|
Financial occupancy (1) |
|
|
88.0 |
% |
|
|
87.3 |
% |
Revenue (in millions) |
|
|
97.1 |
|
|
|
87.1 |
|
Operating expenses (in millions) (2) |
|
|
51.0 |
|
|
|
46.6 |
|
Operating margin |
|
|
47 |
% |
|
|
46 |
% |
Average monthly rent |
|
|
3,364 |
|
|
|
3,157 |
|
IV. Communities under management |
|
|
|
|
|
|
|
|
Number of communities |
|
|
114 |
|
|
|
109 |
|
Resident capacity |
|
|
14,242 |
|
|
|
13,861 |
|
Unit capacity |
|
|
10,925 |
|
|
|
10,968 |
|
Financial occupancy (1) |
|
|
88.0 |
% |
|
|
87.3 |
% |
Revenue (in millions) |
|
|
97.1 |
|
|
|
91.2 |
|
Operating expenses (in millions) (2) |
|
|
51.0 |
|
|
|
48.9 |
|
Operating margin |
|
|
47 |
% |
|
|
46 |
% |
Average monthly rent |
|
|
3,364 |
|
|
|
3,177 |
|
V. Same communities under management |
|
|
|
|
|
|
|
|
Number of communities |
|
|
105 |
|
|
|
105 |
|
Resident capacity |
|
|
13,239 |
|
|
|
13,239 |
|
Unit capacity |
|
|
10,341 |
|
|
|
10,421 |
|
Financial occupancy (1) |
|
|
87.8 |
% |
|
|
87.4 |
% |
Revenue (in millions) |
|
|
90.6 |
|
|
|
88.7 |
|
Operating expenses (in millions) (2) |
|
|
47.2 |
|
|
|
47.3 |
|
Operating margin |
|
|
48 |
% |
|
|
47 |
% |
Average monthly rent |
|
|
3,327 |
|
|
|
3,246 |
|
VI. General and Administrative expenses as a percent of Total Revenues under Management |
|
|
|
|
|
|
|
|
Second Quarter (3) |
|
|
4.8 |
% |
|
|
4.2 |
% |
First six months (3) |
|
|
4.7 |
% |
|
|
4.5 |
% |
VII. Consolidated Mortgage Debt Information (in thousands, except interest rates) (excludes insurance premium and auto
financing) |
|
|
|
|
|
|
|
|
Total fixed rate mortgage debt |
|
|
659,485 |
|
|
|
524,018 |
|
Total variable rate mortgage debt |
|
|
20,272 |
|
|
|
65,222 |
|
Weighted average interest rate |
|
|
4.64 |
% |
|
|
4.74 |
% |
(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/Page
13
CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2015 |
|
|
2014 |
|
|
2015 |
|
|
2014 |
|
Adjusted EBITDAR |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from operations |
|
$ |
3,680 |
|
|
$ |
3,149 |
|
|
$ |
7,398 |
|
|
$ |
5,764 |
|
Depreciation and amortization expense |
|
|
13,468 |
|
|
|
10,816 |
|
|
|
26,263 |
|
|
|
21,767 |
|
Stock-based compensation expense |
|
|
2,717 |
|
|
|
2,717 |
|
|
|
4,444 |
|
|
|
4,077 |
|
Facility lease expense |
|
|
15,298 |
|
|
|
14,889 |
|
|
|
30,554 |
|
|
|
29,683 |
|
Provision for bad debts |
|
|
280 |
|
|
|
134 |
|
|
|
544 |
|
|
|
372 |
|
Casualty losses |
|
|
260 |
|
|
|
101 |
|
|
|
521 |
|
|
|
415 |
|
Transaction and conversion costs |
|
|
876 |
|
|
|
754 |
|
|
|
1,463 |
|
|
|
1,241 |
|
Communities being repositioned/leased up |
|
|
(872 |
) |
|
|
(401 |
) |
|
|
(1,354 |
) |
|
|
(401 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAR |
|
$ |
35,707 |
|
|
$ |
32,159 |
|
|
$ |
69,833 |
|
|
$ |
62,918 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAR Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAR |
|
$ |
35,707 |
|
|
$ |
32,159 |
|
|
$ |
69,833 |
|
|
$ |
62,918 |
|
Total revenues |
|
$ |
101,588 |
|
|
$ |
93,425 |
|
|
$ |
200,228 |
|
|
$ |
185,282 |
|
Communities being repositioned/leased up |
|
|
(4,428 |
) |
|
|
(2,995 |
) |
|
|
(8,783 |
) |
|
|
(6,012 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted revenues |
|
$ |
97,160 |
|
|
$ |
90,430 |
|
|
$ |
191,445 |
|
|
$ |
179,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAR margin |
|
|
36.8 |
% |
|
|
35.6 |
% |
|
|
36.5 |
% |
|
|
35.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income and net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(5,166 |
) |
|
$ |
(9,819 |
) |
|
$ |
(11,205 |
) |
|
$ |
(14,466 |
) |
Casualty losses, net of tax |
|
|
164 |
|
|
|
64 |
|
|
|
328 |
|
|
|
261 |
|
Transaction and conversion costs, net of tax |
|
|
552 |
|
|
|
476 |
|
|
|
922 |
|
|
|
782 |
|
Resident lease amortization, net of tax |
|
|
2,582 |
|
|
|
1,991 |
|
|
|
4,919 |
|
|
|
4,196 |
|
Write-off of deferred loan costs and prepayment premium, net of tax |
|
|
|
|
|
|
4,397 |
|
|
|
549 |
|
|
|
4,397 |
|
Joint venture equity investment valuation gain, net of tax |
|
|
|
|
|
|
(957 |
) |
|
|
|
|
|
|
(957 |
) |
Loss (Gain) on disposition of assets, net of tax |
|
|
41 |
|
|
|
9 |
|
|
|
110 |
|
|
|
6 |
|
Deferred tax asset valuation allowance |
|
|
1,851 |
|
|
|
3,703 |
|
|
|
4,350 |
|
|
|
5,395 |
|
Tax impact of 4 property sale |
|
|
9 |
|
|
|
|
|
|
|
291 |
|
|
|
|
|
Communities being repositioned/leased up, net of tax |
|
|
215 |
|
|
|
153 |
|
|
|
705 |
|
|
|
604 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
248 |
|
|
$ |
17 |
|
|
$ |
969 |
|
|
$ |
218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share |
|
$ |
0.01 |
|
|
$ |
0.00 |
|
|
$ |
0.03 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding |
|
|
28,707 |
|
|
|
28,301 |
|
|
|
28,638 |
|
|
|
28,228 |
|
Adjusted CFFO and Adjusted CFFO per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(5,166 |
) |
|
$ |
(9,819 |
) |
|
$ |
(11,205 |
) |
|
$ |
(14,466 |
) |
Non-cash charges, net |
|
|
17,068 |
|
|
|
19,689 |
|
|
|
33,395 |
|
|
|
32,733 |
|
Recurring capital expenditures |
|
|
(1,095 |
) |
|
|
(1,036 |
) |
|
|
(2,182 |
) |
|
|
(2,065 |
) |
Casualty losses |
|
|
260 |
|
|
|
101 |
|
|
|
521 |
|
|
|
415 |
|
Transaction and conversion costs |
|
|
876 |
|
|
|
754 |
|
|
|
1,463 |
|
|
|
1,241 |
|
Tax impact of 4 property sale |
|
|
9 |
|
|
|
|
|
|
|
291 |
|
|
|
|
|
Tax impact of Spring Meadows Transaction |
|
|
(106 |
) |
|
|
(106 |
) |
|
|
(212 |
) |
|
|
(212 |
) |
Communities being repositioned/leased up, net of tax |
|
|
(138 |
) |
|
|
(10 |
) |
|
|
152 |
|
|
|
318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted CFFO |
|
$ |
11,708 |
|
|
$ |
9,573 |
|
|
$ |
22,223 |
|
|
$ |
17,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted CFFO per share |
|
$ |
0.41 |
|
|
$ |
0.34 |
|
|
$ |
0.78 |
|
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
***
Capital
Senior Living Company Presentation
Exhibit 99.2 |
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
Companys 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. |
3 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 Companys earnings releases,
along with the Companys consolidated balance sheets, statements of
operations, and statements of cash flows. |
4 Company Highlights Value leader in geographically concentrated regions providing quality seniors housing and care at reasonable prices Well positioned to make meaningful gains in shareholder value Substantially all private pay with strong cash flow generation Industry benefits from need-driven demand, limited new supply and an improving housing market and economy Larger company economies of scale and proprietary systems that yield operating efficiencies in highly fragmented industry Executing on disciplined accretive growth initiatives through acquisitions, conversions to higher levels of care, renovations and refurbishments Solid balance sheet |
5 Company Overview Capital Senior Living operates 119 communities in geographically concentrated regions with the capacity to serve 15,200 residents Number of residents by State Greater than 2,000 500 - 2,000 Less than 500 As of July 31, 2015 Resident Capacity By State |
6 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 |
7 Independent Living 47% of Resident Capacity Average 109 units per IL community with large common areas and amenities Supportive services, wellness programs, social, recreational and educational events Average monthly rate of $2,576 100% private pay Average length of resident stay is 31 months The Capital Advantage: Senior Living Options |
8 The Capital Advantage: Senior Living Options Assisted Living- 53% of Resident Capacity Average 68 units per community 79% of communities offer AL Assistance with activities of daily living including medication reminders, bathing, dressing and grooming Average monthly rate of $4,044 Substantially all private pay Average length of resident stay is 24 months |
9 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) 15,000 17,500 20,000 22,500 25,000 27,500 30,000 32,500 35,000 2010 2015 2020 2025 2030 Source: 2010 Census Summary File 1 and U.S. Census Bureau, Population Division |
10 The Capital Advantage: Limited New Supply Source: NIC MAP Trends Senior Housing All Markets |
11 The Capital Advantage: Senior Housing Occupancy Trends Source: NIC MAP Trends All Markets Q2 15 |
12 The Capital Advantage: Competitive Strengths Value leader in geographically concentrated regions Experienced on-site, regional and corporate management Larger company economies of scale and proprietary systems that yield operating efficiencies in highly fragmented industry Solid reputation in industry and 95% resident satisfaction Straightforward private-pay business model Solid balance sheet Strong Board of Directors |
13 The Capital Advantage: Strategy Focus on our core strengths Capitalize on competitive strengths 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 |
14 2015 Business Plan Focused on operations, marketing and growth to enhance shareholder value through: Organic growth, including the conversion of units to higher levels of care and community renovations and refurbishment projects Proactive expense management Accretive acquisitions Utilization of technology |
15 2015 Business Plan: Organic Growth Increase average rents Each 3% increase generates $11.8M of revenue Improve occupancies Each 1% generates $4.0M of revenue, $2.8M of EBITDAR and $0.06 per share of CFFO Convert units to higher levels of care Cash flow value enhancing renovations and refurbishments Continue to enhance sales and marketing initiatives |
16 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 CCRCs , 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 |
17 Significant Occupancy Improvement after Conversion Number of Units Converted Occupancy prior to Conversion Occupancy at end of Q2 15 Third Quarter 2014 Conversions Waterford at Edison Lakes 45 69.0% 92.2% Waterford at Mansfield 45 84.5% 94.0% Autumn Glen 49 56.3% 81.6% Summit Point 35 95.4% 94.0% Fourth Quarter 2014 Conversions Tesson Heights 65 77.7% 91.3% Waterford at Oakwood 32 84.4% 100.0% |
18 The Waterford at Thousand Oaks - Renovations New Entry Hall New Dining Room Old Entry Hall Old Dining Room |
19 The Waterford on Huebner - Renovations New Entry Hall New Dining Room Old Entry Hall Old Dining Room |
20 Community Portfolio Growth: 2010 to Present 25 32 48 59 67 65 69 45 49 50 50 50 50 50 7 3 3 3 0 25 50 75 100 125 2010 2011 2012 2013 2014 Q1 15 Current Owned Leased Joint Venture 77 84 101 112 117 115 Owned % 32.5% 38.1% 47.5% 52.7% 57.3% 56.5% 58.0% 119 |
21 2015 Business Plan: External Growth Strategic acquisitions of high quality senior living communities to enhance geographic concentrations 16.2% cash on cash returns *Based on share count at time of transaction (in millions except number of communities) 2011 2012 2013 2014 Jan July 2015 Combined Purchase Price $83.4 $181.3 $150.4 $160.2 $88.0 $663.3 Communities 7 17 11 8 6 49 Units 551 1,367 881 819 478 4,096 Debt $59.3 $129.5 $112.3 $119.7 $65.7 $486.5 Equity $24.1 $51.8 $38.1 $40.5 $22.3 $176.8 First Year Revenue $21.3 $49.1 $35.1 $36.4 $19.5 $161.4 First Year EBITDAR $7.3 $19.1 $14.1 $15.0 $7.7 $63.2 First Year Cash Flow from Operations (CFFO) $3.4 $9.1 $5.8 $6.7 $3.7 $28.7 First Year CFFO per
share* $0.13 $0.34 $0.20 $0.23 $0.13 $1.03 |
22 Key Metrics: Consistent Significant Growth Revenue * Adjusted EBITDAR ($ In Millions) ($ In Millions) $197 $257 $305 $343 $380 2010 2011 2012 2013 2014 * Excludes community reimbursement revenue and management services revenue
$69 $92 $110 $120 $133 2010 2011 2012 2013 2014 Adjusted EBITDAR Margin Adjusted CFFO per share 32.4% 35.0% 35.4% 34.9% 35.9% 2010 2011 2012 2013 2014 $0.64 $0.91 $1.08 $1.33 $1.44 2010* 2011* 2012* 2013* 2014* * Excludes prepaid resident rents and tax
savings related to cost segregation studies
of $0.25 in 2012 and $0.14 in 2013 |
23 Comparative Operating and Financial Metrics Q2 15 Q2 14 % Increase Total Revenues $ 101.6 $ 93.4 8.7% Adjusted EBITDAR $ 35.7 $ 32.2 11.0% % Margin 36.8% 35.6% Adjusted CFFO $ 11.7 $ 9.6 22.3% Adjusted CFFO Per Share $ 0.41 $ 0.34 Note: EBITDAR and CFFO are as adjusted in press releases. |
24 Balance Sheet As of June 30, 2015 (in millions) ASSETS Cash and Securities $ 51.7 Other Current Assets 23.8 Total Current Assets 75.5 Fixed Assets 811.1 Other Assets 35.4 TOTAL ASSETS $ 922.0 LIABILITIES & EQUITY Current Liabilities $ 71.4 Long-Term Debt 660.2 Other Liabilities 55.9 Total Liabilities 787.5 Stockholders Equity 134.5 TOTAL LIABILITIES & EQUITY $ 922.0 |
25 Debt Overview : 100% Mortgage Debt Debt Maturities Weighted Average Interest Rate (In thousands) $627,624 $0 $0 $0 $43,660 $0 $8,472 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 2021 & After 2020 2019 2018 2017 2016 2015 6.00% 5.79% 5.25% 5.25% 4.70% 4.64% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 2010 2011 2012 2013 2014 2015 YTD Average duration of debt is 8 years, with approximately 92% of all debt maturing in 2021 and after Weighted Average Interest Rate has decreased 136 bps since 2010 |
26 Investment Highlights Value leader in geographically concentrated regions Substantially all private pay 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 Accretive acquisitions in highly fragmented industry Value-enhancing conversions to higher levels of care, renovations and refurbishments Strong cash flow generation Solid balance sheet |
Capital
Senior Living Company Presentation |
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