EX-99.1 2 c92049exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(CAPITAL SENIOR LIVING CORPORATION LOGO)
         
For Immediate Release
  Contact:   Ralph A. Beattie
 
      972/770-5600
CAPITAL SENIOR LIVING CORPORATION
REPORTS THIRD QUARTER 2009 RESULTS
DALLAS — (BUSINESS WIRE) — November 4, 2009 — Capital Senior Living Corporation (NYSE:CSU), one of the country’s largest operators of senior living communities, today announced operating results for the third quarter of 2009. Company highlights for the third quarter include:
Financial Highlights
•   Revenues were $48.1 million in the third quarter of 2009 compared to $47.7 million in the third quarter of 2008.
•   Adjusted EBITDAR was $14.3 million in the third quarter of 2009, compared to $14.6 million in the prior year period.
•   Adjusted EBITDAR margin was 29.8 percent compared to 30.5 percent in the third quarter of the prior year.
•   Net income was $0.8 million or $0.03 per diluted share in the third quarter of 2009 compared to net income of $1.2 million or $0.05 per diluted share in the third quarter of 2008.
•   Adjusted CFFO was $3.3 million or $0.13 per diluted share in the third quarter of 2009, versus $4.2 million or $0.16 per diluted share in the third quarter of 2008.
Operational Highlights
•   Average physical occupancy rate for 58 stabilized communities was 87 percent.
•   Operating margins (before property taxes, insurance and management fees) were 47 percent in stabilized independent and assisted living communities.
•   At communities under management, excluding three communities undergoing conversions, same-store revenue increased 0.5 percent versus the third quarter of 2008 as a result of a 2.8 percent increase in average monthly rent. Same-community expenses decreased 1.5 percent and net income increased 3.6 percent from the comparable period of the prior year.

 

 

 

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“We are happy to achieve a 140 basis point occupancy gain in our communities during the quarter,” said Lawrence A. Cohen, Chief Executive Officer of the Company. “Quarter-ending occupancies improved 80 basis points at our independent living communities and 200 basis points at our assisted living communities. Our strategy of providing affordable quality housing and care to seniors in well-located communities is yielding results. The cost reduction programs we have implemented at the corporate and property levels, along with steady increases in average monthly rents, are resulting in margin improvement. Our operating platform, disciplined management approach and strong financial position enable us to capitalize on opportunities and maximize shareholder value through growth and profitability.”
OPERATING AND FINANCIAL RESULTS
For the third quarter of 2009, the Company reported revenue of $48.1 million, compared to revenue of $47.7 million in the third quarter of 2008. Resident and healthcare revenue decreased from the third quarter of the prior year by approximately $0.4 million despite an increase of 2.2 percent in average monthly rents. The number of consolidated communities remained at 50 in both periods. Financial occupancy of the consolidated portfolio averaged 83.9 percent in the third quarter of 2009 with an average monthly rent of $2,550 per occupied unit. In the month of September, financial occupancy of the consolidated portfolio was 84.4 percent versus 83.2 percent in the month of June, an improvement of 120 basis points in three months. Excluding three communities with units being converted to higher levels of care, financial occupancy of the consolidated portfolio averaged 85.3 percent in the third quarter of 2009.
Revenue under management was $55.7 million in the third quarter of 2009, equal to the third quarter of 2008. Revenue under management includes revenue generated by the Company’s consolidated communities, communities owned in joint ventures and communities owned by third parties that are managed by the Company. There were 66 communities under management in the third quarter of 2009 compared to 65 communities under management in the third quarter of 2008. Two joint venture developments have opened since the third quarter of last year and one management agreement has expired.
Operating expenses for the third quarter of 2009 decreased by $0.6 million from the third quarter of 2008. As a percentage of resident and healthcare revenue, operating expenses were 62.4 percent in the third quarter of 2009 compared to 63.2 percent in the third quarter of 2008, an improvement of 80 basis points.
General and administrative expenses of $2.5 million were approximately equal to the third quarter of 2008 and $0.9 million below the second quarter of 2009. While nearly all expense categories are trending lower, the greatest improvement from the second quarter relates to the net cost of medical benefits. The Company is self-insured for the costs of employee and dependent medical benefits and purchases stop-loss protection on an individual and aggregate basis. The Company’s new benefit year began in July and both payroll deductions and employee co-payments were increased to mitigate the costs of higher claims. As a percentage of revenue under management, general and administrative expenses were 4.4 percent in the third quarter of 2009.

 

 

 

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Facility lease expenses were $6.5 million in the third quarter of 2009, approximately $0.2 million higher than the third quarter of 2008, primarily reflecting increases in contingent rent on 25 leased communities.
Depreciation and amortization expense increased $0.2 million from the third quarter of the prior year as a result of capital improvements at certain of the Company’s owned and leased facilities.
Adjusted EBITDAR for the third quarter of 2009 was approximately $14.3 million, compared to $14.6 million in the third quarter of 2008. Adjusted EBITDAR margin was 29.8 percent for the period.
Interest expense was $3.0 million in the third quarter of 2009, slightly less than the second quarter of 2008, reflecting lower debt due to principal amortization.
The Company reported income before taxes of approximately $1.3 million in the third quarter of 2009 compared to a pre-tax profit of approximately $2.0 million in the third quarter of 2008.
The Company’s provision for income taxes in the third quarter of 2009 was $0.5 million, approximately 40 percent of pre-tax income. The Company is impacted by the recently-enacted Texas Margin Tax which effectively imposes a tax on modified gross revenues for communities operated in Texas. Approximately one-third of the Company’s consolidated communities are in the state of Texas.
The Company reported net income of $0.8 million or $0.03 per diluted share in the third quarter of 2009 versus net income of $1.2 million or $0.05 per diluted share in the third quarter of 2008. Adjusted CFFO was $3.3 million or $0.13 per diluted share in the third quarter of 2009 versus $4.2 million or $0.16 per diluted share in the third quarter of 2008.
For the first nine months of 2009, the Company produced revenue of $143.3 million, compared to revenue of $145.3 million in the first nine months of 2008. Revenue declined $2.2 million due to the Company’s decision to cease new development and its consequent development fee income. This fee income significantly impacted year-over-year comparisons of EBITDAR, net income and CFFO.
Adjusted EBITDAR for the first nine months of 2009 was $42.5 million, compared to $43.7 million for the first nine months of 2008. The Company earned net income of $2.0 million in the first nine months of 2009 compared to net income of $3.9 million in the first nine months of 2008. CFFO was $10.9 million, or $0.42 per diluted share, in the first nine months of 2009 compared to $12.0 million, or $0.45 per diluted share, in the first nine months of 2008.

 

 

 

CAPITAL/Page 4
CAPITAL OVERVIEW AND FINANCING
The Company ended the quarter with $28.4 million of cash and cash equivalents and $2.2 million of restricted cash. The restricted cash represents collateral for letters of credit which are used in place of security deposits with a lessor. The interest earned on the restricted cash is approximately equal to the cost of the letters of credit.
As of September 30, 2009 the Company financed its 25 owned communities with mortgage debt totaling $183.2 million at fixed interest rates averaging 6.1 percent. With the exception of one mortgage of $4.7 million which matured in September of 2009, the next closest maturity is July of 2015. The Company is discussing an extension with the lender on the loan which matured.
Capital expenditures for the quarter were approximately $2.6 million, representing $1.3 million of investment spending and $1.3 million of recurring Capex. Through the first nine months of 2009, the Company has spent $3.0 million of recurring Capex. If annualized, this rate of spending would equal approximately $600 per unit.
Q309 CONFERENCE CALL INFORMATION

The Company will host a conference call with senior management to discuss the Company’s third quarter 2009 financial results. The call will be held on Thursday, November 5, 2009 at 11:00 a.m. Eastern Time.
The call-in number is 913-312-1391, confirmation code 7364056. 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 5, 2009 at 2:00 p.m. Eastern Time, until November 13, 2009 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 7364056. The conference call will also be made available for playback via the Company’s corporate website, www.capitalsenior.com.
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 philosophy emphasizes 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 currently operates 66 senior living communities in 23 states with an aggregate capacity of approximately 9,800 residents, including 40 senior living communities which the Company owns or in which the Company has an ownership interest, 25 leased communities and one community it manages for a third party. Resident capacities in the communities operated by the Company indicate that 69 percent of residents live independently, 24 percent of residents require assistance with activities of daily living and 7 percent of residents live in continuing care retirement communities.

 

 

 

CAPITAL/Page 5
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, 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.
This release contains certain financial information not derived in accordance with generally accepted accounting principles (GAAP), including adjusted EBITDAR, adjusted CFFO, adjusted CFFO per share and other items. The Company believes this information is useful to investors and other interested parties. Such information should not be considered as a substitute for any measures derived in accordance with GAAP, and may not be comparable to other similarly titled measures of other companies. Reconciliation of this information to the most comparable GAAP measures is included as an attachment to this release.
Contact Ralph A. Beattie, Chief Financial Officer, at 972-770-5600.

 

 

 

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CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
                 
    September 30,     December 31,  
    2009     2008  
    (Unaudited)        
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 28,417     $ 25,880  
Restricted cash
     2,165       —  
Accounts receivable, net
     4,449       3,809  
Accounts receivable from affiliates
     521       1,152  
Federal and state income taxes receivable
     465       2,364  
Deferred taxes
     1,052       1,052  
Assets held for sale
     354       354  
Property tax and insurance deposits
     7,890       8,632  
Prepaid expenses and other
     3,398       5,930  
 
            
Total current assets
     48,711       49,173  
Property and equipment, net
     302,373       305,881  
Deferred taxes
     9,929       11,062  
Investments in joint ventures
     6,626       7,173  
Other assets, net
     14,779       14,831  
 
            
Total assets
   $ 382,418     $ 388,120  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
   $ 1,859     $ 1,920  
Accrued expenses
     13,532       13,661  
Current portion of notes payable
     9,683       12,026  
Current portion of deferred income
     6,482       6,174  
Customer deposits
     1,387       1,593  
 
            
Total current liabilities
     32,943       35,374  
Deferred income
     17,574       20,056  
Notes payable, net of current portion
     174,780       177,541  
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 26,851 and 26,679 in 2009 and 2008, respectively
     272       267  
Additional paid-in capital
     131,328       130,426  
Retained Earnings
     26,455       24,456  
Treasury stock, at cost — 350 shares in 2009
     (934 )     —  
 
            
Total shareholders’ equity
     157,121       155,149  
 
            
Total liabilities and shareholders’ equity
   $ 382,418     $ 388,120  
 
            

 

 

 

CAPITAL/Page 7
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2009     2008     2009     2008  
Revenues:
                                
Resident and health care revenue
   $ 42,801     $ 43,224     $ 127,950     $ 128,795  
Unaffiliated management services revenue
     18       52       54       140  
Affiliated management services revenue
     692       1,011       1,992       4,180  
Community reimbursement revenue
     4,603       3,430       13,298       12,151  
 
                        
Total revenues
     48,114       47,717       143,294       145,266  
Expenses:
                                
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below)
     26,718       27,320       78,707       80,191  
General and administrative expenses
     2,456       2,405       8,820       9,733  
Facility lease expense
     6,502       6,319       19,441       18,774  
Stock-based compensation expense
     282       293       902       786  
Depreciation and amortization
     3,334       3,143       9,862       9,258  
Community reimbursement expense
     4,603       3,430       13,298       12,151  
 
                        
Total expenses
     43,895       42,910       131,030       130,893  
 
                        
Income from operations
     4,219       4,807       12,264       14,373  
Other income (expense):
                                
Interest income
     18       140       56       363  
Interest expense
     (2,967 )     (3,066 )     (8,871 )     (9,172 )
(Loss) gain on sale of assets
     —       —       —       596  
Other income (expense)
     (14 )     75       59       227  
 
                        
Income before provision for income taxes
     1,256       1,956       3,508       6,387  
Provision for income taxes
     (506 )     (754 )     (1,509 )     (2,449 )
 
                        
Net income
   $ 750     $ 1,202     $ 1,999     $ 3,938  
 
                        
Per share data:
                                
Basic net income per share
   $ 0.03     $ 0.05     $ 0.07     $ 0.15  
 
                        
Diluted net income per share
   $ 0.03     $ 0.05     $ 0.07     $ 0.15  
 
                        
Weighted average shares outstanding — basic
     26,221       26,396       26,251       26,362  
 
                        
Weighted average shares outstanding — diluted
     26,351       26,705       26,339       26,667  
 
                        

 

 

 

CAPITAL/Page 8
Capital Senior Living Corporation
Supplemental Information
                                                 
    Communities     Resident Capacity     Units  
    Q3 09     Q3 08     Q3 09     Q3 08     Q3 09     Q3 08  
Portfolio Data
                                                
I. Community Ownership / Management
                                                
Consolidated communities
                                                
Owned
     25       25       3,926       3,926       3,503       3,503  
Leased
     25       25       3,715       3,775       3,104       3,152  
Joint Venture communities (equity method)
     15       13       1,995       1,602       1,654       1,367  
Third party communities managed
     1       2       148       294       115       239  
 
                                    
Total
     66       65       9,784       9,597       8,376       8,261  
Independent living
                     6,753       6,656       5,695       5,670  
Assisted living
                     2,376       2,286       2,063       1,973  
Continuing Care Retirement Communities
                     655       655       618       618  
 
                                        
Total
                     9,784       9,597       8,376       8,261  
II. Percentage of Operating Portfolio
                                                
Consolidated communities
                                                
Owned
     37.9 %     38.5 %     40.1 %     40.9 %     41.8 %     42.4 %
Leased
     37.9 %     38.5 %     38.0 %     39.3 %     37.1 %     38.2 %
Joint venture communities (equity method)
     22.7 %     20.0 %     20.4 %     16.7 %     19.7 %     16.5 %
Third party communities managed
     1.5 %     3.1 %     1.5 %     3.1 %     1.4 %     2.9 %
 
                                    
Total
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
Independent living
                     69.0 %     69.4 %     68.0 %     68.6 %
Assisted living
                     24.3 %     23.8 %     24.6 %     23.9 %
Continuing Care Retirement Communities
                     6.7 %     6.8 %     7.4 %     7.5 %
 
                                        
Total
                     100.0 %     100.0 %     100.0 %     100.0 %
Selected Operating Results
                                                
I. Owned communities
                                                
Number of communities
     25       25                                  
Resident capacity
     3,926       3,926                                  
Unit capacity
     3,503       3,503                                  
Financial occupancy (1)
     85.8 %     86.9 %                                
Revenue (in millions)
     20.7       20.4                                  
Operating expenses (in millions) (2)
     11.5       11.8                                  
Operating margin
     44 %     42 %                                
Average monthly rent
     2,299       2,247                                  
II. Leased communities
                                                
Number of communities
     25       25                                  
Resident capacity
     3,715       3,775                                  
Unit capacity
     3,104       3,152                                  
Financial occupancy (1)
     81.7 %     84.3 %                                
Revenue (in millions)
     22.2       22.7                                  
Operating expenses (in millions) (2)
     12.3       12.7                                  
Operating margin
     45 %     44 %                                
Average monthly rent
     2,830       2,761                                  
III. Consolidated communities
                                                
Number of communities
     50       50                                  
Resident capacity
     7,641       7,701                                  
Unit capacity
     6,607       6,655                                  
Financial occupancy (1)
     83.9 %     85.7 %                                
Revenue (in millions)
     42.9       43.1                                  
Operating expenses (in millions) (2)
     23.8       24.5                                  
Operating margin
     45 %     43 %                                
Average monthly rent
     2,550       2,491                                  
IV. Communities under management
                                                
Number of communities
     66       65                                  
Resident capacity
     9,784       9,597                                  
Unit capacity
     8,376       8,261                                  
Financial occupancy (1)
     80.7 %     84.9 %                                
Revenue (in millions)
     55.7       55.7                                  
Operating expenses (in millions) (2)
     30.6       30.9                                  
Operating margin
     45 %     45 %                                
Average monthly rent
     2,720       2,636                                  
V. Same Store communities under management
(excluding 3 communities with conversions)
                                                
Number of communities
     60       60                                  
Resident capacity
     8,707       8,707                                  
Unit capacity
     7,519       7,519                                  
Financial occupancy (1)
     85.3 %     87.3 %                                
Revenue (in millions)
     52.9       52.7                                  
Operating expenses (in millions) (2)
     28.2       29.0                                  
Operating margin
     47 %     45 %                                
Average monthly rent
     2,716       2,643                                  
VI. General and Administrative expenses as a percent of Total Revenues under Management
                                                
Second Quarter (3)
     4.4 %     6.6 %                                
First Six Months (3)
     5.3 %     6.1 %                                
VII. Consolidated Debt Information (in thousands, except for interest rates) Excludes insurance premium financing
                                                
Total fixed rate debt
     183,212       186,688                                  
Weighted average interest rate
     6.1 %     6.1 %                                
(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) — 2008 — Excludes due diligence costs which were written off when a potential acquisition was terminated and costs incurred to avoid a proxy contest.

 

 

 

CAPITAL/Page 9
CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2009     2008     2009     2008  
 
                                
Adjusted EBITDAR
                                
Net income from operations
   $ 4,219     $ 4,807     $ 12,264     $ 14,373  
Depreciation and amortization expense
     3,334       3,143       9,862       9,258  
Stock-based compensation expense
     283       293       903       786  
Facility lease expense
     6,502       6,319       19,441       18,744  
Unusual legal/proxy costs
     —       2       —       180  
Write-off of Hearthstone acquisition costs
     —       —       —       375  
 
                        
Adjusted EBITDAR
   $ 14,338     $ 14,564     $ 42,470     $ 43,716  
 
                        
 
                                
Adjusted EBITDAR Margin
                                
Adjusted EBITDAR
   $ 14,338     $ 14,564     $ 42,470     $ 43,716  
Total revenues
     48,114       47,717       143,294       145,266  
 
                        
Adjusted EBITDAR margin
     29.8 %     30.5 %     29.6 %     30.1 %
 
                        
 
                                
Adjusted net income and net income per share
                                
Net income
   $ 750     $ 1,202     $ 1,999     $ 3,938  
Unusual legal/proxy costs, net of tax
     —       1       —       111  
Write-off of Hearthstone acquisition costs, net of tax
     —       —       —       231  
Asset held for sale impairment, net of tax
     —       —       —       83  
Loss (gain) on sale of assets, net of tax
     —       —       —       (421 )
 
                        
Adjusted net income
   $ 750     $ 1,203     $ 1,999     $ 3,942  
 
                        
 
                                
 
                        
Adjusted net income per share
   $ 0.03     $ 0.05     $ 0.08     $ 0.15  
 
                        
 
                                
Diluted shares outstanding
     26,351       26,705       26,339       26,667  
 
                                
Adjusted CFFO and CFFO per share
                                
Net cash provided by operating activities
   $ 5,096     $ 5,159     $ 16,472     $ 13,176  
Changes in operating assets and liabilities
     (1,268 )     (419 )     (4,022 )     (33 )
Recurring capital expenditures
     (505 )     (505 )     (1,515 )     (1,515 )
Unusual legal/proxy costs, net of tax
     —       1       —       111  
Write-off of Hearthstone acquisition costs, net of tax
     —       —       —       231  
 
                        
Adjusted CFFO
   $ 3,323     $ 4,236     $ 10,935     $ 11,970  
 
                        
 
                                
 
                        
Adjusted CFFO per share
   $ 0.13     $ 0.16     $ 0.42     $ 0.45  
 
                        
 
                                
Diluted shares outstanding
     26,351       26,705       26,339       26,667  
 
                                
Adjusted pretax income
                                
Pretax income as reported
   $ 1,256     $ 1,956     $ 3,508     $ 6,387  
Unusual legal/proxy costs
     —       2       —       180  
Write-off of Hearthstone acquisition costs
     —       —       —       375  
Asset held for sale impairment
     —       —       —       134  
Loss (gain) on sale of assets
     —       —       —       (680 )
 
                        
Adjusted pretax income
   $ 1,256     $ 1,958     $ 3,508     $ 6,396  
 
                        
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