EX-99.1 2 c07792exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
     
(GRAPHIC)
  Capital
Senior
Living
Corporation
         
For Immediate Release
  Contact:   Ralph A. Beattie 972/770-5600
CAPITAL SENIOR LIVING CORPORATION
REPORTS THIRD QUARTER 2010 RESULTS
DALLAS — (BUSINESS WIRE) —November 3, 2010 — Capital Senior Living Corporation (the “Company”) (NYSE:CSU), one of the country’s largest operators of senior living communities, today announced operating results for the third quarter of 2010. Company highlights for the third quarter include:
Highlights
•   Adjusted Cash From Facility Operations (“CFFO”) increased 69 percent to $5.6 million, or $0.21 per share, in the third quarter of 2010 versus $3.3 million, or $0.13 per share, for the third quarter of 2009.
 
•   Revenue increased from the third quarter of 2009 by 11 percent to $53.6 million.
 
•   Consolidated average occupancy was 84.7 percent in the third quarter of 2010, a 90 basis point increase from the second quarter of 2010 and an 80 basis point increase from the third quarter of 2009.
 
•   Adjusted EBITDAR improved over the third quarter of 2009 by $2.3 million, or 16 percent, to $16.7 million. EBITDAR margin improved to 31.1 percent from 29.8 percent.
 
•   In September, the Company added 12 high-quality leased assisted living communities to its portfolio, expanding total resident capacity by 764 seniors and the Company’s assisted living capacity from 26 percent to 32 percent of total capacity.

 

 

 

“We are pleased to report an increase in occupancy, an increase in our resident capacity, and an increase in our mix to higher levels of care during the third quarter,” said Lawrence A. Cohen, Chief Executive Officer of the Company. “We received only a small benefit from completing the Signature transaction in the month of September, but when these results are fully reflected along with the two transactions completed in the second quarter, annual revenues will have grown by $52 million, EBITDAR by over $22 million, and CFFO by over $3 million, or $0.12 per share. We remain encouraged by the fact that new supply of senior housing communities is practically non-existent as needs-driven demand continues to grow.”
Significant Transactions
In September, the Company completed the acquisition from Signature Assisted Living of Texas, LLC (“Signature”) of 12 communities leased from Health Care REIT, Inc. (NYSE: HCN). The 12 leased communities are high-quality purpose-built assisted living and memory care facilities located in Texas. The communities average less than three years of age and are currently 92 percent occupied.
Annualizing the 12 assisted living communities’ revenues yields approximately $31.1 million, with EBITDAR of approximately $14.2 million, net of incremental general and administrative expenses. EBITDAR is expected to exceed the annual cash payment due HCN by approximately $5.3 million, and the transaction is expected to increase the Company’s CFFO by approximately $2.8 million, or $0.10 per share.
Financial Results
For the third quarter of 2010, the Company reported revenue of $53.6 million, compared to revenue of $48.1 million in the third quarter of 2009. Resident and healthcare revenue increased from the third quarter of the prior year by approximately $7.7 million, largely as a result of converting eight communities previously owned in joint ventures to leased communities and the addition of 12 new leased communities late in the quarter. The number of consolidated communities increased from 50 in the third quarter of 2009 to 70 in the third quarter of 2010.
Average monthly rent was $2,652 per occupied unit in the third quarter of 2010, an increase of $106, or 4.2 percent, over the third quarter of 2009. Financial occupancy of the consolidated portfolio averaged 84.7 percent in the third quarter of 2010, 80 basis points higher than the third quarter of 2009 and 90 basis points higher than the second quarter of 2010. Excluding three communities with units being converted to higher levels of care, financial occupancy of the consolidated portfolio averaged 86.4 percent.
For the first nine months of 2010, the Company produced revenue of $152.0 million, compared to revenue of $143.3 million in the first nine months of 2009. Resident and healthcare revenue increased $12.3 million from the first nine months of the prior year.
CAPITAL/Page 2

 

 

 

Revenue under management was $58.7 million in the third quarter of 2010 compared to $55.7 million in the third quarter of 2009. 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. Communities under management increased by 12 with the completion of the Signature transaction.
Operating expenses for the third quarter of 2010 were $31.2 million, an increase of $4.5 million from the third quarter of 2009, primarily due to 20 additional communities now being consolidated. In addition, a particularly hot summer resulted in a nine percent increase in utility costs. As a percentage of resident and healthcare revenue, operating expenses were 61.9 percent in the third quarter of 2010 compared to 62.4 percent in the third quarter of 2009, an improvement of 50 basis points, despite the increased costs.
General and administrative expenses of $3.2 million were approximately $0.8 million higher than the third quarter of 2009. The third quarter of the prior year reflected an unusually low level of expenses. 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. This self-insurance program reduces the Company’s health insurance costs. Health care costs in the third quarter of 2010 exceeded the third quarter of 2009 by approximately $0.6 million but are roughly equal on a year-to-date basis. General and administrative expenses as a percentage of revenues under management were 5.3 percent.
Adjusted EBITDAR for the third quarter of 2010 was approximately $16.7 million, an increase of $2.3 million or 16 percent from the third quarter of 2009. Adjusted EBITDAR margin was 31.1 percent for the period, an improvement of 1.3 percentage points from the third quarter of 2009. Adjusted EBITDAR for the first nine months of 2010 was $47.7 million, compared to $42.7 million for the first nine months of 2009. Adjusted EBITDAR margin for the first nine months of 2010 was 31.4 percent compared to 29.8 percent for the first nine months of 2009.
Net income was $0.5 million, or $0.02 per share, in the third quarter of 2010, versus $0.8 million, or $0.03 per share, in the third quarter of 2009. Excluding costs related to and amortization of resident leases acquired in recently-completed lease transactions, net income for the third quarter of 2010 was $0.7 million, or $0.03 per share. Net income for the third quarter was significantly impacted by non-controllable expenses related to additional medical benefit claims paid and higher utility costs at our consolidated communities. The Company earned adjusted net income of $2.7 million or $0.10 per diluted share in the first nine months of 2010, compared to adjusted net income of $2.0 million or $0.08 per diluted share in the first nine months of 2009.
Adjusted CFFO was $5.6 million or $0.21 per diluted share in the third quarter of 2010, versus $3.3 million or $0.13 per diluted share in the third quarter of 2009. Adjusted CFFO was $14.1 million or $0.53 per diluted share in the first nine months of 2010, compared to $10.9 million or $0.42 per diluted share in the first nine months of 2009. Over $2.0 million of third quarter CFFO was attributable to the Company amending prior year tax returns to recover refunds of taxes paid.
CAPITAL/Page 3

 

 

 

Operating Activities
At communities under management, excluding three communities undergoing conversions, same-store revenue increased 1.0 percent versus the third quarter of 2009 as a result of a 1.5 percent increase in average monthly rent. Same-community expenses increased 1.0 percent and net income increased 1.3 percent from the comparable period of the prior year.
Capital expenditures for the quarter were approximately $2.3 million, representing $1.6 million of investment spending and $0.7 million of recurring capital expenditures. If annualized, spending for recurring capital expenditures equaled approximately $400 per unit.
Balance Sheet
The Company ended the quarter with $39.4 million of cash and cash equivalents, including restricted cash. On a year-to-year basis, cash has increased by $8.2 million while debt has been reduced by $5.6 million.
As of September 30, 2010, the Company financed its 25 owned communities with 24 mortgages totaling $174.9 million at fixed interest rates averaging 6.0 percent. The Company has no mortgage maturities prior to the third quarter of 2015.
Q3 2010 Conference Call Information
The Company will host a conference call with senior management to discuss the Company’s third quarter 2010 financial results. The call will be held on Thursday, November 4, 2010 at 11:00 a.m. Eastern Time. The Company’s earnings release announcing third quarter 2010 financial results is scheduled to be released to news services the evening of Wednesday, November 3, 2010.
The call-in number is 913-312-0949, confirmation code 5349994. 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 4, 2010 at 2:00 p.m. Eastern Time, until November 13, 2010 at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 5349994. The conference call will also be made available for playback via the Company’s corporate website, www.capitalsenior.com.
CAPITAL/Page 4

 

 

 

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 77 senior living communities in 23 states with an aggregate capacity of approximately 11,000 residents.
Safe Harbor
The forward-looking statements in this release are subject to certain risks and uncertainties that could cause results to differ materially, including, but not without limitation to, the Company’s ability to find suitable acquisition properties at favorable terms, financing, 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 EBITDAR margin, 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 for more information.
CAPITAL/Page 5

 

 

 

CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
                 
    September 30,     December 31,  
    2010     2009  
    (unaudited)        
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 33,055     $ 28,972  
Restricted cash
     6,327       2,167  
Accounts receivable, net
     4,029       3,340  
Accounts receivable from affiliates
     346       424  
Federal and state income taxes receivable
     3,242       1,493  
Deferred taxes
     1,147       1,208  
Assets held for sale
     354       354  
Property tax and insurance deposits
     10,128       8,632  
Prepaid expenses and other
     3,830       4,010  
 
            
Total current assets
     62,458       50,600  
Property and equipment, net
     296,561       300,678  
Deferred taxes
     4,262       7,781  
Investments in joint ventures
     2,611       6,536  
Other assets, net
     18,900       14,908  
 
            
Total assets
   $ 384,792     $ 380,503  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
   $ 1,528     $ 2,037  
Accounts payable to affiliates
     2       —  
Accrued expenses
     17,521       12,287  
Current portion of notes payable
     6,564       9,347  
Current portion of deferred income
     7,197       6,838  
Current portion of capital lease obligations
     141       —  
Customer deposits
     1,388       1,295  
 
            
Total current liabilities
     34,341       31,804  
Deferred income
     15,340       16,747  
Capital lease obligations, net of current portion
     99       —  
Other long-term liabilities
     1,992       —  
Notes payable, net of current portion
     171,041       173,822  
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 27,080 and 26,945 in 2010 and 2009, respectively
     274       273  
Additional paid-in capital
     132,760       131,576  
Retained earnings
     29,879       27,215  
Treasury stock, at cost — 350 shares
     (934 )     (934 )
 
            
Total shareholders’ equity
     161,979       158,130  
 
            
Total liabilities and shareholders’ equity
   $ 384,792     $ 380,503  
 
            
See accompanying notes to consolidated financial statements.
CAPITAL/Page 6

 

 

 

CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
Revenues:
                                
Resident and health care revenue
   $ 50,451     $ 42,801     $ 140,253     $ 127,950  
Unaffiliated management services revenue
     18       18       54       54  
Affiliated management services revenue
     418       692       1,625       1,992  
Community reimbursement revenue
     2,713       4,603       10,089       13,298  
 
                        
Total revenues
     53,600       48,114       152,021       143,294  
Expenses:
                                
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below)
     31,209       26,718       85,904       78,707  
General and administrative expenses
     3,246       2,456       9,001       8,820  
Facility lease expense
     8,910       6,502       23,217       19,441  
Stock-based compensation expense
     226       282       783       902  
Depreciation and amortization
     3,536       3,334       10,487       9,862  
Community reimbursement expense
     2,713       4,603       10,089       13,298  
 
                        
Total expenses
     49,840       43,895       139,481       131,030  
 
                        
Income from operations
     3,760       4,219       12,540       12,264  
Other income (expense):
                                
Interest income
     13       18       32       56  
Interest expense
     (2,815 )     (2,967 )     (8,440 )     (8,871 )
Gain on settlement of debt
     —       —       684       —  
Other income
     (9 )     (14 )     8       59  
 
                        
Income before provision for income taxes
     949       1,256       4,824       3,508  
Provision for income taxes
     (468 )     (506 )     (2,160 )     (1,509 )
 
                        
Net income
   $ 481     $ 750     $ 2,664     $ 1,999  
 
                        
Per share data:
                                
Basic net income per share
   $ 0.02     $ 0.03     $ 0.10     $ 0.07  
 
                        
Diluted net income per share
   $ 0.02     $ 0.03     $ 0.10     $ 0.07  
 
                        
Weighted average shares outstanding — basic
     26,607       26,222       26,574       26,251  
 
                        
Weighted average shares outstanding — diluted
     26,703       26,351       26,671       26,339  
 
                        
CAPITAL/Page 7

 

 

 

CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
                 
    Nine Months Ended  
    September 30,  
    2010     2009  
Operating Activities
                
Net income
   $ 2,664     $ 1,999  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation
     10,487       9,851  
Amortization
     —       11  
Amortization of deferred financing charges
     248       253  
Amortization of deferred lease costs, net
     422       277  
Deferred income
     (2,232 )     (2,174 )
Deferred income taxes
     3,580       1,133  
Equity in the earnings of unconsolidated joint ventures
     (8 )     (59 )
Gain on settlement of debt
     (684 )     —  
Provision for bad debts
     139       257  
Stock based compensation expense
     783       902  
Changes in operating assets and liabilities:
                
Accounts receivable
     (828 )     (897 )
Accounts receivable from affiliates
     78       631  
Property tax and insurance deposits
     (1,653 )     742  
Prepaid expenses and other
     135       2,532  
Other assets
     (2,719 )     (489 )
Accounts payable
     (507 )     (61 )
Accrued expenses
     5,234       (129 )
Federal and state income taxes receivable
     (1,749 )     1,899  
Customer deposits
     93       (206 )
 
            
Net cash provided by operating activities
     13,483       16,472  
Investing Activities
                
Capital expenditures
     (6,370 )     (6,343 )
Acquisition of Signature Transaction
     (2,000 )     —  
Distributions from joint ventures
     5,117       606  
 
            
Net cash used in investing activities
     (3,253 )     (5,737 )
Financing Activities
                
Increase in restricted cash
     (4,160 )     (2,165 )
Proceeds from notes payable
     3,591       1,459  
Lease incentive from Signature Transaction
     2,000       —  
Repayments of notes payable
     (8,220 )     (6,563 )
Increase in capital lease obligations
     240       —  
Cash proceeds from the issuance of common stock
     350       5  
Excess tax benefits on stock options exercised
     52       —  
Purchases of treasury stock
     —       (934 )
 
            
Net cash used in financing activities
     (6,147 )     (8,198 )
 
            
Increase in cash and cash equivalents
     4,083       2,537  
Cash and cash equivalents at beginning of period
     28,972       25,880  
 
            
Cash and cash equivalents at end of period
   $ 33,055     $ 28,417  
 
            
Supplemental Disclosures
                
Cash paid during the period for:
                
Interest
   $ 8,261     $ 8,639  
 
            
Income taxes
   $ 1,094     $ 459  
 
            
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Capital Senior Living Corporation
Supplemental Information
                                                 
    Communities     Resident Capacity     Units  
    Q3 10     Q3 09     Q3 10     Q3 09     Q3 10     Q3 09  
Portfolio Data
                                                
I. Community Ownership / Management
                                                
Consolidated communities
                                                
Owned
     25       25       4,058       4,058       3,503       3,503  
Leased
     45       25       5,395       3,892       4,374       3,104  
Joint Venture communities (equity method)
     7       15       1,347       2,086       1,061       1,654  
Third party communities managed
     1       1       148       148       115       115  
 
                                    
Total
     78       66       10,948       10,184       9,053       8,376  
 
                                                
Independent living
                     6,784       6,784       5,695       5,695  
Assisted living
                     3,449       2,685       2,740       2,063  
Continuing Care Retirement Communities
                     715       715       618       618  
 
                                        
 
                     10,948       10,184       9,053       8,376  
Total
                                                
 
                                                
II. Percentage of Operating Portfolio
                                                
Consolidated communities
                                                
Owned
     32.1 %     37.9 %     37.1 %     39.8 %     38.7 %     41.8 %
Leased
     57.7 %     37.9 %     49.3 %     38.2 %     48.3 %     37.1 %
Joint venture communities (equity method)
     9.0 %     22.7 %     12.3 %     20.5 %     11.7 %     19.7 %
Third party communities managed
     1.3 %     1.5 %     1.4 %     1.5 %     1.3 %     1.4 %
 
                                    
Total
     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %     100.0 %
 
                                                
Independent living
                     62.0 %     66.6 %     62.9 %     68.0 %
Assisted living
                     31.5 %     26.4 %     30.3 %     24.6 %
Continuing Care Retirement Communities
                     6.5 %     7.0 %     6.8 %     7.4 %
 
                                        
Total
                     100.0 %     100.0 %     100.0 %     100.0 %
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Capital Senior Living Corporation
Supplemental Information
                 
Selected Operating Results   Q3 10     Q3 09  
I. Owned communities
                
Number of communities
     25       25  
Resident capacity
     4,058       4,058  
Unit capacity
     3,503       3,503  
Financial occupancy (1)
     84.0 %     85.8 %
Revenue (in millions)
     20.3       20.7  
Operating expenses (in millions) (2)
     11.7       11.5  
Operating margin
     42 %     44 %
Average monthly rent
     2,309       2,299  
II. Leased communities
                
Number of communities
     45       25  
Resident capacity
     5,395       3,892  
Unit capacity
     4,374       3,104  
Financial occupancy (1)
     85.3 %     81.7 %
Revenue (in millions)
     30.0       22.2  
Operating expenses (in millions) (2)
     16.4       12.3  
Operating margin
     45 %     45 %
Average monthly rent
     2,948       2,830  
III. Consolidated communities
                
Number of communities
     70       50  
Resident capacity
     9,453       7,950  
Unit capacity
     7,877       6,607  
Financial occupancy (1)
     84.7 %     83.9 %
Revenue (in millions)
     50.3       42.9  
Operating expenses (in millions) (2)
     28.1       23.8  
Operating margin
     44 %     45 %
Average monthly rent
     2,652       2,546  
IV. Communities under management
                
Number of communities
     78       66  
Resident capacity
     10,948       10,184  
Unit capacity
     9,053       8,376  
Financial occupancy (1)
     82.1 %     80.7 %
Revenue (in millions)
     58.7       55.7  
Operating expenses (in millions) (2)
     32.5       30.6  
Operating margin
     45 %     45 %
Average monthly rent
     2,758       2,720  
V. Same Store communities under management (excluding 3 communities with conversions)
                
Number of communities
     60       60  
Resident capacity
     9,103       9,103  
Unit capacity
     7,519       7,519  
Financial occupancy (1)
     85.0 %     85.3 %
Revenue (in millions)
     53.0       52.9  
Operating expenses (in millions) (2)
     29.0       28.2  
Operating margin
     45 %     47 %
Average monthly rent
     2,727       2,716  
VI. General and Administrative expenses as a percent of Total Revenues under Management
                
Third Quarter (3)
     5.3 %     4.4 %
First Nine Months (3)
     5.1 %     5.3 %
VII. Consolidated Debt Information (in thousands, except for interest rates) Excludes insurance premium financing
                
Total fixed rate debt
     174,920       183,212  
Weighted average interest rate
     6.0 %     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)   Excludes acquisition costs incurred for the Midwest and Signature transactions.
CAPITAL/Page 10

 

 

 

CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
 
                                
Adjusted EBITDAR
                                
Net income from operations
   $ 3,760     $ 4,219     $ 12,540     $ 12,264  
Depreciation and amortization expense
     3,536       3,334       10,487       9,862  
Stock-based compensation expense
     226       282       783       902  
Facility lease expense
     8,910       6,502       23,217       19,441  
Provision for bad debts
     8       —       139       257  
Casualty losses
     —       —       161       —  
Transaction costs
     223       —       369       —  
 
                        
Adjusted EBITDAR
   $ 16,663     $ 14,337     $ 47,696     $ 42,726  
 
                        
 
                                
Adjusted EBITDAR Margin
                                
Adjusted EBITDAR
   $ 16,663     $ 14,337     $ 47,696     $ 42,726  
Total revenues
     53,600       48,114       152,021       143,294  
 
                        
Adjusted EBITDAR margin
     31.1 %     29.8 %     31.4 %     29.8 %
 
                        
 
                                
Adjusted net income and net income per share
                                
Net income
   $ 481     $ 750     $ 2,664     $ 1,999  
Casualty losses, net of tax
     —       —       101       —  
Transaction costs, net of tax
     140       —       232       —  
Gain on settlement of debt, net of tax
     —       —       (431 )     —  
Resident lease amortization, net of tax
     88       —       88       —  
 
                        
Adjusted net income
   $ 709     $ 750     $ 2,654     $ 1,999  
 
                        
 
                                
Adjusted net income per share
   $ 0.03     $ 0.03     $ 0.10     $ 0.08  
 
                        
 
                                
Diluted shares outstanding
     26,703       26,351       26,671       26,339  
 
                                
Adjusted CFFO and Adjusted CFFO per share
                                
Net cash provided by operating activities
   $ 2,724     $ 5,096     $ 13,483     $ 16,472  
Changes in operating assets and liabilities
     3,358       (1,268 )     1,916       (4,022 )
Recurring capital expenditures
     (601 )     (505 )     (1,667 )     (1,515 )
 
                        
CFFO
   $ 5,481     $ 3,323     $ 13,732     $ 10,935  
Casualty losses, net of tax
     —       —       101       —  
Transaction costs, net of tax
     140       —       232       —  
 
                        
Adjusted CFFO
   $ 5,621     $ 3,323     $ 14,065     $ 10,935  
 
                        
 
                                
Adjusted CFFO per share
   $ 0.21     $ 0.13     $ 0.53     $ 0.42  
 
                        
****
CAPITAL/Page 11