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) February 24, 2015
Capital Senior Living Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
|
|
|
1-13445 |
|
75-2678809 |
(Commission File Number) |
|
(IRS Employer Identification No.) |
|
|
|
14160 Dallas Parkway
Suite 300 Dallas,
Texas |
|
75254 |
(Address of principal executive offices) |
|
(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):
|
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
¨ |
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 February 26, 2015, Capital Senior Living Corporation (the Company) announced its financial results for the fourth quarter
and fiscal year ended December 31, 2014 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangement of Certain Officers.
(e) Adoption of Compensatory Plan.
On February 24, 2015, the Compensation Committee of the Companys Board of Directors (the Compensation Committee)
approved the Companys 2015 Incentive Compensation Plan (the Plan). The Plan provides performance bonus opportunities to the Companys executive management, including certain eligible named executive officers (collectively, the
Participants), based upon achievement of corporate and individual goals established by the Compensation Committee for the year ending December 31, 2015.
Pursuant to the Plan, the Companys Chief Executive Officer, Chief Operating Officer and Chief Financial Officer are eligible to receive
a target cash performance bonus equal to 75%, 53% and 45%, respectively, of their base salaries for 2015 based upon the Companys achievement of three corporate goals for the year ending December 31, 2015.
|
|
|
First, of that target cash bonus percentage attributable to the achievement of corporate goals, 34%, 26% and 23% for our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, respectively, is
based on the Companys achievement of a Cash Flow From Operations (CFFO) per outstanding share target for 2015. Achievement of 90% of the target level of CFFO per share will result in 90% of the portion of the award subject to such
performance target being earned by the Participants. If this 90% threshold level of CFFO per share performance is attained, but the target level is not attained, the earned portion of the award subject to CFFO per share performance will be prorated
between 90% and 100% based upon the actual CFFO per share results reported in 2015. |
|
|
|
Second, of that target cash bonus percentage attributable to the achievement of corporate goals, 28%, 18% and 15% for our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, respectively, is
based on the Companys achievement of an Adjusted EBITDAR target for 2015. Achievement of 90% of the target level of Adjusted EBITDAR will result in 90% of the portion of the award subject to such performance target being earned by the
Participants. If this 90% threshold level of Adjusted EBITDAR performance is attained, but the target level is not attained, the earned portion of the award subject to Adjusted EBITDAR performance will be prorated between 90% and 100% based upon the
actual Adjusted EBITDAR results reported in 2015. |
|
|
|
Third, of that target cash bonus percentage attributable to the achievement of corporate goals, 13%, 9% and 7% for our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, respectively, is based
upon a target aggregate transaction value with respect to senior housing communities acquired by the Company during 2015. 33% of the portion of the award subject to the aggregate value of transactions performance target will be earned by the
Participants upon the upon the Companys acquisition of senior housing communities valued in the aggregate at 50% of the target amount, and 66% of the portion of the award subject to the aggregate value of transactions performance target will
be earned by the Participants upon the upon the Companys acquisition of senior housing communities valued in the aggregate at 75% of the target amount. |
In addition, the Companys Chief Executive Officer, Chief Operating Officer and Chief Financial Officer are eligible to receive a cash
performance bonus of up to 25%, 17% and 15%, respectively, of their base salaries for 2015 based upon the achievement of certain objective individual goals for the year ending December 31, 2015, which are within such Participants sphere
of influence.
Under the Plan, the Companys Chief Executive Officer, Chief Operating Officer and Chief Financial Officer are also
eligible to receive additional cash performance bonuses of up to 50%, 35%, and 30%, respectively, of their base salaries for 2015 if the CFFO per outstanding share target for the year ending December 31, 2015 is exceeded by between 5% and 25%.
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 8.01 Other Events.
The 2015 annual meeting of stockholders of the Company (the Annual Meeting) has been scheduled for May 21, 2015. The record
date for the Annual Meeting has been set as the close of business on March 25, 2015.
The Company will be filing a proxy statement
and other documents regarding the Annual Meeting with the Securities and Exchange Commission (the SEC). The Companys stockholders are urged to read the proxy statement and other relevant materials when they become available,
because they will contain important information about the Company, the Annual Meeting and related matters. Stockholders may obtain a free copy of the Companys proxy statement, when available, and other documents filed by the Company with the
SEC at the SECs website (www.sec.gov) and in the investor relations section of the Companys website (www.capitalsenior.com).
Item 9.01 Financial Statements and Exhibits.
|
*99.1 |
Press Release dated February 26, 2015. |
|
*99.2 |
Capital Senior Living Corporation Updated Slideshow Presentation. |
* |
These exhibits to this Current Report on Form 8-K are not being filed but are being furnished pursuant to Item 9.01. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
|
|
|
|
|
|
Date: February 26, 2015 |
|
|
|
Capital Senior Living Corporation |
|
|
|
|
|
|
|
|
By: |
|
/s/ Carey P. Hendrickson |
|
|
|
|
Name: |
|
Carey P. Hendrickson |
|
|
|
|
Title: |
|
Senior Vice President and Chief Financial
Officer |
EXHIBIT INDEX
|
|
|
*99.1 |
|
Press Release dated February 26, 2015. |
|
|
*99.2 |
|
Capital Senior Living Corporation Updated Slideshow Presentation. |
* |
These exhibits to this Current Report on Form 8-K are not being filed but are being furnished pursuant to Item 9.01. |
Exhibit 99.1
|
|
|
|
|
PRESS CONTACT:
Carey P. Hendrickson, Chief Financial Officer
Phone: 1-972-770-5600 |
|
FOR IMMEDIATE RELEASE
CAPITAL SENIOR LIVING CORPORATION
REPORTS FOURTH QUARTER 2014 RESULTS
DALLAS (BUSINESS WIRE) February 26, 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 fourth quarter and full year 2014. Company highlights for the fourth quarter and full year include:
Operating and Financial Summary (see Non-GAAP Financial Measures below)
|
|
|
Revenue in the fourth quarter of 2014 was $100.2 million, an $11.2 million, or 12.6%, increase from the fourth quarter of 2013. Revenue for full-year 2014 increased $33.6 million, or 9.6%, to $383.9 million.
|
|
|
|
Occupancy for the Companys consolidated communities, excluding four communities undergoing repositioning, lease-up or significant renovation and conversion, was 87.9% in the fourth quarter of 2014, an increase of
110 basis points from the fourth quarter of 2013. Same-community occupancy was 87.5% for the fourth quarter of 2014, a 20 basis point sequential improvement from the third quarter of 2014 and a 60 basis point improvement from the fourth quarter of
2013. |
|
|
|
Average monthly rent for the Companys consolidated communities increased 3.0% to $3,229 in the fourth quarter of 2014, an increase of $94 per occupied unit as compared to the fourth quarter of 2013. Same-community
average monthly rent was $3,179, a $34 per occupied unit increase from the fourth quarter of 2013, and a 30 basis point improvement from the third quarter of 2014. |
|
|
|
Adjusted EBITDAR increased 20.9% to $36.0 million in the fourth quarter of 2014. This does not include EBITDAR of $0.7 million related to four communities undergoing repositioning, lease-up or significant renovation and
conversion. The Company is currently excluding the results of these four communities from its Non-GAAP financial measures, including Adjusted EBITDAR. The Companys Adjusted EBITDAR margin was 37.5% for the fourth quarter of 2014, an increase
of 290 basis points versus the fourth quarter of the prior year. Adjusted EBITDAR for full-year 2014 increased $13.0 million, or 10.9%, to $132.6 million. |
CAPITAL/Page 2
|
|
|
Adjusted Cash From Facility Operations (CFFO) was $13.5 million, or $0.48 per share, in the fourth quarter of 2014, excluding the four communities previously noted, compared to $14.6 million, or $0.52 per
share, in the fourth quarter of 2013. The fourth quarter of 2013 included tax savings from a cost segregation study of approximately $0.12 per share. On a comparable basis, Adjusted CFFO increased $0.08 per share, or 20.0%, in the fourth quarter of
2014 versus the fourth quarter of 2013. Adjusted CFFO for full-year 2014 was $1.51 compared to $1.54 in full-year 2013. Adjusted CFFO for full-year 2013 included tax savings from the previously noted cost segregation study of approximately $0.14 per
share. |
|
|
|
The Companys Net Loss for the fourth quarter of 2014 was $3.9 million, or $0.13 per share, due to non-cash amortization of resident leases of $4.8 million associated with communities acquired by the Company in the
previous 12 months. Net Loss for full-year 2014 was $24.1 million, or $0.83 per share. Adjusted Net Income was $1.5 million, or $0.05 per share, for the fourth quarter of 2014, and $2.4 million, or $0.09 per share, for full-year 2014.
|
|
|
|
As disclosed in its press release dated January 29, 2015, the Company acquired two senior living communities, one in mid-December and the other in mid-January, for a combined purchase price of approximately $32.8
million. These communities are expected to generate incremental annual CFFO of approximately $0.04 per share. |
|
|
|
Also as disclosed on January 29, 2015, the Company sold four non-core communities in January for $36.5 million. The Company received approximately $18.0 million in net proceeds after relieving the debt associated
with the communities and paying customary transaction and closing costs. |
Our fourth quarter results reflect the continuing momentum
in our operations. Our revenue increased at the highest rate of the year in the fourth quarter while our expenses declined, resulting in excellent growth in Adjusted EBITDAR and Adjusted CFFO. We also experienced continued solid increases in
occupancy and average monthly rent, said Lawrence A. Cohen, Chief Executive Officer of the Company. Our same-community occupancy increased for the fifth consecutive quarter, gaining 20 basis points from the third quarter of 2014 to the
fourth quarter of 2014. Our same-community average monthly rent increased by 30 basis points in the fourth quarter of 2014 as compared to the third quarter, building on the 70 basis point sequential increases in average monthly rent in the two
previous quarters. We also continue to make steady progress on our work to convert approximately 360 vacant independent living units to assisted living and memory care units, with more than half of the conversions complete at the end of 2014.
CAPITAL/Page 3
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 closed on one such community in the
fourth quarter and have subsequently closed on another community in the first quarter, and we continue to pursue additional opportunities.
We are
successfully executing on our strategic plan, and 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,
and an improving economy and housing market.
Recent Investment Activity
|
|
|
The Company is conducting due diligence on additional acquisitions of high-quality senior living communities in states with extensive existing operations totaling approximately $57 million. Subject to completion of
customary closing conditions, at least one of the acquisitions, valued at approximately $30 million, is expected to close by the end of the first quarter of 2015. Another acquisition is expected to close late in the first quarter or early in the
second quarter of 2015, with the remainder expected to close in the second quarter. |
|
|
|
The Company executed an early rate lock agreement on approximately $21 million of debt associated with the previously noted $30 million acquisition expected to close in the first quarter at a fixed interest rate of
3.55% with a 10-year maturity. |
|
|
|
As disclosed on January 29, 2015, the Company also executed early rate lock agreements on $45 million of mortgage debt for two communities at an average fixed interest rate of approximately 3.85% with a 10-year
maturity. One of these transactions closed on February 17 and the net proceeds were used to pay off two short-term bridge loans totaling $14 million. The remaining transaction is expected to close by the end of the first quarter of 2015. After
completion, the Company will have two remaining bridge loans totaling approximately $20 million. |
|
|
|
As disclosed on January 29, 2015, the Company closed a refinance of debt on a community in December 2014 that was originally set to mature in March 2017. The new mortgage is $18.9 million with a 4.46% fixed
interest rate and matures in January 2025. The new mortgage replaced $8.4 million of fixed-rate debt with an interest rate of 5.75%. The refinance yielded $9.3 million in incremental cash proceeds for the Company after customary transaction and
closing costs. |
CAPITAL/Page 4
Financial Results - Fourth Quarter
For the fourth quarter of 2014, the Company reported revenue of $100.2 million, compared to revenue of $88.9 million in the fourth quarter of 2013, an increase
of 12.6%. Resident and healthcare revenue increased from the fourth quarter of the prior year by approximately $13.1 million, or 15.0%, mostly due to the acquisition of 14 communities during or after the fourth quarter of 2013. As expected,
community reimbursement revenue and affiliated management revenue decreased approximately $1.9 million in the fourth quarter of 2014 as compared to the fourth quarter of 2013. 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 fourth quarter of 2014 were $59.7 million, an increase of $5.9 million from the fourth quarter of 2013, primarily due to the
acquisition of 14 communities during or after the fourth quarter of 2013.
General and administrative expenses for the fourth quarter of 2014 were $4.5
million, which includes $0.4 million of transaction and other one-time costs. Excluding transaction and other one-time costs, general and administrative expenses decreased $0.4 million in the fourth quarter of 2014 as compared to the fourth quarter
of 2013. As a percentage of revenues under management, general and administrative expenses, excluding transaction and other one-time costs, were 4.1% in the fourth quarter of 2014 as compared to 5.2% in the fourth quarter of 2013.
The Companys Non-GAAP financial measures exclude four communities that are undergoing repositioning, lease-up of higher-licensed units or significant
renovation and conversion.
Adjusted EBITDAR for the fourth quarter of 2014 was approximately $36.0 million, an increase of $6.2 million, or 20.9%, from
the fourth quarter of 2013. This does not include EBITDAR of $0.7 million related to four communities undergoing repositioning, lease-up or significant renovation and conversion. The Adjusted EBITDAR margin for the fourth quarter of 2014 was 37.5%,
a record-high quarterly margin for the Company and an increase of 290 basis points from the fourth quarter 2013 of 34.6%.
The Company recorded a net loss
of $3.9 million in the fourth quarter. Excluding non-recurring or non-economic items reconciled on the final page of this release, the Company earned adjusted net income of $1.5 million, or $0.05 per share, in the fourth quarter of 2014. Adjusted
CFFO was $13.5 million, or $0.48 per share, in the fourth quarter of 2014 versus $0.52 in the fourth quarter of 2013. The fourth quarter of 2013 included tax savings from a cost segregation study of approximately $0.12 per share. On a comparable
basis, Adjusted CFFO increased $0.08 per share, or 20.0%, in the fourth quarter of 2014 versus the fourth quarter of 2013.
CAPITAL/Page 5
Financial Results Full Year
The Company reported 2014 revenue of $383.9 million compared to revenue of $350.4 million in 2013, an increase of $33.6 million, or 9.6%. Revenues in 2014
included a decrease of $3.4 million in community reimbursement revenue and affiliated management revenue related to the acquisition of three communities formerly held as a joint venture, as previously noted. Resident and healthcare revenue increased
10.7% versus the prior year. Operating expenses were $230.5 million in 2014, an increase of $22.8 million.
General and administrative expenses in 2014
were $19.6 million compared to $20.2 million in 2013. Excluding transaction and other one-time costs, general and administrative expenses as a percentage of revenues under management were approximately 4.7% in 2014 compared to 5.2% in 2013.
Adjusted EBITDAR increased 10.9% to $132.6 million in 2014, an increase of $13.0 million. The Companys Adjusted EBITDAR margin was 35.9% in 2014, a 100
basis point improvement from 2013. Adjusted CFFO for 2014 was $42.8 million, or $1.51 per share, compared to $1.54 per share in 2013. Adjusted CFFO in 2013 included approximately $0.14 per share in tax savings from a cost segregation study. The
Companys net loss for 2014 was $24.1 million, or $0.83 per share. After adjusting for the non-recurring or non-economic items reconciled on the final page of this release, the Company earned adjusted net income of $2.4 million, or $0.09 per
share.
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 fourth quarter of 2014 increased 1.9% versus the fourth quarter of 2013. Same-community expenses decreased 0.9% from the fourth
quarter of the prior year. Labor costs, including benefits, increased approximately 0.4%, food costs increased 1.4% and utilities were down 1.7% as compared to the fourth quarter of the prior year. Same-community net operating income increased 5.1%
in the fourth quarter of 2014 as compared to the fourth quarter of 2013.
Same-community results continued to show significant sequential improvement in
the fourth quarter of 2014. Same-community revenues were up sequentially over the third quarter by 0.6%, following sequential improvement over the previous quarter of 0.6% and 1.1% in the second and third quarters, respectively. Same-community
occupancies increased 20 basis points from the third quarter to the fourth quarter and average rent increased 30 basis points from the third quarter to the fourth quarter.
CAPITAL/Page 6
Same-community expenses were $0.3 million lower than the third quarter of 2014. Same-community net operating
income was 2.0% higher than the third quarter of 2014.
Capital expenditures for the fourth quarter of 2014 were $5.3 million, representing approximately
$3.8 million of investment spending and approximately $1.5 million of recurring capital expenditures. Spending in 2014 for recurring capital expenditures equaled $4.7 million, or approximately $400 per unit.
Balance Sheet
The Company ended the year with
$51.5 million of cash and cash equivalents, including restricted cash. During the fourth quarter of 2014, the Company invested $4.1 million of cash as equity to complete the acquisitions of one community and spent $5.3 million on capital
improvements. For the full year, the Company invested $40.5 million of cash to complete 8 acquisitions and spent $18.7 million on capital improvements.
As of December 31, 2014, the Company financed its 67 owned communities with mortgages totaling $642.5 million at interest rates averaging 4.7%. All of
the Companys debt is at fixed interest rates, except for six bridge loans totaling approximately $65.2 million at December 31, 2014, at variable rates averaging 3.9%. The Company has no mortgage maturities before the third quarter of
2015.
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.
Q4 2014 Conference Call Information
The Company will host a conference call with senior management to discuss the Companys fourth quarter and full year financial results. The call will be
held on Thursday, February 26, 2015, at 5:00 p.m. Eastern Time. The call-in number is 913-312-0850, confirmation code 3717091. 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 Thursday, February 26, 2015, at 8:00 p.m. Eastern Time, until Saturday, March 7, 2015, at 8:00 p.m. Eastern Time. To access the conference call replay, call 719-457-0820, confirmation code 3717091. The
conference call will also be made available for playback via the Companys corporate website, www.capitalsenior.com, beginning February 27, 2015.
CAPITAL/Page 7
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 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 114 senior living communities in
geographically concentrated regions with an aggregate capacity of approximately 15,000 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 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)
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
2014 |
|
|
2013 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
39,209 |
|
|
$ |
13,611 |
|
Restricted cash |
|
|
12,241 |
|
|
|
11,425 |
|
Accounts receivable, net |
|
|
5,903 |
|
|
|
3,752 |
|
Accounts receivable from affiliates |
|
|
5 |
|
|
|
416 |
|
Federal and state income taxes receivable |
|
|
|
|
|
|
5,123 |
|
Deferred taxes |
|
|
460 |
|
|
|
845 |
|
Assets held for sale |
|
|
35,761 |
|
|
|
|
|
Property tax and insurance deposits |
|
|
12,198 |
|
|
|
11,036 |
|
Prepaid expenses and other |
|
|
6,797 |
|
|
|
6,605 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
112,574 |
|
|
|
52,813 |
|
Property and equipment, net |
|
|
747,243 |
|
|
|
651,738 |
|
Investments in unconsolidated joint ventures |
|
|
|
|
|
|
1,010 |
|
Other assets, net |
|
|
37,884 |
|
|
|
39,988 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
897,701 |
|
|
$ |
745,549 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
2,540 |
|
|
$ |
3,813 |
|
Accounts payable to affiliates |
|
|
7 |
|
|
|
1 |
|
Accrued expenses |
|
|
32,154 |
|
|
|
29,321 |
|
Notes payable of assets held for sale |
|
|
15,076 |
|
|
|
|
|
Current portion of notes payable |
|
|
33,664 |
|
|
|
11,918 |
|
Current portion of deferred income |
|
|
14,603 |
|
|
|
11,215 |
|
Current portion of capital lease and financing obligations |
|
|
1,054 |
|
|
|
948 |
|
Federal and state income taxes payable |
|
|
219 |
|
|
|
|
|
Customer deposits |
|
|
1,499 |
|
|
|
1,489 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
100,816 |
|
|
|
58,705 |
|
Deferred income |
|
|
15,949 |
|
|
|
18,021 |
|
Capital lease and financing obligations, net of current portion |
|
|
40,016 |
|
|
|
41,093 |
|
Deferred taxes |
|
|
460 |
|
|
|
845 |
|
Other long-term liabilities |
|
|
1,426 |
|
|
|
1,559 |
|
Notes payable, net of current portion |
|
|
597,860 |
|
|
|
467,376 |
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Shareholders equity: |
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value: |
|
|
|
|
|
|
|
|
Authorized shares 15,000; no shares issued or outstanding |
|
|
|
|
|
|
|
|
Common stock, $.01 par value: |
|
|
|
|
|
|
|
|
Authorized shares 65,000; issued and outstanding shares 29,097 and 28,845 in 2014 and 2013, respectively |
|
|
294 |
|
|
|
292 |
|
Additional paid-in capital |
|
|
151,069 |
|
|
|
143,721 |
|
Retained (deficit) earnings |
|
|
(9,255 |
) |
|
|
14,871 |
|
Treasury stock, at cost 350 shares in 2014 and 2013 |
|
|
(934 |
) |
|
|
(934 |
) |
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
141,174 |
|
|
|
157,950 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
897,701 |
|
|
$ |
745,549 |
|
|
|
|
|
|
|
|
|
|
CAPITAL/Page 9
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resident and health care revenue |
|
$ |
100,160 |
|
|
$ |
87,069 |
|
|
$ |
380,400 |
|
|
$ |
343,478 |
|
Affiliated management services revenue |
|
|
|
|
|
|
211 |
|
|
|
415 |
|
|
|
797 |
|
Community reimbursement revenue |
|
|
|
|
|
|
1,655 |
|
|
|
3,110 |
|
|
|
6,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
100,160 |
|
|
|
88,935 |
|
|
|
383,925 |
|
|
|
350,362 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (exclusive of facility lease expense and depreciation and amortization expense shown below) |
|
|
59,744 |
|
|
|
53,888 |
|
|
|
230,495 |
|
|
|
207,744 |
|
General and administrative expenses |
|
|
4,485 |
|
|
|
5,209 |
|
|
|
19,622 |
|
|
|
20,238 |
|
Facility lease expense |
|
|
14,808 |
|
|
|
14,173 |
|
|
|
59,332 |
|
|
|
56,986 |
|
Provision for bad debts |
|
|
200 |
|
|
|
167 |
|
|
|
717 |
|
|
|
497 |
|
Stock-based compensation expense |
|
|
1,586 |
|
|
|
1,164 |
|
|
|
7,262 |
|
|
|
4,322 |
|
Depreciation and amortization |
|
|
13,880 |
|
|
|
10,055 |
|
|
|
49,487 |
|
|
|
43,238 |
|
Community reimbursement expense |
|
|
|
|
|
|
1,655 |
|
|
|
3,110 |
|
|
|
6,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
94,703 |
|
|
|
86,311 |
|
|
|
370,025 |
|
|
|
339,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
5,457 |
|
|
|
2,624 |
|
|
|
13,900 |
|
|
|
11,250 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
12 |
|
|
|
13 |
|
|
|
52 |
|
|
|
151 |
|
Interest expense |
|
|
(8,476 |
) |
|
|
(6,446 |
) |
|
|
(31,261 |
) |
|
|
(23,767 |
) |
Write-off of deferred loan costs and prepayment premiums |
|
|
(989 |
) |
|
|
|
|
|
|
(7,968 |
) |
|
|
|
|
Joint venture equity investment valuation gain |
|
|
|
|
|
|
|
|
|
|
1,519 |
|
|
|
|
|
Gain on disposition of assets, net |
|
|
795 |
|
|
|
1,442 |
|
|
|
784 |
|
|
|
1,454 |
|
Equity in earnings of unconsolidated joint ventures, net |
|
|
|
|
|
|
57 |
|
|
|
105 |
|
|
|
133 |
|
Write-down of assets held for sale |
|
|
(561 |
) |
|
|
|
|
|
|
(561 |
) |
|
|
|
|
Other income |
|
|
1 |
|
|
|
6 |
|
|
|
23 |
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before provision for income taxes |
|
|
(3,761 |
) |
|
|
(2,304 |
) |
|
|
(23,407 |
) |
|
|
(10,745 |
) |
Provision for income taxes |
|
|
(140 |
) |
|
|
(91 |
) |
|
|
(719 |
) |
|
|
(5,759 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,901 |
) |
|
$ |
(2,395 |
) |
|
$ |
(24,126 |
) |
|
$ |
(16,504 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net loss per share |
|
$ |
(0.13 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.83 |
) |
|
$ |
(0.58 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net loss per share |
|
$ |
(0.13 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.83 |
) |
|
$ |
(0.58 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic |
|
|
28,387 |
|
|
|
27,949 |
|
|
|
28,301 |
|
|
|
27,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding diluted |
|
|
28,387 |
|
|
|
27,949 |
|
|
|
28,301 |
|
|
|
27,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss |
|
$ |
(3,901 |
) |
|
$ |
(2,395 |
) |
|
$ |
(24,126 |
) |
|
$ |
(16,504 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL/Page 10
CAPITAL SENIOR LIVING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2014 |
|
|
2013 |
|
Operating Activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(24,126 |
) |
|
$ |
(16,504 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
49,487 |
|
|
|
43,238 |
|
Amortization of deferred financing charges |
|
|
1,361 |
|
|
|
1,100 |
|
Amortization of deferred lease costs and lease intangibles |
|
|
1,230 |
|
|
|
1,164 |
|
Deferred income |
|
|
1,316 |
|
|
|
1,053 |
|
Deferred income taxes |
|
|
|
|
|
|
10,793 |
|
Write-off of deferred loan costs and prepayment premiums |
|
|
7,968 |
|
|
|
|
|
Joint venture equity investment valuation gain |
|
|
(1,519 |
) |
|
|
|
|
Gain on disposition of assets, net |
|
|
(784 |
) |
|
|
(1,454 |
) |
Equity in earnings of unconsolidated joint ventures, net |
|
|
(105 |
) |
|
|
(133 |
) |
Write-down of assets held for sale |
|
|
561 |
|
|
|
|
|
Provision for bad debts |
|
|
717 |
|
|
|
497 |
|
Stock-based compensation expense |
|
|
7,262 |
|
|
|
4,322 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(2,868 |
) |
|
|
980 |
|
Accounts receivable from affiliates |
|
|
411 |
|
|
|
337 |
|
Property tax and insurance deposits |
|
|
(1,162 |
) |
|
|
406 |
|
Prepaid expenses and other |
|
|
(192 |
) |
|
|
(1,847 |
) |
Other assets |
|
|
(163 |
) |
|
|
(1,745 |
) |
Accounts payable |
|
|
(1,267 |
) |
|
|
(3,166 |
) |
Accrued expenses |
|
|
2,833 |
|
|
|
4,876 |
|
Federal and state income taxes receivable/payable |
|
|
5,342 |
|
|
|
(1,222 |
) |
Customer deposits |
|
|
10 |
|
|
|
(51 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
46,312 |
|
|
|
42,644 |
|
Investing Activities |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(18,742 |
) |
|
|
(13,562 |
) |
Cash paid for acquisitions |
|
|
(160,105 |
) |
|
|
(150,391 |
) |
Proceeds from SHPIII/CSL Transaction |
|
|
2,532 |
|
|
|
|
|
Proceeds from disposition of assets |
|
|
796 |
|
|
|
1,460 |
|
Contributions to joint ventures |
|
|
|
|
|
|
|
|
Distributions from joint ventures |
|
|
102 |
|
|
|
197 |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(175,417 |
) |
|
|
(162,296 |
) |
Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from notes payable |
|
|
300,820 |
|
|
|
140,237 |
|
Repayments of notes payable |
|
|
(140,950 |
) |
|
|
(23,539 |
) |
Cash payments for capital lease and financing obligations |
|
|
(971 |
) |
|
|
(871 |
) |
Increase in restricted cash |
|
|
(816 |
) |
|
|
(1,246 |
) |
Cash proceeds from the issuance of common stock |
|
|
170 |
|
|
|
3,163 |
|
Excess tax benefits on stock options exercised |
|
|
(82 |
) |
|
|
(1,625 |
) |
Deferred financing charges paid |
|
|
(3,468 |
) |
|
|
(1,593 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
154,703 |
|
|
|
114,526 |
|
|
|
|
|
|
|
|
|
|
Increase (Decrease) in cash and cash equivalents |
|
|
25,598 |
|
|
|
(5,126 |
) |
Cash and cash equivalents at beginning of year |
|
|
13,611 |
|
|
|
18,737 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
$ |
39,209 |
|
|
$ |
13,611 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures |
|
|
|
|
|
|
|
|
Cash paid during the year for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
28,856 |
|
|
$ |
21,953 |
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
$ |
724 |
|
|
$ |
702 |
|
|
|
|
|
|
|
|
|
|
CAPITAL/Page 11
Capital Senior Living Corporation
Supplemental Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
|
|
|
Communities |
|
|
Resident Capacity |
|
|
Average Units |
|
|
|
Q4 14 |
|
|
Q4 13 |
|
|
Q4 14 |
|
|
Q4 13 |
|
|
Q4 14 |
|
|
Q4 13 |
|
Portfolio Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I. Community Ownership / Management |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated communities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned |
|
|
67 |
|
|
|
59 |
|
|
|
8,783 |
|
|
|
7,781 |
|
|
|
6,895 |
|
|
|
5,727 |
|
Leased |
|
|
50 |
|
|
|
50 |
|
|
|
6,333 |
|
|
|
6,298 |
|
|
|
4,984 |
|
|
|
5,026 |
|
Joint Venture communities (equity method) |
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
674 |
|
|
|
|
|
|
|
435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
117 |
|
|
|
112 |
|
|
|
15,116 |
|
|
|
14,753 |
|
|
|
11,879 |
|
|
|
11,188 |
|
Independent living |
|
|
|
|
|
|
|
|
|
|
7,597 |
|
|
|
7,602 |
|
|
|
6,134 |
|
|
|
6,180 |
|
Assisted living |
|
|
|
|
|
|
|
|
|
|
7,519 |
|
|
|
6,981 |
|
|
|
5,745 |
|
|
|
5,003 |
|
Skilled Nursing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170 |
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
15,116 |
|
|
|
14,753 |
|
|
|
11,879 |
|
|
|
11,188 |
|
II. Percentage of Operating Portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated communities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned |
|
|
57.3 |
% |
|
|
52.7 |
% |
|
|
58.1 |
% |
|
|
52.7 |
% |
|
|
58.0 |
% |
|
|
51.2 |
% |
Leased |
|
|
42.7 |
% |
|
|
44.6 |
% |
|
|
41.9 |
% |
|
|
42.7 |
% |
|
|
42.0 |
% |
|
|
44.9 |
% |
Joint venture communities (equity method) |
|
|
|
|
|
|
2.7 |
% |
|
|
|
|
|
|
4.6 |
% |
|
|
|
|
|
|
3.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Independent living |
|
|
|
|
|
|
|
|
|
|
50.3 |
% |
|
|
51.5 |
% |
|
|
51.6 |
% |
|
|
55.2 |
% |
Assisted living |
|
|
|
|
|
|
|
|
|
|
49.7 |
% |
|
|
47.3 |
% |
|
|
48.4 |
% |
|
|
44.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.2 |
% |
|
|
|
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
CAPITAL/Page 12
Capital Senior Living Corporation
Supplemental Information (excludes 4 communities being repositioned/leased up)
|
|
|
|
|
|
|
|
|
|
|
Q4 14 |
|
|
Q4 13 |
|
Selected Operating Results |
|
|
|
|
|
|
|
|
I. Owned communities |
|
|
|
|
|
|
|
|
Number of communities |
|
|
64 |
|
|
|
56 |
|
Resident capacity |
|
|
8,174 |
|
|
|
7,002 |
|
Unit capacity |
|
|
6,398 |
|
|
|
5,226 |
|
Financial occupancy (1) |
|
|
89.1 |
% |
|
|
87.3 |
% |
Revenue (in millions) |
|
|
51.8 |
|
|
|
38.9 |
|
Operating expenses (in millions) (2) |
|
|
29.3 |
|
|
|
22.1 |
|
Operating margin |
|
|
44 |
% |
|
|
43 |
% |
Average monthly rent |
|
|
3,030 |
|
|
|
2,845 |
|
II. Leased communities |
|
|
|
|
|
|
|
|
Number of communities |
|
|
49 |
|
|
|
49 |
|
Resident capacity |
|
|
6,107 |
|
|
|
6,072 |
|
Unit capacity |
|
|
4,843 |
|
|
|
4,840 |
|
Financial occupancy (1) |
|
|
86.5 |
% |
|
|
86.3 |
% |
Revenue (in millions) |
|
|
44.0 |
|
|
|
43.3 |
|
Operating expenses (in millions) (2) |
|
|
21.8 |
|
|
|
21.9 |
|
Operating margin |
|
|
51 |
% |
|
|
49 |
% |
Average monthly rent |
|
|
3,499 |
|
|
|
3,452 |
|
III. Consolidated communities |
|
|
|
|
|
|
|
|
Number of communities |
|
|
113 |
|
|
|
105 |
|
Resident capacity |
|
|
14,281 |
|
|
|
13,074 |
|
Unit capacity |
|
|
11,240 |
|
|
|
10,066 |
|
Financial occupancy (1) |
|
|
87.9 |
% |
|
|
86.8 |
% |
Revenue (in millions) |
|
|
95.8 |
|
|
|
82.2 |
|
Operating expenses (in millions) (2) |
|
|
51.1 |
|
|
|
44.0 |
|
Operating margin |
|
|
47 |
% |
|
|
46 |
% |
Average monthly rent |
|
|
3,229 |
|
|
|
3,135 |
|
IV. Communities under management |
|
|
|
|
|
|
|
|
Number of communities |
|
|
113 |
|
|
|
108 |
|
Resident capacity |
|
|
14,281 |
|
|
|
13,748 |
|
Unit capacity |
|
|
11,240 |
|
|
|
10,500 |
|
Financial occupancy (1) |
|
|
87.9 |
% |
|
|
87.0 |
% |
Revenue (in millions) |
|
|
95.8 |
|
|
|
86.4 |
|
Operating expenses (in millions) (2) |
|
|
51.0 |
|
|
|
46.3 |
|
Operating margin |
|
|
47 |
% |
|
|
46 |
% |
Average monthly rent |
|
|
3,229 |
|
|
|
3,155 |
|
V. Same communities under management |
|
|
|
|
|
|
|
|
Number of communities |
|
|
102 |
|
|
|
102 |
|
Resident capacity |
|
|
13,086 |
|
|
|
13,056 |
|
Unit capacity |
|
|
10,355 |
|
|
|
10,352 |
|
Financial occupancy (1) |
|
|
87.5 |
% |
|
|
86.9 |
% |
Revenue (in millions) |
|
|
86.4 |
|
|
|
84.8 |
|
Operating expenses (in millions) (2) |
|
|
45.3 |
|
|
|
45.5 |
|
Operating margin |
|
|
48 |
% |
|
|
46 |
% |
Average monthly rent |
|
|
3,179 |
|
|
|
3,145 |
|
VI. General and Administrative expenses as a percent of Total Revenues under Management |
|
|
|
|
|
|
|
|
Fourth Quarter (3) |
|
|
4.1 |
% |
|
|
5.2 |
% |
Fiscal Year (3) |
|
|
4.5 |
% |
|
|
5.2 |
% |
VII. Consolidated Mortgage Debt Information (in thousands, except for interest rates) (excludes insurance premium and auto
financing) |
|
|
|
|
|
|
|
|
Total fixed rate mortgage debt |
|
|
577,310 |
|
|
|
453,641 |
|
Total variable rate mortgage debt |
|
|
65,222 |
|
|
|
22,522 |
|
Weighted average interest rate |
|
|
4.69 |
% |
|
|
5.25 |
% |
(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 and conversion costs incurred by the Company. |
CAPITAL/Page 13
CAPITAL SENIOR LIVING CORPORATION
NON-GAAP RECONCILIATIONS
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
Fiscal Year Ended December 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Adjusted EBITDAR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from operations |
|
$ |
5,457 |
|
|
$ |
2,624 |
|
|
$ |
13,900 |
|
|
$ |
11,250 |
|
Depreciation and amortization expense |
|
|
13,880 |
|
|
|
10,055 |
|
|
|
49,487 |
|
|
|
43,238 |
|
Stock-based compensation expense |
|
|
1,586 |
|
|
|
1,164 |
|
|
|
7,262 |
|
|
|
4,322 |
|
Facility lease expense |
|
|
14,808 |
|
|
|
14,173 |
|
|
|
59,332 |
|
|
|
56,986 |
|
Provision for bad debts |
|
|
200 |
|
|
|
167 |
|
|
|
717 |
|
|
|
497 |
|
Casualty losses |
|
|
166 |
|
|
|
161 |
|
|
|
748 |
|
|
|
543 |
|
Transaction and conversion costs |
|
|
549 |
|
|
|
660 |
|
|
|
2,648 |
|
|
|
1,866 |
|
Communities being repositioned/leased up |
|
|
(683 |
) |
|
|
739 |
|
|
|
(1,494 |
) |
|
|
859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAR |
|
$ |
35,963 |
|
|
$ |
29,743 |
|
|
$ |
132,600 |
|
|
$ |
119,561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAR Margin |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAR |
|
$ |
35,963 |
|
|
$ |
29,743 |
|
|
$ |
132,600 |
|
|
$ |
119,561 |
|
Total revenues |
|
$ |
100,160 |
|
|
$ |
88,935 |
|
|
$ |
383,925 |
|
|
$ |
350,362 |
|
Communities being repositioned/leased up |
|
|
(4,308 |
) |
|
|
(2,987 |
) |
|
|
(14,381 |
) |
|
|
(7,847 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted revenues |
|
$ |
95,852 |
|
|
$ |
85,948 |
|
|
$ |
369,544 |
|
|
$ |
342,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDAR margin |
|
|
37.5 |
% |
|
|
34.6 |
% |
|
|
35.9 |
% |
|
|
34.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income and net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,901 |
) |
|
$ |
(2,395 |
) |
|
$ |
(24,126 |
) |
|
$ |
(16,504 |
) |
Casualty losses, net of tax |
|
|
105 |
|
|
|
101 |
|
|
|
471 |
|
|
|
342 |
|
Transaction and conversion costs, net of tax |
|
|
346 |
|
|
|
416 |
|
|
|
1,668 |
|
|
|
1,176 |
|
Resident lease amortization, net of tax |
|
|
3,013 |
|
|
|
1,937 |
|
|
|
10,460 |
|
|
|
10,774 |
|
Write-off of deferred loan costs and prepayment premium, net of tax |
|
|
623 |
|
|
|
|
|
|
|
5,020 |
|
|
|
|
|
Write-down of assets held for sale, net of tax |
|
|
353 |
|
|
|
|
|
|
|
353 |
|
|
|
|
|
Joint venture equity investment valuation gain, net of tax |
|
|
|
|
|
|
|
|
|
|
(957 |
) |
|
|
|
|
Gain on disposition of assets, net of tax |
|
|
(501 |
) |
|
|
(908 |
) |
|
|
(494 |
) |
|
|
(916 |
) |
Deferred tax asset valuation allowance |
|
|
993 |
|
|
|
1,297 |
|
|
|
8,456 |
|
|
|
8,810 |
|
Communities being repositioned/leased up, net of tax |
|
|
429 |
|
|
|
756 |
|
|
|
1,578 |
|
|
|
1,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income |
|
$ |
1,460 |
|
|
$ |
1,204 |
|
|
$ |
2,429 |
|
|
$ |
4,852 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share |
|
$ |
0.05 |
|
|
$ |
0.04 |
|
|
$ |
0.09 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding |
|
|
28,390 |
|
|
|
27,966 |
|
|
|
28,305 |
|
|
|
27,871 |
|
Adjusted CFFO and Adjusted CFFO per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,901 |
) |
|
$ |
(2,395 |
) |
|
$ |
(24,126 |
) |
|
$ |
(16,504 |
) |
Non-cash charges, net |
|
|
17,803 |
|
|
|
17,037 |
|
|
|
67,494 |
|
|
|
60,581 |
|
Recurring capital expenditures |
|
|
(1,101 |
) |
|
|
(991 |
) |
|
|
(4,257 |
) |
|
|
(3,866 |
) |
Casualty losses |
|
|
166 |
|
|
|
161 |
|
|
|
748 |
|
|
|
749 |
|
Transaction and conversion costs |
|
|
549 |
|
|
|
660 |
|
|
|
2,648 |
|
|
|
1,866 |
|
Tax impact of Spring Meadows Transaction |
|
|
(106 |
) |
|
|
(106 |
) |
|
|
(424 |
) |
|
|
(424 |
) |
Communities being repositioned/leased up, net of tax |
|
|
138 |
|
|
|
237 |
|
|
|
746 |
|
|
|
631 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted CFFO |
|
$ |
13,548 |
|
|
$ |
14,603 |
|
|
$ |
42,829 |
|
|
$ |
43,033 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted CFFO per share |
|
$ |
0.48 |
|
|
$ |
0.52 |
|
|
$ |
1.51 |
|
|
$ |
1.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
***
|
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
AR.
173
CT.
178
FL.
226
IA.
122
IL.
650
IN.
2,247
KS.
165
LA.
133
MI.
244
MN.
173
MO.
662
MS.
143
NC.
432
SC.
669
NE.
668
NJ.
98
NY.
387
OH.
2,060
OK.
143
TX.
3,720
VA.
317
CA.
408
Company Overview
Resident Capacity By State
AZ.
189
GA.
168
MA.
68
WI.
418
MA.
87
Number of residents by State
Greater than 2,000
500 -
2,000
Less than 500
Capital Senior Living operates 114 communities in geographically
concentrated regions with the capacity to serve 15,000 residents
|
|
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
The Capital Advantage: Senior Living Options
Independent
Living
48%
of
Resident
Capacity
Average 107 units per IL community with large common areas and
amenities
Supportive services, wellness programs, social, recreational
and
educational events
Average monthly rate of $2,487
100% private pay
Average length of resident stay is 31 months |
|
8
The Capital Advantage: Senior Living Options
Assisted Living-
52% of Resident Capacity
Average 65 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 $3,992
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
Source: 2010 Census Summary File 1 and U.S. Census Bureau, Population Division
U.S. Seniors Population Trends (75+ years old) |
|
10
The Capital Advantage: Limited New Supply
Source: NIC MAP Trends All Markets Q4 14 |
|
11
The Capital Advantage: Senior Housing Occupancy Trends
Source: NIC MAP Trends All Markets Q4 14 |
|
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
Employer of choice
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
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
2015 Business Plan |
|
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 and value enhancing renovations and refurbishments
Continue to enhance sales and marketing initiatives |
|
16
Solving to Achieve 90% Occupancy
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
Units
(360)
360
At 90% Stabilized
Occupancy
324
Note: Conversions are subject to customary approvals
Occupancy After Conversions
Stabilize
IL
AL
Total
Total Units
5,832
5,794
11,626
Occupied Units
5,287
5,193
10,480
Occupancy %
90.7%
89.6%
90.1%
(1)
As of June 30, 2014 -
excludes CCRCs , Autumn Glen, and Veranda Club |
|
17
Canton Regency Remodel Concepts
Existing Atrium
Concept Atrium
Concept Bistro
Concept Internet Cafe |
|
18
Community Portfolio Growth: 2009 to Present
Owned %
37.9%
32.5%
38.1%
47.5%
52.7%
57.3%
56.1%
66
77
84
101
112
117
114 |
|
19
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
2015 YTD
Combined
Purchase Price
$83.4
$181.3
$150.4
$160.2
$18.3
$593.6
Communities
7
17
11
8
1
44
Units
551
1,367
881
819
78
3,696
Debt
$59.3
$129.5
$112.3
$119.7
$14.1
$434.9
Equity
$24.1
$51.8
$38.1
$40.5
$4.2
$158.7
First Year Revenue
$21.3
$49.1
$35.1
$36.4
$2.8
$144.7
First Year EBITDAR
$7.3
$19.1
$14.1
$15.0
$1.5
$57.0
First Year Cash Flow from
Operations (CFFO)
$3.4
$9.1
$5.8
$6.7
$0.7
$25.7
First Year CFFO per share*
$0.13
$0.34
$0.20
$0.23
$0.02
$0.92 |
|
20
Historical Key Metrics
($ In Millions)
($ In Millions)
Revenue *
Adjusted EBITDAR
Adjusted EBITDAR Margin
* Excludes community reimbursement revenue and management services revenue
Adjusted CFFO per share
* Excludes tax savings related to cost
segregation studies of $0.25 in 2012
and $0.14 in 2013 |
|
21
Comparative Operating and Financial Metrics
Note: EBITDAR and CFFO are as adjusted in press releases.
Q4 14
Q4 13
% Increase
Total Revenues
$ 100.2
$ 88.9
12.6%
Adjusted EBITDAR
$ 36.0
$ 29.7
20.9%
% Margin
37.5%
34.6%
Adjusted CFFO
$ 13.5
$ 11.2*
20.5%
Adjusted CFFO Per Share
$ 0.48
$ 0.40*
20.0%
* Excludes $3.4 million, or $0.12 per share, from tax savings related to a cost
segregation study completed in 2013. |
|
22
Balance Sheet
As of December 31, 2014 (in millions)
ASSETS
Cash and Securities
$ 51.5
Other Current Assets
61.1
Total Current Assets
112.6
Fixed Assets
747.2
Other Assets
37.9
TOTAL ASSETS
$ 897.7
LIABILITIES & EQUITY
Current Liabilities
$ 100.8
Long-Term Debt
597.9
Other Liabilities
57.8
Total Liabilities
756.5
Stockholders
Equity
141.2
TOTAL LIABILITIES &
EQUITY
$ 897.7 |
|
23
Debt Overview : 100% Mortgage Debt
(In thousands)
Debt Maturities
Weighted Average Interest Rate
Average duration of debt is 8 years,
with approximately 92% of all debt
maturing in 2021 and after
Weighted Average Interest
Rate has decreased 133 bps
since 2010 |
|
24
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 |
Capital Senior Living (NYSE:CSU)
Historical Stock Chart
From Sep 2024 to Oct 2024
Capital Senior Living (NYSE:CSU)
Historical Stock Chart
From Oct 2023 to Oct 2024