Capital Senior Living Corporation (the “Company”) (NYSE: CSU)
announced results for the quarter ended September 30, 2021.
Highlights
- Successfully completed shareholder rights offering and private
placement investment totaling $154.8 million, strengthening the
Company’s liquidity position.
- Third quarter 2021 occupancy of 81.0% increased 290 basis
points compared to the second quarter of 2021 and 170 basis points
over occupancy for the third quarter of 2020. October 2021 average
occupancy was 81.2%, an increase of 590 basis points from the
pandemic low average monthly occupancy of 75.3% in February of
2021. October month-end spot occupancy was 82.3%.
- Consolidated resident revenue in the third quarter of 2021
increased $2.3 million or 5.0% compared to the second quarter of
2021.
- Average monthly rent increased sequentially to $3,578 for the
third quarter of 2021 from $3,518 in the second quarter of
2021.
- The Company announced expansion of Ventas relationship with
three additional managed communities in Arkansas effective December
1, 2021 and also transitioned the remaining Healthpeak communities
to another operator on September 30, 2021.
- Management notified Fifth Third Bank of the Company’s intention
to repay the outstanding $31.5 million bridge loan to fully
extinguish the outstanding loan and 25% Corporate guarantee.
- The Company announced its rebranding as Sonida Senior Living,
Inc. with an effective date of November 15, 2021.
“We are pleased with our performance during the third quarter,
especially occupancy and revenue growth,” said Kimberly S. Lody,
President and Chief Executive Officer. “The operating environment
continues to be challenging with respect to staff availability and
price inflation, which requires a relentless daily focus managing
the balance between growing occupancy in our communities, providing
excellent care to our residents and managing operating margins.
Completing the recent transactions to raise new capital for the
Company will enable us to address our immediate liquidity needs and
strengthen our financial foundation, while we lead the business
through the current operating environment and set the stage for
long-term sustainable growth.”
Summary of Consolidated Financial
Results - Third Quarter 2021
Quarter Ended September
30
Second Quarter 2021
Sequential increase
(decrease)
2021
2020
Increase (decrease)
Consolidated results
Resident revenue
$
48,968
$
85,894
$
(36,926
)
$
46,649
$
2,319
Management fees
1,029
604
425
763
266
Operating expenses
40,668
65,165
(24,497
)
37,568
3,100
General and administrative expenses
6,887
8,128
(1,241
)
8,839
(1,952
)
Gain on extinguishment of debt, net
54,080
—
54,080
67,213
(13,133
)
Net income (loss)
36,510
(214,964
)
251,474
49,078
(12,568
)
Adjusted EBITDAR (1)
3,153
15,540
(12,387
)
2,040
1,113
Adjusted CFFO (1)
(6,328
)
(5,221
)
(1,107
)
(7,341
)
1,013
Continuing Community Results
Resident revenue - continuing communities
(2)
$
48,968
$
48,026
$
942
$
46,373
$
2,595
Continuing community net operating income
(NOI) (1)
$
10,287
$
12,310
$
(2,023
)
$
9,956
$
331
Continuing community net operating income
margin (1)
21.0
%
25.6
%
(4.6
)%
21.5
%
(0.5
)%
Average occupancy
81.0
%
79.3
%
1.7
%
78.1
%
2.9
%
(1) Adjusted EBITDAR, Adjusted CFFO,
Continuing Community Net Operating Income and Continuing Community
Net Operating Income Margin are financial measures that are not
calculated in accordance with GAAP. See "Reconciliations of
Non-GAAP Financial Measures" for the Company's definition of such
measure, reconciliations to the most comparable GAAP financial
measure, and other important information regarding the use of the
Company's non-GAAP financial measures.
(2) Resident Revenue from continuing
communities exclude $0.0 million, $37.9 million and $0.3 million
for the quarters ended September 30, 2021, September 30, 2020 and
June 30, 2021, respectively and relate to revenues earned in the
operations of the 18 Fannie Mae communities that are in the process
of transitioning legal ownership, leased communities whose master
lease agreements or excess cash flow leases were terminated on or
before December 31, 2020 and one owned community sold to a third
party in the fourth quarter of fiscal 2020.
Third Quarter 2021
Results
When comparing the third quarter of fiscal 2021 to the third
quarter of fiscal 2020, the Company generated consolidated resident
revenue of approximately $49.0 million compared to consolidated
resident revenue of approximately $85.9 million, respectively,
representing a decrease of $36.9 million, or 43%. The decrease in
revenue was generated by significant property dispositions
throughout 2020, including: (1) the sale of one owned property
which transitioned to a management agreement with the buyer; (2)
the transition of 39 leased communities to different operators in
conjunction with the Company exiting its master lease agreements;
and (3) the process of transferring legal ownership of 18
communities to Fannie Mae, the holder of nonrecourse debt related
to such communities on August 1, 2020. Resident revenue for the 60
continuing communities increased $0.9 million, or 2.0%, due to an
increase in continuing community average occupancy from 79.3% in
the third quarter 2020 to continuing community occupancy of 81.0%
in the third quarter 2021, an increase of 220 basis points.
Management fee revenue increased $0.4 million, which was due to
the Company’s management of 15 communities during the third quarter
of 2021 versus management of six communities for the entire third
quarter of 2020 and 18 communities for a portion of the third
quarter of 2020. Community reimbursement revenue declined $1.6
million compared to the prior year quarter.
Total expenses were $65.6 million in the third quarter of fiscal
2021 compared to $108.0 million in the third quarter of fiscal
2020, representing a decrease of $42.4 million, or 39%. This
decrease is primarily the result of a $24.5 million decrease in
operating expenses, a $5.9 million decrease in facility lease
expenses, a $6.0 million decrease in depreciation expense, $3.2
million decrease in non-cash impairment charges, $1.6 million
decrease in community reimbursement expense and a $1.2 million
decrease in general and administrative expenses.
The quarter-over-quarter decrease in consolidated operating
expenses of $24.5 million is primarily due to a $16.7 million
decrease in labor and employee-related expenses, a $1.9 million
decrease in food expense, a $1.9 million decrease in utilities, and
a $4.0 million decrease in all other operating expenses, all of
which were primarily due to the disposition of communities since
the third quarter of 2020. For the 60 continuing communities,
operating expenses increased $3.0 million quarter-over-quarter,
which were driven primarily by the labor shortages and other
challenges to hire and retain talent in the senior living industry
and resulted in higher costs for contract labor.
The decrease in general and administrative expenses of $1.2
million is primarily due to a $0.8 million reduction in transaction
costs related to lease amendments and terminations in the third
quarter of the prior year, a decrease of $0.7 million in employee
benefits and health insurance claims, $0.4 million in placement and
separation expenses, $0.3 million in fees, and $0.3 million in
contract labor and consulting expenses, which was partially offset
by an increase of approximately $0.7 million labor related expenses
and $0.6 million in insurance and other expenses.
The $5.9 million decrease in facility lease expense is
attributable to the termination of all of the Company's master
lease agreements during fiscal 2020.
The $6.0 million decrease in depreciation and amortization
expense primarily results from a decrease in depreciable assets at
the Company’s communities resulting from the disposition of
communities since the third quarter of 2020.
During the third quarter of 2020, the Company recorded $3.2
million of non-cash impairment charges with no comparable charges
in third quarter of 2021.
The $1.6 million decrease in community reimbursement expense
includes reimbursements due from the owners of the communities for
which the Company began providing management services on March 1,
2020 for six communities and on August 1, 2020 for 18 communities,
compared to providing management services to 15 communities during
the third quarter of 2021.
Interest expense decreased in the third quarter of fiscal 2021
when compared to the third quarter of fiscal 2020 primarily due to
the (i) early repayment of mortgage debt associated with the sale
of one community in the fourth quarter of 2020 and (ii) completion
of the transition of the ownership of thirteen communities to
Fannie Mae in the nine months ended September 30, 2021.
The gain on extinguishment of debt of $54.1 million relates to
the de-recognition of notes payable and liabilities as a result of
the completion of the transition of the legal ownership of four of
the Company's communities back to Fannie Mae, the holder of the
non-recourse debt related to such properties, during the three
months ended September 30, 2021.
Continuing Community Net Operating Income for the third quarter
of 2021 was $10.3 million compared to $12.3 million in the third
quarter of fiscal 2020 as the revenue increase of $0.9 million for
the continuing community portfolio was offset by increased
operating expense of $3.0 million.
The Company reported net income and comprehensive income of
$36.5 million for the third quarter of 2021, compared to net loss
and comprehensive loss of $215.0 million for the third quarter of
2020.
For the third quarter 2021, Adjusted EBITDAR and Adjusted
EBITDAR excluding COVID-19 impact was $3.2 million and $3.6
million, respectively. Adjusted CFFO was $(6.3) million and
Adjusted CFFO excluding COVID-19 relief and expenses was $(5.9)
million for the third quarter of 2021. (See “Reconciliations of
Non-GAAP Financial Measures” below).
Third Quarter 2021 Results Compared to
Second Quarter 2021
Resident revenue for the third quarter of fiscal 2021 increased
$2.3 million from the second quarter of fiscal 2021 as a result of
an increase in consolidated average occupancy from 78.1% in the
second quarter to consolidated occupancy of 81.0% in the third
quarter, an increase of 290 basis points coupled with an increase
in average monthly rent from $3,518 in the second quarter of 2021
to $3,578 for the third quarter of 2021. Management fee revenue
increased $0.3 million in the third quarter of fiscal 2021 compared
with the second quarter of 2021.
Operating expenses increased $3.1 million or 8.3% in the third
quarter of 2021 compared to the second quarter of 2021 due to a
$1.1 million increase in labor and employee-related expenses due to
a competitive labor market, a $0.8 million increase in food and
utilities expense, and a $1.2 million increase in all other
operating expenses.
The decrease in general and administrative expenses of $2.0
million is primarily due to a $2.4 million decrease in employee
benefits and health insurance claims expenses, $0.3 million lower
transaction and conversion expenses, $0.5 million lower contract
labor and consulting expenses, partially offset by increases of
approximately $1.2 million in labor related expenses.
The gain on extinguishment of debt in the third quarter of 2021
was lower than the second quarter of 2021 by $13.1 million, which
was driven by four community transitions in the third quarter of
2021 compared to six community transitions in the previous
sequential quarter. The gain in both periods relates to the
de-recognition of notes payable and liabilities as a result of the
completion of the transition of the legal ownership of the
Company's communities back to Fannie Mae.
Strategic Investment by Conversant
Capital and Rights Offering Successfully Raise $154.8
Million
On November 3, 2021, the Company received gross proceeds of
$154.8 million through the combination of (a) $82.5 million private
placement to with Conversant Dallas Parkway (A) LP and Conversant
Dallas Parkway (B) LP, affiliates of Conversant Capital LLC
(together, the “Investors”), consisting of $41.25 million of common
stock at $25 per share and $41.25 million of newly designated
Series A Convertible Preferred Stock, (b) $34.0 million common
stock rights offering to its existing stockholders, and (c) $38.3
million backstop through the purchase of additional shares by
Conversant Capital and Arbiter Partners. The transaction also
includes (a) warrants to Conversant to purchase approximately one
million shares of common stock at $40 per share with an expiration
date of five years after closing; and (b) an incremental $25.0
million accordion from Conversant for future investment at the
Company’s option, subject to certain conditions.
At the Closing, the Company and the Investors entered into an
Investor Rights Agreement, pursuant to which, among other things,
the Company's Board was reconstituted with six new Directors and
three continuing Directors.
Corporate Name Change
On November 3, 2021, the Company announced its rebranding as
Sonida Senior Living, Inc. The name change will go into effect on
November 15, 2021, at which time the Company’s common stock will
begin to trade on the New York Stock Exchange under the new ticker
symbol “SNDA.”
Extension of Maturing Bridge
Loan
In August 2021, the Company executed a one-year extension of the
Company’s $40.5 million loan agreement with BBVA, which was
previously scheduled to mature in December 2021 and includes the
option to extend an additional six months if certain financial
criteria are met. The loan agreement extension includes a waiver
for non-compliance with certain financial ratios on December 31,
2020, and eliminates the compliance requirements for minimum
financial ratios. The extension requires principal payments
totaling $5.3 million which will be paid in installments over the
term of the extension.
Liquidity
In addition to approximately $10.7 million of unrestricted cash
balances on hand as of September 30, 2021, the Company’s principal
sources of liquidity are expected to be net proceeds of $128.5
million from the Amended Investment Agreement in November 2021,
additional proceeds from debt refinancings, and/or proceeds from
the sale of owned assets. The Company has implemented plans, which
includes raising capital, and other strategic and cash-preservation
initiatives, all of which are designed to provide the Company with
adequate liquidity to meet its obligations for at least the
twelve-month period following the date its financial statements are
issued. The Company, from time to time, considers and evaluates
financial and capital raising transactions related to its
portfolio, including debt refinancings, purchases and sales of
assets, and other transactions. If capital were obtained through
the issuance of Company equity, the issuance of Company securities
would dilute the ownership of our existing stockholders and any
newly issued securities may have rights, preferences, and/or
privileges senior to those of our common stock. There can be no
assurance that the Company will continue to generate cash flows at
or above current levels, or that the Company will be able to obtain
the capital necessary to meet the Company’s short-and long-term
capital requirements.
The Company was not in compliance with a certain financial
covenant under its loan agreement with Fifth Third Bank, covering
two of the Company's properties, as of September 30, 2021, June 30,
2021, March 31, 2021, December 31, 2020 and September 30, 2020, in
which a minimum debt service coverage ratio must be maintained,
which constituted a default. In May 2021, Fifth Third Bank issued a
notice of default. In the event that this loan for $31.5 million is
accelerated, the loan has 25% recourse to Capital Senior Living
Corporation. In November 2021, subsequent to quarter end, the
Company gave Fifth Third bank the Company’s 30 day notice of its
intention to repay the outstanding $31.5 million bridge loan. The
Company included $31.5 million in outstanding debt related to those
properties in current portion of notes payable, net of deferred
loan costs, on the Company’s Consolidated Balance Sheets at
September 30, 2021.
Conference Call
Information
The Company will host a conference call with senior management
to discuss the Company’s third quarter of 2021 financial results on
Thursday, November 11, 2021 at 2:30 p.m. Eastern Time. To
participate, dial 877-407-0989 (no passcode required). A link to
the simultaneous webcast of the teleconference will be available at
https://www.webcast-eqs.com/register/capitalseniorliving_20210812/en.
For the convenience of the Company’s shareholders and the
public, the conference call will be recorded and available for
replay starting November 12, 2021 through November 25, 2021. To
access the conference call replay, call 877-660-6853, passcode
13724306. The webcast replay will be posted in the Investor
Relations section of the Company’s website.
About the Company
Dallas-based Capital Senior Living Corporation is one of the
nation’s leading operators of independent living, assisted living
and memory care communities for senior adults. The Company operates
72 communities that are home to nearly 7,000 residents across 18
states providing compassionate, resident-centric services and care
and engaging programming. The Company offers seniors the freedom
and opportunity to successfully, comfortably and happily age in
place. For more information, visit www.capitalsenior.com or connect
with the Company on Facebook, Twitter or LinkedIn.
Safe Harbor
The forward-looking statements in this release are subject to
certain risks and uncertainties that could cause the Company’s
actual results and financial condition to differ materially,
including, but not limited to, the continued spread of COVID-19 and
highly contagious variants and sub-lineages, including the speed,
depth, geographic reach and duration of such spread, new
information that may emerge concerning the severity of COVID-19,
the actions taken to prevent or contain the spread of COVID-19 or
treat its impact, the legal, regulatory and administrative
developments that occur at the federal, state and local levels in
response to the COVID-19 pandemic, and the frequency and magnitude
of legal actions and liability claims that may arise due to
COVID-19 or the Company’s response efforts; the impact of COVID-19
and the Company’s near-term debt maturities on the Company’s
ability to continue as a going concern, the Company’s ability to
generate sufficient cash flows from operations, additional proceeds
from debt refinancings, and proceeds from the sale of assets to
satisfy its short and long-term debt obligations and to fund the
Company’s capital improvement projects to expand, redevelop, and/or
reposition its senior living communities; the Company’s ability to
obtain additional capital on terms acceptable to it; the Company’s
ability to extend or refinance its existing debt as such debt
matures; the Company’s compliance with its debt agreements,
including certain financial covenants, and the terms and conditions
of its recent forbearance agreements. and the risk of cross-default
in the event such non-compliance occurs; the Company’s ability to
complete acquisitions and dispositions upon favorable terms or at
all including the transfer of certain communities managed by the
Company on behalf of Fannie Mae, Healthpeak, and Welltower; the
Company’s ability to improve and maintain controls over financial
reporting and remediate identified material weakness; the risk of
oversupply and increased competition in the markets which the
Company operates; the risk of increased competition for skilled
workers due to wage pressure and changes in regulatory
requirements; the departure of the Company’s key officers and
personnel; the cost and difficulty of complying with applicable
licensure, legislative oversight, or regulatory changes; the risks
associated with a decline in economic conditions generally; the
adequacy and continued availability of the Company’s insurance
policies and the Company’s ability to recover any losses it
sustains under such policies; changes in accounting principles and
interpretations; and the other risks and factors identified from
time to time in the Company’s reports filed with the Securities and
Exchange Commission.
For information about Capital Senior Living, visit
www.capitalsenior.com.
Capital Senior Living
Corporation
Consolidated Statements of
Operations and Comprehensive Income (Loss)
(in thousands, except per
share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Revenues:
Resident revenue
$
48,968
$
85,894
$
140,819
$
290,952
Management fees
1,029
604
2,978
819
Community reimbursement revenue
7,927
9,555
33,317
11,888
Total revenues
57,924
96,053
177,114
303,659
Expenses:
Operating expenses (exclusive of facility
lease expense and depreciation and amortization expense shown
below)
40,668
65,165
114,994
211,874
General and administrative expenses
6,887
8,128
22,913
21,036
Facility lease expense
—
5,926
—
23,234
Stock-based compensation expense
586
421
1,269
1,494
Depreciation and amortization expense
9,503
15,547
27,811
47,584
Long-lived asset impairment
—
3,240
—
39,194
Community reimbursement expense
7,927
9,555
33,317
11,888
Total expenses
65,571
107,982
200,304
356,304
Other income (expense):
Interest income
—
14
5
83
Interest expense
(9,701
)
(11,141
)
(28,574
)
(34,044
)
Gain on facility lease modification and
termination, net
—
(753
)
—
10,487
Gain on extinguishment of debt
54,080
—
168,292
—
Loss on disposition of assets, net
(15
)
(191,032
)
(436
)
(198,388
)
Other income
—
9
8,703
2
Income (loss) from continuing operations
before provision for income taxes
36,717
(214,832
)
124,800
(274,505
)
Provision for income taxes
(207
)
(132
)
(368
)
(393
)
Net income (loss)
$
36,510
$
(214,964
)
$
124,432
$
(274,898
)
Per share data:
Basic net income (loss) per share (1)
$
17.71
$
(104.91
)
$
60.37
$
(134.82
)
Diluted net income (loss) per share
(1)
$
17.48
$
(104.91
)
$
59.59
$
(134.82
)
Weighted average shares outstanding —
basic (1)
2,062
2,049
2,061
2,039
Weighted average shares outstanding —
diluted (1)
2,089
2,049
2,088
2,039
Comprehensive income (loss)
$
36,510
$
(214,964
)
$
124,432
$
(274,898
)
(1) Prior period results have been
adjusted to reflect the December 2020 fifteen-for-one Reverse Stock
Split.
Capital Senior Living
Corporation
Consolidated Balance
Sheet
(in thousands)
September 30, 2021
December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
10,669
$
17,885
Restricted cash
5,882
4,982
Accounts receivable, net
4,309
5,820
Federal and state income taxes
receivable
—
76
Property tax and insurance deposits
6,276
7,637
Prepaid expenses and other
8,250
7,028
Total current assets
35,386
43,428
Property and equipment, net
635,405
655,731
Operating lease right-of-use assets,
net
156
536
Other assets, net
3,233
3,138
Total assets
$
674,180
$
702,833
LIABILITIES AND SHAREHOLDERS’
DEFICIT
Current liabilities:
Accounts payable
$
13,859
$
14,967
Accrued expenses
43,594
48,515
Current portion of notes payable, net of
deferred loan costs
159,977
304,164
Current portion of deferred income
3,482
3,984
Current portion of lease liabilities
173
421
Federal and state income taxes payable
384
249
Customer deposits
447
822
Total current liabilities
221,916
373,122
Lease liabilities, net of current
portion
297
533
Other long-term liabilities
3,714
3,714
Notes payable, net of deferred loan costs
and current portion
601,817
604,729
Commitments and contingencies
Shareholders’ deficit:
Preferred stock, $0.01 par value:
Authorized shares – 15,000; no shares
issued or outstanding
—
—
Common stock, $0.01 par value:
Authorized shares – 4,333; issued and
outstanding shares – 2,193 and
2,084 in 2021 and 2020, respectively
22
21
Additional paid-in capital
190,246
188,978
Retained deficit
(343,832
)
(468,264
)
Total shareholders’ deficit
(153,564
)
(279,265
)
Total liabilities and shareholders’
deficit
$
674,180
$
702,833
CAPITAL SENIOR LIVING RECONCILIATIONS
OF NON-GAAP FINANCIAL MEASURES
This earnings release contains the financial measures (1)
Consolidated Net Operating Income, (2) Consolidated Net Operating
Income Margin, (3) Continuing Community Net Operating Income, (4)
Continuing Community Net Operating Income Margin, (5) Adjusted
EBITDAR, (6) Adjusted EBITDAR excluding COVID-19 impact, (7)
Adjusted CFFO, and (8) Adjusted CFFO excluding COVID-19 impact, all
of which are not calculated in accordance with U.S. generally
accepted accounting principles ("GAAP"). Presentations of these
non-GAAP financial measures are intended to aid investors in better
understanding the factors and trends affecting the Company’s
performance and liquidity. However, investors should not consider
these non-GAAP financial measures as a substitute for financial
measures determined in accordance with GAAP, including net income
(loss), income (loss) from operations, or net cash provided by
(used in) operating activities. Investors are cautioned that
amounts presented in accordance with the Company’s definitions of
these non-GAAP financial measures may not be comparable to similar
measures disclosed by other companies because not all companies
calculate non-GAAP measures in the same manner. Investors are urged
to review the following reconciliations of these non-GAAP financial
measures from the most comparable financial measures determined in
accordance with GAAP.
CONSOLIDATED NET OPERATING INCOME AND
CONSOLIDATED NET OPERATING INCOME MARGIN (in
thousands)
Consolidated Net Operating Income and Consolidated Net Operating
Income Margin are non-GAAP performance measures that the Company
defines as net income (loss) excluding: general and administrative
expenses, interest income, interest expense, other income/expense,
provision for income taxes, settlement fees and expenses; and
further adjusted to exclude income/expense associated with
non-cash, non-operational, transactional, or organizational
restructuring items that management does not consider as part of
the Company’s underlying core operating performance and that
management believes impact the comparability of performance between
periods. For the periods presented herein, such other items include
facility lease expense, stock-based compensation expense,
depreciation and amortization expense, long-lived asset impairment,
gain/loss on facility lease modification and termination, gain on
extinguishment of debt, loss on disposition of assets.
The Company believes that presentation of Consolidated Net
Operating Income and Consolidated Net Operating Income Margin as
performance measures are useful to investors because (i) they are
one of the metrics used by the Company’s management for budgeting
and other planning purposes, to review the Company’s historic and
prospective core operating performance, and to make day-to-day
operating decisions; (ii) they provide an assessment of operational
factors that management can impact in the short-term, namely
revenues and the controllable cost structure of the organization,
by eliminating items related to the Company’s financing and capital
structure and other items that management does not consider as part
of the Company’s underlying core operating performance and that
management believes impact the comparability of performance between
periods.
Consolidated Net Operating Income and Consolidated Net Operating
Income Margin have material limitations as performance measures,
including: (i) excluded interest is necessary to operate the
Company’s business under its current financing and capital
structure; (ii) excluded depreciation, amortization and impairment
charges may represent the wear and tear and/or reduction in value
of the Company’s communities and other assets and may be indicative
of future needs for capital expenditures; and (iii) the Company may
incur income/expense similar to those for which adjustments are
made, such as gain/loss on sale of assets, facility lease
termination, or debt extinguishment, non-cash stock-based
compensation expense, and transaction and other costs, and such
income/expense may significantly affect the Company’s operating
results.
Three months ended
September 30,
Nine months ended
September 30,
Three months ended June
30,
2021
2020
2021
2020
2021
Consolidated net operating
income
Net income (loss)
$
36,510
$
(214,964
)
$
124,432
$
(274,898
)
$
49,078
General and administrative expenses
6,887
8,128
22,913
21,036
8,839
Facility lease expense
—
5,926
—
23,234
—
Stock-based compensation expense
586
421
1,269
1,494
517
Depreciation and amortization expense
9,503
15,547
27,811
47,584
9,025
Long-lived asset impairment
—
3,240
—
39,194
—
Interest income
—
(14
)
(5
)
(83
)
(1
)
Interest expense
9,701
11,141
28,574
34,044
9,499
Gain on facility lease modification and
termination, net
—
753
—
(10,487
)
—
Gain on extinguishment of debt
(54,080
)
—
(168,292
)
—
(67,213
)
Loss on disposition of assets, net
15
191,032
436
198,388
—
Other income (expense)
—
(9
)
(8,703
)
(2
)
2
Provision for income taxes
207
132
368
393
98
Settlement fees and expenses (1)
994
535
1,393
562
164
Consolidated net operating
income
$
10,323
$
21,868
$
30,196
$
80,459
$
10,008
Resident revenue
$
48,968
$
85,894
$
140,819
$
290,952
$
46,649
Consolidated net operating income
margin
21.1
%
25.5
%
21.4
%
27.7
%
21.5
%
(1) Settlement fees and expenses relate to
non-recurring settlements with third parties for contract
terminations, insurance claims and related fees.
CONTINUING COMMUNITY NET OPERATING INCOME
AND CONTINUING COMMUNITY NET OPERATING INCOME MARGIN
(in thousands)
Continuing Community Net Operating Income and Continuing
Community Net Operating Income Margin are non-GAAP performance
measures for the Company’s portfolio of 60 continuing communities
that the Company defines as net income (loss) excluding: general
and administrative expenses, interest income, interest expense,
other income/expense, provision for income taxes, settlement fees
and expenses, revenue and operating expenses from the Company’s
disposed properties; and further adjusted to exclude income/expense
associated with non-cash, non-operational, transactional, or
organizational restructuring items that management does not
consider as part of the Company’s underlying core operating
performance and that management believes impact the comparability
of performance between periods. For the periods presented herein,
such other items include facility lease expense, stock-based
compensation expense, depreciation and amortization expense,
long-lived asset impairment, gain/loss on facility lease
modification and termination, gain on extinguishment of debt and
loss on disposition of assets.
The Company believes that presentation of Continuing Community
Net Operating Income and Continuing Community Net Operating Income
Margin as performance measures are useful to investors because (i)
they are one of the metrics used by the Company’s management to
evaluate the performance of our core portfolio of 60 continuing
communities, to review the Company’s comparable historic and
prospective core operating performance of the 60 continuing
communities, and to make day-to-day operating decisions; (ii) they
provides an assessment of operational factors that management can
impact in the short-term, namely revenues and the controllable cost
structure of the organization, by eliminating items related to the
Company’s financing and capital structure and other items that
management does not consider as part of the Company’s underlying
core operating performance and that management believes impact the
comparability of performance between periods.
Continuing Community Net Operating Income and Continuing
Community Net Operating Income Margin have material limitations as
a performance measure, including: (i) excluded interest is
necessary to operate the Company’s business under its current
financing and capital structure; (ii) excluded depreciation,
amortization and impairment charges may represent the wear and tear
and/or reduction in value of the Company’s communities, and other
assets and may be indicative of future needs for capital
expenditures; and (iii) the Company may incur income/expense
similar to those for which adjustments are made, such as gain/loss
on sale of assets, facility lease termination, or debt
extinguishment, non-cash stock-based compensation expense, and
transaction and other costs, and such income/expense may
significantly affect the Company’s operating results.
Three months ended
September 30,
Nine months ended
September 30,
Three months ended June
30,
2021
2020
2021
2020
2021
Continuing community net operating
income
Net income (loss)
$
36,510
$
(214,964
)
$
124,432
$
(274,898
)
$
49,078
General and administrative expenses
6,887
8,128
22,913
21,036
8,839
Facility lease expense
—
5,926
—
23,234
—
Stock-based compensation expense
586
421
1,269
1,494
517
Depreciation and amortization expense
9,503
15,547
27,811
47,584
9,025
Long-lived asset impairment
—
3,240
—
39,194
—
Interest income
—
(14
)
(5
)
(83
)
(1
)
Interest expense
9,701
11,141
28,574
34,044
9,499
Gain on facility lease modification and
termination, net
—
753
—
(10,487
)
—
Gain on extinguishment of debt
(54,080
)
—
(168,292
)
—
(67,213
)
Loss on disposition of assets, net
15
191,032
436
198,388
—
Other income (expense)
—
(9
)
(8,703
)
(2
)
2
Provision for income taxes
207
132
368
393
98
Settlement fees and expenses (1)
994
535
1,393
562
164
Operating expenses for non-continuing
communities (2)
(36
)
(9,558
)
(937
)
(37,605
)
(52
)
Continuing community net operating
income
$
10,287
$
12,310
$
29,259
$
42,854
$
9,956
Resident revenue
$
48,968
$
85,894
$
140,819
$
290,952
$
46,649
Resident revenue for non-continuing
communities (3)
—
(37,868
)
(373
)
(142,733
)
(276
)
Continuing community resident revenue
$
48,968
$
48,026
$
140,446
$
148,219
$
46,373
Continuing community net operating
income margin
21.0
%
25.6
%
20.8
%
28.9
%
21.5
%
(1)
Settlement fees and expenses relate to
non-recurring settlements with third parties for contract
terminations, insurance claims and related fees.
(2)
Operating expenses for non-continuing
communities relate to operating expenses incurred in the operations
of the 18 Fannie Mae communities that are in the process of
transitioning legal ownership, leased communities whose master
lease agreements or excess cash flow leases were terminated on or
before December 31, 2020 and two owned communities sold to third
parties in the first and fourth quarters of fiscal 2020.
(3)
Resident revenue for non-continuing
communities relates to revenues earned in the operations of the 18
Fannie Mae communities that are in the process of transitioning
legal ownership, leased communities whose master lease agreements
or excess cash flow leases were terminated on or before December
31, 2020 and two owned communities sold to third parties in the
first and fourth quarters of fiscal 2020.
ADJUSTED EBITDAR, and ADJUSTED EBITDAR
EXCLUDING COVID-19 IMPACT
Adjusted EBITDAR and Adjusted EBITDAR excluding COVID-19 impact
are non-GAAP performance measures that the Company defines as net
income (loss) excluding: interest income, interest expense, other
expense/income, provision for income taxes; and further adjusted to
exclude income/expense associated with non-cash, non-operational,
transactional, or organizational restructuring items that
management does not consider as part of the Company’s underlying
core operating performance and that management believes impact the
comparability of performance between periods. For the periods
presented herein, such other items include depreciation and
amortization expense, stock-based compensation expense, facility
lease expense, provision for bad debts, long-lived asset
impairment, loss/gain on lease related transactions, gain on
extinguishment of debt, loss on disposition of assets, casualty
losses, transaction and conversion costs and employee placement and
separation costs.
The Company believes that presentation of Adjusted EBITDA and
Adjusted EBITDA excluding COVID-19 impact as performance measures
are useful to investors because they are one of the metrics because
it provides an assessment of operational factors that management
can impact in the short-term, namely revenues and the controllable
cost structure of the organization, by eliminating items related to
the Company’s financing and capital structure and other items that
management does not consider as part of the Company’s underlying
core operating performance and that management believes impact the
comparability of performance between periods.
Adjusted EBITDA and Adjusted EBITDA excluding COVID-19 impact
have material limitations as a performance measure, including: (i)
excluded interest is necessary to operate the Company’s business
under its current financing and capital structure; (ii) excluded
depreciation, amortization and impairment charges may represent the
wear and tear and/or reduction in value of the Company’s
communities, and other assets and may be indicative of future needs
for capital expenditures; and (iii) the Company may incur
income/expense similar to those for which adjustments are made,
such as bad debt, gain/loss on sale of assets, facility lease
termination, or debt extinguishment, non-cash stock-based
compensation expense, and transaction and other costs, and such
income/expense may significantly affect the Company’s operating
results.
Three months ended
September 30,
Nine months ended
September 30,
Three months ended June
30,
2021
2020
2021
2020
2021
Adjusted EBITDAR
Net income (loss)
$
36,510
$
(214,964
)
$
124,432
$
(274,898
)
$
49,078
Depreciation and amortization expense
9,503
15,547
27,811
47,584
9,025
Stock-based compensation expense
586
421
1,269
1,494
517
Facility lease expense
—
5,926
—
23,234
—
Provision for bad debts
222
781
747
2,190
159
Interest income
—
(14
)
(5
)
(83
)
(1
)
Interest expense
9,701
11,141
28,574
34,044
9,499
Long-lived asset impairment
—
3,240
—
39,194
—
Loss (gain) on lease related transactions,
net
—
746
—
(10,487
)
—
Gain on extinguishment of debt, net
(54,080
)
—
(168,292
)
—
(67,213
)
Loss on disposition of assets, net
15
191,032
436
198,388
—
Other expense (income)
—
(9
)
(8,703
)
(2
)
2
Provision for income taxes
207
132
368
393
98
Casualty losses (1)
509
294
1,568
958
679
Transaction and conversion costs (2)
(20
)
866
126
3,082
238
Employee placement and separation costs
(3)
—
401
—
603
(41
)
Adjusted EBITDAR
$
3,153
$
15,540
$
8,331
$
65,694
$
2,040
COVID-19 relief revenue (4)
—
—
—
(502
)
—
COVID-19 expenses (5)
410
1,433
1,736
4,626
220
Adjusted EBITDAR excluding COVID-19
impact
$
3,563
$
16,973
$
10,067
$
69,818
$
2,260
(1)
Casualty losses relate to non-recurring
losses for insured claims and losses related to unexpected
events.
(2)
Transaction and conversion costs relate to
legal and professional fees incurred for lease termination
transactions, restructure projects or related projects.
(3)
Employee placement and separation costs
include severance and other employment costs of organizational
changes.
(4)
COVID-19 relief revenue are grants and
other funding received from third parties in aid to the COVID-19
response and includes federal and state relief funds received.
(5)
COVID-19 expenses are expenses for
supplies and personal protective equipment, testing of the
Company’s residents and employees, labor and specialized
disinfecting and cleaning services.
ADJUSTED CFFO and ADJUSTED CFFO EXCLUDING
COVID-19 IMPACT
Adjusted CFFO and Adjusted CFFO excluding COVID-19 impact is a
non-GAAP liquidity measure that the Company defines as net income
(loss) excluding depreciation and amortization expense, stock-based
compensation expense, loss on disposition of assets, provision for
bad debts, gain on extinguishment of debt, other non-cash charges,
recurring capital expenditures, casualty losses, transaction and
conversion costs, and employee placement and separation costs.
The Company believes that presentation of Adjusted CFFO and
Adjusted CFFO excluding COVID-19 impact as liquidity measures is
useful to investors because they are one of the metrics used by the
Company’s management for budgeting and other planning purposes, to
review the Company’s historic and prospective sources of operating
liquidity, and to review the Company’s ability to service its
outstanding indebtedness, and make capital expenditures.
Adjusted CFFO and Adjusted CFFO excluding COVID-19 impact have
material limitations as a liquidity measure, including: (i) they do
not represent cash available for discretionary expenditures since
certain non-discretionary expenditures, including mandatory debt
principal payments, are not reflected in this measure; and (ii) the
cash portion of non-recurring charges related to gain/loss on
facility lease termination generally represent charges/gains that
may significantly affect the Company’s liquidity limits the
usefulness of the measure for short-term comparisons.
Three months ended
September 30,
Nine months ended
September 30,
Three months ended June
30,
2021
2020
2021
2020
2021
Adjusted CFFO
Net income (loss)
$
36,510
$
(214,964
)
$
124,432
$
(274,898
)
$
49,078
Depreciation and amortization expense
9,503
15,547
27,811
47,584
9,025
Stock-based compensation expense
586
421
1,269
1,494
517
Loss on disposition of assets, net
15
191,032
436
198,388
—
Provision for bad debts
222
781
747
2,190
159
Gain on extinguishment of debt, net
(54,080
)
—
(168,292
)
—
(67,213
)
Other non-cash charges, net (1)
427
1,537
1,007
19,820
217
Recurring capital expenditures
—
(1,136
)
—
(3,407
)
—
Casualty losses (2)
509
294
1,568
958
679
Transaction and conversion costs (3)
(20
)
866
126
3,082
238
Employee placement and separation costs
(4)
—
401
—
603
(41
)
Adjusted CFFO
$
(6,328
)
$
(5,221
)
$
(10,896
)
$
(4,186
)
$
(7,341
)
COVID-19 relief funds (5)
—
—
(8,706
)
(502
)
—
COVID-19 expenses (6)
410
1,433
1,736
4,626
220
Adjusted CFFO excluding COVID-19
impact
$
(5,918
)
$
(3,788
)
$
(17,866
)
$
(62
)
$
(7,121
)
(1)
Other non-cash charges, net include
amortization of deferred financing charges which are included in
interest expense on the Consolidated Statement of Operations and
Comprehensive Income (Loss) and the change in deferred revenue.(1)
Casualty losses relate to non recurring losses for insured claims
and losses related to unexpected events.
(2)
Casualty losses relate to non-recurring
losses for insured claims and losses related to unexpected
events.
(3)
Transaction and conversion costs relate to
legal and professional fees incurred for lease termination
transactions, restructure projects or related projects.
(4)
Employee placement and separation costs
are severance and other employment costs of organizational
changes.
(5)
COVID-19 relief revenue are grants and
other funding received from third parties to aid in the COVID-19
response and includes federal and state relief funds received.
(6)
COVID-19 expenses are expenses for
supplies and personal protective equipment, testing of the
Company’s residents and employees, labor and specialized
disinfecting and cleaning services.
Capital Senior Living
Corporation
Supplemental
Information
Third Quarter
Second Quarter 2021
Sequential increase
(decrease)
2021
2020
Increase (decrease)
Selected Operating Results
I. Continuing community portfolio
(1)
Number of communities
60
60
—
60
—
Unit capacity
5,631
5,634
(3
)
5,629
2
Financial occupancy (2)
81.0
%
79.3
%
1.7
%
78.1
%
2.9
%
Average monthly rent
$
3,578
$
3,582
$
(4
)
$
3,518
$
60.0
II. Managed communities
Number of communities
15
24
(9
)
15
—
Management fee revenue (in thousands)
$
1,029
$
604
$
425
$
763
$
266
III. Consolidated Debt Information (in
thousands, except for interest rates)
(Excludes insurance premium
financing)
Total variable rate mortgage debt
121,660
$
131,806
$
122,261
Total fixed rate debt
$
625,545
$
787,921
$
677,860
Weighted average interest rate
4.6
%
4.5
%
4.6
%
(1)
Excludes 5, 18 and 9 properties in the
process of transitioning ownership back to Fannie Mae at September
30, 2021, September 30, 2020 and June 30, 2021, respectively.
(2)
Financial occupancy represents actual days
occupied divided by total number of available days during the
quarter.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211110006495/en/
Investor Contact: Kimberly Lody, Chief Executive Officer, at
972-308-8323 Press Contact: media@capitalsenior.com
Capital Senior Living (NYSE:CSU)
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