Amica Mature Lifestyles Inc.
TSX : ACC

Amica Mature Lifestyles Inc.

April 12, 2012 08:00 ET

Amica Mature Lifestyles Announces Third Quarter Results for Fiscal 2012

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 12, 2012) - Amica Mature Lifestyles Inc. (TSX:ACC) ("Amica" or the "Company"), a leader in the management, marketing, design, development and ownership of luxury housing and services for mature lifestyles, is pleased to announce the Company's operating and financial results for the three and nine months ended February 29, 2012.

THIRD QUARTER HIGHLIGHTS

  • Consolidated revenues increased 27% to $19.69 million compared to Q3/11;
  • Diluted AFFO per share increased 12% to $0.09 per share compared to Q3/11;
  • Diluted AFFO Adjusted per share after adjusting for lease-up losses, stock-based compensation and the income support fund increased 10% to $0.14 compared to Q3/11;
  • Board approved fourth quarter dividend of $0.105 per common share;
  • Overall occupancy in mature same communities increased to 93.3% at February 29, 2012 from 92.1% at May 31, 2011 and 91.9% at February 28, 2011;
  • Mature same communities MARPAS(1) increased 3.0% compared to Q3/11;
  • Completed acquisition of the Quinte Gardens retirement residence in Belleville, Ontario for $70.5 million; and
  • Issued 4.6 million common shares pursuant to $34.3 million bought deal equity financing.

Colin Halliwell, Amica's Chief Operating Officer, commented, "We are pleased with the overall occupancy in our mature communities of 93.3% at the end of the third quarter, despite the challenges of the winter months with higher turnover and slower traffic. Ontario mature communities ended the third quarter at 91%, up from 90.2% at end of the second quarter. Entering the busy spring leasing season, combined with the progress we are seeing with the occupancy challenged communities and the ongoing success of the VITALIS™ reNEW program, we expect to see the Ontario market continue to improve in the coming months."

"We are very pleased to deliver another quarter of strong operational and financial results," said Samir Manji, Chairman, President & CEO. "The third quarter reflects a $1.5 million increase in consolidated communities margin and for year-to-date Fiscal 2012 the increase is $5.7 million. These results reflect the acquisition of increased ownership interests in existing Amica communities in Fiscal 2011, continued strength in our overall occupancy results in our mature consolidated communities and the Quinte Gardens acquisition completed in January 2012. Our communities in lease-up, including Quinte Gardens, ended the quarter with overall occupancy of 62.9%. Our fourth quarter will represent the first full quarter with consolidated operating results of Quinte Gardens and proportionately consolidated operating results of Amica at Dundas. We continue to focus on identifying additional opportunities for internal consolidations, third party acquisitions and new development opportunities that will be accretive to our overall results."

FINANCIAL HIGHLIGHTS

The following table provides a summary of the financial results for the three month period ended February 29, 2012 ("Q3/12") compared to the three month period ended February 28, 2011 ("Q3/11") and the nine month period ended February 29, 2012 ("YTD Fiscal 2012") compared to the nine month period ended February 28, 2011 ("YTD Fiscal 2011"):

Q3/12 Q3/11 Change YTD Fiscal
2012
YTD Fiscal
2011
Change
(Expressed in thousands of Canadian dollars, except per share amounts) $ $ $ $
Consolidated revenues 19,688 15,556 4,132 56,101 41,953 14,148
Net loss and comprehensive loss attributable to:
Amica shareholders (2,499 ) (1,626 ) (873 ) (5,689 ) (6,251 ) 562
Non-controlling interests (269 ) (327 ) 58 (939 ) (777 ) (162 )
(2,768 ) (1,953 ) (815 ) (6,628 ) (7,028 ) 400
Basic and diluted loss per share attributable to
Amica shareholders(1): (0.10 ) (0.08 ) (0.02 ) (0.24 ) (0.33 ) 0.09
EBITDA(2)(3): 5,440 5,504 (64 ) 16,171 13,545 2,626
EBITDA Adjusted(2)(5): 6,418 4,388 2,030 17,710 11,525 6,185
CFFO(2):
CFFO 2,617 2,480 137 9,286 6,891 2,395
Basic per share 0.11 0.13 (0.02 ) 0.40 0.36 0.04
Diluted per share 0.10 0.13 (0.03 ) 0.39 0.35 0.04
FFO(2)(4):
FFO 2,604 1,837 767 6,229 3,722 2,507
Basic per share 0.11 0.10 0.01 0.27 0.19 0.08
Diluted per share 0.10 0.09 0.01 0.26 0.19 0.07
AFFO(2)(4):
AFFO 2,344 1,633 711 5,449 3,272 2,177
Basic per share 0.10 0.08 0.02 0.23 0.17 0.06
Diluted per share 0.09 0.08 0.01 0.23 0.17 0.06
FFO Adjusted(2)(5):
FFO Adjusted 3,857 2,758 1,099 9,978 6,612 3,366
Basic per share 0.16 0.14 0.02 0.43 0.34 0.09
Diluted per share 0.15 0.14 0.01 0.42 0.34 0.08
AFFO Adjusted(2)(5):
AFFO Adjusted 3,597 2,554 1,043 9,198 6,162 3,036
Basic per share 0.15 0.13 0.02 0.40 0.32 0.08
Diluted per share 0.14 0.13 0.01 0.39 0.32 0.07
Weighted average number of shares:
Basic 24,677 19,263 23,269 19,230
Diluted 24,996 19,542 23,522 19,412
(1) Basic and diluted loss per share are both based on the weighted average basic number of shares outstanding as using the weighted average diluted number of shares outstanding would not be dilutive to the loss per share.
(2) This is a Non-IFRS Financial Measures used by the Company in evaluating its operating and financial performance. Please refer to the cautionary statements under the heading "NON-IFRS FINANCIAL MEASURES" in this news release.
(3) The definition of EBITDA was modified in Q3/12 to purely adjust for interest expense, taxes, depreciation and amortization. As a result, the Company has eliminated deduction of various gains in calculating EBITDA. Comparative periods have been revised to reflect this new definition. See "DEFINITION AND RECONCILIATION OF NON-IFRS FINANCIAL MEASURES - Earnings before interest, taxes, depreciation and amortization ("EBITDA)" in the Company's Management's Discussion and Analysis for the three and nine months ended February 29, 2012 (the "MD&A").
(4) The definition of FFO was updated in Q3/12 to reflect the treatment of the gain on the sale of Richmond Hill land (excluded from FFO). See "DEFINITION AND RECONCILIATION OF NON-IFRS FINANCIAL MEASURES - Funds From Operations ("FFO")" in the Company's MD&A.
(5) The definitions of EBITDA Adjusted, FFO Adjusted and AFFO Adjusted were added to the Company's Non-IFRS Financial Measures in Q3/12. See "DEFINITION AND RECONCILIATION OF NON-IFRS FINANCIAL MEASURES" in the Company's MD&A.

Consolidated revenues

Q3/12 consolidated revenues increased by 27% to $19.69 million and YTD Fiscal 2012 consolidated revenues increased by 34% to $56.10 million. The increase in consolidated revenues is principally attributable to the acquisitions completed in the second half of Fiscal 2011 and the acquisition of Quinte Gardens in Q3/12.

EBITDA

For Q3/12, EBITDA decreased by $0.06 million to $5.44 million. The Q3/12 decrease is primarily related to:

  • $1.17 million decrease due to Quinte Gardens transaction costs expensed;
  • $0.90 million decrease due to $1.27 million in Q3/11 related to gains on business combination and repayment of a mortgage, partially offset by $0.37 gain on sale of a development property in Q3/12;
  • $1.51 million increase from retirement communities margin (after elimination of management fees to Management Operations); and
  • $0.50 million increase due to other factors.

For YTD Fiscal 2012, EBITDA increased by 19% to $16.17 million. This increase is primarily attributable to:

  • $5.67 million increase from retirement communities margin (after elimination of management fees to Management Operations);
  • $2.47 million decrease due to $2.84 million in YTD Fiscal 2011 related to gains on business combinations and repayment of a mortgage, partially offset by $0.37 gain on sale of a development property in Q3/12;
  • $1.17 million decrease due to Quinte Gardens transaction costs expensed in Q3/12; and
  • $0.59 million increase due to other factors.

EBITDA Adjusted

The Company, in assessing its results, adjusts EBITDA for: the remaining portion of the share of lease-up losses from associates, business combination transaction costs expensed, various gains/losses not considered part of normal operations, fees and other income credited to investments in associates. The following table summarizes the impact of these adjustments to EBITDA:

Q3/12 Q3/11 Change YTD Fiscal
2012
YTD Fiscal
2011
Change
(Expressed in thousands of Canadian dollars) $ $ $ $ $ $
EBITDA as reported 5,440 5,504 (64 ) 16,171 13,545 2,626
Add:
Lease-up losses in EBITDA 27 152 (125 ) 364 823 (459 )
Fees and other income credited to investments 149 - 149 373 - 373
Transaction costs, business combinations 1,168 - 1,168 1,168 - 1,168
Deduct:
Gain on business combinations - (598 ) 598 - (2,173 ) 2,173
Gain on repurchase of mortgage - (670 ) 670 - (670 ) 670
Gain on disposal of development property (366 ) - (366 ) (366 ) - (366 )
EBITDA Adjusted 6,418 4,388 2,030 17,710 11,525 6,185

Net loss attributable to Amica shareholders

For Q3/12 the net loss increased by $0.82 million, or 42%, to $2.77 and is principally attributable to: a $0.06 million decrease in EBITDA as described above, a $0.32 million increase in finance costs, a $0.03 million increase in the losses from associates attributable to interest and depreciation, and a $1.21 million decrease in tax recoveries. These increases to the net loss were partially offset by a $0.81 million decrease in depreciation expense.

The Q3/12 net loss attributable to Amica shareholders increased $0.87 million to $2.50 million principally as a result of the above items.

For YTD Fiscal 2012 the net loss decreased by $0.40 million, or 6%, to $6.63 million and is principally attributable to: a $2.63 million increase in EBITDA as described above, $1.79 million lower depreciation expense, offset by a $2.38 million decrease in tax recoveries, a $1.30 million increase in finance costs, and a $0.33 million increase in losses from associates attributable to interest and depreciation.

The YTD Fiscal 2012 net loss attributable to Amica shareholders decreased $0.56 million to $5.69 million principally as a result of the above items.

FFO

Q3/12 FFO increased by 42% to $2.60 million ($0.11 per share basic and $0.10 per share diluted) and YTD Fiscal 2012 FFO increased by 67% to $6.23 million ($0.27 per share basic and $0.26 per share diluted).

FFO Adjusted

The Company, in assessing its results, adjusts FFO to exclude: losses from properties in lease-up as these losses are considered part of the development costs of the properties; stock-based compensation as it is a non-cash expense; and utilization of the income support fund. The following table summarizes the impact of these adjustments to FFO:

Q3/12 Q3/11 Change YTD Fiscal
2012
YTD Fiscal
2011
Change
(Expressed in thousands of Canadian dollars, except per share amounts) $ $ $ $
FFO as reported 2,604 1,837 767 6,229 3,722 2,507
Add back: lease-up losses in FFO 892 862 30 3,022 2,483 539
Add back: stock-based compensation 66 59 7 432 407 25
Add: income support fund 295 - 295 295 - 295
FFO Adjusted 3,857 2,758 1,099 9,978 6,612 3,366
Basic per share amount 0.16 0.14 0.02 0.43 0.34 0.09
Diluted per share amount 0.15 0.14 0.01 0.42 0.34 0.08

AFFO

Q3/12 AFFO increased by 44% to $2.34 million ($0.10 per share basic and $0.09 per share diluted) and YTD Fiscal 2012 AFFO increased by 67% to $5.45 million ($0.23 per share basic and diluted). Q3/12 maintenance capital expenditures were $0.26 million (Q3/11 - $0.20 million).

AFFO Adjusted

The following table summarizes the impact on AFFO of the adjustments to FFO discussed above:

Q3/12 Q3/11 Change YTD Fiscal
2012
YTD Fiscal
2011
Change
(Expressed in thousands of Canadian dollars, except per share amounts) $ $ $ $
AFFO as reported 2,344 1,633 711 5,449 3,272 2,177
Add back: lease-up losses in FFO 892 862 30 3,022 2,483 539
Add back: stock-based compensation 66 59 7 432 407 25
Add: income support fund 295 - 295 295 - 295
AFFO Adjusted 3,597 2,554 1,043 9,198 6,162 3,036
Basic per share amount 0.15 0.13 0.02 0.40 0.32 0.08
Diluted per share amount 0.14 0.13 0.01 0.39 0.32 0.07

COMMUNITY UPDATE

Amica's seven communities in lease-up (Amica at Westboro Park, Amica at Thornhill, Amica at London, Amica at Whitby, Amica at Bayview Gardens - Rentals, Amica at Windsor and Quinte Gardens) continued to make steady progress in the third quarter. At April 9, 2012, overall occupancy in these communities was 62.4% (60.3% excluding Quinte Gardens) (February 29, 2012 - 62.9% (60.8% excluding Quinte Gardens), November 30, 2011 - 58.8%; August 31, 2011 - 52.1%; May 31, 2011 - 46.2%), which is anticipated to increase to 65.7% (64.2% excluding Quinte Gardens) following an additional 37 (35 excluding Quinte Gardens) net pending move-ins. Net pending move-ins reflects suites that have been reserved with a deposit made for the reservation, less suites for which notice of termination has been received. The Company expects to continue to achieve further quarter over quarter growth in overall occupancy in its communities in lease-up. This is the product of the effective execution of the Company's business plan combined with the strength of the Amica brand in key markets Amica operates in.

On January 19, 2012, the Company completed the acquisition of Quinte Gardens, a luxury retirement residence located in Belleville, Ontario, which has a total of 238 rental units. The primary reason for the acquisition was pursuant to the external acquisition component of the Company's growth strategy to enhance financial performance and create shareholder value.

The sale of the Richmond Hill property was completed in January 2012 and the Company recorded a $0.37 million gain on this sale.

On March 1, 2012, the Company acquired an additional 33% ownership interest in Amica at Dundas, bringing the Company's ownership position to 50%. As a result of the Company's ownership interest in Amica at Dundas increasing to 50%, the Company will proportionately consolidate the assets, liabilities, operating results and cash flows of this community in its financial statements commencing March 1, 2012. The Company's investment in this community was previously reported using the cost basis of accounting.

The Company is evaluating the opportunity to commence construction in calendar 2012 for one or more of the developments currently in pre-development.

FINANCIAL POSITION

The Company's consolidated cash and cash equivalents balance as at February 29, 2012 was $11.1 million compared to $10.2 million at May 31, 2011.

As at February 29, 2012, the balance drawn on the Company's demand operating loan is $nil.

During Q3/12, the Company sold 4,600,000 subscription receipts on a bought deal basis for gross proceeds of $34.3 million. The gross proceeds less an amount equal to 50% of the cash commission payable to the underwriters and was held in escrow until January 19, 2012 when the proceeds were released to the Company to complete the Quinte Gardens acquisition. Concurrently with the release of the funds from escrow the Company issued 4,600,000 common shares in exchange for the 4,600,000 subscription receipts.

FOURTH QUARTER DIVIDEND

The Company's Board of Directors has approved a quarterly dividend of $0.105 per common share on all issued and outstanding common shares which will be payable on June 15, 2012, to shareholders of record on May 31, 2012.

RESULTS CONFERENCE CALL

Amica has scheduled a conference call to discuss the results on Thursday, April 12, 2012 at 10:00 am Pacific Time (1:00 pm Eastern Time). To access the call, dial (647) 438-4398 (Local/International access) or 1-866-971-7629 (North American toll-free access). To access a replay of the call, which will be available until April 15, 2012, dial (416) 915-1035 or toll-free 1-866-245-6755 (Passcode: 990005). A slide presentation to accompany management's comments during the conference call will be available. To view the slides, access Amica's website at www.amica.ca and click on "Investor Relations" - "Webcasts". Please log on at least 15 minutes before the call commences.

The Company's unaudited condensed consolidated interim financial statements for the three and nine months ended February 29, 2012 and the management's discussion and analysis are available on SEDAR at www.sedar.com and available on the Company's website at www.amica.ca.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION HIGHLIGHTS
(Unaudited) February 29, 2012 May 31, 2011
(Expressed in thousands of Canadian dollars) $ $
ASSETS
Current
Cash and cash equivalents 11,069 10,195
Other 7,749 6,252
18,818 16,447
Non-current
Mortgages and loans receivable 31,534 23,071
Investments in co-tenancies 14,198 16,107
Property, plant & equipment 371,838 318,889
Other 1,229 804
418,799 358,871
Total assets 437,617 375,318
LIABILITIES
Current
Mortgages payable 25,302 35,764
Other 9,608 9,154
34,910 44,918
Non-current
Mortgages payable 218,791 165,510
Deferred income taxes 12,972 14,847
Obligation to investments in associates 3,671 2,393
Other 3,417 3,694
238,851 186,444
Total liabilities 273,761 231,362
EQUITY
Equity attributable to owners of the company 152,511 131,407
Non-controlling interests 11,345 12,549
Total equity 163,856 143,956
Total liabilities and equity 437,617 375,318
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) HIGHLIGHTS
(Unaudited) 3 Months Ended 9 Months Ended
February
29, 2012
February
28, 2011
February
29, 2012
February
28, 2011
(Expressed in thousands of Canadian dollars, except per share amounts) $ $ $ $
Revenues:
Retirement communities 17,991 14,117 51,461 37,222
Other 1,697 1,439 4,640 4,731
19,688 15,556 56,101 41,953
Expenses and other items:
Retirement communities (11,533 ) (9,171 ) (33,036 ) (24,468 )
General and administrative (1,886 ) (1,997 ) (5,728 ) (5,960 )
Depreciation (4,341 ) (5,149 ) (12,031 ) (13,824 )
Finance costs (2,615 ) (2,293 ) (7,850 ) (6,546 )
Share of losses from associates (1,467 ) (1,558 ) (4,760 ) (4,884 )
Gain on disposal of development property 366 - 366 -
Gain on repayment of mortgage - 670 - 670
Gains on business combinations - 598 - 2,173
Transaction costs, business combinations (1,168 ) - (1,168 ) -
Loss before income tax (2,956 ) (3,344 ) (8,106 ) (10,886 )
Income tax recovery 188 1,391 1,478 3,858
Net loss and comprehensive loss (2,768 ) (1,953 ) (6,628 ) (7,028 )
Basic and diluted loss per share (0.10 ) (0.08 ) (0.24 ) (0.33 )

ABOUT AMICA MATURE LIFESTYLES INC.

Amica Mature Lifestyles Inc., a Vancouver-based public company, is a leader in the management, marketing, design, development and ownership of luxury housing and services for mature lifestyles. There are 25 Amica Wellness & Vitality™ Residences, including a recent acquisition that the Company is transitioning to rebrand, one under development and one in pre-development. The common shares of Amica are traded on the Toronto Stock Exchange under the symbol "ACC". For more information, visit www.amica.ca.

Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable securities laws ("forward-looking statements").

These forward-looking statements are made as of the date of this news release and the Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as otherwise required by law. Users of forward-looking statements are cautioned that actual results may vary from forward-looking statements contained herein. Forward-looking statements include, but are not limited to, statements regarding the Company's growth prospects; future occupancy rates; the Company's business model and strategy going forward; anticipated future revenues and financial results; MARPAS and operating income; management of cash resources; future growth and value for shareholders; dividends and other similar statements concerning anticipated future events, conditions or results that are not historical facts. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".

While the Company has based these forward-looking statements on its expectations about future events as at the date that such statements were prepared, the statements are not a guarantee of the Company's future performance and are subject to risks, uncertainties, assumptions and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such factors and assumptions include, amongst others, the effects of general economic and market conditions; actions by government authorities, including the granting of zoning and other approvals and permits; uncertainties associated with potential legal proceedings and negotiations, including negotiations with respect to construction financing and debt refinancing; and misjudgements in the course of preparing forward-looking statements.

In addition, there are known and unknown risk factors which could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Known risk factors include, among others, risks related to dependence on the ability of Amica's co-tenancy participants to meet their obligations; interest rate volatility in the marketplace; job actions including strikes and labour stoppages; possible liability under environmental laws and regulations, relating to removal or remediation of hazardous or toxic substances on properties owned or operated by Amica; risks associated with new developments, including cost overruns and start-up losses; the ability of seniors to pay for Amica's services; regulatory changes; risks inherent in the ownership of real property; operational risks inherent in owning and operating residences; the risks associated with global events such as infectious diseases, extreme weather conditions and natural disasters; the availability of capital to finance growth or refinance debt as it comes due; Amica's ability to attract seniors with its services and keep pace with changing consumer preferences, as well as those factors discussed in the "Risks and Uncertainties" section of the Company's Management's Discussion and Analysis for the three and nine months ended February 29, 2012, in the "Risk Factors" section of the Company's Short Form Prospectus dated December 7, 2011 and in the "Risk Factors" section of the Company's Annual Information Form dated August 12, 2011, filed with the Canadian Securities Administrators and available at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements, or the material factors or assumptions used to develop such forward looking statements, will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements.

NON-IFRS FINANCIAL MEASURES

This news release makes reference to the following terms: "Cash Flow From Operations (CFFO)", "EBITDA", "Funds From Operations (FFO)", "Adjusted Funds From Operations (AFFO)", "EBITDA Adjusted", "Funds From Operations Adjusted (FFO Adjusted)", "Adjusted Funds From Operations Adjusted (AFFO Adjusted)" and "MARPAS" (collectively the "Non-IFRS Measures"). These Non-IFRS Measures are not recognized under IFRS and do not have standardized meanings prescribed by IFRS. The Company considers these Non-IFRS Measures relevant in evaluating the operating and financial performance of the Company, along with IFRS measures such as net earnings (loss) and comprehensive income (loss), basic and diluted income (loss) per share and cash provided by (used in) operations. Definitions and detailed descriptions of these terms are contained in Amica's Management Discussion and Analysis for the three and nine months ended February 29, 2012.

(1) Mature Same Communities: Effective June 1, 2011, mature same communities was defined by the Company to be mature communities that are classified as income-producing properties for thirteen months after the earlier of reaching 90% occupancy or 36 months of operation. Prior to June 1, 2011, mature same communities was defined by the Company to be mature communities that are classified as income-producing properties for thirteen months after the earlier of reaching 95% occupancy or 24 months of operation. The Company has changed the definition to reflect the longer lease-up period for new communities that has been experienced with developments completed in late 2008 and 2009.

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