Leisureworld Senior Care Corporation

Leisureworld Senior Care Corporation

February 22, 2012 18:12 ET

Leisureworld Senior Care Corporation Reports 2011 Fourth Quarter and Year End Financial Results

MARKHAM, ONTARIO--(Marketwire - Feb. 22, 2012) - Leisureworld Senior Care Corporation (TSX:LW) ("Leisureworld" or "the Company") today announced its financial results for the fourth quarter and year ended December 31, 2011. The Company completed its Initial Public Offering (IPO) on March 23, 2010. Accordingly, the 2010 figures represent the results of Leisureworld Senior Care LP for the period from January 1, 2010 until March 22, 2010, combined with the results of the Company for the period thereafter. Percentage calculations are based on the numbers in the financial statements and may not correspond to rounded figures presented in this release. Full Financial Statements and Management's Discussion and Analysis are available on the Company's website at www.leisureworld.ca.

Financial Highlights

$000s except per share and percentage data Quarter
Dec. 31,
Dec. 31,

Year ended
Dec. 31,

Year ended
Dec. 31,
Average total occupancy (LTC) 98.6 % 98.6 % 98.5 % 98.5 %
Average private occupancy (LTC) 97.1 % 96.7 % 96.7 % 97.1 %
Average occupancy (retirement and independent living)1 66.7 % 95.4 %
Net Earnings (Loss) (3,344 ) (2,268 ) (11,977 ) (8,246 )
Net Operating Income (NOI)² 12,067 10,855 45,939 42,013
Funds from Operations (FFO)² 4,760 4,464 19,581 17,144
Construction Funding (Principal) 1,380 1,116 5,421 4,908
Maintenance Capex (334 ) (502 ) (864 ) (1,400 )
Adjusted Funds from Operations (AFFO)² 3 6,754 5,030 26,580 20,580
Basic AFFO per share 0.2765 0.2514 1.1544 N/A
Dividends declared per share 0.2124 0.2124 0.8496 N/A
AFFO payout ratio 76.8 % 84.5 % 73.6 % N/A
  1. The 2011 retirement and independent living occupancy rates include the addition of the Kingston and Kanata properties as of April 27, 2011, which were acquired in lease-up and not yet at stabilized occupancy. The 2010 occupancy rates only include the Muskoka and Scarborough properties.

  2. Net operating income (loss) ("NOI"), funds from operations ("FFO"), and adjusted funds from operations ("AFFO") are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. NOI, FFO and AFFO are supplemental measures of a company's performance and Leisureworld believes that NOI, FFO and AFFO are relevant measures of its ability to pay dividends on the Company's common shares. The IFRS measurement most directly comparable to NOI, FFO and AFFO is net income (loss).

  3. AFFO includes adjustments of $47, ($48), $76 and ($72), respectively, for HRIS expenses; $901, $0, $3,105 and $0, respectively, for income support; and $0, $0, ($739) and $0, respectively, for a book to filing tax adjustment.

"We achieved 34.3% growth in AFFO in the fourth quarter and 29.2% growth in AFFO in 2011, reflecting increased funding, continued high occupancy in our LTC facilities, disciplined cost controls, and the contribution from our Royale retirement residences," said David Cutler, President and Chief Executive Officer of Leisureworld. "While our primary business focus remains the government regulated, and funded, long-term care market, we are committed to positioning Leisureworld as a leading Canadian provider of facilities and services across the continuum of seniors living. We made significant progress in advancing our growth strategy in 2011 with the acquisition of the Royale retirement properties. By building our presence in other seniors living markets such as independent living, retirement homes, assisted living centers, and home healthcare, we have opportunities to leverage our operating strengths, grow our less regulated revenue streams, and further enhance operating margins, while supporting consistent shareholder dividends."

For the quarter ended December 31, 2011, Leisureworld reported Net Operating Income (NOI) of $12.1 million compared with $10.9 million in the comparable quarter last year, an increase of 11.2%. Improved NOI resulted from increased resident revenue related to LTC, cost management across the portfolio, the contribution of $0.9 million from the Royale retirement properties, which were acquired in the second quarter of 2011, and a $0.1 million increase in NOI from Preferred Health Care Services (PHCS).

Leisureworld generated $4.8 million in Funds from Operations (FFO) during the quarter, an increase of 6.6% from the fourth quarter a year ago. The increase reflected higher NOI in the quarter, and an increased add-back of transaction costs of $1.6 million; partially offset by a $1.6 million increase in general and administrative (G&A) expenses, primarily resulting from higher consulting and acquisition related costs, as well as increased personnel. Net finance charges also increased by $0.6 million as a result of the credit facility related to the acquisition of the Royale retirement properties in Kingston and Kanata.

Adjusted Funds from Operations (AFFO), which the Company believes to be a very meaningful measure of performance, for the fourth quarter of 2011 totaled $6.8 million, a 34.3% increase from $5.0 million in the fourth quarter of 2010. Increased AFFO was primarily attributable to the $0.9 million drawdown of income support funds in conjunction with the lease-up of the Royale retirement properties, a $0.3 million increase in FFO, and a $0.2 million decrease in maintenance capital expenditures.

Dividends declared by Leisureworld in the quarter were $0.2124 per share and Basic AFFO per share was $0.2765, representing a quarterly payout ratio of 76.8%. Leisureworld's payout ratio in the fourth quarter of 2010 was 84.5%.

Leisureworld generated total revenue of $79.0 million in the quarter ended December 31, 2011, compared with $71.6 million in the comparable quarter in 2010, an increase of 10.4%. Long-term care contributed approximately $4.4 million of the increase, retirement revenue accounted for $2.4 million of the increase, and PHCS accounted for the balance, due to higher personal support contract volumes.

The Company's net loss was $3.3 million in the fourth quarter of 2011 compared to $2.3 million net loss in the comparable period of 2010. The increased net loss for the period resulted from higher net finance charges, higher depreciation and amortization expense, and lower income from operations, partly offset by increased tax recovery for the quarter, and a larger gain on the mark-to-market adjustment on interest rate swap contracts.

On a seasonal basis, excluding the impact of the two retirement properties which are currently in lease-up, the fourth quarter typically represents approximately 23% of Leisureworld's annual NOI. Quarterly results are subject to various factors including the seasonality of utility expenses, timing of government funding rate increases and timing of revenue recognition to match spending under the flow-through envelopes.

For the year ended December 31, 2011, NOI was $45.9 million, up 9.3% from $42.0 million in 2010, reflecting increased resident revenues for LTC, cost management across the portfolio, the contribution of $1.6 million from the Royale retirement properties, and a $0.5 million increase in NOI from PCHS. AFFO for 2011 increased 29.2% to $26.6 million from $20.6 million in 2010, reflecting a $2.4 million increase in FFO, the drawdown of $3.1 million in income support funds related to the lease-up of the Royale retirement properties, a $0.5 million decrease in maintenance capital expenditures, and a $0.5 million increase in construction funding principal, partially offset by an income tax book to filing adjustment of $0.7 million. Dividends declared by Leisureworld in 2011 totaled $0.85 per share and Basic AFFO per share was $1.15, representing a payout ratio of 73.6%.

"We continue to increase occupancy levels at our Royale retirement residences in-line with our target growth rate of 2.5 net new resident move-ins per property, per month. In the fourth quarter we added 22 net new move-ins, bringing year-end occupancy rates at the Kingston and Kanata Royale residences to 64.7% and 60.1%, respectively. Due to seasonality, we have encountered several discharges arising from changes in resident health status and care needs in the first quarter of 2012, which is not unexpected," added Mr. Cutler. "Looking ahead, our focus remains on: supporting and increasing occupancy; identifying opportunities to augment our LTC portfolio, through the renewal of our older LTC facilities, or complementary acquisitions, such as our recent agreement to acquire a 160-bed Class A LTC facility in Orleans, Ontario; and increasing our presence across the continuum of seniors living in Canada."

As at December 31, 2011, the Company's debt to gross book value ratio was 52.1%. The long-term debt is represented by 4.814% Series A Senior Secured Notes due November 24, 2015, rated "A- (stable)" by Standard & Poor's Rating Services and "A (stable)" by Dominion Bond Rating Service Limited; and a $55 million two-year bridge loan secured in April 2011 with a Canadian chartered bank. Leisureworld had cash and cash equivalents at year end totaling $21.9 million, a committed undrawn revolving credit facility of $10.0 million, and 24,490,149 common shares issued and outstanding.

Conference Call

A conference call for analysts and interested listeners will be held Thursday, February 23, at 11:00 a.m. (ET). The call-in numbers for participants are 416-340-2218 or 866-226-1793. A live audio feed of the call will also be available on the Internet at: http://www.gowebcasting.com/3025.

A replay of the call will be available until March 9, 2012. To access the replay, dial 905-694-9451 or 800-408-3053 (pass code: 8837687). The replay can also be accessed via Leisureworld's website or the web link above.

About Leisureworld

Leisureworld is the third largest licensed long-term care (LTC) provider in Ontario. The Company owns and operates 26 LTC homes, representing 4,314 beds across Ontario, Canada. Leisureworld also owns and operates three retirement residences comprising 323 suites and one independent living residence with 53 apartments. Leisureworld subsidiaries include: Preferred Health Care Services, an accredited provider of professional nursing and personal support services; and Ontario Long Term Care, a provider of purchasing services, dietary, social work, and other regulated health professional services. For more information, please visit the Company's website at www.leisureworld.ca.

Forward-Looking Statements

Certain of the statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These statements generally use forward-looking words, such as "anticipate", "continue", "could", "expect", "may", "will", "estimate", "believe" or other similar words and include, among other things, statements related to the Company's financial results or strategic plans. These statements are subject to significant known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. The forward-looking statements in this news release are based on information currently available and what management currently believes are reasonable assumptions, including the funding of long-term care facilities by government entities. Other material factors or assumptions that were applied in formulating the forward-looking statements contained herein include the assumption that the business and economic conditions affecting Leisureworld's operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity and government regulations.

Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements. These forward-looking statements reflect current expectations of Leisureworld as at the date of this news release and speak only as at the date of this news release. Leisureworld does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.

Contact Information

  • Leisureworld Senior Care Corporation
    Manny DiFillipo
    Chief Financial Officer
    (905) 489-0787

    Bruce Wigle
    Investor Relations
    (416) 447-4740 ext. 232