Leisureworld Senior Care Corporation

Leisureworld Senior Care Corporation

May 15, 2013 17:01 ET

Leisureworld Senior Care Corporation Reports 2013 First Quarter Results

MARKHAM, ONTARIO--(Marketwired - May 15, 2013) - Leisureworld Senior Care Corporation (TSX:LW) ("Leisureworld" or "the Company") today announced its financial results for the first quarter ended March 31, 2013. Percentage calculations in the following summary of Leisureworld's financial results are based on the numbers in the Financial Statements and/or Management's Discussion and Analysis, which 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 data Quarter ended
March 31, 2013
Quarter ended March 31, 2012
Average total occupancy (LTC) 98.7% 98.5%
Average private occupancy (LTC) 98.7% 97.4%
Average occupancy (retirement and independent living)1 76.0% 67.4%
Net Loss (1,362) (2,609)
Net Operating Income (NOI)2 13,970 11,911
Funds from Operations (FFO)2 6,226 4,949
Construction Funding (Principal) 1,527 1,395
Maintenance Capex 339 189
Adjusted Funds from Operations (AFFO)2 3 8,180 7,141
Basic AFFO per share $0.2795 $0.2923
Dividends declared per share $0.2250 $0.2124
Basic AFFO payout ratio 80.5% 72.7%
  1. Retirement and independent living occupancy rates include the BC retirement properties as of May 24, 2012. One of the properties (The Royale Astoria) is currently in lease-up and not yet at stabilized occupancy. The 2012 first quarter includes occupancy at Muskoka. The retirement facility was closed in September 2012 for renovations and re-opened in April 2013 with 24 licenced LTC beds.
  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: $0 and $11, respectively, for HRIS expenses; $338 and $997, respectively, for income support; and $428 and $0, respectively, for deferred share unit plan compensation.

"We achieved 17.3% growth in NOI and 14.5% growth in AFFO in our first quarter of 2013, compared to the first quarter a year ago. Our growth was driven by continued high occupancy and increased accommodation revenue in our LTC portfolio, the addition of the Madonna LTC home, our expanded retirement home portfolio and continued positive gains in our Home Care operations," said Dino Chiesa, Chair of Leisureworld.

"Subsequent to the end of the quarter, we continued the advancement of our growth strategy with the acquisition of a significant portfolio of Ontario-based assets from Specialty Care Inc. The 10-property portfolio consists of six LTC homes, two retirement residences and two properties containing both LTC and retirement components. Further, Specialty Care brings with it management expertise in retirement home development, lease-up and operations which will align with Leisureworld's entry into the retirement sector, strengths in long term care and home care to further our growth in the senior housing sector. The transaction is expected to be approximately 14% accretive to our basic AFFO per share in the first year following closing. We expect the transaction to close in the fourth quarter of 2013, following regulatory approvals," continued Mr. Chiesa. "We also concluded our search for a new Chief Executive Officer, appointing Lois Cormack, former President of Specialty Care, as President and CEO of Leisureworld, effective April 22, 2013. Lois brings to Leisureworld a strong track record of operational and financial leadership, supported by a wealth of experience in the Ontario Retirement Living and Long Term Care sectors."

"Leisureworld is an emerging leader in Canadian seniors' living and care. I look forward to building on the Company's strong track record in providing quality care and services for LTC residents and home care clients in Ontario, and in providing high quality accommodations and services for seniors in both Ontario and British Columbia," said Lois Cormack, President and CEO of Leisureworld. "My near-term focus is on getting to know Leisureworld, advancing the lease-up of the retirement homes, completing the Specialty Care transaction, and planning for the successful integration of Specialty Care which will further strengthen the extensive management experience and skills of our team. I am committed to ensuring continued disciplined growth in our LTC, Retirement, Management Services and Home Care divisions."

For the quarter ended March 31, 2013, Leisureworld's Net Operating Income (NOI) increased 17.3% to $14.0 million, compared to $11.9 million in the first quarter a year ago. The Company's LTC operations generated NOI of $10.4 million, compared to $10.2 million for the first quarter 2012. The increased contribution from LTC operations was primarily attributable to the inclusion of $0.1 million in NOI from the Madonna acquisition. Leisureworld's retirement residence portfolio generated NOI of $2.7 million, a $1.7 million increase from the first quarter of 2012. The BC Portfolio contributed $1.4 million of the increase and the remaining increase was attributable to increasing occupancy in the Ontario Portfolio. NOI for the Company's Home Care operations was $0.8 million, an increase of $0.1 million compared to the first quarter a year ago. The increase was the result of higher contribution from educational services and sales.

Leisureworld generated $6.2 million in Funds from Operations (FFO) in the first quarter of 2013, an increase of 25.8% from $4.9 million in the first quarter a year ago. The increase reflects higher NOI in the quarter of $2.1 million, partly offset by an increase in net finance charges of $0.6 million related to interest on long-term debt used to finance the BC Portfolio acquisition. General and administrative expenses, net of transaction costs, were marginally higher in the quarter as a result of consulting related expenses.

Adjusted Funds from Operations (AFFO) for the first quarter of 2013 increased 14.5% to $8.2 million, compared with $7.1 million in the first quarter of 2012. Increased AFFO was primarily attributable to increased FFO in the quarter and an add-back of the deferred share unit compensation, partly offset by a $0.7 million decline in income support and a $0.2 million increase in maintenance capital expenditures. The decrease in income support was due to the full utilization of the escrow amount related to the Ontario Portfolio in the third quarter of 2012.

Dividends declared by Leisureworld in the quarter totaled $0.2250 per share and Basic AFFO per share was $0.2795, representing a quarterly payout ratio of 80.5%. Leisureworld's payout ratio in the first quarter of 2012 was 72.7%.

Leisureworld generated total revenue of $83.7 million for the quarter ended March 31, 2013, an increase of 12.0% from $74.7 million in the first quarter a year ago. LTC revenue increased 7.0% to $73.4 million, partly as a result of the Madonna property acquisition. Same property revenues increased by $2.1 million compared to last year. The increase primarily resulted from incremental funding to flow-through envelopes, through special initiative funding of $0.7 million, high-intensity needs funding of $0.7 million, and annual funding rate increases. Retirement residence revenue increased to $6.5 million from $2.8 million a year ago. The increase was primarily a result of the acquisition of the BC properties in May of 2012, which contributed revenue in the quarter of $3.5 million as well as a $0.4 million increase in revenues from the Ontario Portfolio. Home Care's revenue totaled $3.8 million, a 13.3% increase from the first quarter a year ago, primarily due to higher volumes for service contracts and an increase in educational products and services revenues.

The Company's net loss was $1.4 million in the first quarter of 2013, compared to a net loss of $2.6 million in the first quarter of 2012. The lower net loss was attributable to higher income from operations of $1.3 million, primarily the result of the BC portfolio acquisition in 2012, and lower depreciation and amortization charges in the quarter, partly offset by increased interest expenses related to the acquisition and lower tax recovery compared to the first quarter a year ago.

Combined average occupancy rates for the Royale Ontario retirement properties in Kingston and Kanata at the end of the quarter were 69.6%, up from 67.0% at the end of 2012. For the Royale BC portfolio of Astoria, Pacifica and Peninsula, the average occupancy in the quarter was 57.5%, 92.6% and 84.2%, respectively. Synergies of the acquisition and Leisureworld's new CEO bring expertise and a track record of success in the management of retirement homes, which will assist these properties to reach stabilized occupancies.

As at March 31, 2013, the Company's debt to gross book value ratio was 52%. The debt of $425.5 million is represented by: $285.0 million of 4.814% Series A Senior Secured Notes due November 24, 2015, rated "A-(negative)" by Standard & Poor's Rating Services and "A (stable)" by Dominion Bond Rating Service Limited; $46.0 million drawn from the $61.5 million available under a revolving credit facility, maturing April 2014; a $26.1 million term loan, maturing May 2013; a $26.0 million term loan, maturing May 2014; an assumed $23.7 million mortgage that matures on January, 2017, and an assumed $15.7 million mortgage, maturing April 2029. In April 2013 the Company received a commitment letter from a lender for a CMHC insured first mortgage for $17.4 million to replace the term loan maturing on May 2013. Leisureworld had cash and cash equivalents at year end totaling $18.8 million and a further committed undrawn revolving credit facility with a Canadian chartered bank of $10.0 million for working capital purposes. As at March 31, 2013, Leisureworld had 29,282,324 common shares issued and outstanding.

Conference Call

Dino Chiesa, Chair, Lois Cormack, President and CEO, and Manny DiFilippo, CFO, will host a conference call for the investment community on Thursday, May 16, 2013 at 10:00 a.m. (ET). The call-in numbers for participants are 416-340-8527 or 877-240-9772. The call will be webcast at: http://www.gowebcasting.com/4335.

A replay of the call will be available until May 30, 2013. To access the replay, dial 905-694-9451 or 800-408-3053 (pass code: 3618363). The webcast archive will be available via Leisureworld's website or the web link above.

About Leisureworld

Leisureworld Senior Care Corporation is Canada's fifth largest operator of seniors' housing and the third largest licensed long-term care (LTC) provider in Ontario. Leisureworld owns and operates 27 LTC homes across Ontario with 4,498 beds. The Company also owns and operates five retirement residences and one independent living residence, representing 739 suites, in Ontario and British Columbia. 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, and 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 DiFilippo
    Chief Financial Officer
    (905) 489-0787

    Leisureworld Senior Care Corporation
    Bruce Wigle
    Investor Relations
    (416) 447-4740 ext. 232