Leisureworld Senior Care Corporation
TSX : LW

Leisureworld Senior Care Corporation

November 13, 2013 16:30 ET

Leisureworld Senior Care Corporation Reports 2013 Third Quarter Results and Addition to Senior Management Team

MARKHAM, ONTARIO--(Marketwired - Nov. 13, 2013) - Leisureworld Senior Care Corporation (TSX:LW) ("Leisureworld" or "the Company") today announced its financial results for the third quarter and nine months ended September 30, 2013. Interim Condensed Financial Statements and Management's Discussion and Analysis are available on the Company's website at www.leisureworld.ca and www.sedar.com.

Third Quarter Highlights

  • Steady improvement in financial performance - NOI up 6 % and FFO per share diluted up 8%, excluding the accounting implications of the subscription receipts.
  • Improvement in average Retirement Home occupancy of 370 basis points and NOI of approximately $300,000 over the same period in 2012.
  • Specialty Care acquisition is on target to close in December 2013.

Lois Cormack, President and CEO, said, "Our Long-Term Care portfolio is continuing its steady performance. We are beginning to see improvement in our retirement home occupancy levels and although there is still work to be done, we have a plan in place to effect continued improvement in our Retirement Home division's contribution to our overall performance."

Financial and Operating Highlights

$000s except occupancy, per share and ratio data Quarter
ended
September 30,
2013
Quarter
ended
September 30,
2012
Nine months
ended
September 30,
2013
Nine months
ended
September 30,
2012
Average total occupancy (LTC) 99.0 % 99.1 % 98.9 % 98.7 %
Average private occupancy (LTC) 99.6 % 99.0 % 99.2 % 98.2 %
Average occupancy (retirement and independent living) 78.5 % 74.8 % 76.8 % 72.7 %
Net Loss (706 ) (139 ) (3,036 ) (7,787 )
Net Operating Income (NOI) (1) 16,253 15,393 45,778 41,365
Funds from Operations (FFO) (1) 8,019 7,164 21,146 19,374
FFO per share diluted
- with subscription receipts 0.220 0.245 0.632 0.724
- without subscription receipts 0.264 0.245 0.707 0.724
Adjusted Funds from Operations (AFFO) (1) 8,957 9,289 25,705 25,993
AFFO per share diluted
- with subscription receipts 0.245 0.317 0.763 0.971
- without subscription receipts 0.293 0.317 0.855 0.971
Dividends declared per share $ 0.2250 $ 0.2125 $ 0.6750 $ 0.6375
Payout Ratio (2) 73.8 % 66.8 % 77.0 % 65.5 %

1. 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 earnings performance and 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).

2. The Payout Ratio (a non IFRS measure) is calculated using the basic AFFO per share divided by the dividends declared per share for the respective periods.

Ms. Cormack added, "In both the second and third quarter of 2013, our results were impacted by the public offering of securities in April 2013, carried out to facilitate the purchase of Specialty Care. We had over six million subscription receipts outstanding and a higher debt level, with no corresponding investment return until the acquisition closes in early December. The accounting treatment had a dilutive impact on our financial performance of 4.4 cents per share of FFO, and once the acquisition closes next month there will be a very positive impact on our results."

The following chart depicts the change in Leisureworld's earnings and operational performance measures from second quarter of 2013 to the third quarter:

$000s except, per share data Quarter ended
September 30,
2013
Quarter ended
June 30,
2013
Change
Net Operating Income (NOI) 16,253 15,555 698
Funds from Operations (FFO) 8,019 6,901 1,118
FFO per share basic 0.273 0.240 0.033
FFO per share diluted
- with subscription receipts 0.220 0.199 0.021
- without subscription receipts 0.264 0.229 0.035
Adjusted Funds from Operations (AFFO) 8,957 8,568 389
AFFO per share basic 0.305 0.292 0.013
AFFO per share diluted
- with subscription receipts 0.245 0.245 0.000
- without subscription receipts 0.293 0.282 0.011

The current quarter's FFO improvement of $1,118 over the prior quarter is resulting from an NOI improvement in both Long Term Care and Retirement Home performance, coupled with a reduction in administration expenses all of which was partly offset by slightly higher current income taxes.

Third Quarter Results

Leisureworld generated NOI of $16.3 million for the three months ended September 30, 2013, compared to $15.4 million in the same period of 2012, representing an improvement of 6%. LTC NOI increased by $0.4 million to $12.3 million for the three months ended September 30, 2013, reflecting a 3% improvement.

The retirement portfolio generated NOI of $3.2 million for the three months ended September 30, 2013, an increase of $0.3 million over the third quarter of 2012 due to higher occupancy levels and increased rental rates.

For the three months ended September 30, 2013, FFO was $8.0 million, representing an 12% increase over the same quarter in 2012. Lower administrative expenses of $0.5 million (excluding transactions costs), are attributed to lower public company related costs in the current quarter as compared to the third quarter of 2012. FFO per share diluted, (without the impact of the subscription receipts) was $0.264 in the third quarter of 2013, representing an 8% improvement over the same period of 2012.

For the three months ended September 30, 2013, AFFO was $9.0 million, compared to $9.3 million for the third quarter of 2012, representing a decline of 4%. The improved FFO performance noted above was offset by the decrease in income support related to the Astoria and the Ontario Portfolio properties, as well as the adjustment for the deferred share unit plan in the quarter.

Leisureworld recorded total revenue of $86.6 million for the quarter ended September 30, 2013, an increase of 4% over the same period in 2012.

Retirement residence revenue increased to $6.8 million up from $6.6 million in the third quarter of 2012. The increase was primarily due to a higher overall occupancies and rental rate increases in both the BC and Ontario portfolios. This increase was muted by the conversion of the Muskoka retirement home into LTC beds.

Dividends declared by Leisureworld for the three months ended September 30, 2013 totaled $0.225 per share and basic AFFO per share was $0.305, representing a payout ratio of 73.8% for the period.

2013 Nine Months Results Summary

For the nine months ended September 30, 2013, NOI increased 11% to $45.8 million, compared to $41.4 million in the first nine months of 2012.

FFO for the period was $21.1 million, up 9% over the same period last year. AFFO for the first nine months of 2013 was $25.7 million, consistent with levels achieved last year.

Dividends declared by Leisureworld in the first nine months of 2013 totaled $0.675 per share and basic AFFO per share was $0.877, representing a payout ratio of 77.0% for the period.

As at September 30, 2013, the Company's debt to gross book value ratio was 52.7% as compared to 52.2% as at September 30, 2012.

Management Team

Leisureworld also announced the appointment of Michael Annable as Executive Vice President Human Resources and Chief Administrative Officer. Ms. Cormack said, "Michael has extensive expertise in all areas of human resources management, corporate governance and corporate services in many diverse sectors. He brings to us a good track record of achieving financial and business results by developing high performance teams. We are excited to have Michael join our team."

Looking Ahead

Over the past quarter, Leisureworld management has made significant progress on refining the debt and financial risk strategies for refinancing the $294 million of outstanding 4.814% Series A Senior Secured Notes due November 24, 2015. We expect to commence executing these strategies in the first quarter of 2014 and with the current favourable interest rate environment expect positive AFFO accretion as a result.

"Going forward, management believes that the Specialty Care Acquisition will contribute to positive earnings momentum, it will provide additional management depth and significant retirement home expertise. We are very positive in our future outlook," says Ms. Cormack.

Conference Call

Lois Cormack, President and CEO, and Manny DiFilippo, CFO, will host a conference call for the investment community on Thursday, November 14, 2013 at 10:00 a.m. (ET). The call-in numbers for participants are 416-340-8527 or 800-565-0813. A webcast of the call will be accessible via Leisureworld's website at: www.leisureworld.ca/Investors/Events-Presentations.aspx.

A replay of the call will be available until November 28, 2013. To access the replay, dial 905-694-9451 or 800-408-3053 (pass code: 1284272). The webcast will be archived on Leisureworld's website.

About Leisureworld

Leisureworld Senior Care Corporation is one of Canada's largest operators 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. 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
    Lois Cormack
    President and Chief Executive Officer
    (905) 489-0778

    Leisureworld Senior Care Corporation
    Manny DiFilippo
    Chief Financial Officer
    (905) 489-0787
    www.leisureworld.ca