Leisureworld Senior Care Corporation

Leisureworld Senior Care Corporation

May 10, 2011 18:20 ET

Leisureworld Senior Care Corporation Reports Solid First Quarter 2011 Financial Results

MARKHAM, ONTARIO--(Marketwire - May 10, 2011) - Leisureworld Senior Care Corporation (TSX:LW) today announced financial results for the first quarter ended March 31, 2011. The Company completed its Initial Public Offering (IPO) on March 23, 2010, resulting in a nine-day stub period in the corresponding period ended March 31, 2010. Accordingly, to enable investors to get a better understanding of the Company's year-over-year comparative financial and operating results, Leisureworld also reported results for the full first quarter in 2010. 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 nine-day period following the completion of the IPO. 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

Quarter Ended
March 31, 2011
Quarter Ended
March 31, 2010
$000 except per share data
Average total occupancy98.0%98.2%
Average private occupancy95.9%96.9%
Net Loss$(2,864)$(1,473)
Net Operating Income (NOI)$10,106$9,746
Funds from Operations (FFO)$3,644$3,635
Construction Funding (Principal)$1,346$1,217
Maintenance Capex$(215)$(443)
Adjusted Funds from Operations (AFFO)1$5,162$4,479
AFFO per share$0.2567N/A
Dividends declared per share$0.2124N/A
AFFO payout ratio82.7%N/A
1. AFFO includes adjustments of ($52) in 2011 and $70 in 2010 for HRIS expenses and $439 in 2011 for after-tax transaction costs

"We're very pleased with our strong financial results in the first quarter, which featured AFFO of $5.2 million, or $0.26 per share," said David Cutler, President and Chief Executive Officer of Leisureworld. "To put these results in the clearest possible perspective, had we been a public company throughout the first quarter of 2010, our AFFO would have been approximately $4.6 million, or $0.23 per share. These robust results reflect our continued high occupancy levels and disciplined control of costs."

As at March 31, 2011, the Company's debt to gross book value ratio was 51.3%. 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. Leisureworld had cash and cash equivalents at quarter end totaling $16.3 million and an undrawn revolving credit facility of $10.0 million.

Subsequent to quarter end, the Company completed the acquisition of two luxury retirement residences for a net purchase price of $89.0 million, after working capital adjustments and a holdback of $5.5 million to be held in escrow as an income guarantee to supplement cash flow during the period that the residences are being leased-up. The two properties, which together comprise 294 suites, complement the Company's existing retirement residences and long-term care homes and grow its presence across the continuum of seniors living.

The transaction was financed through an equity offering that raised gross proceeds of $46 million and a two-year bridge loan in the amount of $55 million. The Company entered into an interest rate swap contract to fix the interest rate on the loan at 4.045%. On a pro-forma basis following the acquisition, Leisureworld's debt to gross book value ratio was approximately 52%.

In the first quarter ended March 31, 2011, Leisureworld reported Net Operating Income (NOI) of $10.1 million compared with $9.7 million in the comparable quarter last year, an increase of 3.7%. The year-over-year increase is primarily due to government funding increases to enhance resident care and cost containment measures across the portfolio. Leisureworld generated $3.6 million in Funds from Operations (FFO) during the quarter, essentially unchanged from the comparable 2010 period. The year-over-year increase in NOI and lower net interest expense was offset by a reduction in interest income on the construction funding receivable and increases in income taxes and G&A expenses. The increase in G&A expenses was largely due to $0.4 million in costs relating to the above-noted acquisition.

Adjusted Funds from Operations (AFFO), which the Company believes to be a very meaningful measure of performance, for the first quarter of 2011 was $5.2 million, a 15.2% increase from $4.5 million in the first quarter of 2010. The strong improvement reflected solid FFO, as well as the add-back of tax-effected transaction costs, increased construction funding principal and lower maintenance capital expenditures.

Dividends declared by Leisureworld in the quarter were $0.21 per share, representing a quarterly payout ratio of 82.7%.

Leisureworld generated total revenue of $67.7 million in the quarter ended March 31, 2011 compared with $65.2 million in the comparable quarter in 2010, an increase of 4.0%. The increase reflected 2.9% higher government funding rates, increases in special initiative funding and an increase in PHCS's external business, partly offset by a reduction related to the timing of revenue recognition to match spending under the flow-through envelopes and a small reduction in preferred accommodation revenues.

The Company's net loss was $2.9 million in the first quarter of 2011 compared to $1.5 million in the comparable period of 2010. The change was primarily attributable to an increase in amortization, partly offset by an income tax reduction.

On a seasonal basis, the first quarter typically represents approximately 23-24% 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. As a result, year-over-year comparisons provide a more accurate depiction of performance.

"We're off to an excellent start in 2011, with strong growth in AFFO and an exciting acquisition that expands our presence in retirement residences," added Mr. Cutler. "We look forward to continuing to expand our footprint across the broad range of the seniors living market."

Full Financial Statements and Management's Discussion and Analysis are available on the Company website at www.leisureworld.ca and at www.sedar.com.

Conference Call

A conference call for analysts and interested listeners will be held Wednesday, May 11 at 2:00 p.m. (ET). The call-in numbers for participants are 416-695-6616 and 800-355-4959. A live audio feed of the call will also be available on the Internet at: http://www.gowebcasting.com/2413.

A replay of the call will be available until 11:59 pm ET, on May 25, 2011. To access the replay, call 905-694-9451 or 800-408-3053, enter pass code number 6663063 and then press the pound (#) key. The replay can also be accessed over the Internet at the above address.

About Leisureworld

Leisureworld is the third largest licensed long-term care (LTC) provider in Ontario. The Company owns and operates 26 LTC homes, representing approximately 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; Ontario Long Term Care, a provider of purchasing services, dietary, social work, and other regulated health professional services; and Tealwood Developments, a provider of laundry services to the Leisureworld Homes.

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
    Philip Koven
    Investor Relations
    (416) 447-4740 ext 235