Leisureworld Senior Care Corporation
TSX : LW

Leisureworld Senior Care Corporation

August 10, 2011 17:46 ET

Leisureworld Senior Care Corporation Reports Solid Second Quarter 2011 Financial Results

MARKHAM, ONTARIO--(Marketwire - Aug. 10, 2011) - Leisureworld Senior Care Corporation (TSX:LW) ("Leisureworld" or "the Company") today announced its financial results for the second quarter and six-month period ended June 30, 2011, along with comparable results for the corresponding 2010 periods. 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
Ended
June 30, 2011
Quarter
Ended
June 30, 2010
Six months ended
June 30, 2011
Six months ended
June 30, 2010
Average total occupancy (LTC) 98.7 % 98.6 % 98.3 % 98.4 %
Average private occupancy (LTC) 96.7 % 97.3 % 96.3 % 97.1 %
Average occupancy (retirement and independent living)(¹) 60.5 % 93.1 %
67.6
%
93.2
%
Net Loss $2,449 $2,214 $5,313 $3,687
Net Operating Income (NOI) $11,408 $10,907 $21,514 $20,653
Funds from Operations (FFO) $5,703 $4,499 $9,787 $8,134
Construction Funding (Principal) $1,344 $1,272 $2,689 $2,489
Maintenance Capex ($222 ) ($162 ) ($437 ) ($605 )
Adjusted Funds from Operations (AFFO)(²) $7,007 $5,538 $12,169 $10,017
AFFO per share $0.2861 $0.2754 $0.5457 N/A
Dividends declared per share $0.2124 $0.2124 $0.4248 N/A
AFFO payout ratio 74.2 % 77.1 % 77.8 % N/A
1. The 2011 retirement and independent living occupancy rates include addition of the Kingston and Kanata properties as of April 27, 2011. The 2010 occupancy rates only include the Muskoka and Scarborough properties
2. AFFO includes adjustments of $16, ($71), ($36) and ($1) respectively for HRIS expenses; $905, $0, $905 and $0 respectively for income support; $263, $0, $702 and $0 respectively for after-tax transaction costs; ($739), $0, ($739) and $0 respectively for a book to filing tax adjustment

"We're very pleased with our financial results in the second quarter of 2011," said David Cutler, President and Chief Executive Officer of Leisureworld. "Our AFFO increased 26.5% from the comparable period last year, reflecting increased government funding for resident care, continued high occupancy in our LTC facilities and disciplined control of costs. Our payout ratio of 74.2% in the quarter and 77.8% year-to-date speaks to the stability of our cash flow model and our ability to maintain a consistent stream of shareholder dividends."

The second quarter was also noteworthy for the acquisition of two luxury retirement residences in Kingston and Kanata, Ontario, for a net purchase price of $89 million, after working capital adjustments, and an income support agreement of $5.5 million, held in escrow as an income guarantee to supplement cash flow during the lease-up period. The two properties, which together comprise 294 suites, complement the Company's existing retirement facilities and long-term care homes and grow its presence across the continuum of seniors living. As brand new luxury retirement living properties featuring top quality amenities and services which are competitively positioned in attractive markets, the retirement residences will be marketed under the Company's 'The Royale' brand.

Subsequent to quarter-end, Manny DiFilippo joined the Company as Chief Financial Officer. Mr. DiFilippo brings significant expertise in M&A, internal audit, financial controls, risk management and financial reporting to Leisureworld. His direct experience leading cross functional teams with mandates in both M&A and process and control improvement is particularly valuable at this point in the Company's development.

As at June 30, 2011, the Company's debt to gross book value ratio was 52.3%. 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 $13.4 million and a revolving credit facility of $10.0 million.

For the second quarter ended June 30, 2011, Leisureworld reported Net Operating Income (NOI) of $11.4 million compared with $10.9 million in the comparable quarter last year, an increase of 4.6%. The year-over-year increase in NOI was primarily due to government funding increases to enhance resident care, cost management across the portfolio, and the contribution of $0.3 million from the acquired retirement properties. Leisureworld generated $5.7 million in Funds from Operations (FFO) during the quarter, an increase of 26.8% from the corresponding 2010 level. The increase reflected higher NOI in the quarter, a $0.7 million book to filing tax adjustment and a lower tax provision of $0.4 million compared with the second quarter last year, related primarily to the retirement properties transaction. The increase was partially offset by higher interest cost of $0.4 million associated with the two-year credit facility used to partially finance the acquisition of the two retirement properties, in addition to $0.3 million in G&A expenses that were also related to the acquisition.

Adjusted Funds from Operations (AFFO), which the Company believes to be a very meaningful measure of performance, for the second quarter of 2011 was $7.0 million, a 26.5% increase from $5.5 million in the second quarter of 2010. The increase was attributable to improved FFO, the add-back of the after-tax transaction related costs of $0.2 million and the inclusion of the proceeds of the income support of $0.9 million related to the lease-up of the recently acquired retirement properties. The increase was partly offset by the $0.7 million income tax book to filing adjustment in the current quarter.

Dividends declared by Leisureworld in the quarter were $0.21 per share, representing a quarterly payout ratio of 74.2%, compared with 77.1% in the corresponding period of 2010.

Leisureworld generated total revenue of $70.0 million in the quarter ended June 30, 2011 compared with $66.8 million in the comparable quarter in 2010, an increase of 4.9%. Long-term care contributed approximately $1.6 million of the increase, while retirement revenue accounted for $1.3 million and PHCS accounted for the balance.

The Company's net loss was $2.4 million in the second quarter of 2011 compared to $2.2 million net loss in the comparable period of 2010. Higher amortization charges, increased net interest expenses and a loss on interest rate swap contracts related primarily to the retirement residences acquisition were partly offset by higher income from operations and a $0.7 million tax adjustment in the 2011 period.

On a seasonal basis, excluding the impact of the two retirement properties which are currently in the lease-up period, the second quarter typically represents approximately 26.1% 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.

In the six-month period ended June 30, 2011, NOI was $21.5 million, up 4.2% from $20.7 million last year, reflecting the same factors indicated above for the second quarter. AFFO for the six-month period was $12.2 million compared with $10.0 million in the same period in 2010, an increase of 21.5%, also reflecting the same elements referenced in the results for the quarter.

"We are excited about the acquisition of the Royale residences and our growth across the continuum of seniors living," added Mr. Cutler. 'We continue to review opportunities to increase cash flow through similar complementary acquisitions and through the renewal of our older facilities. Our focus remains on identifying initiatives with the potential to enhance shareholder dividends."

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 Thursday, August 11 at 1:00 p.m. (ET). The call-in numbers for participants are 416-340-8530 and 877-240-9772. 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 August 26, 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
    Investor Relations
    Bruce Wigle
    (416) 447-4740 ext. 232