Leisureworld Senior Care Corporation

Leisureworld Senior Care Corporation

February 21, 2013 17:05 ET

Leisureworld Senior Care Corporation Reports Strong 2012 Fourth Quarter and Year End Results

MARKHAM, ONTARIO--(Marketwire - Feb. 21, 2013) - Leisureworld Senior Care Corporation (TSX:LW) ("Leisureworld" or "the Company") today announced its financial results for the fourth quarter and year ended December 31, 2012.

Percentage calculations in the following summary of Leisureworld's 2012 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
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
Average total occupancy (LTC) 99.1 % 98.6 % 98.8 % 98.5 %
Average private occupancy (LTC) 99.2 % 97.1 % 98.5 % 96.7 %
Average occupancy (retirement and independent living) (1) 76.7 % 66.7 %
Net Loss (1,347 ) (3,344 ) (9,134 ) (11,977 )
Net Operating Income (NOI) (2) 14,972 12,067 56,337 45,939
Funds from Operations (FFO) (2) 6,882 4,760 26,256 19,581
Construction Funding (Principal) 1,430 1,380 5,696 5,421
Maintenance Capex (583 ) (334 ) (1,416 ) (864 )
Adjusted Funds from Operations (AFFO) (2), (3) 8,289 6,754 34,282 26,580
Basic AFFO per share $ 0.2835 $ 0.2765 $ 1.2534 $ 1.1544
Dividends declared per share $ 0.2166 $ 0.2124 $ 0.8538 $ 0.8496
Basic AFFO payout ratio 76.4 % 76.8 % 68.1 % 73.6 %
  1. The 2011 retirement and independent living occupancy rates include the addition of the Kingston and Kanata properties as of April 27, 2011, which are currently in lease-up and not yet at stabilized occupancy. The 2012 retirement and independent living occupancy rates include the addition of the BC retirement properties as of May 24, 2012, with one of the properties (The Royale Astoria) currently in lease-up and not yet at stabilized occupancy. The 2012 fourth quarter excludes the Muskoka retirement property, while the year-end figure includes occupancy at Muskoka up until September 30, 2012, when the facility was temporarily closed for renovations.
  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 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).
  1. AFFO includes adjustments of: $0, $47, $52 and $76, respectively, for HRIS expenses; $316, $901, $3,188 and $3,105, respectively, for income support; and $244, $0, $506 and $0, respectively, for deferred share unit plan compensation.

"We have achieved another year of strong financial performance at Leisureworld, generating a 23% increase in Net Operating Income and a 29% increase in Adjusted Funds from Operations, compared to 2011. Our performance enabled us to increase our monthly shareholder dividend by 5.9% in December, resulting in a current dividend rate of $0.90 per share on an annualized basis," said Dino Chiesa, Interim CEO and Chairman of Leisureworld. "During 2012, we advanced our growth strategy with the acquisition of three luxury retirement residences in the Greater Vancouver Area, bringing Leisureworld's Royale retirement residence brand to the BC marketplace, and we added another Class A, Long-term Care home to our existing LTC portfolio through the acquisition of the Madonna home in Orleans, Ontario, just outside Ottawa. These growth initiatives were complemented by increased government funding in our LTC portfolio, our continued focus on disciplined cost management, and peak LTC occupancy rates."

"Our Board of Directors has identified its preferred candidate for the role of President and CEO of Leisureworld, and we expect to make a formal appointment announcement in the coming weeks," added Mr. Chiesa. "Looking ahead, our growth strategy will remain focused on: ensuring exceptional quality seniors care and services, supporting and increasing our occupancy rates, maintaining disciplined cost management, building our presence across the continuum of seniors' living in Canada, and maintaining a strong balance sheet and reliable shareholder dividends."

For the quarter ended December 31, 2012, Leisureworld's Net Operating Income (NOI) increased 24.1% to $15.0 million, compared to $12.1 million in the fourth quarter a year ago. The Company's LTC operations generated NOI of $11.4 million, compared to $10.3 million for the fourth quarter 2011. The increase was primarily attributable to the inclusion of NOI from the Madonna acquisition and increased accommodations revenue, partly offset by higher property operating costs. Leisureworld's retirement residence portfolio generated a $1.9 million increase in NOI mainly as a result of the acquisition of the BC Portfolio. NOI for the Company's Home Care operations was consistent with the comparable quarter of 2011 at $0.7 million, as increased personal support contract volumes were offset by higher staffing costs to accommodate increased volumes and an increase in operating costs.

Leisureworld generated $6.9 million in Funds from Operations (FFO) in the fourth quarter of 2012, an increase of 44.6% from $4.8 million in the fourth quarter a year ago. The increase reflects higher NOI in the quarter and a $0.3 million decline in taxes, partly offset by an increase in net finance charges and higher administrative expenses, net of transaction costs. Higher net finance charges resulted from the incremental debt financing costs associated with the acquisitions, as well as the one-time premium associated with the early redemption of outstanding bonds amounting to $15.7 million. Management believes that this early redemption will yield future interest savings and has also undertaken initial steps towards refinancing the remaining outstanding bonds prior to maturity.

Adjusted Funds from Operations (AFFO) for the fourth quarter of 2012 increased 22.7% to $8.3 million, compared with $6.8 million in the fourth quarter of 2011. Increased AFFO was primarily attributable to increased FFO in the quarter, partly offset by lower income support and higher 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.

Dividends declared by Leisureworld in the quarter totaled $0.2166 per share and Basic AFFO per share was $0.2835, representing a quarterly payout ratio of 76.4%. Leisureworld's payout ratio in the fourth quarter of 2011 was 76.8%.

Leisureworld generated total revenue of $85.5 million for the quarter ended December 31, 2012, an increase of 8.2% from $79.0 million in the fourth quarter a year ago. LTC revenue increased 3.0% to $75.4 million, primarily as a result of the Madonna property acquisition. Retirement residence revenue increased to $6.6 million from $2.7 million a year ago. The increase was primarily a result of the addition of the BC properties in the second quarter, as well as increased revenues from the Ontario Portfolio. Home Care revenue totaled $3.5 million, a 14.4% increase from a year ago, primarily due to higher volumes for service contracts.

The Company's net loss was $1.3 million in the fourth quarter of 2012, compared to a net loss of $3.3 million in the fourth quarter of 2011. This improvement resulted primarily from higher income from operations, of which $1.9 million was attributable to the timing of the acquisition of the retirement portfolio and $1.0 million related to LTC performance. Further, administrative expenses and depreciation and amortization charges declined in the quarter. This was partly offset by increased net finance charges of $2.1 million and lower tax recoveries compared to the fourth quarter a year ago.

For the year ended December 31, 2012, NOI was $56.3 million, up 22.6% from $45.9 million in 2011. LTC contributed $3.4 million of the NOI increase, reflecting increased preferred accommodation premiums and higher management fees. The retirement portfolio contributed $6.6 million of the NOI increase, attributable to continued lease-up of the Ontario Portfolio and the acquisition of the BC Portfolio. Home Care contributed $0.4 million to the increase in NOI. AFFO for the year increased 29.0% to $34.3 million from $26.6 million in 2011. Increased AFFO was attributable to a $6.7 million increase in FFO, partly offset by $0.6 million increase in maintenance capital expenditures. Further, 2011 AFFO included a $0.7 million reduction associated with an income tax book-to-filing adjustment which did not recur in 2012. AFFO for 2012 also included a $0.5 million non-cash add-back for the deferred share unit plan compensation and increased construction funding principal. Dividends declared by Leisureworld in 2012 totaled $0.8538 per share and Basic AFFO per share was $1.2534, representing a payout ratio of 68.1% for the year.

For the year ended December 31, 2012, the Company's net loss was $9.1 million, compared to $12.0 million in 2011. The decreased net loss resulted from higher income from operations and decreased depreciation and amortization expenses, partly offset by a $7.9 million increase in income tax expense, a one-time $2.7 million impairment loss related to the write down of a human resource information system in the second quarter, and higher net financing charges resulting from a one-time premium associated with the partial early redemption of outstanding bonds and increased financing costs for the BC retirement portfolio acquisition.

For the year ended December 31, 2012, total tax expense was $2.3 million compared to a recovery of $5.6 million last year. The current tax variance was primarily a result of the prior year's book-to-filing adjustment of $0.7 million. The variance in deferred taxes arises from a future tax rate change which represents $3.7 million of this variance, with the balance primarily represented by timing differences.

"Occupancy rates for the Royale Ontario retirement properties in Kingston and Kanata at year end were 69.9% and 71.5%, respectively. We continue to target stabilized occupancy for the Royale Ontario retirement properties late in 2013. While we have drawn down the full amount of income support related to these properties, we do not expect this to have a significant impact on our AFFO or payout ratio during the remainder of the lease-up period," said Manny DiFilippo, Chief Financial Officer. "As at December 31, 2012, $1.1 million had been drawn down from our $2.0 million in income support funds related to the Royale Astoria, which is in-line with our financial performance expectations for this property. We expect the Royale Astoria to reach stabilized occupancy by early 2014. In the fourth quarter, we appointed a new Vice President of Retirement to oversee the management of our Royale portfolio and implement a new plan to improve occupancy levels."

As at December 31, 2012, the Company's debt to gross book value ratio was 52.3%. The debt is represented by: 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 one-year $26.1 million term loan, maturing May 2013; a two-year $26.0 million term loan, maturing May 2014; an assumed $23.7 million mortgage, maturing January 2017, and an assumed $15.7 million mortgage, maturing April 2029. Leisureworld had cash and cash equivalents at year end totaling $9.5 million and a further committed undrawn revolving credit facility with a Canadian chartered bank of $10.0 million for working capital purposes. As at December 31, 2012, Leisureworld had 29,272,889 common shares issued and outstanding.

Conference Call

Dino Chiesa, Chairman and Interim CEO, and Manny DiFilippo, CFO, will host a conference call for the investment community on Friday, February 22, 2013 at 11:00 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/4142.

A replay of the call will be available until March 8, 2013. To access the replay, dial 905-694-9451 or 800-408-3053 (pass code: 6587786). 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 4,474 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