CSU - Earnings call transcript Q3 2017 | Sonida Senior Living, Inc.

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Operator

Good day everyone and welcome to the Capital Senior Living Third Quarter 2017 Earnings Release Conference Call. Today’s conference is being recorded. The forward-looking statements in this release are subject to certain risks and uncertainties that could cause results to differ materially including, but not without limitation to, the company’s ability to find suitable acquisition properties at favorable terms, financing, licensing, business conditions, risks of downturns and economic conditions generally, satisfaction of closing conditions such as those pertaining to licensure, availability of insurance at commercially reasonable rates, and changes in accounting principles and interpretations, among others, and other risks and factors identified from time-to-time in our reports filed with the Securities and Exchange Commission. At this time, I’d like to turn the call over to Mr. Larry Cohen. ahead. go Please

Larry Cohen

Senior headwinds. good said, other and third all our over that of XXXX record a Thank operational recently, of and confident afternoon all sales faced. It welcome and we our excellence Capital proud have am disappointed participants call. years. of to Living’s has to and shareholders with I developed us that I'm earnings been am track to by is That you the the I to challenges Living the more performance. Though Capital experience initiatives quarter Senior key progress these frustrating in already operational for I improve and pleased is underway that

operational high are culture have strengthening a and reliability. changes that We number [Indiscernible] a made of restoring of broad and based

maximize taking higher are shareholder enhance strategy as We drive challenges, action enhanced owned overcome revenues, growth, cash value to immediate sustainable a and profitable and real estate. we the comprehensive deliver of execute our value to flow,

Let we accountability. corporate sales concessions instill me allow for marketing Executive with [Indiscernible]. to Managers, restructured and We goals accountability Sales greater actually actions our drive bonus Regional incentive Directors have few simplified pricing. and rent Directors, and performance eliminated We're and to We restructuring excellence. financial enhance a outline and programs organization operational

Brett organization facets empowered build and strengthened complex valuable the community proven sales hiring centralized operations better environments. record stronger building increase to as care Lee residents. experience closing operating and occupancy. our We to providing a improve healthcare ratios. has serve to growth leading skills Brett services We operational have of team Officer. introduced all with to a our develop success platform Operating robust We're of sales global initiatives delivery operations focused formal as within brings sector Chief by sustain also and training a metrics-driven tritely and These leadership targets by objective

growth occupancy for goals each plans and budget immediate community. have We implemented recovery

one We We health a supply to programs consistent care reduce operational items. to for records, and consistent new further us our medical greatly restructured implementing are expense key capabilities we and in more system large census enhance reporting integrated our benefit electronic give CRM, of optimize initiatives shown billing efficiencies. while sales, The began And drive assessment, leveraging into scale expenses. many receivable, has our platform chain improvement our to at accounts of data these and recovery performance metrics. already execution creating

months can gains longest through experienced monthly period the gains have sustained We in September, move-ins five consecutive which for of is I net recall.

improvement Third quarter throughout and month increase to with in X.X% June. XXXX to monthly quarter results Occupancies September's a month of September in improvements portfolio points occupancy Moreover of results. It a the increased same-store occupancy basis quarter of same-store September's basis improvement to compared across savings XX.X% the net to quarter XX quarter compared improved to a XX improvement basis for in second total approximately in same-store increased July. June. September our occupancy in median occupancy savings resulted portfolio. our at resulted number XXX $X.X our of effectiveness million at the the the point points from in Other The rent same-store in XX of the resiliency fourth the X.X% sales across XX% of compared of is occupied the This of with compared occupancy to combination to since XXXX from occupancy, fourth increased expense XX XXXX. June strategy, of XX% expense June. training XX and higher number and to or number a budget widespread restructuring simplified XX% communities XX in XX% sets seven average better rent, communities declined XX% communities end same-community the in monthly August a June. goals end the XXX% professionals, with The of XX income our June. the shows the or end include at communities our from an increase below our of resulted of to operating and in of increasing pricing Implementation quarter quarter and annualized recovery solid improved third the the also of positive and average of occupancy compare foundation of

healthcare to strategy for beyond, in focused and decreased as execute our improvement expected plan middle $X.X completed of the executing of revenues, to growth, million do operating of growth increase XXXX, pursue on strong are so and provide acquisitions new and quarter. to strategy long-term enhancing conversion levels key our we initiatives on that to EBITDAR EBITDAR care, initiatives expenditures. reduce addition, In By produce and net remainder executing third intend metrics foundation is organic implementing units a working. the quarter acquisitions, part to our capital and can the These CFFO. further We expenses diligently compared the and second until expect any we this increase on focus of higher XXXX not expenses, to these

disciplined our enhance real Senior well-positioned the hurricanes growth value communities on during Florida. and Their as value Capital we improvements, as to also residents sheltered securely safely leading and I thankful operational We capitalize two our our and at pure-play at and to I the how excellent onsite shareholder others. evacuated Living senior owner/operator. competitive committed five estate operational and place on advantages well private-pay recent housing as am in proud efforts excellence. strategy a was a and further heroic are they and focus to preparation to say Houston driving of be will the region returning for our in With want corporate of owned

heartwarming. our operating Operating improvements platform we have is Bret my remained addition family to has introduce Lee, will great gratitude throughout also our leadership centralized more more members a provide pleasure team communication now and expressions details about been been Our why It are constant their Officer. and team. He Chief to sustainable. storms these our of believe in with the Brett

Hendrickson, Brett's our Financial financial Carey Officer Chief third Following quarter will Brett? results. comments, our discuss

Brett Lee

has acuity of we Thanks thrive to variation capacity am with in company and both in Well, shifted great community Living a autonomy as there to of decentralized their but decentralization significantly grown our so the can held the larger model physical empowering a serve several available terms living benefits financial join Capital at allow too the we of and much to right. to past dynamic I the residents also All has This everyone. of Senior operating also lead significant of deal take units. company advantage footprint, local more our such excited traditionally individual in come unique performance. resident Senior to within much have Capital are afternoon assisted terms espoused does experience markets, being to us leaders care memory a Living scale and of history. leadership Larry a and the at economies good not time our of with over in level. years that

operating model performance and more therefore, have, new service, creating which five focuses uniform centralized people, pillars around a approach implement growth. core quality, We to decided standardized on a of to cost,

in into plans as training community out include accounts aggregation sales on supply and operators; and establishment economies hurdles real-time maximize platform our utilization, that metrics, detailed of financial chain for operational performance a that operating Executive all opportunities the Directors major focus such this of each for daily elements categories scale; key metric-driven communities, uniform customer community. regional expense for on across administrative payable safety on tracking focused GPO to templates, financial improving initiating gain functions burden each of service management to management, support and and all a for of creation national comprehensive centralizing contracts and key model Sales Some the reduce functionality Directors, rolling to budget training certain or optimize local growth evaluating

yielded and initiatives reduce from a food grid in begun a encouraged we in fourth today. of the are standard levels sustainable of come of We management of compared September with operating our August training more feel staffing and of majority for expenses. improve will management beyond. long-term these menu in into the of our effective majority A nearly financial correspond adjustments we budget million the plans implementation savings mid-August, levels, each occupancy contract are early compared greatly labor have continue reduction our having performance July quarter are the to While and community staff to of and current still The model, majority our wastage and by and to in communities. that in rollout $X.X savings the management the when a to these initiatives this establish financial results of

recently net also in reduce failed expenses has fourth exercise targets. to off will XXXX. Capital them We've for to operations changes, I to now tangible that for company resulted restructure XXXX. They community-based initiatives has will the further will impressed Sales will our economies half five across scale a organization broader I share organizational into sales our into making discuss sales will of CFO, coupled Directors last galvanized passion of a sales very XXXX of be the expect Living to It with common The in and results and that created We outstanding the late has our focus call focus the momentum training our this all scale for also hand for third that partnered been in meet around our these and of Carey even and produce care repositioned that all gains successful what the financial pleasure a marketing local positive the how to Senior residents of a over well-respected with the sales and my third their in have quarter. approach our firm an tremendous optimize a move-ins. goal stronger of months is quarter marketing organization. our who quarter Throughout leaders providing have electronic us Carey? of with know to Hendrickson communities their properties carry finish incredibly consecutive

Carey Hendrickson

Great. executing initiatives revenue afternoon, operating the quarter pleased report have into excellent everyone. third job of and that as to result our Thank expense that expectations Brett you, and coming and Brett, a noted. the did and We're good the on Larry team results exceeded our quarter

and Our third the strong operating in quarter the same-store occupancy revenues finish expenses resulting in progressed, increased September. third a as decreased our to and quarter

We've Hurricane changes the Harvey, quarters third In in quarter sustaining by Capital took while first healthcare with healthcare communities XXXX the of transferred in in compared as and of evacuated effect safety. addition, currently employee plans and temporary begin Houston net residents their the proactively their Most our of suspension two the were to that's Senior expense these in XX to went quarter through cities both to damage communities this lower operations. of last third communities in the of our residents other resulted is in families, our at these their admitting significantly ensure flood to progress communities that year. other early of in June Living the Remediation resulted in year in in and Houston employee in expected Texas. Two are home residents impacted XXXX.

property the expected to of to our related restore expected operations. to the business is coverage loss Our casualty suspension is and damage economic cover buildings insurance and the the all interruption to

licensed that discuss quarter, XXXX. CFFO are measures of to have the of and units, months third the or we The cover XX In adjustment $XXX,XXX our as revenue months my to until over total whichever seven restoration in average contribution lost that third BI of we business first previous in seven compared respond transferred conversion. or for the we've our a deductible claim first. and with after any BI Capitals a September. to quarter. This is to we third of regulations. Our expect excluded XXXX. is We recorded level that in operating communities state to continuing and in the was the reach the $XXX,XXX $XXX,XXX, that Senior from of as The in until restores In will the recorded community Massachusetts, our community with seven coverage changes goal or community of The previous Living their is these one of complete middle quarter, restore interruption currently the the including other these includes of the communities, days approximately adjustment two the $XXX,XXX to which results BI from Harvey in contribution Hurricane we for be undergoing to by include which expenses. recorded quarters, remainder the The the August net residents month the to credit communities, communities communities contribution in in of the last continue net average press lease-up we was cover undergoing line and from results, additional non-GAAP continue impacted the comments significant XXXX. which since intent expenses of at renovation two note higher to four communities to months a BI The was we had of from significant income I'll these repositioning, the operating the loss. the their as CFFO our two first the comes communities our company's exclude economic revenue measures release, non-GAAP renovation that adjustment Houston

would shown by statistical since two revenue our currently include make monthly lost no communities release results over $XXX,XXX, third total our the the have the million for quarter the them reported of these have approximately of of of This of Hurricane have would third the quarter increase from over revenue or was two approximately revenue average communities an approximately meaningful. impacted measures $X.X third as communities, third to which on residents page Prior Houston for quarter exclude the earnings increase revenue X.X% or XXXX. the statistical Houston XXXX. of XX measures million consolidated the quarter, and third for The Including million the would revenue However, $XXX.X of was XXXX. hurricane, of X.X% company they the two less those an been $XXX,XXX. been approximately the to quarter $XXX.X of Harvey

the to since to increased Our operating primarily million, third due third the XXXX $XX.X we've million communities in $X quarter XXXX. of quarter again acquired the expenses of

progressed, earlier, costs, in including usual as of decreased expenses higher quarter which the noted As quarters our two than first I were year. contract labor the this

decreased third compared cost the million expenses XXXX General to from $X.X quarter, Our $XXX,XXX levels had for second to labor and quarter returned September. in $X.X quarter normalized third contract of administrative the but were historical by of importantly, XXXX. the million

June having of quarter compared was had percentage a Excluding from to cost third expense net G&A third XXXX. of third expense a $XXX,XXX compared third as we've credit of small went of Since of a $XXX,XXX of employee the also employee due of effect mostly year new both our lower employee on is to the expense. decreased This employee healthcare healthcare our month. $XXX,XXX revenue XXXX. second plans net quarter transaction management $X.X healthcare million the quarter expense X, of years, the under a XXXX, in of into every net employee third credit X.X% quarter G&A healthcare quarter XXXX compared had $XXX,XXX as compared X.X% healthcare in increase in We to to to in decrease expense this year-over-year. in a as quarter the the XXXX, so, net

in Our in XXXX renovation third of lease-up, are adjusted EBITDAR conversion. of the was $XX.X third of million include the compared This $XXX,XXX related the XXXX. EBITDAR quarter million significant repositioning, or to to not and four does communities undergoing that quarter $XX

the the which range quarter third for to second over of that million adjusted of the $X.X or year. provided was call Our the CFFO on our prior quarter we $XX.X increased $XX.X million revenue CFFO quarter's above of third million. XXXX, quarter $X.X is in Same-community million third X.X% earnings

XX XXX increase points and basis the a basis the quarter third occupancy third from which year. second from of last points of in was same-community Our decrease an the of quarter quarter, was XX.X%

XXXX. average X.X% expenses third same-community rent the quarter the increased Our quarter versus of third X.X% from monthly of Same-community year. operating increased last

costs increased XXXX quarter labor prior the employee Our versus year. third in X% the

costs staff. additional Labor shifts units communities from were have up transitioned covering over August to converted labor we employee labor away prior Excluding with by X.X%. permanent higher existing year, levels as that contract hiring higher the to in employees July care were our of costs and last

costs with previous Our labor flat September year. were the

Our year of major well the continue with versus cost the categories two only food prior and increasing utilities increasing other to quarter be X.X%. managed X.X% expense third

decreased XXXX. quarter the compared in Our income of operating XXXX third to same-community third net as X.X% quarter of the

noted expenses our our and decreased our quarter X.X%. As income I X.X%, increased increased the earlier, improved month our September. operating same-community third net strong a results In with as revenues the progressed, September, finishing X.X%, same-community of

Looking briefly balance million we $XX.X at cash and equivalents including the cash ended of cash. the sheet, restricted with quarter

billion on projects partners $X.X totaling of communities as million leased third for which million received from receive We $X.X our recurring During $X.X reimbursements at the for we REIT capital additional improvements expenditures, completed. spent quarter, are our reimbursements and to was CapEx. expect capital

a debt all approximately bridge average balance XXXX approximately seven was the September debt rate that $XXX.X and our at with $XX.X totaled XX% was for rates of Our two and at of mortgage September after. of weighted XXXX loans debt except fixed XX, at of our million interest approximately years in is X.X%. interest our At XX, maturing duration debt million average

muted quarter, healthy believe to Looking where achieved established fourth we to also expense September, the and occupancy and continue are in as the we monthly lower had experience expect average September sustainable. we've to levels in increases our noted, August We to carry the to occupancy in expect and a months. we into gains we as fourth year Still, quarter largely rent. third is enter quarter we carry expect momentum growth into fourth quarter time the the the of spring the as even in the compared summer typically we to more

nine new to are to savings contract come approximately plans are have removal since and costs offset expense fourth healthcare quarter. net into than snow fourth as fourth the employee the our is of of months we've $XXX,XXX typically quarter, went the experienced those expect quarter holiday continue by or healthcare of about in labor lower labor down June. moderately expected the parties increase but our the in at to continue costs similar quarter, lower third late are they historically in year, first levels cost effect beginning Utilities higher expected the to We and in less in the food related half levels our the costs

our December of due expenses We also and the Taking the time shifts end the fourth able on in approximately have account, depending of accruals we're quarter into $XX.X employee in and during of expect covering at to year. holidays to lower be historically the to expense vacation and a quarter currently higher to CFFO the occupancy various adjustments level to related achieved we and September. August things million year-end degree million to strength all to taken these of sustain in $XX.X which the range the the

forward metrics. execution look to growth expect business we in the strategic key of plan we As and our of produce all our XXXX XXXX, to

increase core our by than it communities, this we've we of to XXXX by to of greater The be stabilization stabilization process $X beginning three with at for XXXX. make XX in grow continuing We the allowing complete enhanced $X.X XX at would expect occupancy average to across the add stabilization, be million these Rather others back the transparency since to at as service initial at When communities. on We these non-GAAP of would be these reposition goal these than impact significant already new will implemented communities and units $XX our anticipate portfolio. made level in renovation expenses on XXXX, $X by to to million to will the our rents XX waiting $X.X and are around increasing in progress XXX the of million these take CFFO. but three the beginning results at XXXX. but for all based XX continue months be And approximately year, our our the X%. decided the growth a XXXX; to million lease-up to full significant. them the in end communities. we be work they add to the reach currently We're our our basis renovations of of communities high to units to initiatives will implemented around we've expect more modest, revenues will points to be think million budgeting lower the and expect to of for EBITDAR, we return communities large of We out and refurbishments to communities to from as about three levels impact three our currently of

healthcare in Larry that expect And increase offset investments and people, to expense. until toward noted, weighted We our year. the of more million G&A we may we we by will corporate the in in as second operations approximately the won't initiatives, primarily, acquisitions team year, some lowering important $XX make XXXX have the for the other partially so net half acquisitions begin pursuing in end of

us housing we over a fragmented and local model shareholder still limited XX% would key we're finished as in long-term things concludes positions new these differentiated considered, industry to believe metrics outstanding where a that need-driven and strategy create the scale, CFFO of market, now formal growth execution increase a to substantially competitive and We benefits we That all and in should well demographics, and for value growing demand, larger like markets, private-pay advantages, call in time questions. a long-term company with competitive currently projections around remarks in strong all with somewhere open clear economy. business believe from our highly estate will our the our supply we for our our refining real over result XXXX successful our XXXX. While

Operator

go to Stifel. Vanacore [Operator We'll Chad with first Instructions]

is line Your open.

Chad Vanacore

evening all. good Hey,

Carey Hendrickson

Chad. evening Good

Chad Vanacore

right. gain? XX expectations make heard I XXXX XX X%, average average Carey, up Hey, occupancy points basis I rent sure just you to want

Carey Hendrickson

That's right. [X.X]

Chad Vanacore

Okay. And to then just get occupancy-- here back

Carey Hendrickson

-- that goal, are is said Like we I our Chad yes.

Chad Vanacore

right. All Okay.

increase the quarter, gains to here we that the quarter. or maintain to thinking expect from Should you that from stay in flat? occupancy fourth third said you expect just the Just

Carey Hendrickson

quarter. ended level began quarter about than the -- think quarter third we at third I third -- a As we in averaged the the than higher we

So, I occupancy our increase to relates it the expect in would fourth quarter. quarter third the to as

Chad Vanacore

occupancy seen as first right. you And month far then in as the XQ? All what have of

Larry Cohen

September. We're full yet, don't we that that's typically again, where that an the holiday about versus estimate points some the trough around in basis that typically have Thanksgiving, October in are financials We pretty but we But up XX continue to again in there's a financially anticipate December. back And we we in we good increase we seasonality of February. seasons off the so pick-up this around improvement October And from over September. of hit trajectory are.

Chad Vanacore

All right.

the good pretty on trajectory. the as a have have I mentioned being well? Also that expense addressing you thinking then that? that you Have use been contract challenge in been lapped like labor And think issue. past, side, of healthcare as an claims Sounds just issue, an we

Brett Lee

cost within We're us contract rates our with also and serve will finalizing a a to that address external be the done labor This share issue. labor more to is drive is are can contract What we've staff where labor I'll existing for systematically reliance to that middleman that contract pools for third-party a labor our market-based between have existing happy create facilities lower a negotiate as contract to with employees own vendors. down Lee, essentially we our Brett and contract regional labor. market on less

that the level of our becomes those contract But And itself be I'll short to our lower. it going returned levels. excited labor So, In evident talk or the healthcare we contract less. to that see September, have be will we let will periods labor rate at when through Carey we time, maintained historical that about for to were it strategies use very anticipate claims. forward

Carey Hendrickson

side, claims we we X plans healthcare those month. our That's for receive and each healthcare pay a since the the On the that Chad, changed out. employee experience small we a have healthcare time, that on have good point had we really in credit net June had we've that of reimbursement in to the and since

that And I be of so credit a for of will project to we on not that's maybe -- to that basis level there been credits, some having kind month-to-month category. expect experience It's June. going since [Indiscernible]. a forward, as continue that kind of positive hard that go in expense maybe for experience would

especially So, be -- that I the think previous will compared to as very good year.

Larry Cohen

in that five think has mean that back Chad, both months as an Yes, becoming program item. in for healthcare the is restructuring, sustainable reducing June far demonstrated I of the as and consecutive I effective, more costs expense

Chad Vanacore

All right.

question, me. stick last year. this So, about million [ph] as the that from expect an second question don't point? this Should acquisitions; averaged around half? anything you you then mid-XXXX annual your until you've $XXX in ramp average basically we large Historically, a up the entire half what's And historical best just or shifting capital at

Larry Cohen

down half start grow sheet. be the in second looking come market year. the a will million quite next use acquisitions the bit we'll year. in best of to cash to mid-year. Right the diligence cash the and of process of have $XX we're our due in CapEx Obviously, in said, closing probably balance Carey the as now, about Chad, transactions the is

We the million spent, properties. think, in three last I have $XXX years on

occupancy we're benefit I of that nice because of in seeing our is physical think one in the made. investments and the improvement all these the improvement plan we've our just in rate

the sheet, of position up acquisitive in are the part middle So, be going balance I stoning very strong in a year. balance be to the to next sheet very, think strengthening we build and

Chad Vanacore

All right.

me. for Thanks. it That's good. Sounds

Larry Cohen

you. Thank

Operator

from the comes of line question of Gajuk next Joanna America. our And from Bank

is line open. Your

Joanna Gajuk

better came performance you. expected Thank so, were had that I question third the than than drivers the since for better Yes, your around quarter guidance, it first had it's what performance?

Carey Hendrickson

our third month one the occupancy came growth of quarter. Well, had Joanna better would our in new than in experience into we Also we we quarter, coming as just we came had healthcare have expenses expected the into on the and quarter good plan. third

was third I full actually for So, experience that have that a not and level level we yet of quarter quarter. experience comfortable the projecting did with

main the are those drivers. So,

that growth was good Just a and quarter. real focus in on occupancy expenses the

Larry Cohen

and that hi, templates. Brett I of the made I expense putting in the actually expectations put staff, for Joanna, recovery should we and introduced worked this We've congratulate want thank future. culture August a and thank objectives in mean there's the encouraging management goals communities. what's in exceeded staff initiatives expenses to of outstanding Larry. the really shift the where to the regional want They out is the and difference. put We've said savings on-site as level to really out each numbers team, into staff out And really performance. a operational corporate the and hard it's we and be I whole sustainable

Joanna Gajuk

on much years. guess August, for what XX guess or XX guess, obviously next for goal, than it since going traction basis that outlook I Carey when -- is down to I And have is talked been better year your occupancy somewhat in I points, nevertheless front, but you about maybe this for Okay. the would year, to but be in five it's talking about lower for

to be just this XXXX? you drivers this is year-over-year to occupancy for the is a program? And the of from flush expect end can of So, just this exactly end XXXX that the you what confirm or out increase

Carey Hendrickson

to XX year-over-year XX basis a the It’s increase, points.

Larry Cohen

a significant as in big the season year, had with think more the we occupancy, flu typically past years, We've couple conservatism the entire where difference the first in really did quarter. prolonged I outlook of is industry. Joanna, the lost this

more being that but rebuilding. XX anticipate grown we we'll cautious and widespread first the Hopefully, that, than the with that's have in because or encouraged really and in then we're that also the been has very we of June. potential I we're and being conservative in the weather. I occupancy occupancy year. by we over October growth better Again, be quarter points pleased next think reduced flu So, XX throughout I'm by am growth nice again from days, It's looking fact improvement for the improved how basis portfolio. what

all in staff, investment increase nice made be occupancy I the of the So, real we'll the the that making in rate accountability, and a initiatives, think yield the should other and for XXXX. we've the estate, training, changes

Joanna Gajuk

All right.

you're or [Indiscernible] another expect just you more kind of of So, strong a QX, just season sort month? conservative you're saying on flu I from that guess

Larry Cohen

-- conservative. the goes. There's being to season. the as today flu about just indicate as -- nothing conservative that more We're We're outlook

Joanna Gajuk

-- then the in CFFO increase of around XX%, so year, talk that about when the similar Okay. the terms last commentary a are the that's talking of piece increase you're here next for year-over-year about And you year?

Carey Hendrickson

A finish from we wherever year-over-year in growing increase about XXXX. XX% that XXXX, by

Joanna Gajuk

within drag saying going to CFFO? at communities they there that you're fact despite stabilized include something? correct? contribute And So, they going that going saying were is were not you be then to to the a are three Or are those you to this XXXX, large

Carey Hendrickson

from beginning a more -- No, the year the $X those drag in the there There fourth at end million in will that XXXX. the most will contribution By and the be their see CFFO XXXX, be that to year, noted of $X CFOO. out -- significant -- obviously, modest not middle will should full to of the communities. at will to start will be through they quarter contribution and be grow of million I it into we of

Joanna Gajuk

on topic. last if then I different may a -- And one Okay. just

you have there In your [Indiscernible], have. than some of it's that assets, families, you leases still you still are -- so it's terms but very of XX% mean more own great I

us can in just escalators? So, of stand lease your you terms where remind you on

Carey Hendrickson

depending particular Yes, to X.X% X% the lease our lease agreement. generally on escalators, they're

Joanna Gajuk

for from all me you. Thank That's Great. now.

Larry Cohen

Okay Joanna.

Operator

next go to Hambly from We'll Instructions] Stephens. [Operator Dana

Your line is open.

Dana Hambly

you And a Brett, And it at Director either these implement a you level model. changes? actually lot but employee details you welcome. little first results, sounds as or Director Brett. the for the I wonder does thanks. turnover in all on Sales like Executive and the for Thanks question Hey, if good sound of any the notice it its My difference is overwhelming level centralizing producing

Brett Lee

organization what Thank last No. for I you leaders in months. of how have place excited across the Yes. really been the the and impressed couple incredibly to I'm responded with to the company have be welcome. put with we've the over

take goals. company to Directors tools And the Sales call real-time to the the this broader to think them Executive this local expense with regionalize focused to create of the out and the look organic company I some in investment with to of are significant management scale in message then metric-driven as that globally. the and and expense here burden need of with successful we around we what more help as recovery we across I level financial for that budget large and from where We resonated very them the really with we all can they them. the the we amount opportunity home through that track a through training well very of P&Ls of think ability some these be expense well categories We've their categories rolled we've initiatives that nationalize have talk them. trying And tried of at to level sales both large value to these accompanied arm Directors going office overarching be the to these training Executive the appreciated sales even the have office as entire the is create the home they well a Sales some for with scale economies an saving have weekly Directors. these as has need where making what's Directors have or I templates, doing to

any increase as of haven't is we I turnover the any think and our leadership into quarter. incredibly company the we So, in positive move fourth tenor really in had across the levels

Dana Hambly

what some up Brett G&A mentioned type talking are Okay. you Good we about? going investments, of on magnitude year, what or talking then to you And the investments hear. are either of next Carey, and expenses kind

Carey Hendrickson

and place. There we people still working -- initiatives We've speak year. IT you side, it, Brett need there make but next are need Larry my both let then to we're we some those to that, in in can want on -- investments implementation have side area And to to on might put the are speak IT for speak? Larry schedules Larry we and area. working Yes, been but and/or to we the on it's need magnitude of some Dana, I --

Larry Cohen

Yes.

we're some a said earlier, to add are support Carey there as more So, going the things in centralized to that the process. movement operational teams

the is said, see some as staff Sales of at accommodate. As odd, area ability benefits in won't take Directors would one more property of that worry every of and more Carey some about that beneficial. I office [Indiscernible] the well, Executive level to to because be think the Directors some incurred so There should and have this a that that of think to there And in as But have corporate will payable be obviously the are accounts to strategy, XXXX, part issues be made will we costs these that we that will properly. attractive be investment almost payback. -- handled be which planned payoff very will fact again,

for pay should themselves and cash really they increasing flow. revenue in So,

Dana Hambly

Okay.

was deductible Okay. it cash a adjustment the Carey, think And again, BI net to little the about flow, I was you I on $XXX,XXX and that then mentioned positive correct? is a and confused of

Carey Hendrickson

-- I with for Well, for that those actually or communities. those communities two the was that $XXX,XXX whole eastern was -- are quarter, two

Just positive quarter from we And would in have speaking was standpoint of us $XXX,XXX. the $XXX,XXX. to somewhere third third BI quarter got a the BI been just to around itself the impact related the in that net

Dana Hambly

Okay

Carey Hendrickson

have restoring -- that's we but course just So, what had that normal in for that's them replacing It's just loss. would communities. those to -- two

Dana Hambly

you. Got

Larry Cohen

those income, a they restores while are from or stabilization. the cash properties it and [Indiscernible] flow they Basically-- closed until loss up are re-leasing while

Dana Hambly

sense. all makes right. That Yes,

Larry Cohen

Yes, that's all right.

Carey Hendrickson

That's all.

Dana Hambly

Yes, all right.

that really have those been cash flow negligible, facilities Had So, contribution? on open, had net impact been the is those the has been would right? open,

Larry Cohen

to Basically -- reimbursed would the those position in us have are back had for all we to the of deduction operate. properties same $XXX,XXX been we continue put deductible,

Dana Hambly

Got you.

more that made I Sorry, than it complicated was.

regulations, discussions? are seeing facility one mentioned other Massachusetts REIT on you due me, what's states similar to any in going Massachusetts? for in state Lastly And you operate having

Larry Cohen

a into on unique staffing in regarding XXXX memory regulation effect that There's to was new care. Massachusetts. It's, I think, put

building has that care. floors memory of a have We two

the We year. care which at have building, earlier this XX% expanding was been occupied memory about working this on

So, put to we the adding another up staffing there would shift we fill And based with that distinct units regulation, the and fire each having interpretation FTEs expensive. by an would triple the had be per demand operation XX beds. that XX very beds because separating doors five the that an to floors three we state beds six be was on two. will existing have would shift in two believes obviously wanted that That versus units, additional of

not is one to traditionally doing be and one impacted we're be by the regulation. we're contained what unit moving new able level and to to everything So, more staff

Dana Hambly

for Okay. me. That's it Thank you.

Larry Cohen

Great. Thank you.

Operator

Brian Hollenden Sidoti. to we'll from And next go

is line open. Your

Brian Hollenden

my for Thanks call. guys. Hey taking

Larry Cohen

Hello Brian.

Brian Hollenden

drivers what largest move decentralized organization, As the are that you of from you to realize savings expect XXXX? in historically a

Brett Lee

Yes.

of we our some will expense forward. get telecom, we which category, categories utilities the just but and rates continue continued look experienced opportunity utilities, centralize into have different labor going better to that and more large not XXX those, savings like. you going experience can When is around addition biggest service, get in can think I food, we to only second at contracts like our we If largest expense cable, today. we reliable is our the XXXX,

the in years, we have across we've going got consolidation tremendous Around the cost, there we've and competitive much participate of anticipate into we through we some for although, decentralized, a So, XXXX. been GPO because company. centralization, become able and more should be to food variations so

varies cost a our meal of to contracts, In significantly our meal $X.XX low per compliance per terms with from high company of a of those our across $XX.

to our of home more process those -- will months than offset to us here reducing like our couple at that maximizing the that accounts looking the effectively, of also ease centralizing that prompt our advantage wastage. that continue also discounts trying So, pay done menus it our But components to over of food by allows we'll sure be in some taking of more standardize make we've contracts, payable, utilization at the office. cost the but last we're adding GPO

larger being in a we can just this more large to under of really variation relationship. and act opportunities thoughtful expense these that reduce spend how centralize the we we as so and that it's company GPO a that concept so maximize have trying general really And about categories

Brian Hollenden

Thanks for color. that

XXXX? So, what to decision your until middle make acquisitions is driving not the of

Larry Cohen

our make acquisitions. if contribution, improvement and the units those have so X,XXX we have investment valuable regional staff. we cash training pursued far you units exceeds at These acquisitions are the corporate return initiatives of look return improving even on the we way staff, with sell. on occupancy, involves The Brian, the we the the on still that performance, the could and EBITDAR flow, that

recovery also established with focus be to improvements have we acquisitions, speaking want about on stronger a where foundation we plan of which that really and better from will initiatives to sustainable we're have we So, take other a seen position once and that the we're XXXX really them. benefit we've other implement additional much into acquire this to these to

the focus it's these think right operating a year. residents, people for the second pause communities, on carrying of initiatives, the now, on very a occupancies, keep acquisition to improving So, focused we the half and in take setting foundation various prudent strong to next continue then

Brian Hollenden

for right. And new me. one on update supply growth you an last regions? All any then geographic Can give in Thanks. your

Larry Cohen

that, say we been at update that from this look slides filed, have quarter. the our most in fairly the of every XX, again, you slide well I just If insulated markets. we would supply we

-- in about units of Columbus, XXX market, XX we're construction Ohio, country, only our --- XXX X% a one at have you in markets property XX.X% we are unit the that's only look the where community, community about highest If top occupied.

Metroplex. being the is again, and market competitive. interesting and thing Texas the been which we as Dallas markets a the lot XXX%, quarter. talked -- focus still we about Occupancy in maintained North is had properties -- XX% that Hurricane had we improvements consider are we I So, being see the day in were Houston, that's One in the of those occupied other a Houston that people market, Harvey, over-built. before

lagging, in an property of those we're XX.X%, of think not median that not is one that's our markets. their [Indiscernible] exception fact that most our in again, are frankly, North with in highlights the are the with occupancy widespread I that issue, the that markets fact quite the supply. So, market occupancy seeing, properties And really Dallas still improvement the in

very we to be well-insulated. So, continue

the they're now, that is those cost just our run and Their have such The and and up make California, other construction clear Harvey banks getting that lenders, to in And two equity to on to years the XX%. basis reiterate, disasters, I Florida going workers. just There's finding who really the all have other increased expensive by building points. pricing there's components even for delay Hurricane of build very would to like the properties our effect that feedback into lumber from other and lending speaking a other developers XXX parts conference those more has increased supply, they're to really the back it XX cost is thing hurricanes because are increasing. and in shortage money, of it of more construction cut

So, now industry, we'll see in that quarters down. starts outlook of that the for are number a a for I think pretty the [Indiscernible] reported is encouraging, slowdown supply. has

widespread starts two supply. the ago. around we demonstrates benefit think where that were But, we're impacted are have our less years think seen in once again portfolio by that not new being I the again, quarter than improvements half down in I to they

Brian Hollenden

All right. Thank you.

Operator

of have from Instructions] a from America. Gajuk question We follow-up [Operator Bank Joanna

open. is line Your

Joanna Gajuk

so thanks Hi, much.

saying how you be around next would what but do going some be be just commentary this were are but the for so does year-to-date quantify year I on the you XXXX? to training know can it you've outlook, labor able what costs? you year? expenses, the either I think for expect, know Because increase, to it's expect that you compare G&A offered to guess, you to So, it not or higher, by what increase do us And XXXX on I color you give

Carey Hendrickson

to on I should somewhere be X% X.X% level. Joanna, -- they a think around

I the to expenses for X.X% whether going think normal it's the be to a us X% level level achieve. to able much the XXXX. sustainability pretty depend on how is that's or And of in of going we're

So, range labor. I for think should be the that

Joanna Gajuk

what XXXX, you is four to be think for going Okay. quarters, so for And but all guess? I for then -- then do

Carey Hendrickson

the quarters, X% closer to -- probably All four level. in

Joanna Gajuk

quarter, the of on on very [ph] was Okay. I how about And September may line terms your then front commentary if in the strong.

is versus So, three off in in -- weak, I'm for it just were thinking September, about they months to best QX? seems the month like August, what pretty but now typically July, the much

Carey Hendrickson

month, XX. is July XX because days partly days. opposed And as It good to it a has both typically August have XX and

So, had then that put the we areas $XXX,XXX that just less having into of had we that many you expenses improvement place. because from so in in less have and initiatives And day. one were the

the September previous So, while better it versus much other year is in months. we years typically the two than this were better, in

Joanna Gajuk

Very good.

September. that the month You expenses of down were said right in actually

Carey Hendrickson

the month September. were. They down X.X% of They in were

Larry Cohen

Yes.

again, say was Just -- up X.X%. September-over-September

Carey Hendrickson

That's right.

Larry Cohen

another June, XX%. month, up XX-day September over was

Carey Hendrickson

Right.

Larry Cohen

in NOI had the history unit actually September. the in We of best the company per

Joanna Gajuk

you. That's for all now. for me Thanks. Thank Great.

Larry Cohen

Thank you.

Operator

I'd portion to Cohen And it that remarks. to Larry for back like concludes the question-and-answer the call. of any closing turn now

Larry Cohen

thank again, and you I to Well, all welcome call first want Brett participating. today. for the of all, I to, thank

As any today's next always, if in a call. attending. Have over you seeing thank follow-up and questions. great afternoon, to some there's feel a that again free And call we few give to forward be the participating us you look weeks at conferences for we'll

Operator

today. does that conclude you call our And for Thank your participation. for

now may You disconnect.

Sonida Senior Living (SNDA) 1 Nov 172017 Q3 Earnings call transcript