CSU - Earnings call transcript Q2 2021 | Sonida Senior Living, Inc.

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Operator

Good day and welcome to the Capital Senior Living Second Quarter 2021 Earnings Call Release Conference Call. Today’s conference is being recorded. All statements today, which are not historical facts, maybe deemed to be forward-looking statements within the meaning of the federal securities law. These statements are made as of today’s date, and the company expressly disclaims any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements. the that the actual issued XX-Q. time earnings as XX-K as reports factors are to earlier quarterly to these files and annual well in company report risk detailed release in in time, of including could SEC Form factors results cause differ today with the Certain the the contained from the reports on the Form company on be found see this harbor may Please press statement, furnished was the release morning. filing the safe full at in today’s for X-K and capitalsenior.com/investor-relations which an the Also, will please note that during non-GAAP this call, measures. company financial present

the of For over Living’s Senior and press reconciliation GAAP At to measure, CEO, from also President Lody. Ms. each a turn the release. most would comparable call non-GAAP measure I this Capital today’s see time, Kimberly please to like

Kimberly Lody

you, second Good our Thank quarter XXXX and to afternoon, call. Doug. welcome earnings

Officer Vice Joining Chief our me Dutton, Operating and Finance. Tiffany are Accounting Senior Brandon today of and our Ribar, President

points. low and occupancy to an continued in pandemic occupancy was report with continue the and dedicated spot we day the cumulative talented operating doing Occupancy XXXX monthly quarter units of our XXX and results clinics of occupancy indicator to units a living by points. all sequential to in our in February. growth, not Living XXX vaccination We grew to every care Capital XXX full delivered Senior and by residents their care months basis which points July completing our experiences good of the at occupancy our I XXXX, average average QX from a in grew of only July Comparing to challenging occupancy now end increase in the that is memory determination in recovery with resident and the independent recently communities, attributed strong points, monthly consecutive XX.X%, and since along navigate we of XX.X% this portfolio. demonstrate of upward month our proposition X living three of have basis pleased our excellent win grid pandemic implemented have average momentum. of of believe increased teams basis XX.X% across As so single resilience variant, strong teams ever-changing the provided assisted differentiated value but every first QX Delta day sets we performance the from and basis XXX community to our COVID-XX their is units, segment, of environment. despite the quarterly occupancy the emergence occupancy am

from with of peers X.X% since the XX-owned pleased in fees our management communities, taxes and COVID, to the and quarterly which and first that recovery communities, margin improved This sign or has onset first in are estate XXXX In increased encouraging revenue second of our for sequentially continue to sequential revenue operating the of for to improvement quarter this quarter. first XX.X% $X.X industry believe excludes in take of insurance, quarter to XX.X% our million We outpace year. Net portfolio we XX-owned second growth. occupancy progress the quarter income this the the hold. and represents compared growth includes begun an real

claims G&A, XXXX low employee as higher $X.X to to extraordinarily the and pandemic. in same primarily of benefits Turning year-to-date by were the driven was due expenses million increase COVID-XX these insurance health

June $X.X same last insurance-related costs expenses to the year. XX year-to-date declined period the Excluding compared have through G&A million periods, health both in approximately

transaction-related health G&A expenses, claims As XXXX, decline. and insurance expenses, excluding to we non-continuing transitions continue the of complete second remaining the to community expect half employee in we

throughout pandemic, our strong been this did evident is Senior in from the pivotal decisive put While very for has took additional a on a the address is for our while cash ongoing XXXX XXXX stress XXXX of And liquidity underperforming and has environment we of work time in resources. years. we many operating company capital-constrained the to now the in statistics pandemic Living. the recovery shedding Capital hard The company’s communities, actions COVID-XX pace by

mortgage outlined debt for we and Additionally, million pressures on in liquidity another of maturing have $XX million facing been have December of April recourse and year. since $XX next These we of of been the May take evident mortgage we provisions we in past doubt with XXXX XXXX risk. maturing our to non-recourse debt of our financial and going this results significant as concern, release about expressed a our and taking company’s steps to mitigate were March continue XX when the to the and months ability continue

We turning increasing for new the growth pandemic the corner and is decade supply accelerate while decade. with at is are now to on the of the low demographic occupancy duration poised

of for $XX successful million, by real $XXX.X conducted Directors their strategic alternatives rates However, investment with seize limited Conversant. offering, staff $XX.X million, environment support of along up explore to offering from challenging point a the but million also pressures pandemic, need to many announced further only which the inflationary fund, the a is long-term support and in On track strategic of a of July Capital, communities XX, unanimously general convertible and strategic institutional operating investor Board This Conversant experienced the our we rights near-term platforms Delta not the thorough in and a proposed require management and teams. with Living’s near-term plan, an the capital. partnering the recovery recovery process variant, inflection company and equity approximately remains in to availability with common responsibly To investment, trajectory the of a additional and will a uncertain growth this growth. to invest we from preferred estate Senior capital costly, record partially requirements Capital backstopped due proliferation consisting very markets, raise and the the to to approved

from future subject year. to is quarter transaction allow offense in will to investment. to accordion Living playing and ways: provide Senior shareholder quickly by playing will pivot Conversant pending addition, fourth When capital first, $XX enabling approval during close grow to Capital is In expected assets us our to This a approval completed, earnings. of raise million for into X the important defense investment significant this this

capital. We the portfolio have of a of to pipeline select projects of that in our expect in in this provide position we returns markets investment competitive our and excess strengthen new cost key

terms a to XXXX maturing Demographic of additional million for on success. With million, X an maturing growth productively capital deploy option full financial XXXX. XX-month an bridge and with this pay-down near-term This fundamentally Second, the for position December for by been capital extended and where but of pandemic-related December never recovery, essentially X We constrained. responsibly of of maximize strength. fortifying we now months that capital of environment investment strategic The better by The scheduled to approximately the strengthens between Capital needs plan we the many operators from there raised May maturities fund were been accretive $X.X which business exciting us Senior $XX.X helpful believe provides of non-recourse working extension the to loan installments addressing can value million same of long-term third, approximately sheet are million sufficient from and to for of certain to capital can The There the $XX lender they future. and over yesterday mortgage recourse trends mortgage time foreseeable months Living. the to $XX.X the debt recourse so by balance near-term has create have by sheet, shareholders. in the in extension will the as the comprehensively previously, debt remains so the in The has partial of we in meeting the capital be bridge an for is assets the be paid company course loan XX we part providing extension. balance of required amount our our a mature debt in are transaction finalized criteria. a strategic capital address And are already place, a loan the the extend loan and acquisitions was of of and favorable. XX. catalyst just both investment to as months

lows. at decade is supply New

measured, Our half for X-year ready Brandon our operating operating foundation strengthen improve the financial to next the sustainable focused now performance and turn call and I are second on and to growth. transformation is more responsible expectations. is QX performance engaging on detail our and provide experiences over to and we resident which nearly exemplary care, will chapter, complete,

Brandon Ribar

afternoon. good Thank you, and Kim,

with early environment dedication QX and teams and more open industry and employee monitoring variant. communities, more the the you we tirelessly in of through fully rise community. of efforts be vaccine to related to family not across Throughout focused the of increase employees remain As communities vaccinated, leaders and increased ever-evolving spite closely effort We the remain the our operating their visits base to while stages Senior proud levels at tours XX% ongoing mentioned, with the landscape are than adjust the across for of operating Living. to worked low important operating and our also local on QX, education percentage significant vaccinated the the local within associated local mandates. could of our state, guide safety quickly more residents fully national and Most of to cases of our our environment Delta the COVID

yet remains ongoing move-in in marketing to and in of this level at lowest and secondary the Move-outs volume cases, option thanks July environment Lead vaccination and volume to to part remains in and strong. reached outreach increase level digital not strong. local early occupancy careful May decision leadership. labor forward tertiary the volume national Despite as markets. and and also since were employment X of conducted the with efforts years the while of finalized, July move remained certain in regional strong is highest been COVID challenging leading the related XXXX. our a in the by While Lead has August, under condition tour tour the indicators weighing in nearly our consideration

capital to invest XX months our have communities availability supporting of our to significant gains While many in over paramount XX our with significant specific meet in investment growth area approximately X The next XX amenities the refurbishments, in of is resident to to of completion QX opportunity. communities in conversion Capital of near-term units the existing within portfolio. capital wings of promising, certain growth million months. demands our in strategy care to opportunity occupancy present markets previous $X and in further the following communities to focused begin growth growing the the are segment upside raise. of memory Commonary our the are common near-term over continue upgrading of and occupancy units refurbishments slated

care of and We have also months. conversion assisted communities fold memory on memory to units these targeted XX% than average. with expected these completion our improve Ohio units Trails Wisconsin recently X unit returns are XX dates generate programming Magnolia and will living of mix independent living care into inside conversions in wings investments the These exceeding more Collectively, and developed communities. XX to for across

behind rate began QX and in just rates of slightly with the QX latter margin, $X,XXX. average our to of averaging Turning part improve to rates $X,XXX, June

first year. result of to from the to decrease. the to X the of elevated and the occupancy, QX continues direct of a As sequentially due concessions declined and move-in decision months data June July, of size use on onetime slightly Based concessions impact grow strategic in our

half We expansion expect rate margin the referenced improve second growth to XXXX of Kim in in the her comments. further

leases. increase as their increases renew take in-place average rent place rent QX, X%. in-place And Our residents our in was

existing ensure our level workers’ our adjust expect margin excluding of while and and for key the previous referenced to labor improve increasing service the levels benefits continue we the days, calendar continue local to retention In per labor our labor and $XXX,XXX maintaining throughout care opportunity and year. total labor remains to We this compensation, our discussions, to our remained occupancy. expense, Adjusted increase market providers. extremely teams The wage of challenging, day versus QX. to flat at frontline pressure by

sequentially, of executive our We and delivered are with debt remained the and leading in revenue of of NOI of consisting rate primarily food stability our key inflationary staff and at X.X% from strong X.X% expansion advertising operating sequential as a growth, leadership X.X% indicator supply-related an stability primarily is and comments. metrics, in roles margin items expense combined X.X%. in revenue strong The expense performance. expense our XX.X% referenced already improved growth QX. by marketing retention X.X% QX bad These of Variable Kim’s low expenses encouraged and and food, in directors of driven key increased by

Our variant to adjust operating nationwide retention of and Delta on safety and staff. team increased COVID and while care residents the continues and to remaining impact the monitor the of frontline focused of cases our our

call turn financials. the detailed a review Now over to to I’ll Tiffany of provide our

Tiffany Dutton

Thank Good everyone. you, Brandon. afternoon,

over and operations the see was quarter, to in team the environment second and excellent points residents results move-ins, completed positioned members. traffic an us growth. to continuing years have to and mitigate basis for their and average safety course to increase has control an During within the while do quarter stabilized we actions XX.X%, X impacts continued to challenging, costs and our their remained increases continue for The the has the of The on future in previous managing health the we and past quarter. our the so our the operating overall occupancy of of as prioritize compared staff COVID-XX business XXX job of

As second for to important second is all quarter consisted of note XXXX or communities portfolio that of I our the the XXXX, of in the quarter to the fewer comparing same of the of review part XX quarter to quarter of it XXXX. compared communities XXXX of second financials our number consolidated

sales second reported by partially of $XXX.X revenue conversions and an reimbursement million. $X.X which the Our XXXX, of we costs to also the Most quarter $XX.X certain million throughout increase were of communities, of associated million an reimbursement for of $XX.X statement. million XX these XXXX, revenues their decrease of XXXX. compared of was fees that in properties to offset the managed of income related revenue our the management the operating offset second as second on the the is in quarter on paid the related in with community $XX.X quarter included million to was expense behalf, or

Our the management rate for average increased increase in is second expenses second XXXX. decrease is basis. the XXXX. approximately to in decrease fee $X.X average the Operating which XX $XXX,XXX was the quarter, were million to majority community of quarter the revenue to the on of due million from remainder million, The a decrease primarily when in point dispositions a compared $XX.X the revenues quarter expenses in during second quarter revenues $XXX,XXX. decrease a of expenses for the quarter second in the occupancy. in XXXX of XXX combined or Resident increased The of previous Operating due $XX.X the accounted to quarter monthly compared a quarter-over-quarter. of X.X% basis second quarter first

labor in a continue operate We tight to market.

an resulted or occupancy and $XXX,XXX expenses. and Our employee to sequentially our during advertising benefits to our of compensation expenses due increases increase the growth. quarter variable increase continued primarily labor workers’ occupancy X.X% $XXX,XXX increased categories due costs other to initiatives which to remainder The and in increase the quarter, other expense in in from marketing combined and food investments during

million margin, relief which Our net expenses income operating exclusive included, XX.X%. funding later the was premium costs and as of we to $XX revenues define less operating are and our was COVID-XX operating

is Our general the for second was The $X.X related million COVID-XX EBITDAR, increase $X.X the of excluding for negative quarter. and excluded, and million are executed approximately primarily XXXX Adjusted the $X.X million was for negative in which insurance decreases quarter costs, travel amendments million second lease health XXXX increases in funds $X.X the workers’ quarter. last quarter in a a movements in $X.X expenses, in million. CFFO was of million and Adjusted administrative When offset was expenses, relief increases adjusted EBITDA and to quarter million were partially year. COVID-XX of of compared the CFFO by of second expenses second Adjusted second to to benefits in were terminations that expenses $X.X transaction were and the employee XXXX. compensation-related $X.X quarter claims, the due XXXX.

decrease Turning $XX.X XXXX. XX, in the unrestricted the we decrease liquidity, at $X.X March June for of reported from at million twofold. cash The XXXX, to million unrestricted had cash a reason million now we XX, $XX.X is cash balance

our improve, our during financial this since order the to about which was to made company’s tear exasperated have lost wear certain and XXXX, properties occupancy position to concern. by doubt the entice we capital properties. in substantial have as fund amenities To COVID-XX caused capital the to to a pandemic, the deficit investments to in ready our continues operated very our Although pandemic make continue apartments future pandemic, in residents working we ability and rent of to by growing a and upgrade recovery address

We operating to at our investments and have program the also made implementation both communities. Trails related Magnolia certain capital of

the XX, pay-down expenditures ratio with capital the year-to-date term totaled quarter December with debt occurred extension that million on in the $XXX,XXX service and certain of maturity for we establish required of debt to to XXXX. beginning are service for $X.X of to through from the million Today, December if extension, of that the coverage of of quarter million. Our waive not March or the December XXXX. be XXXX term loan principal as XXXX. before pay-downs we $XXX,XXX achieved, reserve failure end loans the will December covenant and second extended financial Subsequent $XX.X announced extension $XXX,XXX the XXXX of metrics required then X, the $X are we a conjunction a BBVA bridge In principal date make of pay have

million the of December other XXXX. to We regarding with is near-term bridge our discussions loan, one be active in of lenders in scheduled $XX.X maturity currently totaling continue that the to mature other

regarding are loans, discussions we in million with In have lenders XXXX scheduled to and currently $XX.X prospective totaling that addition, XXXX. current mature begun and

As for position towards require to company growth. future, we continue our we as fund we future the recovery recognize well to look that capital the as

we strategic As along with the announced up million. proposed offering rights a Conversant to $XXX.X together recently Kim Capital, raise that mentioned, will investment from

X-K information the Form on SEC please was For more proposed with XX. that the see transaction, filed July the on

will preliminary coming addition, the SEC In in days. filed a proxy with be the

of with properties underperforming ownership We Mae. progress transfer continue XX the to to of Fannie

related extinguishment of second on ownership bringing quarter, six completed legal Fannie to transitioned recognized have four transfer million the of those the the successfully an debt of of the XX communities. and we the properties additional communities. to $XX communities, dispositions Since the end we quarter, ownership Mae the and During a of additional transitioning of gain liabilities XX our total of

of accrued the ownership legal sheet included $XXX.X expected At those transfers accrued the XX, the interest related extinguishment on remaining is which remainder we to Mae, June and we payables million balance in properties recognize related on to $X.X the current on in XXXX, and debt properties. nine occur gains throughout remaining interest of to Fannie our to of expect As properties. million debt

As results during platform foundation financial improvements the we are towards and our have last operating realize we beginning significant of the future, to to we the made years. look the X

move With wellness as and marketing, phase Conversant our of plan Trails, Magnolia the and continued are capital growth. to into our from we of programming new well investments as in from our strategic investment the the transformational final poised Capital sales

are remarks. for I about since in in our open early the our this have months operator, ask our Doug, are and that will pleased prepared now continued we spring results line optimistic concludes ahead. We seen the occupancy questions. the to That with improvements

Operator

Valiquette Please [Operator comes line from you. question the question. Barclays. proceed Instructions] your Our of with first Steven with Thank

Steven Valiquette

Good afternoon everybody. thanks. Hi,

Kimberly Lody

you. Thank

Steven Valiquette

questions couple a here. just So of

you XXX margin XX.X%, bps. communities, release, real into But expense taxes expenses the and which quarter include the the and for up estate a in at the operating Page Page then you up Just XX.X% XXX real the that XX itself, is NOI margin, presentation, and insurance bps insurance, the on exclude in on show the which slide NOI translates expenses, the estate press is then sequentially. taxes XX and owned you and the X on operating margins the around just

Thanks. thought guess expenses including to one and those I I another, thought comparison just was kind the excluding the so pattern and of just to or on in understand can trying them about the think – better we best excluding pattern that. way So then understand in just

Kimberly Lody

Yes. Thanks, Steve.

the XX.X%. from able excluding we information kind as taxes margin that release the the of at a X you comparison on expenses supplemental items. because the those So That’s we to calculation those relevant look press insurance that’s be assets, Page is that that just real think results. that that and When a of operating schedule look the representation taxes business the company insurance. our presentation, investor two is operating calculation expectation the of historical the those that include line in at pure components estate with referenced, reason in their needs we has of The supplemental doing include that our the is XX.X% real of represented. But the more portfolio assets expenses cover those two include you to should and the how NOI of operating estate versus

Steven Valiquette

That’s okay. Okay, helpful. Great.

the this just So are just that XQ round And in and your roughly labor line of then, raw in amount relative also included regarding $XX expenses call with Thanks. that XQ the quarterly from of in just tying each numbers, year. and to comments operating you quarters? should then use forward it, when extent tight million think first quarterly had, let’s operating here that in how that market, expense those to about we going the we both saw million two dollar expenses the trend labor $XX

Brandon Ribar

expenses of remained And referenced you my occupancy. experienced labor quarter-over-quarter we when referencing expense we of dynamic occupancy workers’ say, looking the we keeping Steve, on continuing compensation, that see environment, back did think as flat heavily increasing our said while we’re kind I to this flat to comments, my that, in increase. focus very, that labor comments, are the our at some in in we’re as exclude operating expense and previously Yes, we’ve I’d just and while benefit

referenced bring to I that we you million $XX as continues the opportunity overall evolve. see think So down that it just environment within to

Delta there away market a around then begin the go right evolves near the variant towards to the just the is may here just how have what government going here – the now end and is to think I future what impact bit that uncertainty of supplements as of year. the in labor

we lot So occupancy right bring now the opportunities so are But at we’re looking in of to down a get of benefit the increasing we and going that variability there on market. that the revenue is that number delivering. and just what’s labor

Steven Valiquette

great. Okay,

then today. questions follow-up And around simplistic just for some I I’ll a but keep offline had I activity, just investor the those things of Okay. more few recent think with to

thanks. So,

Kimberly Lody

Okay, great. Thanks, Steve.

Operator

to our concludes session. I’d Lody remarks. for Ms. to it like That question-and-answer closing hand back

Kimberly Lody

Alright. great Thank and day. Doug. everyone a This have concludes you, Thanks, today’s conference.

Operator

Ladies today’s and your conclude gentlemen, Thank for does this you participation. teleconference.

may You this have and time lines your disconnect at a wonderful day.

Sonida Senior Living (SNDA) 13 Aug 212021 Q2 Earnings call transcript