Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the Sonida Senior Living Second Quarter 2023 Earnings Conference Call. Today's conference is being recorded. All statements today, which are not historical facts may be deemed to be forward-looking statements within the meaning of the federal securities laws. 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 filed 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 morning. harbor may Please press statement in furnished the release this www.sonidaseniorliving.com/invest-relations safe full at the today's for filing was and which X-K please the non-GAAP Also, note will that call, during company measures. the financial present

each For of please also most today's non-GAAP reconciliations comparable GAAP measure, measure from release. press see

Ribar. I turn like to time, to the this Sonida would CEO, over At Brandon call Senior Living

Brandon Ribar

our Earlier our we today, will posted presentation, for the Thank Quarter by be this quarter. welcome Second referenced today joined investor as and Christine. Earnings we Officer. Detz, discuss I'm And our Financial throughout strategic results which Kevin priorities to XXXX operating our QX Chief Call. you, call

can at the if Relations section to sonidaseniorliving.com would presentation find like our Investor you follow in along. You latest

in look more companies average and taking truly and was industry QX a into quarter, and with providing and to XXXX a for sector. are views surpassing consistent with shareholders management our team analysts labor presentation, our our comprehensive materials of our investors the enhancing the to early efforts quarter business Sonida best-in-class This which portfolio and we hold. company. gives earnings our in expense the pivotal occupancy supplemental are committed these introducing also We in forward quarters insight coming transparent and

all growth. company's foundational aggressive in the while in for capital runway create stability the rate We our moved recent with to most structure pursuing forward and changes push history,

excludes funds, labor and continued focus morning. driven community structure management fronts XX% highest Our grant $XX.X effective in and combination and revenue state I'm through three year-over-year a cost of on margin the limit success QX Accelerated share years. was the proud income, to this expense to progress improvement, our delivered inflationary to increases. improved million, adjusted and in level expansion ongoing sequentially team multiple QX throughout which net operating XX%

This XXX to QX. basis by quarterly margin XX% expanded in year-over-year nearly points

Finally, and to adjusted appropriate XX% EBITDA rental leadership supported than more our XXXX, in increase their effort The maintaining improvement and the rates physical community around was team in RevPAR year-over-year margin capture RevPOR XX% this stability the grow history, while from resident QX. million. occupancy $X.X operational to in year-over-year. passion with increased our X% level focused investments in of of plants at revenue driver The of to experience or our care improving highest programming made primary percentage and portfolio's our the in and the leadership increase coupled

further resident QX, in expect additional specifically of re-leasing through growth level increases, rate programming We and spreads. care reimbursed

spot operating Diving team growth occupancy, looking occupancy. end our at quarter deeper into when delivered

June and in trajectory further XXXX's remained results net point July's for over strong recovery. basis below the of However, expansion XX has improvement move-in improvement opportunity show pace of QX.

have We further side see at communities These expense communities or growth further half XX% below and provide to third eight of improvement points detail the occupancy recovery and first the on of eight to expect mark we XX% occupancy are our the will portfolio wide. year business. the Kevin the pleased in support exceeding only of quarter communities XX%. XXX nearly improved basis

gained implementation across QX months. signature resulted of QX of in model. the The creation key in expand each in food and management markets in maintenance markets across our both Two our in clinical, coming of of cost of dynamic labor labor flexible the done labor staffing highlight stable and will service will optimized programs I disciplines dense a further ships a and workforce and pools our year-over-year. stabilize extensive team community designing to a more the However, contract reduction in XX% has and QX on Sonida our traction work focus and labor

The at level significant without and leadership been leadership. of to leadership open our XXX XXXX percentage the stability would quarter, nearly review, our our talent the in XX operating and in have points positions is community remain against similar trends down improvements and roles the across not regional community recent first five turnover In most realized local XXXX. only

to $X the compared XXXX. restructuring operations to Our run the comprehensive first for in pace improvement than represented Sonida and a of six for equity generation the from the mortgage our of fuel generated The commitment, resources first teams in to financial new cash of the our central responsible leadership months coupled fortitude across agreements of company cash that to completion announcement return and first and commenting of on proud lending few of efforts. for time discussion burn all and These flows remains the represent history. the relationships. in material our of our spend of of both capital on equity in million passion across recent our rate agreements support I'll half million largest results. with these the for debt culmination more the provide loans I'm company's stability overall community XXXX operations delivering cash cash $X.X foundational than half more incredibly structure with minutes growth and a improvements our of and

additional Mae the operating for sheet stable financial the and the lending continued economics the partners. believe of the fundamental our expansion overall the of across growth margin to of our as in nature strong debt in positions dive beyond. Sonida into operational QX combination and gaining the approach and our position as strong strengthening a Kevin and each deeper will in success provide Our improvement, our We Fannie of and comments. leadership support his process a transparent were platform, timeline completely and transactions balance equity significant XXXX capital modification to well of

and to from the suppressed the benefit inventory From a trends will years. we industry market levels accelerating coming perspective, remain demand continue in optimistic

near to stress term ongoing due lending and liquidity. pressure tightened and the interest rate both in transaction remains However, market

significant off-market Our future dislocation both for belief sophisticated capabilities offers capital transactions requiring value provide opportunity is and and sellers. the through the operating to investment current a creative partner Sonida

work diligently are the of to first identifying the the the We balance in working opportunities business. solidify the sheet of made and by growth year towards Sonida for accretive possible half completed operations

of assets. an Many accretive and come in living for As actively are and owners, referenced lenders believe investment estate will XXXX from across strategic identifying the of combination real operators previously, with profile. their acquisition our opportunities additional growth a alternatives management existing we senior strategic arrangements

to Sonida The transaction Our operating present partner. goal of as primary QX's summary results is a is simple.

rate year-over-year strong Our in environment. a revenue digit leadership growth and double challenging stable near and teams delivered community

margin experiences, residents sequential only than even environment the hobbies best-in-class with with levels was leadership Our team and caring at in Each through a new creating regional improvement their a to these and and flow where efforts local XXX% encouraging find a joy greater are revenue margin. friendships. possible more of safe shared dedication to with

Kevin to for turn it now financial over a of I'll results. the discussion

Kevin Detz

Brandon. Thanks,

in the principal enough the into through stakeholders step payments on of the up have run portfolio extending modification step, one increases multiple with cash that required momentum, maturity XX X really to Fannie scheduled rate expiration our to structure for with in and to terms including to and Fannie a terms of previously largest the the communities of two was all loans mortgages all loan in over and will presentation, savings elements -- Fannie agreement years Under execution depth. in community Addressing two significantly a X million average the towards that their entered Xst. the of December by all proposed report forbearance, of or Specific of dive beyond, appreciation with our of over as and the address on mature Ally $XX a for the a of were XX% XX You be liquidity collaborative touched for Slide after contractually process debt. loan maturities Mae the included cannot and debt a pleased for revised that lot stress dates. lenders, Mae I'll maturities company's and I loan facets or minimum company XXXX. I of maturity, first year. extending Bank which Picking resulting terms to benefit Mae forbearance, October strong conversations of address areas Fannie these we a partnership on am forbearance more our Mae deferred forbearance into XXXX significant positive more executed prior priority with three little Further, subsequent than maturity a for and include first we Fannie for the reaching be mortgages. on the of of will will

of a effective Finally, be starting Xst, results Sonida over second the by under combination the totaling not provided events million of and decrease the service need the same of loan The not these forbearance default two interest a years repaid forbearance do Fannie X.X% will of rate date amounts $X.X and for $XX.X does the million. receive cost million debt the XX-month in total and from June following any the of relief interest as first well in $X X.X% relief period and principal have These agreements. debt company in to years. as

provided profile. bolster an equity shareholder all-in company the one significant our of requested with as liquidity waiver were the to further company And draws a liquidity As as broader Bank largest its test, to improves individual of year the of necessary. completed. front, commitment sequentially debt flexibility its be Conversant on cash other financial two with equity there provides by Ally $XX.X million which the it part granted restructuring, components Capital minimum

importantly strategic Beyond market. to recapitalization growth initiatives the long sets the term term up management release opportunistic allows its and liquidity on and this creation future provides, unstable for company more focus value it short but

year. July. of few the hit I company's March anniversary our a of Moving to Brandon conversion round success taken expect which having are recent in in part increases will Slide convention build on every to with annual we the a X, trends. on where place mentioned from front, programmatic an to performance another convention of These important rate increases resident upon resident quickly

X% grants. X% as out Excluding to margin the periods, jump quarter These same impact XXXX. same up the grants, state and adjusting again, the of from QX the state onetime to NOI contribute in increases largely RevPOR over nonrecurring impact the in increased compared from dramatic

our the recent leadership cost past nine our community the from for I contributions across the the The through regional initiatives and will the transformation managed a other walk expense over significant and various owned communities. but extremely rolled impact few encouraging NOI we community wanted leadership to and reiterate development, strong have slides, focused to foundational in directly to months. driver out stability trends operating relates of retention teams our

as continue to Our should team's in rise on support execution, margin along our X, occupancy seen with steady Slide base, expansion.

to related Moving Slide XX. the recent ahead result we're a as this to of want highlight successes rate some initiatives in enjoying of I area.

along for us contemplates increase QX our to elevated which re-leasing our its the sustained Our renewals by spread feedback appropriate continues resident with be of a average that an supported more rate quarter, base. This X% base. rate rent in already in is comprehensive also for provides increase strategy occupancy X% with

we our of X% and incline through across must of new becoming roughly made drivers, stream. more assisted, our ahead working resulting the margin our will continue level for a year-over-year discuss the recently care help moving backed should forward. and way subsidies our of of of move XX% the support the discussion are Diving government includes XX% have For we to revenues our our include legislation. trends. sustainability into residents a residents' of This revenue processes available increase increase that Slide even rate their recently more seeing rate this of are Medicaid success labor program. progress with conversion care or the implemented this steady new levels to recent needs of to XX tools assess we to in Revamp baseline All

in that and market pleased we've period, able costs. We labor to control labor extremely hyperinflationary tight been our are this

preceding over decreased for two able revenue, to of the labor XXX reasons. achieve percentage last a immediately basis were this the from As quarters points quarters. We improvement two our

labor limited constraints contract our persist. specific basis. million point, down pushed dramatically $X an we than where First, labor by this contract annualized to handful more At labor of is expense a communities on market now

we contract labor. important, away as just have and from Secondly, migrated

hold depth labor us where to well costs stability able have relatively labor basis. incremental macroeconomic direct levels We top keep line pacing rate to to to with and under ourselves this is have flat and absolute leadership have run Again, testament overall allowed believe been inflationary with historically on average up continue an at our another occupancy accretive elevated that we margin support positioned margin. weighted we growth, recent push

Looking in initiatives a XX, a at on is a decrease in Slide combination all of we discussed expenses This percentage see the of decrease unit calls root taking we largely other as improving costs operating these material past economics. and revenue.

spend appeal we an our to months litigation we the see our with expanded partnership assessed able to since organization. lower in move forward. and tax of down run continue hold as base real will through we been global nine rate reduced even the have our the liability This Specifically, process. first effectively decrease compliance Through improved expense and values estate adviser, and our tax purchasing rollout

year, will insurance On place functions we these overall our put portfolio. accrete environment, front, relatively a steady baseline new we be a in half of nature switching inorganic and with have of the that there part exposure right describing owned already from second unit as expansion compared expense the market, and XXth backdrop our quickly runway, collectability believe pricing we terms cost, in the slide brokers the interest in Amidst from of term are top overall AR and Though today. declines process, maturity future have end floor growth the debt challenging loan our are XXXX. coupled of the rate. locked line despite will we made expense. margin I company's as related reestablish our With thanks the a treasury bad to of long into economic dedicated last with operational well market, all-in our benefits Having a revamped been hit muted to at seeing sub-X% and will time to pleased the with investments categories our very up restructuring increases on a debt ultimately final credit in

variable of fixed rate hedged. is fully debt XX% Our comprised debt remaining debt rate with the

Finally, today, you, in of be the Protective Brandon. as of covenants fully with three today. communities was required mortgage all with the exception later in as compliance under financial Life company to with filed the to more described our mortgages Back XX-Q

Brandon Ribar

of our with continued have Thanks, well stakeholders. open are delivering key team the of for I our coupled share a strengthened running as into conclude we line and while It's of deliver to half as significant growth, a achieving they presentation structure, optimistic our and Kevin. company. utmost please sound all by value I'll industry second Sonida to Already confidence residents once recognizing the service again an capital the this rebuild leading high today's year, honor and thanking to questions. leadership that and to continue throughout remain will my group margin the business. success privilege quality revenue Sonida. Christine, in the leaders care I

Operator

first line Our Instructions] of Steven with from comes Valiquette question Barclays. the [Operator

Steven Valiquette

basically all First, occupancy additional owned communities I this quarter supplemental tied flat in average is I for And further the definitely definitely with financial that analysis. some the appreciate weighted into helpful the think the for somewhat disclosure sequentially.

color types, the I at of of trends don't saw on some Just XX just within it softness AL especially on separating thoughts may AL know industry quarter a any any few have other curious Page the out of but underlying some there the the curious your you this in these IL on get have to different additional IL look you were marketplace? versus data companies occupancy in break we since the to the trends, so comparison between versus community by down IL. that

Brandon Ribar

We performance living really little for I as the care has saw that and and you in a to highest those those rooms. independent it level the associated few resulted growth was different a they actually rate a change that side. the AL of a in either to bit the quarter-over-quarter strong weren't would extra say us, stronger we think profile had while I part driver of the rates direction, very materially ultimately with revenue know, on which of excited year-over-year occupancy move-outs, memory the see which there. were -- side, on

gives of that more of first So we occupancy those bottom we referenced that the aren't those the think before, and and communities QX a seeing lower into good the be kind fact feel on July by those got in that QX us the those in the like going than increase that eight what runway level based half beyond. on at that and segment, lot that improvement X saw the I percentage outlier they've driver in year, stuck should points of confidence of I

And in think, on strong on front. and so bit we think but really rate a that both was confidence IL of I it I part down occupancy was side, why of AL, the the growth slightly have AL

Steven Valiquette

a just shifting bit. here then little And gears

So X restructurings there's the of some Mae and debt it in things this you trade-offs mean case, but Ally some primarily benefits positive. Bank. with on in the Pages highlight X, it's usually, these looks of key some like Fannie and I of all

as just the well. simple the for just kind defaults of covenant that they to lax that lenders, and guess what's unless I'm the trade-off or these sense kind more outcome is your that little a benefit else to potential just ongoing as some payment of get on what just pushing it's of want I So being as figure out trying which terms, out of that, of revising here, is than these it curious the terms either Just from really viewpoint just better breaches?

Kevin Detz

the in the but X-K, million we Xth terms highlights give paydown. what modification in of words your two were had the of So forbearance and the $X the to ultimately are July up

made that, June X there then another was guarantee well burn with when due and another right payments through XXth And we XX to of one burns a we top then million performance. that So off there. to guarantee the from months $XX did ability transaction, the as those at $XX effectively related then off and so there's million that on corporate

was agreed significant ones. cash it best two So in those of given into reinvest was say was what that what are terms all part was of was to communities. we I'd what then collaborative up, And discussion, most the the flow a excess

a there's the so value. And into back cash those for future concept putting excess XX% of of in equity spanning flow assets

part, we our like assets those overall, Fannie's So feel ultimately help on collateral. and gives us improve delever our but were and

Brandon Ribar

And more bit just a little add to color.

company I the and mouth, profile won't operational this of output had, that I was into the by but and company. discussions think their the of put the words possible improving we've in made just

think done I our that of did. of the very not viability level difficult to positive we had outcome confidence deals long would there level a in get been to been these term have

that And partners working -- lot a believe of Sonida benefit platform. so there's that we're with that with the entities the term long

that will comfort And as their it us work available do putting occur on with equity additional so seen like with confidence ongoing recently Mae the as Ally a based what is willing they've really that were where go-forward on in basis. Fannie improvement was and looking and to operational that's Conversant's with well to

Steven Valiquette

release, In already drawn here. And like them, third of couple quarter. you I about show million $XX.X been guess, million the first $X commitment mentioned a already, press from of for that's the equity Conversant of since days you looks moment

Conversant, just I of can might of know around as requirements, just to do have it just out? thoughts rest liquidity get hand the remainder, terms the of part your As ties how into But far of assets those they get new everything that play a kind as or for the that. any that on sense to. want the of to some you requirements that and discretion curious is time at

Kevin Detz

Steve. there, responses two So

into principal million based of $X anticipated the fund other question, our as the and are we planned on And that pulled then effectively and So required we as $X your made forecasting forbearance. was million when draws or payment on out all to we available at that have. entered that we discretion the helped management

Brandon Ribar

not commitment have or not that. is discretion. So does whether our an to purely the to option at Conversant as fund

Steven Valiquette

just Can but of on like there as on some what other falls looks pretty on And the in going quick disclosures Slide category labor. mean, a give of just the then you already, I on. other just I some the kind ones have us just front based [Indiscernible] you labor of progress last curious XX. important it's question know that good as should on here, category other have question, that? obviously, quick you XX. the And not to labor of what's description I'm this Slide

Kevin Detz

over bonus level it's wages, bonuses. line but time, basically bonuses, the premium plan, labor and not the It's incentive not

that's have so contract focus And other we business the we to which that once we part level, that on. of and labor direct part that's address continue the the

Operator

of end like to the over question-and-answer session. now for floor reached Mr. I back you the closing to turn comments. Rebar, would have We the

Brandon Ribar

Thank you, participating. This you concludes Christine. Thank all conference. for today's

Operator

and Ladies does this teleconference. today's conclude gentlemen,

disconnect a participation, have your may time. your for you wonderful this Thank lines day. You at and

Sonida Senior Living (SNDA) 14 Aug 232023 Q2 Earnings call transcript