Capital Senior Living(SNDA) - 2019 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total consolidated revenues for Q2 2019 were $113.1 million, a decrease of $1.5 million or 1.3% compared to Q2 2018 [31] - Operating expenses increased by $1.5 million or 2% to $74.4 million in Q2 2019 compared to Q2 2018 [33] - Adjusted EBITDAR was $34 million in Q2 2019, down from $38.4 million in the same quarter last year [35] - Adjusted CFFO was $5.2 million in Q2 2019, compared to $10.6 million in Q2 2018 [35] - Same community revenues decreased by 1.7% compared to Q2 2018, with occupancy declining by 190 basis points to 83.6% [37] Business Line Data and Key Metrics Changes - Average revenue per occupied room increased by 40 basis points year-over-year and 50 basis points sequentially from Q1 2019 [9] - Concessions decreased significantly to $280,000 in Q2 2019 from $1.1 million in Q2 2018, representing a 75% decrease [11] - Employee turnover improved by 210 basis points compared to the previous quarter, indicating stabilization in the workforce [17] Market Data and Key Metrics Changes - Occupancy for same communities declined by 80 basis points sequentially, ending Q2 at 83.6% [23] - The Omaha market showed strong performance with an occupancy rate of 94.6%, an increase of 380 basis points year-over-year [39] - The Dallas market underperformed, with a sequential decline of 130 basis points, while Houston and San Antonio communities performed well [40] Company Strategy and Development Direction - The company announced a new strategic framework called Stabilize, Invest, Nurture and Grow (SING) to improve operational performance [7] - Focus on quality of communities, services provided, and talent management to drive operational performance [8] - Plans to divest underperforming assets and optimize the portfolio, including the sale of a community in Kokomo, Indiana [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in stabilizing the business despite challenges in the market, particularly in certain regions [28] - The company expects operating and financial results in the second half of 2019 to reflect occupancy declines experienced in the first half [49] - Management remains focused on improving operational and financial performance while delivering quality care [50] Other Important Information - The company is experiencing a downward trend in senior housing construction starts, which may provide some relief in supply-demand dynamics [27] - The lease coverage ratios are improving for several leased communities, although high costs of triple net leases continue to impact results [24] Q&A Session Summary Question: What optimization initiatives are being pursued first? - The primary focus is on driving top-line revenue through high-quality revenue and managing labor costs effectively [54] Question: How should changes in labor costs be interpreted? - The goal is to reduce contract labor and increase direct labor, which is expected to stabilize labor costs [56] Question: What assets are currently being marketed for divestiture? - A limited number of underperforming and strong-performing assets are being evaluated for potential sale [58] Question: What has been the trend of occupancy month-by-month in Q2? - Occupancy trended down during Q2, starting at 83.8% in April and ending at 83.1% in June [61] Question: What is the outlook for pricing and rate increases? - There has been some progress in pricing, with expectations for positive rate increases in the future, particularly in markets with strong occupancy [66]