Sienna Senior Living Inc. Reports 2018 Second Quarter Financial Results and Announces 2% Dividend Increase

MARKHAM, Ontario, Aug. 08, 2018 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. ("Sienna" or the "Company") (TSX:SIA) today announced its financial results for the three and six months ended June 30, 2018. The Unaudited Condensed Interim Consolidated Financial Statements and accompanying Management's Discussion and Analysis are available on the Company's website at www.siennaliving.ca and on SEDAR at www.sedar.com.

2018 Second Quarter Highlights

Strong operating performance

  • Revenue increased by 17.9% to $162.1 million in Q2 2018, compared to Q2 2017;
  • Retirement Same Property Net Operating Income ("NOI") increased by 6.2% to $8.3 million in Q2 2018 compared to Q2 2017, and Overall Same Property NOI increased by 3.7% to $30.5 million in Q2 2018 compared to Q2 2017;
  • Diluted Operating Funds from Operations ("OFFO") increased by 12.7% to $0.372 per share in Q2 2018, compared to Q2 2017, driven by strong operating results, lower general and administrative expenses due to timing and favourable mark-to-market adjustments on deferred share units;
  • Diluted Adjusted Funds from Operations ("AFFO") increased by 4.1% to $0.384 per share in Q2 2018, compared to Q2 2017, driven by strong operating results.

Improved balance sheet

  • Lowered Debt to Gross Book Value by 210 bps to 49.4% from 51.5% year-over-year;
  • Improved interest coverage ratio to 4.1x in Q2 2018 from 3.8x in Q2 2017;
  • Fully repaid the Bridge Loan of $115 million in Q2 2018 that was drawn upon the acquisition of ten retirement residences in Q1 2018;
  • Redemption of all remaining Convertible Debentures as of May 23, 2018, including $31.5 million converted into 1,881,129 common shares during Q2 2018 (at $16.75 per common share), and $13.0 million redeemed in cash.

Continued growth and industry recognition

  • Acquired an additional 16% interest in Glenmore Lodge in British Columbia for $6.2 million, before closing costs and subject to customary closing adjustments, increasing the Company's interest from 61% to 77% on May 1, 2018;
  • Awarded four-year Accreditation with Exemplary Standing, the highest distinction awarded by Accreditation Canada, for Sienna's Residential Care communities in British Columbia.

Dividend Increase

The Board of Directors has approved an increase in Sienna's monthly dividend from $0.075 per share to $0.0765 per share ($0.918 per share annualized). The increase will commence on September 14, 2018, payable to shareholders of record on August 31, 2018.

"We are delighted with the strong second quarter results, which reflect significant contributions from our recent portfolio acquisition in Q1 in addition to strong organic growth," said Lois Cormack, President and Chief Executive Officer of Sienna. "Over the last 18 months, we have transformed the company and established ourselves as one of the market leaders, which is reflected in our operational results and financial performance, allowing us to reward our shareholders with an increase in dividends."

Financial and Operating Highlights:

  Three months ended
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Retirement Same Property – Average occupancy 93.2 % 94.2 % 93.4 % 94.2 %
Retirement Acquisitions – Average occupancy 90.3 % N/A   90.3 % N/A  
Retirement – Average total occupancy 91.6 % 94.2 % 91.8 % 94.2 %
LTC/RC – Average total occupancy 98.3 % 98.5 % 98.1 % 98.1 %
LTC/RC – Average private occupancy 98.3 % 98.9 % 98.4 % 98.7 %
$000s except occupancy, per share and ratio data Three months ended
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  Three months ended
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Revenue $162,124   $137,527   $307,481   $271,493  
Operating expenses $122,734   $108,117   $235,687   $214,622  
NOI (1) $39,390   $29,410   $71,794   $56,871  
Net income $3,548   $6,726   $4,581   $11,405  
Operating Funds from Operations (OFFO) (1) $24,199   $15,754   $42,670   $29,944  
Adjusted Funds from Operations (AFFO) (1) $25,018   $17,657   $45,834   $34,323  
Net income per share, diluted $0.054   $0.136   $0.072   $0.229  
OFFO per share, diluted $0.372   $0.330   $0.679   $0.629  
AFFO per share, diluted $0.384   $0.369   $0.729   $0.718  
Dividends declared per share $0.225   $0.225   $0.450   $0.450  
Payout Ratio (2)   57.8 %   58.9 %   60.6 %   60.6 %

Notes:

  1. NOI, OFFO and AFFO are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. NOI, OFFO and AFFO are supplemental measures of a company's performance, and management of the Company believes that NOI and OFFO are relevant measures of the Company's earnings performance, and AFFO is a relevant measure of the Company's ability to earn cash and pay dividends. The IFRS measurement most directly comparable to OFFO and AFFO is net income and cash flow from operating activities, respectively.
  2. Payout Ratio is calculated using dividends declared per share divided by the basic AFFO per share for the respective periods.

2018 Second Quarter Summary

Revenue increased by 17.9%, or $24.6 million, to $162.1 million over the comparable prior year period. The increase was principally related to the revenues generated from the acquisitions completed since Q2 2017.

Operating expenses increased by 13.5%, or $14.6 million, to $122.7 million over the comparable prior year period. The increase was principally related to expenses incurred by the properties acquired since Q2 2017.

NOI increased by 33.9%, or $10.0 million, to $39.4 million over the comparable prior year period. 

The Company generated net income of $3.5 million for the three months ended June 30, 2018, representing a decrease of $3.2 million over the comparable prior year period. The decrease was principally related to incremental interest expense and depreciation expense incurred from the acquisitions completed since Q2 2017, partially offset by income generated from the acquisitions and lower income taxes.

OFFO increased by 53.6%, or $8.4 million, to $24.2 million over the comparable prior year period. The increase was principally related to the income generated from the acquisitions completed since Q2 2017, partially offset by incremental interest expense on these acquired properties.

AFFO increased by 41.7%, or $7.4 million, to $25.0 million over the comparable prior year period. The increase was principally related to the increase in OFFO noted above, partially offset by an adjustment on deferred share unit compensation earned.

2018 Six Months Summary

Revenue increased by 13.3%, or $36.0 million, to $307.5 million over the comparable prior year period.  The increase was principally related to the revenues generated from the acquisitions completed since Q2 2017.

Operating expenses increased by 9.8%, or $21.1 million, to $235.7 million over the comparable prior year period. The increase was principally related to expenses incurred by the properties acquired since Q2 2017 and the timing of expenditures, partially offset by a prior year tax adjustment of $1.3 million recorded in Q1 2018.

NOI increased by 26.2%, or $14.9 million, to $71.8 million over the comparable prior year period. 

The Company generated net income of $4.6 million for the six months ended June 30, 2018, representing a decrease of $6.8 million over the comparable prior year period.  The decrease was principally related to incremental interest expense and depreciation expense incurred from the acquisitions completed since Q2 2017, and higher transaction costs incurred for the acquisition in Q1 2018, partially offset by income generated from the acquired properties and lower income taxes.

OFFO increased by 42.5%, or $12.7 million, to $42.7 million over the comparable prior year period. The increase was principally related to the income generated from the acquisitions completed since Q2 2017 and a prior year tax adjustment of $1.3 million, partially offset by the dilution of earnings from the February public offering in connection with the acquisition that was completed in Q1 2018, and incremental interest expense on the acquisitions completed since Q2 2017.

AFFO increased by 33.5%, or $11.5 million, to $45.8 million over the comparable prior year period. The increase was principally related to the increase in OFFO noted above and income support received, partially offset by an adjustment on deferred share unit compensation earned and an increase in maintenance capital expenditures due to the Company's growth.

Conference Call

Lois Cormack, President and Chief Executive Officer, and Nitin Jain, Chief Financial Officer and Chief Investment Officer, will host a conference call for the investment community on Thursday, August 9, 2018 at 9:30 a.m. (ET). The toll-free dial-in number for participants is 1-844-543-5234, please enter pass code: 2963059. A webcast of the call will be accessible via Sienna's website at: www.siennaliving.ca/Investors/Events-Presentations.aspx. The webcast of the call will be available for replay until August 9, 2019 and archived on Sienna's website.

About Sienna Senior Living

Sienna Senior Living is a leading seniors' living provider with 85 residences in key markets in Canada.  Sienna offers a full range of seniors' living options, including independent and assisted living, long-term care, and specialized programs and services.  Sienna also provides expert management services.  Sienna is committed to national growth, while driving long-term value for shareholders. The Company's approximately 12,000 employees are passionate about helping residents live fully every day, and were the driving force behind Sienna being named one of Canada's Most Admired Corporate Cultures in 2017.  For more information, please visit www.siennaliving.ca.

Forward-Looking Statements

Certain of the statements contained in this news release are forward-looking statements and are provided for the purpose of presenting information about management's current expectations and plans relating to the future. Readers are cautioned that such statements may not be appropriate for other purposes. These statements generally use forward-looking words, such as "anticipate", "continue", "could", "expect", "may", "will", "estimate", "believe" or other similar words and include, among other things, statements related to the Company's financial results or strategic plans. These statements are subject to significant known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and, accordingly, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. The forward-looking statements in this news release are based on information currently available and what management currently believes are reasonable assumptions, including the funding of long-term care/residential care facilities by government entities. Other material factors or assumptions that were applied in formulating the forward-looking statements contained herein include the assumption that the business and economic conditions affecting the Company's operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity and government regulations.

Although management believes that it has a reasonable basis for the expectations reflected in these forward-looking statements, actual results may differ from those suggested by the forward-looking statements for various reasons. The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements. These forward-looking statements reflect current expectations of the Company as at the date of this news release and speak only as at the date of this news release. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as may be required by applicable law.

FOR FURTHER INFORMATION, PLEASE CONTACT:

Nitin Jain
Chief Financial Officer & Chief Investment Officer
(905) 489-0787
Nitin.Jain@siennaliving.ca

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