Assisted Living Concepts, Inc. Announces 2008 First Quarter Results; Reports Improved Mix and Margins
Monday May 5, 4:01 pm ET
MENOMONEE FALLS, WI--(MARKET WIRE)--May 5, 2008 --
Highlights:
-- Private pay mix as a percent of revenue exceeds 90%
-- Adjusted EBITDAR as a percent of revenue exceeds 30%
-- Expansion program construction begins -- on target for fourth quarter
occupancy permits
Assisted Living Concepts, Inc. ("ALC") (NYSE:ALC - News) reported net income of $4.1 million in the 2008 first quarter as compared to net income of $4.7 million in the 2007 first quarter.
Diluted earnings per common share for the first quarter of 2008 were $0.06 per share as compared to $0.07 per share for the first quarter of 2007.
"Despite lower same store overall occupancy, we improved revenues and adjusted EBITDAR through strategic acquisitions and cost reductions due to lower Medicaid occupancy," commented Laurie Bebo, President and Chief Executive Officer of Assisted Living Concepts, Inc. "In addition, we are excited to announce we are in the construction phase of our expansion program and expect to begin occupying new additions by the fourth quarter of 2008. To date, costs are in line with our original estimates."
Effective January 1, 2008, ALC completed the acquisition of the operations of BBLRG, LLC doing business as Cara Vita, consisting of eight assisted living residences and a total of 541 leased residences for a purchase price (including expenses) of $14.5 million. On January 1, 2008, the Cara Vita residences had 481 occupied units, all private pay. The properties associated with the residences are leased with an initial term expiring in March 2015 with three five-year renewal options. Results of the operations of the Cara Vita residences are included in the 2008 financial data beginning January 1, 2008. ALC does not anticipate making significant operational changes at the Cara Vita residences; however, certain general and administrative expenses are expected to be managed at reduced cost.
Certain non-GAAP financial measures are used in the discussions in this release in evaluating the performance of the business. See attached tables for definitions of adjusted EBITDA and adjusted EBITDAR, reconciliations of net income to adjusted EBITDA and adjusted EBITDAR, calculations of adjusted EBITDA and adjusted EBITDAR as a percentage of total revenues and non-GAAP reconciliation information.
As of March 31, 2008, ALC operated 216 assisted living residences representing 9,076 units.
Quarters ended March 31, 2008, December 31, 2007, March 31, 2007
Revenues of $60.2 million in the first quarter ended March 31, 2008,
-- increased $3.7 million or 6.6% from $56.5 million in the fourth
quarter of 2007 and
-- increased $2.7 million or 4.7% from $57.5 million in the first quarter
of 2007.
Adjusted EBITDA for the first quarter of 2008 was $13.3 million, 22.1% of revenues and
-- increased $0.9 million (6.8%) from $12.5 million and 22.1% of revenues
in the fourth quarter of 2007 and
-- increased $0.3 million (1.9%) from $13.1 million and decreased from
22.7% of revenues in the first quarter of 2007.
Adjusted EBITDAR for the first quarter of 2008 was $18.2 million, 30.3% of revenues and
-- increased $2.2 million (13.7%) from $16.0 million and 28.4% of
revenues in the fourth quarter of 2007 and
-- increased $1.5 million (8.7%) from $16.8 million and 29.2% of revenues
in the first quarter of 2007
First quarter ended March 31, 2008 compared to the fourth quarter ended December 31, 2007
Revenues in the first quarter of 2008 increased from the fourth quarter of 2007 primarily due to additional revenues from acquired residences ($4.4 million) and higher average daily revenue as a result of rate increases ($2.3 million), partially offset by a reduction in the number of units occupied by private pay residents ($1.4 million), the planned reduction in the number of units occupied by Medicaid residents ($1.0 million), and one less day in the 2008 quarter ($0.6 million).
Increased adjusted EBITDA and adjusted EBITDAR in the first quarter of 2008 as compared to the fourth quarter of 2007 resulted primarily from higher revenues as discussed above ($3.7 million) and a reduction in general and administrative expenses ($0.5 million) partially offset by increases in residence operations expenses ($2.0 million), and, for EBITDA, an increase in residence lease expense ($1.3 million). The reduction in general and administrative expenses was primarily related to decreases in salaries and benefits and non-repetitive consulting fees primarily associated with completion of work related to compliance with Sarbanes Oxley Section 404. Residence operations and residence lease expenses increased primarily from the Cara Vita acquisition, partially offset by cost reductions due to lower Medicaid occupancy.
First quarter ended March 31, 2008 compared to the first quarter ended March 31, 2007
Revenues in the first quarter of 2008 increased from the first quarter of 2007 primarily due to additional revenues from acquired residences ($5.1 million), higher average daily revenue as a result of rate increases ($4.0 million), and one additional day in the 2008 quarter ($0.6 million), partially offset by the planned reduction in the number of units occupied by Medicaid residents ($5.4 million), a reduction in the number of units occupied by private pay residents ($1.4 million), and revenue from leasing ALC's corporate office ($0.2 million) in the 2007 period only.
Adjusted EBITDA and adjusted EBITDAR increased in the first quarter of 2008 primarily due to increased revenues discussed above ($2.7 million), partially offset by an increase in residence operations expenses ($1.1 million), an increase in general and administrative expenses ($0.1 million), and, for adjusted EBITDA, an increase in rental expense ($1.2 million). Residence operations and residence lease expenses increased primarily from the Cara Vita acquisition, partially offset by cost reductions due to lower Medicaid occupancy.
Share repurchase program
On December 14, 2006, ALC announced a share repurchase program for up to $20 million of its Class A common stock. On August 20, 2007 and December 18, 2007, ALC announced that its Board of Directors authorized increases to the stock repurchase program of $20 million and $25 million, respectively, bringing the total authorization to $65 million. In the first quarter of 2008, ALC repurchased 1.5 million shares of its Class A common stock at an aggregate cost of $9.1 million and an average price of $6.01 per share. Under the share repurchase program, ALC has repurchased in the aggregate 6.2 million shares of its Class A common stock at an aggregate cost of $48.2 million and an average price of $7.77 per share.
Expansion Program Update
As of the date of this release ALC has begun construction for the expansion units in its program to add 400 units onto existing ALC residences. We are awaiting construction bids on only a few projects. To date, cost estimates have been consistent with our original estimates of $125,000 per unit. Construction is expected to be completed during the second half of 2008.
Financing Activities
As of March 31, 2008 ALC had availability of $61million under its revolving credit facility.
Investor Call
ALC has scheduled a conference call for tomorrow, May 6, 2008, at 10:00 a.m. (Eastern Time) to discuss financial results for the first quarter. The toll-free number for the live call is 877-764-2008, or international 612-332-1020. A taped rebroadcast will be available approximately one hour following the live call until midnight on June 6, 2008. To access the rebroadcast of the call, dial 800-475-6701, or international 320-365-3844; the access code is 909438.
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