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TheStreet Open House

Emeritus Announces Operating Results For Fourth Quarter And Full Year 2012

Stocks in this article: ESC

The conference call will be webcast live over the internet from the Company’s web site at www.emeritus.com under the “Investors” section. The conference call can also be accessed by dialing (877) 705-6003, or for international participants (201) 493-6725. A replay of the conference call will be available after 8:00 P.M. Eastern Time on Thursday, February 28, 2013, until midnight Eastern Time on Thursday, March 7, 2013. The dial-in numbers for the replay are (877) 870-5176 or, for international participants, (858) 384-5517. To access the telephonic replay, enter the conference ID 408366.

Non-GAAP Financial Measures

Adjusted EBITDA/EBITDAR and CFFO are financial measures of operating performance that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company believes that these non-GAAP measures are useful in identifying trends in day-to-day performance because they exclude items that are of little or no significance to operations and provide indicators to management of progress in achieving optimal operating performance. In addition, these measures are used by many research analysts and investors to evaluate the performance and the value of companies in the senior living industry. The Company strongly urges you to review the reconciliation of net loss to Adjusted EBITDA/EBITDAR and the reconciliation of net cash provided by operating activities to CFFO, provided below, along with the Company’s consolidated balance sheets, statements of operations, and statements of cash flows. The Company defines Adjusted EBITDA/EBITDAR and CFFO and provides other information about these non-GAAP measures in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, to be filed with the Securities and Exchange Commission.

The table below shows the reconciliation of net loss to Adjusted EBITDA/EBITDAR for the three months and year ended December 31, 2012 and 2011 (in thousands):

       
Three Months Ended Year Ended
December 31, December 31,
  2012         2011     2012         2011  
Net loss $ (27,525 ) $ (27,976 ) $ (85,075 ) $ (72,263 )
Depreciation and amortization 42,605 32,307 140,629 122,372
Interest income (105 ) (74 ) (408 ) (429 )
Interest expense 60,862 41,418 176,945 157,262
Net equity losses for unconsolidated joint ventures 76 1,829 576 3,081
Provision for income taxes (2,078 ) 362 (1,158 ) 1,019
Loss from discontinued operations 3,915 7,705 21,570
Amortization of above/below market rents 1,309 1,754 6,299 7,532
Amortization of deferred gains (264 ) (274 ) (1,046 ) (1,125 )
Stock-based compensation 2,727 1,224 11,046 8,106
Change in fair value of derivative financial
instruments 29 (1,045 ) 948 (3,081 )
Deferred revenue (620 ) 316 (1,375 ) 2,601
Deferred straight-line rent 2,859 1,663 6,080 8,792
Contract buyout costs 1,586 7,842
Impairment of long-lived assets 2,135
Gain on sale of assets (73 ) (73 )
Gain on sale of investments (1,569 )
Acquisition gain (42,110 )
Acquisition, development, and financing expenses 3,337 (895 ) 6,109 2,403
Self-insurance reserve adjustments   3,560     4,133     5,996     15,911  
Adjusted EBITDA 86,772 60,170 275,406 237,841
Community lease expense, net   29,446     28,321     114,382     108,627  
Adjusted EBITDAR $ 116,218   $ 88,491   $ 389,788   $ 346,468  
 

The following table shows the reconciliation of net cash provided by operating activities to CFFO, and CFFO as adjusted for transaction costs, unusual income tax items, and self-insurance reserves related to prior years (in thousands):

         
Three Months Ended Year Ended
December 31, December 31,
  2012         2011     2012         2011  
Net cash provided by operating activities $ 5,937 $ 10,349 $ 116,558 $ 74,102
Changes in operating assets and liabilities, net 17,005 6,420 (14,735 ) (3,812 )
Contract buyout costs 1,586 7,842
Repayment of capital lease and financing obligations (5,432 ) (3,793 ) (17,882 ) (14,249 )
Recurring capital expenditures (9,303 ) (3,667 ) (23,947 ) (17,299 )
Distributions from unconsolidated joint ventures   161     55     1,177     1,519  
Cash From Facility Operations 8,368 10,950 61,171 48,103
Transaction costs 3,030

(845

)

5,510 1,984
Unusual income tax items (1) 3,048 3,048
Self-insurance reserve adjustments, prior years   3,560     4,133     5,996     15,911  
Cash From Facility Operations, as adjusted $ 18,006   $

14,238

  $ 75,725   $ 65,998  
 
CFFO per share $ 0.19 $ 0.25 $ 1.37 $ 1.09
CFFO per share, as adjusted 0.40

0.32

1.69 1.49
 

(1) Consists of state tax expense related to the Company’s portion of taxable gain on the sale of the Blackstone JV communities

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