Sunrise Senior Living's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Sunrise Senior Living, Inc. (SRZ)

Q1 2012 Earnings Call

May 02, 2012 09:00 a.m. ET


Tim Smith – Investor Relations

Mark Ordan – Chief Executive Officer

Marc Richards – Chief Financial Officer

Greg Neeb – Chief Investment and Administrative Officer


Daniel Bernstein – Stifel Nicolaus



Good day, and welcome to the Sunrise Senior Living First Quarter Conference Call. Today’s conference is being recorded.

At this time, I’d like to hand the conference over to Tim Smith. Please go ahead, sir.

Tim Smith

Thank you. Welcome to Sunrise Senior Living’s first quarter 2012 investor conference call. This is Tim Smith of Sunrise’s Investor Relations. Before we begin, let me remind you this call is being recorded and the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 apply to this conference call.

During the course of this call, the company will make various remarks concerning management’s expectations, predictions, plans and prospects that constitute forward-looking statements. Actual results may differ materially from those anticipated by these forward-looking statements. Any forward-looking statements reflect management’s current view only and the company undertakes no obligation to revise or update such statements in the future.

I will now turn the call over to Mark Ordan, Sunrise’s Chief Executive Officer. Mark?

Mark Ordan

Thanks Tim. I’m pleased to report a strong first quarter for Sunrise Senior Living. Our year-over-year stabilized community occupancy rose 60 basis points to 88.2%. Our average revenue per occupied unit stabilized communities was up 2.9% year-over-year. NOI was up 8% year-over-year for stabilized communities and 10.1% overall. Our sequential quarter to quarter occupancy was flat but historically we declined in Q1 so we were very pleased here as well.

We are off to a flat start in Q2, so it’s too early to see any trend stemming from our strong first quarter. As Marc Richards will detail shortly, our cost declined in Q1. G&A of $28.6 million compared with $32.4 million for the same period last year. Last year’s first quarter did include significant severance cost, but overhead has continued to trend lower and is now at about $100 million run rate that we had talked about over time.

The combination of our incremental EBITDAR driven largely by our recent acquisitions along with our lower cost drove adjusted EBITDAR to $43.8 million up from $28.3 million in last year’s first quarter.

Stepping back from daily operating results let me discuss some highlights since the start of the year. While we continue to add net asset value to Sunrise and to make progress in our remaining restructuring activities, we are particularly pleased by our recently announced venture sale to Ventas. This transaction again validated the value of Sunrise purpose built communities in solid locations. We closed this transaction yesterday and the proceeds to Sunrise, $28 million, will be used to fully pay off our active key bank line.

Finally, and in some ways most important, Ventas by meaningfully adding to the Sunrise portfolio attested to our ability and track record of caring for our residents while being strongest towards a real and financial assets, and that means a lot to all of us.

All that this transaction represents is to the credit of many Sunrise team members in our field operations and in our office. We manage better, report carefully, budget better, communicate openly, and we invest more and more to always be the sector leader in care for people who depend on that care. When we see short comings we attack them immediately with any resources needed.

In the first quarter and going forward our story is much less about restructuring than it is about developing new ways to strengthen the core Sunrise platform. While we have reduced overhead we spent significantly in our hiring, training, oversight and in advanced systems so that we are prepared to go forward and sync with the new healthcare world.

We have reduced churn over something that’s generally accepted in healthcare but we hate. I'm leading a drive called You Voice Counts along with our Head of Operations, Laura McDuffie and our Head of Human Resources, Mike Rodis, just for the engagement of all of our team members by visiting with them and seeking their counsel about how to make Sunrise stronger. I could not overstate the importance we see in listening to our team to shape a better Sunrise, and then questionably this is the best part of our jobs.

In a few minutes Greg Neeb will describe our progress on the few remaining restructuring initiatives in the United States and in the U.K. In all of these cases our discussions while not final and therefore subject to change, make us optimistic for positive outcome. The progresses we’ve made here has enabled Greg to work closely with our IT group led by Pat Horne to implement information and management systems that will touch all areas of our operation.

I hope that our results and what you hear from us in this call will leave you with no doubt about how our determination and optimism about the solid and bright future Sunrise, our residents, our team members, our partners, and our shareholders have to look forward to.

I’ll now turn the call over to Marc Richards, our Chief Financial Officer.

Marc Richards

Thank you, Mark. Good morning, and welcome to Sunrise’s first quarter earnings call. I will focus my discussion this morning on Sunrise’s consolidated operating results for the first quarter of 2012 and the impact recent transactions have had on our consolidated financial statements.

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