SOURCE: Assisted Living Concepts, Inc.
MENOMONEE FALLS, WI–(Marketwire – August 9, 2010) – Assisted Living Concepts, Inc. (
Highlights:
-- Increased average private pay occupancy by 122 and 8 units over the
second quarter of 2009 and the first quarter of 2010, respectively
-- Increased overall and private pay rates by 5.8% and 3.8%, respectively
over the second quarter of 2009
-- Increased Adjusted EBITDAR as a percent of revenues to 33.6%, up from
32.3% in both the second quarter of 2009 and the first quarter of 2010
-- Adjusted EBITDAR as a percent of revenues would have been a record
34.4% (excluding One-Time Charges)
-- Extended and expanded share repurchase program authorizing up to
$15 million through August 9, 2011
Assisted Living Concepts, Inc. (“ALC”) (
$2.9 million in the second quarter of 2010. During the second quarter of
2010, ALC recorded the following “One-Time Charges”: an impairment charge
relating to a non-cash write-down of certain equity investments ($1.3
million net of income tax benefits); expenses associated with the
realignment of our divisions ($0.3 million net of income tax benefits);
and write-off of expenses incurred with an expansion project that the
company decided not to complete ($0.1 million net of income tax benefits).
Excluding the One-Time Charges, net income in the second quarter of 2010
would have been $4.6 million as compared to net income of $3.9 million in
the second quarter of 2009.
“Second quarter operating results were solid. For the fourth quarter in a
row we achieved positive private pay occupancy and revenue growth,”
commented Laurie Bebo, President and Chief Executive Officer. “Despite
continuing challenges in the economy and in particular with high
unemployment rates, we continue to be confident in our ability to increase
private pay occupancy and Adjusted EBITDAR margins throughout 2010.”
For the first six months of 2010, ALC reported net income of $6.5 million.
Excluding the One-Time Charges, net income for the first six months of 2010
would have been $8.2 million compared to a net loss from continuing
operations and a net loss of $7.7 million and $7.9 million in the first
six months of 2009, respectively. Excluding an impairment charge related
to the non-cash, non-recurring write-off of all goodwill ($14.7 million net
of income tax benefits) recorded in the first quarter of 2009, net income
from continuing operations and net income for the first six months of 2009
would have been $7.0 million and $6.8 million, respectively.
Diluted earnings per common share for the second quarter and the first six
months ended June 30, 2010 and 2009 were:
Quarter ended Six months ended
June 30, June 30,
2010 2009 2010 2009
------ ------ ------ ------
Diluted earnings (loss) per common
share from continuing operations $ 0.25 $ 0.33 $ 0.55 $(0.65)
Diluted earnings (loss) per common
share $ 0.25 $ 0.33 $ 0.55 $(0.66)
Pro forma diluted earnings per common
share from continuing operations
excluding One-Time Charges $ 0.39 $ 0.33 $ 0.70 $ 0.59(1)
(1) Excludes the goodwill write-off, net of income tax benefits.
One-Time Charges in the quarter ended June 30, 2010 resulted from:
1. The reclassification of a decline in the fair market value of equity
securities from a component of the Company's stockholders' equity to
the Company's income statement. These equity securities represent
legacy investments transferred from Extendicare Inc. in connection with
the capitalization of ALC in November 2006.
2. The realignment of ALC's divisional level management structure. In
connection with this realignment, ALC incurred certain expenses
primarily related to personnel.
3. The decision not to complete an expansion project due to higher than
anticipated site costs. We continue to evaluate existing owned
properties for expansion growth.
Certain non-GAAP financial measures are used in the discussions in this
release in assessing the performance of the business. See attached tables
for definitions of Adjusted EBITDA and Adjusted EBITDAR, reconciliations of
net income (loss) to Adjusted EBITDA and Adjusted EBITDAR, calculations of
Adjusted EBITDA and Adjusted EBITDAR as a percentage of total revenues, and
non-GAAP financial measure reconciliation information.
As of June 30, 2010, ALC operated 211 senior living residences comprising
9,280 units.
The following discussions include the impact of the One-Time Charges and
exclude the impact of discontinued operations unless otherwise specified.
Quarters ended June 30, 2010, June 30, 2009, March 31, 2010
Revenues of $58.3 million in the second quarter ended June 30, 2010
increased $1.6 million or 2.9% from $56.7 million in the second quarter of
2009 and increased $0.4 million or 0.8% from the first quarter of 2010.
Adjusted EBITDA for the second quarter of 2010 was $14.5 million or 24.9%
of revenues and
-- increased $1.2 million or 9.1% from $13.3 million and 23.4% of revenues
in the second quarter of 2009; and
-- increased $0.9 million or 6.7% from $13.6 million and 23.5% of revenues
in the first quarter of 2010.
Adjusted EBITDAR for the second quarter of 2010 was $19.6 million or 33.6%
of revenues and
-- increased $1.3 million or 7.3% from $18.3 million and 32.3% of revenues
in the second quarter of 2009; and
-- increased $0.9 million or 5.0% from $18.7 million and 32.3% of revenues
in the first quarter of 2010.
Second quarter 2010 compared to second quarter 2009
Revenues in the second quarter of 2010 increased from the second quarter of
2009 primarily due to higher average daily revenue as a result of rate
increases ($2.2 million) and an increase in private pay occupancy ($1.2
million), partially offset by the planned reduction in the number of units
occupied by Medicaid residents ($1.8 million). Average private pay rates
increased in the second quarter of 2010 by 3.8% over average private pay
rates for the second quarter of 2009. Average overall rates, including the
impact of improved payer mix, increased in the second quarter of 2010 by
5.8% over comparable rates for the second quarter of 2009.
Both Adjusted EBITDA and Adjusted EBITDAR increased in the second quarter
of 2010 primarily due to an increase in revenues discussed above ($1.6
million) and a decrease in residence operations expenses ($0.5 million)
(this excludes the loss on disposal of fixed assets), partially offset by
an increase in general and administrative expenses ($0.8 million) (this
excludes non-cash equity based compensation) and, for Adjusted EBITDA only,
an increase in residence lease expense ($0.1 million). Residence
operations expenses decreased primarily from lower labor expenses.
Staffing needs in the second quarter of 2010 as compared to the second
quarter of 2009 decreased primarily because of a decline in the number of
units occupied by Medicaid residents who tend to have higher care needs
than private pay residents. In addition, general economic conditions
enabled us to hire new employees at lower wage rates. General and
administrative expenses increased as a result of expenses associated with
an all-company conference held in the second quarter of 2010 and expenses
associated with the realignment of our divisions.
Second quarter 2010 compared to the first quarter 2010
Revenues in the second quarter of 2010 increased from the first quarter of
2010 primarily due to one additional day in the second quarter ($0.6
million), an increase in the number of units occupied by private pay
residents ($0.1 million), and higher average daily revenue as a result of
rate increases ($0.1 million), partially offset by the planned reduction in
the number of units occupied by Medicaid residents ($0.4 million).
Increased Adjusted EBITDA and Adjusted EBITDAR in the second quarter of
2010 as compared to the first quarter of 2010 resulted primarily from a
decrease in residence operations expenses ($0.9 million) (this excludes the
loss on disposal of fixed assets) and an increase in revenues discussed
above ($0.4 million), partially offset by an increase in general and
administrative expenses ($0.4 million) (this excludes non-cash equity-based
compensation). Residence operations expenses decreased primarily from
decreases in utility expenses resulting from normal seasonal fluctuations.
General and administrative expenses increased as a result of expenses
associated with an all-company conference held in the second quarter of
2010 and expenses associated with the realignment of our divisions.
Six months ended June 30, 2010 and June 30, 2009
Revenues of $116.2 million in the six months ended June 30, 2010 increased
$2.4 million or 2.1% from $113.8 million in the six months ended June 30,
2009.
Adjusted EBITDA for the six months ended June 30, 2010 was $28.1 million,
or 24.2% of revenues and
-- increased $3.3 million or 13.1% from $24.8 million and 21.8% of
revenues in the six months ended June 30, 2009.
Adjusted EBITDAR for the six months ended June 30, 2010 was $38.3 million,
or 33.0% of revenues and
-- increased $3.5 million or 10.2% from $34.7 million and 30.6% of
revenues in the six months ended June 30, 2009.
Six months ended June 30, 2010 compared to six months ended June 30, 2009
Revenues in the six months ended June 30, 2010 increased from the six
months ended June 30, 2009 primarily due to higher average daily revenue
from rate increases ($4.2 million) and an increase in private pay occupancy
($2.1 million), partially offset by the planned reduction in the number of
units occupied by Medicaid residents ($3.9 million). Average private pay
rates increased in the six months ended June 30, 2010 by 3.8% over average
private pay rates for the six months ended June 30, 2009. Average overall
rates, including the impact of improved payer mix, increased in the six
months ended June 30, 2010 by 5.6% over the comparable rates for the six
months ended June 30, 2009.
Both Adjusted EBITDA and Adjusted EBITDAR increased in the six months ended
June 30, 2010 primarily from a decrease in residence operations expenses
($2.2 million) (this excludes the loss on disposal of fixed assets), and
the increase in revenues discussed above ($2.4 million), partially offset
by an increase in general and administrative expenses ($1.1 million) (this
excludes non-cash equity based compensation) and, for Adjusted EBITDA only,
an increase in residence lease expense ($0.3 million). Residence
operations expenses decreased primarily from lower labor and kitchen
expenses. Staffing needs in the six months ended June 30, 2010 as compared
to the six months ended June 30, 2009 decreased primarily because of a
decline in the number of units occupied by Medicaid residents who tend to
have higher care needs than private pay residents. In addition, general
economic conditions enabled us to hire new employees at lower wage rates.
Kitchen expenses were lower due to new group purchasing plans and lower
overall occupancy. General and administrative expenses increased primarily
from upfront costs associated with transitioning payroll and benefits from
a third party vendor to in-house, expenses associated with an all-company
conference held in the second quarter of 2010, and expenses associated with
the realignment of our divisions.
Liquidity
At June 30, 2010 ALC maintained a strong liquidity position with cash of
approximately $12.2 million and undrawn lines of $70 million.
Share Repurchase Program
On August 9, 2010, ALC’s Board of Directors extended and expanded its share
repurchase program by authorizing the purchase of up to $15 million in
Class A common stock through August 9, 2011. In 2010, through August 9,
2010, ALC repurchased 61,461 shares of Class A Common Stock at a cost of
$1.9 million and an average price of $30.45 per share (excluding fees).
Investor Call
ALC has scheduled a conference call for tomorrow, August 10, 2010 at 10:00
a.m. (ET) to discuss its financial results for the second quarter. This
earnings release will be posted on ALC’s website at www.alcco.com. The
toll-free number for the live call is (800) 230-1096 or international (612)
332-0107; the conference name is “ALC Second Quarter Results.” A taped
rebroadcast of the conference call will be available approximately three
hours following the live call until midnight on September 10, 2010, by
dialing toll free (800) 475-6701, or international (320) 365-3844; the
access code is 165684.
About Us
Assisted Living Concepts, Inc. and its subsidiaries operate 211 senior
living residences comprising 9,280 residents in 20 states. ALC’s senior
living facilities typically consist of 40 to 60 units and offer residents a
supportive, home-like setting and assistance with the activities of daily
living. ALC employs approximately 4,100 people.
Forward-looking Statements
Statements contained in this release other than statements of historical
fact, including statements regarding anticipated financial performance,
business strategy and management’s plans and objectives for future
operations, including management’s expectations about improving occupancy
and private pay mix, are forward-looking statements. Forward-looking
statements generally include words such as “expect,” “point toward,”
“intend,” “will,” “indicate,” “anticipate,” “believe,” “estimate,” “plan,”
“strategy” or “objective.” Forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ materially from
those expressed or implied. In addition to the risks and uncertainties
referred to in the release, other risks and uncertainties are contained in
ALC’s filings with United States Securities and Exchange Commission and
include, but are not limited to, the following: changes in the health care
industry in general and the senior housing industry in particular because
of governmental and economic influences; changes in general economic
conditions, including changes in housing markets, unemployment rates and
the availability of credit at reasonable rates; changes in regulations
governing the industry and ALC’s compliance with such regulations; changes
in government funding levels for health care services; resident care
litigation, including exposure for punitive damage claims and increased
insurance costs, and other claims asserted against ALC; ALC’s ability to
maintain and increase census levels; ALC’s ability to attract and retain
qualified personnel; the availability and terms of capital to fund
acquisitions and ALC’s capital expenditures; changes in competition; and
demographic changes. Given these risks and uncertainties, readers are
cautioned not to place undue reliance on ALC’s forward-looking statements.
All forward-looking statements contained in this report are necessarily
estimates reflecting the best judgment of the party making such statements
based upon current information. ALC assumes no obligation to update any
forward-looking statement.
ASSISTED LIVING CONCEPTS, INC.
Consolidated Statements of Operations
(In thousands, except earnings per share)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2010 2009(1) 2010 2009(1)
---------- ---------- ---------- ----------
Revenues $ 58,305 $ 56,683 $ 116,164 $ 113,750
Expenses:
Residence operations
(exclusive of depreciation
and amortization and
residence lease expense
shown below) 34,805 35,181 70,517 72,434
General and administrative 4,256 3,341 8,030 6,775
Residence lease expense 5,111 4,993 10,194 9,923
Depreciation and amortization 5,698 5,218 11,368 10,149
Goodwill impairment -- -- -- 16,315
---------- ---------- ---------- ----------
Total operating expenses 49,870 48,733 100,109 115,596
---------- ---------- ---------- ----------
Income (loss) from operations 8,435 7,950 16,055 (1,846)
Other expense:
Other-than-temporary
investments impairment (2,026) -- (2,026) --
Interest income 4 7 8 19
Interest expense (1,899) (1,834) (3,787) (3,537)
---------- ---------- ---------- ----------
Income (loss) from continuing
operations before income
taxes 4,514 6,123 10,250 (5,364)
Income tax expense (1,618) (2,182) (3,741) (2,326)
---------- ---------- ---------- ----------
Net income (loss) from
continuing operations 2,896 3,941 6,509 (7,690)
Loss from discontinued
operations, net of tax -- (34) -- (178)
---------- ---------- ---------- ----------
Net income (loss) $ 2,896 $ 3,907 $ 6,509 $ (7,868)
========== ========== ========== ==========
Weighted average common shares:
Basic 11,567 11,808 11,572 11,882
Diluted 11,738 11,927 11,741 11,882
Per share data:
Basic earnings per common
share
Earnings (loss) from
continuing operations $ 0.25 $ 0.33 $ 0.56 $ (0.65)
Loss from discontinued
operations -- -- -- (0.01)
---------- ---------- ---------- ----------
Net income (loss) $ 0.25 $ 0.33 $ 0.56 $ (0.66)
========== ========== ========== ==========
Diluted earnings per
common share
Earnings (loss) from
continuing operations $ 0.25 $ 0.33 $ 0.55 $ (0.65)
Loss from discontinued
operations -- -- -- (0.01)
---------- ---------- ---------- ----------
Net income (loss) $ 0.25 $ 0.33 $ 0.55 $ (0.66)
Adjusted EBITDA (2) $ 14,503 $ 13,291 $ 28,100 $ 24,840
========== ========== ========== ==========
Adjusted EBITDAR (2) $ 19,614 $ 18,284 $ 38,294 $ 34,763
========== ========== ========== ==========
(1) Reflects the reclassification of the operations of 118 units previously
reported as continuing operations to discontinued operations.
(2) See attached tables for definitions of Adjusted EBITDA and Adjusted
EBITDAR and reconciliations of net income to Adjusted EBITDA and Adjusted
EBITDAR.
ASSISTED LIVING CONCEPTS, INC.
Consolidated Balance Sheets
(In thousands, except share and per share data)
June 30, December 31,
2010 2009
------------ ------------
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 12,239 $ 4,360
Investments 3,568 3,427
Accounts receivable, less allowances of
$1,096 and $738, respectively 3,627 2,668
Prepaid expenses, supplies and other
receivables 4,095 3,537
Deposits in escrow 1,763 1,993
Income taxes receivable -- 723
Deferred income taxes 4,590 4,636
Current assets of discontinued operations 168 36
------------ ------------
Total current assets 30,050 21,380
Property and equipment, net 411,894 415,454
Intangible assets, net 11,003 11,812
Restricted cash 3,017 4,389
Other assets 1,977 1,935
Non-current assets of discontinued operations -- 399
------------ ------------
Total Assets $ 457,941 $ 455,369
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,749 $ 8,005
Accrued liabilities 16,177 19,228
Deferred revenue 6,008 6,368
Current maturities of long-term debt 1,884 1,823
Income tax payable 1,212 --
Current portion of self-insured liabilities 500 500
Current liabilities of discontinued
operations -- 34
------------ ------------
Total current liabilities 31,530 35,958
Accrual for self-insured liabilities 1,416 1,416
Long-term debt 118,954 119,914
Deferred income taxes 14,281 13,257
Other long-term liabilities 11,801 11,853
Commitments and contingencies
------------ ------------
Total Liabilities 177,982 182,398
------------ ------------
Preferred Stock, par value $0.01 per share,
25,000,000 shares authorized; no shares issued
and outstanding -- --
Class A Common Stock, $0.01 par value,
80,000,000 shares authorized at June 30, 2010
and December 31, 2009; 12,403,499 and
12,397,525 shares issued and 10,108,938 and
10,048,674 shares outstanding, respectively 124 124
Class B Common Stock, $0.01 par value,
15,000,000 shares authorized at June 30, 2010
and December 31, 2009; 1,523,085 and 1,528,650
shares issued and outstanding, respectively 15 15
Additional paid-in capital 314,964 314,602
Accumulated other comprehensive loss (775) (2,012)
Retained earnings 39,995 33,486
Treasury stock at cost, 2,384,561 and 2,348,851
shares, respectively (74,364) (73,244)
------------ ------------
Total Stockholders' Equity 279,959 272,971
------------ ------------
Total Liabilities and Stockholders' Equity $ 457,941 $ 455,369
============ ============
ASSISTED LIVING CONCEPTS, INC.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Six Months Ended
June 30,
---------------------
2010 2009
---------- ----------
OPERATING ACTIVITIES:
Net income (loss) $ 6,509 $ (7,868)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 11,368 10,344
Other-than-temporary investments impairment 2,026 --
Goodwill impairment -- 16,315
Amortization of purchase accounting adjustments
for leases (197) (198)
Provision for bad debts 358 (27)
Provision for self-insured liabilities 262 392
Loss on disposal of fixed assets 315 34
Unrealized gain on investments (17) --
Equity-based compensation expense 362 188
Change in fair value of derivatives 23 --
Deferred income taxes 306 (154)
Changes in assets and liabilities:
Accounts receivable (1,317) 360
Supplies, prepaid expenses and other receivables (558) (1,027)
Deposits in escrow 230 388
Current assets - discontinued operations (132) --
Accounts payable (1,432) (1,735)
Accrued liabilities (3,051) (231)
Deferred revenue (360) 424
Current liabilities - discontinued operations (34) --
Payments of self-insured liabilities (261) (320)
Income taxes payable / receivable 1,935 4,296
Changes in other non-current assets 1,330 809
Other non-current assets - discontinued
operations 399 --
Other long-term liabilities 100 553
---------- ----------
Cash provided by operating activities 18,164 22,543
INVESTING ACTIVITIES:
Payment for executive retirement plan securities (110) (95)
Payments for new construction projects (3,208) (11,768)
Payments for purchases of property and equipment (4,930) (6,930)
---------- ----------
Cash used in investing activities (8,248) (18,793)
FINANCING ACTIVITIES:
Purchase of treasury stock (1,120) (4,860)
Repayment of revolving credit facility -- (19,000)
Proceeds from issuance of new mortgage debt -- 14,000
Repayment of mortgage debt (917) (8,114)
---------- ----------
Cash used by financing activities (2,037) (17,974)
---------- ----------
Increase (decrease) in cash and cash equivalents 7,879 (14,224)
Cash and cash equivalents, beginning of year 4,360 19,905
---------- ----------
Cash and cash equivalents, end of period $ 12,239 $ 5,681
========== ==========
Supplemental schedule of cash flow information:
Cash paid during the period for:
Interest $ 3,575 $ 3,663
Income tax payments, net of refunds 1,494 (1,892)
ASSISTED LIVING CONCEPTS, INC.
Financial and Operating Statistics
Continuing residences* Three months ended
-------------------------------
June 30, March 31, June 30,
2010 2010 2009
--------- --------- ---------
Average Occupied Units by Payer Source
Private 5,476 5,468 5,354
Medicaid 162 214 445
--------- --------- ---------
Total 5,638 5,682 5,799
========= ========= =========
Occupancy Mix by Payer Source
Private 97.1% 96.2% 92.3%
Medicaid 2.9% 3.8% 7.7%
Percent of Revenue by Payer Source
Private 98.1% 97.5% 95.0%
Medicaid 1.9% 2.5% 5.0%
Average Revenue per Occupied Unit Day $ 113.64 $ 113.13 $ 107.42
Occupancy Percentage* 62.7% 63.0% 64.2%
* Depending on the timing of new additions and temporary closures of our
residences, we may increase or reduce the number of units we actively
operate. For the three months ended June 30, 2010, March 31, 2010 and June
30, 2009 we actively operated 8,991, 9,025 and 9,154 units, respectively.
Same residence basis** Three months ended
-------------------------------
June 30, March 31, June 30,
2010 2010 2009
--------- --------- ---------
Average Occupied Units by Payer Source
Private 5,417 5,423 5,304
Medicaid 162 210 387
--------- --------- ---------
Total 5,579 5,633 5,691
========= ========= =========
Occupancy Mix by Payer Source
Private 97.1% 96.3% 93.2%
Medicaid 2.9% 3.7% 6.8%
Percent of Revenue by Payer Source
Private 98.1% 97.5% 95.6%
Medicaid 1.9% 2.5% 4.4%
Average Revenue per Occupied Unit Day $ 113.49 $ 112.92 $ 107.28
Occupancy Percentage 63.4% 64.0% 64.6%
** Excludes quarterly impact of 111 completed expansion units and 76
re-opened renovated units.
ASSISTED LIVING CONCEPTS, INC.
Financial and Operating Statistics
Continuing residences* Six months ended
--------------------
June 30, June 30,
2010 2009
Average Occupied Units by Payer Source
Private 5,472 5,369
Medicaid 188 483
--------- ---------
Total 5,660 5,852
========= =========
Occupancy Mix by Payer Source
Private 96.7% 91.7%
Medicaid 3.3% 8.3%
Percent of Revenue by Payer Source
Private 97.8% 94.4%
Medicaid 2.2% 5.6%
Average Revenue per Occupied Unit Day $ 113.39 $ 107.38
Occupancy Percentage* 62.9% 64.9%
* Depending on the timing of new additions and temporary closures of our
residences, we may increase or reduce the number of units we actively
operate. For the six months ended June 30, 2010 and June 30, 2009 we
actively operated 9,004 and 9,014 units, respectively.
Same residence basis** Six months ended
-------------------
June 30, June 30,
2010 2009
Average Occupied Units by Payer Source
Private 5,392 5,327
Medicaid 186 419
--------- ---------
Total 5,578 5,746
========= =========
Occupancy Mix by Payer Source
Private 96.7% 92.7%
Medicaid 3.3% 7.3%
Percent of Revenue by Payer Source
Private 97.8% 95.0%
Medicaid 2.2% 5.0%
Average Revenue per Occupied Unit Day $ 113.08 $ 107.73
Occupancy Percentage 64.3% 66.3%
** Excludes quarterly impact of 245 completed expansion units, 39 units
temporarily closed for renovation and 76 re-opened renovated units.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDAR
Adjusted EBITDA is defined as net income from continuing operations before
income taxes, interest expense net of interest income, depreciation and
amortization, equity based compensation expense, transaction costs and
non-cash, non-recurring gains and losses, including disposal of assets and
impairment of long-lived assets (including goodwill) and loss on
refinancing and retirement of debt. Adjusted EBITDAR is defined as
Adjusted EBITDA before rent expenses incurred for leased assisted living
properties. Adjusted EBITDA and Adjusted EBITDAR are not measures of
performance under accounting principles generally accepted in the United
States of America, or GAAP. We use Adjusted EBITDA and Adjusted EBITDAR as
key performance indicators and Adjusted EBITDA and Adjusted EBITDAR
expressed as a percentage of total revenues as a measurement of margin.
We understand that EBITDA and EBITDAR, or derivatives thereof, are
customarily used by lenders, financial and credit analysts, and many
investors as a performance measure in evaluating a company’s ability to
service debt and meet other payment obligations or as a common valuation
measurement in the long-term care industry. Moreover, ALC’s revolving
credit facility contains covenants in which a form of EBITDA is used as a
measure of compliance, and we anticipate EBITDA will be used in covenants
in any new financing arrangements that we may establish. We believe
Adjusted EBITDA and Adjusted EBITDAR provide meaningful supplemental
information regarding our core results because these measures exclude the
effects of non-operating factors related to our capital assets, such as the
historical cost of the assets.
We report specific line items separately, and exclude them from Adjusted
EBITDA and Adjusted EBITDAR because such items are transitional in nature
and would otherwise distort historical trends. In addition, we use
Adjusted EBITDA and Adjusted EBITDAR to assess our operating performance
and in making financing decisions. In particular, we use Adjusted EBITDA
and Adjusted EBITDAR in analyzing potential acquisitions and internal
expansion possibilities. Adjusted EBITDAR performance is also used in
determining compensation levels for our senior executives. Adjusted EBITDA
and Adjusted EBITDAR should not be considered in isolation or as a
substitute for net income, cash flows from operating activities, and other
income or cash flow statement data prepared in accordance with GAAP, or as
a measure of profitability or liquidity. We present Adjusted EBITDA and
Adjusted EBITDAR on a consistent basis from period to period, thereby,
allowing for comparability of operating performance.
Adjusted EBITDA and Adjusted EBITDAR Reconciliation Information
The following table sets forth a reconciliation of net income (loss) to
Adjusted EBITDA and Adjusted EBITDAR:
Three months ended Six months ended
---------------------------- ------------------
June 30, June 30, March 31, June 30, June 30,
2010 2009 2010 2010 2009
-------- -------- -------- -------- --------
(in thousands)
Net income (loss) $ 2,896 $ 3,907 $ 3,613 $ 6,509 (7,868)
Less: Income (loss) from
discontinued operations,
net of tax - (34) - - (178)
Add: provision for income
taxes 1,618 2,182 2,123 3,741 2,326
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income taxes $ 4,514 $ 6,123 $ 5,736 10,250 (5,364)
Add:
Depreciation and
amortization 5,698 5,218 5,670 11,368 10,149
Interest expense, net 1,895 1,827 1,884 3,779 3,518
Non-cash equity based
compensation 225 123 137 362 188
Loss on disposal of
fixed assets 145 - 170 315 34
Write-down of equity
investments 2,026 - - 2,026
Goodwill impairment - - - - 16,315
-------- -------- -------- -------- --------
Adjusted EBITDA 14,503 13,291 13,597 28,100 24,840
Add: Lease expense 5,111 4,993 5,083 10,194 9,923
-------- -------- -------- -------- --------
Adjusted EBITDAR $ 19,614 $ 18,284 $ 18,680 $ 38,294 $ 34,763
======== ======== ======== ======== ========
Adjusted EBITDA 14,503 13,291 13,597 28,100 24,840
Add: Division realignment
expense 453 - - 453 -
-------- -------- -------- -------- --------
Adjusted EBITDA before
division realignment
expense 14,956 13,291 13,597 28,553 24,840
Add: Lease expense 5,111 4,993 5,083 10,194 9,923
-------- -------- -------- -------- --------
Adjusted EBITDAR before
division realignment
expense $ 20,067 $ 18,284 $ 18,680 $ 38,747 $ 34,763
======== ======== ======== ======== ========
The following table sets forth the calculations of Adjusted EBITDA,
Adjusted EBITDAR, Adjusted EBITDA before division realignment and Adjusted
EBITDAR before division realignment as percentages of total revenue:
Three months ended Six months ended
------------------------------- --------------------
June 30, June 30, March 31, June 30, June 30,
2010(1) 2009 2010 2010(1) 2009
--------- --------- --------- --------- ---------
(in thousands)
Revenues $ 58,305 $ 56,683 $ 57,859 $ 116,164 $ 113,750
========= ========= ========= ========= =========
Adjusted EBITDA $ 14,503 $ 13,291 $ 13,597 $ 28,100 $ 24,840
========= ========= ========= ========= =========
Adjusted EBITDAR $ 19,614 $ 18,284 $ 18,680 $ 38,294 $ 34,763
========= ========= ========= ========= =========
Adjusted EBITDA as
percent of total
revenues 24.9% 23.4% 23.5% 24.2% 21.8%
========= ========= ========= ========= =========
Adjusted EBITDAR as
percent of total
revenues 33.6% 32.3% 32.3% 33.0% 30.6%
========= ========= ========= ========= =========
(1) Includes division realignment expenses of $453 in both the
quarter and six months ended June 30, 2010. Excluding division
realignment expenses, Adjusted EBITDA, Adjusted EBITDAR, Adjusted
EBITDA as a percent of sales and Adjusted EBITDAR as a percent of
sales for the quarter ended June 30, 2010 would have been $14,956,
$20,067, 25.7% and 34.4%, respectively. Adjusted EBITDA, Adjusted
EBITDAR, Adjusted EBITDA as a percent of sales and Adjusted EBITDAR as
a percent of sales for the six months ended June 30, 2010 would have
been $28,553, $38,747, 24.6% and 33.4%, respectively.
ASSISTED LIVING CONCEPTS, INC.
Reconciliation of Non-GAAP Measures
(unaudited)
Three Six Six
Months Months Months
Ended Ended Ended
June 30, June 30, June 30,
2010 2010 2009
(dollars in thousands except
per share data)
Net income (loss) $ 2,896 $ 6,509 $ (7,868)
Add: Loss from discontinued operations,
net of tax - - 178
--------- --------- ---------
Income (loss) from continuing operations 2,896 6,509 (7,690)
--------- --------- ---------
Add one time charge:
Write down of equity investments 2,026 2,026 -
Goodwill impairment - - 16,315
Loss on disposal of fixed assets related
to expansion project 125 125 -
Division realignment expense 453 453 -
Less: Income tax benefits from one-time
charges 933 933 1,622
--------- --------- ---------
Pro forma net income from continuing
operations excluding one-time charges $ 4,567 $ 8,180 $ 7,003
========= ========= =========
Weighted average common shares:
Basic 11,567 11,572 11,882
Diluted 11,738 11,741 11,882
Per share data:
Basic earnings per common share
Income (loss) from continuing operations $ 0.25 $ 0.56 $ (0.65)
Less: loss from discontinued operations - - (0.01)
Less: loss from one-time charges (0.14) (0.14) (1.24)
--------- --------- ---------
Pro forma net income from continuing
operations excluding one-time charges $ 0.39 $ 0.70 $ 0.60
========= ========= =========
Diluted earnings per common share*
Income (loss) from continuing operations $ 0.25 $ 0.55 $ (0.65)
Less: loss from discontinued operations - - (0.01)
Less: loss from one-time charges (0.14) (0.14) (1.24)
--------- --------- ---------
Pro forma net income from continuing
operations excluding one-time charges $ 0.39 $ 0.70 $ 0.60
========= ========= =========
* Per share numbers may not add due to rounding