MARKHAM, Ontario, Nov. 14, 2018 (GLOBE NEWSWIRE) -- Sienna Senior Living Inc. (“Sienna” or the “Company”) (TSX: SIA) today announced its financial results for the three and nine months ended September 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 Third Quarter Highlights

Strong operating performance

  • Revenue increased by 18.0% to $165.0 million in Q3 2018, compared to Q3 2017;
  • Net Operating Income (“NOI”) increased by 31.7% to $40.5 million in Q3 2018 compared to Q3 2017;
  • Retirement Same Property NOI increased by 4.2% to $8.9 million in Q3 2018 compared to Q3 2017;
  • Long-term Care (“LTC”)/ Residential Care (“RC”) Same Property NOI increased by 3.5% to $23.0 million in Q3 2018 compared to Q3 2017;
  • Diluted Operating Funds from Operations (“OFFO”) increased by 4.6% to $0.362 per share in Q3 2018, compared to Q3 2017;
  • Monthly dividend per share increased by 2% to $0.0765 per share, starting with the August 2018 dividend paid in September 2018.

Improved balance sheet

  • Lowered debt to gross book value by 350 bps to 48.3% from 51.8% year-over-year;
  • Improved interest coverage ratio to 4.0x in Q3 2018 from 3.9x in Q3 2017;
  • Increased weighted average term of debt maturity to 5.0 years at the end of Q3 2018 from 4.6 years at the end of Q3 2017.

“With another solid quarter of operating results and the favourable ruling by the Ontario Superior Court of Justice regarding the discontinuance of the proposed class action, we are poised to end 2018 on a strong note,” said Lois Cormack, President and Chief Executive Officer of Sienna. “We continued to make excellent progress on the integration of our 2018 acquisitions, generated strong organic growth and further enhanced our balance sheet.”

Financial and Operating Highlights:

$000s except occupancy, per share and ratio dataThree months ended
September 30, 2018
 Three months ended
September 30, 2017
 Nine months ended
September 30, 2018
 Nine months ended
September 30, 2017
 
Retirement Same Property – Average occupancy (1)91.8%94.0%92.8%94.1%
Retirement Acquisitions – Average occupancy91.0%N/A 90.3%N/A 
Retirement – Average total occupancy (2)91.4%94.0%91.6%94.1%
LTC/RC – Average total occupancy98.7%98.6%98.3%98.3%
LTC/RC – Average private occupancy98.6%98.5%98.2%98.5%
Revenue $165,048 $139,867 $472,529 $411,360 
Operating expenses $124,529 $109,109 $360,216 $323,731 
NOI (3)$40,519 $30,758 $112,313 $87,629 
Net income$5,000 $6,214 $9,581 $17,619 
Operating Funds from Operations (OFFO) (3)$23,825 $16,565 $66,495 $46,509 
Adjusted Funds from Operations (AFFO) (3)$24,266 $18,217 $70,895 $51,538 
Net income per share, diluted$0.076 $0.127 $0.149 $0.374 
OFFO per share, diluted$0.362 $0.346 $1.042 $0.975 
AFFO per share, diluted$0.370 $0.380 $1.110 $1.078 
Dividends declared per share$0.228 $0.225 $0.678 $0.675 
Payout Ratio (4)61.6%57.3%60.3%60.5%

Notes:

  1. Quarter-over-quarter and year-over-year decreases in Retirement same property occupancy are due to increased resident turnover.
  2. Quarter-over-quarter and year-over-year decreases in total Retirement occupancy are due to acquisitions with lower levels of occupancy and higher levels of short term stays, increased resident turnover, and a more severe and prolonged flu season in early 2018.
  3. 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.
  4. Payout Ratio is calculated using dividends declared per share divided by the basic AFFO per share for the respective periods.

2018 Third Quarter Summary

Average occupancy in our LTC/RC portfolio remained high at 98.7% in Q3 2018, a 0.1% increase over Q3 2017. Average occupancy in the Retirement portfolio was 91.4% in Q3 2018 compared to 94.0% in Q3 2017, largely due to the impact of acquisitions with lower levels of occupancy and increased resident turnover during the quarter. Average occupancy in Retirement same property was 91.8% in Q3 2018 compared to 94.0% in Q3 2017, and trended higher at the end of Q3 2018 to 93.0%.

Revenue increased by 18.0%, or $25.2 million, to $165.0 million over the comparable prior year period. The increase was mainly a result of the revenues generated from acquisitions completed since Q3 2017, in addition to strong same property results.

Operating expenses increased by 14.1%, or $15.4 million, to $124.5 million over the comparable prior year period. The increase was primarily related to expenses incurred by the properties acquired since Q3 2017.

NOI increased by 31.7%, or $9.8 million, to $40.5 million over the comparable prior year period due to strong same property NOI growth and contributions from accretive acquisitions. 

The Company generated net income of $5.0 million for the three months ended September 30, 2018, representing a decrease of $1.2 million over the comparable prior year period. The decrease was primarily related to incremental interest expense and depreciation and amortization incurred from the acquisitions completed since Q3 2017, partially offset by income generated from the acquisitions and lower income taxes.

OFFO increased by 43.8%, or $7.3 million, to $23.8 million over the comparable prior year period. The increase was primarily related to the income generated from the acquisitions completed since Q3 2017 and strong organic growth, partially offset by incremental interest expense on these acquired properties.

AFFO increased by 33.2%, or $6.0 million, to $24.3 million over the comparable prior year period. The increase was primarily related to the increase in OFFO noted above, partially offset by higher maintenance capital expenditures due to the Company’s growth from acquisitions and the timing of these expenditures.

2018 Nine Months Summary

Revenue increased by 14.9%, or $61.2 million, to $472.5 million over the comparable prior year period.  The increase was mainly a result of the revenues generated from acquisitions completed since Q3 2017, in addition to strong same property results.

Operating expenses increased by 11.3%, or $36.5 million, to $360.2 million over the comparable prior year period. The increase was primarily related to expenses incurred by the properties acquired since Q3 2017, partially offset by a prior year tax adjustment of $1.3 million recorded in Q1 2018.

NOI increased by 28.2%, or $24.7 million, to $112.3 million over the comparable prior year period. 

The Company generated net income of $9.6 million for the nine months ended September 30, 2018, representing a decrease of $8.0 million over the comparable prior year period.  The decrease was primarily related to incremental interest expense and depreciation and amortization incurred from the acquisitions completed since Q3 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 43.0%, or $20.0 million, to $66.5 million over the comparable prior year period. The increase was primarily related to the income generated from the acquisitions completed since Q3 2017 and a prior year tax adjustment of $1.3 million, partially offset by the dilution of earnings from the public offering of 9,066,000 common shares in February in connection with the acquisition that was completed at the end of Q1 2018, and incremental interest expense on the acquisitions completed since Q3 2017.

AFFO increased by 37.6%, or $19.4 million, to $70.9 million over the comparable prior year period. The increase was primarily related to the increase in OFFO noted above and income support received, partially offset by higher maintenance capital expenditures due to the Company’s growth.

Proposed Class Action Discontinued

On October 25, 2018, the Ontario Superior Court of Justice issued an order discontinuing the proposed class action, served on the Company on May 2, 2018, as a class action. The Company expects that this action will be an individual claim and any potential liability pursuant to such claim will be covered by insurance and should therefore not have a material adverse impact on the business. For more information, please refer to the Company’s Q3 2018 Management’s Discussion and Analysis.

Conference Call

The toll-free dial-in number for participants is 1-844-543-5234, conference ID: 9089533. 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 November 15, 2019 and archived on Sienna's website.

About Sienna Senior Living

Sienna Senior Living (TSX: SIA) is a leading seniors’ living provider with 87 seniors’ living residences in key markets in Canada.  Sienna offers a full range of seniors’ living options, including independent and assisted living, long-term and residential 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