Brookdale Senior Living Inc. · NYSE:BKD
Brookdale Senior Living — Q2 2017 Earnings Presentation
32 slides from Brookdale Senior Living's earnings presentation, Aug 7, 2017
Slide 1: Supplemental Information 2nd Quarter 2017
Supplemental Information 2nd Quarter 2017 Exhibit 99.2
Slide 2: Table of Contents
2 Financial Overview 3 Segment Overview 7 Senior Housing 8 Ancillary Services 13 G&A Expense & Transaction Costs 14 Capital Expenditures 15 Cash Lease Payments 16 Unconsolidated Ventures 17 Debt & Liquidity 18 Net Asset Value Elements 20 Definitions 21 Appendix: Consolidated Statements of Cash Flows
Slide 3: Overview
3 (1) Brookdale’s weighted average unit ownership percentage is 22.2%. Important Note Regarding Non-GAAP Financial Measures. Adjusted EBITDA, Adjusted Free Cash Flow, Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures and Brookdale’s Proportionate Share of Adjusted Free Ca
Slide 4: Segment Overview
4 Segment Overview (1) Senior Housing Segments Re venue (2 ) Segme nt O pe ra ting In come (3 ) (1) Brookdale’s five segments are Retirement Centers, Assisted Living, CCRCs–Rental (which combined are referred to as Senior Housing), Brookdale Ancillary Services and Management Services. (2) Percentage
Slide 5: Consolidated Financial Overview
5 (1) Primarily consists of proceeds from property insurance, cash paid for debt modification and extinguishment costs and cash paid for state income taxes. (All amounts in 000s) FY 2016 FY 2017 YoY Q2 Q3 Q4 Q1 Q2 Q2 Resident fee and management fee revenue $ 1,072,754 $ 1,058,363 $ 1,030,338 $1,032,
Slide 6: Q2 2017 Segment Financial Overview
6 (1) Other is primarily comprised of corporate capital expenditures, unallocated G&A expense (primarily integration, transaction-related and strategic project costs), non-cash stock-based compensation and transaction costs. ($ in 000s) Q2 2017 Total Senior Housing Owned Portfolio Senior Housing Lea
Slide 7: Total Senior Housing, Ancillary and Management Services
7(1) Excludes reimbursed costs on behalf of managed communities of $186,076, $187,763, $178,530, $183,945 and $229,960 (in thousands), respectively. ($ in 000s, except RevPAR and RevPOR) FY 2016 FY 2017 YoY Q2 Q3 Q4 Q1 Q2 Q2 Total Senior Housing, Brookdale Ancillary and Management Services(1) Revenu
Slide 8: Senior Housing Segments
8 Retirement Centers Revenue $ 169,990 $ 170,706 $ 169,381 $ 172,620 $ 162,248 (4.6)% Segment Operating Income $ 74,754 $ 73,112 $ 72,215 $ 74,002 $ 67,297 (10.0)% Segment Operating Margin 44.0% 42.8% 42.6% 42.9% 41.5% -250 bps Number of communities (period end) 95 95 93 86 86 Period end number of u
Slide 9: Assisted Living Same Community
9 Revenue $ 798,048 $ 798,037 $ 790,042 $ 810,041 $ 798,396 — % Community Labor Expenses (324,092) (324,277) (329,058) (331,947) (339,008) Other facility operating expenses (170,147) (182,928) (180,124) (177,308) (183,452) Facility operating expenses (494,239) (507,205) (509,182) (509,255) (522,460)
Slide 10: Senior Housing Owned Portfolio
10 Resident fee revenue $ 406,908 $ 403,655 $ 383,588 $ 388,310 $ 381,418 Less: Facility operating expenses (267,901) (271,664) (259,430) (252,673) (257,991) Owned Portfolio Operating Income 139,007 131,991 124,158 135,637 123,427 (11.2)% Less: G&A Portfolio Allocation (see page 14) (20,015) (14,685
Slide 11: Senior Housing Leased Portfolio
11 Resident fee revenue $ 524,324 $ 521,913 $ 512,444 $ 516,645 $ 442,462 Less: Facility operating expenses (320,898) (329,918) (328,993) (325,526) (287,327) Leased Portfolio Operating Income 203,426 191,995 183,451 191,119 155,135 (23.7 )% Less: G&A Portfolio Allocation (see page 14) (25,791) (18,9
Slide 12: Brookdale's Largest 20 Markets - Competitive Summary
12 (1) Data reflected is for the consolidated senior housing portfolio only. (2) NIC MAP Supply Set, Q2 2017 "New Construction" properties with projected open dates through Q2 2018. (3) Saturation is equal to units per population Age 75+ with income 50k+. (4) Percentage changes are based on data fro
Slide 13: Ancillary Services
13 Resident fee revenue Home Health $ 97,423 $ 91,858 $ 91,199 $ 92,241 $ 88,561 Outpatient Therapy 14,511 12,667 9,320 6,375 6,179 Hospice 10,503 11,766 12,531 13,346 15,441 Other ancillary services 899 972 992 10 9 Segment resident fee revenue 123,336 117,263 114,042 111,972 110,190 (10.7)% Segmen
Slide 14: G&A Expense & Transaction Costs
14 (1) G&A allocations are calculated using a methodology which the Company believes best matches the type of general and administrative cost with the community, segment, or portfolio. Some of the allocations are based on direct utilization and some are based on formulas such as unit proportion. G&A
Slide 15: Capital Expenditures
15 (1) Includes net recurring and EBITDA-enhancing projects which were formerly reported separately. (2) Formerly referred to by the Company as corporate, integration and other. Community level capital expenditures, including allocations(1) Senior Housing Owned Portfolio $ 18,661 $ 19,983 $ 18,668 $
Slide 16: Cash Lease Payments
16(1) Includes corporate lease expense of $1,171, $1,182, $1,160 $1,133, and $1,109 (in thousands), respectively. Operating Leases Facility lease expense $ 92,682 $ 92,519 $ 91,745 $ 88,807 $ 84,690 Less: Straight-line (income) expense, net 523 859 1,786 3,007 3,119 Less: Amortization of (above) bel
Slide 17: Unconsolidated Ventures
17 ($ in 000s) Q2 2017 Twelve Months Ended June 30, 2017 Total CCRC Venture Other Ventures Total Resident fee revenue $ 360,425 $ 100,066 $ 260,359 $ 1,223,071 Less: Facility operating expenses (251,100) (77,249) (173,851) (841,481) Less: General and administrative expenses including management fees
Slide 18: Debt & Liquidity
18 $2,326,295 $1,271,513 (1) Includes the carrying value of mortgage debt, convertible notes, line of credit and other notes payable, but excludes capital and financing lease obligations. (2) Pertaining to variable rate debt, reflects a) market rates as of June 30, 2017 and b) applicable cap rates f
Slide 19: Debt Maturity Schedule
19 Debt Maturity Schedule(1) ($ in 000s) Debt $1,400,000 $700,000 $0 2017 2018 2019 2020 2021 Thereafter $130,067 $1,032,438 $135,570 $475,794 $324,128 $1,499,811 (1) The debt maturity and weighted rate schedules reflect the payment and interest terms of a debt refinancing completed in July 2017. Th
Slide 20: Net Asset Value Elements
20 (1) Includes results of operations of communities disposed through sale or lease termination through the disposal date. (2) See page 14. G&A allocations presented on this page exclude non-cash stock-based compensation expense of $28,542 and integration, transaction, transaction-related and strate
Slide 21: Definitions
21 Adjusted EBITDA is a non-GAAP financial measure that the Company defines as net income (loss) before provision (benefit) for income taxes; non-operating (income) expense items; depreciation and amortization (including non-cash impairment charges); (gain) loss on sale or acquisition of communities
Slide 22: Definitions (continued)
22 Leased Portfolio Operating Income is defined by the Company as resident fee revenues (excluding Brookdale Ancillary Services segment revenue), less facility operating expenses for the Company’s Senior Housing Leased Portfolio. Leased Portfolio Operating Income does not include general and adminis
Slide 23: Appendix
23 Brookdale West Hartford West Hartford, CT Consolidated Statements of Cash Flows 24 Non-GAAP Financial Measures 25 Appendix
Slide 24: Consolidated Statements of Cash Flows
24 Cash Flows from Operating Activities Net income (loss) $ (35,491) $ (51,728) $ (268,600) $ (126,361) $ (46,337) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Loss on extinguishment of debt, net — 236 876 54 42 Depreciation and amortization, net 135,682 1
Slide 25: Non-GAAP Financial Measures
25 This Supplemental Information contains financial measures utilized by management to evaluate the Company’s operating performance and liquidity that are not calculated in accordance with GAAP, including Adjusted EBITDA; the Company's Proportionate Share of Adjusted EBITDA of Unconsolidated Venture
Slide 26: Adjusted EBITDA Reconciliation
26 Net income (loss) $ (35,491) $ (51,728) $ (268,600) $ (126,361) $ (46,337) Provision (benefit) for income taxes 123 4,159 (569) 84,028 (2,735) Equity in (earnings) loss of unconsolidated ventures (338) 878 (1,182) (981) 4,570 Debt modification and extinguishment costs 186 1,944 5,930 61 693 Loss
Slide 27: Adjusted EBITDAR and Adjusted EBITDA Reconciliations
27 Adjusted EBITDAR; Adjusted EBITDA; and Adjusted EBITDA after cash capital and financing lease payments Reconciliations (excluding integration, transaction, transaction-related and strategic-project costs) ($ in 000s) Twelve Months Ended June 30, 2016 2017 Net income (loss) $ (326,947) $ (493,026)
Slide 28: Net Debt and Adjusted Net Debt Reconciliations
28 Net Debt and Adjusted Net Debt Reconciliations ($ in 000s) As of June 30, 2016 2017 Long-term debt (including current portion) $ 3,708,655 $ 3,597,808 Line of credit 186,500 — Less: cash and cash equivalents (39,053) (151,528) Less: marketable securities — (29,779) Less: cash held as collateral a
Slide 29: Adjusted Free Cash Flow Reconciliation
29 Net cash provided by operating activities $ 107,496 $ 99,442 $ 88,451 $ 66,766 $ 133,108 Net cash (used in) provided by investing activities (82,288) 102,362 231,199 (200,372) (60,843) Net cash (used in) provided by financing activities (57,017) (166,673) (177,437) (23,554) 20,026 Net (decrease)
Slide 30: Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures
30 Brookdale's Proportionate Share of Adjusted EBITDA of Unconsolidated Ventures For purposes of this presentation, amounts for each line item represent the aggregate amounts of such line items for all the Company's unconsolidated ventures. ($ in 000s) FY 2016 FY 2017 TTM Q2 Q3 Q4 Q1 Q2 Q2 2017 Net
Slide 31: Proportionate Share of Adjusted Free Cash Flow of Unconsolidated Ventures
31 Net cash provided by operating activities $ 55,842 $ 47,095 $ 40,994 $ 59,924 $ 85,867 $ 233,880 Net cash (used in) provided by investing activities (45,682) (40,885) 5,556 (1,150,080) (68,585) (1,253,994) Net cash (used in) provided by financing activities (14,784) (12,073) (55,554) 1,145,059 (2
Slide 32: Brookdale Senior Living Inc.
Brookdale Senior Living Inc. 111 Westwood Place, Suite 400 Brentwood, TN 37027 (615) 221-2250 www.brookdale.com
Brookdale Senior Living — Q2 2017 Earnings Presentation on 6ix