Sonida Senior Living, Inc.

Good day and welcome to the Sonita Senior Living Q1 2023 Earnings Conference Call. Today's conference is being recorded.

All statements today, which are not historical facts, may be deemed to be forward-looking statements within the meaning of the federal securities laws. These statements are made as of today's date, and the company expressively disclaims any obligation to update these statements in the future. Actual results and performance may differ materially from forward-looking statements. Certain of these factors that could cause actual results to differ are detailed in the earnings release the company issued earlier today. as well as in the reports the company files with the SEC from time to time, including the risk factors contained in the annual report on Form 10-K and quarterly reports on Form 10-Q. Please see today's press release for the full Safe Harbor Statement, which may be found at sonitaseniorliving.com slash investorrelations, and was furnished in an 8-K filing this morning. Also, please note that during this call, the company will present non-GAAP financial measures for reconciliation of each non-GAAP measure from the most comparable GAAP measure. Please also see today's press release. At this time, I would like to turn the call over to Sunita's Senior CEO, Brandon Rebar.

Thank you, Alicia. Good morning and welcome to our 2023 first quarter earnings call. I'm joined today by Kevin Dietz, our Chief Financial Officer. Earlier today, we posted our Q1 investor presentation, which will be referenced throughout this call as we discuss our strategic priorities and operating results for the quarter. You can find our latest presentation at senitaseniorliving.com in the investor relations section if you would like to follow along. I continue to believe success for Senita in 2023 will be defined across three fundamental efforts. accelerated margin expansion to generate positive cash flow from operations a strengthened balance sheet with a more attractive debt profile and finally portfolio expansion through strategic management arrangements and accretive real estate acquisitions over the last six months we have focused on the first two efforts and i'm excited to share our progress first accelerated margin expansion occurred in q1 driven by the strength of our operational leadership team the passion around our resident experience and programming, and the investments made to our community physical plants in 2022. During our previous earnings call in March, we set forth an expectation for stable occupancy early in the year and expanded margin improvement in 2023. Our operating team delivered an eighth consecutive quarter of occupancy growth, coupled with a REV4 increase of 6.4% over Q4 2022, the strongest increase in our company's recent history. Our owned portfolio averaged 84% occupancy in Q1, with an expectation for further growth in Q2 and throughout 2023. On a sequential quarterly basis, the Q1 revenue increase of 6%, coupled with the strong expense control, contributed to a 26% increase in community NOI and a 7.5% increase in adjusted NOI, which excludes grant revenue for comparable quarters. Even more impactful and encouraging were the March monthly results referenced on page six of the investor deck. We view March results as our new baseline with run rate revenue up more than 10% year over year and operating margin at 24.3% in March, up 440 basis points from Q4 and 530 basis points from Q1 2022. Kevin will provide further detail in his comments, and I cannot thank our leadership team enough for the effort required to achieve these results so quickly. I firmly believe the resident experience and delivering highly valued service and care to each of our residents and their families by team members who are engaged and excited to be part of the Sunita family will remain the foundation for the continued strengthening of our operating results. We are honored to have 35 of our communities recognized as the best in senior living in conjunction with the US News and World Report annual survey. It is a testament to our team members who create safe, caring spaces and cultivate joy for our residents every day. We are grateful for their hard work and dedication and pleased to see that retention of our senior leadership throughout our communities remains strong in Q1. The portfolio experienced widespread operating improvement in Q1, led by concentrated recovery in the Midwest through strong rate expansion and stability on the staffing front, resulting in 600 basis points of margin expansion over the fourth quarter. Texas and Wisconsin, two of our traditionally strongest states, continue to deliver revenue and margin growth, with a combined NOI margin exceeding 31% in those two states. I remain highly confident in our senior operating leadership as they continue to deliver operational excellence. Developing and retaining high performing teams will always be at the top of our core priorities. Leadership retention remains the highlight with only eight open positions across more than 330 local and regional leadership roles with turnover at the community down nearly 10 percentage points in the first quarter. These key metrics reflect our commitment to maintaining an open, transparent, and supportive organizational culture across CENITA that will continue to deliver operational continuity and stable labor costs in our communities. In Q1, the total cost of labor declined sequentially for the first time in recent years, led by an additional 50% reduction in contract labor on top of the 25% reduction already achieved in Q4 2022. Our second area of focus is delivering a strengthened balance sheet with a more attractive debt profile. We look forward to providing an extensive update on our potential lender restructurings in the near term. We remain in discussion with each of our three material lending partners with a goal of providing the short-term liquidity needed to bridge to positive cash flow generation, and more importantly, capital structure stability that supports planned strategic growth. Our operations generated more than $3 million in cash for the first quarter of 2023, a year over year improvement of $4 million. The improvement in run rate cash flows from operations, coupled with a comprehensive restructuring of our mortgage loans, would return the company to overall cash flow generation for the first time in the company's recent history. The combination of strong and stable leadership across our operating platform, substantial progress in discussions with our lending partners, and significant margin expansion in Q1 positions Sunita for continued success and growth in 2023 and beyond. As referenced previously, we believe our growth opportunities in 2023 will come from a combination of additional strategic management arrangements and the acquisition of real estate with an accretive investment profile. Many owners, operators, and lenders across senior living are actively identifying strategic alternatives for their existing assets, And our goal is to present Sunita as a primary transaction partner in the near term. We continue to balance the intense focus on operating improvement of the core portfolio, strengthening of the balance sheet, and participating in the market as an active acquirer in partnership with our shareholders and investors. Success in each of these three primary efforts, margin expansion, strengthening of the balance sheet, and growing the portfolio, will deliver substantial value to our shareholders in 2023 and beyond. Each of these efforts are only possible with the best-in-class leadership team at the local and regional levels with the shared dedication to creating a safe and caring environment where residents find their joy in new experiences, hobbies, and friendships. I'll now turn the call over to Kevin for discussion of the financial results.