Sienna Senior Living Inc. (SIA) Earnings Call Transcript & Summary

I second motion.

Thank you. I declare the motion carried and the Annual and Special Meeting of Shareholders of Sienna Senior Living terminated. On behalf of management and the Board, I would like to again thank you all for attending today. That concludes the formal part of the meeting. Before I call upon Nitin, Karen, and Dr. Moser, to make a presentation, I would like to once again acknowledge and express mine and the Board's gratitude to each and every one of our team members who are working tirelessly to provide care, comfort and compassion to the seniors living in our residences. We are humbled by your commitment and thankful for your ongoing efforts. With that, I want to ask Nitin and team to provide their remarks.

Thank you, Dino. Good morning, everyone, and thank you for attending our annual meeting. For the past 15 months, we have taken critical steps to fight the COVID-19 pandemic while striving to provide the best quality of care and service to the seniors we serve and their families. Words cannot express the gratitude I have for our team members who have made a remarkable difference by prioritizing the health and well-being of our residents and their colleagues. Their dedication to our residents, to each other and their resolve in fighting COVID-19, has been humbling and inspiring. They have my deepest admiration and that our families and of the communities they serve. I have witnessed our team's dedication and courage firsthand when I had the opportunity to visit many of our residences over the past year. I've met with Compass team members, many in the hardest hit communities in Ontario, who said they would rather be caring for and serving their residents and colleagues than anything else despite the challenges of the pandemic. Team members like Beverly [ Gay ], a dedicated personal support worker who came to Canada from Barbados and has spent the past 42 years at our St. George Care Community. Beverly told us, she would not want to be anywhere, but with our residents and colleagues. She is passionate, dedicated and loved by residents and team members alike, who appreciate that she will always be a voice on their behalf, advocating for positive change. [ Lois Kirby ], when COVID-19 hit and senior residences were struggling to maintain staffing level, she answered the call and returned to Traditions of Durham. She's a housekeeper who loves to spend time with residents, chatting and getting to know their stories. The team and residents love having her as part of their family. And Cathy VanBeek, an Executive Director at our Bradford Valley Care Community, who worked tirelessly through 2 outbreaks at her own community and moved to 3 other communities during the pandemic to support her colleagues there. Her courage and desire to help and put the needs of others before her own has been an inspiration to many. Our team members have gone through extraordinary lengths during the pandemic, and many have made enormous sacrifices that often come at a personnel cost, including their own mental, physical, and emotional health. The video we're about to play is titled A Year Of Courage and sums up our team's heroic efforts. [Presentation]

This video showed how our team members were challenged in every possible way. Yet they continue to come to work every single day, putting their residents and colleagues first unless they're in very difficult circumstances. And I cannot thank them enough for their tremendous courage and dedication. Moving to Slide 8. As part of our goal to attract and retain a highly engaged and seasoned team, we enhanced our staffing strategy and increased our workforce by approximately 1,000, to more than 13,000 team members since the beginning of the pandemic. We continue to collaborate with educational and government institutions and intensify our social media campaign to attract new talent. We increased our focus on team members' mental health, including managing stress, gaining resilience, and avoiding burnout. In addition, we implemented new ways of keeping team members informed, including through an enterprise-wide app, which has been invaluable in connecting very quickly with thousands of team members and providing critical information at their fingertips in real time. Moving to our focus on diversity and inclusion, attracting and retaining a talented and diverse team at all levels of our organization remains a key objective. 54% of our leadership team and 1/3 of our independent board members being female, in addition to 30% of our executive team identifying as black, indigenous or people of color. Our leaders are a reflection of a diverse workforce. We believe this is so important and will result in the best outcomes for our residents and team members. With the primary focus on the health and safety of our residents and team, we enhanced our health care expertise with the addition of a Chief Medical Officer to a leadership team and the support of renowned health care advisers. In addition, our Board of Directors established a quality committee focused on the quality of care and life for our residents. Guided by Dr. Moser, our Chief Medical Officer; and Dr. McGeer, Sienna's Chief Infection Prevention and Control Adviser; we enhanced our medical practices and resident safety measures. More recently, Dr. Moser and Dr. McGeer also led our efforts to get as many residents and team members vaccinated as possible. And I would like to invite Dr. Moser to provide a short overview of our vaccination efforts. Dr. Moser?

Thank you, Nitin. We were very fortunate that our sector was prioritized in the government vaccination rollout plans. While this gave us early access to vaccines, addressing hesitancy proved to be crucial, and our approach has been focused on ensuring everyone is well informed. We have put together a far-reaching communication and education plan with the goal to provide our residents, team members and essential caregivers with credible information and address their questions and concerns. With the support of my colleague, Dr. Allison McGeer, we have held numerous town halls, published newsletters and myth-busting fact sheets in multiple languages. And reached out to thousands of our frontline staff through our various channels. If there were specific concerns at a residence, we made sure to address it through our dedicated town halls with the doctors, families, and team members in these residences. Our vaccination task force has also focused on surmounting logistical challenges to ensure that team members and residents could get the vaccine. We compensated team members for their time to get vaccinated. When the vaccine distribution moves beyond Seniors Living, we supported our resident leaders in coordinating transportation for team members to offsite clinics and worked with public health to bring the vaccine in whenever possible. Today, we are proud to say that 96% of our residents and 77% of our team members have received at least their first dose of vaccine with many of them fully vaccinated. I will now turn it back to Nitin.

Thank you, Dr. Moser. We left no stone unturned to get to where we are today. Our combined efforts resulted in a high vaccination rate and a stark reduction in active COVID-19 cases since the beginning of this year. As of May 30, we had 5 residences with active COVID-19 cases and no active resident cases across our entire portfolio in Ontario and British Columbia. As a result, our 82 residences have started to return to a more stable operating environment. As restrictions continue to ease, we expect occupancy improvements across our portfolio over the coming months. The pandemic has thrust the entire health system. Over the past few months, we have been reaching out to our acute care partners to offer our assistance and capacity at residences, including transitional care programs and other innovative opportunities. We are thankful for the continued support of our governments, in particular, with respect to supporting the extraordinary pandemic related expenses and continued provision of a pandemic top-up pay for personal support workers. The pandemic has been a catalyst for change, particularly in relation to system-wide issues our sector has been facing for many years. These were highlighted in 2 recent published reports by Ontario's auditor general and Ontario's Long-Term Care COVID-19 Commission, an independent commission investigating the pandemic in Ontario's Long-Term Care system. Recommendations in these reports included the need for additional staffing, continued prioritization of personal protective equipment, stronger medical leadership, enhanced collaboration with health care partners and the urgent need to redevelop and expand homes to meet a growing demand. We are thankful for the steps the government has already taken to address some of these issues. Over the past year, Sienna has started to implement a number of the recommended improvements, including stronger medical leadership, increased focus on family and caregiver communication, enhanced training of frontline team members and the acceleration of our development plans. Over the coming 5 to 7 years, we plan to invest over $600 million in capital to redevelop our Ontario's Long-Term Care portfolio starting with the construction of 160-bed Long-Term Care home for close to $55 million in North Bay later this year. This investment alone will create many new jobs for the North Bay community and contribute to the long-term economic growth in the region. We expect the announcement of an additional long-term care development program in Ontario later this year. We believe that Sienna and other large private operators in Seniors Living play a crucial role in improving the lives of seniors in Canada. Through our scale and the support of both equity and debt investors, we are able to fund the intensive capital cost of redeveloping an outdated infrastructure. These investments are critical to meet the growing demand for quality care and services of an aging population. We believe that meeting this demand will require the continued participation of a full mix of operators. Private, not-for-profit, charitable, and municipal, and we look forward to Sienna's role in improving the future of seniors living in Canada. With approximately $2 billion in assets, we benefit from efficiencies that come with economies of scale. We have the capability to develop policies and best practices and collaborate with other public and private stakeholders to develop innovative solutions and health care models that benefit us all. One such example is the proposed partnership with Scarborough Health Network to redevelop our ultimate care community in Toronto into a new long-term care campus, providing integrated care for local community. In addition to our development plans, we are also working on immediate upgrades at existing residences. These include improvements to common areas to elevate the experience of our residents and the work environment for our team members. Our plan includes an additional $2 million in capital upgrades in 2021 on top of our regular annual maintenance capital expenditure. We're also making good progress on our joint venture development project of a new retirement residence in Niagara Falls where construction started last month. Sienna has 70% ownership in this 150-suite greenfield joint venture development with Reichmann Senior Housing with a budgeted development cost of approximately $50 million. Our development and redevelopment plans will focus on sustainability, with a goal to significantly reduce the environmental footprint of these homes. In addition, these new residences will improve residents and team member experience and support the local economies through the creation of hundreds of new jobs. We are grateful to be able to contribute to the overall success of the Canadian economy in many years to come. Giving back to our local communities has always played a significant role at Sienna. Earlier this spring, we formed the Sienna for Seniors foundation. The foundation allowed us to raise funds for a variety of important causes in both Ontario and British Columbia. In connection with an enhanced focus on mental health and wellness in the communities we serve, we donated $250,000 to Scarborough Health Network in April in support of its new mental health hub, which will support quality care for seniors. We also continued our contribution to the CaRES Funds, which we co-founded last year. CaRES provide onetime financial grants to employees of Long-Term Care and retirement operators in Canada who are facing extraordinary circumstances and met the COVID-19 crisis. Since May of last year, the fund helped approximately 800 frontline staff with over $2.4 million, including Sienna's corporate and Board of Directors' contribution of approximately $700,000. The foundation and -- our continued contribution to CaRES both reflect our commitment to supporting those who need it the most. Our strong balance sheet puts us in a position they never had to compromise to do what was best for our residents and our team due to the pandemic. We were able to put measures in place to protect the health and well-being of our residents and team members, sometimes long before we knew if or how much government funding would be available. Looking ahead, the strength of Sienna's balance sheet will support our goals to serve our seniors and provide the highest level of care and services for years to come. With that, I will ask Karen to provide an update on our financials.

Thank you, Nitin, and good morning, everyone. Our 2020 financial results were significantly impacted by the pandemic, in particular, with respect to reduced revenue as a result of occupancy decline and increased expenses in connection with the many measures put in place to fight the pandemic. However, Sienna making the strong financial position and investment-grade credit rating all throughout last year and ended 2020 with $217 million in liquidity and an unencumbered asset pool of over $840 million. In October 2020, we successfully completed $275 million of debt financing, which significantly reduced near-term debt maturity and improved our long-term debt ladder, including $175 million in unsecured debentures, carrying a coupon rate of 3.45% and $100 million credit facility. In addition, just 2 weeks ago, we announced the issuance of $125 million in unsecured debentures at an interest rate of 2.82% and a maturity date in March 2027. This financing, which is scheduled to close tomorrow, was completed at the lowest interest rate and longest maturity of any of Sienna's debenture financing. Both financings were highly sought after by investors, indicating a strong vote of confidence for our sector and our company. Throughout the pandemic, the company has maintained our BBB credit rating with a stable outlook. Our debt continues to be well distributed between unsecured debentures, conventional mortgages, CMHC insured mortgages and credit facility. I will now turn the call back to Nitin for his closing remarks.

Thank you, Karen. COVID-19 served as a catalyst for change by highlighting the rising complexities of care, staffing shortages and capital leads in the sector. Stakeholders and seniors living have come together to address long-standing challenges and make real progress in creating lasting improvements. At Sienna, we take this opportunity very seriously. In everything we do, we are guided by the belief that it is both a great privilege and a tremendous responsibility to serve Canada's seniors and to ensure that they live with utmost dignity and respect. This mission is reflected in our inaugural ESG report, which was published in early 2021. We have taken many actions since the beginning of the pandemic and a renewed optimism for our sector and our company. We believe that the rapidly aging population across the country means that there's a growing need for the high-quality care and services that we provide. I want to express my deepest gratitude for the residents and their families, whose confidence, appreciation, and support for the pandemic have been invaluable and had a tremendous impact on our team's ability to keep going and provide the highest level of care and services under very difficult circumstances. I also want to acknowledge the many stakeholders who have supported us, including sector associations, hospital partners in the federal and provincial governments. I further want to sincerely thank our investors and business partners for their ongoing support of Sienna. Your support allowed us to prioritize the health and well-being of our residents and team members throughout the pandemic and your confidence and continued capital investments are crucial for the long-term vitality of the seniors living in Canada. In closing, I want to thank our Board of Directors for their guidance and unwavering commitment to our company. And Sienna's team of over 13,000 for the incredible difference they're making in our residents lives each and every day. We will now be happy to take any questions that you may have.

Thank you, Nitin. I'll begin with the first question, which relates to team member vaccination, what we have done and what we are going to do to drive the percentage up?

Thank you for that question. As Dr. Moser talked about, our sector was prioritized for vaccine, which we're very thankful for. And under the guidance of both Dr. Allison McGeer and Dr. Moser, we did a lot of education, a lot of webinars, not only for residents, team members and for family members. We had very good uptick in our residents. More than 95% of our residents are vaccinated and we have around 4% of refusals, in some cases, because of medical reasons. Our employee vaccination, we are close to around 76%, 77%, and we are making steady progress on a regular basis. However, we are encouraged by recent announcements from the Ontario government about mandating a vaccination policy, around education. And there are other fun things we're doing at the company to -- in terms of cash awards and prizes to try vaccination. But we completely believe that vaccination is one of the biggest defense against COVID-19 and our goal will be to get as close to full vaccination of our staff and residents as possible.

Thank you, Nitin. The next question is, will the dividend be maintained and possibly increased?

So again, as I talked about, we are extremely grateful to investors and our debt holders for the support that we got last year. Our Board and our management had an opportunity to speak to many of our investors who made it very clear that the focus of the company should be taking care of residents and team members, which we did. We spent close to $102 million last year in pandemic-related expenses, and we're thankful that a good part of it was funded by the government. Our focus throughout the history of Sienna is to maintain a conservative payout ratio in the 60s percent to ensure that we have space on a rainy day, and it has been a very difficult time over the last 1 year. Our current focus is to ensure that we put our capital towards redevelopment because we want to increase the infrastructure or change the infrastructure of older homes and to continue to invest and keeping the residents and the team members safe. Our dividend policy is something we review with our Board on a regular basis, and we would continue to do so.

And thank you for submitting the question. The final question is about human capital management. The long-term care sector has been under enormous scrutiny during the pandemic, with particular attention on the relationship between companies' approaches to human capital management and the quality of centers of care provided to the residents. The link between stronger human capital management and improved company performance is well documented. Conversely, the risks of inadequate oversight are clear. Investors have asked company to provide more detailed disclosure on human capital management as well as urged to adopt formal oversight. Can the company please speak to why the Board has chosen not to adopt formal oversight?

Thank you for that question as well. As part of our inaugural ESG report we did earlier this year, we've provided some visibility into our focus on diversity, our focus and inclusion. On a regular basis, even though we don't have a formal human capital meeting, but our Board meeting, throughout my time in 6 years at Sienna, we go through a detailed management report where we go through items such as turnovers, grievances, union challenges and also discuss any specific or material human challenge issues. We also started our quality committee earlier this year which the Board members and Dr. Moser is a part of where we go through quality of care. And not just focus on compliance, but to ensure that our residents are not only healthy, but also happy. Our commitment is to continue to provide more and more information to our shareholders and publicly in terms of more data on the efforts around human capital. And we look forward to providing that information in the future.

Thank you for the questions.

This concludes the Sienna Senior Living Annual and Special Meeting. Thank you very much for participating. You may now disconnect.