Capital Senior Living Corp. (NYSE:CSU) Q3 2019 Earnings Conference Call - Final Transcript
Nov 07, 2019 • 10:00 am ET
Thank you. [Operator Instructions] We'll now take our first question from Chad Vanacore from Stifel. Please go ahead. Your line is open.
Hey, good morning.
Good morning, Chad.
Good morning, Chad.
All right. So I'm thinking about occupancy, and normally, there is a seasonal lift in 3Q. There are some sequential declines, but you had warned us that would happen. Now I want to think about how much of that occupancy do you get back in the fourth quarter. So where does occupancy stand today? And is it continuing a trend of moving up from 3Q lows?
Chad, this is Carey. It has -- it increased a bit in October, about 20 basis points to 30 basis points is what we anticipate, that will happen in October versus September. So -- and we -- as we noted, we've had increases in August, September and October.
So the August increase was less than the September increase, and the September and October increases were both meaningful increases. And so we saw some lift in this in September and more lift in October. And we would expect, again, another lift in November in our occupancy.
And I will just say, November, obviously it's very early in November, but it is trending similar to how October and September trended in the first part of the month.
Okay. That's good color. Just thinking about margins, they were weak in 3Q. Should we be thinking about any non-recurring cost that we can consider that might normalize going forward? Anything related to your cost-savings initiatives?
What we've had -- and if you look at our cost, we -- I think for the most part, there's not much on the operating expense side. There is some non-recurring, if you will, cost in our G&A, but not really from an operating standpoint. So most of those costs are pretty fixed and set going forward. Now we are doing a lot to try to manage those contract labor costs, as we noted, which will result in improvements in our margin.
Yeah. Chad, I'll just jump in here. From an operating perspective, we are very focused on decreasing contract labor to a very minimal point by the end of this year. So we expect to continue to see improvements in that over the fourth quarter.
And we've already made the wage adjustments and investments in our direct labor that we think will allow us to deliver those reductions in the contract labor.
All right. Just staying with labor for a second. And how's your full-time employee turnover trending?
Turnover spiked early in the year as you might imagine. As we've mentioned, we've made quite a lot of changes in the operational and sales team. So we did have a spike in turnover back in the March-April time period, but it has been steadily declining since that period, and we're very happy with our employee turnover and retention here in the last three months.
So we feel like we are in a period