
Q1 2025 Ventas Inc Earnings Call
B J Grant; Investor Relations; Ventas Inc
Debra Cafaro; Chairman of the Board, Chief Executive Officer; Ventas Inc
J. Justin Hutchens; Executive Vice President - Senior Housing, Chief Investment Officer; Ventas Inc
Robert Probst; Chief Financial Officer, Executive Vice President; Ventas Inc
Peter Bulgarelli; Executive Vice President, President and Chief Executive Officer - Lillibridge Healthcare Services, Inc; Ventas Inc
James Cammer; Analyst; Evercore ISI
John Kilichowski; Analyst; Wells Fargo
Michael Carroll; Analyst; RBC Capital Markets.
Vikram Malhotra; Analyst; Mizuho
Jeffrey Spector; Analyst; Bank of America Securities
Richard Anderson; Analyst; Wedbush
Omotayo Okusanya; Analyst; Deutsche Bank
Juan Sanabria; Analyst; BMO Capital Markets
Seth Bergey; Analyst; Citi
Austin Wurschmidt; Analyst; KeyBanc Capital Markets
Michael Stroyeck; Analyst; Green Street
Ronald Kamdem; Analyst; Morgan Stanley
Nick Yulico; Analyst; Scotiabank
Mason Guell; Analyst; Baird
Operator
Thank you for standing by. My name is Amy, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Ventas first-quarter 2025 earnings call. (Operator Instructions) It is now my pleasure to turn the call over to BJ Grant, Senior Vice President of Investor Relations. Please begin.
B J Grant
Thank you, Amy, and good morning, everyone and welcome to the Ventas first-quarter 2025 results conference call. Yesterday we issued our first-quarter of 2025 earnings release, presentation materials, and supplemental information package, which are available on the Ventas website at ir.ventasreit.com. As a reminder, remarks today may include forward-looking statements and other matters. Forward-looking statements are subject to risks and uncertainties, and a variety of topics may cause actual results to differ materially from those contemplated in such statements. For a more detailed discussion of those factors, please refer to our earnings release for this quarter and to our most recent SEC filings, all of which are available on the Ventas website. Certain non-GAAP financial measures will also be discussed on this call, and for a reconciliation of these measures to the most closely comparable GAAP measures, please refer to our supplemental information package posted on the Investor Relations website. And with that, I'll turn the call over to Debra A. Cafaro, Chairman and CEO of Ventas.
Debra Cafaro
Thank you, BJ. I'd also like to welcome all of our shareholders and other participants to the Ventas first-quarter 2025 earnings call. Today we'll highlight our positive financial performance and growth, our increasing investment activity, and our advantage position capitalizing on the multi-year NOI growth opportunity in senior housing. As we execute on our one, two, three strategy, the value proposition for Ventas remains clear. We are focused on delivering superior multiyear growth fueled by internal and external expansion in our senior housing business, which is benefiting from secular, demographically driven demand, and catalyzed by our advantage platform. We expect to be a top grower in the REIT space, projecting 7% normalized FFO per share growth 2025. We possess an excellent financial profile that is improving, and we offer a 3% dividend yield that contributes to total return. Our strong first quarter results highlight our strength and our favorable relative positioning across the broader real estate and corporate landscape. Ventas delivered $0.84 of normalized FFO per share in the first quarter, an increase of approximately 8% powered by our senior housing operating portfolio. SHOP's 14% year over year cash same store NOI growth resulted from meaningful increases in occupancy and rate. Compelling demand supply fundamentals have combined with our operational and portfolio initiatives to create an unprecedented extended opportunity for us to generate multiyear organic NOI growth. Demand remains strong as the over 80 population is experiencing its highest ever growth, and more residents and their families are choosing senior living for the benefits it provides. The over 80 population is increasing by about half a million people this year and again next year, and that number jumps to 900,000 a year between 2027 and 2030. Meanwhile, on the supply side, the number of new senior housing units started in the first quarter of 2025 was the lowest on record at only 1,287 units. Current supply constraints likely extended because of hard cost increases and labor scarcity, coupled with the step function in senior population growth, creates strong and long tailwinds for NOI and occupancy growth in senior housing. And our senior housing portfolio is positioned to capitalize on this unprecedented opportunity. Our communities are located in markets that exhibit over a thousand basis points of expected net absorption in the coming years, and resident affordability is outstanding. We also continue to increase our participation in this multiyear NOI growth opportunity by executing on our acquisition strategy focused on senior housing. Our investment momentum has continued into 2025, and we see compelling opportunities ahead. We have already closed most of our original billion dollar investment guidance in attractive senior housing communities, and we are now increasing our full year volume expectations to $1.5 billion. These investments should enhance our future enterprise growth profile and our value for shareholders. Even more encouraging, our pipeline is expanding as more sellers bring assets to market, our skilled investment team has grown, and we continue to leverage our data, financial, and relationship advantages to capture attractive opportunities. Within senior housing, we are eager to deploy capital whenever we believe we can achieve compelling risk adjusted returns and create value. The balance of our portfolio, led by our Lillibridge managed outpatient medical business, continues to perform well. Outpatient medical delivered solid compounding growth and continues to benefit from outsized increases in the over 65 age group, ongoing trends favoring lower cost care delivery settings, and our competitively advantaged Lillibridge property management and leasing business. Finally, we are delivering on our commitment to financial strength and flexibility. Year to date, we've accelerated our progress on our credit profile, improving both our leverage and our liquidity. At this early stage of the year, we are pleased to reaffirm our normalized FFO per share guidance of 7% growth and confirm our expectations that our SHOP business will represent over half of our NOI by year end. While acknowledging that the current macroeconomic backdrop presents a high degree of uncertainty, when you step back, Ventas occupies an enviable position in today's environment. Both sides of the senior housing demand supply imbalance are tipped in our favor, and those conditions should improve materially over an extended time horizon. We have the potential to continue to increase SHOP revenue from both rate and occupancy growth. Our business model has limited impacts from tariffs and global trade. We have access to attractively priced capital, possess excellent liquidity and a strong balance sheet, and we are well positioned as a preferred acquirer who will get more than our fair share of attractive investments. Coupled with our experience and platform, we're in an excellent position to outperform. And as we've said, the whole Ventas team is in it to win it. Justin, I'm happy to turn the call over to you.
J. Justin Hutchens
Thank you, Debbie. I'll provide updates on first quarter senior housing performance and our investments. I'm pleased that we delivered excellent results on both fronts. I'm happy to report that SHOP delivered double-digit NOI growth for the 11th consecutive quarter as we continue to execute through the OI platform. Our efforts support real time community specific strategies that align with market demand and importantly are executed in partnership with our best-in-class operators. Total SHOP same store cash NOI growth was 13.6%. Revenue growth was 7.4% led by occupancy and rate. In terms of rate, we saw solid underlying pricing from internal rent increases averaging 7%, and very importantly, street rates are trending favorably. Expenses were roughly in line at 5%, and labor expenses were favorable. Same store shop occupancy grew by 290 basis points led by the US with occupancy growth of 330 basis points and NOI growth of 16%. The US also significantly outperformed NIC on both rate and occupancy year over year growth. The incremental margin was about 50% for the first quarter driven by the operating leverage in the business as we grow occupancy. Demand and move ins in the quarter were strong, and year over year occupancy was very good. However, we experienced some seasonality with elevated clinical move outs in March, which causes our jumping off point for occupancy to be a bit lower than expected for the second quarter. The sad part of our business and in fact, life, when people pass away. It's also unpredictable. That said, per usual, the key determinant of occupancy for the full year is the timing and slope of the key selling season, which starts today. We are excited about the upcoming months as we expect strong move ins in the second quarter. As we look at the balance of the year, we anticipate another excellent year of SHOP performance, and we are reaffirming our same store full year guidance in our SHOP portfolio of cash NOI growth of 11% to 16%. Now I'd like to highlight our approach enhancing our portfolio composition. I've worked with my experienced and very capable team through deliberate actions over time to ensure that we are located in the right markets, right assets, and with the right operators. These deliberate actions, all of which are underpinned by our OI data analytics platform, include acquisitions, dispositions, conversions from triple-net to SHOP, transitions to new operators, OI driven operational improvements, and CapEx investments to improve our competitive position. This journey to curate the portfolio has been well underway for a while. However, all things considered equal, the best is yet to come. To our actions to date, our portfolio is positioned with significant embedded occupancy and NOI growth potential. By design, two thirds of the portfolio is in the low 80% occupancy with significant upside opportunity. One example of how we are positioning the portfolio for future growth is our decision to convert 45 Brookdale communities from triple-net to SHOP with new operators later this year. These communities are performing really well year to date and offer significant upside. We expect to double the NOI in these communities from approximately $50 million to $100 million plus over time. The five operators we have selected for the transitions are enthusiastic and highly engaged in the transition process. We've also expanded our operator base from 10 to 33, enhancing our ability to grow in high demand markets. This includes a new shop relationship with an operator in the UK. Growing our operator base is important since our 75% of senior housing operators manage fewer than 50 communities in what is a highly fragmented sector. Adding operator relationships is essential to obtaining scale and density in markets as well as expanding our relationship driven investment opportunity set. Our community refresh program has progressed as planned. We've completed over 250 community redev projects in the past 2.5 years. However, there is more work to be done with a 100 more projects expected to complete by year end, strengthening our competitive positioning and setting the table for the opportunity to drive outsized NOI growth over time. As we look ahead, our enhanced portfolio composition provides a powerful foundation to capitalize on historic demand growth unfolding in senior housing. With a deep bench of high quality operators, a growing presence in the right markets, and a well positioned asset base undergoing continual improvement, we are strategically positioned to deliver strong, sustainable performance. Moving on to investments. We continue to capitalize on our advantage position as Ventas is a senior housing partner of choice with sellers, brokers, the entire investment community. We have continued to execute on our accelerating run of value creating external growth focused on senior housing in the first quarter. We've closed approximately $900 million in senior housing investments year to date and $2.8 billion since the beginning of last year, with most of that completed in the last six months. These investments meet our key criteria of 7% to 8% expected year one NOI yields, low to mid-teens unlevered IRRs, accretive growth, and pricing well below replacement costs. The activity significantly expands our SHOP portfolio, adding 20 newer vintage communities across 8 states, including 11 in high demand Texas markets, with strong net absorption potential and over 1,500 basis points of uncapped net demand over the next few years. These communities offer a full continuum of care and are operated by six high quality managers, including three new operator relationships with strong local execution. The underwritten returns are attractive as we are expecting year one NOI yields of around 7.2% on average and a ten-year unlevered IRR in low to mid-teens. We've also been encouraged by the initial post-closing performance of the $1.8 billion in senior housing acquisitions closed in 2024. Actual NOI is in line with underwriting at a blended yield of 7.7% in the first quarter of 2025. Our investment pipeline is active and growing as we have now reviewed approximately $30 billion of senior housing, bid on $9 billion, and closed on $2.8 billion, all since the beginning of last year. Approximately 75% of our close transactions were relationship driven and sourced off market. We remain flexible and opportunistic, pursuing a diverse set of senior housing investments across markets, asset types, operators, and return profiles. Reflecting our strong pipeline, we are raising our full year investment guidance to $1.5 billion. In summary, we had a strong start to the year, demonstrating solid execution across their senior housing platform, we remain laser focused on advancing parts one and two of our strategy. First, driving profitable organic growth by enhancing operating performance, optimizing pricing and occupancy, and leveraging our data-driven Ventas OI platform in close collaboration with our high performing operators. And second, capturing value through external growth with a targeted focus on high quality senior housing acquisitions that meet our strategic and financial criteria. With favorable demand trends, a well-positioned portfolio, and a robust investment pipeline, we are confident in our ability to create long term value and sustain our significant leadership position in the senior housing sector. Bob?
Robert Probst
Thank you, Justin. I'm pleased to report we're off to a strong start for the year. I'll review our first-quarter performance, discuss our reaffirmed 2025 guidance, and close with our balance sheet, liquidity, and capital markets activities. Starting with our overall enterprise performance, we reported normalized FFO of $0.84 per share, representing nearly 8% year-over-year growth. Our total company's same store cash NOI grew by 7%, led by SHOP increasing approximately 14%. Our outpatient medical and research business, or OM&R, reported same store cash NOI growth of 1.3% year over year. Adjusting for cash fees received in outpatient medical, OM&R same store cash NOI increased by 2.5% year over year. Outpatient medical grew by 3%, adjusted for the aforementioned fees as fundamentals remain solid. Outpatient medical occupancy increased 30 basis points year over year with first quarter new leasing increasing 9% and tenant retention a strong 85% in the quarter. Our research portfolio same store cash NOI contracted modestly year over year. This $200,000 reduction in NOI can be explained by 30 basis points of lower occupancy. Pete and team continue to see a solid research leasing pipeline, including from universities. We are reaffirming our full year OM&R same store cash NOI guidance range of 2% to 3%. And that's a good segue to our updated 2025 full year outlook. After a good start to the year, we are reaffirming our previously issued guidance for full year '25, including our earnings per share measures and property same store cash NOI ranges for each segment. As a reminder, our normalized FFO midpoint of $3.41 represents outstanding 7% year-over-year growth. And consistent with our communication in February, this FFO increase continues to be led by SHOP organic growth and accretive senior housing investment activity, partially offset by higher net interest expense, FX, and dilution from a higher share price. I would remind everyone that the all important senior housing key selling season begins in the second quarter and runs through September. We have updated our guidance for full year 2025 investments focused on senior housing from $1 billion to $1.5 billion as a result of a growing pipeline of deals. We expect the $500 million increase in the investment guidance to close later in the year. So net net, we expect the FFO contribution of the incremental investment guidance to be minimal for 2025. We've already largely funded the increased investment guidance with $1.3 billion in aggregate equity raised together with$ 200 million of disposition activity, previously included in guidance and expected to close in the second quarter. Our balance sheet continues to strengthen as a result of SHOP organic growth and equity funded senior housing investments. Our Q1 net debt to EBITDA of 5.7 times represents a 30 basis point sequential improvement from year end 2024 and a full turn reduction versus prior year first quarter. We expect further leverage improvement in the balance of the year, driven by our senior housing growth engine. We also repaid nearly $1 billion of senior notes in the first quarter at a rate of approximately 3%, utilizing the proactive senior notes we issued in September at approximately 5%. Our liquidity position is robust with available liquidity of $3.6 billion as of April 2025. This liquidity was bolstered in April by a $750 million increase in our revolving credit facility to $3.5 billion to support our growing enterprise. We had robust subscription from our bank group, which demonstrates their strong support of our platform. For additional 2025 guidance assumptions, please refer to our Q1 supplemental and earnings presentation posted to our website. To close, we're pleased with our start to 2025. The entire Ventas team is enthusiastic about the future and focused on delivering superior performance for our shareholders. And with that, I'll turn the call back to the operator.
Operator
(Operator Instructions) James Cammer, Evercore.
James Cammer
Good morning. Thank you. Justin, you always give great statistics on the SHOP update. And I'm just curious, what other color can you provide about sort of the dynamic when you get to 85, 87, 88 type occupancy? How that translates to margin -- expansion?
J. Justin Hutchens
One of my favorite topics. So, we are -- in this period of growing occupancy and facing a period of significant more occupancy growth given the demand that Debbie outlined that we've been seeing over the past few years and especially over the upcoming years. So this question starts to become more relevant the higher occupied you get. What we tend to focus on is simple rules of thumb, one is that when you get to 90% occupancy and you look backwards, you should have achieved around 50% incremental margin during that journey from 80% to 90% occupancy. Same when you get to a 100%. When you get to 100% occupied and you look backward to 90%, you'll see about a 70% incremental margin. The operating leverage in the business is what allows for this. At a certain point, you're fully staffed. Most of your expenses are fixed. You have some variability in expenses, which is why there's still some margin. But it's one of the powerful aspects of the business model. And as we grow occupancy -- certainly, occupancy in itself is a great opportunity, but margin expansion is as well as occupancy growth.
James Cammer
Thanks. And then the genesis of the question is I was kind of looking at you need to provide very helpful information on the page 11 of the supplemental regarding the Canadian portfolio. And maybe that's a decent proxy, maybe it isn't. I don't know if the operating dynamics are that different. But you're able to extract still perhaps double-digit NOI growth at 95% occupancy because you seem to be getting 5% to 6% RevPAR growth. But at some point, you have no more occupancy to gain. But is it still achievable then to get double digit NOI growth from a portfolio at that time?
J. Justin Hutchens
Well, so first of all, we're really happy to have a very high quality, high performing Canadian portfolio. It's been an excellent contributor to NOI growth for us, even at high occupancies, around 97%. It's still been delivering. It's one of my favorite examples around being full in this sector. You know, if you're 90% or 92% or 95% occupancy, you're not full yet. And Canada is demonstrating this to your point. So they're at 97%. They're still growing occupancy. We've had relatively good rate performance. We've had good increases, but we've also -- in terms of rent increases, but we've also had mix impact as our assisted living portfolio in Ontario has picked up occupancy growth. And that's helped RevPAR as well. At some point, it's probably not a double-digit grower. You know, this is something that's probably more clearly in the single digits, but it's been encouraging to see the performance in in recent years even at high occupancies.
Debra Cafaro
Jim, thanks for noticing page 12. It's a good news page for investors. And Justin, could you touch on really the two-thirds of the portfolio where we have significant occupancy upside in the margin and NOI growth in that because that's really a lot of where your efforts are focused with the team.
J. Justin Hutchens
Yeah. So the on page 12, you'll notice, this is one my other favorite topics because it's been a lot of work in the making to get to this point. We decided few -- I'll call it five years ago, when we got to this point where we are at today, we need to be well positioned to capitalize on the demand that we're seeing in the marketplace. You could see it coming. We looked at our portfolio, and we started taking actions to make sure that we're in the right markets, first of all, that would generate strong net absorption and strong affordability. And to do that, you know, we acquired 190 communities. We sold over a 100 communities. We've transitioned well over 100 communities from the triple-net structure to the SHOP structure. And what that did is it's brought in communities that have lower absolute occupancy. So what this graph shows is that group's 79% occupied. The rest of the US is 84%. Canada, when you include everything because it's outside of same store, we have some lease up communities there as well, 95%. The big opportunity for occupancy growth is in the US. And the portfolio, as I said in my prepared remarks, that low 80%s occupancy is well positioned for a lot of occupancy upside, but it's also in markets that should deliver that opportunity. And then when you layer on the actions we've taken through investments in the assets and making sure we have the right operators in place to deliver the successful outcome, we feel really good about how well positioned we are.
James Cammer
Thank you for all that information. I'll get off the line. Thank you.
Debra Cafaro
Thanks, Jim.
Operator
John Kilichowski, Wells Fargo
John Kilichowski
Good morning. Thank you. I would just like to talk about the investments that you made this quarter and just kind of looking at the change this quarter versus last quarter. And I wanted to ask about basis. It looks like your cost per bed took a meaningful step up. I'm curious if that's to do with the competitive landscape or just where you're buying. And then also if you could give color on what's replacement cost in the markets that you're buying in. I'd like to know if you know you're operating still at a pretty steep discount if we're starting to buy above that.
J. Justin Hutchens
Hi. It's Justin. Thanks. Great question. So when you look at the profile of what we bought, you mentioned, the per unit numbers. It was around, what, 270 last year, 350 in this recent tranche of $900 million. So there's a step up in the per unit values. A couple drivers behind that. One of them is that they're newer communities. So we've had newer vintage communities that we bought in this tranche around 7 years on average. Inherent in doing so, you're going to spend more on a per unit basis. They also happen to be as good as the markets were that we entered last year. These are even better. So we have stronger affordability. We have better net absorption and uncapped net demand. I mean it's 1,000 basis points in net absorption, uncapped demand of 1,500 basis points. They're in markets that have those characteristics, and then we also added some very high quality operators. So the quality of the portfolio, I would say, is a step up. The combined portfolio is going to deliver excellent outcomes for us. One other thing that you noted that I'll know is that there's clearly some cap rate compression because we were reporting year one yields of [7.7%] last year. In fact, I mentioned in my remarks, we're realizing that as well, this year we're pointing to a [7.2%]. So there's compression. Having said that, we're still investing within the range. So the weighted average obviously is into the lower [7%], but we're still seeing opportunities that are up towards [8%]. So it's a little bit of both. In terms of replacement cost, we're still buying below replacement costs. A significant discount to replacement cost even at the 350 a unit.
Debra Cafaro
Yeah. And as we've discussed, the replacement cost is rising for a host of reasons, including hard cost inflation, labor scarcity. And so, you know, in most of these cases, you would expect the replacement cost to start with the 4. And so we're still buying at a significant discount to that. And with unlevered return expectations in the low to mid-teens, which obviously is important when we're looking at the risk reward proposition for these investments.
John Kilichowski
Alright, very helpful. Thank you. And just to confirm, you said a 7.2 is roughly the number you're looking at for the entire $1.5 million guide, or am I misconstruing that?
J. Justin Hutchens
Yeah. It's the $900 million that we closed.
John Kilichowski
The $900 million. Okay.
Operator
Michael Carroll, RBC Capital Markets.
Michael Carroll
Yeah, thanks. Justin. Can you give us some more color on the performance of the Brookdale assets that Ventas is going to be taking over or at least transitioning to the seniors housing operating portfolio? I know I think your prepared remarks saying that the EBITDAR is around $50 million, I believe last time the update was in the mid $50 million. So has that changed or should we expect that to change, when you start to transition those assets, when that occurs?
J. Justin Hutchens
Yeah. So I'm probably going to hesitate to give you the exact number. We'll give you -- we'll update that when we get to the period of actually transitioning. But what I'm encouraged about is a couple things. First of all, you know, these are communities that are in transition. So there's always, you know, heightened awareness of that and extra focus that we put on communities when that's happening. The 45 communities that are transitioning to new shop operators are actually outperforming the least assets that are staying behind in a lease. That's exceptionally supportive of the decision we made, but also just our encouragement around where they should be performing when we actually make the transition. A couple things So we've been on the ground quite a bit in these communities. We've been engaged with the five new operators that are taking them on. They've been in communities as well. I've visited several of these, and it seems pretty consistent with exactly what we expected, which is, when you have a these communities, very high quality communities that are located in rate markets, but can benefit from some additional focus and especially investment into the asset to be competitively better positioned, there's a lot of excitement on the ground when you tell that story. So it's been really fun to be interacting with the teams and laying out the game plan for when these transition later this year. And I do think it's notable to point out that they're outperforming the rest of the current portfolio with the that we have with Brookdale.
Michael Carroll
And I know with most transitions, usually there's a period of disruption where you could see EBITDAR dip lower as you're kind of moving in the new team. I mean, should we expect that to happen with these specific assets or is it going to be more seamless than the historical examples?
J. Justin Hutchens
Well, it's a wait and see. But I can tell you that we have -- through the number of -- let's see -- we've had almost 200 communities that have transitioned to new operators in our experience over the past several years. In that experience, particularly in this circumstance where you have a community that's performing behind market and will benefit from the new investment, we've seen good growth opportunity. Whether or not there's a little disruption in the period of transition, we have seen growth to follow. I'm going to give you an example of this. We actually have a case study on that same page that Debbie highlighted, page 12. We had 41 transitions that we completed in 2023. It was mostly independent living communities. Those communities are now in our same store pool. So in the first quarter, we were able to report on year over year results. And those results have been 820 basis points of occupancy growth. They've outperformed where we're located in the next top 99 markets. We've outperformed by 480 basis points. And year over year NOI growth has been 40%. So when we look at the Brookdale opportunity, we have a lot of confidence in our ability to execute. And we'll do everything we can to try to mitigate any potential disruption. But, of course, disruption can be inherent in transitions, but the results that we've been realizing through our experience have been really good
Michael Carroll
Okay, great. Thank you.
J. Justin Hutchens
You bet.
Operator
Vikram Malhotra, Mizuho.
Vikram Malhotra
Good morning. Thanks for taking the question. Justin, I want to dig in a bit more into the March comments you made about sort of move outs. I know it's unfortunate. Is that due to like flu or some specific properties? And has that trend continued into April?
J. Justin Hutchens
Hi, Vikram. It's ironic you're asking this question because we had an interaction on the last earnings call around this topic of seasonality. And when we talked about it last time, I was mentioning that -- we -- although there's been some periods where we've had counter seasonal results, there's always the opportunity to experience seasonality. And I had in my mind at the time was the flu season around the US was elevated. Interestingly, there's no correlation in these clinical move outs and the flu season. In fact, it's uncorrelated to any specific trend whatsoever. It just happened. And it's important that that our investors understand that our move in activity is very good. It's in line with last year, which is one of our best years ever. The tour activity, move in activity that we anticipate in the key selling season should be very strong. This was a move out issue, and it's entirely driven by these clinical move outs, which are unfortunate. It's a sad part of the business, and they're unpredictable. That's really the color I have on it.
Vikram Malhotra
No. Makes sense. You're absolutely right. I did ask you the question, I think, and you had said that you baked in normal seasonality into the guide. So, this is obviously in line with what you said. Just maybe on the pricing side, your full year still is 4.5%. You had really good bumps, and you've kept that intact. So does that essentially suggest pricing power sort of accelerates through the year on a year over year basis? And do you mind sort of giving us a view between Canada and the US? Thanks.
J. Justin Hutchens
Sure. So, you know, pricing, like I said in my prepared remarks, has been really good. Supported by internal rent increases. It's supported by our street rate growth as well. In fact, you know, when you adjust for the leap year, which is a simple calculation, you just add the calculation for RevPOR is revenue divided by occupied units. You just add a step and divide by days, which is important, you know, if you want to get to a good comparison when there is a leap year because we do have one operator that actually builds on a daily basis. So that number, when you run that calculation, is around 5%. So good pricing year over year. On a leap year adjusted basis around 5%. We're off to a strong start. So, you know, that's -- the rest of the year remains to be seen. We have a lot of the year left to play out, and it's in -- what's typically very good. It's the strongest demand season for us in the key selling season. And then Canada, you mentioned too. So, Canada has had good pricing opportunity as well. And we've had - you know, in Quebec, we've had a little bit more opportunity to pass along rent increases because the regulatory body that oversees that has lightened up. The restrictions there, which has helped us to pass expenses through, which are always part of the operation every year. Ontario has always been a little bit better. It's been a lot better for us, though, in recent years because of the lease up we've had in our assisted living portfolio, which is higher price points. So we're getting a mixed impact as well. But good pricing power, an opportunity really across the Board.
Operator
Jeff Spector, Bank of America.
Jeffrey Spector
Great, thank you. Debbie, in your initial comments, you did talk about the high degree of macro uncertainty, I guess -- but you guys have also discussed the strong movement tour activity. It sounds like -- through April, can you just walk us through a bit this leasing season and the importance of let's say housing or anything else we should be watching as risk to the coming months to increasing that occupancy in senior housing. Thank you.
Debra Cafaro
Yes. Hi, Jeff. So, yes, there is a lot of macro uncertainty. We all know that. But what we believe at Ventas is that senior housing is one of the, if not the top asset class within real estate. And there's a lot of reasons for that. As you mentioned, the demographic demand is extremely powerful. The supply picture is as muted as it could be. And if it's 3 year start to finish and you're seeing increased costs to build and you have a step function in the senior population growth starting in 2027, you can see why these strong tailwinds should benefit us for a very extended period of time. And so we feel really good about that in terms of the demand at the doorstep. As Justin likes to say, we are seeing, strong demand. And we -- this is the key selling season, and so we have good expectations for strong activity. In terms of the housing market, there is modest correlation. And the housing market actually just saw a big jump in pending home sales. Most seniors don't have mortgages on their homes, and our residents, when you think about the over 75 population, the average net worth of those households is $1.6 million, so we continue to have good affordability. I said it was excellent. So all of these trends really combine to give us a lot of optimism about this extended multi-year NOI growth opportunity and senior housing that Justin and the team, in collaboration with the operators, is really focused on delivering.
Jeffrey Spector
Great, thank you. And then clearly the focus is on senior housing. Can you talk a little bit more about the strategy around the research portfolio? Thank you.
Debra Cafaro
I mean, our one, two, three strategy is really focused on senior housing with the first, of course, being driving organic growth; the second being expanding our participation and elevating our growth rate by investing in senior housing; and then the third is to maximize performance in the rest of the portfolio. The outpatient medical is at about 20% of that business, and it's of our business. And it is going strong, continuing to deliver that compounding growth. Research is the smallest. It's a single digit kind of NOI contribution all in. And our strategy is really what number three is, which is to maximize the NOI opportunity there. And what I would just leave you with on that is that we've built this life science portfolio differently. And that is, it's a -- three quarters of the tenants are credit tenants, and we have a nine-to-ten-year wall. And so that portfolio really was built to be steady and stable even during more challenging times. And so we feel good about that even though that segment certainly has its some challenges right now. So our strategy is to maximize NOI. And it's a credit business, and Pete and the team are going about doing that.
Jeffrey Spector
Okay. Thank you.
Debra Cafaro
Thank you.
Operator
Richard Anderson, Wedbush.
Richard Anderson
Good morning. Justin, you talked about the Brookdale transitions to RIDEA, the assets outperforming those that are staying behind in the net lease model. I guess the question is, how much money are you leaving on the table there? Did you foresee that delta, when you made the deal with them? And, just curious, if you had just sort of done everything all of it as opposed to some leaving some behind with Brookdale, if that would have been the better option.
J. Justin Hutchens
Hey Rich, you broke up.
Debra Cafaro
Rich, we'll take that offline, but I think it's fair to say that the entire Brookdale portfolio is generally improving in performance. We like the 45 assets that we're moving to SHOP and that are remaining are also performing well. And the way that we're improving NOI in that remaining lease is through a significant rent increase on lease renewal. So we'll come back and get back to your question because you broke up offline. Thank you.
Operator
Omotayo Okusanya, Deutsche Bank.
Omotayo Okusanya
Yes. Good morning, everyone. So I guess focusing on shop, I mean, clearly, the way the stock is before business morning, I think there's some concern just around same store NOI growth kind of slowing this quarter relative to the 15%-plus you've kind of been putting up. I don't know whether you can kind of talk to that, whether there were just some idiosyncrasies with this quarter. I think you just kind of mentioned some move out activity in March. And kind of going forward, how once you kind of think about, you know, hitting it to the lower or higher end of your 11% to 16% full year guidance?
Robert Probst
It's Bob. I'll take that one. So we're pleased with the first quarter, 14%. Very good start. In fact, above our expectation internally. And that was really -- that was RevPOR, that was labor, a good a good start there. And we've highlighted multiple times so far that in terms of phasing, we expect the second half on a year over year basis to be higher than the first half. And as always, you know, beat the drum here. It's the key selling season that is the determinant of that. So from our -- where we sit, strong start, ahead of expectation in the quarter and the phase inconsistent with what we've been saying.
Omotayo Okusanya
Okay, I guess the pushback is if you just kind of take a look at seasonally in 1Q '24, you were kind of above your current same store NOI growth. And I don't know whether it's again -- whether it's just harder to get you over your occupancy gains. I guess just trying to figure it out of getting people comfortable with the idea that the higher end is achievable.
J. Justin Hutchens
Alright. Let me address this, Justin. So, you know, as we look ahead, like I was saying, we have significant occupancy upside in the portfolio. There's various things that impact performance at different times. I remember last year, we had agency coming out of system. That was benefiting expenses. And so that gave us an opportunity for outsized performance. What we have happening now, and I was trying to articulate earlier, is a lot of action that's underway, but the best is yet to come. So we have a strong conviction around the growth opportunity. Like I said, we have a hundred more projects that we're refreshing this year that are -- they're underway. We have all these new operators that we've added, a lot of which are coming through acquisitions, others that we're bringing in to through transitions over time that we've done. They're getting -- they're finding their sea legs. And so -- and we're never ever stopping focusing on trying to improve performance. I mean, this is -- this will be a continuous improvement in performance opportunity. My team fixated on that. So we're not ready to say we haven't seen the that we've already seen the best we're going to see. I mean, we're just now also getting into the strongest period of demand that the sector's ever seen by a long shot. So, I think the best is -- hopefully all things considered equal, the best is yet to come.
Omotayo Okusanya
I appreciate that those comments. If I may ask one more just on the on the life sciences, the part of the business. Again, Debbie, just with this potential change in NIH funding where the indirect cost match from the federal government can get capped at 15%, have you taken a look at just how high that number has been at all the universities you're involved in and whether that could become a real issue going forward?
Debra Cafaro
Yes. We do business with the leading biomedical research institutions in the country. And we have a detailed understanding of the so called indirect cost. I would tell you that first of all, the proposal that the administration put forward is on hold, and so it has not been pushed through. If it were to be pushed through, there would be an impact that would be, on average, maybe a mid single digits impact to the overall research budget for most of the leading universities. And that is manageable in light of the AA credit rating that we have in our portfolio for the university tenants as well as the nine-to-ten-year walls. So these are juggernauts who have a lot of resources to weather the storm.
Omotayo Okusanya
I appreciate that. Thank you.
Operator
Juan Sanabria, BMO Capital Markets.
Juan Sanabria
Hi, just on the acquisition front, given the $500 million incremental that's added to the guidance that you said is back half loaded, is there the expectation or should we be thinking that there's maybe a temporary pause until deals that are reloaded? Is that fair to kind of assume just given the timing of your guidance, or is there other stuff that could fill the interim that could happen pretty quickly here?
J. Justin Hutchens
So I am just stepping back for a minute. One thing I had in my prepared remarks intentionally was the amount of the $2.8 billion that we've done, most of that over the past year, including being last year, happened over the last 6 months. And so we've had this acceleration of investment activity. We added another $500 million we. Have a good line of sight on the $500 million. We have a pipeline that that is much bigger than that. So we're going to keep working on finding opportunities within the pipeline and some that are maybe not there yet that have the criteria that we like, which is, first and foremost, an asset that will deliver strong IRRs, low to mid teen unlevered IRRs. And we're flexible with the type of assets. We're looking for a good combination of high quality, strong markets growth. That's all completely continuing one. It can be lumpy because you have a period of time where you are working -- you access the deal and then you work to close the deals. And so there can be lumpiness in terms of when you actually deliver deals to close. And I think that's the point we're trying to make.
Juan Sanabria
If I could ask a follow up on the shop and the clinical move outs, you noticed -- noted a kind of a lower end point or starting point for the second quarter. Would you guys be able to or can you provide the March 31 year over year figure or what or what the occupancy was on for the same store pool just so we can calibrate and kind of fully take into account that move out impact?
Robert Probst
So I want to make the first point which is move ins strong. First quarter, expect to be strong. Second quarter, we were 290 year over year. First quarter, we reaffirmed 270 full year balance of the year. Clearly, the jumping off point or start point of the second quarter is lower because of the mortality that Justin mentioned. And clearly in reaffirming the guide, if you just do the math balance of the year, it's below that 290 number. But, I think it's right to say, we shouldn't not look at spot numbers, we should look at trends. We should look at the year and really focus on the moves and the key selling season which is right in front of us. So that's how we think about it.
Juan Sanabria
Thank you.
Operator
Seth Bergey, Citi.
Seth Bergey
Hi guys, thanks for taking my question. Kind of going back to the yields, is there any thought about acquiring more type of 4-plus assets versus the newer -- maybe better position in the market assets where you can leverage the Ventas platform, your network of operators, and Ventas OI to kind of drive a higher yield.
Debra Cafaro
Hi, Seth, it's Debbie. I would definitely confirm that we are eager to deploy capital when the acquisition or investment opportunity provides good risk adjusted return, when it provides the kind of low to mid-teens, unlevered IRRs that we're looking for, which is paramount when we can buy below replacement costs. And our aperture for investments is pretty broad based, and we certainly will consider different types of profiles to get to that unlevered IRR. They could be lower occupied, higher occupied. But it's all about the risk adjusted return that we see in the asset and the replacement cost. And that's really where our investment team is focused.
Operator
Austin Wurschmidt, KeyBanc Capital Markets.
Austin Wurschmidt
Great, thanks, and hello everybody. Bob, you hit a little bit on my first question, which is going to be the comment you previously made about expecting the same sort of growth in senior housing to be better in the second half versus the first half. Can you just give us what the biggest drivers of that improvement is because clearly you alluded to occupancy being lower. So is it RevPOR growth re accelerating versus the first half of the year? Is it something on the expense side that's driving that re-acceleration or just changes to the same store pool? Just any color you can shed on that. Thanks.
Robert Probst
Well, I'd really point to what we saw in the first quarter so far and the balancing items. Obviously, the demand was strong in the form of move-ins, and the key selling season is the vast majority of the full year move-in. So that's point one. As you down to the P&L, we mentioned RevPOR was favorable in the first quarter, both in terms of in place and street, both performing well. I would highlight on the OpEx, which we really haven't talked about. 5% on OpEx in the first quarter, year over year, in line with our full year guide. When you unpack that and we gave this in the deck, you can see labor versus non-labor actually trending quite favorably, and that's very encouraging. And so as we look at it, the composition of it, that first quarter is encouraging. And I'm going to be going back to the key selling season, but that's what we saw so far.
Austin Wurschmidt
Got it. And then Justin, maybe what do you attribute to the re-acceleration and RevPOR growth on a leap year adjusted basic basis? Is it more mix related to the assets where you're growing occupancy, or is it more function of the street rate growth you guys have highlighted a few times?
J. Justin Hutchens
Yes, so we have a very deliberate effort through our OI platform and the team that delivers those insights to our operators to focus on price volume optimization. And in doing so, we're looking for, quite frankly, just to be priced right. We don't set pricing, but we give guidance in terms of where we think the opportunity is to either obtain price or to deliver occupancy growth. And through those efforts, we're seeing encouragingly move in rents have been stronger than we've seen in recent years. So we're starting to see a pick up from a street rate/ move in rent standpoint. We had 7% internal rent increases. And I always like to remind everyone, Debbie, especially does too, that we still have relatively low occupancy. So we have good price opportunity even in occupancy that's around 84% in the US. Canada is also benefited from those trends, but it's also benefited from the mix shift as well. But the US is more around the deliberate actions that that our operators have taken, with some insights from us as well, to deliver better pricing.
Operator
Michael Stroyeck, Green Street.
Michael Stroyeck
Thanks and good morning. Maybe going back to the research segment, can you just remind us how much of the tenant base is in the traditional biotech sectors and what the average wall is specifically on those leases?
Debra Cafaro
I'm going to turn it over to my colleague, Pete, for a second, but again, 75% of the single-digit NOI that we get kind of all in from research is credit tenants with wealth between 9% and 10%. So in some senses, Michael, it's the inverse of that, but I'll turn it over to Pete to provide more specifics.
Peter Bulgarelli
Sure, yeah, so as Debbie said, about three-fourth of the tenants are investment grade. And 50% are universities with that AA rating, so it's really a strong tendency, very different than most. And just to give you a perspective, at share we have about 6 million square feet of space in the research portfolio and only 148,000 square feet are in the three most stressed cities, which is San Francisco, Cambridge, and San Diego. So it's a very different portfolio that's been built. Having said that, about the remaining 25% is a mix of retail, biotech, flexible innovation space and so forth. And about half of that are revenue generating. They're kind of past their inflection points. So we think about roughly 12% of our portfolio is kind of the earlier stage biotech or innovation flex space. And at least terms for those are typically, for the innovation spaces, those are 10 years plus, and for the pre revenue biotechs, they're usually five to seven years.
Debra Cafaro
And Michael, one final point on this, I believe Bob mentioned it, but we are continuing to see really good institutional demand for the portfolio, and that really runs across highly rated university users, medical research, and medical users, and some of our non-cluster markets which have basically no new supply. So when I mentioned that these organizations are juggernauts, I mean they've got 50 to 100 year plans. And we really are in a in a good position because we're seeing very current. LOIs, leasing activity, and other interests from these institutional users in the portfolio. And we're trying to take -- trying to capitalize on that. So the near term on those users continues to show a good activity and interest.
Michael Stroyeck
Got it. That's helpful. Maybe just sticking with that point then, where do you expect occupancy to trend over the next 12 months within the research portfolio?
Debra Cafaro
Well, again, right now, we're reaffirming the OM&R same store cash NOI growth of 2% to 3%.
Robert Probst
I would highlight in the total research portfolio that we have a number of the assets up in redevelopment mode, notably in Philly, which is having an impact on occupancy, but we believe that those redevelopments are going to be value creating and so it's the timing issue.
Operator
Ron Kamden, Morgan Stanley.
Ronald Kamdem
Just two quick ones for me. Clearly the conversions really jump out and the success that you've had. I think I asked this last quarter as well. But as you're sort of relooking the NNN portfolio. Is there ways to create more conversion opportunities? Just can you talk us through just the puts and takes there because it would seem like financially it would make a lot of sense to do more.
J. Justin Hutchens
Yeah, it's Justin. So we certainly have put a lot of energy into that given the number of conversions we've had. We've talked about Brookdale. What we haven't talked about yet is the UK. I mentioned in the prepared remarks that we have a new operator, and that came by way of converting triple-net to SHOP. There's 11 London area and Southeast England area care homes that were in a triple-net portfolio. They're now SHOP. They're operated by CCG who is an operator who has -- who's known for turnaround, redev. And they've grown their enterprise to 100 locations across England, Scotland. So we have a right operator. We're in some markets that I'm particularly excited about. One is, we're right in between Walton-on-Thames and Richmond-on-Thames. And if you know that part of the of England, you might know Hampton Palace, which is a great place to visit. It's my old stomping grounds. Our location is right near the river, great campus, very well run care home that has particularly very strong price and occupancy opportunity with investment. So with the right operator and with the right investment in the community, I'm really excited about that and several of the other locations. And I'm also excited to have a SHOP portfolio in the UK now. So we can lean in a little bit over time into that market, which also has very strong fundamentals. Having said that, the US remains our first and foremost priority, and we have tremendous opportunity in the US. But we do keep looking for opportunities to convert from triple-net to SHOP and that's the most recent example.
Ronald Kamdem
Great, helpful. And then I just want to go back to the acquisition slide in question. I think the slide makes it looks like cap rates are compressing 50 basis points, which -- this may not be apples to apples, but I guess I'd love to hear, it's more competition, cap rate trends. Just a little bit more color on that on what you're seeing in the pipeline. Thanks.
J. Justin Hutchens
Yeah, it's -- these are -- when you compare the activity of last year to the activity this year, these are two big samples, of what we're -- what we were able to demonstrate in the market. One was 7.7% last year, 7.2% this year. So clearly there's cap rate compression. But it's also still in our stated range that quite frankly, we established 1.5 years ago of 7% to 8%. And then our IRR still remain really exactly where they were, which is low to mid-teens. And great opportunity to acquire both yield and growth in these communities that we've been purchasing. There is more competition, clearly, given how strong the senior housing fundamentals are in the sector and the standout asset class amongst real estate. More players are coming to the table, but that's when the advantage platform that Ventas has really starts to shine. We enter deals with the track record of having closed all these recent transactions and the credibility of delivering what we say we're going to do. We do not have financing contingency when we enter deals. We have a platform to manage scale and senior housing that is unrivaled by the entire capital sector that faces the industry except for one tier. And therefore we feel very good about our opportunity to continue to compete. And we are also benefiting from the relationships we have in the portfolio. Like I said, 75% of our deals have been born of these relationships, and that's advantage us as well. So yeah, we'll see more competition, and we'll also be ready to continue to compete.
Operator
Nick Yulico.
Nick Yulico
Yeah, I've experienced that a lot in my life. Good morning, everyone. So, I guess just maybe just going back to the commentary on the move out in March, the clinical outcomes, I was just hoping to get a little bit more of maybe the math, if you could flesh that out a little bit because I think what we and some others are kind of struggling with right now is if you have, 60,000 units in your senior housing same sort of pool, how could mathematically your occupancy really be affected by some level of clinical move outs?
J. Justin Hutchens
I mean, we're not probably going to get into the exact numbers, but the simple answer is our movement activity was consistent with last year. Our move out activity was higher, and it's driven by the mortality rate being high. So you just have a relative to our original expectation. You have, a lower jumping off point. And they happen late in the quarter and that's what impacts the jumping off point. So it does have an impact. I mean, just like conversely, the key selling season, which is substantially all of the net movement activity happens, that has the opposite impact. We tend to see around 10% more movements during that period, usually see around 5% less move out. Together that's what the key selling season delivers, May to September, and delivers all that occupancy growth that we hope to see again this year. So that's just how the seasonality tends to play out.
Nick Yulico
Okay, and then just going back to -- I know your company others in the industry have moved away from wanting to give monthly data. And I think it was asked earlier about where was March occupancy, and so I guess I'll try asking again about if there's any way you could give a feel for how March occupancy is? How April's trending? And the reason I'm asking is that, I think, you guys kind of opened the door to this being a natural question when you said that the jumping off point is lower to start in the second quarter. So as everyone's looking at testing your guidance assumptions I know you've already said that you feel good about your full year guidance, but people are thinking about impacts potentially to the guidance or even how you could exceed guidance, it would be pretty helpful to understand where March and April occupancy is for the portfolio.
Robert Probst
Yeah, I think you're right, Nick, to say that the industry has gone away from that timing in light of the fact that we should all be focused on the trends. I'll say again, you can do the math and say 290, first quarter; 270, full year plug. And that gives you a number, which is the start point and on a reasonable approximation of the start point. So, beyond that, I would just keep our eyes focused on the trends in the longer term, notably the key selling season right ahead of us.
Nick Yulico
Okay. Thank you.
Operator
Mason Guell, Baird.
Mason Guell
Thank you. Good morning, everyone. Do you expect independent living occupancy growth to continue outpacing assisted living throughout 2025, and would the GAAP be consistent with the first quarter?
J. Justin Hutchens
As Justin. So historically and currently across the sector, independent living does tend to have a higher absolute occupancy. It's also been a strong contributor of growth for us in the US around 370 basis points for assisted living, which was also very strong with 300 basis points. So, we've had a lot of portfolio actions that have been directed towards independent living, including, operators and investments in the portfolio, but it's also been the case for assisted living. So we'll anticipate growth really in both categories of senior housing moving ahead, and hope that they will continue to be really strong as we get into this key selling season.
Mason Guell
Great. And have you seen a notable difference in competition for independent living versus assisted living product?
J. Justin Hutchens
And you mean in --
Debra Cafaro
In investment?
J. Justin Hutchens
From a consumer standpoint or from an acquisition?
Mason Guell
From an acquisition standpoint.
J. Justin Hutchens
Yeah, so we've been focusing by and large on campuses that offer a combination of services, independent living, assisted living, memory care. For the most part, it's been those three services on a campus. Sometimes it's an assisted living memory care combination. There's been some kind of living that are freestanding that we purchased as well. I'm talking about over 70 communities that we've invested in over the past -- since the beginning of last year. Yeah, we -- there's competition for the highest quality assets, which is what we've been pursuing. And we've been pursuing communities that are high performing with upside. One of the things that really helps us to compete is the preference among our operator relationships. That's been -- that's played a key role for us. And that is that they want to work with us and continue to work with us. And there's a lot of new operators we've added as well. So when we find ourselves in a competitive situation, that's one aspect that's helped us to win deals. Obviously our financial strength and flexibility is another aspect. And then a track record with counterparties as an acquirer of assets is excellent. So we like our opportunity to continue to compete and even for the best assets.
Operator
Thank you. That's all the time that we have questions for today. So I'd like to please turn this back to Ventos Chairman and CEO, Deborah Cafaro, for closing remarks.
Debra Cafaro
Thanks, Amy. So to conclude, Ventas delivered strong results in the first quarter. Demand for senior housing is strong and getting stronger and supply remains highly constrained. The multi-year NOI growth opportunity driven by senior housing is well underway with 11 quarters in a row of double-digit NOI growth, and yet the best is still ahead. So we look forward to seeing all of you soon to discuss this and more, and hope to see you in New York. Thanks.
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To strengthen our leadership position in the industry, the Company expects to spend approximately $70 million in capital expenditures in fiscal 2026, including further investments to equip our rigs with the latest technology,' concluded Mr. Larocque. (1) See 'Non-IFRS Financial Measures' Fourth Quarter Ended April 30, 2025 Total revenue for the quarter was $187.5 million, up 11.6% from revenue of $168.0 million recorded in the same quarter last year. Excluding Explomin, revenue for the quarter would have been $149.9 million, down 11% from the same quarter last year. The favourable foreign exchange translation impact on revenue for the quarter, when compared to the effective rates for the same period last year, was approximately $5 million, with minimal impact on net earnings as expenditures in foreign jurisdictions tend to be in the same currency as revenue. Revenue for the quarter from Canada - U.S. drilling operations decreased by 21.1% to $58.8 million, compared to the same period last year due to a slow start to the quarter as many projects were delayed entering the new calendar year. As well, the junior market remained negatively impacted by a lack of access to capital. South and Central American revenue increased by 78.5% to $88.0 million for the quarter, compared to the same quarter last year. The Explomin acquisition was the main driver of growth in the region, however, the Chilean market also contributed positively to the quarter, which helped offset reduced activity in Argentina. Australasian and African revenue decreased by 7.7% to $40.8 million, compared to the same period last year. Project delays at the start of the calendar year negatively impacted revenue in the quarter. Gross margin percentage for the quarter was 14.8%, compared to 19.3% for the same period last year. Depreciation expense, totaling $15.0 million, is included in direct costs for the current quarter, versus $12.8 million in the same quarter last year. Adjusted gross margin, which excludes depreciation expense, was 22.8% for the quarter, compared to 26.9% for the same period last year. The decrease in margins relates to startup costs for projects that were delayed, as well as ramp-up costs for multiple projects in April. General and administrative costs were $20.9 million, an increase of $3.5 million compared to the same quarter last year. The increase was driven by the addition of the Explomin group of companies and annual inflationary wage adjustments. Amortization of the intangible assets was $2.0 million, an increase of $1.7 million compared to the same quarter last year, due to the addition of intangibles recognized as part of the Explomin acquisition. Other expenses were $2.2 million, down from $3.0 million in the prior year quarter, due to lower incentive compensation expenses given the decreased profitability as compared to the prior year quarter. The income tax provision for the quarter was an expense of $0.7 million, compared to an expense of $2.4 million for the prior year period. The decrease in the income tax provision was related to the overall reduction in profitability. Net earnings were $1.0 million or $0.01 per share ($0.01 per share diluted) for the quarter, compared to net earnings of $9.9 million or $0.12 per share ($0.12 per share diluted) for the prior year quarter. Fiscal Year Ended April 30, 2025 Total revenue for the year was $727.6 million, up 3% from revenue of $706.7 million recorded in the previous year. Excluding Explomin, revenue for the year would have been $657.0 million, down 7% from the previous year. The favourable foreign exchange translation impact, when comparing to the effective rates for the previous year, was approximately $10 million on revenue, with minimal impact on net earnings as expenditures in foreign jurisdictions tend to be in the same currency as revenue. Revenue for the year from Canada - U.S. decreased by 20% to $274.4 million, compared to the previous year. The lack of junior financing continues to impact this region year-over-year, and project delays resulted in a slow start to calendar 2025. South and Central American revenue increased by 40% to $262.3 million for the year, compared to the previous year. While some countries in the region are experiencing slowdowns and project delays, growth was generated by the additional revenue from the Explomin acquisition, and continued growth in Chile, driven by copper exploration. Australasian and African revenue increased by 9% to $190.9 million, compared to the previous year, as demand for specialized services in Australia and Mongolia continues to drive growth in this region. Gross margin percentage for the year was 17.9%, compared to 21.6% for the previous year. Depreciation expense totaling $56.0 million is included in direct costs for the current year, versus $47.8 million in the prior year. Adjusted gross margin (see 'Non-IFRS financial measures'), which excludes depreciation expense, was 25.6% for the year, compared to 28.4% for the prior year. While the Company remains disciplined on pricing, margins were reduced year-over-year as the competitive environment in Canada - U.S. remains, and the Company retained labour throughout project delays. General and administrative costs were $78.8 million, an increase of $11.0 million, compared to the previous year. The increase from the prior year was driven by the addition of the Explomin group of companies and annual wage adjustments implemented at the start of the fiscal year. Amortization of the intangible assets was $3.7 million, an increase of $2.6 million compared to the previous year, due to the addition of intangibles recognized as part of the Explomin acquisition. Other expenses were $9.0 million, down from $10.3 million in the prior year, due primarily to lower incentive compensation expenses throughout the Company, given the decreased profitability. Foreign exchange loss was $1.9 million, compared to $5.5 million for the prior year. While the Company's reporting currency is the Canadian dollar, various jurisdictions have net monetary assets or liabilities exposed to other currencies. Throughout fiscal 2025, various currencies lost strength against the Canadian dollar, while in the prior fiscal year the loss was mainly driven by Argentina as they experienced a significant devaluation of the Peso as part of economic reforms implemented by the Argentinian government. The income tax provision for the year was an expense of $11.3 million, compared to an expense of $17.9 million for the prior year. The decrease was driven by an overall decrease in profitability compared to the prior year. Net earnings were $26.0 million or $0.32 per share ($0.32 per share diluted) for the year, compared to $53.1 million or $0.64 per share ($0.64 per share diluted) for the prior year. Non-IFRS Financial Measures The Company's financial data has been prepared in accordance with IFRS, with the exception of certain financial measures detailed below. The measures below have been used consistently by the Company's management team in assessing operational performance on both segmented and consolidated levels, and in assessing the Company's financial strength. The Company believes these non-IFRS financial measures are key, for both management and investors, in evaluating performance at a consolidated level and are commonly reported and widely used by investors and lending institutions as indicators of a company's operating performance and ability to incur and service debt, and as a valuation metric. These measures do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS. Adjusted gross profit/margin - excludes depreciation expense: EBITDA - earnings before interest, taxes, depreciation, and amortization: Net cash (debt) – cash net of debt, excluding lease liabilities reported under IFRS 16 Leases: Forward-Looking Statements This news release includes certain information that may constitute 'forward-looking information' under applicable Canadian securities legislation. All statements, other than statements of historical facts, included in this news release that address future events, developments, or performance that the Company expects to occur (including management's expectations regarding the Company's objectives, strategies, financial condition, results of operations, cash flows and businesses) are forward-looking statements. Forward-looking statements are typically identified by future or conditional verbs such as 'outlook', 'believe', 'anticipate', 'estimate', 'project', 'expect', 'intend', 'plan', and terms and expressions of similar import. All forward-looking information in this news release is qualified by this cautionary note. Forward-looking information is necessarily based upon various estimates and assumptions including, without limitation, the expectations and beliefs of management related to the factors set forth below. While these factors and assumptions are considered reasonable by the Company as at the date of this document in light of management's experience and perception of current conditions and expected developments, these statements are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such forward-looking statements are subject to a number of risks and uncertainties that include, but are not limited to: the level of activity in the mining industry and the demand for the Company's services; competitive pressures; global and local political and economic environments and conditions; measures affecting trade relations between countries, including the imposition of tariffs and countermeasures, as well as the possible impacts on the Company's clients, operations and, more generally, the economy; the integration of business acquisitions and the realization of the intended benefits of such acquisitions; the level of funding for the Company's clients (particularly for junior mining companies); exposure to currency movements (which can affect the Company's revenue in Canadian dollars); changes in jurisdictions in which the Company operates (including changes in regulation); currency restrictions; the Company's dependence on key customers; efficient management of the Company's growth; the impact of operational changes; safety of the Company's workforce; risks and uncertainties relating to climate change and natural disasters; the geographic distribution of the Company's operations; failure by counterparties to fulfill contractual obligations; disease outbreak; as well as other risk factors described under 'General Risks and Uncertainties' in the Company's MD&A for the year ended April 30, 2025, available on the SEDAR+ website at . Should one or more risk, uncertainty, contingency, or other factor materialize or should any factor or assumption prove incorrect, actual results could vary materially from those expressed or implied in the forward-looking information. Forward-looking statements made in this document are made as of the date of this document and the Company disclaims any intention and assumes no obligation to update any forward-looking statement, even if new information becomes available, as a result of future events, or for any other reasons, except as required by applicable securities laws. About Major Drilling Major Drilling Group International Inc. is the world's leading provider of specialized drilling services in the metals and mining industry. The diverse needs of the Company's global clientele are met through field operations and registered offices that span across North America, South America, Australia, Asia, Africa, and Europe. Established in 1980, the Company has grown to become a global brand in the mining space, known for tackling many of the world's most challenging drilling projects. Supported by a highly skilled workforce, Major Drilling is led by an experienced senior management team who have steered the Company through various economic and mining cycles, supported by regional managers known for delivering decades of superior project management. Major Drilling is regarded as an industry expert at delivering a wide range of drilling services, including reverse circulation, surface and underground coring, directional, sonic, geotechnical, environmental, water-well, coal-bed methane, shallow gas, underground percussive/longhole, and surface drill and blast, along with the ongoing development and evolution of its suite of data and technology-driven innovation services. Webcast/Conference Call Information Major Drilling Group International Inc. will provide a simultaneous webcast and conference call to discuss its quarterly results on Thursday, June 12, 2025 at 8:00 am (EDT). To access the webcast, which includes a slide presentation, please go to the investors/webcasts section of Major Drilling's website at and click on the link. Please note that this is listen-only mode. To participate in the conference call, please dial 416-340-2217, participant passcode 5509648# and ask for Major Drilling's Fourth Quarter Results Conference Call. To ensure your participation, please call in approximately five minutes prior to the scheduled start of the call. For those unable to participate, a taped rebroadcast will be available approximately one hour after the completion of the call until Sunday, July 6, 2025. To access the rebroadcast, dial 905-694-9451 and enter the passcode 3742746#. The webcast will also be archived for one year and can be accessed on the Major Drilling website at . For further information: Ryan Hanley Director, Corporate Development & Investor Relations Tel: (506) 857-8636 Fax: (506) 857-9211 ir@ MAJOR DRILLING GROUP INTERNATIONAL INC. SELECTED FINANCIAL INFORMATION FOR THE THREE AND TWELVE MONTHS ENDED APRIL 30, 2025 AND 2024 (in thousands of Canadian dollars) SEGMENTED INFORMATION The Company's operations are divided into three geographic segments corresponding to its management structure: Canada - U.S.; South and Central America; and Australasia and Africa. The services provided in each of the reportable segments are essentially the same. The accounting policies of the segments are the same as those described in note 4 presented in the Notes to Consolidated Financial Statements for the year ended April 30, 2025. Management evaluates performance based on earnings from operations in these three geographic segments before finance costs, general and corporate expenses, and income tax. Data relating to each of the Company's reportable segments is presented as follows: *Canada - U.S. includes revenue of $27,375 and $36,679 for Canadian operations for the three months ended April 30, 2025 and 2024 respectively, and $102,596 and $130,378 for the twelve months ended April 30, 2025 and 2024 respectively. **General and corporate expenses include expenses for corporate offices, stock options and certain unallocated costs.


Hamilton Spectator
28 minutes ago
- Hamilton Spectator
Andrew Peller Limited Reports Financial Results for Fourth Quarter and Fiscal Year 2025
GRIMSBY, Ontario, June 11, 2025 (GLOBE NEWSWIRE) — Andrew Peller Limited (TSX: ADW.A / ADW.B) ('APL' or the 'Company') announced today results for the three and 12 months ended March 31, 2025. All amounts are expressed in Canadian dollars unless otherwise stated. FISCAL 2025 HIGHLIGHTS FOURTH QUARTER 2025 HIGHLIGHTS 'It was a strong overall fiscal 2025 as we continued to outperform the category, expand and win in important new channels and growth categories, while meaningfully strengthening gross margins, operating margins and free cash flow,' said Paul Dubkowski, Chief Executive Officer. 'Building on this work, we are positioning the company for long-term success and increased market share as we adapt to Ontario's evolving distribution landscape and shifting trade dynamics, and we believe this represents a meaningful opportunity as we move forward.' Mr. Dubkowski added: 'We applaud the Ontario Government's recent policy announcements and its continued support of the province's grape and wine industry. By promoting strong, competitive policies that are aligned with global best practices, and by focusing on local grape growers and wine producers, the Government is reinforcing the vital role our sector plays as a key driver of economic growth in the province. As a market leader, we remain deeply committed to investing in the long-term health and growth of the sector and the regions in which we operate.' Financial Highlights (Financial Statements and the Company's Management Discussion and Analysis for the period can be obtained on the Company's web site at ) (1) Please refer to the Company's MD&A concerning 'Non-IFRS Measures' (2) Selling and administrative expenses in fiscal 2024 include $9.5 million relating to the former CEO retirement and transition costs. These amounts are added back to calculate the Company's EBITA. Financial Review Revenue for the three months ended March 31, 2025 decreased 11.2% compared to the prior year's fourth quarter primarily due to the $5.8 million recognized as revenue at the end of fiscal 2024 which represents the full year's benefit of the revised Ontario VQA Support Program. The revenue from the VQA support program for fiscal 2025 was recognized throughout the fiscal year as eligible sales were made. The remaining decrease can be attributed to the timing of the Easter holiday season when compared to fiscal 2024 and continual adjustment of channel and shipment timing in the evolving Ontario retail market. Revenue for the year ended March 31, 2025 increased 1.0% over the prior year. The increase was attributable to sales to big box stores, partially offset by a decrease in the Company's retail stores in the second half of the fiscal year as Ontario's new beverage alcohol retail distribution guidelines took effect. The Company's retail store sales also benefited from the July strike at the LCBO. Several of the Company's other well-established trade channels performed well during the year, particularly sales to third party restaurants and hospitality locations. This strong performance is offset by softness in sales from the estate wineries and wine clubs due to lower guest traffic and reduced consumer discretionary spending due to tightening economic conditions. Gross margin as a percentage of revenue for the three months ended March 31, 2025 increased to 52.6% from 41.8% mainly due to the inclusion of $9.8 million from the Ontario Grape Support Program (OGSP). As the OGSP program is intended to increase the content of domestic grapes in blended wines, the support is recognized as a reduction to cost of goods sold when eligible wine is sold. For the year ended March 31, 2025, gross margin as a percentage of revenue increased to 42.8% from 39.0%. The increase can be attributed to lower costs for glass bottles and inbound freight due to the cost savings programs implemented by the Company, and the inclusion of the OGSP. Gross margin is also continuing to be impacted by channel mix and inflationary cost pressures in concentrate, packaging and other raw materials. In response to these margin pressures, the Company is continuing to execute cost savings programs and formulation changes relating to these inputs. For the year ended March 31, 2025, these programs have resulted in $10.7 million of cost savings (2024 - $9.3 million). As a percentage of revenue, selling and administrative expenses decreased to 34.7% and 26.6% for the three months and year ended March 31, 2025, respectively, compared to 42.1% and 28.4% in the prior year. Selling and administrative expenses in the fourth quarter of fiscal 2024 included $6.5 million relating to the retirement allowance and consulting agreements entered into as part of John Peller's retirement and transition and $3.0 million in legal and advisory fees incurred by certain shareholders in connection with these agreements. Offsetting the non-recurring expenses from 2024, was higher compensation and higher selling costs as a result of the strong performance in fiscal 2025. Earnings before interest, amortization, loss on debt extinguishment and financing fees, CEO retirement and transition costs, net unrealized gains and losses on derivative financial instruments, other (income) expenses, and income taxes ('EBITA') (see 'Non-IFRS Measures' section of this MD&A) was $13.5 million in the fourth quarter of fiscal 2025, compared to $9.3 million in the fourth quarter of prior year. EBITA increased to $62.9 million for the year ended March 31, 2025 compared to $50.3 million in prior year period. Interest expense for the three months and year ended March 31, 2025 has decreased by 22.4% and 4.4% respectively compared to the prior year due to lower average debt levels and lower interest rates in fiscal 2025 compared to prior year. The Company recorded a net unrealized non-cash loss in fiscal 2025 of $1.8 million related to mark-to-market adjustments on interest rate swaps and foreign exchange contracts compared to a loss of $0.6 million in the prior year. The Company recorded a loss of $0.7 million in the fourth quarter of fiscal 2025 compared to a gain of $1.0 million in the same quarter in the prior year. The Company has elected not to apply hedge accounting and accordingly the change in fair value of these financial instruments is reflected in the Company's consolidated statement of earnings (loss) each reporting period. These instruments are considered to be effective economic hedges and are expected to mitigate the short-term volatility of changing foreign exchange and interest rates. Other expenses (income), net were $0.6 million and $3.5 million for the three months and year ended March 31, 2025. The expense in fiscal 2025 related primarily to a restructuring initiative completed in fiscal year to align the Company's business structure with the changing retail landscape in Ontario. During the year ended March 31, 2025, the Company undertook certain tax planning initiatives as it relates to capital gains with respect to the Port Moody lands. This included transferring the beneficial interest in the land to a newly registered partnership. All parties associated with the limited partner are within the consolidated APL group and there has been no legal ownership change. In March 2025, the Government of Canada announced the cancellation of the previously proposed legislation changes to the capital gains inclusion rate. Consequently, the beneficial interest in the Port Moody lands was transferred at cost rather than at fair value as originally contemplated. The transaction had no impact on the Company's operating results or cash flows. The Company incurred a net loss of $0.7 million (loss of $0.02 per Class A share) for the fourth quarter of fiscal 2025 compared to a net loss of $6.9 million (loss of $0.17 per Class A share) in the fourth quarter of the prior year. For the year ended March 31, 2025, the Company generated net earnings of $11.1 million ($0.26 per Class A share) compared to a net loss of $2.9 million (loss of $0.07 per Class A Share) in the prior year. Investor Conference Call The Company will hold a conference call to discuss the results on Thursday, June 12, 2025 at 10:00 a.m. ET. Paul Dubkowski, CEO, Renee Cauchi, CFO and Patrick O'Brien, President and CCO, will host the call, with a question and answer period following management's presentation. Conference Call Dial In Details: Date: Thursday, June 12, 2025 Time: 10:00 a.m. (ET) Dial-in numbers: Local Toronto / International: (437) 900-0527 North American Toll Free: (888) 510-2154 RapidConnect: Webcast: A live webcast will be available at Replay: Following the live call, a recording will be available on the Company's investor relations website at About Andrew Peller Limited Andrew Peller Limited is one of Canada's leading producers and marketers of quality wines and craft beverage alcohol products. The Company's award-winning premium and ultra-premium Vintners' Quality Alliance brands include Peller Estates, Trius, Thirty Bench , Wayne Gretzky, Sandhill, Red Rooster, Black Hills Estate Winery, Tinhorn Creek Vineyards, Gray Monk Estate Winery, Raven Conspiracy, and Conviction . Complementing these premium brands are a number of popularly priced varietal offerings, wine-based liqueurs, craft ciders, and craft spirits. The Company owns and operates 101 well-positioned independent retail locations in Ontario under The Wine Shop, Wine Country Vintners, and Wine Country Merchants store names. The Company also operates Andrew Peller Import Agency and The Small Winemaker's Collection Inc., importers and marketing agents of premium wines from around the world. With a focus on serving the needs of all wine consumers, the Company produces and markets premium personal winemaking products through its wholly owned subsidiary, Global Vintners Inc., the recognized leader in personal winemaking products. More information about the Company can be found at . The Company utilizes EBITA (defined as earnings before interest, amortization, loss on debt extinguishment and financing fees, CEO retirement and transition costs, net unrealized gains and losses on derivative financial instruments, other (income) expenses, and income taxes) to measure its financial performance. EBITA is not a recognized measure under IFRS. Management believes that EBITA is a useful supplemental measure to net earnings, as it provides readers with an indication of earnings available for investment prior to debt service, capital expenditures, and income taxes, as well as provides an indication of recurring earnings compared to prior periods. Readers are cautioned that EBITA should not be construed as an alternative to net earnings determined in accordance with IFRS as indicators of the Company's performance or to cash flows from operating, investing, and financing activities as a measure of liquidity and cash flows. The Company also utilizes gross margin (defined as revenue less cost of goods sold, excluding amortization). The Company's method of calculating EBITA and gross margin may differ from the methods used by other companies and, accordingly, may not be comparable to measures used by other companies. Andrew Peller Limited common shares trade on the Toronto Stock Exchange (symbols ADW.A and ADW.B). FORWARD-LOOKING INFORMATION Certain statements in this news release may contain 'forward-looking statements' within the meaning of applicable securities laws including the 'safe harbour provisions' of the Securities Act (Ontario) with respect to APL and its subsidiaries. Such statements include, but are not limited to, statements about the growth of the business; its launch of new premium wines and craft beverage alcohol products; sales trends in foreign markets; its supply of domestically grown grapes; and current economic conditions. These statements are subject to certain risks, assumptions, and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. The words 'believe', 'plan', 'intend', 'estimate', 'expect', or 'anticipate', and similar expressions, as well as future or conditional verbs such as 'will', 'should', 'would', 'could', and similar verbs often identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. With respect to forward-looking statements contained in this news release, the Company has made assumptions and applied certain factors regarding, among other things: future grape, glass bottle, and wine and spirit prices; its ability to obtain grapes, imported wine, glass, and other raw materials; fluctuations in foreign currency exchange rates; its ability to market products successfully to its anticipated customers; the trade balance within the domestic Canadian and international wine markets; market trends; reliance on key personnel; protection of its intellectual property rights; the economic environment; the regulatory requirements regarding producing, marketing, advertising, and labelling of its products; the regulation of liquor distribution and retailing in Ontario; the application of federal and provincial environmental laws; and the impact of increasing competition. These forward-looking statements are also subject to the risks and uncertainties discussed in this news release, in the 'Risks and Uncertainties' section and elsewhere in the Company's MD&A and other risks detailed from time to time in the publicly filed disclosure documents of Andrew Peller Limited which are available at . Forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and assumptions which could cause actual results to differ materially from those conclusions, forecasts, or projections anticipated in these forward-looking statements. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. The Company's forward-looking statements are made only as of the date of this news release, and except as required by applicable law, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new information, future events or circumstances or otherwise. For more information, please contact: Craig Armitage and Jennifer Smith ir@ Source: Andrew Peller Limited