10-KPeriod: FY2018

Extra Space Storage Inc. Annual Report, Year Ended Dec 31, 2018

Filed February 26, 2019For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) presented a robust performance in its 2018 10-K filing, highlighting consistent growth in revenues driven by strategic acquisitions and effective rent management. The company's extensive portfolio of 1,647 storage properties across 39 states and Puerto Rico demonstrated strong operational performance, with same-store rental revenues increasing by 4.1% and same-store net operating income growing by 4.0% year-over-year. Financially, EXR maintained a healthy balance sheet with total assets of $7.85 billion and managed its debt effectively, with a debt-to-enterprise value ratio of 28.4%. The company's commitment to shareholder returns was evident through its dividend payments, which increased from $3.12 in 2017 to $3.36 in 2018. Looking ahead, EXR's growth strategy includes continuing to acquire self-storage properties, developing new locations, and expanding its management business, supported by a flexible financing approach utilizing cash flow, credit lines, and equity offerings.

Financial Highlights

39 data points
Beta

Revenue

$1.20B

75.6% Gross Margin

Net Income

$415.29M

34.7% Net Margin

EPS (Diluted)

$3.27

Total Assets

$7.85B

Cash & Equivalents

$57.50M

Free Cash Flow

$677.79M

Financial Statements
Beta
Revenue$1.20B
Cost of Revenue$291.69M
Gross Profit$904.91M
Operating Expenses$607.71M
Operating Income$619.70M
Interest Expense$22.79M
Net Income$415.29M
EPS (Basic)$3.29
EPS (Diluted)$3.27
Shares Outstanding (Basic)126.09M
Shares Outstanding (Diluted)133.16M

Key Highlights

  • 1Total revenues increased by 8.3% to $1.2 billion in 2018, primarily driven by property rental revenue growth.
  • 2Same-store rental revenues grew by 4.1% and same-store net operating income (NOI) increased by 4.0% in 2018, indicating strong performance from existing properties.
  • 3The company owned or operated 1,647 stores as of December 31, 2018, representing a significant increase from the previous year, reflecting successful acquisition and development strategies.
  • 4Total debt increased to $4.8 billion, but the debt-to-total enterprise value ratio remained manageable at 28.4%, with 74.1% of debt at fixed rates.
  • 5Dividends paid per common share increased from $3.12 in 2017 to $3.36 in 2018, demonstrating a commitment to shareholder returns.
  • 6The company actively pursued growth through acquisitions, investing $521.3 million in wholly-owned and joint venture properties in 2018.
  • 7Net income attributable to common stockholders decreased by 13.3% to $415.3 million in 2018, impacted by higher interest expenses and other items, though underlying operational performance remained strong.

Frequently Asked Questions

EXR's primary growth strategy focuses on maximizing the performance of its existing stores through efficient management and revenue optimization, acquiring new self-storage properties, developing new stores, and expanding its third-party management business. The company aims to achieve sustainable long-term growth in cash flow per share to maximize stockholder value.

In 2018, EXR's same-store portfolio showed strong performance with a 4.1% increase in rental revenues and a 4.0% increase in net operating income. This growth was driven by higher occupancy and increased rental rates for both new and existing customers. The company also continued to expand its physical footprint through acquisitions and development.

As of December 31, 2018, EXR had approximately $4.8 billion in outstanding debt. The company maintained a debt-to-total enterprise value ratio of 28.4%, with a significant portion (74.1%) of its debt at fixed rates, mitigating interest rate risk. EXR's liquidity needs were expected to be met by operating cash flow, existing cash reserves, and available credit facilities.

EXR manages its exposure to interest rate fluctuations primarily by using interest rate swap agreements designated as cash flow hedges. These derivatives help to stabilize interest expenses by exchanging variable-rate payments for fixed-rate payments. As of December 31, 2018, approximately $1.3 billion of its debt was subject to variable interest rates.