Summary
Extra Space Storage Inc. (EXR) reported its financial results for the second quarter and first six months of 2009. The company experienced a net loss of $7.5 million ($0.09 per diluted share) for the quarter ended June 30, 2009, a significant shift from the net income of $6.5 million ($0.09 per diluted share) reported in the same period of 2008. This quarterly performance was heavily impacted by an $18.8 million impairment charge related to the wind-down of its development program and severance costs, which together contributed significantly to the reported loss. Despite the quarterly loss, the six-month period showed a net income of $20.1 million ($0.23 per diluted share), an increase from $10.8 million ($0.15 per diluted share) in the prior year. This performance was boosted by a substantial gain of $27.6 million from the repurchase of exchangeable senior notes. Total revenues increased by 4.0% year-over-year for the six months to $138.3 million, driven by property rental revenue and tenant reinsurance. However, total expenses saw a notable increase of 28.2%, largely due to the aforementioned impairment and severance charges, as well as increased property operations and general administrative costs.
Financial Highlights
23 data points| Cost of Revenue | $21.57M |
| Operating Expenses | $66.69M |
| Operating Income | $2.37M |
| Interest Expense | $15.82M |
| Net Income | -$7.54M |
| EPS (Basic) | $-0.09 |
| EPS (Diluted) | $-0.09 |
| Shares Outstanding (Basic) | 86.40M |
| Shares Outstanding (Diluted) | 91.61M |
Key Highlights
- 1Quarterly Net Loss: Reported a net loss of $7.5 million for Q2 2009, compared to a net income of $6.5 million in Q2 2008, largely due to impairment and severance costs from winding down development.
- 2Six-Month Net Income Growth: Achieved a net income of $20.1 million for the first six months of 2009, up from $10.8 million in the comparable period of 2008.
- 3Gain on Debt Repurchase: Recorded a significant gain of $27.6 million from repurchasing exchangeable senior notes during the first six months of 2009, positively impacting net income.
- 4Revenue Growth: Total revenues increased by 4.0% to $138.3 million for the first six months of 2009, driven by property rentals and tenant reinsurance.
- 5Development Program Wind-down: Announced and initiated the wind-down of its development program, resulting in substantial impairment charges ($18.8 million) and severance costs ($1.4 million) in Q2 2009.
- 6Reduced Dividends: Suspended quarterly dividends for Q2 and Q3 2009, with plans for a Q4 dividend comprising primarily stock (90%) to meet REIT distribution requirements.
- 7Liquidity and Capital Resources: Ended the quarter with $131.6 million in cash and cash equivalents; however, management noted that operating cash flow and external sources are expected to fund liquidity needs, with a significant portion of debt carrying fixed rates.