10-QPeriod: Q3 FY2022

Extra Space Storage Inc. Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 4, 2022For Securities:EXR

Summary

Extra Space Storage Inc. (EXR) reported robust financial performance for the nine months ended September 30, 2022, demonstrating significant growth in total revenues, which increased by 23.3% year-over-year to $1.42 billion. This growth was driven by a substantial 24.6% increase in property rental revenues, largely attributed to higher rental rates for existing customers and strategic acquisitions. The company's operational efficiency is highlighted by a 22.9% increase in same-store net operating income for the same period, indicating strong performance from its core self-storage operations. Financially, EXR expanded its real estate assets by approximately 11.8% year-over-year to $9.88 billion, supported by strategic acquisitions and development activities. Despite an increase in total liabilities to $7.77 billion, driven by higher debt levels to fund expansion, the company maintained a manageable debt-to-enterprise value ratio of 22.4% as of September 30, 2022. The company also demonstrated a commitment to shareholder returns, with dividends paid on common stock increasing significantly compared to the prior year, reflecting confidence in its ongoing operational strength and future outlook.

Financial Highlights

42 data points
Beta

Revenue

$498.90M

77.0% Gross Margin

Net Income

$220.72M

44.2% Net Margin

EPS (Diluted)

$1.65

Total Assets

$11.84B

Cash & Equivalents

$86.99M

Free Cash Flow

$307.63M

Financial Statements
Beta
Revenue$498.90M
Cost of Revenue$114.58M
Gross Profit$384.32M
Operating Expenses$229.04M
Operating Income$269.86M
Interest Expense$56.24M
Net Income$220.72M
EPS (Basic)$1.65
EPS (Diluted)$1.65
Shares Outstanding (Basic)133.91M
Shares Outstanding (Diluted)141.50M

Key Highlights

  • 1Total revenues increased by 23.3% to $1.42 billion for the nine months ended September 30, 2022, compared to the same period in 2021.
  • 2Property rental revenue saw a significant increase of 24.6% year-over-year, driven by higher rental rates and acquisitions.
  • 3Same-store net operating income grew by 22.9% for the nine months ended September 30, 2022, showcasing strong performance in established properties.
  • 4Total assets grew by 13.0% to $11.84 billion as of September 30, 2022, compared to December 31, 2021, reflecting continued investment in real estate.
  • 5Acquisitions played a significant role, with the company acquiring 147 wholly-owned stores during the nine months ended September 30, 2022.
  • 6Dividends paid on common stock increased substantially, indicating a commitment to returning value to shareholders.
  • 7The company reported a net income of $701.7 million for the nine months ended September 30, 2022, up from $593.9 million in the prior year.

Frequently Asked Questions

The primary driver of revenue growth was a significant increase in property rental revenue, up 24.6% year-over-year. This was fueled by higher average rental rates for existing customers and the successful acquisition of new properties, including 147 wholly-owned stores during the period.

Acquisitions were a key factor in performance. The company acquired 147 wholly-owned stores and completed the significant acquisition of Bargold Storage Systems, LLC for approximately $179.3 million. These acquisitions contributed to the increase in total revenues and real estate assets.

As of September 30, 2022, Extra Space Storage had approximately $7.0 billion in total debt. The company maintained a debt-to-enterprise value ratio of 22.4% and reported being in compliance with all financial covenants. The company believes its operating cash flow, existing cash, and credit facilities are sufficient to meet its short-term liquidity needs and growth plans.

The company uses interest rate swaps as part of its interest rate risk management strategy. As of September 30, 2022, approximately $2.7 billion of its debt was subject to variable interest rates. To mitigate this, the company has entered into interest rate swap agreements, and as of October 5, 2022, it executed two swap agreements totaling $200 million to hedge against interest rate fluctuations.