LSI - Earnings call transcript Q1 2020 | Life Storage Inc

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Operator

Good morning, and welcome to the Life Storage First Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]

I would now like to turn the conference over to Dave Dodman, Senior Vice President of Strategic Planning and Investor Relations. Please go ahead.

Dave Dodman

to quarter welcome call. earnings and morning, our XXXX first conference Good today's Saffire, Andy Storage; Officer. Joe will Gregoire, Executive Financial Leading be Life Chief discussion Officer of Chief and

questions discussion answers following the reminder, statements. a to As your contain forward-looking and

projected actual and to uncertainties Our business. risks company's due from the may differ results those with

be regarding can the SEC found information Additional factors filings. company's in these

[Operator A Investor Relations the be found copy of on our press at release Instructions] lifestorage.com. and quarterly supplement may page

At Joe. this time, call turn to over I'll the

Joe Saffire

you that and families Dave. Good hope Thanks, I safe all healthy. your and morning. are

touching would Before first a few on COVID-XX. say our results, I words regarding

top weeks our course, protect Our the over and, liquidity. our priority past has been of customers our several to employees,

been As safe employees our proactive feel ensuring open secure that an have stores at working our essential and business, them. extremely and we remain staffed and

our including a significant any call quickly mobilize continuity XXxX now operated our team's to center challenges, weeks eight remotely ability office, business home Our for without testament our to has plans.

accommodations retailing slowed our regards enhances for paused and to acquisitions We With have wholly-owned program. customers liquidity, process. place also are rent expansion and auction like made we've our increases in and

and core COVID-XX growth X%, of which of for strategic reminder the with not broad quarter, annual the very strong the by putting X.X% us another results to merits the home were improve well orders. impact on Now, serve revenue FFO as previous of We first guidance our and obviously growth drive core FFO regards pace quarter, to initiatives state our achieve of our and consider of margins. did to of operating the

continued the quarter. and negative straight in the declined taxes, property to for first expenses, Same-store fourth the X.X% quarter pace to decline accelerate of excluding

strategy side, third-party fees diverse continue revenue well. to growth fuel multiyear our XX%, than management the management portfolio and has portfolio us our our the served On up more to of

game right of fell roughly now, the today back in Houston example, for oil And prices for whereas XXXX. to accounts been rental us allow self it platform dramatically months. XX% to was revenue, what when has our customers over X% changer our a two same-store online For it past serve,

piloted two almost we've across over reminder, years a As ago, been program year. operating for portfolio we and our it this

associated well the sales in and business. customers and to to our contributed procedures teams teammates to conduct from support for XX% safer XXXX. our of of such, in this for rentals now, channel As environment the store Right up roughly XX% fourth established operating ability accounted create a are to to April, significantly quarter

platform, for stores value at X.X, this is dynamic at can integrated call store couple but is we just with. almost Now pricing weeks done a unit we've this will rollout preference. platform. type place of we level, select generation which premium, Rent normally X.X customers a in second standard more Now personal in into XXX placing The This their functionality this today, directly Rent and on based online or the our complete

not And guidance the some therefore, February. first times have of May, the provided coming and are have sufficient confidently trends, we months we recent in in reliable and this do we are into including annual guidance, the in although, by we slightly closing, past withdrawn behaviors week provide customer visibility unprecedented to occurring

over quarter pass to I detail. will more walk now Andy the through to in us

Andy Gregoire

per performance. once $X.XX and over driven year, adjusted same period X.X% quarter, we solid night, reported the Last quarterly by from outstanding a share first for Joe. increase the revenue funds expense Thanks, operations of again controls last

last over the highlighted same year. by of performance X.X%, basis same-store of growth revenue driven was improvement NOI of XXX growth by X.X% margin period Our and points

taxes property quarter points the XXXX. of expenses outside XXX over same-store basis of quarter, First decreased first

X.X% a property Partially item. expenses taxes XXXX. the every spent, efficiencies over of marketing in offsetting quarter spend property decrease in line was a major XX% taxes first in and these increase marketing total and increase operating Excluding expense

solid. and At we our sheet $XXX liquidity cash line had balance approximately our available quarter of Importantly, $XX.X on end, credit. million on remained million hand and of

feature of on have also an add according that our should line an credit exercise $XXX additional available option. would available We that we million

created years issued We the COVID-XX prior first time for the ATM our on in market pandemic. so just to the in $XX.X million and days the disruption by

March debt to debt and was coverage our X.X EBITDA times net Our a service times ratio at six healthy XX. was recurring

August then We again million of have $XXX due is is until until due. not XXXX when when $XXX million no debt and XXXX maturities roughly

is percent and of debt the that X.X was average maturity XX% XX. debt, our rate, total Our fixed was years March at

also XX% of We slightly collected versus very a April, And our we although, April, receivables our are customer closely. XXXX. elevated, are decrease receivables monitoring in X% revenue accounts

actively drive engaging are our due customers collections. We those past to

We and remain expansions additional operating acquisitions extremely liquidity they scaled and necessary. have if diligent expense pull, expenditure managing have planned back levers to our capital and

with we comfortable adequate are funding and only in commitments ability disruption. such sheet and We have standing. maintain discretionary, balance completely we when almost believe to a manage are through our of commitments make period capital the our to good liquidity availability Our we sustained

operator, will for open now that the we questions. call with And

Operator

We will session. now [Operator begin question-and-answer the Instructions]

is Thomas go first from of The question KeyBanc. ahead. Todd Please

Todd Thomas

Hi. Thanks. Good morning.

trends can collections prepared early. comments? far Was else? those just think it's realize But that so something I specific been rentals, in you you or First I on May elaborate have question, or your in remarks, encouraging. that little a Joe, commented to

Joe Saffire

less couple It of the since a weeks Well, the in Actually, first the although year. actually been couple And positive of seen things. of of negative compared a last last up those slightly weeks April. Todd. then positive, a kind I of of week through improvement we it's think have May, last of to slight couple April, negative. Hi, was Yeah. movements,

following So, certain activity business. states for on is going and are in maybe areas certain that opening what's

So Houston, nicely Dallas, San from so up year. to it's news. Mostly, Antonio coming last that's all good Texas, are compared

So, it is quite encouraging.

front sales on pick the volume bit. up call a a seen little have We

hopefully of it. the was, encouraging So, is considering yeah, I very it worst April think obviously,

thing good a it's yeah, far. so So,

Todd Thomas

then And had seeing ups across been the rent roll portfolio. you Okay.

reduced that And positive said rates are You had they and asking for achieved in that XX% mark-to-mark their place had comment PSA market? where portfolio. are company's heard I some last market time Can a rents, this -- versus on across weeks. rates in in that change looks After the rates now mark-to-market rents few you we've down the today? think. by how mark-to-market

Andy Gregoire

to April, significantly were our they roll In that rates that than down Sure. the Todd. XX.X%. to In It’s which move-outs. down, a Andy. paying April was about roll Hi, similar did QX. less very pick QX, X.X% down streets, was up is X.X%, last move-in, in are down rent

Todd Thomas

Thank you. Okay.

Operator

from of is go question next Citi. The ahead. Smedes Rose Please

Unidentified Analyst

Good relatively into should some touch morning, for the last Smedes. guys. last now for Can the balance run just spend what up quarter? saw looking This you just It's for you is even expect sort of half year of pull towards of And just March, at spend the budget? how understand marketing versus guys you can leasing -- the back given year? rate the high the peak season. we actually you of help us [indiscernible] on Did on Thanks.

Andy Gregoire

at easier We the marketing have do spend it be elevated comps. year. beginning expect the quarter. the during did higher The Sure. to was We of

those that the expense, QX. tough had We look up versus we we easier rolling comp expect a elevated you costs little much Less seeing. gets in see level. has the QX per customers. bit bidding activity increasing. QX means, same-store, you'll Internet for do click. But high in liked maintained overall at from very higher Costs activity If a customers we're a are all are comp activity we're and QX,

do whole showing be hold year. We So, XX%. expect internet spend elevated, although we the it wouldn't at the up QX to marketing for over that to expect level

Unidentified Analyst

Yeah.

guys. Thanks, Okay.

Operator

is Spector Bank of Jeff question next go ahead. of from Please The America.

Jeff Spector

Good of demand markets where you. markets? let's markets noticed weaker is about listed My just of markets. little on unemployment high seeing a stronger I talk versus, stronger the was your can claims, morning. you're first Thank say, as these in markets. we've one or your bit LA, I lot a you seen that of guess, some like question

Joe Saffire

really markets Joe. heard doing than we're to -- the mean, It's it's We've Jeff. it's markets. primary I Hi, some get depends. answer are Yeah. whether the better It tertiary or sort of trying -- of York City New few I we certain and weeks, haven't forth in seen in shelters-in-place really so strong seminars some mean, it. or last like the are and over Chicago. the places that secondary -- where there

April performer in for did less the actually in collections, the of We But move-ins the was see yet move-in, same side higher better on portfolio. a the than LA LA but of normal. time at higher terms than was average

incredible what it in regions. XX% considering general, my really -- in pretty April. happened down pretty what's the sporadic in So, over But for is, April is view,

seem can worst the no we're the of there's come sort terms out come is large of across and smaller in of conclusion concrete that And if flow It markets. But and to pleased. we pretty does markets really it various regions.

Jeff Spector

Okay. your if But or rent say, -- states region reopen, said plan forward, And strategy for Thank this. is I'm increases? you've what cities pricing sorry rentals already you. as let's going the

Joe Saffire

Yeah. We increases. hold carefully. We on did do watch that off May the

this happening. advance, because if April. COVID got did started a to a -- have did We as for you're typically to you've pre-advice give portion that -- someone's We to to month about rent. of You project out as started them going in we raise slowdown --

fewer sent we letters So, March. out in

they way in terms increases I the the the some we So, back feel rent half second normal if keep of to of week May, look confident of the get things could going first pretty year. in

do month, it but June. test would test out Nothing we See We what in out. a will we for goes. close them typically will to how it

how opening, happen. And it's that of good more slow. anything we'll it but this. encouraging it it's I to picking there's and see we'll second see wave a predict mean, to hard out. could states no sign And is and take hopefully, activity which goes, very more up. But And

Jeff Spector

Thank Good Great. luck. you.

Joe Saffire

you. Thank

Operator

from is Please go Kim question Bin Ki SunTrust. of Next ahead.

Ian Gaule

with And you customers how than Now on to upsell on morning. more price touch sensitive are is on walk-in? Bin. Ian X.X could versus X.X walk-ins? that Rent Are the customers program? Good and you able then the behavior Maybe -- Ki customer on This maybe first,

Joe Saffire

who to Hi, will own of out there convenience. we think for don't to there relatively to away give But early too sort really Ian. technology, people It's Yeah. protect are you for And pay explanation. -- our any give much. want I

that, option. always and select how steps. terms we on of So, price corner far differential bargain And for much the you have they because be to those see elevator an have hunters a who will close if a spot, And care price, there you choosing to premium And the it really then, facility. don't the might back lower course, so want that a in of you it's, when is XX%. in customers maybe of can

So, mix. and as a is, it it, but business a idea upsell it's and the something counter, we for conduct And we're and love like harder feedback differentiator really to that they love to say, customers becomes it harder I It's the our can And is well. is the this getting early have we at customers us. think working choice. the is from

Ian Gaule

Okay. then for one That's, last helpful. me. that's And

payroll, that? to do -- on could in your peers Just mentioned quantify you maybe employee payroll. have pay increasing up had expenses you will you some If think Have be payroll so, what of XQ? guys

Joe Saffire

hire of the in that Andy higher we the are typically very Well, typically than let I'll strong talk wages we manager and question. pay general, part second others. about But a

that. So, we do have to not had

made first the are to and pay. they thing employees weren't is they feedback our our or allowed if provided done And sure safe for -- lot have the We've stay we had And we've they safe. were that enhanced has obviously done leave tremendous. a if been concerns, We employees home.

in them To to if they a to. reduced felt We've work the able coverage. we've they doors double be to keep alone wanted store, locked allowed

what very been really important. we've So, that's is flexible and

first that have no, to to seen I the payroll think So, the increase terms that don't not continued And wages. do expect -- expenses in quarter coming in had you've you We trend would to down. of that. see have we will

that? Andy, if you to add can

Andy Gregoire

our gets that payroll expect comps we to store similar And we the tougher, that a QX. in would find efficiencies. saw trend little think continue as I teams but continue a would a

Ian Gaule

guys. Okay. I color. Thank you, appreciate that

Joe Saffire

Thanks. Okay.

Operator

question next Steve from Please go of ahead. Sakwa The ISI. Evercore is

Steve Sakwa

us customers on Thanks. of Good just percentage Pay first Auto remind morning. you question, I your guess, are today? can what

Andy Gregoire

Steve. are Pay, Auto XX% on

Steve Sakwa

there assume a I talked the a major on about Okay. difference Auto And Pay is slight see collections and and cash to started of those when pay? on those elevation, that you kind between

Joe Saffire

on in the regularly we cash pay Actually, April, did actually more than see Auto Pay. those

but were that another. rejected Not reason actually Auto to interesting Pays significantly, was for the or of Some one us.

or didn't then So, an typically increase. an time anniversary pay date. incremental or -- May, we incredible who cash we're by in this And those ACH check, see

first on the a bulk so month, -- were dates the have on still first of we of Although, we the of do due month.

it So, good we was April, spot too. than have in compared better it to so seen a that's

Andy Gregoire

It's -- of read total May XX.X% this at we were and We April, revenue encouraging. then at time April in collected. XX.X% collections of

it's in better seeing a So, trend May. we're

So, it's encouraging.

Steve Sakwa

second Anywhere. I the Anywhere. Okay. the the anything mean, the kind helping customer. guess, I question, business retail your certainly seeing how Warehouse Great. and just of And any Warehouse uplifts that? then I you of anything with just kind is on know in the customer was Rent Now on But

Joe Saffire

place. Yeah. had Thanks, Steve. We programs in actually the most pilot probably

want corporate So, will customer solution XX typically, to XX for this days. pilot a to

at But in Fog are the of number little looking a delayed promising solution. been of we're -- for terms has June. enterprise that of some new well just bit. goes And they installations

positive. since to So one this the of had we since the probably we've would out. better It roll really -- be months that's started

I very I'm general, storage In optimistic for think, businesses particular in industry post-COVID. the about

step you're continue to prepared, companies, hospitals, I slowly storage, even reaction demand PPE personal opening take so of this trend back think, a see not you'll we for we and enough not for seeing and I and I And any see inventory, to forth. we think essentials do of lot if to a a continue being having move residence. think, bigger forward, don't and

that of team. Warehouse with gearing so, Anywhere And we're for kind up our

extra a we help that can industries solution need know they'll this and of inventory the to we for certain We're tracking them of with have supplies that equipment targeting store. that some we

terms in for also So, next businesses, by in what I'm encouraged may the storage but be of residential. months XX for

see. we'll So,

But little Warehouse kind a bit despite I am of pleased quite Anywhere a with destruction. of this year,

month new us names could that a June in are for piloting like few good looks be regard. it We and a

Steve Sakwa

Thanks Great. very much.

Operator

Please next question Todd is The go from ahead. Wells Stender Fargo. of

Todd Stender

an details more Can stores assets been we acquired in? thanks. this you markets just what exit? maybe Hi, And expected from they're partner, the have California your JV hear on how was the performing? maybe And

Joe Saffire

We've -- for some was we've quite stores these managed venture a partner. It joint been Yeah. time.

half are know assets. encouraging. underway. high which cap, they're think, be a but is them. in, few to We a I one a It's and great year quite forecast There's should that expansions closer going five

great So, it's for deal a us.

be to do JV very is, when pull on we We expect early exciting a to buyer. this in ultimate off reliable go partner. And into like to off able able to will desirable that something market with be we the it a California a market be like

So, we're it. excited about

have else. on if Andy, you anything specifics

Andy Gregoire

mean, California, Palmdale Jose. I San the Southern one restaurant is The it's Yeah. area. in in

Todd Stender

Storage? Life branded already were They

Joe Saffire

Yeah.

there's So, Where expansions so we've the we've our are well. partner. operated -- know very assets doing no been these have the destruction. ones them, owned we -- been who We and for

Yeah, we we do JVs. for deal quarter. first done we it the We're to that's it's So, -- that a great yeah, get us. were in able excited why

Todd Stender

entering that just wholly-owned reward And that to did speak risk to sticking on this and theme kind asset or Seattle an you then adventure, buy this maybe of opportunity of you're have the with one? just the

Joe Saffire

We you Yeah. the recently just market. -- we got Seattle know, as into

third-party So, presence in three through and with you four your to it's once whether like you're JV. scale, or or your management build do assets,

new acquisitions wholly-owned did to for is fund XXXX. the who more been deals with. this more to It’s be It's great to year on we've deal. this more partner was that in a asset. stabilized wanting Our And assets. the JV CEO a We -- CEO strategy up really on do with lease

take into could we'd first, But they deals, many done it focused are we're hopefully do XXXX. and right So for CEO and We for But deals versus minority stake the RIET. rather creative to way on into REIT. dilutive that the this more the right a come. is again, it have

Todd Stender

you. Thank

Joe Saffire

Thanks Todd.

Operator

question from is next The of Bin Kim ahead. follow-up go Please a SunTrust. Ki

Ian Gaule

follow-up. April, quick in street had want were in those I just promotions? XX% account again. This taking are is into down effective April. What I Ian think you to rates Joe, mentioned rates

Joe Saffire

were our down promotions April. in Yeah,

was double effective. net it just effective. the think, I down, I net check So, here XX%

Ian Gaule

Okay. Thank you.

Operator

the would Joe Saffire concludes to question-and-answer turn our over remarks. session. back conference This I like closing to for

Joe Saffire

calling Okay. you a in to stay few healthy today all you again in I listening. you safe, be for And wish thank everybody and to Well, and you. again, months. Thank and speak

Operator

conference The is today's attending you now for concluded. Thank presentation.

You may now disconnect.

Life Storage Inc - Registered Shares (LSI) 8 May 202020 Q1 Earnings call transcript