StorageVault Reports Fiscal 2019 Annual Results; Highlighting Significant Growth in NOI and FFO; $373 Million in Acquisitions; Provides 2020 Outlook; Increases Dividend
February 28, 2020
STORAGEVAULT CANADA INC. (“StorageVault” or the “Corporation”) (SVI-TSX-V) today reported the Corporation’s full year 2019 audited results. Iqbal Khan, Chief Financial Officer, commented:
“StorageVault continued to deliver solid growth in 2019, with significant year over year increases in revenue, net operating income and funds from operations. Our focus continues to be on growing free cash flow through integrating and improving operations and completing accretive acquisitions. We surpassed our acquisition target with $373 million in acquisitions, while also expanding into the professional information and records management business. We exceeded our expectations with same store NOI growth of 7.3% year over year. Looking ahead, we expect to do $50 to $75 million of acquisitions in 2020, complete the expansion and renovations of two of our existing stores, and continue to increase our cash flow through integration and revenue management.”
2019 Full Year Audited Results
StorageVault achieved significant growth in 2019 with $372.7 million in acquisitions. The full effect of these acquisitions will not be realized until 2020. StorageVault has completed $1.3 billion acquisitions in the past 5 years.
Revenue increased to $135.0 million in 2019 from $96.4 million in 2018 and net operating income (“NOI”), a non-IFRS financial measure (see “Non-IFRS Financial Measures” below), grew to $90.1 million in 2019 from $65.9 million in 2018. Cash flow from operations grew to $30.9 million in 2019 from $29.3 million in 2018 (impacted by the acquisition and integration costs incurred of $7.0 million for the fiscal year ended December 31, 2019 versus $2.2 million for the same period in 2018) and when combined with our financing and investing activities resulted in a cash balance of $24.5 million at the end of the year. The net loss of $46.1 million for the year (net loss of $24.2 million for 2018) is after $79.2 million in depreciation and amortization, $9.3 million in unrealized loss on interest rate swap contracts, $3.6 million in stock based compensation and $16.3 million of deferred tax recovery, all non-cash items, recorded in 2019.
As a result of our strong revenue management platform, our Revenue and NOI from existing self storage, a non-IFRS financial measure, increased by 7.1% and 7.3%, over the prior year. Funds from operations (“FFO”), a non-IFRS financial measure, were $29.7 million in 2019 compared to $28.5 million for 2018, a 4.1% increase year over year. The FFO increase has been impacted by the acquisition and integration costs incurred ($7.0 million for the fiscal year ended December 31, 2019 versus $2.2 million for the same period in 2018) for the $372.7 million of acquisitions closed in fiscal 2019 ($161.4 million in 2018). Adjusted funds from operations (“AFFO”), a non-IFRS financial measure, were $36.7 million for 2019 compared to $30.8 million for 2018, a 19.2% increase year over year.
Annualizing the results from the acquisitions in 2019 would have resulted in revenue of $142.9 million, NOI of $96.8 million, FFO of $33.3 million and AFFO of $40.3 million. See “Annualized Information” below. For a reconciliation of the above NOI, FFO, and AFFO amounts to IFRS, please see pages 11 through 17 of the Corporation’s Management’s Discussion & Analysis for the year ended December 31, 2019 filed on SEDAR at www.sedar.com.
2019 Fourth Quarter Results
Revenue for the fourth quarter 2019 increased to $37.2 million compared to $26.6 million in Q4 2018 and NOI grew to $24.7 million from $18.3 million for the comparative period. As mentioned above, our cash flow from operations increased year over year and when combined with our financing and investing activities resulted in a cash balance of $24.5 million at the end of the year. The Q4 2019 net loss of $11.6 million (net loss of $0.8 million for Q4 2018) is after $22.6 million of depreciation and amortization, $9.3 million in unrealized loss on interest rate swap contracts and deferred tax recovery recorded in the quarter of $11.6 million. All amounts are non-cash items.
As a result of our revenue management program and operational efficiency, Revenue and NOI from existing self storage stores increased by 6.7% and 7.1%, compared to the same period last year. Funds from operations were $8.7 million for Q4 2019 compared to $7.1 million in Q4 2018, a 22.1% increase year over year. Adjusted funds from operations were $9.4 million for Q4 2019 compared to $8.0 million in Q4 2018, a 17.3% increase.
For a reconciliation of the above NOI, FFO, and AFFO amounts to IFRS, please see pages 11 through 17 of the Corporation’s Management’s Discussion & Analysis for the year ended December 31, 2019 filed on SEDAR at www.sedar.com.
Based on the strong quarterly and year over year results, StorageVault is increasing its quarterly dividend by 0.5% beginning Q1 2020 to $0.002667 per common share.
StorageVault is focused on owning and operating storage in the top markets in Canada. Our goal is to have multiple stores in these markets, adding portable storage and records management, to take advantage of economies of scale. Our growth strategy is focused on acquisitions, organic growth, expansion of our existing stores and expansion of our portable storage and records management businesses.
For comprehensive disclosure of StorageVault’s performance for the year ended December 31, 2019 and its financial position as at such date, please see StorageVault’s Consolidated Financial Statements and Management’s Discussion and Analysis for the year ended December 31, 2019 filed on SEDAR at www.sedar.com.
Non-IFRS Financial Measures
Management uses both IFRS and Non-IFRS Financial Measures to assess the financial and operating performance of the Corporation’s operations. These Non-IFRS Financial Measures are not recognized measures under IFRS, do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures presented by other companies. The Non-IFRS Financial Measures referenced in this news release include the following:
- Net Operating Income (“NOI”) – NOI is defined as storage and related services revenue less related property operating costs. NOI does not include interest expense or income, depreciation and amortization, corporate administrative costs, stock based compensation costs or taxes. NOI assists management in assessing profitability and valuation from principal business activities.
- Funds from Operations (“FFO”) – FFO is defined as net income (loss) excluding gains or losses from the sale of depreciable real estate, plus depreciation and amortization, stock based compensation expenses, unrealized gains or losses from interest rate swaps and deferred income taxes; and after adjustments for equity accounted entities and non-controlling interests. The Corporation believes that FFO can be a beneficial measure, when combined with primary IFRS measures, to assist in the evaluation of the Corporation’s ability to generate cash and evaluate its return on investments as it excludes the effects of real estate amortization and gains and losses from the sale of real estate, all of which are based on historical cost accounting and which may be of limited significance in evaluating current performance.
- Adjusted Funds from Operations (“AFFO”) – AFFO is defined as FFO plus acquisition and integration costs. Acquisition and integration costs are one time in nature to the specific assets purchased in the current period or pending and are expensed under IFRS.
- Existing Self Storage – means stores that the StorageVault has owned or leased since the beginning of the previous fiscal year.
NOI, FFO, AFFO and Existing Self Storage, should not be viewed as an alternative to, in isolation from, or superior to, net income or cash flow from operations, or results from StorageVault’s comprehensive operations, respectively, or other measures calculated in accordance with IFRS. NOI, FFO and AFFO should not be interpreted as an indicator of cash generated from operating activities and is not indicative of cash available to fund operating expenditures, or for the payment of cash distributions. Existing Self Storage should not be considered a measure of StorageVault’s comprehensive operations. NOI, FFO, AFFO and Existing Self Storage are simply additional measures of operating performance which highlight trends in StorageVault’s core business that may not otherwise be apparent when relying solely on IFRS financial measures. StorageVault’s management also uses these non-IFRS financial measures in order to facilitate operating performance comparisons from period to period and to prepare operating budgets. In addition, the Corporation’s definitions of NOI, FFO, AFFO and Existing Self Storage may differ from that of other issuers.
The Corporation purchased 46 stores plus a records management business during fiscal 2019 and the revenues and operating expenses from each acquisition are reflected in the December 31, 2019 financial statements from the date of acquisition forward for these properties. In order to provide the reader with a greater understanding of potential results from a full year of operations with the acquired assets, the Corporation has prepared an unaudited estimated Annualized NOI and FFO statement annualizing the revenues and expenses estimated as if the properties were purchased as of January 1, 2019 and owned for the entire 12 month period. For further information on the estimated annualized results referenced above in this news release, please refer to “Annualized Net Operating Income and Funds from Operations” set forth in the Corporation’s Management’s Discussion & Analysis for the year ended December 31, 2019 filed on SEDAR at www.sedar.com.
About StorageVault Canada Inc.
StorageVault owns and operates 201 storage locations in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, and Nova Scotia. StorageVault owns 151 of these locations plus over 4,600 portable storage units representing over 8.1 million rentable square feet.
For further information, contact Mr. Steven Scott or Mr. Iqbal Khan:
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Information: This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein are forward-looking information. In particular, this news release contains forward-looking information regarding: the Corporation’s strategic objectives, goals, growth strategy and focus including growing free cash flow through integration and revenue management, acquisitions, organic growth, expansion of existing stores and expansion of portable storage and records management business; the size of potential future acquisitions the Corporation may make in 2020, including the expectation to complete $50 million to $75 million in acquisitions; the expansion of two existing stores; statements regarding StorageVault’s expected future performance, including an increase in cash flow through integration and revenue management; and the full effect of the acquisitions completed in 2019 and the annualized NOI and FFO assuming previous acquisitions that occurred in Fiscal 2019 were purchased on January 1, 2019. There can be no assurance that such forward-looking information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such forward-looking information. This forward-looking information reflects StorageVault’s current beliefs and is based on information currently available to StorageVault and on assumptions StorageVault believes are reasonable. These assumptions include, but are not limited to: the level of activity in the storage business and the economy generally; consumer interest in the Corporation’s services and products; competition and StorageVault’s competitive advantages; trends in the storage industry, including, increased growth and growth in the portable storage business; the availability of attractive and financially competitive asset acquisitions in the future; the revenue and costs from acquisitions and operations conducted in fiscal 2019 being extrapolated to the entire period for 2019 and being consistent with, and reproducible as, costs and revenue in future periods; and anticipated and unanticipated costs. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of StorageVault to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: general business, economic, competitive, political and social uncertainties; general capital market conditions and market prices for securities; the actual results of StorageVault’s future operations; competition; changes in legislation, including environmental legislation, affecting StorageVault; the timing and availability of external financing on acceptable terms; conclusions of economic evaluations and appraisals; lack of qualified, skilled labour or loss of key individuals; and delay or failure to receive board or regulatory approvals. A description of additional risk factors that may cause actual results to differ materially from forward-looking information can be found in StorageVault’s disclosure documents on the SEDAR website at www.sedar.com. Although StorageVault has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking information as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Forward-looking information contained in this news release is expressly qualified by this cautionary statement. The forward-looking information contained in this news release represents the expectations of StorageVault as of the date of this news release and, accordingly, is subject to change after such date. However, StorageVault expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law.
The amount of potential future acquisitions by the Corporation in fiscal 2020 and cash flow growth for 2020 contained in this news release may be considered a financial outlook as defined by applicable securities legislation. Such information and any other financial outlooks have been approved by management of the Corporation as of the date hereof. Such financial outlooks are provided for the purpose of presenting information about management's current expectations and goals relating to the future business of the Corporation. Readers are cautioned that reliance on such information may not be appropriate for other purposes.