Global Self Storage(SELF) - 2024 Q1 - Quarterly Results

Global Self Storage First Quarter 2024 Results Q1 2024 Financial & Operational Highlights Q1 2024 saw stable revenues, a sharp net income and FFO decline, yet a strong 3.4 p.p. increase in same-store occupancy Key Financial and Operational Metrics | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $3.0 million | $3.0 million | Unchanged | | Net Income | $266,000 | $993,000 | -73.2% | | Diluted EPS | $0.02 | $0.09 | -77.8% | | FFO | $0.8 million | $1.0 million | -18.3% | | AFFO | $0.9 million | $1.1 million | -14.7% | | Same-Store NOI | $1.8 million | $1.9 million | -5.7% | | Same-Store Occupancy (End of Period) | 91.3% | 87.9% | +3.4 p.p. | - The company declared and maintained a quarterly dividend of $0.0725 per share, consistent with the prior year and previous quarter, representing an annualized rate of $0.29 per share[3] - Capital resources as of March 31, 2024, totaled approximately $24.0 million, consisting of $6.9 million in cash, $2.6 million in marketable securities, and $14.5 million available under its revolving credit facility[4][17] Management Commentary Management cited economic headwinds for flat revenues, but highlighted successful marketing driving occupancy gains despite rising IT and inflationary operating costs - Flat revenue is attributed to general economic headwinds, high inflation, and lower move-in rental rates across the industry[7] - Effective digital and local marketing initiatives helped increase average same-store occupancy to 91.3% at the end of Q1, up from 87.9% in the prior year, with occupancy continuing to improve to 92.8% as of May 1, 2024[7][8] - Operating expenses increased due to a one-time IT investment, additional digital advertising spending, and industry-wide inflationary increases in property insurance and real estate taxes[10] - The company continues to evaluate property expansion opportunities and pursue potential acquisitions, supported by capital resources of approximately $24.0 million[12] Financial Performance Analysis This section analyzes consolidated and same-store financial results, detailing revenue, expense, and non-GAAP metric performance for Q1 2024 Consolidated Financial Results Q1 2024 saw flat revenues, a 10.4% rise in operating expenses, leading to a 28.3% operating income drop and a sharp 73.2% net income decline Consolidated Financial Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $3.0 million | $3.0 million | -0.1% | | Total Operating Expenses | $2.4 million | $2.2 million | +10.4% | | Operating Income | $591,000 | $825,000 | -28.3% | | Net Income | $266,000 | $993,000 | -73.2% | - The increase in total operating expenses was attributable to higher store level expenses (marketing, employment, property taxes) and general and administrative expenses[15] - The significant decrease in net income was partly due to an unrealized loss in marketable equity securities in Q1 2024, compared to an unrealized gain in Q1 2023[16] Same-Store Results Same-store revenues were flat in Q1 2024, but a 9.8% cost increase led to a 5.7% NOI decrease, despite a 3.4 p.p. occupancy rise Same-Store Financial Performance | Same-Store Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $3.0 million | $3.0 million | 0.0% | | Cost of Operations | $1.2 million | $1.1 million | +9.8% | | Net Operating Income (NOI) | $1.8 million | $1.9 million | -5.7% | Same-Store Operational Metrics | Same-Store Operational Metric | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Occupancy | 91.3% | 87.9% | | Average Tenant Duration | ~3.3 years | ~3.4 years | Operating Results and Non-GAAP Measures Q1 2024 saw FFO decrease 18.3% to $0.8 million and AFFO decrease 14.7% to $0.9 million, reflecting increased operating and G&A expenses Non-GAAP Financial Performance | Non-GAAP Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | FFO | $0.8 million | $1.0 million | -18.3% | | FFO per diluted share | $0.08 | $0.09 | -11.1% | | AFFO | $0.9 million | $1.1 million | -14.7% | | AFFO per diluted share | $0.08 | $0.10 | -20.0% | - General and administrative expenses increased to $803,000 from $680,000 in the same period last year[22] - Interest expense decreased to $205,000 from $236,000, primarily due to changes in the fair value of the company's interest rate cap[23] Company Strategy and Outlook The company aims to increase stockholder value through strategic acquisitions, joint ventures, and property expansions, guided by board review of key metrics and capital structure - The company's main objective is to increase stockholder value over time by executing its strategic business plan[5] - The strategic plan includes funding acquisitions, either directly or through joint ventures, and pursuing expansion projects at existing properties[5] - The report contains forward-looking statements concerning the company's plans, objectives, and future performance, which are subject to risks and uncertainties[35] Financial Statements This section presents the consolidated balance sheets, statements of operations, and reconciliation of GAAP net income to same-store net operating income for Q1 2024 Consolidated Balance Sheets As of March 31, 2024, total assets were $66.1 million, slightly down from year-end 2023, with net real estate assets at $55.1 million, and total stockholders' equity at $47.8 million Consolidated Balance Sheet Summary | Balance Sheet Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $66,083,519 | $66,879,204 | | Total Liabilities | $18,308,906 | $18,633,177 | | Total Stockholders' Equity | $47,774,613 | $48,246,027 | Consolidated Statements of Operations and Comprehensive Income Q1 2024 saw flat revenues of $3.03 million, rising expenses to $2.44 million, and a significant net income decrease to $266,150, largely due to an unrealized securities loss Consolidated Income Statement Summary | Income Statement Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenues | $3,034,040 | $3,037,952 | | Total Expenses | $2,443,046 | $2,213,139 | | Operating Income | $590,994 | $824,813 | | Net Income | $266,150 | $992,541 | | Diluted EPS | $0.02 | $0.09 | Reconciliation of GAAP Net Income to Same-Store Net Operating Income This section reconciles GAAP Net Income to Same-Store NOI, showing a Q1 2024 Same-Store NOI of $1,786,195, a decrease from Q1 2023, derived from same-store revenues and costs GAAP Net Income to Same-Store NOI Reconciliation | Reconciliation Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $266,150 | $992,541 | | Adjustments (G&A, D&A, Interest, etc.) | $1,519,045 | $902,263 | | Total Same-Store NOI | $1,786,195 | $1,894,804 | Appendix: Non-GAAP Financial Measures and Definitions This appendix defines key non-GAAP measures: FFO (per NAREIT, excluding unrealized gains/losses), AFFO (FFO adjusted for non-recurring items), and NOI (store-level performance), clarifying the same-store portfolio - Funds from Operations (FFO) is a non-GAAP measure defined by NAREIT as net income, excluding gains/losses from property sales and adding back real estate depreciation, with the company also excluding unrealized gains/losses on marketable equity securities[29] - Adjusted FFO (AFFO) is FFO excluding effects of stock-based compensation, business development, and other non-recurring items to better reflect ongoing operating results[30] - Net Operating Income (NOI) is defined as net store earnings before general and administrative expenses, interest, taxes, depreciation, and amortization, and is used to evaluate property-level performance[31] - The same-store portfolio consists of stabilized properties owned and operated throughout the entire comparable periods, with all twelve owned properties classified as same-store as of March 31, 2024[33]