SVI StorageVault Canada Inc

STORAGEVAULT CANADA INC. (“StorageVault” or the “Corporation”) (SVI-TSX) reports the Corporation’s full year 2022 audited results. Iqbal Khan, Chief Financial Officer, commented:

“Our dedicated and disciplined team at StorageVault delivered solid growth in 2022, with significant year over year increases in revenue, net operating income and funds from operations. We completed $241.1 million in acquisitions, including expansion of our professional information and records management business. On a same store basis we achieved an 11.4% year over year increase in revenue and a 12.5% increase in NOI resulting in a 27.9% increase in AFFO. Looking ahead, we have already further reduced our variable rate debt exposure and expect to increase our cash flow through improving operations and revenue management. The expansion of two existing stores will be completed this year and we expect to acquire $70 to $100 million of assets in 2023.”

2022 Full Year Audited ResultsRevenue increased to $261.8 million in 2022 from $208.7 million in 2021 and net operating income (“NOI”), a non-IFRS measure, grew to $176.0 million in 2022 from $139.0 million in 2021. Cash flow from operations grew to $76.4 million in 2022 from $59.0 million in 2021 and when combined with our financing and investing activities resulted in a cash balance of $22.5 million at the end of the year. The net loss of $41.2 million or $0.11 loss per common share for the year (net loss of $35.9 million or $0.10 loss per common share for 2021) is after $104.1 million in depreciation and amortization, $13.6 million in stock based compensation, $3.7 million of unrealized loss on derivative financial instruments and offset by the recovery of $9.6 million of deferred tax, all non-cash items, recorded in 2022.

Revenue and NOI growth from existing self storage, a non-IFRS measure, increased by 11.4% and 12.5%, over the prior year. Funds from operations (“FFO”), a non-IFRS measure, were $70.6 million in 2022 compared to $54.6 million for 2021, a 29.2% increase year over year. Adjusted funds from operations (“AFFO”), a non-IFRS measure, were $80.2 million for 2022 compared to $62.7 million for 2021, a 27.9% increase year over year. On a per share basis, FFO and AFFO, non-IFRS ratios, increased by 26.5% and 25.3%, respectively.

Annualizing results from our 2022 acquisitions would have resulted in revenues of $271.2 million, NOI of $181.2 million, FFO of $73.2 million and AFFO of $82.7 million. See definition of “Annualized Information” below.

For further information on non-IFRS measures and for a reconciliation of the above NOI, FFO, AFFO and Existing Self Storage amounts to the most directly comparable IFRS measure, please see “Non-IFRS Financial Measures” below and the Corporation’s Management’s Discussion & Analysis for the fiscal year ended December 31, 2022 filed on SEDAR at www.sedar.com.

2022 Fourth Quarter ResultsRevenue for the fourth quarter of 2022 increased to $69.1 million compared to $56.8 million in Q4 2021 and net operating income (“NOI”), a non-IFRS measure, grew to $46.0 million from $37.8 million for the comparative period. Our cash flow from operations increased year over year and when combined with our financing and investing activities resulted in a cash balance of $22.5 million at the end of the quarter. The Q4 2022 net loss of $23.3 million or $0.062 loss per common share (net loss of $13.0 million or $0.035 loss per common share for Q4 2021) results from the following non-cash items – $34.1 million of depreciation and amortization, $12.6 million in stock based compensation and offset by $0.4 million of unrealized gain on derivative financial instruments and deferred tax recovery recorded in the quarter of $5.5 million.

Revenue and NOI from Existing Self Storage stores increased by 8.2% and 8.3%, over the prior year. These results were achieved on the same pool of stores as fiscal 2021, when we achieved NOI growth of 20.2% for the fiscal year. Funds from operations (“FFO”), a non-IFRS measure, were $17.6 million for Q4 2022 compared to $14.6 million in Q4 2021, a 20.1% increase. Adjusted funds from operations (“AFFO”), a non-IFRS measure, were $19.2 million for Q4 2022 compared to $17.3 million in Q4 2021, a 11.0% increase. On a per share basis, FFO and AFFO, non-IFRS ratios, increased by 18.7% and 9.7%, respectively.

For further information on non-IFRS measures and for a reconciliation of the above NOI, FFO, AFFO and Existing Self Storage amounts to the most directly comparable IFRS measure, please see “Non-IFRS Financial Measures” below and the Corporation’s Management’s Discussion & Analysis for the fiscal year ended December 31, 2022 filed on SEDAR at www.sedar.com.

Increased Dividend Based on the strong quarterly and year over year results, StorageVault is increasing its quarterly dividend by 0.5% beginning Q1 2023 to $0.002831 per common share.

Our StrategyStorageVault is focused on owning and operating storage in the top markets in Canada. Our goal is to have multiple stores in each market, with complementary portable storage units and records management storage services, 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.

Further InformationFor comprehensive disclosure of StorageVault’s performance for the year ended December 31, 2022 and its financial position as at such date, please see StorageVault’s Consolidated Financial Statements, Management’s Discussion and Analysis and Annual Information Form for the year ended December 31, 2022 filed on SEDAR at www.sedar.com.

Annualized InformationThe Corporation purchased 11 stores during fiscal 2022 and the revenues and operating expenses from each acquisition are reflected in the December 31, 2022 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, 2022 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, 2022 filed on SEDAR at www.sedar.com.

Non-IFRS Financial MeasuresManagement uses both IFRS and non-IFRS Measures to assess the financial and operating performance of the Corporation’s operations. These non-IFRS 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 Measures referenced in this news release include the following:

1. 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.
2. 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, unrealized (gain) or loss on derivative financial instruments, stock based compensation expenses and deferred income taxes; and after adjustments for equity accounted entities and non-controlling interests. FFO should not be viewed as an alternative to cash from operating activities, net income, or other measures calculated in accordance with IFRS. 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.
3. 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.
4. Existing Self Storage – means stabilized stores that StorageVault has owned or leased at least 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 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.

Non-IFRS Financial Measures Reconciliation

The following table reconciles Net Income (Loss) and Net Operating Income:

		(unaudited)												(audited)
		Three Months Ended December 31												Fiscal
								Change												Change
			2022			2021		$			%				2022			2021		$			%
Storage revenue and related services		$	68,605,992		$	56,364,795		$	12,241,197		21.7	%		$	259,933,061		$	206,625,933		$	53,307,128		25.8	%
Management fees			483,861			480,494			3,367		0.7	%			1,895,228			2,034,745			(139,517	)	-6.9	%
			69,089,853			56,845,289			12,244,564		21.5	%			261,828,289			208,660,678			53,167,611		25.5	%
Operating costs			23,068,991			19,026,111			4,042,880		21.2	%			85,794,347			69,660,346			16,134,001		23.2	%
Net operating income 1			46,020,862			37,819,178			8,201,684		21.7	%			176,033,942			139,000,332			37,033,610		26.6	%
Less:
	Acquisition and integration costs		1,666,565			2,700,306			(1,033,741	)	-38.3	%			9,587,840			8,027,373			1,560,467		19.4	%
	Selling, general and administrative		5,461,630			4,859,670			601,960		12.4	%			21,048,950			17,817,594			3,231,356		18.1	%
	Interest		21,321,051			15,623,975			5,697,076		36.5	%			74,801,847			58,508,492			16,293,355		27.8	%
	Stock based compensation		12,587,262			10,750,687			1,836,575		17.1	%			13,631,028			11,288,335			2,342,693		20.8	%
	Unrealized (gain) loss on derivative financial instruments		(422,566	)		(6,142,747	)		5,720,181		-93.1	%			3,664,312			(6,142,747	)		9,807,059		-159.7	%
	Depreciation and amortization		34,124,962			24,521,938			9,603,024		39.2	%			104,126,661			93,189,387			10,937,274		11.7	%
			74,738,904			52,313,829			22,425,075		42.9	%			226,860,638			182,688,434			44,172,204		24.2	%
Net income (loss) before taxes			(28,718,042	)		(14,494,651	)		(14,223,391	)	98.1	%			(50,826,696	)		(43,688,102	)		(7,138,594	)	16.3	%
	Deferred tax recovery		5,452,549			1,489,191			3,963,358		266.1	%			9,584,739			7,823,010			1,761,729		22.5	%
Net income (loss)		$	(23,265,493	)	$	(13,005,460	)	$	(10,260,033	)	78.9	%		$	(41,241,957	)	$	(35,865,092	)	$	(5,376,865	)	15.0	%
1	Non-IFRS Measure.

The following table reconciles Net Income (Loss), and Funds from Operations and Adjusted Funds from Operations:

		(unaudited)												(audited)
		Three Months Ended December 31												Fiscal
			2022			2021		Change							2022			2021		Change
								$			%									$			%
Net income (loss)		$	(23,265,493	)	$	(13,005,460	)	$	(10,260,033	)	78.9	%		$	(41,241,957	)	$	(35,865,092	)	$	(5,376,865	)	15.0	%
Adjustments:
	Stock based compensation		12,587,262			10,750,687			1,836,575		17.1	%			13,631,028			11,288,335			2,342,693		20.8	%
	Unrealized (gain) loss on derivative financial instruments		(422,566	)		(6,142,747	)		5,720,181		-93.1	%			3,664,312			(6,142,747	)		9,807,059		-159.7	%
	Deferred tax recovery		(5,452,549	)		(1,489,191	)		(3,963,358	)	266.1	%			(9,584,739	)		(7,823,010	)		(1,761,729	)	22.5	%
	Depreciation and amortization		34,124,962			24,521,938			9,603,024		39.2	%			104,126,661			93,189,387			10,937,274		11.7	%
			40,837,109			27,640,687			13,196,422		47.7	%			111,837,262			90,511,965			21,325,297		23.6	%
FFO 1		$	17,571,616		$	14,635,227		$	2,936,389		20.1	%		$	70,595,305		$	54,646,873		$	15,948,432		29.2	%
Adjustments:
	Acquisition and integration costs		1,666,565			2,700,306			(1,033,741	)	-38.3	%			9,587,840			8,027,373			1,560,467		19.4	%
AFFO 1		$	19,238,181		$	17,335,533		$	1,902,648		11.0	%		$	80,183,145		$	62,674,246		$	17,508,899		27.9	%
	1 Non-IFRS Measure.
	FFO and AFFO Per Basic Common Share Outstanding
	FFO	$	0.046		$	0.039		$	0.007		18.7	%		$	0.187		$	0.148		$	0.039		26.5	%
	AFFO	$	0.051		$	0.046		$	0.004		9.7	%		$	0.212		$	0.169		$	0.043		25.3	%

The following table reconciles Existing Self Storage Revenue, Operating Costs and Net Operating Income:

	(unaudited)												(audited)
	Three Months Ended December 31												Fiscal
		2022			2021	Change								2022			2021	Change
						$				%								$				%
Revenue
Existing Self Storage 1	$	45,419,565		$	41,980,296		$	3,439,269		8.2	%		$	179,480,134		$	161,105,286		$	18,374,848		11.4	%
New Self Storage 1		20,554,929			11,617,246			8,937,683		76.9	%			69,144,032			35,000,602			34,143,430		97.6	%
Total Self Storage		65,974,494			53,597,542			12,376,952		23.1	%			248,624,166			196,105,888			52,518,278		26.8	%
Portable Storage		2,631,498			2,767,253			(135,755	)	-4.9	%			11,308,895			10,520,045			788,850		7.5	%
Management Fees		483,861			480,494			3,367		0.7	%			1,895,228			2,034,745			(139,517	)	-6.9	%
Combined		69,089,853			56,845,289			12,244,564		21.5	%			261,828,289			208,660,678			53,167,611		25.5	%
Operating Costs
Existing Self Storage		13,276,583			12,307,024			969,559		7.9	%			51,425,783			47,299,126			4,126,657		8.7	%
New Self Storage		7,899,066			4,810,360			3,088,706		64.2	%			26,575,165			15,166,068			11,409,097		75.2	%
Total Self Storage		21,175,649			17,117,384			4,058,265		23.7	%			78,000,948			62,465,194			15,535,754		24.9	%
Portable Storage		1,893,341			1,908,727			(15,386	)	-0.8	%			7,793,399			7,195,152			598,247		8.3	%
Combined		23,068,990			19,026,111			4,042,879		21.2	%			85,794,347			69,660,346			16,134,001		23.2	%
Net Operating Income 1
Existing Self Storage		32,142,982			29,673,272			2,469,710		8.3	%			128,054,351			113,806,160			14,248,191		12.5	%
New Self Storage		12,655,863			6,806,886			5,848,977		85.9	%			42,568,867			19,834,534			22,734,333		114.6	%
Total Self Storage		44,798,845			36,480,158			8,318,687		22.8	%			170,623,218			133,640,694			36,982,524		27.7	%
Portable Storage		738,157			858,526			(120,369	)	-14.0	%			3,515,496			3,324,893			190,603		5.7	%
Management Fees		483,861			480,494			3,367		0.7	%			1,895,228			2,034,745			(139,517	)	-6.9	%
Combined	$	46,020,863		$	37,819,178		$	8,201,685		21.7	%		$	176,033,942		$	139,000,332		$	37,033,610		26.6	%
1 Non -IFRS Measure.

About StorageVault Canada Inc.StorageVault owns and operates 238 storage locations across Canada. StorageVault owns 206 of these locations plus over 4,500 portable storage units representing over 11.4 million rentable square feet on over 665 acres of land. StorageVault also provides last mile storage and logistics solutions and professional records management services, ‎such as document and media storage, imaging and shredding services.

For further information, contact Mr. Steven Scott or Mr. Iqbal Khan:

Tel: 1-877-622-0205ir@storagevaultcanada.com

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. Generally, forward-looking information may be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “proposed”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. 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 improving operations and revenue management; expansion of two existing stores; the size of potential future acquisitions the Corporation may make in 2023, including the expectation to acquire $70 million to $100 million of assets; and the Corporation’s strategy, including having multiple stores in each of the top markets in Canada with complementary portable storage and records management services and a growth strategy focused on acquisitions, organic growth, expansion of existing stores, and expansion of portable storage and records management businesses. ‎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 2022 being extrapolated to the entire period for 2022 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; delay or failure to receive board of directors, third party or regulatory approvals; 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; risks related to the COVID-19 pandemic including various recommendations, orders and measures of ‎governmental authorities to try to limit the pandemic, including travel restrictions, border closures, non-‎essential business closures, service disruptions, quarantines, self-isolations, shelters-in-place and social ‎distancing, mandatory vaccination policies, disruptions to markets, economic activity, financing, supply chains ‎and sales channels, and a deterioration of general economic conditions including a possible national or global ‎recession; and the impact that the COVID-19 pandemic may have on StorageVault which may ‎include: a short-term delay in payments from customers, an increase in accounts receivable and an ‎increase of losses on accounts receivable; decreased demand for the services that StorageVault ‎offers; and a deterioration of financial markets that could limit StorageVault’s ability to obtain ‎external financing‎. 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 2023 and cash flow growth for 2023 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.