Life Storage, Inc. (NYSE:LSI) Q2 2020 Earnings Conference Call - Final Transcript

Aug 07, 2020 • 09:00 am ET

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Life Storage, Inc. (NYSE:LSI) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Life Storage, Inc. Second Quarter 2020 Earnings Call. [Operator Instructions] I'd now like to turn the conference over to David Dodman, Senior Vice President of Investor Relations. Please go ahead.

Executive
David Dodman

Good morning, and welcome to our second quarter 2020 earnings conference call. Leading today's discussion will be Joe Saffire, Chief Executive Officer of Life Storage; and Andy Gregoire, Chief Financial Officer.

As a reminder, the following discussion and answers to your questions contain forward-looking statements. Our actual results may differ from those projected due to the risks and uncertainties with the company's business. Additional information regarding these factors can be found in the company's SEC filings. A copy of our press release and quarterly supplement may be found on the Investor Relations page at lifestorage.com.

[Operator Instructions] At this time, I'll turn the call over to Joe.

Executive
Joseph V. Saffire

Good morning, and thank you for joining us. I hope that you and your families are all safe and healthy. Although the second quarter's results were not as we planned earlier this year, I can say that I feel more confident today as compared to late March and early April.

As an essential business, we were extremely proactive ensuring our stores remained open and our employees and customers felt safe conducting business during these difficult times. Our strategic focus on enabling customers to self-serve with Rent Now has been a key differentiator for us during the past couple of years, and I believe that is evident in our results.

Move-ins during April, the height of the stay-at-home orders across the country, were only down 15% year-over-year, which compared favorably across our sector. And from a financial perspective, same-store payroll and benefits were down 7.3% for the quarter, our seventh straight quarter of year-over-year decline.

Rent Now hasn't been the only reason for that trend as we have had several efficiency initiatives underway to improve our store operating margin, but it has clearly been an important contributor. Rent Now seems to have settled in at around 30% to 35% of rentals after spiking to 50% in April. It is clear to us that customers continue to embrace this new platform and will continue to do so at a much higher rate than pre-COVID days.

I am also pleased that self-storage is once again proving to be resilient at a very difficult macroeconomic environment. We have remained hopeful that there would be pent-up demand, and July activity was indeed strong with same-store move-ins up 16.5% for the month. Furthermore, in June, we resumed both our auction processes and our ECRI program after pausing both early in the second quarter. And both of those initiatives have accelerated through July with only limited exceptions in certain states.

Since asking rate pressures remain, occupancy is an important lever for us, and we grew same-store occupancy 170 basis points year-over-year to 93% as of the end of July. Even after adjusting for auctions that could not be performed, we estimate occupancy as of July