U-Haul Holding Company Q3 FY2025 earnings call

• Joe Shoen noted consumer optimism is good for the self-move business, no significant weather impact on rentals so far, progress on fleet imbalances due to COVID supply chain disruptions, potential benefits from reduced regulations, competitive Truck Share business, U-Box growth, self-storage results needing effort, and watching tariff proposals.
• Jason Berg provided financial details: earnings were $67 million compared to $99 million in the same quarter last year, EBITDA increased in moving and storage segments, equipment rental revenue grew, self-storage revenue increased, U-Box revenue grew, operating expenses were discussed, and cash position at moving and storage segment totaled $1.348 billion as of December 2024.

Equipment Rental

• Revenue increased by $39 million, a little over 4.5% for the quarter.
• Capital expenditures for new rental equipment in the first nine months were $1.587 billion, a $237 million increase compared to the same period last year.
• Proceeds from the sales of retired equipment decreased by $73 million to a total of $521 million.

Self-Storage

• Revenues were up $17 million, an 8% increase for the quarter. Average revenue per occupied foot continued to improve across the overall portfolio, up approximately 90 basis points. Same-store portion saw over 3% growth. Occupied unit count at the end of December was up nearly 42,000 units compared to the same time last year. Added 80,000 new units, leading to an average occupancy across the whole portfolio of 78.7%, and same-store average occupancy decreased by 50 basis points to 92.4%.
• Invested $1.214 billion in real estate acquisitions, along with development costs for self-storage and UBox warehouses in the first nine months, a $245 million increase over the same period last year. Added 2.3 million new net rentable square feet in the quarter, with approximately 8.5 million new square feet being developed.

U-Box

• Revenue increased $9 million. Both UBox moving transactions and UBox storage transactions are growing. Over the last twelve months, warehouse space or covered storage capacity for these containers increased by over 20%, and this pace is expected to continue for at least the next twelve months.

• Expect the pace of new self-storage deliveries to remain elevated into the next quarter.
• Willing to let the Trump administration manage tariffs and have U-Haul react accordingly.
• Plan to continue driving on adding storage product and reevaluate this in early summer.

• Weather events can noticeably dampen rental transactions.
• Complex supply chain and potential misery from tariff proposals.
• Fleet imbalances take time to work through as typical truck is a ten-year asset.
• Storage industry competition and challenges in achieving desired occupancy and rates.

Q: Concerning the drivers in revenue growth, especially revenue per transaction steadily increasing.

A: Jason Berg responded that the answer is yes, with factors like good pricing environment and cost increases being passed along to some extent.

Q: About U-Box growth, asking if people are storing more on lots as opposed to just rentals and moving.

A: Sam Shoen commented that it's a good observation, U-Box serves both moving and storage customers, and as they better explain the product's versatility, there are more conversions to the self-storage end.

Q: On transaction volume increases and month-to-month trends.

A: Jason Berg said transaction growth came from in-town business up just under 2% on transactions, one-way transactions were down but revenue per mile gains helped, and October and November were steady with last-mile business boosting in December.

Q: About U-Box margins relative to self-storage.

A: Jason Berg said newer warehouses stack higher, helping theoretical margin, and Sam Shoen mentioned increased density in the same footprint as traditional facilities.

Q: On storage portfolio value and funding growth.

A: Jason Berg discussed borrowing capacity and runway under five times net debt to EBITDA, and plans to slow down the pace of investments in the next year or two.

Q: On moving business cost advantages and U-Box warehouse pipeline.

A: Joe Shoen said there are many factors, and Jason Berg provided ballpark estimates on fleet rotation and repair costs, while Sam Shoen stated U-Box has a robust warehouse pipeline with no longer a constraint.

Q: On storage occupancy sequential trends.

A: Joe Shoen said there's no broad industry stabilization, but U-Haul is swimming against the tide of price and occupancy erosion in the industry successfully.

Q: On storage additions and U-Box dynamics.

A: Sam Shoen talked about U-Box metrics being similar to traditional self-storage, potential for premiums, and U-Haul's advantages like lower cost, delivery options, and extensive locations contributing to market share gains.