U-Haul Holding Co /NV/ Q3 FY2025 earnings call

• Consumer Optimism: Joe Shoen noted increased optimism among customers and U-Haul team members, which is good for the self-move business.
• Fleet Adjustments: U-Haul is continuing to work through fleet imbalances due to COVID supply chain disruptions, with typical trucks being a ten-year asset.
• UBox Growth: UBox revenue is growing, with both moving and storage transactions increasing, and warehouse space for containers expanded by over 20% in the last twelve months.
• Self-Storage Efforts: While self-storage results are okay, efforts are ongoing to improve them, and plans to add more storage product are in place.
• Tariff Concerns: U-Haul is watching tariff proposals, recognizing the complex supply chain and potential impacts.
• Financial Details: Jason Berg provided earnings details, EBITDA changes in moving and storage segments, equipment rental revenue, self-storage metrics, UBox revenue, operating expenses, and cash position at the moving and storage segment.

Equipment Rental

• Revenue increased by $39 million, representing a little over 4.5% for the quarter. This includes continued strength in average revenue per transaction, growth in in-town transactions, and additional last-mile revenue at the end of the quarter. In January, revenue continued to trend positively compared to the same time last year.

Self-Storage

• Revenues were up $17 million, an 8% increase for the quarter. Average revenue per occupied foot across the overall portfolio improved by approximately 90 basis points, and same-store was up just over 3%. The occupied unit count at the end of December was up nearly 42,000 units compared to the same time last year, while 80,000 new units were added, leading to an average occupancy across the whole portfolio declining to 78.7%. The same-store average occupancy decreased by 50 basis points to 92.4%. Over the first nine months, $1.214 billion was invested in real estate acquisitions and self-storage/UBox warehouse development, a $245 million increase from the prior year, and 2.3 million new net rentable square feet were added in the quarter with 8.5 million square feet currently in development.

UBox

• Revenue in the 'other revenue' line item increased $9 million, with both UBox moving and storage transactions growing. Over the last twelve months, warehouse space for containers was increased by over 20%, and this pace is expected to continue for at least the next twelve months.

• The pace of new self-storage deliveries is expected to remain elevated into next quarter.
• Expect to slow the pace of investments in real estate acquisitions and development over the next year or two.

• Forward-looking statements are inherently subject to risks and uncertainties. For a discussion of the risks and uncertainties that may affect the company's business and future operating results, please refer to the company's public SEC filings and Form 10-Q for the quarter ended December 31, 2024, on file with the US Securities and Exchange Commission.

Q: Concerning the drivers in revenue growth and the pricing environment.

A: Joe and Jason discussed pricing, cost controls, and transaction volume trends, noting that customers are showing willingness to recognize price increases while cost controls have a delayed impact on financial results.

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

A: Jason discussed that transaction growth came from the in-town business (up just under 2% on transactions), one-way transactions were down but revenue per mile gains helped offset mileage decreases, and last-mile business boosted revenue per mile for in-town and miles per transaction. October and November were steady, with last-mile business impacting December.

Q: About UBox margins and storage portfolio value.

A: Jason and Sam discussed UBox margins, with newer warehouses allowing for higher density and potential for increased margins, and Jason provided insights on the storage portfolio's revenue potential if stabilized.

Q: Moving business costs and UBox warehouse pipeline.

A: Joe and Jason discussed fleet repair costs, with some decrease due to newer equipment and less outside work, and Sam discussed the robust UBox warehouse pipeline with no longer a constraint to growth.

Q: Storage industry additions and UBox dynamics.

A: Joe commented on the market-specific nature of storage industry additions, and Sam discussed UBox dynamics, including similar metrics to traditional self-storage, potential for premiums, and focus on maximizing occupancy and rates.