U-Haul Holding Company

Good morning, ladies and gentlemen, and welcome to the U-Haul Holding Company First Quarter Fiscal 2026 Investor Call Conference. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 7 of 2025. I would now like to turn the conference over to Sebastian Reyes. Please go ahead, sir.

Good morning, everyone. Thanks for joining us. Welcome to the U-Haul Holding Company first quarter 2026 investor call. Before we begin, I'd like to remind everyone that certain of the statements during this call, including without limitation, statements regarding revenue, expenses, income, and general growth of our business may constitute forward-looking statements within the meaning of the safe harbor provisions if Section 27A of the Securities Act of 1933 is amended and Section 21E of the Securities Exchange Act of 1934 is amended. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Certain factors could cause actual results to differ materially from those projected. For 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 June 30, 2025, which is on file with the U.S. Securities and Exchange Commission. I'll now turn the call over to Jason Berg, Chief Financial Officer of U-Haul Holding Company.

Thanks, Sebastian. I'm speaking to you today from our offices here in Phoenix, Arizona. Joe Schoen, our Chairman and CEO, is unable to attend today's call. However, He is going to be available to speak to you at length and answer questions in two weeks at our annual investor and analyst webcast. We do have Sam Schoen, the vice chairman of our board of directors, here with us today to answer questions. Yesterday, we reported first quarter earnings of $142 million compared to $195 million for the same quarter last year. In terms of EPS, that's 73 cents per non-voting share this quarter versus a dollar per non-voting share last year at this time. Earnings before interest taxes and depreciation, that I'll refer to this as adjusted EBITDA, and our moving and storage segment increased 6% or nearly $31 million for the quarter, driven by strong revenue growth across our product lines, all of our product lines. Included in our release and our financial supplement is the reconciliation of adjusted EBITDA to GAAP earnings. The largest difference between adjusted EBITDA and GAAP earnings is depreciation, and this is also the cause of the largest negative variance in earnings year over year. During the first quarter of this year, we swung to a $22 million loss on the disposal of retired rental equipment as compared to an $8 million gain last year. Cargo vans that we purchased over the last two years that are now being sold came into the fleet with higher initial costs, and the current market resale values are not reflecting this. That's resulting in a loss. We have increased the pace of depreciation of the remaining units to reflect this new reality. Additionally, we have depreciation from increasing the size of the box truck fleet by approximately 8,600 units compared to June of last year. Pricing on new cargo vans for the upcoming model year indicates some nominal improvement. Of the 27-cent decline in earnings per share in the first quarter, 21 cents is from fleet depreciation and 12 cents is from the increase in losses on rental equipment sales. For the first quarter, our equipment rental revenue results had a $44 million increase, just over 4%. Revenue per transaction increased for both our in-town and one-way markets compared to the first quarter of last year. Overall transactions largely held steady with what we saw in the first quarter of last year. For the month of July, we've seen revenue continue to trend positively compared to the same period last year, but we haven't yet seen a big improvement in transactions. Capital expenditures for new rental equipment in the first quarter were $585 million. That's a $46 million increase compared to the same time last year. This increase was spread across acquisitions of box trucks, trailers, towing devices, and cargo vans. Self-storage continues to be positive. Storage revenues were up $19 million, which is about a 9% increase for the quarter. Average revenue per foot continued to improve across the entire portfolio up just over 1%. while our same store portfolio was up, but it was up just under 1% per occupied foot. Our same store occupancy decreased by 100 basis points to just under 93%. In July, we took on an effort system-wide to increase the number of available rooms at our existing locations by focusing on delinquent units. While this effort will not affect revenue directly, as we don't record any revenue until it's collected, It will serve to reduce our reported occupancy level a few points if we don't refill all of those rooms in time for September reporting. In our financial supplement, you will see that we have a slide that shows where future storage revenue growth is coming from. And the future revenue growth from our existing portfolio has increased. This is partially from us making these rooms now available to paying customers. During the first quarter of this year, we invested $294 million in real estate acquisitions, along with self-storage and UBOX warehouse development. That's down $108 million from the first quarter of last year. During the three months, we added 15 locations with storage, and that's about 1.2 million new net rentable square feet. We currently have approximately 6.5 million new square feet being developed across 124 projects. Our UBOX revenue results are included in other revenue in our 10Q filing, and this line item increased $21 million, of which UBOX is a large part. UBOX revenue by itself was up about 16%. We continue to have success increasing UBOX moving transactions as well as increasing the number of these containers that customers are keeping in storage. Moving in storage operating expenses increased $44 million for the quarter. As a percent of revenue, we were even with the first quarter of last year. The largest components of the increase were personnel, which was up 20 million. Liability costs were up 17, and we did see an increase in fleet repair and maintenance due to the increased size of the fleet. That was up about $5 million. As of June, the end of June this year, Cash, along with availability from our existing corporate revolver at the moving and storage segment, totaled $1,191,000,000. We are holding our 19th Annual Virtual Analyst and Investor Meeting on Thursday, August 21st at 11 a.m. That's 2 o'clock Eastern Time. This is an opportunity to interact directly with company representatives through a live video webcast, which you can find at investors.uall.com. Once again, we'll have a brief presentation by the company, followed by a question and answer session. Please feel free to submit questions to us early through the investor website or sending them to Sebastian, or you can just submit them live during the webcast. We'll be good either way. With that, I'd like to hand the call back to our operator, Chloe, to begin the question and answer portion of the call.

Thank you. We will now begin the question and answer session. To ask the question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press the pound key. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Steven Ralston from Zax. Your line is open.

Thank you, and good morning. Morning. I have some questions specifically for Joe, but I also have one specifically for Sam. I'll delay my questions for Joe until the investor conference. The top line is improving, like Joe expected, and I had one specific question about UBOX, which I know Sam heads. UBOX once again has achieved double-digit growth in this quarter, and it's through that tried-and-true formula of U-Haul that by adding capacity, and specifically in the case of UBOX, increasing warehouse space along with the number of containers and the number of delivery equipment, This is a growing area, and I assume ultimately will be broken out of the segment as it reaches 10% of revenues. How much potential do you still think there's left in UBOX? It's been growing. Do you think it's like 10% done or 25% done, or is it just too early to tell?

Well, thanks for the question, Steve. This is Sam talking. I think you start off some wise observations. Of course, it's way too early to tell. I'm on the more optimistic side. I don't see why there's any reason that UBOX couldn't be as big as U-Haul is today. And I think we're just at the infancy. I think you really can't start answering that question until you start to get some real clarity from the consumer of if they understand what this product and service really is. Of course, we're so blessed with traditional U-Haul that if you're six or 96, you know exactly what U-Haul is and what it does. And when you see it parked on the side of the road, you know exactly what it's there for. You know, the customer isn't quite there. The consumer isn't quite there with the U-Box portable moving and storage model. When they do, I think you'll really be able to answer the question you have. But I think the market's quite large. And as time goes on, you'll see it continue to grow as a pillar of U-Haul company.

Let me just ask you in a slightly different way. Of the number of locations that you have, across the United States, how many have functionality for UBOX? That's a good question.

Sure. So it depends what you're defining as a U-Haul entity. Of course, most of the time within the company, we look at our outlets, including our dealers. So if you want to make the calculation from that, you're looking at, you know, somewhere between, you know, 5 and 10%. if you're looking based on company stores, you're looking a little closer around half. So, you know, needless to say, that's not necessarily assuming that you've got adequate build-out of the UBOX product piggybacked at those locations. So, for example, you take a rather large market like Phoenix, you're still barely scratching the surface of the capability that we need to service the customer. And we're just going to have to keep building it out. And if what you're trying to do is make a projection to say, should this double, triple, quadruple, 10x, you're going the right direction.

All right. Thank you for taking my question. And the other questions had to do with Joe's experience because he's been running the company for quite a long time and wanted to get into some depreciation cycles and inflationary cycles where personnel costs are. I'll save those for the analyst conference.

Okay, Steve. We'll be happy to answer those then.

All right. Thank you for taking my question. You're welcome.

Our next question comes from the line of Steven Ramsey from Amazon Research Group. Your line is open.

Hi, good morning. I wanted to start with, good morning. Yeah, I wanted to start with UBOX. And I would just assume that transactions in UBOX is more associated with one-way moves. Are you able to see if UBOX one-way moves are growing faster than the rental segments? one-way moves or set another way with one-way transactions being up, is that a rising tide for UBOX?

Well, this is Jason. I'll start and just set the scene with the truck one-way transactions, truck and trailer. Those have been from flat to up just slightly, up 10,000 or 20,000 transactions in a quarter or so. That allows Sam to juxtapose his experience with UBOX one-way transactions.

Yeah, UBOX one-way transactions are leading the way. They're exceeding our truck rental transactions as a percentage. As far as a rising tide, I think they're decoupled in many ways. I certainly don't look at the performance of the one-way shipping of UBOX products and juxtapose it against the truck rental numbers and say, well, we only have so much we can go or capped or one number is dragging down the other. I don't necessarily see it that way. And I think what you should expect is for UBOX performance as a percentage to exceed the truck rental gains that we're able to make. There's little doubt of that.

Okay, that's helpful. And then I wanted to think about the margin profile of the business, 35% virtually flattish year over year, even with moving transactions up and then storage and UBOX with a higher margin profile also growing faster. Can you maybe dissect what is causing margin trends in the quarter or if it's better to reflect over the recent past and maybe the puts and takes to the company margin?

Sure. This is Jason. I'll start with that. We put a new slide in the investor deck this time around that shows proxy for cash flow, which would be adjusted EBITDA, the EBITDA margin, and then the share of equipment rental revenue versus the share of storage revenue. And we don't have UBOX revenue in there yet, but the two newer revenue lines, storage, which is strange calling that newer, but it's newer than the original equipment rental revenue. Both of those, when we include those in new projects, it has the effect of increasing the projected return. Now, as you know and you've been to some of our facilities, you see how everything kind of interacts and interrelates. It's very hard for us to break it out separately, but we certainly have seen that when we add more of each of those products to a location, the profitability improves.

Okay, that's helpful. And then maybe to think about some of the dynamics playing out in the storage segment a lot of new uh facilities and units in the total base um maybe as a headwind to the margin profile the slides in the last couple of quarters have been helpful to see that can you maybe talk about the glide path there of uh how units getting soaked up can be positive to margin certain thresholds that that need to be hit to elevate the margin within the storage business?

Yeah, on the slide in the deck that we have, it shows where future storage revenue is coming from. There's a portion of that that shows storage revenue from existing locations, or what we call non-same store locations, ones that haven't hit 90%. And that number, taking it from where it is today to where it would be at 90% is going to be somewhere around $260 million, give or take. By the time we get there, there's likely going to be rate increases, so it'll be a little bit more. Those are at locations where we've opened, and the expense load has largely been recognized in our financial statement. So that additional revenue, a very rough estimate would be maybe 80% of that, give or take, is going to flow to the bottom line. At some locations, it'll be more than that. At some of the newer locations, it might not be all of that. But as a general rule of thumb, to give you a sense. So a lot of the headwinds that we're facing right now on the EBITDA margin or on the GAAP operating margin are truck-related. You know, it's... The liability costs associated with the fleet, we've seen an increase in the severity of claims. I don't think we're seeing more accidents. I think the fleet is in real good condition as far as accidents go. But the severity of those that we're running into is a little bit more significant. And we're building reserves back up. And that's affecting the margin. And that does hit earnings and EBITDA for both of those. And then for the earnings cycle, it's this depreciation headwind that we're facing. We're going to have to work through this cohort of trucks, cargo vans we purchased the last two years. And then likely after this year, the spend on the box truck fleet will begin to slow a bit. And then we should peak on depreciation and then hopefully trend back down.

Okay, that's helpful, Jason. And last quick one for me, when looking at the pending and developed storage square footage currently at 14.8 million, that's been sliding down for a few quarters. Is that a number that you expect to kind of gradually keep coming down over the next few quarters? Or is there a level of developed and pending square footage that you think it's a minimum level that we do not want to go under.

There certainly is an amount that we don't want to go under. I don't think we're close to that right now. What we've been trying to do is slow the spend, not because we don't believe in self-storage or not because we don't want to expand, but because we want to be rational in our capital allocation and make sure that we have enough enough to last us. And with the way that the fleet has been chewing up some capital during this time frame, we're pulling back a little bit on real estate spend. But you don't want to pull back too much where you have what happened to us during COVID, where we shut a bunch of stuff down and then it takes a while to start it back up and you get kind of this unusual amount. If we could stay somewhere in the four and a half to six million square foot range each year, I think that's something that operationally we've proven that we can handle. And if we do that, spending is likely to continue to decrease.

It's great code. Thank you.

Our next question is from Andy Liu from Wolf Research. Your line is open.

Hey, appreciate it. Good morning, everyone. And thanks for taking the question. So really just wanted to double-click first on the while you guys talked, I was kind of, you know, flat, maybe slightly up in the quarter. Just wondering if you guys noticed anything in terms of, you know, sort of like the month-to-month trends, you know, it's flat in the quarter, but has the month-to-month trends kind of, was it like improving through the quarter, or is it, you know, kind of pretty steady through the quarter? Any kind of, any call would be helpful.

Sure. All of our comparisons are going to be year-over-year because our business doesn't really, compare well month to month. So, you know, our best quarter for moving is really our second quarter. The second best would be the first quarter that we just finished and then it goes third quarter and the fourth quarters are worst. So we're always comparing with how we did the year before because largely moving activity tends to look the same year over year. So what I mentioned for July is we're again seeing revenue increase from rates that we're having to charge because our cost of doing business has gone up. But we haven't yet seen traction on the transactions. And we're going through a process right now. I mentioned that the fleet, the size of the fleet has increased. I think from last year, we're up maybe 5,700 trucks. From the last quarter, we're up about 5,000 trucks. But we're also up close to 800 locations compared to last year between dealer locations and our company locations. So we're going through the process, which is fairly difficult, of placing this new equipment in places that we think is going to be productive and opening dealers and doing that in an efficient fashion. And that's what we're working on now. Now, if that doesn't work out the way that we think it is, we'll probably end up increasing the sales of trucks and reduce the size of the fleet. But right now, we think there's opportunity to use these trucks. To give you a sense of the challenge that we're facing, in the last two years, the number of locations that we've added is equal to the size of our second largest truck competitor, right? you know, in opening that many locations and distributing trucks across them and getting customers and our team to be able to route customers to those locations is a bit of a challenge. And that's what we're working through right now. And we're working through it at the same time that we're investing quite a bit in the fleet. But our plan is that all of this is going to pay off in the years to come.

Got it, got it. And sorry about that. I probably should have made my question a little clearer. And then once we trend as in, you know, how did, April year-over-year go, how the May year-over-year and June year-over-year, is that has it been kind of year-over-year flat for all three months, or has it been, you know, maybe improving on a year-over-year basis from April through June? Got it.

Yeah, I went to string on that one, didn't I? So the revenue has been steadily up year-over-year. I would say that transactions, we have some on weeks and some off weeks, and And we deal with the same issue that we've dealt with since the very beginning of the company, and that is people tend to move at the end of the month. So you get this cluster of transactions at the end of the month, and depending upon how the calendar falls from year to year, you can see these weird oddities. So looking at it over a three-month period, you tend to flatten some of that out. And what I would say is we still haven't got traction, however you want to look at it, month over, you know, versus last year or for the three months, the traction still hasn't hit. And I'm not seeing that in July yet either. But it's not like we're far off. There's some weeks that we're up on transactions, so we're right there. We're right there.

Okay, got it, got it. Thank you. That's helpful. And then I'm kind of shifting over to the storage slide. I mean, the storage stuff, I know you guys, you know, I use slides here, so I think that segment's getting, Yeah, you guys are pushing for a little more focus on a segment. So I really want to ask, you know, on that slide on the future, you know, revenue coming out of wine, you guys gave, you know, what the future would look like on a revenue basis. Have you guys looked at it maybe on even an NOI or an EBITDA basis, kind of what that, you know, future pipeline is? You know, I know you guys built this close margin, but just want to get a sense, you know, if that is the revenue number, just, you know, how that hits the bottom line.

Yeah, you know, I answered a question for Stephen just now. On the non-same-store locations that are already open, the additional revenue somewhere around, I would say, 80% of that should probably fall to the bottom line. If you're asking about the other ones that haven't opened yet, those are tougher because, as a whole, most of them have all of our product lines embedded, and so I don't have a clear answer to that. to give you on that because we – I mean, breaking out storage revenue is part of that. No, no.

I'm totally curious if you're on that front. So, kind of guess – ask me another way maybe on the development, you know, the spending side of it, you know, kind of how much does it cost for you to, you know, put this pipeline up, because I looked at, you know, your slides, right, and if you have a five-year look-back period, you did about $5.5 billion of investment, and you brought 26 million square feet of new space online, so that kind of backs into, like, $200 a foot. I'm not sure if that's, like, a good prop for this thing going forward.

Yeah, I don't know if I would be here this long if I allowed a bunch of $220... a foot storage to . So on that slide, the $5.8 billion represents the amount that we spent in that five years. So that doesn't represent the 26 million square feet that went on. It represents a big portion of it. But I'd say there's two complicating factors to that calculation. Because we do all this development on balance sheet, there's a certain amount that we've spent that isn't yet productive, right? We've bought the properties, we've started, we have construction in progress, but they're not renting rooms yet. For the last couple years, that number has run about a billion seven. We're probably about a billion 690 in capital we've invested that isn't really producing revenue right now. And I would say five years ago, that number was probably closer to a billion. But then I would take 650 million out of the numerator because that really is extra money that's spent on assets that aren't productive yet. And then the part that's a little also challenging to figure out is that also includes building UBOX warehouse space. And if you were to convert the amount of covered spaces that we've added the last five years to storage, square foot, because each one of those boxes is a five by eight storage room, that's going to add somewhere between eight to nine million square feet of self-storage space. So in reality, what the number should get to for our investment per foot should be much closer to, say, 150 a foot. That's the long term. story to get to the short answer, which is, it should be about 150. Okay.

Got it. Got it. Super helpful. And then I started last question for me. I know you guys, you know, I asked last quarter as well, the, um, development, you know, the use that you guys get on these stories, the moments you guys mentioned it was closer to like, I think it was like 10%, right? So it would be, so I just, just curious how you guys quote that 10% number. Is that 10% on the one 50 of per square foot spend that you just, uh, Are you just preference or is there a different method you're using to calculate the 10%?

Yeah, that's going to be the unlevered IRR. So you take your total investment in the property and we're looking out, I think it's seven to 10 years of then capping it at the end of that timeframe and looking to see how it performs over that timeframe. If you were to try to convert that to a cap rate, it's probably going to be somewhere between seven and a half, eight.

Okay, awesome. Super helpful. Thanks so much for taking my questions. Have a great day.

You too. Thank you.

There are no further questions at this time. I would now like to turn the conference back over to management for the closing remarks.

Well, this is Jason. I hope everyone's just holding their questions for the annual investor day, which is going to be in about two weeks. If you have any feedback in between, please feel free to shoot it to us otherwise we will we look forward to seeing you then thank you very much this concludes today's conference call thank you for participating you may now disconnect