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.