U-Haul Holding Company

Good morning, ladies and gentlemen, and welcome to the U-Haul Holding Company fourth quarter and fiscal year and 2036 investor call. At this time, all lines are in a 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, May 28, 2026. I would now like to turn the conference over to Sebastian Reyes. Please go ahead.

Good morning, everyone. Thank you for joining us today. Welcome to the U-Haul Holding Company fourth quarter fiscal year end 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 of Section 27A of the Securities Act of 1933 as amended. and Section 21E of the Securities Exchange Act of 1934 as 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-K for the year ended March 31, 2026, 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. Good morning. I'm speaking to you today from our offices here in Phoenix. Yesterday, we reported a fourth quarter loss of $128 million compared to a fourth quarter loss of $82 million a year before. Our full year fiscal 2026 earnings were $83 million, down from $367 million the previous year. In terms of earnings per share, the fourth quarter of this year was a loss of $0.65 per non-voting share compared to $0.41 per non-voting share fourth quarter of the previous year. Earnings before interest, taxes, and depreciation, which we refer to as adjusted EBITDA, And our moving and storage segment increased $6 million for the quarter to $223 million. And for the full year, fiscal 2026, adjusted EBITDA increased $26 million to $1,646,000,000. Included in our release and the financial supplement is a reconciliation of how you get from GAAP earnings to adjusted EBITDA or vice versa. Approximately half of the fourth quarter's decline in EPS came from depreciation on the truck fleet, which went from $181 million in the fourth quarter of last year to $221 million this year. For the full fiscal year, it was $879 million compared to $693 million the year before. We began to materially increase the depreciation rate on our cargo van fleet in the first quarter of fiscal 2006 when we began selling the higher cost 2023 and 24 model year vans into a resale market that frankly just didn't recognize that increased price. Additionally, depreciation has been increasing on box trucks. We grew the box truck fleet by over 14,000 units if you compare end of March of 25 to March 26. A few positive signals though. The rate of change, we'll call it the second derivative of fleet depreciation growth, has been slowing. In fact, we've seen sequential declines in the last two quarters. For box trucks, the upcoming year of no planned growth will lead to a natural decline in depreciation over the course of the year, even if we don't shrink the fleet. On the cargo van front, April and May resale results have been steady. albeit that's in relation to units that had a much higher depreciation rate over the last 12 months. Also, the step down in what we're paying for model year 25 units and 26 units will be beneficial, but not likely enough to be the sole solution to the issue. Looking forward, utilization of the expanded box truck fleet during this summer will inform us of what actions that we should take going into next year. And on the cargo van side, it's going to be the resale market and manufacturer pricing that are going to guide us as to whether we need to extend the holding period next year for those trucks and reduce future purchases. For the fourth quarter, our equipment rental revenue results increased $12 million compared to the same quarter the year before. And for the full year, we finished up $86 million, which is just over 2%. Revenue growth for both our in-town and one-way markets for both the quarter and the full year increased. In-town growth was more robust. Comparing the end of March of this year to the end of March last year, we had 55 new company-operated locations, and we had a net increase of 1,400 independent dealers. Our goal of increasing the number of dealers by several thousand and then productively dispersing equipment to them has been taking shape. April and May revenue has trended in line with what we saw in the fourth quarter. Capital expenditures for new rental equipment in fiscal 2026 were $2,081,000,000. That was a $218,000,000 increase compared to the year before. while proceeds from the sale of retired rental equipment that we sold increased by $48 million to $700 million. That nets out to net equipment purchases of $1,381,000,000. I estimate that close to $780 million of the total spend was growth-related. Our projections for this coming fiscal year include growth of the UBOX container fleet and our new toy hauler trailer, but do not include growth of the truck fleet. We estimate for next fiscal year a decrease in new purchases, net of sales somewhere around $560 million. Storage revenues were up $16 million at the 7% increase for the quarter, and our 12-month results were up 8% or a little over $74 million. Average revenue per occupied foot for both our same store and for the non-stabilized total portfolio improved by over 6%. Our average new customer rental rates have increased by about 3% year over year and rates for customers leaving are still a couple percentage points lower than customers moving in. Same store occupancy was down 540 basis points to 86.1%. I continue to highlight the portion that was due to our cleanup of delinquent rooms, and for this quarter, it was about 450 basis points of that decline. If you recall, we instituted the cleanup program in the second quarter of fiscal 26. Since then, delinquency has not been a problem, but we're still dealing with the year-over-year comparisons. Net tenant move-ins remain slower than in recent years, but we're seeing some incremental improvement. Our strategy of straightforward pricing, which includes the one-year price lock guarantee that Joe announced earlier this year, is strengthening our team's resolve and beginning to resonate with customers. During fiscal 2026, we invested $966 million in real estate acquisitions, along with self-storage and UBOX warehouse development. That's a $541 million decrease over fiscal 25. For the full year, we added 66 locations with storage, totaling 5.3 million net rentable square feet. We have approximately 5.5 million new square feet under development right now across 99 projects and another 6.2 million square feet of potential development behind that in properties that we own, but we haven't started. To put that into context, last year at this time, those figures were respectively 6.9 million and 8.1 million square feet. My projections have us continuing to see spending on self-storage growth decline. Moving and storage operating expenses increased $17 million for the fourth quarter. Compared to the fourth quarter of last year, our adjusted EBITDA margins saw a slight improvement with our all-in operating margins worsening due to the fleet depreciation that we discussed. Personnel increased $13 million for the quarter. Fleet maintenance and repair was up a million. And our self-insurance liability decreased by $2 million, largely due to a rough fourth quarter last year. We've made progress on this front. Over the course of fiscal 26, we've increased our reserves by about $93 million. At the end of March, our cash and availability at moving and storage totaled $1,479,000,000. A couple last items. I wanted to highlight that the U-Haul Holding Company Board of Directors authorized a $350,000,000 share repurchase plan. The plan spans across both our U-H-A-L and U-H-A-L.B share classes. The planned decreases in our growth capex this coming year allow us to allocate capital to this program. We firmly believe that the investments that we've made in the business over the last several years, while they're having near-term downside effect on our earnings, they will mature into productive assets and yield our expected returns. If you haven't visited it yet, although I assume I guess everyone has if you're listening to this call on the internet, visit investors.uhall.com. We've relaunched the site. trying to make it a little bit easier for people to access information, we'd always appreciate any feedback that you have on that. With that, I'd like to hand the call back to our operator, John, to begin the question and answer portion of the call.