Good morning, and welcome to the AMERCO First Quarter Fiscal 2023 Investor Call. Please note, this event is being recorded. I would now like to turn the conference over to Sebastien Reyes. Please go ahead.

Good morning, and thank you for joining us today. Welcome to the AMERCO First Quarter Fiscal 2023 Investor Call. Before we begin, I'd like to remind everyone that certain 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, 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 a discussion of the risks and uncertainties that may affect AMERCO's business and future operating results, please refer to Form 10-Q for the quarter ended June 30, 2022, which is on file with the U.S. Securities and Exchange Commission. I'll now turn the call over to Joe Shoen, Chairman of AMERCO.

Good morning. The truck rental business rate of growth is slowing. It looks like, however, we're going to be able to retain the expanded customer base we developed over the last 2 years. This has really moved overall business ahead. We will continue at U-Haul to probe markets where we can expand. Our U-Box product and service continues strong growth. We have some factors pressuring margin, as I mentioned last call, repair and maintenance expenses due to a higher-mileage fleet than we had in 2020. Repair costs per mile vary with total mileage on the unit. This trend will continue until we can get sufficient new vehicles. Once the OEM spigot is turned back on, it will take perhaps 3 years or more to normalize. Inflation, of course, will negatively impact us as we re-fleet. We are continuing to expand our self-storage footprint and to a lesser extent, our self-move footprint. Freight cost increases have pressured margins at U-Box and are a significant component of U-Box costs. I expect those will normalize again at some point in the future. I look forward to continued success. Thank you.

This is Jason. Yesterday, we reported first-quarter earnings of $17.03 a share compared to $17.60 a share for the same period in fiscal 2022. My comparisons throughout are going to be for the first quarter of this year versus the first quarter of last year, unless specifically noted. Looking first at equipment rental revenue, we had an increase of 5% or about $55 million. This improvement is coming on top of a first quarter last year that experienced normalized growth of somewhere around 18%. During the first quarter of this year, we saw increases in one-way and in-town revenue. This was primarily coming from better revenue per transaction. Growth in transactions compared to the first quarter of last year slowed. The availability of new trucks certainly remains a concern for us. On that front, capital expenditures on new rental equipment were $351 million compared to $310 million last year. There is still uncertainty surrounding the delivery schedules for receiving equipment from manufacturers. Our initial projection for gross equipment purchases this year was $1.8 billion about 3 months ago. Based upon what we've learned so far during the first quarter, we've already reduced this expectation for the year to just over $1.5 billion, and that's likely to continue to decrease as we move through the year. Proceeds from the sale of retired rental equipment decreased by $20 million to a total of $156 million. We're selling fewer trucks, although generally at higher resale values. Performance of self-storage remains strong. Our storage revenues were up $36 million, which is about a 26% increase. Looking at our occupied unit count at the end of June, we had an increase of 77,000 occupied units compared to the same time last year. In addition to the increased occupancy, we experienced growth in average revenue per foot as well, averaging somewhere north of 9%. Our occupancy ratio for all of our storage locations increased 5% to 85% year-over-year. Within that group, 83% of these locations were operating above 80% occupancy at June 30, and the average occupancy at those locations was 96%. One of our challenges is to create more opportunities in the self-storage portfolio by producing new units. To illustrate this need, we have 10,400 fewer vacant rooms available to fill at the end of June this year than we did last year. And compared to 2 years ago, we have 71,500 fewer rooms. For the first quarter this year, so far, we've invested $278 million in real estate acquisitions along with self-storage and U-Box warehouse development costs. That's up from $184 million last year. If you look out over the last 12 months, this represents our highest level of investment in new properties and development at $1.1 billion of investments. Over this time period, we've added 67,000 new units. That's about 5 million net rentable square feet, about 4.6 million of that square feet came online vacant. We currently have somewhere north of 7.3 million new net rentable square feet being developed across 147 projects. We have an additional 135 or so projects where we own the land or building, but have not yet started actual construction. Those should result in approximately 8.1 million new rentable square feet by the time we finish them. And we are close to 90 additional deals that are currently in escrow. In the moving and storage segment, we saw expense growth outpaced revenue growth leading to a decrease in our operating margin compared to last year's historical first quarter high watermark. This resulted in operating earnings in our moving and storage segment decreasing by $1 million to $482 million for the quarter. Operating expenses in the quarter increased to $118 million compared to last year. We've highlighted in the press release and Joe spoke to the $32 million increase in fleet repair and maintenance. Personnel costs also increased faster than revenue this quarter at about a 14% rate due to headcount as well as pressures from wage inflation. Personnel, like repair and maintenance, look worse than last year in the first quarter in both dollars and as a percent of net revenue. However, in the context of recent history, if you look back over the last 5 to 10 years, they're still within a normal range, if not at the better end of it. For example, personnel costs compared to the first quarter of last year are running about 70 basis points higher as a percent of net revenue. However, compared to the average over the last 5- and 10-year periods, we're about 170 basis points better for the quarter. The next largest increase in costs Joe also alluded to, which is freight costs for both our U-Box moving product as well as our cost of shipping products amongst our U-Haul locations. With that, I would like to hand the call back to our operator, Danielle, to begin the question-and-answer portion of the call.

The first question comes from Jamie Wilen of Wilen Management.

Nice strong results for the quarter. I wanted to start on self-storage. When you're looking at a 9% rate increase and a 5% increase in occupancy, what does that measure out to in the same-store revenue increase in total?

Jamie, this is Jason. That's a great question, but unfortunately, I don't have that answer. I can provide some insight on the increase in revenue per foot. I would estimate that about 2.5% of that increase is due to having fewer first-month specials or discounts. As we increase the number of occupied rooms and more people are staying in them, we incur lower costs to attract tenants. While I'm trying to provide you with a specific number, it's important to note that the increase in net operating income is growing at a rate that outpaces revenue growth, in my view.

Got you. Many moons ago, you talked about how long it took to take a new unit out of the ground to make it cash flow positive. It was 4 years and then it got close to 3 years. What do you think it is now from the time you open up the doors of a new facility?

This is Jason. I'll provide the occupancy figure. Over the last several years, the pattern we've observed is that in the first year, occupancy reaches about 40%; in the second year, it increases to 60%; and by the third year, it hits around 75%. This progression has accelerated. I've examined the facilities we opened in the past two years, and we're seeing that by the end of the first year, occupancy is averaging just above 50%. We're also nearing occupancy levels of 65% to 70%. This shift has effectively moved everything up by approximately one to one and a half years.

Jamie, you're probably cash flowing positive at 75% occupancy.

Okay. Excellent. Within the U-Box program, U-Box is growing well into double digits, estimated at 25% to 30% annually.

Yes. If you look at our other revenue line, it's the biggest component of that, so yes, it's well into double digits.

And you have to break that out as a separate entity once it gets to 10% of your total sales.

Yes.

So you're not that far away from that at this point.

Yes, it's got a ways to go. It depends upon how fast everything else grows in relation to it, so yes.

When I compare your company to your competitor, which was sold for $1 billion in 2015, how does U-Box stack up in terms of revenue and units in the market? Do you believe that U-Box is valued at around $1 billion today, similar to what PODS was worth?

That's a great question. First, we don't have access to any PODS data. If you know a source for PODS data, please let Jason know and we'll seek comparisons because we currently lack a solid source for it. We do have some methods to track it, and they are still experiencing growth. I would be surprised if their sales aren't at least three times what they were in 2015. I believe they've performed well in a large market. While I haven't researched it thoroughly, we think our approach will work. The consumer response has been strong for us. Although we've noticed a slowdown in U-Haul growth, that isn’t the case for us. Our customers in moving and storage aren’t typical customers, indicating a preference and unmet need for a box move. We expect this segment to expand, and we are investing in additional boxes, trucks, and warehouses to prepare for further growth. I don't have a specific value, and I'm not sure if Jason does either; we keep track of everything to ensure we are contributing positively to the organization. U-Box has been making a positive contribution every quarter, and we anticipate its continued growth because it represents a bright spot for us. I tend to be cautious about disclosing additional information. Our accountants are monitoring that ratio, and once we exceed it, we'll comply with disclosure requirements. Until then, I prefer to keep a lot of information private.

And the profit margins in U-Box, obviously, you've got a spike short term in freight cost, but the profitability is similar to the corporate average.

Jason mentioned that the challenge lies in how to allocate costs, which is difficult since most locations are co-located deals. Two years ago, their best estimate showed that it was in line with the overall moving and storage EBITDA average operating margin, but it has since declined slightly due to increased freight costs being a significant factor in that business.

And as you're building your new self-storage facilities, it seems like all of them have a significant U-Box component within there. Does that give us a competitive advantage given the number of facilities we have and the number of facilities we're adding? Or is the competition equally as well located throughout the country?

I believe we are making progress. Part of the U-Haul strategy is to establish a presence throughout North America, including the United States and Canada, which has benefited our U-Haul business. This will also be advantageous for U-Box. Many customers who relocate, for instance, from Los Angeles to the Bay Area, are abundant, but some also move to smaller communities like Boise. As we strengthen our connection with these customers, we can maintain a wide reach, which I see as a continuing competitive advantage. I am certain that PODS is aware of this and is taking steps to avoid being left behind. However, I think the overall market is so expansive that we are not really encroaching on each other.

Okay. Lastly, regarding shareholder value, I want to address something you mentioned you would tackle this year. When I examine U-Haul, which has a market cap of $10 billion, and compare it to Life Storage, also at $10 billion and similar in size to our self-storage unit, I see a difference. If I add at least $1 billion for U-Box, that brings U-Haul’s valuation to $11 billion, which exceeds our market cap and doesn’t even consider our strong position in truck rental, our largest profit center. The market capitalization of U-Haul is significantly lower than the intrinsic value of our entities. We’ve managed our business well, but how can we better translate that into long-term shareholder value? Are there strategies in mind, such as stock splits, company restructuring, regular dividends, or possibly rebranding U-Haul, to enhance shareholder value?

I believe you will see progress on each of those items in the coming months, though it may not align exactly with your recommendations. Most of these decisions need to be made at the Board of Directors level. If you're interested in the development of a specific strategy, that falls under my control. However, for some of these other matters, we operate with an independent board. I won't make predictions in advance, but I can observe the trends and shareholder representation on the board.

Okay. Wonderful job of managing each of these businesses. It's a pleasure to watch how you chart the course for U-Haul and move it forward.

The next question comes from Craig Inman of Artisan Partners.

I wanted to first touch on the truck rental business and being behind and what you'll perceive for CapEx. Was wondering if it is 2 to 3 years behind what you need to do to turn the fleet, could you throw some numbers out there in terms of how much CapEx that could be? I'm guessing that you would look at it as a net number, not a gross number, but some data on what that could look like as we catch up from this period would be helpful.

Yes, I'm going to let Jason answer in a minute, but what happens with the fleet is if you're not fleeting up pretty much at an equal rate all the time. When you go to fleet up, you end up looking like a snake that swallowed a rat. We're seeing that, it's got a big lump in it. And then that lump has to work itself out. And in this environment, that lump is going to be inflationary as well as just the normal aggregation of increased capital. The inflation in vehicles if it's not a market leader, it's right up there with gasoline vehicle costs. And I don't know how long that the OEMs are going to be able to make pricing stick, but so far, they have demand outstrip supply. That's simple. And so we're going to see an effect of this inflation. Now on the other hand, we do sell some vehicles, and we're going to get inflated prices for those. But there's going to be a lag in there. So I've lived through this before. What happens is as you end up with a bunch of trucks that have, let's say, 20,000 miles and a bunch of trucks that have 80,000 miles. So you're still paying above desired repair expense on the one end. And until you kind of normalize it, so you have an even distribution of mileage, you keep getting these kind of what I'll call again the snake swallowing the rat, you get these lumps that have nothing to do with actual work performance, but have a lot to do with how the money gets spread around. With that, I'll let Jason to see if he can quantify it.

Sure, I'll provide multiple angles on this. Our anticipated growth capital expenditures for fiscal 2023 are now expected to be just over $1.5 billion. Initially, we projected it to be around $1.8 billion, but due to delivery slowdowns, I've adjusted that figure down to just above $1.5 billion. Of this total, approximately $230 million is attributed to inflation, reflecting the costs of these trucks compared to the past couple of years. Regarding the backup in rotation, I'll focus on the box trucks with multi-year rotation. This is a conservative estimate, likely on the lower end, but I believe we currently have between 8,600 to 9,000 trucks delayed in rotation, which constitutes a backlog valued at around $425 million to $450 million.

Okay. So does that mean it could take a few years due to the OEMs rather than your ability or willingness to spend?

Yes, it definitely relates to the situation, but let’s consider an example. If we were typically planning to buy between 10,000 to 20,000 trucks, we now have 20,000 trucks with 0 mileage while another 120,000 trucks are now 20,000 miles beyond our original expectations. The costs remain elevated until we can properly address the mileage distribution within our fleet. It often takes longer than I anticipate; that's been my experience. Throughout my career, we've faced these challenges, and they occur as they do. I'm unsure how we can price to transfer this inflationary cost to consumers. So far, we've managed to implement some pricing adjustments, and if this continues, we may find ourselves in a favorable situation. We should have access to the necessary capital. Therefore, from your perspective, it's important to understand that a challenge will arise, and it will happen. Don't be surprised when it does, but this won't indicate any change in the core business. It's strictly a financial issue that affects all our expenses, including depreciation, and hopefully it will positively influence repair costs. You'll notice that more vehicles will be under warranty and newer vehicles generally require less service compared to older, high-mileage ones.

Got it. Yes, that's why I was asking. I was curious how this plays out over the next two years. Obviously, U-Haul doesn't have a crystal ball, and neither do any of us, but I wanted to get a sense of what it could look like. It matters more because it makes managing the business easier to have a more evenly distributed mileage fleet based on years and the number of vehicles, rather than having a mix of many new and many older ones, which complicates fleet rotation management.

Yes, it does impact. I mean, again, you're going to wiggle through this. Right now, we've been wiggling for 2 years, we just can't get the fleet we want, okay? So we're adjusting constantly, and we're going to keep trying to optimize the mix. Of course, my druthers would be that the automakers come home at Christmas and get back to work, I have no idea what they're going to do. And I don't think they do either.

Right. And would your preference be, Joe, like we were before the pandemic, to get the fleet back to a newer state than maybe what average what the math would indicate?

Yes. I believe it's important to build up our reserves. We entered the pandemic with our fleet in excellent condition, but we did deplete some of that during the crisis. I prefer to be cautious and ensure we have enough reserves to handle disruptions like the pandemic and the supply chain issues that followed. This way, we can maintain our service to customers without causing them inconvenience. We want our customers to return repeatedly, as many do, and we aim to provide them with a quality experience. While Jason is focused on maximizing profits, my priority is serving the customer well, which has historically allowed us to achieve a reasonable profit as well. I remain optimistic about our ability to do so.

Yes, I was going to ask that. As U-Haul’s fleet ages, is the worst customer experience when a truck breaks down?

It’s possible, but it encompasses everything. The seat tends to sag a bit, and it never gets as clean as you would like. Eventually, we perform what we call a super clean, but it’s similar to when you have a typical car at home that becomes handed down to a 16-year-old—it can end up looking a bit worn, even though it was working well for one of the parents just the day before. This is pretty much how vehicles age, and if all your vehicles are in that state, it doesn’t create a happy environment. We want to maintain a better balance. Right now, we’re losing some of that built-up customer experience. We’re managing it alright, but if this situation persists for four years, we may need to find a solution. We are exploring alternatives since no one seems to have a definitive understanding of what’s happening with vehicles. So, at a higher level, we’re contemplating what actions we should take if this trend continues.

What metrics do U-Haul have beyond just the mathematics of getting business to keep a pulse on the customer and their happiness with the product with rental?

We conduct surveys with our customers. One of our key metrics involves sending them a text or email asking for a review, which consists of about five questions, followed by a space for them to rate us from one to five stars on specific aspects. We publish all of these reviews so customers can see them by location. I've been encouraging all my managers to rely on these reviews in their management practices. For instance, if a customer suggests that Mary deserves a raise, we take that into consideration, while negative comments about Steve's performance also provide valuable insights. I can analyze our database for keywords and different sentiments. About a year to a year and a half ago, I began noticing feedback highlighting kindness from our staff. This was a concept I hadn't consciously associated with our value to customers, but I realized that kindness was something they were increasingly looking for. This insight prompted me to emphasize the importance of kindness in our service, especially considering the general stress levels people are facing, including the stress of moving. Customers appreciate kindness, and I learned this simply by studying reviews. Furthermore, we track revenue and transactions by location and break them down into subcategories. If we notice a decline in revenue or transactions, we can quickly investigate what might be causing the issue. Overall, analyzing revenue, transactions, and customer reviews gives us a solid understanding of how consumers perceive U-Haul.

And that metric hasn't been getting pressured with the aging trucks and just the labor issues and all that.

There's always feedback regarding this. Recently, I had someone mention that when they went to the store, there was only one employee present, which wasn't effective. When they're not accepting payments and the store is empty, that's not the customer experience we aimed for. I'm grateful that the employee showed up for work because, without them, there would have been no one there. This situation is similar to my experience at a restaurant this week, where they announced they would be closing on Sunday due to staffing issues. We haven't had to close any stores because we have adequate staffing, but many others are under-staffed. It's important to create an atmosphere of kindness and goodwill in our business. People can resolve this if they work together, but those who come in with high expectations, treating it like a concierge service, may end up disappointed. It's a balancing act right now in retail, and U-Haul is not exempt from it.

That's an interesting point. I would like to echo Jamie's comments about U-Haul's ability to create economic value over time in the markets, which have at times acknowledged this value and currently seem disconnected from it. It appears that now might be such a moment. I don't want to keep repeating myself, but I am interested in your views on the relationship between the stock price and the business value, and whether you think this disconnect should influence regular dividends or dividends that are linked to the economic performance of the business. I'm just exploring this further, but I am curious if you have any thoughts.

I want to emphasize that my entire network is tied to the company's stock value. I don’t have extra cash set aside or investments in other ventures, nor do I work with a stock broker. My focus is solely on the stock. I’m eager to see growth. However, I don't consider myself an expert in managing stock value. When people like you or Jamie discuss it, I pay close attention, as that’s your area of expertise. How that relates to U-Haul is within my responsibilities, but the overarching principles are likely better understood by you, Jamie, and others on this call. I'm trying to listen to their insights. As I mentioned to Jamie, I believe he is being listened to. My ability to comment is limited due to board decisions. The Board has asked me to speak only on topics they designate, so until they provide guidance, I won't be discussing this further.

Okay. Yes. I'm not suggesting that U-Haul should focus on its stock price; rather, I'm emphasizing the gap between the economic value and the market value being generated, and how that difference is represented.

And that has to do with how effectively we communicate, we being U-Haul and I hear you on that.

The next question comes from Adam Sues of Yacktman Asset Management.

I wanted to follow up. One of my questions on the last call on the truck side. If I look at rental revenue per truck each year, and I know that's not perfect, but it's the data that I have. There was a big step-up in the last 2 years, especially the last year after that metric being flat for almost a decade. And I know there's lots of moving pieces, but how much of that do you think is enduring from a sense of pricing? How much of that do you think you can hold on to? You obviously provide a tremendous amount of value to the customer and should be charging for it, but how much risk is there that, that reverts back to that prior sort of decade average?

I don't believe we're going to see a return to previous levels. My earlier comment highlighted that we seem to be maintaining the increased activity we've experienced over the last 26 months. While the rapid growth in transactions has slowed, we can't determine a trend from just 2 or 3 months. The key question is whether these customers will return. Have we integrated them into our customer base in a way that encourages them to do business with us again when the need arises? I generally think the answer is yes. Over the past 2 years, alongside the increase in total transactions, we've also had some pricing power in the market. We've attempted to raise prices without being excessive. With rising demand, more customers are willing to accept slightly higher prices. We've been cautious with pricing, and in some cases, I had to remind local managers not to overprice, as we don't want to leave customers with a negative impression. Just because demand is high doesn't justify doubling prices. Our strategy remains focused on retaining customers. Pricing is complicated by inflation for us. We are confronting the need to pass on some of our increased costs, particularly related to equipment acquisition. Customers are somewhat accepting of price increases, likely due to broader inflationary trends. When I observe prices at the grocery store, it's clear that many people are noticing these hikes, and it seems everyone is talking about it. Currently, prices for vehicles are at the forefront of economic inflation. Although I don't have extensive statistics, it is clear that vehicle prices have risen significantly, and customers are willing to pay them. Recently, I read an article stating that GM has 100,000 cars waiting for components, which seems credible. However, I doubt that a sudden influx of those cars into the market will drastically change the situation. Even with those additional vehicles, I don't think it will make a significant impact. Whether the automakers can increase their production will influence ongoing inflation, and we will need to adjust accordingly. The automakers have, in my view, exploited their pricing authority successfully, and if you've been in the market for a new car recently, you would notice that consumer leverage in such transactions is minimal. I believe the automakers need to reconsider their pricing strategies, but the next couple of years will ultimately determine the outcome.

The follow-up on that, regarding the moving business, the press release mentions that customers have choices. If I focus specifically on the truck side, many public competitors have been reducing their fleet size. They also do not have the brand recognition that U-Haul possesses, which I believe is very valuable. How would you assess the competitive position and market share of U-Haul in the moving sector, particularly in terms of one-way moves compared to 5 or 10 years ago?

We have seen a slight increase in our market share, but one of the great aspects of capitalism is that when someone is successful, many others want to join in. Several companies are entering our space as a result. For instance, the reorganized Hertz has opted to return to the truck business now that they have a fresh start. This presents a challenge for us as Hertz prepares to compete in our sector, clearly indicating they have the necessary financing to make a strong entry. There are numerous players with funding who believe they can replicate U-Haul’s success. I hope our customers choose to stay with us, but this is the nature of capitalism. I advise my team to ensure that U-Haul remains the top choice for consumers. Thinking you have market dominance can lead to complacency, and we must stick to our core strategies to provide customer value. Throughout the pandemic, I emphasized the importance of impressing customers, because even if we are the only option available, that will not always be the case. Customers will remember how they were treated during those times. I have heard from many that they will recall their experiences with various companies. The competitive landscape is becoming increasingly crowded, and the rise of the Internet has opened the door for more market entrants. Companies like Uber and Lyft have successfully added value for consumers, showing that many believe they can outperform established players. About five or six years ago, we decided our aim was to disrupt the industry rather than be disrupted ourselves. To that end, we have implemented a 24/7 initiative for truck rentals, allowing customers access anytime, even late at night. We are also working to broaden our product offerings and increase our locations. We are focused on ensuring that, in the next five or six years, we remain a preferred option for consumers. However, competition will only intensify, as numerous eager enterprises aspire to enter this market. It’s a competitive environment, and that’s part of being in America.

Switching to the self-storage aspect, you've been making significant investments that seem to be yielding strong returns based on the earlier metrics discussed. There are some concerns within the industry regarding capacity and the development that is emerging, although it hasn't yet impacted the numbers as demand remains high. Looking ahead three to five years, how large do you believe the opportunity for U-Haul stores could be? What is the potential square footage you could add before reaching saturation in your current locations? Are there any obstacles related to capital or the availability of prime locations that might hinder your progress?

I believe the challenge lies in execution. The storage market varies significantly by location, resulting in both saturated and unsaturated areas. Moreover, consumer awareness in the storage market is still lacking, in my opinion. When I first made my projections at the age of 23 or 24, I estimated that the market could reach 1 square foot per person in the United States. However, we are currently observing markets with 22 or 25 square feet per person, which indicates I have often underestimated the market potential throughout my career. The market dynamics are quite varied; for example, New Jersey presented a strong opportunity 7 to 10 years ago, but that has changed as costs have risen and competition has increased. I often expect some fluctuations in the market. Nevertheless, the current environment of readily available capital at low interest rates, even around 5%, remains favorable. I don't anticipate that these rates will deter investment, as there is significant capital pursuing opportunities. There is potential for growth, although the success will depend on effective selection and management of operations. My aim is to improve in these areas, as market conditions are unlikely to be a constraint on a national scale, although specific cities may experience limitations, which we have seen in instances of overbuilding leading to declining rates for a few years before recovery.

Okay. Well, congrats on the results and good luck finishing executing for the rest of this year.

The next question comes from Steven Ralston from Zacks.

Congratulations on a solid quarter. I have two questions, one is a bit lengthy and the other is quite brief. Please correct me if I'm mistaken, but it appears that the quarter shows a strong pricing dynamic for your business while the moving rental segment has decreased to mid-single digits. Nevertheless, demand remains solid. There are two exceptions to this trend: the U-Box business and self-storage, which are both experiencing double-digit growth. The challenges you face include rising repair costs, personnel expenses, and freight costs associated with U-Box, which seem to be influenced by external factors. Specifically, you're dealing with delays in new vehicle deliveries and inflationary pressure on personnel costs. While it's reassuring that you've navigated similar situations before, do you think this time is somewhat different, considering that around 20% of your revenues come from rapidly growing sectors like self-storage and U-Box, which might help reduce cyclicality in your business?

I've been focused on this, hopeful that it's accurate for over 20 years. Only time will reveal how it unfolds. If we look at specific examples, such as St. Louis, we can see that both factors are providing us with greater stability and reduced cyclicality. In Calgary, however, we haven't managed the self-storage or U-Box services as effectively, which means we haven't tackled the cyclicality there as well as we could have. This presents opportunities, and that's how I view the situation. Historically, if we look back 40 years, September would hit, and we would start laying off employees. It's straightforward; we have to get through the tougher times, and we've not had sufficient revenue to support our team. Now, we do have enough revenue and need to be cautious in order to support the team, and as our businesses expand, our capacity to do so will increase. I think you have an accurate perspective on the situation.

And I think I've been on this call almost 3 years now, and there's always a question of when you break out U-Box, but when I look at the numbers, even though it's growing faster, it hovers between 7% and 8.5% of your revenues, and that's just other revenue, there are other things in there. It seems like that it would take at least mathematically 2 or 3 years before that even gets over 10%, and you probably don't have to break it out until it's actually on an annual fiscal basis. So we're talking 2 to 3 years out minimum. Does that seem about right to you?

I want to emphasize that we aim to grow U-Box rather than slow down its development. I'm fully committed to this growth. My son, Sam, is in charge of the U-Box division for a reason; he's gaining valuable experience and knowledge about the business from the ground up. U-Box is an essential part of our future, and I want him to be well-prepared for that future.

This concludes our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Thanks, Danielle. I'd like to thank everyone for participating in the meeting, and I wanted to take this opportunity to remind you that on Thursday, August 18, we have a few important meetings for shareholders. At 09:00 a.m. Arizona time, we're going to start off with our Annual Shareholder Meeting. Once again, this is going to be a live video feed broadcast over the Internet, and we encourage you to participate that way. And then 2 hours after that, at 11:00 Arizona Time, we're going to do our virtual analyst and investor meeting where we're going to have executives available for a broad range panel of questions and answers. Please feel free to start submitting those questions to Sebastien ahead of time, and we look forward to speaking to you in a few weeks. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.