Good morning, ladies and gentlemen, and welcome to the U-Haul Holding Company's Fourth Quarter Fiscal Year End 2025 Investor Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call is being recorded on Thursday, May 29th, 2025. 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 U-Haul Holding Company fourth quarter fiscal year end 2025 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 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 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-K for the year ended March 31, 2025, which is on file with the US Securities and Exchange Commission. I'll now turn the call over to Joe Shoen, Chairman of U-Haul Holding Company.

Hello, everybody. What you see especially in our fourth quarter results are decisions made in prior years working their way through the financial statements. On a more positive note, the original equipment manufacturers appear to have decided to make reliable, fuel-efficient internal combustion engine vehicles in volume at improved pricing. OEMs and U-Haul both need to get some emissions regulation relief from the administration to be able to better serve our customers with truck products. U-Haul, in the meantime, has deflated three quarters of our pickup fleet as we see no path to profitability with more than a small specialized pickup fleet. Resale prices on both vans and pickups are steady or improving. I expect we may struggle through October on resale pricing, but beyond then, it appears to be a clear path. Our customers are expressing optimism, at least our truck share customers are. Storage remains a bright spot wherever we execute with precision. Our programs work. It's less bright where we execute with less precision. Both self-move and self-store are consumer needs, and I expect those needs to continue. It is my challenge to make U-Haul the customer's best choice. With that, I'll turn it to Jason to kind of get specific on the numbers.

Thanks, Joe. So yesterday we reported a fourth quarter loss of $82.3 million compared to a loss of $863,000 for the same quarter last year. Our full year fiscal 2025 earnings were $367.1 million, down from $628.7 million in fiscal 2024. In terms of earnings per share, the fourth quarter of this year was a $0.41 per share loss for non-voting shares as compared to less than $0.01 a share loss in the fourth quarter of fiscal 2024. Earnings before interest, taxes, and depreciation (EBITDA) at our Moving and Storage segment increased by $5.6 million for the quarter to $217.3 million, largely from revenue growth. Our full year fiscal 2025 EBITDA increased by just under $52 million to $1,619.7 million. Included in our earnings release and financial supplement is a reconciliation of EBITDA to GAAP earnings. I'm going to highlight three large differences between the two. First, fleet depreciation from the increased level of fleet acquisitions and the cost per truck over the last several years. Second, the reduced gains on the sales of retired pickups and cargo vans. And third, the declining interest income at the Moving and Storage segment as we reduced our short-term cash balances due to reinvestment. Of the $0.41 decline in earnings per share for the fourth quarter, about $0.16 was from fleet depreciation, $0.12 from the decrease in gains on the sale of rental equipment, and $0.10 from the decline in interest income. For the fourth quarter, our equipment rental revenue results had a $29 million increase or just over 4%. Of note, during the prior year, we benefited from the extra day attributable to the leap year. I mention that because it added somewhere around $11 million to last year's results. For the fiscal year, we finished up just over $100 million for equipment rental revenue, that's about a 2.8% increase. During the fourth quarter, both our one-way and in-town transactions increased compared to last year at that time, as did our revenue per transaction. Our trailer and towing fleets also experienced improved revenue results. For the month of April and now into May, we've seen revenue continue to trend positively compared to the same periods last year. Capital expenditures for new rental equipment for fiscal 2025 were $1,863 million, that's a $244 million increase compared to fiscal 2024. While proceeds from the sales of retired rental equipment declined by $76 million to a total of $652 million. This is a combination of fewer pickups and cargo vans sold, along with slightly lower average sales proceeds on the units that we did sell. Our initial projection for net fleet CapEx in fiscal year 2026 is $1,295 million, that's compared to approximately $1,211 million in fiscal 2025. Switching to self-storage, revenues were up $18 million or 8% for the quarter. Our 12-month results were also up 8% or just under $67 million. Average revenue per occupied foot continued to improve across the entire portfolio, up approximately 1.6%. And if you look at just the same-store piece of that, we were up 3%. Our average move-in rates for the same-store portfolio were up just over 4.5% compared to the fourth quarter of last year. Our occupied unit count at the end of March was up just over 39,000 units compared to the same time last year. This time last year when we were talking, that same statistic was a 31,000 unit improvement, so we picked up the pace a bit compared to where we were last year. During fiscal year 2025, we added 82 new storage locations, 6.5 million new net rentable square feet across 71,000 new rooms. Our average occupancy ratio across all of our own locations during the fourth quarter declined about 2.5% to just over 77%. If you look at just the same-store portfolio, average occupancy experienced about a 50 basis point decrease to 91.9%. During fiscal 2025, we invested $1,507 million in real estate acquisitions along with self-storage and U-Box warehouse development. That's a $249 million increase over the previous year. During just the fourth quarter, we added 1.6 million new net rentable square feet. About 1.5 million of that was newly developed locations along with expansion at existing facilities. We currently have just under 7 million new net rentable square feet being actively developed, and another 8 million square feet in the pipeline behind that. Our U-Box revenue results are included in other revenue in our 10-K filing. This line item within the Moving and Storage segment was up just under $14 million, of which U-Box was a primary contributor. We are seeing both U-Box moving transactions and the related storage transactions grow. Over the last 12 months, we've increased our coverage storage capacity, or warehouse space for these containers by nearly 25% and we're going to continue to see growth in that area. Operating expenses at Moving and Storage were up $53.6 million. Starting off on a positive note, we had another quarter of declining fleet repair and maintenance costs, this time down $6.7 million. Some of the larger expense increases that we had, personnel costs were up $12.8 million, although that was largely in line with our revenue increase. Other costs, including utilities, property taxes, and shipping costs associated with our U-Box moves were up a little over $11 million. The largest outlier for the quarter was our liability costs associated with the fleet were up $27.8 million. As of end of March, our Moving and Storage segment had cash and availability totaling $1,348 million. On our Investor Relations website, we posted some supplemental materials in addition to the earnings release and 10-K filing that are right on the front page for you to click on.

Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Steven Ralston from Zacks. Please go ahead.

Good morning.

Good morning.

Looking through the numbers, I noticed and obviously you're in a seasonal business that the fourth quarter was basically the strongest in the last six years exiting out 2021, which was an exceptionally strong year. And I'm interpreting this as the business itself, the topline business is getting stronger. First of all, I'd like to see if you can interpret that as I do. And secondly, I know Joe talked last year at the beginning of the fiscal year about his outlook given decades of experience, and he basically said modest growth. I don't know if you gave the exact numbers, but I interpreted like 2% to 3% topline growth. With all his decades of experience, what's his current outlook for the topline, excluding the depreciation and the other things that are going on?

Yes, this is Joe, Steve. I think it's picking up. We're seeing signs that customers are positive. And of course, there are all these forces that you can read in the paper and go crazy. But at the base store level, I think we're seeing a little bit of consumer optimism and a willingness to start on some sort of a moving adventure. Every time someone moves, it's an adventure to put it politely. So if they're optimistic, they're doing a little more business and I see them doing a little more business with this. They're accepting a little bit of rate increase. And when we execute with what I call precision, they're good with all this. It's not that people don't have the ability to spend money. They just want to see good value or maybe even great value for the money, which we should be in the position of providing. We're kind of at the great value end of the spectrum. And so I'm pushing that real hard with my troops, and I think we're seeing a positive response from the customer.

Thank you. Now moving over to depreciation, you spent a lot of time on that in this call and also in the press release. I consider depreciation just partly the nature of the business that you're in. I mean, you're in a constant investment stage of capital for replacing your vehicles and increasing capacity, and depreciation is just a byproduct of that. And you use it well to offset, as an expense, a non-cash expense. And at some point, you'll be able to benefit from that when there's an increased demand. This is just the nature of your business in the self-storage industry and also self-moving, obviously. But you're rather downbeat on it. I mean, this is just part of your business. Could you just comment on that? I mean, maybe some investors don't understand that.

I'm with you. Depreciation on self-storage is money in the bank. If you want to scratch me deep, that would be my response there. It's money in the bank. Relax. Equipment is different. Equipment really is a depreciating asset. And through this time, we had a number of things that happened. The cost of acquiring equipment exceeded our upper limit of projections. It was something that we've not seen in 30 years. And then that was coupled with a shortage of equipment, which runs repair expenses up and causes us in the present year to be acquiring more trucks than we would on a normal adjusted basis. But I think you're absolutely right. Equipment depreciation, if we can have a reasonable handle on how we bring the equipment in and how we take it out, should match up to revenues in a positive way over a three or five-year cycle for sure. And I expect it kind of is, but there's this anomaly. The automakers are starting to fess up to this now. If you read the press, they've been grossly subsidizing electric vehicle misadventures by overcharging the people who buy internal combustion engines, whether consumers or fleets. That has created a net loss for everybody. The automakers lost money because they couldn't sell the electric vehicles and make any money. And then we've arguably paid too much for the fleet. But that's now starting to come back towards normalization. We're not quite there, but we're improving. The feedback I get from the automakers is they're pretty much done with the charade of net zero. They're going to allow themselves to go back to their core competencies. Most of these people are excellent manufacturers if you let them go. They have, whatever you want to say, drunk the Kool-Aid and haven't done what is their forte. I think they're focused on getting back to that, and that will benefit us although there will be some bumps getting there. I think it's going to benefit us. I saw an article this morning where Mary Barra commented positively on tariffs. The article speculated whether she was trying to curry favor with the Trump administration or if she actually believes this. But she may be correct. These are complicated equations that affect the economy, and costs that are just wasted, in other words, money spent to develop a vehicle that you can sell for $50 but cost you $100, that's just pure waste in the economy. We've been victims of that, and I think that is coming to a halt. As that comes to a halt, the statement that depreciation is a normal thing will be absolutely true. It should be a normal thing. I don't see chagrin, but I am disappointed that we didn't properly anticipate the extent to which this could go. Our projections did not encompass what actually happened with either the decline in resale value or the pressure that automakers would put on acquisition prices. Those are now coming back where they're more comprehensive and normally work well for the economy. I expect this to straighten itself out; give it a little bit of time. Again, on storage, depreciation is just a piggy bank. It's not a cost. On trucks, it's real, but it should match to revenue.

Thank you very much for taking my questions.

Sure.

Your next question is from the line of Steven Ramsey from Thompson Research Group. Please ask your question.

Hi. Good morning. Maybe to start with the U-Box growth. It jumped up meaningfully in the quarter and is growing three times faster than Moving. What do you attribute that step up to? I saw the comment that Moving and Storage containers are both increasing. Were they increasing at similar levels on a year-over-year basis?

Well, this is Jason. I'll start with that. The moving transactions, the U-Box moving transactions are growing at a faster rate than the U-Box containers that we're keeping in storage. Now both are in the plus 20% range. It's just that the moving transactions are at the higher end of that; the storage transactions are at the lower end of that. So with as many containers that we have acquired and warehouse space that we've built out, our big opportunity is to keep more of those containers in storage.

Okay. And then the 17% growth, I mean, obviously, you can't pinpoint it too specifically, but is that the right sort of range to think about going forward, or is it still something strong but maybe more moderate than that?

This is Joe. I think my expectation is to stay in that range. The market is vast. We've done this largely without cannibalizing our existing customer base. So we've been able to get growth in both of those segments. I see that U-Box has a higher growth rate than the truck share operation for many years to come. It's smaller, and the market is less explored. It's not a simple cannibalization of our other customers. Yes, I think you can project to be higher, and I'm certainly banking on that.

That's great to hear. I wanted to shift to real estate investments next year. Your storage pipeline is down a million or so from the prior quarter and the U-Box warehouse space grew meaningfully last year. Do you expect real estate CapEx to be at similar levels in FY'26, or do you expect it to moderate a bit? Just maybe your logic behind where you see it going?

I'll touch on it and then I'll let Jason. He's the voice of reason here, which I think is the position you'd like him to play. I'm the voice of let's get there before somebody else does. With U-Box, we've done a lot of just playing to get positioned in markets where we weren't previously positioned. With the exception of a few major markets, including Los Angeles, we're woefully underrepresented with U-Box in Los Angeles, but that may end up being the situation for the next 20 years. We've added U-Box capacity throughout North America, and I don't think we're in an emergency construction phase, which I would have said a year or two ago. Now we need to calmly exploit the asset that we've built because that's the whole point of this.

Okay. That's great. And then last one for me, again, to stay on the real estate side of things. You've added a lot of storage capacity online recently that is self-storage. The maturity period, is it still moving at the historical clip transitioning from day one to year one, two, and three? And you have a larger percentage of units in that early ramp-up phase right now, it seems. Can you talk about the impact that has on EBITDA and the timeline of transitioning from money losing to EBITDA positive as storage units mature?

Steven, this is Jason. So our rough estimate is usually approaching 70% occupancy. You're paying your bills. We're not having any issues on the lease-up of the portfolio through the first three or four years. I would say that if there's any slowdown, that we've seen is in the year going from year four to five, where you're going from the low 80s to getting into the low 90s. That's maybe a couple of percentage points slower than what we've seen before, excluding the COVID years, which were unusual. This would indicate more of a management challenge versus a consumer challenge in filling the facility up to the 90% plus. Otherwise, in the first three, four years, as we're monitoring these new facilities that come on, I'm not seeing any real weakness in how they're leasing up.

Okay. That's great. Thank you for taking my questions.

Your next question is from the line of Andy Liu from Wolfe Research. Please ask your question.

Hey, good morning, everyone, and I appreciate you taking the question and really excited to be on the call for the first time. So really to kick it off, you talked about a lot of the positives early on the call, right, on the topline, and in the deck, you mentioned higher transaction, higher revenue per transaction; it was all great news. So the big topic today is the tariffs, right, and that happened early April. As you look at the business on a month-to-month basis in terms of customer traffic, have you guys noticed any meaningful shift, perhaps folks that were thinking about moving saying, maybe I’ll just stay put given uncertainty or anything like that?

I'll answer this. You're going to get my opinion because there isn't a clear-cut fact on that. But my observation is that if we communicate strong value, the consumer is still positive. They're a little pickier, and where I have stores that are poorly managed, my business is down. That would be my answer to you. I will never get every store managed with precision, but I can get most of them there, and that's my task. I'm curious about whether tariffs will make consumers uncertain and cause them to do nothing. When people are uncertain, they typically don't move. But we're seeing people move. So my answer would be I don't think it's as uncertain as we might think.

Okay. Got it. Again, no, that's totally fair. I know you must have been around for a very long time; you have super experience here. So I wanted to get your sense on how you've seen things through the cycle before. What is your outlook as you look at where you are in the cycle now, and how might things play out on the housing and moving side?

Yes. I think, again, moving is a need for the consumer. That continues. The question is, it used to be, for much of my career, can we get them to do business with anybody? Are they going to move in the trunk of their car or the roof of their car or some other way? They've always been moving. Watching investor-moving is a bit like watching them move in wagons. The question is what's the mode, and can you get them into a commercial transaction that works for both sides? Can they see it as a value, and can we squeeze a profit out? I think that’s what we're working on, not so much stimulating moving demand or trying to get people to move more often. But can we get more of them to enter into a commercial transaction with U-Haul? That's our task. If people shut down and they have, I've seen it where they've shut down; it immediately reflects in the distance of moves in our statistics. When the average distance they move declines, that's a growth statistic, but it's a good indicator of anxiousness in the consumer group.

Okay. Got it. That's super helpful. Moving on to the storage side, I appreciate you putting out that slide on the revenue upside on the development pipeline. A couple of quarters back, we talked about developments bringing in yields around 10%. With tariffs or immigration policy potentially affecting input costs and labor, could that impact the yields you initially expected for the future pipeline?

Andy, this is Jason. I've spoken with our real estate folks on the development side. Two areas of concern would be what goes into the concrete mix and then the steel. In talking with our largest steel suppliers, we don't anticipate any significant increases in the cost of steel due to tariffs right now. Likewise, we haven't seen anything manifest itself yet in the cost of concrete. Excluding the threat of tariffs, we've seen the cost of construction gradually coming down for us.

That's a combination of us being a bit smarter and also I think people are hungrier, and we can get them to sharpen their pencils. It doesn't mean that actual costs have declined, but what we're paying is improving.

Okay. Got it. That's fair. It's helpful. It's really great that you’re able to control those costs. Moving on the storage side, your company is sometimes viewed as a combination of operating and real estate aspects, and there can be disconnects in valuation. Looking at your storage business, you own a significant footprint and when looking at other self-storage names or the private market, the value of a self-storage facility is expressed at about $200 a foot. With that in mind, do you think there's a disconnect in how folks are looking at the value of the storage portfolio?

This is Jason. We've been trying to provide more details to help people value that. That's an indication that we think there's a disconnect, and as people understand us more, we believe that the company is worth more than where it's trading. We're working with analysts to communicate that story. Valuing the stock is better left to those listening on this call. Our goal is to provide more information to help our investors.

I appreciate you taking my questions today. I'm excited about diving deeper into the name and looking forward to working with you guys more. Thank you.

You're welcome.

Your next question is from the line of Jamie Wilen from Wilen Management. Please go ahead.

Yes, as a follow-up to the previous question, when you look at the self-storage industry, whether they’re public or private, and consider the growth of your self-storage and U-Box, which most other self-storage entities don't have, the value of self-storage and U-Box exceeds the current stock price. It seems like the truck rental business is being valued at less than zero. So one would hope that in addition to merely providing information to Wall Street Analysts, the company has a plan to reduce that valuation gap since storage is so undervalued relative to its peers.

I think that's a great comment, Jamie. As you know, I've invested in this, and so optimizing that is in my selfish self-interest. I welcome input on the subject and am eager to get there.

Would you consider repurchasing shares at this tremendous discount to intrinsic value to close that valuation gap?

I'm torn on that. We did some repurchases, I don't know, what, 10 or 12, 15 years ago. My family liked it because it felt like they were getting richer, but it didn't give any more money to spend. I don't know if it helped a lot, but at the same time, Jason is keeping a pretty conservative approach to ensure we remain liquidity and flexible because there is significant uncertainty in the financial markets relative to five years ago. It's not been proposed. There's no proposal in front of the Board or any member pushing for share buyback. I wouldn't oppose it if someone made a compelling case, but it's not on the table right now.

Okay. Understood. Financially, the Property and Casualty business, operating profits declined in the quarter from $25 million to $10 million. Is there any particular reason for that decline?

Jamie, this is Jason. This is due to one of my least favored accounting rules regarding valuing common stock that we hold in our investment portfolios at market value and running that change through earnings. We have a portfolio of common stock at the Property and Casualty company. Last year, during the fourth quarter, it went up in value compared to the beginning of the quarter, resulting in a large gain. This year, it happened to go down in value, and combined, I think that was something like a $10 million swing from holding the common stock, not from anything actually happening.

Understood. As a shareholder, it intrigues me with the thought of potentially selling off our insurance businesses and using that liquidity to repurchase shares and close the valuation gap. Any thoughts on that direction?

Yes, I think that's a valid consideration, and it's discussed. I don't want to tell you something that will happen, but the idea has been clearly discussed.

Okay. All right. Thanks, fellas. Appreciate it.

Your last question is from the line of Stephen Farrell from Oppenheimer. Please go ahead.

Good morning. I have a few questions about the fleet. What is the current age? And how does that compare to pre-pandemic levels?

I don't have an exact calculation, as we don't run that statistic. If you look at unused mileage, in other words, let's take 130,000 trucks and how many miles do we have left in that fleet on a per truck basis compared to pre-COVID, we would have had the highest number of unused and therefore available miles in the fleet. We have steadily been increasing that, and this year, we'll increase it again. I was thrilled prior to COVID because I thought we'd got the company into a strong position, and then COVID came and we had our fears and then to acquire more capital trucks. The automakers' inability or unwillingness to manufacture the trucks also contributed to our decline. By the end of this build, I think we could be at about 90% of what we had pre-COVID. I don't have that exact calculation. We look at it twice a year with many assumptions. We're gaining ground, which is the important point.

Right. I just wanted to follow up with that. When there were no supply constraints with the fleet rotation, I always thought of maintenance expenses increasing as depreciation is decreasing, and they would balance out over the life of the vehicle. Is it now that we have a significant increase in depreciation outpacing the decrease in maintenance expense? Is that just a new normal because there was a big lump of spend this year and last year, and not much before that, or do you think it will normally balance out?

I would not characterize it as the new normal. Again, I expect that automakers will continue to improve quality and maybe even pricing ahead. They have room for growth if they focus on it. They are very knowledgeable people. In my conversations with them as of late, this has been their focus. If they get back to that, I believe it will trickle down to us.

There are no further questions at this time. I would like to turn the call back to our management team for closing comments. Please go ahead.

Well, thank you, everyone, for your support. We look forward to speaking with you in August after we report our first quarter results. Thank you.

This concludes today's conference call. Thank you very much for your participation. You may now disconnect.