Good morning, everyone, and welcome to the U-Hall Holding Company First Quarter Fiscal 2026 Investor Call. This call is being recorded on Thursday, August 7, 2025. I will now turn the conference over to Sebastien Reyes. Please proceed.

Good morning, everyone. Thanks for joining us. Welcome to the U-Hall Holding Company first quarter 2026 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 the 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 in Form 10-Q for the quarter ended June 30, 2020, which is on file with the U.S. Securities and Exchange Commission. I will now turn the call over to Jason Berg, Chief Financial Officer of U-Hall Holding Company.

Thanks, Sebastien. I'm speaking to you today from our offices here in Phoenix, Arizona. Joe Shoen, our Chairman and CEO, is unable to attend today's call. However, he will be available to speak to you at length and answer questions in 2 weeks at our Annual Investor and Analyst Webcast. We do have Sam Shoen, 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 $0.73 per non-voting share this quarter versus $1 per non-voting share last year at this time. Earnings before interest, taxes, and depreciation, which I'll refer to as adjusted EBITDA, in our Moving and Storage segment increased 6% or nearly $31 million for the quarter, driven by strong revenue growth across all of our product lines. Included in our release and our financial supplement is a reconciliation of adjusted EBITDA to GAAP earnings. The largest difference between adjusted EBITDA and GAAP earnings is depreciation, which is also the cause of the largest negative variance in earnings year-over-year. During Q1 this year, we swung to a $22 million loss on the disposal of retired rental equipment compared to an $8 million gain last year. Cargo vans purchased over the last 2 years that are now being sold came into the fleet with higher initial costs, and current market resale values do not reflect this, 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 $0.27 decline in earnings per share in Q1, $0.21 is from fleet depreciation and $0.12 is from the increase in losses on rental equipment sales. For Q1, 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 Q1 of last year. Overall transactions largely held steady with what we saw in Q1 of last year. For July, we've seen revenue continue to trend positively compared to the same period last year, but we haven't yet seen a significant improvement in transactions. Capital expenditures for new rental equipment in Q1 were $585 million, 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, with storage revenues 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 just under 1% per occupied foot. Our same-store occupancy decreased by 100 basis points to just under 93%. In July, we initiated a system-wide effort to increase the number of available rooms at our existing locations by focusing on delinquent units. While this effort will not directly affect revenue 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 a slide that shows where future storage revenue growth is coming from, and the future revenue growth from our existing portfolio has increased, partially due to us making those rooms available to paying customers. During Q1 this year, we invested $294 million in real estate acquisitions, along with self-storage and U-Box warehouse development. That's down $108 million from Q1 of last year. Over the 3 months, we added 15 locations with storage, amounting to 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 U-Box revenue results are included in other revenue in our 10-Q filing, and that line item increased by $21 million, of which U-Box is a large part. U-Box revenue alone was up about 16%. We continue to have success increasing U-Box moving transactions as well as the number of these containers that customers are keeping in storage. Moving and storage operating expenses increased by $44 million for the quarter. As a percentage of revenue, we were even with Q1 of last year. The largest components of this increase were personnel, which was up $20 million, liability costs up by $17 million, and an increase in fleet repair and maintenance due to the increased size of the fleet, which was up about $5 million. At the end of June this year, cash, along with availability from our existing corporate revolver in the Moving and Storage segment, totaled $1.19 billion. We are holding our 19th Annual Virtual Analyst and Investor Meeting on Thursday, August 21, at 2:00 p.m. Eastern Time. This is an opportunity to interact directly with company representatives through a live video webcast, which you can find at investors.uhall.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 send them to Sebastien, or you can just submit them live during the webcast, which would 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.

Our first question comes from Steven Ralston from Zacks.

I had 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 U-Box, which I know Sam heads. U-Box once again achieved double-digit growth this quarter, and it's through that tried and true formula of U-Haul that by adding capacity and then specifically in the case of U-Box, 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 as a segment as it reaches 10% of revenues. How much potential do you still think there is left in U-Box? It's been growing. Do you think it's like 10% done or 25% done? Or is it just too early to tell?

Thank you for the question, Steve. This is Sam speaking. I appreciate your thoughtful observations. It’s still quite early to provide a definitive answer. I lean towards optimism and believe there’s no reason why U-Box couldn't reach the same level of success as U-Haul today. We're just beginning this journey. We need clearer insights from consumers regarding their understanding of the product and service. With traditional U-Haul, whether you're 6 or 96, it's widely recognized and understood. When you see a U-Haul vehicle, its purpose is clear. However, the same clarity isn't yet present for consumers with the U-Box portable moving and storage concept. Once they grasp it, we can start to more accurately respond to your question. The market potential is significant, and as time progresses, U-Box will likely become an essential part of U-Haul Company's offerings.

Can you tell me how many locations in the United States have functionality for U-Box? It's essentially the same question.

Sure. So it depends on what you're defining as a U-Haul, and, 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 somewhere between 5% and 10%. If you're looking based on company stores, you're looking a little closer to around half. So needless to say, that's not necessarily assuming that you've got adequate build-out of the U-Box product piggybacked at those locations. 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. We're just going to have to keep building it out. If what you're trying to do is make a projection to say should this double, triple, quadruple, 10x, you're going in the right direction.

Our next question comes from the line of Steven Ramsey from Thompson Research Group.

I wanted to start with U-Box, and I would just assume that transactions in U-Box are more associated with One-Way moves. Are you able to see if U-Box One-Way moves are growing faster than the rental segment One-Way moves? Or said another way, with One-Way transactions being up, is that a rising tide for U-Box?

Well, this is Jason. I'll start and just set the scene with the truck One-Way transactions, truck and trailer. Those have been flat to slightly up, with 10,000 or 20,000 transactions in the quarter. So I'll let Sam share his experience with U-Box One-Way transactions.

Yes. U-Box One-Way transactions are leading the way. They're exceeding our truck rental transactions as a percentage. In terms of a rising tide, I think they're decoupled in many ways. I certainly don't view the performance of the One-Way shipping of U-Box product in relation to the truck rental numbers as a limitation or suggest that one number is dragging down the other. I don't necessarily see it that way. I expect U-Box performance as a percentage to surpass the truck rental gains. There is little doubt of that.

Okay. That's helpful. And then wanted to think about the margin profile of the business, 35%, virtually flat year-over-year, even with Moving transactions up and then Storage and U-Box 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 a proxy for cash flow, adjusted EBITDA, the EBITDA margin, and then the share of equipment rental revenue versus the share of storage revenue. We don't have U-Box revenue in there yet. The 2 newer revenue lines, Storage, which is strange calling that newer, but it's newer than the original equipment rental revenue. 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 is very hard for us to break it out separately, but we've seen that when we add more of each of those products to a location, profitability improves.

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

Yes. On the slide in the deck that we have that shows where future storage revenue is coming from, there's a portion that shows Storage revenue from existing locations, or what we call non-same-store locations, those that haven't hit 90%. That number, taking it from where it is today to where it would be at 90%, is around $260 million, give or take. By the time we get there, there will likely be rate increases that will be a little bit more significant. Those are at locations where we've opened, and the expense load has largely been recognized in our financial statements. So that additional revenue, a very rough estimate would be maybe 80% of that, give or take, will flow to the bottom line. In some locations, it will be more than that. At some of the newer locations, that might not account for all of it, but generally, the headwinds we are facing right now on the EBITDA margin or on the GAAP operating margin are truck-related. 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. The fleet is in good condition regarding accidents. The severity of those we're encountering is slightly more significant, and we're building reserves back up, which is affecting the margin. This does hit earnings and EBITDA for both metrics. The earnings cycle is this depreciation headwind we face. We will have to work through this cohort of trucks and cargo vans we purchased over the last 2 years. After this year, spending on the box truck fleet will likely begin to slow a bit, and we should peak on depreciation and then hopefully trend back down.

Okay. That's helpful, Jason. And the 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 gradually keep coming down over the next few quarters? Or is there a level of developed and pending square footage that you think is a minimum level that we do not want to go under?

There's certainly an amount that we don't want to go under. I don't think we're close to that right now. We've been trying to 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 ensure we have enough for the long term. The way the fleet has consumed some capital during this timeframe has led us to pull back a little bit on real estate spend. However, you don't want to pull back too much, or you risk what happened to us during COVID, where we shut a bunch of projects down, and it takes a while to restart them, which leads to unusual peaks. If we could stay somewhere in the 4.5 million to 6 million square foot range each year, I believe that's something we can operationally handle. If we do that, spending is likely to continue to decrease.

Our next question is from Andy Liu from Wolfe Research.

So really just wanted to double click first on the transaction volume. You guys talked about kind of flat to maybe slightly up in the quarter. Just wondering if you noticed anything in terms of sort of like the month-to-month trends. It's flat in the quarter, but had the month-to-month trends, kind of like improving through the quarter or is it kind of pretty steady through the quarter? Any color would be helpful.

Sure. All of our comparisons are year-over-year because our business doesn't compare well month-to-month. Our best quarter for Moving is the second quarter, followed by the first, with the third next and the fourth being the lowest. We always compare with how we performed the previous year since moving activity generally tends to be similar year-over-year. Regarding July, we're seeing revenue growth due to the rates we need to charge because our business costs have increased. However, we haven't seen any traction in transactions yet. We are currently working through a process. The size of our fleet has increased; compared to last year, we are up about 5,700 trucks, and from last quarter, we're up about 5,000 trucks. Additionally, we've added close to 800 locations this past year, including dealer and company locations. We are focused on placing this new equipment productively and efficiently opening dealers. If this approach does not work, we may end up increasing truck sales and reducing fleet size. However, we currently see an opportunity to utilize these trucks. To illustrate the challenge we face, in the last two years, the number of locations we've added is equivalent to the size of our second-largest truck competitor. Managing that many locations and distributing trucks while routing customers is quite challenging, and that is what we are navigating now while heavily investing in the fleet. Our plan is for all of this to yield positive results in the years ahead.

Got it, and I apologize for the confusion. I should have phrased my question more clearly. I was asking about the monthly trend in terms of year-over-year performance for April, May, and June. Has it been flat on a year-over-year basis for all three months, or has there been some improvement from April to June?

Got it. Okay. I went astray on that one, didn't I? So the revenue has been steadily up year-over-year. I would say that transactions have some on weeks and some off weeks. We deal with the same issue we've dealt with since the very beginning of the company: people tend to move at the end of the month. You get this cluster of transactions at the end of the month. Depending on how the calendar falls year-to-year, you can see these weird oddities. So looking at a 3-month period tends to flatten some of that out. What I would say is we still haven't gained traction, however you want to look at it. Month-over-month versus last year, or for the 3 months, the traction hasn’t hit. I'm not seeing that in July yet either. However, it's not like we're far off. There are some weeks that we're up on transactions. We're right there.

Okay, that's helpful. Now shifting to the storage segment, I see you've added new slides, which indicates you're focusing more on this area. I want to ask about the slide discussing future revenue projections. Have you considered what that would look like on an NOI or EBITDA basis? I know you don’t disclose margins, but I'm interested in understanding how the revenue projections impact the bottom line.

Yes, I just answered the question for Steven. Regarding the non-same-store locations that are already open, I would estimate that about 80% of the additional revenue from those should impact the bottom line. For the locations that have yet to open, it's more complicated since most of them feature all of our product lines. I can't provide a definitive answer on that right now as I am currently breaking out storage revenue as part of the overall analysis.

No. It's really just to give you on that front. So kind of, I guess, asking another way maybe on the development, the spending side of it, how much does it cost for you to put this pipeline up? As I look at your slides, if you have a 5-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 a good proxy for the spend going forward.

Yes. I don't know if I would still be here if I allowed a lot of $220 a foot storage. The $5.8 billion represents the amount we've spent over the past 5 years. It's not entirely for the 26 million square feet that went online, but it covers a significant portion of it. There are two complicating factors in that calculation. First, we conduct all our development on the balance sheet, and a portion of what we've spent isn't generating revenue yet. We purchased properties and started construction, but they aren't renting out rooms yet. Over the last couple of years, this number has been around $1.7 billion, and we're currently about $1.690 billion in capital invested that's not producing revenue. Five years ago, this figure was probably closer to $1 billion. Additionally, I would deduct $650 million from the total because that's money spent on assets that aren't productive yet. It’s also challenging to account for the building of U-Box warehouse space. If you convert the covered spaces we've added over the last 5 years into storage square footage, each box equates to a 5x8 storage room, which will add around 8 million to 9 million square feet of self-storage space. In reality, the investment per foot should be much closer to $150. So, the succinct answer is that it should be about $150.

Okay, I understand. That's very helpful. Now, for my last question, I remember asking this last quarter too. Regarding the yield you mentioned for these storage developments, you indicated it was around 10%. I'm curious about how you arrived at that 10% figure. Is it based on the $150 per square foot you just mentioned, or do you use a different method to calculate the 10%?

Yes. 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 7 to 10 years, and then capping it at the end of that time frame and looking to see how it performs over that time frame. If you were to try to convert that to a cap rate, it's probably going to be somewhere between 7.5 and 8.

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 is just holding their questions for the Annual Investor Day in about 2 weeks. If you have any feedback in between, please feel free to shoot us a message. Otherwise, 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.