U-Haul Holding Co /NV/ Q2 FY2026 Earnings Call

Good morning, ladies and gentlemen, and welcome to the U-Haul Holding Company Second Quarter Fiscal 2026 Investor Conference Call. This call is being recorded on Thursday, November 6, 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 Second Quarter 2026 Investor Call. Before we begin, I'd like to remind everyone that certain statements made 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-Q for the quarter ended September 30, 2025, which is on file with the U.S. Securities and Exchange Commission. I will now turn the call over to Joe Shoen, Chairman of U-Haul Holding Company.

Thank you, Sebastien. The earnings pressure of increased depreciation and the change from booking gains on equipment sales to booking losses on equipment sales became evident this quarter. We reported over 2 years ago that we were having to pay too much for trucks. This pressure is likely to continue for some time as OEM manufacturers continue to align current pricing, and resale values will likely decline roughly proportionately. While I'm glad to bring on new vehicles at a lower cost, this likely will depress earnings in the current period. Since July, we have been working to expand our dealer network well above the historical pace. This should help us better balance truck and trailer inventories by increasing demand. I expect some success here. We spent more on repairs in the quarter than I had anticipated. We are working on a plan to slightly moderate these repair cost increases. As you all know, our customers drive the equivalent to the moon and back more than 12 times a day. So repair or maintenance will always be a significant cost. However, mileage is not up, so we can reduce this expense a bit. Self-storage is a positive, but it remains a challenge. Not many gains are coming easily even on good projects. I am focused more on expanding our footprint than increasing our depth. Competition is strong, and customers are value-conscious. That is an environment in which U-Haul usually competes well. Self-storage is still viewed positively by lenders, which is encouraging new competitors to enter some markets. The administration is having success in reducing ICE regulations that have driven unnecessary dislocations in the transportation economy. It has long been a poorly kept secret that these regulations are politically and not environmentally driven. As the unproductive regulations on vehicle manufacturers and users subside, I expect a reordering that will benefit citizens and businesses alike. This is very positive for the transportation economy, although the transportation economy overall will have to absorb some huge residual costs from the intended green regulation. In summary, our various business lines are solid, and our results have managed to cover a lot of expenses, but are short in terms of return to shareholders. I will now turn the meeting over to Jason for a closer review of the financial results.

Thanks, Joe. Yesterday, we reported second-quarter earnings of $106 million, compared to $187 million for the same quarter last year. This is a $0.54 per nonvoting share EPS number this quarter compared to $0.96 per nonvoting share in the second quarter of last year. Earnings before interest, taxes, and depreciation, what we're calling adjusted EBITDA at our Moving and Storage segment increased 6% or nearly $32 million for the quarter. This is about the same amount of improvement that we saw in the first quarter of this year. Revenue growth across all of our Moving and Storage product lines led to this increase. Included in our earnings release and financial supplement is a reconciliation of adjusted EBITDA to GAAP earnings. Once again, this quarter, the largest difference between adjusted EBITDA and GAAP earnings is depreciation, and that's also the cause of the largest negative variance in earnings year-over-year. During the second quarter of this year, we reported a $38 million loss on the disposal of retired rental equipment, whereas last year at this time, we reported an $18 million gain. Cargo vans that we purchased over the last 2 years that are now being sold came into the fleet at a higher cost, and the current market resale values are not reflecting that, resulting in the loss. We have increased the pace of depreciation on the remaining units to reflect this new reality. Additionally, we have depreciation from increasing the size of the box truck fleet by approximately 10,000 units compared to September of last year. Between fleet depreciation and the loss on disposal, we experienced a $107 million cost increase for the quarter compared to the same time last year, which translates to approximately $0.43 per share. As a reminder, our total decline in earnings per share for the quarter was $0.42. For the second quarter, our equipment rental revenue results had a $23 million increase, which is about 2%. Revenue per transaction increased for both our in-town and one-way markets compared to the same time last year. There was a decrease in overall transactions. In a move intended to improve customer convenience, we're increasing the number of independent dealer locations across our network. In the last 12 months, we've added nearly 1,000 new locations. In fact, for the first time in our history, we have surpassed the 25,000 location count, and the plan is to continue adding. This, along with the increase in the size of our truck fleet, presents an opportunity to grow moving transactions. October results came in below trend, and we're working for an improved November. Capital expenditures for new rental equipment for the first 6 months of this year were $1.325 billion, which is up $169 million compared to last year. For the trailing 12 months, our gross fleet spend has been approximately $2.032 billion. If you net out equipment sales, it was $1.358 billion. I estimate that close to $640 million of the growth spending was growth-related. We had another strong quarter for self-storage. Storage revenues were up nearly $22 million, which is about 10%. Average revenue per foot continued to improve across the entire portfolio by just under 5%, while same-store was up about 4%. We are seeing the cumulative effects of our rate increases flowing through to revenue. Our same-store occupancy decreased by 350 basis points in the quarter to 90.5%. As I mentioned last quarter, in July, we implemented a system-wide effort to increase the number of available units at our existing locations by focusing on delinquent units. This effort did not affect revenue directly, as we don't record revenue until it's collected, but it did result in a reduction in our reported occupancy levels for now. Of the 350 basis point decline in same-store occupancy, roughly 220 basis points of that was related to the removal of delinquent tenants. Net tenant move-ins, while slower than in recent years, have improved compared to last year after adjusting for delinquent units. During the first 6 months of fiscal 2026, we invested $526 million in real estate acquisitions along with self-storage and U-Box warehouse development. That is down $208 million over the first 6 months compared to last year's first 6 months. During the second quarter, we added 23 locations with storage, translating to about 1.6 million new net rentable square feet, and we currently have 6.5 million square feet being actively developed across 116 projects. Our U-Box revenue results are included in other revenue in our 10-Q filing. This line item increased $12 million, of which U-Box was a large part. We continue to have success increasing moving transactions as well as the number of containers that our customers keep in storage, although the pace of growth for both slowed in the quarter. Moving and Storage operating expenses were up $19 million for the second quarter. As a percentage of revenue, we improved compared to the second quarter of last year. The largest component of the increase was personnel, which was up $12 million, but that increased at about the same rate as the revenue increase. Our liability costs associated with the fleet were up $23 million, and fleet repair and maintenance, as Joe mentioned, was up $10 million. Regarding the liability costs, we've made progress on the self-insurance reserves for Moving and Storage. Over the last 6 months, we've increased our liability by $43 million. As of September 2025, cash along with availability from existing loan facilities at our Moving and Storage segment totaled $1.376 billion. Supplemental financial information as of the end of September is available at our investor website, investors.uhaul.com, under the Investor kit. With that, I would like to hand the call back to our operator, Angeline, to begin the question-and-answer portion of the call.

Your first question comes from Stephen Ralston with Zacks.

I'd like to talk about the broader picture instead of the specifics. I'd like to congratulate you on a record top line for any quarter in the company's history. Granted, the second fiscal quarter is your strongest seasonal quarter, but nevertheless, it's a record. Now to the specifics. As we all know, the depreciation expenses have recently been a drag on the top line. I'd like to start the conversation by clarifying your method of depreciation. I think in the past, you've mentioned that you use accelerated depreciation now. But I've noticed that sometimes depreciation is higher in the seasonally high quarters. Is there any component of usage involved in the depreciation scheduling?

Steven, this is Jason. For our rental fleet, we have two basic methodologies for depreciation. The first is for our box trucks, which uses a dynamic depreciation model that depreciates faster in the earlier years and slows down over time. We typically hold these assets for around 12 to 15 years, and that schedule has not changed. This can result in fluctuations if you have uneven purchases of box trucks, leading to variations in depreciation per year. The second part of the fleet is our cargo vans and pickups, for which we typically hold for around 12 to 24 months. That uses a straight-line method, which is more responsive to the resale market because we sell them much quicker. So what we're currently observing is that a cargo van, which would have depreciated at a certain rate three years ago, is now depreciating at 2 to 3 times that rate per month due to current resale market conditions.

When do you expect the depreciation expenses to peak on a quarterly basis? You have better insight into what your anticipated purchases are going to be and also the pricing?

Looking at it in two components, on the box truck fleet, my initial outlook for next year is that we're going to be buying fewer of those trucks. I would expect box truck depreciation to peak towards the end of this year, beginning of next year, and then start to trend down. On the cargo vans, the pricing we anticipate for model year '26 cargo vans is set to come down; however, that will depend heavily on the resale market, which is difficult to predict at this time. So I would like to think that we are peaking by the end of this year, after which it should level off and start to decrease. We are not increasing the size of that part of the fleet, so at least the total number of units subject to additional depreciation isn't growing.

I want to add that the critical question always is whether to take the depreciation hit each month or when the vehicle is turned in. It's a bit of a guessing game. We routinely assess this and may make corrections along the way. We go in with what we think is a reasonable rate of depreciation. However, over the last 18 months, the depreciation has been significantly greater. When I examine these numbers, I add the depreciation and the loss on sale to try to understand what the peak will look like, and it's challenging for us to forecast. Speaking from my personal opinion, I think we're about a year away from the peak on pickups and vans. But so much depends on how new vehicles are priced because used vehicle pricing is just a reflection of new vehicle pricing. If new vehicle pricing comes down, it could affect our depreciation assumptions.

A little harder question is, could you anticipate what level of depreciation is going to be at the next trough? To put it in context, in the early 2000s, before COVID, your level of depreciation on an annual basis was about $600 million. During COVID, because you weren't buying as many vehicles as you wanted, it dropped below $500 million for 2 years. Now we're at a run rate of about $1.1 billion in depreciation. If you could get back to a trough of $600 million, the earnings this quarter would have tripled from what you reported. Given this run rate of over $1 billion in depreciation, at some point, it should peak and then trough out. Do you have any idea where that trough would be in terms of dollars?

This is Jason. The fleet is at least 20,000 units larger than before COVID, and the trucks are costing more, which are the two factors pushing the annual depreciation number up. If we ever reached a point where we bought the same number of trucks every year, our maintenance CapEx number over time would align with our depreciation number. I believe we should end up hovering around the $700 million to $750 million range as a normalized figure, given the size of the fleet today. It will take some time to get there.

That's very helpful. Last question on a completely different topic. I've noticed on social media that there are many clips featuring some of your employees discussing day-to-day operations and innovations in equipment design. Is that a new effort of yours? Or have I just been missing it prior to this?

This is Sebastien. I think what you might be seeing a lot of is around our new toy hauler, Steven. Yes, that's a really exciting opportunity for us. We've received a lot of positive feedback from major automotive publications, and I believe it's a market that we weren't serving well before. It's just a natural extension of our 80 years in the trailer business. So I think there's a lot of excitement surrounding that. The public is starting to realize that as well.

The next question comes from Steven Ramsey with Thompson Research.

I wanted to ask a couple of questions on growing the dealer network. You're optimistic about that effort. Can you share some reasons why you're optimistic? And what is the timeline for gaining momentum on this effort in terms of driving more moving transactions?

This is Joe. I think I'm expecting to see visible numbers by May, perhaps even before then, depending on how well I can get the organization to perform. I'm always evaluating market penetration. When I segment market penetration across various markets, I see areas where we continue to lag our own performance. I don't believe that the market potential differs much in one market compared to another, aside from exceptions like Manhattan. However, in communities such as Denver and Phoenix, I believe there is substantial opportunity for increased penetration, and dealers are our most effective means of entering those markets. Over the last 30 years, dealers have generated just under half of our truck and trailer rental revenue. Today, they're operating about 3 percentage points below their historical figures. I believe there's a good upside here. Better or worse, we are currently a bit over-fleeted, which is why Jason reported lower utilization. In the past, I couldn't execute this maneuver due to insufficient equipment to allocate. Now I have equipment available, which represents a significant opportunity. Of course, if I don't see the expected results, then Jason and other team members may insist we reduce fleet size to increase utilization. These are opposing forces. But I have significant indicators suggesting there’s room for growth in market penetration, and we should see results by June, ideally sooner.

That's helpful context. Looking further into this effort to grow the dealer network, can you discuss any long-term insights or goals for creating new owned U-Haul locations and potential benefits from more U-Box warehouses in these markets? If this were to materialize, is this something expected to happen in 2 years, 4 years, or is it too early to say?

I've been consistently pushing the company to expand our self-storage and U-Box footprint quicker than our U-Move footprint. This is primarily because, to justify a large company-owned operation, we need to attract a fair amount of revenue, which may not be available in markets where there's sufficient U-Box and new store business. Most of the stores we've opened in the last couple of years are generating more in self-storage revenue than in truck and trailer rental revenue, and I expect that pattern to continue.

You've mentioned the competitive intensity in storage. Would you say that it's equal to what it's been in the past, or is it intensifying further? What are you looking for that could indicate this is evolving into a healthier competitive environment?

Competition is primarily driven by the move-in and move-out rental rates from our competitors. My observation is that their move-in rental rates are significantly lower than their move-out rates, which means they are bringing customers in with aggressive discounts and then increasing their rates later on. My experience suggests that this may offend customers, as they often prefer transparency in pricing. Thus, our point-of-sale staff tend to quote initial rental rates that are higher than the competition, sometimes by 30%, and in some cases, it could be up to 50% higher. This situation leads to a slugfest in the market, but relatively, I believe we are managing quite well. It's difficult to assess overall performance since every competitor measures their results differently. However, I see a considerable amount of opportunity ahead. As I mentioned in my prepared comments, we are focusing more on expanding our breadth of coverage rather than depth, in contrast to our REIT competitors Lwho are primarily concentrating on depth of coverage.

That's helpful insight. One final question from me. I understand that your activities in Moving and Storage generally correlate with overall economic activity and life events. Given that existing home sales are currently depressed, do you think that should existing home sales recover, it could lead to a wave that lifts the growth of one-way moves and further boosts new box growth? Essentially, what is your perspective on the relationship between one-way moves, U-Box, and existing home sales?

I don't believe the boost will be significant enough for you to see it. There is no doubt some boost is there, but the transaction volume required to drive it is substantial. I think there is considerable consumer confusion or uncertainty. Historically, as that stabilizes, we tend to see a slight increase in one-way rentals and somewhat longer ones, but we're not witnessing that trend right now. This is a behavior I've observed perhaps three or four times in my career, but I cannot predict how long it will persist. We've seen the opposite during COVID, where rental times extended, and a greater percentage of rentals became one-way because people were eager to move. So I do not think existing home sales will be a useful metric to predict future performance.

The next question comes from Andy Liu with Wolfe Research.

I appreciate the detailed insights regarding depreciation. I want to shift focus to the cash side. Considering your comments about input costs rising and new trucks being priced higher while secondhand markets lagging behind, how does capital allocation today compare between fleet spending and storage development that you previously expected to achieve a yield of 10%?

I want to emphasize a cautionary note regarding the business cycle. The issue with the truck market is that it's a longer-term asset than many anticipate, and storage operates similarly. With that caution in mind, I'll let Jason share his input.

I would agree. In comparative terms, return on trucks has decreased relative to where it used to be, but it's important to remember it's a combined product offering for us. There were periods when storage didn’t perform as well, and the trucks and trailers carried the business. I don't foresee a shift in our long-term strategy due to the current cost structure for the next few years, but we have some work to do to come out of this cycle.

Got it. That's helpful. Another aspect regarding moving is that you've stated that transaction volumes have been declining. I want to understand how that has trended through the quarter. On a year-over-year basis, has the trend remained consistent from July to September? Or has it improved or worsened during that period?

We had stronger transaction volumes in earlier months, but then took a step back this quarter. We've noticed a similar trend extending into October as well. Over the past couple of years, it has been challenging to get transaction numbers to rebound.

Understood. My final question is regarding the storage operations. You mentioned you've been working through tenant removals for non-paying customers. Have you finished that process, and are you now positioned to backfill those spaces and increase occupancy? Or is there still a significant amount of work needed on the storage front?

Yes, this is Joe. We're past that now and have transitioned into renting those rooms to paying customers. We are making some progress there. However, entering the fall season is not the ideal time to execute this maneuver since overall demand tends to be stronger in the spring. Nevertheless, the revenue is working out correctly. In monetary terms, we are experiencing improvements. Additionally, this change has positively affected my managers' morale as we come into spring. The winter season is usually unpredictable, but sometimes not as much variation occurs. We will continue to drive forward on this front and are optimistic.

The next question comes from Jeff Kauffman with Vertical Research Partners.

I have a few questions regarding vehicle procurement. I know you primarily source your vehicles domestically, particularly from Ford and General Motors. Have you noticed any impact on vehicle prices or costs due to existing tariffs?

To address that, we do purchase some Stellantis vans that are assembled in Mexico. We also buy some General Motors products that are finalized there, however, they source parts globally. They've managed to navigate through these challenges effectively for now. Initially, we anticipated seeing significant price increases due to tariffs, but it's not currently reflected in our costs. I believe Ford has a slight advantage due to higher domestic content, but both companies are facing complexities from their supply chain. Throughout discussions, I hear that their raw material costs are increasing, but so far we're not impacted as severely as we once thought. We're somewhat lucky that we haven’t significantly invested in alternative propulsion systems yet. They’re adjusting rapidly, and it seems they'll need to stabilize their costs in the coming months.

I haven’t seen any major tariff impacts either.

The next question comes from Jamie Wilen with Wilen Management.

I want to discuss U-Box to a certain extent. At what point does it need to be its own segment? I understand it’s approaching 10% of revenues. Can you share insights into U-Box's performance? It seems to be growing at a much faster rate than the rest of the company. Are there underlying dynamics that contribute to its substantial growth? Additionally, as its revenues rise, will it reach an inflection point for operating profitability?

Jamie, this is Sam Shoen. Can you repeat the last part of your question?

As U-Box’s revenues expand, will there be a point at which profitability significantly improves?

Understood. I'll let Jason address that last question, but I will say that we continue to see success in U-Box. We had a great summer, but late in the quarter was a bit slower. Nevertheless, compared to the same period last year, we're witnessing percentage and absolute increases across major revenue components of U-Box. These include shipping income, storage rent, and delivery income, all of which are key revenue drivers for U-Box. It’s worth noting that freight expenses are also stable. As for assets, we currently have sufficient inventory of containers, warehouse space, and delivery equipment. While U-Box operates similarly to U-Haul's other business areas, we believe it will be a significant element of our future success. Does this provide better clarity?

Yes, definitely. Do you perceive us gaining market share? Are we capturing a larger portion of the available market, or is overall market growth driving U-Box’s performance?

Yes, we are gaining market share. We are focused on becoming the market leader, and there's no doubt that we are making it difficult for our competitors. We are indeed gaining market share.

That’s great to hear. I’d also like to know, at what point may U-Box need to operate independently as a separate segment? We talked about revenues and margins; what are your thoughts on that?

The unique aspect about U-Box is that it occupies a profitability niche between both U-Move and U-Store. Sam has greatly improved our logistics capabilities, allowing us to lock down costs effectively. Regarding over-the-road transportation for boxes, we've been able to maintain solid margin levels. The remaining piece of the puzzle to further enhance profitability is filling more of the boxes with storage. Our overall storage occupancy is currently much lower than our self-storage product. There's significant upside potential in this regard. As far as a profitability explosion is concerned, my estimate is that we typically hover within a couple of percentage points of the overall Moving and Storage margin on a quarter-by-quarter basis. However, the more boxes we fill—similar to filling storage rooms—the higher our margin profile will be.

Has the duration for which new boxes remain in storage altered over the last year or two?

No, generally it remains consistent with what we see in traditional storage, which I think is positive.

Good to know. One last question regarding capital allocation. Given our ongoing expansion in self-storage, which typically doesn't contribute to profitability for some time, have you considered divesting any non-targeted self-storage assets to reallocate that capital towards more viable markets, where we can generate greater returns?

With very few exceptions, the answer is no. This is largely because our existing footprint in states where we're strong—such as Wyoming and North Dakota—isn't necessarily attractive for major competitors like Public. Those areas typically don’t generate the same level of interest or revenue from those larger competitors. In recent years, we have acquired locations previously owned by Public or Extra Space, as they were considered fringe for their strategy but not for ours. My experience indicates that these existing locations tend to offer solid returns. Although smaller locations have marginally less contribution, they still hold value. On the contrary, new constructions tend to be located in less desirable areas and often come at high construction costs. For existing storage, we generally don’t face significant disadvantages; we create good value.

I would assume if a competitor like Public Storage aims to enter a state like Wyoming, acquiring a leading participant in the market would be advantageous. Is that a valid point?

Yes, in fact, they would consider that a strategy. However, my experience has led me to believe that it doesn't work precisely like that. Smaller locations tend to yield lower contributions, while similarly sized locations often perform comparably to larger markets. The current market dynamics in storage are very strong, even in Wyoming, where you could surpass the performance of some larger California locations due to current market conditions.

Lastly, regarding self-storage, many have noted potential overbuilding in the sector, yet we see that revenues per square foot have increased nicely over the past quarter. How do you attribute our ability to achieve this in a presumably saturated market?

Much of it relates to effective management. When a customer walks into our storage facility, it’s important for our managers to establish a personal connection. For instance, I recently observed a customer presenting a Starbucks gift to our manager. That level of rapport contributes significantly to the client’s perception and choice. Overall, our management quality can enable us to secure better rates. We continually assess rates at a granular level instead of blanket increases. This keeps us competitive while also maximizing revenue.

The next question comes from Stephen Farrell with Oppenheimer Close.

I have a quick question regarding box trucks. Have you experienced any relief in pricing from manufacturers yet?

This is Jason. In terms of box trucks, the recent percentage increase has been more moderate than what we've observed with pickups and cargo vans, where the material issues are more pronounced. We're currently observing some relief on those, but compared to a 10-year average of what inflation would have looked like pre-COVID, these units are still $3,000 to $3,500 pricier than they would have been in a stable market. Box truck prices have seen annual increases going from 4% to perhaps 7% or 8% now.

To provide a slightly different perspective, Ford and General Motors, our primary suppliers, are currently trying to recover from significant costs incurred as a result of attempting to navigate a political agenda that doesn't align with market realities. They’ve invested billions and disrupted many supply chains. This has resulted in layoffs of thousands of engineers focusing on internal combustion engines. They are now trying to regain profitability and stabilize costs for consumers like us. After six months, they have shown a gradual willingness to find a compromise with dealers to restore profitability without excessively raising customer prices.

With the shift away from ICE vehicles, how long do you forecast it will take for manufacturers to pivot back and start increasing supply?

They have already made significant strides in many models, and they are moving as quickly as their production capabilities allow. They've realized that customer demand extends beyond regulatory expectations, especially for utility vehicles. The reality is that utility vehicles have a much different customer reception, and the truth is no longer being withheld due to political nuances. We are all interested in sustainable operations but see a need for rational pricing strategies moving ahead.

Given that competitors are grappling with the same issues that U-Haul faces concerning new vehicle costs, do you believe that this has led some to lower their prices to stimulate demand and maintain utilization?

I'm currently evaluating that in the midst of market prices. While there have been instances of discounting, it's typical to encounter such pricing strategies. I’ve not seen significant downward price trends among our competitors. I monitor their pricing through direct interactions as if I were a customer, which helps inform my understanding of market conditions. From what I've seen, they remain higher than us, allowing customers to find competitive options.

Year-over-year, I understand fleet maintenance was up $10 million in the quarter compared to last year. Overall operating expenses were up by approximately $50 million as well. With liability and insurance costs from the past two years, are those still significant driving factors in the increase or have they stabilized?

For the six-month numbers related to personnel, these are up approximately $32 million; repair and maintenance, $15 million; and liability costs are up $40 million. So yes, those remain the largest components fueling our operating expense increases.

There are no further questions at this time. I will now turn the call back over to management for closing remarks. Please go ahead.

We look forward to speaking with everyone for our next quarterly earnings call in February. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.