U-Haul Holding Co (UHAL) Q3 2026 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to U-Haul Holding Company third quarter fiscal 2026 investor conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would now like to turn a conference call over to Sebastian Reyes. Please go ahead.

Good morning and thank you for joining us today. Welcome to the UOL Holding Company third quarter 2026 investor call. Before we begin, I'd like to remind everyone that certain of the statements during this call, including without limitations, 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 risk and uncertainties, some of which cannot be predicted or quantified. Certain factors could cause actual results to differ materially from those projected. For discussion of the risks and uncertainties that may affect the company's business and future operating results, please refer to the company's public SEC filings and Form 10-Q for the quarter ended December 31, 2025, which is on file with the U.S. Securities and Exchange Commission. I'll now turn the call over to Joe Schoen, Chairman of U-Haul Holding Company.

Joe Schoen, Chairman of U-Haul Holding Company Good morning, everybody. As you read in the press release, we continue to have earnings pulled down due to excessive acquisition costs of vans and pickups in model years 23 and 24. This has hit earnings hard, and you can see it in increased depreciation and in originally declining gains on sale and now losses on sale of vans and pickups exiting the fleet. To a much lesser extent, the enormous post-COVID price increases on internal combustion engine vehicles is dogging our box trucks with elevated depreciation. We had been accumulating internal combustion engine fleet due to predicted declines in availability of ice-powered units going ahead. Now we are too heavy in fleet and the rental market is not responding with significant transaction increases. We are working a plan to open more U-Haul dealership locations, which will put some of this excess fleet to work while earning a return. We will likely still be over-fleeted, so we will need to increase sales of older, higher mileage trucks over the next 12 months. As best as I can tell, we are holding our own and then some in the self-storage industry. In nearly 24 months, we have been adding units faster than we are renting them up. This results in a surplus of unrented units.

We're launching some initiatives intended to improve our rate of units rented over the prior year.

The proof will be in the pudding and we'll see how that develops going into summer. We now have a significant U-Box presence at over 700 locations in North America. By that I mean a significant warehouse and depot operation. This increases our capacity and the absolute number Well, to the extent that U-Box is self-storage, U-Box is both moving and storage, but one component is storage. To the extent U-Box is self-storage, this increases our capacity and absolute number of self-storage customers. We have over 200,000 U-Box containers in service and over 100,000 of them in the hands of customers. We have slowed our rate of adding U-Box warehouses as we have a workable present in most markets. However, in DC, LA, Boston, New York City, and the Bay Area, we are still underserved. In Canada, we are still light on U-Box capacity in Vancouver Island and Edmonton. We have projects in planning or in construction in all of these markets, and I plan to carry through on these capital expenditures. We continue to heavily invest in digital tools to meet what customers expect from the industry leader. Most of this investment is expensed in the current period. With that, I'll turn it back to Jason.

Yesterday, we reported third quarter losses of $37 million compared to earnings of $67 million for the same quarter last year. So that's a loss of $0.18 per non-voting share this quarter compared to earnings of $0.35 per non-voting share in the third quarter of last year. Earnings before interest taxes and depreciation, what we're calling adjusted EBITDA, at our moving and storage segment decreased 11% or nearly $42 million for the quarter. On a percentage basis, that's about the same decrease that we saw operating cash flows for the quarter as well. Included in our release and financial supplement is a reconciliation of adjusted EBITDA gap earnings. Depreciation and losses from the disposal of rental units continue to be a significant earnings headwind. During the third quarter of this year, we reported a $26 million loss on the disposal of retired rental equipment compared to a $4 million gain in last year's quarter. Cargo vans that we've purchased over the previous two model years that are now being sold came into the fleet with a higher cost, and the current market resale values have not been reflecting that, thus resulting in this loss. We've also increased the pace of depreciation on the remaining units to reflect that new reality. On top of this, we have depreciation from increasing the size of the box truck fleet by nearly 11,000 units compared to December of last year. Between fleet depreciation and the loss on disposal, we experienced a $75 million cost increase for this quarter compared to the same time last year, translated into non-voting share EPS, that's approximately $0.24 a share. Over three-quarters of this negative variance is related to our cargo van fleet. Looking towards the future, the model year 2026 cargo van purchases that will be coming on the books this year are going to be at an average cost about 12% lower than last year's model year, and if you compare them to two years ago, about 20% lower. For the third quarter, our equipment rental revenues results increased $8 million at just under one percent compared to the same time the year before, the majority coming from in-town portion of our business. Comparing the end of December 2025 to the same time in 2024, we added 65 new company-operated locations, and we had a net increase of 365 independent dealers. These new locations, as Joe mentioned, are expected to help us better distribute the larger fleet and increased transactions. For January, our results were trending quite positive prior to the onset of the significant weather activity that hit much of the country, which certainly slowed the improvement over the last week and a half or so. Capital expenditures for new rental equipment in the first nine months of this year were $1,748,000,000, the $162 million increase compared to the same nine-month period last year. Looking at the last 12 months, so that would be the calendar year of 2025, our gross fleet spend was approximately $2,025,000,000. If you net out equipment sales, we got down to $1,331,000,000. I'm estimating close to $670,000,000 of that growth of that growth spend was growth related initial estimates for next fiscal year are showing a decrease in new truck purchases somewhere north of 500 million dollars storage revenues were up 18 million or eight percent for the quarter average revenue per foot continued to improve across the entire portfolio by just under seven percent while the same stored revenue per occupied foot was up five percent reflecting the cumulative effects of our rate increase activity. Our strategy of straightforward pricing with the customer and avoiding the large introductory discounts continues. Our same store occupancy decreased 490 basis points to just over 87%. I mentioned in our last earnings call that in July, we took on an effort system-wide to increase the number of available units at existing facilities by focusing on delinquent units. This effort did not affect revenue because we don't record storage revenue until we collect it but it has had an effect on our reported occupancy level so of that almost five percent decrease in same store occupancy close to four percent of that was related to the removal of delinquent rooms net tenant move-ins uh year over year so comparing end of december this year versus last year are slower than in recent years has picked up compared to where we were last year adjusted for the delinquent units. During the first nine months of fiscal 2026, we invested $770 million in real estate acquisitions, along with the development of new self-storage and then U-Box warehouse space. That's a $444 million decrease over the first nine months of fiscal 2025. During the third quarter, we added 16 new locations with storage. Translates to about one and a half million new net rentable square feet. Our development pipeline now is down to active development is down to 106 projects that should result in somewhere around 5.7 million new net rentable square feet. Moving into storage operating expenses, we're up 66 million dollars for the third quarter. As a percent of revenue, we certainly took a step back from the progress that we made last quarter. First, personnel costs were up $16 million, and fleet maintenance and repair were up $13 million. But really, the unusual increase in the largest component that we had was related to our self-insurance liability costs, and they were up $38 million, with the majority of that being in the form of reserve strengthening. We've made progress on this front, increasing our liability by nearly $79 million since March of 2025. In December, our property and casualty insurance company paid U-Haul holding company as parents a $100 million dividend as we are taking steps to reallocate capital among some of our subsidiaries. This $100 million is now available for general U-Haul corporate use. As of December 2025, cash, along with availability from existing loan facilities, at our moving and storage segment totaled $1,475,000,000. I'd like to remind everyone that we have a supplemental financial information exhibit that's available on our homepage, investors.uhaul.com, under Investor Kit. With that, I would like to hand the call back to Jenny as we have Joe, Sam Schoen, and myself here to answer questions.

Thank you, ladies and gentlemen. We will now begin the question and answer session. If you have a question, please press the star followed by the one on your touchstone phone. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any case. Once again, that is 4 or 1, should you wish to ask a question. Your first question is from Stephen Ralston from Zapp. Your line is open.

Good morning. Good morning. Taking into account that seasonally, this is the second-weekest quarter in your year, there would seem to be some pressures in the one-way market in the self-moving equipment area and also in the U-Box program. Could you discuss that? And also, does that indicate there's some sort of – that the U-Box market sort of tracks the one-way market, one-way rental market?

I'll start on that. I mentioned this last conference call. What we've seen over decades is when consumers get anxious, they shorten the distance of a transaction. So instead of moving, relocating to Denver, they go to a suburb of their existing town. They still move for a variety of reasons, which is basic underlying demand, but they move shorter distances. And sometimes that turns a one-way transaction into a local transaction. So there's U-Box, and I'll let Sam elaborate on this. U-Box, we've had our greatest success with long-distance transactions. So to the extent that it tracks U-Haul, it will kind of track it in. U-Box will track it, but maybe a little more exaggerated as a percentage of business.

Yeah, Stephen, that's a great question. I think this is getting to kind of what you're asking. U-Box operates in almost primarily in what U-Move considers the long zones. So for rental trucks, what might be a 20% of our one-way business in the long zones for Ubox might be 80%. And so I think the question you asked was, does Ubox track the one-way moving market? Certainly in that way it does. And then, of course, as we have distribution, you know, as we're using rate to control distribution, now we're pricing U-Haul trucks in a certain way, and our customers are seeing that and getting to incorporate that into their choice. So I think the short answer to your question is yes.

Thank you. You know, you've discussed the depreciation line a great deal, and I think I'm missing something because I just could you please explain it. Depreciation, you know, is up dramatically, but sequentially from the second fiscal quarter to the third fiscal quarter, depreciation actually went down. What's happening on an accounting basis on that?

So, this, Jason, a couple of things going on. First, the depreciation of the box truck fleet is a dynamic depreciation where every time a truck passes its one-year anniversary, the depreciation rate steps down on it, right? So the first year that we buy a box truck, we charge off 16% of the cost. The second year is 13%, and that keeps going down. so if we don't do anything the depreciation on the box truck fleet will will gradually just continue to step down the second part of that is on our pickup and cargo van fleet which is a it's a smaller fleet we hold live there it's a shorter lot dancing right yeah exactly we hold it a shorter period and and those depreciation rates we're adjusting from quarter to quarter based upon what we see in the resale market and as we've we've essentially almost finished selling through the model year 23 units now we're on to the 24 and so we're that that depreciation number is

getting adjusted from from quarter to quarter all right yes thank you for that explanation and uh for taking my questions you're welcome thank you your next question is from steven Ramsey from Thompson Research Group. Your line is now open.

Hi, morning everyone. Maybe to start with, wanted to think about from the high level for your business. You've continued to invest in growth in all areas of the business in a time of subdued activity. If you think about moving competitors against you in the traditional moving in u-box space have you seen capacity reductions from peers or another angle maybe is how you're expanding in the dealer uh space to position you to perform well now and perform much better on the other side of this i'll answer that yes on both moving fleet and locations the numbers aren't hard i can't give you a hard number of what but let's say how many outlets Penske or budget has but we have a bunch of other indicators we you know get from

various industry sources that causes us to be fairly confident they're both reducing fleet and reducing outlets so that should we see an upturn or should we get a another way but should we do a better job of understanding and satisfying customer needs we'll be in a position to fill that demand and that's the way i look at it a lot more in where have we failed to appreciate what our customer needs and if we will find that failure and remedy it the customer will reward us with more transactions and we'll be in a better position we'll have more outlets and convenience is kind of part of our overall strategy. So we're far and away, just for talking points, let's say Budget has 3,000 outlets and Penske has 3,500, but we're sitting with 24,000 and change. So as far as accessibility dominate, and that's part of our strategy. It's a judgment how far to push that. frankly it's not an algorithm maybe maybe there is but it isn't one that we have a map so one other thing that you don't see in Jason I don't think it really talked about is inside our our fleet isn't homogenous it isn't one number so when he says we have 100 next box trucks well the size of those of the age matters when you're trying to manage the whole fleet so we have been playing catch-up to massive disruptions in the supply chain caused by both covid and the government's insistence on electrification curing those takes a while you can cure it in the pickup and van fleet maybe in 24 months because you rotate that fleet in our box truck fleet it's at least an eight-year opportunities so sometimes we're buying a little more trucks than we need because we need a certain size truck or that truck is now available and it wasn't available before so there's a bunch of adjustments inside of the big number and if you went back to let's say 2016 we had it at that point the best i've ever had in my life we had tuned that pretty good And that falls through his profitability. So as we get this fleet rebalanced, and I wish I could tell you a date. Of course, I'm trying to give myself a date as to when that will be back in balance. I don't know. You've heard me bellyache about the administration and the drive towards electrification. You see, that really caused the manufacturers to do two things. One, they increased the price massively. I'm talking 30% and 50% price increases. And two, they allocated vehicles. We couldn't get the model we want and the quantity we want. We had to take what their supply chain was able to produce. And this caused disruption in the age and size of our trucks. And we're working very hard to remedy that. And you see this year, the year we're just kind of finishing, we bought very arguably a little more vehicles than is reasonable. But if you get into the details, you would see we're attempting to get this balanced back out. So two, three, and four years from now, it's the right mix and age of vehicles to serve the market. So we're very aware of it, but it's all judgment. And it's not absolutely guaranteed. I think that I've been elated because the administration has done everything I could imagine to put the tie-bosh on the electrification. So you and I'm sure all your peers have seen what are good friends in the manufacturing business. Mary Barra announced, I think, $6 billion or $5 billion write-off. Jim Farley announced $19.5 billion write-off. Well, that gives you some idea of the disruption at their level, and that disruption kind of is like a ripple in a pond. It carries through to people like me or to car dealers. If you have any car dealer clients, you'll see that they're not getting the exact mix of vehicles that they wish they had. But this will balance out. The car makers are smart people, and once they shed themselves in this electrification, I don't know what it is, dysphoria, I'm not sure of the right name for it, But as they get out of that, they're going to deliver the mix of vehicles that customers want, and customers will respond. So if that kind of addresses your question, it may be too much information.

No, that's a helpful perspective. I appreciate that. I wanted to think about the expense management side of things. I know it's been a focus for you. Do you think this needs to be a more intensified effort over the next 6 to 12 months? Or would you say the structure is actually in a good place, but it's more waiting on volume to come back?

I've been pounding through on – we run on a system of budgets like a lot of people. So I've been pounding through budgets, trying to get the correct response out of the various parts of the corporation. And I think I'll see some results in the present calendar year and a little bit more the next year. repair hasn't been too bad it's a lot of money somewhere approaching 800 million dollars on the annual basis but it's coming in somewhere in a normative we calculate all repair by model, by year, by cents per mile we have a pretty good ability to forecast so repair we've got halfway under control personnel is kind of a we're stuck in a vice on that as I think many many people our organizations are which is cost of living for our workforce is rising at a pretty good clip and they're they're pretty hard pitched so we're going to see that increase steadily over the next two or three years I think for sure and our job is to outpace that when I look at that we look at that on our location by location basis basically we need to get a nexus of revenue enough that will support the complement of people to be open the hours we want to be open. We may likely have to adjust some hours over the coming 12 months because it's not going to generate enough surplus to pay the wages stores presently open, in my judgment. Now, that's not done, but that's the kind of pressure we're under. It gets to a totally micro analysis. You morning we open about 2,400 stores so I got to have a body there and you know it's very specific and then some days of the week I got to have several bodies there those people have to be paid a living wage so that there's there's going to be tension there I think I don't know what part of the country you're from but this year the west coast of the United States was say California Oregon Washington have put in increased minimum wages that pro didn't place plans that will automatically do it next year. And in many jurisdictions, they've done this for both salaried and hourly. Most of us are used to minimum wage for hourly personnel, but they're now putting in minimum wages for salaried personnel. And it's going to stress a significant number of our store's profitability. So, of course, we're going to pay the people, but we have to productivity. Both self-storage and U-Box have been a relief valve for that in many instances expand that presence in the location but other locations are limited by the geographic footprint beyond they could only so much you could do on that piece of land so let's say in los angeles we have several locations that are just slightly over half an acre well you there's no there's no wiggle there so those are under intense pressure and i don't have a simple solution to it but we're very cognizant of it okay that's helpful and then

And last one for me, you've talked some about Ubox in the major markets that you are building out. Can you clarify if construction is going on in those markets for warehouse capacity?

And then secondly, can you talk about Ubox usage, both moving and storage in large metros that you already have established warehouse presence? trying to think about the potential upside in these big cities once it's built out i'll take the run to that question let sam take the back of it in the cities i mentioned or the metropolitan areas i mentioned at the minimum we own property we're somewhere between land use and you know putting the roof on it at these locations these are all to me each one's a big saga okay so i i know too much information on but we'll pick dc we've had us we've had the steel building on the ground for two years it's that that's how how between covid and normal city bureaucracies how much it set us back we thought two years ago we were going to break ground we ordered the building they delivered it we still haven't broke ground so it's not because we're not trying it just because it's quite a labyrinth. But in all those cities, we own the property, or metro areas. In all those metro areas, we own the property. I'll say, well, I'll pick Vancouver Island. That's a readily apparent thing. If we don't have a significant warehouse capacity, there's just going to be no U-box business at all. So we have to have real warehouse capacity there.

But in the rest of Canada, we've done a great job from the maritimes up and through ottawa down through montreal all through the greater ontario or that whole belt of people between toronto and detroit we've got a fairly adequate footprint and so i believe the business will follow sam sure i'll add some more color you know metros for you box is something we're certainly maybe a little extra excited about because joe had the foresight to design our product and our strategy specifically around the size of container that that thrives in the metro areas with challenges of of space so for example our container size unlike a lot of our competitors fits in a in a apartment parking spot no problem a lot of the challenge in metro areas are restrictions on where they can be be laid in terms of needing permits or having outright restrictions to be placed on the street our container option delivery method with the trailer gives it a license plate which means it can go in anywhere that a that's a legal parking spot so Those are tremendous differentiators in our product versus the competition, and those were deliberate. And, of course, we're hoping they continue to drive some exciting results in the Metro, besides the fact that a lot of the Metro demand is for a smaller-sized container in the first place. So getting the right-sized product to those customers is what we do. So I think we've got a biggest image.

Steven, this is Jason. I just want to make sure that there isn't any misunderstanding. In these markets, our customers already have access to the U-Box product. We're just looking to improve their access to it. It's not that we aren't in those markets.

That's all in helpful color. Thank you, guys.

Thank you. Your next question is from Jeff Cuffman from Vertical Research Partners. Your line is open.

Thank you very much. Good morning, everybody. I just had a question more for Jason. You talked about we're almost through the 2023 cargo van cohort and starting to work on the 24s. Can you give us an idea of how many vehicles we have left to kind of get caught up to the current market and maybe the differential between your average acquisition costs and where you're depreciating the 24s versus what that spread looked like for the 23s? Sure.

I'll give you some big-picture numbers. On the 24s, we probably have somewhere around 6,000 of those left, and those were the most expensive ones, a little bit more pricey than the 23s. And then we have, say, close to 19,000 of the model year 25s maybe three thousand dollars cheaper than than the uh the 24s so now we're going to be in the process of rotating out the the um the model year 24s which we have been we've been hitting those with this increased depreciation so part of answered the question earlier um i think it was for for Steve Ralston uh that's been part of the depreciation increases we've been hitting those those model years here before we have to sell them hoping to minimize any loss on disposal

and we'll see how how successful we are here in the next 12 months on that okay but is is your sense that um because look it's going to come out either way right either through depreciation or loss on sale um but is your sense we've got the the 24 model years marked the market fairly at this point in time or is there still kind of going to be this deferred catch up on loss on sale i i think it would be fair to expect a loss on sale uh for for those units i don't know for fully there yet let me address it it's it's you make your estimate of

you're going to get on sale when you're going in to set up your books well then we we've had to come back with adjustments because the way the market has developed that estimate turned out to be wrong and it and as far as i can tell it's wrong because as the automakers get away from electrification and get their supply chains reorganized they're now in fact selling new vehicles for less than last year's new vehicle and maintaining a margin they need to make a profit I'm all for it but that takes the resale value and kind of gives it a little bit more of a hit and we haven't in recent years at least not in the last 15 years had a market where the the new prices kept being under the old price and so i think we poorly estimated this and of course we figured this out i don't know a year year and a half ago we started to to whack on it and everybody was confident going into this particular year we're in that we're finally through it and then of course what happened another round of opportunistic so we're acquiring the fleet cheaper but that may mean that these trucks that we just put in are going to retail for less or wholesale when we get rid of them for less than we thought so we're i've got people here pretty tuned up and i think we will try to if we see it declining what my direction has been try to adjust appreciation to where you're going to basically be neutral at sale because the problem with the sale is that by the time you get it you forgot how much you paid for it and all that so we should suffer the pain monthly and that also puts pressure on my marketing people because they they basically incur that depreciation cost as part of their charge or whatever you want to call that that's part of what they know they have to hit it's harder for them to for me to hold them accountable for recouping a loss on sale, but they really didn't have a budget or a forecast that adequately presented that. So I'm very hopeful we're going to get it right, but you've seen how just this whole thing is just kind of ricocheted through and it's given everybody some things they didn't really totally appreciate. I'm kind of a glass half empty person and i've kind of pushed our people of course they're all marketing and no we're going to sell our way out of it well i think it's pretty clear when the pickup or van prices decline two years in a row you're not going to sell your way out of it you're just going to respond to the market i think it's a collaborative effort to guess make these estimates i won't call them guesses but they're they're kind of a guess but then your estimate of what that thing's going to go out for 18 months from now is an estimate. Of course, there's other industry people making this estimate. We're not the only people trying to figure this out. So I have some belief that we may now hit the bottom of this whole declining group of factors coming together. But should next year GMC lower prices again because they improve their margins and they've written off all the garbage? They have the same problem I did. They had some garbage on the books because they were attempting to respond to government and third-party greenie pressure, people who didn't know what the facts were but nevertheless had power positions. they tried to respond to them this really cost them greatly it hasn't hit us as hard but it's costing us and we we will work through it and every effort is being made to keep the fleet i've always proud of pride of myself for the last 40 years of always having the fleet on the books for less than it's worth because when push comes to shove if you're on the books for more than it's worth it can be a very unpleasant time so i've pushed real hard and we've missed it two years in a row on our pickup and band fleet and we should have it right this time but only only time's going to tell it's it's important we're trying to undershoot without just being stupid if i put too much depreciation on of course my rental teams will say we can't possibly make we can't make any of our goals it's impossible you've afflicted us with so i have to not try to not too low or too high. But on the other hand, I'll say I, but the whole company has overestimated resales for two years running. Yes, it all comes out in the wash, but during the interim period, it can affect people's motivations, and I need to do that, too.

Well, thank you very much.

Thank you. Your next question is from Jamie Willen from Willen Management.

Your line is open thank you um joe you've always mentioned that fleet utilization was your prime objective in managing the business how did you arrive at only reducing the fleet expenditures in the coming year by a half a billion dollars and as you look as you look forward are you going to spend a half billion dollars less in future years as well right now i'll start with the year we're finishing up So we call that fiscal 26, I believe.

In fiscal 26, you're actually seeing an increase, significantly increased fleet expansion. That is aimed at trying to rebalance. If you don't buy some trucks, well, four years from now, you don't have those trucks at that mileage and that cost parameter. And so you create inbalances through the whole fleet, and that also impacts on what can you buy next. So in the year just finished, we put in something like 10,000 10-foot trucks. That's beyond replacement considerably. We have a whole bunch of considerations, and that truck, in our present plan for the coming year, we reduce that massively because we think we know what we're doing there in my 20-foot truck i have a disproportionate amount of fleet that's eight or ten years old so while my total number is okay my my mix is off as a 10-year-old truck can't perform quite like a five-year-old truck or a four-year-old truck so i'm buying a fair amount of those a little bit more than you might say is replacement simply because I have a lump of them that are eight or ten years old and I've got to try to smooth that out the perfect life would be trigger the life of the truck divide that in the fleet make that fleet purchase every year that would be wonderful but they just don't become available and in the past five years it's been aggravated because of all these supply chain disruptions the worst being we're on allocation they would say you can buy X trucks well that that we hadn't seen that since the Korean War so that caught us off balance I would say and and resulted in it in a couple times we made huge buys why because they could they would sell them to us we had to have something so we made a huge buy so we're gonna we're gonna reduce this and then we have to see what we can do with sales because you know that problem it's a buying problem it's also a selling problem can you take that many trucks into the sale market and and can you move them so we'll say in case my 20-foot trucks I have something like 12,000 lump going through and we can't digest 12,000 those that resale in one year and probably couldn't do it less than three years so depending on how but if i don't buy for three years i'm just creating another lump that i have to face down the road so i'm going to do some modest buys and then accelerate sales and see where that where we can find a balance and so we're probing that i'll say specifically on a 20-foot truck right now how much can we how many of those trucks can we put into the resale market successfully. And we should buy at least that many of them this year so that we don't have another lump in our supply chain. So on the self-steerage side, go ahead, I'm sorry.

I say on the self-steerage side, as far as capacity utilization there, is there any thought of slowing the pace of development to a more modest level?

It's slowed a lot. I think Jason thinks it's down 400 million dollars it's it you know it's not a these numbers are a little bit soft but we've slowed it down a ground up self-storage location is probably a three-year process so if I slow it down you won't totally see it till three years from now now the other problem is if I want to speed it up you won't see it for three years so it's a you know you got to be a little thoughtful going both ways. So we have slowed it down. I'm still going ahead with what I consider to be strategic. So the U-Box warehouses I mentioned, I believe they're strategic and we would be foolish not to build them. Although it's going to be a significant amount of money enough money that i'm watching it for self storage we're a little more opportunistic as we're going ahead now we either think it's a market that we know better than somebody else and we see an opportunity or it's something that's semi-distressed so we just bought a location in olive branch mississippi it doesn't mean much to you but we already had a store there we bought a second store we paid well less than three quarters of the cost of construction for it and i think olive branch mississippi is going to do fine over the next 10 years although it's probably not on your horizon but it's a it's a good solid growing area i determined that was opportunistic and we go ahead with it you guys have done an excellent job of building value, but less than a stellar job of creating value for shareholders.

If I were a board member, pardon me? I'm with you on that. Okay. If I were a board member, here's what I would suggest to you to help crystallize a bit more of that value. We all know how undervalued self-storage is relative to the rest of the world, and we'd like to help the investment community as well as analysts recognize a bit of that. What I would suggest us doing is selling a territory of well-occupied facilities that don't have U-Box storage in there because I don't want to eliminate the competitive advantage we have with the rest of the world in U-Box. But I would take an area where we have stabilized occupancies over 80 percent like a Tennessee or New Jersey and hopefully no U-Box storage or not much. And I would want to sell that to one of the publicly held REITs, which could crystallize value for how much we value if we have created there and recycle the proceeds. If we get a billion or two, use half of them to buy back stock, the rest to pay down debt or build new facilities.

But it would help crystallize what we've built and hopefully not impact the growth of the core business there what do you think of that i i kind of understand the math of it i won't say i i am hot on the proposal of course part of the opportunity is every one of those i work to get and so i'm a little bit wary of selling it and should the market turn up we may we may rue the the day we sold it but i think that's a a fair position to explore. I'll explore it a little bit with Jason. He's pretty good on the numbers. So we'll explore that a little bit. The stock buyback, I kind of go both ways on also. I'm not, you know, we went and did the stock dividend and a bunch of other stuff, tried to bring some analysts in, changed the exchange. We were going all in an effort to, I guess improve liquidity or make it the stock more interesting to people with I think very minimal results okay I don't think anybody at my end is a stock guru we don't just that's just not where we all live I was underwhelmed with the response of the market when we did that but these are you know we have to do something to demonstrate value another way to demonstrate value is put these stores at 90% occupancy then of course now it's a little bit easier I'm sitting here with depending on how you want to count it somewhere around 80% effective occupancy now it varies by every store but that's an overall not a bad estimate and that's been drugged down by every time I open a new store I lower that number I believe that the market is significantly larger but it's being mistreated the customers are being mistreated by the industry now and i'm going to try to see if i can communicate that to the customer that we're not the ones mistreating it so we'll see how that goes but a bunch of people have come into this industry which you do probably know them and i don't but they're big money operators and they kind of view storage as a cow to be milked and And I look at it more as a lamb to be petted and taken care of. So they're a little rough on the customer would be the nicest way to put it. And I think we can distinguish on our customer service. And I think there's enough people in the market now who this is their second or third time renting storage. And they know that a storage room is not a storage room. It's not a storage room. We'll see if I can communicate that to the wider group of customers. overall I think we've been outperforming peer group if you wanted to find that as the big REITs I believe we've done a better job of being able to maintain rates and expand customer base now I don't get any numbers of theirs that you don't see so special look into their numbers but it seems that they're having difficulty holding move-in rates at or above move-out rates. We're still able to maintain a differential there. I think that's significant. I'm optimistic I can fill more rooms, but I've got it pretty close to the edge, I think, Jamie, as far as we're pushing somewheres, Jason may have a better number, 220, 230,000 empty units, something like that.

If you include the managed portfolio, so you all branded stories, we're about 290,000 rooms available.

Okay, so all those are depending on either a liability or an opportunity. So as a shareholder, you're probably seeing a little bit as a liability because you're paying for them and getting nothing for it. I think we're going to see significant progress in filling those rooms, and that's how I have my teams wound up. But at the same time that we've increased, successfully we've increased total customers every year in conventional self-storage, we've done the same thing. We've introduced something like 100,000 storage customers into U-Bots. So from the point of view of operating a facility, that manager is looking at total storage customer base. I'm not disgusted with our performance, but I think our performance has to be better because we've invested the money. But I think we're showing we're resonating with the customer as much or better than anybody else in the business.

I believe you have two customers here. One is the person who rents your storage facilities and truck rentals, and the other customer are investors. And investors would love to see you harvest some of the value you've created where you've turned a dollar into four, but we can't see it. Whatever you can do in that respect would be a good thing for this customer.

It's a consolation. I'm 76. So I'm kind of getting a little closer to wanting to see the Goose Lace and Golden Pigs, too. All right. Thank you very much. I appreciate your thoughts. Very good. Thank you.

Thank you. Once again, please press star 1 should you wish to ask a question. And your next question is from Stephen Ralston from Zaxx. Your line is now open.

Thank you. I just want to circle back around and tap Joe's experience and get his historical perspective. You've pointed out that you're in a very unique period with the emphasis on EV vehicles and the demand that came through COVID. When you think about the situation in your past, does it remind you of any time in the past where you resolved the situation and how it happened? and you use that as key markers in managing the company?

In a general sense, yes. But in fleet, we've always been able to buy all the fleet we had money for. Our problem up until recently was we always were capital constrained. And then this flipped, COVID and post-COVID, and we can buy what someone says we can have. Now, we don't have a lot of markers in there, but, of course, we're working on it regularly, and I think if I had to do this all over again, coming out of COVID, or I'll say post-COVID, I would not have, when they went on allocation, I would have told them to keep their trucks. That's what I'll tell them next time, they keep their trucks. and when they jack prices they can keep their trucks because I can sweat out two three four years and I think my customer will support me I think over eager to buy trucks because we had such a nice balance in 16 I wanted to get back to that balance quickly and I didn't stand firm enough when they came through with massive price increases to just download it it's unsupportable Now, they had all this talk, and we all saw it, and I think everybody's a little guilty of this, saying that, as Mary Barrett did, she had something, I don't know, after 2037 or something, GM will not make an internal combustion engine. Well, if you're on my end of the deal, that's a frightening thought, because the other ones don't run, you see. So you can see how I fell into the trap. Well, hell, if she's not going to build any, Then my friends at Ford didn't make quite as broad a statement, but practically speaking, they were running their investment as if they were no longer going to make it. An example, they quit the second shift at one of their truck plants. We'd been the beneficiaries of that second shift for at least 10 years. So when they quit a second shift at that plant, I go, where the hell is the truck going to come from? I think we'd have come out better if we'd have just let the fleet age by just what suited us and just at the price it suited us and we wouldn't be trying to digest all this excess cost but that's not what happens so now we got to digest it and want to work it in a way that it doesn't come back and plague people are trying to make fleet decisions five and six years from now I want to try to just smooth it out and so that's causing us in some models to buy a few more trucks than an analyst would justify. But when you look at the age of the truck and what that's going to do to you going ahead, I think experience tells me you want to buy some trucks. So no, I don't have a marker or an experience on this. Self-storage, I have a lot of markers and experience on. I'm fairly confident that those are all good money bets. But the timing is is too slow and it's not enough to command investor support which i understand i'm an investor here too so but we have markers i you know we can look at market penetration by various markets and storage market finish the demand for that product has far exceeded anyone's expectations i think you could say that of any of the major companies none really appreciated how much demand there was for that product or there is for that product and it's still being served in a spotty fashion so filling in those gaps is an opportunity for someone if they can identify them and then

get them filled in thank you for sharing that historical perspective i appreciate it sure thank you there are no further questions at this time i will now turn the call back over to Thank you, Sebastian Reyes, for closing remarks.

I have one question that I wanted to pose here that came in during the call. U-Haul's profit margins, excluding depreciation, have been in constant decline for the last decade. Please explain why margins have been so persistently weak since 2016, and please explain your plan to restore the profitability of this great company.

Well, this is Jason. I'll take that one. Well, 2016 is picking the high point of our EBITDA margin, so that our earnings over the history of the company have been a little bit cyclical, largely in relation to how much we expand the organization over certain timeframes. So to pick 2016, which I think was maybe 35%, 36% EBITDA margin, the 10 years before that, our EBITDA margin was 25%. The 10 years since 2016, our average EBITDA margin has been 33%. So there has been actually a structural improvement in how the organization has been run. And we've included a slide that shows this trend of improving EBITDA margins that I don't think it's happenstance that it coincides with our growth and the self-storage in the U-box market. Since Fiscal 16, we've had some up years and down years. I would say that during COVID years, where we got back up to the mid 30% range, there was some recognition of revenue and not the recognition of the associated expenses that went along with it. So, for example, the repair and maintenance that we were incurring during the work-from-home phase where revenue shot up, under current accounting rules, you can't accrue for expected maintenance based upon how much the truck is going right now. So, we accrued all of these miles and recognized the revenue, and then there was a couple years after that that we've been paying for the repair and expense associated with that. Then we also had the somewhat idiosyncratic event where our former auditors failed to see the wisdom in how we chose to reserve for our self-insurance liabilities. And they took 80, I think it was $88 million out of our self-insurance reserves in order to sign the opinion. And now over time, I think we've seen that we would have been much better off to leave those reserves on the books. And that would have been a little bit more of a shock absorber, right? Because during COVID, transactions increased, so the rate of potential incidents increased. Well, now we're dealing with, as those incidents that happened back then are developing, they're becoming a little bit worse than what was originally thought. But, you know, it's always, you know, ifs and buts, but for this quarter, if we had a normal UMO revenue quarter of 4% growth and we didn't have the reserve strengthening, we would be looking at an average EBITDA margin. So I'm hesitant to agree with the premise that there's something structurally wrong with how we're operating the business from an expense perspective. I would say that it's a revenue issue, and then it's a cycle. We've been in an unprecedented growth cycle, how much we've grown the fleet and how much we've grown self-storage. And frankly, I think we've done a reasonably good job in keeping the EBITDA margins where they're at while we're going through this process. Now, all that to say, a decent EBITDA margin for us over a 12-month period is going to be in the low 30% ranges, and we are underperforming that this year. well thanks again everyone for your participation we look forward to speaking with you again after we report our year end results in may thanks thank you ladies and gentlemen the conference has now ended.

Thank you all for joining. You may all disconnect your lines.