U-Haul Holding Company Schedules First Quarter Fiscal 2027 Financial Results Release and Investor Webcast

Hello, everyone. Thank you for joining us and welcome to U-Haul Holding Company's first quarter fiscal 2027 investor call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Sebastian Reyes. Sebastian, please go ahead.

Good morning. Welcome to the U-Haul Holding Company first quarter fiscal 2027 investor call before we begin i'd like to remind everyone that certain of the statements during this call including without limitation statements regarding revenue expenses income and general growth of our business may constitute forward-looking statements within the meaning of the safe harbor provisions of section 27a of the securities act of 1933 as amended and section 21e of the securities exchange act of 1934 as amended forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Certain factors could cause actual results to differ materially from those projected. For 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 June 30, 2026, 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.

Good morning and welcome. We continue to have our work cut out for us. We need to increase U-Move and U-Store business. Operating expenses continue to creep up, and this is a combination of operating inefficiencies and pure inflation. About this time last year, we began a massive effort to net gain 3,000 independent U-Haul dealer locations. we are halfway there and still have good momentum for decades u-haul has had a strategy of convenience to the customer adding these locations will further that goal enhancing affordability to our customer and positively impacting equipment utilization for u-haul you move transaction growth has room to improve this time we also initiated a harder line on delinquent storage accounts, pushing our same store occupancy number down. By September, we should be reporting improvements in that number, but the actual work was done one year ago. Positively, our rate of adding new storage customers is improving, but of course, we want and need more. In my judgment, continued deceptive pricing practices by most of the storage REITs is degrading the self-storage industry's reputation with the public. At the minimum, their actions are increasing government oversight of self-storage as evidenced by recent regulations in New York City. This is a shame and my team is dealing with it. U-Haul's customer-facing digital tools reflect increasing acceptance by our actual and potential customers. I see that as a good pause. I see a compelling future for our U-Move, U-Store, and U-Box products.

I'll turn it over to Jason to walk through the current numbers thanks joe yesterday we reported first quarter earnings of 123 million dollars compared to 142 million dollars for the same quarter last year in terms of earning earnings per share the first quarter of this year was 63 cents per non-voting share compared to 73 cents for the same period last year earnings before interest taxes and depreciation what we refer to as adjusted EBITDA at our moving and storage segment decreased $9 million for the quarter to $537 million. Included in both our release, our press release, and our financial supplement is a reconciliation showing how you go from gap earnings to adjusted EBITDA. For the first quarter, our equipment rental revenues increased $29 million compared to the same time last year. Transactions and revenue increased across both our in-town and one-way markets. Compared to the end of June this year to June of the previous year, we added 75 new company operated locations and we had a net increase of over 1,100 independent dealers. For the month of July, revenue has trended in line with what we saw in the first quarter results. Capital expenditures for new rental equipment in the first quarter of fiscal 2027 were $602 million. That's a $17 million increase compared to the same three-month period last year, while proceeds from the sales of retired rental equipment were down about $14 million to $145 million. We're still projecting a decrease of over $500 million for net fleet investing over the back three-quarters of the year. Storage revenues were up $16 million. That's about a 7% increase for the quarter. Our average revenue per occupied foot for the total portfolio sum, including both same store and lease-up properties, improved by over 6%. Digging into that number, our average new customer rental rates have increased by about 2.5% year over year, while our rates on customers who are leaving are just under two percent lower than than what the movement rate was same store occupancy was down 456 basis points to 88.3 percent nearly all of that is due to the harder line that we took on delinquent units in the second quarter of last year as joe mentioned net tenant movement activity is picking up but we're still behind where we think it can be during the first quarter of this year, we invested $194 million in real estate acquisitions, along with self-storage and Ubox warehouse development. That's a $100 million decrease over the first quarter of last year. In this first quarter of this year, we added 18 locations with storage, totally 1.1 million net rentable square feet. We currently have approximately 5.7 million new square feet being developed across 106 projects and then another 6.3 million of potential future development behind that in properties that we own but haven't yet started to put that in context last year at this time those two figures were six and a half million square feet for active and 8.3 million square feet on pending respectively my projections have us continuing to see spending on self-storage growth decline moving in storage operating expenses were up 55 million dollars for the quarter compared to the same trade last year our EBITDA margin declined by just over one and a half percent personnel fleet maintenance and self-insurance liability costs were up just over 20 million dollars during the quarter freight and shipping costs became more of a margin issue with these costs increasing close to $22.5 million from the run-up and what carriers are now charging. Shipping of our U-Box containers accounts for the largest component, with the smaller piece coming from shipping our retail products and repair parts in our system. For this last piece, our team is working to build further efficiencies into how we ship within the company. On the U-Box side, we continue to work with carriers as well as evaluating additional customer pricing adjustments. This cost is likely to be a headwind for the rest of this year, peaking here in July and then lessening over the back half of the year. But that's a lot of conjecture given how the freight markets are trending right now. Fleet depreciation increased $13.5 million for the quarter, but I'd like to point out only $800,000 of that increase was recognized after the month of April. It was May of last year that we began to materially increase the depreciation rate on our cargo van fleets, so those year-over-year negative variances are beginning to subside. Losses from the disposal of retired rental equipment decreased $24 million, actually resulting in a gain of $1.9 million for the quarter. The resale market for cargo vans started the fiscal year relatively strong and has been receding incrementally since. If this trend continues, it could lead to us holding the unit's purchase this fiscal year longer as we look ahead. As of June 30th, this year cash and availability at the moving and storage segment totaled $1,349,000,000. dollars with regard to the 350 million dollar share repurchase program that we announced during our last earnings release here in may during the first quarter we started making purchases for both our voting and non-voting shares through june we repurchased 248 368 shares of voting at a cost of $15.6 million, and 584,278 shares of our non-voting stock at a cost of 32.4 months. Since June 30th, through the close of the market yesterday, we've acquired an additional 149,747 voting shares and 813,211 non-voting shares. as of today the maximum amount that we can still use for repurchases is just under 242 million dollars at today's prices we still see value in repurchasing the shares we're holding our 20th annual virtual analyst and investor meeting on thursday august 20th 2026 at 11 o'clock a.m arizona time which is two o'clock p.m eastern time this is an opportunity to interact directly with company representatives through a live video webcast at investors.uhaul.com. We'll have a brief presentation by the company, and then the rest of the session will be questions and answers. Feel free to submit the questions to us early by sending them to Sebastian, or there will be a process for submitting them live during the presentation. With that, I'd like to hand the call back to our operator to begin the question and answer portion of the call.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality, and if you're muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. The first question is from the line of Stephen Ramsey with Thompson Research Group. Your line is now open. Please go ahead.

Hi, good morning, everyone. Thanks for taking my questions. Maybe to start with in storage, the development and pending square footage gradually declining to the 12 million level right now. do you expect this to continue gliding down in the next few quarters or through the rest of this year? And is there a floor in your mind on either the pending or developed square footage that you would like to maintain for future business purposes?

Well, first of all, what you'd like to do is you'd like to be developing just slightly more than you're renting. Right now, there's a significant gap there where we had been developing at about twice the rate we were renting up that's I don't have a hard number in my mind but we're probably now developing at 140% of the rate we're renting up so there's been improvement there I expect continued improvement there and I'd like it to be closer part of the problem with development is by the time you see a store open the company probably has three years on the site many of these things were the you're seeing come up in the numbers were really committed to at this point maybe two years ago so I have a pretty good idea of where we're headed but we also pack into that number purchases and should purchases should something open up we're looking at it and we would we would try to make a hard run at it. If you're buying existing, even if they're only 50% occupied, there's considerable value to that. Okay. Okay.

That's helpful.

No, I don't.

Okay. That's helpful. And then good to get some of the color on the OPEX growth. Maybe just another way to unpack it. OPEX grew 7%, moving in storage revenue up 3%. Can you maybe dissect how much of the operating expense growth was for the freight issues and how much of it is more in your control, such as repair and maintenance? Basically, what actions could you take in the next few quarters to moderate the OPEX growth down to where moving in storage revenue is.

Okay, let me take a bite out and then we'll turn it to Jason. Part of this is inflationary and we've pushed back on this and we've had a lag. But that stuff inevitably catches up to you. So that's it. Reported inflation is lower than what I think actual inflation is, both for our customers and for the company ultimately. Of course, it puts pressure on personnel. Well, most of our increase in personnel has been in medical benefits, not in base compensation. So there's a built-in, I should say, you know, postponed reckoning there. With the fleet, part of this had to do with the rate at which we are selling trucks. Prior to sale, we bring the truck up to good saleable condition, and that could cost easily $4,000 a unit. So that pushed our numbers around a little bit in this quarter, and it kind of moves expenses between quarters. So I think we might see a little bit better in that in the next quarter.

If you think about our big three costs, personnel, repair and maintenance, and the liability costs for the fleet, those three costs this quarter were up about 20 million dollars and they represent about 70 percent of our operating expense number so if you were to take those as a percent of revenue i would estimate that they probably took down the margin somewhere on 25 basis points whereas the The freight number, the 22 plus million dollar increase there as a percent of its normal run rate is fairly significant. Now, we're coming off of a three-year period where the freight market has been extremely positive for people who are shipping and not so much for people that are doing the shipping. So if there's a positive to this, and we're going to have to balance this with revenue expectations for U-Box, is that for the largest portion of this freight cost increase, we're either going to eat some of that cost or pass some of it along to the customers. I think we'll probably be doing some version of a little bit of both.

Okay, that's helpful. And then last one for me, halfway through the effort to add dealers, can you talk about how effective this has been in your mind? And are you still confident that you need to go all the way to where that goal was?

Yes. What happens, of course, is you bring somebody on and typically the revenue lags behind as they just learn. So it's kind of anybody's guess is how far or how mature is your addition of it. It's certainly no more than half because no more than half have been brought online. I would say probably in numbers coming through, it's probably closer to a third complete because those numbers, the first period of time the deer is just getting established. we can easily the market will support 3,000 dealers if we will thoughtfully open them there's quite a little bit to this of course we have about 850 people who opening dealers as part of their job content so we have quite a force pretty much overlaid the population just about how the population exists I think that We can certainly do $3,000. What we will do when we get there and how much more emphasis on it we will put, I don't know. If you looked at us over the 30-year period, what you see is dealers and U-Haul-operated stores have kind of a 10-to-1 ratio. And we're just kind of adjusting up where we had ought to be. We've had quite a drive on adding company-owned locations, which, of course, drives CapEx real hard. With Dealer, the CapEx is in fleet, not in property plant equipment. So the fleet, if you can handle the Dealer by just being a little more deft on how you handle distribution, you don't have a huge capital commitment to add more Dealers. So that's a positive part of this whole deal. I believe we can add the 3,000. We already outgunned our competitors pretty solidly, but our goal isn't to outgun them. Our goal is to try to get a better connection with the customer where the customer defaults to U-Haul as a solution. We have compelling evidence that if we'll introduce a truck into a community, imagine it was one truck, it's not, but if we introduce one truck into a community and hold the line for 10 years, we have solid evidence that the consumers in that community will drop about 19 vehicles from the registrations. In other words, a whole bunch of pickups and vans and miscellaneous vehicles the customers are hanging on to, when they find U-Haul is a reliable and nearby solution, it's a more cost-effective solution than holding on to a vehicle. So there's a lot of pressure in the country right now to reduce vehicles. Of course, that isn't what the automakers are looking for. and it's not our goal but it is what we see come out of it which helps align our goals with the goals and most communities are trying to get a reduction there so i think there's i think there's room executing it's a little bit of a hat trick but we're we have good momentum right now and i have good esprit de corps in my team so i would expect we'll continue thank you for the color the next question is from the line of steven ralston of zacks your line is now open please

go ahead good morning uh first i'd like to congratulate joe on his 50th anniversary with u-haul i looked at the photos in the social media and it looked like you had a nice party yeah i'm not mr party exactly but you're right we had a nice party In the self-moving segment, I noticed both transactions and total revenues increased both across in-town and one-way markets. But it appears that the average revenue per transaction is not headed in the same direction. Could you unpack the dynamics behind this divergence?

Sure, Stephen. This is Jason. So it continues to be a little bit of a balancing act with where we're at on rates and where we're at on transactions. So on our one-way business this quarter, we saw a pickup on revenue and a little bit stronger on a percentage basis pickup in transactions. But the average revenue per transaction was still off a little bit. And for the longest time now, that's been due to miles per transaction. But we actually saw a small increase in miles per one-way transaction for the quarter. So we've just, for the last two quarters, have seen the revenue per mile step back a little bit. And our team is looking at that. It has not been a concerted effort to try to do that. So I don't think that's going to be a trend that will continue. On the in-town business, transactions have been up, I would say, on a quarterly basis in a fairly spotty fashion. We had a decent, you know, about a 2% increase in in-town transactions for this quarter. I'm sorry, revenue. The transaction increase was probably half a percent. I apologize. On there, we saw revenue per mile outpace the decrease in miles a little bit. So we haven't really had a quarter yet where everything is trending in a positive direction. I would say that we just haven't had, other than a fairly steady increase in revenue, the three major factors that contributed to that haven't lined up all in one quarter.

I might add to that. I've consistently been kind of a little bit of a transactions now revenue to follow guy which annoys some people here but there's a certain amount of truth to it so as we've added locations it's become more convenient to people and in fact that it's reflected in maybe a little bit lower ticket because they didn't drive quite maybe they drove five miles less or something of that nature but in my experience if you can drive transactions and particularly bring newer people into the customer base that over the period they will continue they will tend to repeat and we'll see continued growth so that's that's what I'm

driving on but I think we're we have pretty good awareness here revenue per transaction and miles per transaction we're not alarmed thank you moving over to you box other revenue only grew 1.1% this quarter, which we know is primarily driven by U-Box. Over the last few quarters, U-Box has expanded its footprint in warehouse space and containers and delivery vehicles. Is this due to a tough comparison against last year's 15, roughly half percent growth in the first quarter of the last fiscal year, or is something else impeding U-Box's top line growth?

Well, I'll start with that and let Joe clean up if he needs to. The underlying transactions for the quarter looked better than the actual revenue results. So, you know, part of this, I would attribute a couple million dollars of the variance is just due to how we've done the accounting for some of the insurance products associated with this product and shifted some of that to our P&C company from here, you know, but even given that, it wasn't a blowout quarter for U-Box. So number of boxes in storage is up, and the number of boxes that we shift is up. It's just that the average revenue per each of those didn't climb as fast. And, you know, I referenced the issue that we have with freight, And that's going to be a balancing act as we go through the rest of this year is how much of the inflation that we're facing can the customer bear without us affecting transactions too much.

I might add to that that when you see this freight goes up, it has another kind of a strange consequence. It often reflects more late shipments. And late shipments really annoy the customer. So we had an increase in late shipments that had something to do just with the general freight market. In other words, people were bidding a job, awarded the job, then they just didn't show, okay, which causes us to have to basically book some real expedited. And expedited shipments can cost you three times what a regular shipment costs. And I can't quite unpack that number, but there's an underlying thread going on here. We made some changes probably four weeks ago now that have driven down late shipments, and that'll drive up customer satisfaction. You know, you're always running the blend of this. So I think we made a misstep there that has been corrected, and I think that we will be proceeding ahead calmly and solidly. The increase in boxes and storage is another key metric we've driven on hard over the last nine months, and we're starting to see some results there. The U-Box product is kind of a mix of you move in your store. It's hard to characterize the customer as one or the other, and the greater margin is in the storage of the U-Box rather than the shipping of the U-Box. So as we drive on more storage, which we attribute to U-Box, we don't put that into our storage numbers, but it in fact is storage. So as we drive on the more storage for U-Box, I think it's going to help our margins a little bit and drive the whole thing. So, yeah, we were a little slow from what we had hoped to do, but it appears to be turning the corner. Thank you.

And just a last quick question concerning the share repurchase program. With the announcement last quarter, your stock has gone up 42% since you announced the program. But looking at how it's composed, roughly $32.5 million was deployed toward non-voting stock and $15.5 million to voting stock, which is a two-to-one ratio roughly. but the ratio between non-voting and voting shares is 9 to 1. Is there a strategic reasoning concerning this mix?

I'll start with that. This is Jason. So when we first rolled out the plan, we were testing different allocations and different trading strategies to see what effect it would have on the shares. When the safe harbor window closed and we had to switch to a 10B51 plan, I think you've seen in the numbers that we put into the queue as subsequent to the quarter and what I just reported now that it shifted a little bit more towards buying the non-voting shares. In our minds, there really shouldn't be much of a valuation difference between those two shares, but it's interesting to see where individual investors decide to attribute value. And so I guess that's my insight into it.

Are you saying it's almost totally due to the regulatory restrictions of implementing a share-first-reach purchase program?

No, we set the plan, but then the plan just runs outside the safe harbor window. I would say, I mean, if you look at the number of shares that we've repurchased and the number of shares that are trading, if not our trading activity, I don't believe it's the actual trades that are driving the share price because we're a relatively small piece of the overall activity. oh no i didn't mean to imply that at all i was thinking that i know it's based on the average volume of the shares on a given day that is regulatory controlled and if that was forcing you to have this skew initially no that's not the case at all all right thank you for answering my

questions you're welcome the next question is from the line of andy loi from wolf research your line is now open please go ahead hey morning thank you for taking the question a lot of good ground is already covered so you know my question is really kind of as you think about the u-haul footprint geographically right you know just kind of wondering you know where you guys look expand or or you know even or even contract as i look because when i look at the um earnings release right you guys get top 20 markets i see kind of the biggest growth in square footage on the storage side it's north carolina ontario and then you actually had some um square footage decline quarter over quarter from places like missouri and indiana so i'm just curious you know are there certain states or markets that are performing well something better that you're looking to expand more into, or is there some places where there could be some portfolio pruning going on?

This is Joe. We're not dropping storage except, you know, a condemnation or something of that nature. We're, I'm trying to think of a place, it's a couple times we've done a redevelopment of a place so you take the storage down and then magically two years later you add more rooms to same site so but as far as no we're not pruning the portfolio let's let me answer that first question the second question the second part to me was you know how are you deciding where to put it well as you probably are better aware than i am there's a bunch of sharp people with plenty of statistical information building storage also so we are looking for where we see an opportunity for us and often because we have such a broad footprint we may see an opportunity so i i don't know currently the last time i looked public storage was serving 41 states so they're not competing in nine states so i might i might see more opportunity difference we put a bunch of storage into wyoming and montana not exactly new york city but we think they were all opportunities and so we're kind of being opportunistic storage is very much a local market when you get down to an individual store it's geographically specific i guess would be a better way to say it storage is geographically specific you only store in montana if you have some other contact or relation with montana there's always brand awareness issues and we I think work on them. I don't think, I think maybe our re-competitors are making some decisions more driven by that than we are. We believe we have fairly good brand awareness. So no, we're not pruning. And yes, we're trying to look for where the opportunity is. And oftentimes it's taking us out of some of the major metros because there's not a major metro in the United States? Well, I'll say there is one. El Paso, I mean, Laredo, Texas. We went into Laredo. Nobody else is there. Okay. Well, a significant metro area with no national competitors. So that would be an example. We're in there because we're in with the U-Move product and we're familiar with the market. It's just, we consider that a good market. The rest of the country may say it's an unsettled border town and they don't want a piece of it.

Well, that'll be okay too. we're already in we're already dealing okay no no awesome that that's you know a lot of uh good detail there i appreciate that and um you know you brought up the interesting point of your kind of brand recognition i know earlier this year right and you guys do this periodically as well you know put onto your website about things such as you know just earlier this year it was the uh great lock for it for a year so you know as you talk about kind of you know the pace of move in of net move-ins taking up would you attribute that more towards you know kind of you guys are doing something unique and different or is it or do you see like a broader improvement

in the overall you know in industry and leasing environment no i don't think the industry and leasing environment is improving i think in fact that the major companies we're competing with are destroying the industry's reputation with the consumer or eroding it they're not destroying it that's over brought but they're eroding it and we're using price lock to try to distinguish that but it's difficult for consumers to separate one big company from another and so it's a little bit of an uphill battle but we're we're we're dealing with that battle and that's we have had a we have been the only major person who's ever posted prices in their active location for probably 30 years and we have a whole different view of relations to consumers than some other people do and only the future will determine who's correct okay great no thanks so much for um for all the details there the next question is from jeff kaufman of citizens bank your line is now open please go ahead thank you very much uh well congratulations joe and and also i i guess i'm kind of wondering you surprised by the share reaction post the announcement of the buyback no i think i think the market was sweating us out a little bit and uh they quit sweating us out values there and more but of course it's always a question of time and you all have a relatively tight time frame. So I too often see things in terms of decades rather than quarters. And so we have to get kind of a happy meeting place. And I think that the buyback gave us a little bit more of a happy meeting.

Well, it's nice that the market's seeing the value now. Question for gains on sale. Big turn this quarter. Great to see. I know we're still well off of probably where we should be on a normalized basis, but given the big year-on-year change of almost 24 million, could you talk a little bit about the components of it? How much of that change was we sold more vehicles? How much of that change was a change in vehicle price? How much of that change was relative to the lower depreciable value that you guys have been pushing through the P&L?

Well, I'll touch on it. Then I'll let Jason, he's much more precise on his numbers. But basically, with all this, depreciation and resale, our objective is to try to reflect actual depreciation. So you see sometimes we are more aggressive than other companies because we think there was real actual depreciation. so we're trying to match it in we did a poor job of that i think for three years because we were the optimistic on resale values we got a little more realistic on resale values and sort of appreciation came in so we're realizing the costs every quarter which when i took accounting and principles of accounting that was one of them try to have income and expense in the same period so you know i think it's just a better reflection okay so you could say it was all due to depreciation and you you understand it's not but and and we don't we don't have total product line visibility of income i can't say we know for a fact how did the the pickups do how in fact did the because a bunch of expenses are allocated and if you look at our total operating expenses but But we saw improvement across the board, including on equipment condition. So equipment condition impacts resale. If it's too good, you've not run the equipment hard enough. If the equipment condition is poor, you've run the equipment too hard. So that's a little bit of a murky one, but we did a better balancing job. Most of the actions we took on that really date back probably 20 months. because this has to all process through on a sales cycle, if that makes sense. And the sales cycle is something like 20 months. It's been moving around because we've, you know, had dead ends, and so we've held sales, and Jason alluded to we might hold some sales going into this fall. We were just – it's just a constant tradeoff. You're trying to optimize that, and it's not just run statistics. on railroad tracks and a big part of that is because of the total disruption of the automotive industry and new prices and resale prices have oscillated not our experience for 40 years was they crept up they've been oscillating and they've actually crept down or not crept down it you know some cases you know fell dramatically three years relative to acquisition prices The automakers are very hardworking at trying to regulate this because, of course, it upsets their business mass. A great deal of this has to do with political movements related to green energy and battery-powered or non-internal combustion-related engines. So this is kind of whipsawed everything, but there's been some shock absorbers put on that mess over the last year, and that's helped us. helped everybody get some predictability uh we you know we can't just adjust well we can't we we don't just adjust our depreciation you know every quarter we try to have a little more continuity you don't know if uh if something's an incident or a trend and we're looking at this constantly trying to evaluate it so i would say we did our our our guesses were more accurate let's put that than what our guesses were in some prior times but that had to do with something with our how well we did our job it had a lot to do with this oscillation in the market which has had some brakes put on it which is going to be a net game for everybody jason well i guess what i would say is that you have two primary variables what you buy the truck for and what you sell it for than how we depreciate it over the course of the life.

What we've done a better job of doing over the last 12 months is depreciating the correct amount. And now you can see that in our results today. Our results last year showed that we weren't depreciating nearly enough. This year, eking out a small gain, we're seeing that, okay, well, we've depreciated the trucks the correct amount. And so a positive note is we don't have to increase the amount of depreciation per unit for the next year. So that's a positive. If there's something that isn't such a positive is that we're not at the point where we can dramatically decrease the depreciation per unit going forward, right, which is really the next step that we're aiming for. So what we've seen is incremental movement over the model year 25 and model year 26, the cost of the new units has been coming in. Now, most of what we've sold this first quarter was still the higher priced units, but we were selling into a market with higher resale values. Those higher resale values appear to be a bit temporary and that the levels that we sold out in the first quarter aren't sticking, but they're not going into an area that is terrible. It's just not quite as good. So I think what we're looking forward to is as we purchase the rest of the cargo van fleet that we expect to buy this fiscal year, the average price of the units coming in is going to be going down. So the ones that we brought in early have been the highest price units, then they're going going to trend down. And I've said this the last several calls. We're going to evaluate the resale market. And if the resale market levels out, great. We may continue buying at this pace next fiscal year. But if the resale market continues to go down, then we'll hold these trucks next year and not sell into a down market.

Okay. That was very helpful. So I guess my takeaway is it's more a function of things that you've done internally than the external market becoming incrementally better?

I don't know. I would say that prices are down, which, you know, we can credit our negotiating tactics, or that's just where it's at. I would say that's just where the market's headed. And then the resale market was pretty good for a few kind of idiosyncratic reasons the first quarter of this year that probably aren't going to stick. So we have stuck with our depreciation. We did one thing right. We stuck with our depreciation number, and that appears to have been adequate.

All right. Thank you very much.

Next question is from the line of Jamie Willen with Willen Management. Your line is now open. Please go ahead.

Hey, fellas. First, I want commend you on the change in capital allocation strategy that you engineered last quarter. It's going a good way towards starting to narrow the value gap. I appreciate that. The question is, on self-storage, as you look to build out your network and as you look at the numbers for occupancy rates and the rental rates per square foot, what is the thing that drives you toward different areas? I realize it's always a local market and everything is individual, but are you targeting towards certain areas where occupancy rates are very high or is it more the rental rates that you start with and and and which number are you trying to drive more you do you want to drive occupancy rates or rental rates as you operate the self-storage Jamie operationally we are focused on occupancy rates and and we manage rental rates centrally pretty much so i i deal most of the time with the field force the field force is just fine they accept the price and now the challenge

is to rent them but we have a group of analysts in here can add and subtract just fine and they're trying to optimize that and you if you look you'll see that we have seen steady increase in average rental rate and as jason would point out you're actually seeing our move-in rate a little bit above our move out rate and that's not been worthy outlier in the industry most people are seeing their move in rate significantly below their move out rate and that's been their they have at least 24 months of that i i don't know how long but they're everybody they got every bit of 24 months of that so we have a little bit of a different strategy we have another thing that other people don't have i have something like 2400 2300 stores and some of them a very very strong truck rental orientation and some of them have a very very strong storage orientation and so So kind of for internal strategic reasons, I may be going to try to balance out by putting storage in that community because I just simply don't have as much as I want to be able to get optimum results. In other words, how I spread my overhead makes a difference in how I look at the thing. So the last couple of board meetings, we call those abutting properties. We did some abutting properties that we might not do if we didn't already have a store. That kind of makes sense. So it's not red hot and run in place, but we're in there with the U-Haul. We plan to be there 10 years from now. And at some point, we're going to have to put storage in in order to get enough total revenue to allow us to function. There's other pressures that you don't see. On the West Coast of the United States, there's tremendous momentum to introducing minimum wage for salaried personnel. This is kind of a new concept. Most of us think minimum wages have to do with hourly personnel. These communities are coming in, and they're coming in with numbers in the $80,000 to $90,000 range. And in many communities, it's not supportable with the level of business that we're doing at that location. As you know, once you raise one tier of wages, it kind of trickles through every other tier. So that is driving up the break-even revenue number that we need on a site. So a site that may have been very profitable or at least acceptably profitable for 10 years, now is facing pressures that ultimately may be too great for them to endure. So we're going to put in storage as an adjunct, and it will kind of make the whole thing a little more optimized.

Okay. On the U-Box side, you said transactions haven't increased in U-Box. How would you characterize your market share there versus where it was a few months ago? And the second part of that, Jason, you mentioned that we actually sell insurance on U-Box. I'm sorry to say I've never rented a U-Box, but obviously that's got to be a very profitable operation for us. to, I'm not sure what damages you're insuring for in the U-Box, but one would think it's a very high profit margin for you.

Well, we would hope we'd have a good profit margin. We have two different kinds of insurance. One is damage in transit, and one is damage in storage. So damage in storage would be something like a rodent got in your box, something like that. That we have pretty good control over. damage in transit because we consign the box to a shipper in many cases it's not quite as predictable and so we're making a profit on both of those lines we intend to continue to make a profit on them and it also to a certain extent increases the confidence of the mover they feel will have insurance it's insured so it's a big a little more confidence in the whole process so that As to market share, we don't have anything that's reliable data. We try different things to get something that we can gauge ourselves to. Pods, which is the biggest brand in the industry, I think we saw a little resurgence for them in the last six months. They got a little more – I don't know if they put a new guy in charge or whatever. They put a little more zip in their step. But on the myriad of other competitors, they're kind of, most of them are going to be also rams, although they're all good people, and it's very difficult to develop a network, and so they have a lot of constraints in being competitive there. We have substantially the network in place. I still have, I'm still anticipating constructing a warehouse in Manhattan. Okay, I got the land. I'm in the planning process. One day we're going to break ground, and we'll plop down $20 or $30 million to put in the warehouse in Manhattan. But if you looked at the United States as a whole, we have substantially positioned ourselves. So we have a network. I have a network. We have a network. Nobody's close to us on the network. And that asset, other than property taxes and such, that asset, once you've got it built, it's not a big cash drain. We're obviously increasing our share, but we don't really have a way to tell you it's just the truth. Internally, we get all excited because we're all looking to beat the other team like everybody is. But to tell you that we could tell you a share, I think is.

Thanks, fellas. Great job in moving all these businesses forward. Appreciate it.

We have reached the end of the Q&A session. I will now turn the call back to management for closing remarks.

Well, as Jason mentioned earlier, we'll hold our 20th annual virtual analyst and investor meeting on Thursday, August 20th at 2 p.m. Eastern. You can access the video webcast at investors.uhaul.com. After our brief presentation, we'll have a Q&A session. You can send questions that you have ahead of time to ir at uhaul.com, or you can submit the questions live during the event. Thanks for today, and we'll talk to you in a few weeks. This concludes today's call.

Thank you for attending. You may now disconnect.