Q4 2021 Amerco Earnings Call
Fiscal 'twenty 'twenty, 1 year and Investor call, all participants will be in a listen only mode.
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Please note. This event is being recorded I would now like to turn the conference over to Sebastian Reyes. Please go ahead.
Good morning, and thank you for joining us today.
Come to the AMERCO fourth quarter fiscal 2021 year and Investor call.
Before we begin I'd like to remind everyone that certainly 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 27, a of the Securities Act of the 1933 as amended and section 21 E of the Securities Exchange Act of 19.
And 34 as amended.
Looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.
Certain factors could cause actual results to differ materially from those projected.
For a discussion of the risks and uncertainties that may affect the Americas business and future operating results.
Please refer to form 10-K for the year ended March 31, 2021, which is on file with the U S Securities and Exchange Commission.
I'll now turn the call over to Jason Berg, Chief Financial Officer of America.
Thanks Sebastian.
I'm speaking to you from Phoenix, Arizona. This morning, I have a few minutes of prepared remarks that I wanted to go over and then we'll go ahead and open it up for questions and answers.
Yesterday, we reported fourth quarter earnings of $3.76 months of share.
And as compared to $6.24, a share for the same period and fiscal 2020.
And I did want to remind you, though that in the fourth quarter of fiscal 2020 that was when we recorded the additional net tax benefit.
Mm $146 million, which was $7.45 per share when we recognize the effects of the coronavirus aid relief economic security or the cares Act.
So I believe that another useful supplemental measurement is to look at our earnings excluding this item.
This results and adjusted losses for the fourth quarter of fiscal 2020 of $1.21 per share.
For the full year of fiscal 2021, we reported net earnings of $31.15 a share.
For fiscal 2020 of the Unadjusted number was $22.55.
However, if you exclude the aforementioned cares act tax benefit or.
Our earnings per share for the full fiscal year, and 2020 were $15 and Tencent.
We are of a reconciliation of this and our press release as well.
Let me start with a few comments on our equipment rental revenue.
We experienced an increase of 33%.
Approximately $172 million for the fourth quarter versus the same period last year.
And we finished the full year up 15% of $391 million.
For the fourth quarter and the full year, we saw increases across most of our categories, 1 way and the entire revenue and transactions.
Both increased in double digits average.
The average miles per transaction increase and our 1 way rates remained strong.
Our corporate account business of what many might refer to as last mile experienced a strong increase in revenue for the quarter and for the year.
Compared to the same period last year, we increased the number of retail locations and independent dealers.
As you May recall it was during the first quarter of fiscal 2021, and we began to experience the effects of Covid and we had a 13% decrease and equivalent rental revenues.
And we're now beginning to run into those months on a comparative basis we.
We saw no such weakness in April and May of this current year and in fact revenue trends.
Continued on and a very strong fashion.
Capital expenditures on new rental equipment were $870 million for fiscal 2021.
That's down from $1 billion $374 million and fiscal 2020.
Our original plan for fiscal 2021 was was to reduce <unk>.
Capital spending on the fleet between that plan Covid delays and now the Microsoft Microchip situations facing our manufacturers, we're working to normalize our truck rotation schedule.
Capital expenditures for the rental fleet and again. This this projection is dependent upon the manufacturer of availability or.
And are expected to increase to approximately $1.2 billion and fiscal 2022 net.
And that's before netting any sales proceeds against them.
So speaking of sales proceeds.
Sales proceeds from retired rental equipment decreased by about 150 million.
This last year to a total of $527 million.
Sales volume for fiscal 'twenty, 1 was below last year's levels, However, sales price per unit improved.
Should the availability of new equipment to allow for us to complete our planned purchases this coming year.
Would expect to see our volume of sales and related proceeds increase in fiscal 'twenty 2.
The fourth quarter was another good quarter fulfilling and self storage units.
Looking at our occupied unit count at the end of March we had an increase of 69000 occupied units compared to the same time last year.
And put this in the context.
During the last year's fourth quarter call I reported to you that we had increased occupied rooms.
Just over 49000 rooms, and the previous 12 months.
Increased the pace of filling the rooms by about 40%.
20000 more rooms.
And we sold last year.
This pace of filling the rooms has continued to accelerate into April and May.
Okay.
Storage revenues were up $21 million, which is a 19% improvement and for the full year that was for the quarter for the full year revenue increased just under $60 million of 14%.
For the third quarter and a row are all in blended occupancy rate experience to increase the fourth quarter rate went from 66% last year to 74% this year.
We've added just over 36000, new rooms into the portfolio during fiscal 2021.
For fiscal 2021, we invested $505 million and new real estate acquisitions and.
And the development of self storage and U box warehouse space.
And was down from fiscal 2020, when we spent $750 million.
Our goal going into fiscal 'twenty, 2 is to increase the pace of investments.
We currently have approximately $6 million 700000.
The new square feet and development.
We still have about 50 properties that are not yet in the active development phase that at a bare minimum would add about 2.5 million square feet.
And we are now starting to see our acquisition pipeline and beginning to accelerate a bit we have approximately $150 million worth of.
Acquisitions currently in escrow.
Retail product sales increased 40% for the quarter all 3 of our major product lines move.
Moving supplies hitches and towing accessories, and the propane saw revenue and volume increases during the quarter. These.
These lines are continuing to improve into April and May.
And the moving and storage segment.
While operating expenses increased for the quarter, we continued to see and improvement and our operating margin for both the quarter and for the full year.
If you look at either of our GAAP operating margin of total cost of total revenue or the EBITDA margin, we posted improvements from the fourth quarter and for the full year.
Operating expenses and the quarter increased $78 million, which is higher than usual.
However, the quarter included some costs that are better evaluated within the context of the entire fiscal year.
Yes.
For fiscal 2021, we saw for the full year, we saw the smallest increase and operating costs since 2016, and if you look back across the last 10 years. It was the second smallest day.
Increased and operating costs.
Our 3 largest operating expense categories personnel maintenance and repair and liability costs did see quarterly increases, but they remained below the rate of revenue increase.
I alluded to on our third quarter call that we were going to make a contribution to our employee stock ownership plan.
We did that and the fourth quarter it was about a $19 million charge.
That was recognized in the quarter I also highlighted in the press release that fleet maintenance has increased as the need for preventative checks has gone up in relation to additional rental miles and the fleet.
And as we've had as we haven't been able to rotate and as many new trucks. There is some portion of the $6 million quarterly decrease of fleet depreciation.
That is now being reflected in increased maintenance costs.
Operating earnings at the moving and storage segment increased by $138 million.
Bringing the earnings for the quarter to $117 million.
We continue to improve our cash and liquidity position at the end of March cash and availability from existing loan facilities at the moving and storage segment totaled of $1 billion $115 million.
With that I would like to hand, the call back to our operator, Tom to begin the question and answer portion of the call. Thank you.
Thank you we will now begin the question and answer session.
Ask a question press Star then 1 on a touchtone phone. If you are using a speakerphone. Please pick up of your handset before pressing the keys.
And any time of your question has been addressed and you would like to withdraw your question Press Star then 2.
At this time, we will pause momentarily to assemble our roster.
Yes.
And the first question comes from Steven Ralston with Zacks. Please go ahead.
Okay.
Good morning Lauren.
And Steve.
Okay.
Great.
The top line.
And <unk>.
I wanted to get involved with that it seems like the everything's going your way there.
I'm looking at the cost area.
And.
Could you delve a little bit more into your comments about the margin.
Looking.
Looking just at the operating expenses it seems like did you have.
And abnormal amount of increased personnel costs, even if you ex out the.
The stock.
Ownership program that you had.
And also going forward it may be harder to.
Acquire more employees.
Could you just go into detail on that.
Sure, Yes, I'd be happy to.
Hi.
On the personnel for the quarter and it was up in total and absolute dollars, probably a little over $40 million. So close to half of that was this the aesop cost which.
Which didnt run through the fourth quarter of last year, So thats the costs.
Probably better and evaluated and.
Over in the context of a 12 month period.
And for the 12 months, our personnel number was up maybe $36 million roughly.
Just to kind of put it into context.
We also had some additional.
Uh huh.
Bonus compensation to the field also and the quarters of our bonus number.
That was probably up close to $10 million, but thats largely calculated based upon and improved results. So if you compare our overall personnel numbers to revenue.
Even with that extra Aesop expense, we still picked up arguably somewhere around 18% to $19 million of margin in the quarter there.
And it led to <unk>.
Increase in absolute dollars.
On the repair and maintenance side.
We're working with and such a busy year, we're working to get caught up a little bit on repair and maintenance costs.
So some of those costs arguably.
Took place and the third quarter and and the equipment got into the repair shops.
And the kind of getting the.
Maintenance checked out and the fourth quarter.
Those cost per up little over $13 million were still down for the year.
And on repair and maintenance cost to the tune of about $18 million.
Other significant increases for the quarter, we had.
Look it like property taxes utility costs and non capitalized building maintenance of those were up about $5 million.
Our liability insurance costs were up about another $4 million.
Shipping.
<unk> been shipping a lot more retail product to our locations.
We're also been shipping a lot more new boxes, so shipping costs were probably up close to.
$6 million so.
I don't see anything.
In our expense numbers that concerns me from a structural perspective.
We I would say the timing of personnel expenses kind of uneven across the course of the year, but I think the 12 months is a reasonable look at that.
Thank you for the amount of detail and even took the way 1 of my follow up questions.
Okay.
Also on the.
The additions to the truck fleet there are a lot of challenges there, especially the lack of supply.
And.
Well, we also know that the metal costs are going through the roof. So even when some of things get resolved there seems to be.
There'll be quite of bit of inflation impacting.
The new inventory of the truck fleet.
Could you make a comment on that.
Sure.
We have for the most part of our cost for the equipment going into this next year.
And the equipment costs have been going up 2 to 3.2% to 3% per year over the <unk>.
Yes.
Last 10 years.
Right now more so than cost I think we're just concerned about the availability of and when theyre going to be able to deliver.
So.
And I think versus our competition, we are uniquely qualified to deal with hiccups and the and the fleet supply chain.
We have the repair organization of established where.
You saw this year, if we don't get as much new equipment and as we wanted to we're able to deal with the equipment as it ages I think better than most.
So we are planning our fleet plan for this coming year.
Is to grow the fleet of 2000 and trucks.
If.
They are available.
And and right now it's a little early on and I would say that we're looking at somewhere so far maybe 5% to 7000 and cancellations maybe on the low end and so far of.
Of current model year of trucks.
And we will see how that flushes itself out over the over the rest of the year.
Alright, and then just the circle back of the topline.
And I want to say, it's like self storage is on cruise control, but thats because of good management planning and increasing the capacity.
Any forward looking comments that you'd like to make on the and.
The self moving side.
Especially the repositioning any trucks and.
Our.
And the undesirable locations.
Well, yeah, I'll certainly hit on that last point debt.
Hi.
The repositioning of trucks, which is the just the basic.
And I talked to our folks here internally is the basic blocking and tackling of what we do.
And.
You never really have a point, where everything is where you want it but they have made over the last 3 to 6 months, some significant progress and getting trucks to areas, where we want them I would say and talking with with our folks who run those areas.
And they've made progress and getting equipment down to southern California.
We've made some progress and.
Leading some of the oversupply and Texas out towards Nashville, we always have areas of that that need equipment the northeast.
And it's still an area, where we could use some equipment.
Still have probably a little bit of excess equipment.
Parts of Florida, but.
There is always going to be something like that.
We've made some good progress and areas.
So I don't see anything uniquely.
In place right now that would prevent us from.
Being able to serve customers this year and recognize revenue increases.
Thank you for taking my questions.
Thank you.
The next question comes from Jamie Wilen with Wilen management. Please go ahead.
Jason and nice quarter.
Okay.
First of all comment on thank you and Matt.
2 negatives and you come up with the positive.
Quite the way it works and business.
Thomas positive this quarter and you put out a press release debt.
It sounded like the world was coming to an and.
I would encourage you and the future of actually higher and Investor relations firm to rate.
These press releases.
And you can actually accelerate some of the positives that you've been achieving and how you got there during the past year.
So first of all I'll start with withdraw rental you were the profits for the year, obviously were significantly higher than last year.
And at the highest level of profitability, you've ever had and truck rental.
And that's a great question and certainly going back over say the last 5 years.
And I don't have that off the top of my head going back say before fiscal 16, I think fiscal 16, and I'm thinking of 16 and I'm thinking of.
2006.
As both years debt that we had.
Pete kind of and it absolute dollars yes.
And I'm trying to think of like of common size measurement.
And I might have to compare it against a couple of other years.
Would it not a very good thing to look at that and and.
To show, how well your truck rental business as of this was the highest we've ever achieved.
Yes.
Okay.
And.
And indeed, when the press release came out for the for the year for the quarter.
Yeah.
And the newswires really didn't pick it up at that last year's quarter included.
Kevin.
The share gain from the cares act tax provision.
I think more clarity you might have to help them do that and the earnings you might have looked as good as they were indeed, your profits were up significantly and in that quarter.
And and should have been recognized as such.
And as I look at truck rental what I'm really pleased about is the fleet utilization.
We have and buying a lot of trucks and share we have.
As we've been forced to slow down and had increased volume.
The difference.
Defense and fleet utilization caused the profits to nearly double and.
And this year.
Joe first of all we said for utilization is Susan This is driving force how do you look at fleet utilization for what youre going to achieve and the future.
Well.
And there was a whole lot of <unk>.
Pretax before he got to the question there I just wanted to comment on the press release so.
We attempt to adhere to the letter of.
But the SEC expects of people and I am very sensitive to providing non-GAAP measurements or adjusted earnings per share. So I appreciate what youre, saying, Jamie, but if I say something wrong I'm. The 1 that's going to get in trouble for it and that yield.
I'm, a little sensitive to 2 where I'd place adjusted earnings I appreciate that I try to put it in the same paragraph I can't help it of people are reading that.
On the utilization question.
Yes, we saw improved utilization. This year, we have had years, where on a per truck basis utilization has been higher so we still have blue sky on how much more utilization, we can get out of the equipment.
Okay.
On the self storage side I know you don't break things out, but we have a <unk>.
Large amount of of depreciation and there do we have and actual operating profit after depreciation and I realize the cash flow is humongous because once these things are built it requires a little and the way of capital expenditures.
Sure.
Since we don't break that out of the best I can tell you is based upon how we do reporting to the the lenders that.
Have lent us money against those assets and yes, even after depreciation assumption and they're profitable.
Okay and could you shed some light on an annual basis on a given.
Self storage facility that you built.
The annual depreciation charge.
On the wood.
Over 700 units of $5 million facility versus what would your capital expenditures normally be.
It's a good question I don't know the I don't know that off the tip of my tongue Jamie.
Okay.
The 20% of depreciation or we attempt to.
Allocate as much of the cost of a storage facility as we can to assets that depreciate it benefits us from a tax perspective.
On conversion properties.
In particular, we focus on cost segregation study there is the tax law that is very beneficial to us for conversion properties that allows us to really.
Frontload as much of the those of the.
Tax depreciation as possible.
On a lot of those we do have a different depreciation on the GAAP basis, which slows that down a little bit.
But I would say maybe 5 years ago, we focused on that and we probably accelerated our GAAP depreciation a little bit as well as we've allocated more towards assets the depreciate quicker.
And over the first 5 years of the life of the self storage what percentage of the assets are depreciated with the accelerated basis.
That would kind of go with your first question that I have not looked at and example of that recently at 1 of our cost segregation study and I haven't I don't recall it off the top of my head Jamie.
Okay. You said you had about $150 million I believe and the acquisition pipeline.
Could you tell us the.
The location of the use and the multiple of EBITDA you're paying.
For most of these.
Sure.
As far as locations of those there.
Net all over the place that translates into about 50 of 55 deals.
The.
Debt that our spread I mean off the top of my head I'm thinking of California.
Mexico, Colorado.
Sure.
It's really spread all over the place.
Or what we did and the last 12 months.
I would say I think we bought 910 existing storage facilities and probably the.
The projected cap rate on those purchases of somewhere around 7.5.
For conversion properties.
Say that the the projected cap rate on those deals is closer to say 9.510 and.
And.
And on ground ups, probably 90 to 95.
Okay.
So that you are now ramping up and affiliate program for your self storage units.
As you are all going to be managing more outside of your niche and the future.
Debt.
We're ramping up the existing affiliate program that's been in place now for close to 20 years.
As far as us too and actual third party management.
No I have not seen that yet.
Okay.
Very good and then the last question as you look into.
April and May I believe you said on both sides of the business.
The truck rental revenues and self storage.
Revenues, both look to be at a growth rate that is equal to or exceeding where you had been and the previous quarters.
Yes, it is kind of get complicated here because.
Up until June from from the last 10 days of March through June we had.
Decrease revenue so.
At the time, we hit next quarter.
I'm going to need.
Come up with some comparisons and maybe 2 years ago.
And in order to say, okay, what's the real growth because of.
Of course, there's going to be easy to show outsized improvement compared to the first quarter of last year, but I think we wanted to say if you did average.
<unk> growth from 2 years ago, how does the improvement work and we're still seeing.
April and May was strong revenue growth EBIT compared to the.
The 2 years ago when.
And when you take an average.
So we'll try to work something up I have no doubt that I will find a way to disappoint, you and how I present that but I'll try to find some way of doing it.
Okay, and 1 last 1 with self storage you had always done it and figure 4.
The existing units what percentage of capacity they are running the 1 of the mature units.
And the percentage of self storage facilities running over 90%.
Yes.
That is so well.
<unk>.
Couple of measurement of that.
What I have been kind of going to locations that are over 80%. So right now we have about 70% of our our locations are over 80% occupancy on balance sheet.
Compared to last year at this time, that's 145 more locations at 80% of occupancy.
And then the average occupancy of those locations was 92, 3%, which is a 140 basis point improvement from where we were last year and was.
Yeah.
Okay.
Within the industry. It seems like rates are moving up a little bit.
And as I.
Occupancy rates are moving up do you see that as well.
Yes.
Yes, I would say the the.
At the end of March our average asking rents were up maybe 1.5% to 2% compared to the same rents asking rents of the year before and.
And based upon.
And how the rooms are filling up.
Estimate and we'll see some stronger.
The rate growth this year.
Thank you very much Jason appreciate it nicely.
Youre welcome Jamie Thanks.
As a reminder, if you have a question press Star then 1 to join the queue. The next question comes from Craig Inman with Artisan partners. Please go ahead.
Hey, Jason.
Thank you and me okay.
Yes.
I guess I'll start on the.
And the Capex side for the trucks.
You indicated this year was it growth $1.2 billion is that right.
And that's what we're going into thinking is going to happen.
Okay.
1 of the things.
Obviously.
The business kind of pre pandemic grew and that 5% to 6% range and so we kind of pulled forward 4 of 5 years of revenue growth.
And this period, which is certainly and the last 9 months.
And you saw the the op margin improvement and the utilization improvement.
So how do we.
<unk>.
Not get back into that situation, where we're building for the future too soon.
Where we have too many trucks and we're kind of waiting on the revenue to come.
Plenty of sense of of debt.
Dynamic well.
It's a balancing act so the.
Right now.
We have 2 things that we're trying to accomplish and the fleet program and 1 we're trying to get back to normalized rotation program, because we werent able to get all of the trucks that we needed and this year and order to rotate out the old ones.
So there is a certain amount of that debt, we have to get caught up on and then and the middle of that we see an opportunity where we would like to increase.
The size of the box truck fleet nominally I mean, it's not going to be a dramatic increase.
I think total growth Capex next year under our base plan that would be somewhere around.
$200 million.
And.
Or are we of 100% sure that we're going to be right on demand no, but our best indications is that were going to be able to use that and equipment.
If you go back.
18 months.
And some of the discussions that we're having here then was the.
And that we should stop by and trucks and that we should stop by and self storage and.
And we slowed but I think we're all pretty happy that.
Serendipitous the way it worked out to our advantage to have that capacity and the business environment that we're in today. So sometimes it works out sometimes it doesn't I think.
We have put ourselves into a good position for.
And the environment that we hadn't planned on.
We've been taking advantage of it.
Yes.
No I know I just.
Okay.
Just seeing how the revenue came through and the Opex didn't expand as much and gave US a picture of where utilization was and we were.
And we were over fleeting.
For today, we werent ever fluid for maybe 3 years from now and that has pressured margins and pressured returns.
And it's worked out.
But.
I'm, just asking because we don't want to go back to waiting for 3 more years, if we over fleet again, and just trying to get a sense of how you all are thinking about that.
I completely understand your point, Craig and <unk>.
We are aware of that and.
And we will where we're trying to be as thoughtful and careful about about this is we know how.
Yeah, No I know Theres no answer here, because I mean, you got to play to win and to so.
No.
Look there is and opening here that we've been trying to take advantage of with other people who have maintained the close of attention and.
And.
The chance.
The rates for 1 warrant for.
For the ones that Werent normal.
And maybe.
And maybe we have gotten to a point, where we're a little bit more.
And what normal should of been.
And so.
Hi.
I think we've seen a little bit more activity with.
More miles being driven per transaction and I Couldnt tell you exactly why that is.
But I think at that time.
The fact, so right now I think in town rates are holding I think we've been able to.
The.
Take it.
Get get credit for all of the convenience that we offer on the 1 weight range.
And that benefited us.
Okay.
1 thing interestingly the.
On the P&C side.
And.
Revenues were not up very much year over year.
Is there less uptake on the the.
And the insurance product from from customers because of 1 of the issues we had remember.
And if I'm remembering correctly.
Repair and ended up being higher later.
<unk>.
Customers, returning and and product with too much damage and the dealers.
Dealers werent kind of.
Pushing to get that painful immediately and just.
They're just the GAAP there I would have thought P&C would've followed.
Williams of little more.
Yeah, well debt there is I will remind you that there is a 3 month lag in reporting.
And so are our insurance companies are required to report on a.
On a trailing 12 month basis.
And the calendar year basis.
And so they.
And.
I think we're catching 2 quarters that were look that or didn't have the same.
Moving and storage of transactions, so I think theres, a little bit of of lag there and we will start to catch up on the little bit.
Okay, but otherwise the problem as I look at it penetration rate and and the take rate on.
Our storage customers and our equipment sharing customers.
We're still using the insurance product.
I'm not I'm not too concerned about that and I think the programs are still thriving I think maybe debt 3 months lag of causing it to look a little bit off.
Okay.
Okay that makes sense.
And on the <unk> the development side for self storage.
The pressure just on labor costs land values, so youre still able to get those high single digit cap rates on conversions and ground up.
Yes.
We have been I mean, if things materially change from here.
We may have to adjust our approach, but at this point and time, we're still completing projects I think we're going into new projects with a little bit more of a sober view on what the costs are likely to be by the time, we get there.
And bear land and that we're buying today.
You're often times of year out from actually building.
So a lot can change between now and that and cost could go up or if you believe folks maybe some of these are transitory inflationary pressure.
Pressures.
It's hard to say, we've we've built in.
Projected additional costs and to our model.
But.
And if things were to trend up further from where they are today and then we'd have to figure that out at that point.
Okay, so the stuff, but the stuff that you've already bought and the head.
The 1 before it still penciling out because rates have gone up enough to keep the development's going.
Yes.
Okay, and then on you're doing a little more M&A is that sound.
And I E. The hearing that right in terms of.
In place.
Ran up self storage.
Well I mean like going from from 3 of the year before the Tan.
Still a very very minor part and and.
And most of the time these are smaller and complementary facilities too.
Our existing footprint.
I would say a couple of them are kind of big standalone ones, but for the most part.
That that that market is still very expensive and I mentioned the Jamie the.
The cap the cap rates on those deals and and you can see the difference of the stuff that we're building and converting is expected.
Pencil out much better than the existing stores that we're buying.
Alright, and then as I was asking because the even that 7 and half is.
Better than where the hell of lot of the big public guys are pulling out their checkbook and I think yes.
And we're not price is high and facilities and often times these deals than when you mix them in with the existing U haul presence and the market.
The the idea is that it's going to a rising tide raises all ships for us and that market.
It meant to help out our existing facility as well.
Okay. So you got out of.
The ability to get the squeeze a little more and out of it yes.
Yes, if we can buy something that currently has staff and we can run it with our existing staff and help.
But that's factored into the 7.5.
And that's factored into the 7 okay, because that's what the.
And you can see where they are operating and the big public guys and they're they're not there. So those are.
More attractive cap rates I was just curious how okay.
<unk>.
No I think that's it for <unk>.
And the refund from the IRS or are we still waiting on that it looks like and the K yes.
Yes.
And I won't go into the end of the details of working with the Federal Government agency just in case of the listening.
But it's been a challenge.
There is nothing there.
There is no disagreement with them on whether or not.
We should get the money back there has just been.
Disarray and how theyre getting.
Okay.
And I will ask 1 more obviously you stepped up the dividend last quarter.
I think you all decide.
1 of the 90 day basis.
Any changes and capital allocation are returning.
Ways to return cash to shareholders.
I will tell you that debt that our board.
Or read the transcript of this call so.
And they're always paying attention to that.
And we'll see where our cash position is very strong right now even given the amount of capex that we wanted to do so.
So I think we have and flexibility.
I'm not going to say that we're inclined to go either way on that and not.
Yes in that.
The.
The discussion and I don't want to standard.
But either way on our call.
Well, if the if they read it where the business to get paid and make money and generate cash so.
Appreciate the kick up.
That's all for me thanks.
Thanks, Craig.
Yes.
This concludes our question and answer session I would now like to turn the conference back over to management for any closing remarks.
Thanks, Tom and I actually I do have there's 1 more question that was submitted via email beforehand, I want to make sure I get to that.
And Steve calibrate of.
Kindred capital Advisors and his question was you continue to build and hold much higher cash levels than has historically been the case.
Is this simply and anticipation of deferred expenditures expected in the coming year.
Are you confident that you are being as efficient with your balance sheet as possible.
With an ever increasing sales storage business your capital structure would seem to be less efficient and share place George.
Comparable company, so I wanted to touch on that and the answer Steve.
He largely answered the question, we are anticipating a higher level of capital expenditures those of you.
And then around us for an extended period of time know that our first.
Use of cash is to put it back into the business grow it.
If I look at our free Capex for the coming year, we're probably in the somewhere around.
$250 million of working capital to fund that plan.
On the storage side, we were light this year with $125 million of acquisitions.
2 years ago that number was closer to $550 million.
So I think we're going to end up somewhere in the middle of those 2 numbers as far as acquisitions now.
Development spending last year was around 385 million the.
High as we've ever spent and the year was $540 million.
And there is another opportunity here, depending upon how we get land use and can get into these project quickly that will certainly increase the spend compared to this year.
So.
Going into the pandemic, we would work the cash balance down to about $450 million.
It's going to take us sometime to get back down to that level between the investment or any other uses of capital and Craig mentioned.
I do think that that now is still a good time.
To lock in low low cost debt on the borrowing front and that becomes a possibility and order to help fund us for the next decade.
Steve I hope that that answers your question otherwise you can follow up so.
With that I'd like to thank you all for the.
And your time.
And attending this.
Carl and I look forward to speaking with all of you again on August 8 per our first quarter earnings call. Thank you very much.
The conference has now concluded.
Thank you for attending today's presentation you may now disconnect.