Q3 2022 Amerco Earnings Call
[music].
Speaker 1: Good morning and welcome to the Amerco Third Quarter Fiscal 2022 Investor Conference Call and Webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
Good morning, and welcome to the America third quarter fiscal 2022, Investor Conference call and webcast all participants will be in listen only mode.
Do you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question. You May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded.
Speaker 1: To ask a question, you may press star, then one on your touch tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Sebastian Reyes. Please go ahead.
I would now like to turn the conference over to Sebastian Reyes. Please go ahead.
Good morning, everyone. Thanks for joining us today welcome to the Americas third quarter fiscal 2022 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.
Speaker 2: Good morning, everyone. Thanks for joining us today. Welcome to the AmeriCo's third quarter fiscal 2022 investor call.
Speaker 2: 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 or look in statements within the meeting 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.
Arbor provisions of section 27 of the Securities Act of $19 33, as amended and section 21 E of the Securities Exchange Act of 934 as amendment.
Speaker 2: 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.
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.
Speaker 2: For discussion of the risks and uncertainties that may affect America's business and future operating results, please refer to Form 10Q for the quarter ended December 31, 2021, which is on file with the U.S. Securities and Exchange Committee.
For a discussion of the risks and uncertainties that may affect Americas business and future operating results. Please refer to Form 10-Q for the quarter ended December 31, 2021, which is on file with the U S Securities and Exchange Commission.
Speaker 2: I'll now turn the call over to Joe Schoen, Chairman of America.
I'll now turn the call over to Joe showing chairman of America.
Speaker 3: Thanks, Sebastian. We have another quarter of good financial results. I continue to work on our...
Thanks Sebastian.
Another quarter of good financial results.
I continue to work on our customer experience.
Speaker 3: My workforce is long since ready for the COVID mandates to cease. They are unnef-
My Workforces long sense ready for the Covid mandates to cease.
Unnecessarily stretched.
Speaker 3: Demand, fortunately, is still strong for both our moving and storage products.
Demand Fortunately is still strong for both our moving and storage products.
Speaker 3: As you are well aware, there are disruptions in the vehicle pipeline.
As you're well aware there are disruptions in the vehicle pipeline.
The impact of our repair and Capex budgets.
Speaker 3: that impact our repair and CAPEX budgets and will likely do so for two or three years.
We'll likely do so for two or three quarters.
Speaker 3: While the OEMs are working hard to resolve this, any relief for this summer is very up to date.
While the Oems are working hard to resolve this.
Any relief for this summer is very unlikely.
Like many life insurance company's Oxford has suffered actual really.
Speaker 3: Like many life insurance companies, Oxford has suffered actuarially unpredicted insured debt.
Predicted insured deaths.
However assets and liabilities are well matched and we will work through this.
Speaker 3: However, assets and liabilities are well matched and we will work through them.
I appreciate your support and encourage your use of our services we.
Speaker 3: I appreciate your support and encourage your use of our services.
Speaker 3: We are only as good as our next customer interaction. With that, I'll turn it over to Jason to walk you through the numbers. Thanks, Joe. So yesterday we reported third quarter earnings of $14.35 a share as compared to $9.33 a share for the same period in fiscal 2021.
We are only as good as our next customer interaction.
With that I'll turn it over to Jason to walk you through the bulk thanks Joe.
So yesterday, we reported third quarter earnings of $14 35, a share compared to $9 33, a share for the same period in fiscal 2021.
Speaker 3: Throughout my presentation, my comparisons are going to be for the third quarter of this year versus third quarter fiscal 21 unless otherwise noted.
Throughout my presentation, my comparisons are going to be for the third quarter of this year versus third quarter of fiscal 'twenty, one unless otherwise noted.
Speaker 3: Regarding equipment rental revenue, you may recall last year, we reported a very strong third quarter posting an increase of $187 million. But as you can see from yesterday's finding that we were able to build upon that this quarter with an increase of nearly 21% or approximately $167 million.
Regarding equipment rental revenue you may recall last year, we reported a very strong third quarter, posting an increase of $187 million.
You can see from yesterday's filing that we were able to build upon that this quarter with an increase of nearly 21% or approximately $167 million.
Speaker 3: Within the one-way rental market, we continue to see improvements in transactions and to a greater extent revenue per mile or rate.
Within the one way rental market, we continue to see improvements in transactions and to a greater extent revenue per mile rate.
Speaker 3: Improvements for our in town markets continue to be a good mix of transactions and revenue per transaction.
Improvements for our in town markets continue to be a good mix of transactions and revenue per transaction.
Speaker 3: Even with some headwinds in January , and when I say headwinds, I quite literally mean poor weather, we have seen growth in U-Move revenue continue into the next month.
Even with some headwinds in January and when I say headwinds quite literally mean poor weather.
<unk> seen growth in U move revenue continue into the next month.
Speaker 3: New equipment continues to flow into the fleet, just not at the rate that we would like to see it.
New equipment continues to flow into the fleet just not at the rate that we would like to see it.
Speaker 3: Capital expenditures on new rental equipment were $809 million for the first nine months. Compared to $547 million in the first nine months of last year.
Capital expenditures on new rental equipment were $809 million for the first nine months.
That's compared to $547 million.
First nine months of last year.
In response to the pace of new acquisitions and customer demand.
Speaker 3: In response to the pace of new acquisitions and customer demand, we've slowed the number of units that we retire and sell. This has resulted in growth of the rental fleet.
<unk> slowed the number of units that we retire and sell this has resulted in growth of the rental fleet. This year.
Our expectation for net fleet Capex in fiscal 2022. So this is gross purchases less.
Speaker 3: Our expectation for net fleet capex and fiscal 2022 so this is gross purchases. Less sales.
Sales.
Speaker 3: has been reduced to approximately $495 million for the 12 months.
It has been reduced to approximately $495 million for the 12 months.
Speaker 3: But even with this essentially being an estimate of just the next three months, there is a degree of uncertainty surrounding this.
But even with this essentially being an estimate of just the next three months. There is a degree of uncertainty surrounding this due.
Speaker 3: due to availability of equipment for manufacturing.
Due to.
Availability of equipment for manufacturers.
Proceeds from sales of retired rental equipment increased by $41 million to a total of $471 million in the first nine months.
Speaker 3: Proceeds from sales of retired rental equipment increased by $41 million to a total of $471 million in the first nine months.
Sales volume for the third quarter was about even with where it was last year.
Speaker 3: Sales volume for the third quarter was about even with where it was last year. However, used truck sales prices have been unusually strong.
Used truck sales prices have been unusually strong.
I would estimate that somewhere close to $2 35.
Speaker 3: I would estimate that somewhere close to $2.35 of our $5.02 quarterly EPS improvement came from the sale of retired fleet.
Of our $5 two quarterly EPS improvement came from the sale of retired fleet.
Speaker 3: Demand for self storage has not weakened our occupied unit count at the end of December increased by 94,000 units compared to the same time last year. And that trend continued into January .
Demand for self storage has not weakened our occupied unit count at the end of December increased by 94000 units compared to the same time last year and that trend continued into January .
Speaker 3: Revenues for the quarter were up 36M dollars, which is about a 30% increase.
Revenues for the quarter were up $36 million, which is about a 30% increase.
Our all in blended occupancy rate for the quarter experienced an increase from 73% from the third quarter of last year to 84% this year.
Speaker 3: Are all in blended occupancy right for the quarter experienced an increase from 73% in the 3rd quarter of last year to 84% issue.
For the subset of these facilities that have stabilized and I'll define that as locations that have been at 80% occupancy or better for the last two years.
Speaker 3: But the subset of these facilities that have stabilized and I'll define that as locations that have been at 80% occupancy or better for the last 2 years.
Speaker 3: That cohort of properties increased 320 basis points to an average occupancy of 95.7.
That cohort of properties increased 320 basis points to an average occupancy of $95 seven.
Speaker 3: We also had 81 more properties fit that definition this year versus the same time last year.
We also had 81 more properties fit that definition this year versus the same time last year.
Speaker 3: We've seen increased revenue per foot, indicating improvements to our average rates as well.
We've seen increased revenue per foot, indicating improvements to our average rates as well.
Capital expenditure spending related to real estate.
Speaker 3: Capital expenditure spending related to real estate was $783 million for the first nine months. That's $365 million.
<unk> was $783 million for the first nine months up from $365 million last year.
Speaker 3: Spending in the third quarter was our second largest quarterly investment ever, demonstrating the success that we've had at increasing the pace of investment.
Spending in the third quarter was our second largest quarterly investment ever demonstrating the success that we've had in increasing the pace of investments.
Speaker 3: We currently have approximately 7.2M square feet in development actively across about 146 projects.
We currently have approximately $7 2 million square feet in development actively across about 146 projects.
Speaker 3: We have somewhere close to 100 properties that we own, but we have not yet started building on.
We have somewhere close to 100 properties that we own but we have not yet started building on.
And we have somewhere around 90% to 95 properties in escrow.
Speaker 3: And we have somewhere around 90 to 95 properties in escrow, totaling $227 million in purchase price if we elect to close on all.
Totaling $227 million purchase price, if we elect to close on all of them.
Speaker 3: Operating move earnings at our moving in story segment increased by 140 million dollars to 404 million for the quarter
Operating earnings at our moving and storage segment increased by $140 million to 404 million for the quarter.
Speaker 3: Within that, we saw operating expenses increase 116.
Within that we saw operating expenses increased $116 million.
Speaker 3: Our 2 largest operating expenses personnel and fleet repair and maintenance accounted for about 2 thirds of that increase.
Our two largest operating expenses personnel and fleet repair and maintenance accounted for about two thirds of that increase.
As a percent of revenue both ran almost even with the third quarter of last year.
Speaker 3: As a percent of revenue, both ran almost even with the 3rd quarter of last.
Speaker 3: Keep in mind that our operating margin third quarter of last year was one of our better third quarters.
And keep in mind that our operating margin third quarter of last year was one of our better third quarters ever.
Speaker 3: Several other of our categories that increased to a lesser extent were shipping costs and property.
Several other of our categories that increase to a lesser extent, we're shipping cost and property taxes.
Speaker 3: As Joe mentioned, operating earnings at our life insurance company were down 5.1 million for the quarter. This is largely due to mortality losses that you can reasonably attribute to COVID.
As Joe mentioned operating earnings at our life Insurance company were down $5 1 million for the quarter. This is largely due to mortality losses that you can reasonably attribute to COVID-19 .
Speaker 3: Well, now what you would hope or plan for this is a risk when issued life insurance, and we expect those effects to diminish over time.
You would hope for planned for this as a risk when issued life insurance that we expect those effects to diminish over time.
We continue to improve our cash and liquidity position in anticipation of impending investments and to lock in our borrowing costs for this next development cycle.
Speaker 3: We continue to improve our cash and liquidity position in anticipation of impending investments. And to lock in our borrowing costs for this next development site.
Speaker 3: As of December 31st of this year, we had cash and availability. From existing loan facilities that are moving in storage segment of approximately 2 billion, 344 million.
As of December 31 of this year, we had cash and availability.
From existing loan facilities that are moving and storage segment of approximately $2 billion $344 million.
Speaker 3: During the quarter, we entered into another note purchase agreement to issue 600 million dollars of fixed rate senior unsecured notes and a private placement offering.
During the quarter, we entered into another note purchase agreement to issue $600 million of fixed rate senior unsecured notes in a private placement offering.
Speaker 3: The weighted average interest rate on those is 2.71% and they funded in January .
The weighted average interest rate on those is 271% and they funded in January .
Speaker 3: Our intended use of these funds will primarily be to expand our presence with new locations. Add cell storage and warehouse space and support to our U-box.
Our intended use of these funds will primarily be to expand our presence with new locations and.
And self storage and warehouse space in support of our U box program.
Speaker 3: With that, I would like to hand the call back to our operator, Carrie, to begin the question and answer portion of the call.
With that I would like to hand, the call back to our operator Carrie to begin the question and answer portion of the call.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Speaker 1: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.
You are using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Speaker 1: The first question will come from Stephen Ralston with Zach. Please go ahead.
The first question will come from Steven Ralston with Zacks. Please go ahead.
Good morning.
Good morning.
Speaker 2: Looking at the quarter, we know that the third quarter, fiscal quarter, is seasonably weaker than the others. But this has been just in line.
Looking at the quarter.
No.
Third quarter fiscal quarter is seasonally weaker than the others, but.
But this has been just in line with.
Speaker 2: in the past, especially last year, which you pointed out was unusually strong. So it seems like the underlying fundamentals of being strong demand in the price.
In the past, especially last year, which you pointed out was.
Unusually strong so it seems like the underlying fundamentals.
Being strong demand in the pricing.
Speaker 2: of the rental equipment and vehicles is still quite strong.
All of the rental equipment and vehicles.
Quite strong.
Speaker 3: Is that a proper deduction? Yes, this is Joe.
Is that.
A proper deduction.
Yes, Yes. This is Joe absolutely.
Speaker 3: People are still moving for a tremendously wide variety of reasons.
People are still moving.
Tremendous a wide variety of reasons.
Speaker 4: and we're getting our fair share of that business.
We're getting our fair share of that business.
And it seems like Youre managing.
Speaker 2: And it seems like you're managing the difficulty in acquiring new vehicles pretty well upping your maintenance expenses.
The difficulty in.
Acquiring new vehicles.
Pretty well.
Upping your maintenance expenses.
Speaker 2: I know it's a foggy outlook, but you say that it might take at least three years to resolve this. Can you add any more color to this? Because it really seems like you're managing through it as best you can.
I know I know.
Voggy outlook, but you say that it might take at least three years to resolve this can you add any more color to this.
Because it really seems like youre managing through it as best you can.
Speaker 4: Well, I think we're working very hard at it. But what happens is when you...
Well I think we're working we're working very hard at it but what happens is when you.
Speaker 4: don't buy, you basically have the amount of miles you believe you can run on a piece of equipment.
Sulfide.
Basically type of amount of miles. We believe you can brought out a piece of equivalent.
And.
If you run it on it.
Speaker 4: you're basically at the end of its life. So we're running a little bit more miles on the equipment, is essentially shortening their useful lives. And the way you bring more useful life in is to bring in more equipment. So if we undershoot by 5,000 trucks this year, next year we need 5,000 more trucks.
You are basically at the end of its life. So we're running a little bit more miles on the equivalent is essentially shortening their useful lives and the way you bring more useful life is to bring in more equipment. So.
We undershoot by 5000 trucks. This year next year, we need.
More trucks.
Speaker 4: in addition to those that we are normally wearing out. So at a point.
In addition to those that we are thoughtfully wearing out so.
At a point.
It becomes difficult just physically to get the addition done right now we're not getting it done because of problems.
Speaker 4: it becomes difficult just physically to get that addition done. Right now we're not getting it done because of problems with the OEMs, but
Oh, yes.
Good luck.
We.
Build the boxes.
Sure.
<unk>.
70%.
Speaker 4: of our box trucks. And that's quite a little manufacturing assembly operation. So we'll be highly stressed as soon as we get.
Of our box trucks, that's quite little manufacturing Assembly operation So.
It will be highly stressed as soon as we get.
Speaker 4: access to more chassis from the OEM. So I've been through this before and it takes a couple years to kind of work the bubble out. It's just the problem.
Access to more chassis from the OEM.
I've been through this before and it takes a couple of years to kind of work the bubble up.
Yes.
But we understand it we're working at it.
Speaker 2: And even though you're doing this blocking and tackling in the rental business, how much more time are you spending management's time in expanding the storage facilities? Because I've seen it's been quite active. I've committed a lot.
And even though youre doing this blocking and tackling in the rental business.
How much more time are you spending managements time.
In expanding the storage facilities.
Because I have seen it's been quite active.
I have committed a lot of management tied to that award.
But the balance is working out so far and of course I have to be careful I don't.
Speaker 4: balance is working out so far. Of course I have to be careful I don't
Speaker 4: distract them from our moving customers. Same people do both functions as soon as you get geographically specific. So we're doing okay.
Distract them from are moving customer St people.
Do both functions as soon as you get geographically specific so.
We're doing okay, we have what we have.
We just about have this thing ginned up Aldo.
Speaker 4: replace this stuff, or add stuff, quicker than we have in the last 24 months, and we're getting close to being able to deliver that.
Replace this stuff add stuff quicker than we'll have for the last 24 months.
And we're getting close to being able to deliver that.
Thank you for taking my questions sure. Thank you.
Once again, if you have questions you can press Star then one the next question comes from Jamie Wilen with Wilen management. Please go ahead.
Speaker 1: Once again if you have questions you can press star then 1. The next question comes from Jamie Weiland with Weiland Management.
Speaker 3: Thanks another phenomenal quarter fellas couple questions 1st on self storage. Can you quantify the rate increases you've been able to achieve over the last 12 months? Percentage wise sure this Jason that I. Look at that and you have to break it up into a couple of different pieces, right? So we have a portfolio properties that are. Still trying to stabilize they don't see quite the right activity on those and then you have the properties that are stabilized.
Thanks, another phenomenal quarter fellas.
Couple of questions first one self storage.
Could you quantify the rate increases <unk> been able to achieve over the last 12 months percentage wise.
Sure.
It's Jason.
Look at that.
You have to break it up in a couple of different pieces right. So we have a portfolio of properties that are still trying to stabilize they don't see quite the rate activity on those and then you have the properties that are stabilized.
Speaker 3: So on stabilized properties.
So on stabilized properties.
Speaker 3: Our average revenue per foot for the nine months, or I'm sorry, for the quarter is probably up close to 6% compared to last year. If you look at asking around.
Our average revenue per foot.
For the nine months.
Sorry for the quarter is probably up close to six.
6% compared.
Compared to last year, if you look at asking rents.
Speaker 3: what we're on average charging a new customer this year versus last year. That's also probably about a little over 6% up.
What were on average charging a new customer this year versus last year. That's also probably about a little over 6%.
Speaker 3: Okay, and given the rapid increase in occupancy rates and rate increases, what is your timeframe for a new unit to reach stabilization now? I know it used to be four years, but what is it?
Okay and given the.
Rapid increasing in occupancy rates.
<unk>.
The rate increases what is your timeframe for a new unit to reach stabilization now I know it used to be four years, but what.
What is it.
Gone down for now.
Well, we're mapping out.
Speaker 3: Well, when we're mapping out the investment in 1 of these, we're still assuming 5 years. However, I think. In today's environment, we're seeing some of these ramp up.
The investment in one of these were still assuming five years. However, I think in today's environment, we're seeing some of these ramp up.
253 years.
Okay.
Speaker 3: When I look at similar competitors in the self-storage business, I look at a life storage that has a really similar footprint to what we have as far as owned units and managed units.
And when I look at it similar competitors in the self storage business. So look at the life storage that has it.
Really.
Similar footprint of what we have as far as owned units managed units.
And.
Speaker 3: They have an $11 billion market cap, which is almost equivalent to our entire market cap yet self-storage only represents 10% of our revenues.
They have an $11 billion market cap, which is almost equivalent to our entire market cap yet self storage only represents 10% of our revenues.
Speaker 3: How do we close this value gap in that if 10% of our revenues are worth almost what our entire company is trading for and we obviously have a rather nice truck rental and U-box business as well.
How do we close this value gap in that if 10% of our revenues are worth almost what our entire company is trading floor.
We obviously have a rather nice truck rental and U box business as well.
Speaker 4: You know, I think those are key questions, Jamie. And right now, what I'm driving on is getting more products so we can...
I think those are key questions Jamie again.
Right now what I'm driving at is getting more products. So we can.
Speaker 4: put a cap rate on more product. I'm kind of selfish that way. Okay, now, but there is it. Your questions are good questions, questions that is regularly discussed at the board level and we're trying to.
Put a cap rate.
Dec selfish that way okay, though.
But.
Your questions or any questions to question that.
This revenue discussed at the board level, we're trying to.
Figure how to do that and hopefully we will.
Speaker 4: have some news for you before the year's out, but we'll see. My time gets spent almost entirely on just driving the business.
I have some news for you before the years out, but we'll see.
We're monetize get spent almost entirely on just.
Driving the business.
These other questions.
A little bit more.
Sure.
Speaker 4: long-term strategies a little bit more but we work at at the board level so I don't consider myself an expert
This long term strategy is a little bit more.
But we worked out at the board level.
I don't consider myself an expert on.
But it's kind of determined our market cap, but we're moving or going to.
Speaker 4: but what's going to determine our market cap. But we're moving it, and we're going to, you know, I like moving it, and I'm a shareholder like you are, so I like to see our market cap.
Our likelihood to have a shareholder like you are so I would like to see our market cap.
Yeah.
Okay.
Speaker 3: On the U-Box front, I think we had close to 50% growth this quarter, if I read it correctly, versus last year. How does that become its own segment? How are the profit margins in U-Box?
On the <unk> front win.
I think we had close to 50% growth this quarter, if I read it correctly versus last year when does that become its own segment.
And.
How are the profit margins in U box.
<unk>.
Speaker 3: enjoying the incremental volume relative to the to the rest of the company.
Enjoying the incremental volume relative to the to the rest of the company.
This.
This is Jason.
Speaker 3: From a management perspective, it kind of is being overseen separately. As as any of our other large segments are. From the financial statement.
From a management perspective, and kind of is being overseen separately.
As any of our other large segments are from.
The financial statements.
Speaker 3: No one else reports they're portable, moving in a storage business publicly. Our requirement is I think when it becomes 10% of revenue for a 12 month period, we would do that. We're not close to that right now.
No one else reports their portable moving and storage business publicly our requirement is I think when it becomes 10% of revenue for a 12 month period, we would do that we're not close to that right now.
Speaker 5: Regarding margins. You know we.
Regarding margins.
Speaker 5: We have estimations of what these programs look like on a standalone basis, but it's really hard. We've talked about this before storage business to break that apart from.
We have estimations of what these programs look like on a standalone basis, but it is really hard.
We've talked about this performance towards business.
To break that apart from.
Speaker 5: from some rough estimations internally, it's...
From some rough estimation of internally it.
Yes.
It's a positive program and it's very close to the overall operating margin.
Speaker 5: It's a positive program and it's very close to the overall operating margin. I would say that we have some quarters in the last year and a half where it operates at the overall margin, otherwise it's within a point or two of it on how we're allocating costs.
I'd say that we have some quarters in the last year and a half.
It operates at the overall margin otherwise, it's within a point or two of it.
On how we're allocating cost.
Speaker 5: It's been challenged this year with a big component of that business is the one-way move business, which is shipping these boxes across the country, which has a component of freight costs and freight costs have been up.
It's been challenged this year with a big component of that business.
The one way move business, which is shipping these boxes across the country, which has a component of freight costs and freight costs have been up.
Speaker 5: Um, freight costs as a percent of the revenue that we're collecting. It's not out of historical bounds, but it's at the higher end of what we've. Paid over say the last 10.
Freight costs as a percent of the revenue that we're collecting.
It's not out of historical bounds, but it's at the higher end of what we've paid over say the last.
10 years.
Speaker 3: Gotcha. And I'd like to go back once more to the value disconnect because on marketing your truck rentals, on marketing your self storage and marketing your U-box, if I had to rate you on a scale of one to 10, I'd give you something north of 12.
Got you.
I'd like to go back once more to the value disconnect because.
On marketing your truck rentals on marketing yourself storage and marketing as U box, if I had to reach you on a scale of one to 10 I'd give you something north of 12.
Speaker 3: But on marketing the stock on a scale of one through 10, I would give you somewhere
But on marketing the stock on a scale of one through 10.
It gives you.
Somewhere in lower double digits.
Speaker 3: And there's, you know, when I look at a company, we've earned over $50 a share in just nine months. You know, I think it's really time to start instituting a regularly quarterly dividend, you know, certainly at least several dollars a share on a quarterly basis. And our trade
And.
When I look at the company, we've learned over $50 a share in just nine months.
I think it's really time to start instituting a regularly quarterly dividend.
Certainly at least.
Dollar share on a quarterly basis.
Trading volume.
Speaker 3: is somewhat limited. We are a $600 stock. I see no real reason why it would be inappropriate to do a five for one stock split and we'd still be trading north of $100 and create a little bit more trading liquidity within the markets.
Is somewhat limited.
600 dollar stock.
I see no real reason why it would be inappropriate to do a five for one stock split and we'd still be trading north of $100.
And create a little bit more trading liquidity within the markets.
Speaker 3: And I do think it's time to change the corporate name to the world recognized U-Haul that you've built so well. And I think these are just very…
And I do think it's time to change the corporate name to the world recognized U haul, but you've built so well.
And I think these are just very.
Speaker 3: easy, prudent steps and the time is right to take these steps to create some more value for all of us as well as your family and mine as U-Haul shareholders.
Easy prudent step.
Steps and the time is right to take these steps to create some more value for all of us.
As well as your family in mind as you all shareholders.
Speaker 4: Well, I'm hearing you there and you may be penetrating my cranium. Sometimes repetitive feedback works. I'm not taking you seriously, okay?
Hello, I am hearing you there you.
You may be penetrating lake cranium, sometimes repetitive feedback.
So.
If seriously okay.
Yeah.
Speaker 3: Very good. And nice job on managing a business. It's been remarkable how you've grown this business in a prudent manner and the profitability you're able to enjoy today and look forward to more tomorrow. Thanks, Joe. You bet. The next question comes from...
Very good and nice job on managing our business.
It's been remarkable how you've grown this business in a prudent manner.
The profitability, you're able to enjoy today and look forward to more tomorrow. Thanks, Joe.
You bet.
The next question comes from Craig Inman with Artisan partners. Please go ahead.
Hey, good morning.
Speaker 6: Hey, good morning. You know, one I'd throw in there, Joe, you mentioned the, you know, the migration of combustion engines in the press release to electric. And I hadn't really thought much about that. How do y'all think about that in terms of the business, the evolution, you know, the OEMs committing more resources to the electric, you know, how your fleet would operate if that becomes more of a product to use?
One.
Throw in there Joe you mentioned the.
The migration of combustion engines in the press release to electric.
And I hadn't really thought much about that.
How do you all.
Think about that in terms of the business the evolution the Oems committing more resources to the electric.
How your fleet would operate.
It becomes more of.
Product to use.
Thoughts there would be great.
Speaker 4: So presently there is no product out there that will work for us. Number one, there's a lot of talk. Of course, we follow the talk and visit with these people. There's tremendous political momentum behind it, but not
There are presently there is no product out there that will work.
There's a lot of talk of course.
We followed the talk and visit with these people.
There's tremendous political.
Momentum behind it but not quite as much.
Mechanical reality so.
At some point.
This very well may.
Speaker 4: this very well may get developed to the point where you can do it. My suspicion is that we'll see
<unk> developed to the point, where you could do it.
My suspicion is is that we will see.
A long period of a mixed fleet.
Speaker 4: And I think you'll see that in the whole country with the long period of the mixed fleet. And so we'll.
And I think you'll see that the whole country will be a long period of the mixed fleet.
And so we will.
Have time to do that but of course.
Speaker 4: the end result is there's more capital investment into the electric vehicles basically. You spend more upfront and you regain it on the fuel. Well, our opportunity is, you know, we're not buying the fuel every time. So we're not buying the fuel every time.
The end result is there is more capital investment into the electric vehicles basically.
Spend more upfront and you're regaining of the fuel for our opportunities.
We're not buying the fuel every time so.
We're not.
Quite as.
Eager to become an early adopt drove it is say may be.
Speaker 4: a local UPS delivery man because they know their route. They've got it. I don't know, but I'm sure they've got it down with.
Local EPS delivery band because.
They know their route they've got it I don't know, but I'm sure they've got a down move in 'twenty.
Speaker 4: 20 minutes a day they know exactly how the routes are coming in, they know the mileage.
20 minutes today, they know exactly how the routes are coming in below the mileage.
Speaker 4: they can manage electric vehicle much more realistically. So where we're
They can they can manage electric vehicle.
Much more realistically.
So where we are.
Letting people go down the highway.
It's a little.
The technology just isn't there yet so we're monitoring it very closely.
Speaker 4: The technology just isn't there yet. So we're monitoring it very closely. We don't have a great push from our...
We don't have a great.
Push from our customers to offer that.
I think our customers at.
But the point.
Speaker 4: it becomes technologically and economically feasible. I think our customers will certainly accept it, but there's no
It becomes technologically economically feasible I think our customers are certainly accept it but.
There is no.
Speaker 4: drumbeat at the consumer level, why don't you have an electric...
Drumbeat at the consumer level why don't you have an electric.
Speaker 4: truck for us to ramp up. And if they did ask it, the answer is there is no electric truck, there's a lot of concepts, there's some prototypes, but there really isn't something that you would want to put into.
Drug for us to read and if they did ask if the answer is there is no electric.
Electric truck, there's a lot of concepts there's.
Some prototypes.
But there really isn't.
Something that you would want to put into.
The hands of Euro my wife and encourage them to.
Even move 50 miles.
Speaker 4: So until that comes, we're not going to do it. But when it comes, it's going to take a big capital redirection and also an infrastructure. And I think that's what we're going to do.
So until that time, we're not going to do it but when it comes it's going to take a bit careful.
The redirection and also an infrastructure.
The electrical infrastructure is.
It's totally different than the.
Speaker 4: gas and diesel infrastructure, a whole bunch of timing issues that are...
Gas and diesel infrastructure, a whole bunch of timing issues that are.
Speaker 4: totally different. Our fleets don't typically come back to a
Totally different our fleets don't typically come back to a.
Homebase every night like lets say it again I'll use <unk>, because I think there bill.
Speaker 4: home base every night like let's say it again I'll use UPS because I think they're a real
Speaker 4: with a group of people managing their fleet, well they can bring the vehicle back to its home base and have some idea of what its condition is going to be.
People managing their fleet, but they can bring the vehicle back to install base and they have some idea.
What its condition is going to be.
And so they can then provide us.
Speaker 4: strategy for how they're going to refuel these batteries, which is not a seven or ten minute operation like it is with gas.
Strategy for how they are going to refuel these batteries, which is not a lot.
Seven or 10 minute operation like it has with the gas engine.
Speaker 4: There's a lot of uncertainties. It's very muddy.
There's a lot of uncertainties it's for everybody.
Speaker 4: But we're monitoring it and we're speaking with.
But we're monitoring it.
<unk>.
Speaker 4: as far as I know, most of the likely prospects.
I know.
The likely prospects.
We have.
No.
Speaker 4: some small number of electric vehicles circulating at our technical center. And so we're keeping our eyes wide open, but nothing's going to happen now other than it's muddy. Normally when we buy a truck, a big truck, you're looking at seven days.
Some small number of electric vehicles circulating at our technical et cetera.
So we're keeping our eyes.
Wide open, but nothing is going to happen now other than a muddy normally when we buy a truck.
A big truck.
We're looking at a seven to 10 year lifespan minimum.
Speaker 4: So I kind of have to try to peer into that 7 to 10 year cycle.
And so I kind of have to try to peer into that.
Seven to 10 year cycle.
Speaker 4: what are we going to be refleeting with with the trucks I buy today, what I'd be fleeting with and that's very very uncertain at this point.
What are we going to be re fleeting with with the truck side by today, but won't be repeating with.
And that's very very uncertain at this time.
Unfortunately, that's about as specific as I can be when it happens we are going to be there, but it's not happening yet.
Speaker 4: Unfortunately, that's about as specific as I can be. When it happens, we're going to be there, but it's not happening.
Yes, that's great color and so as part of the.
Speaker 6: Yeah, that's great color. And so it's part of the... You're not seeing, though, then, the issue on getting the trucks is not at the level where the OEMs are committing more resources to the electric now, which is hurting their ability to produce for y'all. Those aren't colliding at this point in time. I don't really think I have a view of that. I suspect that. But I don't know that. Of course.
Youre not seeing there then the issue on the getting the trucks is not at the level, where the Oems are committing more resources to the electric now which is hurting their ability to produce for you all.
Those arent colliding at this point in time.
I don't really think I have a view of that I suspect that the.
I don't know that of course.
When you get to the.
Speaker 4: level say if Jim Farley or somebody at Ford.
Level, Jim Farley or somebody.
Forward.
Speaker 4: He's very, very focused on the electrification, very, very focused.
He is very very focused on the.
Electrification very very focused though.
Speaker 4: He has a whole other cadre of people actually run the plants and buy the parts and everything.
He has a whole another cadre of people actually run the plants and buy the parts and everything.
So far they've kind of still.
Speaker 4: they're still focused on the present products, but this is going to change. There's gonna be conflicts and that's just normal. So I don't think that's necessarily affecting us today, but at the very high level.
They are still focused on the present products, but this is going to change there's going to be conflicts and thats just normal so.
I don't think thats necessarily affecting us today, but.
At the very high level.
Speaker 4: I'm not the person who interfaces with Mary Barra for our company, but again, at her level, she's very, very focused on this electrification. There's tremendous political pressure on her. And she's respond—
I'm not.
The personal interfaces with Mary Barra for our company, but.
But again at her levels. She is very very focused on this electrification theres tremendous political pressure over and.
And she is responding to it so.
Speaker 4: at her level of resource commitment, I'll bet we are getting charted, but that's not, she's not resource committing yet at the park.
At her level of resource commitment, albeit we are getting shorted, but thats not she's not resource committing yet.
Parts and labor point of view or the plant specific point of view, where it's impacting us.
Speaker 4: labor point of view or the plant specific point of view where it's impacted.
Okay, and I know a few years ago. The fleet, obviously was in the new especially if it's ever been and haven't been able to buy.
Speaker 6: Okay. And I know a few years ago the fleet, you know, obviously was in the newest best shape it's ever been and y'all haven't been able to buy up to the level you've wanted on replacement. I mean, is it still ahead of average? I mean, is it still in a position where you've, you know, obviously you're pushing out buying the trucks, which puts pressure on you later, but from a customer experience and a management ability, it's still in good shape.
The level you've wanted on replacement.
I mean, it's still ahead of average I mean is it still.
Position where <unk>.
Obviously, youre pushing out buying the trucks, which puts pressure on your later, but from a customer experience and our management.
Ability, it's still in good shape.
Speaker 4: Well, I look at this as a long walk and where we are right now, we've about burned off the excess fat....
Well I look at this as a long walk where we are right now we have about burned off the excess fat.
Downward.
Speaker 4: We better, we have a caloric input that's required to continue and we're
We better.
We have a co.
Caloric input that's required to continue.
We're.
It's everything we can do to keep doing that and.
Speaker 4: It's everything we can do to keep doing that. And I'm very eager for the OEMs to come online. And then we would build back some of this fat.
Im very eager for the Oems to come online.
And then that we would build back some of this.
Fat or whatever you want to call it back into our physical system.
Because I feel a lot more comfortable.
Speaker 4: very fortunate we had it. No one knew these COVID disruptions were going to come, but I'm kind of one of those people who's always trying to put away something for a rainy day.
It's very Fortunately, we had no one knew.
These COVID-19 disruption, we're going to come but I'm kind of one of those people who is always trying to put away some.
For a rainy day.
And what we've had.
Speaker 4: rainy day as far as buying vehicles and then coupled with expanded demand.
A rainy day as far as buying vehicles, and then coupled with expanded demand which.
Speaker 4: Was not that wasn't a scenario we ever thought that I ever thought through I always thought
It was not that wasn't a scenario we ever flower that I ever thought through all the startup.
Yes.
Speaker 4: the demand would fall if we had a problem like this. In this particular instance, for most reasons, demand rose. We've pretty much
The demand would fall if we had a problem like this in this particular instance for post reasons demand grows.
Pretty much I would say we are.
We're not carrying a lot of thought.
Speaker 4: We're not carrying a lot of fat or unused capacity in our fleet. But you're right. Four years ago, we had a lot, and I was putting more in. But I also have a big fan more.
Our unused capacity in our fleet, but youre right four years ago, we had a lot in there and I was putting more in but.
For the last.
Speaker 4: Now, almost 24 months we've been unable to do that. In fact, we'll...
Now almost 24 months, we've been unable to do that in fact, we are.
Speaker 4: replacing it a lower than the replace required replacement.
Replacing a lower than the replace require replacement.
Speaker 4: In our judgment now there's some you can push that a little bit with repair.
In our judgment now there is some.
You can push that a little bit with repair obviously and so we have a big repair network and moved ended up and everybody.
Speaker 4: And we have a big repair network and we've ginned it up and everybody's on high alert. So we're holding our own. But I would really like to see some relief from the OEM that's behind it.
On high alert so were.
We're holding our own but I really I would really like to see some.
Relief from the Oems by the fall.
Paul.
And there are some prospects they'll have something like that.
Okay.
Speaker 6: And then in the self storage side, just so I got this right, 7.2 million feet in development and then there's 100 properties owned but not started building and then on top of that escrow is 90 to 95. Set the right
And then in the self storage side.
John I got this right $7 2 million in development.
And then there is 100 properties owned but not started building and then on top of that escrow is 90 to 95 is that the right yes.
Yes.
Speaker 6: Okay, so that 100 properties isn't in the development number?
Okay. So that 100 properties isn't in the development number.
Speaker 4: No, no, but land use is a problem and I'm sure you know that better than I. Land use is totally
No no, but landmasses problem and Im sure you know that better than I land users.
Is totally unpredictable and so.
Speaker 4: were at various stages of land use, which is all very frustrating to me because it just it's a very...
We're at various stages of land use which is all very frustrating to me because it just it.
It's a very.
Whoa process and in fact.
Speaker 4: cities have used COVID as an excuse to...
Each cities have used COVID-19 as an excuse to.
Speaker 4: not actually process, literally not process building permits, which is
Not actually process literally not process building permit.
As.
It's kind of a.
Speaker 4: can't go anywhere. Some few cities will let us hire a private processor for them or and we do a lot of zoom.
You can't go anywhere some few cities will let us hire private processor for them or.
And we do a lot of zoom.
Meetings, but the.
Speaker 4: The ability to just walk into the building department and talk over a set of plans isn't isn't existing right now in most jurisdictions and in our
The ability to just walk into the building department and talk over a set of plans isn't isn't existing right now in both jurisdictions.
Our prior experience you could always do that.
Speaker 4: iron some simple things out pretty quickly. So it's just become more.
Iron some simple things out pretty quickly so it's just become more.
Time visit.
Speaker 6: Okay, and those yeah, and those those properties are behind the development pipeline. They're all about similar size. So you could think about them. Are they getting bigger smaller in terms of average? Well, commercial properties...
Okay and those.
Yes.
Those properties are behind the development pipeline there, they're all about the similar size. So you can think about them or are they getting bigger smaller in terms of average.
Commercial property as part of the month.
Speaker 4: Most of this is commercial property. My experience is commercial property is up 100% over 20%
Most of this is commercial property my experiences commercial properties of 100% over 24 months ago.
Speaker 4: So if you were paying 10 bucks a foot, you're paying 20. If you were paying 20, you were paying four.
So if you were paying 10 bucks a foot and you're paying <unk> 20, you paid for it.
Speaker 4: gone to the moon. Now that's only a component of the cost of the facility.
It's gone to the Moon now that's only a component of the cost of the facility.
But.
I don't know that the size is going up but the dollar is going to go up.
Speaker 4: I don't know that the size is going up, but the dollar is going to go up.
So maybe not the size and of course.
Speaker 4: So maybe not the size, and of course, that has to all be predicated on what we believe is the rate we're gonna attract at the time we're actually open, which is a little bit of a guessing game, but we have people who have been doing this for 30 years.
That has to all be predicated on what we believe is the right we're going to attract at the time were actually open which is a little bit of a guessing game, but we have people who.
Been doing this.
For 30 years or halfway.
Thoughtful and so we're trying to be very judicious of course, Jason as all of us.
Speaker 4: thoughtful and so we're trying to be very judicious of course Jason has all this.
Analysts look at these projects and we were attempting to be judicious in not.
Speaker 4: Analysts look at these projects and we were attempting to be judicious and can not do uneconomic things.
Do uneconomic things.
That property has gone up in that.
Speaker 4: in a couple places, we're just gonna have to pay up and then we're gonna have to figure out how we're gonna get the rate out of the country.
A couple of places, we're just going to have to pay up and then we'll have to figure out how we're going to get the right out of the question.
Speaker 6: And, you know, with the financing's with the private placements and, you know, obviously the rate is favorable, more favorable than you all had at other points. Does that lower your cap rate going in? Does that allow you to bid more aggressively? Or do you all keep kind of the same hurdle rates? We've kept the same hurdle rate unless we make a conscious decision on a property-property basis. We'll take a high dive on this one because we think...
And with the financings with the.
<unk> placements.
Obviously the rate is favorable more favorable than you all had another points.
Does that lower your your cap rate going in does that allow you to bid more aggressively.
Kind of the same hurdle rates just kept it the same hurdle rate unless we make a conscious decision on our property property basis as well.
We will take our high dive on this one.
We think we can straight.
Straighten it out.
Speaker 4: During the 10 year period that most of our financing encompasses, I think we can get it straight now.
During the 10 year period that most of our financing encompasses I think we can get it straightened out.
Speaker 4: in anticipation that we may not have such a favorable rate environment in the future.
And the anticipation that we may not have such a favorable rate environment in the future.
Speaker 4: So that's kind of a vague statement. That's the truth. Or not.
So that's kind of a big statement that success with true or not.
Speaker 4: a lot of our, well I would say 98% of our competitors.
A lot of our <unk>.
98% of our competitors.
Speaker 4: purchasing competitors for buying stores have already taken the plunge.
Purchasing competitors for buying storage have already taken the plunge.
They are they are there.
Okay.
Speaker 4: They're assuming 3 or so percent. Interesting comes to the life of the project. That's not my expectation. Now, watch me be wrong and then be right. But that's not my expectation. Our planning is that we're going to see rates bumped. Certainly we'll see rates bumped.
They are assuming three or.
So what percent.
Interest income through the life of a project Thats not my expectation now what should we be wrong in that would be right. Okay. So.
It's not my expectation our planning is that.
We're going to see rate bump.
Certainly.
Within the next 10 years to a different level, but.
Speaker 4: It's all puzzled me. None of it's done what I was taught when I went to school.
It's all puzzled me is none of it's done but I was taught when I went to school.
Speaker 4: So I could be wrong. I thought the rates would go up multiple times over the last five years and they haven't. Cool.
So.
I could be wrong I thought the rates would go up.
Multiple times over the last five years or so.
Speaker 4: maybe by some miracle they'll stay low. We haven't dropped our forecast.
Maybe also by some miracle stay low, but no we haven't dropped our.
Our forecast rate and that has.
Speaker 4: kept us from buying, making some acquisitions that other people haven't. Okay, that was their strategy, that's about all I can tell you. Yeah, but slightly different strategy.
Kept us from buying making some acquisitions of other people have.
Okay that was our strategy thats about all I can tell you.
With a slightly different strategy.
But I don't want to add.
Every opportunity.
That's good to know and Thats great.
Speaker 6: Good color. Thank you. I appreciate it.
Good color. Thank you I appreciate it.
Speaker 1: And this concludes our question and answer session. I would now like to turn the conference back over to management for any closing remarks.
And this concludes our question and answer session I would now like to turn the conference back over to management for any closing remarks.
Okay.
Speaker 2: Well, appreciate everyone's attention today and the questions and we'll look forward to speaking with you after we report our year end results in May. Thank you everyone.
Well I appreciate everyone's attention today and the questions and we look forward to speaking with you. After we report our year end results in May Thank you everyone.
Thank you. The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect your lines have a great day.
Speaker 1: Thank you. The conference is now concluded. Thank you all for attending today's presentation. You may now disconnect your lines. Have a great day. dialogue
Yes.
Okay.
[music].
Okay.