Q1 2023 Amerco Earnings Call
Increases in one way and in town revenue. This was primarily coming from better revenue per transaction.
Growth in transactions compared to the first quarter of last year slowed.
The availability of new trucks, certainly remains a concern for us.
On that front capital expenditures on new rental equipment were $351 million compared to $310 million last year.
There is still uncertainties surrounding the delivery schedules for receiving equipment for manufacturers.
Our initial projection for gross equipment purchases this year.
Was $1 8 billion about three months ago based upon what we've learned so far during the first quarter. We've already reduced this expectation for the year to just over $1 5 billion and that's likely to continue to decrease as we move through the year.
Proceeds from the sale of retired rental equipment decreased by $20 million to a total of $156 million.
We're selling fewer trucks, although generally at higher resale values.
Performance of self storage remains strong.
Our storage revenues were up $36 million, which is about a 26% increase.
Looking at our occupied unit count at the end of June we had an increase of 77000 occupied units compared to the same time last year.
In addition to the increased occupancy we experienced growth in average revenue per foot as well, averaging somewhere north of 9%.
Our occupancy ratio for all of our storage locations increased 5% to 85% year over year.
Within that group.
83% of these locations were operating above 80% occupancy at June 30, and the average occupancy at those locations was 96%.
One of our challenges is to create more opportunities in the self storage portfolio by producing new units.
To illustrate this need.
We have 10400 fewer vacant rooms available fill at the end of June this year than we did last year.
And compared to two years ago, we have 71500 fewer rooms.
For the first quarter of this year, so far we've invested $278 million in real estate acquisitions, along with self storage in U box warehouse development costs.
That's up from $184 million last year.
If you look out over the last 12 months. This represents our highest level of investment in new properties in development at $1 $1 billion of investments.
Over this time period, we've added 67000, new units, that's about $5 million net rentable square feet.
About $4 $6 million of that square feet came online vacant.
We currently have somewhere north of $7 3 million.
New net rentable square feet being developed across 147 projects.
We have an additional 135 or so projects, where we own the land or buildings, but have not yet started actual construction.
Those should result in approximately $8 1 million net rentable square feet by the time, we finish them.
And we are close to 90 additional deals that are currently in escrow.
In the moving and storage segment, we saw expense growth outpaced revenue growth leading to a decrease in our operating margin compared to last year's historical first quarter a high watermark.
This resulted in operating earnings at our moving and storage segment decreased by $1 million to $482 million for the quarter.
Operating expenses in the quarter increased to $118 million compared to last year.
We've highlighted in the press release, and Joe spoke to the $32 million increase in fleet repair and maintenance.
Personnel costs also increased faster than revenue this quarter at about a 14% rate due to head count as well as pressures from wage inflation.
Personnel like repair and maintenance look worse than last year in the first quarter in both dollars and as a percent of net revenue.
However in the context of recent history. If you look back over the last five to 10 years. If they are still within a normal range if not at that.
Better end of it.
For example personnel costs.
Compared to the first quarter of last year are running about 70 basis points higher as a percent of net revenue.
However, compared to the average over the last five and 10 year periods were about 170 basis 175 basis points better for the quarter.
The next largest increase in costs, Joe also alluded to which is freight costs for both our U box moving product as well as our cost of shipping.
Products amongst our U haul locations.
With that I would like to hand, the call back to our operator, Danielle to begin the question and answer portion of the call.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
Okay.
Again, if you have a question please press star one.
Yeah.
The first question comes from Jamie Wilen of Wilen management. Please go ahead.
Hi, Fellas nice nice strong results for the quarter wanted to start on self storage.
When youre looking at 9% rate increase and a.
5% increase in occupancy what does that measure IL two in the same store revenue increase in total.
Jamie This is Jason.
I don't have that answer I apologize.
I would say that maybe about two 5% of that is coming from us.
Having fewer first month free specials or discounting.
The increase in NOI is at a rate faster than the revenue growth.
Got you.
Many moons ago, you've talked about how long it took to take a new unit out of the ground to make it cash flow positive.
It was four years and then it got close to three years, what do you think it is now by the time from the time you.
Open up the doors of a new facility.
This is Jason I'll give you the occupancy figures so.
What we've been running at the last several years is the first year, you get to 40% second year to get to 60.
Third year of <unk>, 75%, that's advanced now so I looked at that we looked at the facilities. We opened in the last two years.
And we're seeing occupancy at the end of the first year averages.
A little bit north of 50%.
And then we're getting close to say $65, 70% in the second year.
It moved everything up close to a year year and a half.
Jamie Youre, probably cash flowing positive at 75%.
Okay excellent.
Excellent.
Within the U box program.
So most of that.
U box is growing well into double digits, I assume 25%, 30% a year.
If you look at our other revenue line.
It's the biggest component of FCA.
Well in the double digits.
And you have to break that out as a separate entity wants it.
<unk> to 10% of your total sales.
Yes.
So youre not that far away from that at this point.
Right.
Yes, it's got a ways to go it depends upon how fast everything else grows in relation to it.
Yes.
When I look at that the other company you compete with and I look back that.
We sold in 2015 for a $1 billion.
How does your box compare to.
To those other folks in terms of.
Revenues.
Units out there and do.
Do you think that valuation of what Todd was worth.
Excuse me sorry to say that word of $1 billion is would you box is actually.
Whereas today.
That's a great question first of all.
Don't see any pods data okay now.
For pods data I'd like you to tell Jason that we'll try to get some comparisons.
Have a good source.
We have some ways that we.
Try to track it they're still growing.
They are seeing good growth.
I'd be shocked if theyre not worth three times more than what they sold for 2015 I'd be shocked I think they are all good.
This.
Bob.
Large market.
So.
I think it would be.
Probably.
I haven't tried to look at suitable what do we think.
Yes.
David Consumer response is strong for us so while we saw U haul growth.
Kind of slow we're not seeing that and these are moving and storage customers I mean, they are not.
Your customers. So there is a customer preference.
And unmet customer preference for our box move.
So.
I expect this to grow and we're investing so we're putting money in there.
Basically in more boxes more trucks more warehouses.
<unk>.
Anticipates further growth so I.
I don't have a value and I don't think I don't know what Jason has one.
C&I track always we always want to make sure that we're.
We're contributing in not.
Being a pair of site to the organization U box is definitely contributing every quarter.
So.
We expect it to continue to grow because it's a bright spot for us.
I'm one of those people who doesn't want to.
Disclose this additional information until we have to so.
Sure.
The accounts are kind of watching that ratio with whom we've tip over it we will do whats.
Sure.
<unk>.
What's required as far as disclosure, but totally allowed to disclose a lot.
And the profit margins with U box.
Obviously, you've got.
Spike short term.
Freight costs, but the profitability is similar to the corporate average.
Jamie This is Jason.
It gets down to the game of how you allocate cost and and it's a very hard thing to do because all of these locations except for maybe three are co located deals.
Our best shot at it showed about about two years ago.
It was right up upon overall, moving and storage EBITDA average operating margin.
And now it's taken a little bit of a step back because freight costs are such a large component of that business.
And as you're building your new self storage facilities. It seems like all of them have a significant U box component within there does that give us a competitive advantage given the number of facilities, we have and the number of facilities, where we're adding or.
Is the competition equally as well located throughout the country.
I think we're moving ahead.
Of course.
The new whole spreads.
As to have.
Footprint across North America, United States and Canada.
And.
That's served us well the U haul business.
G.
And I think it will the new box customer.
Who moves from let's say Los Angeles too.
Bay areas sure Theres a tunnel.
Some of these customers also move.
Move to retire in Boise or move to.
You've got a much smaller communities.
When we as we develop more.
With the customer.
So we can keep a very very broad.
I believe it's going to.
<unk> to be a competitive advantage I'm sure of it.
Great.
I'm sure they're trying to.
Positioned themselves, where they don't lift out coal.
Yes. It is.
So fast.
We're not really.
Pleasingly each of them.
Okay.
And lastly, moving over to shareholder value.
And something that you had said you were going to be addressing this year when I look at U haul with a $10 billion market cap.
And then I compare.
In the self storage area life storage, which has a $10 billion market cap.
Of its own and it is very similar in size to our self storage unit and then layer on at least $1 billion for U box, So im up to <unk> 11 billion.
Without which is above our market cap without taking into.
The wonderful position, we have in truck rental.
Which is obviously our greatest profit center.
The market capitalization of U haul is so much less than the intrinsic value from what all our entities are worth we've done a wonderful job of managing our business, but how are we going to put that into better value for shareholders in the long term, whether it's stock splits.
Splitting the company, which I don't think we're going to do a regular dividend changing the name of U haul what's in your toolbox that you expect to utilize to increase shareholder value.
I think youll get there.
You'll see over the next.
Several months important on every one of those maybe not exactly what you recommend but I think youll see action on all of those again.
Most of those things are things that have to happen at the board of directors level.
Do you want to know about developing.
That's totally my control.
But some of these other items.
We have.
As we're supposed to do we have an independent board and so.
Okay.
Not going to predict.
Hey, Vance.
You can see the trend in.
You bet.
You are represented at the board level.
Okay. Thank you Joe wonderful job managing each of these businesses, it's a pleasure to watch how you chart. The course for U haul and moving forward. Thank you.
The next question comes from Craig Inman of Artisan partners. Please go ahead.
Hey.
I wanted to first touch on the.
Truck rental business and being behind in what you would perceive for Capex.
<unk>.
Was wondering if it is two to three years behind what you need to do to turn the fleet could you throw some numbers out there in terms of how much capex that could be.
Im guessing that would you would look at it as a net number not a gross number.
But some.
Some day.
Data on what that could look like as we catch up from this period would be helpful.
Yes, im going to Jason to answer in a minute.
<unk>.
Yeah.
Lead is if you're not leading up.
Pretty much an equal right all the time.
When you go to fleet up you end up looking like a snake. This followed a rat we've ever seen that kind of big lumpy.
Yes that one pass to work itself out.
In this environment that lumpiness is going to be.
Inflationary as.
As well as <unk>.
Just the normal aggregation of increased capital.
The <unk>.
Inflation.
<unk>.
If it's not a market leader is right up there with gasoline vehicle costs.
I don't know.
Now.
Long that the Oems are going to be able to make this pricing stick, but so far they have demand outstrips supply that simple and so.
Good.
We're going to see an effect of this.
<unk> now on the other hand, we do sell some vehicles when we get we're going to get inflated prices for those but theres going to be a lag in there.
<unk>.
I've lived through this before what happens is you end up with a bunch of trucks that let's say 20000 miles in a bunch of trucks that 80000 miles.
Youre still paying.
Above desired repair expense on the one hand and.
Until you kind of normalize it. So you have an even distribution of mileage you keep getting these kind of.
Okay.
Make swallowing right you get these lumps that have nothing to do with.
Actual work performance, but have a lot to do with how the money gets spread around with.
That'll adjacency, if you can quantify that.
Sure Craig I'll hit this.
So.
Our projected growth Capex now.
For fiscal 2023 is somewhere a little bit north of one 5 billion.
I think we started off the year closer to one eight and as we've already gotten.
Delivery slowdowns I would move that number down to about $1 billion filed a little over $1 five.
I would say that of that amount probably somewhere around $230 million of that is going to be inflation related.
Comparing what these trucks would have cost us the last couple of years versus going forward.
As far as a backup in rotation.
The rotation the ongoing rotation I'm going to limit the discussion to the box trucks that have multi year rotation.
And this is a very conservative estimate probably on the low side, but I think we're somewhere.
North of 80, 609000 trucks behind on rotation, which is probably about a $425 million to $450 million.
Backup.
Okay.
Yes.
Does that.
Neil mentioned it could take a few years is that just because of the Oems not because of your wallet or willingness to spend.
Yes, it's totally totally has to do but even let's just say.
We were normally going to buy 10000 trucks to about 20000 trucks. We are right now you've got 20000 trucks with zero mileage.
And you have 100.
20000 trucks that are now 20000 miles over where we had planned for them to be so their cost stays up right.
Yet.
This shingling out of the mileage on the fleet.
So it always takes longer than I expected too that's been my experience that we've had this for different reasons over my career we've had.
These lumps come through when it come through there always just.
They just are what they are I have no idea.
Now, we're going to be able to price.
Two.
Has this inflationary cost on the consumer so far we've been able to get some pricing.
And if we can continue to get pricing will than we're used to in some kind of arbitrage situation is going to go by.
Assuming we have access to capital, which we should have access to capital so.
Okay.
I just think from your point of view you need milk is going to be a lump come through into the concert don't be shocked when it comes through but it's not going to.
Reflect any.
Change in the base business it just.
Financial loan.
And it impacts.
All of our expenses from depreciation.
Hopefully it positively impacts repair expense, so youll see some.
Because more will be under warranty and plus new vehicles, just don't require as much services.
Higher mileage vehicles.
Got it yes, that's what I was asking.
How this plays out over the next few years and obviously you all don't have the crystal ball, none of us do but.
When they get a sense of what it could look like and so it matters more.
Makes it easier to manage the business, having a more evenly mileage fleet based on years and number of vehicles versus a lot of new wins and a lot of older ones.
That hurts.
Management of rotation fleet, yes.
Okay impacted again youre going to wiggle.
Through this right now we've been wiggling.
Two years, we just can't get the fleet.
Okay. So.
We're adjusting constantly.
We're going to keep trying to optimize the mix.
Okay.
Of course, my druthers would be that the automakers come on at Christmas and get back to back to work.
The idea that they're going to do it I don't think they do either.
Alright.
Would your preference be Jared I'd like we were before the pandemic to get the fleet back to a newer state and maybe what average with the math would indicate yes.
To me, it's kind of.
Moreover than the ship if you got it.
Good we came into this pandemic.
The fleet.
And in the best shape in my career.
And so then we burn some of that down that's just how that goes.
Now.
I am more conservative person I would rather build some more.
<unk>.
Because it just.
It allows for something really.
<unk> like the.
Pandemic and the resulting supply chain disruption whether that comes through you can.
You can work through it is not disappoint the customer the customer ends up getting all of this but if we can manage it they.
They are not disrupted by it and then what we're trying to guard of course is our consumer franchise to the customer.
Comes back in back to back most of our customers are repeated with us.
Dozens of times.
We want them to continue that quality experience.
And keep repeating with this obviously so.
That's.
I am very interested that Jason was a little more focused on.
Given the dollars to work out of it of course, I want to make a good profit and everything but.
If we serve the customer right, we've always been able to Paulo decent profit out so I would expect.
Yes that was going to your question I'd ask here as the fleet ages I mean is the worst customer experience.
Breaking down.
Full probably but it's just everything the <unk> a little bit.
It never gets quite as clean as you want it to be eventually they just kind of get.
We do what we call a super clean and blah Blah blah.
It's just it's about like I.
I don't know if you have a typical at home.
The car and then the car gets handed down to the acute turned 60 in this kind of a little bit.
Overall the day before it went to the Kid who was working for one of the parents. So this is kind of just how vehicles are in.
If all your vehicles.
Or in that situation that is not a great happy household.
So we want to keep this we want a more blended mix.
And right now, we're we're losing some of that.
Sort of.
Value or startup.
Yes.
Experience, we're managing it okay.
If this continues on for four years.
We're going to have to really figure this out and we're looking at that alternative because.
We nobody I think knows what's happening with vehicles for a fact.
So right.
At a high level, we're trying to say.
What would we do should this occur.
Okay.
What metrics do you all have beyond just the E.
The mathematics of that.
Getting business to keep a pulse of the customer and their happiness or their satisfaction with the product with rental.
So we survey people, obviously, we one of our best.
Metrics on that as well.
We serve the customer.
But tax journey email request for a review its about five questions.
And then it has a blank space. So they can the rate is 1% to five stars on specific things.
Yeah.
We then publish every one of those.
To the customers. So they can now buy location.
Do those reviews.
So I.
We're running the company.
Encourage.
All my managers to manage off the reviews and the customer says.
<unk> should get arrays will then maybe Mary deserves arrays customer says.
No.
Steve is sits on us, but all the time and.
And they say things like that.
Sure.
You get a you get you can get a pretty good feel for them.
And of course, I can search that database for key words different thoughts.
An example is.
A year ago, maybe a year and a half ago.
Started noticing.
And a conscious way.
And thats not normally.
Something that we say hey, that's behind it.
But since learning that now for the past year little more open.
Pushing kind has people in this country have been stressed.
And I think the same Detroit, Canada.
Moving is already a little bit stressful. So you combined.
The overall strength of the country and then throw in the stress that moving.
Okay.
Once kindness and I learned that purely from studying reviews.
So.
We have a pretty good of course, we're looking at.
Revenue transactions by location.
And then we aggregate them into sub categories.
If someone's revenue or transactions with dropping gogo.
Sable something.
<unk> you can be right.
Start to probe into that.
So I would say looking at revenue and transactions and then studied reviews.
Gives us a pretty good idea of what the consumer.
Yuval.
And that metric has been.
Getting pressured with the Beijing trucks, and just the labor issues and all that will sure theres comments on that all the time.
Within the last week.
They go into the store, there's one person there.
Well I'll start working so good so when theyre not taking money either outside the stores MTM immuno system not.
The customer experience that we planned on but I mean to.
To me.
Thank the personally thank God became to work you hadn't come to work they had been nobody here today.
And so this I think is every retail operation not been N. I was at a restaurant here this week and they announced they were closing Sunday and the reason was they couldnt staffed okay.
We have yet to have to staff to closed stores, because we can't staff.
Many stores are down staffed and <unk>.
Again, if you can get a an atmosphere of kindness and goodwill.
Do it yourself business people can work this out.
If someone comes in this very demanding and thinks it's a <unk> business, where theyre going.
A little disappointed and so and those customers come in and we want them, but.
It's there's a lot of give and take going on right now at the retail level, a new holes not immune to it.
Alright, Thats great thoughts.
I guess I'll ask I'll, let my voice to the.
Jamie's comments regarding.
Yours creation of economic value over a long stretch of time now in the markets.
At moments is rewarded at that moment it hasnt in one of those moments is probably now or the stock looks disconnected from the economic value created.
Yes.
Want to beat the drum forever, but.
Any other thoughts on just your.
Stance on kind of the stock versus the business value and the disconnect there.
You know.
Greg Waller dividends or dividends, just tied to the economic output of the business.
Fishing around in there, but I'm curious as you probably know my entire network is.
Connected to the.
Value stock of this company, so I don't house.
The big cash hoard amount invested some other.
Operation.
Stock broker or something like that I just Don.
So obviously this stock.
I am very much interested in.
To grow.
So.
I'm hearing you I don't think that.
Managing stock values is a particular point of expertise from MISO and people like you who are Jamie speak characterize listen because I figure you.
That's kind of a little bit your business, how that plays out of U haul is my business, but the <unk>.
General principles.
Probably better understood by Jamie and other people who are on this call. So I'm trying to listen to them and as I told Jamie.
Thank you is being heard.
Right.
Not in a position to say X y or Z really because they are board decisions and I would just.
The board wanted to speak on a subject that talent so until they do I am not speaking understood.
Okay, Yeah, and I'm not trying to get.
Youll shouldnt be managing to your stock price, it's more that the disconnect between the economic value and the value, we're creating in the market and how that multiple is expressed.
And I was hinting at not that you should pay attention to your stock price.
And that has to do with how effectively we communicate we view.
I hear you on that okay.
Adam.
Great well that's all for me. Thank you for your time.
The next question comes from Adam Sues of Yacktman asset management. Please go ahead.
Hi, everyone.
And to follow up one of my questions on the last call on the truck side.
If I look at rental revenue per truck each year, and I know thats not perfect, but it's a data that I have.
There is a big step up in the last two years, especially the last year after that metric being flat for almost a decade.
And I know, there's lots of moving pieces, but how much of that do you think is enduring.
A pricing how much of that do you think you can hold on to.
You, obviously provide a tremendous amount of value to the customer should be charging for it.
How much risk is there that that reverts back to that prior sort of decade average.
I don't think its going to revert back to that it was my comment and Mike.
It looks like.
Hang on to this step up in activity that we've seen over the last.
26 months it looks like it now.
Two or three months don't make a trend, but it looks like it.
While the.
The rapid growth in transactions has slowed. The question is are these people going to come back to us if we get them into our.
Customer base in a way.
That.
They perceive it will be in their best interest to do business with US next time, they have a need.
And I think the answer is generally yes.
So.
What you've seen over the last two years. In addition to just the uptick in total transactions has been.
We've had some.
Pricing ability in the market.
We've tried to do that without.
Gouging.
Kind of a.
A little bit of it.
Estimate but of course.
As demand goes up.
Sure.
More customers, who will pay a little bit higher price and so we have been doing that and trying not to.
I would say a couple of places I had to actually.
So while my local managers back I felt they were trying to.
Overplay their pricing and they were going to leave the customer with a bad taste in their mouth.
Just because there was only five trucks Reston town doesn't mean, you can double the rate.
You can double the rate, but it's not.
Not our that's not our strategy so.
I think that.
<unk>.
Going to hold on to the customers.
The pricing is confused on inflation for me.
And I think as we.
See what happens with our.
Cost of acquiring equipment question is can we.
Pass on that increased cost.
I think we're going to have to try that's I mean, that's just the fact, we got no choice.
And customers are somewhat accepting of pricing increases I'm always watching.
At the grocery store I always speak to the clerk.
I was kind of expensive or whatever and see kind of what they say, yeah everybody's complaining about it and try to get a feel for it but people right now.
Understand that prices are going up.
Companies have to raise their prices due to these inflationary pressures.
Right now vehicles have inflated I think write up ahead of the list.
The economy.
I have a whole bunch of statistics.
Yes.
And those prices have really gone up.
<unk>.
Customers are paying it.
Now we'll see.
I read an article last week or something.
<unk> had 100000 cars parked to their yards waiting for two or three chips I believe thats true.
And then of course the.
Ryder said, well, let's see what happens in those 100000.
Of course, if the market all at once.
I don't think it'll change the thing I don't think 100000 cars is going to be.
Drop in the bucket, so until them automakers get their quantum.
Quantities up there's going to be this inflation and we're going to have to pass along and I'm a little uncertain about although we're watching it.
Which one is going to outpace right now the automakers have kind of.
For my money abused their pricing they are able to get it there.
I don't know if you shop to new car anything lately, but it's a pretty much.
One way experience there is no.
Consumer doesn't carry much leverage in that transaction.
So.
The carmakers have abused it and I think they are.
Wed have to pull back.
That's my opinion.
Two years is going to tell the story.
Alright.
The follow up on that on the moving business side.
Press release mentioned customers have choices.
If I look on the specifically on the truck side most of the public competitors have been shrinking their fleet number of trucks that they that they own and they definitely don't have the mind share is U haul brand, which we think.
He is extremely valuable.
How would you compare the competitive position and market share of U haul on that on the moving side, especially maybe thinking about one way moves versus five or 10 years ago.
But we're up a little bit of share.
The wonderful thing about capitalism is when someone sees someone being successful they all revenue.
So.
There are a number of enterprise and people who are running into our business.
And attacking it.
So I'll clear up to the reorganized service company they know.
Decided since the.
We're able to get a clean slate that now they should go back into the truck business as well.
So thats, where pinsky garlic business was he took over the old Hertz fleet now hurts to get ready to.
Commit ritual suicide.
But coming into our business, but they will come in here.
Apparently have financing they've got juice, so theyre going to come in and they're going to push around.
And we're going to have to deal with it.
So there is plenty of people with money.
Who look at this and think it will help if you hope to do at any fool could so theyre going to jump in.
Okay.
I hope the customer.
Fixed with us obviously.
But that's it's just capitalism so.
To all my people you have to make you hold the best choice for the customer when.
When you think you have some.
Market dominant youre, just kidding yourself, and you're going to get come upwards. So.
But we have to continue with our basic strategies.
Create a value for the customer.
All through the pandemic, where I preached with money.
Retail teams as they needed to Wow, the customer who use that ww, while the customer, but because they have a choice and even though youre the only guy open today.
That won't be always and they're going to remember how they were treated.
When you are the only person in.
In town and I've had a lot of people say that to be social friends.
Theyre going to remember how company extra companywide treated.
And I hope, they remember us and I hope they remembers in a positive manner. So that there is.
When I see the competitive landscape. It's there is another one heightening around every tree literally.
So.
Okay.
To me I think that there's more.
More competition because of the.
<unk>.
Hello.
The internet and alternative ways of bringing coming to market and of course, Uber and Lyft are wonderful examples of great success increased value to the consumer and they have been.
More or less.
Supported by the consumer so there's any number of people.
We think they can do this better and as I said.
Five or six years ago.
Our job is to be the disruptor in the industry not be disrupted.
And so we have.
Massive what we call a 24 seven initiatives. So you can rent a truck.
$24 $700 to 65 in other words, it's not just contact Qwest, there's nobody there it's 11 o'clock at night.
We're doing it.
Suitable business.
That.
Of course, we keep trying to expand the.
Breadth of our products presentation, so more locations.
Locations helps.
So there's a lot of things we're doing to try to.
Make sure that.
We come.
Four or five or six years from now.
We're still.
The preferred choice for the customer.
But theres plenty of competitors.
Enterprises massive.
So loss to be in this business that count.
Hey drew.
So good for them, It's America, let's go out and compete.
Great.
Hi.
Gears onto the self storage side, you have been investing heavily.
It seemingly very good returns given the metrics you talked about earlier.
And there is some concerns in the industry. It was just the amount of capacity that amount of development Thats coming online and it's certainly not yet showing up in the numbers of batesville filling up like crazy, but.
How big do you think and look out three to five years, how big of an opportunity for U haul storage do you think there is how much square foot could could you actually bring online before you sort of saturate your existing footprint and as is the holdup capital is the hold up.
The availability of good locations.
Sort of prevent you from getting there.
Well I think we'll hold those execution.
Yes.
The storage market is very.
Geographically specific.
So.
Okay.
Always find a saturated market always kind of been saturated market.
On top of that the storage market still Hasnt got.
For consumer awareness in my judgment.
So let me first start with this.
I was 23 or four years old and high postulated that the market could be as one square foot per person in the United States. Okay, well now we've got markets with 22% or 25 square foot per person.
Hello.
I've been a poor guesser I guess would be I've underestimated in the market most of my life.
Oh.
But it's very geographically dispersed so.
New Jersey was a really good market lets say seven 810 years ago. If you could get in there you go.
Really.
No clear some profits.
Now, it's a little less so because of course cost of kind of caught everybody has competed and brought it up so.
I'm, the one who always thinks the market is going to get a little tremor here.
This.
Wide availability of capital at low rates.
And even it.
Let's say the rates are 5% or something now there is still very low.
And any sort of perspective.
So I don't think that the rates are going to drive people off.
With money chasing every deal almost.
So I think there is.
I think theres a lot of.
Room, there, although as always been better.
People are better site selection of people better operations are going to just going to do better.
My goal is to be.
Better site selection and better operations.
That's that's just kind of general business, that's like and so I don't think the market is.
There's going to be the limiting factor on any nationwide.
Parameter, but in any given city shirt absolutely can be.
And we've seen it over the years, where too much building rates dropped from three three years or something.
Okay.
Creep back up.
Okay, well congrats on the results and good luck, finishing executing this year. Thanks everybody.
The next question comes from Steven Ralston from Zacks. Please go ahead.
Good morning.
Morning.
Congratulations on a solid quarter.
Two questions one is a little long winded the other ones really short.
And please tell me if I'm wrong somewhere.
It seems like the quarter you still have this very strong pricing dynamic in place for your business.
And the moving rental businesses basically gone down to like a mid single digit so the good solid demand.
You have two exceptions to that and Thats, the U box business and self storage, which is.
Just going double digits.
It seems the challenges on the repair costs and your personnel expenses.
And of course, the shipping you said was associated with differing costs with U box.
Those items seem to be driven by the external environment in other words.
<unk>.
Youre waiting on new vehicle deliveries youre, having inflationary cost with personnel.
And even though it's very comforting that you've lived through this before.
Isn't it a little different or slightly different this time.
In that almost 20% of your business in revenues.
Our in these.
20% to 30% growth industries.
Self storage and U box and that might mitigate any.
Yes, let's say cyclicality in the business at this time around.
I've been driving on that hoping that is true for over 20 years conscious.
Now how that will play out only do.
Future Hotel I can tell you if you go to a micro are more micro example, so let's just say.
St. Louis St. Louis.
Absolutely both of those things are giving us more stability and less cyclicality.
Okay.
Let's see.
Calgary in Calgary, we have not done as good a job with either the self storage or the U box and so we.
We haven't.
Address that cyclicality.
As wells as we can so we have a we have opportunities.
And that's how I look at it but absolutely if you can.
If you back this up 40 years 40 years as soon as September comes Bam its start laying off people.
Just on that simple color would you want to call it.
We're going to have to go through the winter and it's not we don't have enough revenue to carry the team.
We now have enough revenue, we're careful to carrier team.
And the more of those two.
Businesses grow.
Yes.
The more we're going to have that ability so.
Yes, I think youre seeing that.
Landscape pretty well.
And I.
I think I've been on this call almost three years now and there's always a question of when you break out U box.
When I look at the numbers.
Even though it's growing faster.
It hovers between 7% and eight 5% of your revenues and that is just other revenue there's other things in there.
It seems like that it would take at least mathematically two or three years before that even gets over 10%.
And you probably don't have to break it out until it's actually on an annual physical basis.
So we're talking like two or three years out.
Minimum.
I would say that seem about right to you opinion.
I haven't tried to run that math, but it sounds about right.
Yes again.
The accountants are monitoring that im not actually monitoring that.
Alright.
Okay.
I just want to make sure I'm not missing something there.
Because I know asked that question.
Quite a while back but.
Now that I see the math it just seems like it's not going to happen soon it's great that you have.
Okay.
25% to 35% growers, there, but you know.
It's going to be a while before you break it out because.
Yes, so large in dollar rate break it out not decelerate and I'm all for now.
Well.
I am fully committed to growing it my son, Sam roughly U box Division is there for good reason because thats.
He is getting his creds, if he's learning the business from them.
The minute detail and new box is a big part of our future.
And I want to have.
And be fully versed in that future.
Thank you for taking my questions.
Yes.
This concludes our question and answer session I would like to turn the conference back over to management for closing remarks.
Thanks Danielle.
I'd like to thank everyone for participating in the meeting and I wanted to take this opportunity to remind you that on Thursday August 18th we have a few important meetings for shareholders at nine o'clock am Arizona time, we're going to start off with our annual shareholder meeting.
Once again this is going to be a live video feed broadcast over the Internet and we encourage you to participate that way and.
And then two hours after that at 11 o'clock, Arizona time, we're going to do our virtual analyst and Investor meeting, where we're going to have.
Executives available for.
A broad range panel of questions and answers.
Please feel free to start submitting those questions to Sebastian ahead of time, and we look forward to speaking to you in a few weeks. Thank you very much.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.