Q4 2024 U-Haul Holding Co Earnings Call
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Operator: Please stand by; your program is about to begin. If you need operator assistance today, just press star zero. Hello, and welcome to the U-Haul Holding Company fourth quarter fiscal year end 2024 investor call. At this time, all parties are in a listen-only mode. Later, you will have an opportunity to ask questions. To ask a question, press star and one on your phone keypad.
Speaker Change: Hello, and welcome to the U haul holding company fourth quarter fiscal year end 2024 investor call. At this time all parties are in a listen only mode. Later, you will have an opportunity to ask questions to ask a question press star and one on your phone keypad at Star One if you would like to ask a question.
Speaker Change: If you would like to remove yourself from the queue Press Star. Two. Please note that this call is being recorded and I will be standing by should anyone need assistance I would now like to turn the conference over to Sebastian Reyes. Please begin.
Operator: It's star one if you would like to ask a question. If you would like to remove yourself from the queue, press star two. Please note that this call is being recorded, and I will be standing by should anyone need assistance. I would now like to turn the conference over to Sebastien Reyes. Please begin. Good morning, and thank you for joining us today.
Sebastien Reyes: Good morning, and thank you for joining us today welcome to the U haul holding company's fourth quarter fiscal 2024 year end investor call.
Sebastien Reyes: Welcome to the U-Haul holding company fourth quarter fiscal 2024 year end investor call. Before we begin, I'd like to remind everyone that certain of the statements during this call, including without limitation, statements regarding revenue, expenses, income, and general growth of our business, may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Sebastien Reyes: Before we begin I'd like to remind everyone that certain of the statements. During this call, including without limitation statements regarding revenue expenses income and general growth of our business may constitute forward looking statements within the meaning of the safe Harbor provisions of section 27, a of the Securities Act of $19 33, as amended and section.
Sebastien Reyes: 21 E of the Securities Exchange Act of 1034 as amended.
Sebastien Reyes: Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Certain factors could cause actual results to differ materially from those projected. For a discussion of the risks and uncertainties that may affect the company's business and future operating results, please refer to the company's public SEC filing. I'll now turn the call over to Joe Shoen, Chairman of U-Haul Holding Company. Good morning.
Sebastien Reyes: Forward looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.
Sebastien Reyes: Certain factors could cause actual results to differ materially from those projected.
Sebastien Reyes: For a discussion of the risks and uncertainties that may affect the company's business and future operating results. Please refer to the Companys public SEC filings.
Speaker Change: I'll now turn the call over to Joe showing chairman of U haul holding company.
Edward Joseph Shoen: Thanks for joining the call today. The huge price increases that Ford and GM put in over the last three years are manifesting themselves in less gain on sale. There is abundant product in the resale market, and resale pricing increases have so far failed to parallel new vehicle prices. How this will go into the fall is still a guess.
Speaker Change: Good morning, Thanks for joining the call today.
Speaker Change: The huge price increases supported Jim put in over the last three years are manifesting themselves and less gain on sale.
Speaker Change: There is abundant product in the resale market and resale pricing increases have so far failed to parallel new vehicle pricing increases.
Speaker Change: All of this will go into the fall is still gas.
Edward Joseph Shoen: POSITIVELY, repair has come down and has the potential to come down more as we trade vehicle depreciation expense for vehicle repair. Ordinarily, this is a positive trade-off. Recent consumer confidence reports indicate some chance for an upturn in miles traveled per rental. So far, however, consumers remain cautious. In our experience, personnel costs are up. The combination of government.
Speaker Change: Positively repair has come down and it has the potential to come down more as we trade vehicle depreciation expense for vehicle repair expense.
Speaker Change: Ordinarily this is a positive trade off.
Speaker Change: Okay.
Speaker Change: Recent consumer confidence reports indicate some chance for an upturn and miles traveled core rental so far consumers remain cautious in our experience.
Speaker Change: Personnel costs are up.
Speaker Change: It's a combination of government.
Speaker Change: Wage mandates and inflation.
Edward Joseph Shoen: Our best way to combat this is through increased productivity, primarily at the retail level. This is through better IT and whatever product improvements you can achieve. We continue to expand our footprint in self-storage. We are still filling rooms, but at a slower rate than we are adding. We have the broadest footprint in the self-storage business.
Speaker Change: Our best way to come back to us is to increase productivity.
Speaker Change: <unk> at the retail level.
Speaker Change: This is through better IP and whatever products improvements you can achieve.
Speaker Change: We continue to expand our footprint in self storage.
Speaker Change: We are still filling rooms, but at a slower rate than we are adding them.
Speaker Change: We have the broadest footprint in the self storage business.
Edward Joseph Shoen: Yet, there are still many markets I believe it is smart for us to expand into. Both moving and storage are need-based. We, of course, aim to be the customer's best choice. I encourage you to patronize our products and services and encourage your friends to do the same. I look forward to talking to you in the Q&A. Jason.
Speaker Change: Yet there are still many markets I believe it is smart for us to expand into.
Speaker Change: Both moving and storage are need based businesses.
Speaker Change: Of course aimed to be the customers' first choice.
Speaker Change: I encourage you to patronize, our products and services and encourage your friends to do the same.
Speaker Change: We look forward to talking to you in the Q&A section.
Jason: Thanks, Joe. Yesterday, we reported a fourth-quarter loss of $863,000 compared to earnings of $37.4 million for the same quarter last year. And for the full fiscal year 2024, we reported earnings of $628.7 million, compared to $924.5 million for fiscal 2023. The most significant factors leading to the quarterly decline center around the continuing decline in gains on disposal of retired equipment and increases in depreciation costs from both the fleet and real estate.
Jason: Jason Thanks, Joe.
Speaker Change: Yesterday, we reported a fourth quarter loss of $863000 compared to earnings of 37 4 million for the same quarter last year.
Jason: And for the full fiscal year 2024, we reported earnings of $628 $7 million.
Jason: Compared to $924 5 million for fiscal 2023.
Jason: The most significant factors leading to the quarterly declines center around the continuing decline in gains on disposal of retired equipment and increases in depreciation costs from both the fleet and real estate.
Jason: To highlight this, if you look at our quarterly operating cash flow or its income statement proxy, EBITDA, you'll see that we actually had a slight improvement for the quarter. I'm going to start off with Equipment Rental Revenue results. Compared to the fourth quarter of last year, we had a $10 million decrease of 1%.
Jason: To highlight this if you look at our quarterly operating cash flow or income statement proxy EBITDA youll see that we actually had a slight improvement for the quarter.
Jason: I'm going to start off with equipment rental revenue results compared to the fourth quarter of last year, we had a $10 million decrease of 1%.
Jason: March was the first time in 19 months that we experienced a year-over-year improvement in equipment rental revenue. Looking at combined April and May, we've seen even more revenue results flattened out compared to last. To put this fourth quarter into context, we were $200 million better than we were in the fourth quarter four years ago. That translates into an average compounded annual growth rate of a little above 8% for the four-year period. Average miles per transaction continue to decrease, but less than the previous nine month rate.
Jason: March was the first time in 19 months that we experienced a year over year improvement in equipment rental revenue.
Jason: Looking at combined April and May.
Jason: We're seeing.
Jason: Even though revenue result, flattened out compared to last year.
Jason: To put this fourth quarter into context, where $200 million better than we were in the fourth quarter four years ago.
Jason: That translates into an average.
Jason: Compounded annual growth rate of a little above 8% for the four year period.
Average miles per transaction continue to decrease but less than the previous nine months right.
Jason: For the year, total truck transactions were down 3% while the fourth quarter was down 1%, and revenue per mile was positive for the quarter and for the 12 months. Capital Expenditures for New Rental Equipment for Fiscal 2024 were $1,000,000,000.
Jason: For the year total truck transactions were down 3%, while the fourth quarter was down 1%.
Jason: And revenue per mile was positive for the quarter and for the 12 months.
Jason: Capital expenditures for new rental equipment for fiscal 2024 1 billion.
Jason: $619 million. That's a $320 million increase compared to last year. Our initial fiscal 2025 projection is for about a $100 million increase in this number. Proceeds from the sale of retired rental equipment increased by $40 million to a total of $728 million in fiscal 24.
Jason: $619 million.
Jason: $320 million increase compared to last year.
Jason: Our initial fiscal 2025 projection is for equipment.
Jason: About $100 million increase in this number.
Jason: Proceeds from the sale of retired rental equipment increased by $40 million to a total of $728 million in fiscal 'twenty four.
Jason: The increase in proceeds is coming from additional truck sales, but the average sales price per unit has been steadily declining. As we've both mentioned, a large component of the decrease in earnings for the quarter stems from a $32 million decrease in gains from the disposal of equipment compared to the fourth quarter of last year. As we've previously commented, we'd expect these gains to continue to recede over the course of the next 12 months.
Jason: The increase in proceeds is coming from additional truck sales average sales price per unit has been steadily declining.
Speaker Change: As we both mentioned a large component of the decrease in earnings for the quarter stems from a $32 million decrease in gains from the disposal of equipment compared to the fourth quarter of last year.
Speaker Change: As we've previously commented we would expect these gains to continue to recede over the course of the next 12 months.
Jason: We've made progress on our backlog of rotating new trucks into the fleet, and our estimate for fiscal 2025 projects further progress on getting us back to where we need to be on the fleet side. We've increased the number of trucks sold by nearly 20% compared to the year before. At the end of this year, we reported 188,700 trucks in the fleet, which is down about 3,500 from March 31st, 2023.
We made progress on our backlog of rotating new trucks into the fleet.
Speaker Change: And our estimate for fiscal 2025 projects further progress on getting us back to where we need to be on the fleet side.
Speaker Change: We've increased the number of trucks sold by nearly 20% compared to the year before.
Speaker Change: At the end of this year, we reported 188700 trucks in the fleet, which is down about 3500 from March 31 2023.
Jason: Now, if you compare that to March 2020, we still have over 12,000 more trucks in the fleet today than we did four years ago. For self-storage, revenues were up $17.5 million, or 9% for the quarter, and a little over $86.5 million, or 12% for the full 12. The quarterly increase was a combination of a 6% increase in the number of units rented combined with about a 2.5% increase in revenue per occupied square foot.
Speaker Change: Now if you compare that to March of 2020, we still have over 12000 more trucks in the fleet today than we did four years ago.
Speaker Change: For self storage revenues were up $17 5 million or 9% for the quarter.
Speaker Change: And a little over $86 5 million or 12% for the full 12 months.
Speaker Change: The quarterly increase was a combination of a 6% increase in the number of units rented.
Speaker Change: Bind with about a two 5% increase in revenue per occupied square foot.
Jason: The year-over-year improvement in revenue per foot has been coming down as we've progressed through the year. For our total portfolio, so all of our locations combined, the occupancy ratio decreased 140 basis points to just under 80%. That's largely due to the addition of 55,000 new units that we've constructed while increasing the number of occupied units by 31,000. If you narrow this group down to the same store pool, we saw a 190 basis point decrease in occupancy to 92.3%.
Speaker Change: The year over year improvement in revenue per foot has been coming down as we've progressed through the year.
Speaker Change: Our total portfolio. So all of our locations combined the occupancy ratio decreased to 140 basis points to just under 80%.
Speaker Change: That's largely due to the addition of 55000 new units that we've constructed while we increase the number of occupied units by 31000.
Speaker Change: If you narrow this group down to the same store pool, we saw 190 basis point decrease in occupancy to 92, 3%.
Jason: During fiscal 2024, we invested $1,258,000,000 in real estate acquisitions along with self storage and U-box warehouse development. That's down $83 million from the year before. Spending on the acquisitions of new properties has declined while investment and development of these properties have increased. During the quarter, we added 2,424,000 new net rentable square feet, which brought our 12 month figure to 5,475,000 new square feet.
Speaker Change: During fiscal 2024, we invested $1 $258 million in real estate.
Speaker Change: <unk> acquisitions, along with self storage in U box warehouse development, that's down $83 million from the year before.
Speaker Change: Spending on the acquisitions of new properties has declined while investment in development of these properties has increased.
Speaker Change: During the quarter, we added $2 million 424000, new net rentable square feet, which brought our 12 month figure to $5 million 475000, new square feet.
Jason: Our pipeline of active and pending projects remains robust, at 7.8 million and 9.2 million square feet, respectively. However, operating expenses and moving and storage were up $10 million for the fourth quarter and $100 million for the fiscal year. We've now had our second consecutive quarter of fleet repair and maintenance improvement with a decline of $11 million. Now the year was still up $33 million, but I would expect to see these costs continue to move down over the course of fiscal 2025.
Speaker Change: Our pipeline of active and pending projects remains robust.
Speaker Change: At $7 8 million and $9 2 million square feet respectively.
Speaker Change: Operating expenses at moving and storage were up $10 million for the fourth quarter and $100 million for the fiscal year.
Speaker Change: We've now had our second consecutive quarter of fleet repair and maintenance improvement with a decline of $11 million.
Speaker Change: Now the year was still up $33 million, but I would expect to see these costs continue to move down over the course of fiscal 2025.
Jason: As we've been able to rotate in new trucks and begin to remove the oldest ones from the fleet, this has been a positive for repair and maintenance. I mentioned in the press release the $9 million quarterly increase in personnel for the quarter and $50 million for the year. We've also seen our liability costs increase by $14 million in the fourth quarter as we had some negative developments on accident claims this last year. Property costs, including utilities, building maintenance, and property taxes, were up $5 million in the quarter and $26 million for the year.
Speaker Change: As we've been able to rotate in new trucks and begin to remove the oldest ones from the fleet. This has been a positive for repair and maintenance.
Speaker Change: I mentioned in the press release, the $9 million quarterly increase in personnel for the quarter and $50 million for the year we.
Speaker Change: We've also seen our liability cost increased $14 million in the fourth quarter as we had some negative development on accident claims of this last year.
Speaker Change: Property costs, including utilities building maintenance and property taxes.
Speaker Change: We're up $5 million in the quarter and $26 million for the year.
Jason: We are filing our 10k later today, and that will be available both on the SEC website and on our investor website. This is our first financial statement audit with Deloitte, so you will see some slight changes in our presentation. Sebastian and I are always available if you have any questions. With that, I would like to hand the call back to our operator, Guillaume, to begin the question and answer portion of the call.
Speaker Change: We are filing our 10-K later today and that will be available both on the SEC website and on our Investor website.
Speaker Change: This is our first financial statement audit with Deloitte. So you will see some slight changes in our presentation.
Speaker Change: And I are always available if you have any questions about this.
Speaker Change: With that I would like to hand, the call back to our operator to begin the question and answer portion of the call.
Jason: Thank you. Once again, if you'd like to ask a question, it's star one on your phone keypad. Star one. If you would like to ask a question at this time, you may remove yourself from the queue by pressing star two.
Speaker Change: Thank you once again, if you'd like to ask a question is star one on your phone Keypad Star. One if you would like to ask a question at this time you may remove yourself from the queue by pressing star two.
Keegan Grant Carl: We will take our first question today from Keegan Carl with Wolf Research. Yeah, thanks for the time, guys. Maybe just starting on the fleet CapEx, because we kind of ended on that. I guess what I'm just trying to understand is, obviously, we can expect more improvement as you refresh the fleet. But at the same time, we'd expect that utilization also improves over time. So can you help us just understand sort of the puts and takes there and how an increased utilization may be offset with the capex? Well, I think you're basically correct. That's what you're looking to do, continue to drive utilization.
Speaker Change: And we will take our first question today from Keegan Karl with Wolfe Research.
Keegan Grant Carl: Yes. Thanks for the time guys, maybe just starting on the fleet Capex. So we kind of ended on that.
Keegan Grant Carl: I guess, what I'm just trying to understand is obviously you can expect more improvement as you refresh the fleet, but at the same time, we would expect at some point that utilization also improves over time. So can you help us just understand sort of the puts and takes there and on how an increase in utilization, maybe offset some of the capex improvements.
Speaker Change: I think youre basically correct thats, what youre looking to do is continue to drive utilization.
Edward Joseph Shoen: My experience is that utilization increases by decimal points, and that's about what you can really bring out of the place. Of course, we have an Inherent Conflict in Our Strategy, which attempts to have the widest distribution, which cuts against utilization. As you might imagine, our stores usually exceed the utilization of our dealers by a considerable amount.
Speaker Change: Our experiences is that utilization increase.
Speaker Change: Increases.
Speaker Change: Decimal points.
Speaker Change: <unk>.
Speaker Change: What you can really bring out of the place.
Speaker Change: Of course, we have.
Speaker Change: Inherent conflict in our strategy.
Speaker Change: Attempt to have the widest distribution, which cuts against utilization.
Speaker Change: As you might imagine our stores.
Speaker Change: Usually exceed the utilization of our dealers by considerable amount yet we're going to continue with our dealer program and try to grow it next year.
Edward Joseph Shoen: Yet we're going to continue with our dealer program and try to grow it over the next year. As we get a little bit of a reduction in maintenance, it also, you can kind of equate that with an increase in upkeep, and Uptime makes these vehicles more available for rent. Who laughs? I would say 90 days.
Speaker Change: Yes.
Speaker Change: We get a little bit reduction in maintenance. It. It also you can kind of equate that with an increase in uptime.
Speaker Change: And uptime makes these vehicles more available for rent.
Speaker Change: So.
Speaker Change: For the last I.
Speaker Change: I would say 90 days.
Edward Joseph Shoen: We've been having pretty decent results, holding the number of downed vehicles under control. So when a vehicle is scheduled in for certain types of maintenance, we take it off the rental register, and we've been able to. We're doing a better job of controlling that than we did a year ago, I would say, and it's largely by refreshing the fleet, which is what, Keegan. This is Jason. In my prepared remarks, I pointed out that we're still a little over 12,000 trucks more than we had going into COVID, which was largely a result of us holding on to trucks longer into their age. We went into last year with a backlog of maybe almost a year behind on rotation, and we cut that probably by two-thirds this last year.
Speaker Change: We've been having.
Speaker Change: Pretty decent.
Speaker Change: Results in.
Speaker Change: Holding the number of down vehicles under control. So when a vehicle gets scheduled in for certain types of maintenance, we take it off the rental register.
Speaker Change: And we've been able to.
Speaker Change: We're doing a better job of controlling that then we did a year ago I would say, it's largely by refreshing the fleet, which is what you referenced.
Speaker Change: <unk>.
Jason: This is Jason I also in my prepared remarks, I pointed out that we're still little over 12000 trucks more than we had going into Covid, which was largely a result of us holding onto trucks longer into their age.
Jason: We went into last year with a backlog of maybe almost a year behind on rotation or we cut that probably by two thirds of this last year.
Jason: So it's freeing us up to be able to take some more of those units out. So part of the equation is the denominator, which is the number of trucks that we're holding. Joe mentioned utilization; it can be measured in decimal points, which decimal point does translate into something very important to us, and I think as we shed more of these older trucks, it's going to improve utilization or give us the opportunity to improve utilization, and I wouldn't be surprised to see the fleet, the total fleet, about the same size or maybe again a few thousand trucks less by the end of next year. That's a really helpful color.
Jason: So its screen us up to be able to take some more of those units out. So part of the equation is the denominator, which is the number of trucks that were holding.
Jason: Joe mentioned utilization it can be measured in decimal points decimal point does translate into something very important to us.
Jason: And I think as we <unk>.
Jason: <unk> more of these older trucks.
Jason: Yes.
Jason: It's going to improve utilization or give us the opportunity to improve utilization.
Jason: And I wouldn't be surprised to see the fleet. The total fleet about the same size or maybe again, a few thousand trucks less by the end of next year.
Keegan Grant Carl: Um, I guess maybe just shifting gears here, um... Obviously, the commentary in the press release on one-way moves is that it's still below expectations. I guess, could you just maybe help us understand, you know, a frame of reference as we move into peak leasing season? What sort of what percentage of your moves are typically one-way moves?
Speaker Change: That's really helpful color I guess, maybe just shifting gears here.
Speaker Change: Obviously the commentary in the press release in one way moves is that it's still below expectations I guess could you just maybe help help.
Speaker Change: Help us understand.
Frame of reference as we move into peak leasing season, what sort of what percentage of your moves are typically one way moves I guess, specifically on that metric.
Speaker Change: Maybe any commentary on April and May specifically, one way moves would be really helpful.
Jason: And I guess specifically on that metric? Maybe any commentary in April and May specifically on one-way moves would be really helpful. This is Jason.
Jason: This is Jason I'll start off with just some of the.
Figures so historically.
Jason: I'll start off with just some of the figures. So historically, um Well, I got to break this up over the last say 10 years. We've been probably on a revenue break about 55% in town 45% one way, If you went back, I think it's 15, a little over 15 years, it was closer to 50-50, and then the transaction break is much more stark, throughout COVID, that narrowed a couple percentage points, the number of one way moves, well, say the amount of one way revenue, increased several percentage points, the transaction break remained about the same.
Speaker Change: Well I got to break this up over the last say 10 years, we've been probably on a revenue break about 55% in town, 45% one way if.
Speaker Change: If you went back I think 15 little over 15 years. It was closer to 50 50.
Speaker Change: And then the transaction break as much more stark.
Speaker Change: Throughout Covid.
Speaker Change: That narrowed a couple percentage points the the number of one way moves well, let's say the amount of one way revenue.
Speaker Change: Increased several percentage points of the transaction break remained about the same so it was longer moves and we were able to charge a little bit more per mile. So.
Jason: So it was longer moves, and we were able to charge a little bit more per mile. So, that kind of outlines what the transactions and the revenue look like. I'll leave it to Joe for any prognosis.
Speaker Change: That kind of outlines what.
Speaker Change: What the transactions and the revenue it looks like I'll leave Leila to Joe for any prognosis.
Edward Joseph Shoen: Now, when I said I think the consumer is still pretty conservative, that really results in fewer miles per rental. People still move because moving is a need, and it's based on things like marriages, births, deaths, these things are, inherently kind of smooth. They don't have a lot of Peaks of Valor, and they steadily increase over time, but how far people move, and therefore how big the dollar amount of the transaction is, has something to do with just how they feel about life, or so they think.
Speaker Change: And I said I think the.
Speaker Change: Tumors still pretty conservative that really results in less miles per rental people still move because moving is a need and it's based on things like <unk>.
<unk> burst steps these things that are.
Speaker Change: Okay.
Speaker Change: Inherently kind of smooth they don't have a lot of peaks and valleys.
Speaker Change: And they steadily increase over time.
But how far people move and therefore, how big the dollar amount of the transaction.
Speaker Change: Has something to do with just how they feel about life.
Speaker Change: <unk>.
Edward Joseph Shoen: It's great, I'm going to go on my big adventure and move to San Diego and start a new career. Well, great. That'll be great for us. But when they get more conservative, they say, well, I'm going to move to San Diego, to another house in the neighborhood, keep the kids in the same school, keep my present job. So that just shortens the movement to a large extent.
Speaker Change: That's great I'm going to go on my Big Adventure and move to San Diego and starting to clear well, great that'll be great for us, but when they get more conservative they say well I'm going to move to.
Speaker Change: Another house in that neighborhood and keep the kids in the same school keep my present job. So that just shortens the move to a large extent.
Edward Joseph Shoen: We have to recover costs based on mileage incurred. Our costs vary very much with mileage incurred. I don't see why.
Speaker Change: We have to recover costs based on mileage incurred.
Speaker Change: Because our cost very much.
Speaker Change: Barry with mileage and so.
Speaker Change: I don't see.
Edward Joseph Shoen: Big Shift. I thought we would pick up a little bit quicker than we have, and I'm still expecting we're going to see this shift. We're not running behind last year, but we're running, I think, a little bit behind historical trends, or at least how I have anticipated that they would pull you out, will see the housing turmoil, or whatever it's called, has some modest effect on it. But I think how people feel about it.
Speaker Change: Big shift I thought we would pick up a little bit quicker than we have.
Speaker Change: And I am still expecting we're going to see this shift who are not running behind last year, but we're running I think a little bit behind historical trends are.
Speaker Change: Or at least how I have anticipated they would play out.
Speaker Change: We'll see.
Speaker Change: Housing.
Speaker Change: Turmoil or whatever it's called has some modest effect on it but I think.
Speaker Change: How people feel about.
Edward Joseph Shoen: The Economy, and this whole, their whole life situation, in our experience, it has a greater effect than, Residential. New Home Sales. That's really helpful, Joe.
Speaker Change: The economy in this hole.
Speaker Change: The whole <unk>.
Speaker Change: Life situations.
Speaker Change: Our experience it has a greater effect.
Speaker Change: Then.
Speaker Change: Residential.
New home sales.
Okay.
Edward Joseph Shoen: I guess we'll shift gears to storage. I thought the commentary in the press release calling out competitive pricing really stood out. I guess I'm just curious, twofold, you know, what's changed in the past few months to cause you guys specifically to put that in the press release? And I guess second, how is this impacting your decisions around what you guys are doing with your street rates? We have a difference.
Speaker Change: That's really helpful. Joe I guess, let's shift gears to storage I thought commentary in the press release, calling out competitive pricing really stood out.
Speaker Change: I guess I'm just curious twofold.
Speaker Change: Whats changed in the past few months to cause you guys specifically to put that in the press release and I guess second how is this impacting your decisions around what you guys are doing with your street rates.
Speaker Change: We have a different.
Speaker Change: Right strategy.
Edward Joseph Shoen: [inaudible] Most of our larger competitors claim they have, of course. The only way you really know rates is to just docketly go out and call. It's not enough just to survey the internet.
Speaker Change: Most of our.
Speaker Change: Larger competitors claim they have of course.
Speaker Change: The only way you really know raises to just doggedly go out.
Okay calls.
Speaker Change: It's not enough just to survey the internet.
Speaker Change: But the.
Edward Joseph Shoen: All our competitors have some sort of... When demand is up, they jack prices significantly, and when demand is down, they cut prices or reduce prices, whatever you want to call it. We don't pursue the demand model.
Speaker Change: All of our competitors have some soil.
Speaker Change: Demand and pricing model, where when they think.
Jack: Demand is up to date, Jack prices significantly and when demand is down.
Jack: But prices are reducing prices wherever you want to call it significant.
Jack: You don't see the demand.
Edward Joseph Shoen: We're one of the few people who post room prices in our store. If you were to go to our competitor, it would be nothing for the next person in line to be quoted at a rate 20 to 40% different than the person right ahead of them. Kind of like motels and hotels, and we've knocked all of that straight, I think. What we've done has proven to be at least reasonable, given our ability to maintain some modest rate increases over the last 18 months.
Jack: Model.
Jack: One of the few people who.
Jack: Rune prices in our stores.
Jack: If you were to go to a competitor it would be nothing for the next person in line.
Jack: To be quoted rate, 20% to 40% different than the person right ahead of them kind of like hotels and hotels to sometimes.
Jack: And we've not all of that strategy.
Jack: And I think.
Jack: What we've done has proven to at least be reasonable given our ability to.
Maintain some modest rate increases over the last 18 months.
Edward Joseph Shoen: Now there's a lot of factors that go into this, whether our competitors will do what the demand pricing model would say, which would increase prices now that they're in the summer. You know, I don't control any of that.
Jack: Now there's a lot of factors that go into this year.
Jack: Whether our competitors will do what they.
Jack: But the demand pricing model would say, which is increased prices now that through the summer.
Edward Joseph Shoen: I have no window into it other than monitoring pricing. So this, in my experience, jumping around on pricing confuses the customer. They don't know if they're getting a good deal or a bad deal.
Jack: I don't control any of that I have no no window into it other than monitoring pricing.
Jack: So.
Jack: This.
Jack: And my experience jumping around pricing confuses the customer.
Jack: If they're getting a good deal or a bad deal.
Edward Joseph Shoen: We have much more. A steady approach to pricing. So if we offer a discounted price, It's really a discount. It's not, So we jacked up the rate and put a, you know, you kind of see that in how department stores used to price things. Inflate the cost, and then they discount off of it and tell you you're getting a sale, and all they're really doing is charging you what they would have charged you in the first place, but they're confusing it.
Jack: Much more.
Jack: Steady approach to pricing so if we offer.
Jack: A discount.
Jack: Really a discount it's not.
Speaker Change: So Jack.
Jack the rate and then put up.
Speaker Change: See how department stores used to price.
Speaker Change: And placed the cost and the discount off of it until you are getting a sale at all it really does charging what they would've charged you in the first place, but they're confused so we don't we don't.
Edward Joseph Shoen: So we don't we don't subscribe to that process; our competitors are. Admet that they believe this tribes, revenue per square foot for them. It's very difficult for me to give you an honest answer.
Speaker Change: Subscribe to that.
Speaker Change: Process our competitors are.
Speaker Change: Admit that they believe this.
Speaker Change: <unk> revenue per square foot for them.
Speaker Change: It's very difficult for me to give.
Speaker Change: To give you an honest.
Edward Joseph Shoen: Praise them for that, but it does confuse the customer if they go to see it. Competitor, in let's say February, will be 40% back. So we just have to deal with that, and we've been dealing with it. I'm a little bit less confident that they're going to come up on their rate going into this demand season. In other words, they successfully reduced prices when demand was down, do the other, I believe. I don't know.
Speaker Change: <unk> was the output, but it does confuse the customer with vehicles.
Competitor.
Speaker Change: And let's.
Speaker Change: Let's say February 40% back to us.
Speaker Change: Okay.
Speaker Change: So, but we just we have to deal with that and we've been dealing with it.
Speaker Change: I'm a little bit.
Less confident that theyre going to come up on their rates going.
Speaker Change: Going into this demand season in other words, they successfully reduced prices of demand was down are they going.
Speaker Change: The other I believe.
Edward Joseph Shoen: And we kind of have to proceed ahead and have to explain it to the customer that if they do business with us, they're not going to see a great increase in price. So, yeah, we are. In some markets, in some size rooms, it might be a little bit higher priced than the competitor, but we're generally able to explain it to the customer, but it's a constant concern because we're all impacted by it, income per square foot.
Speaker Change: I don't know and we kind of are having to proceed ahead have to explain it to the customer that if they do business with us there.
Speaker Change: They are not going to see a great increase in price.
Speaker Change: No.
Speaker Change: And so yes, we are.
Speaker Change: In some markets and some size rooms, it might be a little bit stronger priced competitor, but.
Speaker Change: We're generally able to explain to the customer.
Speaker Change: Yes.
Speaker Change: But it's a constant concern.
Those were all impacted by <unk>.
Speaker Change: Income per square foot.
Edward Joseph Shoen: Of course, we're impacted by rent, but we're impacted by income per square foot, and we try to... I guess just on that two part here, I mean, I guess, are you seeing any change in your average length of stay just given, you know, what appears to be some macro concerns? And I guess on the rate increase side of things, are you seeing any difference in how your customers are reacting to the rate increases you're sending out?
Speaker Change: Of course were impacted by rooms rented but were impacted by income per square foot and we try to maintain that.
Speaker Change: I guess just on that too.
Speaker Change: Two parter here I guess are you seeing any change in your average length of stay just given appear.
Appears to be some macro concerns and I guess on the rate increase side of things are you seeing any difference in how your customers are reacting to the rate increase you are sending out.
Edward Joseph Shoen: It's a constant conversation. And as far as the changes in the macro environment other than, you know, the whole storage business, a little tougher to compete in, certainly 36 months ago, and probably a little bit tougher than 24 months ago. But is it tougher than last summer?
Speaker Change: It's a constant conversation rate increases are.
Speaker Change: And as far as some.
Speaker Change: Changes in the macro environment other than that.
Speaker Change: The whole storage businesses.
Speaker Change: A little tougher to compete and then it was certainly 36 months ago.
Speaker Change: Probably tougher than 24 months ago.
Edward Joseph Shoen: I'm not absolutely certain. We're not really into it quite yet. But, yeah, they're just the, the, uh, What do you want to say? Scarcity. The mindset of the consumer is no longer there. They no longer think storage is scary. So they want to have a conversation about what's the value.
Speaker Change: Is it tougher than last summer I have I'm not absolutely certain of them are not really into it quite yet.
Speaker Change: But.
Speaker Change: Lou.
No.
Speaker Change: What do you want to say scarcity.
Speaker Change: Mine.
Speaker Change: The mindset of the consumer is no longer they no longer think storage are scarce.
Speaker Change: So they want to have a conversation what's the value.
Edward Joseph Shoen: And we have a pretty long-term tradition with customers of being a value price operation. We tend to do that without putting big discounts on it. So in other words, we don't necessarily jack up the price, but then we also don't now discount the price a bunch, and it's a damper. My competitors are very well aware of it. They're all very intelligent people. They're all doing what they think is smart, and we just have different strategies. Keegan, this is Jason.
Speaker Change: We have a pretty long term traditional with the customers are being a value pricing.
Speaker Change: Operation, we tend to do that without putting big discounts, so and others, we don't necessarily Jack the price, but then.
Speaker Change: We also don't know then discount the price a bunch and it's a dance on.
Speaker Change: All my competitors are well aware that they are all very intelligent people without doing what they think is smart.
Speaker Change: And we just have different strategies.
Jason: Just to get to your average stay question, I just looked at our year-end numbers compared to what they were last year in a couple of the buckets. Maybe there was a 1% change from what it looked like last year. Otherwise, we're not seeing anything dramatic on that. Okay.
Jason: This is Jason just to get your average stay question I just looked at that.
Our year end numbers compared to what they were last year.
Jason: Couple of the buckets, maybe there was a 1% change from what it looked like last year, otherwise, we're not seeing anything dramatic on that front.
Keegan Grant Carl: And then last one for me, just because it was also brought up in the opening remarks, just on supply in general, I guess, what are your views on the supply outlook in the space? And I guess, how should we think about your deliveries in the next 12 months? You're talking motor vehicles? No, on self storage. Self storage. Well, we're probably going to bring more rooms than we fill. That'd be my guests. Of course, I'm trying to fill rooms.
Speaker Change: Got it and then last one for me just because Theres also brought up in the opening remarks, just just on supply in general I guess, what are your views on the supply outlook in this space and I guess, how should we think about your deliveries in the next 12 months impacting that.
Speaker Change: Youre talking in motor vehicles.
Speaker Change: No on self storage self storage.
Speaker Change: We're probably going to.
Speaker Change: Bring to market more rooms than we fill that'd be me.
Edward Joseph Shoen: I have pressure on everybody to fill rooms. They know it. But, All these, we're doing more new construction than acquisition. Depending on where you are, it's a 24-month process, could be 36 months in some tough areas like California, New York, could easily be a 36 month process.
Speaker Change: I guess I'll of course, I'm trying to fill rooms pressure on everybody to fill rooms, they know it.
Speaker Change: But.
Speaker Change: Oh.
Speaker Change: All of these were doing more new construction and acquisition of new construction.
Speaker Change: Depending on where you are 24 month process could be 36 months and some tough areas like California, New York could easily be a 36 month process. So.
Edward Joseph Shoen: I'm not going to just turn that off, necessarily. I see the storage market long term is good. And as I indicated in my remarks, I believe there are markets where it's smart for us to expand. We will rent more room. We will get bigger in these markets. And so that's where I'm going. And, you know, now that interest rates are going up and Jason is having to finance it with higher fees, of course, encouraging me to be careful. Be sure to subscribe to our channel and click the bell to be notified of our latest videos.
I'm not going to just turn that off necessarily I see the storage market long term is good.
And as I indicated in my remarks.
Speaker Change: I believe there is.
Speaker Change: Markets, where it's smart for us to expand we will rent we will rent net more rooms, as we get bigger in these markets.
Speaker Change: So that's going to continue on that trend.
Speaker Change: Yes.
Speaker Change: Now that interest rates are going up and Jason is having to finance it higher.
Speaker Change: Higher.
Speaker Change: He's of course.
Speaker Change: <unk> need to be careful so you can be sure of that.
Operator: Great, super helpful. Thanks for the time, guys. Thank you. Our next question comes from Steven Ralston with SACS. Good morning. Good morning to you.
Speaker Change: Great Super helpful. Thanks for the time guys.
Speaker Change: Thank you. Our next question comes from Steven Ralston with Zacks.
Speaker Change: Yeah.
Speaker Change: Good morning, good morning.
Speaker Change: Turning to you.
Steven Ralston: [inaudible] Personally, well, put it this way, I looked at your top line when it was reported, and it exactly met my estimate. And since I'm the only estimate out there, your top line was right on target. And what I was using was your statement from a couple of quarters ago, saying that you saw the company returning to its historic growth rate, x-ing out some pandemic gains and adding to that with quarter-to-quarter trends and seasonality.
Speaker Change: Personally well put it this way.
Speaker Change: Yes.
Speaker Change: I look at your top line when it was reported.
Speaker Change: And.
Speaker Change: Exactly met my estimate since I'm, the only estimate out there.
Speaker Change: The topline was right on target.
What I was using was your statement from <unk>.
Speaker Change: A couple of quarters ago.
Speaker Change: Saying that you saw the company returning to the historic growth rate.
Speaker Change: Z out some pandemic game.
Speaker Change: And adding to that.
Speaker Change: Quarter to quarter trends and seasonality.
Steven Ralston: The top line looks good. From your tone, however, it seems like that's changing, and so I'm asking you, what are you seeing going forward into fiscal 2025 where I should adjust that premise, if I should? Well, I'm busy, Joe.
Speaker Change: Top line looked good.
Speaker Change: Your tone however.
Speaker Change: It seems like that's changing.
Speaker Change: And so im asking you.
Speaker Change: What are you seeing going forward into fiscal 2025, where I should adjust that premise.
Speaker Change: Sure.
This is Joe.
Edward Joseph Shoen: I'm hammering on truck rental. I know truck rental pretty well. I think we're going to post increases, not decreases in the coming years, and I think it's appropriate. I don't think, Hattrick.
Speaker Change: Hammering on truck rental I know truck, while pretty well I think we're going to.
Post increases not decreases.
Speaker Change: In the coming year.
Speaker Change: Yes.
Speaker Change: I think it's appropriate I don't think it's any.
Edward Joseph Shoen: I just think we just need to guard them, of storage. We are going to. I don't see growth in total rooms around it, but probably a little decline. Occupied square foot is the percent of all, on RAID and self-storage.
Patrick: Patrick I just think we just.
Speaker Change: They are out there we need to go on with the question.
Speaker Change: Self storage.
Speaker Change: Are going to.
Speaker Change: C growth and total rooms rented but.
Probably a little decline in.
Speaker Change: Occupied square foot as a percent of all square foot.
Speaker Change: On rate and self storage.
Speaker Change: Okay.
Edward Joseph Shoen: We're going to try to hold prices at least steady, if not get a small increase in. Truck Rental. It's very specific.
Speaker Change: We're going to try to hold prices at least steady if not get a small increase.
Speaker Change: In.
Speaker Change: Truck rental.
Speaker Change: Yes, it's very specific.
Edward Joseph Shoen: And We are getting a tiny bit more per mile right now, and I think if we're careful, we don't abuse the customer. We may be able to do that again this year. No, just a few pennies more per mile, but those pennies add up.
Speaker Change: We are getting a tiny bit more per mile right now.
Speaker Change: <unk>.
Speaker Change: I think it were careful and we don't abuse the customer.
Speaker Change: We may be able to do that again this year get adjusted.
Speaker Change: Some opinions more per mile, but those pennies add up.
Edward Joseph Shoen: And if we can do that, I would look for both truck rental and self-storage, and have a net gain here, as opposed to what we just took, which is kind of a. Profitability is a little bit more speculative because of the tremendous push on increasingly entry level personnel expenses by the government. It's massive. And they're also all these people are under terrible inflationary pressures they have to make. That's just the truth, and so you see it just depends on who you believe in California.
Speaker Change: If we can do that.
Speaker Change: I would look for both truck rental.
Speaker Change: And self storage.
Speaker Change: Two.
Speaker Change: Our net gain here from now for.
Speaker Change: For the whole year as opposed to what we just took which is kind of a beating.
Speaker Change: Profitability is.
Speaker Change: A little bit more speculative because of.
Speaker Change: The tremendous push on.
Speaker Change: Increasing.
Speaker Change: Entry level personnel expenses by the government, it's massive and they're also.
Speaker Change: All of these people are under.
Speaker Change: Terrible inflationary pressures they have to make more.
Speaker Change: The truth.
Speaker Change: And so you'll see in just depending on who you believe in California.
Edward Joseph Shoen: You know, they've got everybody getting 20 or 25 bucks an hour, depending on whether you're in health care or food service. Of course, they make exceptions for government entities, but they didn't make an exception for you all.
Speaker Change: They've got everybody getting 20, or 25 Bucks an hour, depending if you're a healthcare or foodservice of course, they make exceptions for government entities, but they didnt make an exception for you Paul.
Speaker Change: This is just pure going to push up push up those wages. So we have to drive.
Edward Joseph Shoen: So, you know, this is just pure going to push up those wages. So we have to drive productivity, which is always speculative; we have programs we're pushing on. A lot of this requires IT investment, and what should take 6 months takes 18 months invariably.
Speaker Change: On productivity, which.
And as always.
Speaker Change: We have programs were pushing on.
Speaker Change: A lot of this requires investment which should take six months. It takes 18 months variably in it.
Edward Joseph Shoen: So you don't get quite what you want, but we've made substantial progress and basically customer self-dispatch and self-return, which is an increase in the productivity of our personnel. And I would expect we will continue to make gains there. But how far we can push it, you just don't know.
Speaker Change: So you don't get quite what you want but.
Speaker Change: Made substantial progress.
Speaker Change: Basically customer so.
Speaker Change: Yes.
Speaker Change: Dispatch and self return which is.
Speaker Change: The increased productivity of our personnel.
Speaker Change: And I would expect we will continue to make gains there how far we can push it you just don't know, but this is do it yourself business and if we make it.
Edward Joseph Shoen: But this is a do-it-yourself business, and if we make it work well enough because customers are happy to do it, back to some many more customers prefer to return it themselves or, Okay, he went into basically the bottom line on another call. Well, you had the depreciation, which is expected and has been a cycle for you for as long as you've been in existence. The personnel costs you just addressed with the productivity enhancements with IT and liability insurance. Well, that... The way I look at U-Haul, that's not a true driver of the company. Are there any other costs associated with that? Do you think it concerns you? Sure, it's a negative gain on sale.
Speaker Change: We work well with us customers are happy to do it themselves.
Speaker Change: And so many of our customers prefer.
Speaker Change: To return it themselves our dispatch it themselves.
Speaker Change: Okay.
Speaker Change: <unk>.
Wanted to basically the bottom line and different costs.
Speaker Change:
Speaker Change: Well you had the depreciation which is expected and has been a cycle for you for as long as you've been in existence.
Speaker Change: The personnel costs, you just addressed with the productivity enhancements with the team and the liability insurance will that.
Speaker Change: Yes.
Speaker Change: The way I look at U haul.
Speaker Change: The true driver of the company.
Speaker Change: Are there any other costs.
Speaker Change: Sure.
Speaker Change: Concern you.
Speaker Change: Sure it's negative gain on sale in other words, our gain on sale.
Speaker Change: Is down right now.
Edward Joseph Shoen: In other words, our gain on sale is down. The future is cloudy for the last time. 24 months, automakers have pushed through. A tremendous increase. I'm talking upwards of 50%, and they've been able to get it at retail and, To a certain extent, that's pulled up resale prices, but it hasn't pulled them up as much as the costs have gone. And so just how this is going to play out, the whole confusing thing of Ford and Chevrolet saying electrification but doing gas, and then basically taking it all out on the fleet.
Speaker Change: The futures cloud either for.
Speaker Change: For the last.
Speaker Change: 24 months.
Speaker Change: Automakers have pushed through.
Speaker Change: Tremendous increase I'm talking.
Speaker Change: Upwards of 50%.
Speaker Change: And they've been able to get it at retail.
Speaker Change: And.
Speaker Change: To certain extent, that's pulled up resale prices, but it hasn't pulled them up as much.
Speaker Change: As the costs have gone up.
Speaker Change: And so just how this is going to play out.
Speaker Change: Ho.
Fusing thing.
Speaker Change: Ford and Chevrolet.
Speaker Change: Saying electrification, but doing gas.
Speaker Change: And then.
Speaker Change: Basically taking it all out of a fleet customer.
Speaker Change: Dave.
Edward Joseph Shoen: Smashed every fleet customer in existence, with us being one of them. Price increases way above their cost for the vehicle because they're using us to subsidize electrification. And so we're subsidizing it but getting no benefit. I read a recent study by Ryder.
Speaker Change: They expect every fleet customer.
Speaker Change: In existence us being one of them.
Speaker Change: With.
Speaker Change: Price increases way above there.
Speaker Change: Cost for the vehicle because they are using us to subsidize electrification.
And so we're subsidizing it but getting a benefit from it.
Speaker Change: Yeah.
Speaker Change: So I'll read a recent study by Ryder.
Edward Joseph Shoen: And they, depending on certain assumptions, estimate that. Total electrification. Classes of trucks they read, resulting in at least a 50% increase in cost, total cost to the user, sometimes as much as 100%, and they estimate it's going to impact inflation with the whole country by 50 basis points. It was interesting to read.
Speaker Change: And depending on some certain assumptions estimate that.
Speaker Change: Total electrification.
Speaker Change: The classes of trucks they redwood.
Speaker Change: Resulting.
East 50.
Speaker Change: <unk>, 50% increase in cost total cost to the user sometimes as much as 100%.
Speaker Change: We estimate it's going to impact.
Speaker Change: With inflation for the whole country by 50 basis points.
Edward Joseph Shoen: I don't know that I agree with everything they say, and we rent some trucks different than they rent, but these forces are impacting everybody in transportation and its root is really overwhelming. Montreux of electrification when they don't really have any cost-effective solutions for Eclectic.
Speaker Change: It was interesting to read I don't know that I agree on everything.
Speaker Change: And we rent some trucks different that they ramp but.
Speaker Change: These these forces are impacting.
Speaker Change: Everybody in transportation and its route is really.
Speaker Change: The.
Speaker Change: Overwhelming.
Speaker Change: Mantra of electrification.
When they don't really have.
Speaker Change: Any cost effective.
Speaker Change: Solutions for electrification, but.
Edward Joseph Shoen: But they're spending money, great gobs of it. I know Ford, and I kind of loosely follow them. And they're spending gobs of money on electrification. And that money is coming from internal combustion engine customers. That's just how it works.
Speaker Change: Theyre spending money, great gobs of it I know, Florida kind of loosely follow them theyre spending gobs of money on electrification.
Speaker Change: And that money is coming from.
Speaker Change: Internal combustion engine customers, that's just how it works.
Speaker Change: So.
Edward Joseph Shoen: All that's affecting these resale prices and also availability. Ford simply isn't making as many trucks in the class we buy as they once did. They just aren't making them.
Speaker Change: All thats affecting these resale prices and also availability.
Speaker Change: Or it's simply isn't making as many trucks in the class we buy as they once did they just simply arent, making.
Edward Joseph Shoen: So you can't buy what's not built, if that makes sense. We've basically been on allocation for I'd say at least 36 months, and the same thing is pretty much the truth. Stilantis, or General Motors.
Speaker Change: So you can't buy what's not built if that makes sense.
Speaker Change: And we basically been on allocation.
Speaker Change: I would say at least 36 months.
Speaker Change: And the same thing is pretty much true still.
Edward Joseph Shoen: They've had customers on allocation now, whether they're going to get their supply chain to catch up or whether they even want to, because of the complex formulas they have to have for overall fleet economy and now, with the California Air Resource Board attempting to force electrification from the whole rest of the country, you know, they've got a very much a moving target. I can't I can't tell you what they're gonna do
Speaker Change: As to Lantus or general Motors, they've had customers on allocation.
Speaker Change: Whether theyre going to get their supply chain to catch up or whether they even want to have a catch up.
Because of the complex.
Speaker Change: Formula is they have to have for overall fleet economy ml.
Speaker Change: With the California Air Resource Board attempting to.
Force electrification on the whole rest of the country.
Speaker Change: They've got a.
Edward Joseph Shoen: We'll be the tail of the dog. We're not going to be the people driving electrification. Its scope is so far beyond us.
Speaker Change: But very much a moving target I can't I can't tell you what will be the tail of the dog, we're not going to be the people driving electrification.
Speaker Change: Yes.
Speaker Change: Scope is so far beyond us.
Edward Joseph Shoen: Unknowable. So, I think that's a big deal. Wildcard.
Speaker Change: Unknowable so.
Speaker Change: That's a that's a big.
Speaker Change: Wildcard.
Edward Joseph Shoen: Of course, I would hope, to a certain extent, inflation will rescue us if they keep this inflation up. Vehicles have risen a little bit, but these are primarily vehicles we hold for 24 months or less. So even if we have inflation, it may not be enough to compensate for the cost that they put through. It's not two years isn't a very long time to pick up inflation.
Speaker Change: I would hope to certain extent inflation will rescue us if they keep this inflation.
Speaker Change: Vehicles played a little bit but these are primarily vehicles, we hold 24 months or less.
Speaker Change: So even if we have.
Inflation.
Speaker Change: It's it may not be enough to.
Speaker Change: Compensate for this.
Speaker Change: The cost that they put through.
Speaker Change: It is not two years is in the very long.
Speaker Change: Time to pick up an inflationary.
Edward Joseph Shoen: So I just don't know. I mean, we're in this business for the long haul, we're going to do it, and we're going to keep the customer going. And I think this whole electrification deal will clarify itself over the next three or four years, and when it does, everybody will be able to make more accurate predictions. But I thought Ryder was Ryder's been a good choice. Thank you.
Speaker Change: So I just don't know I mean, we're in this business for the long haul we're going to do it.
Speaker Change: To keep the customer going and I think this whole electrification deal.
Speaker Change: <unk>.
Speaker Change: Clarify itself over the next three or four years and when it does.
Speaker Change: Everybody would be able to make more accurate predictions, but I thought rider.
Speaker Change: Our writers binetti.
Speaker Change: Vocal.
Edward Joseph Shoen: Leader in Adopting Electrification, and they come out, a recent study last month, it says it's going to raise the cost 50 to 100%, and you go, well, that's not good news for your customers. I'm not quite sure, you know, and of course, it's all based on everybody's assumptions, which nobody has a crystal ball. So that's kind of an unknown here that's going on, and you see it in our reduction in gain on sale.
Speaker Change: Leader in adopting electrification they come out with this recent study.
Speaker Change: Months.
Speaker Change: The costs, 50% to 100% and Hugo.
Speaker Change: It's not a good news for your customers.
Speaker Change: Not quite sure.
Speaker Change: And then of course these are all <unk>.
Speaker Change: All based on everybody's assumptions, which nobody has a crystal ball.
Speaker Change: So thats kind of.
Speaker Change: Unknown here Thats going on and you see it in.
Speaker Change: Our reduction in gain on sale.
Edward Joseph Shoen: Just one more quick question and a comment. You said you were using Deloitte. I guess that's why I saw a new line item out there, other interest income. I'm assuming that that's the interest on your cash balance. Correct. Could you just verify that and where it was previously? So we've always had, because we have two insurance companies, we've always had a line called net investment income, where their interest income goes. And historically, the interest income on moving and storage cash balances has been negligible.
Speaker Change: Just one more quick question and a comment.
Speaker Change: You said you are using Deloitte I guess thats why I saw a new line item out there other interest income.
Speaker Change: I'm, assuming that that's the <unk>.
Speaker Change: Interest on your cash balance.
Speaker Change: Correct could you just verify that and where was it previously.
Speaker Change: So we have always had big because we have two insurance companies. We've always had a line called net investment income where their interest income goes and historically the interest income on moving and storage cash balances has been negligible. So it just was included in that line.
Jason: So it just was included in that line. As we've held higher cash balances, right at the same time, short-term rates have gone up, the number got to be a much larger number, and the theory behind that is that interest income is not really part of our operations. So for this year, then, it's reclassified down below what you call operating earnings. So there'll be a little extra work now to get an apples-to-apples comparison.
Speaker Change: As we have held higher cash balances it right at the same time short term rates have gone up the number got to be a.
Speaker Change: A much larger number and.
Speaker Change: And the theory behind that is interest income is not really part of our operations.
Speaker Change: So.
Speaker Change: For.
Speaker Change: This year, then it's re class down below what you would call operating earnings so there'll be a little extra work now too to get an apples to apples.
Jason: But that other interest income is, You nailed it. The moving and storage interest income on our short-term investments, which is government money market funds and some short-term treasurer. Okay, thank you. And now for the comment, and I wouldn't have brought this up unless you had mentioned it. To use you, you hold products and services and recommend them. I've used you, you hold, three times in the last two years, two different products
Speaker Change: Comparisons, but that other interest income is.
Speaker Change: You know that it's the.
Speaker Change: Moving and storage interest income on our short term investments.
Speaker Change: Which is government money market funds and.
Speaker Change: Some short term treasuries.
Speaker Change: Yes.
Speaker Change: Okay. Thank you and now for the comment and I wouldn't have brought this up unless you, but you mentioned it.
Speaker Change: To use you.
Speaker Change: <unk> products and services and recommend that I've used U haul.
Speaker Change: Three times over the last two years two different products.
Steven Ralston: And I have seen productivity enhancements. I mean, most of the things are done on the telephone, on your iPhone. And the interaction with the employees has obviously been reduced. And you just pick up your truck and or call for the U-Box, and it just shows up, and everything works smoothly.
Speaker Change: And I have seen productivity enhancements I mean, most of the things we've done on the telephone.
Speaker Change: Your iPhone.
Speaker Change: And.
Speaker Change: The interaction with the employees.
Speaker Change: Obviously been reduced and we just pick up your truck.
Speaker Change: Or call for the new boxes.
Speaker Change: Those up and everything works smoothly and your employees are very accommodating.
Edward Joseph Shoen: And your employees are very accommodating. Well, thank you. We're pushing on that. And, you know, I think that's, in the longer term, that's a key result. We need to, certainly be ahead of our competition, and we're trying very, very hard on it. Thank you for taking my questions. Truly.
Speaker Change: Thank you.
Speaker Change: We're pushing on that and I think thats a.
Speaker Change: On the longer term that's a key result, we need to we need to certainly be ahead of our competition.
Speaker Change: And we're trying very very hard.
Speaker Change: Thank you Brent taking my questions.
Operator: Thank you. Our next question comes from David Silver with CL King. Yeah, hi, good morning.
Speaker Change: Thank you. Our next question comes from David Silver with CL King.
Speaker Change: Yeah.
David LoPresti: I just had a couple of questions that I think you've touched on, but maybe just if you could flesh out things a little more. But as you look to fiscal 25 with your projected capital spending, just however you look at it, but could you maybe just point us qualitatively, you know, where you think you'll be increasing capital spending? Capital spending or which buckets may where you'll see the CapEx spending decline?
David LoPresti: Yes, hi, good morning.
David LoPresti: I just had a couple of questions that I think you've touched on but maybe just if you could flesh out things a little more but.
As you look to fiscal 'twenty five with your projected capital spending.
Just however, you look at it but could you maybe just point us qualitatively, where you think youll be increasing capital spending or which buckets may.
Speaker Change: Youll see the Capex spending decline so just kind of.
Speaker Change: From your perspective, where is capital most needed or not not needed as much as in the past year or two thank you.
David LoPresti: So just kind of from your perspective, you know, where is capital most needed or not needed as much as in the past year or two? Thank you. David, Jason. I'll start off and then let Joe clean up.
Jason: David This is Jason I'll start off and then let.
Joe: Joe cleanup.
Jason: The number one capital expenditure priority typically every year for us is going to be fleet maintenance capital expenditures, and going into next year, we're projecting a growth spend of somewhere around a billion seven, compared to, I think, I think we had a billion 619 this year. And, and because of the shortages during the pandemic years, it's pretty much all what I'll call delayed maintenance capital expenditures. There isn't, isn't growth CapEx embedded in that number. It's catch up.
Jason: Number one capex priority typically every year for us is going to be.
Speaker Change: Fleet maintenance Capex.
Speaker Change: And going into next year, we're projecting our gross spend.
Joe: Somewhere around a $1 billion seven.
Joe: Compared to I think I think we.
Joe: $1 $6 19, this year end and because of the shortages.
Joe: The pandemic years, it's pretty much all what I'll call delayed maintenance capex, there isn't isn't growth capex and embedded in that number.
Jason: We were down a little bit on real estate spend, about $83 million, but on a billion. Over a billion to spend isn't a big amount. Of the amount that we spent on real estate last year, I would say a little over somewhere close to 900, 925 million of that was development and construction.
Joe: <unk>.
Joe: We were down a little bit on real estate spend about $83 million, but on a $1 billion.
Joe: Over $1 billion to spend it's a small amount.
Joe: Of the amount that we spend on real estate last year, I would say little over.
Joe: Somewhere close to 900 $925 million of Atlas <unk>.
Jason: The rest was acquisition of new land or buildings. The projections I'm looking at for next year or planning for in cash projections are a spend somewhere close to that on real estate than on the Net Fleet CapEx. I think we're going to be going from somewhere this year was close to 880 million, I think, right 890 million, up to something closer to a billion. And we'll be needing to come up with say 350 to 400 million of working capital to fund it. Yeah, I think you're pretty right on there. I don't expect it to be a whole lot less than that.
Joe: <unk> construction, the rest was acquisition of new land or buildings.
Joe: Alright.
Joe: The projections I'm looking at for next year are planning for and cash projections is a spend somewhere close to that on real estate. It then.
Joe: On the net fleet Capex.
Joe: I think we're going to be going from somewhere this year was close to $880 million I think $890 million up to something closer to $1 billion.
Joe: <unk>.
Joe: We'll be needing to come up with say $350 million to $400 million.
Joe: Working capital to fund that.
Joe: Joe I don't know if you want it.
Speaker Change: Youre pretty right on there.
Joe: I don't expect it to be a whole lot less than that.
David LoPresti: Okay, great. Thank you for that. And then last question is maybe more of a big picture question. In your prepared remarks, you know, I heard a number of references to current conditions versus four years ago. And this question is in that spirit. So, you know, in the post-pandemic environment here, I'm kind of wondering how you look at your business opportunity as your customer demographic now, let's say versus pre-pandemic. So I'll just throw out a couple of things. But certainly, the trend towards remote work kind of affects where people, you know, live their lives.
Speaker Change: Okay, great. Thank you for that and then last question is just maybe more of a big picture question.
Speaker Change: Your prepared remarks, I heard a number of references to current conditions versus four years ago and this question is in that in that spirit. So.
Speaker Change: In the post pandemic.
Speaker Change: Environment here.
Speaker Change: Im kind of wondering how you look at your business opportunity as your customer demographic.
Speaker Change: Now, let's say versus pre pandemic, so I'll just throw out a couple of things but.
Speaker Change: The trend towards remote work kind of effects where people live.
Speaker Change: Live their lives and just wondering what implications that might have for your logistics or your strategies too.
Edward Joseph Shoen: And I'm just wondering what implications that might have for your logistics or your strategies to take advantage of that trend and, You know, it's been mentioned here, but digitalization or other productivity enhancements tied to labor and I guess just the ongoing digitalization of things is probably something you think about quite a bit. But, you know, as we sit here, kicking off your fiscal year, twenty-five, I mean, what big differences or what features or priorities have shifted, let's say, from four years ago.
Speaker Change: To take advantage of that trend in.
Speaker Change: It's been mentioned here, but did it digitalization or other productivity enhancements tied to labor and I guess just.
Speaker Change: On going.
Speaker Change: Digitalization of things is probably something you think about quite a bit but as we.
Speaker Change: Sit here kicking off your fiscal year 'twenty, five I mean, how what big differences or what.
Speaker Change: Features are priorities have shifted let's say from <unk>.
Speaker Change: Four years ago. Thank you.
Edward Joseph Shoen: Thank you. Okay, I would say that Karen and I didn't see the remote work thing coming. And it basically was a tidal wave of new customers. These were people who weren't U-Haul customers who hadn't been historically U-Haul customers, and they all of a sudden became those, and I could see that, and through Customer Feedback, that they didn't understand this or that procedure, and it's the reason companies just hadn't done any business with us. So, that the wave has receded. But there still is a little bit of the boomerang effect that I don't have a I don't have any kind of measurement on it.
Speaker Change: Okay.
Speaker Change: Alright, let's say that.
Speaker Change: Comparing we didn't see the.
Speaker Change: Remote work thing coming.
Speaker Change: Basically it was.
Speaker Change: Hey.
Speaker Change: Tidal wave of new customers these were people who.
Speaker Change: Werent.
Speaker Change: U haul customers, who had been historically you all customers and all of sudden became.
Speaker Change: And I could see that.
Speaker Change: And customer feedback.
Speaker Change: They didn't understand this or that procedure and it's typically just had done any business with us.
Speaker Change: So.
Speaker Change: That wave has receded.
Speaker Change: There still is a little bit of a boomerang effect.
Speaker Change: Have I don't have any kind of measurement on it but theres people now going back to work where.
Edward Joseph Shoen: But there are people now going back to work where they fled from because employers, and you see in the newspaper employers saying, Yeah, yeah, yeah. But I mean, you got to come to work. And so. Where that's going to work out, I'm not sure. Personally, I told our team, don't hire anybody who wants to work from home because we don't have any homework except for telephone sales, which we have.
Speaker Change: Where they fled from because the employers and youll see it in the newspaper reporters, saying, yes, yes, yes, but I mean, you've got to come to work.
Speaker Change: So.
Thats going to optimize out I'm not sure.
Speaker Change: Personally I've told our team don't hire anybody wants to work from home because we don't have any homework, except for telephone sales, which we have.
Edward Joseph Shoen: You know, plethora of people doing that. But as far as people want to work in an administrative capacity or an analytical capacity from home, we don't have much of an appetite for it.
Speaker Change: Plethora of people doing that but as far as.
Speaker Change: People want to work.
Administrative capacity or an analyst capacity from home.
Edward Joseph Shoen: I don't see many employers having that appetite, so that should kind of normalize out. But there's a little boomerang effect.
Speaker Change: Don't have much of an appetite for it I don't see many employers having that appetite so.
Speaker Change: That should kind of normalize out, but theres, a little boomerang effect I've seen anecdotally some customers who are moving.
Moving back from someplace like Idaho.
Edward Joseph Shoen: I've seen anecdotally some customers who are moving back from someplace like Idaho, closer to some place where there's actually employment. The digitalization, that's a long-term, ongoing trend, and I continue to try to understand it better. I think there's a lot of misinformation out there, and people have misunderstood it. But what's given them success? Now, that's my opinion
Speaker Change: Closer to someplace, where theres actually deployment.
Speaker Change: The digitalization and Thats, just thats, a long term ongoing trend in.
Speaker Change: Yes.
Speaker Change: I continue to try to understand it better because.
Speaker Change: I think theres a lot of.
Speaker Change: This information out there that people.
Speaker Change: People have.
Speaker Change: Misstated.
Speaker Change: What what's given them success.
Speaker Change: My opinion.
Edward Joseph Shoen: I don't I can't prove it, but I'm trying very much to understand that, of course, it has the opportunity to make doing business with you all easier. That's important. People like things that are easier. So I'm very focused on that, seeing if we can reduce it, particularly when you're doing a one-way move because, Yeah, but this is the best point to read. Turnpoint, they're different, and there's a lot of moving parts there.
Speaker Change: Ken.
Speaker Change: Prove it.
Speaker Change: Turning very much to.
Speaker Change: Understand that of course, it has the opportunity to make.
Speaker Change: Doing business with U haul easier that's important.
Speaker Change: Okay.
Speaker Change: People like things that are easier so I'm very focused on that and see if we could.
Reduce the.
Speaker Change: Complexity of the whole thing we have been.
Speaker Change: Doing business, so those can be somewhat complex because of the.
Speaker Change: Particularly when Youre doing a one way move because you.
Speaker Change: Yes, with this best point.
Speaker Change: Return point, they are different and there's a lot of.
Moving parts there.
David LoPresti: But we're, Part of digitalization helps us anticipate those moving parts better and give the customer more certainty, and we're making regular progress. I think the customer will respond. I don't know if you have a more specific question; I'd be happy to answer it. Not at this point. I mean, I guess I'll follow up with some more specific ones offline.
Speaker Change: But we're.
Speaker Change: Part of Digitalization helps us anticipate those moving parts better and give the customer more certainty.
Speaker Change: And we're making regular progress in fact, I think we will continue to do that I think the customer respond.
Speaker Change: So that's it.
Speaker Change: You have a more specific question I'd be happy to answer them.
Edward Joseph Shoen: But no, just wanted to hear your big picture views about, you know, certain, evolutionary, I guess, trends in your business. So thank you for that. Sure. Thank you. Our next question comes from Jamie Wilen with Wilen Management. Hey fellas, a couple questions.
Speaker Change: Not at this point I mean, I guess I'll follow up.
Speaker Change: With some more specific ones offline, but just wanted to hear your big picture views about evolution certain.
Speaker Change: Evolutionary I guess trends in your in your business. So thank you for that sure.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change #100: Thank you. Our next question comes from Jamie Wilson with willing management.
James R. Wilen: First on fleet, did I hear you say that we have 188,000 trucks in the fleet and that is near the optimum level, and what's going to happen in the future is we're just going to be more in the replacing of some of the older vehicles with new ones, and that is a number we'll probably hang flat at as we move forward? No, if we said that, I apologize. Yeah, Jamie, this is Jason.
Speaker Change #101: Hey, Phil has a couple of questions first on fleet did I hear you say that we have 188000 trucks in the fleet.
Speaker Change #102: That is near the optimum level and what's going to happen in the future as we're just going to be more in the replacing of some of the older vehicles with new ones.
Speaker Change #103: That is the number will probably flatten out as we move forward.
Speaker Change #104: No if we said that I apologize.
Jason: I think maybe what I said might have confused you. I said most of our capex this last year and maybe even going into the next year is maintenance capex. So from a purchase perspective, we're buying more trucks, but we're also gonna be selling more. So I think that there's the likelihood that the fleet overall size could be coming down. Okay, so if we seal it, go on, sorry. It's more complicated than that because a truck that has 120,000 miles on it just simply doesn't have the capability of production of a truck that's got 35,000 miles on it. Due to the postponement of replacements for a three-year period, we've got too many trucks with 120,000 miles on them.
Jason: Yes, Jamie this is Jason I think maybe what I said might have.
Confused I said most of our Capex this last year and maybe even going into next year is maintenance capex.
Jason: So from a purchase perspective.
Jason: We're buying more trucks, but we're also going to be selling more so I think that there is the likelihood that the fleet overall size could could be coming down.
Speaker Change #105: Okay. So if we see Glenn sorry.
Speaker Change #106: It's more complicated than that because of a truck that has a 120000 miles on it just simply doesn't have the capability of production of trucks, It's got 35000 miles on it due.
Speaker Change #106: Due to the postponement of.
Speaker Change #106: Replacements for a three year period, we've got too many trucks with 120000 miles on it and then.
Edward Joseph Shoen: And then, let's just say, between 100 and 40, we have kind of a gap. Okay, and so it's not a strict mathematical trade-off; it's a little bit complex and depends on which size truck you're able to buy because we've been on allocation, where what the automakers are offering doesn't necessarily correspond in quantity to what our needs are. So, we're going to be. I'm looking to grow the capability of the fleet, but that may not grow the numbers of the fleet over the next 18 months.
Speaker Change #106: Lets just say between 140, we have kind of a gap.
Speaker Change #106: And so.
Speaker Change #106: It's not a strict mathematical trade off is a little bit complex and it depends on which size truck youre able to buy because we've been on allocation.
Speaker Change #106: That what what the automakers are offering doesn't necessarily corresponding quantity what our needs are so.
Speaker Change #106: We're going to be.
Speaker Change #106: I'm looking to grow the grow grow the capability of the fleet, but that may not grow the numbers of the fleet over the next 18 months of May in fact see a slight contraction in total numbers as we.
Edward Joseph Shoen: It may, in fact, see a slight contraction in total numbers as we just bring in some of these higher mileage vehicles. I don't have, I can't, you know, can you bring in four trucks for every five you sell? Well, if you do that, you can maintain your transaction growth where you're probably trading up, and that might shrink our fleet of three or four thousand trucks. I don't have a. You know, it's kind of an opportunistic thing.
Speaker Change #106: Just gorge some of these higher miles mileage vehicles that bring in.
Speaker Change #107: I don't have I can't but can you bring in.
Speaker Change #107: For trucks for every five sale if you do that you can maintain your.
Speaker Change #107: Transaction growth, while you are probably trading up in that Mike.
Shrink our fleet three or 4000 trucks I don't have.
Speaker Change #107: It's kind of be opportunistic.
Edward Joseph Shoen: We don't have commitments for next year's production yet, yet those will start to go hard, closer to the middle of July, and that'll help us know what the automakers are capable and willing to produce. So that'll help firm this up. But I, the business is. We're going to expand, simply because the population is expanding. That's the long and the short of it, and we have a good friend.
Speaker Change #107: We don't have.
Speaker Change #107: Commitments for this next year's production yet those will start to go hard.
Speaker Change #107: Closer to the middle of July and that will help us.
Speaker Change #107: No.
Speaker Change #107: Automakers.
Speaker Change #107: Are capable and willing to produce.
Speaker Change #107: That'll help firm this up.
Speaker Change #107: The businesses is.
Speaker Change #107: It's going to expand simply because the population expands.
Speaker Change #107: Sure.
Edward Joseph Shoen: We ought to get our share of that. Okay, so as we grow the rental business, hopefully over the next year or so, fleet utilization should increase by those, you know, tens of percent that are important. That's exactly what we're looking for.
Chris: We have a good Chris.
Chris: Sprint, we ought to get our share of that business.
Speaker Change #109: Okay. So as we grow the rentals hopefully over the next year or so our fleet utilization should increase by those.
Speaker Change #109: 10% that are important.
Edward Joseph Shoen: Okay. On the Ubox side, could you talk about the health of that business and where it is profitability wise, as you look through 2024 and then move forward in 2025? has a higher amount of one-way versus local moves.
Speaker Change #109: That's exactly what we're looking forward yes, okay.
Speaker Change #110: On the <unk> side could you talk about the health of that business and we.
Speaker Change #111: As profitability wise.
Speaker Change #111: As you look through 2024, and then moving forward in 2025.
Speaker Change #111: Sure.
Speaker Change #112: The new box.
Speaker Change #112: Has a higher.
Speaker Change #112: Amount of.
Edward Joseph Shoen: In other words, there's a lot more moves over 100 miles than there are under 100. And that's a little bit the nature of the product, and it's a little bit what our emphasis has been. So we're exploring ways to see if we can crack into it with a good economic proposition for customers. Short Distance Moves, which are prohibited, expensive if you have to contract the freight, so these, the common carriers, will kill you if you're going 100 miles. And if you're going 3,000 miles, they become kind of affordable.
Speaker Change #112: One way versus local moves in other words, there is a lot more moves over 100 miles than there are under 100 miles.
Speaker Change #112: And Thats.
Speaker Change #112: A little bit the nature of the of the product and it's a little bit.
Speaker Change #112: But our emphasis has been so we're exploring over the next what would have been for some months now.
Speaker Change #112: Ways to see if we can.
Speaker Change #112: Crack into with a good economic proposition for customers in the <unk>.
Speaker Change #112: Short distance moves.
Speaker Change #112: Which are prohibited expensive if you have to contract the freight so.
Speaker Change #112: These.
Speaker Change #112: The common carriers.
Speaker Change #112: Will you if youre going 100 miles basically and if youre going 3000 miles they get kind of affordable so and thats been our sweet spot has been the longer move with the U box, but there is there is demand in the shorter moves.
Edward Joseph Shoen: So, and that's been, our sweet spot has been the longer move with the box, but there's demand for the shorter move, and we're going to see if we can get into that and still show a profit, otherwise. Our pricing has been and probably will continue to reflect common carrier rates. They've come down over the last 12 Months. Anyway, I'm not on them every day, but they've come down, and our rates have come down, which means we've seen transaction growth with not only very modest growth in dollars, but margin is the same or a little better. Does that make sense?
Speaker Change #112: And we're going to.
Speaker Change #112: See if we can get into that and still show a profit.
Speaker Change #112: Otherwise our.
Speaker Change #112: Our pricing is has been and probably will continue to.
Speaker Change #112: Reflect common carrier rates they've come down over the last.
Speaker Change #112: 12 months anyway, Im not on them every day, but they've come down and our rates have come down.
Speaker Change #112: Which.
Speaker Change #112: Means we've seen transaction growth was not with only very modest growth.
Speaker Change #112: In dollars, but margin.
Speaker Change #112: Is the same or a little better.
Speaker Change #113: That makes sense.
Edward Joseph Shoen: And how would you characterize the market share gain or loss within that business for you, Bob? We don't have firm numbers on that at all. I'm if anybody has them, I'd love to hear them because I just I just don't have we see what we do relative to ourselves.
Speaker Change #114: And how would you characterize the market share gain or loss within that business for U box.
Speaker Change #115: Don't have firm numbers on that at all.
Speaker Change #116: If anybody has some I'd love to hear them because I just I just don't have we see what we do relative to ourselves and then of course, we can go down to Mike.
Edward Joseph Shoen: And then, of course, we can go down to, you know, micro markets there really easily. And we can see all that information. And so I see places where somebody's up substantially. In other places, somebody's down. And if there's cause and effect, it's usually something we've done stupid or something we did right.
Speaker Change #116: Michael markets, they're really easily and we can see all that information So IC places where.
Speaker Change #116: Somebody's up substantially in other places somebody's down in it.
Speaker Change #116: Cause and effect, it's usually something we've done stupid or something we did correct.
Speaker Change #116: But overall.
Edward Joseph Shoen: But overall, you know, comparing us to, let's say, pods, we have essentially no market share information on them, I would say, very speculative. We attempt to find, we haven't yet found a reliable source of that that we're willing to, and of course, my team officers are doing great next to them. It's a big business, there's a lot of potential there, and we're calmly tapping into it. We're getting more satisfied customers, and that's what builds our base. And we're working on how to crack into this. What we call shorter zones, just less distance between them mark.
Speaker Change #116: Comparing us to.
Speaker Change #116: Let's say pods.
Speaker Change #116: Essentially no market share information on them I would say all of it.
Speaker Change #116: Very speculative.
Speaker Change #116: We attempt to find Pep, we havent, yet gotten a reliable.
Speaker Change #116: Source of that that we're willing to.
Speaker Change #116: So of course by Tmall says Theyre doing great thanks to them.
Speaker Change #116: But.
Speaker Change #116: It's a big business. There is a lot of lot of potential there and were currently tapping into it we're getting.
Speaker Change #116: More satisfied customers and Thats what builds our base.
Speaker Change #116: And we're working on how to crack into this.
Speaker Change #116: What we call shorter zones, just less distance markets and we need to get a model that.
Edward Joseph Shoen: You know, we need to get a model that we can recover our costs with some certainty rather than just go out there and deliver this stuff for free. So we're pushing on that, and we've made some progress. As you build out your self-storage, a lot of the places have U-Box storage within it. Does that give you any sort of competitive advantage? I think it does.
Speaker Change #116: We can recover our costs.
Speaker Change #116: With some certainty rather.
Speaker Change #116: We just go out there and deliver their stuff for free.
Speaker Change #116: So.
Speaker Change #116: We're pushing on that and we've made some progress.
Speaker Change #117: As you build out yourself storage a lot of the places have Hugh box storage within a does that give you any sort of competitive advantage.
Edward Joseph Shoen: In the business? Right now, we're somewhere in the middle 600s on warehouses across the United States and Canada, which gives us a tremendous footprint advantage over anybody else in the business and that we can be near the customer. Very interesting. Some people want to be close to their things.
Speaker Change #117: I think it.
Speaker Change #117: Right now were.
Somewhere in the Middle 600 zone.
Warehouses over USD in Canada, which gives us a tremendous footprint advantage over.
Speaker Change #117: Anybody else in the business.
Speaker Change #117: We can be near the customer.
Speaker Change #117: It's very interesting some people.
Edward Joseph Shoen: I don't know a better way to say it. And that's an advantage with those customers. Now there are customers who could care less, but you'd be shocked at how many people... If you tell them you're going to have it at, you know, Central and Adams.
Speaker Change #117: That would be close to their sector federal way to see it and.
That's an advantage with those customers now there's customers, who could care less but you'd be shocked at how many people.
Speaker Change #117: If you tell them you're going to have it.
Edward Joseph Shoen: They're very committed to you having it there, so you need to have enough warehousing so you can actually make good on that. Representation. If you have in the 600s, any idea how many pods you might have?
Speaker Change #118: Central on atoms there Barry.
Speaker Change #118: Committed to you having it there.
Speaker Change #118: So.
Speaker Change #118: So you need to have enough warehousing, you can actually make good on that.
Speaker Change #118: Representation.
Speaker Change #119: If you have in your 606 I understand any idea how many pods might have.
Edward Joseph Shoen: No, I couldn't give you a number, but I don't. And lastly, on self-storage, could you tell us what your annual depreciation charge was in 2024 and how that differed from 2023? Jason Shoen.
Speaker Change #120: No I Couldnt give you a number but I think it's less.
Speaker Change #120: Just kind of.
Speaker Change #121: And lastly on self storage could you tell us what your annual depreciation charge was in 2024.
Speaker Change #122: That deferred from 2023.
Speaker Change #122: Jason.
Jason: Look. Let me find the exact numbers for you. So. (inaudible) Sorry. I thought I had it right in front of me. Okay, Jimmy, the fleet depreciation over the last 12 months was about 565 million for buildings, real estate, and what I'll also call service vehicles. It was 253. Okay, and could you tell us, versus the previous year, what those numbers were? Sure, it was 520 and 213.
Speaker Change #122: Yes.
Jason: Let me find the exact numbers for you so.
Speaker Change #122: Sure.
Speaker Change #122: The.
Speaker Change #122: Our fleet.
Speaker Change #122: Sorry.
Speaker Change #122: I had it right in farnell.
Speaker Change #122: Okay.
Speaker Change #122: Okay.
Speaker Change #122: Okay.
Jamie Wilson: Okay Jamie.
Jamie Wilson: Fleet depreciation over the last 12 months with about $565 million.
Jamie Wilson: Okay.
Jamie Wilson: On.
Jamie Wilson: Building as real estate and what I also call like service vehicles.
Jamie Wilson: It was $253 million.
Speaker Change #124: Okay and could you tell versus the previous year could you tell us what those numbers were sure. It was $5 20 and 2013.
Jason: Okay, great. Okay. Nice job, fellas. Keep it going. I appreciate it.
Speaker Change #125: Okay great.
Okay nice job, Phil let's keep it going I appreciate it thank you Tim.
James R. Wilen: Thank you. Thank you. Our next question comes from Steven Farrell with Oppenheimer Clothes. Good morning.
Speaker Change #125: Thank you. Our next question comes from Stephen Farrell with Oppenheimer <unk> close.
Speaker Change #126: Good morning.
Steven Farrell: Morning. The last two quarters, fleet maintenance has decreased, but looking back farther before that, fleet maintenance increased by about $300 million since the end of 2021. As you rotate the fleet, how much of that increase do you expect to get back? I really don't have a projection, but
Speaker Change #125: Yeah.
Speaker Change #127: The last two quarters sleep maintenance.
Speaker Change #128: And then looking back farther before that fleet maintenance increase to that $300 million since the end of 2021.
Speaker Change #129: As you rotate the fleet how much of that increase do you expect to get that.
Speaker Change #130: I really don't have a projection.
Edward Joseph Shoen: I'm fighting for a lot of it. Now there's always inflation in expenses, parts, all that stuff's gone up, labor's gone up. But, but a bunch of that was really cheap.
Speaker Change #129: <unk>.
Speaker Change #131: I'm fighting for.
Speaker Change #131: A lot of it.
Speaker Change #131: Always inflation in expenses parts, all that stuff's gone up labor has gone up but.
Speaker Change #131: But.
Speaker Change #131: A bunch of that.
Speaker Change #131: Was really.
Edward Joseph Shoen: We didn't have trucks to depreciate. And so we just had to spend money on repair ordinarily, a mile. Repair expense per mile out or exceeds depreciation per mile. Once you get out to it, depending on the truck to a certain amount of mileage and, Of course, you're always going to have maintenance, but the tradeoff becomes negative at some point. And so you need, and that's why you refle
Speaker Change #131: We didn't have.
Speaker Change #131: Trucks to depreciate and so we just had to spend money on repair ordinarily.
Speaker Change #131: A mile.
Speaker Change #131: Spent repair expense per mile out.
Speaker Change #131: Or exceeds depreciation per mile. Once you get out to depending on the truck to a certain amount of mileage.
Speaker Change #131: And.
Speaker Change #131: Of course, you're always going to have maintenance, but the tradeoff becomes negative at some point.
Speaker Change #131: And so you need and Thats why you re fleet.
Speaker Change #131: And.
Edward Joseph Shoen: I would say of that, let's say it was a $300 million increase over the time you talked about, I would say, 250 of that was probably allocated to I may be wrong, maybe it's 200, but more than half of it was due to holding a truck longer than would have been our drug. So I look to capture a significant portion of that back. But of course, we're fighting repair part costs, and we're fighting labor costs to earn that back. But we're, we're positioned to earn it back. A great deal of that increase ended up being spent on third party providers. We provide a lot of our own me, and that percentage.
Speaker Change #131: I would say of that let's say it was a $300 million increase over the time, we've talked about I would say.
Speaker Change #131: 250 of that.
Speaker Change #131: It was probably allocated to.
Speaker Change #131: I may be wrong, maybe it's 200, but more than half of it was due to.
Speaker Change #131: Holding a truck longer then.
Speaker Change #131: Would have been our druthers.
Speaker Change #131: So I look to capture.
Speaker Change #131: Significant portion of that back but of course, we're fighting repair part cost and we're fighting.
Speaker Change #131: Labor cost to earn that back.
Speaker Change #131: We're positioned to earn it back a great deal of that increase ended up being spent at third party providers we.
Speaker Change #131: We provide.
Speaker Change #131: A lot of our own maintenance and.
Speaker Change #131: That percentage.
Edward Joseph Shoen: Slipped over the last three years, and we always use third parties for remote locations or, you know, in the middle of the night or something. We can make that tradeoff come back our way, and that's what my focus is. How much I can make it come back, just remains to be seen. But there's substantial money there. Assuming we can get the trucks in and, this year, as Jason says, we probably crossed over to making some progress on that problem. And it'll take a couple of years of progress to get this back. It won't come back in just one year.
Speaker Change #131: Slipped over the last three years.
Speaker Change #131: And.
Speaker Change #131: We're always use third parties for remote locations or.
Speaker Change #131: The middle of the night or something but.
Speaker Change #131: We can make that tradeoff come back our way, that's where my focus is how much I can make a comeback.
It just remains to be seen but there is.
Speaker Change #131: Theres substantial money there.
Speaker Change #131: Assuming we can get the trucks in.
Speaker Change #132: This year as Jason says, we probably crossed over to we we made some progress on that problem.
Speaker Change #132: And it'll take a couple of years of progress to get this back you won't come back in one year.
Mhm.
Edward Joseph Shoen: And just based on your other comments around personnel liability, which is the big moving part of operating expenses, to a certain extent, it sounds like we should just expect elevated levels moving forward. Well, I think on personnel. It's a pretty good bet in the near term next year. Looking at the next 12 or 18 months, I think those, inflation is going to be a little bit and the government is putting in tremendous mandates, and now it mandates a minimum wage for salaried personnel. This minimum wage. Mania.
Speaker Change #133: And just based on your other comments around personnel liability would share that.
Speaker Change #133: Moving parts of operating expenses.
Speaker Change #133: Certain extended it sounds like we should just expect the elevated levels moving forward.
Speaker Change #133: Well I think on personnel, it's a pretty good bet in the near term next year looking out. The next 12 to 18 months I think those.
Speaker Change #134: That's not.
Speaker Change #134: Inflation is going to be a little bit up.
Speaker Change #134: And then.
Speaker Change #134: The government is putting a tremendous mandates.
Speaker Change #134: Mandates on.
Speaker Change #134: Minimum wage for salaried personnel.
This minimum wage.
Speaker Change #134: Mania.
Edward Joseph Shoen: Federal, and then some of these states like California and New York have, it's a plethora of regulation, but it's bumping. Not obvious to the normal person, but they're bumping what you pay your salary personnel, the minimum minimum pay for salary personnel. And they're putting in standards that, theoretically, are for the whole country. Well, I can just tell you the difference between Mississippi and New York and what is a base salary that's acceptable for salaried employees.
Speaker Change #134: Federal and then some of these states like California, and New York at.
Speaker Change #134: It's a plus.
Speaker Change #134: Plethora of regulation, but it's bumped.
Speaker Change #134: Not obvious to the normal person, but they're bumping what you pay your salary personnel minimum minimum pay for salaried personnel.
Speaker Change #134: They are putting in standards that.
Speaker Change #134: Theoretically for the whole country, but I can just tell you the difference between Mississippi, and New York and what is.
Speaker Change #134: Base salary thats acceptable for our salaried personnel.
Edward Joseph Shoen: There's more than $20,000 difference, and they're putting in the same amount. Metric, which is, Thoughtless, and we're just going to have to work around it and live with it. That's all. No, there's no stopping these people.
Speaker Change #134: More than $20000 different theyre, putting in the same.
Speaker Change #134: Metric, which is.
Speaker Change #135: Bartlett and we're just going to have to work around it that's all.
Speaker Change #135: There's no stopping these people.
Edward Joseph Shoen: Although you have a chance to vote in November, that's my plug. And moving to self-storage, last year you guys commented that you were targeting about a million square feet per quarter. And given your kind of cautious outlook and comments around self-storage, do you think that'll be lower moving forward? I don't think so.
Speaker Change #135: Although you have a chance to vote in November Thats My point.
Speaker Change #135: Okay.
Speaker Change #136: And then moving to self storage and last year. You guys commented that you were targeting about 1 million square feet.
Speaker Change #135: Corridor.
Speaker Change #137: And given your kind of cautious outlook and comments around self storage do you think that will be lower and moving forward.
Edward Joseph Shoen: Right now, we're kind of committed to that. Again, as I said, once you break ground, it's a minimum of a 12 month process, but you're committed six months prior to breaking ground because we acquired the property and you're significantly into it with Land Use. Commitments, you've committed to the city in order to get your building permits, and you're committed to it, but it's a bunch of money that's committed in most of those projects, so it's better to proceed ahead with.
Speaker Change #138: I don't think so right now we're kind of committed to that again as I said once you break ground, it's a minimum.
Speaker Change #138: Of a 12 month process, but youre committed.
Speaker Change #138: Six months prior to breaking ground, because we acquired the property.
Speaker Change #138: Significantly into it with.
Speaker Change #138: Land use commitments you've committed to the.
Speaker Change #138: The city of <unk>.
Speaker Change #138: In order to get your building permits and have committed to.
Speaker Change #138: Bunch of money Thats committed to most of those projects.
Speaker Change #138: Our better to proceed ahead with so to actually cut the.
Edward Joseph Shoen: So to actually cut the deal, you're certainly got to do it. It's 18 months when you cut it before you see it is the truth unless you do something foolish like, half build the building and let it sit there. We've all seen that happen. That's typically foolish, but if you don't have any money.
Speaker Change #138: The deal you're certainly.
Speaker Change #138: Got to do it it's 18 months when you cut it before you see it is the truth unless you do something foolish like.
Speaker Change #138: <unk> build the building and let it sit there we've all seen that happen.
Speaker Change #138: That's typically foolish, but don't have any money of course, you would do something like that but thats, we don't foresee that we're pretty well carefully funded carefully matched.
Edward Joseph Shoen: But that's not what we don't foresee. We're pretty well matched, carefully funded, and carefully matched. So we don't see those kind of actions reasonably foreseeable over the next 18 months. So we're continuing to go ahead, and I believe there are many markets that there's opportunity in, and I'm trying to focus on those markets, not just slugging it out, but storage. Penetration or availability is all over the map. It's not continuous for the whole country or smooth.
Speaker Change #138: So we don't see.
Speaker Change #138: Those kind of actions.
Speaker Change #138: Reasonably foreseeable over the next 18 months. So we're continuing to go ahead and I believe there is.
Speaker Change #138: There are many markets that there is opportunity and I'm trying to focus on those markets not just slugging it out.
Speaker Change #138: No.
Speaker Change #139: But storage.
Speaker Change #139: Penetration or availability.
As is.
Speaker Change #139: It is all over the map its not continuous for the whole country or smooth. So if you can get in the right.
Edward Joseph Shoen: And so if you can get in the right micro market, you can do okay, still, maybe do a little bit better than okay, and we're focusing on those locations, and we'll see how our strategy pans out. And are there any geographic areas that you can highlight where you are seeing those pockets of opportunity? No, I won't even talk to him. I'll only talk to him with a small circle of friends because I don't want, I don't need any more people rushing in there besides me.
Speaker Change #139: Micro market you can do okay, still and maybe do a little bit better than okay. That's my hope.
And we're focusing on those locations and we will see how our strategy pans out.
Speaker Change #140: And are there any.
Speaker Change #141: Geographic areas that you can highlight where you are seeing those pockets of opportunity.
Edward Joseph Shoen: Okay, there's plenty of sharp real estate people out there, and if they know where we're going, well, that just gives them one more bit of information to compete with us. So, I'm keeping that quiet, but you know. We slug it out in all these major metros. You know, there's a ton of business available in L.A., but do you really want to slug it out there in LA? And you may find L.A. is a four-year term from acquisition to completion. I'm thinking of one project right off the top of my head that was actually four years in the making, and you know, will we ever make any money?
Speaker Change #142: No I won't even talk to him hardly.
Speaker Change #142: Talked about the small circle of friends, because I don't want.
Speaker Change #142: Don't need any more people rushing in there. Besides me, okay, theres plenty of sharp real estate people out there and if they.
Nowhere, we're going well that just gives them one more bit of information to compete with us.
Speaker Change #142: I'm keeping that quiet.
Speaker Change #142: We slug it out in all of these major metros.
Speaker Change #142: There's a ton of business available in la but do you really want to slug. It out there in L a and <unk>.
Speaker Change #142: You may find la is a four year term from acquisition too.
Speaker Change #142: Completion.
Speaker Change #142: I'm thinking of one project right at the top of my head that was actually four years.
Speaker Change #143: Will we ever make any money.
Edward Joseph Shoen: because we don't capitalize that cost; most of it, we don't capitalize, but you paid for it, okay? and so, you don't want to incur any more of that than you have. So there are other markets that are more business-friendly.
Speaker Change #143: We don't capitalize that costs most of it we don't capitalize but you paid it.
Speaker Change #143: Hey.
Speaker Change #143: And so.
Speaker Change #143: Alright.
Speaker Change #143: Incur any more of that and you have to it so theres other markets.
Speaker Change #143: A more business friendly.
Speaker Change #143: The competition isn't news.
Edward Joseph Shoen: [inaudible] and Trent. So we're heading for those. We have the largest footprint in the business. We're the only people in all provinces and all states. In fact, we're the only people in all states, and that lets us see a market because we're there already. It doesn't stick out as hard as it would for one of our weak competitors, although they're very savvy people and they're constantly running
Speaker Change #143: Entrenched.
Speaker Change #143: So we're heading for those but we have the largest footprint of the business. We are the only people in all provinces and Allstate's fact, we're the only people in all states.
Speaker Change #143: That lets us see a market.
Speaker Change #143: Because we're there already.
Speaker Change #143: But maybe as.
Speaker Change #143: It doesn't take out part as it would for one of our REIT competitors, although theyre very savvy people.
Speaker Change #143: Now there are cost of running the numbers.
Edward Joseph Shoen: Well, thank you. That's all I have. Thank you. We have no further questions at this time. I will now turn control of the conference back over to our presenters for any additional remarks. Well, thank you everyone so much for your support. As a reminder, we plan to file our 10k later today, and we look forward to speaking with you after we file our first quarter results in August. Thank you. Thank you, everyone. This concludes today's conference. We appreciate your participation. You may disconnect at any time. [inaudible]
Speaker Change #144: Thank you that's all I have.
Speaker Change #144: Sure.
Speaker Change #145: Thank you we have no further questions at this time I will now turn control of the conference back over to our presenters for any additional remarks.
Okay.
Speaker Change #146: Well. Thank you everyone. So much for the support as a reminder, we plan to file our 10-K.
Speaker Change #146: Later today.
Speaker Change #146: And we look forward to speaking with you after we file our first quarter results in August. Thank you.
Speaker Change #147: Thank you everyone. This concludes today's conference. We appreciate your participation you may disconnect at any time.
Speaker Change #147: Okay.
Speaker Change #147: Okay.
Speaker Change #147: [music].
Speaker Change #147: Hum.
Speaker Change #147: Okay.
Speaker Change #147: Yes.