Q2 2025 U-Haul Holding Co Earnings Call

Speaker Change: Uh huh.

Uh huh.

Speaker Change: [music].

Speaker Change: My teams remained focused on this measurement.

Speaker Change: But we've been getting very modest results.

Speaker Change: We are continuing to develop new storage product.

Speaker Change: And <unk>.

Speaker Change: Bringing it online faster than we're filling.

Speaker Change: Units.

Speaker Change: The industry the storage industry remains set upon.

Speaker Change: By unrealistic move in promotions.

Speaker Change: We are holding with our strategy, but we're watching this all the time.

Speaker Change: U box, which is our service and it addresses both the time and the place needs of consumers.

Speaker Change: It's still making progress.

Speaker Change: We have a significant infrastructure now in place that can reliably handle.

Speaker Change: We have a significant infrastructure now in place that can reliably handle growth in our transactions and I expect we're going to see some.

Speaker Change: Growth in our transactions and I expect we're going to see something.

Speaker Change: I have a word on the an update on the.

Speaker Change: I have a word on the, an update on the acquisition of U-Haul holding company shares by Trion Fund manager LP, Nelson Peltz.

Speaker Change: Acquisition of U haul holding company shares by three on fund management L. P. Nelson Peltz.

Speaker Change: As you know trio unfold 13F with the SEC on August 14 regarding their U haul holding company stock holdings as of June 30.

Speaker Change: As you know, Trion filed a 13-F with the SEC on August 14 regarding their U-Haul holding company stock holdings as of June 30.

Speaker Change: Since then Jason Berg is met once with three unrepresented twos.

Speaker Change: Since then, Jason Berg has met once with Trion representatives and they have sent us a 31-page PowerPoint presentation. Trion has also communicated with other U-Haul holding company shareholders.

Speaker Change: And they have sent us in 31 page Powerpoint presentation.

Speaker Change: Trina as also communicated with other U haul holding company shareholders.

Speaker Change: Of course, <unk> reputation precedes them.

Of course, Trion's reputation precedes them.

Speaker Change: We regularly consider multiple inputs and factors and we'll continue to do so.

Speaker Change: We regularly consider multiple inputs and factors and will continue to do so.

Speaker Change: Yeah.

Speaker Change: We have our business plans in place.

We have our business plans in place.

Speaker Change: There will not be any changes to our plans due to three owns input.

Speaker Change: There will not be any changes to our plans due to Trion's input.

Speaker Change: Jason continues to work too.

Speaker Change: To get accurate helpful information to you as investors and he will continue to do so.

Speaker Change: Jason continues to work to get accurate helpful information to you as investors and he will continue to do so.

Speaker Change: Many things are up in the air regarding consumer confidence.

Many things are up in the air regarding consumer confidence.

Speaker Change: We look forward to the new administration positively contributing to this.

Speaker Change: We look forward to the new administration positively contributing to this, which will just make our ability to see the future a little more accurate.

Speaker Change: Which will just make our ability to.

Speaker Change: I see the future a little more accurate.

Speaker Change: With that I'll turn it over to Jason to take you through the numbers. Thanks, Joe.

Jason Berg: With that, I'll turn it over to Jason to take you through the numbers. Thanks, Joe. Yesterday, we reported second quarter earnings of $187 million compared to $274 million for the same quarter last year.

Jason Berg: Yesterday, we reported second quarter earnings of $187 million compared to $274 million for the same quarter last year.

Jason Berg: From the earnings per share perspective, this translates to <unk> 96 per nonvoting share.

Speaker Change: From the earnings per share perspective, this translates to 96 cents per non-voting share.

Speaker Change: Compared to $1 40 per nonvoting share in the second quarter of last year.

Speaker Change: compared to $1.40 per non-voting share in the second quarter of last year.

Speaker Change: Earnings before interest taxes, and depreciation EBITDA at our moving and storage segment.

Speaker Change: And for the rest of this year and we'd have to adjust to remove interest income from the prior year.

Speaker Change: Yes.

Speaker Change: <unk> decreased by $18 $1 million due almost entirely to operating costs that are unlikely to recur and I'll touch on that further in a moment.

Speaker Change: Equipment rental revenue results, we had an $18 million increase or about one 7% slightly better than what our first quarter improvement was.

Speaker Change: This is now our second consecutive quarter of year over year increases in equipment rental revenues and it points to a likely trough.

Speaker Change: We should hopefully have a return to a more sustained growth trajectory.

Speaker Change: While we werent able to generate increases in one way moving transactions. We did see an increase in the average revenue per transaction for both one way and in town knows.

Speaker Change: And our in town revenues on the trailer and towing <unk> fleet also increased during the quarter.

Speaker Change: October and the first week of November saw revenue continued to trend positively compared to the same time last year.

Speaker Change: Capital expenditures for new rental equipment for the first six months were $1 billion.

Speaker Change: $156 million, that's a $182 million increase compared to the same six month period last year.

Speaker Change: We've increased our fiscal 2025 full year net capex projections, so that's gross spending less sales.

Speaker Change: We've increased it from $1 billion $90 million to approximately $1 billion 115, and thats due to the availability of some additional equipment from our manufacturers that we can purchase this year.

Speaker Change: Proceeds from the sales of retired rental equipment was down $44 million to a total of 361.

Speaker Change: This is a combination of fewer pickups and cargo vans sold along with lower average sales proceeds on the units that we did sell.

Speaker Change: A portion of our depreciation increase that Youre seeing is in response to the declining resale values of these models.

Speaker Change: Wishing to self storage revenues were up $16 million, which is about an 8% improvement.

Speaker Change: Average revenue per occupied foot continues to improve across the entire portfolio up about one 6% for the quarter.

Speaker Change: And if you look at our same store portfolio were up just over 2%.

Speaker Change: Our occupied unit count at the end of September was up nearly 32000 units.

Speaker Change: Compared to the same time last year.

Speaker Change: During the same timeframe, we've added 67000, new units and that's what's led to that.

Speaker Change: The differential in our average occupancy ratio, we're down to about 89% for the whole portfolio.

Speaker Change: If you split out just the same store portion we saw average occupancy decreased 80 basis points to 94, 1%.

Speaker Change: During the first six months of this year, we invested $734 million in real estate acquisitions, along with development costs associated with self storage in U box warehouses.

Speaker Change: $101 million increase over the first six months of last year.

Thank you.

outperform the industry.

I'd say it's going to go back to double digits.

Speaker Change: You know, between now and next summer, I'd hesitate to predict that.

the whole industry is kind of

Speaker Change: got themselves funky, and there's many, many things going on, which...

I probably don't even know about.

but the

Speaker Change: I think we're going to outperform our peer group, and I think we should, but...

Whether we'll get this.

addition of new product and filling of rooms balanced outright.

Speaker Change: it's not you know it's not totally clear of course we're going into what's relatively speaking a slow season but that's fine there's plenty of customers out there even in the slow season so

Speaker Change: At this point, I'm kind of fighting this out location by location. There's not a macro picture, I would say. I, this week, have most of my

Speaker Change: Senior Managers around the country, and of course we're just doubling down on how are we going to specifically get X more rooms rented at location Y, and what does, where's our...

Speaker Change: where's the failure in our sales presentation. I always view this as customers are there we're failing to connect to them and I still believe that is even though the other the rest many participants of the industry are reporting

you know, not too shiny results.

And that's going to be a little jumble shaking out.

Speaker Change: I expect to come out of that jumble ahead of my peer group, but we'll see how that goes.

Thank you.

Speaker Change: Just to talk out loud, I mean, that's one of the key attributes of U-Haul is that you build...

Speaker Change: all this capacity and the ability will come. The demand occurs, last time it was COVID, and then you have all the capacity and the leverage to benefit from that.

They work both in the rental business and for storage.

Well, thank you for answering my question.

Thank you.

Speaker Change: And once again, to ask a question, please press star 1 on your telephone keypad. We'll move next to Jamie Weiland of Weiland Management.

Speaker Change: Hey fellas, the first question is about Ubox and that you seem to be gaining some share in the business.

Speaker Change: The question is relative to, as you build new self-storage, you have a lot of U-box storage in there, and

Speaker Change: How much of a competitive advantage is that for you? Is that why you're gaining share or does that just give you better pricing to customers or better margins for you as you Obviously you think that's a competitive advantage because as you build new self-storage you're including

Places for portable storage in there for you box.

Speaker Change: Yeah, I'm going to let my son Sam, who runs UBOX, speak to that for just a minute.

Sam: Sure, I'm happy to answer that, Jamie. I think the question was

Speaker Change: Is the storage component of U-Box competitive advantage? No doubt about that. I'd agree with you. Now, is it why we're gaining share? That, I think, the answer to that is no.

Speaker Change: I would say if I would give us a grade, on the moving segment of Ubox, I'd give us an A, and on the storage segment of Ubox, I'd give us a C, but it just gives us massive opportunity going forward to shine. I'd say the competitions...

Speaker Change: doing a better job on that relative to us, but I can tell you storage at U-Haul, as you might imagine, is quite a focus and so I've got a lot of support resources to take that C to the A that we know it should and could be so

Thanks for your question.

Speaker Change: Okay, as we continue to build self-storage, it will always include an extra component for portable storage as well.

Not always. You've got to map this out.

and probably the radius that a...

U Box

location serves is larger than the radius of customers that

Speaker Change: traditional self-storage serves. So we're using the opportunity when we build

Speaker Change: to also try to build more self-storage to try to be strategic so we can make one project out of it and also expand our

Speaker Change: you box network but so if you look at the ones we're building currently it's pretty close maybe eight out of ten okay

Speaker Change: But we don't have a goal of going to a one-to-one at all, Jimmy. That would be more capacity.

Speaker Change: that we think we can absorb. But right now what we're building, I'm just going to guess, but I'd say eight out of ten of them where we're putting in more storage, we're putting in UFOX.

Next I want to go to...

Speaker Change: The value gap coherent between what you all is trading for and what it's worth, when I look at

Speaker Change: in a similar revenue base than you, though it does not maintain your growth profile because you have added so much more fresh space than they have. They've got a $10 billion market cap on their shelf storage, and it seems like we're not getting that credit force.

Speaker Change: for on our cell storage operation, which one would think our metrics for

Speaker Change: occupancy and rate are similar to theirs and margin are similar to theirs, so one would think our valuation for our self-storage would be similar to that. Can you...

Speaker Change: talk about the value gap and and is that what is within a lot of the

Tryon's PowerPoint presentation for how to close that value gap.

Okay, I'll talk to it for a minute.

Of course we right now

Speaker Change: Excess capacity is a drag. I can't give you the number, but it's a drag on earnings. Obviously we own the stuff we're paying for it.

and aggressive development is a drag.

and both those things are just...

Speaker Change: mathematically what comes out of that development whether at the end of the day

Speaker Change: This turns out to be a happy day or not is, you know, unknown until you get there. Of course, I think it's going to, or I wouldn't be.

Thank you.

pouring resources into it.

Speaker Change: As far as Mr. Peltz, I don't want to speak for him.

And I don't like to have anything...

Speaker Change: is anything. I don't know. I could send you his presentation, Jamie. I don't know if that would work. I don't really, I don't want to speak for him.

Okay, and you talk about within self-storage that we're...

you know, adding more spaces than we're filling, so...

Speaker Change: in the short term, it really impacts earnings. One of the beautiful things about COVID was not only that we.

Speaker Change: were able to increase occupancy rates in the existing locations, but it restricted our ability to open new locations. So there was much more of a balance in the near term between the costs of carrying.

newly opened units, and the filling of existing units.

Speaker Change: Do you think we'll ever get back to that balance so we can, you know, as opposed to always this is going to be wonderful long-term, out ten years, to balance off the near-term impact for opening so aggressively with new locations?

Speaker Change: Well, I would expect it will ebb and flow is what I think now.

there's

There's still a lot of opportunity.

and all of you all.

breadth of where we operate, so.

We're very active in Wyoming and Montana.

Speaker Change: A lot of people kind of shrug their shoulders and that's fine.

we're already in.

and Jill at Wyoming. Okay, so, us.

Speaker Change: going there with more products and services as long as it's proportional to the market.

Speaker Change: One of our storage competitors, they have no reason to go to Gillette because they have no infrastructure and they would have to...

Speaker Change: gear the whole thing up and marginally it would be a loser for them.

Speaker Change: You go to northern New Jersey and they're all eager to get in there with more product.

Speaker Change: I just turned down some product in Northern New Jersey three weeks ago.

to me it looks like.

hard-working, overtaxed

Speaker Change: I don't know what you want to call it, but the prize is not worth it.

Speaker Change: Now, we'll see who's correct. Nobody knows for sure. But I think there's plenty of places for us to expand. If you want to look out and say two years, I think there's plenty of places to expand over the next two years. And I want to get in them and be positioned.

Oh.

Speaker Change: you know, for a 20-year or 30-year run out of them. They all make...

Speaker Change: Inflation, of course, has saved everybody in the self-storage business. When I first was doing this, we were bringing product on for $7 a square foot. Now we won't rent it for $7 a square foot a year. That was all in cost.

Speaker Change: Then at a point a month up to 15, we thought, boy, this is some pretty expensive storage, of course.

Speaker Change: You go look at those places now, they're selling for $135 a foot, same exact spot.

Speaker Change: And so inflation has really saved the self-storage industry, in my experience.

I don't know.

Currently, we're going in at some pretty high cost and

Speaker Change: and units that are trading in the secondary market are still trading.

very, very high multiples.

In addition to music. And all.

Speaker Change: Maybe that will cool off some of this. We're in this, as you mentioned, for the long haul, and there's no reason for us to...

Speaker Change: in my mind to shy away from going into a market so long as we're

Speaker Change: I'm fairly confident that market's going to produce results over time, but it's a drag. It's a drag.

Speaker Change: As soon as you turn this tap off, you get about 18 or 24 months.

Speaker Change: It looks like a different place on the financial statements. Jason could probably quantify that, but I mean it just it flips real quick as soon as you're not.