Q3 2025 U-Haul Holding Co Earnings Call
Good morning, ladies and gentlemen, and welcome to the U haul holding company third quarter fiscal 2025 investor call.
At this time all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session.
But any time during this call you need assistance. Please press star zero for the operator.
Speaker Change: This call is being recorded on Thursday February six 2025, I would now let's turn the conference over to Sebastian Reyes. Please go ahead.
Good morning, and thank you for joining us today welcome to the U haul holding company's third quarter fiscal 2025 investor call.
Speaker Change: 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 1933 as amended and section 21 E.
Speaker Change: And the Securities Exchange Act of 1934 as amended.
Speaker Change: Forward looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.
Speaker Change: Certain factors could cause actual results to differ materially from those projected.
Speaker Change: 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 and Form 10-Q for the quarter ended December 31, 2024, which is on file with the U S Securities and Exchange Commission.
Joe: I'll now turn the call over to Joe showing chairman of you holding company.
Joe: Thanks Sebastian.
Speaker Change: I am excited to see some positive leadership for the country.
Speaker Change: My experience is that consumer optimism is good for the self move business.
Speaker Change: I am seeing increased optimism with both customers and your whole team members.
Speaker Change: Often we were hit by a weather event in the fourth quarter that noticeably dampens rental transactions.
Speaker Change: So far this has not been the case.
Speaker Change: Yeah.
Speaker Change: As of this point U haul has not had significant property or casualty losses due to the fires.
Speaker Change: Sometimes an event like this stimulates rental transactions.
Speaker Change: However, this does not appear to have been the case in Los Angeles.
Speaker Change: We're continuing to make progress with truck additions and deletions to correct the imbalances in our fleet due.
Speaker Change: Due to Covid supply chain disruptions.
Speaker Change: Our typical truck can be a 10 year asset. So it takes some time to work through fleet imbalances.
Speaker Change: Should the Trump administration progress in reducing crushing regulations you holds in a position.
Speaker Change: To emerge from the electric vehicle mania with only modest damage.
Speaker Change: The medium truck industry has been heading towards.
Speaker Change: And unknown and.
Speaker Change: The industry needs to focus on customer needs.
Speaker Change: The truck share business, where we compete with Penske budget enterprise at multiple local businesses remains very competitive.
Speaker Change: As near as I can tell market share is fairly stable right now.
Speaker Change: Our U box business continues to grow.
Speaker Change: Our teams continued to master the elements of this business.
Speaker Change: We are getting okay self storage results.
Speaker Change: But we're having to work hard to achieve them.
Speaker Change: The storage industry is busy dialing out personal contact and customer service.
Speaker Change: I still see the other approaches the road our customers want us to follow.
Speaker Change: Alright, thank our results validate our approach.
Speaker Change: I plan to continue to drive hard on adding storage product.
Speaker Change: And take another look at this in early summer.
Speaker Change: Like yourselves you hold is watching the tariff proposals.
Speaker Change: Supply chain of course is complex and likely some Missouri will result.
Speaker Change: Overall, I am willing to let Trump and his team manage and you hope to react.
Speaker Change: I'm the most optimistic I've been in some time is always forever the proof will be able to put it.
Speaker Change: Yes.
Speaker Change: Jason do you want to give them some numbers thanks Joe.
Speaker Change: So yesterday, we reported third quarter earnings of $67 million compared to $99 million for the same quarter last year that translates to <unk> 35 per nonvoting share this quarter and 51 per nonvoting share for the third quarter of last year.
Speaker Change: Earnings before interest taxes, and depreciation EBITDA at our moving and storage segment and we've adjusted that to account for the change in interest income presentation.
Speaker Change: Increased by $47 $8 million due primarily to a stronger quarter of revenue growth.
Speaker Change: The disconnect between earnings per share and EBITDA is due primarily to three factors.
Speaker Change: First fleet depreciation from the increased level of fleet acquisitions, the last several years.
Speaker Change: The reduced gains on the sales of retired pickups and cargo vans.
Speaker Change: And third the declining interest income at the moving and storage segment as we've reduced our short term cash balances as we've reinvested the funds.
Speaker Change: Of the 16 <unk> per share decline in earnings.
Speaker Change: 13th census from the decrease in gains on the sale of equipment.
Speaker Change: <unk> <unk> from depreciation that <unk> can be attributed to the interest income variance.
Speaker Change: Looking at equipment rental revenue results, we had a $39 million increase which is a little over four 5% for the quarter.
Speaker Change: This is also better than the one 5% and one 7% improvements that we posted in the first and second quarters of this year.
Speaker Change: In addition to the continued strength in average revenue per transaction and growth in in town transactions. We saw additional last mile revenue come through during the end of the quarter.
Speaker Change: In town revenues on the trailer and towing device fleet also increased during the quarter.
And in January we saw revenue continue to trend positively compared to the same time last year.
Capital expenditures for new rental equipment for the first nine months were $1 billion 587 million Thats, a $237 million increased compared to the same nine month period last year.
Speaker Change: Proceeds from the sales of retired equipment. Meanwhile, decreased by $73 million to a total of $521 million.
Speaker Change: That's a combination of us selling fewer pickups and cargo vans.
Speaker Change: Along with lower average sales proceeds on the units that we did sell.
Speaker Change: A portion of that is whats leading to some increases in our depreciation.
Speaker Change: Switching to self storage revenues were up $17 million Thats, an 8% increase for the quarter.
Speaker Change: Average revenue per occupied foot continued to improve across the overall portfolio up approximately 90 basis points.
Speaker Change: If you look just at the same store portion of the portfolio, we were up just over 3%.
Speaker Change: Our occupied unit count at the end of December was up nearly 42000 units.
Speaker Change: Compared to the same time last year.
Speaker Change: And over that same timeframe. We added 80000, new units is this differential that led to our average occupancy across the whole portfolio declining to 78, 7%.
Speaker Change: Splitting out the same store portion of the portfolio. We saw average occupancy decreased by 50 basis points to 92, 4%.
Speaker Change: During the first nine months of this year, we invested $1 $214 million in real estate acquisitions, along with development costs for self storage in new box warehouses.
Speaker Change: This was a $245 million increase over the first nine months of last year.
Speaker Change: Looking just at the quarter, we added $2 3 million, new net rentable square feet.
Speaker Change: With the majority of that being newly developed locations.
Speaker Change: We currently have approximately $8 5 million new square feet being developed.
Speaker Change: I would expect to see the pace of new deliveries remain elevated into next quarter.
Speaker Change: Our U box revenue results are included in other revenue in our 10-Q filing.
Speaker Change: This line item increased $9 million of which EU box was a major contributor.
Speaker Change: We're seeing both U box moving transactions in U box storage transactions grow.
Speaker Change: Over the last 12 months, we've increased our warehouse space are covered storage capacity for these containers by over 20%.
Speaker Change: We should continue that pace for at least the next 12 months.
Speaker Change: Operating expenses at moving and storage were up $11 6 million.
Speaker Change: We did have another quarter of declining fleet repair and maintenance costs. This time, we were down close to $10 5 million.
Speaker Change: Some of the larger expense increases.
Speaker Change: Personnel costs were up just over $15 million.
Speaker Change: Although that increases largely in line with the pace of revenue increase.
Speaker Change: We also have liability costs associated with the fleet go up $16 5 million.
Speaker Change: And property taxes were up just over $4 5 million.
Speaker Change: As of December 2024 at our moving and storage segment cash along with availability from existing loan facilities totaled $1 billion $348 million.
Speaker Change: On our Investor Relations website investors <unk> Dot com, we posted some supplemental materials for the third quarter. In addition to our <unk>.
Speaker Change: Typical earnings release, and 10-Q filing you can click on these in the lower right corner.
Speaker Change: Before I hand, the call over to our operator for questions.
Speaker Change: I wanted to thank and recognize our newest analysts Steven Ramsey Thompson Research group, who recently initiated coverage.
Speaker Change: He joins Keegan Carl at Wolfe Research and Steve Ralston at Zacks investment who've been covering us as well.
Speaker Change: I would encourage anyone interested to reach out to any of these three as they all have excellent insight.
Speaker Change: With that I would like to hand, the call back to our operator.
Speaker Change: Atlanta for.
Speaker Change: For questions and answers.
Joe myself, and Samsung will be available for questions.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: Do you have a question. Please press the star followed by the one on your Touchtone phone you will hear a path that you had has been leased.
Speaker Change: If you are using a speaker phone please lift the handset before pressing any case.
Speaker Change: And the first question comes from Steven Ralston at Saks. Please go ahead.
Congratulations on the good quarter would that significant uptick in revenue growth.
Speaker Change: Yeah.
Speaker Change: Well my question concerns about the drivers in that growth.
Speaker Change: I noticed that the revenue per transaction.
Has steadily increased for the last at least three quarters. It seems like you have a good pricing environment.
Speaker Change: Yes, so I would say.
Speaker Change: I would say the answer to that is yes.
Speaker Change: Yeah.
Speaker Change: <unk>.
Speaker Change: Could you add any color to that.
Speaker Change: There was.
Speaker Change: Learned about the.
Speaker Change: Well competition other things involved also sure sure World.
Speaker Change: I'm one of these people who is always very good.
Speaker Change: Tentative on increasing prices.
Speaker Change: I always want to communicate that value to the customer.
Speaker Change: Before we just tried to pass along price increases there's been a lot of.
Speaker Change: Cost increases over the last.
Speaker Change: 36 months, not all of which have been passed along some of which we're still going to have to figure out how to pass along.
Speaker Change: Mainly in equipment acquisition, but it's been in personnel, but we're just like everybody else are everything's up.
Speaker Change: So the customers.
Speaker Change: Showing some willingness to recognize that participate.
Speaker Change: And those increases without.
Feeling theyre being done.
Speaker Change: Beat up.
Speaker Change: Read the same stuff I do people doing beat up about the supermarket pricing by.
Speaker Change: By the energy pricing.
Speaker Change: And I tried to keep U haul where they see it.
Speaker Change: Trying to do some sort of value pricing, yet we needed we needed a price increase.
Speaker Change:
Speaker Change: Despite what you said I did notice that it seems like you have instituted some cost controls because sales were up.
Speaker Change: 47%, depending on where Youre looking but your operating expenses were only up one 6% and <unk> been basically harping on this for last few quarters.
Speaker Change: So it seems like something happened that.
Speaker Change: Gain control of your costs.
Speaker Change: We will always do so.
Speaker Change: Delay reaction a lot of this stuff so I think.
Speaker Change: I think I got the attention of my team probably six months ago, but then it doesn't really filter through to <unk>.
Speaker Change: Financial results are.
Speaker Change: Visible way for several months after that.
Speaker Change: Hum.
Speaker Change: Okay.
Speaker Change: One thing I noticed and I'm surprised you didn't mentioned it that you have set up.
Speaker Change: A record for the company.
Speaker Change: On your pipeline for the.
Speaker Change: The <unk>.
Speaker Change: 12, trailing 12 month net rentable square foot has reached a record you posted $7 4 million square feet.
Speaker Change: Prior to this he was in the three four.
Speaker Change: I would like six one.
Speaker Change: Quite an accomplishment.
Speaker Change: And with your mentioned this.
Speaker Change: Acquiring more assets.
Speaker Change: And the pipeline at least statistically is stable there at $16 8 million square feet.
Speaker Change: Do you expect to be in the seven or eight millions net square feet trailing 12 months going forward for a while.
Speaker Change: I think thats faster than we can pull that.
Speaker Change: Some of this is opportunism of course, if there is something.
Speaker Change: But theres not a lot of.
Speaker Change: But everyone at home suite deals in the storage business right now so.
Speaker Change: I think thats faster than we can maintain.
Speaker Change: I see.
Speaker Change: Okay.
Speaker Change: A little bit of color, our acquisitions of existing storage properties over the last 12 months is about 1 million square feet heavier than it was the year before.
Speaker Change: That's part of that increase and then the variance over last year at this time also.
Speaker Change: We were in the process last year of switching over to more ground up development.
Speaker Change: Now, we're starting to see a bunch of those lost launch, whereas last year. They were they were just getting started.
Speaker Change: Okay. Thank you.
Speaker Change: And one last question concerning U box I don't know if its.
Speaker Change: It's the first time I saw it but you emphasized that the revenues are driven not only by the rentals, but all of the storage is there something happening in U box, where people are storing more on your lots as opposed to just rentals and moving.
Sam: This is Sam showing I'll comment on that.
Speaker Change: I think youre exactly right Stephen that's a good observation and of course, that's part of the reason we're in these businesses.
Speaker Change: Not just to serve the moving customer, but also the storage customer as well and in many cases at the same customer.
Speaker Change: And I think as we get better at selling and explaining the advantages of this unique product that.
Speaker Change: A lot of consumers don't really fully appreciate how versatile it is as we get better at explaining that we get more conversions to the self storage.
Speaker Change: And if the deal <unk>.
Speaker Change: And of course, that's why we are in the business.
Speaker Change: That's why I would invest in U haul is is that that's really the exciting part of U box is it storage potential and we're starting to see.
Speaker Change: To see some some exciting.
Speaker Change: <unk> on that side of it.
Craig: Again, Craig congratulations and.
Speaker Change: Thank you for taking my questions.
Craig: Yes.
Craig: Okay.
Speaker Change: Thank you. The next question comes from Keegan Carl at Wolfe Research. Please go ahead.
Speaker Change: Yeah. Thanks for the time, guys and their release, Joe mentioned them moving activity picked up in the quarter driving both demand for storage and for product and services I guess I'm, just curious to maybe quantify the transaction volume increases and how it trended by month.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: We're going to have to go to chase about that sure. So so for the quarter.
Speaker Change: The transaction growth came from the in town business, which was up just under 2% on transactions on one way transactions, which is a smaller number.
Speaker Change: It was down it was still negative for the quarter.
Speaker Change: We're still seeing.
Speaker Change: Revenue per mile gains in there.
The one way business, which is helping to offset.
Speaker Change: The mileage decreases there.
Speaker Change: And I think.
Speaker Change: The normal growth that we would've seen in the quarter, then got bolstered by a couple of percentage points from from some last mile business that came in that.
That helped push up the revenue per mile for the intown and the miles per transaction.
Speaker Change: I guess on the high month basis, you notice anything that stood out maybe was November better than October did.
Speaker Change: Did you see sequential improvement each month, just kind of curious on on that cadence.
Speaker Change: I'd say October and November were fairly steady.
Speaker Change: And then towards the end of December when the last mile business came in.
Speaker Change: November December looked a lot like what we have seen.
Speaker Change: Previous.
Speaker Change: Quarter, and a half two quarters.
Speaker Change: Okay.
Speaker Change: If youre looking to run the revenue out I wouldn't say that four 5% growth.
Speaker Change: Our 4% growth with what we saw in the quarter would be a reasonable it's probably going to be.
A little bit better than what we saw in quarter, one and quarter, two but but.
Speaker Change: Yes.
Speaker Change: Quarter, three probably won't work.
Speaker Change: Repeat yet.
Speaker Change: Okay, No that's really helpful.
Speaker Change: Joe touched a little bit on January I guess I'm. Just curious like are you seeing sequential acceleration from December to January or is it more just the year over year improvement that you noticed.
Speaker Change: At year.
Speaker Change: Look at it year over year, because theres, so much seasonality to it so it did.
Speaker Change: When I'm, making comparisons as saying it's up it's always to the same time in the previous year.
Speaker Change: Got it I guess, just shifting to U box, obviously growth continues to be strong there.
Speaker Change: If we take a very long term view I mean, how should we think about margins in that business relative to your storage business.
Speaker Change: And what you would consider either a fuller stabilized occupancy level with a new box.
Speaker Change: Well I'll start with that and then Sam can fill in or correct me. If he has any other thoughts on it but.
Speaker Change: Keegan remember when we walked a few of those warehouses when you were out here.
Speaker Change: So the newer warehouses that we have stacked much higher so as we get more of these boxes into storage is going to help.
Speaker Change: The theoretical margin. However, you want to come up with that for U box.
Speaker Change: We're just getting better utilization of the asset.
Speaker Change: Got it.
Sam: Sam on Ultra line.
Sam: That's the same thing I was going to say.
Sam: The way I describe it and think about it is using a different word which is density and the exciting part of the U box storage.
Sam: Our solution is that we're getting increased density in the same footprint that you wouldn't have traditional facility. So if we could use as moving activity to follow the U haul formula would use use are moving activity to generate.
Sam: Containers in storage.
Sam: We're going to be able to to.
Sam: To put that density to Houston and be really efficient. So I think that's a that's a wise question youre asking.
Sam: I guess just to wrap this up I mean is it fair to assume that margins would be similar to self storage or could even be higher like I am just trying to get a better feel for in the long run how this business can play out.
Sam: Well of course I'm shooting for higher.
Sam: But we have a lot of work to do so I think you having that expectation.
Sam: Issuing that challenge I am willing to accept.
Sam: Okay, No that's really helpful.
Sam: I guess, just maybe if we take.
Sam: The bigger picture view, you, obviously have a lot of land in your development pipeline and you mark them at cost.
Sam: Yes, if you were to actually take what's in your portfolio.
Sam: With land and buildings, what do you think it would be worth at today's market prices and what sort of disconnect is there between what your mark that Bruce.
Sam: Theoretically.
Speaker Change: Hi, Keith.
Speaker Change: It's a great question, that's not something that we've really discussed publicly other than to say, we communicate to folks what the unencumbered.
Speaker Change: Balance our value is in the portfolio you can see what how much we've borrowed against real estate and then the.
Speaker Change: But the book value and that can kind of give.
Speaker Change: To give you some sort of triangulation as to the.
Speaker Change: Excess market value over book and the portfolio, but it.
Speaker Change: I guess I would consider a fairly significant when I look at our ability to borrow.
Speaker Change: Which then puts our market value at least into perspective.
Speaker Change: We have quite a bit of capacity to borrow if we had to we had the earnings to support that we could easily go out with the assets that we have and borrow another $2 billion.
Speaker Change: Against real estate.
Speaker Change: Okay. That's a good segue into my next question, which obviously the cash balance is down it's down near $1 billion down materially from the peak.
Speaker Change: I guess, just how should we think about your funding of growth going forward. You mentioned that you could take another $2 billion on I mean should we expect you to take on more leverage in that in the near to medium term debt to fund growth.
Speaker Change: Okay.
Speaker Change: Start with this one.
Speaker Change: Two tracks here, one we are going to be going out and we're going to do some normal borrowing.
Speaker Change: That we would do each year.
Speaker Change: We still have.
Speaker Change: Our guide post of trying to remain under five times net debt to EBITDA.
Speaker Change: Which gives us quite a bit of runway.
Speaker Change: And then the exciting part is.
Speaker Change: A lot of the assets that we've invested in.
Speaker Change: Are you starting to Lora launch Youll see that in the net rentable square foot number.
Speaker Change: And.
Speaker Change: That's just going to.
Speaker Change: Give us more flexibility in financing future acquisitions I will.
Speaker Change: I'd say the pace that we've been on the last 12 months, the one 5 billion.
Speaker Change: If you look out the next year or two.
Speaker Change: Will probably slow a bit.
Speaker Change: Okay.
Speaker Change: Okay, and then just last one for me to kind of wrap everything up I mean.
Speaker Change: If you would assume your entire storage portfolio stabilizes today.
Speaker Change: Where do you think that actually puts your total portfolio EBITDA margin at or where do you think it trends and the reason I'm kind of frame. It like this is obviously the large portion of your storage portfolio that was recently delivered and is likely negative on the EBITDA side. So if you would get that stabilized and where where your margin trend and what sort of expansion could we expect.
Speaker Change: Well.
Speaker Change: We don't have a separate.
Speaker Change: A separate margin number for self storage.
Speaker Change: I would say that.
Speaker Change: With the current square footage that we just reported.
Speaker Change: Excluding any sort of rate increases if we get that up to our same store occupancy number today that would be an extra close to $170 million of revenue.
Speaker Change: And the vast majority of that would fall to the bottom line.
Speaker Change: And then beyond that in the development pipeline.
Speaker Change: We have probably close to $350 million of additional revenue or maybe a little bit higher than that I might be understating. It so it.
Speaker Change: Between what we have.
Speaker Change: What we are building now and what we have behind it I think has the opportunity to increase our annual revenue by about 50% from where we're at today.
Speaker Change: On the storage just from the storage lineup.
Speaker Change: Yes.
Speaker Change: Okay. That's super helpful. Thanks for the time guys really appreciate it.
Speaker Change: Thank you. The next question comes from Steven Ramsey Thompson Research. Please go ahead.
Steven Ramsey: Hi, good morning, Thanks for having me on the call.
Steven Ramsey: Wanted to go back to this moving business and higher cost world that everybody is operating in it sounds like competitors are raising prices as well.
Given your cost advantages and your approach to serving the customer app at lower price.
Steven Ramsey: To serve them do you get a sense that competitors are raising prices more than you are and your cost advantages.
Steven Ramsey: Enable you to gain share in a different way in this environment.
Steven Ramsey: And then kind of a follow on to that.
Steven Ramsey: Do you think when one way moves pick up that.
Steven Ramsey: <unk>.
Steven Ramsey: The pricing dynamics allow you to gain even more share when that happens.
Joe: This is Joe.
Speaker Change: Theres a lot of factors go into that price is part of it.
Speaker Change: Normally we're going to have to be competitive on pricing. That's just how it is.
Speaker Change: A lot of.
This has to do with utilization, which has to do with kind of where you are positioned the equivalent.
Speaker Change: And how extensive is your distributions we have.
A very extensive distribution network compared to our competitors.
Speaker Change: And that gives us access to.
Speaker Change: Customers that.
Speaker Change: Dave factor was not economical for them.
Speaker Change: To access just because of distance.
Speaker Change: Customers to travel too far too.
Speaker Change: Obtaining the product and so it effectively.
Speaker Change: Raises their rate, even if theyre right isn't up.
Speaker Change: I don't have a.
Speaker Change: I wish I had a clear answer to your question I don't think Theres a lot of.
Speaker Change: Constantly moving parts.
Speaker Change: And it varies whether it's.
Speaker Change: And in turn transaction or a warm late transaction, but on one ways.
Speaker Change: We're in a position to benefit.
Speaker Change: With any increase.
Speaker Change: Consumer activity, we've got the fleet out there we've got the locations out there.
Speaker Change: Where we're priced in the acceptable range.
Speaker Change: We should see.
Speaker Change: If that comes we should pick up.
Speaker Change: Okay. That's helpful and then on the moving business again, good to see fleet repair and maintenance costs.
Speaker Change: <unk> to show year over year decline can you share how much of that is attributed to newer fleet coming in how much of that is doing more of that work in house and do you see a continued runway where you could.
Speaker Change: So year over year declines in these costs going forward.
Speaker Change: I think we can see some more more cost decreases yes.
Speaker Change: I don't have a good answer on how much of it is due to doing more work in house versus.
Taking into third parties with third parties just since.
Speaker Change: As you might expect just cost more that's all Steve.
Jason: Steve This is Jason.
Jason: I'll give kind of ballpark.
Jason: <unk>.
Jason: Part of what we've done is we have this year as we've decreased the size of our pickup fleet and to a lesser extent cargo van fleet and increased the size of the box truck fleet.
Jason: So the repair the box trucks would be more along the lines of your comments about power cost going down due to rotation of newer equipment and the reduction of the pickup in the cargo van fleet would have more to do with outside vendor repair and.
Jason: I would say that is probably <unk>.
Bye.
Jason: For the truck repair maybe a third.
Jason: Due to less outside work and two thirds from rotation of the fleet.
Jason: Okay. Okay. That's helpful color.
Jason: Wanted to ask a question on U box.
Jason: You can clarify again the pipeline of the build out on warehouses.
Jason: Coming in the next 12 months, and maybe where you see it going over the long term I know in prior years. This was a constraint to growth would you say warehouses are a constraint at this point to new box growth.
Sam: This is Sam shown speaking no we've got a very robust.
Sam: Pipeline for U box warehouse growth.
Speaker Change: <unk> had some good progress in the last year certainly it's no longer on my list of excuses.
Sam: <unk>.
Sam: It's it is putting tremendous pressure on the competition and again freeing us up to run new boxes is a part of our product line that wants to run and so we're we're on it.
Sam: Okay. That's helpful and then last one for me.
Sam: Storage.
Sam: Occupancy it looks like in the last year's Q3 shows a sequential dip from the second quarter on both the same store and non same store basis, but noticed that in this report the sequential dip was less than the prior years.
Sam: Im curious if theres anything to read into that.
Sam: The environment, improving or core outperformance.
Sam: If theres anything to read into kind of the sequential trends and if may be there.
Sam: <unk> got kind of in the market broadly that youre benefiting from.
Sam: Well. This is Joe I don't think there is a broad stabilization of the industry.
Speaker Change: You, probably see Europe by competitors' numbers, as well or better than I do but.
Sam: There's been a lot of.
Sam: Thank you erosion of both.
Sam: Rice in occupancy in the industry.
Sam: We're we're swimming against that tide successfully so far.
Speaker Change: Okay. That's helpful. Thank you.
Speaker Change: Thank you and the next question comes from Jamie Wilen at Wilen Management. Please go ahead.
Speaker Change: Thanks, Phil that you're seeing within the industry.
Speaker Change: Level of additions that people are building other than yourselves.
Speaker Change: So declining rate from where it has been over the last two years and does that create a little bit of opportunity.
Speaker Change: Right as you look forward.
Jamie Wilen: It's very market specific Jamie I don't think I can give you a generalization.
Speaker Change: Okay.
Speaker Change: Traveling but they are building new stuff every place okay great.
Speaker Change: [laughter].
Speaker Change: On the box side, a few other questions about the dynamics of the business.
Speaker Change: Yes.
Speaker Change: Rates for storage, how do they compare for self storage.
Speaker Change: Rental rate per square foot.
Speaker Change: And I assume the margins on that.
Our unit in storage are rather high since we don't have much cost against it and if you could tell us about the dynamics of.
Speaker Change: Somebody does a U box how long is it normally in storage for.
Speaker Change: And are there any changes in those dynamics over time.
Sam Sean: Okay, Great. That's a great question, Jamie This is Sam Sean.
Speaker Change: Right now today.
Speaker Change: Almost all of those metrics that you just brought up are very similar to our traditional self storage product.
Speaker Change: But in my mind, there's no reason why every single one of them could exceed and should exceed so just for as an example.
Speaker Change: You brought up.
Speaker Change: Per square foot basis if.
Speaker Change: If the product adds more can be gives more convenience to the customer there is the flexibility to ship. It there is the flexibility to deliver to their door. Some some customers in the industry, sometimes refers to it as valet storage will of course, we need to to to work towards getting a premium for that and right now.
Speaker Change: We've gone from kind of famine to feast on warehouse capacity and I'd say my first priority is let's get some occupancy.
Speaker Change: And as I think we've demonstrated in the U haul.
Speaker Change: Historically once we've got the storage occupancy I think we've we've done a.
Speaker Change: Decent job in maximizing the rate and so that's the game plan that's the trajectory we're on.
Speaker Change: I am embracing all of those those issues that you brought up it's a good question.
Speaker Change: As we are gaining market share is it a function of we've got much more.
Speaker Change: <unk> storage for this for the <unk>.
Speaker Change: Your box I can't imagine how somebody would want a stored outside for an extended period of time, but.
Speaker Change: Is that.
Speaker Change: <unk> advantage.
Jamie Wilen: The one thing that's allowing us to what the major thing thats, allowing us to gain market share and Thats why were focusing on that in the future as well will Jamie I was hoping you would ask me that kind of a softball for somebody to ask that question.
Jamie Wilen: The short answer to it is no the competition has indoor storage as well, but despite that.
Jamie Wilen: We've got them in a real head lock our advantages I would argue are the fact that were lower cost we can deliver multiple containers at one time, we have the most locations available in every state and every province, we have self delivery options. These are all things that the competition.
Jamie Wilen: Tissue cannot and and and and won't match and so of course, that's why we're on the way up and they're on the way down and so of course.
Jamie Wilen: It is inevitable that we were going to dominate this industry and in the same manner, we do the truck rail industry.
Scott: Well this is Scott.
Jamie Wilen: Sorry.
Jamie Wilen: Have you had said, but I just hope it happens.
Jamie Wilen: [laughter].
Jamie Wilen: One last thing on self storage as we are.
Jamie Wilen: Acquiring existing units.
Jamie Wilen: Sure.
Jamie Wilen: I assume everything we are acquiring are stabilized base and are they are immediately accretive as opposed to.
Jamie Wilen: The new units that we built.
Jason: Jamie This is Jason.
Jamie Wilen: That's an interesting question and it brings up.
Speaker Change: Interesting commentary on some of our competition in that industry. So.
Speaker Change: Several of the properties that we've purchased.
Speaker Change: Okay.
Speaker Change: Our CFO deals so they're essentially zero percent occupancy when we buy them.
Speaker Change: There are some that are that are close to stabilization as you have I think our average for everything that we took on at the last nine months has been somewhere around 70% occupancy day one.
Speaker Change: But what's happening is as some of these are managed by national REIT competitors.
Speaker Change: And.
Dave: What Dave the way that they manage rates and how they handle the customers.
Dave: You end up dropping a significant amount of occupancy. The first month that you are in there and you start working with the customers and figuring out the right.
Dave: So.
Dave: We're not we're not going out and financing is immediately there is a little bit of cleanup that we have to do to the rent rolls.
Dave: So it probably adds an extra three to six months on call. It the seasoning process, but before I can.
Dave: Set my 18th loose and have them do the financing on these.
Speaker Change: Why do you lose occupancy as soon as you acquire these things.
Dave: Because the.
Speaker Change: A lot of the.
Speaker Change: The occupancy figures when someone's getting ready to sell sometimes the manager will increase occupancy at the cost of lowering the rates significantly in order to get people in and then when we get in.
Speaker Change: Straightened out the rates to where we think they should be you end up losing quite a few people.
Steven Ramsey: Got you and last question, Joe You mentioned electrical vehicle impact on your business.
Speaker Change: I'm not going to Peter possibly in the future.
Speaker Change: Go a little bit more depth as to what you're talking about how that impacted our business.
Speaker Change: Others.
Speaker Change: Significant electric vehicle mandates that are driven largely by California.
Speaker Change: And Theyre variously reported.
Speaker Change: The simple fact is California has been driving that for.
Speaker Change: More than 10 years.
Speaker Change: B.
All this talk of zero emissions all electric.
Speaker Change: There just is no.
Speaker Change: Mechanical solution out there.
Speaker Change: And the size of trucks that we ramped.
Speaker Change: And so it's.
Speaker Change: It's kind of.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: Someone's dream, but in our case, if there is a mandate we're supposed to meet the mandate.
Speaker Change: And.
Speaker Change: If there's not inventory will now you got to.
Speaker Change: Our real problem, it's been an unsolvable dilemma, we worry about a lot, but theres nothing we can do that we have.
Speaker Change: We have been modest on bringing in.
Speaker Change: Test fleets for exemplary fleets, because we can pretty much detail.
Speaker Change: But working one up.
Speaker Change: It's a no go.
Speaker Change: And doing the.
Speaker Change: Buying 500 of them is just simply.
Speaker Change: Virtue signaling.
Speaker Change: Two the green people, but not to the shareholders Abbott shareholders. So.
Speaker Change: I'd, rather we signaled to shareholders.
Speaker Change: Good economic proposition so there.
Speaker Change: Has not been one.
Speaker Change: And certainly there is a demand for and a place for electric vehicles certainly but.
Speaker Change: We're a long ways from having that be a solution for anybody.
Speaker Change: And so the daily rental business.
Speaker Change: We are they are just they're just there is the solution.
Speaker Change: We've been just heading towards costly when does the squeeze start.
Speaker Change: So far the squeeze that Youre seeing is it goes back.
Speaker Change: Little over 36 months now which is.
Speaker Change: The increased cost of internal combustion engine trucks, the manufacturers because of the dilemma area.
Speaker Change: Have.
Speaker Change: Pushed as much of the development cost of electric vehicles is that Kim onto the people buying the gasoline vehicles.
Speaker Change: So.
Speaker Change: We've had it.
Speaker Change: More than one truck model that went up.
Over 40% in <unk>.
Speaker Change: 18 months.
Speaker Change: Although those are for us historically huge.
Speaker Change: Costs and Youre seeing that process through now with.
Speaker Change: With the reduced gain on sale at <unk>.
Jason: Jason referenced earlier.
Speaker Change: So.
Speaker Change: I'd much rather the old system is working good for me, but.
Speaker Change: Yes.
Speaker Change: That's just it so.
Speaker Change: Basically the same vehicles costing us.
Speaker Change: Considerable amount more.
Speaker Change: We are having to deal with that reality, but if you go with the electric.
Speaker Change: Youll Dream, you could get the same vehicle for more money because the electric vehicles, just simply isn't available.
Speaker Change: Ones that are available simply don't perform so.
Speaker Change: During the Bice that Theres no theres no solution too so I'm, hoping that what comes out of.
Speaker Change: This review Theyre doing a review and then they'll probably do more at the EPA.
Speaker Change: PPA level I'm, hoping they come out with.
Speaker Change: A solution that is something like.
Speaker Change: But I heard one of the administration people say is so that people can buy the kind of vehicle they want.
Speaker Change: So there are people, who want to electric vehicles and there is a place where when those people can buy them and.
Speaker Change: And there is a place for internal combustion engine vehicles and people can buy them.
Speaker Change: Always a few.
Speaker Change: If theres only a black and white.
Speaker Change: Choice.
Our sub optimizing we need a lot of <unk> in this and I think that.
Speaker Change: There is some.
Speaker Change: More common sense to make Berkeley through this it will be.
Speaker Change: At least for the medium duty truck business.
Speaker Change: It will be a welcome.
Speaker Change: Opportunity.
Speaker Change: We're in a dilemma on this constantly.
Speaker Change: It impacts Sam with forklift trucks.
Speaker Change: They've got initiatives up forklift trucks that are causing us to have to reposition trucks.
Speaker Change: It's all over.
Speaker Change: Sure.
Speaker Change: Electric versus propane propane.
Sam Sean: Now I guess, Sam runoff of worrying about propane bad electric good.
Sam Sean: The idea and of course in reality, it's the exact opposite.
Speaker Change: Certainly in my lifetime, there will be a day when there is an electric forklift that superior to a propane forklift and when that happens that's what we'll buy just like when our customers want electric trucks will buy electric trucks, but right. Now there are they are not the best truck and our customers don't want them and they are not part of our plan.
I appreciate the insights also thanks for the.
Speaker Change: Additional color in the presentations with the quarterly numbers.
Jamie Wilen: Youre welcome Thanks, Jamie.
Speaker Change: Thank you that concludes today's Q&A I will turn the call back over to management for closing comments.
Jamie Wilen: Well thanks, everyone for the support we look forward to speaking with you after our year end filing in May Thank you.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and we ask that you. Please disconnect your lines.
Yeah.