Q2 2026 U-Haul Holding Co Earnings Call
Speaker #1: Good morning , ladies and gentlemen , and welcome to the U-Haul Holding company . Second quarter fiscal 2026 Investor Conference call . At this time , all lines are in .
Speaker #1: Listen only mode . Following the presentation , we will conduct a time this call you require immediate assistance . Please press star zero .
Speaker #1: For the operator . This call is being recorded on Thursday , November 6th , 2025 . I would now like to turn the conference over to Sebastien Reyes .
Speaker #1: Please go ahead .
Speaker #2: Good morning and thank you for joining us today . Welcome to the U-Haul Holding company . Second quarter 2026 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 27 of the Securities Act of 1933 , as amended , and section 21 of the Securities Exchange Act of 1934 , as amended .
Speaker #2: Forward looking statements are inherently subject to risks and uncertainties , some of which cannot be predicted or quantified . Certain factors could cause actual results to differ materially from those projected .
Speaker #2: For 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 filings and form 10-q for the quarter ended September 30th , 2025 , which is on file with the US Securities and Exchange Commission .
Speaker #2: I will now turn the call over to Joe Schoen , chairman of U-Haul Holding company .
Speaker #3: Thanks , Sebastian . The earnings crush of increased depreciation and change from booking gains on equipment sales to booking losses on equipment sales became evident .
Speaker #3: This quarter . We reported this over two years ago that we were having to pay too much for trucks . This pounding is likely to continue for some time as OEM manufacturers continue to bring current pricing in line .
Speaker #3: Resale values will likely decline roughly , proportionately . While I am glad to bring on new vehicles at lower cost , this likely will depress earnings in the current period .
Speaker #3: Since July , we have been working to expand our dealer network well above the historical pace . This should help us better balance truck and trailer inventories by increasing demand .
Speaker #3: I expect some success here . We spent more on repair in the quarter than I had anticipated . We are working a plan to slightly reel these repair costs increases .
Speaker #3: As you all know , our customers drive the equivalent of to the moon and back more than 12 times a day . So repair or maintenance will always be significant .
Speaker #3: Cost . Mileage , however , is not up . So we can reel this expense back a bit . Self storage is a positive , but it remains a slugfest .
Speaker #3: Not very many gains are coming easily even on good projects . I am focused more on expanding our footprint than increasing our depth .
Speaker #3: Competition is strong . Customers are value conscious . That is an environment that U-Haul usually competes in . Well , self storage is still viewed positively by lenders , which is encouraging new competitors to enter in some markets .
Speaker #3: The administration is having success in reducing ice regulation that has driven unnecessary dislocations in the transportation economy . It has long been a dirty little secret that these regulations are politically and not environmentally driven .
Speaker #3: As the unproductive regulations on vehicle manufacturers and users subside , I expect a reordering that will benefit citizens and businesses alike . This is very positive for the transportation economy .
Speaker #3: Although the transportation economy overall will have to eat some huge residual costs from the ill conceived green regulation . In summary , our various business lines are solid and our results have covered a lot of expenses .
Speaker #3: But are short in return to shareholders . I will now turn the meeting over to Jason to closer review the financial results . Thanks .
Speaker #2: Joe .
Speaker #4: Yesterday we reported second quarter earnings of 106 million . That's compared to 187 million for the same quarter last year . This is a 54 cent per non-voting share .
Speaker #4: EPs number this quarter compared to $0.96 per share . Non-voting shares in the second quarter of last year , earnings before interest , taxes and depreciation .
Speaker #4: What we're calling adjusted EBITDA at are moving and storage segment increased 6% for nearly $32 million for the quarter . This is about the same amount of improvement that we saw in the first quarter of this year .
Speaker #4: Revenue growth across all of our moving and storage product lines led to this increase included in our earnings release and financial supplement is a reconciliation of adjusted EBITDA to GAAP earnings .
Speaker #4: Once again this quarter . The largest difference between adjusted EBITDA and GAAP earnings is depreciation . And that's also a cause of the largest negative variance in earnings year over year .
Speaker #4: During the second quarter of this year , we reported a $38 million loss on the disposal of retired rental equipment . Whereas last year at this time , we were reported an $18 million gain cargo vans that we purchased over the last two years that are now being sold came into the fleet with a higher cost in the current market , resale values are not reflecting that , resulting in the loss .
Speaker #4: We have increased the pace of depreciation on the remaining units to reflect this new reality . Additionally , we have depreciation from increasing the size of the box truck fleet by approximately 10,000 units compared to September of last year .
Speaker #4: Between fleet depreciation and the loss on disposal , we experienced $107 million cost increase for the quarter compared to the same time last year .
Speaker #4: Translated to EPs . That's about $0.43 a share as a reminder , our total decline in earnings per share for the quarter was $0.42 .
Speaker #4: For the second quarter , our equipment rental revenue results had a $23 million increase . That's about 2% revenue per transaction increased for both our in-town and one way markets compared to the same time last year .
Speaker #4: There was a decrease in overall transactions in a move intended to improve customer convenience . We're increasing the number of independent dealer locations across our network .
Speaker #4: In the last 12 months , we've added nearly 1000 new locations . In fact , for the first time in our history , we have eclipsed the 25,000 location count .
Speaker #4: And the plan is to continue adding this in conjunction with the increase in the size of our truck fleet . We believe there's an opportunity to grow moving transactions .
Speaker #4: October results came in below trend . We're working for an improved November capital expenditure , expenditures for new rental equipment for the first six months of this year were a billion $325 million .
Speaker #4: That's up $169 million compared to last year . For the last 12 months . So the trailing 12 months , our gross fleet spend has been approximately $2,000,000,032 million .
Speaker #4: If you net out equipment sales , it was $1,000,000,358 million . I estimate that close to $640 million of the gross gross spending was growth related .
Speaker #4: We had another strong quarter for self-storage storage revenues were up nearly $22 million , which is about 10% . Average revenue per foot continued to improve across the entire portfolio by just under 5% , while same store was up about 4% .
Speaker #4: We are seeing the cumulative effects of our rate increases flowing through to revenue . Our same store occupancy decreased by 350 basis points in the quarter to 90.5% .
Speaker #4: As I mentioned last quarter , in July , we took on an effort system wide to increase the number of available units at our existing locations by focusing on delinquent units .
Speaker #4: This effort did not affect revenue directly , as we don't record revenue until it's collected , but it did have the effect of reducing our reported occupancy levels .
Speaker #4: For now . Of that 350 basis point decline in same store occupancy , about 220 basis points of that was related to removal of delinquent tenants .
Speaker #4: Net tenant move ins , while slower than recent years , has picked up compared to where we were at last year . Adjusted for delinquent units during the first six months of fiscal 2026 , we invested $526 million in real estate acquisitions , along with self-storage and U-box warehouse development .
Speaker #4: That is down $208 million over the first six months compared to last year's first six months . During the second quarter , we added locations with storage .
Speaker #4: That translates to about 1.6 million net rentable square feet , and we currently have 6.5 million square feet . Being actively developed across 116 projects .
Speaker #4: Our U-box revenue results are included in other revenue in our 10-q filing . This line item increased $12 million , of which U-box was a large part of that .
Speaker #4: We continue to have success increasing moving transactions as well as increasing the number of containers that our customers keep in storage . Although the pace of growth for both slowed in the quarter , moving in , storage , operating expenses were up $19 million for the second quarter .
Speaker #4: As a percent of revenue . We improved compared to the second quarter of last year . The largest component of the one of the largest , larger components of the increase was personnel , which was up $12 million .
Speaker #4: But that increased at about the same rate as revenue increased our liability costs associated with the fleet were up $23 million , and fleet repair and maintenance , as Joe mentioned , was up $10 million .
Speaker #4: Regarding the liability cost , we've made progress on the self-insurance reserves from moving and storage over the last six months . We've increased our liability by $43 million as of September 2025 , cash , along with availability from existing loan facilities that are moving in storage segment , totaled $1,000,000,376 million .
Speaker #4: Supplemental Financial information as of the end of September is available at our investor website . Investors , under what we call investor kit .
Speaker #4: With that , I would like to hand the call back to our operator , Angelyne , to begin the question and answer portion of the call .
Speaker #1: Thank you . Ladies and gentlemen , we will now begin the question and answer session . Should you have a question , please press the star followed by the number one on your touchtone phone .
Speaker #1: You will hear a prompt that your hand has been raised should you wish to decline from the calling process , please press the star followed by the number two .
Speaker #1: And if you are using a speakerphone , please lift the handset before pressing any keys . One moment please . For your first question , your first question comes from Steven Ralston with Zacks .
Speaker #1: Please go ahead .
Speaker #5: I'd like to talk about the forest , looking at the forest instead of the trees . I'd like to congratulate you on a record top line of any quarter in the company's history .
Speaker #5: Granted , the second fiscal quarter is your strongest seasonal quarter , but nevertheless , it's a record . Now to the tree , now to the trees .
Speaker #5: As we all know , these depreciated expenses have recently been a drag to the top line . I'd like to start the conversation by clarifying your method of depreciation .
Speaker #5: I think in the past you've mentioned that you use accelerated depreciation . Now , but I've noticed that sometimes the depreciation is higher in the seasonally high quarters .
Speaker #5: Is there any component of usage involved in the depreciation scheduling ?
Speaker #4: Stephen . Hi . This is Jason . So when for our rental fleet we have two basic methodologies for depreciation . The first would be for our box trucks .
Speaker #4: And that's a dynamic depreciation model that depreciates faster in the earlier years . It then slows down over time . We hold those assets generally 12 to 15 years .
Speaker #4: And that schedule has not changed . But it does result if you have uneven purchases of box trucks you can have that number either go up or down in a year .
Speaker #4: The second part of the fleet is our cargo vans and pickups that we hold anywhere from 12 to 24 months . That's a straight line method that is a little more responsive to what the resale market is , because we sell them so much quicker .
Speaker #4: So what we're seeing today is a cargo van that that would have depreciated at a certain level three years ago , is now depreciating 2 to 3 times that rate per month because of what we're seeing in the resale market .
Speaker #5: Now, thank you. When do you expect the depreciation expenses to peak on a quarterly basis? You have better insight into what your anticipated expenses are.
Speaker #5: Purchases are going to be . And also the pricing .
Speaker #4: So again I'll look at it in 2 in 2 components on the box truck fleet . I think our initial look into next year is we're going to be buying fewer of those trucks .
Speaker #4: I would expect the box truck depreciation to peak towards the end of this year , beginning of next year , then start to trend down on the cargo vans .
Speaker #4: Whereas the the price that we're we're looking to pay for model year 26 cargo vans is going to be coming down . That's going to be dependent upon on the resale market .
Speaker #4: And that's tough to judge right now . So I'd like to think that we're peaking by the end of this year . And then it should maybe flatten out and start to come down .
Speaker #4: We are not increasing the size of that part of the fleet . So at least the the total number of units subject to additional depreciation isn't growing .
Speaker #4: Okay .
Speaker #3: Can I add there , Jason , I want to add that . The question always is do you take the hit every month .
Speaker #3: Do you take the hit when you turn the vehicle . And it's a bit of a guessing game . And so then we will routinely look at that .
Speaker #3: And then midcourse make a correction . Because it's just just it's just how things work out . So we try we go in with what we think is a reasonable rate of depreciation .
Speaker #3: But these last 18 months and it's really come clear here . The depreciation has been significantly greater . So when I look at this number I had the depreciation and the loss on sale to try to understand what's going to be the peak .
Speaker #3: And it's a little bit hard for us to forecast but not consulting Jason here . But speaking from my personal opinion , I think we're a year away from the peak on the pickups and vans , but so much of this depends on how the new vehicles get priced , because used vehicles just kind of are reflection of new vehicle pricing .
Speaker #3: And if new vehicle pricing comes down , it could affect our assumptions . At this point . And depreciation .
Speaker #5: Thank you . A little harder question is . Could you anticipate what the what the level of depreciation is going to be at the next trough ?
Speaker #5: And to put it into context and the beginning of the 2000 , actually pre-COVID , your level of depreciation on an annual basis was about $600 million .
Speaker #5: And actually during Covid , because you weren't buying more vehicles as , as , as you as many as you wanted , it actually dropped below 500 million for two years .
Speaker #5: Now we're at a run rate of basically $1.1 billion of depreciation . If you could get back to a trough of 600 , the earnings this quarter would have tripled from what you reported .
Speaker #5: That's how much of an effect this has with given this run rate of over $1 billion in depreciation at some point , it should peak .
Speaker #5: And then trough out . Do you have any idea where that trough would be dollars wise ?
Speaker #4: This is Jason , so I'll I'll take a shot at that . So from when we went into Covid to where we're at today , the fleet is at least 20,000 units larger and the trucks are costing more .
Speaker #4: So . So those are the two factors that are that are pushing us . The annual depreciation number up right . If we were ever to get to a point where we bought the same number of trucks every year , we would our maintenance CapEx number would end up becoming our depreciation number over time .
Speaker #4: And and going into Covid , I was at that time , I was quoting something 600 million . In in for , for the trucks at least not not including trailers or the box containers .
Speaker #4: We're where we should end up is going to be much closer . Hovering around the 700 to $750 million range . I would think , at a normalized number , given the size of the fleet today , what it's going to take a little bit of time to get there .
Speaker #5: Thank you . That's very helpful . Last question on a completely different topic . I've noticed on social media , you've I've seen a lot of clips concerning some of your employees talking about day to day operations and innovations and equipment design .
Speaker #5: Is that a new effort of yours , or have I just been missing it prior to this ?
Speaker #2: This is Sebastian . I think what you might be seeing a lot of is around our toy hauler , Stephen . Yeah , I mean , that's a real exciting opportunity for us .
Speaker #2: We've had a lot of really great pickup on that from really big automotive publications . And I think it's a market that we weren't serving as good as we could have before .
Speaker #2: And is just a natural extension of 80 years of being in the trailer business . So I think there's a lot of excitement around that , I think the public is starting to realize that as well .
Speaker #5: Thank you for taking my questions .
Speaker #1: Thank you . The next question comes from Stephen Ramsey with Thompson Research . Please go ahead .
Speaker #6: Good morning everyone . I wanted to ask a couple questions on growing the dealer network . Your optimistic on that effort . Can you share some of the reasons why you're optimistic and what is the timeline for gaining momentum on this effort ?
Speaker #6: As far as driving more moving transactions ?
Speaker #3: This is Joe . I'll speak to it . I think that I'm expecting to see visible numbers by May , maybe before then .
Speaker #3: It depends how well I can get the organization to perform , but always you're looking at market penetration and when I . Segment out market penetration , various markets , I continue to see areas where we're lagging our own performance .
Speaker #3: And I don't believe that the market is that different or the potential is that much different in one market or another . So let's say eliminating Manhattan and places like that , but going to more communities , Denver , Phoenix , others .
Speaker #3: I think that there is a substantial opportunity for increased penetration and dealers is our most effective way to enter that . Over the last 30 years , dealers have hovered at just under half of our truck and trailer rental revenue .
Speaker #3: Today , they're running maybe three percentage points below where they've been running . So I think we've got it out of kilter about that much now .
Speaker #3: Nothing is certain , but I have significant indicators that tell me we've neglected this and whether , you know , so I think there's I think there's a nice increase here .
Speaker #3: And also , for better or worse , we actually are a little bit over Fleeted right now , which is why Jason reports , we have a little bit lower utilization .
Speaker #3: So you see , oftentimes in the past I couldn't do this maneuver . I didn't have enough equipment to allocate . So today I have equipment I can allocate .
Speaker #3: So to me it's a big opportunity . Now of course if I can't do this then Jason and other people in the company will insist we squeeze the fleet down a little bit in order to up utilization .
Speaker #3: These are just , you know , kind of opposite forces . I believe there's significant room in market penetration . And that's what I'm driving on .
Speaker #3: And we should see results by June . I believe I'll see them sooner than that because I'll see different numbers than you see .
Speaker #3: But I believe by then you should see some results .
Speaker #6: That's color . Maybe thinking even further out than this on this effort to grow the dealer network , can you talk about the long term insights or goals as far as creating new owned U-Haul locations and the potential benefits of more u-box warehouses in these markets ?
Speaker #6: If this were to come about , is this something two years out , four years out , if if this comes to fruition ?
Speaker #3: Well , I've been steadily driving the whole company , not just me , the whole company's been steadily driving on , increasing our storage and u-box footprint quicker than our human footprint .
Speaker #3: And I think that's because to justify a , a big company owned operation , you're going to suck . You have to suck in a fair amount of revenue .
Speaker #3: And that may not be available in markets where there's plenty of u-box and you store business . So . Of the stores that we've opened in the last .
Speaker #3: I don't know , 2 or 3 years , nearly every one of them is going to do more self-storage than it does truck and trailer rental revenue .
Speaker #3: And that that would be , I think , a continuing pattern .
Speaker #6: Okay , that's that's helpful . And then you've talked about , as you described the slugfest in storage , would you say that the competitive intensity there is equal to what it has been , or is it intensifying further ?
Speaker #6: And what are you looking for to that might show this is evolving to be a bit more healthy , competitive environment than it has been in this recent period ?
Speaker #3: Well , Jason , always brings me move in , move out rental rates for our competition . They quote that and they're they're move in rental rates are massively below their their move out rates , which means they're bringing you in on kind of a little bit of a overzealous discount .
Speaker #3: And then cranking the rate up . My experience is , is that offends a lot of customers . They would rather just be told about what it's going to cost them , and then they'll figure it into their budget .
Speaker #3: So that causes our people to point of sale . To be quoting a first 3 or 4 months rental rate . That's going to be higher than what they're going to quote from the competition .
Speaker #3: And 30% would not be a big gap . I've seen 50% gaps . So this is to me is is foolish . It sets up an expectation in the customer that we can't provide the product at that , at those low rates .
Speaker #3: It's not economical for anyone . So but our competition , the big REIT's primarily are dead set on that pricing mechanism . And so we're just we're just it's just kind of being a little bit of a slugfest .
Speaker #3: And but overall we're I think relatively we're coming out well now that's a tough thing to know because everybody does their information a little bit different .
Speaker #3: But I think we're coming out well overall , and I see a lot of runway ahead of us . As I said in my prepared comments , we're focusing a little bit more on .
Speaker #3: Breadth of coverage than depth of coverage , where I think due to their management structure , a lot of our competitors are focusing more on depth of coverage than breadth , primarily because we're already in all these markets , because of truck and trailer rentals .
Speaker #3: So we have just a little different strategy . And I'm saying it's a better or worse strategy , just a little different , which is fine for me .
Speaker #3: I like a little differentiation .
Speaker #6: Okay . That's helpful . And then last quick one for me , I know your activity in moving in storage generally tied to overall economic activity and life events .
Speaker #6: But in this time period , with existing home sales being so depressed , I'm curious if you think in a recovery scenario on existing home sales , if that would be a wave that would lift the growth of one way moves and lift u-box growth , even further , maybe just the general linkage of one way moves and u-box to existing home sales .
Speaker #3: I don't think it will be enough of a boost that you'll be able to see it , no doubt there's some boost there , but the transaction volume it takes to move that is pretty significant .
Speaker #3: I think that there's been a lot of consumer confusion or uncertainty , and I think as that becomes stable , my experience has been that we see a little more one way rentals and a little bit longer one way rentals , and we're not seeing that presently .
Speaker #3: So this is a pattern I've seen three , maybe four times in my career . And it's I don't have a good way to estimate how long this will continue , but this has been a trend for a little while now .
Speaker #3: So we'll see . We saw just the opposite during Covid . We got a little longer rental and a little more percentage of one way .
Speaker #3: It was strangely that that turned out people were very eager to move . So no , I don't think that home sales are going to be a something that would be good for you to use as a tent stake to try to drive a prediction .
Speaker #6: Okay . That's helpful color . Thank you for the time .
Speaker #1: Thank you . The next question comes from Andy Liu with Wolfe Research . Please go ahead .
Speaker #7: Hey . Thank you guys . Yeah . So a lot of color around the the depreciation here . You know , I want to focus more on , you know , kind of like the cash side right .
Speaker #7: So thinking through your comments of , you know , the input costs being being hired at the new trucks in the second hand market .
Speaker #7: Not catching up to that . I just wonder , you know , on a capital allocation standpoint , as you look at it today , how does the returns there compared to like money to spend elsewhere ?
Speaker #7: For example , the storage side and the development you guys previously called out . For a 10% yield on this . So just wondering , you know , when you think about the avenues of where you could deploy capital , how to expanding the fleet versus storage , compare .
Speaker #3: I want to say one cautionary note . And that that is what is a business cycle . And the problem with not the problem , but part of what you have to look at with the truck , it's a little bit longer asset than many people think .
Speaker #3: And certainly storage is so with that , I'll let Jason speak to it .
Speaker #4: I was going to say about the same thing . So . Comparatively speaking , where costs are at , and where revenue is at today , the return on trucks has directionally gone down from from where it used to be .
Speaker #4: But it's a combined product offering for us . And there was times where when storage wasn't returning quite as well , and the trucks and trailers carried the day for us .
Speaker #4: So I don't think we're going to because of just the current cost structure for a few years , we're going to adjust the long term strategy of the company , but we do have some work to to get out of this cycle .
Speaker #7: Okay . Yeah , I totally hear you on that . On that point there . So double clicking on the sort of moving side of business , you know , you guys mentioned sort of the transaction volume side has been coming down .
Speaker #7: I'm just curious how that has kind of trended through the quarter on a year over year basis . Have things , you know , the year over year trend for , say , July to September , has that been roughly the same through through the three months , or has things been trending better or worse throughout the quarter ?
Speaker #7: I just want to get a sense of , you know , I get I get that the quarter is down , but just wondering how that trended , is it sequentially improving through the quarter , or is it about the same through the three months ?
Speaker #4: We yeah , on transactions we will have a good month and then we kind of recede a little bit and you know , I think the fourth quarter of last year , the first quarter of this year , that six month period , we were we had started to trend up in transactions within this quarter .
Speaker #4: We took a little bit of a step back . We saw a little bit more of a of that same sort of step back trend in October .
Speaker #4: So it it's been the last couple of years . It's been tough to get the transaction number to turn .
Speaker #7: And we got it . Got it . No that's that's helpful . That's helpful . And then my last question kind of shifting to the storage side , I know you guys called out last quarter that you're working through getting some tenants out .
Speaker #7: You know who who weren't paying . So I see you know , there's some impact on the occupancy here . Just want to get a sense of is that , are you guys have you guys gone through the bulk of that .
Speaker #7: And you're set up to , you backfill those bases and get occupancy up or or is there still a good amount of evictions that you guys have to do on the storage front ?
Speaker #3: Yeah , this is Joe . We're through that . And we're now in in the cycle of where I want us to be , which is now rent those rooms to paying customers .
Speaker #3: And we're we're making some gains . There . Of course , going the fall is the wrong time to execute this maneuver because overall demand isn't as strong as it is in the spring .
Speaker #3: So seeing gains right now , I think we did the right thing . Overall revenue is up . So if you measure money , which a lot of us do , the money is working out correctly .
Speaker #3: Now , it also psychologically with my manager's opened up more opportunity and I think that that's going to have a subtle but very positive effect as we come into spring .
Speaker #3: Just how the winter's always a little bit goofy , but it's always down a little bit . But sometimes not as much . So we're going to continue to drive on this .
Speaker #3: And I think what we're through it and it was the right move . And now the question just is how fast can we drive revenue ?
Speaker #7: Okay , awesome . That's super helpful . Thanks so much for taking the question .
Speaker #1: Thank you . The next question comes from Jeff Kaufman with Vertical Research Partners . Please go ahead .
Speaker #8: Thank you very much . And good morning , everybody . Number of my questions have been asked . So I'm going to just kind of go in a different direction .
Speaker #8: I know you buy most of your vehicles domestically . Ford and General Motors , but have you seen any impact to vehicle prices or vehicle costs from the tariffs that are out there ?
Speaker #3: I'll try this and . We we buy some Stellantis bands that are assembled in Mexico . We buy some General Motors products that are assembled in Mexico or , you know , final assembly .
Speaker #3: These parts , as you know better than I do , come from all over the planet . So they would be who we thought we would see .
Speaker #3: The worst impact so far , they've been picking their way through that minefield successfully . Be what I would say is , in other words , when it reflects down to us and we see the net cost , they're still not clear out of the ballpark going in .
Speaker #3: We thought we might see , you know , the GM product built in Mexico be 15 or 20% non-competitive . We're not seeing that presently .
Speaker #3: It's a you know , I don't know how the numbers are working at their end , but so far but Ford has a little advantage here .
Speaker #3: I think they just they advertise that they're they have higher domestic content and they're a little bit less influenced . But here again , some of their .
Speaker #3: Raw materials come through this foreign supply chain . And it's very complex in speaking with people . They all are dreading it . But none of them have something they can make stick with .
Speaker #3: The end user . Does that make sense ? Now this could change as time goes on . I'm sure they all hedge stuff and did a whole bunch of things , and we're kind of living on that right now .
Speaker #8: Now does this show up primarily in the cost of your vehicle purchases and CapEx , or does some of this show up in repair and maintenance costs for you ?
Speaker #3: It's going to be primarily in new vehicle costs , although , you know , parts prices are going up . That's just a fact of life .
Speaker #3: And a lot of these components , let's pick an alternator . Many of those are made non-domestic . They're sourced on domestically . And so they're going to encounter some tariff difficulties in the big number .
Speaker #3: It's not showing up yet , but everybody who's in the purchasing end of this is very wary . And constantly trying to find some way to wiggle .
Speaker #3: And hold prices a little longer . And we've put a lot of pressure on suppliers to hold prices . And again , I think a bunch of them could see this .
Speaker #3: And so they hedged their situation somehow and have kept the price increases way below these . You see numbers quoted on tariffs of 20 and 25% .
Speaker #3: We're not seeing that come through. I don't know, Jason, do you want to address it?
Speaker #4: No I haven't seen that either .
Speaker #8: All right . Well that's my question . So thank you .
Speaker #4: Jeff . Thanks for initiating coverage . Also , we appreciate that .
Speaker #1: Thank you . The next question comes from Jamie Wilson with William Management . Please go ahead .
Speaker #3: Hey , fellas . Just want to touch base on U-box a little bit . First . When does it .
Speaker #9: Come to the point in time where it has to be its own segment ? I thought it was 10% of the revenues . I think we're approaching that .
Speaker #9: But can you discuss U-box positioning ? Obviously , the revenue growth in U-box is far greater than the rest of the of the company .
Speaker #9: So what are the dynamics there that are causing U-box to have such large increases ? And are they gaining market share ? What's and and lastly , as their revenues increase , do they reach an inflection point on operating profitability ?
Speaker #2: Hi Jamie , this is .
Speaker #4: Sam Schoen . Can you repeat .
Speaker #10: The last part of your question one more time ?
Speaker #9: As revenues are gaining and growing in U-box , is there an inflection point where profitability dynamically moves forward ?
Speaker #10: Got it . I'll let Jason answer that last part , but I'll just touch on some general u-box subjects that it's good to hear from you .
Speaker #10: Thanks . Thanks for the questions . As you noted , we continue to find success in U-box . We had a very hot summer and then ended the quarter with a little bit of a whimper , but the compared to the the same period last year in all our big revenue components of U-box , we had increases on a percentage basis and and gross basis as well .
Speaker #10: Those are shipping income , storage , rent and delivery income . Those are the real drivers for U-box revenue . You know , when you when you think about U-box expenses , freight is is where you need to focus on those are under control .
Speaker #10: Assets aren't limitation right now . Plenty of containers , plenty of warehouse space , plenty of delivery equipment . You know , you mentioned some of the things that are different about U-box .
Speaker #10: A lot of the same . U-box is a hard work business , just like the rest of U-Haul , but we're still poised for it to be an exciting cornerstone of the future .
Speaker #10: Does that does that help give you some color ?
Speaker #9: Do you see us gaining market share , or are we are we having a greater percentage of the business that's overall there , or is the market for that type of moving , growing significantly as well ?
Speaker #10: No , we're gaining market share . We're we're we've got our eyes set on becoming the market leader . That's that's that's our goal .
Speaker #10: There's no doubt you talk to anybody in the competition . We're making their life a living hell . And we're gaining market share .
Speaker #10: Unquestionably .
Speaker #9: Living hell is good . And as far as the profitability inflection point .
Speaker #4: Jamie , this . Jason . So the interesting thing about about U-box is it has the profitability profile of both you move and you store .
Speaker #4: Right ? So on the moving transactions over the years , Sam has made great strides in the logistics side of the business and locking down those costs and being able to quote .
Speaker #4: So I think we're on the actual over the road . Getting boxes from one city to another through either over the road carriers or through our customers delivering the boxes for us .
Speaker #4: I think we're at a good margin level there . So then the remaining piece of the puzzle where we can really take off is getting these more of these boxes in storage and .
Speaker #4: You know , the overall occupancy in our facilities is a fraction of where we're at with the self product . So there's a big upside on that as far as profitability explosion .
Speaker #4: My rough estimate continues to be that we're typically on a quarter to quarter basis within a couple percentage points of the overall moving and storage margin .
Speaker #4: But the more boxes we feel just like , the more storage rooms we fill our margin profile is going to increase .
Speaker #9: Okay . And does the length of time that a U-box is in storage , has that changed at all over the last year or two ?
the real estate and field, people more
You can kind of get a feel for the, the Trends on this. I don't think there's an opportunity to
to sell in those areas.
And reinvest in more, densely, populated areas know. I I don't think that's
I don't think that's a good unless list list of storage question. You know people have talked about the uh the overbuilding of Self Storage over time yet. Our revenues per per foot are up nicely in this past quarter, how do you explain? They were able to do that in a market that's theoretically saturated.
Well, a great deal that has to do with how well you manage at that level at that level.
I was in a store the other day.
And were, you know, of course, we're doing trucks and storage and in walks. A customer with a Starbucks and hands it to my manager. I think. What the hell is that? So I asked her, she said well, that person's because Storage customer. She brings me a Starbucks every morning.
Well, that costs more to the story, Drew. Okay. So,
Obviously there's more going on than than uh, you know, just renting the room. They have a personal relationship. I like to say that people rent storage from other people and they rent trucks for companies.
So about 100% true but it's more true than false. So as we get a better quality manager and a manager that just simply is
it's just a better quality more. More service oriented
we're able to squeeze a little more rate out, and we do a, a decent job of
Surveying rates on a repetitive basis.
Sorting for. Where is where in the mix? Is there a rate opportunity? We
Essentially never do an across the board rate increase. It's always very specific.
To a type of storage or the size of storage room. And if you just keep at that regularly, you'll you'll kind of sort
To what is the optimum price? You can get in that market. So I'm
Overall.
proud that we're able to, we've been able to get a little bit of increases to the storage industry, has struggled with increases like
We're able to get them but they're, they're hard fought.
But I think. Okay, thank you. Tell us appreciate it.
Okay.
Thank you.
The next question comes from Stephen sell with oppenheim close. Please go ahead.
Good morning. I just have a quick question about the box trucks. Have you seen any relief in the pricing? From manufacturers yet?
The percentage increase over the last couple years has been um a little more sedate than what we've seen on the pickups in the cargo vans that that's really where the more material issue has been.
uh, we're we're seeing some relief um on those but if you were to take
The 10-year average of what inflation was on those units, pre to where we're at today.
I would say that there's still
3,000 3500 more expensive than what they would have been had. We never gone through this inflation cycle.
Uh, on the box trucks. It's a
Don't get me wrong there, there's still up, um, but, but maybe it would go from say a 4%, average, annual increase to maybe.
7 to 8.
I'll give it a slightly different answer to that question, which is
sport in General. Motors are primary suppliers that can be set with costs that are staggering as they've attempted to adjust to a political agenda that didn't match.
The realities of the marketplace so they've committed.
God knows how many billions of dollars.
And disrupted. God knows how many supply lines laid off tens of thousands of internal combustion engineers.
and,
They have been attempting to recover those losses on customers like ourselves or the retail customer.
And that's just the position. They're stuck in. They have now done about face. I think you could see that over the last 6 months.
Even Mary Barra. Now, recents this stuff.
and uh,
it was a
It's been a political agenda all along, and not a manufacturing agenda but they're stuck with. They actually build things for money.
and so they they they've had to overspend and over invest and they're looking for somebody to lay these costs out on
over. If you looked at this over a 30-year cycle, we could go to the manufacturer and say, hey you want to complete a second shift. We we can buy so many units and we can all talk, you know, reasonably that really has. They've been precluded from doing that. But they just now, I would say in the last 6 months,
Have shown a little more willingness to let’s all figure out how we, a bunch of us, can make a profit.
As they back away from these.
Unwanted and unneeded costs. So and that goes clear across the line and transportation from
pickup trucks up through Class, 8 Vehicles, every everybody's seeing the same.
Dilemma. And
Different people are in deeper, we're very lucky in that, we did not.
We did a lot of poking around and we did plenty of tests trucks but we didn't go and commit.
Significant amount of resources.
To.
Alternative means of propulsion.
And although we've been compelled to say California, you can't build a building. Unless you put an electric Chargers, no 1's going to use them, but you can't, you can't build a building
and,
The these costs are all inflationary and to the automakers. There's so much
They're just they're covered up with them but they're they're trying now and we're going to see I think they could hold prices constant for 2 or 3 years and it wouldn't hurt a damn thing. And that's they heard that from me. I made myself very clear to
them given that they moved away from Ice Vehicles. How long do you think it would take for them to Pivot back and increase Supply?
They're they're they're already there in many models and uh, they're going. Absolutely as fast as they can make it happen because they they have right now admitted internally.
Again, this was not a customer-driven agenda.
And in capitalism ultimately the customer drives the the market and the customers driving away from it on anything. That's a
Utility vehicle. I'm Passenger cars. I have no comment. I don't, I don't keep track of them, but apparently electrics are very successful there. But in
utility vehicles, something like
What? We rent their total.
Non-starter and have them and everybody's known it. It's been a dirty little secret. Like I said, but nobody wanted to raise their hand because the political repercussions are telling the truth. We're terrifying to most people
So the you know, the cats out of the bag now and I think people will speak freely about it, I won't be the only person in a transportation company who would Express these same thoughts?
Do you think that's LED them to sort of cut prices and keep utilization High?
No. I I'm doing a round of that in the middle of 1 right now, trying to, you know,
See if we can ascertain.
What's really being priced in the market. And
We've seen some.
Discounting. But, but there's always some discounting and
And we do a price check, we don't just survey the computer and see what the computer shows. They're saying they're charging me to
Actually, deal hard like a customer would like it was real money and see what we can beat them down to. So they're they're a little bit flexible like experience so far as they're still.
Higher than us, so that the consumer net, net.
In most applications will be.
Very competitive, not in all applications. Nobody can be in all applications.
And, um, year over year, I know that, um,
Fleet Maintenance was up 10 million in the quarter compared to last year operating expenses were up about.
50 million, I think.
I know that uh you had greater insurance and liability expenses and the last 2 years. Are those still at Big drivers of the increase or is that leveled off?
So, we saw the... are you talking about the six-month numbers?
Or the yeah, 6 months.
Yeah. So, so for the 6-month, you know, Personnel was up about 32 million repair maintenance 15 and liability costs 40. So yeah, those are still the, the largest components so,
those 3, everything else kind of
Uh, a much smaller scale.
Thank you. That's all I have.
Thank you.
There are no further questions at this time.
I will now turn the call back over to the management for closing remarks. Please go ahead.
well uh we look forward to uh, speaking with everyone uh for our next quarterly, earnings call that will be in February
Uh, thank you very much.
Thank you.
Ladies and gentlemen.
Thank you for.
you may now disconnect