U-Haul Q3 2026 U-Haul Holding Co Earnings Call | AllMind AI Earnings | AllMind AI
Q3 2026 U-Haul Holding Co Earnings Call
Speaker #1: Investor conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time.
Operator: Investor conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If anyone has any difficulties hearing the conference, please press star 0 for operator assistance at any time. I would now like to turn the conference call over to Sebastien Reyes. Please go ahead.
Speaker #1: call over to Sebastien Reyes. Please I would now like to turn the conference go
Speaker #1: ahead. Good morning, and thank you for joining us
Joe Shoen: Good morning, and thank you for joining us today. Welcome to the U-Haul Holding Company Q3 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 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. Forward-looking statements are inherently subject to risk and uncertainties, some of which cannot be predicted or quantified. Certain factors could cause actual results to differ materially from those projected.
Speaker #2: today. Welcome to the U-Haul Holding
Speaker #1: Company . Third quarter 2026 Investor call Before we begin , I'd like to remind everyone that the statements during this call , including , without certain of limitation , statements regarding revenue , expenses , income and growth of our business may constitute forward looking .
Speaker #1: During this call , including , without limitation , statements regarding revenue , expenses , and general growth of our business may constitute general harbor of the safe of 27 of Securities Act of the section amended , 1933 , as and section 21 of the as Exchange Act of 1934 , Securities .
Speaker #1: Forward looking statements are inherently risks and subject to uncertainties , some of which predicted cannot be amended . Certain factors could cause actual results to differ materially from those projected .
Joe Shoen: 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 31 December 2025, which is on file with the U.S. Securities and Exchange Commission. I'll now turn the call over to Joe Shoen, Chairman of U-Haul Holding Company.
Speaker #1: discussion For 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 December 31st , 2025 , which is on file with US the Securities and Exchange Commission .
Operator: Good morning, everybody. As you read in the press release, we continue to have earnings pulled down due to excessive acquisition costs of vans and pickups in model years 2023 and 2024. This has hit earnings hard, and you can see it in increased depreciation, and in originally declining gains on sale, and now losses on sale of vans and pickups exiting the fleet. To a much lesser extent, the enormous post-COVID price increases on internal combustion engine vehicles is dogging our box trucks with elevated depreciation. We had been accumulating internal combustion engine fleet due to predicted declines in availability of ICE-powered units going ahead. Now we are too heavy in fleet, and the rental market is not responding with significant transaction increases. We are working a plan to open more U-Haul dealership locations, which will put some of this excess fleet to work while earning a return.
Speaker #1: I'll over to Joe Schoen , chairman of U-Haul Holding company .
Speaker #2: Good morning everybody . As
Speaker #2: in the press release , we continue to have pulled earnings down due to excessive acquisition costs of vans and pickups and model years 23 and 24 .
Speaker #2: This has hit earnings hard and you can see it in increased depreciation and in now turn And now losses on sale of vans and pickups exiting the to a much lesser extent .
Speaker #2: The enormous post-Covid price increases on internal combustion engine vehicles is dogging box our trucks with elevated depreciation . We had been accumulating internal combustion engine to due fleet predicted declines in availability of units going ahead .
Speaker #2: powered ice Now are too heavy fleet we and the rental in market is not responding with significant . Transaction increases working . We are plan to a open more U-Haul dealership locations , which will put some of this excess fleet work while earning a return .
Operator: We will likely still be overfleeted, so we will need to increase sales of older, higher-mileage trucks over the next 12 months. As best as I can tell, we are holding our own and then some in the self-storage industry. For nearly 24 months, we have been adding units faster than we are renting them up. This results in a surplus of unrented units. We're launching some initiatives intended to improve our rate of units rented over the prior year. The proof will be in the pudding, and we'll see how that develops going into summer. We now have a significant U-Box presence at over 700 locations in North America. By that, I mean a significant warehouse and depot operation.
Speaker #2: will We be over so we will likely still need to increase sales of older , higher mileage trucks Fleeted , over the next to 12 months .
Speaker #2: As best as I can tell , we are holding our then own and some in the self storage industry for nearly 24 months we have been adding units than we are faster renting them up .
Speaker #2: This results in a surplus of unrented units . We're launching some initiatives to intended improve rate of our rented over the prior year .
Speaker #2: The proof will be in the pudding . We'll see how that develops going into summer . We now have a significant u-box presence at over 700 locations in North America .
Operator: This increases our capacity, and the absolute number will, to the extent that U-Box is self-storage (U-Box is both moving and storage, but one component of it is storage) to the extent U-Box is self-storage, this increases our capacity and absolute number of self-storage customers. We have over 200,000 U-Box containers in service and over 100,000 of them in the hands of customers. We have slowed our rate of adding U-Box warehouses as we have a workable presence in most markets. However, in DC, LA, Boston, New York City, and the Bay Area, we are still underserved. In Canada, we are still light on U-Box capacity in Vancouver Island and Edmonton. We have projects in planning or in construction in all of these markets, and I plan to carry through on these capital expenditures. We continue to heavily invest in digital tools to meet what customers expect from the industry leader.
Speaker #2: mean a significant warehouse and depot operation . This increases our capacity and the absolute number will , to the extent that By that I is self storage shoeboxes both moving and storage .
Speaker #2: But one component of its storage , to the extent U-box is self-storage . This increases our capacity and absolute number of self-storage customers .
Speaker #2: We have over 200,000 u-box containers in service and over 100,000 of them in the hands of customers . We have our slowed rate of adding u-box warehouses as we have a workable present in most markets .
Speaker #2: However , in DC , LA , Boston , New York City and the Bay Bay and the we area , still underserved . In Canada , we are still light on U-box capacity in Island and Vancouver Edmonton .
Speaker #2: We have projects in planning or in construction . In all of these markets , and I plan to through on these capital expenditures .
Speaker #2: We continue to heavily invest in digital tools to meet what customers expect from the industry leader . Most of this investment is expensed in the current period .
Operator: Most of this investment is expensed in the current period. With that, I'll turn it back to Jason.
Joe Shoen: Thanks, Joe. Yesterday, we reported Q3 losses of $37 million compared to earnings of $67 million for the same quarter last year. So that's a loss of $0.18 per non-voting share this quarter compared to earnings of $0.35 per non-voting share in Q3 of last year. Earnings before interest, taxes, and depreciation, what we're calling adjusted EBITDA at our moving and storage segment, decreased 11% to nearly $42 million for the quarter. On a percentage basis, that's about the same decrease that we saw in operating cash flows for the quarter as well. Included in our release and financial supplement is a reconciliation of adjusted EBITDA to GAAP earnings. Depreciation and losses from the disposal of rental units continue to be a significant earnings headwind.
Speaker #2: With that , I'll turn it to Jason . back
Speaker #3: Thanks , Joe . Yesterday we reported third quarter losses $37 million compared to of earnings of $67 million for the same last year .
Speaker #3: that's quarter a loss of $0.18 per non-voting share this quarter compared to earnings of $0.35 per non-voting share in the third quarter of last year .
Speaker #3: before Earnings interest , taxes and depreciation . What we're calling adjusted EBITDA at our moving and storage segment decreased 11% , or nearly $42 million for the quarter .
Speaker #3: On a percentage basis , about that's the same decrease that we saw in operating cash flows for as the quarter , well . Included in our release and supplement is a financial reconciliation of adjusted EBITDA to GAAP earnings .
Joe Shoen: During Q3 of this year, we reported a $26 million loss on the disposal of retired rental equipment compared to a $4 million gain in last year's quarter. Cargo vans that we purchased over the previous two model years that are now being sold came into the fleet with a higher cost, and the current market resale values have not been reflecting that, thus resulting in this loss. We've also increased the pace of depreciation on the remaining units to reflect that new reality. On top of this, we have depreciation from increasing the size of the box truck fleet by nearly 11,000 units compared to December of last year. Between fleet depreciation and the loss on disposal, we experienced a $75 million cost increase for this quarter compared to the same time last year, translated into non-voting share EPS. That's approximately $0.24 a share.
Speaker #3: Depreciation and losses from the disposal of rental units continue to be a earnings headwind significant during the third quarter of this year . We reported a $26 million loss on the disposal of rental equipment as compared to $4 million gain in quarter .
Speaker #3: Cargo we purchased vans that over the previous two model years that are now being sold into the fleet came higher with a cost , the current and market resale values have not been that , thus in this loss .
Speaker #3: We've also resulting pace of depreciation on the remaining units to reflect that new reality . increased the of this , On top we have from depreciation reflecting increasing the size of the box truck fleet by nearly compared to 11,000 units December of last year .
Speaker #3: Between fleet depreciation and the loss on disposal , we experienced a $75 million cost increase for this quarter compared to the same time year last .
Joe Shoen: Over three quarters of this negative variance is related to our cargo van fleet. Looking towards the future, the model year 2026 cargo van purchases that will be coming on the books this year are going to be at an average cost about 12% lower than last year's model year. If you compare them to two years ago, about 20% lower. For Q3, our equipment rental revenues results increased $8 million at just under 1% compared to the same time the year before, the majority coming from in-town portion of our business. Comparing the end of December 2025 to the same time in 2024, we added 65 new company-operated locations, and we had a net increase of 365 independent dealers. These new locations, as Joe mentioned, are expected to help us better distribute the larger fleet and increase transactions.
Speaker #3: Translated into a non-voting share . EPs . That's approximately $0.24 a share . Over three quarters of this negative variance is related to our cargo van fleet .
Speaker #3: Looking towards the future . The model year 2026 cargo van purchases that will be books coming on the this year are going to be average cost at an of about 12% , lower than last year's model year , and if you compare to the two years ago , about them 20% lower for the third quarter .
Speaker #3: Our equipment rental revenues results increased $8 million , or just under 1% , compared to the same time the year before . The majority coming in-town from portion of our business .
Speaker #3: Comparing the end of December 2025 to the same time in 2024 , we added 65 new company locations and we had a net increase operated of 365 independent dealers .
Speaker #3: These these new locations , as Joe mentioned , are expected to help us better distribute the larger fleet and increase transactions for January .
Joe Shoen: For January, our results were trending quite positive prior to the onset of the significant weather activity that hit much of the country, which certainly slowed the improvement over the last week and a half or so. Capital expenditures for new rental equipment in the first nine months of this year were $1,748 million. It's a $162 million increase compared to the same nine-month period last year. Looking at the last 12 months, so that would be the calendar year of 2025, our gross fleet spend was approximately $2,025 million. If you net out equipment sales, we got down to $1,331 million. I'm estimating close to $670 million of that growth spend was growth-related. Initial estimates for next fiscal year are showing a decrease in new truck purchases somewhere north of $500 million. Storage revenues were up $18 million or 8% for the quarter.
Speaker #3: Our results were trending quite positive prior to the onset of the significant weather activity that hit much of the was certainly slowed . The over the improvement last week and a half or so capital expenditures for new rental equipment in the first nine months of this year were 1,748,000,000 .
Speaker #3: It's $162 million increase compared to the nine months same nine month period last year . Looking at the last 12 months . So that would be the calendar year of 2025 .
Speaker #3: gross Our fleet spend was approximately 2,025,000,000 . If you net out the equipment sales , we got down to 1,331,000,000 . estimating close to 670 million of that growth of that gross spend was growth I'm .
Speaker #3: estimates for next fiscal year Initial showing a are decrease in new truck purchases somewhere north of $500 million . Storage revenues were or up 18 million , 8% , for the quarter .
Joe Shoen: Average revenue per foot continued to improve across the entire portfolio by just under 7%, while the same store revenue per occupied foot was up 5%, reflecting the cumulative effects of our rate increase activity. Our strategy of straightforward pricing with the customer and avoiding the large introductory discounts continues. Our same store occupancy decreased 490 basis points to just over 87%. I mentioned in our last earnings call that in July, we took on an effort system-wide to increase the number of available units at existing facilities by focusing on delinquent units. This effort did not affect revenue because we don't record storage revenue until we collect it, but it has had an effect on our reported occupancy level. So of that almost 5% decrease in same store occupancy, close to 4% of that was related to the removal of delinquent rooms.
Speaker #3: revenue per foot continued to improve across the entire portfolio by just under 7% , while the same store revenue per occupied foot was up 5% , reflecting the cumulative effects of our rate increase activity .
Speaker #3: Our strategy of straightforward pricing with the customer and avoiding the large introductory discounts continues . Our same store occupancy decreased 490 basis points to just over 87% , and mentioned in our last earnings call that in July , we took on an effort system wide to increase the number of available units existing at facilities by focusing on delinquent units .
Speaker #3: This effort did not revenue because we affect storage record revenue don't until we collect it , but it has had an effect on our reported occupancy So levels .
Speaker #3: of that , almost 5% decrease in same store occupancy , close to 4% of that was related to the removal of delinquent rooms .
Joe Shoen: Net tenant move-ins year-over-year, so comparing end of December of this year versus last year, while slower than in recent years, has picked up compared to where we were last year adjusted for the delinquent units. During the first nine months of fiscal 2026, we invested $770 million in real estate acquisitions along with the development of new self-storage and U-Box warehouse space. That's a $444 million decrease over the first nine months of fiscal 2025. During Q3, we added 16 new locations with storage. Translates to about 1.5 million new net rentable square feet. Our development pipeline now is down to active development: 106 projects that should result in somewhere around 5.7 million new net rentable square feet. Moving into storage operating expenses, we're up $66 million for Q3.
Speaker #3: Net tenant move ins year over year . So comparing end of December this year versus last year , while slower than in recent years , has picked up compared to where we were last year .
Speaker #3: Adjusted for the delinquent units during the 2026 , we invested nine months of fiscal first $770 million in real estate acquisitions , along with the development of new self-storage than U-box warehouse space .
Speaker #3: That's a $444 million decrease over the first nine months of fiscal 2025 . During the third quarter , we added 16 new locations with storage translates to about 1.5 million new net rentable square feet .
Speaker #3: Our development pipeline now is down to active development is down to 106 projects that result should in somewhere around 5.7 million net rentable square feet .
Joe Shoen: As a percent of revenue, we certainly took a step back from the progress that we made last quarter. First, personnel costs were up $16 million, and fleet maintenance and repair were up $13 million. But really, the unusual increase and the largest component that we had was related to our self-insurance liability costs, and they were up $38 million, with the majority of that being in the form of reserve strengthening. We've made progress on this front, increasing our liability by nearly $79 million since March 2025. In December, our property and casualty insurance company paid U-Haul Holding Company, its parent, a $100 million dividend as we're taking steps to reallocate capital amongst some of our subsidiaries. This $100 million is now available for general U-Haul corporate use.
Speaker #3: Moving into storage . Operating expenses were up $66 million for the , as a percent of revenue . We certainly took a step back from the we progress that made last quarter .
Speaker #3: First , third quarter personnel costs were up $16 million and fleet maintenance and repair up $13 million . But really , the the unusual largest was component increase in the that we self-insurance liability costs .
Speaker #3: And they were up $38 million . With the that being in the form of reserve strengthening . We've made progress on this front , increasing our liability by nearly $79 million since March of 2025 .
Speaker #3: In December , our property and casualty company insurance paid U-Haul holding company as parent , $100 million dividend . As we're taking steps to reallocate capital amongst some of our subsidiaries , this available for $100 million is now general U-Haul corporate use .
Joe Shoen: As of December 2025, cash along with availability from existing loan facilities at our moving and storage segment totaled $1,475 million. I'd like to remind everyone that we have a supplemental financial information exhibit that's available on our homepage, investors.uhaul.com, under Investor Kit. With that, I'd like to hand the call back to Jenny as we have Joe Shoen, Sam Shoen, and myself here to answer questions.
Speaker #3: As of December 2025 , cash along with availability from existing loan facilities at our moving and storage segment , totaled 1,475,000,000 . I'd like to remind everyone that we have a supplemental financial information exhibit that's available on our home page .
Speaker #3: Investors under investor Kit . With that , I would like to hand the call back to Jenny , as we have Joe Sam Schoen and myself here to answer questions .
Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. If you have a question, please press the star followed by the 1 on your touch-tone phone. Should you wish to cancel your request, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star 1 should you wish to ask a question. Your first question is from Stephen Ralston from Zacks. Your line is now open.
Speaker #4: Thank you , ladies and gentlemen . We will now begin the question and answer session . Could you have a question please press star followed by the one on your touchtone phone .
Speaker #4: Should you wish to cancel your request , please press the star followed by the two . If you are using a speakerphone , please lift the handset before pressing any case .
Speaker #4: Once again , that is star one . Should you wish to ask a question . Your first question is from Steven Ralston from Zacks .
Stephen Ralston: Good morning.
Joe Shoen: Morning.
Stephen Ralston: Good morning. Taking into account that seasonally this is the second weakest quarter in your year, there seem to be some pressures in the one-way market in the self-moving equipment area and also in the U-Box program. Could you discuss that? And also, does that indicate that the U-Box market sort of tracks the one-way market, one-way rental market?
Speaker #4: line is Your now open .
Speaker #5: morning Good .
Speaker #3: Good morning .
Speaker #2: Good morning .
Speaker #5: into this , is the seasonally Taking second weakest account that quarter in your year , there seem to be some pressures in the one way market in the Self-moving equipment area .
Speaker #5: And also in the U-box program . Could you discuss that ? And also , does that indicate there's some sort of that the markets of tracks ?
Joe Shoen: I'll start on that. I mentioned this last conference call. What we've seen over decades is when consumers get anxious, they shorten the distance of a transaction. So instead of relocating to Denver, they go to a suburb of their existing town. They still move for a variety of reasons, which is basic underlying demand, but they move shorter distances. And sometimes that turns a one-way transaction into a local transaction. So U-Box, and I'll let Sam elaborate on this, U-Box, we've had our greatest success with long-distance transactions. So to the extent that it tracks U-Haul, it will kind of track it in U-Box will track it, but maybe a little more exaggerated as a percentage of business.
Speaker #5: The market U-box one way , one way rental market ?
Speaker #2: I'll start on that . As I mentioned , this last conference call , but we've seen over decades is when consumers get anxious , they shorten the distance of a transaction .
Speaker #2: So instead of moving relocating Denver , they go to a of their existing . They still move variety of reasons , which is demand .
Operator: Your line is now open.
Speaker #2: underlying But basic , they've move distances . And sometimes turns a transaction into a local transaction . So there's . So u-box and I'll let Sam elaborate on this .
Speaker #2: underlying But basic , they've move distances . And sometimes turns a transaction into a local transaction . So there's . So u-box and I'll let Sam elaborate on one way U-box .
Steven Ralston: Good morning.
Good morning.
Good morning morning.
Samuel Shoen: Morning.
Joe Shoen: Good morning.
Hum.
Steven Ralston: Taking into account that seasonally, this is the second weakest quarter in your year, there seem to be some pressures in the one-way market, in the self-moving equipment area, and also in the U-Box program. Could you discuss that? And also, does that indicate there is some sort of that the U-Box market sort of tracks the one-way market, one-way rental market?
Taking into account that seasonally this is the second weakest quarter.
In your year.
They always seem to be some pressures in the one way market.
Speaker #2: We've had our shorter greatest success with long distance transactions . So extent to the tracks that it U-Haul , it will kind of track it in will track it , but maybe a little more exaggerated as a percentage of business .
In the self moving equipment area and also in the U box program.
Jason Berg: Right. Yeah, Stephen, that's a great question. I think this is getting to kind of what you're asking. U-Box operates almost primarily in what U-Move considers the long zones. So for rental trucks, what might be a 20% of our one-way business in the long zones for U-Box might be 80%. And so I think the question you asked was, does U-Box track the one-way moving market? Certainly, in that way, it does. And then, of course, as we have distribution as we're using rate to control distribution, now we're pricing U-Haul trucks in a certain way, and our customers are seeing that and getting to incorporate that into their choice. So I think the short answer to your question is yes.
Could you discuss that and also it is does that indicate there's some sort of that.
Speaker #2: Right ?
Speaker #3: Yeah . that's a great Stephen , I think this is getting to kind of what you're asking . U-box operates in almost primarily in you move considers the what long zones .
The blue box markets, what attracts the one way market.
Speaker #3: question . U-box a 20% of our one way business in the long zones for might U-box be 80% . And so I think the question you asked was , does U-box track the one way moving market ?
One way rental market.
I'll start on that.
Joe Shoen: I'll start on that. I mentioned this last conference call. What we've seen over decades is when consumers get anxious, they shorten the distance of a transaction. So instead of moving, relocating to Denver, they go to a suburb of their existing town. They still move for a variety of reasons, which is basic underlying demand, but they move shorter distances, and sometimes that turns a one-way transaction into a local transaction. So U-Box, and I'll let Sam elaborate on this. U-Box, we've had our greatest success with long-distance transactions. So to the extent that it tracks U-Haul, it will kind of track it in. U-Box will track it, but maybe a little more exaggerated as a percentage of business.
As I mentioned this last conference call what we've seen.
Speaker #3: So for trucks rental , what might
Decades is when consumers.
Get anxious they shorten.
The distance of the transaction so instead of moving.
Relocating to Denver, they go to a suburb of their existing tab.
Speaker #3: Certainly in that way it does . And then , of course , as we have distribution , you know , as we're we're using rate to control distribution .
They still move for a variety of reasons, which is basic underlying demand, but they've moved shorter distances and sometimes that turns a one way transaction into.
Speaker #3: Now we're pricing U-Haul trucks a certain in way and a competitive . And , and our customers are seeing that . And getting to that incorporate their into choice .
Our local transaction so theirs.
Okay.
So.
U box with Sam elaborate on the shoebox.
Stephen Ralston: Thank you. You've discussed the depreciation line a great deal. And I think I'm missing something because I just could you please explain it? Depreciation is up dramatically. But sequentially, from Q2 to Q3, depreciation actually went down. What's happening on an accounting basis on that?
Speaker #3: So I think the short your answer to question is yes
Had our greatest success with long distance transactions, so to the extent that it tracks U haul.
Speaker #5: Thank . you . You've discussed the depreciation line a great deal . And I think I'm missing something because just could you please explain it ?
It will kind of track it in U box will track up but maybe a little more.
Exaggerated as a percentage of business right.
Speaker #5: Depreciation . You is up know , I dramatically . But sequentially from the second fiscal third fiscal quarter to the quarter , depreciation actually went down .
Samuel Shoen: Right. Yeah, Steven, that's a great question. I think this is getting to kind of what you're asking. U-Box operates almost primarily in what U-Move considers the long zones. So for rental trucks, what might be 20% of our one-way business in the long zones, for U-Box might be 80%. And so I think the question you asked was, does U-Box track the one-way moving market? Certainly, in that way, it does. And then, of course, as we have distribution, you know, as we're using rate to control distribution, now we're pricing U-Haul trucks in a certain way, and our customers are seeing that and getting to incorporate that into their choice. So I think the short answer to your question is yes.
Steve Thats a great question I think this is getting to kind of what you're asking.
<unk> operates in.
Jason Berg: So this is Jason. A couple of things are going on. First, the depreciation of the box truck fleet, it's a dynamic depreciation where every time a truck passes its one-year anniversary, the depreciation rate steps down on it, right? So the first year that we buy a box truck, we charge off 16% of the cost. The second year, it's 13%. And that keeps going down. So if we don't do anything, the depreciation on the box truck fleet will gradually just continue to step down. The second part of that is on our pickup and cargo van fleet, which is a, it's a smaller fleet. We hold.
Almost primarily in what you move considers the long zones.
Speaker #5: What what's happening an on accounting basis on that .
Speaker #3: So this Jason a couple of things going on . First . The depreciation of the box truck fleet is a dynamic depreciation where every every time a truck passes , it's one year anniversary .
So for rental trucks what might be.
20%.
Of our one way business in the long zones for U box might be 80% and so I think the question. You asked was does your box traffic one way moving market certainly in that way. It does and then of course as we have distribution.
Speaker #3: The depreciation rate steps down on it . Right . So our first year that we the buy a box truck , we charge off 16% of the cost .
We're using rates of controlled distribution now where pricing.
Speaker #3: The second year it's 13% . And that keeps going down . So if we don't do anything the depreciation on the box truck fleet will will gradually just continue to step down .
U haul trucks in a certain way and a competitor.
Our customers are seeing that in getting to incorporate that into their choice. So I think the short answer to your question is yes.
Speaker #3: The second part of that on our pickup is and cargo van fleet , which is . A it's a smaller fleet . We hold .
Stephen Ralston: It's a live asset. It's a shorter live asset, right?
Jason Berg: Yeah, exactly. We hold it a shorter period. And those depreciation rates, we're adjusting from quarter to quarter based upon what we see in the resale market. And we've essentially almost finished selling through the model year 2023 units. Now we're onto the 2024. And so that depreciation number is getting adjusted from quarter to quarter.
Thank you.
Steven Ralston: Thank you. You've discussed the depreciation line a great deal, and I think I'm missing something because I just... Could you please explain it? Depreciation, you know, is up dramatically, but sequentially, from Q2 to Q3, depreciation actually went down. What's happening on an accounting basis on that?
No.
Discuss the depreciation line, a great deal and I think I'm missing something because I just could you. Please explain it.
Speaker #5: It's a shorter asset , right ?
Speaker #3: Yeah . Exactly . We hold it a shorter period those . And depreciation rates were adjusting from quarter to quarter based upon market .
Depreciation.
It is.
Up dramatically, but sequentially from the second fiscal quarter to the third fiscal quarter depreciation actually went down.
Speaker #3: in the resale And as we've we've essentially almost finished selling through the model year 23 units . Now we're under the 24 . And so we're that is getting adjusted from from depreciation number quarter to quarter .
Whats happening on an accounting basis on that.
Stephen Ralston: All right. Yes. Thank you for that explanation and for taking my questions.
So this Jason a couple of things going on first.
Jason Berg: So, this is Jason. A couple of things are going on. First, the depreciation of the box truck fleet is, it's a dynamic depreciation, where every time a truck passes its one-year anniversary, the depreciation rate steps down on it, right? So, the first year that we buy a box truck, we charge off 16% of the cost, the second year, it's 13%, and that keeps going down. So if we don't do anything, the depreciation on the box truck fleet will gradually just continue to step down. The second part of that is on our pickup and cargo van fleet, which is a smaller fleet. We hold-
Joe Shoen: You're welcome.
The depreciation of the box truck fleet.
Speaker #5: All right . Yes thank you for that explanation and taking my questions for .
It's a dynamic.
Operator: Thank you. Your next question is from Steven Ramsey from Thompson Research Group. Your line is now open.
Depreciation where every every time a truck passes.
Speaker #3: welcome You're .
The one year anniversary the depreciation rate steps down on it right. So are the first year that we buy a box truck recharge off 16% of the cost the second year of 13%.
Speaker #4: Thank you . Your next question is from Steven Ramsey from Thompson Research Group . Your line is open now .
Steven Ramsey: Hi. Good morning, everyone. Maybe to start with, I wanted to think about from the high level for your business. You've continued to invest in growth in all areas of the business in a time of subdued activity. If you think about moving competitors against you in the traditional moving and U-Box space, have you seen capacity reductions from peers? Or another angle maybe is how you're expanding in the dealer space to position you to perform well now and perform much better on the other side of this?
Speaker #6: Morning Hi . , everyone . Maybe to start with , wanted to think about from the high level for your You've continued to invest in growth in business .
That keeps going down so if we don't do anything that.
The depreciation on the box truck fleet.
We will gradually just continue to step down.
Speaker #6: business the in a time of activity . subdued If about moving you think competitors against you in traditional the moving u-box and space , have you seen reductions from capacity peers or another angle maybe .
The second part of that is on our pickup in cargoes and fleet, which is.
Okay.
Hey.
It's a smaller fleet, we hold live that.
Steven Ralston: It's a live asset. It's a shorter live asset, right?
Sure there are lots of assets.
Yes, exactly we hold at a shorter period to end.
Jason Berg: Yeah, exactly. We hold it a shorter period, and those depreciation rates, we're adjusting from quarter to quarter based upon what we see in the resale market. And as we've essentially almost finished selling through the model year 2023 units. Now we're onto the 2024, and so we're... That depreciation number is getting adjusted from quarter to quarter.
Speaker #6: Is how you're expanding in the dealer space to position you to now and perform better on the other side of this much . ?
And those depreciation rates were adjusting from quarter to quarter based upon what we see in the resale market.
Joe Shoen: I'll answer that. Yes, on both moving fleet and locations, the numbers aren't hard. I can't give you a hard number of what, let's say, how many outlets Penske and Budget has. But we have a bunch of other indicators we get from various industry sources that causes us to be fairly confident they're both reducing fleet and reducing outlets. So should we see an upturn, or should we get another way to put it, should we do a better job of understanding and satisfying customer needs, we'll be in a position to fill that demand. And that's the way I look at it a lot more in where have we failed to appreciate what our customer needs? And if we will find that failure and remedy it, the customer will reward us with more transactions, and we'll be in a better position. We'll have more outlets.
And as we've we've essentially almost finished selling through the model year 'twenty three units now we're onto the 24 and so where.
Speaker #2: that Answer yes . On both moving fleet locations . The numbers aren't and hard . I can't give you a hard number of how many can secure has , budget but we have a bunch of other indicators we've got from various industry that sources causes to us be fairly confident .
That depreciation number is getting adjusted from from quarter to quarter.
Alright, yes, thank you for that explanation.
Steven Ralston: All right. Yes. Thank you for that explanation and, for taking my questions.
And for taking my questions.
Youre welcome.
Jason Berg: You're welcome.
Speaker #2: They're both fleet and reducing reducing outlets . So that should we see an upturn or get a should we . Another way to put it , should we do a better job of understanding and satisfying customer needs , will be in a position fill that that's the demand .
Okay.
Okay.
Operator: Thank you. Your next question is from Steven Ramsey, from Thompson Research Group. Your line is now open.
Thank you. Your next question is from Steven Ramsey from Thompson Research Group. Your line is now open.
Hi, good morning, everyone maybe.
Steven Ramsey: Hi, good morning, everyone. Maybe to start with, wanted to think about from the high level for your business, you've continued to invest in growth in all areas of the business in a time of subdued activity. If you think about moving competitors against you in the traditional moving and U-Box space, have you seen capacity reductions from peers? Or another angle maybe is how you're expanding in the dealer space, to position you to perform well now and perform much better on the other side of this?
Maybe to start with wanted to think about from the high level for your business you've continued to invest in growth in all areas of the business in.
Speaker #2: to And way I look it . at in more we failed to appreciate what our customer needs and if we will find that failure and remedy it .
In a time of subdued activity. If you think about moving competitors against you in the traditional moving in new box space have you seen capacity reductions from peers or another angle, maybe is how you're expanding in the dealer.
Joe Shoen: Convenience is kind of part of our overall strategy. So we're far and away. Just for talking points, let's say Budget has 3,000 outlets and Penske has 3,500, but we're sitting with 24,000 and change. So as far as customer accessibility, we dominate. And that's part of our strategy. It's a judgment how far to push that. Frankly, it's not an algorithm. Maybe there is, but it isn't one that we have a math problem that solves that algorithm. So one other thing that you don't see, and Jason doesn't, I don't think, really talked about is inside our fleet isn't homogenous. It isn't one number. So when he says we have 100 box trucks, well, the size of those and the age matters when you're trying to manage the whole fleet.
Speaker #2: The customer will reward us with more be in a better transactions and we'll position . We'll more outlets have and convenience is kind of part of our overall strategy .
Space.
Speaker #2: So we're we're far and away just for talking points . Let's say budget 3000 outlets and has Penske has 3500 . But we're with 24,000 in change .
Position you to perform well now and perform much better on the other side of this.
I'll answer that yes on both moving fleet and locations of the numbers arent hard I can't give you a.
Joe Shoen: I'll answer that. Yes, on both moving fleet and locations. The numbers aren't hard. I can't give you a hard number, but let's say, how many outlets Penske or Budget has. But we have a bunch of other indicators we, you know, get from various industry sources that causes us to be fairly confident they're both reducing fleet and reducing outlets. So that should we see an upturn or should we get. Another way to put it, should we do a better job of understanding and satisfying customer needs, we'll be in a position to fill that demand, and that's the way I look at it a lot more in where have we failed to appreciate what our customer needs? And if we will find that failure and remedy it, the customer will reward us with more transactions, and we'll be in a better position.
Speaker #2: So as far as customer accessibility , it we dominate . And that's part of our just strategy . It's it's a judgment how far to push that .
Hard number.
How many outlets <unk> budget has been.
We have a bunch of other indicators.
From various industry sources.
It causes us to.
Speaker #2: it's Frankly not an algorithm . Maybe maybe there is . it isn't one that we have a map problem that algorithm solves that .
Be fairly confident they are both reducing fleet and reducing outlets.
So should we see an upturn should we get a.
Speaker #2: So one other thing that you don't see , and Jason hasn't I don't think it really about is talked inside our our fleet isn't homogenous .
Okay.
Another way should we do a better job understanding and satisfying customer needs.
We will be in a position to fill that demand, but thats the way I look at it a lot more in.
Speaker #2: It isn't one number . So when he says have 100 x box trucks , well , we the size of those in the age when you're trying to manage the whole fleet .
Where we failed.
Joe Shoen: So we have been playing catch-up to massive disruptions in the supply chain caused by both COVID and the government's insistence on electrification. Curing those takes a while. You can cure it in the pickup and van fleet maybe in 24 months because you rotate that fleet. In our box truck fleet, it's at least an eight-year opportunity. So sometimes we're buying a little more trucks than we need because we need a certain size truck, or that truck is now available and it wasn't available before. So there's a bunch of adjustments inside of the big number. And if you went back to, let's say, 2016, we had it at that point the best I've ever had it in my life. We had tuned that pretty good. And that falls through as profitability. So as we get this fleet rebalanced and I wish I could tell you a date.
To appreciate what our customer needs.
If we will.
Find that failure remedy that the customer will reward us with more transactions that will be in a better position.
Speaker #2: So we have been catch up playing matters massive disruptions in the to supply chain caused by both and the government's on insistence electrification .
Joe Shoen: We'll have more outlets, and convenience is kind of part of our overall strategy. So we're far and away. Just for talking points, let's say Budget has 3,000 outlets and Penske has 3,500, but we're sitting with 24,000 and change. So as far as customer accessibility, it just we dominate. And that's part of our strategy. It's a judgment how far to push that. Frankly, it's not an algorithm. Maybe there is, but it isn't one that we have a math problem that solves that algorithm. So one other thing that you don't see, and Jason, this I don't think really talked about, is inside our fleet isn't homogeneous. It isn't one number.
More outlets.
Convenience is kind of part of our overall strategy so were.
We're far and away.
Just for talking points, let's say budget is.
Speaker #2: Curing those while . You takes a can cure the pickup it in and van fleet . Maybe in 24 months because you rotate fleet and our box truck fleet least an eight year .
<unk> 3000 outlets Penske F 3500.
We're sitting with 24000 and change.
As far as.
Customer accessibility.
Speaker #2: Opportunity . So , it's at sometimes we're little more trucks a we need a certain size or truck because truck is available . And it now wasn't available before .
Yes.
Eliminate and that's.
That's part of our strategy.
It's a judgment how far to push that.
Frankly, it's not.
Speaker #2: there's So a bunch of adjustments inside of the big number . And went back to , let's say , 2016 , we had it at that point , the best I've ever had in life .
The algorithm I, maybe maybe there isn't it isn't one that we have.
Our problem was solves that al.
Yes.
So.
One other thing that you don't see adjacent businesses I don't think it really.
Speaker #2: We had my tuned that pretty good . And that falls through as profitability . So we get this fleet and I wish tell you rebalanced a date .
<unk> talked about is inside our.
Joe Shoen: Of course, I'm trying to give myself a date as to when that will be back in balance. I don't know. You've heard me bellyache about the administration and the drive towards electrification. You see, that really caused the manufacturers to do two things. One, they increased the price massively. I'm talking 30% and 50% price increases. And two, they allocated vehicles. We couldn't get the model we want and the quantity we want. We had to take what their supply chain was able to produce. And this caused disruption in the age and size of our trucks. And we're working very hard to remedy that. And you see this year, the year we're just kind of finishing, we bought very arguably a little more vehicles than is reasonable. But if you get into the details, you would see we're attempting to get this balance back out.
Our fleet isn't homogenous it isn't one number.
Joe Shoen: So when he says we have 100 next box trucks, well, the size of those and the age matters when you're trying to manage the whole fleet. So we have been playing catch up to massive disruptions in the supply chain caused by both COVID and the government's insistence on electrification. Curing those takes a while. You can cure it in the pickup advance fleet, maybe in 24 months because you rotate that fleet. In our box truck fleet, it's at least an 8-year opportunity. So sometimes we're buying a little more trucks than we need because we need a certain size truck, or that truck is now available, and it wasn't available before. So there's a bunch of adjustments inside of the big number.
Speaker #2: I could Of trying to get my own self a date as to when that will be back in balance . I don't know .
So when he says we have.
100, and X box trucks.
The size of those of the H matters, when you're trying to manage the whole fleet.
Speaker #2: We've had you've me bellyache the administration and the drive towards electrification . You that really caused the see do two things . manufacturers to about increased the massively .
We have been playing catch up.
Two massive disruptions in the supply chain caused by both Covid and the government's insistence.
On electrification.
Speaker #2: I'm talking 30 and 50% price increases , and two , allocated vehicles . We couldn't get the model we want and the quantity we want .
Securing those.
Takes a while you can curate and the pickup advance lead maybe in 24 months because you rotate Duffy.
Speaker #2: We take what had to chain their supply was able heard And produce . caused price disruption in and size of our trucks . And we're working very hard to remedy that .
Our box truck fleet.
It's at least an eight year opportunity so sometimes we are buying.
A little more trucks than we need because we need a certain size truck or.
Speaker #2: And you see , this year , the year we're just kind of finishing , we bought arguably very a little more vehicles than is But reasonable .
That truck is now available and it wasn't available before so there's a.
A bunch of <unk>.
Joe Shoen: So 2, 3, and 4 years from now, it's the right mix and age of vehicles to serve the market. So we're very aware of it. But it's all judgment. It's not absolutely guaranteed. I think that I've been elated because the administration has done everything I could imagine to put the kibosh on the electrification. So you and I'm sure all your peers have seen what our good friends in the manufacturing business, Mary Barra announced, I think, $6 billion or $5 billion write-off. Jim Farley announced $19.5 billion write-off. So that gives you some idea of the disruption at their level. And that disruption kind of is like a ripple in a pond. It carries through to people like me or to car dealers.
Adjustments inside of the big number.
Speaker #2: if you get into the you would see we're details , the age this attempting back out . three and four years from balanced now So two , , it's the right age of mix in vehicles to serve the So we're very of it , but aware it's all it's all It's judgment .
Joe Shoen: And if you went back to, let's say, 2016, we had it at that point, the best I've ever had it in my life. We had tuned that pretty good, and that falls through as profitability. So as we get this fleet rebalanced, and I wish I could tell you a date, which I'm trying to give my own self a date as to when that will be back in balance. I don't know. We've had, you've heard me bellyache about the administration and the drive towards electrification. You see, that really caused the manufacturers to do two things. One, they increased the price massively. I'm talking 30% and 50% price increases. And two, they allocated vehicles. We couldn't get the model we want and the, and the quantity we want.
And if you went back to let's say 2016.
We had it at that point, the best I've ever had in my life.
Tune that pretty good.
<unk> profitability so.
As we get this fleet rebalanced.
I wish I could tell you a date.
Speaker #2: not absolute guaranteed . I think that I've been elated because the administration has done everything I could the kibosh on the electrification . So you and I'm sure all your peers have .
Im trying to get miles sulfur date.
As to when that will be.
Back in balance I don't know we've had you've heard me bellyache about.
The administration of the drive towards electrification, you'll see that really caused the manufacturers to do two things.
The increase the price massively I'm talking.
Speaker #2: good Our friends in the imagine to put market . seen manufacturing are business what I think 6 billion or 5 billion . Write off announced , .
30% to 50% price increases and to the allocated vehicles, we couldnt get the model. We wanted the quantity we want we had to take.
Speaker #2: Jim Farley announced 19.5 billion write off gives you some idea of the disruption at their level . And that of is disruption kind like a ripple in a pond .
Joe Shoen: We had to take what their supply chain was able to produce, and this caused disruption in the age and size of our trucks, and we're working very hard to remedy that. You see this year, the year we're just kind of finishing, we bought very arguably a little more vehicles than is reasonable. But if you get into the details, you would see we're attempting to get this balance back out. So two, three, and four years from now, it's the right mix and age of vehicles to serve the market. So we're very aware of it, but it's all judgment. It's not absolutely guaranteed. I think that I've been elated because the administration has done everything I could imagine to put the kibosh on the electrification.
What their supply chain was able to produce in this.
Joe Shoen: If you have any car dealer clients, you'll see that they're not getting the exact mix of vehicles that they would wish they had. But this will balance out. The car makers are smart people. And once they shed themselves of this electrification - I don't know what it is, dysphoria. I'm not sure the right name for it - but as they get out of that, they're going to deliver the mix of vehicles that customers want. And customers will respond. So if that kind of addresses your question, it may be too much information. I don't know.
Cause disruption.
Speaker #2: It carries through to people like me or to car dealers . If have any car dealer clients , you that they're they're not getting the exact mix of vehicles that that they wish they they've had .
The age and size of our trucks and we're working very hard to remedy that and you'll see this year.
We're just kind of finishing.
But very arguably a little more vehicles than is reasonable, but if you get into the details you would see we're attempting to get this balance back out so two or three or four years from now.
Speaker #2: But this will balance out the car makers are smart people . And once they shed themselves of this electrification , I don't know what it is .
Speaker #2: Dysphoria . I'm not name for it , but sure the right out of that as they get going to deliver the mix of , they're That customers want vehicles .
It's the right mix and age of vehicles too.
Well served market so.
Hello.
We're very aware of it but it's all it's all it's all judgment it is not.
Speaker #2: and customers respond will . So . that kind of address question , it may be too much don't know information . I .
Steven Ramsey: No, that's helpful perspective. Appreciate that. What if to think about the expense management side of things? I know it's been a focus for you. Do you think this needs to be a more intensified effort over the next 6 to 12 months, or would you say the structure is actually in a good place, but it's more waiting on volume to come back?
Absolute guarantee you I think that.
I've been related because the administration has.
Done everything I can imagine to put the Thai Bosch.
Speaker #6: No . That's helpful perspective . Appreciate that . Wanted to think about the expense management side of things . I know it's been a focus for you .
On the electrification.
Joe Shoen: So you and I'm sure all your peers have seen what, our good friends in the manufacturing business, Mary Barra announced, I think, $6 billion or $5 billion write-off. Jim Farley announced $19.5 billion write-off. Well, that gives you some idea of the disruption at their level, and that disruption kind of is like a ripple in a pond that carries through to people like me or to car dealers. If you have any car dealer clients, you'll see that they're, they're not getting the exact mix of vehicles that they, that they would wish they had. But this will balance out.
I'm sure all your peers.
Have seen what.
Speaker #6: think this needs to be Do you intensified a more effort over the next 6 to 12 months ? Or would you say the structure is actually in a good place , but it's waiting on volume to come back ?
Our good friends in the manufacturing business.
Alright.
Joe Shoen: I've been pounding through on – we run on a system of budgets like a lot of people. So I've been pounding through budgets, trying to get the correct response out of the various parts of the corporation. And I think I'll see some results in the present calendar year and a little bit more of the next year. Repair hasn't been too bad. It's a lot of money. It's somewhere approaching $800 million on an annual basis. But it's coming in somewhere, as an enormous – we calculate all repair by model, by year, by cents per mile. We have a pretty good ability to forecast that. So repair, we've got halfway under control. Personnel is kind of a – we're stuck in a vise on that as I think many, many people or organizations are, which is cost of living for our workforce is rising at a pretty good clip.
Mary Barra announced I think 6 billion or 5 billion write off.
Jim Farley announced 19 5 billion write off.
Speaker #2: I've been pounding through on we run on a system of budgets like a lot of people , been pounding through budgets , trying to get correct response out of the various parts of the corporation , and I think I'll see some results in present the year .
And that gives you some idea of the disruption at their level and that disruption kind of like a ripple upon that carries through to people like me or to car dealers. If you have any car dealer clients youll see that there.
They're not getting the exact mix of vehicles that they've got the Wuxi ahead.
Speaker #2: And calendar a the little bit more next year hasn't been lot of bad . It's a It's . Repair too approaching $800 million in annual basis , but it's somewhere in a coming in normative .
But this will balance out the carmakers are smart people and once the shed themselves of this.
Joe Shoen: The carmakers are smart people, and once they shed themselves of this electrification, I don't know what it is, dysphoria, I'm not sure of the right name for it, but as they get out of that, they're going to deliver the mix of vehicles that customers want, and customers will respond. So if that kind of addresses your question, it may be too much information. I don't know.
Electrification.
Although it is just for you I am not sure the right name for it but as they get out of that.
They're going to deliver the mix of vehicles that customers want our customers will respond.
Speaker #2: We calculate all repair by cents model , by year , by per mile . We good ability to that forecast . So repair we've got have a pretty control under .
So.
If that kind of addresses your question it may be too much information Idaho.
Speaker #2: Personnel is kind of a halfway vise on that as I Many , many people think . organizations are are which is cost of workforce for our is rising at a pretty good clip .
No. That's helpful perspective appreciate that.
Steven Ramsey: No, that's helpful perspective. Appreciate that. Wanted to think about the expense management side of things. I know it's been a focus for you. Do you think this needs to be a more intensified effort over the next six to 12 months, or would you say the structure is actually in a good place, but it's more waiting on volume to come back?
Joe Shoen: They're pretty hard-pitched. So we're going to see that increase steadily over the next 2 or 3 years, I think, for sure. Our job is to outpace that. When I look at that, we look at that on a location-by-location basis. Basically, we need to get a nexus of revenue enough that will support the complement of people to be open the hours we want to be open. We may likely have to adjust some hours over the coming 12 months because it's not going to generate enough surplus to pay the wages for the hours the store is presently open, in my judgment. Now, that's not done. But that's the kind of pressure we're under. It gets to a totally micro-analysis. You can say overall, blah, blah, blah. But every morning, we open about 2,400 stores. So I got to have a body there.
To think about the expense management side of things I know, it's been a focus for you.
Do you think that needs to be a more intensified effort over the next six to 12 months or would you say the structure is actually in a good place, but it's more waiting on volume to come back.
Speaker #2: And they're pretty pinched . So living . We're going to see that increase over the next 2 or 3 years . for sure our job is to outpace that .
Joe Shoen: I've been pounding through on... We run on a system of budgets like a lot of people. So I've been pounding through budgets, trying to get the correct response out of the various parts of the corporation. And I think I'll see some results in the present calendar year and a little bit more of the next year. Repair hasn't been too bad. It's a lot of money. It's somewhere approaching $800 million on an annual basis, but... It's coming in somewheres in a normative. We calculate all repair by model, by year, by cents per mile. We have a pretty good ability to forecast that. So repair, we've got halfway under control.
Speaker #2: when I look at that , And we look at that on a location by location , basis , steadily we need to get a .
I've been pounding through one we run on our system our budget cycle a lot of people so I've been pounding through budgets.
Trying to get the correct response out of there.
Speaker #2: A will support nexus of complement of that people to be open the hours we be open want to . We may revenue enough likely have to adjust some hours over the coming 12 months because the it's not going to generate enough surplus to pay the wages hours that stores presently open .
Various parts of the Corporation and I think we'll see some results.
The present calendar year end.
A little bit more the next year.
Repair.
Hasn't been too bad, it's a lot of money somewhere approaching $800 million of an annual basis.
Speaker #2: But in my judgment , that's not done . for the That's the that's the kind of pressure . And it gets to a totally a micro analysis .
It's coming in somewhere in a normative.
Calculate all repair by model by year by cents per mile. We have a pretty good ability to forecast that.
Speaker #2: You it's on overall blah blah blah , but but every morning we open about 2400 stores . So I got to have a body there .
Joe Shoen: It's very specific. Then some days of the week, I got to have several bodies there. And those people have to be paid a living wage. So there's going to be tension there, I think. I don't know what part of the country you're from. But this year, the West Coast of the United States, let's say California, Oregon, Washington, have put in greatly increased minimum wages, have processed, or have in place plans that will automatically do it next year. And in many jurisdictions, they've done this for both salaried and hourly. Most of us are used to minimum wage for hourly personnel. But they're now putting in minimum wages for salaried personnel. And it's going to stress a significant number of our store's profitability. So, of course, we're going to pay the people, but we have to boost productivity.
So repair we've got halfway there control personnel is kind of a.
Joe Shoen: Personnel is kind of a vice we're stuck in on that, as I think many, many people or organizations are, which is cost of living for our workforce is rising at a pretty good clip, and they're pretty hard pitched. So, we're gonna see that increase steadily over the next two or three years, I think, for sure. And our job is to outpace that. When I look at that, we look at that on a location-by-location basis. Basically, we need to get a nexus of revenue, enough that it'll support the complement of people to be open the hours we want to be open. We may likely have to adjust some hours over the coming 12 months because the...
Speaker #2: And it's , it's , it's specific very . And then some days the week I got to have bodies several . They're so and those people have to be paid to living wage .
Youre stuck and advice on that is I think mainly.
Many many people.
Organizations are witches.
Cost of living for our Workforces rising.
At a pretty good clip and they're pretty hard pitch. So.
Speaker #2: So there's , be tension there . I think there's going to know what part . of the I don't country you're from , but the west this year coast of the States was United a California , Oregon , Washington have put in .
Paul.
We're going to see that increase steadily over the next two or three years I think for sure.
And our job is to outpace that.
Speaker #2: Greatly increased minimum wages have have processed or have in place plans that will automatically do it next year . And in many jurisdictions , they've done this for both salaried and hourly .
When I look at that we looked at that on a location by location basis basically.
We need to get out.
Nexus of revenue enough that will support the complement of people to be opened the hours, we want to be open.
Speaker #2: Most of us are used to minimum wage for hourly personnel , but they're now putting in wages for salaried , and personnel it's going to minimum stress a number of our significant stores profitability of course we're .
We may likely have to adjust some hours over the coming 12 months because.
The.
It's not going to generate enough surplus to pay the wages.
Joe Shoen: It's not gonna generate enough surplus to pay the wages for the hours the store is presently open, but in my judgment, now that's not done. But that's the kind of pressure we're under, and it gets to a totally micro analysis. You can say overall, blah, blah, blah, but every morning, we open about 2,400 stores, so I got to have a body there. And, you know, it's very specific. And then some days of the week, I got to have several bodies there. So, and those people have to be paid a living wage, so there's gonna be tension there, I think.
Joe Shoen: Both self-storage and U-Box have been a relief valve for that in many instances. We've been able to expand that presence in the location. But other locations are limited by the geographic footprint we own. There's only so much you can do on that piece of land. So let's say in Los Angeles, we have several locations that are just slightly over half an acre. There's no wiggle there. So those are under intense pressure. I don't have a simple solution to it, but we're very cognizant of it. We're working on it.
For the hours to stores presently open my judgment on our stock.
Speaker #2: the people . So going to pay But we have to boost productivity , both self and U-box have been a relief valve for that .
<unk>.
That's the kind of pressure water and its all of it.
It gets to a totally micro analysis, you can say overall blah blah blah, but.
Speaker #2: many In instances , we've been able to expand that presence in the location , but other locations are . Limited by the geographic footprint we own .
But every morning, we opened about 2400 stores or I got to have a body there.
Hello.
Yes.
Very specific.
Speaker #2: There's only so much you on that piece of land . So let's say in Los can do Angeles we have several locations that are just over half slightly an acre .
And then some days week I got to have several bodies there so.
So.
And those people have to pay a living wage so that theres going to be tension there I think.
Speaker #2: There's no there's no wiggle there . So under intense pressure . And I are a don't have simple solution to it . But we're very cognizant of it .
I didn't know what part of the country are from.
Joe Shoen: I don't know what part of the country you're from, but this year, the West Coast of the United States, let's say California, Oregon, and Washington, have greatly increased minimum wages, have processed or have in place plans that will automatically do it next year. And in many jurisdictions, they've done this for both salaried and hourly. Most of us are used to minimum wage for hourly personnel, but they're now putting in minimum wages for salaried personnel. And it's gonna stress a significant number of our stores' profitability. So of course, we're gonna pay the people, but we have to boost productivity. Both self-storage and U-Box have been a relief valve for that in many instances. We've been able to expand that presence in the location, but other locations are limited by the geographic footprint we own.
Steven Ramsey: Okay. That's helpful. And then last one for me. You've talked some about U-Box in the major markets that you are building out. Can you clarify if construction is going on in those markets for warehouse capacity? And then secondly, can you talk about U-Box usage, both moving and storage, in large metros that you already have established warehouse presence, trying to think about the potential upside in these big cities once it's built out?
This year, the west coast of the United States will say, California, Oregon, Washington put in.
Speaker #2: working We're on it those .
Greatly increased minimum wages approach.
Speaker #6: helpful . And Okay . That's then last one for me , you've some about talked u-box in the major markets that you are building out .
Processed.
I had it in place plans that will automatically do it next year and in many jurisdictions they've done this for all salaried and hourly most of US are used to a minimum wage for salaried personnel.
Speaker #6: Can you clarify if is going on construction in those warehouse markets for capacity and then secondly , can you talk about U-box usage both moving and storage in large metros already have established warehouse presence , trying to think about that you the potential upside in these big cities once it's built out .
But theyre not putting in minimum wages for salary personnel.
It's going to stress.
A significant number of our stores profitability.
Joe Shoen: I'll take the run to that question. Let Sam take the back of it. In the cities I mentioned or the metropolitan areas I mentioned, at the minimum, we own property. We're somewhere between land use and putting the roof on it at these locations. To me, each one's a big saga. Okay. So I know too much information on them. But we'll pick DC. We've had the steel building on the ground for 2 years. That's how, between COVID and normal city bureaucracies, how much it set us back. We thought 2 years ago, we were going to break ground. We ordered the building. They delivered it. We still haven't broke ground. So it's not because we're not trying. It's quite a labyrinth. But in all those cities, we own the property or metro areas. In all those metro areas, we own the property.
We're going to pay the people, but we have to.
Boost productivity.
Both self storage U box had been a relief valve for that in many instances we've been able to.
Speaker #2: I'll take front of that question . Let the of it in the cities I the mentioned , metropolitan areas I at the mentioned minimum , we own property .
To expand that presence in the location, but other locations are.
Oh.
Limited by the <unk>.
Geographic footprint. They can do only so much you can do on that piece of land.
Speaker #2: We're somewhere between land use putting the roof on these locations it . At are all and . . These big To be each one's a I saga .
Joe Shoen: There's only so much you can do on that piece of land. So let's say in Los Angeles, we have several locations that are just slightly over half an acre. Well, there's no, there's no wiggle there. So those are under intense pressure, and I don't have a simple solution to it, but we're very cognizant of it. We're working on it.
So let's see in Los Angeles, we have several locations there.
Just slightly over half an acre theres no theres no wiggle there.
So those are under intense pressure.
Speaker #2: much Okay , so information on them , but we'll pick had a D.C. we've the we've had steel building on the ground for two years .
Don't have a simple solution to it but we're very cognizant of them we're working.
Speaker #2: It's that how how that's between and normal city bureaucracies , how much it set us back . We thought two years ago we were going to break ground .
Okay. That's helpful. And then last one for me you've talked some about U box in the major markets that you are building out.
Steven Ramsey: Okay, that's helpful. And then last one from me: You've talked some about U-Box in the major markets that you are building out. But can you clarify if construction is going on in those markets for warehouse capacity? And then secondly, can you talk about U-Box usage, both moving and storage, in large metros that you already have established warehouse presence? I try to think about the potential upside in these big cities once it's built out.
Speaker #2: We ordered the building . They We still broke delivered it . haven't ground . So it's not because we're not trying . It's it's a it's quite a labyrinth .
Can you clarify if construction.
Is going on in those markets for warehouse capacity and then secondly can you talk about your box usage, both moving in storage in large metros that you already have established warehouse presence.
Speaker #2: But in all those cities we property or all those own the metro metro areas and areas we own the property . I say , I'll pick Vancouver Island .
Joe Shoen: I'll say, well, I'll pick Vancouver Island. That's a readily apparent thing. If we don't have a significant warehouse capacity, there's just going to be no U-Box business at all. So we have to have real warehouse capacity there. But in the rest of Canada, we've done a great job from the Maritimes up and through Ottawa, down through Montreal, all through the greater Ontario or that whole belt of people between Toronto and Detroit. We've got a fairly adequate footprint. And so I believe the business will follow. Sam?
Trying to think about the potential upside in the big cities. Once it's built out I'll take the brunt of that question, let Sam take the back of it.
Speaker #2: That's readily apparent thing . If we don't have a significant warehouse capacity , there's just going to be no u-box business at all .
Joe Shoen: I'll take the front of that question, let Sam take the back of it. In the cities I mentioned or the metropolitan areas I mentioned, at the minimum, we own property. We're somewheres between land use and, you know, putting the roof on it at these locations. These are all- To me, each one's a big saga. Okay, so I know too much information on it, but we'll pick DC. We've had the steel building on the ground for 2 years. That's how, between COVID and normal city bureaucracies, it set us back. We thought 2 years ago, we were going to break ground. We ordered the building, they delivered it, we still haven't broke ground. So it's not because we're not trying, it's just, it's quite elaborate.
Speaker #2: So we have to have real warehouse capacity . There but in the rest of . So Canada , we've done a great job for the Maritimes up and through through Montreal down , all the through Greater Ottawa , Ontario or belt that whole of people between Toronto and .
And the city as I mentioned or the metropolitan areas that I mentioned.
At the minimum we own property.
We're somewhere in between.
Land use and put in the room product at these locations.
These are all.
Speaker #2: Detroit . We've got a fairly adequate footprint . And so I believe the business will follow . Sam . Sure .
Samuel Shoen: Sure. I'll add some more color. Metros for U-Box is something we're certainly maybe a little extra excited about because Joe had the foresight to design our product and our strategy specifically around a size of container that thrives in the metro areas with challenges of space. So, for example, our container size, unlike a lot of our competitors, fits in an apartment parking spot, no problem. A lot of the challenge in metro areas are restrictions on where they can be laid in terms of needing permits or having outright restrictions to be placed on the street. Our container option delivery method with the trailer gives it a license plate, which means it can go anywhere that's a legal parking spot. So those are tremendous differentiators in our product versus the competition. Those were deliberate.
To be each one's a big saga, Okay side, I know too much information on that.
We'll pick DC when Carlos <unk>.
Speaker #7: some more I'll add color , you know , for you box is something where certainly maybe a little extra excited about the foresight to design our product and our strategy because specifically around the container that thrives in the size of metro areas with of of space .
<unk> had steel building on the ground for two years.
That's how all between.
Covid than.
Normal city bureaucracies, how much it set us back we thought two years ago.
We are willing to.
Break ground, we own the building they delivered it we still have a full crowd.
So it's not because we're not trying it just.
No.
Speaker #7: , for challenges example , container size , lot of our unlike a competitors , fits in a in Apartment a . parking our spot .
It's quite elaborate but in all those cities we own the property.
Joe Shoen: But in all those cities, we own the property or metro areas. In all those metro areas, we own the property. I'll say... Well, I'll pick Vancouver Island. That's a readily apparent thing. If we don't have a significant warehouse capacity, there's just gonna be no U-Box business at all. So we have to have real warehouse capacity there. So, but in the rest of Canada, we've done a great job from the Maritimes up and through Ottawa, down through Montreal, all through the Greater Ontario or that whole belt of people between Toronto and Detroit. We've got a fairly adequate footprint, and so I believe the business will follow. Sam?
Metro areas and all of those metro areas, we own the property.
Speaker #7: problem . A lot of the challenge in metro areas are restrictions on where they can be be laid . In terms of needing permits or having outright restrictions to be street on the placed option container delivery .
Hi.
Well I'll pick.
Vancouver Island.
<unk> readily apparent that if we don't have a significant warehouse capacity, they're just going to be no U box business at all.
So we have to have real warehouse capacity there.
So but in the rest of Canada, we've done a great job for the Maritimes up and through.
Speaker #7: with trailer the gives it a license plate , means it can which go method in anywhere that a that that's a legal parking spot .
Ottawa down to Montreal, all through the greater Ontario, or the whole Delta.
Samuel Shoen: Of course, we're hoping they continue to drive some exciting results in the metro, besides the fact that a lot of the metro demand is for a smaller-sized container in the first place. So getting the right-sized product to those customers is what we do. So I think we've got a big advantage.
Speaker #7: So are tremendous differentiators in our product versus the Our competition . And those deliberate and of course were we're we're they they drive and some continue to drive some results in the metro .
People between Toronto them.
Detroit, we've got it.
Fairly adequate footprint and so.
Speaker #7: exciting Besides the fact that , you of these , metro know , a lot demand is is for a the smaller size in the first place .
I believe the business will fall Sam sure I'll add some more color metros for U box is something we're certainly and maybe a little extra excited about because Joe had the foresight to design, our product and our strategy specifically around the size of container.
Samuel Shoen: Sure, I'll add some more color. You know, metros for U-Box is something we're certainly maybe a little extra excited about because Joe had the foresight to design our product and our strategy specifically around the size of container that thrives in the metro areas with challenges of space. So for example, our container size, unlike a lot of our competitors, fits in an apartment parking spot, no problem. A lot of the challenge in metro areas are restrictions on where they can be laid in terms of needing permits or having outright restrictions to be placed on the street.
Speaker #7: So container getting the size right product to those customers is is what we do . So I think we've got a big advantage .
Jason Berg: Steven, this is Jason. I just want to make sure that there isn't any misunderstanding. In these markets, our customers already have access to the U-Box product. We're just looking to improve their access to it. It's not that we aren't in those markets.
Speaker #3: Stephen , this is Jason . I just want to make sure that there isn't any these misunderstanding in markets . Our customers already have access to the We're just looking to improve their access to it .
Thrives in the metro areas with challenges.
Of space. So for example, our container size, unlike a lot of our competitors.
Steven Ramsey: That's all helpful color. Thank you, guys.
Speaker #3: It's not that we those aren't in
Any apartment Carking Scott no problem.
Speaker #2: Yes .
Operator: Thank you. Your next question is from Jeff Kauffman from Vertical Research Partners. Your line is now open.
A lot of the challenge in metro areas or restrictions on where they can be delayed in terms of needing permits are having outright restrictions to be placed on the street.
Speaker #6: Thank you guys That's all helpful . .
Speaker #6: Thank you guys That's all helpful . .
Jamie Wilen: Thank you very much. Good morning, everybody. I had a question more for Jason. You talked about we're almost through the 2023 cargo van cohort and starting to work on the 2024s. Can you give us an idea of how many vehicles we have left to kind of get caught up to the current market and maybe the differential between your average acquisition costs and where you're depreciating the 2024s versus what that spread looked like for the 2023s?
Speaker #4: Your Thank you . question is next from Jeff from Vertical Research Partners . Your Coffman now open .
Joe Shoen: ... our container option delivery method with the trailer gives it a license plate, which means it can go in anywhere that's a legal parking spot. So those are tremendous differentiators in our product versus the competition, and those were deliberate. And, of course, we're hoping they drive some-- continue to drive some exciting results in the metro. Besides the fact that, you know, a lot of these, the metro demand is for a smaller size container in the first place. So, getting the right size product to those customers is what we do. So I think we've got a big advantage.
Our container option delivery method with the trailer gives it a license plate, which means it can go anywhere.
Speaker #8: Thank you very much . Good morning everybody . just was I had a question for Jason . You talked about we're almost through the 2023 cargo van cohort .
That's a legal parking spots. So those are tremendous differentiators in our product versus the competition and those were deliberate in and of course, we're hoping they they drive.
Speaker #8: And starting to 20 fours . Can work on the give us idea of how an many vehicles we left to have kind of get caught up to the current you market and maybe the differential between your acquisition and your where your average depreciating the 20 fours versus what that spread look like for the 20 threes .
Some continue to drive some exciting results in the metro. Besides the fact that a lot of these the metro demand is for a smaller sized container.
Jason Berg: Sure. I'll give you some big-picture numbers. On the 2024s, we probably have somewhere around 6,000 of those left. Those were the most expensive ones, a little bit more pricey than the 2023s. Then we have, say, close to 19,000 of the model year 2025s that then were maybe $3,000 cheaper than the 2024s. Now we're going to be in the process of rotating out the model year 2024s, which we've been hitting those with this increased depreciation number. Part of answering the question earlier, I think it was for Steve Frosten, that's been part of the depreciation increase, is we've been hitting those model years here before we have to sell them, hoping to minimize any loss on disposal. We'll see how successful we are here in the next 12 months on that.
The first place so.
Getting the right sized products to those customers is is what we do so I think we've got a big advantage.
Speaker #3: Sure . I'll give you some some big picture on the numbers probably We 20 fours . around 6000 of those left . And .
Jason Berg: Stephen, this is Jason. I just want to make sure that there isn't any misunderstanding. In these markets, our customers already have access to the U-Box product. We're just looking to improve their access to it. It's not that we aren't in those markets.
Given this Jason I just wanted to make sure that there isn't any misunderstanding in these markets or customers that already have access to the box product. We're just looking to improve their access to it it's not that we arent in those markets.
Speaker #3: expensive those were ones have somewhere little bit more than the 20 threes . And then we have , say to close pricey 19,000 of the model year 25 .
Joe Shoen: Yes.
That's all helpful color. Thank you guys.
Steven Ralston: That's all helpful color. Thank you, guys.
Speaker #3: That that then were than , $3,000 cheaper than the the 20 fours . now we're going to be in the process of rotating out the , maybe the the model year 20 fours , have been we've been those with this increased depreciation .
Thank you. Your next question is from Jeff Kauffman from vertical Research partners. Your line is now open.
Operator: Thank you. Your next question is from Jeff Kauffman from Vertical Research Partners. Your line is now open.
Thank you very much good morning, everybody.
Jeff Kauffman: Thank you very much. Good morning, everybody. I was just had a question, more for Jason. You talked about we're almost through the 2023 cargo van cohort and starting to work on the 2024s. Can you give us an idea of how many vehicles we have left to kind of get caught up to the current market, and maybe the differential between your average acquisition costs and your- where you're depreciating the 2024s versus what that spread looked like for the 2023s?
I was just had a question more for Jason.
You talked about we're almost through the 2023 cargo van cohort and starting to work on the 24th can you give us an idea of how many vehicles. We have left to kind of get caught up to the current market and maybe the differential between your average acquisition cost senior.
Speaker #3: And so part of the answer to the question earlier , I think was which we Steven Ralston , that's been part of the So depreciation increases we've been hitting .
Speaker #3: Those those model here before . We sell them have to hoping to minimize any loss on years disposal . And we'll see how how we are here in the next 12 months on that successful .
Jamie Wilen: Okay. But is your sense that because, look, it's going to come out either way, right, either through depreciation or loss on sale? But is your sense we've got the 2024 model years marked to market fairly at this point in time, or is there still kind of going to be this deferred catch-up on loss on sale?
Where youre depreciating the 'twenty four is versus what that spread look like for the 'twenty threes.
Sure.
Speaker #8: Okay . is your sense But that because , look , it's going to come out either way , right . depreciation loss on Either through sale or , but sense got the is your 24 model years mark to market fairly we've point Or is there in time .
Jason Berg: Sure. I'll give you some big picture numbers on the 2024s. We probably have somewhere around 6,000 of those left, and those were the most expensive ones, a little bit more pricey than the 2023s. And then we have, say, close to 19,000 of the model year 2025s that then were maybe $3,000 cheaper than the 2024s. So now we're going to be in the process of rotating out the model year 2024s, which we have been. We've been hitting those with this increased depreciation. So part of answering the question earlier, I think it was for Steven Ralston, that's been part of the depreciation increases. We've been hitting those model years here before we have to sell them, hoping to minimize any loss on disposal.
To give you some some big picture numbers on the 20 fours.
We probably have somewhere around 6000 of those left and those were the most expensive ones.
A little bit more pricing than the 20 threes.
Jason Berg: I think it would be fair to expect a loss on sale for those units this year. I don't know if we're fully there yet.
Speaker #8: still kind of going to be deferred this catch up on loss on sale ?
And then we have.
Joe Shoen: Let me address it. You make your estimate of what you're going to get on sale when you're going in. You set up your books. Well, then we have had to come back with adjustments because the way the market has developed, that estimate turned out to be wrong. And as far as I can tell, it's wrong because as the automakers get away from electrification and get their supply chains reorganized, they're now, in fact, selling new vehicles for less than last year's new vehicle and maintaining a margin. They need to make a profit. I'm all for it. But that takes the resale value and kind of gives it a little bit more of a hit. And we haven't, in recent years, at least not in the last 15 years, had a market where the new prices kept being under the old price.
Say close to.
Speaker #3: I think it to expect a on sale loss for for those units . I don't know if we're fully there yet .
19000 of that model year, 'twenty fives that than we are.
Maybe $3000 cheaper.
Speaker #2: Let me address it . It's . You make your estimate you're going to of what get on sale . When you're going in , you set up your books .
And then the.
The 20 fours. So now we're going to be in the process of rotating out.
The.
Speaker #2: Then have had to back with way the because the adjustments market has developed come that estimate out to be turned wrong . And and as far as can tell I , it's wrong because as the automakers get away from electrification and get their chains supply reorganized in fact , they're now , selling new vehicles for than year's new last and maintaining a margin to make a I'm all for less it .
The model year, 'twenty for us, which we have been.
We've been hitting those with this increased depreciation I'm still part of answered the question earlier.
I think this is for Steve.
Boston.
Sure.
That's been part of the depreciation increases we've been hitting those those model years here before we have to sell them, hoping to minimize any loss on disposal.
Jason Berg: And we'll see how successful we are here in the next 12 months on that.
We'll see how how successful we are here in the next 12 months on that.
Speaker #2: But that takes the profit . resale value and kind of gives it a little bit more of a hit . And we haven't in recent not in the last had a market 15 years , where the the new prices kept being under the old price .
Oh.
Okay.
Jeff Kauffman: Okay, but is your sense that, because, look, it's going to come out either way, right? Either through depreciation or loss on sale. But is your sense we've got the 24 model years mark-to-market fairly at this point in time, or is there still kind of going to be this deferred catch-up on loss on sale?
Your sense that.
Look it's going to come out either way right and you go through depreciation or loss on sale.
Joe Shoen: And so I think we poorly estimated this. And, of course, we figured this out, I don't know, a year, year and a half ago. And we started to whack on it. And everybody was confident going into this particular year we're in that we're finally through it. And then, of course, what happened? Another round of opportunistic. So we're acquiring the fleet cheaper, but that may mean that these trucks that we just put in are going to retail for less or wholesale when we get rid of them for less than we thought. So I've got people here pretty tuned up. And I think we will try to, if we see it declining, what my direction has been, try to adjust depreciation to where you're going to basically be neutral at sale.
But as you said, we've got the 24 model years Mark to market fairly at this point in time or is there still kind of going to be this deferred catch up on loss on sale.
Speaker #2: And so I think we poorly estimated this we they need figured this out , I don't know , a year , year and a half ago .
I think it would be fair to expect a loss on sale.
Jason Berg: I think it would be fair to expect a loss on sale for those units this year.
Speaker #2: And we started to , to whack on it . And everybody confident going into this was particular year . We're in that we're finally through it .
For those units I don't know FERC fully there yet.
Jeff Kauffman: Mm-hmm.
Jason Berg: I don't know if we're fully there yet.
Joe Shoen: Let me address it. It's... You make your estimate of what you're going to get on sale when you're going in to set up your books.
Let me address it it's.
Yeah.
Speaker #2: course , what And then , of happened ? Another round of opportunistic . So we're . Acquiring the cheaper . that may mean that these trucks that But we just put in are going to retail less or for wholesale when we get rid of them for less So than we thought .
You make your estimate of what Youre going to get on sale when youre going in to set up your books.
Although we have had to come back with adjustments because of the way the market has developed.
Jeff Kauffman: Mm-hmm.
Joe Shoen: Well, then we, we've had to come back with adjustments because the way the market has developed, that estimate turned out to be wrong. And as far as I can tell, it's wrong because as the automakers get away from electrification and get their supply chains reorganized, they're now, in fact, selling new vehicles for less than last year's new vehicle and maintaining a margin. I – They need to make a profit, I'm all for it. But that takes the resale value and kind of gives it a little bit more of a hit. And we haven't, in recent years, at least not in the last 15 years, had a market where the new prices kept being under the old price.
Debt.
Estimate turned out to be wrong.
As far as I can tell.
Speaker #2: we're I've got people here pretty tuned up . And I think we will try to if we see it declining . What my direction has been , try to adjust depreciation to where you're going to basically be neutral at sale because problem with the sale is that by the time you get it , you much you paid for it and all that .
It's wrong because as the automakers.
Get away from electrification and get their supply chain reorganized.
Joe Shoen: Because the problem with the sale is that by the time you get it, you forgot how much you paid for it and all that. So we should suffer the pain monthly. And that also puts pressure on my marketing people because they basically incur that depreciation cost as part of their charge or whatever you want to call it. That's part of what they know they have to hit. It's harder for me to hold them accountable for recouping a loss on sale. But they really didn't have a budget or a forecast that adequately presented that. So I'm very hopeful we're going to get it right. But you've seen how just this whole thing has just kind of ricocheted through. And it's given everybody some things they didn't really totally appreciate. And I'm kind of a glass-half-empty person. And I've kind of pushed our people.
Now in fact, selling new vehicles for list than last year's new vehicle.
Maintaining a margin or they need to make a profit I'm all for it.
But that takes the resale value and kind of gives it a little bit more of a hit and we haven't.
Speaker #2: So forgot how we should suffer the pain monthly . And that also puts pressure on my marketing people because they they basically incur that cost as part of depreciation .
In recent years at least not in the last 15 years had a market where.
The.
The new prices kept.
Speaker #2: Charge or whatever you want to call it that . what they That's part of know . They have to hit . It's harder for them to for me to hold them accountable for loss on sale .
Being under the old price and so I.
Joe Shoen: So I think we poorly estimated this, and of course, we figured this out, I don't know, 1 year or 1 year and a half ago, and we started to, to whack on it, and everybody was confident going into this particular year we're in, that we're finally through it. And then, of course, what happened? Another round of opportunistic, so we're acquiring the fleet cheaper, but that may mean that these trucks that we just put in are going to retail for less, or wholesale when we get rid of them, for less than we thought. So we're- I, I've got people here pretty tuned up, and I think we will try to, if we see it declining, what my direction has been, try to adjust depreciation to where you're going to basically be neutral at sale.
I think we.
Poorly estimated this.
Speaker #2: recouping a That they really didn't have a budget or a that adequately that . forecast So presented I'm very we're going hopeful to get it right .
Of course, we'll figure this out I don't know a year year and a half ago when we start to.
To work on it and everybody was confident going into this particular year. We're in that we're finally through it and then of course what happened.
Speaker #2: But seen you've just this whole thing is just ricocheted through , and it's given everybody they some things didn't totally And I'm kind of a half empty person how .
Another round of.
Opportunistic so were.
Acquiring the fleet cheaper but.
That may mean that these trucks that we.
Just put in.
Joe Shoen: Of course, they're all marketing and, "No, we're going to sell our way out of it." Well, I think it's pretty clear when the pickup or van prices decline two years in a row, you're not going to sell your way out of it. You're just going to respond to the market. So I think it's a collaborative effort to make these estimates. I won't call them guesses, but they're kind of a guess. But your estimate of what that thing's going to go out for 18 months from now is an estimate. And, of course, there's other industry people making this estimate. We're not the only people trying to figure this out. So I have some belief that we may now hit the bottom of this whole declining group of factors coming together.
Our retail for less wholesale when we get rid of them for less than we thought so.
Speaker #2: And I've kind of pushed our people . Of course , they're all marketing no , . And we're going to sell our way out of it .
Speaker #2: And I've kind of pushed our people . Of course , they're all marketing no , . And appreciate . clear when the pickup or van declined two years in a row , you're not going to sell your way out of it .
I've got people, who are pretty tuned up and I think we will.
Try to if we see it declining with my direction has been tried to adjust depreciation to where youre going to basically be neutral.
Speaker #2: You're just going to respond to the market . So prices think I it's a collaborative effort to make these estimates . I won't call them guesses , but they're guess .
That sale because problem with a sale is it.
Joe Shoen: Because the problem with the sale is that by the time you get it, you forgot how much you paid for it and all that. So we should suffer the pain monthly, and that also puts pressure on my marketing people because they basically incur that depreciation cost as part of their charge or whatever you want to call it. That's part of what they know they have to hit. It's harder for them to—for me to hold them accountable for recouping a loss on sale, but they really didn't have a budget or a forecast that adequately presented that. So I'm very hopeful we're going to get it right, but you've seen. Just this whole thing, it just kind of ricocheted through, and it's given everybody some things they didn't really totally appreciate. And I'm kind of a—
By the time you get it you forgot how much you pay for it and all that so we should suffer the pain.
Speaker #2: kind of a But estimate of what that thing is going to your go out for now 18 months from is an estimate . And of course , there's other industry people making this estimate .
Monthly and that also puts pressure on <unk>.
Marketing people because.
They basically incur that depreciation costs as part of their.
Speaker #2: We're not the only people figure trying to this out . So I have some belief that we may now get the bottom of this whole declining .
Oh.
Charge or whatever you want to call that.
Part of what they know they have to hit it's harder for them too.
For me to hold them accountable for recouping, a loss on sale, but.
Joe Shoen: But should next year GMC lower prices again because they improved their margins and they've written off all the garbage, they have the same problem I did. They had some garbage on the books because they were attempting to respond to government and, I don't want to call it third-party greeny pressure, people who didn't know what the facts were but nevertheless had power positions, they tried to respond to them. And it's really cost them greatly. It hasn't hit us as hard, but it's costing us. And we will work through it. And every effort is being made to keep the fleet. I've always prided myself for the last 40 years of always having the fleet on the books for less than it's worth. Because when push comes to shove, if you're on the books for more than it's worth, it can be a very unpleasant time.
They really didnt have a budgeted or forecasted adequately presented that so.
Speaker #2: Group of factors together , but should year next GMC lower prices again because improve they they their margins and they've off all the written garbage .
I'm very hopeful we're going to get it right but.
<unk> seen how.
Just this whole thing is just kind of ricocheted zones, given everybody some things they didn't really totally appreciate it.
Speaker #2: They have the same problem I did . They had some garbage on the on the books because they were attempting to respond to government and I don't want to call third party Greeny pressure people who didn't know what the facts were , but nevertheless had power positions .
Im kind of early.
Steven Ralston: Mm-hmm.
Glass half empty person.
Joe Shoen: a glass half empty person, and I've kind of pushed our people. Of course, they're all marketing, and, "No, we're going to sell our way out of it." Well, I think it's pretty clear when the pickup or van prices decline 2 years in a row, you're not going to sell your way out of it. You're just going to respond to the market. So I think it, it's a collaborative effort to guess, make these estimates. I won't call them guesses, but they're, they're kind of a guess. But the, your estimate of what that thing is going to go out for 18 months from now is, is an estimate. And of course, there's other industry people making this estimate. We're not the only people trying to figure this out.
And.
I've kind of pushed our people of course, they are all marketing and <unk>.
So we're going to sell our way out of it well I think it's pretty clear.
We'll pick up our band prices declined two years in a row youre not going to sell your way out of it youre just going to respond to the market.
Speaker #2: They tried to respond to them . It's really cost them greatly . It hasn't hit us as hard , but it's costing us and we will will .
So.
Speaker #2: work through it and We every effort is being made to keep fleet . I've always prided myself over the last 40 years . Of always having the fleet on the books for less than it's worth , because when push comes to shove , if you're on the books for more than it's worth , it can unpleasant time .
I think it's a collaborative effort to guests make these estimates I won't call them guesses, but they're part of our guests.
Your estimate of what that thing is going to go out for.
Joe Shoen: So I've pushed real hard. And we've missed it two years in a row on our pickup and van fleet. And we should have it right this time. But only time's going to tell. It's important. We're trying to undershoot without just being stupid. If I put too much depreciation on, of course, my rental teams will say, "We can't possibly make any of our goals. It's impossible. You've afflicted us with." So I have to try to be not too low or too high. But on the other hand, I'll say I, but the whole company has overestimated resales for two years running. Yes, it all comes out in the wash. But during the interim period, it can affect people's motivations. And I need to do that too.
18 months from now.
As an estimate.
Of course, Theres other industry people, making this estimate we're not the only people trying to figure this out.
Speaker #2: be a very So I've pushed real hard , and we've missed it . Two years in a row on our pickup and Van Fleet and we should have it right this time .
Joe Shoen: So I have some belief that we may now hit the bottom of this whole declining group of factors coming together. But should next year GMC lower prices again, because they improved their margins, and they've written off all the garbage. They have the same problem I did. They had some garbage on the books because they were attempting to respond to government, and I don't want to call it third-party greeny pressure. People who didn't know what the facts were, but nevertheless, had power positions. They tried to respond to them, and it's really cost them greatly. It hasn't hit us as hard, but it's costing us, and we will work through it, and every effort is being made to keep the fleet.
So I have some.
Belief that we may now.
Speaker #2: But only , only time is going to tell . It's important . We're trying to without just being undershoot stupid . If I put too much depreciation on , of course , my rental teams will say we can't possibly make .
At the bottom of this.
Hold declining.
Group of factors coming together, but should next year.
Speaker #2: We can't make any of our goals . It's impossible . You've afflicted us with so I have to not try to be not too low or too high .
GNC lower prices again.
Because they they improve their margins in a written off all the garbage. They have the same problem I did add some garbage on them.
Speaker #2: So other hand , . I , But on the I , I'll say I but the whole company has overestimated resales for two years running .
On the books because they.
They were attempting to respond to.
Speaker #2: Yes , it all comes out wash , but during the interim period . It can affect people's motivations . And I need to do that to .
Government.
Jamie Wilen: Well, thank you very much.
And.
I don't want to call third party greenie pressure people, who didn't know what the facts were but nevertheless had power positions.
Speaker #8: Well , thank
Speaker #8: you very in the much .
Tried to respond to them is really toss them greatly it hasnt hit us as hard, but it's costing us.
Operator: Thank you. Your next question is from Jamie Wilen from Wilen Management. Your line is now open.
We will work through it and every effort is being made.
Joe Shoen: Thank you. Joe, you've always mentioned that fleet utilization was your prime objective in managing the business. How did you arrive at only reducing the fleet expenditures in the coming year by a half a billion dollars as you look forward? Are you going to spend a half a billion dollars less in future years as well? Right now, I'll start with the year we're finishing up. So we call that fiscal 2026, I believe. In fiscal 2026, you're actually seeing a significantly increased fleet expense. That is aimed at trying to rebalance. If you don't buy some trucks four years from now, you don't have those trucks at that mileage and that cost parameter. And so you create imbalances through the whole fleet. And that also impacts on what can you buy next. So in the year just finished, we put in something like 10,000 10-foot trucks.
Speaker #4: Thank you . Your next question James Wilen from from Wilson Your line open is now .
I've always prided myself for the last 40 years of always having the fleet on the books for less than it's worth.
Joe Shoen: I've always prided myself for the last 40 years of always having the fleet on the books for less than it's worth. Because when push comes to shove, if you're on the books for more than it's worth, it can be a very unpleasant time. So I've pushed real hard, and we've missed it two years in a row on our pickup and van fleet, and we should have it right this time, but only time is going to tell. It's important. We're trying to undershoot without just being stupid. If I put too much depreciation on, of course, my rental teams will say, "We can't possibly make any of our goals. It's impossible. You've afflicted us with." So I have to try to be not too low or too high, so.
Speaker #8: Thank you . Hey , Joe , you've always mentioned that fleet utilization was your objective prime in managing the How did you arrive at only reducing the fleet expenditures in the coming year ?
Because when push comes to shove. If you are on the books for more than it's worth it can be very unpleasant time so.
Pushed real hard we've missed it two years in a row.
Speaker #8: By half $1 billion ? And have you looked as you look forward , are you going to spend a half $1 billion less in future years as well ?
On our pickup advanced fleet and.
We should have it right. This time, but only only time to hotel. It's important we're trying to undershoot without just be stupid, if I put too much depreciation on of course.
Speaker #2: Right now , I'll start with the year we're finishing up . So we call that fiscal 26 . I believe fiscal 26 . You're actually seeing an significantly increased fleet increase expense that is aimed at trying to rebalance if you don't buy some trucks for four years from now , you don't have those trucks in at that mileage .
Rental teams will say, we can't possibly be.
We can't make any of our goals, it's impossible afflicted us whatsoever.
I have to not try to be not too low or too high so.
Joe Shoen: But on the other hand, I, I'll say I, but the whole company has overestimated resales for two years running. Yes, it all comes out in the wash, but during the interim period, it can affect people's motivations, and I need to do that, too.
But on the other hand, I will say that the whole company is overestimated resales were two years ago, yes. It all comes out in the wash but.
During the interim period, it can affect people's motivations of I need to do that.
Speaker #2: And that cost parameter . And so you create imbalances through the whole fleet . And that also impacts on what can you buy So in the year , just finished .
Thank you very much.
Steven Ralston: Well, thank you very much.
Okay.
Thank you. Your next question is from Jamie Wilen from Wilen Management. Your line is now open.
Operator: Thank you. Your next question is from Jamie Wilen from Wilen Management. Your line is now open.
Joe Shoen: That's beyond replacement considerably. We have a whole bunch of considerations. That truck, in our present plan for the coming year, we reduce that massively because we think we know what we're doing there. In my 20-foot truck, I have a disproportionate amount of fleet that's 8 or 10 years old. So while my total number is okay, my mix is off. A 10-year-old truck can't perform quite like a 5-year-old truck or a 4-year-old truck. So I'm buying a fair amount of those, a little bit more than you might say is replacement, simply because I have a lump of them that are 8 or 10 years old. I've got to try to smooth that out. The perfect life would be you trigger the life of the truck, divide that into the fleet, make that fleet purchase every year. That would be wonderful.
Speaker #2: We put in something like 10,010 foot trucks . That's that's beyond replacement considerably . We have a whole bunch of considerations . And that truck in our present plan for coming year , the reduced we that massively because we think we know what we're doing there .
Great. Thank you.
James Wilen: Thank you. Joe, you've always mentioned that fleet utilization was your prime objective in managing the business. How did you arrive at only reducing the fleet expenditures in the coming year by half a billion dollars? And as you look forward, are you going to spend half a billion dollars less in future years as well?
Joe you've always mentioned that.
Utilization was your prime objective of managing the business. How did you arrive at only reducing the fleet expenditures in there.
The coming year by a half a billion dollars have you as you look forward are you going to spend the $5 billion less in future years as well.
Okay.
Speaker #2: In my 20 foot truck , I have a disproportionate amount of fleet that's 8 or 10 years old . So while my total number is okay , my my mix is off .
Right now I'll start with the year, we're finishing up so we call that fiscal 2016.
Joe Shoen: Right now, I'll start with the year we're finishing up. So we call that fiscal 2026, I believe. In fiscal 2026, you're actually seeing an increased, significantly increased fleet expense. That is aimed at trying to rebalance. If you don't buy some trucks, well, four years from now, you don't have those trucks at that mileage and that cost parameter, and so you create imbalances through the whole fleet, and that also impacts on what can you buy next. So in the year just finished, we put in something like 10,000 10-foot trucks. That's beyond replacement, considerably. We have a whole bunch of considerations, and that truck, in our present plan for the coming year, we reduce that massively because we think we know what we're doing there.
In fiscal 'twenty, six youre actually seeing increased significantly increase fleet expense.
Speaker #2: A ten year old truck can't perform quite like a five year old truck or a four year old truck . I'm buying So a fair amount of those a little than bit more you might say is replacement , simply because a I have lump of them that are 8 or 10 years old , and I've got to try to smooth that .
That.
Is aimed at trying to rebalance.
If.
You don't buy some trucks.
Four years from now you don't have those trucks at that mileage.
<unk>.
Joe Shoen: But they just don't become available. And in the past 5 years, it's been aggravated because of all these supply chain disruptions, the worst being we're on allocation. They would say, "You can buy X trucks." We hadn't seen that since the Korean War. So that caught us off balance, I would say, and resulted in a couple of times we made huge buys. Why? Because they would sell them to us. We had to have something. So we made a huge buy. So we're going to reduce this. And then we have to see what we can do with sales because that problem, it's a buying problem. It's also a selling problem. Can you take that many trucks into the sale market? And can you move them? So we'll say, in the case of my 20-foot trucks, I have something like 12,000 lump going through.
Cost parameter and so you create.
Speaker #2: The perfect life would be you trigger the life of the truck in the fleet , , divide that make that fleet purchase every year .
In balance through the whole fleet and that also impacts one what can you buy next.
Speaker #2: would be That wonderful . But they just don't become available . And in the past five years , it's been aggravated because of all these supply chain disruptions worst , the being on allocation .
So in the year just finished.
We've put into something like.
10000.
10 foot trucks.
Speaker #2: They would say , you can buy X trucks . Well , that that we haven't seen that since the Korean War . So that caught us off balance .
Speaker #2: I would say . And and resulted in , in a couple times we made huge buys because they could they would sell them to us .
In our present plan for the coming year.
We reduced that.
Massively because we think what we're doing there.
Speaker #2: We had to have something . So we made a huge buy . So we're going to we're going to reduce this and then we have to see what we can do with sales , because that problem , you know it's a buying problem .
In my 20 foot truck.
Joe Shoen: In my 20-foot truck, I have a disproportionate amount of fleet that's 8 or 10 years old. So while my total number is okay, my mix is off. A 10-year-old truck can't perform quite like a 5-year-old truck or a 4-year-old truck. So I'm buying a fair amount of those, a little bit more than you might say is replacement, simply because I have a lump of them that are 8 or 10 years old, and I've got to try to smooth that out. The perfect life would be figure the life of the truck, divide that in the fleet, make that fleet purchase every year. That would be wonderful, but they just don't become available. And in the past 5 years, it's been aggravated because of all these supply chain disruptions. The worst being we're on allocation.
I have a disproportionate amount of fleet.
Eight or 10 years old.
Speaker #2: It's also problem . Can you selling take that many market . sale And trucks into and can you move . So we'll them case of my 20 foot trucks , I have something like 12,000 lump going through .
So my total number is okay.
Mix is off as a 10 year old truck can't perform quite like.
A five year old truck or a four year old trucks.
Joe Shoen: We can't digest 12,000 of those at resale in 1 year and probably couldn't do it in less than 3 years. So depending on how, but if I don't buy for 3 years, I'm just creating another lump that I'll have to face down the road. So I'm going to do some modest buys and then accelerate sales and see where we can find a balance. And so we're probing that, I'll say, specifically on the 20-foot truck right now. How many of those trucks can we put into the resale market successfully? And we should buy at least that many of them this year so that we don't have another lump in our supply chain. So if you could.
Im buying a fair amount of those a little bit more then.
You might say is replacement simply because I have a lump of them that are eight or 10 years old and I've got to try to smooth that out.
Speaker #2: And we can't digest 12,000 at resale in one year . And probably couldn't do it less than three years . So depending on how .
Perfect life would be triggered the life of the truck.
That and the fleet make that fleet purchase every year that would be wonderful, but they just don't become available and.
Speaker #2: But if I don't buy for three years , I'm just creating another lump that I'll have to face down the road . So I'm going to do some modest buys and then accelerate sales and where that where we can find the balance .
And in the past five years, it's been aggravated because all these supply chain disruptions.
The worst being broad allocation.
Speaker #2: And so we're probing that . I'll say specifically on the 20 foot truck right now , how much can we how many of those trucks can we put into the resale market successfully .
Joe Shoen: They would say, "You can buy X trucks." Well, that—we haven't seen that since the Korean War, so that caught us off balance, I would say. And resulted in a couple times, we made huge buys. Why? Because they could—they would sell them to us. We had to have something, so we made a huge buy. So we're going to reduce this, and then we have to see what we can do with sales. Because, you know, that problem, it's a buying problem, it's also a selling problem. Can you take that many trucks into the sale market, and can you move them? So we'll see in the case of my 20-foot trucks, I have-...
David said, you can buy X trucks.
That debt.
We haven't seen that since the Korean or so.
That caught us.
Speaker #2: And we should buy at least that many of them this year so that we don't have another , another lump in our supply chain .
Jamie Wilen: On the self-storage.
Off balance I would say.
Joe Shoen: On the self-storage.
And and resulted in a in a couple of times, we made huge buys why because they could they would sell them to us we had to have something so we made a huge buy so we're going to we're going to reduce this and then we have to see.
Jamie Wilen: Go ahead. I'm sorry. I was going to say, on the self-storage side, as far as capacity utilization there, is there any thought of slowing the pace of development to a more modest level?
Speaker #8: So on the self storage on .
Speaker #2: Storage .
Speaker #8: Sorry .
Speaker #2: ahead . I'm Go sorry .
Speaker #8: say on I the self storage side , as far as capacity utilization , there , is there any thought of slowing the pace of development to a more modest level ?
While we can do as sales because.
Joe Shoen: It slowed a lot. I think Jason thinks it's down $400 million. It's kind of, it's not a. These numbers are a little bit soft. But we've slowed it down. A ground-up self-storage location is probably a three-year process. So if I slow it down, you won't totally see it till three years from now. Now, the other problem is if I want to speed it up, you won't see it for three years. So you got to be a little thoughtful going both ways. So we have slowed it down. I'm still going ahead with what I consider to be strategic. So the U-Box warehouses, I mentioned, I believe they're strategic. And we would be foolish not to build them. Although it's going to be a significant amount of money, enough money that I'm watching it. For self-storage, we're a little more opportunistic as we're going ahead now.
That problem, it's a buying projects also selling products can you.
Take that many trucks into the sale market.
Speaker #2: It slowed a lot . I think Jason thinks it's down $400 million . You know , it's it's not a these numbers are a little bit soft , but we've slowed it down a ground up self storage location is probably a three year process .
And can you move on.
So we will see an increase in my 20 foot trucks.
Okay.
Something like.
Joe Shoen: Something like 12,000 lump going through, and we can't digest 12,000 of those at resale in one year, and probably couldn't do it less than three years. So depending on how. But if I don't buy for three years, I'm just creating another lump that I have to face down the road. So I'm gonna do some modest buys and then accelerate sales and see where that, where we can find a balance. And so we're probing that, I'll say, specifically on the 20-foot truck right now. How much can we, how many of those trucks can we put into the resale market successfully? And we should buy at least that many of them this year, so that we don't have another, another lump in our supply chain. So.
12002 lump going through.
Speaker #2: So if I slow it down you won't totally see it till three years from now . Now the other problem is if I want to speed it up , you won't see it for three years .
We can digest 12000 homes that resale in one year and probably Couldnt do it.
Less than three years, so depending on how but if I don't buy for three years I'm, just creating another lump that will have to face down the road. So I'm going to do some modest buys and then accelerate sales and see where that where we can find the balance.
Speaker #2: So it's , you've got to be a little thoughtful going both ways . So we have slowed it down . I'm still going ahead with what I consider to be strategic the .
So we're probing that I'll say, specifically on the 20 foot truck right now how much can we.
Speaker #2: So u-box warehouse , as I mentioned , I believe they're strategic and be foolish not to build we would them . Although they're it's going to be a significant amount of money , enough money that I'm watching it for self storage .
How many of those trucks can we put into the resale market successfully.
And we should by at least that many of them. This year. So that we don't have another another lump in our supply chain.
Joe Shoen: We either think it's a market that we know better than somebody else, and we see an opportunity, or it's something that's semi-distressed. So we just bought a location in Olive Branch, Mississippi. It doesn't mean much to you. But we already had a store there. We bought a second store. We paid well less than three-quarters of the cost of construction for it. And I think Olive Branch, Mississippi, is going to do fine over the next 10 years, although it's probably not on your horizon. But it's a good, solid-growing area. I determined that was opportunistic, and we go ahead with it.
Yeah.
So on the sales group.
James Wilen: On the self-storage-
Joe Shoen: It, it-
James Wilen: On the self-storage. Okay, I'm sorry.
Speaker #2: We're a little more opportunistic as we're going We're either think it's a market that ahead now . we know better than somebody else , and we see an opportunity , or it's something that's semi distressed .
Okay.
Go ahead I'm sorry.
Joe Shoen: Go ahead. I'm sorry.
James Wilen: I say, on the self-storage side, as far as capacity utilization there, is there any thought of slowing the pace of development, to a more modest level?
I'd say on the self storage side as far as capacity utilization. There is there any thought of slowing the pace of development.
To a more modest level and slowed a lot I think Jason thinks that's down $400 million.
Speaker #2: So we just bought a location in Olive branch , Mississippi , which doesn't mean much to you , but we already had a store there .
Joe Shoen: It's slowed a lot. I think Jason thinks it's down $400 million. It's, you know, it's not a ... These numbers are a little bit soft, but we've slowed it down. A ground-up self-storage location is probably a three-year process. So if I slow it down, you won't totally see it till three years from now. Now, the other problem is, if I want to speed it up, you won't see it for three years. So it's a, you know, you got to be a little thoughtful going both ways. So we have slowed it down. I'm still going ahead with what I consider to be strategic. So the U-Box warehouse, as I mentioned, I believe they're strategic, and we would be foolish not to build them. Although, so there - it's gonna be a significant amount of money, enough money that I'm watching it.
These numbers are a little bit soft, but we've slowed it down.
Speaker #2: bought a second store . We paid We . Well less than three quarters of the cost of construction for it . And I think Olive branch , Mississippi is going to do fine over the next ten years .
Ground up self storage location is probably a three year process.
So.
If I slow it down.
You wont totally see until three years ago now.
Speaker #2: Although it's probably not on a your horizon , but it's a it's a good solid growing area . I determined that was opportunistic .
The other problem is that we want to speed it up you won't see it for three years.
Jamie Wilen: Okay. You guys have done an excellent job of building value but less than a stellar job of creating value for shareholders. If I were a board, pardon me?
You've got to be a little thoughtful going both ways. So we have slowed it down.
Speaker #2: And we go ahead with it .
I am still going ahead, with what I consider to be strategic.
Speaker #8: have done an value job of , but excellent You guys building Okay . less than a stellar job of creating value for shareholders .
Joe Shoen: I'm with you on that.
Jamie Wilen: Okay. If I were a board member, here's what I would suggest to you to help crystallize a bit more of that value. We all know how undervalued self-storage is relative to the rest of the world. We'd like to help the investor community as well as analysts recognize a bit of that. What I would suggest is doing is selling a territory of well-occupied facilities that don't have U-Box storage in there because I don't want to eliminate the competitive advantage we have with the rest of the world in U-Box. But I would take an area where we have stabilized occupancies over 80%, like Tennessee or New Jersey, and hopefully no U-Box storage or not much.
So the U box warehouse as I mentioned I believe they're strategic.
Speaker #8: I if I were a board member , pardon me .
We would be foolish not to build them.
Speaker #2: I'm with you on that .
Speaker #8: Okay . If I were a board member , here's what I would suggest to you to help crystallize a bit more of that value .
Although.
So it's going to be.
Significant amount of money.
Speaker #8: We all know how undervalued is relative to the rest of the self-storage world , and we'd like to help the investment community , as well as analysts , recognize a bit of that .
I'm watching it.
Joe Shoen: For self-storage, we're a little more opportunistic as we're going ahead now. We either think it's a market that we know better than somebody else, and we see an opportunity, or it's something that's semi-distressed. We just bought a location in Olive Branch, Mississippi. It doesn't mean much to you, but we already had a store there. We bought a second store. We paid well less than three-quarters of the cost of construction for it. And I think Olive Branch, Mississippi, is gonna do fine over the next 10 years, although it's probably not on your horizon. But it's a-
Sure.
Self storage.
We're a little more opportunistic as we're going ahead now read I think it is a market that.
Speaker #8: What I would suggest us doing is selling a territory of , well occupied facilities that don't have box storage in there , because I don't want to eliminate the competitive advantage we have with the rest of the world .
We know better than.
Somebody else and we see an opportunity.
Thank goodness.
Semi distressed.
So we just bought a location in olive branch, Mississippi doesn't mean much to you but.
Speaker #8: In U-box . But I would take an area where we have stabilized occupancies over 80% , like a Tennessee or New Jersey and and hopefully no U-box storage or not much I would want to sell that to one of the held REITs could , which much crystallise we for how we have value .
We already had a store there we bought a second store.
Jamie Wilen: I would want to sell that to one of the publicly held REITs, which could crystallize value for how much value we have created there and recycle the proceeds if we get $1 billion or 2 billion, use half of them to buy back stock, the rest to pay down debt, or build new facilities. It would help crystallize what we've built and hopefully not impact the growth of the core business there. What do you think of that?
Okay.
Well less than three quarters of the cost of construction for it.
And I think olive branch, Mississippi is going to decline over the next 10 years, although it's probably not on your horizon.
Speaker #8: We have created there . recycle the And proceeds . If we get 1 billion or 2 , use half of them to buy back stock .
But it's a.
James Wilen: Mm-hmm.
Joe Shoen: It's a good, solid, growing area. I determined that was opportunistic, and we go ahead with it.
It's a good solid growing areas.
I determined that was Opportunistically go ahead with it.
Speaker #8: The rest would pay down debt or build new facilities , but it would help crystallize what we've built and hopefully not impact the the growth of the core business .
Okay, you guys have done an excellent job of building value, but less than a stellar job of creating value for shareholders.
James Wilen: Okay. You guys have done an excellent job of building value, but less than a stellar job of creating value for shareholders.
Joe Shoen: I kind of understand the math of it. I won't say I am hot on the proposal. Of course, part of the opportunity is every one of those I work to get. And so I'm a little bit wary of selling it. And should the market turn up, we may rue the day we sold it. But I think that's a fair position to explore. I'll explore it a little bit with Jason. He's pretty good on the numbers. So we'll explore that a little bit. The stock buyback, I kind of go both ways on also. We went and did the stock dividend and a bunch of other stuff, tried to bring some analysts in, changed the exchange we were going all in an effort to, I guess, improve liquidity or make the stock more interesting to people with, I think, very minimal results, okay?
Joe Shoen: I- I-
If I were aboard.
James Wilen: If I were a board mem- Pardon me?
Speaker #8: There . What do you think of that ?
Pardon me.
Joe Shoen: I'm with you on that.
With you on that.
Speaker #2: I kind of understand the math of it . I won't say I am hot on the proposal . Of course , part of the opportunity is every one of those I work to get .
James Wilen: Okay. If I were a board member, here's what I would suggest to you to help crystallize a bit more of that value. We all know how undervalued self-storage is relative to the rest of the world, and we'd like to help the investment community, as well as analysts, recognize a bit of that. What I would suggest us doing is selling a territory of well-occupied facilities that don't have U-Box storage in there, because I don't want to eliminate the competitive advantage we have with the rest of the world in U-Box. But I would take an area where we have stabilized occupancies over 80%, like a Tennessee or New Jersey, and hopefully, no U-Box storage or not much.
Okay. If I were a board member here's what I would suggest to you that helps crystallize a bit more of that value. We all know how undervalued self storage is relative to the rest of the world.
And we'd like to help the investment community as well as analysts recognize a bit of that.
Speaker #2: So I'm a little bit wary of selling it . And should the market turn up . We may . We may rue the day we sold it .
I would suggest that's doing is selling a territory well occupied facilities that don't have your box storage in there because I don't want to.
Speaker #2: But I think that's a fair position to explore . explore a little bit I'll with Jason . He's pretty good on the numbers .
To eliminate the competitive advantage, we have with the rest of the world the new box, but I would take an area, where we have stabilized occupancies over 80% like a Tennessee and New Jersey.
Speaker #2: So we'll bit . The stock little explore that a buyback I kind of go both ways on also not , I'm you know , we went and did the stock dividend and a bunch of other stuff .
And hopefully no U box storage or not much.
James Wilen: I would want to sell that to one of the publicly held REITs, which could crystallize the value for how much we, we value if we have created there and recycle the proceeds. If we get $1 billion or $2 billion, use half of them to buy back stock, the rest to pay down debt or build new facilities. But it would help crystallize what we built and hopefully not impact the growth of the core business there. What do you think of that?
And I would want to sell that to one of the publicly held rights.
Speaker #2: Tried to bring some analysts in changed the exchange . We were going all in an effort to . I guess improve liquidity or make a stock more interesting to people with I think , very minimal results .
Which could crystallize value for how much.
We value we have created there and recycle the proceeds if we got $1 billion to use half of them to buy back stock the rest to pay down debt or build new facilities, but it would help crystallize, what we built and hopefully not impact.
Joe Shoen: I don't think anybody at my end is a stock guru. That's just not where we all live. I was underwhelmed with the response of the market when we did that. But these are we have to do something to demonstrate value. Another way to demonstrate value is put these stores at 90% occupancy. Then, of course, now it's a little bit easier. I'm sitting here with, depending on how you want to count it, somewhere around 80% effective occupancy. Now, it varies by every store. But that's an overall not a bad estimate. And that's been dragged down by every time I open a new store, I lower that number. So I believe that the market is significantly larger, but it's being, let's say, mistreated. The customers are being mistreated by the industry now.
Speaker #2: Okay . I don't think anybody on my end is a stock guru . We don't we just that's just not where we all live .
The growth of the core business there.
What do you think of that.
Speaker #2: I was the response of the market when we did that underwhelmed with , but these are you know , we have to do something to demonstrate value .
Joe Shoen: I kind of understand the math of it. I won't say I am hot on the proposal. Of course, part of the opportunity is every one of those I work to get, and so I'm a little bit wary of selling it, and should the market turn up, we may rue the day we sold it. But I think that's a fair position to explore. I'll explore it a little bit with Jason. He's pretty good on the numbers, so we'll explore that a little bit. The stock buyback, I kind of go both ways on also. I'm not... You know, we went and did the stock dividend and bunch of other stuff, tried to bring some analysts in, changed the exchange.
I kind of understand the math of it.
<unk>.
I won't say.
Hot on the proposal of course part of opportunities.
Speaker #2: Another way demonstrate value is to put these stores at 90% occupancy . Then , of course , now it's a little bit easier .
Every one of those I work to get a little bit.
Where you are selling it and should the market.
Speaker #2: I'm sitting here with , depending on how you want to count it , somewhere around 80% effective occupancy . Now it varies by every store , but that's an overall not a bad And estimate .
Turn up.
Okay.
We may we may route.
David So I think that's.
A fair position to explore all export a little bit with Jason Keyes.
Speaker #2: that's been dragged down by every time I open a new store . I lower that number . So . I believe that the market is significantly .
Pretty good on our numbers, so we'll explore that a little bit.
On buyback I kind of go both ways on also.
I'm not.
We went and did the stock dividend and bunch of other stuff tried to bring some analysts and changed.
Speaker #2: Larger , but it's being . Let's say mistreated the customers are being mistreated by the industry . Now . And I'm going to try to see if I can communicate that to the customer , that we're not the ones mistreating you .
Joe Shoen: I'm going to try to see if I can communicate that to the customer that we're not the ones mistreating you. So we'll see how that goes. But a bunch of people have come into this industry, which you probably know, and I don't. But they're big-money operators. And they kind of view storage as a cow to be milked. And I look at it more as a lamb to be petted and taken care of. So they're a little rough on the customer, would be the nicest way to put it. And I think we can distinguish on our customer service. And I think there's enough people in the market now who this is their second or third time running storage. And they know that a storage room is not a storage room. It's not a storage room.
The exchange we were gone all in an effort to.
Joe Shoen: We were going all in an effort to, I guess, improve liquidity or make it, the stock, more interesting to people, with, I think, very minimal results, okay? I don't think anybody on my end is a stock guru. We don't. We just. That's just not where we all live. I was underwhelmed with the response of the market when we did that. But these are... You know, we have to do something to demonstrate value. Another way to demonstrate value is put these stores at 90% occupancy. Then, of course, now it's a little bit easier. I'm sitting here with, depending on how you want to count it, somewhere around 80% effective occupancy. Now, it varies by every store, but that's an overall, not a bad estimate.
I guess improve liquidity or make it.
Stock more interesting to people with I think very minimal results okay.
Speaker #2: we'll So see how that goes . But a bunch of people have come into this industry , which you probably know them , and I don't .
Speaker #2: But they're big money operators and they kind of view storage as a cow to be milked . And I look at it more as a lamb to be petted and taken care of .
I don't think anybody at my end.
Stock do we don't we just that's just not where we all live.
I was underwhelmed with the response of the market what we did that.
Speaker #2: So they're a little rough on the customer would be the nicest way to put . I it think we can distinguish our customer service , and I think there's in the enough people market now who this is their third time running storage , second or and they know that storage room is not a storage room .
But these are.
We have to do something to demonstrate value another way to demonstrate values put these stores at 90% occupancy that of course now.
Joe Shoen: We'll see if I can communicate that to the wider group of customers. Overall, I think we've been outperforming our peer group, if you wanted to find that as the big REITs. I believe we've done a better job of being able to maintain rates and expand customer base. Now, I don't get any numbers of theirs that you don't see. So I don't have any special look into their numbers. But it seems that they're having difficulty holding move-in rates at or above move-out rates. We're still able to maintain a differential there. I think that's significant. I'm optimistic I can fill more rooms. But I've got it pretty close to the edge, I think, Jamie, as far as we're pushing. Somewhere Jason may have a better number, 220,000, 230,000 empty units, something like that.
It's a little bit easier I'm sitting here with.
Depending on how you want to count it.
Similar to around 80% effective occupancy varies by restored.
Speaker #2: It's not a storage room . Let's see if I can communicate that to the to the wider group of customers . Overall , I think we've been outperforming our peer group .
Overall, not a bad.
Estimate and Thats been dragged down by every time, we open a new store at lower that number.
Joe Shoen: That's been dragged down by every time I open a new store, I lower that number. So, I believe that the market is significantly larger, but it's being, let's say, mistreated. The customers are being mistreated by the industry now, and I'm gonna try to see if I can communicate that to the customer, that we're not the ones mistreating them. So we'll see how that goes. But a bunch of people have come into this industry, which you probably know them and I don't, but they're big money operators, and they kind of view storage as a cow to be milked, and I look at it more as a lamb to be petted and taken care of. So, they're a little rough on the customer, would be the nicest way to put it.
So.
Speaker #2: If you wanted to find that as the big reach , I believe we've done a better job of being able to maintain rates .
I believe that the market is significantly.
Larger, but it's being.
Speaker #2: And expand customer base . Now , I don't get any numbers of theirs that you don't see . So I don't have any special look into their numbers , but it seems that they're having difficulty holding .
That's a mystery.
Mistreated the customers are being mistreated by the industry now.
And I'm going to try to see if I can communicate that to the customer that we're not the ones Ms treating it.
So we'll see how that goes.
A bunch of people who have come into this industry, which you probably know them, but I don't.
Speaker #2: Move in rates at or above . Move out rates . We're still able to maintain a differential there . I think that's . I'm optimistic .
They are.
Big money operators in the economy.
The storage is a.
Cow to milk and I look at it more as the Lam to be petted, it taken care of so.
Speaker #2: I can I'm fill more rooms , but I've got it pretty close to the edge . I think . Jamie , as far as we're pushing somewheres , Jason may have a better number .
They are a little rough on the customer will be the nicest way to put it.
Jamie Wilen: If you include the managed portfolio, so U-Haul branded storage were about 290,000 rooms available.
Joe Shoen: I think we can distinguish on our customer service, and I think there's enough people in the market now, who this is their second or third time renting storage, and they know that a storage room is not a storage room is not a storage room. We'll see if I can communicate that to the wider group of customers. Overall, I think we've been outperforming our peer group, if you wanted to define that as the big REITs. I believe we've done a better job of being able to maintain rates and expand customer base. Now, I don't get any numbers of theirs that you don't see, so I don't have any special look into their numbers, but it seems that they're having difficulty holding move-in rates at or above move-out rates. We're still able to maintain a differential there.
We can distinguish on our customer service and I think there's enough people in the market now.
Speaker #2: , 230,000 empty units , 220 something like that .
Who this is their second or third time renting storage and they know that storage is not in storage.
Joe Shoen: Okay. So all of those are depending either a liability or an opportunity. So as a shareholder, you'll probably see them a little bit as a liability because you're paying for them and getting nothing for it. I think we're going to see significant progress in filling those rooms. And that's how I have my teams wound up. At the same time, though, successfully, we've increased total customers every year in conventional self-storage. We've done the same thing. We've introduced something like 100,000 storage customers into U-Box. So from the point of view of operating a facility, that manager is looking at total storage customer base. So I'm not disgusted with our performance. But I think our performance has to be better because we've invested the money. But I think we're showing we're resonating with the customer as much or better than anybody else in the business.
Speaker #3: If you include the managed portfolio . So U-Haul branded storage for about available .
It's not a storefront.
Let's see if I can communicate that to the.
Speaker #2: So , those Okay . a 290,000 rooms either or an liability depending on opportunity . So as a shareholder , you're probably seeing a little bit as a liability because you're paying for them and getting nothing for it .
Speaker #2: so all of
Wider group of customers overall.
I think we are outperforming.
Our peer group as you wanted to find out is the big reach.
Speaker #2: I think we're going to see significant progress in filling those rooms . And that's how I have my teams wound up . At the same time That we've increased .
I believe we've.
Done a better job of being able to maintain rates.
And expand customer base no I don't.
Get any numbers. So there is that you don't see yourself.
Speaker #2: successfully , we've increased total customers every year in in conventional self storage . We've done the same thing . We've introduced something like 100,000 storage customers into U-box .
I don't have any special look into there.
Numbers, but it seems that they are having difficulty holding.
Move in rates.
Speaker #2: So from the point of view of operating a , a facility that manager is looking at a total storage customer base . So I'm not .
At or above.
Move out rates.
We're still able to maintain a differential there I think that's significant.
Joe Shoen: I think that's significant. I'm optimistic I can fill more rooms, but I've got it pretty close to the edge, I think, Jamie, as far as, we're pushing somewhere. Jason may have a better number, 220,000 to 230,000 empty units, something like that.
I'm I'm optimistic.
There are more rooms, but I've got it pretty close to the edge I think Jamie as far as.
Speaker #2: Disgusted with our performance , but I think our performance has to be better because we've the invested money . But I think we're showing we're resonating with the customer as much or better than anybody else in the business .
We're pushing somewheres, Jason May have a better number 202200 30000 empty units something like that.
Jamie Wilen: I believe you have two customers here. One is the person who rents your storage facilities and truck rentals. The other customer are investors. Investors would love to see you harvest some of the value you've created where you've turned a dollar into four, but we can't see it. Whatever you can do in that respect would be a good thing for the discount.
Jason Berg: If you include the managed portfolio, so U-Haul branded storage-
If you include the managed portfolio. So you will hop branded stores for about 290000 rooms available. Okay. So so all of those are depending on these reliability of an opportunity.
Speaker #8: I believe you have two customers here . One is the person who rents your storage facilities and truck rentals , and the other customer are investors .
Joe Shoen: Okay.
Jason Berg: We're about 290,000 rooms available.
Joe Shoen: Okay. So all those are, depending either a liability or an opportunity. So as a shareholder, you're probably seeing it a little bit as a liability because you're paying for them and getting nothing for it. I think we're gonna see significant progress in filling those rooms, and that's how I have my teams wound up. At the same time, though, we've increased successfully. We've increased total customers every year in conventional self-storage. We've done the same thing. We've introduced something like 100,000 storage customers into U-Box. So from the point of view of operating a facility, that manager is looking at total storage customer base. So, I'm not disgusted with our performance, but I think we, our performance has to be better because we've invested the money.
Speaker #8: And investors would love to see you harvest some of the value you've created , where you've turned $1 into four . But can't see it .
As a shareholder you're probably seeing a little bit as a liability because you.
Joe Shoen: I got it. Okay. It's a consolation. I'm 76. So I'm kind of getting a little closer to wanting to see the goose lace and golden things too. All right. Thank you very much. I appreciate your thoughts.
Speaker #8: Okay we , whatever you can do in that respect would be a good thing for . I got it . For this company .
You are paying for them and get them up for it.
Okay.
I think we're going to.
Speaker #2: It's a consolation . I'm 76 , so I'm kind of getting a little closer to wanting to see the Goose Lakes and golden eggs to All much . .
Speaker #2: It's a consolation . I'm 76 , so I'm kind of getting a little closer to wanting to see the Goose Lakes and golden eggs to All much .
See significant progress on filling those rooms, and Thats all I have my team's wound up at the same time.
Jamie Wilen: Very good. Thank you.
So we've increased successfully we've increased total customers every year.
Operator: Thank you once again. Please press star one should you wish to ask a question. Your next question is from Stephen Ralston from Zacks. Your line is now open.
Speaker #2: very right . Thank you I appreciate your thoughts
Speaker #8: Thank
Speaker #8: you . Very good . .
And conventional self storage we've done the same thing we've introduced.
Speaker #4: Thank you . Once again , please press star one should you wish to ask a question and your next question is from Steven Ralston .
Something like 100000 storage customers in the U box.
Stephen Ralston: Thank you. I just want to circle back around and tap Joe's experience and get his historical perspective. You pointed out that you're in a very unique period with the emphasis on EV vehicles and the demand that came through COVID. When you think about the situation in your past, does it remind you of any time in the past where you resolved the situation and how it happened? And you used that as key markers in managing the company?
So from the point of view of operating.
Speaker #4: From your line is now open .
A facility that managers looking at.
Speaker #5: Thank you . I just want to circle back around in Tap Joe's experience and get his historical perspective . You pointed out that you've in a very unique period with the emphasis on EV vehicles and the demand that came through Covid .
Total storage customer base.
So.
I'm not.
Okay.
Discussed it with our performance, but I think where our performance has to be better because we have invested the money, but I think we're showing we're resonating with the customer as much or better than anybody else in the business.
Joe Shoen: But I think we're showing we're resonating with the customer as much or better than anybody else in the business.
Speaker #5: When you think about the in your in situation your past , does it remind you of any past where time in the you .
I believe we have two customers here one is the person who rents your storage facilities and truck rentals and the other customer.
James Wilen: I believe you have two customers here. One is the person who rents your storage facilities and truck rentals, and the other customer are investors.
Our investors and investors would love to see you harvest some of the value you've created where you've turned the dollar than before but we can't see it.
Joe Shoen: Yeah.
James Wilen: Investors would love to see you harvest some of the value you've created, where you've turned a dollar into four, but we can't see it.
Speaker #5: And resolve the situation and how it happened and you use that as like key markers in the managing company ?
Joe Shoen: In a general sense, yes. But in fleet, we've always been able to buy all the fleet we had money for. Our problem up until recently was we always were capital-constrained. And then this flipped, COVID and post-COVID, and we can buy what someone says we can have. We don't have a lot of markers in there. But of course, we're working on it regularly. And I think if I had to do this all over again, coming out of COVID or I'll say post-COVID, I would not have, when they went on allocation, had to tell them to keep their trucks. That's what I'll tell them next time. They keep their trucks. And when they jack prices, they can keep their trucks. Because I can sweat out 2, 3, 4 years. And I think my customer will support me.
Joe Shoen: Okay. I-
James Wilen: Whatever you can do in that respect would be a good thing for-
Whatever you can do in that respect would be a good thing for I got it.
Joe Shoen: I got it.
James Wilen: -the discount.
Joe Shoen: Okay. It's a consolation. I'm 76, so I'm kind of getting a little closer to wanting to see the goose lays in gold eggs, too. All right. Thank you very much.
Speaker #2: In general sense , yes , but in fleet , we've always been able to buy all the fleet we had money for our problem up until recently was we always were capital constrained .
It's a constellation I'm 76, I'm kind of getting a little closer to wanting to see the goose leasing all fixed.
[laughter].
Alright, Thank you very much I appreciate your thoughts.
James Wilen: All right.
Joe Shoen: I appreciate your thoughts.
James Wilen: Very, very good. Thank you.
Very good thank you.
Speaker #2: And then this flipped . Covid and post Covid and we can buy what someone says we can That's that . We don't have a lot of markers in there .
Okay.
Thank you once again, please press star one should you wish to ask a question.
Operator: Thank you. Once again, please press star one should you wish to ask a question. Your next question is from Steven Ralston, from Zacks. Your line is now open.
And your next question is from Steven Ralston from Zacks. Your line is now open.
Speaker #2: But of course , we're we're we're working on it . Regularly . And I think if I had to do this all over again , coming out of out of Covid or I'll say post Covid , I would not have when on they went allocation , I'd have told them to keep their trucks .
Thank you I just wanted to circle back around and.
Steven Ralston: Thank you. I just want to circle back around and tap Joe's experience and get his historical perspective. You've pointed out that you're in a very unique period with the emphasis on EV vehicles and the demand that came through COVID. When you think about the situation in your past, does it remind you of any time in the past where you and resolved the situation and how it happened, and you use that as like key markers in managing the company?
Tap Joe's experience and get it to Oracle perspective.
You've pointed out that you're in a very unique period with me.
And this is on EV vehicles, and the demand that came through Covid.
Speaker #2: That's what I'll tell them next time they keep their trucks . And when they jack prices , they their trucks because I can sweat four years out two , three , .
When you think about the situation in your in your past does it remind you of any time in the past where you are.
Joe Shoen: I think I was overeager to buy trucks because we had such a nice balance in 2016. I wanted to get back to that balance quickly. I didn't stand firm enough when they came through with massive price increases. I just don't know that it's unsupportable. Now, they had all this talk. We all saw it. I think everybody's a little guilty of this of saying that, as Mary Barra did, she had something I don't know, after 2037 or something, GM will not make an internal combustion engine. Well, if you're on my end of the deal, that's a frightening thought because the other ones don't run, you see? You can see how I fell into the trap of thinking, "Well, hell, if she's not going to build any." My friends at Ford didn't make quite as broad a statement.
Hmm.
Speaker #2: I And think my customer will support me . I think I was overeager to buy trucks because we had such a nice balance .
Resolve the situation and how it happened and you use that.
Key markers.
In managing the company.
Speaker #2: In 16 , I wanted to get back to that balance quickly and I didn't stand firm enough when they came through with massive price to just all of it .
Okay.
Joe Shoen: In a general sense, yes, but in fleet, we've always been able to buy all the fleet we had money for. Our problem up until recently was we always were capital constrained, and then this flipped COVID and post-COVID, and we can buy what someone says we can have. That's that. We don't have a lot of markers in there. But of course, we're working on it regularly, and I think if I had to do this all over again, coming out of COVID, or I'll say post-COVID, I would not have. When they went on allocation, I'd have told them to keep their trucks. That's what I'll tell them next time. They keep their trucks, and when they jack prices, they can keep their trucks. Because I can sweat out two, three, four years, and I think my customer will support me.
In a general sense, yes, but.
And fleet.
We've always been able to buy all the fleet, we had money for our problem up until recently was we always were capital constrained.
Speaker #2: It's unsupportable now . They had all this talk and we all saw it , and I think everybody's a little guilty of this , of that as saying Mary did , she had something I don't know , 37 or after 20 , something .
And then this flipped.
Covid and post Covid and we can buy.
<unk> says we can have.
<unk>.
Speaker #2: GM will not make an internal combustion engine . So if you're on my end of the deal , that's a frightening thought because the other ones don't run .
That we don't have a lot of markers out there.
But of course, we are.
Speaker #2: You see . So you can see how I fell trap of into the hell , if she's not going to build any . And then my friends at Ford didn't make quite as broad a statement .
We're working on it regularly.
I think if I.
Joe Shoen: But practically speaking, they were running their investment as if they were no longer going to make it. An example, they quit the second shift at one of their truck plants. Well, we'd been the beneficiaries of that second shift for at least 10 years. So when they quit a second shift at that plant, I go, "Where the hell is the truck going to come from?" So I think we'd have come out better if we'd have just let the fleet age by just what suited us and just at the price that suited us. And we wouldn't be trying to digest all this excess cost. But that's not what happens. So now we got to digest it and want to work it in a way that it doesn't come back and plague people who are trying to make fleet decisions 5 and 6 years from now.
I had to do this all over again.
Coming out of Covid.
Obviously postponed with them I would not have.
Speaker #2: But practically were running speaking , they their investment as if they longer going to make it an example . They quit the second shift at one of their truck plants , we'd been the beneficiaries of that second shift for at least ten years .
When they went on allocation I told them to keep their trucks and so I'll tell him next time, they keep their trucks.
And when they jacked prices they can keep their trucks.
Because I can sweat out 234 years.
Speaker #2: So when they quit a second shift to that plant , I go , where the hell's trucks going to come from ? So I think we'd have we'd have come out better if we'd had just let the fleet age just what by suited us .
Yes.
My customer will support me.
I think I was.
Joe Shoen: I think I was overeager to buy trucks because we had such a nice balance in 2016. I wanted to get back to that balance quickly. I didn't stand firm enough when they came through with massive price increases to just tell them that they weren't. It's unsupportable. Now, they had all this talk, and we all saw it, and I think everybody's a little guilty of this, of saying that, as Mary Barra did, she had something, I don't know, after 2037 or something, GM will not make an internal combustion engine. Well, if you're on my end of the deal, that's a frightening thought, because the other ones don't run, you see?
Over eager to buy trucks, because we had such a nice balance in 16, I wanted to get back to that balance.
Quickly.
And.
Speaker #2: And just at the price that suited us . And we digest all this wouldn't be excess trying to cost . But that's not what happened .
I didn't stand firm enough when they came through with massive price increases just don't have it.
It's unsupportable now they had all this talk and we all saw it and I think everybody's a little guilty of this.
Speaker #2: So now we got to digest it and want to work it in a way that it doesn't come back . And plague people who are trying to make fleet decisions .
Joe Shoen: I want to try to smooth it out. So that's causing us, in some models, to buy a few more trucks than an analyst would justify. But when you look at the age of the truck and what that's going to do to you going ahead, I think experience tells me you want to buy some trucks. So, no, I don't have a marker and experience on this. Self-storage, I have a lot of markers and experience on. I'm fairly confident that those are all good-money bets. But the timing is too slow. It's not enough to command investor support, which I understand. I'm an investor here too. We have markers. We can look at market penetration by various markets. The demand for that product has far exceeded anyone's expectations. I think you could say that of any of the major companies.
Saying that as Mary Barra did she had something I don't know after 2037 or something GM will not make an internal combustion engine.
Speaker #2: Five and six years from now . I want to try to to smooth it out . And so that's causing us in some models to buy a few more trucks an than analyst would justify .
Well if you're on my end of the deal that's a frightening thought because the other ones don't run.
Speaker #2: But when you look at the age of the truck and what that's going ahead , to do to going I think experience tells trucks .
<unk>.
Joe Shoen: So you can see how I fell into the trap of thinking, "Well, hell, if she's not going to build any..." And then my friends at Ford didn't make quite as broad a statement, but practically speaking, they were running their investment as if they were no longer going to make it. An example, they quit the second shift at one of their truck plants. Well, we've been the beneficiaries of that second shift for at least 10 years. So when they quit a second shift to that plant, I go, "Where the hell is trucks gonna come from?" So I think we'd have, we'd have come out better if we'd have just let the fleet age by just what suited us and just at the price that suited us, and we wouldn't be trying to digest all this excess cost. But that's not what happened.
So you can see high.
Fell into the trap and will help me if she is not going to build any.
Speaker #2: you want to So me . So , so no , I don't have a marker or an experience this self storage . I have a lot of and experience on .
And then my friends at forward didn't.
Quietest broad statement, but Pratt.
Practically speaking they were running their investment as if they were no longer willing to make it.
Speaker #2: I'm fairly confident that's that those are all good money bets . But the timing is too slow and it's not that enough to on support , investor which I understand .
An example, they quit the second shift to one of their truck plants, where we've been.
The beneficiaries that second shift for at least 10 years.
When they put a second shift to that plan, where the health trucks going to come from.
Speaker #2: I'm an investor to . So here but we have markers . I you know , we can look at market penetration by various markets and storage market .
Okay.
So.
I think we would've come out better if we'd just let the fleet age.
By just what suited us adjusted the prices to us.
Joe Shoen: None of them really appreciated how much demand there was for that product or there is for that product. And it's still being served in a spotty fashion. So filling in those gaps is an opportunity for someone if they can identify them and then get them filled in.
Speaker #2: The demand for that product is far exceeded . Anyone's expectations . you could say I think that of any of the major companies , none of really appreciated how much demand there was for that product or there is for that product .
And we wouldn't be trying to digest all of this.
Excess costs.
That's not what happened so now we've got to digest it.
Joe Shoen: So now we got to digest it and want to work it in a way that it doesn't come back and plague people who are trying to make fleet decisions 5 and 6 years from now. I want to try to smooth it out, and so that's causing us in some models to buy a few more trucks than an analyst would justify. But when you look at the age of the truck and what that's going to do to you going ahead, I think experience tells me you want to buy some trucks. So no, I don't have a marker, an experience on this. Self-storage, I have a lot of markers and experience on.
I want to work it in a way that it doesn't come.
Come back can plague.
Speaker #2: And it still being served in a spotty fashion . So in gaps is an opportunity for those someone if they can identify them .
People are trying to make fleet decisions five and six years and I wanted to try to.
To smooth it out and so thats, causing us.
Stephen Ralston: Thank you for sharing that historical perspective. I appreciate it.
Some models to buy.
Speaker #2: And then get them filled in .
Joe Shoen: Sure.
Few more trucks then.
And analysts with justified, but when you look at the age of the truck.
Speaker #5: Thank sharing you for that historical perspective . appreciate I it .
Operator: Thank you. There are no further questions at this time. I will now turn the call back over to Sebastien Reyes for closing remarks.
That's going to do to going ahead, I think experience tells me you want to buy some trucks. So.
Speaker #2: Sure .
Speaker #4: Thank you . no further There are questions at this time . I will now turn the call back over to Sebastien Reyes for closing remarks .
Sebastien Reyes: Thanks, Jenny. I have one question that I wanted to pose here that came in during the call. U-Haul's profit margins, excluding depreciation, have been in constant decline for the last decade. Please explain why margins have been so persistently weak since 2016. And please explain your plan to restore the profitability of this great company.
Okay.
So no I don't have a marker or an experience of this self storage I have a lot of markers of experience on that.
Speaker #1: Thanks , Jenny . I have one question that I wanted to here that came in during the call U-haul's profit margins , excluding depreciation , have been in decline for the last decade .
Joe Shoen: I'm fairly confident that that those are all good money bets, but the timing is too slow, and it's not enough to command investor support, which I understand. I'm an investor here, too. So, but we have markers. You know, we can look at market penetration by various markets and storage market penetration. The demand for that product has far exceeded anyone's expectations. I think you could say that of any of the major companies. None of them really appreciated how much demand there was for that product or there is for that product, and it's still being served in a spotty fashion. So filling in those gaps is an opportunity for someone if they can identify them and then get them filled in.
Fairly confident that that's.
But those are all good money bets, but the timing is too slow and it's.
Not enough to command Investor support, which I understand I'm, an investor here too.
Speaker #1: Please explain why margins have so been persistently weak since 2016 , and please explain your plan to restore the profitability of this company .
Jason Berg: Well, this is Jason. I'll take that one. Well, 2016 is picking the high point of our EBITDA margin. So our earnings over the history of the company have been a little bit cyclical, largely in relation to how much we expand the organization over certain time frames. So to pick 2016, which I think was maybe 35%, 36% EBITDA margin, the 10 years before that, our EBITDA margin was 25%. The 10 years since 2016, our average EBITDA margin has been 33%. So there has been actually a structural improvement in how the organization has been run. And we've included a slide that shows this trend of improving EBITDA margins that I don't think it's happenstance that it coincides with our growth in the self-storage and the U-Box market. Since fiscal 2016, we've had some up years and down years.
So.
But we have markers.
We can look at.
Market penetration by various markets.
Speaker #3: this is Well , Jason .
Speaker #3: I'll I'll take that one . great Well , picking a 2016 is picking the high EBITDA of our point is margin . So our earnings over the history of the company have been a little bit cyclical in relation , largely to we how how we much that expand the organization over a certain frame .
Storage market the demand for that product as far exceeded anyone's expectations I think.
You could say that of any of the major companies.
Really appreciate it.
How much demand there was for that product or there is for that product.
And it's still being served in a spotty fashion.
<unk>.
Filling in those gaps as an opportunity for someone if they can identify them and then get them till date.
Speaker #3: So to which I pick 2016 , think was maybe 35 , margin , the ten years before that 36% EBITDA , our EBITDA margin was 25% .
Thank you for sharing that historic perspective I appreciate it.
Steven Ralston: Thank you for sharing that historical perspective. I appreciate it.
Joe Shoen: Sure.
Sure.
Thank you there are no further questions at this time I will now turn the call back over to Sebastian Ross for closing remarks. Thanks, Jenny I have one question that I wanted to pose here that came in during the call.
Operator: Thank you. There are no further questions at this time. I will now turn the call back over to Sebastian Reyes for closing remarks.
Speaker #3: The ten years since EBITDA margin has been 33% . 2016 are average So there has structural improvement in actually a how the organization has been been run .
Sebastien Reyes: Thanks, Jenny. I have one question that I wanted to pose here, that came in during the call. U-Haul's profit margins, excluding depreciation, have been in constant decline for the last decade. Please explain why margins have been so persistently weak since 2016, and please explain your plan to restore the profitability of this great company.
Speaker #3: And we've a included slide that shows of improving this margins EBITDA that I don't think it's happenstance that it coincides with our growth in the self-storage in U-box market since fiscal the 16 , we've we've had some up years years .
You have profit margins, excluding depreciation have been in constant decline for the last decade.
These explain why margins have been so persistently weak.
<unk> thousand 16, and please explain your plan to restore the profitability of this great company.
Jason Berg: I would say that during COVID years where we got back up to the mid-30% range, there was some recognition of revenue and not the recognition of the associated expenses that went along with it. So, for example, the repair and maintenance that we were incurring during the work-from-home phase, where revenue shot up. Under current accounting rules, you can't accrue for expected maintenance based upon how much the truck is going right now. So we accrued all of these miles and recognized the revenue. And then there was a couple of years after that that we've been paying for the repair and expense associated with that. Then we also had the somewhat idiosyncratic event where our former auditors failed to see the wisdom in how we chose to reserve for our self-insurance liabilities.
Jason Berg: Well, this is Jason. I'll take that one. Well, 2016 is picking the high point of our EBITDA margin. So that... Our earnings over the history of the company have been a little bit cyclical, largely in relation to how much we expand the organization over a certain time frame. So to pick 2016, which I think was maybe 35, 36% EBITDA margin, the 10 years before that, our EBITDA margin was 25%. The 10 years since 2016, our average EBITDA margin has been 33%.
This is Jason.
I'll take that one.
Speaker #3: I would we've say that and down during Covid years where we got back up to the the 30% range , there is some recognition of since revenue and not the recognition associated expenses that went with it .
Well 2016 is picking up is.
Is picking the high point of our EBITDA margin so that.
Our earnings over the history of the company had been a little bit cyclical largely in relation to.
Speaker #3: So along example , the repair and maintenance that we were incurring during , for work phase where revenue shot up under a current accounting rules , you can't for maintenance based upon how much the truck is going right now .
How are we how much we expand the organization over certain timeframe. So.
To pick 2016, which I think was.
Maybe 35%, 36% EBITDA margin.
Speaker #3: So mid 30 , we accrued all of these and recognized the miles revenue . And then couple of there was a years after that that paying we've been for the repair .
10 years before that.
Our EBITDA margin was 25%.
The 10 years since 2016, our average EBITDA margin has been 33%. So that it has been actually a structural improvement in.
Speaker #3: And expense associated with that we . Then had also the somewhat idiosyncratic event where our former failed to see the wisdom we in how chose to reserve for our self-assurance , liabilities .
Jason Berg: So there has been actually a structural improvement in how the organization has been run, and we've included a slide that shows this trend of improving EBITDA margins, that I don't think it's happenstance, that it coincides with our growth in the self-storage and the U-Box market. Since fiscal 2016, we've had some up years and down years. I would say that during COVID years, where we got back up to the mid-30s percent range, there was some recognition of revenue and not the recognition of the associated expenses that went along with it. So for example, the repair and maintenance that we were incurring during the work from home phase, where revenue shot up, under current accounting rules, you can't accrue for expected maintenance based upon how much the truck is going right now.
How the organization has been run and we've included.
Jason Berg: And they took 80, I think it was $88 million, out of our self-insurance reserves in order to sign the opinion. And now, over time, I think we've seen that we would have been much better off to leave those reserves on the books. And that would have been a little bit more of a shock absorber, right? Because during COVID, transactions increased. So the rate of potential incidents increased. Well, now we're dealing with as those incidents that happened back then are developing, they're becoming a little bit worse than what was originally thought. It's always ifs and buts. But for this quarter, if we had a normal U-Move revenue quarter of 4% growth and we didn't have the reserve strengthening, we would be looking at an average EBITDA margin.
Slide that shows this trend.
<unk> is improving EBITDA margins that.
I don't think its happen stance that it coincides with our growth in the self storage in the U box market.
Speaker #3: And they took 80 . I think it was $88 million out of our self-insurance reserves in order to sign the opinion and now , over time , I think we've seen that we would have been much better off those reserves on the to leave books .
Since since fiscal 2016.
We've had some up years and down years, I would say that during COVID-19, Here's where we got back up to the mid <unk>.
Speaker #3: And that would have been a little bit more of a shock absorber . Right ? Because Covid during transactions increased . So the rate of incident potential incidents increased .
30% range.
There was some.
Recognition of revenue and not the recognition of the associated expenses that went along with it. So for example.
Speaker #3: Well , now we're dealing with , those as incidents that happened back then are developing , they're becoming a worse than what was thought .
The repair and maintenance that we were incurring Turin.
The work from home Phase, where we are.
Speaker #3: know , You always , ifs and originally buts . But for this quarter , if , if , if we had a move revenue you of 4% growth quarter and we the reserve didn't have strengthening , we would normal be looking at an average EBITDA margin .
Revenue shot up.
Under current accounting rules, you can't accrue for expected maintenance based upon how much the truckers going right now.
Jason Berg: So I'm hesitant to agree with the premise that there's something structurally wrong with how we're operating the business from an expense perspective. I would say that it's a revenue issue. And then it's a cycle. And we've been in an unprecedented growth cycle, how much we've grown the fleet and how much we've grown self-storage. And frankly, I think we've done a reasonably good job in keeping the EBITDA margins where they're at while we're going through this process. Now, all that to say, a decent EBITDA margin for us over a 12-month period is going to be in the low 30% ranges. And we are underperforming that this year.
Jason Berg: So we accrued all of these miles and recognized the revenue, and then there was a couple of years after that that we've been paying for the repair and expense associated with that. Then we also had the somewhat idiosyncratic event where our former auditors failed to see the wisdom in how we chose to reserve for our self-assurance liabilities, and they took $88 million out of our self-assurance reserves in order to sign the opinion. And now, over time, I think we've seen that we would have been much better off to leave those reserves on the books, and that would have been a little bit more of a shock absorber, right? Because during COVID, transactions increased, so the rate of incident, potential incidents increased.
We accrued all of these miles and recognize the revenue and then there was a couple of years after that that we have been paying for them.
Speaker #3: So I'm to hesitant agree with the premise something that structurally with the wrong how . there's We're the expense from an perspective . I would that say that it's a revenue issue and then cycle .
Repair and expense associated with that.
Then.
We also have the somewhat idiosyncratic events, where our former auditors failed to see the wisdom and how we chose to reserve for our self insurance liabilities.
Speaker #3: We've been in an unprecedented growth cycle . How much we've grown the operating fleet and how much it's a we've grown self and business frankly , I think we've done a reasonably good job in keeping the EBITDA margins where at while we're going process they're .
And they took 80.
He was $88 million out of our self insurance reserves.
In order to sign the opinion and now over time I think we've seen that we would've been much better off to leave those reserves on the books and that would've been a little bit more of a shock absorber right because.
Speaker #3: Now , all that to say , a decent EBITDA margin for us over a 12 month period is going to be in the low through this 30% range , and we are underperforming that this year
Sebastien Reyes: Well, thanks again, everyone, for your participation. We look forward to speaking with you again after we report our year-end results in May. Thanks.
During COVID-19.
Speaker #1: Well , thanks again , everyone , for your participation . We look forward to you again report our after we year end results speaking with May .
<unk> increased the rate of incidents potential incidents increased will now we're dealing with those.
Operator: Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may all disconnect your lines.
Jason Berg: Well, now we're dealing with, as those incidents that happened back then are developing, they're becoming a little bit worse than what was originally thought. You know, it's always, you know, ifs and buts, but for this quarter, if, if, if we had a normal U-Move revenue quarter of 4% growth and we didn't have the reserve strengthening, we would be looking at an average EBITDA margin. So I'm hesitant to agree with the premise that there's something structurally wrong with the, how we're operating the business from an expense perspective. I would say that, that, it's a revenue issue, and then it's a cycle. We've been in an unprecedented growth cycle, how much we've grown the fleet and how much we've grown self-storage.
Those incidents that happened back then are developing there'll be coming a little bit worse than what was originally thought.
Speaker #4: Thank you .
Speaker #4: Ladies . gentlemen , the and conference ended . Thank you all for joining . You may all disconnect your lines .
Yes.
It's always ifs and buts.
For this quarter, if if if we had our normal U move revenue quarter, a 4% growth.
And we didn't have the reserve strengthening we would be looking at an average EBITDA margins. So I'm hesitant to agree with the premise.
That there is something structurally wrong with the.
How we're operating the business from an expense perspective.
I would say that that.
It's a revenue issue and then it's a cycle we've been in an unprecedented growth cycle, how much we've grown the fleet and how much we've grown self storage and frankly, I think we've done a reasonably good job in keeping the EBITA margins, where they are at while we're going through this process.
Jason Berg: And frankly, I think we've done a reasonably good job in keeping the EBITDA margins where they're at while we're going through this process. Now, all that to say, a decent EBITDA margin for us over a 12-month period is gonna be in the low 30% ranges, and we are underperforming that this year.
Now all of that to say a decent EBITDA margin for us over a 12 month period is going to be in the low 30% ranges and we are underperforming that this year.
Well, Thanks again, everyone for your participation we look forward to speaking with you again after we report our year end results in May.
Sebastien Reyes: Well, thanks again, everyone, for your participation. We look forward to speaking with you again after we report our year-end results in May. Thanks.
Thanks.
Thank you ladies and gentlemen, the conference has now ended thank you all for joining you may all disconnect your lines.
Operator: Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining, and you may all disconnect your lines.
