U-Haul Holding Company Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Equipment Rental: Increased cost of new rental trucks impacted P&L, unable to pass along increased costs. Saw traction in reversing decline in moving equipment transactions.
• Self-Storage: Gained in self-storage while competitors not doing so, but close contest. Continued to add self-storage units faster than renting them up.
• Financials: First quarter earnings $195 million vs $257 million last year. Equipment rental revenue up, self-storage revenue up, but occupancy declined in self-storage due to new unit additions.

Segment Performance

• Equipment Rental: Revenue increased by $15 million (about 1.5%), marking the first year-over-year increase in eight quarters. Capital expenditures for new rental equipment were $539 million, an $85 million increase. Proceeds from sales of retired equipment decreased by $49 million to $144 million.
• Self-Storage: Revenue was up $17 million (about 8%). Average revenue per occupied foot increased nearly 3%, and same-store portfolio was up over 4.5% per foot. Occupied unit count was up over 32,000 units, but added nearly 64,000 new units led to average occupancy decline. Invested $402 million in real estate acquisitions, added 17 new storage locations.
• U-Box: Revenue increased $9 million, contributing to other revenue.

Guidance

• Capital Expenditures: Increased fiscal 2025 full-year net CapEx projection by about $40 million to $90 million due to more units available from manufacturer.
• Fleet: Expect fleet to be flat for rest of the year, with some fluctuations due to supply chain and resale market conditions.

Risks

• Supply Chain and Resale Market: Increased cost of new rental trucks not passed to consumer, resale market not supporting inflated costs of internal combustion vehicles.
• Competition: Self-storage remains a close contest, market competitive with consumer choices.
• Cash and Debt: Need to manage cash levels for development and debt maturities, potential fluctuations in cash balances.

Question and Answer

Q: Comment on pricing power and customer winning the event A: Joe Shoen mentioned customer is key, viewing business as consumer product, competitors discounting below cost, U-Haul focusing on customer service. Jason Berg added revenue per occupied foot in storage still improving, no decrease in pricing power in fleet Q: Sequential acceleration in business segments A: Storage steady, equipment rental in fits and spurts, July flattened then August picking up Q: CapEx timeline and fleet mix A: Depreciation affected by mix of pickups, vans, and larger trucks. More expensive trucks causing upward pressure on depreciation, with larger trucks expected to add to depreciation if available Q: Inorganic vs organic storage growth A: Organic growth (ground up) takes 2-4 years, inorganic (acquisitions) opportunistic, closing deals quickly Q: Fleet size and market share A: Fleet expected to be flat, no accurate market share data, gains from owned/borrowed equipment users