Prepared remarks
Good morning, ladies and gentlemen, and welcome to the U-Haul Holding Company's Fourth Quarter Fiscal Year End 2025 Investor Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call is being recorded on Thursday, May 29th, 2025. I would now like to turn the conference over to Sebastien Reyes. Please go ahead.
Good morning, and thank you for joining us today. Welcome to the U-Haul Holding Company fourth quarter fiscal year end 2025 investor call. Before we begin, I'd like to remind everyone that certain 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 risks and uncertainties, some of which cannot be predicted or quantified. Certain factors could cause actual results to differ materially from those projected. For a 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-K for the year ended March 31, 2025, which is on file with the US Securities and Exchange Commission. I'll now turn the call over to Joe Shoen, Chairman of U-Haul Holding Company.
Hello, everybody. What you see especially in our fourth quarter results are decisions made in prior years working their way through the financial statements. On a more positive note, the original equipment manufacturers appear to have decided to make reliable, fuel-efficient internal combustion engine vehicles in volume at improved pricing. OEMs and U-Haul both need to get some emissions regulation relief from the administration to be able to better serve our customers with truck products. U-Haul, in the meantime, has deflated three quarters of our pickup fleet as we see no path to profitability with more than a small specialized pickup fleet. Resale prices on both vans and pickups are steady or improving. I expect we may struggle through October on resale pricing, but beyond then, it appears to be a clear path. Our customers are expressing optimism, at least our truck share customers are. Storage remains a bright spot wherever we execute with precision. Our programs work. It's a less bright spot where we execute with less precision. Both self-move and self-store are consumer needs, and I expect those needs to continue. It is my challenge to make U-Haul the customer's best choice. With that, I'll turn it to Jason to kind of get specific on the numbers.
Thanks, Joe. So yesterday we reported a fourth quarter loss of $82.3 million compared to a loss of $863,000 for the same quarter last year. Our full year fiscal 2025 earnings were $367.1 million, down from $628.7 million in fiscal 2024. In terms of earnings per share, the fourth quarter of this year was a $0.41 per share loss per non-voting share loss as compared to less than $0.01 a share loss in the fourth quarter of fiscal 2024. Earnings before interest, taxes, and depreciation (EBITDA) at our Moving and Storage segment increased by $5.6 million for the quarter to $217.3 million largely from revenue growth. Our full year fiscal 2025 EBITDA increased by just under $52 million to $1,619.7 million. Included in our earnings release and financial supplement is a reconciliation of EBITDA to GAAP earnings. I'm going to highlight three large differences between the two. First, fleet depreciation from the increased level of fleet acquisitions and the cost per truck over the last several years.
Second, the reduced gains on the sale of retired pickups and cargo vans. And third, the declining interest income at the Moving and Storage segment as we reduced our short-term cash balances due to reinvestment. Of the $0.41 decline in earnings per share for the fourth quarter, about $0.16 was from fleet depreciation, $0.12 from the decrease in gains on sale of rental equipment, and $0.10 from the decline in interest income. For the fourth quarter, our equipment rental revenue results had a $29 million increase, or just over 4%. Of note, during the prior year, we benefited from the extra day attributable to the leap year. I mention that because it added somewhere around $11 million to last year's results. For the fiscal year, we finished up just over $100 million for equipment rental revenue, that's about a 2.8% increase. During the fourth quarter, both our one-way and in-town transactions increased compared to last year at that time, as did our revenue per transaction.
Our trailer and towing fleets also experienced improved revenue results. For the month of April and now into May, we've seen revenue continue to trend positively compared to the same periods last year. Capital expenditures for new rental equipment for fiscal 2025 were $1,863 million, that's a $244 million increase compared to fiscal 2024. While proceeds from the sales of retired rental equipment declined by $76 million to a total of $652 million. This is a combination of fewer pickups and cargo vans sold, along with slightly lower average sales proceeds on the units that we did sell. Our initial projection for net fleet CapEx in fiscal year 2026 is $1,295 million, compared to approximately $1,211 million in fiscal 2025. Switching to self-storage, revenues were up $18 million or 8% for the quarter. Our 12-month results were also up 8% or just under $67 million. Average revenue per occupied foot continued to improve across the entire portfolio, up approximately 1.6%.
And if you look at just the same-store piece of that, we were up 3%. Our average move-in rates for the same-store portfolio were up just over 4.5% compared to the fourth quarter of last year. Our occupied unit count at the end of March was up just over 39,000 units compared to the same time last year. This time last year when we were talking, that same statistic was a 31,000-unit improvement, so we picked up the pace a bit compared to where we were at last year. During fiscal year 2025, we added 82 new storage locations and 6.5 million new net rentable square feet across 71,000 new rooms. Our average occupancy ratio across all of our own locations during the fourth quarter declined about 2.5% to just over 77%. If you look at just the same-store portfolio, average occupancy experienced about a 50 basis point decrease to 91.9%. During fiscal 2025, we invested $1,507 million in real estate acquisitions along with self-storage and U-Box warehouse development.
That's a $249 million increase over the previous year. During just the fourth quarter, we added 1.6 million new net rentable square feet. About 1.5 million of that was newly developed locations along with expansion at existing facilities. We currently have just under 7 million new net rentable square feet being actively developed and another 8 million square feet in the pipeline behind that. Our U-Box revenue results are included in other revenue in our 10-K filing. This line item within the Moving and Storage segment was up just under $14 million, of which U-Box was the primary contributor. We are seeing both U-Box moving transactions and the related storage transactions grow. Over the last 12 months, we've increased our coverage storage capacity or warehouse space for these containers by nearly 25% and we're going to continue to see growth in that area. Operating expenses at Moving and Storage were up $53.6 million.
Starting off on a positive note, we had another quarter of declining fleet repair and maintenance costs, this time down $6.7 million. Some of the larger expense increases that we had, personnel costs were up $12.8 million although that was largely in line with our revenue increase. Other costs, including utilities, property taxes, and shipping costs associated with our U-Box moves were up a little over $11 million. The largest outlier for the quarter was our liability costs associated with the fleet, which were up $27.8 million. As of the end of March, our Moving and Storage segment had cash and availability totaling $1,348 million. On our Investor Relations website, investors.uhaul.com, we posted some supplemental materials in addition to the earnings release and 10-K filing that are right on the front page for you to click on. With that, I would like to hand the call back to our operator, Constantine, to begin the question-and-answer portion of the call.
Questions and answers
Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Steven Ralston from Zacks. Please go ahead.
Good morning.
Good morning.
Looking through the numbers, I noticed that the fourth quarter was the strongest in the last six years, following an exceptionally strong year in 2021. I see this as a sign that the top-line business is strengthening. First, I’d like to know if you interpret it in the same way. Also, Joe mentioned last year at the start of the fiscal year that his outlook, based on his extensive experience, was for modest growth, which I interpreted as around 2% to 3% top-line growth. Considering his experience, what is his current outlook for the top-line, taking into account depreciation and other factors?
Yes, this is Joe, Steve. I think it's picking up. We're seeing signs that customers are positive. And of course there's all these forces that you can read the paper and go crazy. But at the base store level, I think we're seeing a little bit of consumer optimism and willingness to start on some sort of a moving adventure. Every time someone moves, it's an adventure to put it politely. So if they're kind of optimistic, they're doing a little more business and I see them doing a little more business with this. They're accepting a little bit of rate increase. And when we execute with what I call precision, they're good with all this. It's not that people don't have the ability to spend money; they just want to see good value for the money or maybe even great value for the money, which we should be in the position to provide. We're kind of at the great value end of the spectrum. And so I'm pushing that real hard with my troops. And I think we're seeing a positive response from the customer.
Thank you. Now let's discuss depreciation, which has been a significant focus in this call and the press release. I see depreciation as somewhat inherent to your business model. You are continually investing in capital to replace your vehicles and expand capacity, and depreciation is a natural consequence of that. You effectively utilize depreciation as a non-cash expense to offset costs. Eventually, when demand increases, you will benefit from this strategy. This is simply the reality of operating in the self-storage and self-moving industries. However, your outlook seems somewhat pessimistic on this matter. It’s an integral part of what you do. Could you elaborate on this? Some investors may not fully grasp this concept.
I agree. Depreciation on self-storage is essentially value that can be relied upon. If pressed on the topic, that would be my main point. It’s a reliable asset. The situation with equipment is different. Equipment truly loses value over time. Recently, we experienced several challenges. The costs to acquire equipment surpassed our expectations, a situation we haven't encountered in three decades. This was compounded by a shortage of equipment, which raised repair costs and has led us to purchase more trucks than we would typically need. However, I believe that equipment depreciation, if managed appropriately in terms of acquisition and disposal, should align positively with revenues over a three to five-year period. I expect that it is, but there is a unique situation. Automakers have recognized, as reported, that they have been significantly subsidizing electric vehicle failures at the expense of buyers of traditional combustion engines, whether individual consumers or fleets. This has led to losses across the board. Automakers lost money because they struggled to sell electric vehicles profitably, and we arguably overpaid for our fleet. Nonetheless, we are beginning to see a shift towards normalization. We aren’t fully there when examining a 10-year trend, but we are on the path to improvement.
Thank you very much for taking my questions.
Sure.
Your next question is from the line of Steven Ramsey from Thompson Research Group. Please ask your question.
Hi. Good morning. Maybe to start with the U-Box growth. It jumped up meaningfully in the quarter and is growing three times faster than Moving. What do you attribute that step up to? I saw the comment that Moving and Storage containers both increasing or were they increasing at similar levels on a year-over-year basis?
Well, this is Jason. I'll start with that. The moving transactions, the U-Box moving transactions are growing at a faster rate than the U-Box containers that we're keeping in storage. Now both are in the plus 20% range. It's just that the moving transactions are at the higher end of that; the storage transactions are at the lower end of that. So with as many containers that we have acquired and warehouse space that we've built out, our big opportunity is to keep more of those containers in storage.
Okay. And then the 17% growth, I mean, obviously, you can't pinpoint it too specifically, but is that the right sort of range to think about going forward or is it still something strong but maybe more moderate than that?
This is Joe. I think my expectation is to stay in that range. The market is vast. We've done this largely without cannibalizing our existing customer base. So we've been able to get growth in both of those segments. I see that the U-Box has a higher growth rate than the truck share operation for many years to come. I just think that's the nature of it. Of course, it's smaller, but it's all the market is less explored also. And it's not a simple cannibalization of our other customer. So, yes, I think you can project to be a higher. And I certainly am banking on that.
That's great to hear. I wanted to shift to real estate investments next year. Your storage pipeline is down a million or so from the prior quarter and the U-Box warehouse space grew meaningfully last year. Do you expect real estate CapEx to be at similar levels in FY '26 or do you expect it to moderate a bit? Just maybe your logic behind where you see it going?
I'll address this and then turn it over to Jason, who will provide a more measured perspective. I'm focused on seizing opportunities quickly. Regarding U-Box, we've been working to establish a presence in markets where we previously were not active. For instance, in Los Angeles, we currently have a limited presence in U-Box, which might continue for the next 20 years. However, we've increased U-Box capacity across North America. We're not in an urgent need for construction as I would have described a couple of years ago; back then, I would have said we needed to build more immediately. Now, we should strategically utilize the assets we've developed, as that is the main goal. As Jason mentioned, with more customers using storage and the continued growth of the U-Box moving franchise, we will be able to capitalize on these assets, which should yield positive results.
Okay. That's great. And then last one for me, again, to stay on the real estate side of things. You brought a lot of storage capacity online recently that is self-storage. The maturity period, is it still moving at the historical clip on a going from day one to year one, two, and three? And then secondly, you have a larger percentage of units in that early phase of ramp-up right now, it seems. Can you talk about the impact that has on EBITDA and the timeline of transitioning from money losing to EBITDA positive as storage units mature?
Steven, this is Jason. So our rough estimate is usually approaching 70% occupancy, you're paying your bills. We're not having any issues on the lease-up of the portfolio through, say, the first three or four years. I would say that if there's any slowdown that we've seen, it's in the year going from year four to five, where you're going from the low 80s to getting into the low 90s. I would say that, that's maybe a couple of percentage points slower than what we've seen before. And I'm excluding the COVID years, which were unusual. And that would point to more of a management challenge versus a consumer challenge trying to get the facility filled up to the 90% plus. Otherwise, in the first three, four years, as we're monitoring these new facilities that come on, I'm not seeing any real weakness in how they're leasing up.
Okay. That's great. Thank you for taking my questions.
Your next question is from the line of Andy Liu from Wolfe Research. Please ask your question.
Hey, good morning, everyone, and I appreciate you taking the question and really excited to be on the call for the first time. So really to kick it off, you guys talked about a lot of the positives early on the call, right, on the top line and in the deck, you mentioned higher transactions, higher revenue per transaction, it was all great news. So the big topic today is the tariffs, right, and that kind of happened early April. So as you look at the business on a month-to-month basis on the customers' traffic, have you guys noticed any meaningful shift there, perhaps folks that were thinking about moving and are saying like, hey, maybe I'll just stay put, given uncertainty or anything like that?
I'll answer this. You're going to get an opinion because there's not. If someone has a fact on that, I'd appreciate hearing it. But my opinion, my observation is that if we communicate strong value, the consumer is still positive. They're a little picky and where I have stores that are poorly managed, my business is down, that'd be my answer to you. I will never get every store managed with precision, but I can get most of them there, and that's my task. So, no, I'm not seeing this, and I've been very curious about this like you state, where tariffs going to make consumers uncertain and then they do nothing. If you ask my opinion when people are uncertain, they don't move, okay, but we're seeing people move. So my answer would be I don't think they're uncertain as we might think.
Okay. Got it. Again, no, that's totally fair. I know you must have been around for a very long time; you are super experienced here. So just wanted to kind of get your sense on you've seen things through the cycle before. So as you kind of look at where you are in sort of the cycle now, sort of what is your kind of your outlook here and how things might play out on the housing and the moving side?
Yes. I believe the need for consumers to move remains constant. The concern used to be whether we could persuade them to engage with any service. They have always been moving, and we've noted that even investors are relocating. The key question is the method of moving and whether we can facilitate a beneficial commercial transaction for both parties. It's essential for them to recognize the value and for us to derive a profit from it. Our focus is not on stimulating the demand for moving or encouraging people to move more frequently; rather, we seek to increase the number of customers who engage in business with us, particularly U-Haul. However, when people stop moving, we notice an impact reflected in our statistics, as they tend to move shorter distances on average. While this is a growth statistic, a decline in moving distance indicates some anxiety within the consumer group.
Okay, understood. That's very useful. Moving on to the storage side, I really appreciate you sharing that slide about the revenue potential from the development pipeline. A couple of quarters ago, I mentioned that these developments could yield around 10% returns. On the real estate side, we've heard that tariffs might increase input costs, or that immigration policy could impact labor availability. Could these factors potentially affect the yields you initially anticipated for the future pipeline, specifically that 10%?
Andy, this is Jason. I've spoken with our real estate folks on the development side. And two areas of concern for us would be what goes into the concrete mix and then the steel. And in talking with our largest steel suppliers, we don't anticipate any significant increases in the cost of steel, at least due to tariffs right now. And likewise, we haven't seen anything manifest itself yet in the cost of concrete. So what we've actually been seeing excluded from the threat of tariffs is the cost of construction has been gradually coming down for us.
That's a combination of us being a little bit smarter. And also, I think that people are just a little bit hungrier and we can get people to sharpen their pencil. So that's it. It doesn't mean that actual costs have declined, but what we're paying is improving.
Okay, that's understandable and helpful. It's impressive that your team is managing those costs effectively. Regarding the storage aspect, there can often be a disconnect between a company's operational side and its real estate valuation. Considering your substantial presence in the storage market, when we compare you to other storage companies or those in private markets, the typical value for a self-storage facility is about $200 per square foot. Given your current trading levels, do you believe there may be a disconnect in how investors are perceiving the value of your storage portfolio?
This is Jason. To address that, we've been working to provide more information to help people understand our value. We believe there is a disconnect and that as people gain a better understanding of us, the company will be valued higher than its current trading price. We've been collaborating with analysts to communicate this narrative. For those listening to this call, you're likely more adept at valuing the stock. Our goal is to present more information that our investors are seeking, enabling everyone to better assess the stock's value for themselves.
Yes, for sure, for sure. And I really appreciate you taking my questions today. Happy to be launching on the name and looking forward to working with you guys more. Appreciate it. Thank you.
You're welcome.
Your next question is from the line of Jamie Wilen from Wilen Management. Please go ahead.
Yes, as a follow-up to the previous question, it would seem like when one looks at the self-storage industry, whether they're public or private and looks at the growth of your self-storage as well as floating in U-Box there, which most of the other self-storage people do not have a similar component. The value of self-storage in U-Box exceeds the current stock price. So it seems like the truck rental business is being valued for less than zero. So one would hope, other than just putting out information to additional analysts, that the company can garner a plan for how to reduce that valuation gap since our self-storage is so undervalued relative to its peers in the market.
I think that's a great comment, Jamie. And of course, as you know, I've invested in this. And so optimizing that is in my selfish self-interest. And I welcome input on the subject and then trying to get there.
But would you all consider repurchasing shares at this tremendous discount to intrinsic value to close that valuation gap?
I'm uncertain about that. We did some share repurchases around 10 to 15 years ago. My family appreciated it because it seemed like they were becoming wealthier, but it didn't actually provide any additional funds to spend. So, I question how impactful it really was. Meanwhile, Jason is maintaining a strong position and ensuring we remain very liquid and flexible due to the considerable uncertainty in the financial markets compared to five years ago. He is focusing on keeping a solid amount of liquidity. There hasn't been a proposal regarding share buybacks, and no board member that I can remember is pushing for one. I'm not advocating for a buyback either, but if someone makes the case, we would certainly discuss it. I'm just unsure; it could potentially be a wise decision. We did it in the past, and while I wasn't strongly in favor then, I aim to approach this without hypocrisy.
I believe the valuation gap today is significantly larger than it was when you were buying back shares many years ago. So the circumstances are different now.
Well, I appreciate you making that point.
Financially, the Property and Casualty business, operating profits declined in the quarter from $25 million to $10 million. Is there any particular reason that would happen?
Jamie, this is Jason. And this is due to one of my least favored accounting rules on the face of the earth and that is valuing common stock that we hold in our investment portfolios to market and running that change through earnings. So we have a portfolio of common stock at the Property and Casualty company. Last year, during the fourth quarter, it went up in value compared to the beginning of the quarter, and we had a large gain. This year, it happened to go down in value and then combined, I think that was something like a $10 million swing just from holding the common stock, not from anything actually happening.
Understood. As a shareholder, it intrigues me with the thought of potentially selling off our insurance businesses and using that liquidity to repurchase shares and close the valuation gap and be able to put forth more capital into the businesses that are growing in our core businesses. Any thoughts in that direction?
Yes, I believe that's a valid point and it has been discussed. However, I don't want to make any definitive statements about what will occur because the idea is clear. So, I'll leave it at that.
Okay. All right. Thanks, fellas. Appreciate it.
Your last question is from the line of Stephen Farrell from Oppenheimer. Please go ahead.
Good morning. I have a few questions about the fleet. What is the current age? And how does that compare to pre-pandemic level?
I don't have an exact calculation, as we don't track that statistic. However, if you examine unused mileage, for instance, if we consider 130,000 trucks and assess the remaining miles on a per truck basis compared to pre-COVID, when we had the highest number of available miles in our fleet. We have been consistently increasing that number, and this year we expect to make further progress. Before COVID, I felt confident about the company's strong position, but then the pandemic hit, bringing our own apprehensions and challenges in acquiring more capital trucks, compounded by the automakers' reluctance to manufacture. This led to a rapid decline, which you could see reflected in our increased repair costs—not just a few hundred million dollars over a short period, but due to trucks having more used mileage and fewer available unused miles. Each truck varies in its mileage capacity, so there's no single reference number.
By the end of this build cycle, which will continue through next March, I believe we will surpass 90% of our pre-COVID levels. I don't have a precise figure in mind, as we evaluate this twice a year with various assumptions. However, what's important is that we are making progress. Even small gains add up over time. It’s essential to balance the fleet's age; having it too new can be costly. Ideally, I would prefer an even distribution of models across production years, but that rarely happens. Sometimes, I'm required to purchase a significant percentage of a specific model in a single year because it's what is available, leading to fluctuations in our fleet. While we are not yet at pre-COVID standards, we have improved significantly across various points in our company's history. I'm proud of our fleet, and I don't anticipate customers encountering rough trucks randomly today. In the past, there was a chance of receiving a less reliable truck, but that’s not the case now.
This reliability enhances our business as customers recognize the quality of our trucks. We’re not currently facing any significant issues, but we are investing more in these trucks, which is reflected in our depreciation costs.
I just wanted to follow up on that. You can correct me if I'm wrong, but when there were no supply constraints with the fleet rotation, I always thought that maintenance expenses would increase as depreciation decreased, and those two generally balance out over the life of the vehicle. Now, is it the case that we have a significant increase in depreciation that is surpassing the decrease in maintenance expenses? Is this just a new normal because we had a substantial amount of spending this year and last year, with not much prior to that, or do you believe it will eventually balance out?
I'm sorry, I do not want, I would not characterize it as the new normal. Again, I expect that automakers will continue to improve quality and maybe even pricing going ahead. They have room there if they can get themselves focused on it and get their costs allocated. So they're not constantly trying to subsidize another vehicle. So they're very good at this. They're very knowledgeable people. And in my conversations with them as of late, that is their focus. I couldn't have said that two years ago. So if they get focused on this, I think they'll do a good job and that will trickle through to us. And then we have to do, of course, a good job of what trucks we buy. We buy the right ones and the right amount. So and then there's always the issue that Jamie Wilen brought it or are you really making a profit or not because there are so many things on what we call a box truck and there was a truck that has a square U-Haul box on the back of it.
You're not out of the woods for seven or eight years, that's just the truth. And that's always been the truth, and it's not a scary thought to us. We deal with that all the time. But so you make a projection, an eight-year projection; this is kind of a long projection, and we try to be real sober about that because we intend to be here seven or eight years from now in our positions, and we don't want it to be reflecting poorly on this. So we're trying to do that to the very best of our ability. And we will become easier as the automakers focus back on their core competency because they're more predictable. Things are predictable. And all this green business has just disrupted. Go to a car dealer and talk to the dealer. His tale of the world will be frightening. He has a bunch of unsold inventory and a bunch of orders for trucks for vehicles he can't source. Well, that just means his supply chain has been disrupted, and we need to rationalize the supply chain, which I think is speedily being addressed, and they will get it right because that is what they do well at.
That's good. Thank you very much.
There are no further questions at this time. I'd like to turn the call back to the management team for closing comments. Sir, please go ahead.
Well, thank you, everyone, for your support. We look forward to speaking with you in August after we report our first quarter results. Thank you.
This concludes today's conference call. Thank you very much for your participation. You may now disconnect.