管理層發言
Good day, everyone, and welcome to today's U-Haul Holding Company Second Quarter Fiscal Year 2025 Investor Call. At this time, all participants are in a listen-only mode. Please note, this call may be recorded. I will be standing by if you should need any assistance. It is my pleasure to turn the conference over to Sebastien Reyes.
Good morning, and thank you for joining us today. Welcome to the U-Haul Holding Company second quarter fiscal 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-Q for the quarter ended September 30, 2024, 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.
Thanks, Sebastien. This is the time of the year that we try to lock down our moving truck and trailer capital expenditures. The big unknown for us is how successful the new administration will be in getting EV mandates turned around. If the vehicle manufacturers can gain some certainty, that will help us with our strategy. Rental income on moving equipment is up slightly. My teams remain focused on this measurement, but we've been getting very modest results. We are continuing to develop new storage products and bringing them online faster than we are filling units. The storage industry remains beset by unrealistic moving promotions. We are holding to our strategy, but we're watching this all the time. U-Box, which is our service that addresses both the time and place needs of consumers, is still making progress. We have a significant infrastructure now in place that can reliably handle growth in our transactions, and I expect we're going to see some.
I have a word on the update on the acquisition of U-Haul Holding Company shares by Trian Fund Management LP, Nelson Peltz. As you know, Trian filed a 13F with the SEC on August 14, regarding their U-Haul Holding Company stock holdings as of June 30. Since then, Jason Berg has met once with Trian representatives, and they have sent us a 31-page PowerPoint presentation. Trian has also communicated with other U-Haul Holding Company shareholders. Of course, Trian's reputation precedes them. We regularly consider multiple inputs and factors and will continue to do so. We have our business plans in place. There will not be any changes to our plans due to Trian's input. Jason continues to work to get accurate, helpful information to you as investors, and he will continue to do so. Many things are up in the air regarding consumer confidence. We look forward to the new administration positively contributing to this, which will just make our ability to see the future a little more accurate. With that, I'll turn it over to Jason to take you through the numbers.
Thanks, Joe. Yesterday, we reported second quarter earnings of $187 million compared to $274 million for the same quarter last year. From an earnings per share perspective, this translates to $0.96 per non-voting share compared to $1.40 per non-voting share in the second quarter of last year. Earnings before interest, taxes, and depreciation, EBITDA, at our moving and storage segment for the rest of this year, I'm going to have to adjust to remove interest income from the prior year. That amount decreased by $18.1 million due almost entirely to operating costs that are unlikely to recur, and I'll touch on that further in a moment. Equipment rental revenue results had an $18 million increase, or about 1.7%, up slightly better than our first quarter improvement. This is now our second consecutive quarter of year-over-year increases in equipment rental revenues, and it points to a likely trough.
We should hopefully have a return to a more sustained growth trajectory. While we weren't able to generate increases in one-way moving transactions, we did see an increase in the average revenue per transaction for both one-way and in-town lows. Our in-town revenues on the trailer and towing fleet also increased during the quarter. October and the first week of November saw revenue continue to trend positively compared to the same time last year. Capital expenditures for new rental equipment for the first six months were $1.156 billion, which is a $182 million increase compared to the same six-month period last year. We've increased our fiscal 2025 full year net CapEx projection, so that's gross spending less sales. We've increased it from $1.90 billion to approximately $1.115 billion, and that's due to the availability of some additional equipment from our manufacturers that we can purchase this year.
Proceeds from the sales of retired rental equipment were down $44 million to a total of $361 million. This is a combination of fewer pickups and cargo vans sold along with lower average sales proceeds on the units that we did sell. A portion of our depreciation increase is in response to the declining resale values of these models. Switching to self-storage, revenues were up $16 million, which is about an 8% improvement. Average revenue per occupied foot continues to improve across the entire portfolio, up about 1.6% for the quarter. And if you look at our same-store portfolio, we were up just over 2%. Our occupied unit count at the end of September was up nearly 32,000 units compared to the same time last year. Now during the same timeframe, we've added 67,000 new units and that's what's led to the differential in our average occupancy ratio down to about 80.9% for the whole portfolio. If you split out just the same-store portion, we saw average occupancy decrease by 80 basis points to 94.1%.
During the first six months of this year, we invested $734 million in real estate acquisitions along with development costs associated with self-storage and U-Box warehouses. That's a $101 million increase over the first six months of last year. During the quarter, we added just over 900,000 new net rentable square feet, about 860,000 of that was from newly developed locations. We currently have approximately 8.1 million new square feet being developed, and I would expect to see net rentable square feet deliveries increase next quarter compared to this quarter. Our U-Box revenue results are included in other revenue in our 10-Q filing and are not large enough yet to break out separately, but this line item increased by $7 million, of which U-Box was a major contributor. Operating expenses at moving and storage increased just over $55 million. As we mentioned on last quarter's call, the decline in fleet repair and maintenance was going to slow, and it was down $5.4 million for the quarter.
Personnel costs were up just over $17 million. Liability costs associated with the fleet increased by $7.6 million, and property taxes and building maintenance combined were up about $8 million. During the quarter, we had a $16.5 million cost related to our transition to a new cardboard box supplier for our moving supplies. While we expect this over time to result in improved service and lower cost of goods sold, we opted to expense this amount in the quarter. As of September of this year, at our moving and storage segment, we had cash along with availability from existing loan facilities of $1.775 billion. On our Investor Relations website, we posted some supplemental materials in addition to the earnings release and the 10-Q filing. I would encourage you to take a look at them. We hope that it will be helpful to you. With that, I would like to hand the call back to our operator, Leo, to begin the question-and-answer portion of the call.
分析師問答
Thank you. We'll take our first question from Steve Ralston of Zacks.
Good morning. I have two questions concerning the trends of the business in the self-moving rental business and also self-storage. In the rental business, you had your second consecutive quarter of year-over-year improvement, which is quite interesting because two quarters ago Joe mentioned that he expected slow but modest improvement over the near term. I'm wondering if you have anything that you can foresee over the next two quarters. I know you mentioned that you might see a strengthening later on. But what's your feeling for the next two quarters?
I don't see any big changes. We're fine doing stuff all the time, but you're getting minuscule changes or results. Now that doesn't mean we won't come upon something that significantly works. I think that all this turmoil in the country may settle down, and we may start to see people act in a more predictable manner, which I hope results in more business for us. But I have really no insight; I'm blind as to if something is going to pick up over the next 180 days. We're going to introduce, sometime in the fourth quarter, probably late in the fourth quarter, an additional trailer model that will move the dial on trailer rentals a little bit, but that's going to ramp up slowly. But I'm looking for that to be a modest success. But I don't see anything. I'm blind as to anything that is going to pick up over the next 180 days.
Thank you for that. In the self-storage business, the year-over-year rate gain has been deteriorating. It used to be a nice solid double digits, and now it's upper single digits. There are a lot of factors that are going into this. And I know you point out that the size of your portfolio is growing, and that's mathematically part of it. You alluded to the pricing situation. Could you comment on that trend and when you think it will stabilize and start improving?
Well, of course, we are adding rooms faster than we're filling rooms. That's our basic imbalance. And of course, it gets very location-specific and all that. Jason can point to plenty of places where we're in the low to middle 90s doing fine. But as you bring on new products, some are more winners than others. I think our new product that's coming on is going to be 90% winners, so I look for that to outperform the industry. But I hesitate to predict that it will go back to double digits between now and next summer. The whole industry has kind of got themselves in a funk, and there are many things going on that I probably don't even know about. However, I think we're going to outperform our peer group, and I think we should. But whether we'll get this addition and addition of new products filling of rooms balanced out right, it's not totally clear. Of course, we're going into what's relatively speaking a slow season, but that's fine.
There's plenty of customers out there even in the slow season. So at this point, I'm kind of fighting this out location by location. There's not a macro picture I would say. This week, I have most of my senior managers around the country, and of course, we're just doubling down on how we're going to specifically get more rooms rented at certain locations and where the failure in our sales presentation lies. I always view this as customers are there, and we're failing to connect with them. I still believe that. Even though the other participants in the industry are reporting not so shiny results, I tried to anticipate this, and I mentioned that there were many entrants into the market who didn't quite know what they were getting into, and now they're all in it. That’s going to be a little jumble shaking out. I expect to come out of that jumble ahead of my peer group, but we'll see how that goes.
Just to talk out loud, I mean, that’s one of the key attributes of U-Haul is that you build all this capacity and you build it, it will come. The demand occurs. Last time it was COVID. And then you have all the capacity and the leverage to benefit from that, but it works both in the rental business and self-storage. Well, thank you for answering my questions.
We'll move next to Jamie Wilen of Wilen Management.
Thanks a lot. First question is about U-Box, and you seem to be gaining some share in the business. The question is, as you build new self-storage, do you have a lot of U-Box storage in there? How much of a competitive advantage is that for you? Is that why you're gaining share? Or does it just give you better pricing to customers or better margins for you as you include places for portable storage in there for U-Box?
Yes. I'm going to let my son, Sam, who runs U-Box, speak to that for just a minute.
Sure. I'm happy to answer that, Jamie. I think the question was, is the storage component of U-Box a competitive advantage? No doubt about that. I'd agree with you. Now is it why we're gaining share? I think the answer to that is no. I would say, if I were to grade the moving segment of U-Box, I'd give us an A, and on the storage segment of U-Box, I'd give us a C, but it just gives us massive opportunity going forward to shine. I'd say the competition is doing a better job on that relative to us. But I can tell you that storage at U-Haul, as you might imagine, is quite a focus. So, I've got a lot of support resources to take that C to the A that we know it should and could be. So, thanks for your question.
Okay. And as we continue to build self-storage, will it always include an extra component for portable storage as well?
Not always. You've got to map this out, and probably the radius with a U-Box location service is larger than the radius of customers that traditional self-storage serves. So we're using the opportunity when we build to also expand our U-Box network strategically so we can make one project out of it. But if you look at the ones we're building currently, it's pretty close, maybe eight out of ten. But we don't have a goal of going to a one-to-one at all, Jamie; that would be more capacity than we think we can absorb. But right now, what we're building, I'm just going to guess, about eight out of ten of them where we're putting in more storage, we're putting in U-Box.
Next, I want to go to the value gap coherent between what U-Haul is trading for and what it's worth. When I look at competitors like CubeSmart, which has a similar revenue base to you, although it does not maintain your growth profile because you have added so much more fresh space than they have, they have a $10 billion market cap on their self-storage, and it seems like we're not getting that credit for it on our self-storage operation, which one would think our metrics for occupancy and rate are similar to theirs and margins are similar to theirs. Can you talk about the value gap? Is that what is within a lot of the Trian PowerPoint presentation for how to close that value gap?
Okay. I'll talk to it for a minute. Of course, right now, excess capacity is a drag. I can't give you the exact number all the way, but it's a drag on earnings. Obviously, we own the assets, and we're paying for them. Aggressive development is a drag, and both of those things are just mathematically what comes out of that development, regardless of whether at the end of the day this turns out to be a happy day or not, is unknown until you get there of course. I think it's going to, or I wouldn't be pouring resources into it. As for Mr. Peltz, I don't like to speak for him, and I don't like to speculate on anything. I could send you his presentation, Jamie. I don't know if that would work. I don't really want to speak for him.
Okay. You talk about within self-storage that we're adding more spaces than we're filling. So in the short term, it really impacts earnings. One of the benefits of COVID was not only that we were able to increase occupancy rates in the existing locations but also that it restricted our ability to open new locations. So there was much more balance in the near term between the cost of carrying newly opened units and the filling of existing units. Do you think we'll ever get back to that balance? So we can balance the near-term impact for opening aggressively with new locations?
Well, I would expect it will ebb and flow, is what I think now. There's still a lot of opportunity, and one of U-Haul's stronger points is the breadth of where we operate. So, we're very active in places like Wyoming and Montana. A lot of people shrug their shoulders, and that's fine. We're already in Gillette, Wyoming. So us going there with more products and services, as long as it's proportional to the market, is totally within scope whereas a storage competitor would have no reason to venture there without existing infrastructure. I just turned down some product in Northern New Jersey three weeks ago because to me it looks like hard work and overtaxed. I don't know if you want to call it a prize that isn’t worth it. Now, we’ll see this correct. Nobody knows for sure. But I think there are plenty of opportunities to expand over the next two years.
Exactly. I just wonder if we can slow the pace of capital that we put into it, so the percentage of new units is lower. And on the corollary to that, you talk about New Jersey versus Wyoming. It's easier to be a big player in a smaller pond than a small player in a big pond. What would be the thought process of selling off a part of our existing mature facilities to be able to then take the capital to build in areas with greater opportunity for profitability?
You could possibly do some financial adjustments, but most of these sites have U-Box and U-Haul new stores there. So you could conceivably do some partitioning and some kind of selling of partial interests. We did a version of that with W. P. Carey, which rolled over just a year ago. We have some experience with it. It seems to provide a one-time cash influx, that’s my experience. What I get is a one-time increase, but after that, of course, the people who have the financial interest and assets try to extract every penny out of it. So I've managed over 100 other stores with other people at one point, and I encountered six or eight decent lawsuits alleging fraud or similar issues. It's not as simple as it seems, and partitioning these things is awkward to say the least. But that's our strategy; a combined presentation to the customer. We've tried a couple of different things and haven't seen anything trying to partition these assets yield significant benefits.
Thank you for all this. I appreciate your time.
You bet.
It seems there are no further questions at this moment. I will now hand the call back to management for their concluding remarks.
Well, thanks so much, everyone, for your support. We look forward to speaking with you after we report earnings in February. Thank you.
This does conclude today's U-Haul Holding Company Second Quarter Fiscal Year 2025 Investor Call. You may now disconnect your lines, and everyone have a great day.