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Amerco (NASDAQ:UHAL)
Q4 2018 Earnings Conference Call
May. 31, 2018 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the AMERCO fourth-quarter fiscal 2018 year-end investor conference call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator instructions] Please note, this event is being recorded. I would now like to turn the conference over to Sebastien Reyes.

Please go ahead.

Sebastien Reyes -- Director, Investor Relations

Good morning, and thank you for joining us today. Welcome to the AMERCO fourth-quarter fiscal 2018 year-end 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 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 AMERCO's business and future operating results, please refer to Form 10-K for the year ended March 31, 2018, which is on file with the U.S. Securities and Exchange Commission. I will now turn the call over to Jason Berg, Chief Financial Officer of AMERCO.

Jason Berg -- Chief Financial Officer

Thanks, Sebastien. I'm speaking to you today from Phoenix, Arizona. After a few minutes of some prepared remarks, we'll turn it over for questions-and-answer session. Yesterday, we reported fourth-quarter earnings of $0.56 a share, compared to $0.49 a share for the same period in fiscal 2017.

This last quarter, we recorded an additional net tax benefit of $16.5 million associated with our insurance companies recognizing the effects of the Tax Act. Excluding this item, we had adjusted losses for the quarter of $0.28 a share as compared to the earnings last year of $0.49. For the full year of fiscal 2018, we reported net earnings of $40.36 a share as compared to $20.34 per share in fiscal 2017. However, as you recall, both of these years had some significant one-time items that we wanted to break out separately.

So included in the results of fiscal 2018 were two of these events. As discussed in the third quarter conference call, we closed on a sale of a portion of the Chelsea, New York location. That gain, net of tax, has accounted for $7.34 of our earnings per share for the year. The other event was the Tax Reform Act, and the net benefit for this for the full year was $18.16 per share.

And I also wanted to remind you that last year's results included an after-tax benefit of $0.79 per share associated with our settlement over the PEI litigation that resulted in a reduction of operating expenses of $24.6 million. So we feel that it would be a useful supplemental measurement to look at our earnings excluding these items. And that results in adjusted earnings of $14.86 per share for fiscal '18, compared to $19.55 per share for fiscal 2017. We do have a reconciliation of all of these amounts included in our press release as well.

Equipment rental revenues increased to a little over 6% or about $31 million for the quarter, and will be finished the full year with a 5% increase or $117 million. For the quarter, the increase was primarily the result of transaction growth combined with slightly better revenue per transaction. And for the year, the revenue increase was more closely matched to the increase in transactions. During fiscal 2018, we increased the number of trucks and trailers in our rental fleet.

U-Move revenue growth has continued into the first half of the upcoming quarter. Capital expenditures on new rental trucks and trailers were just over $1 billion for fiscal 2018, compared with $1.179 billion the year before. Proceeds from the sales of retired equipment also increased from $475 million in fiscal 2017 to $491 million this last year. Our initial projection for rental CAPEX going into fiscal 2019 is to once again spend approximately $1 billion.

That's before netting any equipment sales proceeds against it. We are projecting another improvement in proceeds from the sales of equipment going into next year. Our current expectations for net CAPEX is $450 million. At this point, I believe that this would result in a nominal increase in the size of the rental fleet.

Storage revenues were up just under $10 million or about 13% for the quarter and also 13% for the year or $37 million. A portion of the revenue gain came from growth in occupied rooms. If you look just at our occupied room count March 31 of this year, we had an increase of 23,000 rooms compared to the same point in time last year. That same statistic for March of 2017 showed an increase of 19,000 rooms compared to 2016.

Moreover, the occupied rooms included in this amount that we added via the acquisition of existing self-storage facilities accounted for 1,700 fewer filled rooms this last year than the year before. This all points to improved organic rental. We are continuing to see an improvement in the underlying revenue per square foot as well from increasing rates. I want to give a little bit more information related to our reported occupancy figures.

The reported average occupancy that we put in the 10-K for fiscal 2018 was just under 72%. This last quarter, my analysis team looked back over that same period of time, and we broke the occupancy between facilities opened 36 months or longer and those opened 36 months or less. Our average occupancy for locations open at least three years was 84% for the year while those less than three years ran an average of 39% for the year. Another statistic highlighting the health of our self-storage portfolio: At March 31, we had 43% of our owned locations with occupancy greater than 90%.

That's an increase of 35 locations compared to the same time last year. Our real estate-related CAPEX for the year was $607 million that's compared to $484 million last year at this time as we've been attempting to redeploy the proceeds from the sale of our Chelsea location. During fiscal 2018, we added right around 3.7 million net rentable square feet to the storage portfolio with about 1/3 of that coming online in the fourth quarter. Operating earnings in the moving and storage segment decreased $40 million to a loss of $11 million for the quarter.

And for the year, if you exclude the real estate gains, operating earnings decreased by $168 million to $520 million. I wanted to go through a bit of a laundry list of items that led to this. The single biggest driver of the increase in operating costs and the related decrease in operating margins has been the additional maintenance and repair that we have incurred this year on the cargo van and pickup fleet. For the quarter, our total repair costs were up $18 million, and for the year, they were up $73 million.

This became an issue on the income statement in the second quarter of fiscal 2018, so we are approaching the one year mark and we feel like progress is being made. Customer behavior has started to change, and we are seeing increased sales of the damage waiver products, but there remains much that can still be done on the repair expense front. During the fourth quarter, we issued a bonus to all of our employees in relation to the enactment of tax reform. This bonus was approximately $20 million.

Absent this bonus in the quarter and also excluding the second quarter field bonus that we discussed back during that call, we had minimal margin decline due to personnel expense during the quarter and in fiscal 2018. Depreciation and lease expense associated with the rental fleet increased $11 million for the quarter and $51 million for the full year. We have continued to invest in the fleet, and this has resulted in the average fleet size over the course of fiscal 2018 being up 10%. Comparing fourth quarter to fourth quarter, the average fleet size was up 8%.

Gains on the sale of rental equipment were down a little over $4 million for the quarter and $20 million for the year. Over the last several calls, we've been discussing our challenges in trying to increase sales volume. We've had some success with this over the last two quarters. Over the last 1.5 years or so, we faced challenges that we've created, namely the damage to the units, along with manufacturer challenges in the form of recalls and delivery issues.

However, on the positive side, what's remained constant through all of this has been the underlying consumer demand to continue to rent these units. Property taxes, building maintenance and utilities are three of the larger non-personnel expenses associated with new properties that we've been buying. These costs increased by nearly $11 million for the quarter and $26 million for the year. During the fourth quarter of fiscal '18, we declared a $0.50 per share cash dividend that was paid in April.

This brings the total amount of cash dividend declared for the fiscal year to $2 a share. We continue to maintain conservative cash balances at March 31. Cash and availability from existing loan facilities totaled $882 million at our moving and storage segment. With that, I would like to hand the call back to Gary so that we can begin the question-and-answer portion of the call.

Questions and Answers:

Operator

We will now begin the question-and-answer session. [Operator instructions] The first question comes from George Godfrey with CL King. Please go ahead.

George Godfrey -- C.L. King & Associates -- Analyst

Thank you and good morning. Thank you for taking my question.

Jason Berg -- Chief Financial Officer

Hi, George.

George Godfrey -- C.L. King & Associates -- Analyst

Thank you. The $20 million bonus that was paid in the fourth quarter this year, what was that amount a year ago? Was there one?

Jason Berg -- Chief Financial Officer

We didn't have one a year ago.

George Godfrey -- C.L. King & Associates -- Analyst

OK. So that was strictly related to the tax benefit then?

Jason Berg -- Chief Financial Officer

Correct. It was a combination of recognizing the efforts that have been put forth and it's also recognizing the efforts that we need to put forth going forward. So the Tax Reform Act, it's a tool that is allowing us to reinvest back in the business, but our team needs to now take that and actually create value from it. And it was meant as a thank you and as a motivation that if we can create more value and actually kind of turn the tide here, increase operating earnings, perhaps future bonuses might be possible.

George Godfrey -- C.L. King & Associates -- Analyst

Got it. Thank you for that. And does that appear in the $460 million operating expense line item? Or is it spread out among other expenses?

Jason Berg -- Chief Financial Officer

That would be in operating expenses.

George Godfrey -- C.L. King & Associates -- Analyst

OK. And then you talked about additional maintenance and repair on the fleet being up this quarter and for the year. Is that reflective of the maintenance itself being more expensive, meaning inflation, or is the truck -- the average truck being serviced older? Or could you just go into more detail on what the $18 million and the $73 million. Is it that renters are damaging the trucks more? If you could just be a little bit more granular on what exactly is driving that maintenance and repair.

Thanks.

Jason Berg -- Chief Financial Officer

Sure. Great question. So typically, what our maintenance and repair costs are is doing a routine preventative maintenance on the fleet. So, as I mentioned during the prepared remarks, our average -- the number of trucks in the fleet on average increased close to 10% this year.

So there should have been an increase in repair and maintenance costs just because we had 10% more trucks during the year, and we did see that. But on the positive side, the underlying preventative maintenance that we're doing is falling within expectations. It increased a little bit less than the size of -- the fleet size increase and really didn't contribute to, I would call, the margin decline. So what contributed to the margin decline was primarily these additional repairs, largely cosmetic, to the pickups and the cargo van portion of the fleet that we need to take to sale.

So what happened was one year or two ago, the equipment that we were sending to auction was going there with too many dents and dings. It wasn't cleaned up enough. So we began a concerted effort to fix the bumpers, fix the dents, replace windshields, do all those things that you need to do to increase your ranking going into the auctions. That is the bulk of the repair and maintenance flux year over year and that's the piece that we believe over time now we're going to be able to manage those costs down and that we don't think that that's a structural increase in repair and maintenance.

So I can't tell you that we're 100% there. I'd say that we're probably halfway there and the next two quarters are going to be very telling in how well we've done that because the issue kind of -- the anniversary of it here is going to be the second quarter of '19, and we'll get a better sense then of how well we've done. I will say that we have been collecting much more from customers for selling them the damage waiver so that if they do, do any damage, it's covered. We've been doing to a lesser material extent, we've been collecting more damage payments from customers for damage that they have done.

So I think we still have more opportunity on all three of those sides. I think during the checkout process and the check-in process, our team has been doing a better job of reviewing the equipment with the customer.

George Godfrey -- C.L. King & Associates -- Analyst

Great. Thank you. And then my follow-up -- thank you very much for the occupancy rate on properties owned, 36 months or more or 36 months or less. If we just focus on the ones that you've owned for 36 months or more, 84% occupancy rate.

If we look at the revenue per unit or revenue per square foot three years ago versus today, is that on average up with inflation, up more or flat, or down? Do you have any sense on where that's trended relative to inflation in the market? And thank you.

Jason Berg -- Chief Financial Officer

Sure. I wish I had the presentation we gave at your conference here in front of me. But my sense of it is we've been -- our rent revenue per square foot has been increasing north of 3% -- 3% to 4% per year over the last several years. And I think we saw for fiscal '18, that number was actually a little bit higher, probably closer to 5%.

And that's a function -- and that's all units. That's not just the units that are three years and older. So we're still seeing some healthy improvement in rates that I think is a little bit ahead of inflation factor.

George Godfrey -- C.L. King & Associates -- Analyst

Great. Thank you very much.

Operator

The next question comes from Ian Gilson with Zacks Investment Research. Please go ahead

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

Good morning.

Jason Berg -- Chief Financial Officer

Good morning, Ian.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

As we look at the consumption rate, was the utilization up? Or were there fee increases that added to the revenue apart from the increased number of trucks?

Jason Berg -- Chief Financial Officer

So far, our equipment rental revenue, mostly transaction-driven. In the fourth quarter, we saw miles per transaction increase a little bit, which -- that's what kind of gave us the spread between revenue increase and transaction increase. As far as utilization goes, no. We -- the increase in trucks was greater than the increase in transactions.

So we did not recognize an increase in utilization for the year.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

OK. How big was Chelsea in the revenue stream considering you've cut back on the space there? Is that going to have any material impact?

Jason Berg -- Chief Financial Officer

No. It -- what's getting cut back there or what got cut back was the storage revenue. The remaining building that we have, our operations team when I spoke with them, they think that they're going to be able to maintain our equipment rental numbers. I think that's going to be a challenge, but -- so even if they come close to it, that won't be a huge impact.

But what we will lose is the storage revenue, but I think we've more than offset that through the reinvestment of those funds back into additional storage properties. So I don't think it will be something that will be big enough for anyone to recognize.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

OK. On the sale of the, let's say, repaired trucks, is it better that you sell them damaged and take the loss rather than spend the money on fixing them and then selling them?

Jason Berg -- Chief Financial Officer

That's an excellent question. It's a little bit more nuanced process. I think what we ran into was we were going into a market that if we didn't do the repairs, they weren't going to really sell at all. So now we're at a point where we're trying to figure out what the right amount of sales or what the right amount of repairs are in order to get the best bang for our buck.

So I think there is a calibration process taking place right now. Our fleet management team here, our sales operations team here has been able to pick up the volume. And in the last several calls, Joe has been discussing that where back several thousand units of sales. I think we've made some progress there.

We may have given up a little bit on price to do that, although from what I've seen over the last quarter, it seems to me like our prices have not been going down anymore. They've hardened up a bit. And we've caught up a little bit of it in volume. So I don't think we're nearly as far behind.

So when we first started this, it was more a case of we needed to do the repairs to get them to sell. Now I'm thinking we're more at a point where your question comes more into play, and that is what is the right amount of repairs to do in order to maximize the sales process.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

OK. Now if you increase the sales of that, let's say, the tail end of the fleet, when do you think we could see those significant expenses, the extra expenses sort of disappear because those trucks have been sold? The middle of this current fiscal year or toward the end?

Jason Berg -- Chief Financial Officer

Well, we've been kind of targeting the second quarter of this coming year is going to kind of be -- we're hoping is going to be an important inflection point for us. If you hear what I'm saying, I don't have 100% confidence in that yet. But from where we're headed, I think we have a really good shot of seeing improvement. Hopefully, some part of that in the first quarter but certainly into the second quarter.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

OK. The 24/7, presumably 365 initiative, now that's complete in the company-owned spaces, correct?

Jason Berg -- Chief Financial Officer

Yes.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

Is that extended into other major affiliated dealers or ...

Jason Berg -- Chief Financial Officer

Yes, it's working its way through our dealer network right now. So April was the one-year anniversary of our launch of that tool, and we continue to see customer acceptance of that tool. People want to use it. And now what we're seeing is for the last -- I would say the last four months, the ratio of closed transactions via 24/7, the ratio taking place at dealers has been steadily increasing.

So that's telling me that there's going to be a broader acceptance of the tool by our dealer network. I think we still have a lot of blue sky there to harvest, but it looks to me like it's starting to take hold.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

OK. On the security of those trucks, there's a little lockbox, correct, that you open with an app?

Jason Berg -- Chief Financial Officer

Yes. Well, you use the app, and in as part of the app, you're interfacing with an actual person here at our call center so that we can verify who you are and that you're the person who's supposed to be renting the truck and the person on the driver's license. And then once all of that is confirmed, then our team provides you with the code that's necessary to open up the box.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

OK. So the IT security is pretty good?

Jason Berg -- Chief Financial Officer

Yes, I feel comfortable with how that's working out. Right now our concern there is it's just a live verification process. It seems that the IT structure behind it is holding up just fine. And what we don't have is we don't have some sort of a wireless connection to the lockboxes.

That can all be handled with a little more physical process. So we have been able to take that complication out of it.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

OK. And lastly, is there any intention of making the dividend, a regular dividend? So that it appears on the financial side as a dividend per share? Because you're not getting any benefit in valuation from an irregular payment.

Jason Berg -- Chief Financial Officer

That insight is completely understood and has been communicated, but a change has not been made yet.

Ian Gilson -- Zacks Investment Research Inc. -- Analyst

OK. Great. Thank you very much.

Jason Berg -- Chief Financial Officer

You're welcome.

Operator

The next question comes from Craig Inman with Artisan Partners. Please go ahead

Craig Inman -- Artisan Partners LP -- Analyst

Hey, guys. Can you all hear me?

Jason Berg -- Chief Financial Officer

Yes. Craig, it's good to talk to you again.

Craig Inman -- Artisan Partners LP -- Analyst

Hey, how are you doing? Hey, a question. So the fleet grew about 8% year-over-year. But it looks like in CapEx, and I think in the comments, you all were saying that the fleet will grow kind of nominally this year. Is that right?

Jason Berg -- Chief Financial Officer

That's the plan right now.

Craig Inman -- Artisan Partners LP -- Analyst

OK. And is that to that kind of improve the utilization or you just have enough trucks out there and let it -- you kind of grow into that dynamic? Or I'm just curious because it's been growing a good bit in the last few years.

Jason Berg -- Chief Financial Officer

Yes. So a few things there. The fleet grew a little bit more than what was initially anticipated, at least by me. And I think the majority -- I mean, we did increase the amount of equipment that we bought versus the original projection.

But then we also sold fewer box trucks than what I thought as well. So the quickest way that we can grow or shrink the fleet is through the sales process versus the acquisition process. So we sold fewer trucks. So going into this year, I think there's a chance that we may sell more box trucks versus what we did in the previous year.

We are still facing the complication, and a complication for our rates and distributions team on the equipment side is we continue to add additional locations into the system, additional company-owned locations and additional dealers. So you keep trying to find the right mix, the right amount of equipment that we need in order to service this growing network. I think that there's certainly a focus here on improving utilization. The No.1 way we increase revenue isn't through raising prices.

It's through increasing utilization. And we certainly now have an opportunity to increase utilization as that really hasn't happened over the last year or two.

Craig Inman -- Artisan Partners LP -- Analyst

Yes, that makes sense. Yes, I'm not -- that definitely makes sense. Just it should improve the earnings. And the disclosure around the self-storage is great on the three-year.

Is there any change there to kind of the capital plans as of now? Just the last year was the first one where we kind of saw revenue growth lower than square footage growth. But you guys are still seeing the returns you expect? Or is there any change there?

Jason Berg -- Chief Financial Officer

No. I think we're really excited about that and we have -- I look back at how projects are progressing. So I have the analysis team go back and pick out properties that have reached their five years in maturity now this last year. So those are properties that should have reached stabilization.

And they were able to identify 135 of those locations that have now reached the five-year maturity point. And of those, the average occupancy at those locations now is 82%. 60% of those are over 85%. And we look back at how they were progressing year by year.

And that group, that 135 properties, matured pretty much how we would have projected them to mature. I think if there was anything that was a little bit different is that early occupancy went faster and then the later occupancy was much slower. And I think we got up to 70% within three years, and then in the next two years, it took us two years to get another 12 to 15 points of occupancy. So I think we're encouraged by those.

Now we have a lot ahead of us. We have, I think, just last year, we closed on 143 acquisitions. I think we have 112 active projects right now in development, close to 6.5 million square feet in those. And then we have another 87 properties that we don't have plans for yet.

So this is a -- it's a multiyear development plan. But from what we're seeing right now in the rent up, it appears to be renting up as we expected. So I'm encouraged. I was a little concerned, but after kind of I was able sit down through some of this analysis, I'm encouraged by what I'm seeing.

Craig Inman -- Artisan Partners LP -- Analyst

So that 82% level, at five years, those returns are working for you guys in terms of getting those pre-tax unlevered returns?

Jason Berg -- Chief Financial Officer

Yes, our target is typically depending upon the market, 85% or 90%. So...

Craig Inman -- Artisan Partners LP -- Analyst

OK.

Jason Berg -- Chief Financial Officer

While the average is 82%, for -- the median is 88%. So we have a few facilities in there that have kind of dragged that down. But the majority of them are past that 85% point and those are doing what we expected. And then to your point, hitting how we price them.

Craig Inman -- Artisan Partners LP -- Analyst

OK. One kind of random question. I noticed the Canadian market, which you guys break out in the K, earnings have gone down a lot over there. It's not meaningful in terms of the total business, but it's a big change.

I was curious if there's anything specific there or what could be going on.

Jason Berg -- Chief Financial Officer

Sure. Yes, it did. It does kind of stick out as a percentage basis, a pretty big decrease. A few things there.

They have faced the same challenges that we have on the United States as far as development. We've been adding, I think somewhere over the last two years, probably 10 to 15 projects up there that are in development versus existing storage products, so they're some of the same things: property taxes, utilities, personnel costs. I think when we did the tax reform bonus, even though it was not Canadian tax reform, those people up there are part of our team and received something as well. And then also, during the year, my treasury team placed, in U.S.

dollars, I think it was about a $65 million loan on real estate up there. We felt like we underleveraged it, so the number this year includes some additional interest expense that were threw at it.

Craig Inman -- Artisan Partners LP -- Analyst

So it's non-fundamental. OK.

Jason Berg -- Chief Financial Officer

No, up there we're still seeing improvement in storage revenues. We're still seeing improvement in equipment rental revenues. So the basic revenue makeup still works a lot like what's happened in the U.S.

Craig Inman -- Artisan Partners LP -- Analyst

OK. And then just lastly, how many just used trucks, kind of extra, do you think we have right now just waiting to be sold, you know, from the recall, just kind of the truck overhang?

Jason Berg -- Chief Financial Officer

Well, I think we've worked that down. At one point, I think we were 5,000 to 7,000 heavy. Now I think it's probably down to a couple of thousand.

Craig Inman -- Artisan Partners LP -- Analyst

OK. That's good. OK. OK.

Great. I appreciate it.

Jason Berg -- Chief Financial Officer

Thanks, Craig.

Craig Inman -- Artisan Partners LP -- Analyst

Thanks.

Operator

The next question comes from Jamie Wilen with Wilen Management. Please go ahead.

Jamie Wilen -- Wilen Investment Management Corp. -- Analyst

Hey, Jason. In the fourth quarter, we had an extra $20 million expense for bonuses because of tax reforms. So basically, $1 share, $0.75 after-tax expense this quarter that didn't appear last year.

Jason Berg -- Chief Financial Officer

I think that's how it works out, yes.

Jamie Wilen -- Wilen Investment Management Corp. -- Analyst

OK. And in total, we paid $40 million of bonus this year that we didn't pay last year?

Jason Berg -- Chief Financial Officer

Yes.

Jamie Wilen -- Wilen Investment Management Corp. -- Analyst

Are these onetime things or salaries where you would expect paying $40 in bonuses out of nowhere regardless of operating performance in future years?

Jason Berg -- Chief Financial Officer

No, clearly not. I believe we had this discussion also back during the second quarter when we did the large bonus for our field management team and the tax reform also. As I mentioned to George a little bit earlier that it's meant to motivate us to create additional value and performance now over the last two years. I would say that there's been some things that have happened that clearly we have room to make up before something like this happens again.

Now I'm not the final decision-maker on that. However, my suggestions are that we need to have the improvement in underlying performance before we think about doing something like that again.

Jamie Wilen -- Wilen Investment Management Corp. -- Analyst

Sounds like the right idea, Jason. You gave us the statistics on the self-storage units that we have held over three years at 84% occupancy in 2018. Do you have that figure for the prior year?

Jason Berg -- Chief Financial Officer

I do, but I had them run that exact calculation but with facilities that would've been three years last year. And I think what it shows is were down about 75 basis points on both. So it's not I asked them for that kind of late in the game. So I'm not sure I've had a chance to really think through what that means because we had some facilities that would have shown up in the before three years but then jumped up.

So I think that was a bigger number. So overall, if you were trying to analyze kind of a same-store occupancy, I think that we're probably down somewhere in the 50- to 75-basis-point range this year.

Jamie Wilen -- Wilen Investment Management Corp. -- Analyst

OK. And overall, we looked at the capital strategy of the company, which doesn't appear to be focused and proper balanced between long-term and near term. I know when you look at, gee, we've put on 15 million square feet of self-storage over the past several years, and it's going to be wonderful long term. But are we indeed doing too much investment spending that is hurting us in the short term? When I look at overall occupancy rates, because self-storage comes on at 5%, so it's an impact to earnings.

When you look at we're spending so much on buying trucks such that our utilization rates actually declined a little bit this year. Shouldn't we be looking toward a proper balance in how can we optimize, not maximize, but optimize utilization rates, optimize capacity percentages? Having really well-defined capital programs such that our dividend is not an irregular dividend but part of the program? And as you look at the returns on investments, you look at the whole piece. I mean, we have a company where when I look at Life Storage, which is the, I believe, fourth largest self-storage, and we're the third, their market cap is over $4 billion. So if you say ours is worth no more than theirs, 2/3 of our market cap is equitable to self-storage and only 1/3 to a proper -- to a profitable truck rental business.

When I look at that, I say, wow, we are massively undervalued. We should have a regular dividend program given how undervalued we are. We should have a very large share repurchase program. And maybe we're putting too much money in on an annual basis into building self-storage because as you say, gee, our 5-year program to get us there, well, that's kind of a long time for an incredibly heavy period of time.

Isn't there a point of time when we begin to harvest more than invest? And aren't we there now because we've invested so much over the last five years, which is wonderful the long-term. But isn't it a time to more harvest and optimize our capital expenditures and have a more defined -- well-defined capital program?

Jason Berg -- Chief Financial Officer

Jamie, great insight. I always look forward to hearing your comments on the call. That debate is certainly happening here internally. And those exact thoughts are being discussed actively.

We have a great deal of capacity for future revenue growth that I think there's a great argument for saying let's harvest some of that on the truck and trailer side as well as the self-storage side. So I don't have a definitive answer for you other than that's a very serious discussion that's taking place here and it's being considered. And I don't know...

Jamie Wilen -- Wilen Investment Management Corp. -- Analyst

And if I could put forth a suggestion, a $4 per share annual dividend aided $1 quarterly, would certainly be a reasonable return. A $0.5 billion share repurchase program, especially at these levels, would seem to be a reasonable usage of our capital. And just tone down the self-storage. We can more spot pick our better potential unit.

As opposed to doing $3 million, I'd rather do $1.5 million of higher potential units and have our capital allocated elsewhere.

Jason Berg -- Chief Financial Officer

I appreciate the thoughts, and I'm sure everyone who is listening is taking them into consideration as well.

Jamie Wilen -- Wilen Investment Management Corp. -- Analyst

OK. Thank you, Jason.

Jason Berg -- Chief Financial Officer

You're welcome.

Operator

The next question is a follow-up from George Godfrey with CL King. Please go ahead.

George Godfrey -- C.L. King & Associates -- Analyst

Thank you. Because there's been so many moving pieces on the tax side, what should we use for pro forma modeling assumptions on the tax rate in '19? Thanks.

Jason Berg -- Chief Financial Officer

Sure. Yes, this year was really ugly because there was a partial year rate, kind of a compound rate. Going forward we're expecting our GAAP effective rate to be approximately 24.3%, I think, is what we reported.

George Godfrey -- C.L. King & Associates -- Analyst

Thank you.

Jason Berg -- Chief Financial Officer

You're welcome.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Jason Berg -- Chief Financial Officer

Thanks, Gary. I'd like to thank everyone for their interest in AMERCO and for your support, and we look forward to speaking to you again. Our first quarter conference call, I believe, is going to be on August 9, so I look forward to talking to everyone then as well. Thank you very much.

Operator

[Operator signoff]

Duration: 42 minutes

Call Participants:

Sebastien Reyes -- Director, Investor Relations

Jason Berg -- Chief Financial Officer

George Godfrey -- C.L. King & Associates -- Analyst

Ian Gilson -- Zacks Investment Research -- Analyst

Craig Inman -- Artisan Partners -- Analyst

Jamie Wilen -- Wilen Investment Management Corp. -- Analyst

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