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Date
Thursday, August 7, 2025 at 11 a.m. ET
Call participants
Vice Chairman of the Board of Directors — Sam Shoen
Chief Financial Officer — Jason Berg
Head of Investor Relations — Sebastien Reyes
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Risks
The company reported a $22 million loss on the disposal of retired rental equipment for fiscal Q1 (period ended June 30, 2025), due to higher initial purchase costs and lower resale values for recently acquired cargo vans.
Depreciation related to the rental fleet increased in fiscal Q1.
Same-store occupancy in self-storage declined by 100 basis points to just under 93% for fiscal Q1, with further decreases possible due to a system-wide effort to make delinquent units available, which management cautioned could lower occupancy rates further in future reporting periods.
Management noted higher liability costs for fiscal Q1, stating "We've seen an increase in the severity of claims," which is impacting margins and contributing to higher operating expenses.
Takeaways
Net earnings-- GAAP net earnings were $142 million for fiscal Q1, down from $195 million for fiscal Q1 of the prior year, reflecting a $53 million decrease attributed mainly to fleet depreciation and losses on equipment sales in fiscal Q1.
Earnings per share (EPS)-- $0.21 of the decrease is from fleet depreciation and $0.12 from losses on rental equipment dispositions in fiscal Q1 (the two impacts do not sum due to offsetting factors).
Moving and storage segment EBITDA-- Led by revenue growth across product lines.
Equipment rental revenue-- Grew by $44 million (just over 4%), with revenue per transaction rising for both in-town and one-way business in fiscal Q1 and transaction counts remained roughly flat.
U-Box revenue-- Driving overall "other revenue" higher by $21 million; management described U-Box growth as still at its "infancy."
Storage revenue-- While average revenue per square foot improved just over 1%; same-store revenue per occupied foot rose just under 1%.
Capital expenditures on rental equipment-- Used to expand box trucks, trailers, towing devices, and cargo vans fleet.
Self-storage and real estate investment-- $294 million invested in real estate acquisitions along with self-storage and U-Box warehouse development in fiscal Q1, down $108 million from fiscal Q1 of the prior year; with approximately 6.5 million square feet in development across 124 projects as of June.
Operating expenses-- Principal increases include personnel expenses increased by $20 million, liability costs increased by $17 million, and fleet repair/maintenance increased by $5 million.
Liquidity-- Cash plus revolver availability as of June totaled $1.191 billion.
Same-store occupancy-- Decreased by 100 basis points to just under 93% for fiscal Q1, with near-term downside risk due to efforts to address delinquencies.
Future storage revenue opportunity-- Management cited approximately $260 million in incremental revenue possible as non-same-store locations mature toward typical occupancy, noting approximately 80% of that may translate to the bottom line for non-same-store locations that are already open.
Development spend guidance-- Annual storage development spend may stabilize in the 4.5 million–6 million square foot range each year, with per-foot costs trending toward $150, based on management commentary regarding recent five-year investment and development activity.
Development yield-- Storage investments target a 10% unlevered IRR (as discussed by management on the fiscal Q1 earnings call), which management noted is equivalent to a 7.5%-8% cap rate.
Summary
Management highlighted that recent fleet expansion and ongoing investment in equipment and storage are contributing to increased costs in fiscal Q1, pressuring GAAP earnings compared to the same quarter last year despite revenue growth. Liquidity remains strong, supporting continued development and capital allocation flexibility. Future storage revenue growth is primarily expected from improved utilization at existing and new locations, as discussed in the fiscal Q1 earnings call, with margin expansion possible as these assets scale. Company representatives confirmed that U-Box remains an early-stage growth driver, with significant room for broader rollout and increasing revenue contribution as consumer adoption matures.U-Haul(UHAL -1.22%) noted a near-term risk to self-storage occupancy rates as a result of system-wide actions to address delinquent units in July.
CFO Jason Berg explained, "Of the $0.27 decline in earnings per share in the first quarter, $0.21 is from fleet depreciation and $0.12 is from the increase in losses on rental equipment sales."
Vice Chairman Sam Shoen stated, "I don't see why there's any reason that U-Box couldn't be as big as U-Haul is today. And I think we're just at the infancy."
Management noted transaction volumes for in-town and one-way rentals were "largely held steady" but continued to see positive revenue trends in July due to higher pricing, with "a big improvement in transactions" yet realized.
The company expanded its box truck fleet by approximately 8,600 units year over year as of fiscal Q1, indicating a deliberate buildout of capacity ahead of anticipated demand.
Industry glossary
U-Box: U-Haul's containerized portable moving and storage product line, offering both moving and storage services via standardized shipping containers, distinct from traditional truck/trailer rentals.
Cap rate: Real estate return metric, representing annual net operating income divided by property value, used here to equate unlevered IRR estimates for storage investment performance.
Full Conference Call Transcript
Jason Berg: Joe Shoen, our chairman and CEO, is unable to attend today's call. However, he is going to be available to speak to you at length and answer questions in two weeks at our annual investor and analyst webcast. We do have Sam Shoen, the vice chairman of our board of directors, here with us today to answer questions. Yesterday, we reported first quarter earnings of $142 million compared to $195 million for the same quarter last year. In terms of EPS, that's 73¢ per nonvoting share this quarter versus $1 per nonvoting share last year at this time.
Earnings before interest, taxes, and depreciation, which I'll refer to as EBITDA, in our moving and storage segment increased 6% or nearly $31 million for the quarter, driven by strong revenue growth across all of our product lines. Included in our release and our financial supplement is a reconciliation of adjusted EBITDA to GAAP earnings. The largest difference between adjusted EBITDA and GAAP earnings is depreciation, and this is also the cause of the largest negative variance in earnings year over year. During the first quarter of this year, we swung to a $22 million loss on the disposal of retired rental equipment as compared to an $8 million gain last year.
Cargo vans that we purchased over the last two years that are now being sold came into the fleet with higher initial costs, and the current market resale values are not reflecting this, resulting in a loss. We have increased the pace of depreciation of the remaining units to reflect this new reality. Additionally, we have depreciation from increasing the size of the box truck fleet by approximately 8,600 units compared to June. Pricing on new cargo vans for the upcoming model year indicates some nominal improvement. Of the $0.27 decline in earnings per share in the first quarter, $0.21 is from fleet depreciation and $0.12 is from the increase in losses on rental equipment sales.
For the first quarter, our equipment rental revenue results had a $44 million increase, just over 4%. Revenue per transaction increased for both our in-town and one-way markets compared to the first quarter of last year. Overall, transactions largely held steady with what we saw in the first quarter of last year. For the month of July, we've seen revenue continue to trend positively compared to the same period last year, but we haven't yet seen a big improvement in transactions. Capital expenditures for new rental equipment in the first quarter were $585 million, a $46 million increase compared to the same time last year. This increase was spread across acquisitions of box trucks, trailers, towing devices, and cargo vans.
Self-storage continues to be positive. Storage revenues were up $19 million, which is about a 9% increase for the quarter. Average revenue per foot continued to improve across the entire portfolio, up just over 1%, while our same-store portfolio was up just under 1% per occupied foot. Our same-store occupancy decreased by 100 basis points to just under 93%. In July, we took on an effort system-wide to increase the number of available rooms at our existing locations by focusing on delinquent units.
While this effort will not affect revenue directly as we don't record any revenue until it's collected, it will serve to reduce our reported occupancy level a few points if we don't refill all of those rooms in time for September reporting. In our financial supplement, you will see that we have a slide that shows where future storage revenue growth is coming from, and the future revenue growth from our existing has increased. This is partially from us making these rooms now available to paying customers. During the first quarter of this year, we invested $294 million in real estate acquisitions along with self-storage and U-Box warehouse development. That's down $108 million from the first quarter of last year.
During the three months, we added 15 locations with storage and about 1.2 million new net rentable square feet. We currently have approximately 6.5 million new square feet being developed across 124 projects. Our U-Box revenue results are included in other revenue in our 10-Q filing, and this line item increased $21 million, of which U-Box is a large part. U-Box revenue by itself was up about 16%. We continue to have success increasing U-Box moving transactions as well as increasing the number of these containers that customers are keeping in storage. Moving and storage operating expenses increased $44 million for the quarter. As a percent of revenue, we were even with the first quarter of last year.
The largest components of the increase were personnel, which was up $20 million, liability costs were up $17 million, and we did see an increase in fleet repair and maintenance due to the increased size of the fleet, which was up about $5 million. As of June this year, cash, along with availability from our existing corporate revolver at the Moving and Storage segment, totaled $1.191 billion. We are holding our nineteenth annual virtual analyst and investor meeting on Thursday, August 21 at 11 AM at 2:00 PM Eastern Time. This is an opportunity to interact directly with company representatives through a live video webcast, which you can find at investors.uhaul.com.
Once again, we'll have a brief presentation by the company, followed by a question and answer session. Please feel free to submit questions to us early through the investor website or by sending them to Sebastien. You can also submit them live during the webcast. We'll be good either way. With that, I'd like to hand the call back to our operator, Chloe, to begin the question and answer portion of the call.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press the pound key.
Steven Ralston: Our first question comes from the line of Steven Ralston from Zacks. Your line is open. Thank you, and good morning.
Jason Berg: Morning. I had some questions specifically for Joe, but I also have one specifically for Sam. I'll delay my questions for Joe until the investor conference.
Sebastien Reyes: The top line is improving.
Jason Berg: Like Joe expected, and I had one specific question about U-Box, which I know Sam heads.
Sebastien Reyes: U-Box once again has achieved double-digit growth in this quarter.
Operator: And it's through that tried and true formula of U-Haul
Jason Berg: that by adding capacity, and then specifically, in the case of U-Box,
Sebastien Reyes: increasing warehouse space along with the number of containers and the number of delivery equipment. This is a growing area. And I assume ultimately will be broken out as a segment as it reaches 10% of revenues.
Jason Berg: How much
Sebastien Reyes: potential do you still think there's left in the U-Box? It's
Jason Berg: been growing.
Sebastien Reyes: Do you think you'd, like, 10% done or 25% done? Or is it just too early to tell?
Jason Berg: Well, thanks for the question, Steve. This is Sam talking. I think you start off with some wise observations. Of course, it's way too early to tell. I'm on the more optimistic side. I don't see why there's any reason that U-Box couldn't be as big as U-Haul is today. And I think we're just at the infancy. You really can't start answering that question until you start to get some real
Sebastien Reyes: clarity
Jason Berg: from the consumer if they understand what this product and service really is. Of course, we're so blessed with traditional U-Haul that if you're six or 96, you know exactly what U-Haul is and what it does. And when you see it parked on the side of the road, you know exactly what it's there for. You know, the customer isn't quite there. The consumer isn't quite there with the U-Box portable moving and storage model. When they do, I think you'll really be able to answer the question you have. But I think the market's quite large. And as time goes on, you'll see it continue to grow as a pillar of U-Haul company.
Let me just ask you in a slightly different way. Of the number of locations that you have across the United States,
Steven Ralston: how many
Jason Berg: have
Sebastien Reyes: functionality for U-Box?
Steven Ralston: What percentage? Question.
Jason Berg: Sure. So it depends on what you're defining as a U-Haul entity. Of course, most of the time within the company, we look at our outlets, including our dealers. So if you want to make the calculation from that, you're looking at somewhere between 5-10%. If you're looking based on company stores, you're looking a little closer around half. Needless to say, that's not necessarily assuming that you've got adequate build-out of the U-Box
Steven Ralston: product,
Jason Berg: piggyback at those locations. So for example, you take a rather large market like Phoenix, you're still barely scratching the surface of the capability that we need to service the customer. And so we're just going to have to keep building it out, and if what you're trying to do is make a projection to say, should this double, triple, quadruple, 10x, you're going the right direction.
Sebastien Reyes: Alright. Thank you for taking my question. And the other questions had to do with Joe's experience because he's been running the company for quite a long time and wanted to get into some of the depreciation cycles in first and inflationary cycles. Where personnel costs are. I'll save those for the analyst comp.
Jason Berg: Okay, Steve. We'll be happy to answer those then.
Sebastien Reyes: Alright. Thank you for taking my question.
Jason Berg: You're welcome.
Operator: Our next question comes from the line of Steven Ramsey from Amazon Research Group. Your line is open. Hi. Good morning. I wanted to start with good morning. Yeah. I wanted to start with U-Box. And
Steven Ramsey: would just assume that transactions in U-Box are more associated with one-way moves. Are you able to see if U-Box one-way moves are growing faster than the rental segment one-way moves? Or set another way, with one-way transactions being up, is that a rising tide
Jason Berg: for
Steven Ramsey: U-Box?
Jason Berg: Well, this is Jason. I'll start and just set the scene with the truck one-way transactions, truck and trailer. Those have been from flat to up just slightly. Up 10 or 20,000 transactions in a quarter. So then I'll allow Sam to juxtapose his experience with U-Box one-way transactions. Yeah. U-Box one-way transactions are leading the way. They're exceeding our truck rental transactions as a
Steven Ramsey: percentage.
Jason Berg: As far as a rising tide, I think they're decoupled in many ways. I certainly don't look at the performance of the one-way shipping of U-Box product and juxtapose it against the truck rental numbers to say, oh, well, we only have so much we can go. We're capped or one number is dragging down the other. And I think what you should expect is for U-Box performance as a percentage to exceed the truck rental gains that we're able to make. There's little doubt of that.
Steven Ramsey: Okay. That's helpful. And then wanted to think about the margin profile of the business 35%, virtually flattish year over year. Even with moving transactions up and then storage and U-Box with a higher margin profile also growing faster. Can you maybe dissect what is causing margin trends in the quarter? Or if it's better to reflect over the recent past, then maybe the puts and takes to the company margin?
Jason Berg: We put a new slide in the investor deck this time around that shows a proxy for cash flow, which would be adjusted EBITDA, the EBITDA margin, and then
Steven Ramsey: the share of
Jason Berg: equipment rental revenue versus the share of storage revenue. And we don't have U-Box revenue in there yet, but the two newer revenue lines, storage is newer than the original equipment rental revenue. Both of those, when we include those in new projects, it has the effect of increasing the projected return. Now as you know, when you've been to some of our facilities, you see how everything kind of interacts and interrelates. It's very hard for us to break it out separately. But we certainly have seen that when we add more of each of those products to a location, the profitability
Steven Ramsey: improves.
Steven Ramsey: Okay. That's helpful. And then maybe to think about some of the dynamics playing out in the storage segment, a lot of new facilities and units in the total base maybe as a headwind to the margin profile, the slides in the last couple of quarters have been helpful to see that. Can you maybe talk about the glide path there
Steven Ramsey: of how
Steven Ramsey: units getting soaked up can be positive to margin, certain thresholds that need to be hit to elevate the margin within the storage business?
Jason Berg: Yeah. On this slide in the deck that we have, it shows where future storage revenue is coming from.
Steven Ramsey: There's
Jason Berg: a portion of that shows storage revenue from existing locations. Or what we call non-same store locations, ones that haven't hit 90%. And that number, taking it from where it is today to where it would be at 90%, is somewhere around $260 million, give or take. By the time we get there, there's likely going to be rate increases. It'll be a little bit more. Those are at locations where we've opened and the expense load has largely been recognized in our financials. So that additional revenue, a very rough estimate would be maybe 80% of that, give or take, is going to flow to the bottom line. At some locations, it'll be more than that.
At some of the newer locations, it might not be all of that. But as a general rule of thumb, a lot of the headwinds that we're facing right now on the EBITDA margin or on the GAAP operating margin are truck-related. It's the liability costs associated with the fleet. We've seen an increase in the severity of claims. I don't think we're seeing more accidents. I think the fleet is in real good condition as far as accidents go. But the severity of those that we're running into is a little bit more significant, and we're building reserves back up. And that's affecting the margin, does hit earnings and EBITDA. For both of those.
And then for the earnings cycle, it's this depreciation headwind that we're facing. We're going to have to work through this cohort of trucks, the cargo vans we purchased the last two years. And then likely after this year, the spend on the box truck fleet will begin to slow a bit. And then we should peak on depreciation and then hopefully trend back down.
Steven Ramsey: Okay. That's helpful, Jason. And the last quick one for me. When looking at the pending and developed storage square footage currently at 14.8 million, that's been sliding down for a few quarters. Is that a number that you expect to kind of gradually keep coming down over the next few quarters? Or is there a level of developed and pending square footage that you think it's a minimum level that we do not want to go under?
Jason Berg: There certainly is an amount that we don't want to go under. I don't think we're close to that right now. What we've been trying to do is slow the spend not because we don't believe in self-storage or not because we don't want to expand, but because we want to be rational in our capital allocation and make sure that we have enough to last us. And with the way that the fleet has been showing up some capital during this time frame, we're pulling back a little bit on real estate spend.
But you don't want to pull back too much where you have what happened to us during COVID where we shut a bunch of stuff down, and then it takes a while to start it back up, and you get kind of this unusual amount. If we could stay somewhere in the, say, 4.5 to 6 million square foot range each year, I think that's something that operationally we've proven that we can handle. And if we do that, spending is likely to continue to decrease.
Steven Ramsey: That's great color. Thank you.
Operator: Our next question is from Andy Liu from Wolfe Research.
Andy Liu: Hey. Appreciate it. Good morning, everyone. And thanks for taking the question. So really just wanted to double click first on the transaction volume that's talked about kind of, you know, flat to maybe slightly up in the quarter. Just wondering if you guys noticed anything in terms of your speeches, you know, sort of like the month-to-month trends. You know, it's been flat in the quarter, but have the month-to-month trends kind of been improving through the quarter? Or is it, you know, kind of pretty steady through the quarter?
Sebastien Reyes: Any kind of any color would be helpful.
Andy Liu: Sure. All of our comparisons are going to be year over year because our
Jason Berg: business doesn't really compare well month to month. So, you know, our best quarter for moving is really our second quarter. The second best would be the first quarter that we just finished, and then it goes third quarter, and the fourth quarter is our worst. So we're always comparing with how we did the year before because largely, moving activity tended to look the same year over year. So what I mentioned for July is we're again seeing revenue increase from rates that we're having to charge because our cost of doing business has gone up. But we haven't yet seen traction on the
Steven Ramsey: on
Jason Berg: transactions. And we're going through a process right now. I mentioned that the fleet, the size of the fleet has increased. I think from last year, we're up maybe 5,700 trucks. From last quarter, we're up about 5,000 trucks. We're also up close to 800 locations compared to last year. Between dealer locations and our company location. So we're going through the process, which is fairly difficult, of placing this new equipment in places that we think it's going to be and opening dealers and doing that in an efficient fashion. And that's what we're working on now.
Now if that doesn't work out the way that we think it is, we'll probably end up increasing the sales of trucks and reduce the size of the fleet. But right now, we think there's an opportunity to use these trucks. You know, to give you a sense of the challenge that we're facing, in the last two years, the number of locations that we've added is equal to the size of our second-largest truck competitor. Right? So, you know, in opening that many locations and distributing trucks across them and getting customers and our team to be able to route customers to those locations is a bit of a challenge, and that's what we're working through right now.
And we're working through it at the same time that we're investing quite a bit in the fleet. But our plan is that all of this is going to pay off in the years to come.
Operator: Got it. Got it. And sorry about that. I probably should've made my question a little clearer. And then, like and then
Andy Liu: monthly trend as in how did April year over year go? How did May year over year and June year over year? Is that has it been kind of year over year flat for? All three months, or has it been, you know, maybe improving on a year over year basis from April through June?
Steven Ramsey: It. Okay. After. Yeah. I went astray on that one, didn't I?
Jason Berg: So the revenue has been steadily up year over year. I would say that transactions, we have some on weeks and some off weeks. And we deal with the same issue that we've dealt with since the very beginning of the company, and that is people tend to move at the end of the month. So you get this cluster of transactions at the end of the month. And depending upon how the calendar falls from year to year, you can see these weird oddities. So looking at it over a three-month period, you tend to flatten some of that out.
What I would say is we still haven't got traction however you want to look at it, month over, you know, month versus last year or for the three months, the traction still hasn't hit. And I'm not seeing that in July yet either. But it's not like we're far off. There's some weeks that we're up on transactions, so we're right there. We're right there.
Andy Liu: Got it. Got it. Thank you. That's helpful. And then I kind of shifting over to the storage slide. I mean, storage stuff that you guys, you know, see I use wipes here. So I think that segment's getting you guys are pushing for a little more focus on a segment. So I really want to ask, you know, on that slide, on the future you know, revenue coming out online, you guys gave you know, what the future would look like on a revenue basis. Have you guys looked at it maybe on even an NOI on EBITDA basis? I don't know what that future pipeline is?
I know you guys don't disclose margin, but just want to get a sense
Steven Ramsey: if that is the revenue number, just, you know, how that hits the bottom line.
Jason Berg: Yeah. You know, I answered a question for Steven just now. On the non-same store locations that are already open, the additional revenue somewhere around, I would say, 80% of that should probably fall to the bottom line. If you're asking about the other ones that haven't opened yet, those are tougher because most of them have all of our product lines embedded, and so I don't have a clear answer to give you on that because we for I mean, breaking out storage revenue as part of that.
Andy Liu: No. No. It's you know, I know it's all I hear you. If you're on that front. So kind of guess ask it another way, maybe on the development, you know, the spending side of it. You know, kind of how much does it cost for you to, you know, put this pipeline up? Because I looked at, you know, your slides. Right? And if a five-year look back period. You did about $5.5 billion of investment, and you brought 26 million square feet of new space online. So that kind of backs into, like, $200 a foot. I'm not sure if that's, like, a good proxy for this thing going forward.
Jason Berg: Yeah. I know if I would be here this long if I allowed a bunch of $220 a foot storage to
Steven Ramsey: to Yeah. That's for sure.
Jason Berg: So that on that slide, the $5.8 billion represents the amount that we spent in that five years. So it's not exact that's not for the that doesn't represent the 26 million square feet that went on. It represents a big portion of it. But I'd say there's two complicating factors to that calculation. One is because we do all this development on balance sheet, there's a certain amount that we've spent that
Steven Ramsey: isn't yet
Jason Berg: productive. Right? We've bought the properties. We've started because we have construction in progress, but they're not renting rooms yet.
Steven Ramsey: For the last
Jason Berg: couple of years, that number has run about a billion 7. We're probably about a billion $6.90 in capital we've invested that isn't really producing revenue right now. And I would say five years ago, that number was probably closer to a billion. So then I would take $650 million out of the numerator. Because that really is extra money that's spent on assets that aren't productive yet. And then the part that's a little also challenging to figure out is that also includes building U-Box warehouse space. And if you were to convert the amount of covered spaces that we've added the last five years to storage, square foot?
Because each one of those boxes is a five by eight storage room. That's going to add somewhere between 8 to 9 million square feet of self-storage space. So in reality, what the numbers could get to for our investment per foot should be much closer to, say, $150 a foot. Is that's the long story to get to the short answer, which is it should be about $150.
Andy Liu: Okay. Got it. Got it. Super helpful. And then I sorry. Last question for me. I know you guys, you know, had asked last quarter as well. The development, you know, the yields that you guys get on these storage developments, you guys mentioned it was closer to, like, it was, like, 10%. Right? So I'm just curious how you guys quote that 10% number. Is that 10% on the one fifty of
Jason Berg: per square foot spend that you just
Andy Liu: that you just referenced, or is there or is there a different method you're using to calculate the 10%?
Jason Berg: Yeah. That's going to be the unlevered IRR. So you take your total investment in the property. And we're looking out I think it's seven to ten years, and then capping it at the end of that time frame and looking to see how it performs over that time frame. If you were to try to convert that to a cap rate, it's probably going to be somewhere between seven and a half, eight. Okay. Awesome. Super helpful. Thanks so much.
Andy Liu: For taking my questions. Have a good have a great day.
Jason Berg: You too. Thank you.
Operator: There are no further questions at this time. I would now like to turn the conference back over to management for the closing remarks.
Jason Berg: Well, this is Jason. I hope everyone's just holding their questions for the annual investor day, which is going to be in about two weeks. If you have any feedback in between, please feel free to shoot it to us. Otherwise, we look forward to seeing you then. Thank you very much.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.