U-Haul Holding Company 2027 Q1 Earnings Call

Welcome to the U-Haul Holding Company first quarter fiscal 2027 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 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 June 30, 2026, which is on file with the U.S. Securities and Exchange Commission. I'll now turn the call over to Joe Shoen, Chairman of U-Haul Holding Company.

Good morning, and welcome. We continue to have our work cut out for us. We need to increase U-Move and U-Store business. Operating expenses continue to creep up, and this is a combination of operating inefficiencies and pure inflation. About this time last year, we began a massive effort to net gain 3,000 independent U-Haul dealer locations. We are halfway there and still have good momentum. For decades, U-Haul has had a strategy of convenience to the customer. Adding these locations will further that goal, enhancing affordability to our customer and positively impacting equipment utilization for U-Haul. U-Move transaction growth has room to improve. Last year at this time, we also initiated a harder line on delinquent storage accounts, pushing our same-store occupancy number down. By September, we should be reporting improvements in that number, but the actual work was done one year ago.

Positively, our rate of adding new storage customers is improving. Of course, we want and need more. In my judgment, continued deceptive pricing practices by most of the storage REITs is degrading the self-storage industry's reputation with the public. At the minimum, their actions are increasing government oversight of self-storage, as evidenced by recent regulations in New York City. This is a shame. My team is dealing with it. U-Haul's customer-facing digital tools reflect increasing acceptance by our actual and potential customers. I see that as a good positive. Overall, I see a compelling future for our U-Move, U-Store, and U-Box product offerings. Now, I'll turn it over to Jason to walk through the current numbers.

Thanks, Joe. Yesterday, we reported first quarter earnings of $123 million, compared to $142 million for the same quarter last year. In terms of earnings per share, the first quarter of this year was $0.63 per non-voting share, compared to $0.73 for the same period last year. Earnings before interest taxes and depreciation, what we refer to as adjusted EBITDA, at our moving and storage segment decreased $9 million for the quarter to $537 million. Included in both our press release and our financial supplement is a reconciliation showing how you go from GAAP earnings to adjusted EBITDA. For the first quarter, our equipment rental revenues increased $29 million compared to the same time last year. Transactions and revenue increased across both our In-Town and One-Way markets.

Compared to the end of June this year to June of the previous year, we added 75 new company-operated locations. We had a net increase of over 1,100 independent dealers. For the month of July, revenue has trended in line with what we saw in the first quarter results. Capital expenditures for new rental equipment in the first quarter of fiscal 2027 were $602 million. That's a $17 million increase compared to the same three-month period last year. While proceeds from the sales of retired rental equipment were down about $14 million to $145 million. We're still projecting a decrease of over $500 million for net fleet investing over the back three quarters of the year. Storage revenues were up $16 million. That's about a 7% increase for the quarter.

Our average revenue per occupied foot for the total portfolio sum, including both same-store and lease-up properties, improved by over 6%. Digging into that number, our average new customer rental rates have increased by about 2.5% year-over-year, while our rates on customers who are leaving are just under 2% lower than what the move-in rate was.

Same-store occupancy was down 456 basis points to 88.3%. Nearly all of that is due to the harder line that we took on delinquent units in the second quarter of last year. As Joe mentioned, net tenant movement activity is picking up, but we're still behind where we think it can be. During the first quarter of this year, we invested $194 million in real estate acquisitions, along with self-storage and U-Box warehouse development. That's a $100 million decrease over the first quarter of last year. In this first quarter of this year, we added 18 locations with storage, totaling 1.1 million net rentable square feet. We currently have approximately 5.7 million new square feet being developed across 106 projects, and then another 6.3 million of potential future development behind that in properties that we own but haven't yet started.

To put that in context, last year at this time, those two figures were 6.5 million square feet for active and 8.3 million square feet on pending, respectively. My projections have us continuing to see spending on self-storage growth decline. Moving and storage operating expenses were up $55 million for the quarter compared to the same period last year. Our EBITDA margin declined by just over 1.5%. Personnel, fleet maintenance, and self-insurance liability costs were up just over $20 million. During the quarter, freight and shipping costs became more of a margin issue. With these costs increasing close to $22.5 million from the run-up in what carriers are now charging. Shipping of our U-Box containers accounts for the largest component, with the smaller piece coming from shipping our retail products and repair parts in our system.

For this last piece, our team is working to build further efficiencies into how we ship within the company. On the U-Box side, we continue to work with carriers as well as evaluating additional customer pricing adjustments. This cost is likely to be a headwind for the rest of this year, peaking here in July and then lessening over the back half of the year. That's a lot of conjecture given how the freight markets are trending right now. Fleet depreciation increased $13.5 million for the quarter. I'd like to point out only 800,000 of that increase was recognized after the month of April. It was May of last year that we began to materially increase the depreciation rate on our cargo van fleet. Those year-over-year negative variances are beginning to subside.

Losses from the disposal of retired rental equipment decreased $24 million, actually resulting in a gain of $1.9 million for the quarter. The resale market for cargo vans started the fiscal year relatively strong and has been receding incrementally since. If this trend continues, it could lead to us holding the units purchased this fiscal year longer as we look ahead. As of June 30th, for this year, cash and availability at the moving and storage segment totaled $1.349 billion. With regard to the $350 million share repurchase program that we announced during our last earnings release here in May, during the first quarter, we started making purchases for both our voting and non-voting shares. Through June, we repurchased 248,368 shares of voting at a cost of $15.6 million and 584,278 shares of our non-voting stock at a cost of $32.4 million.

Since June 30th, through the close of the market yesterday, we've acquired an additional 149,747 voting shares and 813,211 non-voting shares. As of today, the maximum amount that we can still use for repurchases is just under $242 million. At today's prices, we still see value in repurchasing the shares. We're holding our 20th annual virtual analyst and investor meeting on Thursday, August 20, 2026 at 11:00 A.M. Arizona time, which is 2:00 P.M. Eastern time. This is an opportunity to interact directly with company representatives through a live video webcast at investors.uhaul.com. We'll have a brief presentation by the company, and then the rest of the session will be questions and answers. Feel free to submit the questions to us early by sending them to Sebastien, or there will be a process for submitting them live during the presentation.

With that, I'd like to hand the call back to our operator to begin the question and answer portion of the call.