UHAL earnings call transcript, November 4, 2026

Okay, that's great. And then it appears that U-Box covered warehouse space growth continues to outpace U-Box revenue growth, even with both moving and storage usage growing. Is that the right perception? And if it is, do you expect U-Box investment to also be reduced in the coming quarters? Yes. As I look at the pipeline, the projected covered spaces that we're looking to build are probably about half of what they were a year ago or two years ago. And that's not, that's a function of we've been building out this network of warehouses across the country to get them into areas where we have, I don't know. If they really want to call it this, but I'll call it a hub and spoke type situation where customers can access the box at just about any location. But then the storage of it takes place at these larger warehouses that we've been building. And as we work our way through all of the major markets that need warehouses, we're not going to have to go back in and build more warehouses. So I fully expect to spend on you box related real estate. To continue to trend down. Okay, that's helpful. And then last one for me, freight and shipping costs, again, a pressure with you box. Can you talk about where you see that going in the next couple of quarters or settling out? Yeah, a few things. There's what I've focused on a lot in the calls here. Just the increase in cost from an industry perspective. I think what our team here at the home office and out in the field is focused on is things that they can do a little bit better to make sure that they're not causing a situation where we have to pay more for freight. So I think we're making progress on that front and we're going to optimize the freight costs as much as we can, even though they're going to go up. So first,

we're trying to make sure our processes are bulletproof so we're not causing an increase in freight expense. Second, we're then trying to make sure that the realities of the freight costs for shipping these boxes around is appropriately reflected in the rates that we're charging customers, right? These shipping costs are not unique to us. They're universal to anyone that's shipping containers around the country. So everyone has this same challenge and we should be we should be pricing appropriately. And then third, we have a program internally where it was a program that Sam developed years ago that we group U-Box shipments that are going to markets that we also have one-way customers driving U-Haul trucks to and the U-Haul customers then for a deal on their truck rental take the boxes with them. And that's another way of doing shipping. for us and there's a certain amount more that that we need to compensate customers for because the increase in fuel prices but it's not nearly the same increase that we're seeing in over the road carriers. Okay that's helpful. Thank you. You're welcome. Thank you.

Okay, great question. I appreciate you going back in history like that. In both of those situations, I think you can attribute a lot of the success that we had back then to management focus. So the 2000... In 2004 timeframe, we were coming out of a financial restructuring process. There was a lot of noise that kind of took focus off of what the core operations were. The fleet was allowed to age a bit. That was in the early 2000s. And then by 2004, and then nine, and then I also think of 16. It's times where we had the fleet in excellent shape. And then we did something that expanded our reach. And I would say today what we're focused on in order to try to create our own catalyst here is this dealer expansion program, right? Because if we look out into the marketplace, I don't think there's anything either on the self-storage front or on the moving front that looks like a structural demand. and catalyst out with the customers. So then it's just us having to do a better job of trying to place the trucks and the dealer program is that. Is it going to result in as big of improvements as we saw back then? I think the jury's still out on that. We're up a net 500 dealers. I think we would have liked to have been up more than that by this time. You know, we've been made comments nine months ago. That we're going to see after the summer months, how the dealer program was able to absorb the fleet. And I don't think we made enough progress on the dealer front to really make a final call on the fleet size. So I think that that call is going to be pushed out a little bit.

So, Steve, I don't know if I answered the question to your liking. I'm sure Joe would have done a little bit better job at that. But I think in each of those instances, there was a degree of management focus that we're able to get back to because I don't recall a significant event outside of the COVID run-up that would cause the increase in demand. And I may just be forgetting it. Well, thank you for reminding me about the catalyst of the dealer expansion program. Yeah. Could you make any comment on this dichotomy of the growth rate between the core self-moving rental business? And those two top line growth engines? It personally surprised me when I started looking at the numbers. Yeah. I think what excites us about the evolution of the company is the stickiness of the non-moving revenue, right? So if you think about storage and then part of Ubox, which is the storage component, when you get a customer, there's an ongoing annuity, right? That they... They stay in the product for a longer period of time. Whereas the move, you make the move and then you're done and then you get ready to help the next person. Whereas in storage, they're staying in excess of 30 months on average. So I think we're excited about that piece of it. And that's why I have a slide in the investor deck that shows... As that ratio of equipment rental revenue declines as a percent of the total, I anticipate our margins continuing to improve structurally.

Okay. Action count and compare it to the previous 12 months. And we've been running negative on that measurement here for quite some time. And in October, we shifted over to positive. Now it's, you know, several, you know, 23, 24,000 transactions on millions, but it's headed in the right direction. And I would say anytime that we start to see transaction growth, that has typically been a positive sign for us in in the long term. Another another point that I would say is miles per transaction. We've been running now for several years, kind of negative miles per transaction numbers on the one way fleet. And now we've we've compiled three quarters in a row, where we're starting to see small improvements in the average distance of people's moves. We and and positively with that is we also saw a little bit of improvement on revenue per mile for one way. And typically, the longer the move that you get, the harder it is to pick up revenue per mile, we saw both go up. So those are two things that internal statistics that that we look at that typically would say something right is happening underneath.

And then just kind of taking that a little further in the extension, and thank you for that granularity. So we're getting out of the stronger seasonal quarters, we're heading into the more moderate quarters of the year. What do you think in terms of when you look at where the company is now? Are there hatches to batten down further? Are there projects that you want to engage in that will make things stronger? for the upturn? Are there things and I know depreciation starting to settle in the right direction. Gain on sale starting to settle in the right direction. We've slowed down growth in the storage business. But as we head into this slower seasonal time of the year are there opportunities that are out there for you to take advantage of? Absolutely. This is the time that our field team starts to get a little bit of a breather from the hectic pace of the moving season. And they can start to focus on a few other things, making sure that the storage product at their location is cleaned up the way that it should be, perhaps finishing some projects, and generally focusing on other items that, in the heat of the moment, we don't want to laden them with one more thing to do. So, this is normally the type of other projects. And Joe and JT are communicating with the team. I think storage is a big focus of that right now, as far as making sure we're reading customer reviews and addressing them at a location by location basis, because things just tend to get a little bit behind, especially if the location is heavy on equipment rental, you know, there's things that, you know, you maybe just don't get a garage door fixed right away.

Or whether, you know, something else falls behind on the maintenance side, we can we can address those items and then as far as other things we're doing here at the home office, the the rollout of our teams here utilizing the AI tools that we have is is really exciting. We we haven't handed any processes or procedures over to AI you know on an autonomous basis where it's doing it itself but we're working hand in glove with the tool and and the output that at least what I've seen is is really powerful. Okay thank you very much.