U-Haul Holding Company (NYSE:UHAL) Q3 2024 Earnings Call Transcript
U-Haul Holding Company (NYSE:UHAL) Q3 2024 Earnings Call Transcript February 8, 2024
U-Haul Holding Company isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning. My name is Laura, and I will be your conference operator today. At this time, I would like to welcome everyone to the U-Haul Holding Company Third Quarter Fiscal 2024 Investor Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Sebastian Reyes, you may begin your conference.
Sebastian Reyes: Good morning, and thank you for joining us today. Welcome to the U-Haul Holding Company third quarter of fiscal 2024 investor call. Before we begin, I’d like to remind everyone that certain of the statements during this call including without limitations, 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 risk and uncertainties, some of which cannot be predicted or quantified. Certain factors could cause actual results to differ materially from those projected.
For 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 December 31, 2023, 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.
Joe Shoen: Well, thank you all for joining us again for our quarterly report. There have been few positive signs in the consumer demand for either truck sharing or self-storage rentals. Our U-Box continues to grow, but it is simply too small a part of the total market to be considered as an indicator of moving and storage demand. We are making some modest progress in backfilling the voids created in our fleet by vehicle manufacturers unwillingness to build sufficient truck product basically since the beginning of COVID. This will take several years to work its way completely through the fleet assuming someone will build trucks. We continue to build and buy self-storage. I believe the right locations managed over a period of years are a good investment for the company.
Everybody has their own opinion of what’s going on in this market. Rising costs continue to pressure U-Haul and our customers. We are often unable to accurately predict future costs or to hedge them. My strategy is to try to absorb all legitimate costs into the present period rather than try to postpone them into an uncertain future. Our insurance subsidiaries are solid. Mark Haydukovich, the President and Chairman of our Oxford Life Insurance Group, will be retiring this quarter after 45 years of leadership for this company. Mark will remain on the Board of Directors. I’ll now pass the call to Jason Berg for some analysis of the numbers.
Jason Berg: Thanks, Joe. Yesterday, we reported third quarter earnings of $99 million compared to $199 million for the same quarter last year. This translates to earnings per share of $0.51 for non-voting share this quarter compared to $1.02 per non-voting share in the third quarter of last year. Beginning with equipment rental revenue results compared to the third quarter of last year, we had a $59 million decrease, which is about a 7% decline. Over the last 18 months, we’ve had a $379 million decrease in U-move revenue, giving back a portion of the $1.4 billion of increases we experienced the eight quarters before that. To give you a better sense of how much of those revenues we’ve maintained so far compared to the last quarter of the pre-pandemic called the third quarter, which ended December 31, 2019, we’ve increased our third quarter revenue results by over $218 million third quarter two years ago to today, or on a compounded growth basis, I’m sorry, four years ago by nearly 8%.
Average miles per transaction continue to decrease as customers are using our equipment on shorter mileage moves. On a positive note, whereas transactions for the nine months are down a little over 3%, for the quarter we were down just over 1%. And in fact, while we still had a revenue decrease in the month of December, transactions increased around 1% in the month. Unfortunately, we lost a bit of momentum in January as our results were undoubtedly affected by tough weather. Capital expenditures on new rental equipment for the first nine months were $1,350 million. That is a $334 million increase compared to the same period last year. We’ve increased our fiscal 2024 full year net CapEx projection from $870 million to approximately $930 million.
So that’s gross purchases net of proceeds. Proceeds from the sales of retired equipment are up $68 million for the nine months to a total of $595 million. The increase in proceeds is coming from additional truck sales. Average sales price per unit has been steadily declining. At our current pace this year, we should make maybe a 2,500 to 3,000 truck dent in our rotation backlog and our teams have been increasing the pace of truck retirements, taking out older equipment. For self-storage, revenues were up $20 million, or 11% for the quarter. We increased the total number of occupied rooms and were also able to improve average revenue per occupied square foot by almost 4%. The year-over-year improvement in revenue per foot has been coming down as we progress through the year.
Our occupied unit count at the end of December was up nearly 29,000 units compared to the same time last year. Over that same time frame, we’ve added 42,000 new units into the inventory and it’s this differential that’s led to our average I’ll call it all-in occupancy ratio during the third quarter to decline to 82%. This same moderation in occupancy can be seen in the same-store grouping of these properties that we put in our press release with an occupancy decrease of 210 basis points to 92.9%. Our asking rents for new customers on average across the entire portfolio are up a little less than 3% year-over-year. During the first nine months of this year, we’ve invested $969 million in real estate acquisitions along with self-storage and U-Box warehouse development.
That’s a $35 million decrease over last year. Spending on acquisitions of new properties has declined, while investment in development of existing properties that we own has increased. During the quarter, we added a little over a million new net rentable square feet and we have just under 8 million square feet being actively worked on. Operating expenses at moving and storage increased $37 million for the third quarter. First, the good news from the quarter was that the fleet repair and maintenance was down $3 million. Conversely, we had a $13 million increase in personnel and the quarter also included approximately $17 million of costs that I would consider non-recurring in nature, including a large vendor rebate that we netted against costs last year.
That was a one-time event. Combined with some credit card accrual charges that were recorded this year that I would not expect to recur. Property taxes also were up about $4 million. We have made progress in deploying some of our cash balances to new investments, but we still intend to remain conservative in regards to cash and liquidity as of December 31 this year – 2023, cash along with availability from existing loan facilities at our moving and storage segment totaled $2,211 million. With that, I would like to hand the call back to our operator Laura to begin the question-and-answer portion of the call.
See also 15 Best East Coast Cities to Retire on a Budget of $1,200 a Month and 25 Countries That Gave the Most Foreign Aid in 2023.
To continue reading the Q&A session, please click here.
