U-Haul - Q3 2024
February 8, 2024
Transcript
Operator (participant)
Good morning. My name is Lara, 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 speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. Thank you. Mr. Sebastien Reyes, you may begin your conference.
Sebastien Reyes (Director of Investor Relations)
Good morning, and thank you for joining us today. Welcome to the U-Haul Holding Company third quarter fiscal 2024 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 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 (Chairman and CEO)
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 Company, 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 (CFO)
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 per 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, I call it 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 $1.35 billion. That is a $334 million dollar 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 dollars 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 2,500-3,000 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 we're also able to improve average revenue per occupied sq ft by almost 4%. The year-over-year improvement in revenue per sq ft 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 the, our average, we'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 1 million new net rentable sq ft, and we have just under 8 million sq ft 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, 2023, well, cash, along with availability from existing loan facilities at our Moving and Storage segment, totaled $2.211 billion. With that, I would like to hand the call back to our operator, Lara, to begin the question and answer portion of the call.
Operator (participant)
Thank you, sir. At this time, I would like to remind everyone, in order to ask a question, please press Star, then the number one on your telephone keypad. Again, that's Star, then the number one. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Steven Ralston from Zacks. Please go ahead.
Steven Ralston (Senior Analyst and Director of Research)
Good morning.
Jason Berg (CFO)
Morning.
Operator (participant)
Morning.
Steven Ralston (Senior Analyst and Director of Research)
I actually only have one question, and I'll preface it by saying, the top line, to me, is roughly in line with expectations. It follows, what management has been saying, and what I also believe is that, you're still on your historical growth rate, after the blip up, that caused by the pandemic. Given the economic environment, it is consistent, with that premise. It's something I mentioned in the last earnings call. I have a quite detailed earnings model, and everything seems to be in line, except this one particular metric that I monitor, and that's looking at the operating expenses for moving and storage, and it's the margin for that, so you divide it by the revenues of the self-moving equipment rentals.
It's popped up considerably, and I have not been following U-Haul for a very long time, only five years. And it's the highest margin or level of expenses relative to revenues in that, in the previous fiive years. I looked at the 10-Q, and you do mention it. You attribute it to personnel costs, property taxes, and building maintenance. And as you just said, property taxes only went up $4 million, which doesn't account for that increase in margin. So I'm sort of concluding it's in personnel costs. It seems like it's inflationary in nature, and I'd just like you to dive a little deeper into these operating expenses and what's driving this increase?
Because the third fiscal quarter is relatively a clean quarter, given its seasonal slowness relative to some of the others. And it just kind of sticks out at me that this operating expense number is accelerating higher than normal.
Jason Berg (CFO)
... Well, I'll, I'll start with that. This is Jason. So first, our, our largest expense, personnel costs, that's been more of a function of the, the decrease in revenue, and, and there has not been a, a coincident decrease in, in personnel costs. We've—we've tried to become a little more efficient at the home office with staffing, and the headcount this year is only up about 2%, so we're not growing the size of the personnel so much. That's more a function of the revenue just has been coming down, and we have the capacity for, for, for more business. The repair and maintenance this quarter compared to last year is down. If you were to go back four years, it's up probably $70 million, on a, on a quarterly basis, so that's still higher than what we would expect.
As we put on the new equipment, and you see the depreciation expense climb associated with the new equipment, you would normally expect then to see the repair and maintenance come down, and the utilization of the fleet increase, and both of those have been lagging this time around. Then I did point out in the comments, there are about a little over $17 million of what I would say are kind of non-recurring costs in this quarter, but I think you're speaking to a greater trend a little bit more than just this quarter.
Steven Ralston (Senior Analyst and Director of Research)
Yes. I mean, everything else is the quarter is actually pretty good, considering the environment and what you're dealing with. I'm just looking at this personnel cost. Well, I guess it might be something else. The 2%, is that the headcount or is that the expenses? In other words, you might have to be paying the employees a higher level of compensation in order- in this environment.
Jason Berg (CFO)
That was headcount.
Steven Ralston (Senior Analyst and Director of Research)
That was headcount. Okay. Are these compensations going up higher than usual?
Jason Berg (CFO)
I wouldn't classify it higher than usual. It's been going up the last several years on a per hour basis. I think for the nine months, I think we're up somewhere close to $8 million-$10 million on medical benefits, and the rest is wage activity.
Steven Ralston (Senior Analyst and Director of Research)
Okay. Well, thank you for answering my question, and, all in all, good quarter. I just have a little concern about the expenses. Thank you.
Jason Berg (CFO)
Thank you.
Operator (participant)
Question comes from the line as Keegan Carl from Wolfe Research. Please go ahead.
Keegan Carl (SVP of Equity Research)
Hey, guys. Thanks for the time. I guess I'll start with a question I asked last quarter, too, but just trying to think on a like-for-like basis, what you think the self-moving equipment rentals would have been down if you removed the new stores you would have added year-over-year? And I guess, more broadly, how does that compare to the prior quarter? Are you seeing any sort of sequential improvement?
Joe Shoen (Chairman and CEO)
I don't know if Jason has a number. I would say probably 1% or less. So that's a very... It's. You can't get as hard a number on that as you might think you'd be able to get. But so kind of another way to phrase that question is, did the new stores cannibalize same-store sales, or were they additive? And I think they were probably about half the revenue they generated was additive, so that's that's gonna be kind of my... But I can't give you a hard number on that, but that's something, of course, to be concerned of. As you know, we also go to the customer via what we call a U-Haul dealer.
And so trying to balance total revenue and then the source of that revenue, where the customer encounters the product, is, of course, a concern and something we watch. And stores did a little bit more of the business than they did a year ago, so in a sense, you could say they cannibalized a little bit into dealer business. So if we had stripped the stores out and hadn't done them, I think we might have seen a percent maybe. Maybe, maybe not that much. I don't know, Jason, what do you think?
Jason Berg (CFO)
Every couple of years, we do a study of this to see what happens when we put a new company location in and the effect that it has on dealers. That hasn't been done now for a couple of years, but what we have found historically is that the entire market ends up coming up after we put a company location in. So my generalized response to that is, it doesn't. It shouldn't have a big negative effect, and I haven't seen a market where we've put a company location in, where the overall market has gone down. It's always... Everyone I've ever looked at, it's always gone up.
Keegan Carl (SVP of Equity Research)
That's really helpful. I guess shifting gears, just specifically on the self moving business in January, I know you mentioned it was, you know, it didn't have an easy month, but also it was weather related. I guess I'm just curious, you know, maybe as we work through that, are you seeing any incremental improvements? I know it's early in February, but just trying to get a better feel for, I guess, you know, how you're expecting that portion of the business to trend throughout this quarter.
Joe Shoen (Chairman and CEO)
Of course, hope springs eternal, and of course, anybody who tells me the weather caused them to be down in business. Basically, it gets a tongue lashing. So we're not relying on that. But if you, you know, I think that we really did have some of that. We had a pretty decent first 10 days of February, but February is another one of those months, the son of a gun. Every six or seven years, we get slaughtered either in January or February. We got slaughtered in January. Could we get slaughtered in February? It still could happen. You know, California had just had another run of nasty weather, but it—so far I, I'm, but again, I'm hopeful constantly, so I may be the wrong person to say.
But it doesn't look like there's anything negative in the market other than weather. In other words, there's not a competitive force happening. People, as Jason commented, are driving fewer miles, and we've seen this over 40 years. When people are uncomfortable with their economic certainty, they tend to drive our trucks shorter distances. It's. We've seen that repeat and repeat. And there's a, there's a, some kind of a little malaise kind of over consumers' heads right now, that I don't have an explanation for totally. But until that kind of turns to a little bit more positive view, I don't expect them to drive more miles. Now, I don't think we're losing long rentals to competitors. We look at those kind of things. We don't see that happening.
We just see that people are just a little hesitant, and when they get that way, it's kind of logical. They don't want to move as far, they don't want to... They'll still move because they got married, but they just don't move in, you know, to a distant city. So all these things that drive business, these life events, they continue on, but they're not quite as adventurous as they might have been when they were more, they just felt more positive about the, their circumstance.
Jason Berg (CFO)
And this, Jason, if I could just, I think people's definitions of slaughter might vary. And for us, that's-
Joe Shoen (Chairman and CEO)
It's not an accounting term. Okay.
Jason Berg (CFO)
Probably closer to, say, like a 5%-6% decrease.
Joe Shoen (Chairman and CEO)
Yeah.
Keegan Carl (SVP of Equity Research)
No, that's really helpful. I guess one specifically for Joe, the press release, I actually thought the commentary was pretty positive in the beginning. You know, you mentioned that you're seeing pockets of modern or modest growth in certain markets and product lines. Just maybe go into some more detail on this, and then what markets in particular are you seeing improvements in?
Joe Shoen (Chairman and CEO)
Well, it's kind of a red state, blue state analysis about the long and short of it. Probably, I think we're probably the same as every other business. I bet that restaurants will tell you the same thing. So, you know, where we have... Well, just take Tennessee Hell. Tennessee is just a wonderful place to do business today, and that's just what, just what it is. And, I think everybody sees that, and we'll see how it goes. We kinda end up reflecting it. So you see some place like Tennessee, and you think, "Well, good, let's, let's, let's push ahead." But we don't always get-- opportunities don't always present themselves only in the better markets. I also am seeing a lot of... We're going back through and sorting back at a very detailed level. Where do we have the equipment?
Where do we have the outlet? And population is still shifting in this country, not like it did during the pandemic, but people are moving around. And as you know, there's a tremendous amount of inbound migration, and these people are creating new, basically, new pockets of humanity or whatever you wanna call it. And so we need to keep adjusting our basis to market to those people. We largely do that in the initial phases with our independent dealers because they're in that market running a landscaping business or something else, and so they make a good combination with U-Haul. But then we'll start to, as those communities become a little more established, we may go ahead and put a company operation in that area.
So other than just saying, which nobody wants to hear, red state, blue state, I would just say it's, it's communities growing that maybe we weren't aware of last year. I get my best information from what we call our local traffic. We have 200 traffic offices across the country, and the people there see trends first. They, they see them, and they try to alert us and say, "Well, this looks like it's gonna go positive." Of course, you know, Florida has done great, Texas has done great. I mean, it's about what you'd think. I, I would like to say that we had some marketing initiative that was catching fire, and I, I don't think we have a particular... If we do, I'm not aware of it, I guess is what I'd say, other than equipment distribution.
With us, it's so important to have the equipment where and when the customer wants it. So just because we own the equipment doesn't mean it corresponds to where demand is. So we have a, you know, big operation trying to get that, constantly trying to get it better, and it's a constantly moving target because next week we'll have X tens of thousands of trucks in a different spot than they were this week, you see? So you're constantly trying to reoptimize that.
Keegan Carl (SVP of Equity Research)
Maybe just shifting gears to storage here. I guess big picture, are you seeing any change in your average length of stay? And I know rate increases that are being sent out are obviously topical in the storage industry. I'm just curious, are you seeing any change in how customers are reacting to the rate increases you're sending out?
Joe Shoen (Chairman and CEO)
I'll say I'll address the rate increases. We continue to send rate increases. That's not what's going on in the industry. What we have now is rate slashing 50% off and more, and that's unsettled the customer because they wanna know why store competitor X are, is half our price. Well, they're half our price because they're gonna jack you so hard 90 days from now, you're gonna, your head's gonna spin. But we don't do that to people. We consider it anti-consumer activity, and we think it's destructive of the industry, but everybody has their own view of that. So whipsawing rates, if you're making a rate change more than 5%, you'd have to explain to me why. Something was wrong with your original pricing.
That's my feedback, and so you'll see us typically. We're doing... I think we did 3%. Is that about what our asking rate is now?
Jason Berg (CFO)
Over the whole portfolio.
Joe Shoen (Chairman and CEO)
Over the whole portfolio. So, you know, the storage market is tighter by far than it was two years ago. By far. And so you're having to look to your knitting. Well, that's kind of our game. I, I like to believe, I like to believe when that comes up, we start to dig in, and it energizes us. And so that's what we're attempting to do: offer a better overall experience for the customer, but not necessarily by slashing pricing. Maybe we could increase value. We, we're, we push value real hard.
Jason Berg (CFO)
Keegan, this is Jason. I haven't seen any dramatic shifts in the average stay.
Keegan Carl (SVP of Equity Research)
Really helpful. Then last one for me, I guess this is another big picture question, but obviously, you guys have a lot of excess liquidity on your balance sheet in the form of cash. I guess I'm just curious how we should think about the utilization of that, especially, you know, if you take a look at the forward rate curve, it's coming down. You know, the interest income won't be as favorable. So just kind of curious, you know, where your heads are at on cash utilization.
Jason Berg (CFO)
Well, this is Jason. We've worked it down, give or take, close to $1 billion here from, like, say, a year ago, January till now. So we're all about getting that reinvested back into the, in, into self-storage. I would say that right now we have somewhere close to or north of $1.6 billion in assets that would include cost of acquisition and construction put into them so far, that are either haven't opened or not fully opened or have additional phases remaining. So I wouldn't call them, you know, fully realized yet. So there's quite a bit going on there. We've kind of been sitting out on the real estate financing side, so we do have the ability to raise quite a bit of cash at some point if we need to.
But as you can see, we're not doing that right now.
Keegan Carl (SVP of Equity Research)
Great. That, that's it for me. Thanks for the time, guys.
Operator (participant)
Our next question comes from the line of Jamie Wilen from Wilen Management. Please go ahead.
James Wilen (President)
Hey, fellas. Joe, you've always said that the fleet utilization for your, for the trucks is one of the most important metrics you look at. With transactions being, let's say, relatively flat... I mean, I realize you have to upgrade the fleet to better and better units all the time, but why are we, why are we increasing the size of our fleet while transactions are flat if we're trying to raise that fleet utilization percentage?
Joe Shoen (Chairman and CEO)
It's, it's really because our deletions haven't quite where they should be. So in other words, this, this is all about what goes in the top and what goes out the bottom. And we, we have some stuff at the bottom that still needs to come out. Some of them, just grounding, we believe it's better to rent a different truck. Pending sale, of course, that doesn't put a big smile on Jason's face because we're just... But until we can sell them, that's kind of what happens. Now, at the same time, we've, we've down fleeted our pickup fleet, maybe 2,300, 2,500. You, Jason, do you know where we are exactly?
Jason Berg (CFO)
Yeah. The smaller end of our fleet, mostly pickups, some of the vans, is down close to 4,000 units.
Joe Shoen (Chairman and CEO)
Yeah, if you do vans and pickups, we're down almost 4,000 units. And I think that that's our... we can most readily respond to. It's a more liquid resale market. Most of those trucks go to the auction and through dealers and such, and so that's a much bigger market. The... So our van trucks are... Typically, we retail it ourself, so it's not going to some auction where you can clear 50 trucks in a day. They kind of go out dribs and drabs. And since we stopped selling during the pandemic, we kind of turned off the faucet with buyers, and buyers, other sellers or whatever buyers do. So in the last 12, 18 months, we've tried to get that coming on, but it's coming on slower than we expected.
So I don't, I think when we calculate utilization, you correct me, Jason. I believe we calculate all trucks.
Jason Berg (CFO)
If it's actually in the, those aren't included.
Joe Shoen (Chairman and CEO)
Right. But if it's-
Jason Berg (CFO)
But if you haven't actually classified them in the-
Joe Shoen (Chairman and CEO)
We haven't
Jason Berg (CFO)
... it waters it down.
Joe Shoen (Chairman and CEO)
Then it waters it down. So, I think we're—you're right, we have too many trucks... but I think it's because they're not sold yet, not because we have bought too many. And well, we're still buying a license plate, but a bunch of this equipment is more or less pending-
James Wilen (President)
Gotcha.
Joe Shoen (Chairman and CEO)
sale, and that's where it could be. Shouldn't be in the rental.
James Wilen (President)
Right. Your fleet maintenance expenditures have declined a bit. Are you seeing any difference in the quality of the vehicles that you own, that would give you any inclination that fleet maintenance and repair will not be a rising figure moving forward?
Joe Shoen (Chairman and CEO)
We're not that far along. You saw our repair expense bloom something like $200 million a year. And that was because we were running new vehicles. And basically, just like you with a car and a family, goes to the mom, and it goes to the dad, and then it goes to the kid, it has a lot of variable costs associated with it, but not much fixed cost. And that's basically what's happened to a bunch of our trucks. We've depreciated them, but now if you wanna drive it another 1,000 miles, you're gonna have to pay for the maintenance every 1,000 miles. So, yes, we've seen some improvement. We can debate it. Let's say we put 3,000 extra trucks. Let's just...
I'm not sure of the exact number, but something like that. Okay, well, that's 3,000, probably against 20,000. In particular, 'cause it matters by size, so it's not just the total number. Now we have to balance this for every individual size truck. Ordinarily, if you had your druthers, you'd buy the same amount of each different size truck every year, and you'd maintain a constant fleet. But because of supply considerations, this just doesn't happen. And so we have fleets where we have a whole bunch of high-mileage trucks and a whole bunch of low-mileage trucks and no trucks in the middle. And that's kinda what it goes through us like a snake swallowing a rat. It just kinda goes through. It's gotta kinda work its way through. It doesn't just, you go through smoothly.
So we're, we're seeing some of that. It'll balance out, and I, I'm not sure... I'm not gonna predict next, next quarter of, of reduction in repair, but that should come as we bring in new trucks, and then you'll see depreciation go up, but they don't exactly correlate. The trends correlate exactly, the numbers don't. And you're also seeing us pay more vehicles. I saw on the paper this morning that Ford claimed $11 billion of earnings, and $7 billion of it was on fleet sales. Well, I cannot tell you how poorly we've been treated by Ford and General Motors on fleet sales. They've come through with 40% price increases. Price increases-
James Wilen (President)
Geez!
Joe Shoen (Chairman and CEO)
-and that one through with the rest of this. So they're making good product. I got no, no complaints about the product, but they, they have made a decision internally in both those companies to finance their losses on electric vehicles, fleet customers like us, who we actually... This isn't like at home, I can tell the kid to drive the car another year. But here, it's a business. I, when I need more trucks, I need more trucks. I'm gonna have to buy them, and they- they're leveraging that against us with everything they can in a, in a, just in a really hard way. That's. And then when I saw with how Ford analyzed their earnings this morning, I said, "Well, no kidding, guys.
I mean, that's what you've done to us." And this is all under the banner of electrification, which they don't have an electrification solution for us, but we're financing it, and that's what they're doing with their customers. And, that's just what that does.
James Wilen (President)
Two little pieces of commentary. You increased the quarterly dividend by 25%. I'm glad you're seeing to share everything with shareholders, and we look forward to some annual increases along the way. I love that you are quoting the self-storage analyst, that people understand that we have an incredibly large and growing self-storage business, and that we've never talked to the analyst there before. And, yeah, I was wondering, within the industry, if anyone else maintains the same organic growth that U-Haul has. I mean, this is the most difficult thing to do when you start at 0%, but it also creates the most significant upside. Is our organic growth relative to everybody else at a higher level at this point?
Joe Shoen (Chairman and CEO)
Without... I'm not gonna say that I can quote. I believe it was last year, but I don't... no. We're trying to grow everywhere where it makes sense, and we're not constrained by capital. Our constraint is our ability to execute, okay?
James Wilen (President)
Mm-hmm.
Joe Shoen (Chairman and CEO)
You can just pour money into development, and you're not gonna be as happy as you can. Cost can run out of control if you don't have some in-house expertise. So we're trying to expand, and we're not capital constrained, but we're not expanding everywhere because we just are unable to execute in that many places on a given day. So I don't have a number that I'm trying to benchmark against somebody like Extra Space and saying, you know, how. I'm not doing that. We're all in the marketplace. We're all doing stuff. We all have slightly different strategies, and sometimes I learn something by watching them, and maybe sometimes they learn something by watching me.
I'm not quite sure of that, but, of course, I try to keep my eye on them, and so I understand what they're doing to get themselves in a better situation.
James Wilen (President)
As you look forward, are you looking to add 1 million sq ft per quarter? Is that gonna be a relatively constant number?
Joe Shoen (Chairman and CEO)
I'd like to see it be that, personally, yes. Now-
James Wilen (President)
Okay
Joe Shoen (Chairman and CEO)
... you know, again, we have to fill the room. See, we built more than we filled this last quarter, okay? So, okay, got that. We've done that before. It's not a terrible thing. The question is, are those rooms gonna rent up? And so I'm looking at rooms rented over the prior year by store. If I can manage that, okay, well, then this thing kinda all works itself out. And then, of course, you're watching the rate, because all these projects, you can't get the rate, well, it's gonna, you know, the master's gonna go poorly. So we're watching all that, and I think we should be able to continuously build at that rate. I believe we should. Now, our model indicates we should be able to build at that rate.
If something really changes in the macro environment, it'll get us. But yeah, that's the rate I see us being able to continue doing.
James Wilen (President)
Okay, and lastly, on U-Box, you've continued to grow that business. Has the bottom line continued to keep pace with the top line growth? And how are the margins in that business for you?
Jason Berg (CFO)
Jamie, this is Jason. I would say that U-Box is maybe a little outperforming in that we had some revenue declines last year. It's now bounced back, and for really the last six months, we've had transaction increases. This last quarter, we had revenue increase. So, you know, we don't do segment reporting here, but the best proxies that I have for kind of an EBITDA number for that is that it's been down, but maybe in the, you know, 5%-8% range. So it, in that sense, it's done a little bit better than the rest of the organization.
James Wilen (President)
Okay. Thank you, fellas. Appreciate it.
Joe Shoen (Chairman and CEO)
Sure.
Operator (participant)
Our next question comes from the line of Craig Inman from Artisan Partners. Please go ahead.
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Hey, guys. Just real quick, technically, Jason, that $17 million you're talking about, I didn't catch that. Is that extra cost this quarter, or there's some kind of year-over-year comparison? Just wanting-
Jason Berg (CFO)
Yeah -
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
A little color on that.
Jason Berg (CFO)
So a little under $5 million of that was a credit last year that didn't recur this year, so it wasn't... It reduced expenses last year. It didn't really increase them this year, but if you're comparing last year to this year, it looks like an increase. And then the remainder of that was an additional expense that we booked this quarter that should not come around again.
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Okay, gotcha. Okay. 'Cause that was what I was gonna just ask about. I mean, I know the, you know, the priority is to get the fleet rotated, building out the self-storage and getting that done. And so I was curious about then the cost base. You just- we've seen a lot of businesses through this period where they had a lot of revenue from, kinda the COVID changes. And then you're lapping that, and you have some excess cost in the business in certain places. Are y'all not in that position? I mean, I know y'all are always very mindful of cost, but just curious about how the cost base stacks up versus what you would expect, kinda given how you're looking at the, you know, the revenue trajectory over the last four years, and it normalizing now.
Joe Shoen (Chairman and CEO)
I think you're gonna see personnel be a touch area for three or four years. I think that there's a whole bunch of initiatives coming on at state and possibly at the federal level, that's going to massively inflate wages, and maybe that's a public policy, I don't know. But the question is, of course, can we earn that back through some value add with the customer or somehow get the customer to participate paying that? And that's all kind of to be determined. But if you follow the states, the states are. There's been a lot of press about California's bumping fast food wages. Well, why fast food? I don't know why they're bumping them. It's obviously political, but that'll ricochet through my operation also in California, you see?
So we're, you know, the labor is very fungible, and so if I can't stay competitive, they'll leave me and start making hamburgers, okay? So, you know, it's just, it's just the truth. I think, I think we've been through similar things, but there's quite a swarm of this coming at us right now, and I would expect it to keep this trend to go for a couple, three or four years. I, I don't have a crystal ball, obviously, but there's so many of these initiatives down to cities. New York is just replete with minimum wages for salaried people. I mean, the first couple of times I heard that, I said, "What do you mean minimum wage for salaried people?" Well, I don't know. Can you quote it, Jason? I believe it, it's hovering around $80,000 right now-
Jason Berg (CFO)
I don't-
Joe Shoen (Chairman and CEO)
in New York. Okay? It's... You can't... I don't take that as the Bible, but it's, the minimum wage used to be about $34,000 for salaried people, so it was irrelevant. But now they're actually cranking this, and it's gonna affect places because it does. There's different costs to living, and maybe that makes sense in-... San Francisco is not going to make quite as much sense in Alabama, but it'll carry through. So there's a lot of this that's just going on that's pure inflationary, it's driven by legislation, and we're going to deal with it. We have initiatives all the time, which what I call productivity-enhancing initiatives, which is an attempt to get a process to accomplish a task instead of a human.
We have made huge gains on that, but not enough to totally outweigh increased personnel costs. So, we're still chasing it, in my judgment. We're in the midst of a big revamp, which will probably take three years on our whole point-of-sale orientation, but the net effect will be to have customers do more self-service, basically. We get a lot of self-service. We've quoted you before, I think, Sebastien. You press released recently, but we've done more than 5 million, what we call 24/7 truck rentals, where the customer is self-dispatched and self-returned. Where before it would have been somebody running out, somebody on our payroll or one of our dealers, 'cause it affects them equally, who would have had to accomplish that. The customer accomplishes that. That's a net savings for everyone.
So long as the customer is good to go on it, everybody saves a buck. So we're focused on this. I keep thinking that we've gotten everything we can, and then I find something else we're doing that's kind of ignorant if you put it under a comprehensive review. And say, "Okay, we can quit doing this, or we can change how we do this and stabilize the personnel input without increasing a technology input a greater amount than we reduce the personnel." So that's going on all the time, but we've been chasing it, we haven't been leading it.
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Okay. So but the cost base, where it is, Joe, you're not thinking this is way out of line, and we need to take action yet? Those are just the ongoing pressures.
Joe Shoen (Chairman and CEO)
Yeah, but so you, you're talking, do we want to, you know, decimate the ranks? There's no reason to decimate the ranks. You, you will, you will lose business if you decimate the ranks. We run our own call centers. Can we tune that up? Oh, hell, we've tuned it up a bunch over the last 12 months. You know, ratio of people to, to calls, to reservations, we've tuned it up a bunch, and we are continuing to do that, and I expect to see, you know, double-digit increases in, in our productivity in that area alone this year. But at the end of the day, you know, it's really a vehicle. You really do have to clean it when it comes back.
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Yeah.
Joe Shoen (Chairman and CEO)
You really have to-
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Yeah, yeah
Joe Shoen (Chairman and CEO)
... park it. Now, we got customers parking vehicles, and a lot of them are damn happy to do that, okay? We tell them exactly where to put it electronically, and they put it there. So we had zero of that business five years ago. Today, we have a considerable amount of that business. Every time I get a customer to do that, they experience no waiting in line, and our personnel experience less physical work. So we're very, very focused on that. But again, on balance, we're chasing it, not leading it. I would wish I could report we're ahead of it.
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Yeah. Yeah.
Joe Shoen (Chairman and CEO)
That technology, it hasn't happened, but we're hard on it. And I would say compared to our peer groups, we're at or ahead, I think, both in the self-storage and the self-move industry on this. We do a tremendous amount of customer self-move-ins and outs in self-storage. Now, we don't call that contactless or unmanned, but the it's a version of that. Every time you get the customer to do something, if the customer considers it in their best interest, well, we all benefit. And so we are in the do-it-yourself businesses, both our self-storage and our self-move, is a do-it-yourself deal. So most of our customers are willing to balance out. They do a little bit of effort, and we reciprocate in some way with them, and they call that a fair trade.
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Gotcha. Yeah, that makes sense. And then just, I know I've asked this before, so household formation, you know, existing home sales, obviously all, you know, weak. But what you're saying and the data continues to indicate is y'all's transactions are more tied to the consumer and just economic, general economic activity, consumer confidence versus the housing market being a big driver here.
Jason Berg (CFO)
Yeah, this is Jason. You know, I was excited to see the last couple of reports on consumer confidence. That should, based on what we've seen historically, be a positive indicator for us. And, you know, it's not a great correlation, but it's the closest correlation we've found. So I think that can't hurt. And as far as the housing market goes, you know, if that opens up, it can't hurt us, or-
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Right
Jason Berg (CFO)
... it can only help us. So on those fronts, I think we're looking at a couple potential tailwinds here.
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Yeah. But it's not, you can't put your finger on and say, "Yeah, it's clear that housing starts moving up and down, just has a big driver to, to the one-way moves." That's not how it works.
Jason Berg (CFO)
No.
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Yeah.
Jason Berg (CFO)
We have so much noise right now coming out of COVID and the changing dynamics of work from home, that it's hard to isolate any one of these variables right now. There's so many things happening.
Craig Inman (Managing Director and Portfolio Manager of U.S. Value Team)
Yeah. Yeah. Okay. All right, no, that's all for me. I appreciate it.
Operator (participant)
... And we have our next question coming from the line of Stephen Farrell from Oppenheimer. Please go ahead.
Stephen Farrell (Investment Management Associate)
Good morning. You continue to see weakness in the one-way transactions. Can you comment a little on the level of transactions compared to 2019?
Jason Berg (CFO)
This is Jason. Compared to 2019, I'm not sure if we're quite back down to that level, but we've been working our way back to that. I would say I mentioned December, we actually had a slight improvement in those, so my hope is that we're hitting the trough on the transactions here. The In-Town transactions are still ahead, and I would want to verify the statement before I make it. So I'll just say we're headed back towards that number. I can't verify for sure if we're back to it yet.
Stephen Farrell (Investment Management Associate)
Okay. You mentioned the trucks that are pending sale but still in the fleet. Is there a big carrying cost just to have those in the fleet while they're waiting sale?
Joe Shoen (Chairman and CEO)
No, I think you can just take, you know, cost of capital, cost of interest, something like that, just throw it at it. No, there's not a big cost. The worst thing is the battery goes dead, and you have to put it back on a battery charger, but no, they don't. And they're not going down in value. If anything, they might be inching up in value, but I don't have enough frequency to where I'd be willing to predict that. But I could see them because new, new truck prices are just astronomical. And so typically, that kind of, in a rough way, flows through to used truck prices. You know, so there's no absolute certainty. It doesn't cost us more to insure them. We're self-insured, essentially.
Unless we have an insurance event, if the truck's parked, it doesn't have an insurance event. You're basically looking at depreciation or... I think the depreciation is not a real cost. I think the value of them is flat or increasing. You have whatever capital is tied up and whatever Jason wants to put on that for a cost.
Stephen Farrell (Investment Management Associate)
Okay, that's good. And with the number of vehicles in the fleet growing, and you talked a little bit about this earlier, but is there an opportunity to sort of switch over one-way vehicles that are older to the In-Town and local while the one-way transactions are down, or do you still need their availability?
Joe Shoen (Chairman and CEO)
We're doing exactly that.
Stephen Farrell (Investment Management Associate)
For the older vehicles, are returns there more a function of lower utilization because they're undergoing repair and maintenance or higher costs?
Joe Shoen (Chairman and CEO)
You're asking which vehicle is more profitable, a new one or an old one, I guess? Is that what that question is?
Stephen Farrell (Investment Management Associate)
Well, no, more specifically for the older vehicles, are their returns more impacted by the downtime while they're being repaired or the higher cost of the repair?
Jason Berg (CFO)
Many individual truck, that'll vary, but as we model them out, our expectation and experience has shown that the increase in the increase in the maintenance costs, the decrease in the utilization, which takes into account the days out of the fleet for repair, is largely offset by the significant decrease in the depreciation expense that we allocate towards them. So we depreciate these trucks down to 20% by the end of year seven or 30%, and then after that, we straight line them down to 15% over the, like, the next eight years. So there's a very low cost of depreciation there, and as a large cohort, that largely ends up offsetting the increased cost and the lower utilization.
And to put a button on your other question, I just checked, Steven, and on trailing twelve months, one-way transactions through December, we're still ahead of where we were in December 2020. So, it hasn't pulled back as much as I may have made it sound. It— we're still a ways ahead.
Stephen Farrell (Investment Management Associate)
Thank you for that. Just one question on self-storage. What percentage of new supply for the non-same stores is new supply versus expansion and struggling stores there?
Jason Berg (CFO)
That's a good question. I haven't broken them out that way, but that's a really good question. I could age that portfolio and see ones that have been in there. If they've been in there more than four years and haven't hit the stabilized pool, then that would fall into that category of a lagging performer. I did not do that breakout this quarter.
Stephen Farrell (Investment Management Associate)
Okay. Well, thank you, guys.
Operator (participant)
Thank you. There are no further questions at this time. I'd now like to turn the call back over to management for final closing comments.
Sebastien Reyes (Director of Investor Relations)
Well, thanks, everyone, for the support. We'll look forward to speaking with you after we file our 10-K in May. Thank you.
Operator (participant)
Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.