UHAL Q1 2026: $22M Depreciation Loss Weighs on Margins
- Robust U‑Box Growth: Executives highlighted that the U‑Box segment is in its infancy with potential to grow as large as traditional U‑Haul operations. Early performance, especially in one‑way transactions outpacing truck rentals, signals significant expansion potential for this new revenue pillar.
- Attractive Storage Revenue Upside: Management indicated that unlocking additional revenue—up to around $260 million—from existing non-same‐store locations could yield roughly 80% bottom‑line contribution, underpinning a margin‐enhancing expansion in self‑storage operations.
- Expanding Network and Fleet Investment: The company is aggressively expanding its footprint—with notable increases in **dealer and company-operated locations and a growing fleet—which positions U‑Haul well to drive long‑term revenue and market share growth.
- Elevated Depreciation Headwinds: The call highlighted a shift to a $22M loss on disposed rental equipment versus a gain last year, driven by higher depreciation from recent fleet additions. This headwind could continue to pressure margins and earnings.
- Challenges from Rapid Fleet and Network Expansion: The company’s rapid addition of nearly 5,700 new trucks and approximately 800 new locations introduces operational complexities and placement challenges, potentially impacting utilization and efficiency.
- Uncertainty in U-Box Growth: Although U-Box is achieving double-digit growth, management noted that consumer awareness remains nascent and it is still in its infancy, raising doubts about its ability to scale and significantly contribute to overall revenue.
Topic | Previous Mentions | Current Period | Trend |
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U-Box Growth Dynamics | In Q2–Q4 2025, U-Haul consistently highlighted U-Box’s strong expansion potential along with challenges in consumer awareness and scaling (e.g., double-digit growth, growth in moving transactions, and gradual warehouse and capacity expansion). | In Q1 2026, U-Haul remains bullish on U-Box with double-digit growth but still notes that consumer awareness is developing and scaling issues persist. | The sentiment remains largely consistent with a bullish outlook while continuing to note uncertainties in consumer understanding and scaling challenges. |
Self-Storage Expansion | Across Q2–Q4 2025, self-storage was portrayed as a steady revenue driver with notable expansion activity, improved revenue per foot, and added locations, though overcapacity and occupancy declines (and even valuation concerns) were repeatedly noted. | Q1 2026 reports revenue increases, new locations, and incremental revenue potential, along with a drop in same-store occupancy, though valuation topics are less emphasized. | The theme is consistent in driving revenue growth amid overcapacity and occupancy concerns, but current discussions omit some valuation issues compared to earlier periods. |
Fleet and Network Expansion | In Q2–Q4 2025, discussions emphasized aggressive fleet and network expansion as a long-term growth engine despite increased depreciation, higher capital spending, and operational complexities (e.g., significant increases in truck numbers, increased CapEx, and ongoing operational challenges). | Q1 2026 continues to report robust fleet expansion and network growth with new equipment additions and similar depreciation challenges. | The focus remains on long-term growth opportunities through expansion, with ongoing short-term cost and depreciation concerns. |
Operational Efficiency & Cost Management | During Q2–Q4 2025, U-Haul detailed cost control initiatives such as improved fleet management, supplier transitions, pricing strategies, and rational capital allocation to counter rising personnel, maintenance, and liability costs. | In Q1 2026, U-Haul reiterates efforts to enhance efficiency through fleet placement, depreciation adjustments, and cost management across self‐storage and U‑Box. | The approach to managing costs and improving margins has stayed steady, though Q1 2026 emphasizes balancing rising expenses with targeted margin stability measures. |
Earnings Volatility & Financial Leverage | Q2–Q4 2025 discussions addressed earnings fluctuations driven by depreciation, equipment sale proceeds, and varying cash balances; they underscored efforts to maintain liquidity and manage leverage risks in an uncertain market. | In Q1 2026, earnings are affected by higher depreciation and equipment losses but there is less explicit discussion on leverage risks or fluctuating cash balances. | While earnings volatility persists, there is a slight de-emphasis on financial leverage issues in Q1 2026 compared to earlier periods. |
Rental Business Performance | In Q2–Q4 2025, rental performance was marked by modest revenue gains (driven by higher rates) but stagnation in transaction volumes, persistent fleet placement challenges, and rising depreciation impacting short-term improvements. | Q1 2026 continues to show revenue improvement through higher rates, yet transaction volumes remain largely stagnant and fleet-related challenges persist. | The concerns over slow short-term improvement and stagnation in transactions remain consistent over the periods, with incremental revenue gains not fully offsetting challenges. |
Valuation Gaps & Shareholder Value Initiatives | In Q2 and Q4 2025, management and analysts discussed a significant valuation gap—particularly in the self-storage and U‑Box segments—along with suggestions for share buybacks or asset restructuring to improve shareholder value. | There is no mention of valuation gaps or shareholder value initiatives during Q1 2026. | The focus on addressing valuation gaps has been dropped in the current period, marking a reduced emphasis on shareholder value initiatives. |
Tariff and Equipment Acquisition Cost Pressures | In Q3–Q4 2025, external cost pressures were a notable theme, with discussions on potential tariffs, rising acquisition costs for new equipment due to supply chain issues and automaker pricing strategies, as well as concerns surrounding electric vehicle mandates affecting cost structures. | Q1 2026 does mention higher equipment costs and depreciation related to past acquisitions, but there is no focused discussion on tariffs or explicit external cost challenges. | While equipment cost pressures persist, the explicit discussion of tariffs and related external challenges has been reduced or omitted in Q1 2026. |
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Margin Outlook
Q: What key factors are affecting margins?
A: Management highlighted that fleet liability costs and accelerated depreciation from new equipment are weighing on margins, though improvements in self-storage and new revenue lines are expected to help over time. -
UBox Growth
Q: How much untapped potential remains for UBox?
A: Management is optimistic about UBox’s future, noting it is still in its early stages and could eventually grow to be as significant as the traditional U-Haul business. -
UBox Locations
Q: How many locations currently offer UBox?
A: Management explained that while about 50% of company stores incorporate UBox, overall outlet coverage—including dealers—suggests a higher footprint, indicating substantial room for growth. -
Storage Yield
Q: What is the yield from storage development?
A: Management noted an unlevered IRR of roughly 10%, which translates to an approximate 7–8% cap rate, with investment costs settling around $150 per sq foot after adjustments. -
Transaction Trends
Q: How did monthly transaction trends compare year-over-year?
A: While revenue improved due to rate hikes, transaction volumes fluctuated—largely because of end-of-month moving clusters—with management expecting gradual month-over-month improvement.
Research analysts covering U-Haul Holding Co /NV/.