Q3 2025 Earnings Summary
- U-Haul's U-Box business is gaining significant market share due to competitive advantages that competitors cannot and won't match, such as lower cost, ability to deliver multiple containers at one time, having the most locations available in every state and every province, and offering self-delivery options. These advantages position U-Haul to dominate this industry similarly to how they dominate the truck rental industry.
- Operating expenses increased by only 1.6% while sales were up 4% to 7%, indicating that U-Haul has effectively instituted cost controls and improved operational efficiency, which should lead to enhanced margins and profitability.
- U-Haul is successfully outperforming the industry in self-storage, managing to avoid the erosion of both price and occupancy that competitors are experiencing. They are "swimming against that tide successfully", demonstrating strong execution in a challenging market environment.
- One-way transactions were down and remained negative for the quarter, indicating weakness in a crucial segment of U-Haul's moving business.
- Liability costs associated with the fleet increased by $16.5 million, and property taxes were up over $4.5 million, contributing to rising operating expenses. These increased costs may pressure margins if not fully passed on to customers.
- Cash balance has decreased to near $1 billion, down materially from the peak, and the company may need to take on more leverage to fund growth, increasing financial risk.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +4% YoY | Higher demand for in-town self-moving rentals and incremental expansions in self-storage boosted revenue, though partially offset by a decline in net investment income. These trends reflect continued consumer mobility alongside increased square footage deployments. |
Operating Income | -24% YoY | Costs rose due to higher fleet depreciation, non-recurring expenses (e.g., supplier transition costs), and lower gains on equipment disposal, narrowing margins despite modest revenue growth. |
Net Income | -32% YoY | The fall in operating income, combined with increased interest expenses, led to a steeper drop in net earnings. This decline was partially offset by revenue gains in self-storage. |
EPS (Diluted) | -35% YoY | Lower net income and no significant change in outstanding shares drove EPS down. The interest rate environment and rising operational costs exacerbated the negative impact on per-share results. |
Self-Storage Revenue | +8% YoY | Occupancy gains and new capacity additions (e.g., an increase in net rentable square feet) propelled revenues, reflecting continued consumer preference for flexible storage and company-specific expansion initiatives. |
Other Revenue | +9% YoY | Primarily driven by continued expansion of U-Box® services, where increased warehouse capacity and delivery equipment met higher demand for containerized storage solutions amid shifting consumer moving patterns. |
Property & Casualty Insurance | +30% YoY | Growth in net premiums and favorable claim trends led to improved results. The segment benefited from higher policy volumes and more stable claim frequency, which positively impacted overall segment profitability. |
Insurance Premiums | +26% YoY | Enhanced product offerings and rising policyholder counts fueled the premium increase, reflecting solid demand for both property and casualty coverage and broader coverage adoption. |
Life Insurance | +8% YoY | The segment benefited from higher investment gains and continued product stability, with steady annuity contracts supporting revenue. Reduced claims also contributed to margin improvements. |
Net Investment & Interest Income | -30% YoY | Reclassification of interest income within the Moving and Storage segment and mark-to-market losses on common stock resulted in a considerable decline. Elevated interest rates lowered valuations, leading to less robust net income from investments. |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Self-storage expansion and performance | Previously (Q4 2024 & Q1–Q2 2025): Mixed sentiment with ongoing expansion outpacing occupancy, short-term drag on earnings but long-term optimism. | Positive but cautious, highlighting growth opportunities (potential +$170M revenue) and industry-wide pricing challenges. | Recurring, large future impact |
Operating expenses and margin pressures | Previously (Q4 2024 & Q1–Q2 2025): Rising personnel, property, and fleet costs, creating critical profitability concerns. | Cautiously optimistic about cost controls; expenses rose slightly but less than revenue growth, still facing depreciation pressures. | Persistent challenge, ongoing focus |
U-Box and portable moving services | Previously (Q4 2024 & Q1–Q2 2025): Emphasis on competitive advantage, strong growth potential, and integration with self-storage. | Strongly bullish with market share gains, improved warehouse capacity, aiming for industry dominance and margin expansion. | Recurring focus, strong bullish outlook |
Moving business trends: in-town vs. one-way transactions | Previously (Q4 2024 & Q1–Q2 2025): Shifts in consumer distance, with in-town growth vs. flat or declining one-way volumes; key revenue driver. | In-town transactions up (~2%), one-way down but higher revenue per mile; sentiment is mixed with hopes for one-way rebound. | Ongoing topic, sentiment partially improved |
Cash flow and leverage | Previously (Q1 2025): Declining cash balance, potential large borrowings for real estate projects; significant capital deployment. | Mention of lower cash balance (~$1B) and leverage capacity available; focus on remaining under 5x net debt/EBITDA. | Mentioned in Q1 & Q3, potential financial risk |
Fleet modernization and technology | Previously (Q4 2024): Active fleet rotation and tech improvements to boost utilization, uncertain impact due to cost inflation. | Limited reference: Concerns about electric vehicle mandates and fleet composition shifts, but no major modernization update. | Prominent in Q4, less focus Q1–Q3, uncertain long-term |
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EV Mandates Impact
Q: How will EV mandates affect your business?
A: Edward Shoen explained that significant EV mandates, especially from California, are challenging because there's no viable electric alternative for the size of trucks U-Haul rents. Manufacturers have increased costs of internal combustion engine trucks by over 40% in 18 months due to EV development costs, impacting profitability and reducing gains on sales. -
Funding Growth Plans
Q: How will you fund growth with cash balance down?
A: Jason Berg stated they plan to continue normal borrowing while keeping net debt to EBITDA under 5x. They have capacity to borrow an additional $2 billion against real estate. The investment pace of the last 12 months, about $1.5 billion, will likely slow. -
Storage Revenue Growth Potential
Q: What's the potential revenue increase from storage developments?
A: Jason Berg indicated that achieving same-store occupancy with current square footage could add about $170 million in revenue, mostly falling to the bottom line. The development pipeline could contribute an additional $350 million, offering an opportunity to increase annual revenue by about 50% from current levels. -
U-Box Margin Potential
Q: Will U-Box margins match or exceed self-storage?
A: Edward Shoen aims for U-Box margins to be higher than self-storage margins. Samuel Shoen noted they are increasing occupancy and plan to maximize rates, leveraging U-Box's added convenience and flexibility to command a premium. -
Storage Occupancy Trends
Q: Are storage occupancy trends stabilizing?
A: Edward Shoen mentioned that despite industry-wide erosion in price and occupancy, U-Haul is "swimming against the tide successfully". They do not see broad stabilization in the industry but are outperforming competitors. -
Fleet Maintenance Cost Reductions
Q: Can you sustain declines in fleet maintenance costs?
A: Edward Shoen believes they can achieve further cost decreases. Jason Berg explained that reducing outside repairs and rotating in newer equipment contributed to cost reductions, with approximately one-third due to less outside work and two-thirds from fleet rotation. -
Pricing and Market Share
Q: Are competitors raising prices more than you?
A: Edward Shoen said they must remain competitive on pricing. Their extensive distribution network provides an advantage, positioning them to benefit from any increase in consumer activity in one-way moves. -
Acquisition of Storage Properties
Q: Are acquired storage units immediately accretive?
A: Jason Berg noted that while some acquisitions are at 70% occupancy upon purchase, others are at 0%. Adjusting rates to desired levels often leads to an initial drop in occupancy, requiring 3 to 6 months to season the properties before financing. -
U-Box Growth and Market Position
Q: Is warehouse capacity still constraining U-Box growth?
A: Samuel Shoen confirmed they have a robust pipeline for U-Box warehouse growth, and capacity is no longer a constraint. Their advantages, like lower cost and having the most locations, are pressuring competitors. -
Net Rentable Square Footage Growth
Q: Will you maintain high growth in net rentable square footage?
A: Edward Shoen believes the recent addition of 7.4 million square feet is faster than they can maintain. Jason Berg added that some of this increase was opportunistic, with acquisitions being 1 million square feet heavier than the previous year.