Good morning, and welcome to the AMERCO second quarter fiscal 2023 investor call. All participants will be in a listen-only mode today. Should you need any assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note that this event is being recorded today. I would now like to turn the conference over to Sebastien Reyes. Please go ahead. Good morning. Thank you for joining us today. Welcome to the AMERCO second quarter fiscal 2023 investor call. Before we begin, I would like to remind everyone that certain 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, 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 a discussion of the risks and uncertainties that may affect AMERCO's business and future operating results, please refer to Form 10-Q for the quarter ended September 30, 2022, which is on file with the U.S. Securities and Exchange Commission. I'll now turn the call over to Joe Shoen, Chairman of AMERCO. Thanks, Sebastien. Good morning, everybody. In the face of some mediocre results this quarter, I am very positive on our underlying businesses. U-Move will struggle with hard to win one-way transactions. We have been through this before. The tide is simply running against us for a while. U-Box is about flat to last year in this quarter. This is a first experience with this for the U-Box organization. The pattern seems to be mimicking one-way U-Haul truck rental transactions. Self-storage remains strong. Of course, as I have been saying for the past two years, there will be a crunch in many storage markets eventually. I am endeavoring to invest in markets we believe still have unfilled demand. Hitches, moving supplies sort of follow U-Move, but they are currently outperforming it. Our Moving Help business is up. Customer support is substantial. As you saw in the financials, we're seeing a lot of cost pressures, just as you and your customers are. For us, it's vehicle repair expense, personnel expense, cost of acquiring new truck chassis, cost of bare land, cost of construction, utilities, and property taxes. Jason has done a good job with our funding, so we're not borrowing so much at the new higher rates. Continued focus on expenses by our teams is going to help. We're not really tapped out on cost savings in my judgment. There is still unserved U-Move demand, but we have not been successful in tapping into it. We are, of course, committed to locating and serving more customers. You should expect us to continue to work on the liquidity of our stock. Jason is presently attempting to line up a second analyst. If you have someone you would recommend, drop Jason an email. I appreciate your continued support, and I encourage you to visit our stores. Thank you. Thanks, Joe. This is Jason. Yesterday, we reported second-quarter earnings of $17.95 a share, compared to $20.90 a share for the same period in fiscal 2020. My comparisons this morning will be for the second quarter of this year to the second quarter of last year, unless otherwise noted. Starting off with equipment rental revenue, we saw a decrease of 1% or approximately $17 million. In-town transactions and revenue continued to improve during the quarter. However, declines in one-way business, as Joe mentioned, more than offset that. We are seeing reduced one-way moving activity for trucks, trailers, and U-Boxes. Just to clarify Joe's comment about U-Box, for the second quarter, revenue was still up for U-Box. However, so far into the third quarter, it has flattened out. On the capital expenditures front, the flow of new equipment has improved for certain of our truck models. We've invested $718 million for the first six months of this year in new truck purchases, compared with $564 million last year at this time. There's still uncertainty surrounding the delivery schedules for receiving equipment from manufacturers. During our last earnings call, I'd reduced our forecasted gross fleet CapEx number down from $1.5 billion. This quarter, I'm further reducing it now to just under $1.4 billion. Proceeds from the sale of retired equipment increased by $25 million to a total of $325 million for the six months. Sales proceeds from pickups and cargo vans have increased compared to last year, while we have purposely slowed the sales of box trucks for now. Resale values remained strong throughout the quarter, but have begun to show signs of weakening. Performance of self-storage remains strong. Storage revenues were up $32 million, which is about a 21% increase. Looking at our occupied unit count at the end of September, we had an increase of 61,000 occupied rooms compared to September of last year. In addition to the increased occupancy, we experienced nearly 10% growth in average revenue per foot. Our occupancy ratio across the entire portfolio of storage locations increased 1% to 85% year-over-year. Within that group of properties, about 84% of our storage locations are operating at or above 80% occupancy as of September 30th. Of those properties, their average occupancy is at 95%. Our plans for expanding our network of company locations continues, with self-storage being a focal point of each new store. For the first six months of this year, we've invested $584 million in real estate acquisitions, along with self-storage and U-Box warehouse development. That's up from $444 million last year. Over the last 12 months, we've added 70,000 new storage units, which translates to about 5.4 million net rentable sq ft. We currently have about 5.8 million new sq ft being developed across 131 projects. We have an additional 146 or so projects where we own the land or buildings, but we haven't started the construction yet. I would expect these projects to result in approximately 8.7 million new net rentable sq ft. We have close to 100 additional deals currently in escrow that we're evaluating. In the moving and storage segment, we saw expense growth outpace revenue growth, leading to a decrease in our operating margin. This resulted in operating earnings in our moving and storage segment decreasing $41 million- $515 million for the quarter. Operating expenses increased $114 million. We highlighted in the press release the $34 million increase in fleet repair and maintenance. The challenge there continues to be the lag in our fleet rotation program, combined with the increase in miles driven by the fleet over the last several quarters. Personnel costs increased by $29 million, a rate faster than revenue this quarter, and that's due primarily to headcount increases. The next largest increase was freight costs, both for our U-Box moving product as well as the cost of shipping, our product amongst ourselves and to our customers. We are starting to see moderation of freight costs. Other increases came from what I'd call property level costs, such as utilities, property taxes, and non-fleet maintenance or building maintenance. Beyond that, payment processing fees, fleet license expense, and professional services were all higher. Outside of our normal cost discipline, we have not yet addressed the growth of operating expenses in a meaningful way. Given the direction of revenue, I would expect that this posture is going to change as we move into the second half of our third quarter and into the fourth quarter. Our two insurance segments reported a combined decrease in operating earnings of nearly $16 million. Accounting conventions related to their investment portfolios led to over $11 million of this decrease. It's a combination of mark-to-market rules and expected credit loss allowances, all of it non-cash. Thanks to our treasury team, we continue to have a strong cash and liquidity balance. At September 30th of this year, we had, at the moving and storage segment, $3.175 billion of cash and available credit. After the quarter end, the company announced several corporate actions, including the changing the name of AMERCO to U-Haul Holding Company. We expect that to be completed by the end of the calendar year. We also have the creation of a new class of non-voting shares, and then a 9-for-1 dividend of these shares to all existing AMERCO shareholders of record as of November 3rd of this year. These shares began trading this morning. The board also announced a regular dividend policy for the new class of shares at $0.04 per share per quarter, with the first dividend taking place in this third quarter coming up. With that, I'd like to hand the call back to our operator, Joe, to begin the question and answer portion of the call. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we'll pause momentarily to assemble our roster. Joe, while we wait for the questions to get in the queue, I'll ask a few that have come in before the call. These are from Craig Inman of Artisan Partners. The first question is: Where does the company stand regarding catching up on fleet rotation? How, if at all, is management's view of the size of the fleet changing as we see a slowdown in moving and economic activity? Let me address that a little bit. We're still not getting sufficient new vehicles for ordinary replacement, and this is, of course, throwing a little wrench in the works. We don't have an expectation that in the next 12 months, the Ford and General Motors organizations will be able to produce what we have requested in purchases. On the overall fleet size, we may see just a little contraction. I think, of course, it gets very specific if you're gonna do this, but I think we may see a little contraction there in both the assigned box truck fleet and in the pickup and van fleet. On a good note, you all have heard that last mile delivery companies are a little bit stressed, and this time of year, ordinarily, we get a fair amount of business from them. To the extent that business has dropped off, we've been able to replace it with normal consumer business. We've done that in a pretty straightforward fashion. I'm happy to report that. The second question from Craig is, does the company plan to pay out larger cash dividends going forward beyond what was announced? There's no plan that I'm aware of that doesn't preclude it. This is, for us at least, this was quite a flurry of activity. The declared dividend policy comes out to something like $1.44 on the old share basis, so it's very comparable to kind of what was done before, but was done totally on a subjective basis, where this now has a pattern and something people can look forward to. Finally, did the board consider in creating a new share class without voting rights that those shares might trade at a material discount to the shares carrying voting rights? The actual structure was done by an independent committee of the board, which I was not a member of. Of course, this was part of their charge, was to consider such matters. The hope is, of course, to increase the liquidity and ultimately perhaps positively impact the share price overall. Our first live question today will come from Brian Marckx with Zacks Investment Research. Please go ahead. Hello. Actually, this is Steven Ralston from Zacks Investment Research. Hi, Steven. Hi, how are you? Good. Even though your tone seems to be on the concern side, my only concern about the quarter is the equipment rentals and obviously the U-Box, which is trailing that. I should say mimicking that. Could you expand upon it about the demand and pricing? In other words, you usually use your statistics of volume of transactions and average revenue per transaction. Obviously, you probably have seen this many times before with the decades of experience management has. Do you track certain things like new single home sales or existing home sales that might account for this? Or are there other variables that you use to guide your expectations of volume and pricing in the equipment rentals? Steven, this is Jason. I'll start off, then I'll let Joe clean up my answer or add to it. As far as statistics that we're tracking on revenue per transaction, the components that go into that, the largest one are miles per transaction and then revenue per mile or rate. In the one-way business during the quarter, the rate continued to improve compared to the same time last year, but we did see a decrease in the average number of miles driven. Those largely offset each other. Much of the decrease in the one-way revenue came from a decrease in transactions. On the in-town business, we saw similar changes. However, transactions were up for the in-town business. As far as correlating our business to macroeconomic factors, we've done that in the past and haven't found anything. We're taking a fresh look at that now. It's been quite some time since we've seen interest rates on mortgages shift so dramatically in such a short period of time. I think that deserves a look. I can't tell you definitively that that's behind any of the changes right now. Mm-hmm. I might add to that we've seen that when people in the country are less optimistic, they travel shorter distances. It's about that simple. You can imagine if it was your son or daughter leaving the home, they might stay in town rather than try to go to a new town for a job. We would see that. They still move because they're moving out of the home. Instead of it being a $400 rental from Phoenix to L.A. or something like that, it's a $100 rental just on the one side of Phoenix to Tempe. The underlying drivers, which are marriages, divorce, births, deaths, these sorts of things, promotions, demotions, those go on. There'll be a little flurry of activity in some markets if people do big layoffs. What happens there, we soon run out of trucks. They can lay off 10,000 people, but we only have 800 trucks, so they wipe us out, and there's no more upside at that point. In fact, it disrupts our system. We'll see a little bit of that kind of activity, and we're probably seeing some more. I know for sure we're seeing some of it now, but it doesn't really turn out to be like a benefit exactly. We're gonna continue, I think, based on what we'll loosely call consumer optimism. We're gonna continue to see people pull in their horns, not be so aggressive in their activity, and that will reflect itself in less miles traveled. We're gonna have an opportunity because, of course, the cost of new vehicles are going up to the point they actually sell us some. They're costing us more, so we're gonna have to have some price, you see, to make that work out. Customers are tolerating some price increases. I don't know if in the final analysis, they're gonna cover enough of a price increase. The good news on the truck equipment side is, generally speaking, both Ford and Chevrolet are making a terrific product right now, so it's a very durable product, and it'll have a good economic life. The downside is they're jacking prices at greater than the national rate of inflation. Yes. In a way, it is unexplored territory. I did see a statistic. Now, it isn't totally comparable because it's just the rates on U.S. Treasuries, which don't perfectly mimic the increase in mortgage rates, but they're close. What I saw was that this rapid decline in the Treasury market historically, it said, it's the greatest increase since, I can't believe this, 1788, the change in rates in a short period of time. We are entering some very new territory. Then again, it seems like these statistics, as you said, the correlation with U-Haul's truck rentals is sort of like hit and miss. It doesn't have a high probability of having a good correlation. Right. That's right. We've run all those numbers till you're blue in the face. I kinda lost interest in them, because I just had no luck doing it. I said, "Okay, great. This is how it's gonna kinda play out." Now our job is to find more customers. If you looked at a 20- or 30-year track record, we've constantly outpaced the population growth, which would be at the bottom, given that most of our business is with consumers. At the bottom of the deal is, the biggest driver is population. We've constantly outpaced it because we've found a slightly different twist on the use of the product and an application for the customer, and they've responded and given us more transactions. Of course, that's what I'm focused on now. That won't happen one quarter, but we're on it as much as we're on it. I think if we're a little slow on the draw, it's what Jason said, we're a little slow on the draw on expenses, and I don't know how big a dent we're gonna be able to put in them. You're seeing the same forces we are. Just one last question. Is this enabling you in any way to better reposition your fleet around the United States? Actually not, but we've had a real strong initiative over the last 18 months of adding a bunch of young, bright people into that part of the company. I think that we're making modest gains there. That thing doesn't move very fast, and even a tiny move has a very positive effect on revenue. I think we're going to see some help. Kind of an interesting thing. Last year at this time, we were able to rent to the last mile people a truck that was 800 or 1,000 miles from where they wanted it. They'd go get it and bring it to their market, and then they would leave it where we wanted it, which was a win-win, okay? This year, they're not quite that desperate for additional trucks, and so we're not getting that little boost. We got that just about this time last year. We had a real nice boost from that. We're not seeing that. These are the kind of things that they're all small maneuvers, but they can sum to be significant. I can assure you, people are motivated to find them right now. Thank you for taking my questions. Our next question will come from Jamie Wilen with Wilen Management. Please go ahead. Thanks. First off, I'd like to give you a hearty thank you for changing the name to U-Haul, doing a stock split, initiating a quarterly dividend. Thank you, thank you, thank you. You're welcome. A couple questions. First, U-Box is trending more flattish than growth, is that a function of the industry that it's in, or is there more competition out there in that industry for them? I'll try that. I don't think it's a competitive situation. There's not good intelligence on the competitors, but I do not believe it's a competitive situation. I believe it's the U-Box gets more long-distance moves as a percentage of moves than the U-Haul business does, okay? When U-Haul sees long one-way moves soften, well, for U-Box, that's like almost all of their moves are these longer moves. I think it's just that simple. Of course, we're looking, are we doing something in pricing this? We're actually getting a tiny increment better freight pricing, which allows us to pass that on to the consumer in a lower price overall. That's running for us over the last 60 days maybe. There's a lot of forecasts that said that's gonna continue to stay a little bit softer. That's been a nightmare the last 24 months, but it's coming around. I think it's just simply this. Now, on the other side, what I tell my teams is, "Come on, the market's so much bigger than this. Why are we? There's no reason to be flat." In other words, they're doing a tiny percentage of the transactions. Go out there and let's shake the trees. Let's find some more customers for whom we're a good solution. I expect that we'll get that turned around. Can you talk about the dynamics of the U-Box business as far as the rent per square footage that you get versus a self-storage unit and the length of time that a U-Box unit tends to stay in that earning range for how many months that happens? In a general way, I will, but I'm not gonna give out anything that I think that our competitors would care about. The U-Box rate depends on how high you can stack them. If you're stacking them too high, it's about like self-storage. As you gain three high, four high, and in some cases five highs, that's all incremental gains. It's if you can get the height, stacking height, your economics of the storage of the U-Box massively improves. The length of stay is a little confusing because everyone shows as a one-month tenant because we give you 30 days storage included in the purchase because you're gonna have it at your home for a few days, then you may store it for a week at our warehouse in Tempe, then we ship it to San Antonio, stays for a week in our warehouse there, and then on the fourth week, we redeliver it to your house. That shows as a month of storage in our statistics. It's in many ways just simply moving. It's, you know, we debate back and forth how to count that. Once the people actually store, in other words, they're not just in transit in a move. Once they actually store, they're about like our longer-term self-storage customers. They're gonna stay a while. You know, three to five years would not be an extraordinary long stay. They're, you know, these people, most of these people are solvent. We have a higher percentage of credit card billings. You know, it's once they're in storage, they're a much more predictable phenomenon. You're saying a U-Box can be sitting in your storage for years? Yes. Paying. It's not just sitting there. They're renting. I understand. Okay. Yeah. I understand. Right. Right. Yeah. Okay. On the self-storage side, as rates have increased and things are filling up more quickly, what is the timeframe before a new unit, on average, becomes cash flow positive today versus two to three years ago? Jason? Well, the occupancy point is still about the same, which is 70% we're paying the bill. 80% above, we're starting to make some money. We have, for the most part, in the locations opened in the last two years, I think we've seen about an acceleration of about 10 points of occupancy each year versus what we would normally see. I think that we're starting to see the velocity of that slow as far as how quickly these locations are filling up. I think there was a COVID boost to occupancy. When we were pricing new deals, we never changed our discipline as far as assuming a five-year ramp-up. If that does continue to slow, it'll still fall within our pricing range. To get back to your question, typically, it's around year three to four, and I would say that maybe during COVID, that's accelerated almost 12 months. Okay. Lastly, with the change in value of your bond portfolio, it's, I think it's $200 million from beginning of the year till now. Only a portion of that flows through to the income statement? Yeah. On that, our property and casualty company holds common stocks of unaffiliated companies. The change in market value of your common stock portfolio gets run through income. That's why you see this large decrease. I think we actually posted negative investment income, if you can believe that, at the P&C company, because I think there was an $8.5 million decrease in the market value of their common stock. At the life insurance company, we don't have common stocks over there. It doesn't fit the liability profile. However, with the change in interest rates, we do have an allowance for expected credit losses. The accountants call it CECL. That number went up, I think about $2.5-$3 million during the quarter. Another non-cash adjustment. We're still in a position where we can hold our investments to maturity, so we don't expect that to result in any losses. You can see that at the life segment, their comprehensive income actually went or accumulated other comprehensive income went negative for the quarter. Again, if we don't sell the investments, we won't realize those losses. Okay. I don't think we quite answered the question, and I don't know if you can, if you have an answer. I think he's suggesting we lost as much as $200 million in bond value due to interest rate changes. I don't think that's. Yes. -correct. No. Over the last year, the value of those bonds because of the interest rate swings in the market have resulted in a decrease on the books of that much. Now, the closer they get to maturity, those unrealized losses come off or as interest rates come down. As I said, we don't intend to sell those bonds at this point, so we won't be recognizing those losses. At the life insurance company, they're all matched against the risk. Unless we have a big run that's not statistically forecast, it's gonna kinda be just much ado about nothing. We're seeing a little bit of an increase in, I don't know what to call them, lapses or withdrawals, but it's not at this point causing a bunch of fear on our side. I think it's that company is overcapitalized by most measures. There's not much it's gonna have to sell bonds in an emergency. Okay. Thank you, and I look forward to asking for the U-Haul conference call during the next quarter. Okay. This will conclude our question and answer session. I'd like to turn the conference back over to management for any closing remarks. Well, thank you all for your support. Again, if anybody knows an analyst who's looking to add a company to follow, introduce him to Jason or Jason to them, one or the other. Jason will take cold calls from analysts. I don't think they do such a thing, but he'd readily accept it. It's the point that we made several times that we need additional following to get this to go the way you all would like to see it. We're gonna keep working at that and hopefully get a result. I look forward to seeing you again in 90 days at our next quarterly call. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.