Good morning, ladies and gentlemen, and welcome to the U-Haul Holding Company’s First Quarter fiscal 2026 Investor Call Conference. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 7, 2025. I would now like to turn the conference over to Sebastien Reyes. Please go ahead, sir. Good morning, everyone. Thanks for joining us. Welcome to the U-Haul Holding Company first quarter 2026 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 in Form 10-Q for the quarter ended June 30, 2025, which is on file with the U.S. Securities and Exchange Commission. I will now turn the call over to Jason Berg, Chief Financial Officer of U-Haul Holding Company. Thanks, Sebastien. I'm speaking to you today from our offices here in Phoenix, Arizona. Joe Shoen, our Chairman and CEO, is unable to attend today's call. However, he is going to be available to speak to you at length and answer questions in two weeks at our annual investor and analyst webcast. We do have Sam Shoen, the Vice Chairman of our Board of Directors, here with us today to answer questions. Yesterday, we reported first quarter earnings of $142 million compared to $195 million for the same quarter last year. In terms of EPS, that's $0.73 per non-voting share this quarter versus $1.00 per non-voting share last year at this time. Earnings before interest, taxes, and depreciation, that I'll refer to as adjusted EBITDA, in our moving and storage segment increased 6% or nearly $31 million for the quarter, driven by strong revenue growth across our product lines, all of our product lines. Included in our release and our financial supplement is a reconciliation of adjusted EBITDA to GAAP earnings. The largest difference between adjusted EBITDA and GAAP earnings is depreciation, and this is also the cause of the largest negative variance in earnings year-over-year. During the first quarter of this year, we swung to a $22 million loss on the disposal of retired rental equipment. That's compared to an $8 million gain last year. Cargo vans that we purchased over the last two years that are now being sold came into the fleet with higher initial costs, and the current market resale values are not reflecting this. That's resulting in a loss. We have increased the pace of depreciation of the remaining units to reflect this new reality. Additionally, we have depreciation from increasing the size of the box truck fleet by approximately 8,600 units compared to June of last year. Pricing on new cargo vans for the upcoming model year indicates some nominal improvement. Of the $0.27 decline in earnings per share in the first quarter, $0.21 is from fleet depreciation and $0.12 is from the increase in losses on rental equipment sales. For the first quarter, our equipment rental revenue results had a $44 million increase, just over 4%. Revenue per transaction increased for both our in-town and one-way markets compared to the first quarter of last year. Overall, transactions largely held steady with what we saw in the first quarter of last year. For the month of July, we've seen revenue continue to trend positively compared to the same period last year, but we haven't yet seen a big improvement in transactions. Capital expenditures for new rental equipment in the first quarter were $585 million. That's a $46 million increase compared to the same time last year. This increase was spread across acquisitions of box trucks, trailers, towing devices, and cargo vans. Self-storage continues to be positive. Storage revenues were up $19 million, which is about a 9% increase for the quarter. Average revenue per foot continued to improve across the entire portfolio, up just over 1%, while our same-store portfolio was up, but it was up just under 1% per occupied foot. Our same-store occupancy decreased by 100 basis points to just under 93%. In July, we took on an effort system-wide to increase the number of available rooms at our existing locations by focusing on delinquent units. While this effort will not affect revenue directly, as we don't record any revenue until it's collected, it will serve to reduce our reported occupancy level a few points if we don't refill all of those rooms in time for September reporting. In our financial supplement, you will see that we have a slide that shows where future storage revenue growth is coming from, and the future revenue growth from our existing portfolio has increased. This is partially from us making these rooms now available to paying customers. During the first quarter of this year, we invested $294 million in real estate acquisitions, along with self-storage and U-Box warehouse development. That's down $108 million from the first quarter of last year. During the three months, we added 15 locations with storage, and that's about 1.2 million new net rentable square feet. We currently have approximately 6.5 million new square feet being developed across 124 projects. Our U-Box revenue results are included in other revenue in our 10-Q filing, and this line item increased $21 million, of which U-Box is a large part. U-Box revenue by itself was up about 16%. We continue to have success increasing U-Box moving transactions, as well as increasing the number of these containers that customers are keeping in storage. Moving and storage operating expenses increased $44 million for the quarter. As a percent of revenue, we were even with the first quarter of last year. The largest components of the increase were personnel, which was up $20 million. Liability costs were up 17%, and we did see an increase in fleet repair and maintenance due to the increased size of the fleet. That was up about $5 million. As of the end of June this year, cash, along with availability from our existing corporate revolver at the moving and storage segment, totaled $1,191 million. We are holding our 19th annual virtual analyst and investor meeting on Thursday, August 21, at 11:00 A.M. That's 2:00 P.M. Eastern Time. This is an opportunity to interact directly with company representatives through a live video webcast, which you can find at investors.uhall.com. Once again, we'll have a brief presentation by the company, followed by a question-and-answer session. Please feel free to submit questions to us early through the investor website or sending them to Sebastien, or you can just submit them live during the webcast. We'll be good either way. With that, I'd like to hand the call back to our operator, Chloe, to begin the question and answer portion of the call. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press the pound key. 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 Investments. Your line is open. Thank you, and good morning. Morning. I had some questions specifically for Joe, but I also have one specifically for Sam. I'll delay my questions for Joe until the investor conference. The top line is improving, like Joe expected, and I had one specific question about U-Box, which I know Sam heads. U-Box, once again, has achieved double-digit growth in this quarter, and it's through that tried-and-true formula of U-Haul that by adding capacity, and then specifically in the case of U-Box, increasing warehouse space along with the number of containers and the number of delivery equipment. This is a growing area, and I assume ultimately will be broken out as a segment as it reaches 10% of revenues. How much potential do you still think there's left in U-Box? It's been growing. Do you think you're like 10% done or 25% done, or is it just too early to tell? Thank you for the question, Steve. This is Sam talking. I think you started off with some wise observations. Of course, it's way too early to tell. I'm on the more optimistic side. I don't see why there's any reason that U-Box couldn't be as big as U-Haul is today. I think we're just at the infancy. You really can't start answering that question until you start to get some real clarity from the consumer on if they understand what this product and service really is. Of course, we're so blessed with traditional U-Haul that if you're 6 or 96, you know exactly what U-Haul is and what it does. When you see it parked on the side of the road, you know exactly what it's there for. The customer isn't quite there. The consumer isn't quite there with the U-Box portable moving and storage model. When they do, I think you'll really be able to answer the question you have. I think the market's quite large, and as time goes on, you'll see it continue to grow as a pillar of U-Haul Holding Company. Let me just ask it in a slightly different way. Of the number of locations that you have across the United States, how many have functionality for U-Box? That's a good question. Sure. It depends what you're defining as a U-Haul entity. Of course, most of the time within the company, we look at our outlets, including our dealers. If you want to make the calculation from that, you're looking at somewhere between 5% and 10%. If you're looking based on company stores, you're looking a little closer around half. Needless to say, that's not necessarily assuming that you've got adequate build-out of the U-Box product piggybacked at those locations. For example, you take a rather large market like Phoenix, you're still barely scratching the surface of the capability that we need to service the customer. We're just going to have to keep building it out. If what you're trying to do is make a projection to say, should this double, triple, quadruple, 10X, you're going the right direction. All right. Thank you for taking my question. The other questions had to do with Joe's experience because he's been running the company for quite a long time and wanted to get into some depreciation cycles and inflationary cycles where personnel costs are. I'll save those for the analyst conference. Okay, Steve, we'll be happy to answer those then. All right, thank you for taking my question. You're welcome. Our next question comes from the line of Steven Ramsey from Thompson Research Group. Your line is open. Hi, good morning. I wanted to start with. Morning. Morning. I wanted to start with U-Box. I would just assume that transactions in U-Box are more associated with one-way moves. Are you able to see if U-Box one-way moves are growing faster than the rental segment one-way moves? Or said another way, with one-way transactions being up, is that a rising tide for U-Box? This is Jason. I'll start and just set the scene with the truck one-way transactions, truck and trailer. Those have been from flat to up just slightly, up 10,000 or 20,000 transactions in a quarter. I'll allow Sam to juxtapose his experience with U-Box one-way transactions. U-Box one-way transactions are leading the way. They're exceeding our truck rental transactions as a percentage. As far as a rising tide, I think they're decoupled in many ways. I certainly don't look at the performance of the one-way shipping of U-Box product and juxtapose it against the truck rental numbers and say, "Oh, we only have so much we can go," or capped, or one number is dragging down the other. I don't necessarily see it that way. I think what you should expect is for U-Box performance as a percentage to exceed the truck rental gains that we're able to make. There's little doubt of that. Okay, that's helpful. I wanted to think about the margin profile of the business, 35%, virtually flattish year-over-year, even with moving transactions up and then storage and U-Box with a higher margin profile also growing faster. Can you maybe dissect what is causing margin trends in the quarter, or if it's better to reflect over the recent past and maybe the puts and takes to the company margin? Sure. This is Jason. I'll start with that. We put a new slide in the investor deck this time around that shows proxy for cash flow, which would be adjusted EBITDA, the EBITDA margin, and then the share of equipment rental revenue versus the share of storage revenue. We don't have U-Box revenue in there yet, but the two newer revenue lines, storage, which is strange calling that newer, but it's newer than the original equipment rental revenue. Both of those, when we include those in new projects, it has the effect of increasing the projected return. As you know, and you've been to some of our facilities, you see how everything kind of interacts and interrelates. It's very hard for us to break it out separately. We certainly have seen that when we add more of each of those products to a location, the profitability improves. Okay, that's helpful. Maybe to think about some of the dynamics playing out in the storage segment, a lot of new facilities and units in the total base, maybe as a headwind to the margin profile. The slides in the last couple of quarters have been helpful to see that. Can you maybe talk about the glide path there of how units getting soaked up can be positive to margin, certain thresholds that need to be hit to elevate the margin within the storage business? Yeah, on the slide in the deck that we have, it shows where future storage revenue is coming from. There's a portion of that that shows storage revenue from existing locations, what we call non-same store locations, ones that haven't hit 90%. That number, taking it from where it is today to where it would be at 90%, is going to be somewhere around $260 million, give or take. By the time we get there, there's likely going to be rate increases. It'll be a little bit more. Those are at locations where we've opened, and the expense load has largely been recognized in our financial statements. That additional revenue, a very rough estimate would be maybe 80% of that, give or take, is going to flow to the bottom line. At some locations, it'll be more than that. At some of the newer locations, it might not be all of that. As a general rule of thumb, to give you a sense. A lot of the headwinds that we're facing right now on the EBITDA margin or on the GAAP operating margin are truck-related. It's the liability costs associated with the fleet. We've seen an increase in the severity of claims. I don't think we're seeing more accidents. I think the fleet is in real good condition as far as accidents go, but the severity of those that we're running into is a little bit more significant. We're building reserves back up. That's affecting the margin. That does hit earnings and EBITDA for both of those. For the earnings cycle, it's this depreciation headwind that we're facing. We're going to have to work through this cohort of trucks, cargo vans we purchased the last two years. Likely after this year, the spend on the box truck fleet will begin to slow a bit. We should peak on depreciation and then hopefully trend back down. Okay, that's helpful, Jason. The last quick one for me. When looking at the ending and developed storage square footage currently at 14.8 million, that's been sliding down for a few quarters. Is that a number that you expect to kind of gradually keep coming down over the next few quarters, or is there a level of developed and pending square footage that you think it's a minimum level that we do not want to go under? There certainly is an amount that we don't want to go under. I don't think we're close to that right now. What we've been trying to do is slow the spend, not because we don't believe in self-storage or not because we don't want to expand, but because we want to be rational in our capital allocation and make sure that we have enough to last us. With the way that the fleet has been chewing up some capital during this timeframe, we're pulling back a little bit on real estate spend. You don't want to pull back too much or you have what happened to us during COVID where we shut a bunch of stuff down and then it takes a while to start it back up and you get kind of this unusual amount. If we could stay somewhere in the, say, 4.5 MM sq ft - 6 MM sq ft range each year, I think that's something that operationally we've proven that we can handle. If we do that, spending is likely to continue to decrease. That's great color. Thank you. Our next question is from Andy Liu from Wolfe Research. Your line is open. Hey, appreciate it. Morning, everyone. Thank you for the question. I really just wanted to double-click first on the transaction volume that's talked about kind of flat, maybe slightly up in the quarter. Just wondering if you guys noticed anything in terms of sort of like the month-to-month trends. You know, it's flat in the quarter, but has the month-to-month trend kind of like improving through the quarter, or is it kind of pretty steady through the quarter? Any color would be helpful. Sure. All of our comparisons are going to be year-over-year because our business doesn't really compare well month to month. Our best quarter for moving is really our second quarter. The second best would be the first quarter that we just finished, and then it goes third quarter, and the fourth quarter is our worst. We're always comparing with how we did the year before because largely moving activity tends to look the same year-over-year. What I mentioned for July is we're again seeing revenue increase from rates that we're having to charge because our cost of doing business has gone up. We haven't yet seen traction on the transactions. We're going through a process right now. I mentioned that the size of the fleet has increased. I think from last year, we're up maybe 5,700 trucks. From last quarter, we're up about 5,000 trucks. We're also up close to 800 locations compared to last year between dealer locations and our company locations. We're going through the process, which is fairly difficult, of placing this new equipment in places that we think it's going to be productive and opening dealers and doing that in an efficient fashion. That's what we're working on now. If that doesn't work out the way that we think it is, we'll probably end up increasing the sales of trucks and reduce the size of the fleet. Right now, we think there's an opportunity to use these trucks. To give you a sense of the challenge that we're facing, in the last two years, the number of locations that we've added is equal to the size of our second largest truck competitor, right? In opening that many locations and distributing trucks across them and getting customers and our team to be able to route customers to those locations is a bit of a challenge. That's what we're working through right now. We're working through it at the same time that we're investing quite a bit in the fleet. Our plan is that all of this is going to pay off in the years to come. Got it. I'm sorry about that. I probably should have read my question a little clearer. Once we trend, as in, how did April year-over-year go? How did May year-over-year and June year-over-year? Has it been kind of year-over-year flat for all three months, or has it been maybe improving on a year-over-year basis from April through June? Got it. Okay. How about that, Bill? Yeah, I went astray on that one, didn't I? The revenue has been steadily up year-over-year. I would say that transactions, we have some on-weeks and some off-weeks. We deal with the same issue that we've dealt with since the very beginning of the company, and that is people tend to move at the end of the month. You get this cluster of transactions at the end of the month. Depending upon how the calendar falls from year to year, you can see these weird oddities. Looking at it over a three-month period, you tend to flatten some of that out. What I would say is we still haven't got traction, however you want to look at it, month over, you know, month versus last year or for the three months, the traction still hasn't hit. I'm not saying that in July yet either, but it's not like we're far off. There are some weeks that we're up on transactions, so we're right there. We're right there. Okay. Got it. Thank you. That's helpful. I kind of shifting over to the storage slide. I mean, the storage stuff, I know you guys, you know, use slides here, so I think that segment's getting, you know, you guys are pushing for a little more focus on a segment. I really want to ask, on that slide on the future, you know, revenue coming out online, you guys see, you know, what the future would look like on a revenue basis. Have you guys looked at it maybe on even an NOI or an EBITDA basis, kind of what that, you know, future pipeline is? I know you guys don't disclose margin, but I just want to get a sense, you know, if that is the revenue number, just so you know how that hits the bottom line. Yeah, you know, I answered a question for Steven just now. On the non-same store locations that are already open, the additional revenue, somewhere around, I would say, 80% of that should probably fall to the bottom line. If you're asking about the other ones that haven't opened yet, those are tougher because as a whole, most of them have all of our product lines embedded. I don't have a clear answer to give you on that because breaking out storage revenue is part of that. No, it's good to hear you on that front. Kind of just asking another way, maybe on the development, the spending side of it, how much does it cost for you to put this pipeline up? I look at your slides, right, and if you multiply your look-back period, you did about $5.5 billion of investment, and you brought 26 MM sq ft of new space online. That kind of backs into like $200 a foot. I'm not sure if that's a good cost for the spend going forward. Yeah, I don't know if I would be here this long if I allowed a bunch of $220 a foot storage to. Yeah, for sure. On that slide, the $5.8 billion represents the amount that we spent in that five years. It's not exactly that. That doesn't represent the 26 MM sq ft that went on. It represents a big portion of it. I'd say there's two complicating factors to that calculation. One is because we do all this development on balance sheet, there's a certain amount that we've spent that isn't yet productive, right? We've bought the properties. We've started, we have construction in progress, but they're not renting rooms yet. For the last couple of years, that number's run about $1.7 billion. We're probably about $1.690 billion in capital we've invested that isn't really producing revenue right now. I would say five years ago, that number was probably closer to $1 billion. I would take $650 million out of the numerator because that really is extra money that's spent on assets that aren't productive yet. The part that's also a little challenging to figure out is that also includes building U-Box warehouse space. If you were to convert the amount of covered spaces that we've added the last five years to storage square foot, because each one of those boxes is a five-by-eight storage room, that's going to add somewhere between 8 to 9 MM sq ft of self-storage space. In reality, what the number should get to for our investment per foot should be much closer to, say, $150 a foot. That's the long story to get to the short answer, which is it should be about $150. Okay, got it. Super helpful. I saw the last question for me. I know you guys, you know, I asked the last quarter as well. The development, you know, the yield that you guys get on these storage developments, you guys mentioned it was closer to, like, I think it was like 10%, right? I'm just curious how you guys hold that 10% number. Is that 10% on the $150 of first square foot spend that you just referenced, or is there a different method you're using to calculate the 10%? Yeah, that's going to be the unlevered IRR. You take your total investment in the property, and we're looking out, I think it's seven to 10 years of then capping it at the end of that timeframe and looking to see how it performs over that timeframe. If you were to try to convert that to a cap rate, it's probably going to be somewhere between 7.5% and 8%. Okay, awesome. Super helpful. Thanks so much for taking my question. Have a great day. You too. Thank you. There are no further questions at this time. I would now like to turn the conference back over to management for the closing remarks. I hope everyone's just holding their questions for the annual investor day, which is going to be in about two weeks. If you have any feedback in between, please feel free to shoot it to us. Otherwise, we will look forward to seeing you then. Thank you very much. This concludes today's conference call. Thank you for participating. You may now disconnect.