U-Haul (NYSE:UHAL.B) reported higher earnings for its fiscal second quarter as equipment rental and storage revenue increased, even as freight costs continued to pressure expenses and same-store storage occupancy declined.
The moving and storage company earned $137 million in the quarter, up from $106 million a year earlier, Chief Financial Officer Jason Berg said on its investor call. Earnings per non-voting share rose to $0.71 from $0.54. Adjusted EBITDA in the moving and storage segment increased $5 million to $548 million.
Berg described revenue growth as “durable and steady,” though slower than the company would like. He said October revenue had trended somewhat higher than the second-quarter pace, while recent transaction and mileage trends offered signs of improvement.
Rental demand and dealer expansion
Equipment rental revenue rose $37 million from a year earlier, with gains in both in-town and one-way markets. In-town transactions increased, and revenue per transaction improved in both categories as customers drove more miles per transaction and revenue per mile rose, Berg said.
U-Haul added 63 company-operated locations and a net total of more than 500 independent dealers over the year through September. Berg said dealer expansion is central to the company’s effort to extend its reach because he does not see a structural demand catalyst in either moving or storage.
Still, the dealer network has not expanded as much as management had hoped. Berg said the company had not made enough progress to make a final decision on fleet size, pushing that assessment further out.
In response to an analyst’s question about demand indicators, Berg said the company’s trailing 12-month transaction count turned positive in October compared with the prior 12 months, after running negative for some time. One-way miles per transaction also posted small improvements for three consecutive quarters, he said.
Storage revenue rises as development slows
Storage revenue increased $16 million, or about 6%, and average revenue per occupied square foot across the company’s portfolio improved by just under 3%. Same-store occupancy fell 110 basis points to 89.5%.
Berg said some of the year-over-year revenue improvement would dissipate because the company is now a full year past a cleanup of delinquent rooms. Average rental rates for new customers were up about 2%, while rates for departing customers remained about 1% below move-in rates.
U-Haul invested $432 million in real estate acquisitions and development of self-storage and U-Box warehouses during the first six months of fiscal 2027, a decrease of $94 million from the prior-year period. In the second quarter, it added 10 storage locations totaling 1 million net rentable square feet.
The company had approximately 5.5 million square feet under development across 110 projects, with another 5.5 million square feet in projects not yet started. Both figures were lower than a year earlier. Berg said development spending was approaching a likely steady-state pace.
Freight costs weigh on U-Box
Moving and storage operating expenses increased $54 million, including a nearly $24.5 million rise in freight and shipping costs. Berg said he does not expect freight carriers to lower costs in the near term.
U-Box returned to revenue growth during the quarter, with increases in both containers shipped and containers in storage. Berg said most U-Box storage customers first use the product for a move, although some locations have had success directing customers to containers when conventional storage is full.
To address shipping costs, the company is working on its processes, adjusting customer rates and expanding a program that pairs U-Box shipments with one-way truck rental customers. Berg also said he expects spending on U-Box-related real estate to continue declining as the warehouse network reaches major markets.
Fleet spending and buybacks
Capital expenditures for new rental equipment fell $275 million to $466 million in the quarter. Proceeds from retired equipment sales declined $21 million to $198 million. Berg maintained the company’s expectation that net fleet investment would decrease by a little over $500 million for the full fiscal year.
Fleet depreciation declined $4.5 million, while losses on equipment disposals fell $34 million to $4.2 million. Berg attributed the smaller disposal loss in part to additional depreciation recognized over the past year and resilient resale proceeds.
During the quarter, U-Haul repurchased approximately 149,900 voting shares for $10.1 million and 1.1 million non-voting shares for $68.2 million. Berg said just under $224 million remained available under the repurchase program, adding that the company was balancing liquidity needs against its view that its shares, particularly the non-voting stock, were undervalued.
About U-Haul (NYSE:UHAL.B)
U-Haul Holding Company, formerly known as AMERCO, is a North American provider of do-it-yourself moving and storage services. Its U-Haul business rents trucks, trailers and towing equipment, and sells moving supplies and related products. Customers can also use U-Box portable storage containers for moving or storage.
The company operates self-storage facilities and offers related services, including vehicle hitch installation and propane sales at some locations. Its network includes company-operated locations and independent dealers.
Founded in 1945 by Leonard Shoen, U-Haul serves customers in the United States and Canada.
