U-Haul Holding Company's Quarterly Report (Form 10-Q) for the Period Ended September 30, 2024

U-Haul Holding Company Maintains Strong Position in Moving and Storage Market

U-Haul Holding Company, the parent company of the iconic U-Haul brand, has reported its financial results for the second quarter and first six months of fiscal year 2025. The company continues to demonstrate its leadership in the North American “do-it-yourself” moving and storage industry through a seamless and integrated supply chain.

Financial Performance Overview

For the second quarter of fiscal 2025, U-Haul Holding Company reported consolidated revenue of $1.66 billion, up from $1.65 billion in the same period last year. Earnings from operations decreased to $302.0 million, compared to $422.4 million in the prior year quarter. Net earnings available to common stockholders were $186.8 million, down from $273.5 million.

Over the first six months of fiscal 2025, the company generated consolidated revenue of $3.21 billion, up from $3.19 billion in the same period of fiscal 2024. Earnings from operations decreased to $608.2 million, compared to $822.0 million in the prior year period. Net earnings available to common stockholders were $382.2 million, down from $530.3 million.

Revenue and Profit Trends

The company’s core Moving and Storage segment, which includes the U-Haul truck and trailer rental business as well as self-storage operations, saw revenues increase in both the quarter and six-month periods. Self-moving equipment rental revenues grew by $17.9 million and $33.1 million, respectively, driven by higher transaction volumes and increased revenue per transaction.

Self-storage revenues also rose, up $15.6 million in the quarter and $32.4 million year-to-date, due to a 5.5% and 5.6% increase in the average monthly number of occupied units, respectively. The company continued to expand its self-storage portfolio, adding approximately 0.9 million net rentable square feet in the second quarter and 2.6 million over the first six months.

However, earnings from operations for the Moving and Storage segment decreased significantly, down 28.9% in the quarter and 26.2% year-to-date. This was primarily due to higher operating expenses, including a $36.0 million and $58.3 million increase in depreciation on the rental fleet, as well as a $29.2 million and $77.1 million decline in net gains from the disposal of rental equipment.

The Property and Casualty Insurance segment saw relatively stable revenues, with premiums increasing slightly in both periods. Pretax earnings decreased 10.3% in the quarter and 7.6% year-to-date, due to higher benefits and losses incurred. The Life Insurance segment reported modest revenue growth, with premiums declining but offset by higher net investment income. Pretax earnings increased 37.1% in the quarter and 9.8% year-to-date.

Strengths and Weaknesses

A key strength of U-Haul Holding Company is its dominant market position and strong brand recognition in the North American moving and storage industry. The company’s integrated supply chain and extensive network of company-operated and independent dealer locations provide customers with convenient access to its products and services.

The company’s investments in expanding its self-storage portfolio, developing new technology solutions like the U-Haul mobile app and online marketplace, and growing its U-Box program demonstrate its commitment to innovation and meeting evolving customer needs. U-Haul’s focus on sustainability through equipment sharing and recycling also positions it well for the future.

However, the company faces challenges in managing its large rental fleet, as evidenced by the significant increase in depreciation expenses and decline in net gains on disposals. Rising costs, including for personnel, liability, and the transition to a new box supplier, have also pressured the company’s operating margins.

Additionally, the performance of the insurance subsidiaries has been mixed, with the Property and Casualty segment seeing lower profitability and the Life Insurance segment’s growth being more modest. Regulatory restrictions on the insurance companies’ ability to pay dividends to the parent company could limit U-Haul Holding Company’s financial flexibility.

Outlook and Conclusion

Looking ahead, U-Haul Holding Company plans to continue focusing on increasing transaction volume and improving pricing, product, and utilization for its self-moving equipment rentals. The company will also likely increase spending on self-storage acquisitions and new development projects in fiscal 2025 to expand its portfolio and meet customer demand.

Inflationary pressures may challenge the company’s ability to maintain or improve its operating margin, and its ability to acquire and rotate its rental fleet effectively will be crucial to managing costs. The performance of the insurance subsidiaries will also be an important factor in the company’s overall financial results.

Overall, U-Haul Holding Company remains a dominant player in the North American moving and storage market, leveraging its strong brand, integrated supply chain, and diversified product offerings. However, the company faces operational and financial headwinds that will require careful management to maintain its leadership position and deliver consistent profitability to shareholders.