U-Haul Holding Company's Quarterly Report (Form 10-Q) for the Period Ended December 31, 2024

U-Haul Holding Company Maintains Steady Performance Amid Changing Market Conditions

U-Haul Holding Company, the parent company of the iconic U-Haul moving and storage brand, has reported its financial results for the third quarter and first nine months of fiscal year 2025. Despite facing some headwinds, the company has managed to maintain a steady performance, leveraging its strong brand recognition and diversified business model.

Moving and Storage Segment Drives Revenue Growth

The Moving and Storage segment, which encompasses U-Haul’s core rental equipment and self-storage operations, was the primary driver of revenue growth during the quarter and nine-month period. Self-moving equipment rental revenues increased by $38.8 million and $71.9 million, respectively, compared to the same periods last year. This was attributed to improvements in both in-town and one-way rental transactions, as well as an increase in the number of company-operated retail locations and independent dealers, along with a larger box truck fleet.

Self-storage revenues also saw significant growth, rising by $16.6 million and $49.0 million, respectively, during the quarter and nine-month period. This was driven by a 6.8% and 6.0% increase in the average monthly number of occupied storage units, as well as the addition of approximately 2.3 million and 4.9 million net rentable square feet to the portfolio.

The company’s U-Box program, which offers portable moving and storage containers, also contributed to the increase in other revenue, as both moving and storage transactions related to this service continued to expand.

Insurance Segments Provide Stable Earnings

U-Haul’s insurance subsidiaries, Property and Casualty Insurance and Life Insurance, also played a role in the company’s overall performance. The Property and Casualty Insurance segment saw a significant increase in earnings from operations, rising from $9.4 million to $19.5 million in the third quarter, and from $36.8 million to $44.8 million in the first nine months. This was primarily driven by gains in the segment’s investment portfolio, as well as a decrease in commissions in select geographies.

The Life Insurance segment, on the other hand, experienced a decline in earnings from operations, from $8.0 million to $4.1 million in the third quarter, and from $14.7 million to $11.6 million in the first nine months. This was largely due to an increase in interest credited to policyholders, as well as higher operating expenses related to salary, wages, and other administrative costs.

Profitability Impacted by Increased Costs

While U-Haul’s revenue growth was impressive, the company’s profitability was impacted by a significant increase in costs and expenses. Total costs and expenses increased by $95.9 million and $326.1 million during the quarter and nine-month period, respectively, compared to the same periods last year.

The primary drivers of this increase were higher depreciation expenses associated with the rental fleet, as well as a decrease in net gains from the disposal of rental equipment. Depreciation expense on the rental fleet increased by $34.2 million and $92.5 million, respectively, due to the higher cost of new additions to the fleet and expected decreases in resale values for certain units. Net gains from the disposal of rental equipment decreased by $32.7 million and $109.8 million, as resale values have declined while the average cost of units being sold has increased.

Additionally, the company experienced increases in personnel and liability costs, as well as non-recurring expenses related to the transition to a new box supplier.

Liquidity and Capital Resources Remain Strong

Despite the increase in costs, U-Haul’s liquidity and capital resources remain strong. As of December 31, 2024, the company had $1,017.4 million in cash and cash equivalents, and an additional $465.0 million in available borrowing capacity under existing credit facilities.

The company’s Moving and Storage segment continues to hold significant cash and has access to additional liquidity to fund its capital expenditure requirements, which are expected to remain high in fiscal 2025. The company plans to reinvest approximately $1,115 million, net of equipment sales, in its rental equipment fleet during the fiscal year, as well as continue its expansion of owned storage properties through acquisitions and new development.

The insurance subsidiaries, Property and Casualty Insurance and Life Insurance, also maintain adequate levels of liquidity and capital to meet their respective obligations and regulatory requirements.

Outlook and Challenges Ahead

Looking ahead, U-Haul remains focused on executing its strategy to maintain its leadership position in the North American “do-it-yourself” moving and storage industry. The company will continue to invest in its rental equipment fleet, expand its self-storage portfolio, and grow its U-Box program to meet customer demand.

However, the company faces several challenges that could impact its future performance. Inflationary pressures may make it difficult to maintain or improve operating margins, and the company’s ability to acquire enough new rental equipment to properly rotate its fleet could lead to increased repair and maintenance costs.

Additionally, the company’s revenue in the U-Move program could be adversely impacted by unforeseen events, such as adverse economic conditions or heightened competition, which are beyond the company’s control.

Conclusion

Despite the headwinds faced during the quarter and nine-month period, U-Haul Holding Company has demonstrated its resilience and ability to adapt to changing market conditions. The company’s diversified business model, strong brand recognition, and focus on customer service have allowed it to maintain a steady performance.

As the company navigates the challenges ahead, it will need to continue to invest in its core operations, explore new growth opportunities, and manage costs effectively to ensure long-term success. Investors and stakeholders will be closely watching the company’s progress in the coming quarters and fiscal year.