U-Haul pany(US:UHAL)2020-02-06 19:44Financial Data and Key Metrics Changes - The company reported Q3 earnings of $1.58 per share, down from $4.01 per share in the same quarter last year [13] - EBITDA decreased by approximately $30 million in Q3, with profits described as "lousy" [11] - Equipment rental revenues decreased nearly 1% or about $5 million, primarily due to decreased corporate account activity [14] - Storage revenues increased by $13 million, representing a growth of just over 14% [17] Business Line Data and Key Metrics Changes - Equipment rental revenues were negatively impacted by a decline in last mile delivery services, while other equipment rentals, including one-way and In-Town markets, continued to grow [14][15] - The self-storage business saw an increase of 45,000 occupied units, a 45% increase in the pace of filling rooms year-over-year [17] - Operating earnings in the Moving and Storage segment decreased by $58 million to $62 million for the quarter [21] Market Data and Key Metrics Changes - The company added 122 new storage locations, with an average monthly occupancy of 67% across all facilities [19][20] - The average occupancy at locations with over 80% occupancy was 90%, slightly up from the previous year [19] Company Strategy and Development Direction - The company plans to focus on the self-storage business and aims to be the customer's best choice despite competitive pressures [10] - Management acknowledged the potential for oversupply in localized markets due to new storage products flooding the market [10] - The company intends to continue investing in its future despite current profit challenges [11] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the profitability of the last mile business and noted that stringent customer qualifications led to lost accounts [8][9] - The company is facing challenges in managing fixed costs associated with its fleet, which impacts profitability [30] - Management indicated that while they are investing heavily in capital expenditures, they are also aware of the need to optimize profitability and cash generation [56][68] Other Important Information - Capital expenditures on new rental trucks and trailers were $1,161 million for the first nine months of fiscal 2020, compared to $882 million in the same period last year [16] - The company declared a $0.50 per share cash dividend in December [26] Q&A Session Summary Question: Profitability of last mile delivery services - Management acknowledged that while profitability may have improved, fixed costs associated with the fleet still impacted overall margins [30][31] Question: Concerns about Amazon becoming a competitor - Management expressed confidence that Amazon's entry into the fleet management space would be challenging and not directly comparable to U-Haul's business model [33][34] Question: Operating expenses as a percentage of rental revenue - Management confirmed that the increase in operating expenses was primarily due to a decline in equipment revenue rather than a dramatic increase in costs [39][40] Question: U-Box program performance - Management indicated that while revenue growth for the U-Box program has slowed, profit contribution has improved [50][51] Question: Capital allocation and fleet utilization concerns - Management acknowledged the need for better capital allocation and indicated that they are aware of the challenges related to fleet utilization [54][56] Question: Self-storage capacity and profitability - Management noted a trend of slowing acquisitions and indicated that capital expenditures for self-storage would decrease in the coming years [66][68]