8-K: U-Haul Q1 Earnings Dip Amid Rising Fleet Costs

U-Haul Holding Company reported a 27% drop in first-quarter net earnings despite revenue growth, impacted by increased depreciation and equipment disposal losses.

Summary

• Net earnings available to common shareholders for the first quarter ended June 30, 2025, were $142.3 million, a decrease from $195.4 million in the same period last year.
• Earnings per share for Non-Voting Shares (UHAL.B) were $0.73, down from $1.00 in the prior year's first quarter.
• Consolidated revenue increased by 5.3% to $1.63 billion for the quarter, up from $1.55 billion.
• Moving and Storage earnings from operations decreased by $52.2 million to $242.9 million.
• Increased losses from the disposal of retired rental equipment accounted for $29.7 million of the decrease in Moving and Storage earnings.
• Fleet depreciation expense increased by $50.7 million, and real estate related depreciation expense increased by $7.1 million.
• Moving and Storage EBITDA increased by $30.6 million to $545.3 million for the quarter.
• Trailing twelve months Moving and Storage EBITDA increased by $65.8 million to $1.65 billion.
• Self-storage revenues grew by $18.5 million, or 8.6%, compared to the prior year.
• Self-moving equipment rental revenues increased by $43.9 million, or 4.3%.
• Other revenue for Moving and Storage increased by $20.6 million, or 15.6%, driven by growth in the U-Box product offering.
• Cash and credit availability at the Moving and Storage segment decreased to $1.19 billion as of June 30, 2025, from $1.35 billion as of March 31, 2025.
• Total debt increased to $7.29 billion as of June 30, 2025, from $7.23 billion as of March 31, 2025.
• Net debt to adjusted EBITDA (TTM) increased to 4.0x from 3.3x a year prior.

Sentiment

Score: 4

Explanation: While revenue growth in core segments and EBITDA improvement are positive, the significant decline in net earnings and EPS, coupled with rising depreciation, losses on asset disposals, and increasing debt leverage, indicates a challenging quarter for profitability. Management's comments about persistent cost pressures related to fleet emissions add a cautious tone to the outlook.

Positives

• Consolidated revenue increased by 5.3% to $1.63 billion, demonstrating strong top-line growth.
• Moving and Storage EBITDA increased by $30.6 million to $545.3 million for the quarter, indicating improved operational profitability before non-cash charges.
• Trailing twelve months Moving and Storage EBITDA also increased by $65.8 million to $1.65 billion, showing sustained positive trend in core business profitability.
• Self-storage revenues grew by 8.6% ($18.5 million), and 15 new self-storage locations were added, along with 1.2 million net rentable square feet.
• Self-moving equipment rental revenues increased by 4.3% ($43.9 million), with increased revenue per transaction for both In-Town and One-Way markets.
• The number of Company operated retail locations, independent dealers, and box trucks in the rental fleet all increased.
• Other revenue, primarily from the U-Box product offering, saw significant growth of 15.6% ($20.6 million).
• A cash dividend of $0.05 per share on Non-Voting Common Stock was declared and paid.

Negatives

• Net earnings available to common shareholders decreased by 27.2% to $142.3 million from $195.4 million year-over-year.
• Earnings per share for Non-Voting Shares (UHAL.B) declined by 27% to $0.73 from $1.00.
• Moving and Storage earnings from operations decreased by $52.2 million.
• Losses from the disposal of retired rental equipment increased by $29.7 million, negatively impacting earnings.
• Fleet depreciation expense increased significantly by $50.7 million.
• Real estate related depreciation expense increased by $7.1 million.
• Fleet maintenance and repair costs increased by $5.2 million.
• Cash and credit availability at the Moving and Storage segment decreased by $156.4 million quarter-over-quarter.
• Total debt increased by $55.8 million quarter-over-quarter to $7.29 billion.
• Net debt to adjusted EBITDA (TTM) increased to 4.0x from 3.3x a year ago, indicating higher leverage.
• Net debt to total assets increased to 36.7% from 31.9% a year ago, also indicating higher leverage.
• Self-storage same store occupancy decreased by 1.0% to 92.8%.

Risks

• Increased depreciation expense and losses on the sale of retired rental equipment are significantly impacting profitability.
• The 'race to zero emissions on work trucks' is leading to increased costs for customers and shareholders, which are expected to persist.
• The company and truck OEMs require additional help from the EPA to develop economical and effective zero-emission products, indicating regulatory and technological challenges.
• General risks and uncertainties that may affect the business and future operating results, as referenced in the Form 10-Q.

Future Outlook

Management indicates that increased costs related to the 'race to zero emissions on work trucks' will persist for a while, and that U-Haul and truck OEMs need additional help from the EPA to make economical and effective products available. The company continues to expand its U-Box product offering through additional warehouse space, containers, and delivery equipment, and has approximately 14.8 million net rentable square feet in self-storage development or pending.

Management Comments

• "Revenues for self-move and self-storage are up over the same quarter last year."
• "We are working through increased depreciation expense and losses on the sale of retired rental equipment."
• "The race to zero emissions on work trucks has proven to be ephemeral. The increased costs to our customers and shareholders will persist for a while."
• "U-Haul and truck OEMs need additional help from the EPA to have economical and effective product available."

Industry Context

The company's comments regarding the 'race to zero emissions on work trucks' highlight a broader industry challenge for transportation and logistics companies facing regulatory pressures and the associated costs of fleet modernization. While U-Haul's self-move and self-storage segments show revenue growth, the significant increase in depreciation and equipment disposal losses suggests a capital-intensive business facing headwinds in fleet management and asset turnover, potentially reflecting a challenging market for used commercial vehicles or accelerated fleet upgrades.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for direct industry benchmarking.
• The increase in self-storage revenue (8.6%) and self-moving equipment rental revenue (4.3%) suggests healthy demand in their core markets, which generally aligns with the resilient nature of the moving and storage industry.
• The decline in net earnings despite revenue growth, driven by higher depreciation and losses on asset disposals, indicates a potential divergence from peers who might be managing fleet turnover or capital expenditures more efficiently, or who are less exposed to the specific 'zero emissions' pressures cited by U-Haul.
• The increase in net debt to adjusted EBITDA (4.0x) and net debt to total assets (36.7%) suggests a higher leverage profile compared to the previous year, which could be a point of concern when compared to industry averages for capital-intensive service providers.

Stakeholder Impact

• Shareholders: Experienced a significant decrease in net earnings and earnings per share, but received a cash dividend.
• Customers: May face increased costs due to the 'race to zero emissions on work trucks' as management indicated these costs will persist.
• Employees: No direct impact mentioned, but the company was recognized as a 'Best for Vets' employer and one of the 'Healthiest Workplaces in America'.
• Suppliers (Truck OEMs): U-Haul's call for EPA assistance suggests ongoing challenges and collaboration needs in developing compliant and economical vehicles.

Next Steps

• The company will hold its investor call for the first quarter of fiscal 2026 on Thursday, August 7, 2025, at 8 a.m. Arizona Time (11 a.m. Eastern).
• The 19th Annual Virtual Analyst and Investor meeting will be held on Thursday, August 21, 2025, at 11 a.m. Arizona Time (2 p.m. Eastern).

Key Dates

Recommendation

The company exhibits strong revenue growth in its core self-moving and self-storage segments, along with an increase in EBITDA, indicating healthy underlying business operations and demand. However, the significant decline in net earnings and earnings per share, primarily driven by substantial increases in depreciation expense and losses from the disposal of retired rental equipment, raises concerns about profitability and asset management. The worsening debt metrics (net debt to adjusted EBITDA and net debt to total assets) also suggest increasing financial leverage. Management's explicit mention of persistent increased costs related to the 'race to zero emissions on work trucks' introduces a notable future headwind. Given the mixed performance with strong top-line but significant bottom-line pressures and increasing leverage, a 'hold' recommendation is appropriate, awaiting clearer signs of improved cost control and profitability.

Keywords

U-Haul, Self-moving, Self-storage, Rental equipment, Truck rental, Moving services, Financial results, Earnings, Depreciation, EBITDA, Debt, Fleet costs, U-Box