10-Q: U-Haul Reports Q3 Loss Amid Rising Costs, Fleet Investment

U-Haul Holding Company reported a net loss for the third quarter and a significant decline in nine-month earnings, driven by increased operating expenses, depreciation, and interest costs despite revenue growth in core segments.

Summary

• Total revenues for the third quarter ended December 31, 2025, increased by 1.95% to $1.42 billion, compared to $1.39 billion in the prior year quarter.
• Net earnings available to common stockholders for the third quarter were a loss of $37.0 million, a significant decrease from earnings of $67.2 million in the same period last year.
• Basic and diluted earnings per share for Common Stock were ($0.23) for the quarter, down from $0.30 in the prior year.
• For the nine months ended December 31, 2025, total revenues increased by 3.72% to $4.77 billion, up from $4.60 billion.
• Net earnings available to common stockholders for the nine months decreased by 53.06% to $210.9 million, compared to $449.4 million in the prior year period.
• Basic and diluted earnings per share for Common Stock for the nine months were $0.94, down from $2.16 in the prior year.
• Self-moving equipment rental revenues increased by $7.6 million (0.86%) for the quarter and $74.7 million (2.50%) for the nine months.
• Self-storage revenues grew by $17.9 million (7.89%) for the quarter and $58.2 million (8.72%) for the nine months, driven by occupancy gains, new capacity, and a 6.7% improvement in average revenue per occupied foot for the quarter.
• Operating expenses increased by $66.6 million for the quarter and $130.4 million for the nine months, primarily due to higher repair costs, personnel expenses, and liability costs.
• Depreciation expense, net of gains/losses on disposals, surged by $79.1 million (32.15%) for the quarter and $279.9 million (40.58%) for the nine months, attributed to an increased box truck fleet and expected decreases in resale values.
• Net losses from the disposal of rental equipment increased by $29.8 million for the quarter and $115.6 million for the nine months, as resale values decreased and the average cost of units sold increased.
• Interest expense rose by $18.9 million (24.74%) for the quarter and $52.9 million (24.56%) for the nine months, due to increased debt outstanding and higher average cost of debt.
• The company added approximately 1.5 million new net rentable square feet of self-storage in the third quarter and 4.3 million in the first nine months of fiscal 2026.
• Net cash provided by operating activities increased by $134.7 million for the nine months, driven by improved operations, lower income taxes paid, and timing of credit card receivable settlements.
• The company received a $100.0 million dividend from its Repwest insurance subsidiary in December 2025 and is owed a $127 million IRS refund plus $23.6 million in interest.
• As of December 31, 2025, cash and cash equivalents totaled $1.03 billion, and available borrowing capacity under existing credit facilities was $465.0 million.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative report due to the significant decline in net earnings, resulting in a quarterly loss, and the substantial increase in operating costs and depreciation, which overshadowed modest revenue growth. While strategic investments are ongoing, the immediate financial performance is concerning.

Positives

• Total revenues increased by 1.95% for the quarter and 3.72% for the nine months, indicating continued top-line growth.
• Self-storage revenues showed strong growth of 7.89% for the quarter and 8.72% for the nine months, driven by occupancy gains, new capacity additions, and improved revenue per occupied foot.
• The company added significant new self-storage capacity, with 1.5 million net rentable square feet in Q3 and 4.3 million in the first nine months of fiscal 2026.
• Net investment and interest income increased by 16.58% for the quarter and 6.07% for the nine months, contributing positively to revenue.
• Net cash provided by operating activities increased by $134.7 million for the nine months, reflecting improved operational cash generation.
• The company received a $100.0 million dividend from its Property and Casualty Insurance subsidiary (Repwest) in December 2025.
• An IRS refund of $127 million plus $23.6 million in interest is being processed, which will further boost liquidity.
• The U-Box program continues to expand its breadth and reach through additional warehouse space, containers, and delivery equipment.

Negatives

• Net earnings available to common stockholders plummeted to a loss of $37.0 million for the third quarter, compared to a $67.2 million profit in the prior year, representing a significant deterioration in profitability.
• Nine-month net earnings available to common stockholders decreased by 53.06% to $210.9 million, indicating a substantial decline in year-to-date profitability.
• Basic and diluted EPS for Common Stock turned negative for the quarter at ($0.23) and significantly decreased for the nine months to $0.94.
• Total costs and expenses increased substantially by 11.64% for the quarter and 10.98% for the nine months, outpacing revenue growth.
• Operating expenses rose significantly due to higher repair costs ($13.1 million in Q3, $28.6 million in 9M), personnel expenses ($16.2 million in Q3, $48.0 million in 9M), and liability costs ($37.9 million in Q3, $78.3 million in 9M).
• Depreciation expense, net of disposals, increased sharply by 32.15% for the quarter and 40.58% for the nine months, reflecting both fleet expansion and expected decreases in resale values.
• Net losses from the disposal of rental equipment increased by $29.8 million for the quarter and $115.6 million for the nine months, indicating challenges in the used-truck sales market and higher average costs of units sold.
• Interest expense increased by 24.74% for the quarter and 24.56% for the nine months, driven by higher debt levels and increased average cost of debt.
• Life insurance premiums decreased by 22.15% for the quarter and 13.67% for the nine months, primarily due to lower Medicare supplement and life premiums, and a significant decline in deferred annuity deposits.

Risks

• Potential future pandemics or similar events could impact system members or customers.
• The economic environment may adversely affect demand for products and services, as well as the cost and availability of debt and capital.
• Fluctuations in costs to maintain and update the fleet and facilities could impact profitability.
• Reliance on a limited number of manufacturers for rental trucks poses supply chain risks.
• The ability to effectively hedge variable interest rate debt is crucial to manage interest rate risk.
• Control by a small contingent of stockholders could lead to governance concerns.
• Fluctuations in quarterly results and seasonality are inherent to the business.
• Changes in, and compliance with, government regulations, particularly environmental and motor carrier operations, could incur significant costs.
• Outcomes of litigation could have a material impact on financial position.
• Reliance on a third-party dealer network introduces operational and reputational risks.
• Liability claims relating to rental vehicles and equipment could lead to significant expenses.
• The ability to attract, motivate, and retain key employees is critical for operations.
• Reliance on automated systems and the internet exposes the company to technology, cybersecurity, or data security breaches.
• Credit ratings could impact borrowing costs and access to capital.
• The ability to recover under reinsurance arrangements is important for insurance segments.
• Inflationary pressures and/or imposition of tariffs may challenge the ability to maintain or improve operating margins.
• Failure to acquire enough new rental equipment to properly rotate the fleet could lead to continued increases in repair and maintenance costs.
• Unforeseen events, including adverse economic conditions or heightened competition, could cause declines in revenues.

Future Outlook

The company plans to continue focusing on increasing transaction volume and improving pricing, product, and utilization for self-moving equipment rentals. New investment in the truck fleet is expected to increase in fiscal 2026. For the storage business, the company aims to complete current projects, increase occupancy in existing locations, and acquire new properties, with spending on acquisitions and new development likely to increase. Investment in the U-Box program will also continue. Inflationary pressures are anticipated to challenge the ability to maintain or improve operating margins. The Life Insurance segment intends to expand its presence in the senior market through agency growth, new product offerings, and business acquisitions.

Management Comments

• Management believes that consolidating their insurance companies' calendar year into the fiscal year financial statements does not materially affect the presentation of financial position or results of operations.
• Management's overall strategy is to maintain leadership in the North American do-it-yourself moving and storage industry by providing a seamless and integrated supply chain.
• Management is focused on expanding the dealer and center network, increasing selection and availability of rental equipment, and providing a complete line of products for the do-it-yourself moving and storage customer.
• Management believes that the basic business premise of equipment sharing helps reduce greenhouse gas emissions and the inventory of total large capacity vehicles.
• Management believes that the historical loss information compiled is a reasonable base on which to determine expected credit losses for trade receivables.
• Management believes the current capital structure is a positive factor enabling the pursuit of operational plans and goals and providing sufficient liquidity.
• Management believes that stockholders' equity at Property and Casualty Insurance remains sufficient, and its ability to pay ordinary dividends to U-Haul Holding Company will not be restricted.
• Management believes that the overall sources of liquidity for Life Insurance are adequate to meet future operating cash needs.
• Management believes it has adequate liquidity between cash and cash equivalents and unused borrowing capacity in existing credit facilities to meet current and expected needs over the next several years.
• Management believes that additional opportunities for leverage exist in the current capital structure.

Industry Context

StockSavvy.ai notes that U-Haul's performance reflects a mixed environment. While the core moving and storage segments show revenue growth, indicating sustained demand for DIY moving and self-storage services, the significant increase in operating costs and depreciation suggests broader inflationary pressures and potentially higher capital expenditure requirements impacting profitability across the industry. The decline in life insurance premiums, contrasted with growth in property and casualty, highlights differing dynamics within the insurance sector, with the senior market potentially facing headwinds or increased competition. The substantial investment in fleet and real estate indicates a long-term growth strategy, but the immediate impact on earnings is negative due to associated costs and lower resale values for equipment.

Comparison to Industry Standards

• The self-storage industry has seen robust demand, and U-Haul's 7.89% quarterly and 8.72% nine-month revenue growth in this segment, coupled with 1.5 million new net rentable square feet added in Q3, aligns with or exceeds the expansion efforts of major competitors like Public Storage (PSA) and Extra Space Storage (EXR), which have also been actively acquiring and developing new facilities to meet demand.
• The increase in depreciation and net losses on disposal of rental equipment suggests a challenging used vehicle market, which could impact other fleet-heavy rental companies such. This trend is consistent with broader automotive market shifts where resale values for certain vehicle types may be softening after a period of elevated prices.
• The rise in interest expense by 24.74% for the quarter is a common challenge across industries, as companies with variable rate debt or those seeking new financing face higher borrowing costs in the current interest rate environment, similar to what might be observed in other capital-intensive sectors like transportation or real estate development.
• The decline in Life Insurance premiums, particularly Medicare Supplement, could indicate a competitive or saturated market for senior-focused insurance products, potentially lagging behind growth seen in other specialized insurance providers or facing pressure from evolving healthcare policies.

Legal Proceedings

• The company is named as a defendant in various claims and litigation arising out of the normal course of business.
• Compliance with environmental requirements of federal, state, provincial, and local governments may affect business operations.
• The company has issues regarding hazardous substances on some properties and has remedial plans in place.
• Compliance with environmental laws and cleanup costs are not expected to result in a material adverse effect on financial position, results of operations, or cash flows.

Related Party Transactions

• U-Haul Holding Company has continuing related party interests with certain major stockholders, directors, and officers.
• SAC Holding Corporation and SAC Holding II Corporation (SAC Holdings), substantially controlled by Blackwater Investments, Inc. (wholly owned by Willow Grove Holdings LP, owned by Mark V. Shoen and trusts associated with Edward J. Shoen and Mark V. Shoen), acquire and develop self-storage properties managed by U-Haul.
• U-Haul received management fee revenue from Blackwater of $7.17 million for Q3 2025 and $22.78 million for 9M 2025.
• U-Haul received management fee revenue from Mercury Partners, L.P. (Mercury), controlled by Mark V. Shoen, of $1.65 million for Q3 2025 and $5.24 million for 9M 2025.
• U-Haul incurred lease expenses to Blackwater of $0.60 million for Q3 2025 and $1.80 million for 9M 2025.
• U-Haul incurred printing expenses to Blackwater of $1.76 million for Q3 2025 and $4.64 million for 9M 2025.
• U-Haul incurred commission expenses to Blackwater of $18.61 million for Q3 2025 and $66.38 million for 9M 2025.
• U-Haul incurred lease expenses to Mercury of $0.04 million for Q3 2025 and $0.11 million for 9M 2025.
• U-Haul incurred commission expenses to Mercury of $5.15 million for Q3 2025 and $18.08 million for 9M 2025.
• As of December 31, 2025, U-Haul had receivables from Blackwater of $41.45 million and from Mercury of $16.53 million.

Stakeholder Impact

• Shareholders: Experienced a significant decline in net earnings and a quarterly loss, impacting per-share results and potentially future dividend growth, despite consistent Series N Non-Voting Common Stock dividends.
• Employees: Increased personnel expenses suggest continued investment in the workforce, but overall profitability decline could create future pressure.
• Customers: Continued expansion of self-moving equipment, self-storage facilities, and the U-Box program aims to improve service and convenience, while protection packages offer added value.
• Suppliers: Increased repair costs for the rental fleet and ongoing capital expenditures for new equipment and real estate indicate continued business for suppliers.
• Creditors: Increased debt and interest expense highlight higher leverage and borrowing costs, which could affect creditworthiness, though the company maintains significant liquidity and borrowing capacity.
• Regulatory Authorities: Ongoing compliance with environmental laws and tax regulations (e.g., Pillar Two legislation) is a continuous operational and financial consideration.

Next Steps

• Continue to focus on increasing transaction volume and improving pricing, product, and utilization for self-moving equipment rentals.
• Maintain an adequate level of new investment in the truck fleet, which is likely to increase in fiscal 2026.
• Actively look to complete current self-storage projects, increase occupancy in existing locations, and acquire new locations.
• Spending on self-storage acquisitions and new development is likely to increase through the remainder of fiscal 2026.
• Continue to invest capital and resources in the U-Box program throughout fiscal 2026.
• Life Insurance segment will pursue expanding its presence in the senior market by growing its agency force, expanding new product offerings, and pursuing business acquisition opportunities.

Key Dates

Recommendation

The filing presents a mixed picture with significant negatives outweighing positives in the short term. While U-Haul's core moving and storage segments show revenue growth and strategic investments in fleet and real estate are ongoing, the sharp decline into a net loss for the quarter and a substantial drop in nine-month earnings are concerning. This is primarily driven by rapidly increasing operating expenses, depreciation, and interest costs. The company's strong liquidity position and ongoing expansion efforts provide a foundation for future growth, but the immediate profitability challenges and inflationary pressures warrant caution. A 'hold' recommendation reflects the long-term potential of the strategic investments balanced against the current financial headwinds and erosion of profitability.

Keywords

U-Haul, Self-moving, Self-storage, Rental equipment, Insurance, Financial results, Q3 earnings, 10-Q filing, Logistics, Real estate, Depreciation, Interest expense, Capital expenditures, UHAL