U-Haul Holding Company (UHAL) Earnings Call Transcript & Summary

Hello again. I'm Joe Shoen. Although 2020 has presented U-Haul with unique challenges, our collective experience and long-term focus will get us through this temporary COVID hurdle. In the continuum of 75 years in business, we have met tough challenges with increased service. Today, our products and services are contributing to the resiliency of the public, our small business dealers and the communities where we operate. My parents founded U-Haul in 1945, recognizing a need that many others would soon have following the end of World War II. U-Haul trailer rental company served a basic mobility need and was founded entirely on a system of trust. It was not an overnight success. The industry simply did not exist. The concept of rent here, leave there was yet to be formed. Born before the Great Depression and living through wartime, they tirelessly pressed forward. 4 years later, it was possible for customers to rent trailer one way from city to city throughout most of the United States and, by 1955, throughout most of Canada. There was no interstate highway system to support widespread migration in those early years until the Federal-Aid Highway Act of 1956 directed construction of the Interstate highway system. Solely due to leadership from U-Haul, licensing reciprocity was established between and among the 48 states. Today, the IRP agreement helps facilitate the mobility of our customers between the U.S. and Canada. The Arab oil embargo. Our network of U-Haul dealer locations was decimated overnight as full-service service stations went under in 1973. This forced us to reevaluate our business model, which now meant owning land, running our own retail locations and eventually expanding into self-storage. Today, well-financed organizations, technology, new and existing competitors and now COVID are all trying to disrupt our business. Time and again, U-Haul has been pressed by external forces. We have adapted, and many of those hurdles have come and gone. Our strategy is to focus on our customers and let them sort out the winners and losers. The COVID panic has again tested our team, and we have responded by exercising discipline. We have instituted protocols to protect our team and our customers, including increased measures to sanitize equipment, enhanced PPE. We've embraced social distancing and encouraged customers to utilize our range of contactless products and services. Because of our workforce and the significant investments we have made in electronic tools over the past decade, we are well positioned to serve customers during this pandemic. I'm going to briefly highlight a few of the products and services we offer that help U-Haul serve customers in a contactless environment. Hello. This is Joe Shoen from U-Haul. We're here today at a U-Haul store on West Camelback Road in Phoenix, Arizona. With me is my son, Sam Shoen, Vice Chairman of AMERCO; and John J. T. Taylor, President of U-Haul International. Today, we're going to talk to you a little bit about our contactless rentals, which are really electronic tools called by the current popular name contactless rentals. We've been working on technologies for at least 12 years. We have a tremendous amount of tools rolled out and active. And JT, why don't you talk to us a little bit about Truck Share 24/7 and customer after-hours returns?

We have a program that's unique and only U-Haul has. When we first started the program, we thought maybe a customer would do it more often when we were closed. But the truth is, we have found that they do it as often, if not more often, when we're open because that's the way they prefer to do business. And so what they're doing is they come to the location. Their phone identifies that they are at that location. They're connected with our live verification team, a team that's been specially trained and knowledgeable in being able to rent the equipment. They verify the customer is who they say they are. They go through a quick little process, less than a minute, and then they're off and running.

So JT, is Truck Share 24/7 specifically for millennials or specifically for people in the coastal cities?

No. It's for everybody. In fact, we have done Truck Share 24/7 in every province and every state that we have. Our customers are really demanding that we do this because they expect that's the service that we're going to provide, and that's -- they expect that help from us and to be able to do their rentals.

Okay. Now I understand you do this at over 2,000 U-Haul stores. How about your 20,000 U-Haul dealers? Surely, there must be demand for it there, too.

We are doing this at all 22,000 of our locations. We do this day in and day across U.S. and across Canada.

Over 22,000 locations, 24/7, 365, every province in Canada, every state in the United States.

Absolutely.

Hawaii?

Hawaii, for sure.

Alaska?

Alaska, definitely.

Okay. And we also are doing after-hours customer self-returns. How does that work?

That works really easily for our customer. And in fact, it's a preferred procedure for our customer. All they do is they pull into the location. Again, a text message is received on their mobile device. They identify they are at the location they say they're supposed to be at, identify how much fuel is in the vehicle. They ask what the mileage is. And then they go through a series of questions to see how the equipment ran. And answering those questions, they complete that process and they're set to go.

And which of our other do-it-yourself competitors have tools like this for their customers?

Not a single other competitor does this.

Great. Sam, you want to talk a little bit about U-Box?

Sure. So behind Joe and JT is a U-Box portable moving and storage container. We've been doing this product and service for about 10 years, and it's a real popular contactless option. The customer will go on the web or give us a call, place a reservation, and we will actually deliver as many boxes as they need to their door. They can then fill them at their own pace and then give us a call or go back on the web to let us know they're ready. We'll come back, pick up the boxes, not having to deal with any U-Haul personnel, and we'll then return them to our warehouse to either store or ship.

We stepped inside our showroom here on West Camelback Road in Phoenix. And this store, like approximately 1,600 other stores, does significant self-storage as well as U-Move transactions. JT, what do you have for contactless or technologically enhanced storage transactions?

Well, when we have extended access to all of our storage locations and all the storage rooms, then all the customer would have to do is to the door, swipe, they have a passcode, and they're allowed in.

So that gets people in hours when maybe they need to because of their work or their recreational needs. They need to get in after our store -- our normal store hours. How about...

Pharmaceutical salespeople, contractors, they really appreciate that service.

JT, how about for customers who want to actually move in after hours? In other words, it's more convenient for them after we're closed for normal business hours.

It works so much the same as the rest of our contactless services, Joe. They would just get on their smartphone, go in, sign in to the location they're at, rent the room at that point, and they're really set to go.

It will actually let them access the room at that point.

It will both rent the room to them and allow them to access it immediately.

Are they going to be able to get a lock and key? I know you require customers to bring their own lock and key.

We have rooms set up for them. And so when they go through, they'll be able to identify the room that they want. And inside that room, we have a lock for them. So they don't even -- they don't need to do anything. The store doesn't even really need to be open.

JT, today, it seems like almost every retailer offers online purchase options and delivery or order online, pick up in store. What has U-Haul done in this regard?

We are also doing order online, pick up at store. It's growing in popularity. And right now, all you have to do is go online on uhaul.com, type in what you want, tell them what you want and tell them the store location that you want to pick up at. You would designate a time of when you want or expect to be there and you're set.

What if it's better for me to have moving supplies brought to my house?

Again, no problem with that. You go on uhaul.com, identify all the moving supplies that you want, and it'll be shipped right to your location. The other option we have is a Scan & Go option where you go to uhaul.com/scan, come to one of our showrooms, browse what you are looking for. You can go ahead and check out, be on your way without interacting with anybody in our showroom, waiting in line, totally contactless.

You don't have to go give them your credit card even?

No, you do it all yourself. So it's a self-checkout for those people who want to come in store, see our products and services, pick which -- what they want, self-checkout. They're out the door not having to deal with anybody, totally contactless.

And is that something you just developed just right now because of COVID-19?

No. We actually had momentum on this way before COVID-19. But it works best for a lot of folks who have COVID fears.

Sometimes, our showrooms get crowded on, say, Saturday morning, end month, there's maybe a line actually to do the checkout. How do these tools work in that case?

Oh, that's when the tools work most effectively. As Sam described, Scan & Go, our customer can come in and if there's potentially a line there, all they need to do is go ahead and get on their smartphone and order what they want, check out and they're set to go.

How about the Truck Share? Could a customer do that, come to the store and just decide I'll do a Truck Share and do it all themselves and check themselves out?

Our customer can actually switch to do a Truck Share. If they walked in and didn't want to wait for specific help that maybe the person at the counter could give them, just on their phone, change their reservation, keys are waiting in the lockbox, and they're, again, set to go. It's a very easy process.

U-Haul is a do-it-yourself operation. That meant we're especially appropriate for all these social distancing and COVID-related protocols. You've heard a little bit today that we have several contactless options. But I want to make it clear to you: U-Haul is a hard work business. This isn't a work-from-home outfit. This is work in the midst of it. All of our 30,000 employees have stood tall during the recent COVID scare, reported for work, served the customers, cleaned the trucks, maintained the trucks. It's all very physical and demands a great labor force, which we're very lucky to have. All this work has to go on behind the scenes for any one of these tools to function. I'm very proud of the workforce we have. They're hard work-oriented. And now as we celebrate 75 years of being in business, this tradition continues.

Hello, and welcome to the 2020 AMERCO Virtual Analyst and Investor Meeting. Thanks for joining us today. During this meeting, we'll take a look back at our performance in fiscal 2020 and the first quarter of fiscal 2021. Before we begin, I'd like to remind all participants of this webcast that certain of the statements during this meeting, including without limitation statements regarding revenue, expenses, income and general growth of our business, may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Certain factors could cause actual results to differ materially from those projected. For a discussion of the risks and uncertainties that may affect AMERCO's business and future operating results, please refer to our most recent Form 10-K filing with the U.S. Securities and Exchange Commission and any updates as may be provided in our periodic Form 10-Q filings. The virtual platform for this meeting is an important part of our corporate sustainability initiatives. This is our 14th consecutive year hosting a virtual meeting. At this time, I'll now turn the webcast over to Joe Shoen, Chairman of AMERCO.

Welcome again to the live part of today's virtual analyst and investor meeting. Joining me today are a few key people from the U-Haul organization: Sam Shoen manages U-Box and is Vice Chairman of AMERCO. This is Sam's 27th year with the company. Jason Berg, our Chief Financial Officer, has worked at U-Haul or a subsidiary for 24 years. Dennis O'Connor is our Vice President of Storage Operations and Property Management. He's held his position for 21 years, and he's been with U-Haul for 28 years. Kim Merow is our Program Manager for the Truck Share 24/7 and has been with U-Haul for 25 years. And Brian O'Loughlin is the Director of Fleet Sales and Support. He has been with the company for 32 years. During the presentation, you can key in questions and commentary on your screen. After the prepared remarks, Sebastien Reyes will ask those questions of our panel here today. I'm now going to turn the meeting over to Jason to walk us through some of the financial highlights.

Thank you, Joe. I appreciate that. For those of you who've logged in, this year, we did something a little bit different with our supplemental materials. We went ahead and published our full investor presentation this year. I'm only going to walk through a few of those slides. You don't have to worry about going through all 25 or 26 of them. I wanted to use my time today and speak to you about the financial implications of the COVID-19 outbreak, walk through its effects on us and what we did in response to it from a financial perspective. When the -- when we first noticed the financial effects of this in the month of March, our focus immediately went to liquidity. We kind of had -- we saw -- we were hit on 2 fronts. First, I'll start with the U-Move revenue. From the last 10 days of March through the end of April, we experienced about a 30% decrease in truck and trailer rental revenues. That equates to about an $85 million decrease in revenue over that roughly 40-day period. If you take that out through the month of June, that increases to about $115 million. And that's on a mixed dollar basis, Canadian and U.S. dollars combined. At the same time, we saw the commercial auto auctions where we saw a large portion of our equipment shutdown. That resulted in about -- a reduction of about $85 million in sales proceeds. These auctions are a significant component of working capital for us when we purchase new equipment. So it's this one-two punch that really got us concerned about liquidity. Over the years, we've spoken about the different methods that we would employ should we need to go into a period of cash conservation. So the first thing we looked at was fleet spending, and we immediately began to scale back the acquisitions within our fleet. At the same time that we needed to scale back purchases, the manufacturers found themselves in a situation where they couldn't produce equipment even if they wanted to. Their factories were shut down. So we've either canceled or deferred approximately 15,000 purchases of pickups and cargo vans and about 2,500 box trucks. However, when you go to shut down a pipeline this large, it doesn't just stop on a dime. There was about $90 million worth of fleet that we had acquired that was either on the factory lots or was being delivered to us during this time frame. We had to complete those purchases. So that was a $90 million use of cash. We went out to one of our lenders, and we pulled out a $25 million 6-month fleet loan to help offset some of the negative effects of that cash drain. At the same time, our fleet sales department began focusing on alternative methods for selling our equipment. And as Joe mentioned, Brian O'Loughlin, who's the head of our fleet sales department, is here to answer any questions you might have on that. With the auto auctions closed for physical lines, they switched to online auctions. And we went ahead and tried to sell as much equipment through that process as we could. We also continued to sell equipment through our own website, uhaultrucksales.com, and through our rental lots across the U.S. and Canada. During the first quarter of this year, we were able to generate about $75 million worth of proceeds, which is down from $161 million in the first quarter of last year but still a fairly significant amount given the challenges that we face. Now that the process is beginning to resume both on the sales side and the manufacturer side, we're looking at the challenges of trying to readjust our rotation cycle. It's likely going to take us over a year to 1.5 years for us to normalize new trucks coming in and old trucks going out. On the other hand, we looked at the real estate side. We've long said that our expansion in the self-storage market is associated with what opportunities present themselves. So we looked at the developments that we had in process, and we delayed approximately $100 million worth of new projects that were about to be started. We also immediately began canceling reimaging projects and smaller upgrade projects to facilities that didn't have to go through. On the acquisition front, we tried to push as many of our acquisitions out into the future as we could. I think for the first quarter of this year, we reported about $23 million in acquisitions. That's down $15 million from the first quarter of last year, which was down from the first quarter of the year before that. On the construction front, if you look at our first quarter statements, we reduced total construction spending by about $66 million in the quarter. Now that the dust has settled a little bit and we feel more comfortable with our liquidity position, we've begun prioritizing these projects and trying to get them started again. New -- we still remain very selective on new acquisitions. If you look at the last 3 quarters of the chart that was just put up, those quarters do not represent normal activity for us. They're lower than usual, and acquisitions at that level are not sustainable in the long term. On the operating expense front, we took actions on a few different categories. First off, I wanted to point out somewhere where we didn't make any structural cuts, and that was to our field team. Joe felt very strongly that we didn't want to do anything during this time frame that would degrade the customer experience or make it any more difficult for our field team to serve the customers. With the pandemic and all the challenges that came along with it, they had enough going against them that we didn't need to throw any sort of personnel cuts on top of that. We did look at the back-office functions, and we chose to streamline a few areas that, over the last couple of years, had outsized growth in them. It's my hope that over the next year or so, many of those cuts will remain. We also took several actions on the treasury front. Where we're at today, it's hard to remember how everyone felt back at the end of March and the beginning of April, but there was a lot of uncertainty as far as how long business was going to be closed down. So at that point in time, we chose to get as liquid as we could. We drew down all of our revolvers at that point in time. We worked with our lead banking partner and expanded our corporate revolver from $150 million to $200 million and took that down. As a result of the CARES Act, the tax reform provisions within that act gave us the ability to file for over $235 million of refunds of taxes previously paid or deposited with the U.S. Treasury. We monetized those claims in a $200 million 1-year deal with a group of our existing lenders. Since that time, over the last 1.5 months or so, as things have calmed down, we've paid down our corporate revolver by $50 million. We've also received the first $109 million from the U.S. Treasury, and that went to pay down the $200 million tax loan. When we were going into this pandemic in the month of March, cash and availability at the moving and storage segment was about $525 million. Over the last week, cash and availability has been north of $950 million. I wanted to make a few comments about performance. In the first quarter earnings call, I mentioned that July U-Move revenue had increased compared to July 2019. For the first couple of weeks of August, we are seeing similar trends. Looking at self-storage, one of the key measurements that we track is total occupied rooms year-over-year. Throughout fiscal year 2020, we averaged about plus 44,700 additional occupied rooms versus the year before. We peaked in March with an increase of over 50,000 occupied rooms compared to March of 2019. With the pandemic, we saw April and May activity begin to trend down and June flatten off. We've now seen July and August occupied room counts compared to the previous year begin to increase again, and we're almost back to peak levels that we saw back in March. During the first quarter, we added about 1.3 million net rentable square feet to the portfolio. That's about 600,000 square feet off the pace of where we're at last year at this time. In our 10-Q, we report what our owned portfolio looks like as far as square footage. If you combine that with a number of square feet that we manage for off-balance sheet entities, total U-Haul-branded self-storage across the U.S. and Canada is 68 million net rentable square feet. The last 5 years, we've seen significant capital investment in the organization as we've expanded both storage and the U-Move fleet. In fact, in self-storage, over the last 5 years, we've doubled the size of our owned portfolio. So 5 years ago, we had just under 21 million square feet in the portfolio. Today, we're just under 43.4 million net rentable square feet. That represents an increase of about 360 locations. On the fleet side, over the last 5 years, we've increased the fleet size by about 30%. That's about 38,000 trucks and close to 20,000 trailers and towing devices. Our system-wide distribution network of company-operated locations and independent dealers has grown 2,200 locations over that time frame. Our opportunity now over the last several years is to begin to grow into those invested assets. And I believe that we've made significant progress, not just last year. We're making progress now even through the pandemic. With that, I would like to hand the presentation back to Sebastien to begin the question-and-answer portion of the call.

Great. [Operator Instructions] The first question we have is, what is the minimum population in an area to support a company-owned store? How long does it take for a new company-owned store to reach at least a cost of capital return?

Well, obviously, there's a lot of variation in that. Jason, do you want to give your opinion on the time to reach breakeven cost of capital?

Sure. I'll start by talking -- we really have 3 different types of new projects. So I'll look first at a ground-up project, which is usually the slowest. So I think the question was cover cost capital, so NOI, and that's kind of an interpretation here on a project-by-project basis. But on a ground up, typically, we're looking at about 5 years for the NOI to cover the unlevered cost of capital. On a conversion project, that's probably closer to 4 years. On an existing storage project, that could be year 1. It all depends upon how you purchase it. When you -- one of the keys that we have is when we can begin borrowing against that property and lever it up. The sooner you can do that, the shorter that you can shorten that time frame, probably by about a year on each one of those types.

Dennis, maybe you could speak to what is rent-up as opposed to the finances. What's the rent-up profile of a location -- a typical brand-new location?

Typically, brand new, year 1, they -- we come at around 45% occupied. And then between year 4 and 5, we're stabilized between 80% and 85% occupied. So...

Okay. And as far as size of the community, there is no absolute limit. It has a lot to do with what the trade area is. And so you -- there's very small communities. We're in Gearhart, Oregon. It's a community of about 2,500. But the trade area, because of its location, probably goes 20 miles both directions. And so we're able to serve that market and eke out a profit. But of course, we had to buy everything right. We've had a lot of things lined up there. So that kind of shows the range. Ordinarily, you're looking for well north of 50,000 people, but you need to really think what the trade area is.

Are any pieces of the truck business expense structure likely to be notably different as a percentage of sales in the coming years?

Well, Brian, do you want to speak to acquisition? That will be the first thing.

I think the price that we can acquire vehicles continues to rise faster than the ability in some segments to recover it as sales. So that puts pressure on utilization. It's another part of the business that has to increase if the price goes up. And what drives that price is a move towards -- the industry move towards autonomy. That adds cost to the vehicles in terms of upgraded electric platforms. Safety is a constant driver of expense. Automatic emergency braking is the latest iteration of that, where it's something that we certainly value but may not necessarily return itself on -- immediately on sale.

In addition to the capital costs, some of these items are going to be reflected in repair costs. So when we have a vehicle that has an array of sensors in it and it gets in a modest fender bender, you could be getting into the sensors and it gets much more complex than it would have been on a truck 10 years ago. So this is -- these are going to be consistent drivers, and we will have to deal them. And our first line is exactly what Brian said: utilization.

Self-service U-Move was implemented at a great time. Can you talk about the number of these self-service rentals and how they have grown from year-to-year? Are there any problems the system that you need to address?

Well, Kim, that's one for you.

As we've grown and implemented Truck Share 24/7, we've seen consistent growth with customers using the program. And this last year, we performed and outpaced the previous 2.5 years. So we're going to continue to grow with the program. When we do run into issues, we have a team that strives to correct them as quickly as possible.

I'm pleased to see you described consistent growth as last year, you did more than the prior 2.5 years. That's actually accelerating growth the way I look at it. So it's a -- we're not giving out exact numbers on this now primarily because I'm very jealous with our data regarding our competitors. But this is a successful program for U-Haul at this point.

If the cost of new trucks began to rise significantly, how would AMERCO offset that rising cost? Would the company be able to increase rates to consumers? And if not, what factors prevent the company from raising prices?

Well, of course, U-Haul is a need-based business, so there's some people have to move, just have to move. But if you looked at the last 40 years, our growth has been not by putting competitors out of business but by expanding the business and making it more cost effective for more people to enter the business. So as these costs go up, we have to offset them primarily by being -- increasing convenience and increasing utilization. Of course, there would be some price increases.

Approximately, what level of net capital spending is needed to maintain the fleet at today's size and quality? And same question for the storage assets.

Well, Jason, that's kind of a financial question there.

Sure. Thanks, Joe. Maintenance CapEx for the fleet, fiscal 2021 actually was going to look a lot like a maintenance CapEx year for us. We were only planning on adding a couple of thousand net units to the fleet this year. With the pandemic, that's kind of thrown our schedule off whack a little bit, so it will be interesting to see how it turns out. So with our fleet, the pickups and cargo vans, we usually turn in about 12 to 14 months. The box trucks run 10 to 15 years. So if you assume a schedule of about 12 years for box truck, the maintenance schedule for us will be somewhere around of $450 million to $460 million net of reasonable amount of sales. On the trailer component of that, if we needed to really conserve, most of those costs would probably shift to maintenance costs, repair and maintenance costs. We've been spending somewhere to the magnitude of, say, $40 million to $50 million a year on trailers right now. On the self-storage side, real estate side, if you look at our self-storage portfolio, I think maybe a reasonable estimate would be somewhere around $0.30 to $0.35 a foot, which would put us somewhere around $15 million for the self-storage portfolio. And we have, say, another 300, 310 facilities that don't have storage at them, so if you were to layer another $3 million to $5 million a year for those. So I think somewhere around $20 million to $25 million might be a rough estimate if we were ever put in a position where we had to go into just a maintenance schedule for real estate.

And of course, you can always defer maintenance, and that's a little shortsighted. It comes back to you and usually with a percentage increase that's greater than the inflationary cost. So postponing maintenance, I mean we've had to do that in years past. There's some that's discretionary maintenance. You can postpone it, but you will pay it plus interest.

Is U-Box growing? And is it profitable?

Well, Sam, why don't you address that?

Sure. The short answer is yes to both. U-Haul is certainly -- excuse me, U-Box is growing by every measure: revenue, number of containers, customers served, occupancy. And in terms of profitability, Jason has a fairly aggressive allocation of expenses. And our conclusion is U-Haul -- or excuse me, U-Box is profitable, yes.

Jason, do you want to add anything to that?

No, I agree. We have a little bit of an exhibit that we put together internally to help kind of stick our thumb in the air and see which way it's going. And as a -- if I look at kind of an EBITDA margin performance for U-Box versus the overall moving and storage segment, it's now within a couple of points of the overall moving and storage margin. So it's improved by leaps and bounds.

I personally don't believe in accumulating losses to move ahead. I believe a program should be able to handle with marginal cost at the minimum, and U-Box essentially has done that from day 1.

Regarding web self-storage, can you shed some light on the program? Do you see its adoption by independents as an advantage you possess over the REITs as far as site selection?

Dennis, we'll let you try to -- do you want to reread the question?

No, I heard it. You talked about expanding the business. With the affiliate network, we're not looking to manage them. We're looking to help them compete with the big players out there. The affiliates are able to get on our website and be seen by the U-Haul customers. And the customer is also better satisfied in that they have more locations to look at. To the second part of that question -- sorry, I forgot now.

Read the second half about site selection.

Do you see its adoption by independents, meaning the program by independents, as an advantage you possess over the REITs as far as site selection?

Okay. Again, we're not looking to manage them. But of course, we're partnered with an affiliate group. And it is our hope that we establish this partnership and relationship, where should they decide to sell at any point in the future, we'd certainly like them to approach us with that first given our partnership.

I might add to that, that a lot of our affiliates are 1- or 2-store operators, and sometimes, you hear those referred to as mom-and-pops. I'd say you might refer to them as accountants and attorneys or mayors and city councilmen. These are effective, successful people in their community, and they do not have aspirations of a national or regional level, but they have the brains to do that. It just isn't in their particular plan. So sometimes they've got a location that's just whiz-bang and nobody's going to get it who doesn't possess the same local connections. So I think it's -- that way, I think it's a big advantage in location because we're present at the area. But we don't own them and don't necessarily aspire to.

I've consolidated a number of questions on this subject: It's been widely reported in the news that people are leaving big cities. Coupled with the shift to online learning at universities, what have these COVID-related trends done to your distribution?

Well, I'll let Sam talk to U-Box first.

Sure. Well, I got to get a plug in for U-Box. I think, first, you got to say it's a fact that people are fleeing super metros, and it's also a fact that all that demand is affected and constrained our truck and trailer availability, but it's been a big opportunity to transition those customers into the U-Box product. Of course, that conversion process is something we're learning about and trying to refine, and it's becoming less and less a mystery to us. But certainly, a huge advantage of serving those customers with U-Box is addressing those capacity -- equipment capacity problems. It's way easier to backfill U-Boxes into an area than it is to get trucks and trailers back into an area.

I would kind of echo that, that people often wonder do we hire drivers to move trucks across the country and this sort of thing. We have done that. We've tried to -- we've -- railcard things. We've done a number of systems, and they all break even at best if you look at it over the lifetime of a truck or a trailer. So paying to relocate equipment, our standard moving equipment, is a losing bet most of the time, a breakeven when done very elegantly. So part of this perceived exodus, U-Haul has difficulty capitalizing on because once you've rented all the trucks out of Manhattan, that's all the trucks out of Manhattan. Now you're waiting for someone to bring a truck in. And of course, if it's a net migration, you're getting less in every day relative to the outflow. So for U-Haul, jumping on that isn't quite as easy. Now storage has a different impact. Dennis, do you want to talk about how this impacts storage?

Well, with the people fleeing, they're often not taking all of their belongings with them, and they need somewhere to -- they may be uncertain whether they're going to return at some point, what their fears are right now, and they place their belongings and furniture and toys and so on and so forth into a self-storage room for an undefined period of time until they better understand what they're going to do in the long term.

What part have we missed there, Sebastien?

No, you got it. The next question is, there were several references in the last earnings call to, "We found new customers." Can you expand on how you did that? And what is the nature of these customers?

Sam?

Sure. I'll take a crack at it. I think I can think of 2 ways to address that question. First of all, the lessening of our dependence on the last-mile providers has really left a hole in our pickup and van business that we've been fortunate to plug. And where that's coming from, I think we're still trying to figure it. But historically, it's been small business-related customers. And of course, all -- again, this points back to our product offerings like U-Box and Moving Help that provide more service than I think most people picture our trucks and trailers having, and I think that opens up a whole new category of customers. I think Sebastien said found business or something like that. But I think we're accessing a lot of that through folks who couldn't have transacted with us before without a product like U-Box or a product like Moving Help.

Great. Jason, do you have a number that you can quote on what the decline in last-mile business has been for the truck operation?

It's been -- so for the 3 months, I think it was in excess of 20%.

20% of the -- 20% of what?

Of itself from the year before.

It was less or it was 20% less?

20% less.

20% less. I would have gone a bigger number, but there's been a big shift. Amazon did a tremendous amount of business with us. 12 and 18 months ago, Amazon predictably has fleeted up, has a massive fleet now. So they -- that's a dynamic situation. And we knew it was going to happen. It happened about a year earlier, I think, than we really had absolutely planned on, but we've replaced that business with other business. And with the result that we're doing more transactions at a lower dollar amount, which is kind of predictable, they'd rent them by the week or the month and our typical customers by the day.

Can you provide some color on the truck resale market?

Okay.

The truck resale market at this point is -- could be described as good and improving. Where we would normally see declines in prices for any given model year over the months, we're seeing prices hold steady or increase. That is a direct result of the OEMs dealing with COVID with shutting down their factories for up to 2 months at a time. That supply chain shortage has worked its way to the dealers. The dealers now are finding alternate inventory. They're going to the auctions, and the auctions are where we have our off-rental inventory for sale. So that's creating a situation that is good for us in the short term. We're happy to have it, but it's not sustainable forever. I think over the next year, we'll start to see prices normalize. But for now, we're able to sell everything that we're asked to sell efficiently.

You mentioned the automaker several times. It sounds like you interact with them on a regular basis.

Yes. We're constantly in touch with them. In fact, it's kept me extremely busy over the last 4 months making sure that we have day-to-day conversations with them. They have stepped up in a big way to do what they can, to save what we can for this year to make sure that we build what we're able to build. Our supply chain is difficult. Theirs is extremely complicated. So hats off to the job they've done and working with us to get done what we have gotten done.

And I'll put a plug-in for domestic manufacturer at this point. So with that, we'll go back to Sebastien.

Given the growth in e-commerce, especially during COVID-19, will the company need to increase its online marketing and advertising spending to remain competitive?

I'll take that. I think to start -- the short answer is no. To start, we have to all appreciate we've been blessed with this great asset of the U-Haul brand. And it doesn't really matter if you're 9 years old, 99 years old. You know who U-Haul is and what we do. And because of that, we haven't been addicted to this drug of online -- paid online advertising to keep the engine going. And of course, today with COVID customers need us now more than ever, but they're coming to us. They know who we are, and we don't need to seek them out online any different than we have been.

I'll add to that, don't think we're not very active digitally. We're massively active digitally, but that does not mean buying clicks. There's a lot more to this digital environment, and I'm not an expert, but there's a lot more to it than buying clicks in order to keep yourself competitive. An area we're very strong in, I believe we're very strong in, is simply keeping all the maps and the directional apparatus working. You would think that it would just work automatically, but there is so much disruption with road changes, freeway changes. We have a whole team that's simply updating and working with the big people who manage these maps to get every location to show up accurately, to show where it is. We have a tremendous effort in reviews. How many years have we been hard at collecting customer reviews, refusing to edit them and publishing them on the web so the customer can access it? Sam, do you know about how long?

I'm going to estimate 15 years.

15 years. Does anybody know the number of reviews we have up at this point?

Millions. It's millions and millions. I'm going to get 5 million, I guess.

I believe we have 1 million up on Moving Help alone.

We have 2 million up on Moving Help alone.

Okay. We have 2 million reviews up on Moving Help. We're so big on reviews, and I'm very proud of that. And I'll put a plug-in for it. Our reviews are not baloney and lies. And very frankly, if someone knows a site that's not baloney and lies that's not owned by the domain, the business itself, I'd like to be introduced to it. And I include all major reviewers in that. It's a tough battle. They're all out there trying to monopolize the review business, but I've not seen one yet that isn't, in fact, selling reviews. However, they conceal the fact. So our review program is massive. If a customer wants to know how we perform at a given location, it's readily available on the web. To my knowledge -- and somebody correct me if you know, we have never edited a customer review. We have millions of them up. And what came in is what we put up, and that causes a discipline. I said in the video U-Haul is a hard work company. Customers tell you what they don't like. Now you got to go to work and fix it. So that's -- a big part of our digital effort is learning from the customer digitally and then fixing it.

W. P. Carey, a publicly traded REIT list, U-Haul Moving Partners, Inc. and Mercury Partners, L.P., has its largest tenant with 78 properties. They disclosed a remaining term of less than 4 years with an annual base rent of $38,751,000. Are these leases with AMERCO or its related [ show in ] parties? What are the options available to AMERCO, at least expiration, that shareholders should be aware of?

That's a good question. I don't know, Jason, if you want to try that?

Sure. Well, I'd like to start by amending my previous response on the corporate account business, and that's actually off 45%. So you were right on that one. I guess I was -- I'm a hopeless optimist. On the W. P. Carey deal, this was a deal that we did back in 2004 during our restructuring, where these 78 properties, we sold to W. P. Carey. We received funds that were then used as part of the financial restructuring. And then in the leaseback process, U-Haul leased back the nonstorage portion of these 78 properties. So essentially, that would cover equipment rental revenue, moving supplies what eventually developed into U-Box. And then another entity, Mercury Partners, leased back the self-storage piece. If you want to learn more about Mercury Partners, we have a disclosure in our 10-K under related parties where you can learn more about Mercury. And then Mercury contracted with U-Haul to do the property management. So when you look at our property management fees, we earn fees for managing those 78 properties for them. U-Haul's current portion of that rent, I think, is right around $13.5 million, maybe a little bit over that $13.6 million. The -- it was a 20-year deal. So in 2024, the deal matures or terminates, and Mercury Partners has an option to then purchase the properties at that time.

I might add, it's expected to be a noncash event for U-Haul. So that's what our guess is today.

Correct. Yes.

Regarding margins on storage revenue, taking into account the differences in our storage business model versus our REIT peers, namely our smaller-sized facilities, lack of advertising spend, non-dedicated staff and taxable status, do you think $1 of revenue at our mature units generates greater or less EBITDA than the REIT peers, which seem to average approximately 60% to 65% EBITDA margins?

I think that's a little bit of a complicated question. I would kind of agree with the 65% is an overall statement. Jason?

Well, yes. We -- so we don't -- I'm going to say it again. We don't report that separately, but I will try to answer the question. First off, you're right about the size of the facilities. So if you look at a U-Haul branded storage facility, our average size is about 40,000 square feet. If you look at the competition on the small side, they average maybe 61,000 square feet versus 73,000. For a new location that we're putting up, I think our newer locations are probably going to end up being somewhere around 50,000 to 55,000 square feet. And there, our competition is probably pushing something north of 80,000 square feet. On -- I'll try to answer your financial question about how much -- for every additional dollar of revenue, how much goes to the bottom line. If you look at a facility, and Dennis mentioned this earlier, at about 40%, 45% occupancy, you start to cover some of your costs. So from that point on, about $0.85 out of every dollar falls down to the bottom line for self-storage.

Given the current pressure on rental truck demand and weakening truck rental profitability over the last 5 years, why is AMERCO still targeting growing the rental fleet and projecting net CapEx for the year to be $460 million?

Give me the 2 premises one more time.

Yes. Given the current pressure on rental truck demand and weakening truck rental profitability over the last 5 years.

Okay. Well, first of all, I think Jason said we're up 11% in July and August. Is that about what you -- what were the numbers you quoted?

Well, I said that we had improved over July and August of last year fairly significantly. And I would just like to comment that the $460 million is, as I mentioned earlier, close to a maintenance CapEx schedule for us. So we had not envisioned this year being a large year for increasing the size of the fleet. So I think in somewhat recognition of some of the economics that you mentioned that we experienced in fiscal year '20, we were slowing fleet growth going into this. It's going to be tough to project fleet size right now. Some of the challenges that we're facing with trucks are selling faster than we can buy them at this point. So we'll see some movement to the fleet that probably wasn't planned, but by no means was this year projected to be a large increase in the size of the fleet.

Yes. I think this year, we clearly have projected we'd be working utilization rather than net additions to the fleet. And we have several programs flowing from that. With the COVID curveball, a lot of our predictable -- historically predictable traffic patterns have been disrupted, and we're trying to get light on our feet so we can respond to them. But it's -- we catch them and then we lose them. I'm very actively involved in that on a regular basis. We're attempting to find these localities or uses where -- that are, in fact, grown or growing and -- but as I mentioned earlier, it's very cost-prohibitive if you go trying to relocate the fleet by paying to have it relocated. So our challenge is, can we get those -- get vehicles rented into there and capitalize on a rate or utilization increase. So the profitability of the fleet is very dependent on utilization and growing utilization, and we've had an 18- or 24-month pause in our ability to create increased utilization. Our plan going into this year was we would get a net increase in utilization. And I'm not sure how that's going to turn out now. There's been -- Jason may have a forecast. I don't know if you do on utilization or not yet.

Well, I would say that what we've seen in July and August are encouraging, but there's a lot that can happen between then and the end of the year.

Yes. And of course, for better or worse, we came to the party with the truck and trailer customer, and we're at the party with the truck and trailer customer, and we're tremendously loyal to that customer. And they do rent our storage rooms and buy our boxes and a bunch of other things. So nobody else is wanting to jump in on -- in that relationship because it is a hard work business and your margins can deteriorate rapidly. But again, it's something we've developed, some capabilities, I would say, hands down better than anybody else in the industry, but that's my biased opinion. So I would expect we're going to continue to drive on the U-Haul truck and trailer activity, and we're going to continue to see increases for -- as far as I can see in the future, years into the future.

Given that so many U-Haul locations are dealers, how do we make sure that they are properly sanitizing the vehicles?

Well, we have these roughly 20,000 dealers organized behind a fleet of mobile, about 790 mobile managers. And so you can kind of do the math on that, something like 25 units to a manager, and they're mobile and that's part of the job they do. Our business model is premised on the dealer is a responsible, successful person in their local community and maybe could outperform a company location because they have the interest of ownership, and they do not want to jeopardize their business reputation with their other business customers. So it's not as simple as saying we have a secret shopper who goes in and something like that as -- Sam?

I'll chime in on this. I think as you were mentioning earlier, the ultimate feedback loop is reviews. So it doesn't matter if it's sanitizing the equipment. It doesn't matter what it is. If one of our entities is not performing, the customer leaves a review and then we follow through on that feedback loop. And so of course, the COVID-related matters are included in that as well.

Thank you, Sam. I think that's a much better answer and it's driven by that. And if we'll drive on that, I think we're going to be better than any other system I've been able to learn about.

When we open self-storage businesses, do we target underserved markets? Or the demographics of even a somewhat saturated area more important?

Dennis, do you want to take a crack at that?

Sure. Sam gives the short answer, so I'm going to say both. The underserved market is -- of course, everyone wants to be in an underserved market, wherever that might be. In a more saturated market, we want to be there, too. It all has to do with the location within this -- a market and itself. When people describe Houston as a market, I would describe Houston as at least 5 markets. So when we say saturated market and then we use big cities like Houston, we don't do that. In an underserved market, every time we find them, we want to be there, of course.

Congratulations on adding female representation to the Board with the appointment of Roberta Shank. Can we expect further positive improvements in corporate governance? Specifically, would you appoint a Lead Independent Director and form a Nominating Committee? If not, can you elaborate?

I'll take it.

Go ahead, Sam.

Yes. I think -- first, I want to say thanks for the compliment. Sissie, she's sitting right over there. She's been a fantastic contributor and a valuable adviser for sure, and it's my privilege to sit with her on the Board. I think in terms of the specific question, yes, it's reasonable to expect continuous improvement in AMERCO's corporate governance. I would say if you're making a conclusion on the diversity of the U-Haul Company, your first step would be to walk into one of our stores, look at our team members, look at our customers. I think you'll be very pleased with what you'll find. In terms of the 2 initiatives specifically that you mentioned, there's no plans or focus on those at this time.

I want to add to that, that recently, 2 members of our Board, Jim Grogan, who's here today in person, and John Brogan is here virtually, both received National Association of Corporate Directors certifications. There's probably less than 200 directors anywhere who have these certifications. And there is -- according to the NACD, there is no corporation besides AMERCO that has 2 such people on their Board of Directors. So we've taken this very seriously. Tom Hayes, who's a very accomplished person long before he came to me at U-Haul and a well-known fiduciary, has consulted with us on independence for over 20 years. And I think he should be credited with making sure we keep our nose clean on that whole issue.

Regarding Truck Share 24/7, are there any changes you need to make to improve from a technology or awareness perspective?

Where are they at?

We're constantly looking at new technology that comes out, exploring it, seeing if it will make it better for our customers, make it better for our locations. But this is still very much a high-touch point product. We have to have our independent locations. We have to have our corporate locations participating in this program at this time. And so because of that, we are -- it's a constant balance between the tech and the location. So I think it's important to recognize that we are constantly looking at tech. And as we find something that will work to make it better for our customers, we'll adopt it for sure.

I'll add to that. We went into the Car Share business 12 or 13 years ago now and ran that business and actually are just closing it out now because we don't believe there's anything further we can learn from that business. We went into that business so we could get into this business. It's been very deliberate. We've been through a variety of technologies and we'll probably -- I would say you could count on us going through more technologies to be at -- lead the field. Our system is based though on leveraging our physical presence as opposed to imagining that we can simply appropriate public use space through all the cities and towns in North America. We've attempted that, and that's very much what the Car Share model is. And the long and the short of it is I wish them well. They're going to be a lot smarter than us if they make that work.

Please talk to the philosophy and process of determining executive compensation, including metrics evaluated.

Well, I think, first, it has to go to whom do you consider an executive. At U-Haul, we have 5 levels of executive management, myself, my 4 executive vice presidents, 28 regional vice presidents, and 185 local U-Haul company presidents, and then 2,000 U-Haul Company general managers. Our general manager is part of our executive management team. It's routine when I'm traveling that I'll have every single part of the executive management team physically in place at a location, very common. And every one of those people is contributing. The person who actually runs a location runs off a P&L. They have a base and then they have increasing -- increased opportunities based on specific measurable metrics. And they have a P&L that updates daily, closes out monthly, accumulates annually, and they're trying to be familiar with how to use that in conjunction with the review information to make decisions with the customer's money. Most of the money we spend is customer money, and we try to spend it wisely. Above them, we have what we call a U-Haul Marketing Company President. That individual again is on a P&L and a variety of other metrics, and their compensation depends upon that. At the level above that, what we call a District Vice President, compensation is completely discretionary. I would say the same at the EVP and at my level. It's discretionary. The losers won't last too long, but saying you're going to get a big bonus because of X, Y or Z is probably not going to happen either. So does that answer that question?

Can we get an update on how many square feet are under development? How many square feet are in escrow? Can you...

Jason?

The other part of this question, can you provide any development property cohort data? So for example, for facilities reaching the 3-year mark, how is occupancy trending?

Sure. So in the slide deck that we posted, I have the slide that shows the pipeline of new projects. So right now, we have right around 160 active projects totaling, if we finish those off, about 7.8 million net rentable square feet. Last year at this meeting, I think reported 205 of those projects totaling just under 11 million square feet. So you can see the development pipeline has decreased. The number of projects that we own but are not actively working on because they're likely tied up in land use issues is right about even with where it was last year, about 65. Most of those are different projects this year. And then projects in escrow, I think we have around 17. I mean it changes a little bit each week. We've got about 17 projects in escrow. That's down. I mean 2 years ago at this meeting, I think that number was close to 135 projects in escrow. So the pipeline continues to shrink. The second half of that question, I was hoping to forget. That goes back to the disaster of a slide that I presented in the last 2 years showing "older than 3 year" properties and "younger than 3 year" properties. If you noticed, I didn't put that in the deck this year. But if I had, I think what you would see is that we had an increase of probably 78 or 80 properties that now have passed the 3-year threshold and probably another extra 50 or 60 properties drop into the under-3-year bucket. And we're probably doing about 1% worse on occupancy for the plus 3 years because of the -- this was the problem with the slide. As you bring in the new 3-year properties, it dilutes that occupancy. So that -- I think that's all I got for that one.

Why not sell Oxford Life given likely higher returns in your core operations? I can think of a couple of reasons for not selling, taxes and dividend, but I also recognize that there is enormous demand today from private equity for life insurance assets that life insurance businesses have been known to produce nasty surprises.

Sam, do you want to touch that?

Sure. I'm disagreeing with the fundamental premise in the second part of the question. I think probably our short answer is we're happy with Oxford's performance. We'd have to figure out a better way to deploy the capital. I'm not sure I'm personally advocating for something that's such a shinier deployment of that capital. Jason or Joe?

Well, I'd like to take a run at that. I get this question a lot. And in the first part of it, we have to evaluate what are our needs for capital to Moving and Storage segment. And right now, we're not capital-constrained at the Moving and Storage segment. So there wouldn't be a whole lot that we would do with that. I tend to agree that there is a high demand for a company like Oxford. Oxford and its -- the type and size of company that it is, is a shrinking -- there aren't that many of them out there. But the people who are looking for that type of company out there, I think they're looking to do along the same lines as what we do with it, which is that there's a synergy in the investment portfolio for us, where our insurance companies combined have several hundred million dollars' worth of first mortgages on unaffiliated self-storage properties so that there's a natural synergy between us and them in order to underwrite those properties. From a management perspective, the organization at Oxford has been run for decades. It runs very smoothly. I would also argue about the volatility. In the businesses that we're in, there isn't a significant amount of profit volatility up until we hit this year, and that's due to accounting rules and -- but -- and on a return basis -- I get this question a lot in that from a return basis, we don't let them lever up. So they're essentially unlevered. I think they have a mortgage on their office building, and then they have some short-term cash facilities with the Federal Home Loan Bank. But essentially, they're unlevered, whereas a typical life company would be levered to the tune of about 30%, if you layer that on. And then I think it's also fair to -- in the equity component, the last several years, where interest rates are at, the unrealized gain on their investment portfolio is -- has shot up fairly significantly, which increases their equity. So that increases the denominator when you look at their return, and we're a buy-and-hold company with that investment portfolio. So I don't know if that's an entirely fair way to evaluate their return percentage as well.

So to sum it up, we're not unhappy with Oxford Life Insurance.

Kim, you mentioned the growth of Truck Share 24/7. Have you seen widespread dealer adoption?

We have seen widespread dealer adoption oftentimes more so than the other -- our other locations that are outpacing our company stores. I think that it comes down to dealers have -- they're open less hours, have independent locations. This allows them to continue to rent equipment to continue to serve customers, help both their customers and their communities even when they're not there. And so they've really adopted this program as one that's special to them. And in addition to that, they've also adopted the ability -- the other portion of the Truck Share 24/7 process, which is the customer return process. And I think the reason why they've adopted that as well is not only does it give the customer peace of mind, they get to complete their rental, they know exactly how much they owe, and it's done. But it also helps the independent dealers. When they come back, they can easily just process the rental and make it ready for another family.

There's a tremendous physicality to receiving a truck back in off rental. And the technology we've developed streamlines that appreciably for a vehicle that is received in when no one is present. Otherwise, when you receive in a vehicle, it's largely an unknown and it requires a great deal more time to receive in effectively. And we like to believe we have a high standard of how we receive equipment in and this customer return that Kim related is very significant in that regard.

What are the intended benefits of having the ESOP? Does management believe the plan is achieving its intended goals? Do employees understand the ESOP and view it as a valuable benefit?

Multifaceted question. I'll throw that at Dennis and maybe a little bit to you, Brian, is -- what do you think as far as the people perceive that? You've been here how many years?

I've been here 32 years. And if not for 2 divorces, I'd still have a lot more ESOP than I have. But it's still a very, very valuable part of my retirement. It gives me a feeling of participating in a community, and it gives me a sense of ownership. I don't hesitate to tell people that I'm an owner at U-Haul.

Dennis?

Likewise, I don't have -- unfortunately, I only have one divorce. So I'm only half as bad or half have lost weight. Yes. The ESOP program does. Everyone who's been here is invested in the company that has the -- you don't wear system, member name tag. You're an owner of the company. And I know that and the people that work for me know that. And at least in my group, we have, for the company, a high participation rate because we want to be part of something.

As far as the program in general, it's kind of at a decision point because so much of it was, I think what's correctly called, a leveraged ESOP, and we've burned through that or paid those notes off. And so we are at a point we need to reevaluate that. And that work is being done, but there's not anything that I'm prepared to comment publicly on.

Joe, you spoke a little bit about P&L at the store level. Given the frontline nature of your employees' work, the COVID era may be the wrong time to consider margins and profits. But on a longer-term basis, can you speak specifically about incentives at the store level that are geared towards margin and return improvements?

Well, everybody from my area, district vice presidents down is ranked minimum monthly on margin and profitability, every single person. So I would say that we're very interested in that. Now we have a wide variety of stores. I have some very, very modest stores, tiny by today's standards, that we're continuing to run. I have about 400 stores that do not have a self-storage component, and that forms a different economic profile there simply. So it's my plan that we'd be managing that right down to a granular level and doing what's in the best interest of all concerned. I don't know if we have a number of how many stores we have closed this year. Do you have a number? Closing and consolidating stores is a regular function. We're doing that all the time. I'll just be guessing but I wouldn't be surprised if we either closed or consolidated 50 stores this year. And what we're seeking, of course, is a better balance of margin and profits but also of opportunity. When we bring a person in to run a store and bring them into the work group, we view that as a long-term commitment, and we want to have a clear path for them that's reasonable that they could look forward to continued personal and professional growth. And part of that is income growth. And so we have to keep going back through these smaller stores and attempting to find a way to create a better path, better clear path for the man or woman who's running it because they're an integral part of the organization. And we can't focus solely on their present return on investment. Every one of these stores got us to where we are. I am personally fond of every single one of them. And that may sound strange to you, but I'm actually fond of them. I know them. I know their history. I feel comfortable when I go there. It's like I was going to a home I used to live in or something. So how we manage that is -- certainly takes in -- and if you ask the person in the site, they might say we overemphasize margin and profitability, but we certainly do emphasize it, but there's another component to it and we try to understand that also. So is there more you can do? Well, there's always more you can do. And the greatest part of more is helping people learn and appreciate their options in growing this business. And so we talked earlier about found customers at some of our stores. In many of those cases, that general manager or that company president found those customers. Nobody at the home office did. These people rubbed it out. They saw something. They approached the person, tried to learn what the person was doing and then tried to match that up with U-Haul products and services and says, "Is there a match here? And can I communicate that to this individual in a way that they would come and patronize my store?" So having people who are willing to go that far for the company is fundamental to our -- I would say our attitude towards work. And should any of you happen into one of our stores, and I would encourage you to go into it, hopefully, you will find that person and be able to congratulate them on what they've done, be it big or small.

Numerous insiders -- and in particular, Joe, pulled out their wallets during the recent downturn and were significant buyers of AMERCO's stock. Can Joe comment or provide any insight on why he stepped up as a buyer?

Well, first of all, that's a misunderstanding. I didn't buy any stock. I did some estate planning to move some stuff around, but it was -- I didn't buy any stock. It's very confusing how it gets reported. It's being reported totally accurately but not very helpfully. It would be my observation. So I believe that some of my family through another corporation that we control did buy some stock. We obviously did it because we thought it was a good value. And of course, all of us and my son, Sam, here, and I have my -- one of my other children, my daughter here. I've got a 16-year-old who works in a U-Haul store. I expect that we're going to continue to want to support the company and look at it as an opportunity because, of course, we have the opportunity to impact its success and we intend to impact it favorably.

If AMERCO stopped building new storage facilities and just filled the current facilities, what occupancy would management expect the properties to stabilize around that maturity?

90%. You could go higher than that. I shouldn't jump too quick. What do you want to say, Dennis?

No, that's what I would say. I would say 90% on a stabilized -- we've been there before when we weren't adding as many stores as we have in the last 2, 3 years, and I fully expect us to get back there.

I -- again, every month, I rank every store on where they are in occupancy, and we do it on economic occupancy, not on rooms filled or square footage. Economic occupancy is the most rigorous way to define occupancy. And all these managers know I'm reviewing them, then I give them visibility to the whole United States as they succeed. And I have a bunch of tigers out there as far as I'm concerned, and that's been one of the areas. Someone asked about Sissie on our Board as a Director. Well, the next bunch of directors we got are out there working in a store right now, and we brought in a tremendous number of young women, and they're just absolutely -- I wouldn't say -- I shouldn't say young, tremendous number of women. They all look young to me because I'm 71. So if you're 50, you look young to me. But -- so I want to correct that comment. But we brought a tremendous number of women in as managers at that level. And what they are doing right now is they're just percolating up through the whole entire organization. And I would expect that certainly, during Sam's tenure here, we'll see some of those people come into director positions. They're already in area, district vice president positions, and that's the natural process. Talent tends to rise to the top.

Jason, what is the average NOI margin of a stabilized AMERCO self-storage facility? And what is the unlevered cap rate underwritten at stabilization for new development?

So again, I'm going to give the answer that no one likes is that we don't report the margin numbers. As far as the measuring our acquisitions or our developments on a cap rate basis, I would say that projects approved in the last 12 months probably work out to a cap rate of somewhere around 9%.

Which I'll say that's way different from our competitors. And whether that's a good strategy, I worry about all the time. Our competitors, we see routinely at 6% or less. What do you see routinely -- and of course, that's their business model, and that gives them opportunities that we're backing away from. I -- so I worry about that all the time, but we're very interested in survival and don't want to let greed totally overrun our survival instincts.

If the business was in a position where it was generating more cash flow than the business could reinvest, can you discuss if you'd return excess funds to shareholders and how those funds would be returned?

I have no idea, but I'm a shareholder and my family is a big shareholder. And if there was money to spread around, of course, we'd want to get in the way of that, that were just normal human beings. Of course, the other one is there's a tremendous number of people who work here who ought to be in the way of some event like that, too. So I have no idea how that would happen. Ordinarily, we're scrapping for more money rather than having to figure out what to do with too much. But maybe that will change.

And 2 more here before we come up on our allotted time. Because of the accounting for the portfolio changes in our insurance business with a 3-month lag, we normally took a hit on the March decline. On the other hand, you know what tailwind from the June change we will enjoy in the September quarter. Do you expect it to be a positive swing?

So our insurance companies report on a 3-month lag. So when we did our -- we filed our June Q, their investment valuations were as of March 31, which -- it is hard to pick a worse time than March 31 to, one, implement a new accounting standard on expected credit losses; and then two, value the portfolio. So looking at their June results, which will show up in our September Q, there's a pretty big turnaround. So in the first quarter, I think credit losses, expected credit losses and the swing in market value was about a $10 million charge. I think combined and a pretax income for the insurance companies was somewhere around $2.5 million to $3 million. In the second quarter, I would expect that number to get back closer to normal, which is somewhere around, say, $15 million to $18 million.

And then lastly, what is the largest business opportunity for AMERCO over the next 3 years?

I'm not thinking of one right off the bat. Of course, what I have is a group of people who all think their opportunity is the largest opportunity. They're all pitching me on it. So Sam believes it's going to be U-Box. Dennis believes it's going to be storage. Kim says it's in 24/7. I don't mean to be flippant about it, but of course, that's what we want them to do. I would say improving what we're doing now. Our opportunity is to not lose our head and pick a different strategy. To continue to believe that who's going to determine the winner and the loser in all of our businesses is the customer and not necessarily these other forces and factors. Not to minimize them, the government is huge, Wall Street is huge. These are all real forces. But we put a lot of faith in the customer who'll help us survive and prosper in the days ahead. I don't know, Dennis or Sam, if either you want to talk to that.

Well, I agree.

I agree, too.

Fill storage, expand U-Box, rent trucks, keep with the plan.

Well, before we close, I just want to remind everyone that this webcast will be available on amerco.com by next week. So please, if you need to watch a replay, come back to amerco.com, and it will be available to you. Joe, any final comments?

No. Once again, I want to thank you for joining us. We appreciate your feedback even though some things we don't give out, and we appreciate your continued support of the company. It takes a lot of people working together to make this to go. As always, I would like to encourage you to stop by one of our locations and evaluate our products and services for yourself. We're only as good as the next transaction we engage in, and I'm very aware of it and it's a little -- there's a pretty wide spectrum. I look forward to seeing you at the same time next year.