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

And how many days a week are you open here?

I'm hoping it's 365 days a year.

So if someone saw this video, and wondering, should they be interested in U-Haul dealership? What would you tell them?

Don't wait. Yes. I mean this is a win-win. There is a zero negative loss to you, leveraging the brand that U-Haul has built over the decades, you're going to grow your business. And that is exactly the positive impact this is having on me.

A successful U-Haul dealer invariably has a base business, which has taught them how to be in business. It's just taught them customer service caught them banking, taught them advertising. And so while the base business has evolved over time, the fact that dealers are a substantial contributor to the overall service we provide has remained the same. Our independent neighborhood dealers out number company-owned and operated locations, 10:1. Even with a great number of stores and independent dealership we have today, I see much more opportunity to expand our service footprint, particularly with the fleet capacity we possess today. With service minded dealers, we can do so in a very capital-efficient way and build the resiliency of the dealers base business, share the profitability with the local economy, reduce emissions and vehicle miles traveled all the while meeting the needs of the moving public.

Hello. Welcome to the 2026 U-Haul Holding Company Virtual Analyst and Investor Meeting. Thank you for joining us today. During this meeting, we'll take a look back at our performance in fiscal 2026 in the first quarter of fiscal 2027. 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 the company'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 initiative. This is our 20th consecutive year hosting a virtual meeting. Joining me today are a few key people from the organization. Joe Shoen, Chairman of U-Haul Holding Company. Joe has served as Chairman for 40 years and has worked at the company for 50 years; JT Taylor is President of U-Haul International. JT has held this position for 20 years and has been with you haul for 45 years; Jason Berg is our Chief Financial Officer, and has worked at U-Haul or a subsidiary for 30 years; Parul Butala is President of America Real Estate Company as of this year. She was previously the Director of Land Use and Planning and has been with the company for 32 years; Royal Shoen is the President of U-Haul Company of Eastern Arizona. She has worked in a variety of roles at the Home Office and in the field over the past 13 years; Eric Regan is Vice President of Dealer and Area Field Manager Operations. He has held this role for 4 years and has been with the company for 21 years. [Operator Instructions].

Our first question is, on the dealer growth efforts on the earnings call, you said you were about halfway to the finish line on new dealers and 1/3 of the way on a revenue basis. Can you talk about how you're making sure that you're adding quality dealer to the network? What efforts do you have going on to help dealers be more effective? Eric, it sounds like one for you.

Yes. When we add independent dealers, and we partner with independent business owners, one of the things that we look at, as part of some of the characteristics is that, they're open 6 or 7 days a week. When the dealers opened that amount of time, we're able to have the equipment available to the customer. We're able to utilize the equipment better. We also have area field managers that manage these locations. They have access to a lot of different types of data points and information. So this allows them to determine when and where to add dealers. They also have historical information of where dealers used to exist and may not exist today. And so with that, they can kind of go back in time and see if adding a dealer where we previously were, it would make sense. And then as far as how we help dealers be more effective, as part of our 3,000 dealer push, we are from day 1 opening dealers with equipment that's available in that area. This allows us to serve the customer right away in their community.

We recall that you target a 10% unlevered IRR on storage. What has been the IRR for the past 10 years? Do you still target the same 10% IRR going forward? How has the new storage put in, in the last 5 years performing? Are they still reaching 80% occupancy by year 4 or 5? Jason?

Thanks, Sebastian. I'll start off with the last part of that question first as far as the occupancy performance. So we've had about 500 properties here that have matured past 5 years. So fiscal '21 and before when they went into service. Those properties actually were reaching occupancy levels ahead of schedule. Normally, if you would project stabilization in year 5 at 90%, we were getting the 90% at the end of year 4 and 95% at year 5. Now those properties all benefited from the work from home boomlet there in fiscal '22, '23. For the properties that we've opened the last 3 years, so they've -- in which case, it's a much smaller group that's actually completed 3 years. But the ones that have completed 1 year in the 2 or into the third year. We're seeing those lag about 8% to 10% on occupancy right now. The first part of the question, I think, was return on invested capital. Or I'm sorry, what -- it was IRR. So our target when we're approving new deals has traditionally been the breaking it out into three pieces. When we're looking at existing storage facilities over the last 12 months, this is a pretty small group of properties. We're still targeting 10%. And we think when we go into the deals, that's what we're going to get. If you go back out 5 years, I think the average number is probably closer to 8.5%. The next largest cohort of properties is our conversion properties. On those properties, we're much closer to or just above 10%. Those are some of our best returning properties. And now the largest expansion cohort is the ground-ups. And on ground ups, over the last 12 months, we've been just below 9%. If you were to look out -- I'm sorry, just below 10%. If you were to look out over the last 5 years, we're probably targeting just over 9%. So if we've taken a little bit of liberty on entities deals, it's going to be the ground ups.

Why has U-Box revenue slowed in the recent quarters? On a head-to-head basis, does U-Haul typically have a lower price than competitors on the same route? Are you seeing competitors using unsustainable price to compete for market share? Joe?

Yes. U-Box has ebbed and flowed. And oftentimes, my observation has been it's been our activity or our failure to act. So I wouldn't say U-Box has slowed is an accurate statement. When you talk about price, it's very difficult to get a real price comparison that's absolute apples-to-apples -- our product offering is such that we're able to present the customer with what the customer sees as a very competitive price. And we expect we'll be able to do that ongoing. That was a structural decision we made early on. And additionally, to my knowledge, we are the only people who will actually quote you and honor a real-time price. And in this current freight market, that's been a little bit of a task for us because we're seeing it constantly escalating prices. So it's difficult to have posted prices, but we maintain posted prices, and we believe the consumer wants to see them. Finally, is the actions of the other competitors in the market sustainable? I don't know that would be their question to answer. Obviously, Pods, the Pods organization has been more aggressive on advertising in the last several months and I think more aggressive in the marketplace.

U-Haul is a time in place business, in other words, having the right equipment in the right place at the right time. How is management employing AI or other information systems to improve the time place aspects of the equipment fleet? How is management deploying and testing AI in the company? JT, you want to take that one?

Sure. I think we're doing far more than just testing. We are productively using and employing AI throughout the company. We're curating the customer experience and the app online, in person on the phone. We're utilizing it for our front line to better identify who our customers are, matching identities, which speeds the rental process. This especially helps with our 24/7 rentals, using our own data and AI to really get a best fit for our -- Moving Help customers with our service providers. And I think that's delivering a better customer experience as well. We're using AI Assistant in our contact center, which helps them kind of maintain a set of a knowledge base, I guess, I would call it, that each agent, regardless of the experience they have in the center itself can answer customers' questions and help the customer in a more unified, consistent manner. And of course, our IT and development groups are using it on QA and many other areas. And there's far more than that. But the question hit on time and place, that's. That's something that is, of course, important to our equipment distribution. We've been building tools for the last 40 years that help us do answer that question. And I don't know that there's any singular solution to fleet distribution. I think we'll continue to use those tools effectively, and I'm sure we'll advance those tools as we move forward.

What is the historical return on invested capital on the self-moving side? Jason?

Okay. Well, I'll start off first with a 5-year look. So over the last 5 years, if you kind of do a rolling quarterly average, I think we're about 7.5% take that out to 10 years, we get closer to 8%. And then at the 15-year mark, that's where we're real close to 10% or just above where the S&P 500 has been at. So the question you're probably getting to, and I did kind of slide past, I think you said the Moving business. We don't have a separate calculations that we report publicly between the Moving and the Storage business. So I'm referring to the total company return on invested capital. What's been happening in the last 5, 10 years that's caused the number to slide down. Over the last 10 years, I'd say we've had conservatively speaking, somewhere between $700 million, maybe $1.7 billion of invested capital in real estate projects that haven't yet opened, right? And then you think about that's just the capital and properties that haven't opened. If you then extend it out to ones that are working their way through the occupancy cycle, you have even more underutilized assets. So I think at a minimum, that's 140 basis points to 150 basis points of the downward slide. And then if you look out over the last couple of years where it's been even worse than the 5-year average I reported. You have that same issue on self-storage. We've now also built in some excess capacity on the fleet side, which has costs running through it without the same level of utilization that we would historically expect. And then we've had the pickup or the cargo van fleet issues on resale and the insurance cost. So fortunately, most all of those things are transitory, and we're working our way out of them. We made some progress here in the first quarter. But the heavy lifting to get us back up to historical return on invested capital levels is really on the revenue side. Its the asset utilization. We have to fill the storage rooms, and we have to get these trucks dispersed to their distribution points and rented.

Is U-Box cannibalizing storage Parul, do you want to take a shot at that?

Yes, sure. Thanks, Sebastian. Is U-Box cannibalizing storage? I don't think so. There may be some overlap, but I think we are comfortable with that. To me, the question is not whether a U-Haul product occasionally replaces another U-Haul product. But the important thing is whether we are able to address and provide the right solution to that customer walking into our doors and keep that customer within the U-Haul network. When we develop storage locations, our U-Haul locations throughout U.S. and Canada, we try to co-locate both U-Box and Storage because we believe it's complementary. Traditional storage is for the customer who wants recurring convenient access to their belongings over a generally longer period of time, whereas U-Box is geared towards the moving customer who needs temporary storage, portability and delivery options. And U-Box also provides additional capacity when storage rooms are full. So no, I don't think it's cannibalizing at all. I believe it's very complementary to our business.

Royal, is that how you're seeing it in the field?

Yes. I agree, Paul. Our greatest opportunity though is helping our team to understand the selling differences between both U-Box and Self-storage, and then being able to determine who is a Self-storage customer versus who was a U-Box customer.

Great. If a low growth moving environment lasts for another 2 to 3 years, and you're adding a huge number of dealers, do you think you can gain share with them? Essentially, you could gain share while reducing or maintaining the equipment fleet? Eric?

Yes. I believe, historically, as U-Haul has grown over the years and our other organization has grown, we are creating greater customer convenience to the customer. When we do that, we are able to drive on increasing our transactions across our dealer organization. So when we're able to do that, I think we're going to serve the customer. And at the same time, we can do it while maintaining our same fleet size.

There's a chart that you've shown in the past that shows U.S. moving trend for capita declining for the past 40 years. How has it been trending in the past 3 years? Do you still see unmet demand for self-moving, and how large do you think the market is? Joe?

Sure. We've -- there's statistics. I think most of them come from the U.S. Bureau of Census on moves and they showed pretty much a steady decline over 40 years. Over the last 3 years, I don't think the data is sensitive enough to really say there's been any change to that. How big is the market? Well, it's vast. We're certainly not serving half the market with U-Haul. It's a vast market. And when we increase convenience, as Eric talked about here just a moment ago by introducing more dealers. But we -- our experience tells us is that we will increase overall transactions it may or may not change share. There's a lot of calculations that go into determining what is share and there isn't a universally accepted standard for that. But it will change overall transactions. And that's really what's driven our economic line in the opposite direction of moving trends for the last 40 years.

Since the company has added assets in recent years, it has also accumulated more debt. Debt has become more expensive generally and interest expense is consuming an increasing amount of corporate earnings. Net leverage has doubled in the last 4 years from 2.3x to 4.4x with operating margins under pressure, does it make sense for management to prioritize debt reduction in its capital allocation decisions. Jason?

Thanks. So to be fair, the range that you gave, the 2.3x to where we're at today, we weren't ever going to be running the organization at 2.3x. You kind of caught us at the moment of greatest liquidity, at that point before we really deployed the capital fully. So we went from that range to now where we're at today, 4.3x, 4.4x, which is a little bit outside of our comfort zone. I'd say our comfort zone where we feel we've optimized capital is in the 3.5x to 4x net debt-to-EBITDA number. So with those -- with the current leverage number that we're looking at now, that means we're either $650 million heavy on debt over $170 million short on EBITDA. So the answer is probably somewhere in between those two numbers. So what we've been doing to address that is we started this several years ago, actually, Joe started scaling back projected future spending on real estate. And then this last year, we took the step of taking our fleet plan and switching it to just a rotation-only or what some of you might call maintenance CapEx here on fleet. So that generated -- that will generate some additional free cash flow this year. And we made the decision this year, the Board of Directors and management to then deploy that additional free cash flow towards the share repurchase plan. So I think investor sentiment has been fairly positive on that. We may have had a little more excitement from that versus if I'd come out and said we're going to pay down debt, $350 million. But the plan going forward is we think we're probably going to peak this year on our debt levels. And absolute dollar of debt is probably going to begin to decrease. And then in the backdrop, the plan is for earnings to increase, then the ratio should stabilize on its own.

How has the rollout of toy haulers gone versus your original expectations? What are some of the secondary benefits such as opening up a new customer base? JT?

I'd say we are pleased with the rollout the toy hauler. Joe sets a strong expectation, but I think if you -- as I look at it, we have met our expectations related to manufacturing. Our distribution has been strong. it's contributed to our revenue lines. I think if I looked at the most exciting part of that is we -- I would say we exceeded our customers' expectations. We sent out surveys we've been sending out surveys to the customers that are renting trying to learn more about those customers and found that they're using it for far more than simply moving vehicles, moving their vehicles on a move. They're -- they're using it -- they send pictures in, they'll have airplane fuselages on the top of it, a helicopter body, farmers going to take their crops to market. We've had sale boat among so many other things that they do. So -- and again, the length of it has been a very big positive because you see people taking lumber, baseboards, things like that. So additional use has been -- maybe for myself a bit of a surprise, a pleasant surprise. And so yes, there's much going on with the Toy Hauler. I think it's been a big positive.

The customer demand is so high on my logs that I can't even keep the equipment. They're selling like hot cakes. But in regards to the new customer base, are seeing in the field that the Toy Hauler has opened up the off-road and overlanding markets for us.

Great color there. It sounds like you feel like the competitive backdrop for U-Box is tougher now than 1 to 2 years ago. Is that accurate? And do you think the big players in the market are being rational? Joe?

Read that one more time?

Yes. It sounds like you feel like the competitive backdrop for U-Box is tougher now than 1 to 2 years ago. Is that accurate? And do you think the big players in the market are being rational?

I don't think the market is so much more competitive, where we have some cost pressures due to increased freight, but the actual market I see is expanding as people become more familiar with the product and its availability. So as you probably get from seeing our dealer organization, we attempt to broadly serve the country. So we have U-Box firmly in every major market in North America, that's United States and Canada. And that is going to just increase awareness where most of our competitors service less than a total market. So customers always has to find out, do you go there? Well, it's U-Haul. They know we go there. So I think that, that alone is going to continue to build this market.

I know and hope Joe is not going anywhere and strongly suspect CM is waiting in line, but some general commentary about how management and the Board is thinking about this would be welcome. Joe?

That's a succession question?

Yes.

Okay. Well, first of all, I'm healthy and enjoy going to work. So there's not likely to be a big change there. Of course, succession is always a possibility, and it will eventually happen. One thing that investors in the outside normally doesn't see is the most of our general management is distributed across the country. We have candidates that people watching this webcast will be surprised. I'm confident that when I'm no longer in this position that the Board will have several good candidates.

You are reducing CapEx for the Fleet and adding dealers. Does this imply that Fleet is moving off of owned and operated sites to dealers? This seems like a difficult thing to execute efficiently. Do you think this is holding back your ability to capture market opportunity while this is in flight? JT?

No. I think it's the opposite of holding back market opportunity actually. I think we saw that today with the dealer that we saw at Prescott Cleaners. I think dealers if they're open strategically, which that one was, if they're given a piece of equipment, as Eric had commented on earlier, to start off with, I think that's a powerful way to do it. I think increases our overall market penetration. And whenever we're increasing market penetration and increasing convenience at the same time, which adding dealers does, our equipment is highly utilized. Our customers win and we end up increasing transactions. So I think no. We want to have equipment utilization. Now we have to have a plan to do so, which you've heard about. And if we -- the question is, can we execute on that plan, and I believe we can.

How has the sales effectiveness or market uptake been in toy haulers between dealers and operated locations. Eric?

Yes. I'm lucky to be in a position to get a lot of feedback from our field teams. And there's a lot of excitement behind the product. There is -- this product has given us a way to say yes to more customers. I also have the opportunity to be part of the dealer message board system online, where dealers are able to interact with one another. And they share all the time whenever a toy hauler lands on their lot. They love to share pictures of what customers are using them for. So there's absolutely some excitement behind the product. And like I said, it allows us to say yes to more customers.

This is a big question here on modeling. So it might be one for Jason. One of our core investment premises for U-Haul is the significant operating leverage the company achieves during demand spikes, similar to what was observed between 2020 and 2022. Since 2022, management has deployed significant capital to expand capacity, notably through the resurgence of the fleet rotation program, adding independent self-moving dealer distribution points, expanding self-storage square footage and scaling up the U-Box program. In management's estimation, how much has U-Haul's overall capacity to serve both the self-moving and self-storage markets increased compared to the baseline of when COVID began in 2020? And how should we model the potential operating leverage of this larger footprint when the next demand surge occurs? So how should we model the potential operating leverage of this larger footprint when the next demand surge occurs?

Okay. Well, you pitched it to the finance guys and you're going to get it in terms of revenue. So the Fleet where we're at today, we've grown the Fleet over the last couple of years for a variety of reasons, not all being expected future demand. There's always -- you're always watching this the supply for trucks and want to make sure that you have enough going into the future. But in regards to the opportunities that we see, we focused on the 3,000 dealers. I guess the best way that I could answer this question off the cuff would be taking the current fleet that we have today, looking and then taking the average utilization rate for the fleet, I'll take the years before COVID because those were unnaturally lower than unnaturally high. And if you were to rerun the size of the fleet that we have today against those utilization numbers, we could handle somewhere north of another $330 million of revenue with this size fleet. I'm going to caveat that and say that that's kind of a low floor estimate of what's capable, with the size of the fleet. Every year, we get a little bit better at managing it, and that should get better. On the Storage side, we have a slide that addresses this in the investor presentation that if we were to just take the existing storage facilities that we have today and get them up to 90% not assuming any improvement in rate, that's another $288 million, $290 million there. When you already acquired the assets for the model purpose, you're talking about operating leverage. On Storage, maybe not so much on trucks, you're talking about something probably north of 80% of that an operating leverage figure against that revenue. And then for U-Box, it's a little bit harder to model. We certainly have the containers we have the covered storage space that we can grow into that. If you were to just take our covered storage space and call it self-storage, it's another 17 million square feet of self-storage that we have in the system. So I don't have a specific number to put to that yet because we don't have enough containers to fill that. But I think the first two will get you pretty close to what we think we could probably do over the next several years.

This is one on buybacks and use of capital. Due to the fact that we are slowing down purchases of moving rental equipment and slowing square footage growth in our Self Storage portfolio. Naturally, we would be generating substantial positive free cash flow over the next 18 to 24 months. our artists have appreciated nearly 40% since the announcement of the share buyback. Is it clear now to management and the Board that the best use of our excess capital is for share buybacks. Any response to that, maybe Joe or Jason?

Well, I'll start. It's not like we discovered the math in the last 6 months. I have Kevin Hart, my Treasurer and I have a very educated guess on what cash is going to be between now and at least the next 12 months looking forward. So knowing what our cash position is, that helps dictate how much capital we have to allocate. And I think I kind of answered it on an earlier question that decisions that we're making on the operations side to allow them to grow into the assets that we've already purchased, has given us a little bit of flexibility to open up the capital allocation. And as soon as that became available, we made the move to do a share repurchase. And if rooms fill up and the trucks begin to rent, our first and foremost priority is to allocate capital to growth. So you can count on that taking place. Then we have the share repurchase, and then an earlier question was asking when are we going to pay down debt? So between all three of those things, I would say growth comes first and then some management of the leverage level other than the share repurchase has been as you noted in the question, has been successful.

What is management or the Board's opinion on why there is a 14% delta between our voting and nonvoting share prices. Jason, you've looked at this a little bit.

Yes. So -- we've had -- I've spoken with a lot of people that are listening to this call, people that are investing in the stock. We've had outside experts that we've engaged to help us try to understand this. We've we've played around with different allocations on the share repurchase program to see how that would affect it. At the end of the day, I don't have a real good answer as to why the people listening to this call are choosing to invest which class stock that they choose to invest in. We don't really see a huge difference economically between the two classes of shares. One has a vote and you can determine the value of that vote given the ownership structure that we have. And the other one has a dividend attached to it. And for whatever value that you attach to each of those, I should say that the nonvoting has a greater number of shares. There's more liquidity in that class of shares. So we would have thought that they would have traded closer. We've tried to do everything we can to assist with that. But at a certain point, you kind of leave it to the market, and you guys decide.

You have long said that moving activity is closely linked to the economy overall. Moving equipment revenue has been modestly positive for quite some time. Do you think the economy overall is still the main driver of moving activity? Or do you think there is a particular sector of the economy that is driving it like housing or apartment rental? JT?

Maybe I've said this before, I think now having been here for 45 years. I think the main driver, and I'm still firm believer, is life's events. I think people get married, changed jobs, sadly die. There's birth, those type of events, I believe, have the -- is a major factor and a driver in what we're seeing in transactions and moves being made. Certainly, housing and apartments being built, there's a bit of cyclicality to it. And I think it's there, but I think really life's events have the major impact on moves being made.

I might add to that. I think also people on this call are interested in revenue. And clearly, we see a larger ticket for a variety of reasons, when things are booming and when they're not. But berths and marriages and divorces and deaths don't really change. They're pretty much a basic demographic and our challenge in the 40 years, JT and I have been working together has always been, well, how do we beat that demographic because there are a new pocket of business. Is there a product, we'll say, the toy hauler that is serving, as Royal said, the off-road and overland market, which then brings them in and creates another dynamic. So now as a result of that, we're real hot with [indiscernible] straps right now. They're just hotter in a pistol, and it was kind of a lethargic product in our store before. So part of this always is a little bit of self-discovery, but the -- I think people would be making a mistake if they tried to find a single or even two or three indicators say this is going to drive business. I think you would be disappointed. We have tried to do that many times and not succeeded in having something that had a better correlation than overall consumer sentiment. I can speak to our low points. Typically, it's we've shot ourselves from the foot. We [indiscernible] going to the [indiscernible], that's in retrospect, what I would say. So try not to make a mistake and then -- can you just beat the demographics a little bit.

Can you talk about where you are on capacity of U-Box containers and warehouses? Are you paring back investment to grow either boxes or warehouses this year. Parul, do you want to take a shot at that?

Yes. Thanks, Sebastian. Building a U-Box locations throughout U.S. and Canada has been a top priority for our real estate group. In fact, in the last 5 years, we've actually doubled our covered space capacity. Currently, the U-Box container occupancy sits at about 67%, and our U-Box utilization of the covered space is at about 34%. Now the difference in this utilization -- the difference in between the occupancy of the containers and the utilization of the warehouses intentional because we have to build these U-Haul warehouses well ahead of demand because it takes so long. For example, I'm working on a project in Hayward, California across the bay from San Francisco for a U-Box project, and it's just taken several years. In markets like these, industrial land is just scarce and expensive zoning and entitlement processes are really complex and the construction time lines are extremely lengthy. So we have to look ahead and plan our investment for our infrastructure much before customer demand. Now having said that, we are not slowing our investment in containers because demand and utilization remains strong. But however, we are slowing our investment in warehouse space because we have built enough warehouse space to meet future demand. So we have built infrastructure ahead of demand. And now we just continue adding containers and wait for the warehouse occupancy to catch up.

Moving in Storage. Usage has clearly been linked up over the years. Has there been -- or can there be a linkage from using toy haulers to self-storage? JT, what do you see?

I don't have a specific metric or statistic on that exact toy hauler linking directly up. I would say that the toy hauler has created more customer transactions. And anytime we get more customer transactions, you're getting overall that direct connection between customer transactions and self-storage, I think, is what you said. So -- and there probably is a link. Royal you may have a little better color of touching the customer as close as you do.

Yes. What I've seen in my centers actually is those same off-road customers are the same customers that store vehicles with us. via our RV storage or vehicle storage options.

Can you talk about the cost pressures in Q2 regarding U-Box and Freight, Joe?

Sure. Freight is up and it's likely to stay up a little while. If you track Freight for 20 years, which I'm sure some of you have, it's very cyclical. It goes up and down, up and down. Two big factors are hammering it today. One is driver availability, and that's been in the press for the last 18 months to 24 months. And of course, of fossil fuels. So a variety of world events have driven up fossil field. So both of those are on. And the freight companies, when they -- because they get beat down in load periods when demand is -- or supply is tight, they're very aggressive on pricing, that's putting it bluntly. So they get any excuse to put in a surcharge, they're putting in a surcharge, and they've gotten plenty of excuses lately and they're getting away with surcharges. So we do mostly less than truckload, which is a lot harder to hedge or contract out. We try, but it's not quite as clear cut as you'd like to imagine. So we're stuck with that. As I mentioned earlier, we actually quote a price instantaneously to you. So our competitors are going to tell you we'll get back to you, then they will then quote a freight carrier, for instance, and they'll do whatever markup whether they consider appropriate. So we don't do that. We go right to a price. We think that gives us a tremendous advantage with the consumer. But right now, we're getting margins squeezed. I expect you'll see that ebb and flow over the entire life of U-Box.

Moving activity is stuck with low growth and U-Box has outperformed generally over the past few years. Do you still get the sense that U-Box is not taking share, but is instead additive? Joe?

Well, again, someone here said it earlier, maybe it was Parul. The customers are a little different. Certainly, there's some overlap. And of course, when we had no U-Box then we told them a truck was a perfect solution. The first I can remember moving in the Shoen family, we had 7 children, 2 cars, a big house and U-Haul Solution was 2, 12-foot trailers. We said that's why big family needs to move 1,200 miles. Well, of course, today, my life would just divorced me if I said that it was just a couple of us moving So I told her two, 6 x 12 trailer will do. It's a ridiculous proposition. But you kind of got to sell what you got. So we now have this additional card to play. It's sure there's going to be a little bit of crossover, but really, you're going to reach new customers and get a higher satisfaction level. Parul, said that our goal is to keep these people in our orbit not necessarily to slaughter them in any one transaction. We're going to keep them in our orbit, keep them coming back. They'll move multiple times over their life, have multiple occasions to do business with us. So I don't believe it cannibalizes the business enough to just even whistle at.

Actually I have the understanding that the Gen Z understanding of U-Box is "for the girlies that don't drive". And what they really mean by that is the customers that want convenience. So the people that don't want to rent a truck and then drive to a storage facility to then complete their move. So the people that want it, delivered to their house. And with U-Box, we can deliver it, we can ship it, we can store it. And at U-Haul, we are the moving experts. So U-Box allows us to say yes to all moving customers.

Got a question on margins here. In the past, you've said you expect the Moving and Storage business to reach EBITDA margins in line with or above the 10-year average, which is 33%. And do you still expect to achieve mid-30s margins? If so, what needs to happen to get there? And how long will this take, Jason?

Well, how long is it going to take is the big question. And I guess what I can say is there is no structural reason we can't get back to that level. Each time I look at it, our results the last couple years, there's always oh, well, if, but. We -- a little saying I won't get into on that. But there's last 2 years, there's always been something that's come up that has kind of set us back a little bit from the pace. So last year, at least on the EBITDA margin, 'twas the insurance expense, right, the self-insurance liability and we made up a lot of space last year, and we don't think that that's going to be as much of a headwind this year. It really does get back to filling rooms and renting trucks. It's really more of a revenue issue. And we either get to that point or you have to scale back the capacity side. Right now, we don't see any reasons why we should veer off of our path. We think we can grow into these assets and we're going to. So is that 2 years? Is that 3 years from now, it's going to take a little bit of time to do that. But getting back to those margins, I just don't see a reason why we can't do it.

I think this next one might be a good one to end on. What is the company's strategy in choosing to allocate buyback dollars toward voting shares versus nonvoting shares? I might have thought you would favor the nonvoting shares given the cheaper price but it seems like the voting shares are being favored. Jason?

Okay. So certainly, through June, we tried out a bunch of different strategies to see what the effect would be for our purchases on any given day. So there was a whole bunch of very idiosyncratic type of buy orders that we put in. If you've listened to our update since then, the allocation has certainly shifted a little bit wider from what it was in June, as we've seen the appreciation and the shares since we started buying. So we're not locked into any specific allocation for that or we're not even locked in to continuing to buy from there. But once we report the next quarter, I think you're going to see a wider allocation, I don't think we're going to see 9:1, but it will be something much closing.

I might add to that, in addition to Parul. When we did the stock dividend, we believe people wanted to see more shares total outstanding, and they believe that might help improve liquidity, and so in a lot of ways, again, I'm no stock expert, but in a lot of ways, the lesser shares have less liquidity and taking them some out of the market just furthers that goal as far as I'm concerned, and point us where we were asked to go by the shareholders, and we have responded.

Thanks for that, Joe. As a reminder to everyone, this webcast is available for replay right where you came for it in the Events and Presentation section on our website. Thank you for your participation today and your ongoing support of the company. Take care.