U-Haul’s parent company saw a big revenue gain in self-storage during the quarter ended June 30.
The parent company, Amerco, posted a 16.7 percent jump in self-storage rental revenue compared with the same period last year, racking up more than $49 million. Revenue in Amerco’s core business — truck and trailer rentals — climbed 11 percent in the quarter, accounting for $580 million. Overall revenue grew 10 percent, totaling $824 million.
U-Haul’s self-storage rentals made up 5.9 percent of total revenue in the first quarter. The company earned profit of $124.5 million during the quarter, up from $113 million during the year-ago period.
Amerco announced results for the first quarter of fiscal 2015 on Aug. 6.
Growing occupancy
Compared with the four publicly traded self-storage REITs, U-Haul’s occupancy rate lags by about 10 percentage points, but the company is working to catch up. Occupancy at its self-storage facilities grew to 82.3 percent at the end of the first quarter from 80.2 percent during the same period a year ago.
Jason Berg, chief accounting officer at Amerco, said during an Aug. 7 conference call with Wall Street analysts that roughly 65 percent of U-Haul’s storage facilities boast occupancy rates higher than 90 percent. Properties purchased during the first quarter had an average occupancy rate of about 62 percent, he said.
“We’re throwing lower-occupancy product into the mix, and that tends to water down the overall rate,” Berg said. “On our seasoned facilities, we certainly have the ability to manage those as well as anyone else in the business.”
U-Haul has added nearly 2 million square feet to its self-storage portfolio since last year. During the first quarter alone, the company added 13 facilities, representing 480,000 square feet.
U-Haul is working out “hitches” in its U-Box portable storage program.
Portable storage
The company continues to develop its U-Box program. In this program, a customer’s portable storage container is shipped by U-Haul, and then stored until the customer is ready to retrieve it. Expenses related to that program rose during the first quarter, but Berg declined to disclose the dollar amount, “largely for competitive reasons.”
U-Haul recently tweaked the U-Box program by creating a point-of-sale system and a fleet management system, both aimed at improving customer service. With the recent changes, Berg said, the program is close to making money. U-Haul is trying to overcome challenges associated with long-distance shipping of the boxes, he said.
“We’re trying to work out those hitches,” Berg said. “With this new system in place, I think we’re poised to take on a whole lot more business than we currently have today.”
Berg said U-Haul is “investing a whole lot of energy” in beefing up the U-Box program.
“I would say that there is probably more of an opportunity in this business — at least that’s my opinion — than in the truck and trailer business as far as getting to places where the competition isn’t right now,” he said.
