U-Haul Holding Company (UHAL) Q2 2027 earnings review
U-Haul profit rebounds on truck sales, but freight costs climb
U-Haul Holding Company, the truck-rental and self-storage leader, reported a sharp jump in bottom-line profit even though its day-to-day cash profit barely moved. Total revenue rose 3%, while earnings per non-voting share climbed 31% because the company stopped taking heavy losses on retired rental vans. Chairman Joe Shoen called the quarter a modest win and trimmed the storage construction backlog again.
| Revenue | $1.77B +3.1% from a year ago |
|---|---|
| Profit per non-voting share | $0.71 +31% from a year ago |
| Moving & Storage cash profit (Adjusted EBITDA) | $547.6M +0.9% from a year ago |
| Storage development pipeline | Cut to 11.4M sq ft down 20% from a year ago |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because rising operating costs cancelled out steady rental and storage demand. On the positive side, mature storage occupancy stabilised once last year's tenant cleanup passed, and U-Haul stepped up share buybacks to $78 million while shrinking its truck fleet. The bad news: a $24 million jump in freight bills pushed operating expenses up twice as fast as sales, while net debt rose again.
The question now is whether slowing construction and truck purchases will let cash flow catch up with debt and rising operating expenses. Either mature storage pricing and lower fleet spending lift free cash flow, or freight, staffing and empty new storage rooms keep squeezing margins while leverage climbs. The third-quarter cash flow statement and freight line will tell.
🐂 Bull Case
Fewer Losses on Used Trucks Lifted Profit
U-Haul buys trucks for its rental fleet and sells them after a few years, so swings in used-vehicle prices hit its profit line. Last year the company booked heavy losses when it retired older, pricier vans. This quarter those resale losses nearly vanished, which drove a 22% jump in operating profit at the main Moving and Storage division.
- Losses on retired rental equipment: $4.2 million, down $34.1 million from a year ago
- Fleet depreciation (the yearly write-down of truck value): $222.4 million, down $4.5 million
- Total depreciation and disposal cost: 17.3% of revenue, down 2.5 percentage points by our math
The improvement shows that the worst of the expensive post-pandemic vehicle cycle has passed. Still, the gain came from a much easier comparison rather than booming demand. Excluding equipment disposal losses, Moving and Storage operating profit rose 4.4% by our math, and excluding fleet depreciation as well, it rose 1.3%.
What to watch: losses on retired rental equipment in the third quarter. A small loss or gain would confirm that cheaper newer vans are keeping fleet costs down.
Slower Fleet and Storage Spending Funded Buybacks
For years the moving giant poured its cash into new trucks and storage buildings. Now it is pulling back on construction and returning cash to shareholders under a $350 million buyback plan approved in May. “I am going to call our results a modest win. We continue to reinvest, but at an appropriately slower pace,” chairman Joe Shoen said.
In the second quarter the group bought back $78.3 million of stock, up from $48.0 million in the first quarter, leaving $223.6 million on its authorisation by our math. It directed $68.2 million into non-voting shares and $10.1 million into voting shares, a much closer match to its 90% non-voting share split than in the first quarter, though it still paid an 8.2% higher average price for the family-controlled voting class by our math. Meanwhile, the rental truck fleet shrank by 2,000 vehicles from June to 205,600, and U-Haul opened 1.0 million square feet of storage space, down from 1.6 million a year ago.
What to watch: net fleet spending in the quarterly filing's cash flow statement. A large drop will show whether U-Haul is generating the cash to fund buybacks without borrowing more.
Mature Storage Sites Held Their Pricing Power
U-Haul tracks a “same-store” pool of 980 storage locations that have been open for more than three years and stayed at least 80% full for the last two. Last summer the operator cleared out non-paying tenants across its network, which dragged reported occupancy down by 4.5 percentage points in the first quarter.
This quarter the business passed the anniversary of the start of that cleanup, so the same-store occupancy drop narrowed to 1.1 percentage points from a year ago, reaching 89.5%. At the same time, annual revenue per occupied square foot at those mature properties rose 6.7% to $18.99. Because rate increases outweighed the slight dip in filled rooms, total self-storage revenue grew 6.4% to $262.1 million even against a tough 9.7% growth comparison from last year.
What to watch: same-store occupancy change in the third quarter, when the rest of last year's tenant cleanup passes out of the comparison. A flat or positive reading would prove underlying storage demand is steady.
🐻 Bear Case
Freight and Staff Costs Outran U-Box Revenue
Beside trucks and storage rooms, U-Haul rents portable U-Box containers that it ships between cities for customers. The company highlighted a $7.6 million, or 4.3%, rise in Moving and Storage other revenue from “growth of our U-Box product offering” and said it is expanding the service with “additional warehouse space, moving and storage containers and delivery equipment”.
However, day-to-day operating costs grew twice as fast as total revenue, rising 6.1% to $965.1 million, or 54.4% of revenue (up 1.6 percentage points by our math). The biggest culprit was freight and shipping expense, which jumped $24.4 million from a year ago — more than three times the dollar revenue gain of the entire other-revenue line that houses U-Box. Personnel costs also climbed $10.2 million, self-insured liability costs rose $6.2 million and property taxes added $4.7 million. As a result, Moving and Storage profit before interest, taxes and depreciation (Adjusted EBITDA) edged up just 0.9% to $547.6 million, and fell $39.5 million over the past twelve months.
What to watch: freight and shipping expense in the third quarter. Another large increase would show that container shipping costs are eating up U-Box revenue growth.
Debt and Interest Bills Keep Climbing
Even though Shoen is slowing construction, U-Haul is still borrowing to finish its storage build-out while buying back stock. At the Moving and Storage segment, total debt minus cash (net debt) rose 8.5% from a year ago to $7.40 billion by our math, driven by $362.4 million more in real-estate debt and $180.9 million more in fleet debt.
- Net debt to Adjusted EBITDA: 4.5 times, up from 4.4 times in June and 4.1 times a year ago
- Quarterly interest expense: $99.0 million, up 9.7% from a year ago
- Floating-rate share of debt: 10.3%, up from 8.4% in June and 7.1% a year ago
Because trailing twelve-month cash profit shrank while debt grew, leverage ticked higher for a fifth straight quarter and interest costs absorbed more than a third of consolidated operating profit.
What to watch: net debt to Adjusted EBITDA in the third quarter. A move closer to 5 times would test the balance sheet during the seasonally weaker winter months.
Empty New Rooms Weighed on Total Occupancy
To grow without buying expensive land, U-Haul has been recruiting independent hardware stores and gas stations as rental dealers, which management sees as a low-cost way to boost rentals. While that effort has added locations, overall equipment rental growth remains modest and new storage buildings are still opening faster than customers fill them.
Over the past year U-Haul added 4.57 million square feet of owned storage space, but average occupied space rose by only 2.24 million square feet by our math. That gap pulled average occupancy across all 1,652 owned sites down 2.1 percentage points to 74.2%, with the 672 newer or expanding locations sitting at just 60.0% full. Meanwhile, truck and trailer rental revenue grew 3.4% to $1.15 billion. The company said independent dealers, revenue per transaction and local in-town rentals all increased, but it did not report how many dealers it added or whether one-way moving transactions grew.
What to watch: total owned storage occupancy and independent dealer counts on the investor call. Until occupied square footage grows faster than new space, empty rooms will keep dragging on property taxes and staff costs.
Risks this quarter didn't answer
Three standing questions could not be checked from the earnings release because the detailed figures appear in the quarterly filing or on the conference call.
- Fleet spending cuts: the release omits the cash flow statement, so the quarterly filing is needed to test the planned $500 million drop in net fleet spending over the last three quarters of the year.
- Dealer additions: the release states independent dealers increased, but the investor call is needed to see how close U-Haul is to its 3,000-dealer goal.
- Minimum-wage rules: personnel costs rose $10.2 million, and the call is needed to hear whether West Coast wage rules drove the increase.
💲 Other KPIs
Available cash and borrowing capacity at the main Moving and Storage unit edged down from $1,348.6 million in June and $1,479.4 million in March. Segment cash on hand fell by $144.3 million over the first six months to $870.1 million as U-Haul bought back stock and paid for new storage buildings and trucks.
Deferred income — cash customers have paid upfront for rentals and storage not yet used — rose 24.1% from a year ago and 22.4% since March by our math. While small next to quarterly revenue, the balance grew much faster than the 3.1% rise in reported sales.
Combined operating profit at U-Haul's property-casualty and life insurance subsidiaries rose 14.9% from a year ago by our math. Life insurance premiums fell 56.9% to $7.9 million, which cut policyholder benefit costs and helped life operating profit double to $6.2 million, while property-casualty profit held steady at $17.0 million.
🔮 Guidance
Cut. The square footage of self-storage projects in construction or pending dropped by 600,000 square feet from June, or 5.0% by our math, as U-Haul finished 1.0 million square feet during the quarter and started fewer new sites. The backlog of unbuilt space is down 19.7% from 14.2 million square feet a year ago, matching Shoen's plan to slow spending while existing sites fill up.
❓ Key Questions
Why did freight costs jump three times U-Box's growth?
Freight and shipping expenses rose $24.4 million while the other-revenue line that holds U-Box grew $7.6 million. Investors need to know how much of the freight bill came from U-Box and whether U-Haul is raising container prices to cover it.
How much did net fleet spending fall in Q2?
Last quarter management planned to cut net truck spending by more than $500 million over the last three quarters of fiscal 2027. Because the release omits the cash flow statement, the dollar drop in second-quarter truck purchases and sales proceeds is still unknown.
How many independent dealers did U-Haul add this quarter?
U-Haul aims to add 3,000 independent dealer locations to boost rentals without buying real estate, and was halfway there in June. The release says dealer count rose, but gives no number and does not say whether one-way transactions grew.
Why did U-Haul pay 8% more for voting shares?
U-Haul shifted 87% of its second-quarter buybacks into non-voting stock, up from two-thirds in the first quarter. However, it still paid an average of $67.37 for voting shares versus $62.26 for non-voting shares, and has not stated how it will split the remaining $223.6 million.