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Jason Berg

Thanks, Joe. So yesterday, we reported third quarter earnings of $67 million compared to $99 million for the same quarter last year. That translates to $0.35 per nonvoting share this quarter and $0.51 per nonvoting share for the third quarter of last year.
Earnings before interest, taxes and depreciation, EBITDA at our moving and storage segment, and we've adjusted that to account for the change in interest income presentation, increased by $47.8 million due primarily to a stronger quarter of revenue growth.
The disconnect between earnings per share and EBITDA is due primarily to three factors. First, fleet depreciation from the increased level of fleet acquisitions the last several years. Second, the reduced gains on the sales of retired pickups and cargo vans. And third, the decline in interest income at the moving and storage segment as we've reduced our short-term cash balances as we've reinvested the funds. Of the $0.16 per share decline in earnings, $0.13 is from the decrease in gains on the sale of equipment, $0.12 from depreciation and $0.05 can be attributed to the interest income variance.
Looking at equipment rental revenue results, we had a $39 million increase, which is a little over 4.5% for the quarter. This is also better than the 1.5% and 1.7% improvements that we posted in the first and second quarters this year. In addition to the continued strength in average revenue per transaction, and growth in In-Town transactions, we saw additional last mile revenue come through during the end of the quarter. In-Town revenues on the trailer and towing device fleet also increased during the quarter. And in January, we saw revenue continue to trend positively compared to the same time last year.
Capital expenditures for new rental equipment for the first nine months were $1.587 billion. That's a $237 million increase compared to the same nine month period last year. Proceeds from the sales of retired equipment meanwhile decreased by $73 million to a total of $521 million. That's a combination of us selling fewer pickups and cargo vans, along with lower average sales proceeds on the units that we did sell. A portion of that is what's leading to some increases in our depreciation.
Switching to self-storage. Revenues were up $17 million, that's an 8% increase for the quarter. Average revenue per occupied foot continued to improve across the overall portfolio of approximately 90 basis points. And if you look just at the same store portion of the portfolio, we were up just over 3%. Our occupied unit count at the end of December was up nearly 42,000 units compared to the same time last year. And over that same timeframe, we added 80,000 new units. And it's this differential that led to our average occupancy across the whole portfolio declining to 78.7%.
Splitting out the same-store portion of the portfolio, we saw average occupancy decreased by 50 basis points to 92.4%. During the first nine months of this year, we invested $1.214 billion in real estate acquisitions, along with development costs for self-storage and U-Box warehouses. This was a $245 million increase over the first nine months of last year.
Looking just at the quarter, we added 2.3 million new net rentable square feet with the majority of that being newly developed locations. We currently have approximately 8.5 million new square feet being developed, and I would expect to see the pace of new deliveries remain elevated into next quarter. Our U-Box revenue results are included in other revenue in our 10-Q filing. This line item increased $9 million, of which U-Box was a major contributor. We're seeing both U-Box moving transactions and U-Box storage transactions grow.
Over the last 12 months, we've increased our warehouse space or covered storage capacity for these containers by over 20%. We should continue near that base for at least the next 12 months. Operating expenses at moving and storage were up $11.6 million. We did have another quarter of declining fleet repair and maintenance costs. This time we were down close to $10.5 million. Some of the larger expense increases, personnel costs were up just over $15 million, although that increase is largely in line with the pace of revenue increase.
We also had liability costs associated with the fleet go up $16.5 million and property taxes were up just over $4.5 million. As of December 2024, at our moving and storage segment, cash along with availability from existing loan facilities totaled $1.348 billion. On our Investor Relations website, investors.uhaul.com, we posted some supplemental materials for the third quarter in addition to our typical earnings release and 10-Q filing, you can click on these in the lower right corner.
Before I hand the call over to our operator for questions, I want to thank and recognize our newest analyst, Steven Ramsey at Thompson Research Group, who recently initiated coverage. He joins Keegan Carl at Wolfe Research and Steve Ralston at Zacks Investment, who've been covering us as well. I would encourage anyone interested to reach out to any of these three as they all have excellent insights.
With that, I would like to hand the call back to our operator, Joanna, for questions and answers. Joe, myself and Sam Shoen will be available for questions.

Question and Answer Session

Operator

(Operator Instructions)
Steven Ralston, Zacks.

Steven Ralston

Congratulations on the good quarter with that significant uptick in revenue growth. Well, my question is concerned about the drivers in that growth. I noticed that the revenue per transaction has steadily increased for the last -- at least three quarters. It seems like you have a good pricing environment.

Edward Shoen

Yes. So I would say -- I would say the answer to that is yes.

Steven Ralston

Could you add any color to that? There was concern about the -- well, competition other things involved also.

Edward Shoen

Sure, sure. Well, I'm one of these people who is always very tentative on increasing prices. I always want to communicate a value to the customer before we just try to pass along price increases. And there's been a lot of cost increase over the last 36 months, not all of which should have been passed along, but some of which we're still going to have to figure out how to pass along, mainly in equipment acquisition, but it's been in personnel, but we're just like everybody else, everything's up.
So the customer is showing some willingness to recognize that participate in those increases without feeling they're being beat up. You read the same stuff I do. People feeling beat up about the supermarket pricing, by the energy pricing. And I try to keep U-Haul where they see we're trying to do some sort of value pricing. Yes, we needed the price increase.

Steven Ralston

Despite what you said, I did notice that it seems like you have instituted some cost controls because sales were up 4% to 7%, depending on where you're looking, but your operating expenses were only up 1.6%. And I've been basically harping on this for the last few quarters, but it seems like something happened that you gain control of your costs.

Edward Shoen

We'll always -- there's a delay reaction in a lot of this stuff. So I think I got the attention of the team probably six months ago, but then it doesn't really filter through to financial results in a visible way for several months after that.

Steven Ralston

One thing I noticed, and I'm surprised you didn't mention it, that you've set a record for the company. Your pipeline for the -- the trailing 12-month new net rentable square foot has reached a record. You posted 7.4 million square feet. Prior to this was in the 3, 4 like 6.1, quite an accomplishment. And with your mention of acquiring more assets in the pipeline, at least statistically, is stable there at 16.8 million square feet. Do you expect to be in the 7 million or 8 million net square feet trailing 12 months going forward for a while?

Edward Shoen

I think that's faster than we can hold that. Some of this is opportunism, of course, if there's something comes, but there's not a lot of whatever you want to call them sweet deals, in the storage business right now. So I think that's faster than we can maintain.

Jason Berg

This is Jason. A little bit of color. Our acquisitions of existing storage properties over the last 12 months is about 1 million square feet heavier than it was the year before. So that's part of that increase. And then the variance over last year at this time also is we were in the process last year of switching over to more ground-up development and now we're starting to see a bunch of those lost or launch, whereas last year, they were just getting started.

Steven Ralston

And one last question concerning U-Box. I don't know if it's the first time I thought, but you emphasized that the revenues are driven not only by the rentals but of the storage. Is there something happening in U-Box where people are storing more on your lots as opposed to just rentals and moving?

Samuel Shoen

This is Sam Shoen, I'll comment on that. I think you're exactly right, Stephen. That's a good observation. Of course, that's part of the reason we're in this business is not just to serve the moving customer, but also the storage customer as well and in many cases, they're the same customer. And I think as we get better at selling and explaining the advantages of this unique product that I think a lot of consumers don't really fully appreciate how versatile it is.
As we get better at explaining that, we get more conversions to the self-storage end of the deal. And of course, that's why we're in the business. That's why I would invest in U-Haul is that's really the exciting part of U-Box is its storage potential, and we're starting to see some exciting progress on that side of it.

Operator

Keegan Carl, Wolfe Research.

Keegan Carl

In the release, Joe mentioned the moving activity ticked up in the quarter, driving both demand for products and services. I guess I'm just curious, can you maybe quantify the transaction volume increases and how it trended by month?

Edward Shoen

Now we're going to have to go to Jason about that.

Jason Berg

Sure. So for the quarter, the transaction growth came from the In-Town business, which was up just under 2% on transactions on one-way transactions, which is a smaller number, it was down. It was still negative for the quarter. We're still seeing revenue per mile gains in the one-way business, which is helping to offset the mileage decreases there. And I think the normal growth that we would have seen in the quarter then got bolstered by a couple of percentage points from some last mile business that came in, that helped push up the revenue per mile for the In-Town and the miles per transaction.

Keegan Carl

I guess on the five month basis, did you notice anything that stood out, maybe was November better than October? Did you see sequential improvement each month? Just kind of curious on that cadence.

Jason Berg

I would say, October, November were fairly steady as in -- towards the end of December when the last mile business came in. November, December looked a lot like what we have seen the previous quarter half , two quarters. So if you're looking to run the revenue out. I wouldn't say that 4.5% growth or 4% growth, but what we saw in the quarter would be reasonable. It's probably going to be a little bit better than what we saw in quarter one and quarter two, but quarter three probably won't repeat yet.

Keegan Carl

Okay. No, that's really helpful. And I know Joe touched a little bit on January. I guess I'm just curious, like, are you seeing sequential acceleration from December to January? Or is it more just the year-over-year improvement that you noticed?

Jason Berg

We always look at it year-over-year because there's so much seasonality to it. So it did -- when I'm making comparisons and saying it's up, it's always to the same time in the previous year.

Keegan Carl

Got it. I guess just shifting the U-Box. Obviously, growth continues to be strong there. If we take a very long-term view, I mean how should we think about margins in that business relative to your storage business, and what you would consider either a full or stabilized occupancy level within U-Box?

Jason Berg

Well, I'll start with that and then Sam can fill in or correct me if he has any other thoughts on it. But Keegan, remember, when we walked a few of those warehouses when you were out here, the newer warehouses that we have stack much higher. So as we get more of these boxes into storage, it's going to help the theoretical margin, however you want to come up with that for U-Box because we're just getting better utilization of the asset. So I don't know -- Sam, I don't know if you want to --

Samuel Shoen

Yes. No, I mean, that's the same thing I was going to say. I mean, the way I describe it and think about it is using a different word, which is density. And the exciting part of the U-Box storage solution is that we're getting increased density in the same footprint that you would in a traditional facility. So if we could use this moving activity to follow the U-Haul formula use our moving activity to generate containers and storage, we're going to be able to put that density to use and be really efficient. So I think that's a wise question you're asking.

Keegan Carl

I guess just to wrap this up, I mean is it fair to assume that margins would be similar to self-storage or could they even be higher? Like I'm just trying to get a better feel for in the long run how this business can play out.

Edward Shoen

Well, of course, I'm shooting for higher. But we have a lot of work to do. So I think you having that expectation and issuing that challenge, I'm willing to accept.

Keegan Carl

Okay. No, that's really helpful. I guess just maybe if we take a bigger picture view. You obviously have a lot of land in your development pipeline and you mark them at cost. I guess if you were to actually take what's in your portfolio, both land and buildings, what do you think would be worth at today's market prices? And what sort of disconnect is there between what you're marked at versus what it's theoretically worth?

Jason Berg

Keegan, that's a great question. That's not something that we've really discussed publicly other than to say we communicate to folks what the unencumbered balance or value is in the portfolio. You can see what -- how much we've borrowed against real estate and then the book value, and that can kind of give you some sort of triangulation as to the -- I'll call it, excess market value over book in the portfolio. But I guess I would consider it fairly significant when I look at our ability to borrow, which then puts our market value at least into perspective. We have quite a bit of capacity -- I mean to borrow if we had to. We had the earnings to support it, we could easily go out with the assets that we have and borrow another $2 billion against real estate.

Keegan Carl

Okay. I mean that's a good segue to my next question, which obviously, the cash balance is down. It's down to near $1 billion, down materially from the peak. I guess just how should we think about your funding of growth going forward? You mentioned that you could take another $2 billion on. I mean, should we expect you to take on more leverage in the near to medium term just to fund growth?

Jason Berg

I'll start with this one. There's two tracks here. One, we are going to be going out and we're going to do some normal borrowing that we would do each year. We still have our guidepost of trying to remain under 5 times net debt to EBITDA, which gives us quite a bit of runway. And then the exciting part is a lot of the assets that we've invested in are starting to launch. You see that in the net rentable square foot number. And that's just going to give us more flexibility in financing future acquisitions. I would say the pace that we've been on the last 12 months, the $1.5 billion, if you look out the next year or two, will probably slow a bit.

Keegan Carl

Okay. And then just last one for me to kind of wrap everything up. I mean, if you would assume your entire storage portfolio stabilizes today, where do you think that actually puts your total portfolio EBITDA margin at? Or where do you think it can trend to? The reason I'm kind of framing it like this is, obviously, the large portion of your storage portfolio that was recently delivered and is likely negative on the EBITDA side. So if you get that stabilized, where could your margin trend? And what sort of expansion could we expect?

Jason Berg

Well, we don't have a separate margin number for self-storage. I would say that with the current square footage that we just reported, excluding any sort of rate increases, if we get that up to our same-store occupancy number today, that would be an extra close to $170 million of revenue. And the vast majority of that would fall to the bottom line and then beyond that in the development pipeline, we have probably close to $350 million of additional revenue or maybe a little bit higher than that. I might be understating it. So between what we have -- or what we are building now and what we have behind it, I think, has the opportunity to increase our annual revenue by about 50% from where we're at today.

Keegan Carl

On the storage, just from the storage line?

Jason Berg

Other storage.

Operator

Steven Ramsey, Thompson Research.

Steven Ramsey

Thanks for having me on the call. I wanted to go back to this moving business and the higher cost world that everybody is operating in. It sounds like competitors are raising prices as well. Given your cost advantages and your approach to serving the customer at a lower price to serve in, do you get a sense that competitors are raising prices more than you are and your cost advantages enable you to gain share in a different way in this environment? And then kind of a follow-on to that, do you think when one-way moves pick up the pricing dynamics allow you to gain even more share when that happens?

Edward Shoen

This is Joe. There's a lot of factors go into that. Price is part of it. Normally, we're going to have to be competitive on pricing. That's just how it is. A lot of this has to do with utilization, which has to do with kind of where you have positioned the equipment and how extensive is your distribution. We have very extensive distribution network compared to our competitors. And that gives us access to customers that the [fact] is not economical for them to access just because of distance. The customer has to travel too far to obtain the product.
And so it effectively raises their rate even if their rate isn't up. I don't have a -- I wish I had a clear answer to your question. I don't -- there's a lot of constantly moving parts, and it varies whether it's an In-Town transaction or one-way transaction. But in one-way, we're in a position to benefit with any increase in consumer activity. We've got the fleet out there. We've got the locations out there. We're priced in the acceptable range, we should see -- we should -- if that comes, we should pick up.

Steven Ramsey

Okay. That's helpful. And then on the moving business, again, good to see fleet repair and maintenance costs continuing to show year-over-year declines. Can you share how much of that is attributed to newer fleet coming in? How much of that is doing more of that work in-house? And do you see a continued runway where you could show year-over-year declines in these costs going forward.

Edward Shoen

I think we can see some more cost decreases, yes. I don't have a good answer on how much of it is due to doing more work in-house versus taking it to third parties, but third parties, just as you might expect, just costs more. That's all.

Jason Berg

Steve, this is Jason. I'll give kind of some ballpark estimates. Part of what we've done is we've -- this year is we've decreased the size of our pickup fleet and to a lesser extent, the cargo van fleet and increase the size of the box truck fleet. So the repair of the box trucks would be more along the lines of your comments about repair costs going down due to rotation of newer equipment and the reduction of the pickup in the cargo van fleet would have more to do with outside vendor repair. And I would say that it's probably roughly at least for the truck repair, maybe third due to less outside work and two-third from rotation of the fleet.

Steven Ramsey

Okay. Okay. That's helpful color. I wanted to ask a question on U-Box. Maybe you can clarify again, the pipeline of the build-out on warehouses that you have coming in the next 12 months and maybe where you see it going over the long term? I know in prior years, this was a constraint to growth. Would you say warehouses are a constraint at this point to U-Box growth?

Samuel Shoen

This is Sam Shoen speaking. No, we've got a very robust pipeline for U-Box warehouse growth. We've had some good progress in the last year. Certainly, it's no longer on my list of excuses. It's -- it's putting tremendous pressure on the competition, and again, freeing us up to run. U-Box is a part of our product line that wants to run. And so we're on it.

Steven Ramsey

Okay. That's helpful. And then last one for me. Storage occupancy, it looks like in the last few years, Q3 shows a sequential dip from the second quarter on both the same-store and non-same-store basis, but noticed that in this report, the sequential dip was less than the prior years. I'm curious if there's anything to read into that, if it's the environment improving or core outperformance, just if there's anything to read into kind of the sequential trends and if maybe there's stabilization kind of in the market broadly that you're benefiting from?

Edward Shoen

Well, this is Joe. I don't think there's a broad stabilization in the industry, but you probably see my competitors' numbers as well or better than I do, but there's been a lot of the erosion of both price and occupancy in the industry, and we're swimming against that tide successfully so far.

Operator

Jamie Wilen, Wilen Management.

Jamie Wilen

As you see within the industry, the level of additions that people are building other than yourselves. Is that a decline rate from where it has been over the last two years? And does that create a little bit of opportunity for rate as you look forward?

Edward Shoen

It's very market specific, Jamie. I don't think I can give you a generalization. When I travel, it looks like they're building new stuff every place.

Jamie Wilen

On the U-Box side, a few other questions about the dynamics of the business. The rates for shortage, how do they compare for a self-storage rental rate per square foot. And I assume the margins on that unit and storage are rather high since we don't have much cost against it. And if you could tell us about the dynamics of somebody does a U-Box. How long is it normally in storage for? And are there any changes in those dynamics over time? Or how --

Samuel Shoen

That's a great question, Jamie. This is Sam Shoen. Right now today, almost all of those metrics that you just brought up are very similar to our traditional self-storage product. But in my mind, there's no reason why every single one of them could exceed and should exceed. So just as an example, when you brought up per square foot basis, if the product adds more -- gives more convenience to the customer, there's the flexibility to ship it, there's the flexibility to live it to their door. Some customers in the industry sometimes refers to it as valet storage.
Well, of course, we need to work towards getting a premium for that. And right now, we've gone from kind of famine to feast on warehouse capacity. And I'd say my first priority is let's get some occupancy. And as I think we've demonstrated in U-Haul, historically, once we've got the storage occupancy, I think we've done a decent job in maximizing at the rate. And so that's the game plan. That's the trajectory we're on, and I'm embracing all of those issues that you brought up. It's a great question.

Jamie Wilen

As we are gaining market share, is it a function of we've got much more indoor storage for this -- for the U-Box? I can't imagine how someone would want a store outside for an extended period of time, but is that a competitive advantage, that's the one thing that's allowing us to -- or the major thing that's allowing us to gain market share, and that's why we're focusing on that in the future as well.

Samuel Shoen

Well, Jamie, I was hoping you'd ask me that kind of softball question. I was pitching for somebody to ask that question. The short answer to it is no. The competition has indoor storage as well. But despite that, we've got them in a real headlock. Our advantage is -- I would argue are the fact that we're lower cost, we can deliver multiple containers at one time, we have the most locations available in every state and every province, we have self-delivery options. These are all things that the competition cannot and won't match. And so of course, that's why we're on the way up and they're on the way down. And so of course, I'm -- it's inevitable that we're going to dominate this industry in the same manner we do the truck rental industry.

Edward Shoen

This is -- I'm happy it's inevitable. I just hope it happens while I still walk.

Jamie Wilen

One last thing on self-storage. As we are acquiring existing units, I assume everything we are acquiring are to stabilize base and they are immediately accretive as opposed to the new units that we build?

Jason Berg

Jamie, this is Jason. That's an interesting question, and it brings up some interesting commentary on some of our competition in that industry. So a lot -- several of the properties that we've purchased have been what you call CFO deals. So they're essentially 0% occupancy when we buy them.
There are some that are close to stabilization as you have. I think our average revenue that we took on the last nine months has been somewhere around 70% occupancy day one. But what's happening is some of these are managed by national REIT competitors. And what they've -- the way that they manage rates and how they handle the customers, you end up dropping a significant amount of occupancy in the first month that you're in there and you start working with the customers and figuring out the rates.
They've -- so -- we're not going out and financing these immediately. There's a little bit of cleanup that we have to do to the rent rolls. So that probably adds an extra three to six months, I call it, the seasoning process. But before I can set my ATs loose and have them do the financing on these.

Jamie Wilen

Why do you lose occupancy as soon as you acquire these things?

Jason Berg

Because the -- a lot of the occupancy figures when someone's getting ready to sell, sometimes the manager will increase occupancy at the cost of lowering the rates significantly in order to get people in. And then when we get in and straighten out the rates to where we think they should be, you end up losing quite a few people.

Jamie Wilen

Got you. And last question. Joe, you mentioned the electrical vehicle impact on your business that's not going to be there possibly in the future. Could you go a little bit more in depth as to what you're talking about and how that impacted our business?

Edward Shoen

Well, there's significant electric vehicle mandates that are driven largely by California and they're variously reported and -- but the simple fact is California has been driving that for more than 10 years. And the -- all this talk of zero emissions, all electric, there just is no mechanical solution out there in the sized trucks that we rent. And so it's kind of someone's dream. But in our case, if there's a mandate, we're supposed to meet the mandate you see. And if there's not inventory, well, now you've got a real problem.
It's been an unsolvable dilemma. We worry about it a lot, but there's nothing we can do. Now we've been modest on bringing in test fleets or exemplary fleets because we can pretty much tell by working one up that it's a no-go. And doing the buying 500 of them is just simply virtue signaling to the green people, but not to the shareholders. I'm a shareholder. So I'd rather be signal to shareholders with a good economic proposition. So there has not been one.
And certainly, there's a demand for a place for electric vehicles, certainly, but we're a long ways from having that be a solution for anybody who's in the data rental business like we are. They're just -- there isn't a solution. And we've been just heading towards costly, when does the squeeze start. So far, the squeeze that you're seeing is, goes back a little over 36 months now, which is increased cost of internal combustion engine trucks, the manufacturers because of the dilemma they're in have pushed as much of the development cost of electric vehicles as they can on to the people buying the gasoline vehicles.
So we've had more than one truck model that went up over 40% in 18 months. Those are, for us, historically huge costs, and you're seeing that process through now with the reduced gain on sale that Jason referenced earlier. So of course, I'd much rather -- the old system is working good for me. But that's just it. So basically, the same vehicle is costing us a considerable amount more and we're having to deal with that reality. But if you go with the electric, it won't -- you'll dream you can get the same vehicle for more money because the electric vehicle just simply isn't available. The ones that are available simply don't perform. So you're in an turn advice that there's no solution to.
So I'm hoping that what comes out of this review, they're doing a review, and they'll probably do more at the EPA level. I'm hoping they come out with a solution that is something like -- but I heard one of the administration people say, so that people can buy the kind of vehicle they want. So there are people who want electric vehicles, there's a place for them and most people can buy them. And there's a place for internal combustion engine vehicles and people can buy them. Always if you -- if there's only a black-and-white choice, you're really suboptimizing.
We need a lot of gray in this, and I think that there's some more common sense to make percolate through this, and it will be at least for the medium-duty truck business, it's -- it will be a welcome opportunity. We're in a dilemma on this constantly. It impacts Sam with forklift trucks. They've got initiatives on forklift trucks that are causing us to have to reposition trucks. And it's all over electric versus propane. Propane is now, I guess, Sam, I don't want to put words in your mouth, propane bad, electric good.

Samuel Shoen

So that's the idea. And of course, in reality, it's the exact opposite. And certainly in my lifetime, there will be a day when there is an electric forklift that's superior to a propane forklift and when that day happens, that's what we'll buy. Just like when our customers want electric trucks, we'll buy electric trucks. But right now, they're not the best truck and our customers don't want them, and they're not part of our plan.

Jamie Wilen

Appreciate the insights also. Thanks for the additional color in the presentations with the quarterly numbers.

Operator

Thank you. That concludes today's Q&A. I will turn the call back over to management for closing comments.

Sebastien Reyes

Well, thanks, everyone, for the support. We look forward to speaking with you after our year-end filing in May. Thank you.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.