Amerco

F:AUK

Earnings Call Transcript 2019-Q3

[Operator]

Good day, and welcome to the AMERCO Third Quarter Fiscal 2019 Investor Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Sebastien Reyes. Please go ahead.

[Sebastien Reyes, executive]

Good morning, and thank you for joining us today. Welcome to the AMERCO Third Quarter Fiscal 2019 Investor Call.

Before we begin, I'd like to remind everyone that certain of the statements during this call, 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 Form 10-Q for the quarter ended December 31, 2018, which is on file with the U.S. Securities and Exchange Commission.

I'll now turn the call over to Joe Shoen, Chairman of AMERCO.

[Edward Shoen, executive]

Thanks, Sebastien. Good morning to everyone. We remain in very competitive businesses: our truck rental and remarketing, our self-storage and our moving suppliers markets. Lots of well-financed people look at these markets and think this is an easy market and decide to compete, and we have to deal with that.

The truck rental, particularly, is more competitive than many people comprehend, but I believe there remains room for profitable growth. Our truck remarketing is just beginning a new model cycle. We finished the current remarketing cycle and did a little bit better than last year, but we're still short of where I'd like to see us, and I believe we're on the path to improve.

Self-storage continues to reflect a flood of additional product. We, of course, are part of this flood. This likely will result in some near-term sluggishness in rent-up. Of course, in 2 or 3 years, we'll all be able to look back and know how this turns out.

I'm very positive on the long-term strength of the self-storage market for well-positioned, well-run, good-quality product. I've got to focus on our retail moving and supplier programs currently in process. I believe we have room for continued growth there, just a little unhappy with some of the growth in the last 12 months.

With that, I'll turn it over to Jason to try to walk us through the numbers.

[Jason Berg, executive]

Thanks, Joe. Throughout my presentation this morning, all of my comparisons are going to be for the third quarter of this year compared to the third quarter of fiscal 2018, unless otherwise noted.

Yesterday, we reported third quarter earnings of $4.01 per share, compared to $27 per share before adjustments. I think a fair way of looking at our quarterly results is to provide some adjustments for events and transactions that occur infrequently.

There were 2 unique events in the results for the third quarter of last year. One was the gain on the sale of a portion of our Chelsea, New York location. The Chelsea gain accounts for $7.34 per share of last year's earnings.

The other event was the Tax Reform Act, which remeasured our deferred tax liabilities. This accounted for $17.32 per share of our earnings last year. The effective federal income tax rate for the third quarter of fiscal 2019 benefited from the Tax Reform Act of the third quarter of last year and did not fully recognize the new rate. We had a blended rate. Had this year's rate been effective for the third quarter of last year, it would have increased prior year earnings by $0.90 per share.

So excluding these 3 items from the calculation, earnings per share for the third quarter of last year were $3.24 per share compared to this year's $4.01 per share.

Equipment rental revenues increased nearly 9% or about $51 million. During November and December, we experienced increased corporate account activity or what many outside the company might refer to as last mile, which accounted for about 1/3 of the improvement. Please keep in mind our ongoing concerns with this type of business, and that is what is the condition of the equipment going to be when it's returned. It is possible that we will see some trailing costs associated with these rentals emerge in the next few quarters in the form of repair expense.

Aside from that, we saw continued improvement in transactions for both the one-way and In-Town markets, along with better revenue per transaction. Compared to last year at this time, we've increased the number of trucks, trailers and towing devices in the fleet, and we have more independent dealers and company locations.

While there has been severe weather throughout parts of the United States and Canada in January, we are still showing revenue increases for our equipment rental business.

CapEx on new rental trucks and trailers was $882 million for the first 9 months of this year. That's compared to $788 million for the first 9 months of last year. Meanwhile, proceeds from the sales of retirement -- retired equipment also increased to $559 million, compared to $389 million the year before.

Regarding truck sales, gains from the disposal of rental equipment were down over $3 million for the quarter but were still up nearly $15 million for the 9 months. Sales volume was down for the quarter compared to last year, but we did see some nominal improvement in the sales proceeds per truck.

Storage revenues were up $11 million, that's just under 14%. Average monthly occupancy throughout the third quarter of this year for the entire portfolio was 58%. Looking just at our occupied room count as of December 31, we had an increase of 31,200 rooms compared to the same time last year. If you look at the same statistic for December 31, 2017, last year, that number was 20,600 rooms. So we are increasing the pace of renting new rooms. We are continuing to see an improvement in our underlying revenue per square foot, as well from increasing rates.

Our real estate-related CapEx for the first 9 months of this year was $639 million, compared to $400 million last year. From January 1, 2018 to December 31, 2018, we added just over 4.9 million net rentable square feet to the storage portfolio, about 1.1 million of that came online during the third quarter. Operating earnings at the moving and storage segment, excluding the net gains of the disposal of real estate last year, increased $27 million to $120 million for the quarter. And I'd like to touch on a few of the more significant items.

Fleet maintenance and repair declined $10 million during the quarter. To put that in perspective, last year, in this call, I was reporting a $32 million increase in repair and maintenance, primarily associated with the cargo, van and pickup fleet. While we feel we are continuing to make progress on this front, nearly all of the improvement for this quarter came from a reduction in the volume of the number of units being prepped for sale. We continue to work on lowering the cost incurred per truck.

Depreciation and lease expense associated with the rental fleet decreased $2 million, while depreciation on all other assets, primarily storage location assets, increased by about $5 million. The reduction in fleet depreciation may be short-lived as we're beginning production on more of our 26-foot trucks in the fourth quarter.

Property taxes, building maintenance and utilities are 3 of the larger non-personnel expense items associated with new properties that we've been buying. These costs were up about [ $15 ] million for the quarter. Properties purchased just over the last 12 months accounted for close to 1/3 of this increase.

Some additional operating expenses that increased during the quarter included shipping and fuel costs associated with the delivery of our U-Boxes and legal fees and some litigation accruals.

Personnel expense, while up over last year, was in line with revenue improvements.

In December, we declared a $0.50 per share cash dividend that we paid in January. As of December 31, 2018, cash and availability from existing loan facilities that are moving to storage segment totaled $980 million.

During the quarter, we entered into and drew down on 2 additional bank revolvers totaling $150 million and several other real estate loans totaling approximately $214 million. In January, we closed on the purchase of 13 properties from Sears Holding for a total purchase price of $62 million.

With that, I'd like to hand the call back to Allison, our operator, to begin the question-and-answer portion of the call.

[Operator]

[Operator Instructions]

[Sebastien Reyes, executive]

Allison, we have a few questions that came in before the call from Jamie Wilen. I'll go ahead and ask those now. The first question is, in the moving and storage business, once we take out all the non-reoccurring items, what are operating profits this year versus this quarter last year? Have we been able to obtain any operating leverage on the 9% increase in revenue? Is the outlook for revenue growth to continue at or near this pace in the future?

[Jason Berg, executive]

Sebastien, I'll take that. This is Jason. So operating earnings for the third quarter were $120 million, compared to $93 million, so we did see an improvement. Excluding the bump from the corporate account business or the last-mile business, we were closer to a 6% increase on equipment rental revenue for the quarter, which is closer to what we've been running this year. On our big 3 operating expenses, which are personnel, repair and liability costs, we are making improvement. For personnel, I'd say that the third quarter, as a percent of revenues, stacked up favorably to third quarters that we've seen in the past. On a trailing 12-month basis, we're still probably about 150, 200 basis points off of our peak operating margin in fiscal '14 and '15. The new properties are continuing to put downward pressure on the margin in relation to where we were at the peak. But I feel like the effect of those is beginning to lessen. However, that development is going to be an obstacle for us getting back to where we were, at least for the next couple of years.

[Sebastien Reyes, executive]

The second question we have is, we sold fewer rental trucks in the quarter but at higher prices. Would you expect to sell more in the fourth quarter and how is pricing in the used truck market currently?

[Jason Berg, executive]

I'll start with this one. It's Jason again. The fourth quarter is typically our lightest quarter for truck sales. The fourth quarter of last year was a bit heavier than most. It was still the lightest of the fourth quarters last year, but I would not expect us to sell many more trucks than we did during the fourth quarter of last year.

[Sebastien Reyes, executive]

In the self-storage business, when we take out locations that are less than 3 years old and still in the ramp-up stage, what are occupancy rates versus last year?

[Jason Berg, executive]

So if I look at locations that were open more than 3 years last year at this time, and I take that same group of properties, which is a little over 700 properties, and look at the occupancy this year, the average occupancy for those locations last year was about 82.5%. This year, just under 84%. And the median for those last year was 89.6%, and we're just under 91% this year. So on either measurement, our occupancy on that basis has improved close to 1.5 points.

[Sebastien Reyes, executive]

We've added nearly 5 million net rentable square feet in the last year, which takes several years to become a profit contributor. Do you think it's prudent to continue to devote so much capital to these projects that will take so long to add to our bottom line? Would shareholders be better served by having a regular quarterly dividend and also devoting $100 million annually to a share buyback program as our stock price does not nearly reflect the underlying asset value of U-Haul?

[Edward Shoen, executive]

I'll take that, Sebastien. The simple answer would be, no. Of these projects we're bringing on, some percentage of them are what I would consider strategic with the U-Haul organization. There are also self-storage, but they're strategic to us for a variety of specific [ locally ]. And just overall in the storage market, it's a little bit of a slugfest to keep position in the market. I mean, of course, we're in that slugfest, so I think that the over a period of years, we're all going to be very happy to have these just because we're very happy with those that we got in the prior years [ and had to work to ] build and profit.

[Sebastien Reyes, executive]

The last question I have from Jamie is, we have purchased a significant number of former Sears and Kmart locations for conversion to self-storage facilities. Are we able to buy these locations at terrific prices so they have much more favorable returns? It seems like many may be white elephants that we can pick up very cheaply since they are abandoned retail sites with very little on the way of competition for these locations.

[Edward Shoen, executive]

Of course, we're only getting facilities after their value as retail real estate has been determined to be poor by the market. If the market thought they were good retail locations, of course, they'd price us out. The -- we think we're making a good move. We think so. So obviously, we're going ahead with it now, but that's about dried up at this point. There's no thought of tremendous volume with that unless something changes with the Sears Kmart reorganization which, of course, is anybody's guess.

[Sebastien Reyes, executive]

Allison, we'll hand the call back to you if there's any additional questions from callers.

[Operator]

At this time, we have a question from George Godfrey of CL King.

[George Godfrey, analyst]

Wanted to ask about, in the self-storage, the pipeline in under contract square footage. I'm looking at the investor presentation back from August, and pipeline storage, storage that was in the pipeline, was about 11 million square feet and under contract was about 6 million. Where does that stand today?

[Jason Berg, executive]

I'll say, right now, we have -- this is Jason. We have 173 active projects. I don't have that slide directly in front of me, but I think I broke that out into parts. So I would say that the number of square feet currently being worked on is about 9.4 million, and I think that number increased since we last spoke. And I would say the in-escrow portion of that has declined. I don't have the square footage of that currently, but I think we're down to about 75 properties in escrow. I think we have another 75 or 80 properties that are still in the early entitlement phases that are not yet what I would call an active project, but we do own them.

[George Godfrey, analyst]

Okay. So if I look at the -- I'm looking at the square footage and I heard -- so 6 million up to 9.4 million, so the under contract has gone up and it sounds like the pipeline would've come down. Do you anticipate that number, the pipeline number, going up from an 11 million to 12 million square footage maybe to 14 million or 16 million over the next year or 2? Or is 11 million to 12 million the ideal pipeline size on a given period?

[Edward Shoen, executive]

This is Joe. There's no ideal size. And what really is going to determine is how well we do on rent-up and whether we can make this self-funding. So if it's not, then we'll have to scale this back a little bit. But this is more -- this is a bigger pipeline than we historically have maintained, and we're maybe, depends how you want to count it, 14 or 18 months into this level. So I don't want to make a prediction. I mean, I'm prepared to slow it down if it looks like it has to slow down. But where there's opportunity, I don't want to be -- have the company be a wallflower.

[George Godfrey, analyst]

Yes. Agreed. And that makes sense to me, particularly if you can get a good price on the facility at a mall or a piece of land that you're looking at. So I definitely get the idea that you want to be opportunistic both based on, Joe, on your comments that supply is coming on could have a sluggish lease or rent-up facility, it would intuitively make sense to me that, that pipeline number wouldn't go higher in the short term, unless there was a really advantageous acquisition. Is that fair?

[Edward Shoen, executive]

I think that's fair to say. And again, it's our job to perform. And so whether the market is good or bad, we've got to get performance and so I'm determined to get performance. But nevertheless, it's a big marketplace, and there is just so much supply and I don't have a good handle on what the supply is. There's people who try to analyze that. But it's rolling on, and I'm sure you can see it in your community. So we're going to have to be a little bit wary on that.

[George Godfrey, analyst]

Understood. And then my last question is, if I look at the operating expenses just in Q3 and I'm looking at this year, it came in, by my numbers, 52%. Last year was 52%. And then if I go back to '17 and '16, it was 49% and 48%. Is the 52% on revenue on operating expense a high watermark and should we expect that number to trend down, or worst-case scenario, just stay there at a 52% level in Q3?

[Jason Berg, executive]

George, this is Jason. I -- a lot of what's been happening there, and it depends how you take it with depreciation or without depreciation, so I'll take it as just operating expenses as a percent of revenue. I think the last few quarters we started to see some year-over-year improvement outside of repair and maintenance. So our big 3 expenses: personnel, repair and maintenance and then liability costs, I think the big question still is the direction of the repair and maintenance number. The personnel number has been reasonably positive compared to previous years. I think we might see that number go up in the fourth quarter. As in -- as these development properties begin to cover their own costs, I think we'll see the operating margin improve again, but I think where we're at right now is it's probably not going to get worse, but I think we have several years to go before we get back to where we were.

[George Godfrey, analyst]

Understood. And I'm sorry, just had one more question. You mentioned that you're getting higher proceeds on the truck sales and that fleet and maintenance was down principally on a volume basis. So to get the higher proceeds, are these trucks coming back to you from renters in better condition, requiring less repairs so that the proceeds are higher? Or are they trucks that aren't as old? What is exactly leading to the higher proceeds per truck?

[Edward Shoen, executive]

Higher proceeds per truck is that we spent money on repairing them. And this cycle, as I mentioned, is just about done and we'll start a new cycle. We're actually trying to introduce trucks now. We'll start selling them in March, and we'll have to see how the repair numbers come in on that. I wish I could tell you that I have a real positive sense that repair is down, but my information is largely anecdotal. So we run through 5,000 or 6,000 trucks to really see what the numbers really do come in at. I'm not going to commit. There's still room to improve there, I guess, would be what I would say. I think we're still getting more damage than is reasonable. These are -- when I say damage, these are a crease in the bumper, door ding, just kind of road rush-type damage. And in the markets where these pickups are sold, they need to be real clean or they just don't sell. So that's our opportunity. We need to spend the money, it is the reasonable trade-off to liquidity. Not as clear the trade-off to price. Does that makes sense?

[George Godfrey, analyst]

Yes, it does.

[Operator]

Our next question today will come from Ian Gilson of Zacks Investment Research.

[Ian Gilson, analyst]

Congratulations on the increase in revenue. 6% is still pretty good. So, basically, you were running at that level of gains during the second half of last year. When we look at the corporate group, is that rate of gain sustainable or, basically, is it just due to a high Christmas retail online delivery profit?

[Edward Shoen, executive]

I think the 6% really is sustainable outside of that business. Ian, this is Joe speaking. There's a lot of trade-offs on that business, and I'm not as captivated by it as some people in the organization. But I think there is -- well, I know there's more opportunity. As you know, our overall ability to have the fleet positioned where the market is active is really the key to our profitability. And that's kind of an amorphous or like the blob, you have to just -- it's not an exact science. But we're working on that, and there's -- I don't think we're as good with our distribution as we have been at some times in our company. So I'm a little critical of our people in distribution right now. And of course, they're trying to position things better. And as we continue to get an improved match up there, I think there's at least 6% of volume out there. The question is, do we really match up and get it, day in, day out. So at this time, I think there's reasonable chance to look good.

[Ian Gilson, analyst]

How about that 3% from the corporate business? Is that rate of growth sustainable?

[Edward Shoen, executive]

Well, Ian, they've got purchasable agents. You can just figure this, and they're all well-funded people. The day they don't want to trade with us, they're going to just buy their own trucks and move on. And they've done a lot of that, and they're seeing explosive growth. So I think you have to look at there were a marginal provider for them. Does that make sense? They're only using us for their unpredictable or unsustainable volume. And so as they get more predictability, and they do a better job internally, they'll do less business with us. That's just how this is going to work. We're not some smoking low-cost provider, and I -- and I'm not going to pretend to be. There is seasonal use, but the time that I have other customers will also pay me money. So I'm not wanting to get into too big of a dance with these people because the day they decide to fleet up and use their own equipment, they just won't appear at our door, and that's just how that goes. So it's good business, we're making a little bit of money on it and we're trying to modulate it. And I think we did a little better this year than we did last year. And assuming they see -- continue to see the explosive growth that they seem to be seeing, they'll probably be back next year and want to try to be what kind of a deal they can cut with us.

[Jason Berg, executive]

And, Ian, this is Jason. Just to clarify, the majority of this business really does just place November, December, and to a much lesser extent, January. So that's not something that is at this volume throughout the year.

[Ian Gilson, analyst]

Okay. So, basically, you are sort of a peak shaving mechanism for the parcel company?

[Edward Shoen, executive]

Exactly, exactly, as they better understand their situation, I would figure they got a crew of analysts trying to figure out how not to do business with us, basically.

[Ian Gilson, analyst]

Okay. A question for Jason. On this 2018-12. That's just a review, correct? There's no impact on revenue?

[Jason Berg, executive]

That's correct. We went through all of the revenues, and there is some -- a whole lot of paperwork and analysis to what's going on, but it had very minimal effect on what we were doing as far as the amounts presented.

[Ian Gilson, analyst]

Okay. So it's not a dramatic change in the way that they are looking at the accounting?

[Jason Berg, executive]

On the revenue standard?

[Ian Gilson, analyst]

Yes.

[Jason Berg, executive]

Yes. For us, unlike other companies, a lot of software companies or companies that had multiple deliverables over time, our piece is much more straightforward. And I don't want to minimize it at all. Our accounting team did a fantastic job in going through. There's a lot of work involved with that process. But at the end of the day, it resulted in very little change to what's going on. Right now, they're focused on the next big accounting piece, which is the change in the lease accounting, which will change the geography of our balance sheet a bit as we have to move some things on balance sheet and change the way that we report on leases. But at the end of the day, the net effect to earnings or equity shouldn't be dramatic at all.

[Edward Shoen, executive]

Ian, as you know, we've always presented ourselves as an EBITDA or EBITDAR performer. And I think that what Jason is saying, you and I have lived through changes in how to account for leasing before. It's an expense, however you account for it, it's an expense. And an expense doesn't vary much by how you account for it. So we kind of encouraged people to look at this with an EBITDA or EBITDAR. And in that way, if the accounting professionals decide it's done on a different presentation, no big deals will be shocked.

[Ian Gilson, analyst]

Okay. The choice between leasing and buying, you had a lot of cash at the end of the third quarter, but that seems to be the peak quarter in cash generation over the years. If interest rates increase, are you likely to keep that lease line low and continue to buy? And within that vein, Joe mentioned a new purchase cycle, new model cycle. And his line and my connection is not too good, would you elaborate on that?

[Edward Shoen, executive]

Sure. I'll take that, and I'll let Jason have the first part of the question. We will take a big group of vans and pickups every year, and we've just pretty much finished our sales, and the new trucks are starting to come in. And then about 3 weeks later, they'll start to appear as sales income, the outgoing truck. So that's a normal thing we do every year. We're kind of at the low point right in here, it's kind of between a slack/tight or wherever it is, right in between the new trucks coming in and then the trucks that replace them going out. So we'll see if that cycle goes through. It will be very instructive on what our damage expense part of our repair and maintenance comes in at. Hopefully, it comes in lower. You want to address the rent versus buy, Jason?

[Jason Berg, executive]

Sure. For -- the leases that we're doing today are almost exclusively on balance sheet, so it's purchases, the decision to go whether a bank loan versus a capital lease is largely up to the lender and what works best for them and what gets us the lowest interest rate. So you mentioned rising interest rate. We haven't seen any large swing in the cost of funds for our real estate loans, which are longer-term loans. The fleet loans, which are shorter term and are benchmarked off of shorter-term benchmarks, with the increase in short-term rates, we have seen average fleet borrowing costs come up a bit, but we have been able to reduce rent slightly in order to keep that cost very manageable and we're still at historic lows. The large cash balance at the end of the quarter, I mentioned that we did fund several real estate loans and revolvers in anticipation of the acquisition from Sears and then also some additional real estate spending. So the large cash balance was largely earmarked for future development.

[Ian Gilson, analyst]

Okay. And, Joe, could you repeat your comment on the impact of the weather in the first quarter, in January?

[Edward Shoen, executive]

Okay. I don't remember making a comment. But of course, the weather always stinks when -- this time of year, and which week it stinks in or which month it stinks in, we don't know. And this last cold snap, of course, hurt a little bit of business. We actually had some stores, I think Wednesday of that week, weren't able to even open. It was just -- wasn't -- we didn't bring our people in. So that will have some modest impact, but I think it's no different than any winter. It's kind of -- it will kind of work itself out in the bigger number, Ian.

[Jason Berg, executive]

Ian, this is Jason. I had made the comment, in just -- in relation to our January equipment rental results. And the increase looked a lot like what we've seen the previous 9 months.

[Operator]

Our next question will come from Craig Inman of Artisan Partners.

[Craig Inman, analyst]

One of the things I was curious about on the self-storage, we've gone from ground up for a few years now. And what have you all learned over this time period of the development? Anything you'd do differently or anything you wish you hadn't done, I guess?

[Edward Shoen, executive]

Well, I wish I bought more completed storage, it's just fraught with delay, not-to-be-believed delay. And -- but they're essentially all some quasi-regulation, clear down to they want to debate what color to paint the building, and good golly, let's move on. So all this has told me is buying is better than building. But nevertheless, we're in certain markets and everything, you just need to build them, and so that's what we're kind of stuck with. And we don't have a policy of like a lot of the competitors do where they get someone to build it and get it leased up, partially leased up, and then we do a takeout. So we just -- the whole thing comes on our balance sheet and through our income statement, so it's a little ugly. But it'll kind of all net out in the end, I believe. So I don't think there's any one lesson, we knew -- we've tried to avoid building. But just right now, certain markets and everything, we're just going to have to build. And it's a torturous process, to put it politely, and almost adversarial. This is not to be believed that people will be as -- I don't know. They want to be so much in your business, the local people, I believe. But that's just the market, and everybody has the same -- there's nobody in the storage business that's got some big deal up on anybody else, I don't think. Everybody is going through that problem.

[Craig Inman, analyst]

So delays in terms of getting it built would be the headache. But in terms of once it's built, you're getting the occupancy and rate that works for your returns?

[Edward Shoen, executive]

Yes, of course. I have shining stars and barking dogs. But overall, yes. I think we're seeing things come in. The delays are coming and the delays in getting the entitlement and getting to where you can actually break ground are running longer than we had forecasted. So that's an error on our part, I guess, in that regard. But once they're built, we're still renting up predictably. And -- but as I said in my earlier comment, we're going to get some sluggishness in some markets. That's bound to happen. There's so much product coming on board. No different than apartments or single-family homes or any of these things. When people get a little too exuberant, it's going to slow down for somebody. And I don't know that we'll be totally an exception in that regard. But I'm not seeing a big slowdown yet. But what part of the country are you from?

[Craig Inman, analyst]

Atlanta.

[Edward Shoen, executive]

Atlanta. Well, you can drive around Atlanta. You can see they're sprouting like mushrooms, okay? So...

[Craig Inman, analyst]

Yes, it's always been a bad self-storage market here.

[Edward Shoen, executive]

Well, we're doing fine in Atlanta. So our results are okay. I'd say they're better than average, and the first part of it is I have a crackerjack team in Atlanta. I wish I had that team in every metro area in the United States. We have a good reputation with the customer. We -- we're recognized in the market very, very well, I think, in Atlanta. I can't tell you off the top of my head how much storage we have. But...

[Jason Berg, executive]

We have over, I think, around 34, 35 locations. And there's a lot of different ways to slice Atlanta, so I might be undercounting. But we're over 90% occupancy, and we're getting good rate increases there. So that whereas other people have complained a bit, our team has done quite well there.

[Edward Shoen, executive]

Still much of this is subjective. And, of course, the way I look at all of it is subjective. Okay, so what's the market type? Perform better. I mean, now from a specific point, that's where I am with every one of my people in the management side, but I still believe we're going to see some sluggishness out here, whether this year, next year, 2 years from now. There's so much product coming online and so many new entrants in the market. We're all pretty sure there's a certain way to riches with little work. Well, it's not -- that's not been our experience.

[Craig Inman, analyst]

Yes. And we appreciate -- I always appreciate the candor and a lot of management teams, they just tell you what's going right and that you guys are always telling us where you can improve. Can you talk about areas where you are excelling? Maybe areas that you're excited about that are coming in ahead of expectations?

[Edward Shoen, executive]

Well, you changed my whole outlook on life, [ I've got to say ].

[Jason Berg, executive]

Well, I'd say -- if I could just mention something from a financial perspective. And Craig, we've spoken for a while now, we're coming off a couple of years where we've been increasing the fleet at a fairly significant rate, and that watered down some of our what I refer to as efficiency result, gross revenue per unit utilization. And what we've seen for this 9-month period now is just about every model of truck that we have is up in just about every statistic. So we've been able to swallow a large increase in the fleet. And in the middle of that, a whole lot of disruption from recalls and whatnot and still get the fleet where we need it and show a reasonably good improvement in overall utilization profitability of the fleet. So I would point that out from a financial perspective, and I think we've done pretty good with that over the last 9 months.

[Craig Inman, analyst]

And so, I mean, you all hinted at buying more 26-footers coming up. Have they been -- had a good return?

[Edward Shoen, executive]

Yes, and the consumer wants more of it, and we're putting the lid to it, but we'll see a fair amount of that over the next 12 to 16 months, should we -- we're going to be a little aggressive there. As you probably know, we assemble most of our van boxes on chassis we buy from different motor carriers. So we kind of have a -- we kind of know or planned it out to the future a little bit. We planned it out a little bit long. So those trucks will be coming in, in pretty good quantity over the next 12 to 16 months, and I think the market is doing well.

[Craig Inman, analyst]

Yes. I guess, the last one. You all called out revenue per transaction in the press release, and I just glanced back quickly and hadn't seen that in the last few. Is that a change there in some -- I mean, not pricing, but consumer uptake of products? I'm curious what that, just that byline might indicate.

[Jason Berg, executive]

Sure, Craig. A couple of things go into that, but it's going to be either miles driven per transaction or the revenue per mile are the 2 larger components for that. And we haven't seen a significant increase in miles per transaction. In December, we did from that last-mile business, but for the 9-month period, not so much. So it's -- I'm hesitant to make any comments about the overall rate environment, but it does seem that we are earning a bit more per mile than we did last year.

[Craig Inman, analyst]

So a little bit more -- pricing isn't tight in that quarter as it was last year?

[Edward Shoen, executive]

Probably. It's not quite that precise. But since we have -- the other thing that affects this is what sized truck it is. Basically, big trucks rent more than a little truck, does that make sense? Just across the whole fleet. So there's still a little increase there, while we weren't adding big trucks. It means we probably got a little bit of price, yes.

[Operator]

Ladies and gentlemen, at this time, we will conclude our question-and-answer session. I'd like to turn the conference back over to management for closing remarks.

[Edward Shoen, executive]

Well, I'd like to thank you all for attending the call and supporting us. And I look forward to talking to you again when we have more results to report. Do you want to do the closing then, Sebastien?

[Sebastien Reyes, executive]

That's it. Thanks for -- everyone, for joining us. We'll talk to you again after we file the 10-K in May. Thank you.

[Operator]

The conference has now concluded. We thank you all for attending today's presentation. You may now disconnect your lines.