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Good day. And welcome to the AMERCO Fourth Quarter Fiscal 2021 Year End Investor Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]
Please note this event is being recorded. I would now like to turn the conference over to Sebastien Reyes. Please go ahead.
Good morning and thank you for joining us today. Welcome to the AMERCO fourth quarter fiscal 2021 year end 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-K for the year ended March 31, 2021, which is on file with the U.S. Securities and Exchange Commission.
I will now turn the call over to Jason Berg, Chief Financial Officer of AMERCO.
Thanks, Sebastien. I am speaking to you from Phoenix, Arizona this morning. I have a few minutes of prepared remarks that I want to go over and then we will go ahead and open it up for questions-and-answers.
Yesterday we reported fourth quarter earnings of $3.76 a share, as compared to $6.24 a share for the same period in fiscal 2020. I did want to remind you though that in the fourth quarter of fiscal 2020 that was when we recorded the additional that tax benefit of $146 million, which was $7.45 per share when we recognize the effects of the Coronavirus Aid, Relief and Economic Security or CARES Act. So I believe that another useful supplemental measurement is to look at our earnings excluding this item. This results in adjusted losses for the fourth quarter of fiscal 2020 of $1.21 per share.
For the full year of fiscal 2021, we reported net earnings of $31.15 a share. For fiscal 2020, the unadjusted number was $22.55. However, if you exclude the aforementioned CARES Act tax benefit, our earnings per share for the full fiscal year in 2020 were $15.10. We have a reconciliation of this in our press release as well.
Let me start with a few comments on our equipment rental revenue. We experienced an increase of 33% or approximately $172 million for the fourth quarter versus the same period last year and we finished the full year up 15% or $391 million.
For the fourth quarter and the full year, we saw increases across most our categories. One way and in town revenue and transactions both increased in double digits. Average miles per transaction increase and our one way rates remains strong.
Our corporate account business or what many might refer to as last mile experienced a strong increase in revenue for the quarter and for the year. Compared to the same period last year we increased the number of retail locations and independent dealers.
As you may recall, it was during the first quarter of fiscal 2021 that we began to experience the effects of COVID and we had a 13% decrease in equipment rental revenues. We are now beginning to run into those months on a comparative basis. We saw no such weakness in April and May of this current year, and in fact, revenue trends continued on a very strong fashion.
Capital expenditures on new rental equipment were $870 million for fiscal 2021. That’s down from a $1,374 million in fiscal 2020. Our original plan for fiscal 2021 was to reduce capital spending on the fleet. Between that plan COVID delays and now the microchip situation facing our manufacturers, we are working to normalize our truck rotation schedule.
Capital expenditures for the rental fleet and again this projection is dependent upon manufacturer availability are expected to increase to approximately $1.2 billion in fiscal 2022. That’s before netting any sales proceeds against them.
So speaking of sales proceeds, sales proceeds from retired rental equipment decreased by about $150 million this last year to a total of $527 million. Sales volume for fiscal 2021 was below last year’s levels.
However, sales price per unit improved. Should the availability of new equipment allow for us to complete our planned purchases this coming year, I would expect to see our volume of sales and related proceeds increased in fiscal 2022.
The fourth quarter was another good quarter for filling the self-storage units. Looking at our occupied unit count at the end of March we had an increase of 69,000 occupied units compared to the same time last year.
To put this into context, during last year’s fourth quarter call I reported to you that we had increased occupied rooms just over 49,000 rooms in the previous 12 months. We have increased the pace of filling rooms by about 40% or 20,000 more rooms than we filled last year. This pace of filling rooms has continued to accelerate into April and May.
Storage revenues were up $21 million, which is a 19% improvement and for the full year -- that was for the quarter, for the full year revenue increased just under $60 million or 14%.
For the third quarter in a row, our all-in blended occupancy rate experienced an increase. The fourth quarter rate went from 66% last year to 74% this year. We have added just over 36,000 new rooms into the portfolio during fiscal 2021.
For fiscal 2021 we invested $505 million in new real estate acquisitions and in development of self-storage and U-Box warehouse space. That was down from fiscal 2020 when we spent $750 million. Our goal going into fiscal 2022 is to increase the pace of investments.
We currently have approximately 6.7 million new square feet in development. We still have about 50 properties that are not yet in the active development phase that at a bare minimum would add about 2.5 million square feet and we are now starting to see our acquisition pipeline beginning to accelerate a bit. We have approximately $150 million worth of acquisitions currently in escrow.
Retail products sales increased 40% for the quarter. All three of our major product lines moving supplies, hitches and towing accessories, and propane saw revenue and volume increases during the quarter. These lines are continuing to improve into April and May.
In the moving and storage segment, while operating expenses increased for the quarter. We continued to see an improvement in our operating margin for both the quarter and for the full year. If you look at either our GAAP operating margin of total cost total revenue or EBITDA margin we posted improvements from the fourth quarter and for the full year.
Operating expenses in the quarter increased $78 million, which is higher than usual. However, the quarter included some costs that are better evaluated within the context of the entire fiscal year.
For fiscal 2021, we saw -- for the full year we saw the smallest increase in operating costs since 2016 and if you look back across the last 10 years it was the second smallest increase in operating costs.
Our three largest operating expense categories, personnel, maintenance and repair and liability costs did see quarterly increases, but they remained below the rate of revenue increase. I alluded to on our third quarter call that we were going to make a contribution to our employee stock ownership plan. We did that in the fourth quarter is about a $19 million charge that was recognized in the quarter.
I also highlighted in the press release that fleet maintenance has increased as the need for preventative checks has gone up in relation to additional rental miles in the fleet and as we have had -- as we haven’t been able to rotate in as many new trucks, there is some portion of the $6 million quarterly decrease in the fleet depreciation that is now being reflected in increased maintenance costs.
Operating earnings at the moving and storage segment increased by $138 million, bringing our earnings for the quarter to $117 million. We continue to improve cash and liquidity position at the end of March, cash and availability from existing loan facilities at the moving and storage segment totaled a $1,115 million.
With that, I would like to hand the call back to our operator, Tom, to begin the question-and-answer portion of the call. Thank you.
Thank you. [Operator Instructions] And the first question comes from Steven Ralston with Zacks. Please go ahead.
Good morning.
Good morning, Steve.
Great topline and really I don’t want to get involved with that. It seems like everything’s going your way there. I am looking at the cost area and could you delve a little bit more into your comments about the margin. Looking just at the operating expenses, it seems like that you have an abnormal amount of increased personnel costs even if you ex out the stock ownership program that you had and also going forward it may be harder to acquire more employees. Could you just go on into detail on that?
Sure. Yeah. I’d be happy too. On the personnel for the quarter it was up in total and absolute dollars probably a little over $40 million. So close to half of that was this ESOP cost, which didn’t run through the fourth quarter of last year. So that’s a cost that’s probably better evaluated in -- over in the context of a 12-month period and for the 12 months, our personal number was up maybe $36 million roughly just to kind of put it into context.
We also had some additional bonus compensation to the field. Also in the quarters our bonus number was probably up close to $10 million, but that’s largely calculated based upon an improved results.
So if you compare our overall personnel numbers to revenue, even with that extra ESOP expense we still picked up arguably somewhere around $18 million to $19 million of margin in the quarter. It was just -- it led to an increase in absolute dollars.
On the repair and maintenance side, we are working -- we had such a busy year, we are working to get caught up a little bit on repair and maintenance costs. So some of those costs arguably took place in the third quarter and the equipment got into the repair shops and began getting maintenance checked out in the fourth quarter. Those costs are up a little over $13 million. We are still down for the year on repair and maintenance cost to the tune of about $18 million.
Other significant increases for the quarter we had, if you look at like property taxes, utility costs and non-capitalized building maintenance, those are up about $5 million. Our liability insurance costs are up about $4 million.
Shipping, we have been shipping a lot more retail product to our locations. We are also been shipping a lot more U-Boxes, so shipping costs were probably up close to just $6 million. So I don’t see anything in our expense numbers that concerns me from a structural perspective. We -- I would say the timing of personnel expense is kind of uneven across the course of the year. But I think 12 months is a reasonable look at that.
Thank you for the amount of details even took away one of my follow-up questions. Also on the additions to the truck fleet, there are a lot of challenges there especially the lack of supply, and well, we also know that metal costs are going through the roof. So even when some things get resolved there seems to be there will be quite a bit of inflation impacting your new inventory of the truck fleet. Could you make a comment on that?
Sure. We have for the most part of our cost for the equipment going into this next year. The equipment costs have been going up 2% to 3% per year over last 10 years. Right now more so than cost, I think, we are just concerned about the availability of and when they are going to be able to deliver.
So I think versus our competition, we are uniquely qualified to deal with hiccups in the fleet supply chain. We have the repair organization established where you saw this year. If we don’t get as much new equipment in as we wanted to, we are able to deal with the equipment as it ages, I think, better than most.
So we are planning -- our fleet plan for this coming year is to grow the fleet a few thousand trucks if they are available and right now it’s a little early on. I would say that we are looking at somewhere so far maybe 5,000 to 7,000 cancelations maybe on the low end so far of our current model year trucks and we will see how that fleshes itself out over the rest of the year.
All right. And then just to circle back to the topline, I want to say it’s, like, self-storage is on cruise control, but that’s because of good management planning and increasing the capacity. Any forward-looking comments that you would like to make on the self-moving side, especially about repositioning any trucks that are in undesirable locations?
Well, yeah, I will certainly hit on that last point that, the reposition of trucks which is the basic. I talked to our folks here internally it’s the basic blocking and tackling of what we do. And you never really have a point where everything is where you want it.
But they have made over the last three months to six months, so significant progress in getting trucks to areas where we want them. I would say in talking with our folks who run those areas. They have made progress in getting equipment down to Southern California.
We have made some progress in relieving some of the oversupply in Texas out towards Nashville. We always have areas that need equipment the northeast is still an area where we could use some equipment. We still have probably a little bit of excess equipment in parts of Florida.
But there’s always going to be something like that. I think we have made some good progress in areas. So I don’t see anything uniquely in place right now that would prevent us from being able to serve customers this year and recognize revenue increases.
Thank you for taking my questions.
Thank you.
The next question comes from Jamie Wilen with Wilen Management. Please go ahead.
Hey, Jason. Nice quarter.
Hi, Jamie. Thanks.
First a little comment on things, in math you take two negatives and you come up with a positive. That’s not quite the way it works in business. Do you had a ton of positives this quarter and you put out a press release that sounded like the world was coming to an end. I would encourage you in the future to actually hire an Investor Relations firm to write these press releases. So you can actually accentuate some of the positives that you have been achieving and how you got there during the past year. So first I will start with truck rental, you were --- your profits for the year obviously were significantly higher than last year. Was this the highest level of profitability you have ever had in truck rental?
That’s a great question. Certainly going back over to say the last five years, I don’t have that at the top of my head going back, say, before fiscal 2016. I think fiscal 2016. I am thinking of 2016, I am thinking of 2006 as both years that that we had peak kind of, in absolute dollars yes. I am trying to think like a common size measurement. I might have to compare it against a couple other years.
Would it not have been a good thing to look at that and to show how well your truck rental business is this is the highest you have ever achieved?
Yeah.
Okay. And just -- and indeed when the press release came out for the year or for the quarter, the newswires really didn’t pick it up, but that last year’s quarter included a $7 a share gain from the CARES Act tax provision. I think more clarity might have helped them do that and the earnings might have looked as good as they were. Indeed your profits were up significantly in that quarter and should have been recognized as such. As I look at truck rental, what I am really pleased about is the fleet utilization. We have been buying a lot of trucks and here we have as we have been forced to slow down and had increased volume, the difference in fleet utilization caused the profits to nearly double in this year. Joe has always said, fleet utilization is driving force. How do you look at fleet utilization for what you are going to achieve in the future?
Well, there is a whole lot of pretax before you got to the question there. I just want to comment on the press release. So we attempt to adhere to the letter of what the SEC expects of people and I am very sensitive to providing non-GAAP measurements or adjusted earnings per share.
So I appreciate what you are saying, Jamie. But if I say something wrong, I am the one that’s going to get in trouble for it not you. So I am a little sensitive to where I place adjusted earnings. I appreciate that. I try to put it in the same paragraph. I can’t help it if people aren’t reading that.
On the utilization question, yes, we saw improved utilization this year. We have had years where on a per truck basis utilization has been higher, so we still have blue sky on how much more utilization we can get out of the equipment.
Okay. On the self-storage side, I know you don’t break things out, but we have a large amount of depreciation in there. Do we have an actual operating profit after depreciation? I realize the cash flow is humongous because once these things are built it requires little in the way of capital expenditures?
Sure. I -- since we don’t break out, the best I can tell you is based upon how we do reporting to the lenders that have lent us money against those assets, and, yes, even after depreciation assumption they are profitable.
Okay. And could you shed some light on an annual basis on a given self-storage facility that you build, what would the annual depreciation charge be on whatever 700 unit $5 million facility versus what would your capital expenditures normally be?
It’s a good question. I don’t know that off the tip of my tongue, Jamie.
Okay. But what’s -- is it 20% depreciation or?
We attempt to allocate as much of the cost of a storage facility as we can to assets that depreciate. It did benefits us from a tax perspective. On conversion properties, in particular we focus on cost aggregation studies. There is tax law that is very beneficial to us for conversion properties that allowed us to really front load as much of those cash depreciation as possible.\
On a lot of those we do have a different depreciation on the GAAP basis, which slows that down a little bit. But I would say, maybe five years ago we focused on that and we probably accelerated our GAAP depreciation a little bit, as well as we have allocated more towards assets that depreciate quicker.
And over the first five years of the life of a self-storage what percentage of the assets are then depreciated with the accelerated basis?
That would kind of go with your first question that, I have not looked at an example of that recently at one of our, I get cost segregation studies. I haven’t -- I don’t recall that off the top of my head, Jamie.
Okay. You said you had about $150 million I believe in the acquisition pipeline. Could you tell us the location of these and the multiple of EBITDA you were paying for most of this?
Sure. Well, I -- as far as locations goes, they are spread all over the place. That translates into about 50 or 55 deals that are spread. I mean off the top of my head I am thinking California, New Mexico, Colorado, Florida. It’s really spread out all over the place or what we did in the last 12 months, I would say, I think, we bought nine or 10 existing storage facilities and probably the projected cap rate on those purchases was somewhere around 7.5% for conversion properties. I would say that the projected cap rate on those deals is closer to say 9.5% to 10% and on grounds ups probably 9% to 9.5%.
Okay. I also -- so that you are now ramping up an affiliate program for your self-storage units, is UHAL going to be managing more outside units in the future?
That -- we are ramping up the existing affiliate program that’s been in place now for close to 20 years. As far as us doing actual third-party management, no, I have not seen that yet.
Okay. Very good. And then the last question as you look into April and May, I believe you said on both sides of the business, both truck rental revenues and self-storage revenues both look to be at a growth rate that is equal to or exceeding where you have been in the previous quarters?
Yeah. It’s going to get complicated here, because up until June -- from the last 10 days of March through June we had decreased revenue. So by the time we get next quarter, I am going to need to come up with some comparisons and maybe two years ago in order to, say, okay, well, what’s the real growth, because, of course, it’s going to be easy to show outsized improvement compared to the first quarter of last year.
But I think we want to say if you did average growth from two years ago how does our improvement look and we are still seeing April and May was strong revenue growth even compared to two years ago when you take an average. So we will try to work something up. I have no doubt that I will find a way to disappoint you in how I present that, but I will try to find some way of doing it.
Okay. And one last one with self-storage, you had always done a figure for the existing units, what percentage of capacity they are running the one -- the mature units and the percentage of self-storage facilities running over 90%.
Yeah. That is -- so -- well, I have a couple of measurements. But what I have been kind of going to is locations that are over 80%. So right now we have about 70% of our locations are over 80% occupancy on balance sheet, compared to last year at this time that’s 145 more locations at 80% occupancy. The average occupancy at those locations was 92.3%, which is 140-basis-point improvement from where we were last year.
Okay. Within the industry it seems like rates are moving up a little bit as occupancy rates are moving up. Do you see that as well?
Yes. Yeah. I would say that, at the end of March, our average asking rents were up maybe 1.5% to 2% compared to the same rents -- asking rents the year before. And based upon how the rooms are filling up, I would estimate that we will see some stronger rate growth this year.
Okay. Thank you very much, Jason. I appreciate it. Nicely done.
You are welcome, Jamie. Thanks.
[Operator Instructions] The next question comes from Craig Inman with Artisan Partners. Please go ahead.
Hey, Jason. Can you hear me, okay?
Yeah.
I guess, I will start on the CapEx side for the trucks. You indicated this year, what was it gross $1.2 billion, is that right?
Yeah. That’s what we are going into thinking it’s going to happen.
Okay. One of the things, obviously, the business kind of pre-pandemic grew in that 5% to 6% range. And so we kind of pulled forward four years or five years of revenue growth during this period, which is certainly in the last nine months. And you saw the op margin [ph] improvement and the utilization improvement. So how do we not get back into that situation where we are building for the future too soon, where we have too many trucks and we are kind of waiting on the revenue to come? I want to get a sense of that dynamic?
Well, it’s about to act. So right now we have two things that we are trying to accomplish in the fleet program. One we are trying to get back to a normalized rotation program, because we weren’t able to get all of the trucks that we needed in this year in order to rotate the old ones. So there’s a certain amount of that that we have to get caught up on.
And then in the middle of that we see an opportunity where we would like to increase the size of the box truck fleet nominally. I mean it’s not going to be a dramatic increase. I think total growth CapEx next year under a base plan would be somewhere around $200 million. And are we a 100% sure that that we are going to be right on demand? No. But our best indication is that we are going to be able to use that equipment.
If you go back 18 months and some of the discussions that we were having here then was that that we should stop buying trucks and that we should stop buying self-storage and we slowed. But I think we are all pretty happy that serendipitously it worked out to our advantage to have that capacity in the business environment that we are in today. So sometimes that works out, sometimes it doesn’t, I think we have put ourselves into a good position for an environment that we hadn’t planned on and we can take the advantage of it.
Yeah. No. I just see how the revenue came through and the OpEx didn’t expand as much. It gave us a picture of where utilization was and we were over fleeted. For today, we weren’t over fleeted for maybe three years from now and that had pressured margins and had pressured returns and it’s worked out. But I am just asking we don’t want to go back to waiting for three more years if we over fleet again. I was just trying to get a sense of how you are all are thinking about that?
I completely understand your point, Craig, and we are aware of that and we will - we are trying to be as thoughtful and careful about this as we know how.
Yeah. No. I know there’s no answer, but as you know, I mean, you got to play to win too, so.
Yeah. That’s -- look, there’s an opening here that we have been trying to take advantage of with other people who have been paying close attention. And [Audio Gap] chance that the rate who were once -- were the once that were normal, right? I mean…
Okay.
Maybe we have gotten to a point where little bit more what normal should have been. So I think we have seen a little bit more activity with more miles been driven per transaction and I couldn’t tell you exactly why that is. But I think that that’s had an effect. So right now I think in towns rates are holding. I think we have been able to take it -- get credit for all of the convenience that we offer on the one way rate and that benefited us.
Okay. One thing interestingly the -- on the P&C side, revenues were not very much year-over-year. Is there less uptake on the insurance product from customers, one of the issues we had remember, I think, I am remembering correctly is, repair ended up being higher later, customers returning product with too much damage and the dealers wanted kind of pushing to get that paid for immediately?
Yeah.
And just -- is just a gap there, I thought P&C would have followed volumes a little more?
Yeah. Well, there is a little money. There’s a three month lag in reporting. So our insurance companies are required to report on a trailing 12-month basis, I mean, on a calendar year basis. So they -- I think we are catching two quarters that were -- that are didn’t have the same growth that…
I got it. Yeah.
…moving and storage transactions. So I think there’s a little bit of a lag there that then we will start to catch up on a little bit.
Okay.
But otherwise, from as I look at it, penetration rate and the take rate on our storage customers and our equipment sharing customers, they are still using the insurance product. So I am not too concerned about that. I think the programs are still thriving. I think maybe that three-month lag is causing it to look a little bit of...
Okay.
… was.
Okay. That makes sense. And on the development side, for self-storage, the pressure just on labor, costs, land values, so you are still able to get those high single-digit cap rates on conversions and ground up?
We have been. I mean, if things materially changed from here, we may have to adjust our approach. But at this point in time, we are still completing projects. I think we are going into new projects with a little bit more of a sober view on what the costs are likely to be by the time we get there.
A bare land that we are buying today, you are oftentimes a year out from actually building. So a lot can change between now and then. Cost could go up or if you believe, folks maybe some of these are transitory inflationary pressures. It’s hard to say. We have built in projected additional costs into our model, but if things were to trend up further from where they are today then we would have to figure that out at that point.
Okay. So the stuff -- but the stuff that is -- you already bought in or had owned before is still penciling out, because rates have gone up enough to keep the developments going.
Yeah.
And then on -- you are doing a little more M&A? Is that sound -- am I hearing that right in terms of in place ran up self-storage?
Well, yeah, I mean, like, going from three year to four year to 10 year, it’s still very, very minor part.
Okay.
And most of the time these are smaller complimentary facilities to our existing footprint. I would say a couple of them are kind of big standalone ones, but for the most part that market is still very expensive. And I mentioned that to Jamie, the cap rates on those deals and you can see that the difference that the stuff that we are building and converting is expected to pencil out much better than the existing storage that we are buying.
Right. No. That’s why I was asking, because even that 7.5% is better than where the -- a lot of the big public guys are pulling out their checkbook. I think…
Yeah. We are not buying those same facilities. And oftentimes, these deals…
Yeah.
… then, when you mix them in with the existing UHAL presence in the market, the idea is that it’s going to a rising tide raises all ships for us in that market. So it’s meant to help out our existing facility as well.
Okay. So you got ability to get squeezed a little more out of it?
Yeah. If we can buy something that currently has staff and we can run it with our existing staff. It helps. But that’s factored into the 7.5%.
That’s factored into the 7.5%. Okay. Because that’s what -- I mean, you can see where they are operating in the big public guys and they are not there. So those are more attractive cap rates. I was just curious how.
Okay.
Now, I think that’s it for -- oh, the refund from the IRS. Are we still waiting on that? It looks like in the K.
Yes. I won’t go into the details of working with a federal government agency, just in case they are listening. But it’s been a challenge. It’s -- there is nothing. There is no disagreement with them on whether or not we should get the money back. There’s just been disarray and how they are getting up with that.
Okay. Well, actually, I will ask one more, obviously, you will stepped up the dividend last quarter. I think you will decide on a 90-day basis, any changes in capital allocation or returning ways to return cash to shareholders?
All right. I will tell you that our Board hears or read the transcript of this call, so they are always paying attention to that and we will see where -- our cash position is very strong point right now, even given the amount of CapEx that we want to do. So I think we have some flexibility. But I am not going to say that we are inclined to go either way on that. I am not in that discussion. I don’t want to say that in either way on the call.
Well, if they read it, we are in business to get paid and make money, generate cash. So we appreciate the kick up. That’s all for me.
Thanks, Craig.
Thanks.
This concludes our question-and-answer session. I would now like to turn the conference back over to management for any closing remarks.
Thanks, Tom. But I -- actually I do have -- there’s one more question that was submitted via email before and I want to make sure I get to that. From Steve Galbraith of Kindred Capital Advisors and his question was, you continue to build and hold much higher cash levels than has historically been the case? Is this simply in anticipation of deferred expenditures expected in the coming year? Are you confident that you are being as efficient with your balance sheet as possible? With an ever increasing self-storage business, your capital structure would seem to be less efficient than pure play storage comparable companies?
So I wanted to touch on that and answer for Steve. He largely answered the question. We are anticipating a higher level of capital expenditures those of you have been around us for an extended period of time know that that our first use of cash is to put it back into the business grow it.
If I look at our fleet CapEx for the coming year, we are probably going to need somewhere around $250 million of working capital to fund that plan. On the storage side, we were light this year with $125 million of acquisitions. Two years ago that number was closer to $550 million. So I think we are going to end up somewhere in the middle of those two numbers as far as acquisitions go.
Development spending last year was around $385 million. The highest we have ever spent in a year was $540 million. So there is another opportunity here depending upon how we get land use and can get into these projects quickly that will certainly increase the spend from compared to this year.
So going into the pandemic we would work the cash balance down to about $450 million. It’s going to take us some time to get back down to that level between investment or any other uses of capital, as Craig mentioned.
I do think that that now is still a good time to lock in low cost debt on the borrowing front if that becomes a possibility in order to help fund us for the next decade. So Steve I hope that that answers your question. Otherwise you can follow up.
So, with that, I’d like to thank you all for your time and attending this call. And I look forward to speaking with all of you again on August 8th for our first quarter earnings call. Thank you very much.
The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.