Q1 Shock: Revenue Beat (+5.3%) and a Large EPS Miss — The Numbers That Matter#
U-Haul’s most recent quarter produced a clear contrast: consolidated revenue of $1.63 billion, +5.3% year-over-year, paired with a GAAP EPS miss (reported $0.73 vs. consensus ~$1.21) that drew attention to non-operational equipment costs and heavy reinvestment. That split — top-line strength alongside near-term profit pressure — defines the company’s current inflection point as management pushes U-Box and self-storage growth while managing an elevated equipment replacement cycle.
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The headline tension is straightforward: revenue growth is coming from higher-margin recurring businesses, yet fleet depreciation, disposal losses and aggressive capex timing combined to erode reported earnings in the quarter. For investors the critical question is whether the revenue mix shift and the investments behind it will ultimately restore durable margin expansion or whether equipment-cycle volatility will continue to compress near-term profitability.
Earnings snapshot and underlying trends (FY and quarterly context)#
To place the quarter in context, the FY consolidated figures show divergent trends: for FY 2025 U-Haul reported revenue of $5.83 billion versus $5.63 billion in FY 2024, a year-over-year increase of +3.55% (calculated). Over the same interval operating income slid from $977.79 million to $716.15 million (a decline of -26.75%) and net income fell from $596.94 million to $331.80 million (a decline of -44.43%). Those moves compress margins: the FY 2025 EBITDA margin was 30.02% (EBITDA $1.75B / Revenue $5.83B), while the net margin was 5.69% (Net Income $331.8M / Revenue $5.83B).
According to the company’s Q1 press release and management commentary, the quarter’s earnings shortfall was driven primarily by elevated depreciation and disposal losses on retired rental equipment, alongside increases in personnel and liability costs BusinessWire. The company also continues to direct meaningful capital into U-Box real estate and fleet refresh — actions that are already changing the revenue mix but weighing on near-term cash flow and reported income.
Income statement trend table (FY2022–FY2025)#
| Year | Revenue (USD) | Operating Income (USD) | EBITDA (USD) | Net Income (USD) | Operating Margin | EBITDA Margin | Net Margin |
|---|---|---|---|---|---|---|---|
| 2025 | $5.83B | $716.15M | $1.75B | $331.80M | 12.28% | 30.02% | 5.69% |
| 2024 | $5.63B | $977.79M | $1.94B | $596.94M | 17.38% | 34.44% | 10.61% |
| 2023 | $5.86B | $1.45B | $2.19B | $890.75M | 24.65% | 37.40% | 15.19% |
| 2022 | $5.74B | $1.43B | $2.34B | $1.12B | 24.86% | 40.69% | 19.59% |
The table shows an unmistakable margin compression trend beginning in FY 2023 and accelerating into FY 2025, driven principally by lower operating income and net income despite broadly stable revenue. The principal culprits called out by management — higher fleet depreciation and losses on equipment disposal — are visible in the income-statement trajectory.
Cash flow and balance-sheet reality: capex-heavy and rising net debt#
U-Haul’s balance sheet shows capacity to invest: total assets of $20.48 billion and property, plant & equipment net of $15.30 billion at the end of FY 2025. That tangible asset base supports the company’s self-storage and equipment footprint but also requires heavy capital maintenance and growth spending.
On cash flow, the FY 2025 figures reflect important tensions. The company reported net cash provided by operating activities of $1.45 billion and capital expenditures (investments in property, plant and equipment) of -$3.45 billion. Reconciling those two figures produces a computed free cash flow of -$2.00 billion for FY 2025 (1.45B + -3.45B = -2.00B). Note: the dataset included a field labeled freeCashFlow = $1.45B that conflicts with the operating cash flow and capex figures; our calculation follows cash-flow fundamentals and therefore treats FCF for FY 2025 as -$2.00B. The discrepancy in the reported freeCashFlow field is material and flagged below for transparency.
Balance-sheet leverage increased alongside the capex program: net debt rose from $4.79 billion in FY 2024 to $6.25 billion in FY 2025 (+30.5%), while long-term debt increased from $6.33 billion to $7.24 billion. Using FY 2025 reported EBITDA of $1.75B, net debt / EBITDA is ~3.57x (6.25 / 1.75), and debt / equity is ~0.97x (7.24 / 7.50). The current ratio based on reported totals is ~1.45x (total current assets $2.51B / total current liabilities $1.73B).
Balance-sheet & cash-flow snapshot (FY2022–FY2025)#
| Year | Cash & Equivalents | Total Assets | Long-term Debt | Total Debt | Net Debt | Op Cash Flow | Capex | Computed FCF |
|---|---|---|---|---|---|---|---|---|
| 2025 | $988.8M | $20.48B | $7.24B | $7.24B | $6.25B | $1.45B | -$3.45B | -$2.00B |
| 2024 | $1.53B | $19.06B | $6.33B | $6.33B | $4.79B | $1.45B | -$2.99B | -$1.54B |
| 2023 | $2.06B | $18.10B | $6.17B | $6.17B | $4.11B | $1.73B | -$2.72B | -$0.99B |
| 2022 | $2.70B | $17.30B | $5.59B | $6.10B | $3.39B | $1.95B | -$2.14B | -$0.19B |
Two takeaways emerge. First, U-Haul is investing heavily and the cash outflow associated with that investment turned FY 2025 FCF materially negative when we reconcile operating cash flow and capex. Second, leverage is rising in tandem with the investment program; net debt / EBITDA above ~3.5x is notable for a capital-intensive, asset-backed operator and elevates sensitivity to cyclical cash-flow variability.
The strategic pivot: U-Box and self-storage are reshaping revenue quality#
Management’s strategic emphasis is explicit: grow recurring, higher-quality revenue via self-storage and U-Box while maintaining leadership in the moving and truck-rental market. The quarter and FY numbers show early evidence of that pivot. Management and supplemental slides indicate U-Box revenue grew ~15.6% year-over-year in the recent quarter, while self-storage revenue increased ~8.6%, supported by a 6.4% rise in occupied units and expansion of rentable square footage through new facilities Investing.com slides.
The revenue mix is shifting: on a trailing basis the rental fleet still represents a majority of sales but self-storage has climbed toward mid-teens percentage of consolidated revenue and U-Box is growing from a smaller base. Management disclosed near-term capital allocations to support that pivot — roughly $300 million toward real estate and warehouses for U-Box and ~$585 million in new rental equipment over the recent period — signaling a willingness to trade near-term cash flow for scale in recurring revenue streams.
This strategy has two structural implications. First, storage and U-Box revenue is less cyclical than one-way truck rentals and supports occupancy-based recurring cash flow. Second, the economics of storage and U-Box depend on real-estate yields and utilization; scaling these businesses requires time for occupancy to normalize and for pricing to migrate to target levels. Execution risk — especially pricing discipline versus incumbent public REITs — will determine whether these investments materially lift long-term margins.
Margin decomposition: depreciation, disposal losses and operating costs#
Management identified two non-trivial, largely equipment-related items as principal drivers of the EPS miss: an increase in fleet depreciation of $50.7 million year-over-year and a swing to $22 million in losses on disposal of retired rental equipment (versus an $8 million gain in the prior year). Those items alone explain a substantial portion of the quarter’s EPS shortfall, in management’s view, and they also reflect timing and residual-value dynamics in the fleet refresh cycle.
Beyond non-cash depreciation and disposal swings, cash-based operating costs are also rising. The company called out increases in personnel expenses (+$20M YoY), liability costs (+$17M YoY) and higher fleet maintenance (~+$5.2M). Together these items compressed operating margin despite the revenue tailwinds from storage and U-Box.
Put differently: the company is running two overlapping dynamics — a deliberate, cash-intensive growth program to scale recurring revenue, and an equipment cycle that is temporarily elevating non-cash and disposal losses. One is strategic and potentially persistent; the other is cyclical and may normalize as the cycle rebalances.
Capital allocation and shareholder returns — dividends intact, buybacks absent#
U-Haul continues to pay dividends and maintain a payout cadence rather than aggressive share repurchases. On a TTM basis the reported payout ratio is ~11.56% and dividend yield is effectively 0% on the most recent price fields due to the low per-share distribution relative to the stock price and timing of payments. Management’s stated capital allocation priority is three-fold: maintain the dividend cadence, invest in U-Box and storage real estate, and refresh the fleet.
That framework explains the absence of buybacks and the tilt toward reinvestment. For investors seeking near-term cash-return growth, this is an important signal: the company is prioritizing long-term revenue diversification over accelerating buybacks.
Key risks and potential catalysts#
The primary risks are equipment-cycle and residual-value volatility, execution risk on U-Box and storage rollouts, and elevated leverage during the scale-up period. Specifically, if residual values for trucks and cargo vans continue to underperform expectations or disposal losses increase, reported earnings and cash flows will remain volatile. Interest-rate and macro sensitivity also matter: with net debt / EBITDA ~3.57x and rising capex needs, weaker operating cash flow can create pressure on liquidity or force slower expansion.
On the catalyst side, there are clear items to watch. Successful occupancy ramp and pricing improvement at new storage facilities and U-Box warehouses would improve gross margins and cash generation. Normalization of the equipment replacement cycle (lower depreciation and fewer disposal losses) would materially improve reported EPS without revenue growth. Finally, quarterly results and management guidance across the next 2–4 quarters — including the next scheduled earnings cadence on the company calendar — will be informative in judging whether the current compression is transitory or structural. For reference the company’s earnings calendar displays upcoming announcement timing for later in the year [stock data].
What this means for investors#
The current set of results tells a clear story: U-Haul is intentionally investing to change its revenue mix, and that investment is producing top-line diversification but pressuring short-term earnings and free cash flow. The metrics investors should watch most closely in coming quarters are occupancy and revenue per square foot in storage, U-Box revenue growth and contribution margin, the size and trend of disposal losses, and the company’s quarterly free cash flow after capex. Those indicators will reveal whether the strategy is translating into durable operating leverage or whether equipment economics will remain a drag.
- If U-Box and storage scale with improving margins, the company’s sizable asset base and distribution footprint could convert into a higher-quality, recurring revenue platform that reduces cyclical earnings volatility.
- If disposal losses and depreciation remain elevated, the company faces ongoing EPS volatility and a heavier near-term cash burden, making leverage and liquidity key monitoring points.
Final synthesis: a strategy in execution, not yet in the payoff phase#
U-Haul’s most recent quarter illustrated a classic strategic trade-off. Management is buying growth in recurring revenue (U-Box and self-storage) through heavy capital deployment and fleet reinvestment, and the P&L is reflecting that choice now in the form of elevated depreciation, disposal losses and compressed margins. The company’s balance sheet remains asset-rich but more leveraged than a year ago, and free cash flow — when reconciled to operating cash flow and reported capex — turned negative in FY 2025 by roughly -$2.0 billion.
The investment hypothesis implicit in management’s strategy is that today’s capex and real-estate spending will deliver higher-quality revenue and margins over time. The near-term reality is that the market will need to see consistent evidence of margin recovery (through disposal-loss normalization and improving storage/U-Box economics) and a return to positive free cash flow before the strategy can be judged fully successful on a financial basis.
For market participants, the key monitoring checklist is straightforward: occupancy and pricing trends at new storage facilities, U-Box contribution margins and scale economics reported in quarterly disclosures, and the direction of disposal losses and depreciation over the next 2–4 quarters. Those data points will determine whether U-Haul’s pivot is starting to pay off or whether equipment-cycle volatility remains the dominant story.
Key takeaways#
U-Haul’s quarter delivered a revenue beat and a meaningful EPS miss. The beat reflects the payoff from growing self-storage and U-Box revenues; the miss reflects heavy capex, higher depreciation and disposal losses as the fleet replacement cycle plays out. Balance-sheet leverage has increased alongside the investment program, and our cash-flow reconciliation shows FY 2025 free cash flow of approximately -$2.00 billion, a materially negative figure that emphasizes the current cost of the growth push. Watch storage/U-Box margins and disposal-loss trends — those will determine whether the company’s strategic pivot can sustainably lift long-term profitability.
For source details and management commentary, see the company’s Q1 fiscal 2026 release and supplemental slides BusinessWire and Investing.com slides.