Good morning, and welcome to the AMERCO Second Quarter Fiscal 2015 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.

Good morning, everyone, and thank you for joining us today. Before we begin, I would 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 and 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 September 30, 2014, which is on file with the U.S. Securities and Exchange Commission. Participating in the call today will be Jason Berg, Chief Accounting Officer of AMERCO. I will now turn the call over to Jason.

Thanks, Sebastien. Good morning. I'm speaking to you today from Phoenix, Arizona. With me on the call are: Gary Horton, AMERCO's Treasurer; and from our offices in Reno, Nevada is Rocky Wardrip, AMERCO's Assistant Treasurer. All 3 of us will be available for questions after the prepared remarks. Yesterday, we reported second quarter earnings of $7.98 a share. That's compared to $7.06 a share for the same period in fiscal 2014. As usual, to try to minimize repetition during my prepared comments, all of my period-over-period comparisons are going to be for the second quarter of fiscal 2015 compared to the second quarter of fiscal 2014, unless otherwise specified. Our core Moving and Storage operations experienced a $34 million increase in operating earnings for the quarter. All 3 of our primary revenue lines for this segment improved, with the most significant increase coming from our equipment rental revenue. U-Move revenues increased $55 million or 9%. We saw several key measurements trend up, again, this quarter. Transactions from both our in-town and one way markets for trucks, trailers and trolling devices all increased. The average number of trucks in the fleet increased. The number of independent dealers was up. And we continue to add new company-owned locations, with 19 new U-Move locations coming on line during the quarter. I have nothing new to report regarding the pricing environment, it remains competitive. Looking at preliminary results for the first month of the upcoming third quarter, we are continuing to see U-Move revenue growth. Capital expenditures for the first 6 months of fiscal 2015, on new rental trucks and trailers, were $536 million, that's a $153 million increase compared to the same 6-month period last year. Proceeds from the sale of retired equipment were $259 million, that's a $92 million increase. Our projections…

[Operator Instructions] Our first question comes from Ian Gilson of Zacks Investment Research.

On the cash versus debt repayment, you got a lot of cash available. Can you pay down early with not much of a penalty? Or is that not to the advantage at this point in time?

I'm going to hand that question over to Gary. He is in the office here with us.

What we've been doing is, we've been refinancing a set of our storage assets, and we've paid the fees and some of the costs as Jason mentioned. We are so close to the first quarter. We can pay off a lot of our maturities in January of next year without the season. So we're very close to it. So what we've been doing is accumulating cash. And to some extent, probably, paying more interest than we will. But with the low rates have been, it was wise, we've [indiscernible] on our refies as far out as 20 years and fully amortizing. So the liquidity that we build up has actually been to our next year, so that's one of the reasons why we have the cash.

Okay. Jason, on the transaction data, we never really had much over the last few years on details about what actually the gain has been. How far can you push that? Is there anything that competitively that has enabled due to increased transactions? Where is the demand coming from?

Just to refer to the transaction data. What I have communicated at least over the last year or 2 is that revenue growth has been right on top of the transaction growth. So that kind of gives you a real good sense of what our transaction growth -- overall transaction growth has been. It's pretty much near to our revenue growth. That's where much of our revenue growth is coming from, is just transactions versus rate. As far as where we think that can go, we are clearly geared it up for growth along those lines looking forward. We've added significant number of distribution points. We've also added a significant number of trucks. I think that both of those factors will enable us to -- we have more than enough trucks right now to service additional business. So our improvement in revenue this year has not been coming from utilization. So we believe utilization is an opportunity once again and on a bigger scale, in fact, because we have more equipment, we have more locations. So right now, I don't think that we see a cap in the near term on where we can take transaction growth.

The next question comes from Jamie Wilen at Wilen Management.

Just to follow up on the balance sheet and the refinancing. When you get all through the refinancing. When you get to, let's say, June of next year, what will the balance sheet look like? How much will you have paid off? How much cash will you be sitting with? And again, the interest rate savings, I assume, is as it was before with no change there.

Gary, do you want to start off with that. I'll try to supplement.

Sure. We're looking at -- I think we have $293 million of real estate associated data. We have a few things that we will be buying out on -- excuse me, the equipment leases and capital [indiscernible] be paying some of those up. But again, I would say there are a lot of dollars, right now, we've actually prefunded a lot of the maturities that are coming up next year. So again, the older debt that we're retiring is at the higher rate. So there should be some positive impacts from that. But as Jason was saying, if you look at our CapEx, we have a lot of CapEx, we have a lot of storage that we're looking at. So I think, the balance sheet would probably be a shift from cash availability to some real estate that's available, which takes about -- probably, 6 weeks to 2 months, please go ahead and refi and bring money. But again, we are offering basically and buying all of our stuff with all of our equipment and locations with cash.

So Jamie, this is Jason. At the end of the last fiscal year, if you were take our on balance sheet debt, our off balance sheet debt and net out cash, we were right about $1.7 billion. And at the end of this quarter, we were at about $1.709 billion. So net of everything hasn't changed that much. After the pay downs, I think, just, as Gary said, the cash balances are going to serve to reduce that. So on a net basis, I don't know how big of the change is, there's going to be there.

Okay. And then, you've always said to the other side of the valley, you will figure out the best way to allocate capital whether it was through cash dividends or share repurchase or what have you. Is that still the game plan? When would you expect to be able to make a decision and start implementing that?

So I think the Board would consider that once we have some certainty. Gary has mentioned that some of those pay offs could possibly happen as early as our fourth quarter of the fiscal year, which should be the first quarter of the calendar year and then, consider that after the fact. A mitigating factor, a complicating factor, that is we're always looking on the acquisition front. And while we may not have a significant one right now, we are looking along the lines of acquisitions; some people are out there looking to sell right now. So that could be something that when we make this decision, maybe, an acquisition arises. If not, I know that the board will address the issue once those loans are paid off.

Okay, on the self-storage side. Do you publish at all what your rental rate is per square foot, that's how other people do?

No, we don't.

Could you tell us what it is.

I would say just -- directionally speaking, I think, in-place rents were probably up about 3%. Our challenge is that we blend new product in with old product. We're also -- I would say, our -- the geography of our storage is probably different than most of everyone else. So our rates are going to look a little bit different. However, just directionally speaking, I think, in-place rents are probably up about 3%, blend are probably up closer to 2%.

And what percentage of your self-storage facilities are now running over 90% occupancy?

On the own portfolio, we're 48%, 49%, which is about -- I think, last year at this time, we were about 44% or 45%. So I think, we picked up about 50 facilities. The average occupancy in those facilities, that are over 90, is about 95%.

And when you talk about the 2% increase in occupancy rates, was that similar throughout the entire network? Or did most of that happen to newly acquired facilities?

I think we don't often quote that because it's a complicated number. We may have rate increases in certain areas of 5%, and then, we may be adding product that is lower than our average rate overall, which would bring that down. So that's why I don't have a real -- I don't quote that number because we don't do a same-store number like some of the other reads, so it doesn't make quite as much because you're talking about a different pool of assets from year to year.

Okay, I was referring to occupancy ratio, not rental.

I'm sorry, I mistook you. So what was the question then?

The increase in occupancy rates that you had during the quarter of 2%, was that spread equally over the chain or was that -- or most of that happen in the newly acquired facilities?

No. I think that kind of happened across the board.

Okay. And obviously, [indiscernible] significant advantage for us not paying any taxes, still any further discussion to lower the tax rate or change the corporate structure to be able to not pay as much to the federal government?

We're, certainly, looking at a strategies to do that. I would say that converting to our rate, probably, is not the top of that list right now.

And lastly, the U-Box program. Obviously, you had some difficulties. I'm not exactly sure what the rate difficulties are, I guess, moving these things around is a bit difficult. But could you track for us kind of how much U-Box is costing? And when you would expect it to hit the breakeven level?

I think we got real close to that point last year. And I run into the same challenge that we run into on every other line, which is why we don't publish profitability by product line, is that everything is kind of blended. So our best guess of throwing cost against is that we think are there, showed probably breaking even or maybe a little bit positive last fiscal year. And then, we threw some challenges at it this year to kind of take a couple of steps back, and we are probably a little bit below that this year now. And that's an amount that we talked about at the last quarter, somewhere in the $8 million to $10 million range, we're probably not going to get back. But we're starting to see our trends move back to what we saw before we put the systems in. And when you think about it, just to expand on your comment about freight. What we're seeing in this business is, it's largely a moving business versus a storage business for us. So then, the majority of what you're doing is, you're moving these boxes around the country with third-party carriers. And for them, just by the nature of that, that's going to be one of your largest expenses. So that's the cost that we're trying to manage to and one of the systems that we threw at that last quarter was a freight management system that our freight costs went up through our understanding or the lack thereof of the freight management system.

Would you expect U-Box to be in the black next fiscal year.

Certainly, what we're planning towards.

Okay. And lastly, as far as expenditures for trucks moving forward and rental equipment. It seems like it's tailing off in the back half of the year, you're looking at increased utilization. Are your planned expenditures for adding to the fleet going to stay at this level? Or is this the high point and we're moving little South now?

I think, I break it down into 2 pieces, growth, CapEx. Yes, I think, probably, this year will be a high point. And we may stay at this point or come down depending upon demand and depending upon how we see the utilization numbers come. We've added a significant number of trucks over the course of the year. And I think, our focus now is shifting towards improving the utilization of what we've added. What we will see through the end of this year and then into next year is, I think we'll see our net CapEx stabilizes as we get onto a new sales schedule at the size of the fleet so that we should see more year-over-year stabilized proceeds from sales. So I don't think that there's a huge plan right now to -- well, we don't look out that side. I don't have a projection for the next year on fleet. I say that we usually address that in quarterly end also. I will say that end of this year is probably going to be up a little bit over the same 6-month period last year.

The next question comes from Jim Barrett CL King & Associates.

Jacob Meier calling in for Jim. I think you just answered one of the CapEx question I had, but just wanted to elaborate a little bit. Was most of that growth there is that really tied to the fleet, or especially, going forward to the rest of the year?

Yes, I break the CapEx comments down into 2 pieces, but the fleet, which is a little bit more predictable than the real estate, which is, certainly, kind of opportunistic. So the comments that I just made were related to fleet.

Okay, great. And also, looking at the margin performance in the quarter. And obviously, you don't break it out, but is that mostly driven by the self-storage business, do you say?

Well, if everything held steady with last year, then I think that will be the case. But we continue to additional storage facilities. So where as facilities that we added 2 and 3 years ago are beginning to add value to the operating margin. We're adding new facilities in which then kind of offset that. So I think that there maybe a little bit of that going on, but I don't know if that's the largest part. This quarter, they kind of spread across most of our operating expenses. We picked up a little bit of margin on personnel. We picked up a little bit of margin on our liability costs associated with operating the fleet. It was fairly well spread across most of our other miscellaneous-type expenses that the increases in those costs were less than the increases in revenues for the quarter.

Your next question is from Ian Gilson of Zacks Investments.

Couple of questions. How is it going into the significant path of your other sales? And given all of the declines that have happened in the energy industry of late, how is that pricing affecting you? And second question is, with the number of trucks sold, with the average price -- selling price of those trucks increased or did the number of trucks that you sold increased to account for the difference in revenue.

I will hit the propane question first. Propane volume for the 6 months were down a little bit for the quarter and for the month were up. And our volume largely shifts with the price of propane, excluding seasonal adjustments for weather, but comparing the same period-over-period. Price largely dictates that. We are down on revenue for the quarter and for the month. But we still focus, I think, we have -- we added several locations this last year. I think we're up to close to 1,100 of our locations offer propane. So it's a key -- it's one of our key retail sales items. Your question on the fleet sales, the smaller portion of the fleet we saw much of the increase come from more trucks being sold. The resale prices have been solid. That's something that we've been highlighting for folks on these call is that, that we're in a strong resale market right now. So the likelihood of there being more gains per piece of equipment is probably unlikely, but those have held steady compared to last year, maybe, even a little bit better. But much of the variance or fluctuation is coming from the number of units sold.

The next question comes from Jamie Wilen at Wilen Management.

Jason, I would be remissed not to mention that even though the performance of the company operating wise and stock wise has been nothing short of fantastic. After beautiful numbers, you've traded all 5000 shares. I would love if you could make an impassionate speech to the board that it would be really worthy to do a 5 for 1 or so stocks spilt so, we can have greater trading volume in our company and more people would realize who you are and how good a job we're doing. So one would hope you would reconsider a stock split, it doesn't cost the company anything and could only be of benefit to all shareholders.

The -- the world is spinning back on its axes, I was worried that we won't get that question this time. The impassion speeches have been made, I don't have anything else I can comment on at this time about that.

And lastly, property and casualty insurance. Revenues up 20%, it seems like it should be a very easy business for you to increase profitability on, the profits were flat. I felt that's somewhat of a easy margin business for you.

Well, nothing is easy. But I would say that the increase in that business is tied into U-Haul business as far as new sales go, because they are selling products to our Moving and Storage customers and other storage customers throughout the industry that may not be directly affiliated with us. So it's a business that we know, we think it's profitable. They also do the administration of claims for us. And there's several arrangements back and forth between U-Haul and we're up last to compensate the company for those arrangements and from time-to-time those arrangements may change a little bit. So we're still very happy with the performance, and overall, I think, they're contributing at the same level or more than they have been in the past, it may just be reflected in different columns within our financial statements.

[Operator Instructions] Seeing no further questions. I would like to turn the conference back over to management for closing remarks.

Thanks, Amy. I'd like to thank everyone for your interest and support in AMERCO. I look forward to speaking to, everyone, again, on our third quarter investor call in early February. Thank you very much.

The conference is now concluded. Thank you for attending today's presentation.