U-Haul Holding Company (UHAL) Q2 2017 Earnings Report, Transcript and Summary

Good morning and welcome to the AMERCO Second Quarter Fiscal 2017 Investor Conference Call. All participants will be in 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'd now like to turn the conference over to Sebastien Reyes. Please go ahead.

Good morning, everyone, and thank you for joining us today. Welcome to the AMERCO second quarter fiscal 2017 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 September 30, 2016, 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.

Thanks, Sebastien. I appreciate everybody being on the call. Our earnings as you all have seen were below last year, but above what was anticipated that our discussion in last quarter's call. The two big factors are the used truck market and last quarter we discussed one-way transactions. We saw one-way transactions firm up in the last quarter here, but not dollar per transaction. If you recall, last winter into the spring, we spoke about our fleet was a little bit behind -- our one-way fleet was a little bit behind in total numbers and we expected that to catch up in late June or July. Those numbers caught up and we saw our transactions start to positively develop. I expected that we'll see decent transaction growth through the winter. I'm always a little bit apprehensive to predict anything, but that’s the way it looks right now. And I expect we'll see a continued sluggish truck resale market, both in volume that the market wants to absorb and in dollar, the pricing that we’re getting. Other than that, we're proceeding ahead with adding more fleet, particularly in the larger size truck, the 26 footer. And we’ve a pipeline full of self-storage product -- projects and I expect we will see a increased amount of inventory come on in this 12 months compared to the prior 12 months. I’m fairly positive about everything, although I'm a normally apprehensive person, as all you know. With that, I will turn it over to Jason, walk through the numbers and then we will go to questions. Thank you.

Thanks, Joe. Yesterday we reported second quarter earnings of $9.01 per share as compared to $9.36 per share for the same period in fiscal 2016. Through all of my comments, my period-over-period comparisons are going to be for the second quarter of '17 versus the second quarter of fiscal '16, unless specifically noted. Included in the results for the second quarter of fiscal 2017, was an after-tax benefit of $0.79 per share associated with our settlement of the PEI litigation. This resulted in a reduction of operating expenses of $24.6 million during the quarter. Excluding this after-tax benefit, adjusted earnings were approximately $8.22 per share for the second quarter of this year. To tie a knot on this issue, in October, we settled our outstanding litigation with PODS Enterprises that dated back to mid-2012. In the previous two fiscal years we had accrued approximately $66 million of expenses associated with what we believe would be a probable ultimate outcome of that case. We were able to reach a settlement with them and that included a cash payment of $41.4 million. Operating earnings at our moving and storage segment decreased $4 million to $293 million. Equipment rental revenues we increased them 2% or about $13 million during the quarter. We continue to increase our transactions while revenue per transaction was down nominally as Joe mentioned. It is this continued growth in transactions that leads us to believe we’ve opportunities to further improve revenue beyond the current pace. The number of trucks in the rental fleet continues to be higher than at the same period. term. U-Move revenue growth for the month of October was slightly ahead of our six-month trend. Storage revenues were up little over $10 million or about 16%. Revenue growth is coming from occupancy gains at existing locations, new facilities being added to the system as well as the general improvement in rates. Over the last 12 months we’ve added approximately 3.5 million net rentable square feet to the system, about 540,000 of that came online during the second quarter of this year. Our spending on real estate related CapEx for the first six months was $252 million. That’s down about $24 million from last year at this time, but the majority of that decrease coming from reduced acquisitions of existing storage facilities. Our all in quoted occupancy statistics, we finished the quarter at 79% occupancy, down about 5%. Looking at square feet occupied on average, we experienced a 2.4 million square-foot increase in how much -- how many square feet were occupied during the quarter. Of the 3.5 million square feet of new storage that I just mentioned, about half of that came from our own development, the other half from acquisitions and the average occupancy of that new square footage was about 19%. Excluding that new square footage, we would've reported occupancy just under 90%. Operating expenses at the moving and storage segment decreased little over $8 million for the quarter. If you exclude the effect of the reversal, the PEI litigation accrual, operating expenses otherwise increased $16.5 million. We saw increases in personnel, repair, and maintenance, property taxes, and we still are seeing the effect of our accounting for the expensing of smaller capital items. During the second quarter this last item accounted for about a $4 million increase in our operating expenses. Capital expenditures on new rental trucks for the six months was $665 million as compared to $426 million last year. While proceeds in the sale of our retired rental equipment were $308 million, that’s down from $376 million for the first six months of last year. Our rental equipment depreciation expense, I'm looking at this before the -- before taking into account gains, for the quarter was up $17,400,000, primarily due to additional equipment in the rental fleet. Gains on the disposal of property, plant and equipment primary the sales of our trucks decreased $23.2 million. We increased our pace of truck sales from the first quarter, but we're still below last year's amount. The decrease in gains for the quarter was primarily a result of higher average cost of equipment being sold, along with a decrease in the average sales price per unit. Our consolidated earnings from operations including all of our segments were $307 million, which is down $4 million from last year. Cash and credit availability to moving and storage segment was $971 million at September 30. Our notes, loans, and capital leases payable were approximately $3 billion. During the second quarter, we completed the financing of 23 storage properties, resulting in $94.5 million of proceeds. We continue to maintain a pool of unencumbered real estate assets that could be leveraged in the future. And finally on October 5 of this year we declared a $1 per share cash dividend which was paid on November 3 of this year. With that, I’d like to hand the call back to Joe.

Thanks, Jason. We will go to questions now. Operator go ahead and take questions, please.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jim Barrett from CL King & Associates. Please go ahead.

Good morning, everyone.

Good morning.

Good morning, Jim.

Joe, could you talk about at least directionally what percentage of your customers go into a U-Haul location and actually negotiate -- attempt to negotiate price?

I don’t know a statistic there. You know, between the Internet doing price comparisons which people, as you know do and we try to make it not totally easy to do, but nevertheless people do. I don't have good number on that. I would say that it's not an abnormal thing. People giving in [indiscernible], then its why you want to do the call, but a lot of the people say something, Jim, like I want to rent it, not buy it. In other words, kind of they’re not directly negotiating, but they are negotiating.

Right.

And so someone like that you will -- hopefully they will pitch back product feature or maybe include a dozen furniture pads or something like that. It kind of depends on where the person views himself, I think that and I believe I mentioned it in last quarter's calls that, I didn't like where we’re headed on transactions going into middle June and going into July. So I told people to get the transactions and to a certain extent they interpret that as permission to give way if they are in doubt as to whether the customer, is going to lose the customer will wait. So we recovered some of that clearly in this last quarter. We did -- we clearly did better, but we're still below where we were the same time last year in dollar per transaction, which as you know it's kind of a somewhat a metaphor for pricing. So I couldn’t. And why this would has, I don't know, it is not uncommon at all. The people push back on price and it's very common that people will say they quoted a competitor. And so either ask us to price match or something. Now we don't always price match, it's -- no don’t guarantee a price match, because there's a lot of factors going on in, we don't think it would be smart to guarantee a price match. But at the retail point-of-sale people are going to be, if they have the inventory they’re going to be in inclined to price match.

I see. Can you tell us, how are your branch managers actually incentivized? Is it salary plus bonus? How does that work?

Yes, the store manager and then what we call marketing company, the level above the store manager, are on an incentive that, of course always have a total gross increase on dollar, just total gross dollar incentive. Then the people who run the store were actually on the profitability incentive. So everyone of the stores reproduce a P&L every month for and it puts their expenses against their revenue, including self-storage, [indiscernible] and in truck rentals. And they’re attempting to manage that mix or stuff and their expenses and the primary variable expense of course being payroll and utilities, they try to manage those to show a profit on a monthly basis and then they get a -- some performance compensation based on that. So, but they are not incentivized directly on transactions, but we’re on a level of incentives based on what we call work load or utilization. So, if people are running high utilization, sometimes they’re not able get a transaction growth, because they’re just -- they’re short of equipment. They have another way to get compensation, which is by having a very high utilization. So they could get -- still get a bonus even if revenue wasn’t up, if utilization was up enough.

Makes sense. And then on a separate subject, when was the last time the Company reported breakeven or loss on disposals? And what kind of industry factors correlate with those kind of results here?

They’re either -- Jason you’ve to help me, either first quarter or later '09, I think we actually had a loss on disposal for [multiple speakers]?

It was fiscal 2009.

Yes, fiscal 2009. And that was, if you kind of think back, the truck market, particularly the pickup and Van market just went bad and we -- our primary way of getting liquid with our pick up advance is through the organized auto auction business, [indiscernible], there is auto auctions around the country. The primary way we sell our bigger trucks, our six wheel truck would be retailed in ourselves. So there is a -- so little different between the two of them. The -- correct me if I’m wrong, Jason, we did probably a little better than breakeven in our 6 foot trucks, somewhat right at breakeven and maybe a little bit better and we made money on our pickups and vans last quarter, but not as much we have.

I'm sorry. And on a [multiple speakers] front, we actually had some gains in the quarter. Again, those sales are relatively small amount of our overall sales. So, it wasn't that material, but it was positive during year-over-year. And the last time to put some more detail to the last time, we experienced is, September of 2008 we experienced losses in pickups and cargo vans that lasted until February of the following calendar year.

Okay. So it was for almost five months there, six months.

Yes.

Good. And Jim I don’t have a crystal ball on that. I have some friends who are car dealers and of course they’re still reporting decent sales, but I have to believe that they’re incentivizing people and I don't have a aligned to this any better than you do, except for what I see it with our own sales. We're taking steps of course, we're going back to equipment condition, I have a -- the course of equipment comes in with scratches and chips of course it's getting less money, I’m so all hard on everybody on that, because that's just throwing away money and I think that there was some of that going on, but the market is tighter. There is just no question about it. And we are in for more money per vehicle. They got is pretty good, all the automakers got pretty good price increases 24 to 18 months ago and that’s the vehicles you see rolling now and they’re rolling into a much less roll out to resale market, so the margin is squeezing. It's still positive, but its squeezing.

Right. Okay. Thank you both you both very much.

Our next question comes from Ian Gilson from Zacks Investment Research. Please go ahead.

Good morning, gentlemen. Joe, let's [indiscernible] and look at the transaction value, if you like, in prior years you had discussed a competitor discounting and particular I believe Penske, in certain key markets. How are you seeing that at the moment over the last few quarters? As the discounting to become more or less, or do you had a feel for that?

Yes, budget. Permanently price is underneath us. They go to some as near as I can tell, they don’t share this with me, neither as I can totally [ph] go to some great links to date the minority lead system. And they intensely price back of us across the board. When they don't, it's an aberration, okay. In other words, they’ve some inventory difficulty. So they kind of steps themselves as a competitor, okay. And we have chosen to -- if we drop down they will drop, if we drop again they will drop again. They’re just -- they just decide that they’re going to run at a low rate. And we try to counter that really with convenience product availability and then finally product features. So we’re much more geographically convenient. We're much more product available and we consider we have better product features, but ultimately if the $1,000 or $1,500 rental, then coming back five off plus or something, ends up in $50 or $75, it's enough money that the customer might care. I don't think in this day and age that it's -- that it will work good for anybody if we just simply start ratcheting down on them real hard. We're beating them on convenience, we’re beating them on availability, and I think hands-down beating them on product features and I think it's a valid strategy. It's very difficult for me to tell, if they’re up fleeting or down fleeting and I don't -- I couldn’t actually tell you different ports of the country, I see different signs of what they’re doing. They had been for the prior three years, I would say they’re steadily down fleet, but this last year I’ve seen mix signals as to what they’re doing. So Penske is -- I can't make a generalization, I think that wouldn’t be accurate.

Okay. General Motors is cutting production across the board and now it's in the northern U.S states, a hard time. I don’t know they had much left in Michigan, but certainly in Ohio. I believe they produce the smaller trucks up there?

Yes.

Does that likely to have any impact or can you get better pricing out of them or …?

We are hitting them up for better pricing. It's interesting because as near as I can tell, they're upping production capacity in the lighter duty trucks, at the same time that you and I both hearing a production cuts, they’re on these longer-term five and seven year programs of capacity. They’re actually going to be bringing on more capacity going into next summer. So if that would lead to where we might be able to negotiate better pricing, we're certainly out there aggressively. We are doing it and you know what normally happens is of there is a little bit of oversupply you can get a little bit better price. But again that won't reflect itself for 18 or 24 months, so all these things have a lag and a lead. In the present tense in the next six months, we're really in a position of having equipment that we paid more for than we did just 24 months ago and right now the sales price that you’re seeing in the used truck market is down. I personally think it would be -- I'm not going to complain if they cuts on production, because it will lower supply and usually that makes the prices kind of come up a little bit. So I don't -- they're not sharing with lead, their high-level strategy. We know that production capacities, because of course they always want to tell us, if you ordered this is how many we could produce blah, blah. So we’ve a pretty good idea what their capacity is and definitely General Motors is increasing capacity, so they must have some reason for optimism. Although what you see in the paper, it is that they are cutting production.

Okay. Without giving away any of your positioning, but about half are in advance, do you book or put in orders for …?

You need usually at least 90 days lead to the …

Okay. You’re talking about a few months, not extra months or more.

[Multiple speakers] but let's, we’re really committed today about 90% committed to what will be produced in May, if you really go through it. So they're just starting deliveries right now on trucks we probably ordered 90 days ago, but we ordered enough at the time that they will be delivering through May. Now if we had to cut some of those, we could still cut them. And if we wanted to increase, we could do a little bit of increase. But we're -- in order just to get into their production planning process, they give you the 90 day lead and then that’s kind of low in your head at the same time. So, it would be -- and we would have a real contentious thing, if we tried today, canceled January's production, plant production because they're pretty much committed to it. And that's about 90 Days away. If we want to lower our trucks, we would except in March, we could negotiate that today. So it’s a lowering process, but we do a big negotiation every fall and that big negotiation is pretty much occurred.

Okay. And finally, other revenue, I see that its grown very nicely on a year-over-year basis.

Well, of course I’m cautiously optimistic. We're still seeing room to, if we will improve our service or improve our presentation that we can get the customer to do more business with us. The storage market remains still delivering good gains even though there's a lot of new entrants out there, just the truth is a lot of them out there and they're probably going to be more people coming and I can't -- I have no control over that and that's a combination of just if the market looks good and then the cost of money is low, so people are jumping in continuously. But that hasn't hurt so far and I don't think it will hurt our stores particularly, but at some point they're going to -- be a little cut back in the storage business. So I don’t see how it could not happen. Other revenues boxes were solid on. Our U-box continues to grow a little bit and I feel like when they’re getting better positioned every day. So, yes, other revenues are there. We saw some -- we’ve some more opportunity in trade, they’re not quite hitting traders where I would like to be Chairman, I mean, [indiscernible] and so, that’s -- I don’t have the answer yet, but there is more market share or more growth in that market than we’ve gotten at this point. So I’m trying to recheck that at this time.

Okay. Thank you.

Our next question comes from Ted Wagenknecht from Applied Fundamental Research. Please go ahead.

Good morning.

Good morning, Ted.

You guys -- so you made the comment last call, that you’re trying to increase your number of transaction with the peak …

I’m going to interrupt you for a minute. I don’t think I’m on the speaker line, I’m not the operator. I got some feedback that I’m not showing up from the speaker line, if the operator could hear. Go ahead, Ted. I’m sorry for interrupting.

It's okay. I was going to say last quarter you guys mentioned that you were almost purposely trying to take transaction volumes to grow your share. You kind of made the comment that you wanted to dominate this market. Has that been in progress? -- would the evidence suggest that you’re being successful in that initiative?

Yes. I would say, simply yes.

Okay. And so, when do you -- strategically when do you think about or how do you think about trying to get back some of this price that you have used to increase this utilization, now that you have that share?

I would be saying it too simplistically if I said. I can literally contract the price and grow share, but we’ve been growing share -- our growing total transaction volume and I think you give up some price, but we don’t literally, Ted, lower our price need. If we just lower our price needed, it doesn't quite do. What happens is these end up being at the point-of-sale reductions. The manager makes a reduction, or the dealer makes a reduction. They’re not really that you’ve lowered you price. But to -- on the other hand, we bought -- so we grew some of that back in the last 60 days. So I saw some of that, what we would call dollar per transaction. It's a metaphor for price. It's not the same as price, but our dollar per transaction, we got some of that back in this last quarter, but not as much as we believe we should have gotten there, that’s fairly available from the customers. So we're trying to do that going into the spring and that will be my intent, but it's not literally if we have a X share of X that we can crank the price. It doesn’t quite work like that. There is more moving parts, but the principle is this or the fundamental action was going in through the last spring, we were -- we had an undersupply in one of our sizes of trucks and that hurts in transactions and as when we got into the summer, in particularly about July, they didn’t quite have the transaction growth that I believe we should have and I put pressure on my teams to get transactions. I put pressure on them to get transactions. One of the things they do is, cave or given a little bit easier to point-of-sale to the customer. In other words, the customer wants a concession. They’re more likely to give it. And so we probably did that more, although I don’t have a statistic that I could really, really report that to you all. But I believe that, so we did and then we picked it up, until people say okay, let’s firm our stance up, that’s hit product features, availability, convenience, and hold a little tighter on the pricing. I think people did that only -- bought a little over that pack. How much we will -- get going to the winter? I don’t know. Always we’re -- the whole industries is at overcapacity and [indiscernible] not normally a time, you think you’re going to get much in the way of dollar per transaction. But there's a lot of markets where we can, so we’re -- when we look at this, we break this down into hundreds of submarkets, because you're not really a national truck rental marketed. Breaking down those marketers, there's plenty of places we can increase our dollar per transaction. We are looking [indiscernible] something.

So, I would …

Hope to see it. Certainly, no more declines in it, but hopefully affirming up a little increase.

Okay. And if I'm reading correctly, are you no longer a controlled company?

That's correct. We no longer a controlled company. So that's a very specific definition, so yes under I believe that’s NASDAQ rules or Jason or Sebastian you could comment?

Yes, that’s correct.

I’m curious as to then, has there been any, I guess discussion about adding newer directors to the Board, making any changes in terms of upping the number of independent?

Well, right now we’ve a very fewer on the call, you speak up if I miss speak, okay? We’ve a eight member Board, which six from independence and two of those people are new as of August. So we actually had that exact discussion you're talking about a year-ago. I think we’re going to go this way. And so we recruited some Board members, brought them on and so -- the answer is yes, what we already pretty much they have.

And would you be willing to revisit, I guess, adding new members who might bring different skill sets to the Board? On a net neutral basis, I mean, still with the [multiple speakers].

It's not that I don’t have -- right now I would have to get somebody off. I don’t want to -- with my Board members really think I want them to take -- I’m trying to get rid of him.

That’s fair.

I’m not trying to get rid of anybody, but sure we’re -- absolutely, I mean, that’s a -- we actually reinstitute in order to work towards that. We reinstituted what we call an advisory board position and so we bought a third person on, what we call the advisory board. They come to the meetings, they participate, but they're not legally a Board member. But it's a way to continue to introduce people at a high level who have a different skill set, different business experience. So we had -- we’ve used that in prior years and we're happy with the results. So we reinstituted that as of August of this year also.

Got you. All right. Thanks so much.

Sure.

[Operator Instructions] Our next question comes from Jamie Wilen from Wilen Management. Please go ahead.

Hi, fellas, you’ve added a lot of square footage in the self-storage area over the last several years and obviously more to come and I’m always pleased when I see the press releases that you taken part of [indiscernible] it deteriorated and you turn a vacant building into a potential profit center for you all and a great new spot for the town. But what I'm looking at is for every million square feet that you add, obviously in the startup phase it cost you money and down the pike we make money. Is there any way you can quantify for every million square feet we add, how much it costs us in year one, the profitability and year two, and when it -- when those facilities -- when do you expect them to be a positive contributor to corporate earnings.

Jason, do you want to take a cut at that?

Sure. Jamie, I don't have a specific metric that I can give you. Just generally speaking this year for example, for the first six months of this year, our property tax bill is a little over $4.5 million, about half of that is from properties that we bought in the last year or so. So that’s kind of a drag right there, but I guess if there is a good point to this, we start to develop -- we started developing so many years ago that now we are kind of at the point that as we bring on new properties, properties that were drag in the previous year are now beginning to rent up and then kind of offsetting that. So I still want to be able to answer your question, but I just don't have any answer for it yet.

Okay. Obviously, part -- go ahead, sorry.

Go ahead.

You know part of the hit to the income line is the property tax bill, but obviously there is an operating loss you have to incur in these facilities in year one and year two, or at least in year one as the occupancy rate goes from 0 to 50 to 90?

Yes. And if you’re looking to this is, could we quantify? So I will speak to it on a per store basis. I don't have a aggregate number.

Okay.

Now on a per store basis what happens typically is, is that it's going to take you 12 to 18 months after your first outlay of cash to actually be open on any considerable basis. This is a new build or a conversion, okay. Of course, if you buy existing grommets the next day, but next we built in conversions, it can take 12 to 18 months before you see real money coming in and you’re going to then ramp up, best case 18 months, worst case five years, okay. So somewhere in that range, of course we’re always looking to do it in 18 months or less, but that's the real range. And what you’re going to lose during that time, of course you’re going to have a cost of capital loss and we have been fortunate or I guess in the last three or four years, that loss has been a modest thing. So I don’t know which you want to put on that, 4%, 5% and in the 5% across the capital, it's -- lets assume debt finance 5%, so -- and you’re going to see that kind of decline although, let's say a 36 month basis to where you're not losing cost of capital. And after that, it's your operating expenses. It may vary. You can get one of these giant locations that this could be $300,000 on a given storage, Jason?

Yes, easily.

On a year?

Yes.

Yes, so then you could capital on top of that. So you can -- on a $10 million store, I don’t think it would be at all unreasonable, so you’re going to lose a million dollars getting to breakeven, on a real cash flow. I think I would be not a total -- I think that would be somewhat reasonable assumption, of course I don't budget people to that we're driving not to, but the fact is you could. On the other hand, like Jason says, if you're not expanding your total amount in the pipeline, that kind of remains the same here after year. The difference is the last two years as you’ve observed, we’ve added a lot more in the pipeline, so it's kind of blown that up. And if you want to know whether that was $10 million this year or $5 million, or $15 million, I don’t actually -- I don't have an answer as we sit here today. I don’t know what the answer would be, and [indiscernible] Jason does either.

Okay. I still applaud the efforts. I think it's great to -- we’re looking to optimize the -- your earnings in the long run not to maximize in the short run, so it's great investment spending.

Thank you.

Secondly, on the additions to the fleet, we're seeing lowest single-digit growth in transactions, but our fleet continues to increase at a pretty nice pace there. I mean, is there an optimal level to what the fleet is or why are -- why is our fleet size increasing to such a significant extent when our transaction volume is not increasing so much? As I go around, I see sometimes a lot of U-Haul centers with a lot of truck sitting there. Do we have too much, too little?

It kind of separate in the categories vehicles. You’re not going to see as much absolute number growth in the next 12 months as you saw in the last 12 months. We’ve kind of reached a little another plateau, I believe. Now I'm always aggressively wanting to probe the market, expand and not leave an easy spot for our competitors to grow into. But we’ve found some pretty good techniques over the last four years, that allowed us to increase the fleet. I don't see that over the next 18 months, although we're going to have some growth and some of that growth, Jason, you correct me if I’m wrong, is going to be in the one-way fleet whereas the growth we had in the -- the big number growth over the last 36 month was in the local or the what we call, the in town fleet. So inside of this we have, as you might imagine, a lot of different category of things, but I don't think you’re going to see the growth in numbers, but we now have a, let's say a bank of utilization to use to grow. So we have the equipment and that means we have -- that’s unused time period or underutilized equipment, so the opportunity is to grow under that. So I think we have plenty of room to grow even if we don't grow the total amount of trucks over the next say 18 months.

Okay. And lastly on the U-Box program. Could you talk about that a little bit? Is that now profitable and what's your future outlook for the program?

Jason, I will let you speak to profits, you’re the accounting person.

Sure. What I will say is over the last -- with that eight months now of consecutive month-over-month growth. We are still little bit off of our peak. If you look at kind of 12 month running a revenue, we're still a little bit off the peak of where we were two or three -- about two years ago. From a contribution margin perspective, I will say the amount that revenue is contributing to our bottom line after we do some cost allocations to it is positive for the six-month positive for the first quarter compared to both periods last year, still relatively small amount. But its positive and we're seeing some nice revenue growth. Ian asked the question earlier about the other revenue line and the majority of the increase in that line is coming from U-Box improvements.

Okay. Very good. Thank you, fellas.

Thank you, too.

This concludes our question-and-answer session. I’d like to turn the conference back over to management for any closing remarks.

This is Joe again. I appreciate you being on. Now we will try to keep you as well informed as we possibly can. I am so cautiously optimistic and I will put in a little bump for Donald Trump. I'm excited to see him in. I think maybe if we get a little lift for the whole country, we will rise with it. So thank you for being on the call. Look forward to talking to you in another 90 days.

Ladies and gentlemen, the conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.