Joe Shoen: We’re not that far along. You saw our repair expense bloom something like $200 million a year. And that was because we were – new vehicles. And basically it’s just like you with a part of the family, if you – mom and it goes to the dad and then it goes to the kid. It has a lot of variable cost associated with it, but not much fixed cost. And that’s basically what’s happened to a bunch of our trucks. We’ve depreciated them. Now if you want to drive it another 1,000 miles, you’re going to have to pay for some maintenance every 1,000 miles. So yes, we’ve seen some improvement. You can debate it. Let’s say we booked 3,000 extra trucks, let’s just – I’m not sure exact number, but something like that.
Okay, well, that’s 3,000 probably against 20,000 particular because it matters by size. So it’s not just the total number. Now we have to balance this for every individual size truck. Ordinarily, if you had your druthers, you’d buy the same amount of same size truck every year and you’d maintain a constant fleet, but because of supply considerations, this just doesn’t happen. And so we have fleets where we have a whole bunch of high mileage trucks and a whole bunch of low mileage trucks and no trucks in the middle. And that kind of goes through us like a snake swallowing a rat. It just kind of goes through. It’s got to kind of work its way through. It doesn’t just go through smoothly. So we’re seeing some of that. It’ll balance out and I’m not sure, I’m not going to predict next quarter a reduction in repair, but that should come as we bring in new trucks and then you’ll see depreciation go up and they don’t exactly correlate – the trends correlate exactly.
The numbers don’t. And you’re also seeing us. In our vehicles, I saw in the paper morning that Ford claimed $11 billion of earnings and $7 billion of it was on fleet sales. Well, I cannot tell you how poorly we’ve been treated by Ford and general manager on fleet sales. They’ve come through with 40% price increases, price increases – and that lump through with the rest of this. So they’re making good product. I got no complaints about the product, but they have made a decision internally in both those companies finance their losses on electric vehicles, fleet customers like us, who we actually truck. This isn’t like at home, I can just tell the kid to drive the car another year, but here it’s a business. I – when I need more trucks, I need more trucks, I’m going to have to buy them.
And they’re leveraging that against us with everything they can just in a really hard that’s – and any – when I saw how Ford analyzed their earnings this morning, I said, well, no kidding, guys, that’s what you’ve done to us. And this is all under the banner of electrification. They don’t have an electrification solution for us, but we’re financing it and that’s what they’re doing with their customers. And of course, that’s causing us to seek alternative suppliers and that’s just what that does.
Jamie Wilen: And two little pieces of commentary, you increased the quarterly dividend by 25%. I’m glad you’re seeing to share everything with shareholders, and we look forward to some annual increases along the way. And then also, I love that you are quoting the self-storage analysts, that people understand that we have an incredibly large and growing self-storage business, and that we’ve never talked to the analysts there before. And I was wondering, within the industry if anyone else maintains the same organic growth that U-Haul has. I mean, this is the most difficult thing to do when you start at 0%, but it also creates the most significant upside. Is our organic growth relative to everybody else at a higher level at this point?
Joe Shoen: With out – I’m not going to say that I believe it was last year, but I know, I – we’re trying to grow everywhere where it makes sense that we’re not constrained by capital. Our constraint is our ability to execute, okay? You can just pour money into development, and you’re not going to be as happy as you can – costs can run out of control, if you don’t have some in-house expertise. So we are trying to expand, and we’re not capital constrained, but we’re not expanding everywhere because we just are unable to execute in that many places on a given day. So I don’t have a number that I’m trying to – that I’m benchmarking against somebody, like, extra space and saying, how we – I’m not doing that.
We’re all in the marketplace. We’re all doing stuff. We all have slightly different strategies. And sometimes I learn something by watching them, and maybe sometimes they learn something by watching me. I’m not quite sure that. But of course, I try to keep my eye on them. So I understand what they’re doing to get themselves in a better situation.
Jamie Wilen: As you look forward, are you looking to add a million square feet per quarter? Is that going to be a relatively constant number?
Joe Shoen: I’d like to see it be that, personally, yes. Again, we have to fill the room. See, we built more than we filled this last quarter. Okay. So, okay, got that. We’ve done that before. It’s not a terrible thing. The question is, are those rooms going to rent? And so I’m looking at rooms rented over the prior year by store, if I can manage that, okay? Well, then this thing kind of all works itself out. And then, of course, you’re watching the rate, because all these projects can’t get the rate. The master is going to go poorly. So we’re watching all that, and I think we should be able to continuously build at that rate. I believe we should now. Our model indicates we should be able to build at that rate, if something really changes in the macro environment, it’ll get us. But yes, that’s the rate I see us being able to continue doing.
Jamie Wilen: Okay. And lastly on U-Box, you’ve continued to grow that business. Has the bottom line continued to keep pace with the top line growth and how are the margins in that business for you?
Jason Berg: Jamie, this is Jason. I would say that U-Box is maybe a little bit outperforming, in that we had some revenue declines last year. It’s now bounced back. And for the really the last six months we’ve had transaction increases. This last quarter we had revenue increase. So we don’t do segment reporting here, but the best proxies that I have for kind of an EBITDA number for that is that it’s been down, but maybe in the 5% to 8% range. So in that sense, it’s done a little bit better than the rest of the organization.
Jamie Wilen: Okay. Thank you, fellas. Appreciate it.
Operator: Our next question comes from the line of Craig Inman from Artisan Partners. Please go ahead.
Craig Inman: Hey, guys, just real quick, technically, Jason, that $17 million you’re talking about, I didn’t catch that. Is that extra cost this quarter or there’s some kind of year-over-year comparison, just want to get a little color on that.
Jason Berg: Yes. So a little under $5 million of that was a credit last year that didn’t recur this year. So it reduced expenses last year. It didn’t really increase them this year. But if you’re comparing last year to this year, it looks like an increase, and then the remainder of that was an additional expense that we booked this quarter that should not come around again.
Craig Inman: Okay, got you. Okay. Because that was what I was going to just ask about. I mean, I know the priorities to get the fleet rotated, build out the self-storage and get that done. And so I was curious about then the cost base. You just – we’ve seen a lot of businesses through this period where they had a lot of revenue from kind of the COVID changes, and then you’re lapping that and you have some excess cost in the business in certain places. Are you all not in that position? I mean I know you all are always very mindful of costs, but just curious about how the cost base stacks up versus what you would expect, kind of given how you’re looking at the revenue trajectory over the last four years and it normalizing now.
Joe Shoen: I think you’re going to see personnel be a touch area for three or four years. I think that there’s a whole bunch of initiatives coming on at state and possibly at the federal level that’s going to massively inflate wages. And maybe that’s a public policy, I don’t know. But the question is, of course, can we earn that back through some value add with the customer or somehow get the customer to participate in paying that, and that’s all kind of to be determined. But if you follow the states, the states are – there’s been a lot of press about California’s bumping fast food wages. Why fast food? I don’t know, why they’re bumping them, it’s obviously political, but that’ll ricochet through my operation also in California, you see.
So the labor is very fungible, and so if I can’t stay competitive, they’ll leave me and start making [indiscernible] okay, so its just the truth. I think we’ve been through similar things, but there’s quite a swarm of this coming at us right now. And I would expect it to keep this trend to go for a couple, three or four years. I don’t have a crystal ball, obviously, but there’s so many of these initiatives down to cities. New York is just replete with minimum wages for salaried people. I mean, first couple of times I heard that. What do you mean, minimum wage for salaried people? Well, I don’t know. Can you quote it, Jason? I believe it’s hovering around 80 grand right now in New York, okay? that you can – I don’t take that as the Bible, but its – the minimum wage used to be about $34,000 for salaried people, so it was irrelevant.
