U-Haul Holding Co (UHAL) 2013 Q4 法說會逐字稿

Good morning, and welcome to the Amerco fourth quarter fiscal 2013 year-end investor conference 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 Jennifer Flachman. Please go ahead.

Thank you for joining us today. Before we begin, I would like to remind everyone that certain of the statements during this call regarding general revenues, income, and general growth of our business constitute forward-looking statements contemplated under the Private Securities Litigation Reform Act of 1995, and certain factors could cause actual results to differ materially from those projected. For a brief 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, 2013, which is on file with the Securities and Exchange Commission. Participating in the call today will be Jason Berg, and I'll now turn the call over to Jason.

Thanks, Jennifer. Good morning. I'm speaking to you this morning from Phoenix, Arizona. Also on the call with me here in Phoenix is Joe Shoen, our Chairman and CEO, and from our offices in Reno, Nevada, Gary Horton, our Treasurer, and Rocky Wardrip, our Assistant Treasurer. Yesterday we reported fourth quarter earnings of $1.93 per share. That's compared to $1.29 per share for the same period fiscal 2012. For the full year of fiscal 2013 we reported net earnings of $13.56 a share as compared with $10.09 per share for the previous year. I would like to remind everyone that included in the fiscal 2012 results was $1.61 non-cash charge in the third quarter for the reserve strengthening that happened at our property and casualty insurance subsidiary, Repwest. Excluding this charge, our adjusted earnings per share for fiscal 2012 were $11.70.

At our Moving and Storage segment, which includes our core equipment rental and self-storage business, and excludes our insurance operations, our operating earnings increased by over $5 million to nearly $55 million for the fourth quarter. And for the year, we are up nearly $30 million to $462 million. The most significant factor leading to this improvement in profitability is our growth in equipment rental revenues. For the fourth quarter, we increased these revenues by nearly $23 million, or 7%, and for the full year we had an $89 million increase, or about 5%. I think it's worthwhile to note that the fourth quarter of last year was also aided not only by the extra day in the month of February, which we did not have this fiscal year.

I would like to highlight a few key items related to this revenue growth. First, for the fourth quarter and for the full year, we continued to post transaction gains for both our in-town and one-way markets. Generally speaking with competition still being aggressive, we are growing revenue largely through transactions instead of any across-the-board improvement in rates. Second, we have increased our points of distribution. We added nearly 50 company-owned and operated locations during fiscal 2013, and we also expanded our independent dealer network by approximately 900 new dealers, bringing the total at March 31 to 16,400. From what we've seeing during the first month or so of fiscal 2014, we are still finding additional upside in our revenue results.

Over the course of fiscal 2013, we increased the size of our rental fleet by approximately 6000 trucks and 7000 trailers and towing devices, as compared to March 31 of the previous year. Capital expenditures on new rental trucks and trailers increased $95 million to just under $600 million in fiscal '13. That's compared to fiscal 2012. While the proceeds from the sale of retired equipment were $221 million for this last fiscal year. Our initial projections for rental equipment CapEx in fiscal 2014 are in the neighborhood of $525 million. This is before netting any equipment sales proceeds against them.

We remain focused on growing our portfolio of self-storage locations. Through improved occupancy at existing locations and by acquisition or development of additional storage facilities, we've increased our revenue by $6 million in the fourth quarter, and for the full year we increased it $18 million. For all of fiscal 2013, our all-in average monthly occupancy rate increase just under 2% to 79% compared to fiscal 2012. This leaves us considerable room for additional self-storage revenue growth with little incremental cost to accommodate that. From March 31, 2012 through March 31, 2013 we added over 2.1 million net rentable square feet to the self-storage portfolio. Spending on real estate-related items including construction, renovation, and acquisitions increased $68 million year-over-year to approximately $170 million.

Speaking in broad geographic terms, the acquisition market for self-storage has become much competitive. While we are in this portion of the cycle, we could -- this could affect how much we are willing to invest in the purchase of existing facilities. Our plans are to continue to opportunistically expand our presence in the self-storage market through these acquisitions while continuing to work on conversions and development projects. Our operating margin at the Moving and Storage segment for all of fiscal 2013, which I calculate by dividing operating earnings before the equity in the insurance subsidiaries divided by total revenues, improved by about 20 basis points compared to fiscal 2012.

During fiscal 2013, some of the more significant expense increases that we experienced were for commissions paid to our independent dealers, personnel costs, legal expense, property taxes, and then operating expenses associated with the growth and expansion of our U-Box program. Maintenance costs for the fiscal year were largely flat compared to 2012, fiscal 2012. However, during the fourth quarter we did see these costs increase compared to the same period the previous year. Depreciation expense, net of gains and losses on the disposal, increased $29 million for the 12 months compared to the prior year. Based upon current trends in fleet purchases and our financing options, we should see a similar, if not slightly greater, annual increase for fiscal 2014. However, we do anticipate that the decrease in lease expense will offset a large portion of this.

Both of our insurance segments improved their operating earnings in comparison to fiscal 2012. The Life Insurance segment posted a nearly $3 million improvement for the year, and our Property and Casualty segment improved by nearly $51 million. During the third quarter of fiscal 2012, we took a $48 million charge at the P&C segment related to excess workers comp reserves. We had no such reserve strengthening necessary this year, thus accounting for the majority of that improvement. Consolidated earnings from operations for the fourth quarter of fiscal 2013 were $72 million. That's compared to $58 million for the previous year. And for the full 12 months of fiscal 2013, we reported earnings from operations of $499 million. That's compared to $416 million the year before.

Our cash, short-term investments, and unused availability from existing borrowing facilities at the Moving and Storage segment was $544 million at March 31, 2013 compared to $628 million the year before. Worthwhile to note that most of our expansion in self-storage during fiscal 2013 was financed through our existing cash balances. With that, I would like to hand the call back to Emily to start the question-and-answer portion of this call.

Thank you. We will now begin the question-and-answer session.

(Operator Instructions)

Ian Gilson of Zacks Investment Research.

Good morning, gentlemen. Can you hear me okay?

Yes, good morning.

Good morning. I've got some of my usual nitpicking questions on the financials. Fourth quarter tax rate was down significantly year-over-year and quarter-by-quarter. Now, I know this is a [balancing] factor, but it was contributory factor to earnings goals, net earnings goals. What do we expect the tax rate to be in 2014?

Our tax rate historically has run around 36.5% to 37%. We're probably -- and we're just over 35% this quarter. I would say that we're probably going to revert back closer to 36.5%. We had some one-time permanent differences. We had partial deductibility of the common stock dividend, and then on a few of the state taxes we had -- when states change their apportionment rate a little bit. However, I expect it to kind of flow back towards 36.5%.

Thank you. Looking at the operating expense line on the income statement as a percentage of rental revenue, in the fourth quarter of last year it was 74.7%. In the fourth order of this year it was 78.1%. Anything in there I should be aware of?

We did have an increase in maintenance and repair costs for the quarter. We also, last year I think we took a larger reduction in insurance reserves. So our liability costs were also a little bit higher.

I am X'ing that out, by the way, for last year. I treat that as an extraordinary item.

Okay.

It should not have been in there. Looking at the Property and Casualty Insurance business, and Repwest, I thought that was winding down. Are you writing any new business on casualty insurance?

All of the new business written at that segment is related to the moving and storage business. So within that segment of their business, that is increasing. So as our transactions increase and as we expand our presence in providing insurance on self-storage tenant insurance, we're going to see their premiums increased there, but it's business that we feel very comfortable with, because it is related to our core business and we watch that very closely.

Good, good. Net investment and interest income fourth quarter to fourth quarter was up over $10 million from $18 million last year versus $30 million this year. Anything in there? It is certainly not gone up.

Right, a couple things. Just in general, on something that we will see moving ahead. Oxford has a larger invested asset base, and we will see their investment income continue to increase. We also had a significant kind of one-time gain that took place at the insurance company in the fourth quarter on a mortgage that they held that matured that ended up being about $8 million pretax gain.

Okay. Excuse me as I hesitate while I am writing all of this down. Okay, I think that pretty will settles most of my questions. Thank you very much.

Thank you.

Jim Barrett of CL King & Associates.

Good morning, everyone.

Morning.

Joe, could you give us your perspective? When you look back over the last three to five years, what has changed competitively, and in terms of how you are managing Amerco to explain the Company's performance? Can you give us sort of broad strokes on that?

Well, sure. First of all, nothing has changed at all. Same program, same people, and things are simply coming together well. The competitive situation is, if anything, tightening, but you won't see that for another year or two. But it's always been competitive in this business, whether it is the self-storage or the truck rental end of it, and it's going to remain that way. Of course, Jim, we have now been in the self-storage business 40 years, 68 years in the trailer rental business, 53 years running trucks, and so we know the business somewhat, and have a long-term group of men and women working here who are maxxed in what they are doing. It's, as you know, we have never managed to an income number or income per share number, and we are not managing that way today. Just very simply, we are having a lot of programs coming together.

These are systems that we have talked about over the years, whether it is our pricing system, which is light years ahead of anyone in the industry. Our inventory control system, light years ahead of anyone in the industry. But those are developments that -- none of them take less than 5 years, most of them 10 years to get actually operating. So we are seeing a lot of this stuff coming together, and I think that our team is very focused on trying to get results, and I credit some of that to our employee stock ownership plan and I credit some of it to just the -- we finally dispensed with the last of the harassing litigation from members of my nuclear family, which removed a tremendous burden of people here and allowed them to just go to work instead of having to look over their shoulder all the time. I think all those things are coming together.

We have a good fleet. This whole truck deal is very dependent on -- maintenance is very dependent on what we are able to buy, what the manufacturers can build, and right now the manufacturers are building good trucks. And I visited with somebody from Ford here recently, and they said it's actually a problem in their dealership organization, is that warranty income is down. Well, it's down because they are building a better product. Well, that's all -- we are also the beneficiaries of that. They're building a better product, which we don't have to spend as much money to repair, relatively speaking. So we have had at different times in our histories of very dependable originally equipment, manufactured equipment. We are in that spot right now.

We have -- the equipment we are able to buy is good equipment. Sometimes you buy a truck and that thing's just cost you money from day one. And we made the bet to stay with gasoline and not go with diesel, and that was going in. Nobody knew for sure, but I think that has turned out to be a good bet for us. We've got a better fleet that is more affordable to run and is more customer-responsive. That is a kind of a moving target. But all those things have come together. The experience of the crew, our underlying technology that we run the Company under, and a lot of people don't understand that, but there is a tremendous network of technology that allows us to do these things, like that Jason talked about, how do 900 dealers in one year and not just scrambled the eggs so bad you can't find out what is going on? Well, we have a very robust technology network behind that, that allows us to do that, and not have it be just tearing us up with trying to keep track of everything.

All these things have come together. You see we got some good increases in self-storage occupancy this year. That very much contributes to the bottom line. A bunch of small things coming together. There's no one thing that you can relate it to, and again for me, almost every program is five years in the making, which the good news is, maybe a well hold for a while, too. We are constantly threatened by competitors, and people are constantly benchmarking us, or trying to emulate us, or think this is a easy market to make a fast buck in. And if you go look over a 40-year history, whether it's National Car or Transamerica, Ryder, the countryside -- Jartran, the countryside is littered with people who lost hundreds of millions of dollars coming into this business, but they also inflicted injury on our Company's ability to make a living while they went through this. And I would expect we will see more of those people come in because they are attracted, they think this is an easy money, fast buck. Well, talk to me after being in the business for 68 years and then we will see how much of a fast buck this business is.

Our customer service is at the best level it has been in my lifetime with the Company. Okay? Now, that doesn't mean its acceptable, because of course we are always missing the mark with some of our customers, but it's the best we've ever had. And I think at the end of the day, that's what the -- and ensure business' success, is that it resonates well with the customers. Our customers are the happiest they have ever been, admitting though that we have, off course we have happy customers, but relatively speaking, we are at a high, and I think with that, again it is hard to say chicken to egg, but that is the result of our inventory management systems, our reservation systems, us having an expanded dealer network. All those things go back and create customer satisfaction. It's no one thing, but it's a -- the common thread is, is that we have been at this a while, we have a team in place who -- the individuals have been added for a while, and people are energized. They're not just lethargic, or resting on their laurels. So all those things come together, Joe.

When you say competition is tightening, you are one publicly-traded competitor is losing money, closing dealerships, reducing their company-owned locations, and have informed investors they are going to restructure and reduce the size of their truck rental business. So should I interpret your comments to mean that the competition is tightening from privately-owned competitors?

Just a variety of people are starting to think this is a easy money business. We will pick Enterprise. Enterprise has been 10 years trying to get into this market. They are doggedly pursuing it, and they are tightening it and we are having to respond to them everyday. What happens is, of course, as soon as we get a little bit of success then everyone thinks this must be a good place to put additional capital. The storage business is phenomenally competitive and is -- there's a pretty adequate supply of storage in most markets. I'm not going to say everything is overbuilt, but there's a good supply. So if you're not performing at a top level, you're simply not going to attract storage customers because they have other viable alternatives.

The storage market, while it is very much localized, is still very intensely competitive, and we're succeeding there because we're performing at a very high level, way more than twice I would say the level of customer satisfaction from 10 years ago. An enormous improvement in the storage customer satisfaction, and that is in the face of everyone improving their performance. Over the years there've been many, many people who think they can finance some trucks and get into the truck rental business, and indeed they can. You, I'm sure, have seen ABF. ABF is determined. They're sure that they can be in this business. And so they are just going to come in, that's all, and we're going to deal with them one at a time, or the customer will deal with them. We're going to serve the customer and let the customer decide who they want to do business with.

Okay. Speaking of your customers, my last question. Can you give us an update on how satisfied you are with consumers' response to your U-Box business venture?

Yes consumer response is better than our ability to serve the market. Right now we've spent a lot of time trying to see that actually have a system that will work, and as we have discussed, we are attempting to put in a North American footprint, and really an international footprint, but certainly a North American footprint on that organization, which means we need to have the ability to have origins and destinations in myriad submarkets across the country, and we still struggle with that. I can't quote you the accurate number, but we are somewheres around 1000 unique origin and destinations in North America right now. That puts us light years ahead of our -- the industry, but still shy of what we think the consumer really wants to see.

We think the consumer wants considerably more origins and destinations than that, that we can really serve, and of the 1000s that are, I'll say the round number where we are today, probably 250 of those are still pretty rugged as far as their real ability to execute. In other words, it's herky-jerky. I would say we have 750 origins and destinations that are functioning smoothly, approximately the level you would expect as a consumer. As we roll this product out, there is a learning curve, and so some people are back on the learning curve. But we are seeing that there is a legitimate spot for that in the customer demand. I couldn't tell you if we are making any money. I don't know if Jason could. I don't think we are losing barrels of money at it, but we're -- it would be very hard to say we're making money on a full-costing basis. But as you know, most of our stuff kind of goes in on a marginal basis, because we're really just expanding the services we are providing our existing customer base. We're not actually -- it's not a total new business.

Right.

Certainly on a marginal basis, I don't think we are losing money, but we are in this about four or five years now. I expect by year 10 we will be pretty polished at this, and it meets a need that people have who need to relocate and who are do-it-yourselfers, but for one reason or another this solution is a better solution for them. I don't know as a stand-alone business if it would make any sense at all, but now that we are already in the business of solving moving and storage solutions, having this additional solution is clearly in the customers' best interest, and I think long-term, they will pay us enough to do this that we will be able to continue to reinvest in it. And we are still refining it. This is very much a moving target. As you know, Jim, we have been in the truck rental business for over 50 years, and we are still learning what little wrinkles in it. This U-Box business, we'll be learning -- our learning curve year-to-year is pretty steep. And that is good, so we will do a better job. We are up considerably in the business. It's still not enough money, but Jason is breaking it out. But we are up considerably, and it just means customers like it.

Thank you very much, Joe.

Sure.

Jamie Wyland of Wyland Management.

Excellent quarter and year, fellows. Just want to start first on the truck rental side. What is the current age of your fleet, and what is that relative to what it has been in the past?

I don't know what the current age of the fleet is. This is Joe. Jason, do you?

Yes, I don't track the specific age of the fleet, because our fleet is unique in that we have a certain group of trucks that need to be newer and we have a certain group of trucks that we specifically want to be a little bit older for cost purposes. The overall, I would say based upon the CapEx spending that we have done over the last several years, it would be one of the newer fleets that we have certainly had in a long time.

As maintenance expenditures have dropped, that's not -- that's more a function of quality truck -- of the truck as opposed to the age of the fleet?

It is a little bit of both, but the quality truck is far and away the driver there.

Okay. In the competitive situation, are you able to gauge what your market share is? Are you gaining, as obviously the competitors are transitioning? Some are leaving, some are coming, but how would you gauge your market share in the past year?

In the truck rental business?

Yes.

Will it certainly didn't go down. If it changed, it would be something in the neighborhood of less than 1%, something like that. But it didn't go down. We don't have a -- there is not good comparable data, and no one knows for sure. So I don't want to -- when I went to business school, they knew how much share Coke had and Pepsi had, and everybody somehow. We don't really have good information on the other people in the industry, but we do sampling. And of course sampling is never quite the same as seeing someone's data. I watch people who sample our data, and of course they sometimes misperceive what is going on. And I think we have to be very careful there when we look at market share that we are not misperceiving. Most of our competitors are also doing business in marketplaces we're not in. We will take Penske. I can't quote you a figure, but I'll bet the area where they are heads-up against us is 10% of their business. That'd be a -- so when you go try to see well, where is the share, well, you can get a lot of -- you can misread it pretty easily. And so I kind of hesitate to really hit it. We don't internally publish and market share figure. We don't have one because we don't think the data is good enough.

You have added 900 new dealers in the year. How many net new dealers do you have from the beginning of the year?

900 is the net number.

Yes.

The net number?

Yes. There's a whole bunch -- the number's (multiple speaker) yes.

Okay. On the self-storage side, you mentioned operating margins were up a couple hundred basis points. Is that correct?

No, I said Moving and Storage was up about 20 basis points.

20 basis point, okay. You didn't break out the self-storage, you just said Moving and Storage?

We don't track those separately.

You can look at occupancy and margin. Kind of the occupancy leads margin obviously, and it's like any highly leveraged business. There's a -- and everybody in the storage business has a different opinion where their -- they start really making money, but if you can drive occupancy, margin drives at a faster rate, obviously.

Right. I mean, you've made a lot of acquisitions in self-storage, yet you kind of alluded to how competitive it is to buy these properties. How are you that successful, and are these properties accretive immediately to your operating earnings, even though you are paying a little bit more for them?

I would say they have been, on balance, not a big drag, but I wouldn't say they are immediately accretive on a (inaudible). Jason?

No, I think for us where target, was it 75% to 80% occupancy is where they really start to add, and on average most of these that we are acquiring that are existing facilities are going to be a little bit below that number. It is not a drag yet. It adds to what I call the slack in our portfolio that gives us upside in the future to earnings, but I think we're getting the big revenue bump, but I'm hesitant to say that a whole lot of the revenue bump from acquisitions has gone to the bottom line yet.

Historically, how long does it take you to take an acquisition from its current operating level occupancy level to the rest of the Company's operating level?

Two to three years.

Okay, all right. And lastly, as a shareholder investor, which we all are, I would hope one day you would consider 3 or 4 for 1 stock split to create additional trading volume and liquidity in the stock. I think it would be a great benefit. I also think it would be a benefit if the Company traded under the name of the corporate name of U-Haul as opposed to Amerco, since every time there's a press release they say the corporate name of Amerco and then have to mention that it's the parent company of U-Haul. I hope you would consider those two things as a limited cost but great benefit to shareholders. Thank you.

Thank you, too.

[Tyra Reisbeg] of MIB Partners.

Hi, guys. Great quarter. I guess I'm sorry if I missed the first question on taxes, but I was just wondering if you could explain why your cash taxes were somewhat higher this year compared to previous years?

We have rolled through most of our NOLs and the bonus depreciation. So we are finally starting to get caught up and hitting a cash pay level.

Okay. So going forward this level is a pretty good run rate?

Yes. It's going to be right around that rate, yes.

Right around the 35%, 36% level, tax rate?

Yes. I'm trying to remember the, in dollar amount. Our effective rate is going to be around 36.5%. The cash rate, I might need to get back to on.

Okay, great. In terms of the CapEx that you spent on new storage facilities, or net rentable square footage, do have kind of a target IRR for those, and how long does it typically take you to achieve that? Kind of the occupancy that kind of you target towards.

We have a return objective that we attempt to price to, and I think a look at that. Generally, we will look at a 10- to 15-year look to see if we can hit that hurdle rate, which is going to be in excess of 10%. It's going to depend upon which market we are pricing it in, as things are going to be a little different from market to market.

Okay. And lastly, you talk at all about utilization on the moving or truck rental business side? I know for storage, occupancies run 79%, but just curious what the utilization is on the rental truck business?

There isn't a measurement. We don't use a days rented like what the car rental people do, and we don't disclose what our utilization is, but we are high enough utilization so just moving something the equivalent of a 0.1%, I can see. It's a big fleet, little changes are significant. We are running, I think, at least competitive rates of utilization based on what we can intuit about other people in our business. But if you are familiar with the car rental business, they kind of have a measurement that they all use, and if there is one in the truck rental business, I am not familiar with it. We don't have a number -- our internal number we use is very convoluted, wouldn't mean anything to you, and we don't disclose it. So I don't have a good answer for you.

Okay, no problem. Then lastly, I guess I will just second the previous analyst's comments on the stock split and the corporate name change. I think that would be wonderful for your stock.

Thank you.

Thank you very much.

Ian Gilson of Zacks Investment Research.

Yes, just a recap on the new locations, the Company ones. Were they all associated with new storage facilities?

Yes.

And a number of 16,400, are they the new -- the total non-Company-owned facilities, or totally including Company-owned facilities?

That is total not including Company-owned facilities.

Great, thank you.

Sarah Hunt of Alpine Funds.

Good morning, gentlemen. I am not as familiar with the story as some of the folks on this call are, and you made a comment that part of the reason that you have seen such good results coming through on the bottom line have been systems that you have put in place and some investments that you have made over the last five years. I was just wondering sort of where we are in the process of harvesting? Is that something where you will continue to see benefits from that going forward?

Of course there -- this as Joe. That is my intent, obviously. Only -- the proof is in the pudding. Of course that is our intent, and we're -- we don't -- we are, I think, fairly conservative on whether we capitalize all the investments in a new infrastructure program. Jason could talk about the accounting rules, but we try to aggressively expense those things so that if it is a belly flop, it doesn't drag us down. But you don't know if it's going to really work, and we had one we launched, I don't know, ill-fated here last weekend, and we had [baited] it twice, and the third time we baited it we went ahead and rolled it out, and it took our whole system down. They don't always work as advertised.

Right.

Of course, wee are very aggressive doing that. We believe that is part of the plan to ensure we have a good future. And of course, our competitors watch all that stuff, and they are making their plans, how they are going to do something, and of course you only get a limited time out of any single advance because then it becomes kind of standard.

Right. I guess the question that I was trying to get at is, is there something where you see more opportunities to continue rolling through things like this? Or have you done all these investments and now they sort of are -- since I haven't been following you for very long, I'm just trying to get a sense of where you are in that process, and whether it's continuous and there's more things to do, or if you are at a point where it is up to the next group of things to continue to move those margins, and all that other stuff?

It is continuous, but the problem is, I will take an example. It won't quite speak to what you want, but if you -- for the future in storage, let's say, individual door locks. We were one of the pioneers of putting individual door locks and spent scads of money on it, and it gave us a little occupancy bump, but what happens is now every operator who comes in new puts in individual door alarms, and pretty soon we can get nothing for it. Climatization's another one. We have a phenomenal amount of climatized storage, and originally you could get premiums of up to 40%. Now those have trailed off and you're getting 10% premiums. So you don't quite know how, as you roll it in --

How it's going to work through, I see, okay.

Roll-off on the back end. And of course you are trying to work that in each submarket in a way that you can see that you are getting the best amount of revenue you can out of a specific step ahead, but just the consumer is the one who dictates all this, and we are beneficiaries of us coming out of the debacle of 2008, 2009 as a whole country. So of course almost probably every business you follow is benefiting from a little bit of this improvement. So as things strengthen, I would hope that we would still see strengthening in our performance.

Okay. And then one more quick one on the 900 additional dealers, what is typical in a year?

There is no -- we try to gain, we have had years where we have actually had net losses in dealers. We have tried to gain. This is an atypical amount, I would say, because you can just look at, what did he say? Yes, 16,400, Jason, over year end. If we gained 900 ever year, heck, I'd have 80,000 dealers.

Right, it sounded high to me, but again, I just wanted to get a gauge.

It is high.

Yes.

It's high. We are out there competing. We have a good offering, what we are able to offer the dealer is attractive to them. We have just come out of a -- our dealers are small business people. We've just come out of a tough market, and so we're looking, and have been looking for ways to increase income. As soon as they are really, really prosperous, well then U-Haul is not quite so attractive to them because their base business is doing well, and the opportunity to earn $5000 or $7000 a year net, which is really what most of these people are going to see, something a number like that. Well, that's not a very compelling number. So we've been what we call prospecting, trying to bring dealers on very aggressively throughout the whole downturn, because that's how you meet people and get people who are a little edgy and who will really go out and merchandise for us. That is not -- I don't think we will -- I don't want you to project that out for six years or something.

Right.

I don't think that's -- although internally, sure as heck, we are going for it. But it's going to depend on how attractive our offering is economically to the individual business owners so that they see this as being a positive thing in their economic future.

Yes, to put it in historical perspective, last year we added 500, the year before we added a net 100.

Okay. Thank you.

Thank you.

(Operator Instructions)

I'm showing no further questions. This concludes our question-and-answer session. I'd like to turn the conference back over to Jason Berg for any closing remarks.

I would like to thank everyone for following us, listening in on the call today, and we will be speaking to your again in this forum in the first or second week of August with our first quarter results. Thank you very much.

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