Good day, and welcome to the AMERCO Fourth Quarter Fiscal 2020 Year End Investor Call and Webcast. All participants will be in listen-only mode. [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 and thank you for joining us today. Welcome to the AMERCO Fourth Quarter Fiscal 2020 Year-End 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-K for the year ended March 31, 2020, which is on file with the U.S. Securities and Exchange Commission. I will now turn the call over to Joe Shoen, Chairman of AMERCO.

Good morning. Thanks for being on the phone with us. Much of what I have to say relates to the April and May timeframe. As you all know by now U-Haul as part of the critical essential infrastructure in the United States. As such, we remained open through the recent pandemic and we did the same in Canada. There have been and are still evolving, many blows to the U-Haul organization. However, this is a discipline group and we will work through matters as they become clear. Obviously, our self move rental revenues were cut substantially. It has not yet returned to last year's level, let alone the levels we've planned on. Today, I have many locations and some markets for our sell-through revenue and transactions are above last year. However, this is still the exception, not the rule. Storage revenue has held up through March, April and May. This revenue though is below plan and could well deteriorate more. This is an evolving situation. Sales of moving supplies reflect our decreased moving business. Competitive responses by our self-storage competitors have too often been knee jerk reactions to lower rates. With many markets arguably oversupplied, we should brace for continued rate pressure. Like other people in the vehicle business, sales out of our fleet were and remain far below what is necessary to roll the fleet over. This is tied up some cash. Automotive -- auto maker shutdowns in continued difficulty in restarting their enormous factories has created a temporary inability to acquire new fleet. That mist of new fleet simply will not be caught up in the short term. However, this largely just kicks the can down the road and will increase CapEx sometime in the future. We have experienced similar disruption in the past and basically know what…

Thanks, Joe. Yesterday, we reported fourth quarter earnings of $6.24 a share as compared to $0.04 a share for the fourth quarter of fiscal 2019. In the fourth quarter of this year, we recorded an additional net tax benefit of $146 million that's $7.45 per share as we recognize the effects of the Coronavirus Aid, Relief and Economic Security or CARES Act. We feel another useful supplemental measurement is to look at our earnings excluding this item. This results in adjusted losses for the quarter of $1.21 per share. For the full year of fiscal 2020, we reported net earnings of $22.55 per share. In fiscal 2019, we reported $18.93. Also included in our fiscal year 2020 results was the CARES Act tax benefit. Excluding this benefit, our earnings per share for the full year in fiscal 2020 were $15.10. We have a reconciliation of this in our press release as well. Before I go into some comments on the business, I want to provide some additional color regarding the CARES Act tax adjustment that I just mentioned. The CARES Act allows companies with net operating losses to carry those back up to five years. And it also made some other technical corrections that we've availed ourselves of. We have net operating losses that have previously been recorded in our deferred tax provision, assuming that we would use them in the future at today's current 21% federal income tax rate. These tax losses were generated largely from our reinvestment activities used in growing the business. But the CARES Act now, which allows us to carry these losses back two years before the 2017 Tax Cut and Jobs Act. These losses are now valued at or are being used at the previous 35% federal income tax. It's this difference in rate…

[Operator Instructions] Our first question will come from Ian Gilson with Zacks Investment Research. Please go ahead.

Good morning, gentlemen. I have a -- so, the impact of the tax that -- is that a book entry or can you actually claim cash?

Ian, this is Jason. We are -- we have filed for refunds associated with the CARES Act. So, for -- we've amended our fiscal '18 and '19 returns, and those should results in -- while they resulted in refund request totaling $123 million. For our fiscal year '20 return which we're probably going to file sometime around October, we're expecting a refund in excess of $250 million. And then we've also filed for a return of some cash that was former payments that we made that have -- we've been applying against operating income that should result in about $109 million. So in total, we're looking at some -- somewhere north of $490 million in refunds.

So when might be expected to check or check?

Well, those were filed in April. So if you were to give the internal revenue service, the 90 day service expectation that would be sometime in August or September. In the meantime, what we've done is we've worked out a deal with several of our banks in our lending group, where we've essentially borrowed about $200 million against those refunds currently. And then as we receive those refunds, we'll pay down that loan.

Okay. Given the necessity of conserving cash, wouldn't it be an advantage to you to lease trucks relevant by them?

As you know Ian, we've done both over the years and we've done a variety of leases, we are continued to explore that. And I don't know the current status of where we are, but we're going to still push for the best net cash, best net cost to us. We don't yet see this as a situation where getting 100% financing is necessary. There's still -- we're still optimizing and let's see what Jason says to the same question.

Sure. We -- our basic borrowing program for equipment is the equity out is anywhere from 0% to 30%. So we're continuing to mix that. The current liquidity position that we're in isn't something where we need to stress that. Our fleet or Assistant Treasurer responsible for fleet has already reached out to our lending groups to speak to them about. If we needed to borrow at a higher loan to value that option is available with many folks. But right now, it doesn't have to be at the top of our list of things to do.

Okay. And the storage business, I would have thought would have been less volatiles than the truck rental business. Particularly in the face of the fact that people can't move things out of storage as easily as they could have earlier? So storage not had been impact as much as truck rental?

I think that's a fair thing to say in the short run, Ian. However, a bunch of people, as you know, are stressed a big percentage of the population. So, as things evolve here further, we either get some delinquencies or more move outs and it's -- we're of course, doing everything we can do give terrific customer service to retain these people as tenants. But you're right. The people have been impacted, but the visibility of that impact may be deferred. And we'll have to see how that develops. I can't give you -- we don't have a forecast. That's a usable forecast. And again, we're going to stretch to try to keep these people in through top quality service and I expect we will retain the vast majority of them.

Okay. With the fact that the sale of trucks and the deferment of moving new trucks into the fleet could maintenance expenses declined somewhat?

Well, actually probably not. They probably will go up. Because maintenance basically varies linearly with the age of a vehicle. So what will actually happen we'll end up keeping some vehicles longer than we had intended to. So their expense, their repair expense per mile, Ian, will probably try to creep up. So, and that's been our experience over the last 40 years as you can do what you want to but maintenance varies linearly with mileage, which equates to age and that we're going to see some vehicles not be sold out at the bottom of the fleet because there's no market for them. We can rent them fine, but they probably will bump maintenance a little bit.

Okay. Hertz US has declared bankruptcy. That improved budget. Have you noticed or do you think that this would probably help you hold truck rental?

Well, actually the Hertz Organization is separate from the budget. The budget organization is connected with the Avis organization. And they last I saw were very solvent and they were out executing new financings at kind of a higher rate. But we're not planning on any big capital markets issues. If we have an advantage over our competitors right now. It's because they're still reeling from this. And they're not providing the level of service that the customer demands. And we've doubled down on service and we're going to give the customer what they want in the hopes of retaining those customers or even perhaps gaining some more customers.

Okay, and back to Jason, did you say that April was down 30% in truck rental?

Correct.

Or may show some strength. I presume that is compared sequentially rather than year-over-year.

Year-over-year is down about a half of what we saw in April. So maybe it's trending somewhere around 12% to 15% for the first half of it.

Our next question will come from Jamie Wilen with Wilen Management. Please go ahead.

Hi, fellows. Sometimes necessity is the mother of invention and glad to see that your alternative capital allocation program, sometimes it's good to plant the seeds. Sometimes it's good to harvest and I'm glad we're taking this pause to reevaluate and maybe slow the expenditures. So we can harvest more of the profits. What is your plan for self-storage as you move forward?

Well of course, long term we're committed to the self-storage market, Jamie. There's been as I've spoken of, in the past, considerable expansion in the product and specific markets. And I don't know where you live. But you can see whatever is in your area. The most of the country is experienced a lot of new product. And much of that new product is still coming online. So I don't think anybody really knows what's going to happen with demand. We have a bunch of projects that are in process. And our plan is to complete them. But so I think short term that we'll have more products come online. And then it will kind of stop coming online. I don't know what's going to happen in the overall industry. But I think that it won't be too different from us and that a lot of new product is still going to come online. And as I said in my prepared remarks, we'll probably put pressure on rates because many of these people are new to the industry, arguably over financed. And they are going to make the mistake that many people do, which is now cut your prices in the face of this. And they're basically going to cut their throats. I don't want them to injure us in the process. So we're doing what we can. But there's going to be some rate pressure and I think that's going to have the inevitable effect on earnings for people because these projects are basically huge fixed cost projects. The variable cost is really personnel, utilities and property taxes. So, there's going to be a pause in the self-storage business would be my best guess. Of course, we don't intend to pause and we're up even in March and April and May, we have no intention of pausing or renting up rooms, but we're pausing building more rental. So hopefully if that works out well. But I don't think anybody has a real fix on what's happening. I'm in stores, I was in a store yesterday, and we were at 99% occupancy. The woman who manages it was saying, god, get me more rooms, I could rent more rooms. Well, I'm unlikely to go spend another $1 million and get her more rooms. I'm probably going to just enjoy being at 99 for a few big years.

Okay. A couple of questions. What are your estimated self-storage capital expenditures in the current coming -- in the current fiscal year?

Jason, do you have a number on that?

Well and we provisioned pretty much what we've spent in the previous year. So this last year we spent $750 million on that. I would say that our existing -- I'll break it down into a couple pieces. So, deals in escrow were down significantly from the prior year. I think we have 23 deals that we have sitting out in escrow. We pushed back the closing dates on those just to see how the environment reacts. But acquisitions of new properties, fiscal 2019 to fiscal 2020 are down about $320 million. Now we have, if we were to complete everything that we currently have and would like to work on and complete that number is a little over $900 million, but that's going to be spread out over several years. So we have work to take us several years from now and we have been slowing the input. So, I think apples-to-apples probably our pipeline of projects to work on is down probably about $350 million to $360 million from this time last year.

So your CapEx versus the $750 million in 2020, you expect it to be what, in 2021?

Well, it's opportunistically, when we set out, I kind of set out a cash and availability plan that we could spend up to $800 million on the current capital plan and then that will get adjusted up or down based upon the availability of opportunities what we're seeing. Right now we're, we've pushed back or slowed down about $110 million worth of debt of development. So that slow down over the next couple of months is probably going to lead to a decline in how much we spend this year is going to be spent at some point. It just might not fall into this fiscal year.

What we're actually doing is, we're completing everything we've got in the ground and we have concrete. We're completing all of that at this time and then no new starts until we see where things are. And it's everybody's guess; we're going to act rationally on that just because we can sit on the property. We have a whole bunch of undeveloped sites, but we can sit on those. They're already baked into our current expense ratio. In other words, the property taxes and that's already all baked into the capital costs. It's all baked into what you've been seeing. So that will get no worse and we'll just see how this property that comes on. Jason, how many square, we did 5.1 million last fiscal year.

5.8.

5.8 million. And I don't have a firm number yet here today, but we probably put in a million square feet between March 31st and I'll say June 15, it's going to be real close to that. So those projects will come online and hopefully start renting up. So we have a lot that's -- what are we going to call it near term, going to get completed, and then we'll have other stuff kind of flow in on the next three quarters, but we won't be fueling the fire there. So, I wish I had a hard number I could give you, but I really don't. I think what Jason says is we're going to act prudently, but what this is doing, and it's been doing for some months, is we'd already turned this down before we had the pandemic. And so it takes a while for that train to slow down, with that train slow down now. And we have an inventory that we can build out or we can sit on. We’re not in a disastrous situation and as a shareholder you won’t see increased expenses because, they’re all basically rolled into our current financing cost and our property taxes and that those aren’t going to change 2% or 3% or something, not much.

Sure. Given that REIT’s value relatively fully occupied self-storage facilities at a very high level. And we obviously don’t get credit for our facilities that do that, as you say, we’ve got whatever the number was 600 or 700 facilities that average over 90%. What would be the thought of packaging up 50 to 100 of very productive facilities and realizing full value for them by selling a package to the REITs who obviously traded very low yields, borrow for very little and are willing to pay up for those properties and to be able to do that and then continue to reinvest in programs where we have much greater upside?

Well, I don’t see it being under serious consideration at this time. It’s been a number of years before we did a real hard work upon that. Of course, applying the ointment there is that all these locations but two or three, they’re just -- they’re big in self-storage they’re also big and you move, that’s applying the ointment and so, I don’t think that near term there’s much of a push to try to do that, but I'm aware of the more as the concept and where in various ways you can read out the whole company. But that’s not beyond the pale. So, I wish I had a better answer for you, I know more of what the answer is you’re looking here but I really don’t have that answer.

Okay, I would help you just looking somewhat in that direction to consider it in the near future. On the U-Box program, how did that fare within this whole process? Was that profitable in the past fiscal year and what is your current outlook for the business?

I’ll let Jason to speak to profitability.

Yes, it was profitable. It was in absolute dollars and slight improvements on kind of our internally calculated margin number. It was a plus this year and we’ve seen strong growth in revenue even during what’s happening right now.

So, I would say Jamie on that, that’s still a growth program, and like our self-storage program, it’s going to -- this growth is going to outpace the growth of the truck rental industry. And we’re continuing to invest in that, we believe it’s prudent investments. It’s not a huge strain on capital, but we’ll continue to invest there. We think that we’re improving our position constantly. We have a very good response from the customer. It doesn’t seem to be eroding our truck rental business in a measurable amount. I'm sure there’s some modest amount in that but, it complements in some ways too. So, I think it’s clearly a viable program. It had increases all though the last year and had increases in the last couple of months so, now but it ought to because it’s a growth program. Just like self-storage, it should outpace the truck rental business and that would look forward to continue to do so.

Okay. Also Joe you mentioned the corporate accounts were down in 2020 and in the fourth quarter. Could you detail a little bit about why and what’s your outlook in that direction?

Sure. We did a lot of business for the Amazon. They cost us more in equipment damage than they generated revenue totally abusive situation. The Amazon rents, very, very many piece of equipment to contractors. They’re not actually Amazon personnel. They’re very abusive to equipment. We recently reached an agreement with Amazon where they would back stop the damage on that equipment. And under those circumstances, we would rent to them. Of course, during the period where we would not rent to them, they formed other business relationships. And so now whether those people are losing are making money, I have no knowledge, but we were losing money with Amazon. And if, and to the extent we do any other business with them, it will be where we can make a modest profit. At the same time, UPS and FedEx continue to do business with us and they're both pretty straight up organizations and we make some modest profitability doing business with them, but Amazon was the elephant in the room and they were just simply bringing our equipment back, so beat that we were losing money on the overall transaction.

Okay. And lastly, accounting-wise depreciation expense moving forward, are you -- should be relatively flat in 2021 versus 2020 even though the reduced expenditures?

We’re still going see that -- we're still going to see depreciation on -- for both the fleet and for real estate increased through 2021, but I think the way that it's had an each quarter right now it's been coming; the rate of increase has been coming down. So based upon the current fleet plan, I would suspect that it's going to flat out by the end of fiscal 2021, on the fleet side.

Our next question is a follow-up from Ian Gilson from Zacks Investment Research. Please go ahead.

All right. Thank you. The automakers had problem and essentially close down most of their facilities and bought some of them up to do other work than making cars or trucks. If we get a second wave or a flattening out instead of a declining say a kind of account of patients, will you meet your unit number projections or let go down. And if you reduce the trucks purchased in 2020, what does that do to depreciation?

Ian. That's a very complicated question to give you an accurate answer to. If the automakers re-close their plants, in other words they get them started, and then they shut them down. We will lose that amount of forecasted production. Ordinarily, we're not forecast to get a lot of production in the last quarter of the calendar year. We usually have heavy production now, which is why we've suffered for a big lack of new equipment coming in. So it wouldn't impact us nearly as much as it has in the quarter we're in right now. But certainly it would impact us. And then what will happen, Ian, is that at some point you have to replace the vehicles. If we don't replace them this year, we'll have to replace them the subsequent year. So it's going to bump in some way the amount of money we have to spend in subsequent years, assuming our customer transactions remain large enough to accommodate that fleet. I mean, it's not beyond the pale that there could be a permanent reduction in the economy. I see these numbers for every single market, and there are markets that have been savaged. You can figure out who they are. If you watch the TV, it's the politicians who simply are enforcing some sort of authoritarian state on the consumer and the consumer they shut down, totally done, gone. Now go to another place like Utah, Utah, everybody's doing business, Utah was doing fine, but they have a different government orientation. So I have no idea what will happen if other than revenue will decline if we have another partial or full shutdown of the economy in the fall, revenue will decline. There's no question about it. And revenue declined a bunch of expenses won't decline and profits will get smacked. So, of course we've reduced some costs, but those costs. But those costs aren't of the nature of 30% or 50% which is what we saw business. We saw 30% decline overall and Jason quoted or 30% what percentage, Jason?

In April 30%.

30% in April. So our expenses don't go down 30%. Our depreciation actually went up. So, I mean it's a real negative leverage problem. So we're not going to run out of cash. But such an event like that let's slaughter profitability in the short run.

Ian, this is Jason. To your question about what do we do to depreciation? Just so far what's happened today, with the cancellations of orders due to the plant shutting down? Depreciation will probably continue the increases will become less and less each quarter. I would suspect towards the end of this year and then probably in to the next fiscal year, we will see probably a decline in what we call gain on the disposal of equipment as we're selling older units without buying the new pickups and cargo vans, we're holding that fleet longer than we typically do. So we will see the gain on the disposal of those units begin to trend down a little bit, the longer that we hold them.

Okay, you said that the orders were cancelled. Does that mean you will have to reorder at a later date?

Well, there's no way we can't. They can't build that many. And until we can sell trucks we can't afford that many. So it's kind of an unhappy coincidence. They can't build them and we don't have any money to buy them because we can't sell the existing ones. Now we expect that market to improve and we see signs of it and we're not frozen with fear yet. But until we can sell the older units, it's imprudent for us to bring in new units. And we're not going to do that. So it's anybody's guess. And Ford and General Motors have been trying to restart their plants. And if you follow in the press, they get somebody test positive for COVID. They send the whole place home for a day or two. Well, I've never run an automotive plant, but I can't imagine you can open it for a day, shut it down for a day and get any production to speak of. Last week, I believe I'm correct in saying that, they told us they built two trucks for us. That's not quite what you would call production. Okay. In other words, they do that like every 20 minutes normally. So the volume of trucks that we would be getting this time of the year is just drastically cut and with negative consequences, as far as I can tell, for all involved, it's, it's got to be hurting the automakers. It's definitely hurting us. And as Jason alluded to, when they ultimately do sell these vehicles, they're going to sell for less because they're going to be older and have more miles. And values vary linearly with age and mileage. So we've continued to depreciate them. So we're not caught in a trap there. So we continue to depreciate, and we try to watch that carefully because the last thing you want to do is find out you're upside down in your fleet. So we are not presently upside down in our fleet. We don't intend to get there. But we'll do that by varying the depreciation rate if circumstances dictate that.

And our next question will come from Craig Inman with Artisan Partners. Please go ahead.

Hey, guys, can you hear me? Hey. One of the issues with this business is always -- you're always trying to manage the fleet in certain locations because of migration out of areas into other areas. With the pandemic, is that change -- is that created any problems with stacking up trucks anymore? I mean, is that become another issue down the line?

Bring all credit take that. Certainly it has. And it's changed the timing. So just take students for an instance. Ordinarily, this time of year we just see a daily just student moves. But what actually happened is some of them went away entirely, and some of them occurred six weeks ago. So we can't quite sort that out to say, what are we going to be down this weekend compared to last year? We know that the big schools are already all let out and have been let out for some time. Yet there's residual business coming through these schools are now doing phased move out. So they're contacting students and saying everybody in ex-building or whatever has to move out on the 27th of May. And so then we see a little bump in transactions in that specific market. So it's caused a lot of dislocations. We also this time of year see a lot of second home type in the school year thing, and that, again is real mushy. I think, here in Arizona, most of the grade schools broke this last Friday. So we with a little luck, we'll pick up a little business but how many people are going to go up to their second home I can't predict. On the other hand, we got a bunch of people who had second homes, will say in Maine or New Hampshire, they got out of New York and Connecticut six weeks ago. So there's a whole bunch of tiny disruptions to say that overall has put us in a worse or a better situation. I would say it's about normal amount of dislocated fleet. It's not gotten horribly worse. But that's the day in day out problem we have is managing that to a certain --…

Okay. That's good color. And then on the truck side with the -- if you can't get new trucks in Ford and GM, and the auctions are -- or the auctions still closed?

Yes, they're starting to open virtually, the largest -- I think they're the largest. The Manheim furloughed over 10,000 people and their stated intent is to attempt to not reopen to transfer to a virtual business changed their whole economic structure. Well, during that time sales have just collapsed. Now whether that's because of the virtual formats are a whole bunch of other factors. I could only guess, I have no -- we see what we are able to move on a daily basis. And that just it went to just almost zero for a couple of weeks. Now it's slowly creeping back but it's nowhere near, I would say it's less than 12% or 15% of what we would have expected, Jason, would give --

Yes. At the most.

It's drastic decline. Now we watch everyday and we every -- we see a little glow we kind of encourage each other and all that. But when the money finally comes into Jason it's disappointing. So I don't know what's going to happen with the auction business. I don't know if you have ever been to one but they -- it's big social event as well as sales event and so there is a whole bunch of people who have their business social activity build around this but they are all rubbing shoulders with each other, it's hustle bustle and if people are unwilling to be in that environment compared to an open air market or something. People may not be willing to back in that environment. If that happens it's going to change the whole auction industry. And Manheim is making the right bet. I have no idea what's going to happen.

So if you have a scenario where the auctions are -- if they are back online but a little slower and you can't get trucks from Ford and GM does that put too much pressure on being able to sell truck or raise cash in this environment. I mean how do we how do we in operation.

We will slow way down. The truck gets a little bit older. We spend a little bit more money on depreciation and we've done that. Our fleet is in far and away. The best condition has been in my working life far and away. I would say -- there's no comparison. I'm part up on all maintenance. Every preventative maintenance is on schedule today. My truck my fleet is newer than it's ever been. It has less mileage than it's ever had. If there has to be a time where we had this problem, today is the today and we had been building towards this as because these things always happen. I'm a real big believer in seven good years followed by seven bad years and, I think there's a long history to that trend. So I'm always trying to put something away just because it's going to happen. In this case, we're sitting there, right with this fleet; the fleet is got common parts. We know how to maintain them. We have all our support systems totally operating. And if we had to go two years without a single addition, we'd go two years without a single addition. Now, I would rather not because then you'd be a little long in the tooth. But we could go two years easily and the consumer would never see a difference. They would have the same reliability to the truck. They would appear the same as modern as they need them to appear. So I can go two years now. That's not my choice. I don't think that's going to happen. But if that's happened, if that's where this is going to go, we'll go that way with it.

Yes, and that's good. I mean that's good to know. And with the revenue trends if they overall remain weak and auctions are closed, do you, and you want to build this, the self storage, for the stuff that's already in the ground under construction, do you need the proceeds, if you were shrinking the fleet summed for cash flow purposes.

No. We don't need them. I mean this is a guy who's never given, turned down a dollar, okay. So, but do we need them in order to proceed ahead? No, but Jason constantly monitored that and this is a week by week process with him. I know Jason, if you want to give some color to that, but he's on me like whatever. He wants to costly where we are because he has to wonder what's going to happen.

Well, Craig, this is Jason, I think I may, I'm not sure if I'm reading more into the question or not. But, the auction proceeds aren't used for general operations. They're typically used just as capital to buy the next round of trucks. So if the next round of trucks isn't being purchased then the auction proceeds aren't that necessary. So for us, I would say that, if the auctions were to stay shut down for another six to nine months, or we get closer to a two year hold period on the pickups and cargo vans, then it'll become more of a capital planning issue as we'd have to work through some issues in our revolving facilities for holding the trucks more than two years. But at least for the next year or so it, that's not something that we need in order to fund operations

Yes, that's not I meant just more from a cash flow planning perspective. If you got a top-line pressure, OpEx isn't that as flexible and you want to build the self-storage just do you have enough cash, if you can't raise proceeds from selling trucks. And I don't know, it wouldn't be -- you don't need them to for cash flow purposes. If you're not ordering new trucks.

Yes, we had, essentially we had kind of a one time use of cash from the full freeze up. So when auction sales stopped, we still had several thousand trucks in the pipeline to be delivered. So we did pay for trucks that were in the pipeline, and we didn't have the auction proceeds for those. So April had kind of like a one time use of cash to buy trucks that didn't have auction proceeds to offset it. But we were able to deal with that outflow and it hasn't been a problem.

Okay. And then I can hop into a second. But on the Self-Storage side rates which are a key component of the in place rents because of shelter in place orders. Are you all seeing rate pressure? It's because of similar dynamics.

Downward rate pressure. Exactly. And we're not the first one to flinch in that circumstance, okay? My guy who manages rate to little -- he's is not the one that's going to take the high dive, okay. And, of course the answer with the customer is worth whatever let's just say $50 a month that worth it to move. That has a lot $50 to $50 and times 12 months but $600 until we could see a person would say I can get $50 cheaper I'm going to move. And $50 would be an extreme rate cut. And it'd be 35% let's say. So in that case, we're trying to sell on service. And I would say our service is right up at the top. I won't say our services the best because it varies by manager by location; our service is the best it's ever been in U-Haul's history. And I believe our combination of security ancillary services and locations helps us be able to address rate issues in a way other than simply matching rate. But there's going to be some recent entrance and you probably know more than I do about apartment rents or multifamily rents or some other real estate process. But when there's oversupply, there are some people who are financed in real high leverage rate. And they're under occupied. I'm seeing these knee jerk reactions, well let's drop our rate 50% see if that helped, was not going to help. You're going to go out of business because you can't survive even one year 50% it filled the whole place that would be making your cost of capital. So I don't know of all their financing. But there's a typical bunch of people are out there on one and two year financings at full cost. And if they dump rates, they're essentially transferring title, that's how I view it. And it but it will damage us as they go through that process and they'll damage some other people in the business, so I can't -- I don't control them. But again, you've seen it, no doubt as some other real estate deal like apartment. What happens? And hopefully where we see it'll be contained to a specific market. Nobody will -- nobody who said nationwide or a large footprint competitor will take a knee jerk reaction. We hope that those people would be -- have a more long-term perspective. But we'll see. We'll see.

Now, our next question will come from Jamie Wilen with Wilen Management. Please go ahead.

Given your outlook for auctions and the ability to get new equipment, would you expect your fleet size to diminish this fiscal year?

No because precisely because there's no point. The only way to get the fleet smaller sells them. And if we don't get a sales market, it's not going to get smaller. Now, Jason talked about we picked up some extra trucks and I'll have a number that'd be wrong. Let's just say we picked up 1,500 extra trucks in late March and early April. Those are kind of a millstone around our neck. We have a program to attempt to deploy the marginal markets to see if we can -- what we can get for income on them. But that is changing easily weekly, as we start to regain the business. So, my bet is we're going to shrink the fleet a little bit, but I don't know if we'll be able to shrink it before September or October because the sale market, there's just no point in going into the market and dumping your prices. The sales we're getting now are our full price sales and that's our intention. There's no reason for us to go trash, use truck market, we're a big player in that market. We don't need to go trash that market. We have good merchandise. I think if the auctions were running, this might have been an opportunity because the factories have been shut down. And so there's the suppliers now and I've read several articles that dealers are begging for pickups. Dealers buy a lot of our pickups, and vans, cleaned them up, put them on their lot, as low mileage used cars that are still available for standard bank financing. So, if we were able to -- if that market existed, we've made some sales to dealers because of course we know these people we can deal direct and go around the auction but they're still constrained, because in some states they made them close the car dealership industry. And so they really haven't seen their business. I have a couple dealer friends. A couple of my dealer friends are starting to see business where the government has lifted these orders. So stay in Arizona. I've seen dealers in Arizona do better. Almost the last year's level now whether that's some pent-up demand. It's a really murky picture. But one of my friends, he did 30 trucks on Saturday, maybe three weeks ago and he said that was exactly what he would have hoped for a year ago. Now -- but was that people who should have bought in March and I -- he doesn't know and I don't know.

If the resale market continues to open up, would you like to reduce the fleet size a bit to increase utilization going forward?

Absolutely. In specific mark.

This will conclude today's question-and-answer session. And I would like to turn it back over to management for any closing remarks.

Okay. This is Joe. Thank you very much. I appreciate your attention, your question and we're going to obviously learn a bunch of new things over the next -- now the next earnings call. And I expect we'll make as good out of the facts circumstances is anybody can make out of the fact circumstances. Sebastien, any closing comments?

Thanks for your support. We look forward to speaking with you again in August.

The conference call has now concluded. Thank you for attending today's presentation. And you may now disconnect.