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AMERCO Reports Second Quarter Fiscal 2018 Financial Results

RENO, Nev., Nov. 8, 2017 /PRNewswire/ -- AMERCO (Nasdaq: UHAL), parent of U-Haul International, Inc., Oxford Life Insurance Company, Repwest Insurance Company and Amerco Real Estate Company, today reported net earnings available to shareholders for its second quarter ended September 30, 2017, of $124.6 million, or $6.36 per share, compared with net earnings of $176.5 million, or $9.01 per share, for the same period last year. Included in the results for the second quarter ended September 30, 2016, was an after tax benefit of $0.79 per share associated with our settlement of the PEI litigation that resulted in a reduction in operating expenses of $24.6 million. Excluding this after tax benefit, adjusted earnings were $8.22 per share for the second quarter ended September 30, 2016.

For the six-month period ended September 30, 2017, net earnings available to shareholders were $250.8 million, or $12.81 per share, compared with net earnings of $323.6 million, or $16.52 per share, for the same period last year. Included in the results for the six-month period ended September 30, 2016, was an after tax benefit of $0.79 per share associated with our settlement of the PEI litigation that resulted in a reduction in operating expenses of $24.6 million. Excluding this after tax benefit, adjusted earnings were $15.73 per share for the six-month period ended September 30, 2016.

"Quarterly results were impacted by $20 million of discretionary bonuses to frontline managers. Operating results were reduced by fewer trucks sold and a higher cost associated with those sold trucks," stated Joe Shoen, chairman of AMERCO. "Truck sales will take at least six months to get back onto a more regular fleet rotation. Self-move and self-store transactions were within planned ranges. The closing of the Chelsea, NYC property sale occurred in October instead of September."

Highlights of Second Quarter Fiscal 2018 Results

  • Self-moving equipment rental revenues increased $28.8 million or 4% during the second quarter of fiscal 2018, compared with the second quarter of fiscal 2017. Increases in both one-way and in-town transactions led to the improvement in revenue. We increased the number of trucks, trailers, towing devices, independent dealers and Company-owned locations compared with the same period last year.
  • Self-storage revenues increased $8.3 million during the second quarter of fiscal 2018, compared with the second quarter of fiscal 2017. The average monthly amount of occupied square feet increased by 8.1% during the second quarter of fiscal 2018 compared with the same period last year. The growth in revenues and square feet rented comes from a combination of improved occupancy at existing locations as well as the addition of new facilities to the portfolio. Over the last twelve months, we have added approximately 3.6 million net rentable square feet or a 14.2% increase to our owned self-storage portfolio with over 1.0 million of that coming on during the second quarter.
  • Depreciation, net of gains and losses on disposals increased $23.1 million. Depreciation on the rental equipment fleet increased $14.6 million primarily due to a larger fleet. Gains on the disposal on rental trucks decreased $4.5 million due to lower unit sales. All other depreciation increased $4.0 million from the increase in new moving and storage locations.
  • Personnel and fleet maintenance and repair costs increased $46.6 million in the second quarter of fiscal 2018 compared with the same period last year. Personnel expense was largely impacted by a special discretionary bonus paid to our local field management teams. Higher repair and maintenance spending was due to the larger rental fleet combined with increased repairs on units in preparation for sale.
  • Operating earnings at our Moving and Storage operating segment decreased $76.2 million in the second quarter of fiscal 2018 compared with the same period last year. Total revenues climbed $44.8 million and total costs and expenses increased $121.0 million.
  • For both the first six months of fiscal 2018 and fiscal 2017 gross truck and trailer capital expenditures were approximately $665 million, for the first six months of fiscal 2018 compared with the first six months of fiscal 2017 proceeds from sales of rental equipment were $256 million compared with $308 million and spending on real estate related acquisitions and projects were approximately $258 million compared with $252 million.
  • Cash and credit availability at the Moving and Storage operating segment was $939.9 million at September 30, 2017 compared with $804.7 million at March 31, 2017.
  • On July 5, 2017, the Board declared a cash dividend on our Common Stock of $1.00 per share to holders of record on July 20, 2017. The dividend was paid on August 3, 2017.

AMERCO will hold its investor call for the second quarter of fiscal 2018 on Thursday, November 9, 2017, at 8 a.m. Arizona Time (10 a.m. Eastern). The call will be broadcast live over the Internet at www.amerco.com. To hear a simulcast of the call, or a replay, visit www.amerco.com.

About AMERCO
AMERCO is the parent company of U-Haul International, Inc., Oxford Life Insurance Company, Repwest Insurance Company and Amerco Real Estate Company. U-Haul is in the shared use business and was founded on the fundamental philosophy that the division of use and specialization of ownership is good for both U-Haul customers and the environment.

Certain of the statements made in this press release regarding our business constitute forward-looking statements as contemplated under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those anticipated as a result of various risks and uncertainties. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. The Company undertakes no obligation to publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. For a brief discussion of the risks and uncertainties that may affect AMERCO's business and future operating results, please refer to our Form 10-Q for the quarter ended September 30, 2017, which is on file with the SEC.

Report on Business Operations

Listed below on a consolidated basis are revenues for our major product lines for the second quarter of fiscal 2018 and 2017.



Quarter Ended September 30,



2017


2016



(Unaudited)



(In thousands)

Self-moving equipment rentals

$

740,558

$

711,710

Self-storage revenues


80,472


72,163

Self-moving and self-storage product and service sales


73,268


70,330

Property management fees


6,831


6,712

Life insurance premiums


38,862


40,893

Property and casualty insurance premiums


15,026


14,009

Net investment and interest income


26,469


25,590

Other revenue


61,200


57,278

Consolidated revenue


1,042,686


998,685






Listed below are revenues and earnings from operations at each of our operating segments for the second quarter of fiscal 2018 and 2017.



Quarter Ended September 30,



2017


2016



(Unaudited)



(In thousands)

Moving and storage





Revenues


965,208


920,400

Earnings from operations before equity in earnings of subsidiaries


216,930


293,160

Property and casualty insurance





Revenues


19,199


17,887

Earnings from operations


6,087


7,094

Life insurance





Revenues


60,430


61,961

Earnings from operations


6,718


7,098

Eliminations





Revenues


(2,151)


(1,563)

Earnings from operations before equity in earnings of subsidiaries


(354)


(372)

Consolidated results





Revenues


1,042,686


998,685

Earnings from operations


229,381


306,980

The Company owns and manages self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned locations follows:



Quarter Ended September 30,



2017


2016



(Unaudited)



(In thousands, except occupancy rate)

Room count as of September 30


341


294

Square footage as of September 30


29,104


25,480

Average monthly number of rooms occupied


249


230

Average monthly occupancy rate based on room count


73.9%


78.9%

Average monthly square footage occupied


22,408


20,722

Listed below on a consolidated basis are revenues for our major product lines for the first six months of fiscal 2018 and 2017.



Six Months Ended September 30,



2017


2016



(Unaudited)



(In thousands)

Self-moving equipment rentals

$

1,410,416

$

1,358,046

Self-storage revenues


157,190


139,885

Self-moving and self-storage product and service sales


152,179


147,633

Property management fees


13,593


13,316

Life insurance premiums


77,953


81,785

Property and casualty insurance premiums


26,841


25,264

Net investment and interest income


53,686


52,921

Other revenue


108,753


103,026

Consolidated revenue


2,000,611


1,921,876

Listed below are revenues and earnings from operations at each of our operating segments for the first six months of fiscal 2018 and 2017.



Six Months Ended September 30,



2017


2016



(Unaudited)



(In thousands)

Moving and storage





Revenues

$

1,847,735

$

1,766,231

Earnings from operations before equity in earnings of subsidiaries


437,438


541,665

Property and casualty insurance





Revenues


35,305


34,772

Earnings from operations


11,523


14,597

Life insurance





Revenues


121,086


123,756

Earnings from operations


10,154


11,014

Eliminations





Revenues


(3,515)


(2,883)

Earnings from operations before equity in earnings of subsidiaries


(703)


(739)

Consolidated results





Revenues


2,000,611


1,921,876

Earnings from operations


458,412


566,537

The Company owns and manages self-storage facilities. Self-storage revenues reported in the consolidated financial statements represent Company-owned locations only. Self-storage data for our owned locations follows:



Six Months Ended September 30,



2017


2016



(Unaudited)



(In thousands, except occupancy rate)

Room count as of September 30


341


294

Square footage as of September 30


29,104


25,480

Average monthly number of rooms occupied


243


225

Average monthly occupancy rate based on room count


73.5%


78.2%

Average monthly square footage occupied


21,895


20,257

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED BALANCE SHEETS




September 30,


March 31,



2017


2017



(Unaudited)





(In thousands)

ASSETS





Cash and cash equivalents

$

768,351

$

697,806

Reinsurance recoverables and trade receivables, net


194,131


178,081

Inventories, net


100,693


82,439

Prepaid expenses


83,673


124,728

Investments, fixed maturities and marketable equities


1,843,768


1,663,768

Investments, other


395,327


367,830

Deferred policy acquisition costs, net


125,936


130,213

Other assets


101,767


97,525

Related party assets


80,923


86,168



3,694,569


3,428,558

Property, plant and equipment, at cost:





Land


684,729


648,757

Buildings and improvements


2,826,712


2,618,265

Furniture and equipment


564,033


510,415

Rental trailers and other rental equipment


526,603


492,280

Rental trucks


4,337,308


4,091,598



8,939,385


8,361,315

Less: Accumulated depreciation


(2,551,064)


(2,384,033)

Total property, plant and equipment


6,388,321


5,977,282

Total assets

$

10,082,890

$

9,405,840

LIABILITIES AND STOCKHOLDERS' EQUITY





Liabilities:





Accounts payable and accrued expenses

$

441,010

$

450,541

Notes, loans and leases payable


3,422,077


3,262,880

Policy benefits and losses, claims and loss expenses payable


1,099,597


1,086,322

Liabilities from investment contracts


1,263,107


1,112,498

Other policyholders' funds and liabilities


20,454


10,150

Deferred income


32,443


28,696

Deferred income taxes


911,780


835,009

Total liabilities


7,190,468


6,786,096






Common stock


10,497


10,497

Additional paid-in capital


452,474


452,172

Accumulated other comprehensive loss


(11,534)


(51,236)

Retained earnings


3,124,152


2,892,893

Cost of common shares in treasury, net


(525,653)


(525,653)

Cost of preferred shares in treasury, net


(151,997)


(151,997)

Unearned employee stock ownership plan shares


(5,517)


(6,932)

Total stockholders' equity


2,892,422


2,619,744

Total liabilities and stockholders' equity

$

10,082,890

$

9,405,840

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




Quarter Ended September 30,



2017


2016



(Unaudited)



(In thousands, except share and per share data)

Revenues:





Self-moving equipment rentals

$

740,558

$

711,710

Self-storage revenues


80,472


72,163

Self-moving and self-storage products and service sales


73,268


70,330

Property management fees


6,831


6,712

Life insurance premiums


38,862


40,893

Property and casualty insurance premiums


15,026


14,009

Net investment and interest income


26,469


25,590

Other revenue


61,200


57,278

Total revenues


1,042,686


998,685






Costs and expenses:





Operating expenses


492,482


398,213

Commission expenses


83,351


80,462

Cost of sales


42,866


40,952

Benefits and losses


47,109


46,836

Amortization of deferred policy acquisition costs


5,944


5,989

Lease expense


8,575


9,349

Depreciation, net of (gains) losses on disposals


132,978


109,904

Total costs and expenses


813,305


691,705






Earnings from operations


229,381


306,980

Interest expense


(32,023)


(27,989)

Pretax earnings


197,358


278,991

Income tax expense


(72,719)


(102,516)

Earnings available to common shareholders

$

124,639

$

176,475

Basic and diluted earnings per common share

$

6.36

$

9.01

Weighted average common shares outstanding: Basic and diluted


19,588,571


19,586,411






AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS




Six Months Ended September 30,



2017


2016



(Unaudited)



(In thousands, except share and per share data)

Revenues:





Self-moving equipment rentals

$

1,410,416

$

1,358,046

Self-storage revenues


157,190


139,885

Self-moving and self-storage products and service sales


152,179


147,633

Property management fees


13,593


13,316

Life insurance premiums


77,953


81,785

Property and casualty insurance premiums


26,841


25,264

Net investment and interest income


53,686


52,921

Other revenue


108,753


103,026

Total revenues


2,000,611


1,921,876






Costs and expenses:





Operating expenses


909,406


783,295

Commission expenses


158,716


154,278

Cost of sales


90,461


84,314

Benefits and losses


94,829


93,839

Amortization of deferred policy acquisition costs


12,265


13,931

Lease expense


16,862


20,397

Depreciation, net of (gains) losses on disposals


259,660


205,285

Total costs and expenses


1,542,199


1,355,339






Earnings from operations


458,412


566,537

Interest expense


(62,368)


(54,415)

Pretax earnings


396,044


512,122

Income tax expense


(145,198)


(188,474)

Earnings available to common shareholders

$

250,846

$

323,648

Basic and diluted earnings per common share

$

12.81

$

16.52

Weighted average common shares outstanding: Basic and diluted


19,588,231


19,586,240



Quarter Ended



September 30, 2016



(Unaudited)

(In thousands, except share and per share amounts)






AMERCO and Consolidated Subsidiaries



Earnings per common share: basic and diluted

$

9.01

PEI litigation accrual reduction, net of taxes, per common share basic and diluted


(0.79)

Earnings per common share: basic and diluted before PEI litigation accrual reduction

$

8.22




PEI litigation accrual reduction

$

24,600

Income tax benefit


(9,053)

PEI litigation accrual reduction, net of taxes

$

15,547

PEI litigation accrual reduction, net of taxes, per common share basic and diluted

$

0.79

Weighted average shares outstanding: basic and diluted


19,586,411















Six Months Ended



September 30, 2016



(Unaudited)

(In thousands, except share and per share amounts)






AMERCO and Consolidated Subsidiaries



Earnings per common share: basic and diluted

$

16.52

PEI litigation accrual reduction, net of taxes, per common share basic and diluted


(0.79)

Earnings per common share: basic and diluted before PEI litigation accrual reduction

$

15.73




PEI litigation accrual reduction

$

24,600

Income tax benefit


(9,053)

PEI litigation accrual reduction, net of taxes

$

15,547

PEI litigation accrual reduction, net of taxes, per common share basic and diluted

$

0.79

Weighted average shares outstanding: basic and diluted


19,586,240




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SOURCE AMERCO