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
