AMERCO Reports Second Quarter Fiscal 2017 Financial Results

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November 9, 2016 4:33 PM EST

RENO, Nev., Nov. 9, 2016 /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, 2016, of $176.5 million, or $9.01 per share, compared with net earnings of $183.4 million, or $9.36 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, 2016, net earnings available to shareholders were $323.6 million, or $16.52 per share, compared with net earnings of $354.7 million, or $18.10 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.

"This quarter has developed about like we thought it would: Truck transactions were up, income per transaction down," stated Joe Shoen, chairman of AMERCO. "The truck resale market is supporting lower pricing and is likely to stay that way. We continue to add rental vehicles and self-storage locations."

Highlights of Second Quarter Fiscal 2017 Results

  • Self-moving equipment rental revenues increased $13.5 million or 2% during the second quarter of fiscal 2017, compared with the second quarter of fiscal 2016. The improvement in revenue was generated from an increase in transactions. The average number of rental trucks in the fleet increased compared with the same quarter last year.
  • Self-storage revenues increased $10.1 million during the second quarter of fiscal 2017, compared with the second quarter of fiscal 2016. The average monthly amount of occupied square feet increased by 12.8% during the second quarter of fiscal 2017 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 3.5 million net rentable square feet to our owned self-storage portfolio with over 0.5 million of that coming on during the second quarter.
  • Depreciation, net of gains and losses on disposals increased $46.8 million due to increased costs of acquisition, lower relative sales values, and the sale of fewer trucks in the period compared with the same period last year.
  • In October 2016, we settled the litigation with PODS Enterprises, LLC ("PEI"). As part of this settlement, we paid $41.4 million to PEI. In fiscal 2015 and fiscal 2016, we recorded $66.0 million as accrued contingencies and interest. During the second quarter of fiscal 2017, we recognized the difference between our contingency accrual and the actual settlement as a $24.6 million reduction of operating expenses.
  • Operating earnings at our Moving and Storage operating segment decreased $3.9 million in the second quarter of fiscal 2017 compared with the same period last year. Total revenues climbed $32.1 million and total costs and expenses increased $36.1 million.
  • As a result of changes in IRS regulations regarding the capitalization of low value assets, the Company has changed its policy. This shift in procedure results in the immediate recognition of reported operating costs with a lagging decrease in depreciation expense over the term that these assets would have been depreciated. For the second quarter of fiscal 2017 this resulted in an additional $4.0 million of operating expenses. This change is expected to benefit the Company through the immediate recognition of tax deductible costs.
  • For the first six months of fiscal 2017 compared with the first six months of fiscal 2016 gross truck and trailer capital expenditures were approximately $665 million compared with approximately $426 million, proceeds from sales of rental equipment were $308 million compared with $376 million and spending on real estate related acquisitions and projects were approximately $252 million compared with $276 million.
  • Cash and credit availability at the Moving and Storage operating segment was $970.9 million at September 30, 2016 compared with $633.7 million at March 31, 2016.
  • On October 5, 2016, we declared a cash dividend on our Common Stock of $1.00 per share to holders of record on October 20, 2016. The dividend was paid on November 3, 2016.

AMERCO will hold its investor call for the second quarter of fiscal 2017 on Thursday, November 10, 2016, 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 AMERCOAMERCO 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, 2016, 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 2017 and 2016.

Quarter Ended September 30,

2016

2015

(Unaudited)

(In thousands)

 Self-moving equipment rentals

$

711,710

$

698,219

 Self-storage revenues

72,163

62,060

 Self-moving and self-storage product and service sales

70,330

70,703

 Property management fees

6,712

6,320

 Life insurance premiums

40,893

40,515

 Property and casualty insurance premiums

14,009

13,372

 Net investment and interest income

25,816

22,151

 Other revenue

57,278

49,563

 Consolidated revenue

998,911

962,903

 

Listed below are revenues and earnings from operations at each of our operating segments for the second quarter of fiscal 2017 and 2016.

Quarter Ended September 30,

2016

2015

(Unaudited)

(In thousands)

 Moving and storage

 Revenues

920,400

888,294

 Earnings from operations before equity in earnings of subsidiaries

293,160

297,106

 Property and casualty insurance  

 Revenues

17,887

16,625

 Earnings from operations

7,094

6,065

 Life insurance   

 Revenues

61,961

59,187

 Earnings from operations

7,098

8,057

 Eliminations

 Revenues

(1,337)

(1,203)

 Earnings from operations before equity in earnings of subsidiaries

(146)

(160)

 Consolidated results

 Revenues

998,911

962,903

 Earnings from operations

307,206

311,068

 

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,

2016

2015

(Unaudited)

(In thousands, except occupancy rate)

Room count as of September 30

294

252

Square footage as of September 30

25,480

22,023

Average monthly number of rooms occupied

230

205

Average monthly occupancy rate based on room count

78.9%

84.0%

Average monthly square footage occupied

20,722

18,364

 

Listed below on a consolidated basis are revenues for our major product lines for the first six months of fiscal 2017 and 2016.

Six Months Ended September 30,

2016

2015

(Unaudited)

(In thousands)

 Self-moving equipment rentals

$

1,358,046

$

1,327,505

 Self-storage revenues

139,885

119,251

 Self-moving and self-storage product and service sales

147,633

147,961

 Property management fees

13,316

12,431

 Life insurance premiums

81,785

80,781

 Property and casualty insurance premiums

25,264

23,928

 Net investment and interest income

53,365

44,123

 Other revenue

103,026

91,728

 Consolidated revenue

1,922,320

1,847,708

 

Listed below are revenues and earnings from operations at each of our operating segments for the first six months of fiscal 2017 and 2016.

Six Months Ended September 30,

2016

2015

(Unaudited)

(In thousands)

 Moving and storage

 Revenues

$

1,766,231

$

1,703,134

 Earnings from operations before equity in earnings of subsidiaries

541,665

577,685

 Property and casualty insurance  

 Revenues

34,772

31,515

 Earnings from operations

14,597

12,543

 Life insurance   

 Revenues

123,756

115,256

 Earnings from operations

11,014

12,268

 Eliminations

 Revenues

(2,439)

(2,197)

 Earnings from operations before equity in earnings of subsidiaries

(295)

(320)

 Consolidated results

 Revenues

1,922,320

1,847,708

 Earnings from operations

566,981

602,176

 

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,

2016

2015

(Unaudited)

(In thousands, except occupancy rate)

Room count as of September 30

294

252

Square footage as of September 30

25,480

22,023

Average monthly number of rooms occupied

225

200

Average monthly occupancy rate based on room count

78.2%

83.2%

Average monthly square footage occupied

20,257

17,849

 

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

March 31,

2016

2016

(Unaudited)

(In thousands)

ASSETS

Cash and cash equivalents

$

921,327

$

600,646

Reinsurance recoverables and trade receivables, net

183,243

175,210

Inventories, net

81,609

79,756

Prepaid expenses

87,968

134,300

Investments, fixed maturities and marketable equities

1,632,420

1,510,538

Investments, other

382,065

310,072

Deferred policy acquisition costs, net

118,652

136,386

Other assets

85,600

77,210

Related party assets

80,171

85,734

3,573,055

3,109,852

Property, plant and equipment, at cost:

Land

616,969

587,347

Buildings and improvements

2,401,802

2,187,400

Furniture and equipment

448,990

399,943

Rental trailers and other rental equipment

490,451

462,379

Rental trucks

3,720,268

3,514,175

7,678,480

7,151,244

Less: Accumulated depreciation

(2,244,417)

(2,133,733)

Total property, plant and equipment

5,434,063

5,017,511

Total assets

$

9,007,118

$

8,127,363

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Accounts payable and accrued expenses

$

438,921

$

502,613

Notes, loans and leases payable

2,992,490

2,665,396

Policy benefits and losses, claims and loss expenses payable

1,088,128

1,071,412

Liabilities from investment contracts

1,043,129

951,490

Other policyholders' funds and liabilities

10,211

8,650

Deferred income

27,801

22,784

Deferred income taxes

791,524

653,612

Total liabilities

6,392,204

5,875,957

Common stock

10,497

10,497

Additional paid-in capital

451,909

451,629

Accumulated other comprehensive loss

(19,890)

(60,525)

Retained earnings

2,857,289

2,533,641

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

(7,241)

(6,186)

Total stockholders' equity

2,614,914

2,251,406

Total liabilities and stockholders' equity

$

9,007,118

$

8,127,363

 

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter Ended September 30,

2016

2015

(Unaudited)

(In thousands, except share and per share data)

Revenues:

Self-moving equipment rentals

$

711,710

$

698,219

Self-storage revenues

72,163

62,060

Self-moving and self-storage products and service sales

70,330

70,703

Property management fees

6,712

6,320

Life insurance premiums

40,893

40,515

Property and casualty insurance premiums

14,009

13,372

Net investment and interest income

25,816

22,151

Other revenue

57,278

49,563

Total revenues

998,911

962,903

Costs and expenses:

Operating expenses

398,213

406,282

Commission expenses

80,462

80,799

Cost of sales

40,952

39,881

Benefits and losses

46,836

43,428

Amortization of deferred policy acquisition costs

5,989

5,643

Lease expense

9,349

12,724

Depreciation, net of (gains) losses on disposals

109,904

63,078

Total costs and expenses

691,705

651,835

Earnings from operations

307,206

311,068

Interest expense

(28,215)

(23,973)

Pretax earnings

278,991

287,095

Income tax expense

(102,516)

(103,716)

Earnings available to common shareholders

$

176,475

$

183,379

Basic and diluted earnings per common share

$

9.01

$

9.36

Weighted average common shares outstanding: Basic and diluted

19,586,411

19,597,717

 

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Six Months Ended September 30,

2016

2015

(Unaudited)

(In thousands, except share and per share data)

Revenues:

Self-moving equipment rentals

$

1,358,046

$

1,327,505

Self-storage revenues

139,885

119,251

Self-moving and self-storage products and service sales

147,633

147,961

Property management fees

13,316

12,431

Life insurance premiums

81,785

80,781

Property and casualty insurance premiums

25,264

23,928

Net investment and interest income

53,365

44,123

Other revenue

103,026

91,728

Total revenues

1,922,320

1,847,708

Costs and expenses:

Operating expenses

783,295

769,451

Commission expenses

154,278

153,857

Cost of sales

84,314

81,136

Benefits and losses

93,839

86,819

Amortization of deferred policy acquisition costs

13,931

10,421

Lease expense

20,397

29,788

Depreciation, net of (gains) losses on disposals

205,285

114,060

Total costs and expenses

1,355,339

1,245,532

Earnings from operations

566,981

602,176

Interest expense

(54,859)

(46,073)

Pretax earnings

512,122

556,103

Income tax expense

(188,474)

(201,439)

Earnings available to common shareholders

$

323,648

$

354,664

Basic and diluted earnings per common share

$

16.52

$

18.10

Weighted average common shares outstanding: Basic and diluted

19,586,240

19,596,921

 

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

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/amerco-reports-second-quarter-fiscal-2017-financial-results-300360109.html

SOURCE AMERCO


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