AMERCO Reports Third Quarter Fiscal 2018 Financial Results

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February 7, 2018 4:10 PM EST

RENO, Nev., Feb. 7, 2018 /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 third quarter ended December 31, 2017, of $528.9 million, or $27.00 per share, compared with net earnings of $65.2 million, or $3.33 per share, for the same period last year. Included in the results for the quarter ended December 31, 2017 was a $17.32 per share, or $339.2 million benefit resulting from the Tax Reform Act and an additional after-tax benefit of $7.34 per share or $143.8 million resulting from the sale of a portion of our Chelsea, NY property.  Excluding these items, adjusted earnings were $2.34 per share for the quarter ended December 31, 2017.

For the nine-month period ended December 31, 2017, net earnings available to shareholders were $779.7 million, or $39.81 per share, compared with net earnings of $388.9 million, or $19.85 per share, for the same period last year. Included in the results for the nine-month period ended December 31, 2017, was a $17.32 per share, or $339.2 million benefit resulting from the Tax Reform Act and an additional after-tax benefit of $7.34 per share or $143.8 million resulting from the sale of a portion of our Chelsea, NY property.  Excluding these items, adjusted earnings were $15.15 per share for the nine-month period ended December 31, 2017.  Included in the results for the nine-month period ended December 31, 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 $19.06 per share for the nine-month period ended December 31, 2016.

"Tax reform is a real benefit.  While accounting rules required us to recognize a large book gain in the quarter, significant cash flow benefits will accrue to us over time," stated Joe Shoen, chairman of AMERCO. "We have already been investing savings from bonus tax depreciation back into increased rental equipment.  The new depreciation rules will allow us to accelerate investments in the future.  The tax rate changes allow U-Haul to invest still more in our people and in facility and equipment upgrades.   I was pleased with the growth in both equipment and self-storage revenues.  We are still challenged to better manage the sales of our pickups and cargo vans."

Highlights of Third Quarter Fiscal 2018 Results

  • The recently enacted Tax Reform Act resulted in a net benefit to the Company of $339.2 million. This is a combination of a $349.2 million benefit resulting from the application of the new 21% federal income tax rate in our deferred tax liability calculation, partially off-set by a $10.0 million charge from the deemed repatriation of foreign earnings from our Canadian subsidiaries. Excluding the net benefits resulting from the initial application of the new laws we expect our blended GAAP effective tax rate for the twelve months of fiscal 2018 will be approximately 34.3% and 24.3% for fiscal 2019.
  • Self-moving equipment rental revenues increased $33.3 million or 6.2% during the third quarter of fiscal 2018, compared with the third quarter of fiscal 2017. The revenue improvement was primarily transaction driven and came from our truck and trailer rental fleets. Transaction and revenue increases were recognized in both the one-way and in-town markets. 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 $9.8 million during the third quarter of fiscal 2018, compared with the third quarter of fiscal 2017. The average monthly amount of occupied square feet increased by 9.2% during the third 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 3.5 million net rentable square feet or a 13.2% increase to our owned self-storage portfolio with approximately 0.7 million of that coming on during the third quarter.
  • Depreciation, net of gains and losses on sales increased $18.5 million. Depreciation on the rental equipment fleet increased $17.9 million primarily due to a larger fleet. Gains on the sales of rental trucks increased $2.1 million due to higher unit sales partially offset by lower gains per unit. All other depreciation increased $2.7 million from the increase in new moving and storage locations.
  • Net gains on the sale of real estate increased $190.0 million. The increase was caused by the sale of a portion of our Chelsea, NY property which resulted in a pre-tax gain of $190.7 million.
  • Fleet maintenance and repair costs increased $32.3 million in the third quarter of fiscal 2018 compared with the same period last year. Higher repair and maintenance spending was primarily associated with the portion of the fleet nearing resale.
  • Operating earnings at our Moving and Storage operating segment, excluding the gain on the Chelsea property, decreased $23.5 million in the third quarter of fiscal 2018 compared with the same period last year. Total revenues climbed $48.5 million and total costs and expenses excluding the gain on the Chelsea property increased $72.0 million.
  • For the first nine months of fiscal 2018 compared with the first nine months of fiscal 2017 gross truck and trailer capital expenditures were $788 million and $870 million, for the first nine months of fiscal 2018 compared with the first nine months of fiscal 2017 proceeds from sales of rental equipment were $389 million compared with $403 million and spending on real estate related acquisitions and projects were $400 million compared with $378 million.
  • Cash and credit availability at the Moving and Storage operating segment was $1,141.3 million at December 31, 2017 compared with $804.7 million at March 31, 2017.
  • On December 6, 2017, the Board declared a cash dividend on our Common Stock of $0.50 per share to holders of record on December 21, 2017. The dividend was paid on January 5, 2018.

AMERCO will hold its investor call for the third quarter of fiscal 2018 on Thursday, February 8, 2018, 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 December 31, 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 third quarter of fiscal 2018 and 2017.

Quarter Ended December 31,

2017

2016

(Unaudited)

(In thousands)

 Self-moving equipment rentals

$

574,801

$

541,473

 Self-storage revenues

82,127

72,309

 Self-moving and self-storage product and service sales

53,130

51,562

 Property management fees

9,881

9,734

 Life insurance premiums

38,957

41,279

 Property and casualty insurance premiums

16,093

14,938

 Net investment and interest income

28,821

22,833

 Other revenue

39,072

36,327

 Consolidated revenue

$

842,882

$

790,455

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

Quarter Ended December 31,

2017

2016

(Unaudited)

(In thousands)

 Moving and storage

 Revenues

$

762,487

$

713,984

 Earnings from operations before equity in earnings of subsidiaries

285,456

118,253

 Property and casualty insurance  

 Revenues

20,399

18,381

 Earnings from operations

7,595

7,219

 Life insurance   

 Revenues

62,379

59,694

 Earnings from operations

10,382

6,872

 Eliminations

 Revenues

(2,383)

(1,604)

 Earnings from operations before equity in earnings of subsidiaries

(296)

(363)

 Consolidated Results

 Revenues

842,882

790,455

 Earnings from operations

303,137

131,981

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 December 31,

2017

2016

(In thousands, except occupancy rate)

Room count as of December 31

352

305

Square footage as of December 31

29,780

26,310

Average monthly number of rooms occupied

247

227

Average monthly occupancy rate based on room count

70.9%

75.1%

Average monthly square footage occupied

22,401

20,515

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

Nine Months Ended December 31,

2017

2016

(Unaudited)

(In thousands)

 Self-moving equipment rentals

$

1,985,217

$

1,899,519

 Self-storage revenues

239,317

212,194

 Self-moving and self-storage product and service sales

205,309

199,195

 Property management fees

23,474

23,050

 Life insurance premiums

116,910

123,064

 Property and casualty insurance premiums

42,934

40,202

 Net investment and interest income

82,507

75,754

 Other revenue

147,825

139,353

 Consolidated revenue

$

2,843,493

$

2,712,331

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

Nine Months Ended December 31,

2017

2016

(Unaudited)

(In thousands)

 Moving and storage

 Revenues

$

2,610,222

$

2,480,215

 Earnings from operations before equity in earnings of subsidiaries

722,894

659,918

 Property and casualty insurance  

 Revenues

55,704

53,153

 Earnings from operations

19,118

21,816

 Life insurance   

 Revenues

183,465

183,450

 Earnings from operations

20,536

17,886

 Eliminations

 Revenues

(5,898)

(4,487)

 Earnings from operations before equity in earnings of subsidiaries

(999)

(1,102)

 Consolidated Results

 Revenues

2,843,493

2,712,331

 Earnings from operations

761,549

698,518

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:

Nine Months Ended December 31,

2017

2016

(In thousands, except occupancy rate)

Room count as of December 31

352

305

Square footage as of December 31

29,780

26,310

Average monthly number of rooms occupied

245

226

Average monthly occupancy rate based on room count

72.6%

77.1%

Average monthly square footage occupied

22,064

20,343

 

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31,

March 31,

2017

2017

(Unaudited)

(In thousands)

ASSETS

Cash and cash equivalents

$

1,022,887

$

697,806

Reinsurance recoverables and trade receivables, net

205,873

178,081

Inventories, net

95,672

82,439

Prepaid expenses

147,375

124,728

Investments, fixed maturities and marketable equities

1,868,314

1,663,768

Investments, other

407,822

367,830

Deferred policy acquisition costs, net

124,820

130,213

Other assets

93,608

97,525

Related party assets

42,909

86,168

4,009,280

3,428,558

Property, plant and equipment, at cost:

Land

738,525

648,757

Buildings and improvements

3,000,208

2,618,265

Furniture and equipment

600,216

510,415

Rental trailers and other rental equipment

538,334

492,280

Rental trucks

4,243,305

4,091,598

9,120,588

8,361,315

Less: Accumulated depreciation

(2,632,909)

(2,384,033)

Total property, plant and equipment

6,487,679

5,977,282

Total assets

$

10,496,959

$

9,405,840

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Accounts payable and accrued expenses

$

469,955

$

450,541

Notes, loans and leases payable

3,493,908

3,262,880

Policy benefits and losses, claims and loss expenses payable

1,090,206

1,086,322

Liabilities from investment contracts

1,319,945

1,112,498

Other policyholders' funds and liabilities

10,739

10,150

Deferred income

27,491

28,696

Deferred income taxes

671,548

835,009

Total liabilities

7,083,792

6,786,096

Common stock

10,497

10,497

Additional paid-in capital

452,619

452,172

Accumulated other comprehensive loss

(9,911)

(51,236)

Retained earnings

3,643,253

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

(5,641)

(6,932)

Total stockholders' equity

3,413,167

2,619,744

Total liabilities and stockholders' equity

$

10,496,959

$

9,405,840

 

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Quarter Ended December 31,

2017

2016

(Unaudited)

(In thousands, except share and per share data)

Revenues:

Self-moving equipment rentals

$

574,801

$

541,473

Self-storage revenues

82,127

72,309

Self-moving and self-storage products and service sales

53,130

51,562

Property management fees

9,881

9,734

Life insurance premiums

38,957

41,279

Property and casualty insurance premiums

16,093

14,938

Net investment and interest income

28,821

22,833

Other revenue

39,072

36,327

Total revenues

842,882

790,455

Costs and expenses:

Operating expenses

438,071

389,352

Commission expenses

63,487

61,052

Cost of sales

33,995

32,537

Benefits and losses

45,168

45,403

Amortization of deferred policy acquisition costs

5,952

5,200

Lease expense

8,415

8,807

Depreciation, net of (gains) losses on disposal

137,061

118,541

Net (gains) losses on disposal of real estate

(192,404)

(2,418)

Total costs and expenses

539,745

658,474

Earnings from operations

303,137

131,981

Interest expense

(31,558)

(28,782)

Amortization on early extinguishment of debt

-

(499)

Pretax earnings

271,579

102,700

Income tax (expense) benefit

257,315

(37,472)

Earnings available to common shareholders

$

528,894

$

65,228

Basic and diluted earnings per common share

$

27.00

$

3.33

Weighted average common shares outstanding: Basic and diluted

19,589,218

19,586,694

 

AMERCO AND CONSOLIDATED ENTITIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Nine Months Ended December 31,

2017

2016

(Unaudited)

(In thousands, except share and per share data)

Revenues:

Self-moving equipment rentals

$

1,985,217

$

1,899,519

Self-storage revenues

239,317

212,194

Self-moving and self-storage products and service sales

205,309

199,195

Property management fees

23,474

23,050

Life insurance premiums

116,910

123,064

Property and casualty insurance premiums

42,934

40,202

Net investment and interest income

82,507

75,754

Other revenue

147,825

139,353

Total revenues

2,843,493

2,712,331

Costs and expenses:

Operating expenses

1,347,477

1,172,647

Commission expenses

222,203

215,330

Cost of sales

124,456

116,851

Benefits and losses

139,997

139,242

Amortization of deferred policy acquisition costs

18,217

19,131

Lease expense

25,277

29,204

Depreciation, net of (gains) losses on disposal

396,540

323,785

Net (gains) losses on disposal of real estate

(192,223)

(2,377)

Total costs and expenses

2,081,944

2,013,813

Earnings from operations

761,549

698,518

Interest expense

(93,926)

(83,197)

Amortization on early extinguishment of debt

-

(499)

Pretax earnings

667,623

614,822

Income tax (expense) benefit

112,117

(225,946)

Earnings available to common shareholders

$

779,740

$

388,876

Basic and diluted earnings per common share

$

39.81

$

19.85

Weighted average common shares outstanding: Basic and diluted

19,588,558

19,586,389

 

Quarter Ended

December 31, 2017

(In thousands, except share and per share amounts)

AMERCO and Consolidated Subsidiaries

Earnings per common share: basic and diluted

$

27.00

Gain on sale of Chelsea property, per common share basic and diluted

(7.34)

Earnings per common share: basic and diluted before gain on sale of Chelsea property

$

19.66

Gain on sale of Chelsea property

$

190,712

Income tax expense

(46,915)

Gain on sale of Chelsea property, net of taxes

$

143,797

Gain on sale of Chelsea property, net of taxes, per common share basic and diluted

$

7.34

Weighted average shares outstanding: basic and diluted

19,589,218

Nine Months Ended

December 31, 2017

(In thousands, except share and per share amounts)

AMERCO and Consolidated Subsidiaries

Earnings per common share: basic and diluted

$

39.81

Gain on sale of Chelsea property, per common share basic and diluted

(7.34)

Earnings per common share: basic and diluted before gain on sale of Chelsea property

$

32.47

Gain on sale of Chelsea property

$

190,712

Income tax expense

(46,915)

Gain on sale of Chelsea property, net of taxes

$

143,797

Gain on sale of Chelsea property, net of taxes, per common share basic and diluted

$

7.34

Weighted average shares outstanding: basic and diluted

19,588,558

 

Quarter Ended

December 31, 2017

(In thousands, except share and per share amounts)

AMERCO and Consolidated Subsidiaries

Earnings per common share: basic and diluted

$

27.00

Tax Reform Act adjustment, per common share basic and diluted

(17.32)

Earnings per common share: basic and diluted before Tax Reform Act adjustment

$

9.68

Tax Reform Act adjustment

$

339,221

Tax Reform Act adjustment, per common share basic and diluted

$

17.32

Weighted average shares outstanding: basic and diluted

19,589,218

Nine Months Ended

December 31, 2017

(In thousands, except share and per share amounts)

AMERCO and Consolidated Subsidiaries

Earnings per common share: basic and diluted

$

39.81

Tax Reform Act adjustment, per common share basic and diluted

(17.32)

Earnings per common share: basic and diluted before Tax Reform Act adjustment

$

22.49

Tax Reform Act adjustment

$

339,221

Tax Reform Act adjustment, per common share basic and diluted

$

17.32

Weighted average shares outstanding: basic and diluted

19,588,558

Nine Months Ended

December 31, 2016

(In thousands, except share and per share amounts)

AMERCO and Consolidated Subsidiaries

Earnings per common share: basic and diluted

$

19.85

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

(0.79)

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

$

19.06

PEI litigation accrual

$

24,600

Income tax expense

(9,053)

PEI litigation accrual, net of taxes

$

15,547

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

$

0.79

Weighted average shares outstanding: basic and diluted

19,586,389

 

 

Cision View original content:http://www.prnewswire.com/news-releases/amerco-reports-third-quarter-fiscal-2018-financial-results-300595353.html

SOURCE AMERCO


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