AMERCO Reports First Quarter Fiscal 2020 Financial Results

RENO, Nev., Aug. 7, 2019 /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 common shareholders for its first quarter ended June 30, 2019, of $132.4 million, or $6.76 per share, compared with net earnings of $127.8 million, or $6.53 per share, for the same period last year.

"Modest revenue gains in the equipment rental business reflect continued demand for self-move equipment," stated Joe Shoen, chairman of AMERCO. "Self-storage revenues continue to improve as we fill units and should continue to do so. The self-storage market is very competitive and we are competing."

Highlights of First Quarter Fiscal 2020 Results

Self-moving equipment rental revenues increased $32.0 million, or 4.5% for the first quarter of fiscal 2020 compared with the first quarter of fiscal 2019. The improvements came from both the truck and trailer rentals. Compared with the same period last year, we increased the number of retail locations, independent dealers, box trucks, trailers and towing devices in the shared fleet.
Self-storage revenues increased $12.1 million, or 14.0% for the first quarter of fiscal 2020 compared with the first quarter of fiscal 2019. Over the last twelve months, we have added approximately 5.8 million net rentable square feet to the self-storage portfolio or approximately 69 thousand additional units. Approximately 1.9 million square feet of that came online during the first quarter. The average number of units occupied during the quarter increased by 40 thousand compared to the same quarter last year, an improvement of 15 thousand units compared to the occupancy pace last year at this time.
For the first quarter of fiscal 2020 compared with the first quarter of fiscal 2019, depreciation, net of gains and losses on sales increased $14.2 million. Depreciation expense on the rental equipment fleet increased $8.4 million due to a larger fleet. Net gains on the sales of rental trucks increased $0.4 million. All other depreciation increased $6.2 million from the increase in new moving and storage locations. Net gains on disposal of real estate increased $1.6 million from the condemnation of a property in the quarter.
For the first quarter of fiscal 2020 compared with the first quarter of fiscal 2019 gross truck and trailer capital expenditures were approximately $561 million compared with approximately $440 million. Proceeds from sales of rental equipment were $158 million compared with $187 million. Spending on real estate related acquisitions and development were approximately $218 million compared with $219 million, respectively.
Fleet maintenance and repair costs decreased $2.5 million in the first quarter of fiscal 2020 compared with the same period last year.
Operating earnings at our Moving and Storage operating segment increased $1.5 million compared with the same period last year. Total revenues climbed $52.5 million and total costs and expenses increased $51.0 million.
Cash and credit availability at the Moving and Storage segment was $575.5 million at June 30, 2019 compared with $724.5 million at March 31, 2019.
On March 6, 2019, we declared a cash dividend on our Common Stock of $0.50 per share to holders of record on March 21, 2019. The dividend was paid on April 4, 2019.
We are holding our 13^th Annual Virtual Analyst and Investor meeting on Thursday, August 22, 2019 at 11:00 a.m. Arizona Time (2:00 p.m. Eastern). This is an opportunity to interact directly with Company representatives through a live video webcast on amerco.com. A brief presentation by the Company will be followed by a question and answer session.

AMERCO will hold its investor call for the first quarter of fiscal 2020 on Thursday, August 8, 2019, at 8 a.m. Arizona Time (11 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 June 30, 2019, 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 first quarter of fiscal 2020 and 2019.

		Quarter Ended June 30,
		2019		2018
		(Unaudited)
		(In thousands)
Self-moving equipment rentals	$	748,596	$	716,602
Self-storage revenues		98,274		86,212
Self-moving and self-storage product and service sales		80,026		79,241
Property management fees		7,156		7,416
Life insurance premiums		32,710		36,888
Property and casualty insurance premiums		13,424		12,781
Net investment and interest income		35,749		24,605
Other revenue		63,314		55,832
Consolidated revenue	$	1,079,249	$	1,019,577

Listed below are revenues and earnings from operations at each of our operating segments for the first quarter of fiscal 2020 and 2019.

		Quarter Ended June 30,
		2019		2018
		(Unaudited)
		(In thousands)
Moving and storage
Revenues	$	1,000,398	$	947,885
Earnings from operations before equity in earnings of subsidiaries		201,896		200,395
Property and casualty insurance
Revenues		20,305		15,889
Earnings from operations		8,466		2,713
Life insurance
Revenues		60,321		57,863
Earnings from operations		3,781		1,881
Eliminations
Revenues		(1,775)		(2,060)
Earnings from operations before equity in earnings of subsidiaries		(278)		(285)
Consolidated Results
Revenues		1,079,249		1,019,577
Earnings from operations		213,865		204,704

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 June 30,
	2019	2018
	(Unaudited)
	(In thousands, except occupancy rate)
Unit count as of June 30	452	383
Square footage as of June 30	38,175	32,394
Average monthly number of units occupied	302	262
Average monthly occupancy rate based on unit count	68.4%	69.6%
Average monthly square footage occupied	27,421	23,666

AMERCO AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30,		March 31,
		2019		2019
		(Unaudited)
		(In thousands)
ASSETS
Cash and cash equivalents	$	519,831	$	673,701
Reinsurance recoverables and trade receivables, net		243,235		224,785
Inventories and parts, net		101,032		103,504
Prepaid expenses		188,153		174,100
Investments, fixed maturities and marketable equities		2,336,585		2,235,397
Investments, other		313,050		300,736
Deferred policy acquisition costs, net		124,490		136,276
Other assets		73,176		78,354
Right-of-use assets – financing, net		1,265,023		-
Right-of-use assets - operating		105,384		-
Related party assets		31,215		30,889
		5,301,174		3,957,742
Property, plant and equipment, at cost:
Land		991,213		976,454
Buildings and improvements		4,183,178		4,003,726
Furniture and equipment		676,263		689,780
Rental trailers and other rental equipment		475,913		590,039
Rental trucks		3,324,576		4,762,028
		9,651,143		11,022,027
Less: Accumulated depreciation		(2,477,573)		(3,088,056)
Total property, plant and equipment, net		7,173,570		7,933,971
Total assets	$	12,474,744	$	11,891,713
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses	$	591,139	$	556,873
Notes, loans and finance/capital leases payable, net		4,343,935		4,163,323
Operating lease liability		105,008		-
Policy benefits and losses, claims and loss expenses payable		1,013,933		1,011,183
Liabilities from investment contracts		1,705,422		1,666,742
Other policyholders' funds and liabilities		9,763		15,047
Deferred income		42,353		35,186
Deferred income taxes, net		794,168		750,970
Total liabilities		8,605,721		8,199,324

Common stock		10,497		10,497
Additional paid-in capital		453,535		453,326
Accumulated other comprehensive loss		(23,873)		(66,698)
Retained earnings		4,109,384		3,976,962
Cost of common stock in treasury, net		(525,653)		(525,653)
Cost of preferred stock in treasury, net		(151,997)		(151,997)
Unearned employee stock ownership plan shares		(2,870)		(4,048)
Total stockholders' equity		3,869,023		3,692,389
Total liabilities and stockholders' equity	$	12,474,744	$	11,891,713

AMERCO AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Quarter Ended June 30,
		2019		2018
		(Unaudited)
		(In thousands, except share and per share data)
Revenues:
Self-moving equipment rentals	$	748,596	$	716,602
Self-storage revenues		98,274		86,212
Self-moving and self-storage products and service sales		80,026		79,241
Property management fees		7,156		7,416
Life insurance premiums		32,710		36,888
Property and casualty insurance premiums		13,424		12,781
Net investment and interest income		35,749		24,605
Other revenue		63,314		55,832
Total revenues		1,079,249		1,019,577

Costs and expenses:
Operating expenses		534,472		496,554
Commission expenses		80,899		79,257
Cost of sales		48,929		49,881
Benefits and losses		49,006		48,554
Amortization of deferred policy acquisition costs		6,064		6,031
Lease expense		7,036		8,169
Depreciation, net of gains on disposals		140,600		126,427
Net gains on disposal of real estate		(1,622)		-
Total costs and expenses		865,384		814,873

Earnings from operations		213,865		204,704
Other components of net periodic benefit costs		(263)		(253)
Interest expense		(38,888)		(35,254)
Pretax earnings		174,714		169,197
Income tax expense		(42,292)		(41,348)
Earnings available to common stockholders	$	132,422	$	127,849
Basic and diluted earnings per common stock	$	6.76	$	6.53
Weighted average common stock outstanding: Basic and diluted		19,597,697		19,590,585

NON-GAAP DISCLOSURE

As of April 1, 2019, we adopted the new accounting standard for leases. Part of this adoption resulted in approximately $1 billion of property, plant and equipment, net being reclassed to Right-of-Use Assets - Financing, net ("ROU-Financing"). As of June 30, 2019, the balance of ROU-Financing also includes the rental equipment purchased under new financing liability leases during the first quarter. The table below shows adjusted property, plant and equipment, net as of June 30, 2019, by including the ROU-Financing to help compare our PPE assets with our March 2019 fiscal year end. The assets included in the ROU-Financing is not a true book value as some of the assets are recorded at between 70% and 100% of value based on the lease agreement.

						June 30,
						2019
		June 30,		ROU Assets		Property, Plant and Equipment		March 31,
		2019		Financing		Adjusted		2019
		(Unaudited)
		(In thousands)

Property, plant and equipment, at cost
Land	$	991,213	$	-	$	991,213	$	976,454
Buildings and improvements		4,183,178		-		4,183,178		4,003,726
Furniture and equipment		676,263		36,304		712,567		689,780
Rental trailers and other rental equipment		475,913		129,826		605,739		590,039
Rental trucks		3,324,576		1,813,633		5,138,209		4,762,028
Right-of-use assets, gross		9,651,143		1,979,763		11,630,906		11,022,027
Less: Accumulated depreciation		(2,477,573)		(714,740)		(3,192,313)		(3,088,056)
Total property, plant and equipment, net	$	7,173,570	$	1,265,023	$	8,438,593	$	7,933,971