AMERCO Reports Third Quarter Fiscal 2017 Financial Results
RENO, Nev., Feb. 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 third quarter ended December 31, 2016, of $65.2 million, or $3.33 per share, compared with net earnings of $81.8 million, or $4.17 per share, for the same period last year.
For the nine-month period ended December 31, 2016, net earnings available to shareholders were $388.9 million, or $19.85 per share, compared with net earnings of $436.4 million, or $22.27 per share, for the same period last year. 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.
"Revenue gains in our core rental business were driven by transaction growth," stated Joe Shoen, chairman of AMERCO. "I am greatly encouraged by the Trump administration and since the inauguration have committed to 3,000 additional built-in-America Ford trucks. I expect growth to accelerate and I want U-Haul ready to serve customers moving to a new job or improved living arrangements."
Highlights of Third Quarter Fiscal 2017 Results
- Self-moving equipment rental revenues increased $24.1 million or 5% during the third quarter of fiscal 2017, compared with the third quarter of fiscal 2016. The improvement in revenue was generated from an increase in transactions from both our In-Town and one-way truck business. Our distribution network continued to expand with the addition of new independent dealers and Company-owned locations. The average number of rental trucks in our fleet increased compared with the same quarter last year.
- Self-storage revenues increased $9.1 million during the third quarter of fiscal 2017, compared with the third quarter of fiscal 2016. The average monthly amount of occupied square feet increased by 10.9% during the third 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 3.1 million net rentable square feet to our owned self-storage portfolio with over 0.8 million of that coming on during the third quarter.
- Depreciation, net of gains and losses on disposals increased $30.4 million due to additional trucks in the rental fleet, increased costs of acquisition and lower relative sales values in the third quarter of fiscal 2017 compared with the same period last year.
- Operating earnings at our Moving and Storage operating segment decreased $25.8 million in the third quarter of fiscal 2017 compared with the same period last year. Total revenues climbed $41.2 million and total costs and expenses increased $67.0 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 third quarter of fiscal 2017 this resulted in an additional $4.3 million of operating expenses. This change is expected to benefit the Company through the immediate recognition of tax-deductible costs.
- For the first nine months of fiscal 2017 compared with the first nine months of fiscal 2016 gross truck and trailer capital expenditures were approximately $870 million compared with approximately $586 million, proceeds from sales of rental equipment were $403 million compared with $459 million and spending on real estate related acquisitions and projects were approximately $378 million compared with $439 million.
- Cash and credit availability at the Moving and Storage operating segment was $1,067.0 million at December 31, 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 third quarter of fiscal 2017 on Thursday, February 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 December 31, 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 third quarter of fiscal 2017 and 2016.
| Quarter Ended December 31, |
||||
| 2016 |
2015 |
|||
| (Unaudited) |
||||
| (In thousands) |
||||
| Self-moving equipment rentals |
$ |
541,473 |
$ |
517,403 |
| Self-storage revenues |
72,309 |
63,164 |
||
| Self-moving and self-storage product and service sales |
51,562 |
50,038 |
||
| Property management fees |
9,734 |
8,170 |
||
| Life insurance premiums |
41,279 |
40,657 |
||
| Property and casualty insurance premiums |
14,938 |
14,105 |
||
| Net investment and interest income |
23,054 |
19,026 |
||
| Other revenue |
36,327 |
32,188 |
||
| Consolidated revenue |
790,676 |
744,751 |
||
Listed below are revenues and earnings from operations at each of our operating segments for the third quarter of fiscal 2017 and 2016.
| Quarter Ended December 31, |
||||
| 2016 |
2015 |
|||
| (Unaudited) |
||||
| (In thousands) |
||||
| Moving and storage |
||||
| Revenues |
$ |
713,984 |
$ |
672,752 |
| Earnings from operations before equity in earnings of subsidiaries |
118,253 |
144,070 |
||
| Property and casualty insurance |
||||
| Revenues |
18,381 |
17,357 |
||
| Earnings from operations |
7,219 |
6,271 |
||
| Life insurance |
||||
| Revenues |
59,694 |
56,148 |
||
| Earnings from operations |
6,872 |
7,718 |
||
| Eliminations |
||||
| Revenues |
(1,383) |
(1,506) |
||
| Earnings from operations before equity in earnings of subsidiaries |
(142) |
(157) |
||
| Consolidated results |
||||
| Revenues |
790,676 |
744,751 |
||
| Earnings from operations |
132,202 |
157,902 |
||
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, |
||||
| 2016 |
2015 |
|||
| (Unaudited) |
||||
| (In thousands, except occupancy rate) |
||||
| Room count as of December 31 |
305 |
265 |
||
| Square footage as of December 31 |
26,310 |
23,178 |
||
| Average monthly number of rooms occupied |
227 |
205 |
||
| Average monthly occupancy rate based on room count |
75.1% |
78.4% |
||
| Average monthly square footage occupied |
20,515 |
18,493 |
||
Listed below on a consolidated basis are revenues for our major product lines for the first nine months of fiscal 2017 and 2016.
| Nine months Ended December 31, |
||||
| 2016 |
2015 |
|||
| (Unaudited) |
||||
| (In thousands) |
||||
| Self-moving equipment rentals |
$ |
1,899,519 |
$ |
1,844,908 |
| Self-storage revenues |
212,194 |
182,415 |
||
| Self-moving and self-storage product and service sales |
199,195 |
197,999 |
||
| Property management fees |
23,050 |
20,601 |
||
| Life insurance premiums |
123,064 |
121,438 |
||
| Property and casualty insurance premiums |
40,202 |
38,033 |
||
| Net investment and interest income |
76,419 |
63,149 |
||
| Other revenue |
139,353 |
123,916 |
||
| Consolidated revenue |
2,712,996 |
2,592,459 |
||
Listed below are revenues and earnings from operations at each of our operating segments for the first nine months of fiscal 2017 and 2016.
| Nine months Ended December 31, |
||||
| 2016 |
2015 |
|||
| (Unaudited) |
||||
| (In thousands) |
||||
| Moving and storage |
||||
| Revenues |
$ |
2,480,215 |
$ |
2,375,886 |
| Earnings from operations before equity in earnings of subsidiaries |
659,918 |
721,755 |
||
| Property and casualty insurance |
||||
| Revenues |
53,153 |
48,872 |
||
| Earnings from operations |
21,816 |
18,814 |
||
| Life insurance |
||||
| Revenues |
183,450 |
171,404 |
||
| Earnings from operations |
17,886 |
19,986 |
||
| Eliminations |
||||
| Revenues |
(3,822) |
(3,703) |
||
| Earnings from operations before equity in earnings of subsidiaries |
(437) |
(477) |
||
| Consolidated results |
||||
| Revenues |
2,712,996 |
2,592,459 |
||
| Earnings from operations |
699,183 |
760,078 |
||
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, |
||||
| 2016 |
2015 |
|||
| (Unaudited) |
||||
| (In thousands, except occupancy rate) |
||||
| Room count as of December 31 |
305 |
265 |
||
| Square footage as of December 31 |
26,310 |
23,178 |
||
| Average monthly number of rooms occupied |
226 |
201 |
||
| Average monthly occupancy rate based on room count |
77.1% |
81.5% |
||
| Average monthly square footage occupied |
20,343 |
18,064 |
||
| AMERCO AND CONSOLIDATED ENTITIES |
||||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
| December 31, |
March 31, |
|||
| 2016 |
2016 |
|||
| (Unaudited) |
||||
| (In thousands) |
||||
| ASSETS |
||||
| Cash and cash equivalents |
$ |
984,185 |
$ |
600,646 |
| Reinsurance recoverables and trade receivables, net |
199,095 |
175,210 |
||
| Inventories, net |
79,682 |
79,756 |
||
| Prepaid expenses |
54,486 |
134,300 |
||
| Investments, fixed maturities and marketable equities |
1,700,581 |
1,510,538 |
||
| Investments, other |
376,813 |
310,072 |
||
| Deferred policy acquisition costs, net |
118,040 |
136,386 |
||
| Other assets |
78,049 |
77,210 |
||
| Related party assets |
91,705 |
85,734 |
||
| 3,682,636 |
3,109,852 |
|||
| Property, plant and equipment, at cost: |
||||
| Land |
633,725 |
587,347 |
||
| Buildings and improvements |
2,509,073 |
2,187,400 |
||
| Furniture and equipment |
477,131 |
399,943 |
||
| Rental trailers and other rental equipment |
493,214 |
462,379 |
||
| Rental trucks |
3,806,387 |
3,514,175 |
||
| 7,919,530 |
7,151,244 |
|||
| Less: Accumulated depreciation |
(2,314,849) |
(2,133,733) |
||
| Total property, plant and equipment |
5,604,681 |
5,017,511 |
||
| Total assets |
$ |
9,287,317 |
$ |
8,127,363 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
| Liabilities: |
||||
| Accounts payable and accrued expenses |
$ |
435,000 |
$ |
502,613 |
| Notes, loans and leases payable |
3,198,435 |
2,665,396 |
||
| Policy benefits and losses, claims and loss expenses payable |
1,083,627 |
1,071,412 |
||
| Liabilities from investment contracts |
1,085,775 |
951,490 |
||
| Other policyholders' funds and liabilities |
8,268 |
8,650 |
||
| Deferred income |
23,847 |
22,784 |
||
| Deferred income taxes |
791,661 |
653,612 |
||
| Total liabilities |
6,626,613 |
5,875,957 |
||
| Common stock |
10,497 |
10,497 |
||
| Additional paid-in capital |
452,014 |
451,629 |
||
| Accumulated other comprehensive loss |
(21,034) |
(60,525) |
||
| Retained earnings |
2,902,932 |
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 |
(6,055) |
(6,186) |
||
| Total stockholders' equity |
2,660,704 |
2,251,406 |
||
| Total liabilities and stockholders' equity |
$ |
9,287,317 |
$ |
8,127,363 |
| AMERCO AND CONSOLIDATED ENTITIES |
||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||
| Quarter Ended December 31, |
||||
| 2016 |
2015 |
|||
| (Unaudited) |
||||
| (In thousands, except share and per share data) |
||||
| Revenues: |
||||
| Self-moving equipment rentals |
$ |
541,473 |
$ |
517,403 |
| Self-storage revenues |
72,309 |
63,164 |
||
| Self-moving and self-storage products and service sales |
51,562 |
50,038 |
||
| Property management fees |
9,734 |
8,170 |
||
| Life insurance premiums |
41,279 |
40,657 |
||
| Property and casualty insurance premiums |
14,938 |
14,105 |
||
| Net investment and interest income |
23,054 |
19,026 |
||
| Other revenue |
36,327 |
32,188 |
||
| Total revenues |
790,676 |
744,751 |
||
| Costs and expenses: |
||||
| Operating expenses |
389,352 |
356,156 |
||
| Commission expenses |
61,052 |
58,347 |
||
| Cost of sales |
32,537 |
29,460 |
||
| Benefits and losses |
45,403 |
41,574 |
||
| Amortization of deferred policy acquisition costs |
5,200 |
5,138 |
||
| Lease expense |
8,807 |
10,461 |
||
| Depreciation, net of (gains) losses on disposals |
116,123 |
85,713 |
||
| Total costs and expenses |
658,474 |
586,849 |
||
| Earnings from operations |
132,202 |
157,902 |
||
| Interest expense |
(29,003) |
(25,407) |
||
| Amortization on early extinguishment of debt |
(499) |
- |
||
| Pretax earnings |
102,700 |
132,495 |
||
| Income tax expense |
(37,472) |
(50,726) |
||
| Earnings available to common shareholders |
$ |
65,228 |
$ |
81,769 |
| Basic and diluted earnings per common share |
$ |
3.33 |
$ |
4.17 |
| Weighted average common shares outstanding: Basic and diluted |
19,586,694 |
19,599,352 |
||
| AMERCO AND CONSOLIDATED ENTITIES |
||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||
| Nine months Ended December 31, |
||||
| 2016 |
2015 |
|||
| (Unaudited) |
||||
| (In thousands, except share and per share data) |
||||
| Revenues: |
||||
| Self-moving equipment rentals |
$ |
1,899,519 |
$ |
1,844,908 |
| Self-storage revenues |
212,194 |
182,415 |
||
| Self-moving and self-storage products and service sales |
199,195 |
197,999 |
||
| Property management fees |
23,050 |
20,601 |
||
| Life insurance premiums |
123,064 |
121,438 |
||
| Property and casualty insurance premiums |
40,202 |
38,033 |
||
| Net investment and interest income |
76,419 |
63,149 |
||
| Other revenue |
139,353 |
123,916 |
||
| Total revenues |
2,712,996 |
2,592,459 |
||
| Costs and expenses: |
||||
| Operating expenses |
1,172,647 |
1,125,607 |
||
| Commission expenses |
215,330 |
212,204 |
||
| Cost of sales |
116,851 |
110,596 |
||
| Benefits and losses |
139,242 |
128,393 |
||
| Amortization of deferred policy acquisition costs |
19,131 |
15,559 |
||
| Lease expense |
29,204 |
40,249 |
||
| Depreciation, net of (gains) losses on disposals |
321,408 |
199,773 |
||
| Total costs and expenses |
2,013,813 |
1,832,381 |
||
| Earnings from operations |
699,183 |
760,078 |
||
| Interest expense |
(83,862) |
(71,480) |
||
| Amortization on early extinguishment of debt |
(499) |
- |
||
| Pretax earnings |
614,822 |
688,598 |
||
| Income tax expense |
(225,946) |
(252,165) |
||
| Earnings available to common shareholders |
$ |
388,876 |
$ |
436,433 |
| Basic and diluted earnings per common share |
$ |
19.85 |
$ |
22.27 |
| Weighted average common shares outstanding: Basic and diluted |
19,586,389 |
19,597,735 |
||
| Nine months Ended |
||
| December 31, 2016 |
||
| (Unaudited) |
||
| (In thousands, except share and per share amounts) |
||
| AMERCO and Consolidated Subsidiaries |
||
| Earnings per common share: basic and diluted |
$ |
19.85 |
| 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 |
$ |
19.06 |
| 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 |
19,586,389 |
|
SOURCE AMERCO
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