AMERCO Reports Third Quarter Fiscal 2018 Financial Results
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 |
|
SOURCE AMERCO
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