AMERCO Reports Fiscal 2018 Financial Results

RENO, Nev., May 30, 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 the year ended March 31, 2018, were $790.6 million, or $40.36 per share, compared with $398.4 million, or $20.34 per share for the same period last year. Included in the results for the year ended March 31, 2018, was a $18.16 per share, or $355.7 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 $14.86 per share for the year ended March 31, 2018. Included in the results for the year ended March 31, 2017, 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 $19.55 per share for the year ended March 31, 2017.

For the quarter ended March 31, 2018, the Company reported net earnings available to shareholders of $10.8 million, or $0.56 per share compared with net earnings of $9.5 million, or $0.49 per share for the same period last year. Included in the results for the quarter ended March 31, 2018, was a $0.84 per share, or $16.5 million benefit resulting from the Tax Reform Act, excluding this, adjusted losses were ($0.28) per share for the quarter ended March 31, 2018.

“Customer demand for our self-moving and self-storage products remains steady,” stated Joe Shoen, chairman of AMERCO. “We made progress in managing the sale of our pickups and cargo vans during the quarter but more work remains. We continue to invest in self-storage, the rental fleet and technology for the long-term.”

Highlights of Fiscal Year and Fourth Quarter 2018 Results

The recently enacted Tax Reform Act resulted in a net benefit to the Company of $355.7 million. We expect our blended GAAP effective tax rate for the twelve months of fiscal 2019 will be approximately 24.3%. During the quarter the Company issued bonuses to all of its team members in response to the enactment of the Tax Reform Act totaling approximately $20.3 million.
Self-moving equipment rental revenues increased $31.2 million or 6.7% in the fourth quarter of fiscal 2018 compared with the fourth quarter of fiscal 2017, and finished the full year up $116.9 million or 5.0% compared with fiscal 2017. During fiscal 2018 we added to the number of Company operated locations and grew our truck, trailer and towing device fleets. Both In-Town and one-way transactions increased compared with fiscal 2017.
Self-storage revenues increased $9.9 million or 13.3% in the fourth quarter of fiscal 2018 compared with the fourth quarter of fiscal 2017 and for the full year increased $37.0 million or 12.9% compared with fiscal 2017. The average monthly amount of occupied square feet increased by 10.3% during the fourth quarter of fiscal 2018 compared with the same period last year. Over the last twelve months, we have added approximately 3.7 million net rentable square feet to our owned self-storage portfolio. Average monthly occupancy throughout fiscal 2018 for the entire owned storage portfolio was 72%. Of this amount, facilities open for more than three years averaged 84% while facilities open less than three years averaged 39%.
For the quarter, depreciation, net of gains and losses on sales increased $21.5 million. Depreciation on the rental equipment fleet increased $10.9 million primarily due to a larger fleet. Losses on the sales of rental trucks increased $4.5 million due to higher cost of units sold combined with lower proceeds per unit on sale. All other depreciation increased $6.1 million from the increase in new moving and storage locations. For the full fiscal year, depreciation, net of gains and losses on sales increased $94.2 million. Depreciation on the rental equipment fleet increased $56.5 million primarily due to a larger fleet. Gains on the sales of rental trucks decreased $20.7 million due to higher cost of units sold with the volume of sales increasing. All other depreciation increased $17.0 million largely from the increase in new moving and storage locations.
Net gains on the sale of real estate increased $191.8 million. The increase was caused by the sale of a portion of our Chelsea, NY property in the third quarter of fiscal 2018 which resulted in a pre-tax gain of $190.7 million.
Fleet maintenance and repair costs increased $17.9 million in the fourth quarter of fiscal 2018 compared with the same period last year and $72.9 million for the full year of fiscal 2018. 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 decreased $40.1 million in the fourth quarter of fiscal 2018 compared with the same period last year. Total revenues climbed $47.7 million and total costs and expenses increased $87.8 million.
Gross truck and trailer capital expenditures for fiscal 2018 were approximately $1,007 million compared with approximately $1,179 million for fiscal 2017. Proceeds from the sales of rental equipment were approximately $491 million for fiscal 2018 compared with $475 million in fiscal 2017. Spending on real estate related acquisitions and projects increased approximately $123 million to $607 million in fiscal 2018 compared with fiscal 2017.
Cash and credit availability at the Moving and Storage operating segment was $882.0 million at March 31, 2018 compared with $804.7 million at March 31, 2017.
On March 8, 2018, we declared a cash dividend on our Common Stock of $0.50 per share to holders of record on March 23, 2018. The dividend was paid on April 6, 2018.

AMERCO will hold its investor call for fiscal 2018 on Thursday, May 31, 2018, 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-K for the year ended March 31, 2018, 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 fourth quarter and the full year of fiscal 2018 and 2017.

		Quarter Ended March 31,				Twelve Months Ended March 31,
		2018		2017		2018		2017
		(In thousands)
Self-moving equipment rentals	$	494,525	$	463,314	$	2,479,742	$	2,362,833
Self-storage revenues		84,586		74,692		323,903		286,886
Self-moving and self-storage product and service sales		56,248		53,878		261,557		253,073
Property management fees		6,128		6,025		29,602		29,075
Life insurance premiums		37,793		40,515		154,703		163,579
Property and casualty insurance premiums		14,166		12,132		57,100		52,334
Net investment and interest income		27,966		26,522		110,473		102,276
Other revenue		36,209		32,358		184,034		171,711
Consolidated revenue		757,621		709,436		3,601,114		3,421,767

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

	Quarter Ended March 31,		Twelve Months Ended March 31,
	2018	2017	2018	2017
	(In thousands)
Moving and storage
Revenues	680,445	632,785	3,290,667	3,113,000
Earnings from operations before equity in earnings of subsidiaries	(11,121)	28,995	711,773	688,913
Property and casualty insurance
Revenues	18,867	15,833	74,571	68,986
Earnings from operations	6,760	5,345	25,878	27,161
Life insurance
Revenues	60,397	62,149	243,862	245,599
Earnings from operations	7,423	9,760	27,959	27,646
Eliminations
Revenues	(2,088)	(1,331)	(7,986)	(5,818)
Earnings from operations before equity in earnings of subsidiaries	(292)	(355)	(1,291)	(1,457)
Consolidated Results
Revenues	757,621	709,436	3,601,114	3,421,767
Earnings from operations	2,770	43,745	764,319	742,263

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 storage locations follows:

	Quarter Ended March 31,
	2018	2017
	(In thousands, except occupancy rate)
Room count as of March 31	366	318
Square footage as of March 31	30,974	27,305
Average monthly number of rooms occupied	249	226
Average monthly occupancy rate based on room count	68.9%	72.2%
Average monthly square footage occupied	22,621	20,514


	Twelve Months Ended March 31,
	2018	2017
	(In thousands, except occupancy rate)
Room count as of March 31	366	318
Square footage as of March 31	30,974	27,305
Average monthly number of rooms occupied	246	226
Average monthly occupancy rate based on room count	71.6%	75.8%
Average monthly square footage occupied	22,203	20,386

AMERCO AND CONSOLIDATED ENTITIES
CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31,		March 31,
		2018		2017
		(Unaudited)
		(In thousands)
ASSETS
Cash and cash equivalents	$	759,388	$	697,806
Reinsurance recoverables and trade receivables, net		193,538		178,081
Inventories and parts, net		89,877		82,439
Prepaid expenses		165,692		124,728
Investments, fixed maturities and marketable equities		1,919,860		1,663,768
Investments, other		399,064		367,830
Deferred policy acquisition costs, net		124,767		130,213
Other assets		244,782		97,525
Related party assets		33,276		86,168
		3,930,244		3,428,558
Property, plant and equipment, at cost:
Land		827,649		648,757
Buildings and improvements		3,140,713		2,618,265
Furniture and equipment		632,803		510,415
Rental trailers and other rental equipment		545,968		492,280
Rental trucks		4,390,750		4,091,598
		9,537,883		8,361,315
Less: Accumulated depreciation		(2,721,142)		(2,384,033)
Total property, plant and equipment		6,816,741		5,977,282
Total assets	$	10,746,985	$	9,405,840
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued expenses	$	510,678	$	450,541
Notes, loans and leases payable		3,513,076		3,262,880
Policy benefits and losses, claims and loss expenses payable		1,248,033		1,086,322
Liabilities from investment contracts		1,364,066		1,112,498
Other policyholders’ funds and liabilities		10,040		10,150
Deferred income		34,276		28,696
Deferred income taxes		658,108		835,009
Total liabilities		7,338,277		6,786,096

Common stock		10,497		10,497
Additional paid-in capital		452,746		452,172
Accumulated other comprehensive loss		(4,623)		(51,236)
Retained earnings		3,635,561		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		(7,823)		(6,932)
Total stockholders’ equity		3,408,708		2,619,744
Total liabilities and stockholders’ equity	$	10,746,985	$	9,405,840

AMERCO AND CONSOLIDATED ENTITIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Quarter Ended March 31,
		2018		2017
		(In thousands, except share and per share data)
Revenues:
Self-moving equipment rentals	$	494,525	$	463,314
Self-storage revenues		84,586		74,692
Self-moving and self-storage products and service sales		56,248		53,878
Property management fees		6,128		6,025
Life insurance premiums		37,793		40,515
Property and casualty insurance premiums		14,166		12,132
Net investment and interest income		27,966		26,522
Other revenue		36,209		32,358
Total revenues		757,621		709,436

Costs and expenses:
Operating expenses		460,506		395,436
Commission expenses		54,502		51,900
Cost of sales		36,033		35,634
Benefits and losses		45,314		43,468
Amortization of deferred policy acquisition costs		6,297		7,087
Lease expense		8,683		8,139
Depreciation, net of gains on disposals		146,707		125,240
Net gains on disposal of real estate		(3,191)		(1,213)
Total costs and expenses		754,851		665,691

Earnings from operations		2,770		43,745
Interest expense		(32,780)		(30,209)
Pretax earnings (losses)		(30,010)		13,536
Income tax benefit (expense)		40,853		(3,988)
Earnings available to common shareholders	$	10,843	$	9,548
Basic and diluted earnings per common share	$	0.56	$	0.49
Weighted average common shares outstanding: Basic and diluted		19,589,871		19,587,204

AMERCO AND CONSOLIDATED ENTITIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		Twelve Months Ended March 31,
		2018		2017
		(In thousands, except share and per share data)
Revenues:
Self-moving equipment rentals	$	2,479,742	$	2,362,833
Self-storage revenues		323,903		286,886
Self-moving and self-storage products and service sales		261,557		253,073
Property management fees		29,602		29,075
Life insurance premiums		154,703		163,579
Property and casualty insurance premiums		57,100		52,334
Net investment and interest income		110,473		102,276
Other revenue		184,034		171,711
Total revenues		3,601,114		3,421,767

Costs and expenses:
Operating expenses		1,807,983		1,568,083
Commission expenses		276,705		267,230
Cost of sales		160,489		152,485
Benefits and losses		185,311		182,710
Amortization of deferred policy acquisition costs		24,514		26,218
Lease expense		33,960		37,343
Depreciation, net of gains on disposals		543,247		449,025
Net gains on disposal of real estate		(195,414)		(3,590)
Total costs and expenses		2,836,795		2,679,504

Earnings from operations		764,319		742,263
Interest expense		(126,706)		(113,406)
Amortization on early extinguishment of debt		–		(499)
Pretax earnings		637,613		628,358
Income tax benefit (expense)		152,970		(229,934)
Earnings available to common shareholders	$	790,583	$	398,424
Basic and diluted earnings per common share	$	40.36	$	20.34
Weighted average common shares outstanding: Basic and diluted		19,588,889		19,586,606

NON-GAAP FINANCIAL RECONCILIATION SCHEDULE

		Year Ended
		March 31, 2018

(In thousands, except share and per share amounts)

AMERCO and Consolidated Subsidiaries
Earnings per common share: basic and diluted	$	40.36
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	$	33.02

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		19,588,889

		Year Ended
		March 31, 2018

(In thousands, except share and per share amounts)

AMERCO and Consolidated Subsidiaries
Earnings per common share: basic and diluted	$	40.36
Tax Reform Act adjustment, per common share basic and diluted		(18.16)
Earnings per common share: basic and diluted before Tax Reform Act adjustment	$	22.20

Tax Reform Act adjustment	$	355,748
Tax Reform Act adjustment, per common share basic and diluted	$	18.16
Weighted average shares outstanding: basic and diluted		19,588,889

		Quarter Ended
		March 31, 2018

(In thousands, except share and per share amounts)

AMERCO and Consolidated Subsidiaries
Earnings per common share: basic and diluted	$	0.56
Tax Reform Act adjustment, per common share basic and diluted		(0.84)
Losses per common share: basic and diluted before Tax Reform Act adjustment	$	(0.28)

Tax Reform Act adjustment	$	16,527
Tax Reform Act adjustment, per common share basic and diluted	$	0.84
Weighted average shares outstanding: basic and diluted		19,589,871

		Year Ended
		March 31, 2017

(In thousands, except share and per share amounts)

AMERCO and Consolidated Subsidiaries
Earnings per common share: basic and diluted	$	20.34
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	$	19.55

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		19,586,606