AMERCO Reports Second Quarter Financial Results
RENO, Nev., Nov. 7, 2005 -- AMERCO , the parent of U-Haul International, Inc., Oxford Life Insurance Company, Republic Western Insurance Company and Amerco Real Estate Company, today reported net earnings available to common shareholders for its second quarter ending September 30, 2005 of $65.9 million or $3.16 per share, compared with net earnings of $49.8 million, or $2.39 per share for the same period last year.
For the six month period ending September 30, 2005 net earnings available to common shareholders was $97.7 million or $4.69 per share, compared with net earnings of $91.0 million, or $4.38 per share for the same period last year. The results for the six months include a non-recurring pre-tax charge of $35.6 million associated with the company's previously announced re-financing.
"We are pleased with the ongoing progress that has been made for the quarter and first six months of fiscal 2006. Our core self-moving equipment rental revenue increased 4.1% for the quarter and 3.5% for the six months compared with the same periods last year," according to Joe Shoen, chairman of AMERCO. "Occupancy at our owned and managed self-storage facilities continues to increase. This combination has enabled profitability to grow for the three and six month periods compared with last year," Shoen concluded.
Listed on a consolidated basis, are revenues for our major product lines.
Quarter Ended Six Months Ended
Sept. 30, Sept. 30,
2005 2004 2005 2004
(Unaudited)
(In thousands)
Self-moving equipment rentals $446,705 $429,156 $847,965 $818,898
Self-storage revenues 33,601 28,938 62,369 59,513
Self-moving and self-storage
products and service sales 62,492 57,909 129,055 119,273
Property management fees 3,829 3,109 8,269 6,091
Life insurance premiums 29,718 32,035 59,307 65,294
Property & casualty
insurance premiums 5,399 7,038 10,223 16,840
Net investment & interest income 12,352 11,475 26,066 29,051
Other revenue 11,420 9,760 21,720 17,405
Consolidated revenue 605,516 579,420 1,164,974 1,132,365
Revenues for the Quarter Ended September 30, 2005
During the second quarter of fiscal 2006, self-moving equipment rentals increased $17.5 million primarily from improved equipment utilization. Other contributing factors are inventory and product mix. Storage revenues increased $4.7 million for the second quarter of fiscal 2006 compared with fiscal 2005. Sales of self-moving and self-storage related products and services increased $4.6 million following our growth in moving equipment rental revenues.
RepWest continued to exit non-U-Haul related lines of business and as a result, its premium revenues declined $1.6 million. Oxford's premium revenues declined $2.3 million reflecting results prior to its recent ratings upgrade by A.M. Best. As a result of the items mentioned above, revenues for AMERCO and its consolidated entities were $605.5 million for the second quarter of fiscal 2006, compared with $579.4 million for the second quarter of fiscal 2005.
Revenues for the Six Months Ended September 30, 2005
During the first six months of fiscal 2006, self-moving equipment rentals increased $29.1 million primarily from improved equipment utilization. Other contributing factors are inventory and product mix. Storage revenues increased $2.9 million for the first six months of fiscal 2006 compared with fiscal 2005. Sales of self-moving and self-storage related products and services increased $9.8 million following our growth in moving equipment rental revenues.
RepWest continued to exit non-U-Haul related lines of business and as a result, its premium revenues declined $6.6 million. Oxford's premium revenues declined $6.0 million primarily as a result of the lingering effects of its rating downgrade in 2003 by A.M. Best.
As a result of the items mentioned above, revenues for AMERCO and its consolidated entities were $1,165.0 million for the first six months of fiscal 2006, compared with $1,132.4 million for the first six months of fiscal 2005.
Listed below are revenues and earnings from operations at each of our four operating segments.
Quarter Ended Six Months Ended
Sept. 30, Sept. 30,
2005 2004 2005 2004
(Unaudited)
Moving and storage (In thousands)
Revenues $555,383 $523,904 $1,062,946 $1,016,280
Earnings from operations 124,573 101,370 233,538 189,506
Property and casualty
insurance
Revenues 8,057 10,737 16,366 25,076
Earnings from operations 1,742 103 3,324 469
Life insurance
Revenues 36,270 40,411 74,343 83,052
Earnings from operations 3,297 2,497 6,737 6,170
SAC Holding II
Revenues 12,612 11,776 24,671 23,122
Earnings from operations 3,049 4,399 7,100 7,460
Eliminations
Revenues (6,806) (7,408) (13,352) (15,165)
Earnings from operations (4,423) (4,176) (9,901) (8,224)
Consolidated results
Revenues 605,516 579,420 1,164,974 1,132,365
Earnings from operations 128,238 104,193 240,798 195,381
Results for the Quarter Ended September 30, 2005
Total costs and expenses rose by $2.1 million. The primary reason was due to increased business activity of U-Haul offset by improved loss experience at the insurance companies.
As a result of the above-mentioned changes in revenues and expenses, earnings from operations improved to $128.2 million in the second quarter of fiscal 2006, compared with $104.2 million for the second quarter of fiscal 2005.
Interest expense for the second quarter of fiscal 2006 was $15.2 million, compared with $18.1 million in the second quarter of fiscal 2005.
Income tax expense was $43.9 million in the second quarter of fiscal 2006, compared with $33.1 million in the second quarter of fiscal 2005.
As a result of the above-mentioned items, net earnings available to common shareholders rose to a record $65.9 million in the second quarter of fiscal 2006, compared with $49.8 million in the second quarter of fiscal 2005.
Basic and diluted earnings per share in the second quarter of fiscal 2006 were $3.16, compared with $2.39 for the same period last year.
Results for the Six Months Ended September 30, 2005
Total costs and expenses fell by $12.8 million primarily as a result of a decrease in benefits and losses at the insurance companies offset by increases in costs in the Moving and Storage segment related to increases in revenues.
As a result of the above-mentioned changes in revenues and expenses, earnings from operations improved to $240.8 million for the first six months of fiscal 2006, compared with $195.4 million for the first six months of fiscal 2005.
Interest expense for the first six months of fiscal 2006 was $70.5 million, which includes a one-time, nonrecurring charge of $35.6 million related to the early termination of previous indebtedness, compared with $37.1 million in the first six months of fiscal 2005.
Income tax expense was $66.1 million in the first six months of fiscal 2006, compared with $60.8 million in the first six months of fiscal 2005.
As a result of the above-mentioned items, net earnings available to common shareholders rose to $240.8 million in the first six months of fiscal 2006, compared with $195.4 million in the first six months of fiscal 2005.
Basic and diluted earnings per share in the first six months of fiscal 2006 were $4.69, compared with $4.38 for the same period last year.
Hurricanes
In our second quarter of fiscal 2006, Hurricanes Katrina and Rita struck the Gulf Coast of the United States causing business interruption to a number of our operating facilities. We identified customers impacted by the hurricanes and our rapid response teams provided a variety of solutions to divert operations to alternate facilities and restore operations where possible. We have been able to redeploy assets and employees to service our customers in cases where the facilities remain inoperable or have not returned to full operating capacity. We lost approximately 150 trucks and 150 trailers during and after the devastation caused by these hurricanes. We maintain property and business interruption insurance coverage to mitigate the financial impact of these types of catastrophic events. Our insurance deductible is $500,000 and has been recorded in our second quarter.
Fiscal 2006 Outlook
We have many developments, which we believe should positively affect performance in fiscal 2006. We believe the momentum in our Moving and Storage Operations will continue. We are investing strongly in our truck rental fleet to further strengthen U-Haul's "do-it-yourself" moving business. Over the last six months we placed 6,750 of our largest rental trucks in service. We are currently manufacturing the vans for our mid-sized trucks and expect to produce over 7,700 units in the coming months. This investment is expected to increase the number of rentable truck days available to meet our customer's demand and will reduce future spending on repair costs and equipment down time.
At Republic Western, our plans to exit non-U-Haul related lines are progressing well.
At Oxford, the recent the recent ratings upgrade by A.M. Best should support the expansion of its distribution capabilities.
Also, we completed the refinancing of the Company's debt on June 8, 2005. This action increased our borrowing capacity by more than $195.0 million and will significantly reduce our effective borrowing rates. Additionally, the new debt increases our financial flexibility thus enabling us to complete the fleet investment plans outlined above. The early extinguishment of our existing debt resulted in a one time pre-tax charge of approximately $35.6 million during the first quarter of fiscal 2006.
Our objectives for fiscal 2006 are to position our rental fleet to achieve revenue and transaction growth and continue to drive down operating costs. The aforementioned investment in our fleet will give us a strong basis for meeting our objectives.
AMERCO will hold its investor call for the second quarter of fiscal year 2006 on Wednesday, November 9, 2005, at 1 p.m., Mountain Time. The call will be broadcast live over the Internet at http://www.amerco.com/ . To hear a simulcast of the call, or a replay, visit http://www.amerco.com/ .
AMERCO is the parent company of U-Haul International, Inc., North America's largest "do-it-yourself" moving and storage operator, Amerco Real Estate Company, Republic Western Insurance Company and Oxford Life Insurance Company. With a network of over 15,300 locations in all 50 United States and 10 Canadian provinces U-Haul is celebrating its 60th year of serving customers. The company has the largest consumer truck rental fleet in the world, with over 93,000 trucks, 78,750 trailers and 36,100 towing devices. U- Haul has also been a leader in the storage industry since 1974, with over 340,000 rooms and approximately 33 million square feet of storage space and over 1,050 facilities throughout North America.
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 Form 10-Q for the quarter ended September 30, 2005 on file with the SEC.
AMERCO AND CONSOLIDATED ENTITIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Sept 30, 2005 Mar 31, 2005
(Unaudited)
Assets (In thousands)
Cash and cash equivalents $289,133 $55,955
Trade receivables, net 233,616 236,817
Notes and mortgage receivables, net 2,369 1,965
Inventories, net 69,781 63,658
Prepaid expenses 22,293 19,874
Investments, fixed maturities 683,629 635,178
Investments, other 214,864 345,207
Deferred policy acquisition costs, net 48,599 52,543
Other assets 98,456 85,291
Related party assets 256,608 252,666
Total 1,919,348 1,749,154
Property, plant and equipment, at cost;
Land 160,735 151,145
Buildings and improvements 720,569 686,225
Furniture and equipment 273,407 265,216
Rental trailers and other rental equipment 201,885 199,461
Rental trucks 1,229,664 1,252,018
SAC Holding II - PP&E 77,976 77,594
Subtotal 2,664,236 2,631,659
Less: Accumulated depreciation (1,277,864) (1,277,191)
Total property, plant and equipment 1,386,372 1,354,468
Total assets 3,305,720 3,103,622
Liabilities & stockholders' equity
Liabilities:
Accounts payable & accrued expenses $212,998 $206,763
AMERCO notes and loans payable 865,163 780,008
SAC Holding II notes & loans payable 76,890 77,474
Policy benefits & losses, claims & loss
expenses payable 802,180 805,121
Liabilities from investment contracts 476,375 503,838
Other policyholders' funds & liabilities 19,857 29,642
Deferred income 39,481 38,743
Deferred income taxes 123,983 78,124
Related party liabilities 10,164 11,070
Total liabilities 2,627,091 2,530,783
Stockholders' Equity:
Series A common stock 929 929
Common stock 9,568 9,568
Additional paid-in-capital 353,596 350,344
Accumulated other comprehensive income (26,260) (30,661)
Retained earnings 769,344 671,642
Cost of common shares in treasury, net (418,092) (418,092)
Unearned employee stock ownership plan shares (10,456) (10,891)
Total stockholders' equity 678,629 572,839
Total liabilities & stockholders' equity 3,305,720 3,103,622
AMERCO AND CONSOLIDATED ENTITIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended September 30,
2005 2004
(Unaudited)
(In thousands, except share and per share amounts)
Revenues:
Self-moving equipment rentals $446,705 $429,156
Self-storage revenues 33,601 28,938
Self-moving and self-storage products
and service sales 62,492 57,909
Property management fees 3,829 3,109
Life insurance premiums 29,718 32,035
Property and casualty insurance premiums 5,399 7,038
Net investment and interest income 12,352 11,475
Other revenue 11,420 9,760
Total revenues $605,516 $579,420
Costs and expenses:
Operating expenses 289,701 287,447
Commission expenses 53,197 51,854
Cost of sales 30,917 28,516
Benefits and losses 26,709 33,381
Amortization of deferred policy
acquisition costs 5,854 7,778
Lease expense 36,578 36,348
Depreciation, net 34,322 29,903
Total costs and expenses $477,278 $475,227
Earnings from operations 128,238 104,193
Interest expense 15,245 18,060
Pretax earnings 112,993 86,133
Income tax expense (43,871) (33,074)
Net earnings 69,122 53,059
Less: Preferred stock dividends (3,241) (3,241)
Earnings available to common shareholders $65,881 $49,818
Basic and diluted earnings per common share $3.16 $2.39
Weighted average common shares outstanding:
Basic and diluted shares 20,848,620 20,801,525
AMERCO AND CONSOLIDATED ENTITIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended
September 30,
2005 2004
(Unaudited)
(In thousands, except
share and per share
amounts)
Revenues:
Self-moving equipment rentals $847,965 $818,898
Self-storage revenues 62,369 59,513
Self-moving and self-storage products and
service sales 129,055 119,273
Property management fees 8,269 6,091
Life insurance premiums 59,307 65,294
Property and casualty insurance premiums 10,223 16,840
Net investment and interest income 26,066 29,051
Other revenue 21,720 17,405
Total revenues 1,164,974 1,132,365
Costs and expenses:
Operating expenses 556,493 559,358
Commission expenses 101,215 98,767
Cost of sales 61,961 56,256
Benefits and losses 54,023 70,052
Amortization of deferred policy acquisition costs 12,052 17,736
Lease expense 69,873 76,883
Depreciation, net 68,559 57,932
Total costs and expenses 924,176 936,984
Earnings from operations 240,798 195,381
Interest expense 34,881 37,064
Fees on early extinguishment of debt 35,627 -
Pretax earnings 170,290 158,317
Income tax expense (66,106) (60,839)
Net earnings 104,184 97,478
Less: Preferred stock dividends (6,482) (6,482)
Earnings available to common shareholders $97,702 $90,996
Basic and diluted earnings per common share $4.69 $4.38
Weighted average common shares outstanding:
Basic and diluted shares 20,842,539 20,794,766