AMERCO First Quarter Results

Ian Gilson, CFA

AMERCO First Quarter Results

There is no fundamental reason for the recent decline except for the weakness in the overall market. The company does not need to access the debt market over the near term. They have always balanced interest rates with lease rates to obtain the best financing costs. We are keeping our target prices at $110.

On August 3, 2011 AMERCO (UHAL - Analyst Report) announced its 2012 first fiscal quarter results, followed by a conference call on August 4, 2011.

Revenue from the moving and storage operations were again in line with our expectations:

                                                                  1Q actual    1Q estimated
(Dollars in millions)
Self-moving equipment                               $446.5        $445
Products and services                                 $64.4          $63
Self storage                                                 $31.8          $31
Self storage management fees                    $4.7            $4

Total moving and storage                            $542.6        $539
(excluding interest & investment income)
Operating expenses                                     $272           $260
Pretax earnings                                            $125.7        $124.4
Net Income                                                   $78.2          $78.3

During fiscal 2011 the truck rental operations achieved transaction growth of about 4%, slightly lower than the 4Q11, however the seasonality has a significant effect on sequential growth. So far the second quarter is also showing some transaction growth. Fleet utilization grew in the first quarter, but again seasonality had a major effect. Rental rates are competitive but are not as cutthroat as in prior years. H-Haul spent $170 million on new trucks and expects to spend $380 to $400 million in fiscal 2012

The self storage industry still suffers from excess capacity in many geographical areas but  performed better than in the 4Q11. The company is adding rooms in certain areas and will continue to do so during fiscal 2012. In the 1Q12 the company added 398,000 sq. ft. at a cost of $19 million.

AMERCO has started an Investment Club, whereby people can purchase asset backed investments. These are securities registered with the SEC and currently offer competitive rates with CDs. You can purchase the rear right wheel of a truck if you want to. The moneys will be cash on the asset side and notes & loans on the liabilities side. The return to the investor will be treated as an interest expense to AMERCO.
 

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