READ THE FULL UHAL RESEARCH REPORT
Headquartered in Reno, AMERCO (NASDAQ:UHAL( is North America's largest "do-it-yourself" moving and storage operator. U-Haul offers "do-it-yourself" moving and storage and supplies products and services to help people move and store their household and commercial goods in the United States and Canada. The company also has Property and Casualty Insurance and Life Insurance subsidiaries, Repwest Insurance and Oxford Life Insurance, respectively.
Financial Results for the First Quarter of Fiscal 2022
On August 4, 2021 after the market close, AMERCO reported financial results for the first fiscal quarter ending June 30, 2021. Revenues were well above our expectations. Total revenues increased 49.2% YOY to approximately $1.47 billion, driven by a 58.2% increase (or an increase of $381 million) in self-moving equipment rentals. Self-moving/self-storage products & services increased 14.8% (or $13.5 million). In the self-storage area, revenues increased 26.1% (or $28.4 million).
In the self-moving equipment rental business, revenues increased across most metrics: volume of transactions and average revenue per transaction for both in-town and one-way rentals of trucks and trailers. The number of retail locations, independent dealers, box trucks and towing devices has increased over the last 12 months.
In self-moving/self-storage products & services, the 14.8% revenue increase was due to increased sales of hitches, moving supplies and propane.
In the self-storage area, revenues increased 26.1% (or $28.4 million) as the average monthly number of occupied units increased by 26% (or 89,373 units), driven by occupancy gains at existing locations and a 8% increase in new capacity (3.5 million net rentable square feet) over the last 12 months.
Other revenue increased 66.7$ (or $42.5 million) driven primarily by growth in the U-Box program.
Total costs and expenses increased only 17.5% (or $145.5 million). Cost of sales and commission expenses increased 32.3% and 63.6%, respectively. Depreciation expense decreased by $44.0 million (or 26.5%), primarily due to a slowdown in the expansion of the rental fleet as COVID-19 pandemic has delayed new truck production.
Management had planned to return to a normalized rotation program during fiscal 2022 with a capex budget of $1.2 billion; however, truck manufacturers are incurring supply disruptions. Therefore, management believes it is unlikely for the company to acquire the desired amount of new trucks planned for the current fiscal year, and some portion will be deferred into next year.
Earnings from operations increased 221% (or by $340.1 million) to $494.2 million compared to $154.1 million in first fiscal quarter of 2021. An income tax expense of $109.6 million was recorded.
For the first quarter of fiscal 2022, AMERCO reported a net income of $345.2 million (or $17.60 per diluted share) compared to $87.73 million (or $4.47 per diluted share) in the comparable quarter last year. Shares outstanding have remained stable at 19,607,788 shares for a decade.
As of June 30, 2021, AMERCO has a strong liquidity position in the Moving and Storage operating segment of approximately $1.550 billion (cash and cash equivalents). Working capital increased 3.05% to approximately $5.85 billion.
In summary, AMERCO reported strong quarterly results with both the top-line (total revenues) and bottom line (net income/EPS) coming in well above expectations. AMERCO reported financial results after the market close on August 4, 2021. On the next day, August 5th, the stock rallied 7.5% to $627.96 on the news. On the conference call, management indicated that equipment rental revenues continue to increase, as well occupied units in the storage business. The second fiscal quarter should be slightly stronger than the first fiscal quarter, which is the normal seasonality experienced by the company.
Recent News - Oxford Life Insurance Upgraded
On July 30, 2021, Oxford Life Insurance Company's Financial Strength Rating was upgraded A by A.M. Best. AMERCO's P&C subsidiary, Repwest Insurance Company is also rated A, having been upgraded on September 24, 2020.
Annual Virtual Analyst & Investor Meeting
AMERCO will hold its 15th Annual Virtual Analyst & Investor Meeting on Thursday, August 19, 2021 at 2 PM ET. Management traditionally shares nuances of its strategy, along with detailed information about the company's operations and financials. The virtual meeting is open to all through a link on the company's website on the day of the event.
Special Dividend Declared
On June 10, 2021, AMERCO declared a special cash dividend of $0.50 per common share. The dividend was paid on July 8, 2021 to holders of record on June 24, 2021 (ex-date of June 23, 2021).
Valuation
The expected EV-to-EBITDA range for this valuation metric over the next 12 months is 8.4-to-10.4. The target price for AMERCO is $740 per share, which is based the stock achieving the high end of the expected range.
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