U-Haul Parent Amerco Posts an Adjusted Earnings Loss

Amerco (UHAL 0.32%) reported its fourth-quarter and full-year fiscal 2018 earnings after the market closed on Wednesday. For the quarter, the parent company of the do-it-yourself moving leader and self-storage player U-Haul, which also has two insurance company subsidiaries, grew revenue 6.8% year over year. Adjusted for one-time factors, it posted a loss of $0.28 per share, versus earnings per share (EPS) of $0.49 in the year-ago quarter. 

The market's reaction was muted, with shares of Amerco essentially flat in after-hours trading on Wednesday. 

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Amerco earnings: The raw numbers

Data source: Amerco. GAAP = generally accepted accounting principles.

The GAAP results include a $16.5 million, or $0.84 per share, benefit resulting from the Tax Reform Act. The adjusted EPS result excludes this benefit.

For fiscal 2018, revenue rose 5.3% year over year to $3.60 billion, net income jumped 98% to $790.6 million, or $40.36 per share, and adjusted EPS declined 24% to $14.86. The fiscal 2018 adjusted EPS result excludes an $18.16 per share benefit associated with tax reform and an after-tax benefit of $7.34 per share from the sale of a portion of Amerco's Chelsea, New York, property. 

What happened with Amerco in the quarter?

• Revenue in the U-Haul segment, which accounted for 89.8% of the company's total revenue, increased 7.5% from the year-ago period to $680.4 million.
• Revenue in the insurance segment (comprised of one property casualty and one life insurance company) edged up 1.6% to $79.3 million. (Revenue from the two segments adds up to a bit more than the company's total revenue because there's a small revenue elimination, which excludes the sale of goods and services between the two business units.)
• Within the U-Haul segment, self-moving equipment rental revenue grew 6.7% from the year-ago period to $494.5 million.
• Within the U-Haul segment, self-storage revenue rose 13.3% to $84.6 million. 
• Room count grew to 366,000 at the end of the quarter compared to 318,000 at the end of the year-ago period.
• Average occupancy rate based on room count was 68.9%, down from 72.2% in the year-ago period.
• DIY moving and self-storage product and service sales revenue increased 4.4% to $56.2 million, while property management fees grew 1.7% to $6.1 million. These are fees the company collects from managing self-storage units owned by others.
• The U-Haul segment posted an operating loss of $11.1 million, versus a gain of $29.0 million in the fourth quarter of fiscal 2017. One main reason for this was that fleet maintenance and repair costs increased $17.9 million over the year-ago quarter. Also, the company gave out bonuses to employees totaling about $20.3 million, which was essentially a sharing-the-wealth type of thing stemming from tax reform.
• Operating income in the insurance segment declined 6.1% to $14.2 million. (Operating results from the two segments adds up to slightly more than the company's total operating income because of the elimination previously mentioned.) 

What management had to say

Here's what CEO Joe Shoen had to say in the press release:

Customer demand for our self-moving and self-storage products remains steady. 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.

Looking ahead

Amerco had a challenging quarter. Operating income declined markedly in the quarter, and on an adjusted basis, the company posted a bottom-line loss. It's been struggling with increased maintenance and repair costs for its vehicles, particularly those nearing resale. Increased depreciation on its vehicles has also been hurting reported earnings, but depreciation is a noncash expense.

Amerco doesn't provide guidance. There's also just a single Wall Street analyst who provides annual estimates, making them of little value.