Please ensure Javascript is enabled for purposes of website accessibility

U-Haul Parent Company's Operating Income and Earnings Get Back on the Growth Track

By Beth McKenna – Nov 13, 2018 at 6:43AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

In fiscal second-quarter 2019, Amerco's revenue grew 6% and EPS jumped 31% year over year.

U-Haul parent Amerco (UHAL 2.02%) reported its fiscal second-quarter 2019 results, for the period ended Sept. 30, after the market close on Wednesday, Nov. 7.

The do-it-yourself moving leader and major self-storage player, which also has two insurance company subsidiaries, grew revenue by 5.9% and earnings per share (EPS) by 31% over the year-ago period

Middle-aged man and young girl carrying boxes from the back of a moving truck with a house in the background.

Image source: Getty Images.

Amerco earnings: The raw numbers

Metric

Fiscal Q2 2019

Fiscal Q2 2018

Year-Over-Year Change

Revenue

$1.105 billion

$1.043 billion

5.9%

Operating income

$250.9 million

$229.6 million

9.3%

Net income

$163.5 million

$124.6 million

31%

GAAP earnings per share (EPS)

$8.35

$6.36

31%

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

The operating income comparison got a boost from discretionary bonuses being paid to local field managers in the year-ago period, but not in the current quarter. In the second quarter of fiscal 2018, the company paid $20 million in such bonuses as a sharing-the-wealth type initiative stemming from U.S. tax reform. Excluding these bonuses, the year-ago period's operating income would have been about $249.6 million -- essentially flat with the current quarter. 

In addition to the benefit just noted, earnings also got a boost from a lower tax rate due to U.S. tax reform. Had the same rate been in effect in the year-ago period, net income and EPS in that period would have been $149.7 million and $7.64, respectively. Adjusting for the tax rate change, EPS increased 9.3% year over year.

What happened with Amerco in the quarter?

  • Revenue in the U-Haul segment, which accounted for 93% of the company's total revenue, increased 6% from the year-ago period to $1.027 billion. Revenue from one-way and in-town markets both increased, the company said in the earnings release.
  • Revenue in the insurance segment (comprised of one property-casualty and one life insurance company) edged down 0.6% to $80.1 million. 
  • Within the U-Haul segment, self-moving equipment rental revenue grew 6% from the year-ago period to $781.7 million. The "increase was primarily the result of transaction growth, combined with slightly better revenue per transaction," CFO Jason Berg said on the earnings call. 
  • Within the U-Haul segment, self-storage revenue jumped 14% to $91.5 million.
  • Room count grew to 398,000 at the end of the quarter compared to 341,000 at the end of the year-ago period.
  • Average occupancy rate based on room count was 70.6%, down from 73.9% in the year-ago period.
  • DIY moving and self-storage product and service sales revenue slipped 0.5% to $72.9 million, while property management fees grew 5% to $7.2 million. These are fees the company collects from managing self-storage units owned by others.
  • The U-Haul segment's operating income increased 9% to $235.9 million. 
  • Operating income in the insurance segment rose 20% to $15.4 million. (Operating income from the two segments adds up to slightly more than the company's total reported operating income due to the effect of a small revenue elimination, which excludes the sale of goods and services between the two business units.) 

What management had to say

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

Growth in equipment rental revenue and occupied storage rooms continued during the quarter and we have the capacity for additional improvement. Truck sales are improving, returning some revenue and expense that was in the third quarter last year into this second quarter. Discretionary personnel bonus amounts that were recognized in the second quarter last year have not yet been determined. We have lots of work to do and are about it.

Looking ahead

This was the first quarter in more than two years that Amerco's operating income and EPS adjusted for one-time items both increased year over year. That said, essentially the entire increase in operating income is due to no discretionary bonuses being paid to local field managers in the current quarter compared with $20 million in such bonuses being paid in the second quarter of fiscal 2018.

There were some positive trends in the quarter, however. Gains from the sales of used trucks increased "a little over $7 million," CFO Berg said on the earnings call. And while fleet maintenance and repair costs increased $11.8 million over the year-ago period, they decreased year over year in the month of September.

The company doesn't provide guidance.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool recommends Amerco. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AMERCO Stock Quote
AMERCO
UHAL
$508.72 (2.02%) $10.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.