UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from __________________ to __________________
Commission File Number 001-11255
|
|
|
|
|
State or other jurisdiction of incorporation or organization |
Registrant, State of Incorporation, Address and Telephone Number |
I.R.S. Employer Identification No. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nevada |
AMERCO |
88-0106815 |
|
|
(A Nevada Corporation) |
|
|
|
5555 Kietzke Lane Suite 100 |
|
|
|
Reno , Nevada 89511 |
|
|
|
Telephone ( 775 ) 688-6300 |
|
|
|
|
|
|
|
N/A |
|
|
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) |
||
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
|
Common Stock , $0.25 par value |
UHAL |
NASDAQ Global Select Market |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐ .
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
19,607,788 shares of AMERCO Common Stock, $0.25 par value, were outstanding at October 29, 2021.
TABLE OF CONTENTS
Part i Financial information
Item 1. Financial Statements
AMERCO AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED balance sheets
|
|
|
September 30, |
|
March 31, |
|
|
|
2021 |
|
2021 |
|
|
|
(Unaudited) |
|
|
|
|
|
(In thousands, except share data) |
||
|
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$ |
2,430,233 |
$ |
1,194,012 |
|
Reinsurance recoverables and trade receivables, net |
|
227,935 |
|
224,426 |
|
Inventories and parts, net |
|
142,955 |
|
105,577 |
|
Prepaid expenses |
|
202,339 |
|
469,144 |
|
Investments, fixed maturities and marketable equities |
|
2,845,147 |
|
2,695,656 |
|
Investments, other |
|
571,942 |
|
489,759 |
|
Deferred policy acquisition costs, net |
|
97,138 |
|
89,749 |
|
Other assets |
|
51,626 |
|
47,730 |
|
Right of use assets - financing, net |
|
752,990 |
|
877,038 |
|
Right of use assets - operating, net |
|
85,237 |
|
92,505 |
|
Related party assets |
|
38,773 |
|
35,395 |
|
|
|
7,446,315 |
|
6,320,991 |
|
Property, plant and equipment, at cost: |
|
|
|
|
|
Land |
|
1,172,648 |
|
1,075,813 |
|
Buildings and improvements |
|
5,477,544 |
|
5,163,705 |
|
Furniture and equipment |
|
811,337 |
|
786,505 |
|
Rental trailers and other rental equipment |
|
536,814 |
|
477,921 |
|
Rental trucks |
|
4,278,732 |
|
3,909,724 |
|
|
|
12,277,075 |
|
11,413,668 |
|
Less: Accumulated depreciation |
|
(3,386,162) |
|
(3,083,053) |
|
Total property, plant and equipment, net |
|
8,890,913 |
|
8,330,615 |
|
Total assets |
$ |
16,337,228 |
$ |
14,651,606 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Liabilities: |
|
|
|
|
|
Accounts payable and accrued expenses |
$ |
694,284 |
$ |
645,575 |
|
Notes, loans and finance leases payable, net |
|
5,335,278 |
|
4,668,907 |
|
Operating lease liability |
|
85,199 |
|
92,510 |
|
Policy benefits and losses, claims and loss expenses payable |
|
1,016,505 |
|
997,701 |
|
Liabilities from investment contracts |
|
2,276,829 |
|
2,161,530 |
|
Other policyholders' funds and liabilities |
|
10,943 |
|
12,420 |
|
Deferred income |
|
51,212 |
|
42,592 |
|
Deferred income taxes, net |
|
1,312,281 |
|
1,178,489 |
|
Total liabilities |
|
10,782,531 |
|
9,799,724 |
|
|
|
|
|
|
|
Commitments and contingencies (notes 4, 8, 9 and 10) |
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
Series preferred stock, with or without par value, 50,000,000 shares authorized: |
|
|
|
|
|
Series A preferred stock, with no par value, 6,100,000 shares authorized; |
|
|
|
|
|
6,100,000 shares issued and none outstanding as of September 30 and March 31, 2021 |
|
– |
|
– |
|
Series B preferred stock, with no par value, 100,000 shares authorized; none |
|
|
|
|
|
issued and outstanding as of September 30 and March 31, 2021 |
|
– |
|
– |
|
Serial common stock, with or without par value, 250,000,000 shares authorized: |
|
|
|
|
|
Serial common stock of $0.25 par value, 10,000,000 shares authorized; |
|
|
|
|
|
none issued and outstanding as of September 30 and March 31, 2021 |
|
– |
|
– |
|
Common stock, with $0.25 par value, 250,000,000 shares authorized: |
|
|
|
|
|
Common stock of $0.25 par value, 250,000,000 shares authorized; 41,985,700 |
|
|
|
|
|
issued and 19,607,788 outstanding as of September 30 and March 31, 2021 |
|
10,497 |
|
10,497 |
|
Additional paid-in capital |
|
453,819 |
|
453,819 |
|
Accumulated other comprehensive income |
|
74,207 |
|
106,857 |
|
Retained earnings |
|
5,693,824 |
|
4,958,359 |
|
Cost of common stock in treasury, net (22,377,912 shares as of September 30 and March 31, 2021) |
|
(525,653) |
|
(525,653) |
|
Cost of preferred stock in treasury, net (6,100,000 shares as of September 30 and March 31, 2021) |
|
(151,997) |
|
(151,997) |
|
Total stockholders' equity |
|
5,554,697 |
|
4,851,882 |
|
Total liabilities and stockholders' equity |
$ |
16,337,228 |
$ |
14,651,606 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
AMERCO
AND
CONSOLIDATED
SUBSIDIARIES
CONDENSED CONSOLIDATED Statements of operations
|
|
|
Quarter Ended September 30, |
||
|
|
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands, except share and per share amounts) |
||
|
Revenues: |
|
|
|
|
|
Self-moving equipment rentals |
$ |
1,179,061 |
$ |
931,030 |
|
Self-storage revenues |
|
153,485 |
|
115,273 |
|
Self-moving and self-storage products and service sales |
|
92,191 |
|
98,628 |
|
Property management fees |
|
8,747 |
|
7,840 |
|
Life insurance premiums |
|
28,913 |
|
31,057 |
|
Property and casualty insurance premiums |
|
22,499 |
|
15,869 |
|
Net investment and interest income |
|
36,780 |
|
33,333 |
|
Other revenue |
|
142,578 |
|
91,878 |
|
Total revenues |
|
1,664,254 |
|
1,324,908 |
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
Operating expenses |
|
696,074 |
|
574,083 |
|
Commission expenses |
|
127,896 |
|
99,365 |
|
Cost of sales |
|
66,491 |
|
60,933 |
|
Benefits and losses |
|
44,630 |
|
45,452 |
|
Amortization of deferred policy acquisition costs |
|
6,750 |
|
5,552 |
|
Lease expense |
|
7,441 |
|
6,870 |
|
Depreciation, net of gains on disposal of ($36,075 and $28,062, respectively) |
|
135,748 |
|
137,438 |
|
Net losses on disposal of real estate |
|
523 |
|
3,425 |
|
Total costs and expenses |
|
1,085,553 |
|
933,118 |
|
|
|
|
|
|
|
Earnings from operations |
|
578,701 |
|
391,790 |
|
Other components of net periodic benefit costs |
|
(280) |
|
(246) |
|
Interest expense |
|
(39,545) |
|
(40,525) |
|
Pretax earnings |
|
538,876 |
|
351,019 |
|
Income tax expense |
|
(128,978) |
|
(84,654) |
|
Earnings available to common stockholders |
$ |
409,898 |
$ |
266,365 |
|
Basic and diluted earnings per common stock |
$ |
20.90 |
$ |
13.58 |
|
Weighted average common stock outstanding: Basic and diluted |
|
19,607,788 |
|
19,607,788 |
Related party revenues for the second quarter of fiscal 2022 and 2021, net of eliminations, were $8.7 million and $7.8 million, respectively.
Related party costs and expenses for the second quarter of fiscal 2022 and 2021, net of eliminations, were $27.1 million and $21.2 million, respectively.
Please see Note 10, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for more information on the related party revenues and costs and expenses.
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
AMERCO AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED Statements of operations
|
|
|
Six Months Ended September 30, |
||
|
|
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands, except share and per share amounts) |
||
|
Revenues: |
|
|
|
|
|
Self-moving equipment rentals |
$ |
2,214,438 |
$ |
1,585,315 |
|
Self-storage revenues |
|
290,878 |
|
224,228 |
|
Self-moving and self-storage products and service sales |
|
197,076 |
|
189,978 |
|
Property management fees |
|
17,196 |
|
15,187 |
|
Life insurance premiums |
|
57,618 |
|
61,965 |
|
Property and casualty insurance premiums |
|
39,368 |
|
29,603 |
|
Net investment and interest income |
|
71,779 |
|
50,315 |
|
Other revenue |
|
248,757 |
|
155,554 |
|
Total revenues |
|
3,137,110 |
|
2,312,145 |
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
Operating expenses |
|
1,310,603 |
|
1,066,745 |
|
Commission expenses |
|
241,045 |
|
168,540 |
|
Cost of sales |
|
136,406 |
|
113,764 |
|
Benefits and losses |
|
91,928 |
|
85,029 |
|
Amortization of deferred policy acquisition costs |
|
15,573 |
|
12,440 |
|
Lease expense |
|
15,088 |
|
13,473 |
|
Depreciation, net of gains on disposal of ($86,398 and $29,131 respectively) |
|
257,465 |
|
303,109 |
|
Net (gains) losses on disposal of real estate |
|
(3,907) |
|
3,169 |
|
Total costs and expenses |
|
2,064,201 |
|
1,766,269 |
|
|
|
|
|
|
|
Earnings from operations |
|
1,072,909 |
|
545,876 |
|
Other components of net periodic benefit costs |
|
(560) |
|
(493) |
|
Interest expense |
|
(78,723) |
|
(80,046) |
|
Pretax earnings |
|
993,626 |
|
465,337 |
|
Income tax expense |
|
(238,553) |
|
(111,246) |
|
Earnings available to common stockholders |
$ |
755,073 |
$ |
354,091 |
|
Basic and diluted earnings per common stock |
$ |
38.51 |
$ |
18.06 |
|
Weighted average common stock outstanding: Basic and diluted |
|
19,607,788 |
|
19,607,788 |
Related party revenues for the first six months of fiscal 2022 and 2021, net of eliminations, were $17.2 million and $15.2 million, respectively.
Related party costs and expenses for the first six months of fiscal 2022 and 2021, net of eliminations, were $50.7 million and $37.2 million, respectively.
Please see Note 10, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for more information on the related party revenues and costs and expenses.
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
AMERCO AND CONSOLIDATED SUBSIDIARIES
Condensed consolidatED statements of COMPREHENSIVE INCOME (loss)
|
Quarter Ended September 30, 2021 |
|
Pre-tax |
|
Tax |
|
Net |
|
|
|
(Unaudited) |
||||
|
|
|
(In thousands) |
||||
|
Comprehensive income: |
|
|
|
|
|
|
|
Net earnings |
$ |
538,876 |
$ |
(128,978) |
$ |
409,898 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
Foreign currency translation |
|
992 |
|
– |
|
992 |
|
Unrealized net gain on investments |
|
52,525 |
|
(11,143) |
|
41,382 |
|
Change in fair value of cash flow hedges |
|
(74) |
|
18 |
|
(56) |
|
Amounts reclassified into earnings on hedging activities |
|
1,003 |
|
(246) |
|
757 |
|
Total other comprehensive income (loss) |
|
54,446 |
|
(11,371) |
|
43,075 |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
$ |
593,322 |
$ |
(140,349) |
$ |
452,973 |
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, 2020 |
|
Pre-tax |
|
Tax |
|
Net |
|
|
|
(Unaudited) |
||||
|
|
|
(In thousands) |
||||
|
Comprehensive income: |
|
|
|
|
|
|
|
Net earnings |
$ |
351,019 |
$ |
(84,654) |
$ |
266,365 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
Foreign currency translation |
|
290 |
|
– |
|
290 |
|
Unrealized net gain on investments |
|
115,186 |
|
(24,347) |
|
90,839 |
|
Change in fair value of cash flow hedges |
|
46 |
|
(11) |
|
35 |
|
Amounts reclassified into earnings on hedging activities |
|
961 |
|
(237) |
|
724 |
|
Total other comprehensive income (loss) |
|
116,483 |
|
(24,595) |
|
91,888 |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
$ |
467,502 |
$ |
(109,249) |
$ |
358,253 |
|
Six Months Ended September 30, 2021 |
|
Pre-tax |
|
Tax |
|
Net |
|
|
|
(Unaudited) |
||||
|
|
|
(In thousands) |
||||
|
Comprehensive income: |
|
|
|
|
|
|
|
Net earnings |
$ |
993,626 |
$ |
(238,553) |
$ |
755,073 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
Foreign currency translation |
|
(2,400) |
|
– |
|
(2,400) |
|
Unrealized net loss on investments |
|
(39,926) |
|
8,281 |
|
(31,645) |
|
Change in fair value of cash flow hedges |
|
(142) |
|
35 |
|
(107) |
|
Amounts reclassified into earnings on hedging activities |
|
1,990 |
|
(488) |
|
1,502 |
|
Total other comprehensive income (loss) |
|
(40,478) |
|
7,828 |
|
(32,650) |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
$ |
953,148 |
$ |
(230,725) |
$ |
722,423 |
|
|
|
|
|
|
|
|
|
Six Months Ended September 30, 2020 |
|
Pre-tax |
|
Tax |
|
Net |
|
|
|
(Unaudited) |
||||
|
|
|
(In thousands) |
||||
|
Comprehensive income: |
|
|
|
|
|
|
|
Net earnings |
$ |
465,337 |
$ |
(111,246) |
$ |
354,091 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
Foreign currency translation |
|
(2,627) |
|
– |
|
(2,627) |
|
Unrealized net gain on investments |
|
56,224 |
|
(10,884) |
|
45,340 |
|
Change in fair value of cash flow hedges |
|
(659) |
|
162 |
|
(497) |
|
Amounts reclassified into earnings on hedging activities |
|
1,708 |
|
(420) |
|
1,288 |
|
Total other comprehensive income (loss) |
|
54,646 |
|
(11,142) |
|
43,504 |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
$ |
519,983 |
$ |
(122,388) |
$ |
397,595 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Amerco and consolidated subsidiaries
condensed consolidated statements of changes in stockholders’ equity
|
|
|
Common Stock |
|
Additional Paid-In Capital |
|
Accumulated Other Comprehensive Income (Loss) |
|
Retained Earnings |
|
Less: Treasury Common Stock |
|
Less: Treasury Preferred Stock |
|
Total Stockholders' Equity |
|
|
(Unaudited) |
|||||||||||||
|
|
(In thousands) |
|||||||||||||
|
Balance as of June 30, 2021 |
$ |
10,497 |
$ |
453,819 |
$ |
31,132 |
$ |
5,293,730 |
$ |
(525,653) |
$ |
(151,997) |
$ |
5,111,528 |
|
Foreign currency translation |
|
– |
|
– |
|
992 |
|
– |
|
– |
|
– |
|
992 |
|
Unrealized net gain on investments, net of tax |
|
– |
|
– |
|
41,382 |
|
– |
|
– |
|
– |
|
41,382 |
|
Change in fair value of cash flow hedges, net of tax |
|
– |
|
– |
|
(56) |
|
– |
|
– |
|
– |
|
(56) |
|
Amounts reclassified into earnings on hedging activities |
|
– |
|
– |
|
757 |
|
– |
|
– |
|
– |
|
757 |
|
Net earnings |
|
– |
|
– |
|
– |
|
409,898 |
|
– |
|
– |
|
409,898 |
|
Common stock dividends: ($0.50 per share for fiscal 2022) |
|
– |
|
– |
|
– |
|
(9,804) |
|
– |
|
– |
|
(9,804) |
|
Net activity |
|
– |
|
– |
|
43,075 |
|
400,094 |
|
– |
|
– |
|
443,169 |
|
Balance as of September 30, 2021 |
$ |
10,497 |
$ |
453,819 |
$ |
74,207 |
$ |
5,693,824 |
$ |
(525,653) |
|
(151,997) |
$ |
5,554,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2020 |
$ |
10,497 |
$ |
453,819 |
$ |
(13,732) |
$ |
4,484,248 |
$ |
(525,653) |
$ |
(151,997) |
$ |
4,257,182 |
|
Foreign currency translation |
|
– |
|
– |
|
290 |
|
– |
|
– |
|
– |
|
290 |
|
Unrealized net gain on investments, net of tax |
|
– |
|
– |
|
90,839 |
|
– |
|
– |
|
– |
|
90,839 |
|
Change in fair value of cash flow hedges, net of tax |
|
– |
|
– |
|
35 |
|
– |
|
– |
|
– |
|
35 |
|
Amounts reclassified into earnings on hedging activities |
|
– |
|
– |
|
724 |
|
– |
|
– |
|
– |
|
724 |
|
Net earnings |
|
– |
|
– |
|
– |
|
266,365 |
|
– |
|
– |
|
266,365 |
|
Common stock dividends: ($0.50 per share for fiscal 2021) |
|
– |
|
– |
|
– |
|
(9,804) |
|
– |
|
– |
|
(9,804) |
|
Net activity |
|
– |
|
– |
|
91,888 |
|
256,561 |
|
– |
|
– |
|
348,449 |
|
Balance as of September 30, 2020 |
$ |
10,497 |
$ |
453,819 |
$ |
78,156 |
$ |
4,740,809 |
$ |
(525,653) |
$ |
(151,997) |
$ |
4,605,631 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Amerco and consolidated subsidiaries
condensed consolidated statements of changes in stockholders’ equity
|
|
|
Common Stock |
|
Additional Paid-In Capital |
|
Accumulated Other Comprehensive Income (Loss) |
|
Retained Earnings |
|
Less: Treasury Common Stock |
|
Less: Treasury Preferred Stock |
|
Total Stockholders' Equity |
|
|
(Unaudited) |
|||||||||||||
|
|
(In thousands) |
|||||||||||||
|
Balance as of March 31, 2021 |
$ |
10,497 |
$ |
453,819 |
$ |
106,857 |
$ |
4,958,359 |
$ |
(525,653) |
$ |
(151,997) |
$ |
4,851,882 |
|
Foreign currency translation |
|
– |
|
– |
|
(2,400) |
|
– |
|
– |
|
– |
|
(2,400) |
|
Unrealized net gain on investments, net of tax |
|
– |
|
– |
|
(31,645) |
|
– |
|
– |
|
– |
|
(31,645) |
|
Change in fair value of cash flow hedges, net of tax |
|
– |
|
– |
|
(107) |
|
– |
|
– |
|
– |
|
(107) |
|
Amounts reclassified into earnings on hedging activities |
|
– |
|
– |
|
1,502 |
|
– |
|
– |
|
– |
|
1,502 |
|
Net earnings |
|
– |
|
– |
|
– |
|
755,073 |
|
– |
|
– |
|
755,073 |
|
Common stock dividends: ($1.00 per share for fiscal 2022) |
|
– |
|
– |
|
– |
|
(19,608) |
|
– |
|
– |
|
(19,608) |
|
Net activity |
|
– |
|
– |
|
(32,650) |
|
735,465 |
|
– |
|
– |
|
702,815 |
|
Balance as of September 30, 2021 |
$ |
10,497 |
$ |
453,819 |
$ |
74,207 |
$ |
5,693,824 |
$ |
(525,653) |
|
(151,997) |
$ |
5,554,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2020 |
$ |
10,497 |
$ |
453,819 |
$ |
34,652 |
$ |
4,399,402 |
$ |
(525,653) |
$ |
(151,997) |
$ |
4,220,720 |
|
Adjustment for adoption of ASU 2016 - 13 |
|
– |
|
– |
|
– |
|
(2,880) |
|
– |
|
– |
|
(2,880) |
|
Foreign currency translation |
|
– |
|
– |
|
(2,627) |
|
– |
|
– |
|
– |
|
(2,627) |
|
Unrealized net gain on investments, net of tax |
|
– |
|
– |
|
45,340 |
|
– |
|
– |
|
– |
|
45,340 |
|
Change in fair value of cash flow hedges, net of tax |
|
– |
|
– |
|
(497) |
|
– |
|
– |
|
– |
|
(497) |
|
Amounts reclassified into earnings on hedging activities |
|
– |
|
– |
|
1,288 |
|
– |
|
– |
|
– |
|
1,288 |
|
Net earnings |
|
– |
|
– |
|
– |
|
354,091 |
|
– |
|
– |
|
354,091 |
|
Common stock dividends: ($0.50 per share for fiscal 2021) |
|
– |
|
– |
|
– |
|
(9,804) |
|
– |
|
– |
|
(9,804) |
|
Net activity |
|
– |
|
– |
|
43,504 |
|
341,407 |
|
– |
|
– |
|
384,911 |
|
Balance as of September 30, 2020 |
$ |
10,497 |
$ |
453,819 |
$ |
78,156 |
$ |
4,740,809 |
$ |
(525,653) |
$ |
(151,997) |
$ |
4,605,631 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
AMERCO AND CONSOLIDATED subsidiaries
Condensed consolidatED statements of cash flows
|
|
|
Six Months Ended September 30, |
||
|
|
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands) |
||
|
Cash flows from operating activities: |
|
|
|
|
|
Net earnings |
$ |
755,073 |
$ |
354,091 |
|
Adjustments to reconcile net earnings to cash provided by operations: |
|
|
|
|
|
Depreciation |
|
343,863 |
|
332,240 |
|
Amortization of deferred policy acquisition costs |
|
15,573 |
|
12,440 |
|
Amortization of premiums and accretion of discounts related to investments, net |
|
9,151 |
|
6,926 |
|
Amortization of debt issuance costs |
|
2,791 |
|
2,755 |
|
Interest credited to policyholders |
|
31,894 |
|
24,241 |
|
Change in allowance for losses on trade receivables |
|
222 |
|
(140) |
|
Change in allowance for inventories and parts reserves |
|
8,352 |
|
106 |
|
Net gains on disposal of personal property |
|
(86,398) |
|
(29,131) |
|
Net (gains) losses on disposal of real estate |
|
(3,907) |
|
3,169 |
|
Net gains on sales of investments |
|
(3,432) |
|
(1,288) |
|
Net (gains) losses on equity investments |
|
(4,342) |
|
2,254 |
|
Deferred income taxes |
|
138,916 |
|
80,198 |
|
Net change in other operating assets and liabilities: |
|
|
|
|
|
Reinsurance recoverables and trade receivables |
|
(3,771) |
|
(28,288) |
|
Inventories and parts |
|
(45,718) |
|
386 |
|
Prepaid expenses |
|
266,780 |
|
116,064 |
|
Capitalization of deferred policy acquisition costs |
|
(17,807) |
|
(13,404) |
|
Other assets |
|
(1,327) |
|
(553) |
|
Related party assets |
|
(2,724) |
|
2,785 |
|
Accounts payable and accrued expenses |
|
91,548 |
|
112,489 |
|
Policy benefits and losses, claims and loss expenses payable |
|
18,968 |
|
16,575 |
|
Other policyholders' funds and liabilities |
|
(1,477) |
|
(4,764) |
|
Deferred income |
|
7,592 |
|
13,237 |
|
Related party liabilities |
|
(700) |
|
(46) |
|
Net cash provided by operating activities |
|
1,519,120 |
|
1,002,342 |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
Escrow deposits |
|
(2,341) |
|
1,266 |
|
Purchases of: |
|
|
|
|
|
Property, plant and equipment |
|
(1,039,688) |
|
(662,259) |
|
Short term investments |
|
(21,669) |
|
(19,222) |
|
Fixed maturities investments |
|
(415,640) |
|
(160,755) |
|
Equity securities |
|
(36) |
|
(719) |
|
Preferred stock |
|
(8,000) |
|
(13,111) |
|
Real estate |
|
(124) |
|
(223) |
|
Mortgage loans |
|
(106,963) |
|
(72,316) |
|
Proceeds from sales and paydowns of: |
|
|
|
|
|
Property, plant and equipment |
|
306,946 |
|
314,335 |
|
Short term investments |
|
16,673 |
|
23,180 |
|
Fixed maturities investments |
|
230,043 |
|
226,656 |
|
Equity securities |
|
1,894 |
|
72 |
|
Mortgage loans |
|
26,612 |
|
3,219 |
|
Net cash used by investing activities |
|
(1,012,293) |
|
(359,877) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
Borrowings from credit facilities |
|
987,048 |
|
585,723 |
|
Principal repayments on credit facilities |
|
(227,072) |
|
(386,779) |
|
Payment of debt issuance costs |
|
(2,092) |
|
(3,477) |
|
Finance lease payments |
|
(87,500) |
|
(122,720) |
|
Common stock dividends paid |
|
(19,608) |
|
(9,804) |
|
Investment contract deposits |
|
199,426 |
|
114,288 |
|
Investment contract withdrawals |
|
(116,021) |
|
(102,466) |
|
Net cash provided by financing activities |
|
734,181 |
|
74,765 |
|
|
|
|
|
|
|
Effects of exchange rate on cash |
|
(4,787) |
|
3,986 |
|
|
|
|
|
|
|
Increase in cash and cash equivalents |
|
1,236,221 |
|
721,216 |
|
Cash and cash equivalents at the beginning of period |
|
1,194,012 |
|
494,352 |
|
Cash and cash equivalents at the end of period |
$ |
2,430,233 |
$ |
1,215,568 |
The accompanying notes are an integral part of these condensed consolidated financial statements
7
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
1.Basis of Presentation
AMERCO, a Nevada corporation (“AMERCO”), has a second fiscal quarter that ends on the 30 th of September for each year that is referenced. Our insurance company subsidiaries have a second quarter that ends on the 30 th of June for each year that is referenced. They have been consolidated on that basis. Our insurance companies’ financial reporting processes conform to calendar year reporting as required by state insurance departments. Management believes that consolidating their calendar year into our fiscal year financial statements does not materially affect the presentation of financial position or results of operations. We disclose material events, if any, occurring during the intervening period. Consequently, all references to our insurance subsidiaries’ years 2021 and 2020 correspond to fiscal 2022 and 2021 for AMERCO.
Accounts denominated in non-U.S. currencies have been translated into U.S. dollars. Certain amounts reported in previous years have been reclassified to conform to the current presentation.
The condensed consolidated balance sheet as of September 30, 2021 and the related condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity for the second quarter and first six months of fiscal 2022 and 2021 and cash flows for the first six months of fiscal 2022 and 2021 are unaudited.
In our opinion, all adjustments necessary for the fair presentation of such condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The information in this Quarterly Report on Form 10-Q (“Quarterly Report”) should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.
Intercompany accounts and transactions have been eliminated.
Description of Legal Entities
AMERCO is the holding company for:
U-Haul International, Inc. (“U-Haul”);
Amerco Real Estate Company (“Real Estate”);
Repwest Insurance Company (“Repwest”); and
Oxford Life Insurance Company (“Oxford”).
Unless the context otherwise requires, the terms “Company,” “we,” “us” or “our” refer to AMERCO and all of its legal subsidiaries.
Description of Operating Segments
AMERCO has three ( 3 ) reportable segments. They are Moving and Storage, Property and Casualty Insurance and Life Insurance.
The Moving and Storage operating segment (“Moving and Storage”) includes AMERCO, U-Haul and Real Estate and the wholly owned subsidiaries of U-Haul and Real Estate. Operations consist of the rental of trucks and trailers, sales of moving supplies, sales of towing accessories, sales of propane, and the rental of fixed and portable moving and storage units to the “do-it-yourself” mover and management of self-storage properties owned by others. Operations are conducted under the registered trade name U-Haul® throughout the United States and Canada.
8
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
The Property and Casualty Insurance operating segment (“Property and Casualty Insurance”) includes Repwest and its wholly owned subsidiaries and ARCOA Risk Retention Group (“ARCOA”). Property and Casualty Insurance provides loss adjusting and claims handling for U-Haul ® through regional offices in the United States and Canada. Property and Casualty Insurance also underwrites components of the Safemove ® , Safetow ® , Safemove Plus ® , Safestor ® and Safestor Mobile ® protection packages to U-Haul customers. The business plan for Property and Casualty Insurance includes offering property and casualty insurance products in other U-Haul-related programs. ARCOA is a group captive insurer owned by us and our wholly owned subsidiaries whose purpose is to provide insurance products related to our moving and storage business.
The Life Insurance operating segment (“Life Insurance”) includes Oxford and its wholly owned subsidiaries. Life Insurance provides life and health insurance products primarily to the senior market through the direct writing and reinsuring of life insurance, Medicare supplement and annuity policies.
2. Earnings per Share
Our earnings per share is calculated by dividing our earnings available to common stockholders by the weighted average common shares outstanding, basic and diluted.
3. Investments
Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
We deposit bonds with insurance regulatory authorities to meet statutory requirements. The adjusted cost of bonds on deposit with insurance regulatory authorities was $ 25.4 million and $ 27.7 million as of September 30, 2021 and March 31, 2021, respectively.
Available-for-Sale Investments
Available-for-sale investments as of September 30, 2021 were as follows:
|
|
|
Cost Amortized |
|
Unrealized Gains Gross |
|
Unrealized Losses More than 12 Months Gross |
|
Unrealized Losses Less than 12 Months Gross |
|
Allowance for Expected Credit Losses |
|
Market Value Estimated |
|
|
|
(Unaudited) |
||||||||||
|
|
|
(In thousands) |
||||||||||
|
U.S. treasury securities and government obligations |
$ |
103,378 |
$ |
9,917 |
$ |
– |
$ |
(508) |
$ |
– |
$ |
112,787 |
|
U.S. government agency mortgage-backed securities |
|
58,978 |
|
478 |
|
– |
|
(1,890) |
|
– |
|
57,566 |
|
Obligations of states and political subdivisions |
|
203,429 |
|
19,461 |
|
(76) |
|
(283) |
|
– |
|
222,531 |
|
Corporate securities |
|
2,048,283 |
|
169,072 |
|
(90) |
|
(3,615) |
|
(179) |
|
2,213,471 |
|
Mortgage-backed securities |
|
172,606 |
|
11,284 |
|
(1) |
|
(1) |
|
– |
|
183,888 |
|
|
$ |
2,586,674 |
$ |
210,212 |
$ |
( 167 ) |
$ |
( 6,297 ) |
$ |
( 179 ) |
$ |
2,790,243 |
9
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Available-for-sale investments as of March 31, 2021 were as follows:
|
|
|
Cost Amortized |
|
Unrealized Gains Gross |
|
Unrealized Losses More than 12 Months Gross |
|
Unrealized Losses Less than 12 Months Gross |
|
Allowance for Expected Credit Losses |
|
Market Value Estimated |
|
|
|
|
||||||||||
|
|
|
(In thousands) |
||||||||||
|
U.S. treasury securities and government obligations |
$ |
92,429 |
$ |
12,941 |
$ |
– |
$ |
– |
$ |
– |
$ |
105,370 |
|
U.S. government agency mortgage-backed securities |
|
61,427 |
|
911 |
|
(1) |
|
(132) |
|
– |
|
62,205 |
|
Obligations of states and political subdivisions |
|
230,521 |
|
25,249 |
|
(59) |
|
(3) |
|
– |
|
255,708 |
|
Corporate securities |
|
1,846,507 |
|
199,447 |
|
(163) |
|
(641) |
|
(1,319) |
|
2,043,831 |
|
Mortgage-backed securities |
|
174,728 |
|
11,706 |
|
(1) |
|
(8) |
|
– |
|
186,425 |
|
|
$ |
2,405,612 |
$ |
250,254 |
$ |
( 224 ) |
$ |
( 784 ) |
$ |
( 1,319 ) |
$ |
2,653,539 |
We sold available-for-sale securities with a fair value of $ 224.0 million during the first six months of fiscal 2022. The gross realized gains on these sales totaled $ 3.7 million. The gross realized losses on these sales totaled $ 2.2 million.
For available-for-sale debt securities in an unrealized loss position, we first assess whether the security is below investment grade. For securities that are below investment grade, we evaluate whether the decline in fair value has resulted from credit losses or other factors such as the interest rate environment. Declines in value due to credit are recognized as an allowance. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse market conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, cumulative default rates based on ratings are used to determine the potential cost of default, by year. The present value of these potential costs is then compared to the amortized cost of the security to determine the credit loss, limited by the amount that the fair value is less than the amortized cost basis.
Declines in fair value that have not been recorded through an allowance for credit losses, such as declines due to changes in market interest rates, are recorded through accumulated other comprehensive income, net of applicable taxes. If we intend to sell a security, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, the security is written down to its fair value and the write down is charged against the allowance for credit losses, with any incremental impairment reported in earnings. Reversals of the allowance for credit losses are permitted and should not exceed the allowance amount initially recognized.
Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. There were no incremental impairment charges recorded during the first six months as of September 30, 2021.
10
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
The adjusted cost and estimated market value of available-for-sale investments by contractual maturity were as follows:
|
|
|
September 30, 2021 |
|
March 31, 2021 |
||||
|
|
|
Cost Amortized |
|
Market Value Estimated |
|
Cost Amortized |
|
Market Value Estimated |
|
|
|
(Unaudited) |
|
|
||||
|
|
|
(In thousands) |
||||||
|
Due in one year or less |
$ |
48,717 |
$ |
49,480 |
$ |
90,142 |
$ |
91,190 |
|
Due after one year through five years |
|
575,511 |
|
613,941 |
|
562,442 |
|
601,818 |
|
Due after five years through ten years |
|
693,842 |
|
768,285 |
|
672,733 |
|
754,536 |
|
Due after ten years |
|
1,095,998 |
|
1,174,649 |
|
905,567 |
|
1,019,570 |
|
|
|
2,414,068 |
|
2,606,355 |
|
2,230,884 |
|
2,467,114 |
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
172,606 |
|
183,888 |
|
174,728 |
|
186,425 |
|
|
$ |
2,586,674 |
$ |
2,790,243 |
$ |
2,405,612 |
$ |
2,653,539 |
As of September 30, 2021 and March 31, 2021, our common stock and non-redeemable preferred stock that are included in Investments, fixed maturities and marketable equities on our balance sheet are stated in the table below. The changes in the fair value of these equity investments are recognized through Net investment and interest income.
Equity investments of common stock and non-redeemable preferred stock were as follows:
|
|
|
September 30, 2021 |
|
March 31, 2021 |
||||
|
|
|
Amortized Cost |
|
Value Estimated Market |
|
Amortized Cost |
|
Value Estimated Market |
|
|
|
(Unaudited) |
|
|
|
|
||
|
|
|
(In thousands) |
||||||
|
|
|
|
|
|
|
|
|
|
|
Common stocks |
$ |
9,775 |
$ |
24,728 |
$ |
9,775 |
$ |
20,440 |
|
Non-redeemable preferred stocks |
|
28,034 |
|
30,176 |
|
20,034 |
|
21,677 |
|
|
$ |
37,809 |
$ |
54,904 |
$ |
29,809 |
$ |
42,117 |
11
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
4. Borrowings
Long Term Debt
Long term debt was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
March 31, |
|
|
2022 Rates |
|
|
Maturities |
|
2021 |
|
2021 |
|||||
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|||
|
|
|
|
|
|
|
|
|
(In thousands) |
|||||
|
Real estate loan (amortizing term) |
|
|
|
1.58 |
% |
|
|
|
2023 |
$ |
53,591 |
$ |
82,913 |
|
Senior mortgages |
2.76 |
% |
- |
5.50 |
% |
|
2022 |
- |
2038 |
|
2,186,376 |
|
2,125,324 |
|
Real estate loans (revolving credit) (a) |
1.33 |
% |
- |
3.14 |
% |
|
2023 |
- |
2025 |
|
535,000 |
|
535,000 |
|
Fleet loans (amortizing term) |
1.61 |
% |
- |
4.66 |
% |
|
2022 |
- |
2028 |
|
149,931 |
|
176,295 |
|
Fleet loans (revolving credit) |
1.24 |
% |
- |
1.33 |
% |
|
2024 |
- |
2026 |
|
548,000 |
|
535,000 |
|
Finance leases (rental equipment) |
1.92 |
% |
- |
5.04 |
% |
|
2021 |
- |
2026 |
|
426,155 |
|
513,623 |
|
Finance liability (rental equipment) |
1.60 |
% |
- |
4.22 |
% |
|
2024 |
- |
2029 |
|
778,146 |
|
644,375 |
|
Private placement |
2.43 |
% |
|
2.78 |
% |
|
2029 |
- |
2033 |
|
600,000 |
|
– |
|
Other obligations |
1.75 |
% |
- |
8.00 |
% |
|
2021 |
- |
2049 |
|
87,080 |
|
86,085 |
|
Notes, loans and finance leases payable |
|
|
|
|
|
|
|
|
|
5,364,279 |
|
4,698,615 |
|
|
Less: Debt issuance costs |
|
|
|
|
|
|
|
|
|
|
(29,001) |
|
(29,708) |
|
Total notes, loans and finance leases payable, net |
|
|
|
|
$ |
5,335,278 |
$ |
4,668,907 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Certain loans have interest rate swaps fixing the rate between 3.03% and 3.14% based on current margins. |
|
|
|
|
|||||||||
Real Estate Backed Loans
Real Estate Loan
Real Estate and certain of its subsidiaries and U-Haul Company of Florida are borrowers under a real estate loan (the “Real Estate Loan”). The Real Estate Loan requires monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. The Real Estate Loan is secured by various properties owned by the borrowers.
The interest rate, per the provisions of the amended loan agreement, is the applicable London Inter-Bank Offer Rate (“LIBOR”) plus the applicable margin. As of September 30, 2021, the applicable LIBOR was 0.08 % and the applicable margin was 1.50 %, the sum of which was 1.58 %. The default provisions of the Real Estate Loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.
Senior Mortgages
Various subsidiaries of Real Estate and U-Haul are borrowers under certain senior mortgages. The senior mortgages require monthly principal and interest payments. The senior mortgages are secured by certain properties owned by the borrowers. The fixed interest rates, per the provisions of the senior mortgages, range between 2.76% and 5.50%. The weighted average interest rate of these loans as of September 30, 2021 was 4.12%. Certain senior mortgages have an anticipated repayment date and a maturity date. If these senior mortgages are not repaid by the anticipated repayment date, the interest rate on these mortgages would increase from the current fixed rate. We are using the anticipated repayment date for our maturity schedule. Real Estate and U-Haul have provided limited guarantees of the senior mortgages. The default provisions of the senior mortgages include non-payment of principal or interest and other standard reporting and change-in-control covenants. There are limited restrictions regarding our use of the funds.
12
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Real Estate Loans (Revolving Credit)
Various subsidiaries of Real Estate are borrowers under asset-backed real estate loans with an aggregate borrowing capacity of $ 385.0 million. As of September 30, 2021, the outstanding balance of these loans in the aggregate was $ 385.0 million. These loans are secured by certain properties owned by the borrowers. The loan agreements provide for term loans, subject to the terms of the loan agreements. The loans require monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. The interest rate, per the provision of the loan agreements, is the applicable LIBOR plus the applicable margin. As of September 30, 2021, the applicable LIBOR was 0.08 % and the margin was between 1.25 % and 1.50 %, the sum of which was between 1.33 % and 1.58 %. AMERCO is the guarantor of these loans. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants.
AMERCO is a borrower under a real estate loan. The current maximum credit commitment is $ 200.0 million, which can be increased to $ 300.0 million by bringing in other lenders. As of September 30, 2021, the outstanding balance was $ 150.0 million. This loan agreement provides for revolving loans, subject to the terms of the loan agreement. This loan requires monthly interest payments with the unpaid loan balance and accrued and unpaid interest due at maturity. As of September 30, 2021, the applicable LIBOR was 0.09 % and the margin was 1.38 %, the sum of which was 1.47 %. The default provisions of the loan include non-payment of principal or interest and other standard reporting and change-in-control covenants. There is a 0.30 % fee charged for unused capacity.
Fleet Loans
Rental Truck Amortizing Loans
The amortizing loans require monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. These loans were used to purchase new trucks. The interest rates, per the provision of the loan agreements, are carried at fixed rates ranging between 1.61 % and 4.66 %. All of our rental truck amortizing loans are collateralized by the rental equipment purchased. The majority of these loans are funded at 70%, but some may be funded at 100%.
AMERCO, and in some cases U-Haul, is guarantor of these loans. The default provisions of these loans include non-payment of principal or interest and other standard reporting and change-in-control covenants.
Rental Truck Revolvers
Various subsidiaries of U-Haul entered into three revolving fleet loans with an aggregate borrowing capacity of $ 590.0 million. The outstanding balance for these revolvers is $ 548.0 million. The interest rates, per the provision of the loan agreements in aggregate of $ 373.0 million, are the applicable LIBOR plus the applicable margin. As of September 30, 2021, the applicable LIBOR was between 0.08 % and 0.09 %, the margin was between 1.15 % and 1.25 %, the sum of which was between 1.24 % and 1.33 %. Of this $373.0 million outstanding, $ 100.0 million is fixed with an interest rate of 2.36 %. The other loan of $ 175.0 million uses the Secured Overnight Funding Rate (“SOFR”) which interest rate was 0.05 % plus a margin of 1.25 % totaling 1.30 % as of September 30, 2021. Only interest is paid on the loans until the last nine months of the respective loan terms when principal becomes due monthly.
Finance Leases
The Finance Lease balance represents our sale-leaseback transactions of rental equipment that were entered into and classified as capital leases prior to the adoption of Topic 842. The historical capital lease balance was reclassified to Right-of-Use (“ROU”) assets-finance, net. The agreements are generally seven (7) year terms with interest rates ranging from 1.92% to 5.04%. All of our finance leases are collateralized by our rental fleet. The net book value of the corresponding rental equipment was $753.0 million and $877.0 million as of September 30, 2021 and March 31, 2021, respectively. There were no new financing leases, as assessed under the new leasing guidance, entered into during the six months ended September 30, 2021.
13
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Finance Liabilities
Finance liabilities represent our rental equipment financing transactions that have historically been accounted for as capital leases prior to the adoption of Topic 842, which substantially changed the accounting for sale-leasebacks going forward. In accordance with the new leasing guidance, we assess if sale-leaseback transactions qualify as a sale at initiation by determining if a transfer of ownership occurs. We have determined that our equipment sale-leasebacks do not qualify as a sale, as the buyer-lessors do not obtain control of the assets in our ongoing sale-leaseback arrangements. As a result, we expect future sale-leasebacks to be accounted for as a financial liability and the leased assets will be capitalized at cost. Our finance liabilities have an average term of seven (7) years and interest rates ranging from 1.60 % to 4.22 %. These finance liabilities are collateralized by our rental fleet.
Private Placement
In September 2021, AMERCO entered into a note purchase agreement to issue $ 600.0 million of fixed rate senior unsecured notes in a private placement offering. These notes consist of four tranches each totaling $ 150.0 million. The fixed interest rates range between 2.43 % and 2.78 %. Interest is payable semiannually.
Other Obligations
In February 2011, AMERCO and U.S. Bank, NA (the “Trustee”) entered into the U-Haul Investors Club ® Indenture. AMERCO and the Trustee entered into this indenture to provide for the issuance of notes by us directly to investors over our proprietary website, uhaulinvestorsclub.com (“U-Notes ® ”). The U-Notes ® are secured by various types of collateral, including, but not limited to, rental equipment and real estate. U-Notes ® are issued in smaller series that vary as to principal amount, interest rate and maturity. U-Notes ® are obligations of the Company and secured by the associated collateral; they are not guaranteed by any of the Company’s affiliates or subsidiaries.
As of September 30, 2021, the aggregate outstanding principal balance of the U-Notes ® issued was $ 89.5 million, of which $ 2.4 million is held by our insurance subsidiaries and eliminated in consolidation. Interest rates range between 1.75 % and 8.00 % and maturity dates range between 2021 and 2049 .
Oxford is a member of the Federal Home Loan Bank (“FHLB”) and, as such, the FHLB has made deposits with Oxford. As of June 30, 2021, the deposits had an aggregate balance of $ 65.5 million, for which Oxford pays fixed interest rates between 0.00 % and 1.72 % with maturities between September 30, 2022 and September 25, 2025. As of June 30, 2021, available-for-sale investments held with the FHLB totaled $ 119.1 million, of which $ 72.8 million were pledged as collateral to secure the outstanding advances. The balances of these advances are included within Liabilities from investment contracts on the condensed consolidated balance sheets.
Annual Maturities of Notes, Loans and Finance Leases Payable
The annual maturities of our notes, loans and finance leases payable, as of September 30, 2021 for the next five years and thereafter are as follows:
|
|
|
Year Ended September 30, |
||||||||||
|
|
|
2022 |
|
2023 |
|
2024 |
|
2025 |
|
2026 |
|
Thereafter |
|
|
|
(Unaudited) |
||||||||||
|
|
|
(In thousands) |
||||||||||
|
Notes, loans and finance leases payable, secured |
$ |
537,619 |
$ |
502,285 |
$ |
1,098,072 |
$ |
547,975 |
$ |
623,220 |
$ |
2,055,108 |
14
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Interest on Borrowings
Interest Expense
Components of interest expense include the following:
|
|
|
Quarter Ended September 30, |
||
|
|
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands) |
||
|
Interest expense |
$ |
39,804 |
$ |
41,600 |
|
Capitalized interest |
|
(2,722) |
|
(3,494) |
|
Amortization of transaction costs |
|
1,460 |
|
1,458 |
|
Interest expense resulting from cash flow hedges |
|
1,003 |
|
961 |
|
Total interest expense |
$ |
39,545 |
$ |
40,525 |
|
|
|
Six Months Ended September 30, |
||
|
|
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands) |
||
|
Interest expense |
$ |
78,739 |
$ |
83,511 |
|
Capitalized interest |
|
(4,752) |
|
(7,928) |
|
Amortization of transaction costs |
|
2,746 |
|
2,755 |
|
Interest expense resulting from cash flow hedges |
|
1,990 |
|
1,708 |
|
Total interest expense |
$ |
78,723 |
$ |
80,046 |
Interest paid in cash, including payments related to derivative contracts, amounted to $ 35.3 million and $ 39.1 million for the second quarter of fiscal 2022 and 2021, respectively, and $ 71.4 million and $ 78.5 million for the first six months of fiscal 2022 and 2021, respectively.
Interest Rates
Interest rates and Company borrowings were as follows:
|
|
|
Revolving Credit Activity |
|
||
|
|
|
Quarter Ended September 30, |
|
||
|
|
|
2021 |
|
2020 |
|
|
|
|
(Unaudited) |
|
||
|
|
|
(In thousands, except interest rates) |
|
||
|
Weighted average interest rate during the quarter |
|
1.39 |
% |
1.67 |
% |
|
Interest rate at the end of the quarter |
|
1.38 |
% |
1.67 |
% |
|
Maximum amount outstanding during the quarter |
$ |
1,093,000 |
$ |
1,105,000 |
|
|
Average amount outstanding during the quarter |
$ |
1,090,283 |
$ |
1,059,130 |
|
|
Facility fees |
$ |
61 |
$ |
90 |
|
15
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
|
|
|
Revolving Credit Activity |
|
||
|
|
|
Six Months Ended September 30, |
|
||
|
|
|
2021 |
|
2020 |
|
|
|
|
(Unaudited) |
|
||
|
|
|
(In thousands, except interest rates) |
|
||
|
Weighted average interest rate during the period |
|
1.38 |
% |
1.67 |
% |
|
Interest rate at the end of the period |
|
1.38 |
% |
1.67 |
% |
|
Maximum amount outstanding during the period |
$ |
1,093,000 |
$ |
1,175,000 |
|
|
Average amount outstanding during the period |
$ |
1,081,716 |
$ |
1,109,978 |
|
|
Facility fees |
$ |
131 |
$ |
94 |
|
5. Derivatives
We manage exposure to changes in market interest rates. Our use of derivative instruments is limited to highly effective interest rate swaps to hedge the risk of changes in cash flows (future interest payments) attributable to changes in LIBOR swap rates with the designated benchmark interest rate being hedged on certain of our LIBOR indexed variable rate debt. The interest rate swaps effectively fix our interest payments on certain LIBOR indexed variable rate debt. We monitor our positions and the credit ratings of our counterparties and do not currently anticipate non-performance by the counterparties. Interest rate swap agreements are not entered into for trading purposes. These fair values are determined using pricing valuation models which include broker quotes for which significant inputs are observable. They include adjustments for counterparty credit quality and other deal-specific factors, where appropriate and are classified as Level 2 in the fair value hierarchy.
The derivative fair values reflected in prepaid expense and accounts payable and accrued expenses in the condensed consolidated balance sheet were as follows:
|
|
|
Derivatives Fair Values as of |
||
|
|
|
September 30, 2021 |
|
March 31, 2021 |
|
|
|
(Unaudited) |
|
|
|
|
|
(In thousands) |
||
|
Interest rate contracts designated as hedging instruments: |
|
|
|
|
|
Assets |
$ |
– |
$ |
– |
|
Liabilities |
$ |
3,292 |
$ |
5,141 |
|
Notional amount |
$ |
235,000 |
$ |
235,000 |
|
|
|
The Effect of Interest Rate Contracts on the Statements of Operations for the Quarters Ended |
||
|
|
|
|||
|
|
|
September 30, 2021 |
|
September 30, 2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands) |
||
|
(Gain) loss recognized in AOCI on interest rate contracts |
$ |
(929) |
$ |
(1,007) |
|
(Gain) loss reclassified from AOCI into income |
$ |
( 1,003 ) |
$ |
( 961 ) |
Gains or losses recognized in income on interest rate derivatives are recorded as interest expense in the condensed consolidated statements of operations. During the first six months of fiscal 2022, we recognized an increase in the fair value of our cash flow hedges of $0.1 million, net of taxes. During the first six months of fiscal 2022 we reclassified $1.5 million from accumulated other comprehensive income (loss) (“AOCI”) to interest expense. As of September 30, 2021, we expect to reclassify $3.2 million of net losses on interest rate contracts from AOCI to earnings as interest expense over the next twelve months.
16
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
6. Accumulated Other Comprehensive Income (Loss)
A summary of AOCI components, net of tax, were as follows:
|
|
|
Foreign Currency Translation |
|
Unrealized Net Gain on Investments |
|
Fair Market Value of Cash Flow Hedges |
|
Postretirement Benefit Obligation Net Loss |
|
Accumulated Other Comprehensive Income (Loss) |
|
|
|
(Unaudited) |
||||||||
|
|
|
(In thousands) |
||||||||
|
Balance as of March 31, 2021 |
$ |
(52,929) |
$ |
167,653 |
$ |
(3,879) |
$ |
(3,988) |
$ |
106,857 |
|
Foreign currency translation |
|
(2,400) |
|
– |
|
– |
|
– |
|
(2,400) |
|
Unrealized net gain on investments |
|
– |
|
(31,645) |
|
– |
|
– |
|
(31,645) |
|
Change in fair value of cash flow hedges |
|
– |
|
– |
|
(107) |
|
– |
|
(107) |
|
Amounts reclassified into earnings on hedging activities |
|
– |
|
– |
|
1,502 |
|
– |
|
1,502 |
|
Other comprehensive income (loss) |
|
(2,400) |
|
(31,645) |
|
1,395 |
|
– |
|
(32,650) |
|
Balance as of September 30, 2021 |
$ |
( 55,329 ) |
$ |
136,008 |
$ |
( 2,484 ) |
$ |
( 3,988 ) |
$ |
74,207 |
7. Stockholders’ Equity
The following table lists the dividends that have been declared and issued for fiscal year 2022:
|
Common Stock Dividends |
||||||
|
Declared Date |
|
Per Share Amount |
|
Record Date |
|
Dividend Date |
|
|
|
|
|
|
|
|
|
June 9, 2021 |
$ |
0.50 |
|
June 24, 2021 |
|
July 8, 2021 |
|
August 19, 2021 |
$ |
0.50 |
|
September 7, 2021 |
|
September 21, 2021 |
|
October 6, 2021 |
$ |
0.50 |
|
October 18, 2021 |
|
October 29, 2021 |
As of September 30, 2021, no awards had been issued under the 2016 AMERCO Stock Option Plan.
8. Leases
Lessor
We have determined that revenues derived by providing self-moving equipment rentals, self-storage rentals and certain other revenues, including U-Box rentals, are within the scope of the accounting guidance contained in Topic 842.
We combined all lease and non-lease components of lease contracts for which the timing and pattern of transfer are the same and the lease component meets the classification of an operating lease, and account for them in accordance with Topic 842. The revenue streams accounted for in accordance with Topic 842 are recognized evenly over the period of rental. Please see Note 15, Revenue Recognition, to the Notes to Condensed Consolidated Financial Statements.
Lessee
We determine if an arrangement is a lease at inception. Operating leases, which are comprised primarily of storage rental locations, are included in ROU assets – operating, net and operating lease liability in our condensed consolidated balance sheets. Finance leases, which are comprised primarily of rental equipment leases, are included in ROU assets - financing, net, and notes, loans and finance leases payable, net in our balance sheets.
17
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the expected remaining lease term. We use our incremental borrowing rate based on information available at commencement date including the rate for a fully collateralized loan that can either be fully amortizing or financed with a residual at the end of the lease term, for a borrower with similar credit quality in order to determine the present value of lease payments. Our lease terms may include options to extend or terminate the lease, which are included in the calculation of ROU assets when it is reasonably certain that we will exercise those options. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
We have lease agreements with lease and non-lease components, which are generally not accounted for separately. Additionally, for certain leases, we apply a portfolio approach to account for the operating lease ROU assets and liabilities as the leases are similar in nature and have nearly identical contract provisions.
The standard also changed the manner by which we account for our equipment sale/leaseback transactions. Based on our assessment, the lease transactions are classified as financing leases, and therefore the transactions do not qualify as a sale. Pursuant to the guidance, new sale leaseback transactions that fail to qualify as a sale will be accounted for as a financial liability. Please see Note 4, Borrowings, of the Notes to Condensed Consolidated Financial Statements for additional information.
The following tables show the components of our ROU assets:
|
|
|
As of September 30, 2021 |
||||
|
|
|
Finance |
|
Operating |
|
Total |
|
|
|
(Unaudited) |
||||
|
|
|
(In thousands) |
||||
|
|
|
|
|
|
|
|
|
Buildings and improvements |
$ |
– |
$ |
136,568 |
$ |
136,568 |
|
Furniture and equipment |
|
18,316 |
|
– |
|
18,316 |
|
Rental trailers and other rental equipment |
|
182,741 |
|
– |
|
182,741 |
|
Rental trucks |
|
1,325,624 |
|
– |
|
1,325,624 |
|
Right-of-use assets, gross |
|
1,526,681 |
|
136,568 |
|
1,663,249 |
|
Less: Accumulated depreciation |
|
(773,691) |
|
(51,331) |
|
(825,022) |
|
Right-of-use assets, net |
$ |
752,990 |
$ |
85,237 |
$ |
838,227 |
|
|
|
As of March 31, 2021 |
||||
|
|
|
Finance |
|
Operating |
|
Total |
|
|
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Buildings and improvements |
$ |
– |
$ |
132,901 |
$ |
132,901 |
|
Furniture and equipment |
|
22,316 |
|
– |
|
22,316 |
|
Rental trailers and other rental equipment |
|
203,594 |
|
– |
|
203,594 |
|
Rental trucks |
|
1,494,098 |
|
– |
|
1,494,098 |
|
Right-of-use assets, gross |
|
1,720,008 |
|
132,901 |
|
1,852,909 |
|
Less: Accumulated depreciation |
|
(842,970) |
|
(40,396) |
|
(883,366) |
|
Right-of-use assets, net |
$ |
877,038 |
|
92,505 |
|
969,543 |
As of September 30, 2021 and March 31, 2021, we had finance leases for the ROU assets, net of $426.2 million and $513.6 million, respectively and operating leases of $85.2 million and $92.5 million, respectively.
18
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
|
|
|
Finance leases |
|
||
|
|
|
September 30, |
|
March 31, |
|
|
|
|
2021 |
|
2021 |
|
|
Weighted average remaining lease term (years) |
|
3 |
|
3 |
|
|
Weighted average discount rate |
|
3.6 |
% |
3.6 |
% |
|
|
|
Operating leases |
|
||
|
|
|
September 30, |
|
March 31, |
|
|
|
|
2021 |
|
2021 |
|
|
Weighted average remaining lease term (years) |
|
15.2 |
|
14.7 |
|
|
Weighted average discount rate |
|
4.6 |
% |
4.6 |
% |
For the six months ended September 30, 2021 and 2020, cash paid for leases included in our operating cash flow activities were $ 15.2 million and $ 14.2 million, respectively, and our financing cash flow activities were $ 87.5 million and $ 122.7 million, respectively. Non-cash activities of ROU assets in exchange for lease liabilities were $3.8 million and $5.2 million for the first six months of fiscal 2022 and 2021, respectively. The components of lease costs were as follows:
|
|
|
Six Months Ended |
||
|
|
|
September 30, 2021 |
|
September 30, 2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands) |
||
|
|
|
|
|
|
|
Operating lease costs |
$ |
16,101 |
$ |
14,540 |
|
|
|
|
|
|
|
Finance lease cost: |
|
|
|
|
|
Amortization of right-of-use assets |
$ |
62,243 |
$ |
79,259 |
|
Interest on lease liabilities |
|
8,780 |
|
12,082 |
|
Total finance lease cost |
$ |
71,023 |
$ |
91,341 |
Maturities of lease liabilities were as follows:
|
|
|
Finance leases |
|
Operating leases |
|
|
|
(Unaudited) |
||
|
Year ending September 30, |
|
(In thousands) |
||
|
|
|
|
|
|
|
2022 |
$ |
155,818 |
$ |
24,757 |
|
2023 |
|
129,840 |
|
22,610 |
|
2024 |
|
87,728 |
|
17,921 |
|
2025 |
|
62,633 |
|
6,045 |
|
2026 |
|
20,956 |
|
3,135 |
|
Thereafter |
|
– |
|
60,834 |
|
Total lease payments |
|
456,975 |
|
135,302 |
|
Less: imputed interest |
|
(30,820) |
|
(50,103) |
|
Present value of lease liabilities |
$ |
426,155 |
$ |
85,199 |
19
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
9. Contingencies
COVID-19
In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world have implemented measures to reduce the spread of COVID-19. These measures along with the threat the virus poses have adversely affected workforces, customers, consumer sentiment, economies and financial markets.
The Company has been impacted by the spread of COVID-19. The extent to which COVID-19 impacts the Company’s business, operations and financial results will continue to evolve in ways that the Company is not fully able to predict at this time. We have experienced customer initiated changes in behavior, actions by government entities, concerns from our workforce, and reactions from the capital markets.
Although the Company cannot estimate the length or gravity of the impact of COVID-19 at this time, if the pandemic continues, it may have a material adverse effect on the Company’s results of future operations, financial position and liquidity in fiscal 2022 and beyond.
CARES Act
The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. As a result of the federal income tax provisions of the CARES Act, we have filed applicable forms with the Internal Revenue Service (“IRS”) to carryback net operating losses. These refund claims total approximately $ 366 million, of which we have received approximately $243 million in the first six months of fiscal 2022, are reflected in Prepaid expense. As refunds are received, they will reduce this amount. We have estimated and recorded the overall effects of the CARES Act and do not anticipate a material change. It is possible future legislation could reduce or delay our ability to carryback these losses.
Environmental
Compliance with environmental requirements of federal, state and local governments may significantly affect Real Estate’s business operations. Among other things, these requirements regulate the discharge of materials into the air, land and water and govern the use and disposal of hazardous substances. Real Estate is aware of issues regarding hazardous substances on some of its properties. Real Estate regularly makes capital and operating expenditures to stay in compliance with environmental laws and has put in place a remedial plan at each site where it believes such a plan is necessary.
Based upon the information currently available to Real Estate, compliance with the environmental laws and its share of the costs of investigation and cleanup of known hazardous waste sites are not expected to result in a material adverse effect on AMERCO’s financial position or results of operations.
Other
We are named as a defendant in various other litigation and claims arising out of the normal course of business. In management’s opinion, none of these other matters will have a material effect on our financial position and results of operations.
10. Related Party Transactions
As set forth in the Company’s Audit Committee Charter and consistent with NASDAQ Listing Rules, our Audit Committee (the “Audit Committee”) reviews and maintains oversight over related party transactions, which are required to be disclosed under the Securities and Exchange Commission (“SEC”) rules and regulations and in accordance with generally accepted accounting principles (“GAAP”). Accordingly, all such related party transactions are submitted to the Audit Committee for ongoing review and oversight. Our internal processes are designed to ensure that our legal and finance departments identify and monitor potential related party transactions that may require disclosure and Audit Committee oversight.
20
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
AMERCO has engaged in related party transactions and has continuing related party interests with certain major stockholders, directors and officers of the consolidated group as disclosed below.
SAC Holding Corporation and SAC Holding II Corporation (collectively “SAC Holdings”) were established in order to acquire and develop self-storage properties. These properties are being managed by us pursuant to management agreements. SAC Holdings, Four SAC Self-Storage Corporation, Five SAC Self-Storage Corporation, Galaxy Investments, L.P. and 2015 SAC Self-Storage, LLC are substantially controlled by Blackwater Investments, Inc. (“Blackwater”). Blackwater is wholly owned by Willow Grove Holdings LP (“WGHLP”), which is owned by Mark V. Shoen (a significant stockholder), and various trusts associated with Edward J. Shoen (our Chairman of the Board, President and a significant stockholder) and Mark V. Shoen.
Related Party Revenue
|
|
|
Quarter Ended September 30, |
||
|
|
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands) |
||
|
U-Haul management fee revenue from Blackwater |
$ |
7,428 |
$ |
6,644 |
|
U-Haul management fee revenue from Mercury |
|
1,319 |
|
1,196 |
|
|
$ |
8,747 |
$ |
7,840 |
|
|
|
Six Months Ended September 30, |
||
|
|
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands) |
||
|
U-Haul management fee revenue from Blackwater |
$ |
14,608 |
$ |
12,792 |
|
U-Haul management fee revenue from Mercury |
|
2,588 |
|
2,395 |
|
|
$ |
17,196 |
$ |
15,187 |
We currently manage the self-storage properties owned or leased by Blackwater and Mercury Partners, L.P. (“Mercury”), pursuant to a standard form of management agreement, under which we receive a management fee of between 4 % and 10 % of the gross receipts plus reimbursement for certain expenses. We received management fees, exclusive of reimbursed expenses, of $ 19.4 million and $ 17.5 million from the above-mentioned entities during the first six months of fiscal 2022 and 2021, respectively. This management fee is consistent with the fee received for other properties we previously managed for third parties. Mark V. Shoen controls the general partner of Mercury. The limited partner interests of Mercury are owned indirectly by James P. Shoen and various trusts benefitting Edward J. Shoen and James P. Shoen or their descendants. Mercury holds the option to purchase a portfolio of properties currently leased by Mercury and a U-Haul subsidiary, which option is exercisable in 2024.
21
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Related Party Costs and Expenses
|
|
|
Quarter Ended September 30, |
||
|
|
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands) |
||
|
U-Haul lease expenses to Blackwater |
$ |
611 |
$ |
658 |
|
U-Haul commission expenses to Blackwater |
|
26,536 |
|
20,533 |
|
|
$ |
27,147 |
$ |
21,191 |
|
|
|
Six Months Ended September 30, |
||
|
|
|
2021 |
|
2020 |
|
|
|
(Unaudited) |
||
|
|
|
(In thousands) |
||
|
U-Haul lease expenses to Blackwater |
$ |
1,237 |
$ |
1,315 |
|
U-Haul commission expenses to Blackwater |
|
49,416 |
|
35,865 |
|
|
$ |
50,653 |
$ |
37,180 |
We lease space for marketing company offices, vehicle repair shops and hitch installation centers from subsidiaries of Blackwater. The terms of the leases are similar to the terms of leases for other properties owned by unrelated parties that are leased to us.
As of September 30, 2021, subsidiaries of Blackwater acted as independent dealers. The financial and other terms of the dealership contracts are substantially identical to the terms of those with our other independent dealers whereby commissions are paid by us based upon equipment rental revenues.
These agreements with subsidiaries of Blackwater, excluding Dealer Agreements, provided revenues of $ 14.6 million, expenses of $ 1.2 million and cash flows of $ 13.3 million during the first six months of fiscal 2022. Revenues and commission expenses related to the Dealer Agreements were $ 234.6 million and $ 49.4 million, respectively, during the first six months of fiscal 2022.
Management determined that we do not have a variable interest pursuant to the variable interest entity model under Accounting Standards Codification (“ASC”) 810 – Consolidati