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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 June 30, 2022

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.

 

 

 

 

AMERCOlogo

 

 

 

 

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 August 1, 2022.


 

 

TABLE OF CONTENTS

 

        

Page

 

PART I FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

 

a) Condensed Consolidated Balance Sheets as of June 30, 2022 (unaudited) and March 31, 2022

1

 

b) Condensed Consolidated Statements of Operations for the Quarters Ended June 30, 2022, and 2021 (unaudited)

2

 

c) Condensed Consolidated Statements of Comprehensive Income (Loss) for the Quarters Ended June 30, 2022, and 2021 (unaudited)

3

 

d) Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Quarters Ended June 30, 2022, and 2021 (unaudited)

4

 

e) Condensed Consolidated Statements of Cash Flows for the Quarters Ended June 30, 2022, and 2021 (unaudited)

5

 

f) Notes to Condensed Consolidated Financial Statements (unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

35

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

Item 4.

Controls and Procedures

46

 

 

 

 

PART II OTHER INFORMATION

 

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3.

Defaults Upon Senior Securities

46

Item 4.

Mine Safety Disclosures

47

Item 5.

Other Information

47

Item 6.

Exhibits

47


 

part i financial information

 

Item 1. Financial Statements

 

AMERCO AND CONSOLIDATED SUBSIDIARIES

CONDENSED CONSOLIDATED balance sheets

 

 

June 30,

 

March 31,

 

 

2022

 

2022

 

 

(Unaudited)

 

 

 

 

(In thousands, except share data)

ASSETS

 

 

 

 

Cash and cash equivalents

$

3,098,271

$

2,704,137

Reinsurance recoverables and trade receivables, net

 

219,574

 

229,343

Inventories and parts, net

 

164,579

 

158,888

Prepaid expenses

 

231,714

 

236,915

Investments, fixed maturities and marketable equities

 

2,669,986

 

2,893,399

Investments, other

 

557,124

 

543,755

Deferred policy acquisition costs, net

 

129,568

 

103,828

Other assets

 

53,477

 

60,409

Right of use assets - financing, net

 

568,223

 

620,824

Right of use assets - operating, net

 

72,538

 

74,382

Related party assets

 

45,190

 

47,851

 

 

7,810,244

 

7,673,731

Property, plant and equipment, at cost:

 

 

 

 

Land

 

1,354,587

 

1,283,142

Buildings and improvements

 

6,154,373

 

5,974,639

Furniture and equipment

 

858,094

 

846,132

Rental trailers and other rental equipment

 

671,880

 

615,679

Rental trucks

 

4,873,554

 

4,638,814

 

 

13,912,488

 

13,358,406

Less: Accumulated depreciation

 

(3,891,128)

 

(3,732,556)

Total property, plant and equipment, net

 

10,021,360

 

9,625,850

Total assets

$

17,831,604

$

17,299,581

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Liabilities:

 

 

 

 

Accounts payable and accrued expenses

$

722,617

$

677,785

Notes, loans and finance leases payable, net

 

6,232,564

 

6,022,497

Operating lease liabilities

 

72,277

 

74,197

Policy benefits and losses, claims and loss expenses payable

 

988,030

 

978,254

Liabilities from investment contracts

 

2,374,250

 

2,336,238

Other policyholders' funds and liabilities

 

11,999

 

10,812

Deferred income

 

63,647

 

49,157

Deferred income taxes, net

 

1,292,369

 

1,265,358

Total liabilities

 

11,757,753

 

11,414,298

 

 

 

 

 

Commitments and contingencies (notes 3, 7, 8 and 9)

 

 

 

 

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 June 30 and March 31, 2022

 

 

Series B preferred stock, with no par value, 100,000 shares authorized; none

 

 

 

 

issued and outstanding as of June 30 and March 31, 2022

 

 

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 June 30 and March 31, 2022

 

 

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 June 30 and March 31, 2022

 

10,497

 

10,497

Additional paid-in capital

 

453,819

 

453,819

Accumulated other comprehensive income (loss)

 

(89,246)

 

46,384

Retained earnings

 

6,376,431

 

6,052,233

Cost of common stock in treasury, net ( 22,377,912 shares as of June 30 and March 31, 2022)

 

(525,653)

 

(525,653)

Cost of preferred stock in treasury, net ( 6,100,000 shares as of June 30 and March 31, 2022)

 

(151,997)

 

(151,997)

Total stockholders' equity

 

6,073,851

 

5,885,283

Total liabilities and stockholders' equity

$

17,831,604

$

17,299,581

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 June 30,

 

 

2022

 

2021

 

 

(Unaudited)

 

 

(In thousands, except share and per share amounts)

Revenues:

 

 

 

 

Self-moving equipment rentals

$

1,090,775

$

1,035,377

Self-storage revenues

 

173,177

 

137,393

Self-moving and self-storage products and service sales

 

109,351

 

104,885

Property management fees

 

9,139

 

8,449

Life insurance premiums

 

25,781

 

28,705

Property and casualty insurance premiums

 

19,972

 

16,869

Net investment and interest income

 

33,573

 

34,999

Other revenue

 

136,072

 

106,179

Total revenues

 

1,597,840

 

1,472,856

 

 

 

 

 

Costs and expenses:

 

 

 

 

Operating expenses

 

733,167

 

614,529

Commission expenses

 

118,493

 

113,149

Cost of sales

 

79,671

 

69,915

Benefits and losses

 

44,100

 

47,298

Amortization of deferred policy acquisition costs

 

7,672

 

8,823

Lease expense

 

7,475

 

7,647

Depreciation, net of gains on disposal ($64,348 and $50,323, respectively)

 

113,796

 

121,717

Net (gains) losses on disposal of real estate

 

2,307

 

(4,430)

Total costs and expenses

 

1,106,681

 

978,648

 

 

 

 

 

Earnings from operations

 

491,159

 

494,208

Other components of net periodic benefit costs

 

(304)

 

(280)

Interest expense

 

(49,799)

 

(39,178)

Pretax earnings

 

441,056

 

454,750

Income tax expense

 

(107,054)

 

(109,575)

Earnings available to common stockholders

$

334,002

$

345,175

Basic and diluted earnings per common share

$

17.03

$

17.60

Weighted average common shares outstanding: Basic and diluted

 

19,607,788

 

19,607,788

 

Related party revenues for the first quarter of fiscal 2023 and 2022, net of eliminations, were $9.1 million and $8.4 million, respectively.

Related party costs and expenses for the first quarter of fiscal 2023 and 2022, net of eliminations, were $25.5 million and $23.5 million, respectively.

Please see Note 9, 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 COMPREHENSIVE INCOME (loss)

Quarter Ended June 30, 2022

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

441,056

$

(107,054)

$

334,002

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

197

 

 

197

Unrealized net loss on investments

 

(173,046)

 

36,664

 

(136,382)

Change in fair value of cash flow hedges

 

170

 

(42)

 

128

Amounts reclassified into earnings on hedging activities

 

566

 

(139)

 

427

Total other comprehensive income (loss)

 

(172,113)

 

36,483

 

(135,630)

 

 

 

 

 

 

 

Total comprehensive income

$

268,943

$

(70,571)

$

198,372

 

 

+  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30, 2021

 

Pre-tax

 

Tax

 

Net

 

 

(Unaudited)

 

 

(In thousands)

Comprehensive income:

 

 

 

 

 

 

Net earnings

$

454,750

$

(109,575)

$

345,175

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation

 

(3,392)

 

 

(3,392)

Unrealized net loss on investments

 

(92,451)

 

19,424

 

(73,027)

Change in fair value of cash flow hedges

 

(68)

 

17

 

(51)

Amounts reclassified into earnings on hedging activities

 

987

 

(242)

 

745

Total other comprehensive income (loss)

 

(94,924)

 

19,199

 

(75,725)

 

 

 

 

 

 

 

Total comprehensive income

$

359,826

$

(90,376)

$

269,450

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

 


 

 

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, 2022

$

10,497

$

453,819

$

46,384

$

6,052,233

$

(525,653)

$

(151,997)

$

5,885,283

Foreign currency translation

 

 

 

197

 

 

 

 

197

Unrealized net loss on investments, net of tax

 

 

 

(136,382)

 

 

 

 

(136,382)

Change in fair value of cash flow hedges, net of tax

 

 

 

128

 

 

 

 

128

Amounts reclassified into earnings on hedging activities

 

 

 

427

 

 

 

 

427

Net earnings

 

 

 

 

334,002

 

 

 

334,002

Common stock dividends: ($ 0.50 per share for fiscal 2023)

 

 

 

 

(9,804)

 

 

 

(9,804)

Net activity

 

 

 

(135,630)

 

324,198

 

 

188,568

Balance as of June 30, 2022

$

10,497

$

453,819

$

(89,246)

$

6,376,431

$

(525,653)

 

(151,997)

$

6,073,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

(3,392)

 

 

 

 

(3,392)

Unrealized net loss on investments, net of tax

 

 

 

(73,027)

 

 

 

 

(73,027)

Change in fair value of cash flow hedges, net of tax

 

 

 

(51)

 

 

 

 

(51)

Amounts reclassified into earnings on hedging activities

 

 

 

745

 

 

 

 

745

Net earnings

 

 

 

 

345,175

 

 

 

345,175

Common stock dividends: ($ 0.50 per share for fiscal 2022)

 

 

 

 

(9,804)

 

 

 

(9,804)

Net activity

 

 

 

(75,725)

 

335,371

 

 

 

259,646

Balance as of June 30, 2021

$

10,497

$

453,819

$

31,132

$

5,293,730

$

(525,653)

$

(151,997)

$

5,111,528

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

 


 

AMERCO AND CONSOLIDATED subsidiaries

Condensed consolidatED statements of cash flows

 

 

Quarter Ended June 30,

 

 

2022

 

2021

 

 

(Unaudited)

 

 

(In thousands)

Cash flows from operating activities:

 

 

 

 

Net earnings

$  

334,002

$  

345,175

Adjustments to reconcile net earnings to cash provided by operations:

 

 

 

 

Depreciation

 

178,144

 

172,040

Amortization of deferred policy acquisition costs

 

7,672

 

8,823

Amortization of premiums and accretion of discounts related to investments, net

 

4,929

 

4,361

Amortization of debt issuance costs

 

1,473

 

1,332

Interest credited to policyholders

 

15,157

 

15,583

Provision for allowance for losses on trade receivables

 

(6,151)

 

(484)

Provision for allowance for inventories and parts reserves

 

4,646

 

3,403

Net gains on disposal of personal property

 

(64,348)

 

(50,323)

Net (gains) losses on disposal of real estate

 

2,307

 

(4,430)

Net (gains) losses on sales of investments

 

268

 

(2,469)

Net (gains) losses on equity investments

 

1,551

 

(2,231)

Deferred income taxes

 

63,493

 

82,374

Net change in other operating assets and liabilities:

 

 

 

 

Reinsurance recoverables and trade receivables

 

15,894

 

(8,082)

Inventories and parts

 

(10,347)

 

(15,765)

Prepaid expenses

 

4,935

 

162,706

Capitalization of deferred policy acquisition costs

 

(7,398)

 

(8,990)

Other assets

 

1,935

 

(853)

Related party assets

 

484

 

562

Accounts payable and accrued expenses

 

74,676

 

71,599

Policy benefits and losses, claims and loss expenses payable

 

10,386

 

9,064

Other policyholders' funds and liabilities

 

1,187

 

(1,430)

Deferred income

 

14,448

 

11,863

Related party liabilities

 

2,028

 

385

Net cash provided by operating activities

 

651,371

 

794,213

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Escrow deposits

 

4,789

 

1,887

Purchases of:

 

 

 

 

Property, plant and equipment

 

(646,137)

 

(508,411)

Short term investments

 

(22,017)

 

(11,810)

Fixed maturities investments

 

(36,488)

 

(281,507)

Equity securities

 

(1,366)

 

Preferred stock

 

 

(8,000)

Real estate

 

 

(67)

Mortgage loans

 

(42,561)

 

(42,538)

Proceeds from sales and paydowns of:

 

 

 

 

Property, plant and equipment

 

159,180

 

182,146

Short term investments

 

18,073

 

12,558

Fixed maturities investments

 

55,808

 

126,956

Equity securities

 

362

 

Mortgage loans

 

32,345

 

5,628

Net cash used by investing activities

 

(478,012)

 

(523,158)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Borrowings from credit facilities

 

393,264

 

161,854

Principal repayments on credit facilities

 

(145,369)

 

(109,334)

Payment of debt issuance costs

 

(1,069)

 

(352)

Finance lease payments

 

(34,982)

 

(45,170)

Common stock dividends paid

 

(9,804)

 

Investment contract deposits

 

85,767

 

113,779

Investment contract withdrawals

 

(62,911)

 

(64,332)

Net cash provided by financing activities

 

224,896

 

56,445

 

 

 

 

 

Effects of exchange rate on cash

 

(4,121)

 

(1,531)

 

 

 

 

 

Increase in cash and cash equivalents

 

394,134

 

325,969

Cash and cash equivalents at the beginning of period

 

2,704,137

 

1,194,012

Cash and cash equivalents at the end of period

$  

3,098,271

$  

1,519,981

 

The accompanying notes are an integral part of these condensed consolidated financial statements

5

 


amerco and consolidated subsidiaries

notes to condensed consolidated financial statements

1.Basis of Presentation

AMERCO, a Nevada corporation (“AMERCO”), has a first fiscal quarter that ends on the 30 th of June for each year that is referenced. Our insurance company subsidiaries have a first quarter that ends on the 31 st of March 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 2022 and 2021 correspond to fiscal 2023 and 2022 for AMERCO.

Accounts denominated in non-U.S. currencies have been translated into U.S. dollars.

The condensed consolidated balance sheet as of June 30, 2022 and the related condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the first quarter of fiscal 2023 and 2022 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 the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022.

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.

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. 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.

6

 


amerco and consolidated subsidiaries

notes to condensed consolidated financial statements – (continued)

We deposit bonds with insurance regulatory authorities to meet statutory requirements. The adjusted cost of bonds on deposit with insurance regulatory authorities was $ 23.8 million and $ 27.1 million as of March 31, 2022 and December 31, 2021, respectively.

Available-for-Sale Investments

Available-for-sale investments as of June 30, 2022 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

$

127,940

$  

2,947

$  

(1,578)

$  

(2,493)

$  

$  

126,816

U.S. government agency mortgage-backed securities

 

37,806

 

149

 

(380)

 

(4,126)

 

 

33,449

Obligations of states and political subdivisions

 

166,572

 

5,830

 

(1,275)

 

(2,009)

 

 

169,118

Corporate securities

 

1,970,857

 

38,302

 

(11,259)

 

(51,863)

 

(77)

 

1,945,960

Mortgage-backed securities

 

337,023

 

2,206

 

(1)

 

(16,372)

 

 

322,856

 

$

2,640,198

$  

49,434

$  

( 14,493 )

$  

( 76,863 )

$  

( 77 )

$  

2,598,199

 

Available-for-sale investments as of March 31, 2022 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

$

128,078

$  

7,984

$  

$  

(969)

$  

$  

135,093

U.S. government agency mortgage-backed securities

 

44,678

 

280

 

(42)

 

(3,111)

 

 

41,805

Obligations of states and political subdivisions

 

178,040

 

15,450

 

 

(508)

 

 

192,982

Corporate securities

 

1,989,212

 

138,909

 

(402)

 

(6,604)

 

(60)

 

2,121,055

Mortgage-backed securities

 

324,029

 

7,671

 

(1)

 

(1,542)

 

 

330,157

 

$

2,664,037

$  

170,294

$  

( 445 )

$  

( 12,734 )

$  

( 60 )

$  

2,821,092

 

We sold available-for-sale securities with a fair value of $ 54.1 million during the first quarter of fiscal 2023 and $ 352.3 million for the full year of fiscal 2022. The gross realized gains on these sales totaled $ 0.3 million during the first quarter of fiscal 2023 and $ 9.5 million for the full year of fiscal 2022.   The gross realized losses on these sales totaled $ 0.1 million during the first quarter of fiscal 2023 and $ 1.4 million for the full year of fiscal 2022.

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.

7

 


amerco and consolidated subsidiaries

notes to condensed consolidated financial statements – (continued)

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 was a $ 17 thousand net impairment charge recorded in the first quarter ended June 30, 2022.

The adjusted cost and estimated market value of available-for-sale investments by contractual maturity were as follows:

 

 

June 30, 2022

 

March 31, 2022

 

 

Cost

Amortized

 

Market

Value

Estimated

 

Cost

Amortized

 

Market

Value

Estimated

 

 

(Unaudited)

 

 

 

 

(In thousands)

Due in one year or less

$

104,389

$

105,325

$

97,969

$

99,432

Due after one year through five years

 

554,348

 

557,915

 

541,840

 

570,135

Due after five years through ten years

 

713,435

 

717,393

 

704,295

 

765,073

Due after ten years

 

931,003

 

894,710

 

995,904

 

1,056,295

 

 

2,303,175

 

2,275,343

 

2,340,008

 

2,490,935

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

337,023

 

322,856

 

324,029

 

330,157

 

$

2,640,198

$

2,598,199

$

2,664,037

$

2,821,092

As of June 30, 2022 and March 31, 2022, 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:

 

 

June 30, 2022

 

March 31, 2022

 

 

Cost

Amortized

 

Market

Value

Estimated

 

Cost

Amortized

 

Market

Value

Estimated

 

 

(Unaudited)

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

Common stocks

$

28,707

$

45,837

$

27,674

$

46,212

Non-redeemable preferred stocks

 

26,054

 

25,950

 

26,054

 

26,095

 

$

54,761

$

71,787

$

53,728

$

72,307

 

Investments, other

The carrying value of the other investments was as follows:

 

 

June 30,

 

March 31,

 

 

2022

 

2022

 

 

(Unaudited)

 

 

 

 

(In thousands)

 

 

 

 

 

Mortgage loans, net

$

433,385

$

423,163

Short-term investments

 

34,809

 

30,916

Real estate

 

67,539

 

67,824

Policy loans

 

10,360

 

10,309

Other equity investments

 

11,031

 

11,543

 

$

557,124

$

543,755

8

 


amerco and consolidated subsidiaries

notes to condensed consolidated financial statements – (continued)

3. Borrowings

Long Term Debt

Long term debt was as follows:

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

2023 Rates

 

 

Maturities

 

2022

 

2022

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

(In thousands)

Real estate loans (amortizing term)

2.27

%

-

2.70

%

 

2023

-

2037

$

87,147

$  

50,259

Senior mortgages

2.70

%

-

5.50

%

 

2023

-

2042

 

2,322,293

 

2,206,268

Real estate loans (revolving credit) (a)

2.31

%

-

2.56

%

 

2023

-

2025

 

535,000

 

535,000

Fleet loans (amortizing term)

1.61

%

-

4.66

%

 

2022

-

2029

 

119,576

 

124,651

Fleet loans (revolving credit)

1.90

%

-

2.36

%

 

2025

-

2027

 

560,000

 

560,000

Finance leases (rental equipment)

2.16

%

-

5.04

%

 

2022

-

2026

 

312,411

 

347,393

Finance liabilities (rental equipment)

1.60

%

-

4.77

%

 

2024

-

2030

 

1,051,917

 

949,936

Private placements

2.43

%

-

2.88

%

 

2029

-

2035

 

1,200,000

 

1,200,000

Other obligations

1.50

%

-

8.00

%

 

2022

-

2049

 

81,008

 

86,206

Notes, loans and finance leases payable

 

 

 

 

 

 

 

 

 

6,269,352

 

6,059,713

Less: Debt issuance costs

 

 

 

 

 

 

 

 

 

 

(36,788)

 

(37,216)

Total notes, loans and finance leases payable, net

 

 

 

 

$

6,232,564

$  

6,022,497

 

 

 

(a) A certain loan has an interest rate swap fixing the rate at 3.14% based on current margins.

 

 

 

Real Estate Backed Loans

Real Estate Loans

Real Estate and certain of its subsidiaries and U-Haul Company of Florida are borrowers under a real estate loan. This loan requires monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. This 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 June 30, 2022, the applicable LIBOR was 1.20 % and the applicable margin was 1.50 %, the sum of which was 2.70 %. The default provisions of this 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.

Real Estate is a borrower under another real estate loan. This loan requires monthly principal and interest payments, with the unpaid loan balance and accrued and unpaid interest due at maturity. This loan is secured by various properties owned by the borrowers. The interest rate per the provisions of the loan agreement, is the applicable Secured Overnight Funding Rate (“SOFR”) plus the applicable margin. As of June 30, 2022, the applicable SOFR was 1.52 % and applicable margin was 0.75 %, the sum of which was 2.27 %. This loan is hedged with a SOFR interest rate swap fixed at 2.86 %. The interest rate swap is effective July 15, 2022 and expires in July 2032. The default provisions of this real estate loan includes non-payment of principal or interest and other standard reporting and change-in-control covenants.  

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 2.70 % and 5.50 %. The weighted average interest rate of these loans as of June 30, 2022 was 4.0 %.   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.

9

 


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 June 30, 2022, 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 June 30, 2022, the applicable LIBOR was between 0.93 % and 1.06 % and the margin was between 1.25 % and 1.50 %, the sum of which was between 2.31 % and 2.56 %. 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. These loan agreements contain fallback language for the replacement of LIBOR.

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 June 30, 2022, 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 June 30, 2022, the applicable LIBOR was 1.06 % and the margin was 1.38 %, the sum of which was 2.44 %. 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. This loan agreement contains fallback language for the replacement of LIBOR.

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 $ 615.0 million. The aggregate outstanding balance for these revolvers as of June 30, 2022 is $ 560.0 million. The interest rates, per the provision of the loan agreements, in aggregate of $ 415.0 million, are the applicable LIBOR plus the applicable margin. As of June 30, 2022, the applicable LIBOR was 1.06 % and the margin was between 1.15 % and 1.25 %, the sum of which was between 2.21 % and 2.31 %. Of the $ 415.0 million outstanding, $ 100.0 million was fixed with an interest rate of 2.36 %.   The revolving fleet loan with a borrowing capacity of $ 175.0 million uses SOFR, which interest rate was 0.65 % plus a margin of 1.25 %, totaling 1.90 % as of June 30, 2022.   Only interest is paid on the loans until the last nine months of the respective loan terms when principal becomes due monthly. Subsequent to June 30, 2022, the remaining two LIBOR based loans have been amended to use SOFR.

Finance Leases

The Finance Lease balance represents our sale-leaseback transactions of rental equipment. The agreements are generally seven (7) year terms with interest rates ranging from 2.16 % to 5.04 %.   All of our finance leases are collateralized by our rental fleet. The net book value of the corresponding rental equipment was $ 568.2 million and $ 620.8 million as of June 30, 2022 and March 31, 2022, respectively. There were no new financing leases, as assessed under the new leasing guidance, entered into during the first quarter of fiscal 2023.

Finance Liabilities

Finance liabilities represent our rental equipment financing transactions, and 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, sale-leasebacks are accounted for as a financial liability and the leased assets are capitalized at cost.   Our finance liabilities have an average term of seven (7) years and interest rates ranging from 1.60% to 4.77%. These finance liabilities are collateralized by the related assets of our rental fleet. The net book value of the corresponding rental equipment was $1,276.0 million and $1,068.3 million as of June 30, 2022 and March 31, 2022, respectively

10

 


amerco and consolidated subsidiaries

notes to condensed consolidated financial statements – (continued)

Private Placements

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 and funded in September 2021.   The fixed interest rates range between 2.43 % and 2.78 % with maturities between 2029 and 2033 .   Interest is payable semiannually.  

In December 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 funded in January 2022. These notes consist of three tranches each totaling $ 100.0 million and two tranches each totaling $ 150.0 million.   The fixed interest rates range between 2.55 % and 2.88 % with maturities between 2030 and 2035 .   Interest is payable semiannually.  

Other Obligations

In February 2011, AMERCO and U.S. Bank Trust Company, NA, as successor in interest to U.S. Bank National Association (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 June 30, 2022, the aggregate outstanding principal balance of the U-Notes ® issued was $ 82.9 million, of which $ 1.9 million is held by our insurance subsidiaries and eliminated in consolidation. Interest rates range between 1.50 % and 8.00 % and maturity dates range between 2022 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 March 31, 2022, the deposits had an aggregate balance of $ 60.0 million, for which Oxford pays fixed interest rates between 0.49 % and 1.72 % with maturities between September 30, 2022 and September 29, 2025. As of March 31, 2022, available-for-sale investments held with the FHLB totaled $ 97.2 million, of which $ 62.8 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 June 30, 2022 for the next five years and thereafter are as follows:

 

 

Years Ending June 30,

 

 

 

 

2023

 

2024

 

2025

 

2026

 

2027

 

Thereafter

 

Total

 

 

(Unaudited)

 

 

(In thousands)

Notes, loans and finance leases payable, secured

$

502,394

$

1,059,057

$

648,440

$

638,221

$

671,424

$

2,749,816

$

6,269,352

Interest on Borrowings

Interest Expense

Components of interest expense include the following:

 

 

Quarter Ended June 30,

 

 

2022

 

2021

 

 

(Unaudited)

 

 

(In thousands)

Interest expense

$

50,405

$

38,935

Capitalized interest

 

(2,618)

 

(2,030)

Amortization of transaction costs

 

1,446

 

1,286

Interest expense resulting from cash flow hedges

 

566

 

987

Total interest expense

$

49,799

$

39,178

 

Interest paid in cash, including payments related to derivative contracts, amounted to $42.3 million and $40.9 million for the first quarter of fiscal 2023 and 2022, respectively.

11

 


amerco and consolidated subsidiaries

notes to condensed consolidated financial statements – (continued)

Interest Rates

Interest rates and Company borrowings related to our revolving credit facilities were as follows:

 

 

 

Revolving Credit Activity

 

 

 

Quarter Ended June 30,

 

 

 

2022

 

2021

 

 

 

(Unaudited)

 

 

 

(In thousands, except interest rates)

 

Weighted average interest rate during the quarter

 

1.99

%

1.39

%

Interest rate at the end of the quarter

 

2.29

%

1.38

%

Maximum amount outstanding during the quarter

$

1,095,000

$

1,088,000

 

Average amount outstanding during the quarter

$

1,095,000

$

1,073,055

 

Facility fees

$

58

$

71

 

4. 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:

 

 

 

June 30, 2022

 

March 31, 2022

 

 

(Unaudited)

 

 

 

 

(In thousands)

Interest rate contracts designated as hedging instruments:

 

 

 

 

Assets

$

149

$

Liabilities

 

 

587

Notional amount

 

75,000

 

235,000

 

 

 

 

The Effect of Interest Rate Contracts on the Statements of Operations for the Quarters Ended

 

 

 

 

June 30, 2022

 

June 30, 2021

 

 

(Unaudited)

 

 

(In thousands)

Gain recognized in AOCI on interest rate contracts

$

(736)

$

(919)

Loss reclassified from AOCI into income

$

566

$

987

 

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 quarter of fiscal 2023, we recognized an increase in the fair value of our cash flow hedges of $0.1 million, net of taxes. During the first quarter of fiscal 2023, we reclassified $0.4 million from accumulated other comprehensive income (loss) (“AOCI”) to interest expense, net of tax. As of June 30, 2022, we expect to reclassify $0.2 million of net losses on interest rate contracts from AOCI to earnings as interest expense over the next twelve months.

12

 


amerco and consolidated subsidiaries

notes to condensed consolidated financial statements – (continued)

We use derivatives to hedge our equity market exposure to indexed annuity products sold by our Life Insurance company. These contracts earn a return for the contractholder based on the change in the value of the S&P 500 index between annual index point dates. We buy and sell listed equity and index call options and call option spreads. The credit risk is with the party in which the options are written. The net option price is paid up front and there are no additional cash requirements or additional contingent liabilities. These contracts are held at fair value on our balance sheet. As of March 31, 2022 and December 31, 2021, these derivative hedges had a fair value of $ 7.0 million and $ 7.5 million, with notional amounts of $ 434.0   million and $ 416.7   million, respectively. These derivative instruments are included in Investments, other; on the condensed consolidated balance sheets. The fair values of these call options are determined based on quoted market prices from the relevant exchange and are classified as Level 1 in the fair value hierarchy.

Although the call options are employed to be effective hedges against our policyholder obligations from an economic standpoint, they do not meet the requirements for hedge accounting under generally accepted accounting principles (“GAAP”). Accordingly, the changes in fair value of the call options are recognized each reporting date as a component of net investment and interest income. The change in fair value of the call options include the gains or losses recognized at the expiration of the option term and the changes in fair value for open contracts.

5. Accumulated Other Comprehensive Income (Loss)

A summary of AOCI components, net of tax, were as follows:

 

 

Foreign Currency Translation

 

Unrealized Net Gains (Losses) 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, 2022

$

(55,757)

$  

105,027

$  

(444)

$  

(2,442)

$  

46,384

Foreign currency translation

 

197

 

 

 

 

197

Unrealized net losses on investments

 

 

(136,382)

 

 

 

(136,382)

Change in fair value of cash flow hedges

 

 

 

128

 

 

128

Amounts reclassified into earnings on hedging activities

 

 

 

427

 

 

427

Other comprehensive income (loss)

 

197

 

(136,382)

 

555

 

 

(135,630)

Balance as of June 30, 2022

$

( 55,560 )

$  

( 31,355 )

$  

111

$  

( 2,442 )

$  

(89,246)

6. Stockholders’ Equity

The following table lists the dividends that have been declared and issued for fiscal year 2023.

Common Stock Dividends

Declared Date

 

Per Share Amount

 

Record Date

 

Dividend Date

 

 

 

 

 

 

 

April 6, 2022

$

0.50

 

April 18, 2022

 

April 29, 2022

As of June 30, 2022, no awards had been issued under the 2016 AMERCO Stock Option Plan.

7. Leases

The following tables show the components of our ROU assets, net:

 

 

As of June 30, 2022

 

 

Finance

 

Operating

 

Total

 

 

(Unaudited)

 

 

(In thousands)

Buildings and improvements

$

$

139,799

$

139,799

Furniture and equipment

 

14,731

 

 

14,731

Rental trailers and other rental equipment

 

159,618

 

 

159,618

Rental trucks

 

1,044,124

 

 

1,044,124

Right-of-use assets, gross

 

1,218,473

 

139,799

 

1,358,272

Less: Accumulated depreciation

 

(650,250)

 

(67,261)

 

(717,511)

Right-of-use assets, net

$

568,223

$

72,538

$

640,761