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, 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. |
|
|
|
|
|
|
|
|
|
Nevada |
AMERCO |
88-0106815 |
|
(A Nevada Corporation) |
|
|
5555 Kietzke Lane Suite 100 |
|
|
Reno , Nevada 89511 |
|
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Telephone ( 775 ) 688-6300 |
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|
|
|
|
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 November 4, 2022.
TABLE OF CONTENTS
Part i Financial information
Item 1. Financial Statements
AMERCO AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED balance sheets
|
|
September 30, |
|
March 31, |
|
|
2022 |
|
2022 |
|
|
(Unaudited) |
|
|
|
|
(In thousands, except share data) |
||
ASSETS |
|
|
|
|
Cash and cash equivalents |
$ |
3,065,115 |
$ |
2,704,137 |
Reinsurance recoverables and trade receivables, net |
|
203,202 |
|
229,343 |
Inventories and parts, net |
|
166,136 |
|
158,888 |
Prepaid expenses |
|
236,035 |
|
236,915 |
Investments, fixed maturities and marketable equities |
|
2,615,758 |
|
2,893,399 |
Investments, other |
|
548,198 |
|
543,755 |
Deferred policy acquisition costs, net |
|
146,778 |
|
103,828 |
Other assets |
|
47,900 |
|
60,409 |
Right of use assets - financing, net |
|
529,000 |
|
620,824 |
Right of use assets - operating, net |
|
68,208 |
|
74,382 |
Related party assets |
|
48,337 |
|
47,851 |
|
|
7,674,667 |
|
7,673,731 |
Property, plant and equipment, at cost: |
|
|
|
|
Land |
|
1,427,781 |
|
1,283,142 |
Buildings and improvements |
|
6,390,317 |
|
5,974,639 |
Furniture and equipment |
|
876,515 |
|
846,132 |
Rental trailers and other rental equipment |
|
727,953 |
|
615,679 |
Rental trucks |
|
5,087,235 |
|
4,638,814 |
|
|
14,509,801 |
|
13,358,406 |
Less: Accumulated depreciation |
|
(4,041,125) |
|
(3,732,556) |
Total property, plant and equipment, net |
|
10,468,676 |
|
9,625,850 |
Total assets |
$ |
18,143,343 |
$ |
17,299,581 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Liabilities: |
|
|
|
|
Accounts payable and accrued expenses |
$ |
706,402 |
$ |
677,785 |
Notes, loans and finance leases payable, net |
|
6,298,831 |
|
6,022,497 |
Operating lease liabilities |
|
67,858 |
|
74,197 |
Policy benefits and losses, claims and loss expenses payable |
|
990,233 |
|
978,254 |
Liabilities from investment contracts |
|
2,390,028 |
|
2,336,238 |
Other policyholders' funds and liabilities |
|
12,126 |
|
10,812 |
Deferred income |
|
56,871 |
|
49,157 |
Deferred income taxes, net |
|
1,307,807 |
|
1,265,358 |
Total liabilities |
|
11,830,156 |
|
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 September 30 and March 31, 2022 |
|
– |
|
– |
Series B preferred stock, with no par value, 100,000 shares authorized; none |
|
|
|
|
issued and outstanding as of September 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 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, 2022 |
|
10,497 |
|
10,497 |
Additional paid-in capital |
|
453,819 |
|
453,819 |
Accumulated other comprehensive income (loss) |
|
(192,121) |
|
46,384 |
Retained earnings |
|
6,718,642 |
|
6,052,233 |
Cost of common stock in treasury, net (22,377,912 shares as of September 30 and March 31, 2022) |
|
(525,653) |
|
(525,653) |
Cost of preferred stock in treasury, net (6,100,000 shares as of September 30 and March 31, 2022) |
|
(151,997) |
|
(151,997) |
Total stockholders' equity |
|
6,313,187 |
|
5,885,283 |
Total liabilities and stockholders' equity |
$ |
18,143,343 |
$ |
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 September 30, |
||
|
|
2022 |
|
2021 |
|
|
(Unaudited) |
||
|
|
(In thousands, except share and per share amounts) |
||
Revenues: |
|
|
|
|
Self-moving equipment rentals |
$ |
1,162,025 |
$ |
1,179,061 |
Self-storage revenues |
|
185,586 |
|
153,485 |
Self-moving and self-storage products and service sales |
|
96,864 |
|
92,191 |
Property management fees |
|
9,277 |
|
8,747 |
Life insurance premiums |
|
25,456 |
|
28,913 |
Property and casualty insurance premiums |
|
25,718 |
|
22,499 |
Net investment and interest income |
|
30,509 |
|
36,780 |
Other revenue |
|
167,429 |
|
142,578 |
Total revenues |
|
1,702,864 |
|
1,664,254 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Operating expenses |
|
811,594 |
|
696,074 |
Commission expenses |
|
125,341 |
|
127,896 |
Cost of sales |
|
72,625 |
|
66,491 |
Benefits and losses |
|
37,363 |
|
44,630 |
Amortization of deferred policy acquisition costs |
|
6,972 |
|
6,750 |
Lease expense |
|
7,684 |
|
7,441 |
Depreciation, net of gains on disposal of $64,342 and $36,075, respectively |
|
117,318 |
|
135,748 |
Net losses on disposal of real estate |
|
1,872 |
|
523 |
Total costs and expenses |
|
1,180,769 |
|
1,085,553 |
|
|
|
|
|
Earnings from operations |
|
522,095 |
|
578,701 |
Other components of net periodic benefit costs |
|
(304) |
|
(280) |
Interest expense |
|
(57,193) |
|
(39,545) |
Fees on early extinguishment of debt |
|
(959) |
|
– |
Pretax earnings |
|
463,639 |
|
538,876 |
Income tax expense |
|
(111,624) |
|
(128,978) |
Earnings available to common stockholders |
$ |
352,015 |
$ |
409,898 |
Basic and diluted earnings per common share |
$ |
17.95 |
$ |
20.90 |
Weighted average common shares outstanding: Basic and diluted |
|
19,607,788 |
|
19,607,788 |
Related party revenues for the second quarter of fiscal 2023 and 2022, net of eliminations, were $9.3 million and $8.7 million, respectively.
Related party costs and expenses for the second quarter of fiscal 2023 and 2022, net of eliminations, were $27.0 million and $27.1 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 operations
|
|
Six Months Ended September 30, |
||
|
|
2022 |
|
2021 |
|
|
(Unaudited) |
||
|
|
(In thousands, except share and per share amounts) |
||
Revenues: |
|
|
|
|
Self-moving equipment rentals |
$ |
2,252,800 |
$ |
2,214,438 |
Self-storage revenues |
|
358,763 |
|
290,878 |
Self-moving and self-storage products and service sales |
|
206,215 |
|
197,076 |
Property management fees |
|
18,416 |
|
17,196 |
Life insurance premiums |
|
51,237 |
|
57,618 |
Property and casualty insurance premiums |
|
45,690 |
|
39,368 |
Net investment and interest income |
|
64,082 |
|
71,779 |
Other revenue |
|
303,501 |
|
248,757 |
Total revenues |
|
3,300,704 |
|
3,137,110 |
|
|
|
|
|
Costs and expenses: |
|
|
|
|
Operating expenses |
|
1,544,761 |
|
1,310,603 |
Commission expenses |
|
243,834 |
|
241,045 |
Cost of sales |
|
152,296 |
|
136,406 |
Benefits and losses |
|
81,463 |
|
91,928 |
Amortization of deferred policy acquisition costs |
|
14,644 |
|
15,573 |
Lease expense |
|
15,159 |
|
15,088 |
Depreciation, net of gains on disposal of $128,690 and $86,398 respectively |
|
231,114 |
|
257,465 |
Net (gains) losses on disposal of real estate |
|
4,179 |
|
(3,907) |
Total costs and expenses |
|
2,287,450 |
|
2,064,201 |
|
|
|
|
|
Earnings from operations |
|
1,013,254 |
|
1,072,909 |
Other components of net periodic benefit costs |
|
(608) |
|
(560) |
Interest expense |
|
(106,992) |
|
(78,723) |
Fees on early extinguishment of debt |
|
(959) |
|
– |
Pretax earnings |
|
904,695 |
|
993,626 |
Income tax expense |
|
(218,678) |
|
(238,553) |
Earnings available to common stockholders |
$ |
686,017 |
$ |
755,073 |
Basic and diluted earnings per common share |
$ |
34.99 |
$ |
38.51 |
Weighted average common shares outstanding: Basic and diluted |
|
19,607,788 |
|
19,607,788 |
Related party revenues for the first six months of fiscal 2023 and 2022, net of eliminations, were $18.4 million and $17.2 million, respectively.
Related party costs and expenses for the first six months of fiscal 2023 and 2022, net of eliminations, were $52.5 million and $50.7 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.
3
AMERCO AND CONSOLIDATED SUBSIDIARIES
Condensed consolidatED statements of COMPREHENSIVE INCOME (loss)
Quarter Ended September 30, 2022 |
|
Pre-tax |
|
Tax |
|
Net |
|
|
(Unaudited) |
||||
|
|
(In thousands) |
||||
Comprehensive income: |
|
|
|
|
|
|
Net earnings |
$ |
463,639 |
$ |
(111,624) |
$ |
352,015 |
Other comprehensive income (loss): |
|
|
|
|
|
|
Foreign currency translation |
|
(739) |
|
– |
|
(739) |
Unrealized net loss on investments |
|
(137,836) |
|
29,392 |
|
(108,444) |
Change in fair value of cash flow hedges |
|
8,336 |
|
(2,047) |
|
6,289 |
Amounts reclassified into earnings on hedging activities |
|
24 |
|
(5) |
|
19 |
Total other comprehensive income (loss) |
|
(130,215) |
|
27,340 |
|
(102,875) |
|
|
|
|
|
|
|
Total comprehensive income |
$ |
333,424 |
$ |
(84,284) |
$ |
249,140 |
|
|
|
|
|
|
|
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 |
Six Months Ended September 30, 2022 |
|
Pre-tax |
|
Tax |
|
Net |
|
|
(Unaudited) |
||||
|
|
(In thousands) |
||||
Comprehensive income: |
|
|
|
|
|
|
Net earnings |
$ |
904,695 |
$ |
(218,678) |
$ |
686,017 |
Other comprehensive income (loss): |
|
|
|
|
|
|
Foreign currency translation |
|
(542) |
|
– |
|
(542) |
Unrealized net loss on investments |
|
(310,882) |
|
66,056 |
|
(244,826) |
Change in fair value of cash flow hedges |
|
8,506 |
|
(2,089) |
|
6,417 |
Amounts reclassified into earnings on hedging activities |
|
590 |
|
(144) |
|
446 |
Total other comprehensive income (loss) |
|
(302,328) |
|
63,823 |
|
(238,505) |
|
|
|
|
|
|
|
Total comprehensive income |
$ |
602,367 |
$ |
(154,855) |
$ |
447,512 |
|
|
|
|
|
|
|
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 |
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, 2022 |
$ |
10,497 |
$ |
453,819 |
$ |
(89,246) |
$ |
6,376,431 |
$ |
(525,653) |
$ |
(151,997) |
$ |
6,073,851 |
Foreign currency translation |
|
– |
|
– |
|
(739) |
|
– |
|
– |
|
– |
|
(739) |
Unrealized net loss on investments, net of tax |
|
– |
|
– |
|
(108,444) |
|
– |
|
– |
|
– |
|
(108,444) |
Change in fair value of cash flow hedges, net of tax |
|
– |
|
– |
|
6,289 |
|
– |
|
– |
|
– |
|
6,289 |
Amounts reclassified into earnings on hedging activities |
|
– |
|
– |
|
19 |
|
– |
|
– |
|
– |
|
19 |
Net earnings |
|
– |
|
– |
|
– |
|
352,015 |
|
– |
|
– |
|
352,015 |
Common stock dividends: ($0.50 per share) |
|
– |
|
– |
|
– |
|
(9,804) |
|
– |
|
– |
|
(9,804) |
Net activity |
|
– |
|
– |
|
(102,875) |
|
342,211 |
|
– |
|
– |
|
239,336 |
Balance as of September 30, 2022 |
$ |
10,497 |
$ |
453,819 |
$ |
(192,121) |
$ |
6,718,642 |
$ |
(525,653) |
|
(151,997) |
$ |
6,313,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
– |
|
– |
|
– |
|
(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 |
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, 2022 |
$ |
10,497 |
$ |
453,819 |
$ |
46,384 |
$ |
6,052,233 |
$ |
(525,653) |
$ |
(151,997) |
$ |
5,885,283 |
Foreign currency translation |
|
– |
|
– |
|
(542) |
|
– |
|
– |
|
– |
|
(542) |
Unrealized net loss on investments, net of tax |
|
– |
|
– |
|
(244,826) |
|
– |
|
– |
|
– |
|
(244,826) |
Change in fair value of cash flow hedges, net of tax |
|
– |
|
– |
|
6,417 |
|
– |
|
– |
|
– |
|
6,417 |
Amounts reclassified into earnings on hedging activities |
|
– |
|
– |
|
446 |
|
– |
|
– |
|
– |
|
446 |
Net earnings |
|
– |
|
– |
|
– |
|
686,017 |
|
– |
|
– |
|
686,017 |
Common stock dividends: ($1.00 per share) |
|
– |
|
– |
|
– |
|
(19,608) |
|
– |
|
– |
|
(19,608) |
Net activity |
|
– |
|
– |
|
(238,505) |
|
666,409 |
|
– |
|
– |
|
427,904 |
Balance as of September 30, 2022 |
$ |
10,497 |
$ |
453,819 |
$ |
(192,121) |
$ |
6,718,642 |
$ |
(525,653) |
|
(151,997) |
$ |
6,313,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 loss 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) |
|
– |
|
– |
|
– |
|
(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 |
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, |
||
|
|
2022 |
|
2021 |
|
|
(Unaudited) |
||
|
|
(In thousands) |
||
Cash flows from operating activities: |
|
|
|
|
Net earnings |
$ |
686,017 |
$ |
755,073 |
Adjustments to reconcile net earnings to cash provided by operations: |
|
|
|
|
Depreciation |
|
359,804 |
|
343,863 |
Amortization of deferred policy acquisition costs |
|
14,644 |
|
15,573 |
Amortization of premiums and accretion of discounts related to investments, net |
|
10,249 |
|
9,151 |
Amortization of debt issuance costs |
|
3,356 |
|
2,791 |
Interest credited to policyholders |
|
24,690 |
|
31,894 |
Provision for allowance for losses on trade receivables |
|
(5,494) |
|
222 |
Provision for allowance for inventories and parts reserves |
|
7,125 |
|
8,352 |
Net gains on disposal of personal property |
|
(128,690) |
|
(86,398) |
Net (gains) losses on disposal of real estate |
|
4,179 |
|
(3,907) |
Net (gains) losses on sales of investments |
|
7,207 |
|
(3,432) |
Net (gains) losses on equity investments |
|
7,963 |
|
(4,342) |
Deferred income taxes, net |
|
103,828 |
|
138,916 |
Net change in other operating assets and liabilities: |
|
|
|
|
Reinsurance recoverables and trade receivables |
|
32,342 |
|
(3,771) |
Inventories and parts |
|
(14,416) |
|
(45,718) |
Prepaid expenses |
|
3 |
|
266,780 |
Capitalization of deferred policy acquisition costs |
|
(14,900) |
|
(17,807) |
Other assets |
|
2,432 |
|
(1,327) |
Related party assets |
|
(1,640) |
|
(2,724) |
Accounts payable and accrued expenses |
|
64,297 |
|
91,548 |
Policy benefits and losses, claims and loss expenses payable |
|
13,654 |
|
18,968 |
Other policyholders' funds and liabilities |
|
1,314 |
|
(1,477) |
Deferred income |
|
9,458 |
|
7,592 |
Related party liabilities |
|
742 |
|
(700) |
Net cash provided by operating activities |
|
1,188,164 |
|
1,519,120 |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Escrow deposits |
|
9,688 |
|
(2,341) |
Purchases of: |
|
|
|
|
Property, plant and equipment |
|
(1,335,528) |
|
(1,039,688) |
Short term investments |
|
(36,173) |
|
(21,669) |
Fixed maturities investments |
|
(202,265) |
|
(415,640) |
Equity securities |
|
(4,356) |
|
(36) |
Preferred stock |
|
– |
|
(8,000) |
Real estate |
|
(4,931) |
|
(124) |
Mortgage loans |
|
(75,635) |
|
(106,963) |
Proceeds from sales and paydowns of: |
|
|
|
|
Property, plant and equipment |
|
329,611 |
|
306,946 |
Short term investments |
|
33,373 |
|
16,673 |
Fixed maturities investments |
|
106,527 |
|
230,043 |
Equity securities |
|
717 |
|
1,894 |
Mortgage loans |
|
74,165 |
|
26,612 |
Net cash used by investing activities |
|
(1,104,807) |
|
(1,012,293) |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Borrowings from credit facilities |
|
792,654 |
|
987,048 |
Principal repayments on credit facilities |
|
(441,019) |
|
(227,072) |
Payment of debt issuance costs |
|
(3,942) |
|
(2,092) |
Finance lease payments |
|
(65,831) |
|
(87,500) |
Securitization deposits |
|
49 |
|
– |
Common stock dividends paid |
|
(19,608) |
|
(19,608) |
Investment contract deposits |
|
169,017 |
|
199,426 |
Investment contract withdrawals |
|
(139,917) |
|
(116,021) |
Net cash provided by financing activities |
|
291,403 |
|
734,181 |
|
|
|
|
|
Effects of exchange rate on cash |
|
(13,782) |
|
(4,787) |
|
|
|
|
|
Increase in cash and cash equivalents |
|
360,978 |
|
1,236,221 |
Cash and cash equivalents at the beginning of period |
|
2,704,137 |
|
1,194,012 |
Cash and cash equivalents at the end of period |
$ |
3,065,115 |
$ |
2,430,233 |
The accompanying notes are an integral part of these condensed consolidated financial statements
7
1.Basis of Presentation
AMERCO, a Nevada corporation (“AMERCO” or the “Company”), 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 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 September 30, 2022 and the related condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity for the second quarter and first six months of fiscal 2023 and 2022 and cash flows for the first six months 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
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
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.
We deposit bonds with insurance regulatory authorities to meet statutory requirements. The adjusted cost of bonds on deposit with insurance regulatory authorities was $ 22.4 million and $ 27.1 million as of September 30, 2022 and March 31, 2022, respectively.
Available-for-Sale Investments
Available-for-sale investments as of September 30, 2022 were as follows:
|
|
Amortized Cost |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses More than 12 Months |
|
Gross Unrealized Losses Less than 12 Months |
|
Allowance for Expected Credit Losses |
|
Estimated Market Value |
|
|
(Unaudited) |
||||||||||
|
|
(In thousands) |
||||||||||
U.S. treasury securities and government obligations |
$ |
127,788 |
$ |
735 |
$ |
(2,289) |
$ |
(4,121) |
$ |
– |
$ |
122,113 |
U.S. government agency mortgage-backed securities |
|
36,023 |
|
102 |
|
(3,440) |
|
(1,897) |
|
– |
|
30,788 |
Obligations of states and political subdivisions |
|
165,048 |
|
1,853 |
|
(1,759) |
|
(5,521) |
|
– |
|
159,621 |
Corporate securities |
|
2,054,320 |
|
5,535 |
|
(17,759) |
|
(134,689) |
|
(2,008) |
|
1,905,399 |
Mortgage-backed securities |
|
364,654 |
|
394 |
|
– |
|
(30,658) |
|
– |
|
334,390 |
|
$ |
2,747,833 |
$ |
8,619 |
$ |
(25,247) |
$ |
(176,886) |
$ |
(2,008) |
$ |
2,552,311 |
Available-for-sale investments as of March 31, 2022 were as follows:
|
|
Amortized Cost |
|
Gross Unrealized Gains |
|
Gross Unrealized Losses More than 12 Months |
|
Gross Unrealized Losses Less than 12 Months |
|
Allowance for Expected Credit Losses |
|
Estimated Market Value |
|
|
|
||||||||||
|
|
(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 $105.5 million during the first six months of fiscal 2023 and $352.3 million for the full year of fiscal 2022. The gross realized gains on these sales totaled $0.8 million during the first six months of fiscal 2023 and $9.5 million for the full year of fiscal 2022. The gross realized losses on these sales totaled $0.3 million during the first six months of fiscal 2023 and $1.4 million for the full year of fiscal 2022.
9
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
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 was a $ 1.9 million net impairment charge recorded in the first six months ended September 30, 2022.
The adjusted cost and estimated market value of available-for-sale investments by contractual maturity were as follows:
|
|
September 30, 2022 |
|
March 31, 2022 |
||||
|
|
Amortized Cost |
|
Estimated Market Value |
|
Amortized Cost |
|
Estimated Market Value |
|
|
(Unaudited) |
|
|
||||
|
|
(In thousands) |
||||||
Due in one year or less |
$ |
114,799 |
$ |
114,987 |
$ |
97,969 |
$ |
99,432 |
Due after one year through five years |
|
589,259 |
|
580,364 |
|
541,840 |
|
570,135 |
Due after five years through ten years |
|
754,434 |
|
709,509 |
|
704,295 |
|
765,073 |
Due after ten years |
|
924,687 |
|
813,061 |
|
995,904 |
|
1,056,295 |
|
|
2,383,179 |
|
2,217,921 |
|
2,340,008 |
|
2,490,935 |
|
|
|
|
|
|
|
|
|
Mortgage-backed securities |
|
364,654 |
|
334,390 |
|
324,029 |
|
330,157 |
|
$ |
2,747,833 |
$ |
2,552,311 |
$ |
2,664,037 |
$ |
2,821,092 |
As of September 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.
10
amerco and consolidated subsidiaries
notes to condensed consolidated financial statements – (continued)
Equity investments of common stock and non-redeemable preferred stock were as follows:
|
|
September 30, 2022 |
|
March 31, 2022 |
||||
|
|
Amortized Cost |
|
Estimated Market Value |
|
Amortized Cost |
|
Estimated Market Value |
|
|
(Unaudited) |
|
|
|
|
||
|
|
(In thousands) |
||||||
|
|
|
|
|
|
|
|
|
Common stocks |
$ |
29,680 |
$ |
40,526 |
$ |
27,674 |
$ |
46,212 |
Non-redeemable preferred stocks |
|
26,054 |
|
22,921 |
|
26,054 |
|
26,095 |
|
$ |
55,734 |
$ |
63,447 |
$ |
53,728 |
$ |
72,307 |
Investments, other
The carrying value of the other investments was as follows:
|
|
September 30, |
|
March 31, |
|
|
2022 |
|
2022 |
|
|
(Unaudited) |
|
|
|
|
(In thousands) |
||
|
|
|
|
|
Mortgage loans, net |
$ |
424,633 |
$ |
423,163 |
Short-term investments |
|
33,540 |
|
30,916 |
Real estate |
|
72,165 |
|
67,824 |
Policy loans |
|
10,506 |
|
10,309 |
Other equity investments |
|
7,354 |
|
11,543 |
|
$ |
548,198 |
$ |
543,755 |
3. Borrowings
Long Term Debt
Long term debt was as follows:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
March 31, |
|
2023 Rates |
|
|
Maturities |
|
2022 |
|
2022 |
|||||
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|||
|
|
|
|
|
|
|
|
(In thousands) |
|||||
Real estate loan (amortizing term) (a) |
3.06 |
% |
- |
4.29 |
% |
|
2027 |
- |
2037 |
$ |
294,737 |
$ |
50,259 |
Senior mortgages |
2.70 |
% |
- |
5.50 |
% |
|
2024 |
- |
2042 |
|
2,416,027 |
|
2,206,268 |
Real estate loans (revolving credit) |
3.76 |
% |
- |
4.02 |
% |
|
2024 |
- |
2025 |
|
150,000 |
|
535,000 |
Fleet loans (amortizing term) |
1.61 |
% |
- |
4.99 |
% |
|
2023 |
- |
2029 |
|
113,518 |
|
124,651 |
Fleet loans (revolving credit) |
3.53 |
% |
- |
3.95 |
% |
|
2025 |
- |
2027 |
|
615,000 |
|
560,000 |
Finance leases (rental equipment) |
2.16 |
% |
- |
5.04 |
% |
|
2022 |
- |
2026 |
|
281,562 |
|
347,393 |
Finance liabilities (rental equipment) |
1.60 |
% |
- |
5.55 |
% |
|
2024 |
- |
2030 |
|
1,186,855 |
|
949,936 |
Private placements |
2.43 |
% |
- |
2.88 |
% |
|
2029 |
- |
2035 |
|
1,200,000 |
|
1,200,000 |
Other obligations |
1.50 |
% |
- |
8.00 |
% |
|
2022 |
- |
2049 |
|
78,871 |
|
86,206 |
Notes, loans and finance leases payable |
|
|
|
|
|
|
|
|
|
6,336,570 |
|
6,059,713 |
|
Less: Debt issuance costs |
|
|
< |