AMERCO: Another record quarter:
Ian Gilson, CFA
On August 8, 2012
reported is first fiscal quarter results for fiscal 2013. The
numbers were a first quarter record and very close to our
estimates, as shown below.
Revenue was driven by improving local and one-way transactions.
Truck utilization improved which caused the operating expense ratio
as percentage of rental revenue to improve slightly Y/Y. U-Haul has
been adding to its fleet, net of sales, which has a benefit of
reducing maintenance expenses and provides vehicles for growth.
The U-Box business has expanded to all company owned self storage
facilities (between 12,000 to 13,000 locations). This business is
growing rapidly but is not yet large enough for management to
consider it material relative to total revenue. Revenue is included
in other income. However, the expenses are included in the moving
and storage group.
Revenue from self storage has remained close to $34 million a
quarter and management intends to increase the number of facilities
and square footage. Occupancy rates are close to 80%. SAC Holdings
has paid down its debt to AMERCO so there is cash available for
expansion. U-Haul receives management fees from SAC so there is no
incentive to buy facilities from them. All self storage facilities,
both U-Haul and SAC, are truck rental sites so adding storage has a
positive effect on future growth in two ways.
AMERCO has benefitted from declining interest rates. Both lease
expense and interest expense has been constant over the last few
quarters. With $56 million a quarter of combined lease and interest
expense, up from $54 million in the fourth quarter of 2012, good
financial management has been a positive factor for many years.
At the current price the stock is selling at a lower valuation than
most of its peer group yet it has the highest return on equity. We
believe that the stock will outperform its peer group, and the
overall market, over the next six months. Our valuation methods use
Earnings Before Interest Taxes Depreciation Amortization (EBITDA)
and EBITDA plus Lease expense (EBITDAL) since the company can buy
(using borrowed moneys and generating depreciation) or lease
depending on the lowest cost to the company.
AMERCO INC (UHAL): Free Stock Analysis Report
To read this article on Zacks.com click here.