UHAL

Amerco (UHAL)

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AMERCO (UHAL)

F2Q09 Earnings Call

November 6, 2008 10:00 am ET

Executives

Jennifer Flachman - Director of Investor Relations

Edward Shoen - Chairman of the Board, President

Jason Berg - Principal Accounting Officer

Gary Horton - Treasurer

Analysts

Ross Haberman - Haberman Fund

Jim Barrett - CL King & Associates

Ian Gilson - Zacks Investments

Robert Bruce

Presentation

Operator

Good morning. My name is Ruth, and I will be your conference Operator today. At this time, I would like to welcome everyone to the AMERCO second quarter fiscal 2009 investor conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions). Ms. Flachman, Director of Investor Relations, you may begin your conference.

Jennifer Flachman

Thank you for joining us today, and welcome to the AMERCO second quarter fiscal 2009 investor call. Before we begin, I would like to remind everyone that certain of the statements during this call regarding general revenues, income and general growth of our business constitute forward-looking statements contemplated under the Private Securities Litigation Reform Act of 1995, and certain factors could cause actual results to differ materially from those projected.

For a brief discussion of the risks and uncertainties that may affect AMERCO’s business and future operating results, please refer to Form 10-Q for the quarter ended September 30, 2008, which is on file with the Securities and Exchange Commission.

Participating in the call today will be Joe Shoen, Chairman of AMERCO. I will now turn the call over to Joe.

Edward Shoen

Good morning. I am speaking to you from Phoenix, Arizona, and I am joined here by Jason Berg, our Chief Accounting Officer; and Gary Horton, our Chief of Finance; Rocky Wardrip, our Assistant Treasurer is participating via phone from Reno. They will all be available to answer questions. I am going to have Jason start by walking through the numbers and we will go straight into the question and answer. Jason?

Jason Berg

Good morning. Yesterday, we reported second quarter earnings of $2.10 per share compared to $2.39 for the same period in fiscal 2008. Rental[2:03] revenues for the quarter increased $3.5 million. For the quarter and for the first six months of this fiscal year we have been operating with fewer trucks than last year at this time.

For the quarter, our truck count was down about 3.5% compared with the same period last year, and for the six months we were down about 4%. As Joe mentioned in our last quarterly call, we have had issues with one of our suppliers fulfilling their product delivery commitment to us for small box truck. This shortage continued into the second quarter. We estimate the loss revenues due to this shortfall to be in the $6 - 7 million range for the last six months.

Despite this comparative decrease in inventory, we were able to increase total truck rental transactions for the second quarter of fiscal 2009 as compared to the same period last year. We did this through improvements in utilization. Increased truck and trailer transactions drove the U-Move revenue increase for the quarter.

Competitor rates continue to have a negative influence on our revenues. While our revenue per transaction statistics over the last two quarters indicate a softening trend and price decline. Competitive rate pressures still way on our result. Our competitors’ actions combined with the current economic stress affecting our customers could dampen our revenues in the near term.

During the quarter, we added over 5600 new box trucks to the fleet and replaced approximately 1200 pick ups and cargo vans. For the first six months of fiscal 2009, we have invested approximately $375 million in new rental equipment, compared to approximately $390 million last year during the same six month period. We have increased our finance allocation to operating leases this year, funding approximately $242 million compared to $130 million last year at this time.

In our GAAP cash flow statement, we net, operating leases funding against equipment purchases. Our current plans for the last six months of this year include investing approximately $140 million in new rental equipment.

Our initial projection assumed used equipment sales in the neighborhood of $150 million to $160 million for the full year. This projection may fall short based upon the current price trends of the used truck market. Continuing now with the used truck market, our loss from the disposal of rental equipment has increased $6.4 million during the second quarter of fiscal 2009 compared with the same period last year. This increase is nearly $12 million for the first six months of this year. I cannot accurately project what these losses will look like over the last six month of this fiscal year, we will continue to see this negative year-over-year fluctuation continue.

Revenues for our storage program decreased 1.3% for the second quarter of fiscal 2009, as compared to the same period last year. Our occupancy rates are down 4.7% to 81.8 for the quarter. This variance is arrived at for two factors. First, we have fewer rooms rented this year than last year. Our average number of rooms occupied has decreased 2.2% for the quarter. Second, our average number of available rooms has increased almost 3.5% compared to the same quarter last year.

Our recorded occupancy statistics consider all available storage rooms. We do not adjust for same store comparison. We have had some new projects come online over the last 12 months that are on the ramp up phase. These have added new rooms faster than we can rent them leading to some dilution of our occupancy rates.

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