Amerco (UHAL)

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F1Q10 (Qtr End 06/30/09) Earnings Call Transcript

August 6, 2009 11:00 am ET


Jennifer Flachman -- IR

Joe Shoen -- Chairman and President of AMERCO, CEO and Chairman of U-Haul

Jason Berg -- Principal Accounting Officer of AMERCO

Gary Horton -- Treasurer of AMERCO and U-Haul


Jim Barrett -- CL King & Associates

Ian Gilson -- Zacks Investments

Gary Lenhoff -- Ironworks

Ross Haberman -- Haberman Funds



Good morning. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the AMERCO first quarter fiscal 2010 investor 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).

Thank you. Ms. Jennifer Flachman, you may begin your conference.

Jennifer Flachman

Good morning and thank you for joining us today, and welcome to the AMERCO first quarter fiscal 2010 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 quarter ended June 30, 2009, which is on file with the Securities and Exchange Commission.

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

Joe Shoen

Hello. This is Joe Shoen. I'm speaking to you from Phoenix, Arizona. I have Jason Berg here on the conference call with me. Gary Horton and Rocky Wardrip are joining us via telephone from Reno.

You've all seen the numbers. We finished another rough quarter. U-Haul revenues were down year over year, and expense reductions were less than revenue declines. So that's kind of the bad news.

We put a tremendous amount of effort in again this quarter. I would have liked to see a better top line. But at the same time, I'm fairly confident that we positively impacted the top line. In other words, so, our business isn't varying quite with demand. We're making progress, although it's not reflected in profitability.

Overall, what I see in the marketplace is a very tough business climate where the customer demands outstanding value before they will part with their money. And U-Haul products are ordinarily a value proposition and ordinarily, that should work in our favor. And I think it is. We continue to roll out initiatives designed at giving the customer greater value without increasing our cost, and we will continue to do so for the balance of the year.

Fleet utilization was down very marginally, like a percent or something like that in the last quarter, and that indicates the fleet's a few thousand trucks larger than we are presently supporting. In the fourth quarter of '09, we took steps to adjust the size of the fleet, but that process takes about a year to work itself through.

In other words, we slowed down the rate of new fleet and continue to take fleet out the bottom, what happens is the fleet comes down in size. And so we'll trim a few thousand trucks out of the fleet, and that'll have a very positive effect overall.

We continue to maintain good liquidity and to have support of equipment lenders and lessors.

The sales of six-wheel tucks exiting our fleet continues at the pace of about 10,000 units a year. Our actual retirements are a little bit larger because of vehicles that are retired for a physical issue as opposed to just sold.

Sales of four-wheel pickups and vans, continues at the same rate it had been, but we saw definite pricing strength in the first quarter, and this has been very positive. We had, as many of you know, enjoyed a little bit of margin on selling those vehicles for the last several years, and then it kind of went away. And certainly, around November/December of '09, that market was really, really tough. That market's come back considerably, and that's a very positive development from my point of view.

We continue to invest modestly in our U-Box moving product, our internet-based phone system, mobile computers at the point of sale and the appearance of our point of sale facilities. We will be well positioned, should things improve as they ultimately will.

Competition remains very active in both the self-move and the self-store markets. Consumers are wary, and I don't see that's going to change a lot over the next quarter. I think that that climate's going to continue.

I see signs of life in multiple areas. Of course I'm speaking with my people in the operations; that's all I talked about is where the grass is green. But nevertheless, even with those, I've not been able to pull together an overall revenue increase. I think that the team we have in place is doing a terrific job with the customer, and we're active, as most of you know, in nearly every submarket in North America. If there's a market we've missed, tell us and we'll go get in it.

So, there are many positive places in North America where business is up. We all see the places like Texas, not Texas; it's really Arizona, Florida, California where housing values have fallen and everything. That's not reflective of the whole country. So, we get areas where we're seeing good increases, and I know we are very well positioned.

At the same time, our costs ran a little higher than I think I would have liked to have seen them this quarter, and I think they're trending down and will continue to trend down in the first, or the next quarter; it would be our second quarter. At which point, the cost and the revenue changes cross for a positive, I'm not going to predict here today, because I really don't have an absolute forecast for that.

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