U-Haul Holding Co quarterly report, Q3 FY2020

Filing Scope and Business Context

The provided filing is AMERCO’s Form 10-Q for the quarter ended December 31, 2021, covering fiscal 2022 third-quarter and nine-month results. This does not match the request metadata identifying “U-Haul Holding Co.” and “2019 Q3.” AMERCO is the holding company for U-Haul, Real Estate, Repwest Insurance and Oxford Life Insurance. Its reportable segments are Moving and Storage, Property and Casualty Insurance, and Life Insurance. Results are unaudited; insurance subsidiaries report on a calendar-quarter basis and are consolidated with AMERCO’s fiscal periods.

Key Financial Metrics

Metric	Quarter Ended Dec. 31, 2021	Quarter Ended Dec. 31, 2020	Nine Months Ended Dec. 31, 2021	Nine Months Ended Dec. 31, 2020
Revenue	$1.404 billion	$1.170 billion	$4.541 billion	$3.482 billion
Earnings from operations	$416.7 million	$283.9 million	$1.490 billion	$829.8 million
Earnings available to common stockholders	$281.5 million	$183.0 million	$1.037 billion	$537.1 million
Basic and diluted EPS	$14.35	$9.33	$52.86	$27.39
Operating margin	29.7%	24.3%	32.8%	23.8%
Net margin	20.0%	15.6%	22.8%	15.4%
Cash flow from operations	Not provided for the quarter	Not provided for the quarter	$1.789 billion	$1.377 billion

Quarterly revenue increased approximately 20.0%, operating earnings increased approximately 46.8%, and earnings available to common stockholders increased approximately 53.8%. For the first nine months, revenue increased approximately 30.4%, operating earnings increased approximately 79.5%, and earnings available to common stockholders increased approximately 93.0%.

Revenue Drivers

Self-moving equipment rentals were $975.6 million for the quarter and $3.190 billion for the nine months, up from $808.2 million and $2.394 billion, respectively.
Self-storage revenue was $159.4 million for the quarter and $450.3 million for the nine months, compared with $123.0 million and $347.3 million.
Average monthly self-storage occupancy increased to 83.6% in the quarter and 82.6% for the nine months, from 73.4% and 71.0%.
Property and casualty insurance premiums increased, while life insurance premiums declined because of lower single-premium life sales and Medicare supplement policy decrements.
Other revenue increased primarily because of higher U-Box activity.

Balance Sheet, Debt and Liquidity

Cash and cash equivalents were $2.327 billion at December 31, 2021, compared with $1.194 billion at March 31, 2021.
Total assets were $16.588 billion and stockholders’ equity was $5.815 billion at December 31, 2021.
Notes, loans and finance leases payable, net, were $5.398 billion, up from $4.669 billion at March 31, 2021.
Debt included $600 million of fixed-rate senior unsecured notes issued in September 2021. A further $600 million issuance funded on January 27, 2022 and is a subsequent-period financing event.
Moving and Storage had $90 million of additional borrowing capacity under existing credit facilities at December 31, 2021.
Moving and Storage held $2.254 billion of cash and had $5.398 billion of debt; insurance-company assets are generally restricted from satisfying non-insurance obligations.
Net capital expenditures were $1.169 billion for the first nine months, compared with $527.1 million in the prior-year period, including $808.9 million for rental equipment and $782.7 million for real estate, construction and renovations, partially offset by $483.8 million of property and equipment sales.

Material Changes Versus the Prior Comparable Period

Moving and Storage revenue increased to $4.292 billion for the nine months from $3.257 billion, while earnings from operations before equity in insurance subsidiaries increased to $1.443 billion from $789.6 million.
Higher transaction volumes, pricing, self-storage occupancy, U-Box activity and used-equipment resale values materially supported results.
Operating expenses rose because of personnel, fleet repair and maintenance, property taxes, payment processing and freight costs. Fleet repair costs increased $94.0 million for the nine months.
Net gains on disposal of rental equipment increased by $117.9 million for the nine months, contributing to lower net depreciation expense despite a larger fleet.
Property and casualty insurance operating earnings increased to $34.1 million from $24.3 million for the nine months, while Life Insurance operating earnings decreased to $13.9 million from $16.7 million.
Operating cash flow increased $412.6 million, but investing cash outflows increased $793.5 million because of higher capital expenditures. Financing cash inflows increased $621.8 million, primarily from borrowings and lower debt and finance-lease payments.
Accumulated other comprehensive income declined to $63.3 million from $106.9 million, primarily due to unrealized investment losses and foreign-currency effects.

Guidance, Outlook, Risks and Unusual Items

Management expects fiscal 2022 fleet reinvestment of approximately $495 million, net of equipment sales and excluding lease buyouts; approximately $338 million had been invested through the first nine months.
Management expects continued investment in rental equipment, self-storage acquisitions and development, and the U-Box program. Fiscal 2022 spending on storage acquisitions and new development may increase.
COVID-19 continued to cause manufacturer delays affecting fleet replacement. Management noted potential impacts on demand, operations, financing availability, liquidity and future results.
The CARES Act generated approximately $366 million of tax refund claims, of which approximately $243 million had been received during the first nine months and recorded in prepaid expenses. Future legislation could reduce or delay additional refunds.
Variable-rate debt was approximately $1.137 billion. Management estimated that a 100-basis-point LIBOR increase would reduce annual earnings and cash flow by approximately $9.0 million after hedging effects.
Key risks include leverage, interest rates, limited truck manufacturers, fleet maintenance and availability, used-equipment values, competition, seasonality, environmental compliance, litigation, insurance claims and reinsurance recoverability, dealer reliance, labor availability, cybersecurity and the concentrated ownership structure.
Environmental matters and ordinary-course litigation were not expected by management to have a material adverse effect. No material updates to previously disclosed risk factors were reported.
The filing states that disclosure controls were effective at a reasonable assurance level and that no material changes occurred in internal control over financial reporting during the quarter.

Investor Verification Items

Verify the intended issuer and period, because the supplied source is AMERCO’s December 31, 2021 Form 10-Q rather than a 2019 third-quarter filing for U-Haul Holding Co.
Reconcile the unusually strong earnings growth with higher used-rental-equipment disposal gains, tax refunds and other nonrecurring or timing-sensitive items.
Assess whether fleet-manufacturer delays, repair costs, inflation and higher capital spending could pressure future margins and cash flow.
Review debt maturities, the January 2022 $600 million note funding, variable-rate exposure and available credit capacity.
Evaluate the liquidity restrictions on insurance subsidiaries and the extent to which consolidated cash is available to Moving and Storage.
Monitor COVID-19 effects, self-storage occupancy and pricing, rental transaction volume, U-Box growth and the sustainability of used-equipment resale values.
Review related-party transactions, including management fees, dealer commissions and leases involving entities controlled by significant stockholders.