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UHAL: Fourth quarter moving & storage revenue spot on our estimate. Continued short term problems with repair of vehicles for sale impact operating earnings.

By Ian Gilson, PhD, CFA



AMERCO (NASDAQ:UHAL) reported its 2018 fiscal year financial results after the market close on May 31, 2018, followed by a conference call the following day. Our estimate of Moving & Storage was spot on.
Truck rentals were ahead of our targets due to improved revenue per transaction for the full year plus the increases in fleet size (trucks and trailers). Revenue per truck (fleet size is available only on a yearend basis) declined slightly. Fleet size continued to be impacted by recalls and vehicle sales offset by vehicles purchased.

Operating expenses were impacted by repair of trucks for sale. Some of the trucks were sold at a loss when the extra repair cost was included.

As vehicles are sold, especially the older pick-up trucks, the damaged vehicles will move out of the fleet and operating margins will improve. This should occur starting in 2Q19 and gather momentum into 2020.

The 24/7 initiative is moving into the independent dealer network, 21,000 of them at the end of March 2018. The reservation includes interaction with the dealer personnel to ensure a valid driver license and credit card before the reservation and phone app approved. This limits unauthorized access and possible theft.

Storage operations improved as room count; square footage occupied and dollars per square foot all increase. However, occupancy rates dropped slightly as did revenue per room.

Capital expenditure in fiscal 2019 for trucks and trailers should be about $1 billion, offset by vehicle sales of $500 to $550 million.

Net income was affected by the sale of the Chelsea NY facility in 3Q18 and the tax adjustment in 4Q18. This adjustment was due to the fact that the insurance operation is staggered by one quarter (3Q insurance numbers are included in consolidated results for the 4Q).

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