UHAL: UHAL Fiscal 3rd Quarter Results Reflect A Post-Pandemic Reduction In One-Way Moves. Fleet Capex Reduced Again Due To Supply Constraints And Pricing. Self-Storage Revenues Continue To Grow In The Double-Digit Range.
NYSE:UHAL
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Financial Results for Third Quarter of Fiscal 2023
On February 8, 2023 after the market close, U-HAUL (NYSE:UHAL) reported financial results for the third fiscal quarter ending December 31, 2022. Total revenues decreased 2.1% YOY to approximately $1.375 billion.
Self-moving equipment rentals decreased by 7.9% (or $76.7 million) as both transactions and revenue decreased in both In-Town and one-way sub-segments.
In self-moving/self-storage products & services, the 0.7% revenue decrease (or $551 thousand) was due to a decrease in the sale of moving supplies.
In the self-storage area, revenues increased 19.5% (or $31.06 million) as the average monthly number of occupied units at company-owned locations increased by 57,229 units, occupancy rates decreased YOY from 83.6% to 82.9% and new capacity over the last 12 months expanded by 6.2 million net rentable square feet (77,000 new units).
Other revenues (which are predominately driven by U-Box) decreased 2.1% (or $2.94 million), primarily due to decreased U-Box transactions.
Total costs and expenses increased by 6.8% (or $67.3 million). Operating expenses increased 11.5% (or $75.4 million) primarily driven by fleet repair & maintenance (due to preventative work required because of the slower rotation of new equipment into the fleet) and personnel costs.
Management has been attempting to return to a normalized rotation program; the availability of certain truck models has improved with capital expenditures on new rental equipment totaling $1.016 million during the first nine months of this fiscal year compared to $809 million in fiscal 2021. Management has again reduced forecasted gross fleet capex to just under $1.3 billion.
Earnings from operations decreased 23.1% (or by $96.3 million) to $320.4 million compared to $416.7 million in third fiscal quarter of 2022. Income tax expense increased 34.1% to $59.0 million due to an increase in outstanding debt.
For the third quarter of fiscal 2022, U-HAUL reported net income (earnings available to common stockholders) of $199.2 million (or $0.98 per diluted common share and $1.02 per diluted non-voting share), a 29.2% decrease compared to $281.5 million (or $1.44 per diluted common share) in the comparable quarter last year. Common voting shares outstanding have remained stable at 19,607,788 shares, though effective November 10, 2022, shares outstanding increased to 196,077,889 due to the 9-for-1 stock dividend of Non-Voting Series N shares.
Upon the issuance of the Series N Non-Voting Common Stock, the company became required to report earnings per share in accordance with the two-class method in accordance with Accounting Standards Codification Topic 260.
As of December 31, 2022, U-HAUL has a strong liquidity position. The Moving and Storage operating segment has approximately $2.89 billion of cash and available credit. Working capital sequentially decreased by 6.8% to approximately $6.5 billion.
In summary, management is not satisfied with year-to-date results. Post-pandemic, transactions and average miles in the one-way truck rental business experienced has declined. In town results are mixed with transactions increasing with reliable individual consumers though total income has declined. Also, productivity improvements need to be implemented to counter rising personnel expense. Management will be addressing these issues, but experience indicates that time will be required.
Creation of Series N Non-Voting Common Stock
The new Non-Voting Common Stock was distributed at the close of trading on November 9, 2022. Trading of the non-voting shares began on November 10, 2022 under the ticker UHAL-B. The ticker symbol of the voting common stock continues to be UHAL.
The new series of non-voting stock is intended to preserve the current voting structure of the company so that management’s long-term operational orientation can be retained. The stock dividend has almost the same effect as a 10-for-1 stock split with every holder of current voting shares subsequently holding ten (10) shares, of which one (1) will be voting and nine (9) will be non-voting. The proportional ownership will remain the same. On the dividend front, holders of non-voting shares will be entitled to receive the same dividends or distributions in the future at no less a rate than voting shares on a per share basis.
Dividend Declared on Series N Non-Voting Common Stock
On December 7, 2022, a $0.04 per share cash dividend was declared on the Series N Non-Voting Common Stock to holders of record on December 19, 2022. The dividend was paid on December 30, 2022.
Corporate Name Change
In order to attract new stockholders, Committee approved a name change to U-Haul Holding Company so that current shareholders and potential investors will have the awareness that the company holds one of the most recognized brands in North America. The name change became effective on December 19, 2022.
Valuation
Utilizing comparable EV-to-EBITDA valuation of a blend of truck rental and self-storage companies, along with an historical rising valuation range, a target price of $69.80 is indicated.
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