Amerco (UHAL) Q2 2016 Earnings Call

posted in: Earnings Call, Notes | 0

Amerco (UHAL) CEO Ed Shoen said profitability declined due to costs going up and they haven’t been able to pass on higher prices to their customers

“We are reporting a drop in profitability for the quarter year over year. Rental truck cost increases, put through by Ford and General Motors, was a big driver of the decline. U-Haul’s cost of acquisition went up. And we have not yet got the customer to be willing to absorb the increases. Of course, we’re continuing to work on this.”

Delaying growing their fleet size after buying more trucks for 3 consecutive years

“After increasing the van and pickup fleet in each of the last three years, we have not yet settled on our plans going into next summer. Our truck sales teams continue to manage our sales volumes and prices. We held some trucks back in the quarter in an effort to gain some increased transactions and to seek some better pricing.”

Ford & GM are being real tough on holding their line on pricing

“The price is stuck, we pay them. Now, will those prices hold going ahead? I don’t know. So far, they’ve been holding – Ford and GM are real tight on pricing. They are as hard on it as I have ever seen in my work career. So, of course, I’m going to go hit them up again obviously. Whether they’ll care or not is another issue.”

Amerco (UHAL) CEO Ed Shoen has friends who own auto dealerships

“I have friends who are car dealers and probably you have friends who are car dealers. They are still very bullish, but, of course, that’s their part of the food chain. They are supposed to be optimist. So I remain optimistic, but I don’t know what’s going to happen with resale values. We’re not able drive that. We could injure it by acting ignorantly, and we try real hard not to act ignorantly, but predicting it, I’m not much of in a position. Absolutely, our costs went up. And absolutely, unless pricing goes up that compresses our margins and that’s just simply the fact.”