Amerco (UHAL) Q2 2016 Earnings Call

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.”


Amerco (UHAL) Q4 2016 Earnings Call

Amerco (UHAL) Principal Financial Officer Jason Berg said they’re continuing to grow their store count 

“Our retail distribution network continues to expand during all of fiscal 2016 our network of U-Haul locations continued to grow. We finished the year with approximately 19,500 independent dealers that’s up about 1300 net outlets that our company owned – company operated locations by just over 100 outlets bringing our total distribution system to right around 21,200 locations at the end of fiscal 2016.”

They are spending money to grow the size of their truck fleet

“Capital expenditures, our new rental trucks and trailers was $881 million in fiscal 2016. While proceed from sales of retire rental equipment was $517 million. This leads us net fleet capital expenditure of approximately $365 million this last year.”

And adding storage space to their real estate portfolio

“We continue to focus time and capital in our self-storage business. During this last fiscal year we either opened or added storage to 77 company locations totaling over 3.6 million net rentable square feet.”

Amerco (UHAL) Principal Financial Officer Jason Berg said they are not wiling to pay the multiples for acquiring storage buildings that some of their competitors have recently 

“You mentioned that large transaction they had a couple large ones recently that, I don’t think that we’re at the point where we would be willing to pay those multiples for something. Our view is a little bit different as far as whether what our future looks like and talking with our storage team and with Joe, they’ve all been through several cycles we have been in this since the late 70s.”

JS Earnings Call Notes 11.10.15 – Amerco, Priceline, Rockwell Automation

Amerco (UHAL) Principal Financial Officer Jason Berg said the company saw continued sequential revenue growth and volume growth during the quarter

“Operating earnings at the moving and storage segment increased $37 million to $297 million from another good quarter of revenue growth. Equipment rental revenues increased 7% or approximately $45 million.  We are continuing to see growth in transactions and revenues across both our truck and trailer fleets, as well as from the in-town and one-way moving markets.”

And they continued to add locations where you can utilize U-Haul equipment

“Our team continues to expand the distribution network, adding over 350 net new independent dealers, along with 30 new company-owned locations during the quarter.”

They’re also utilizing their existing fleet of moving trucks more efficiently

What’s happened this year is that the growth of the fleet has flattened out and we’re seeing improvements in efficiencies of the existing fleet.  We’re seeing improvements in utilization for truck. We’re seeing improvements in revenue per unit.  Things that we’ve done back-office wise is we try to increase truck availability through improving the repair and maintenance process so that we don’t have trucks down for as a longer period of time.”

They’ve been able to raise prices in the storage unit 

 In general across the country, I think our rates are up approximately 3%.”

Amerco (UHAL) Principal Financial Officer Jason Berg acknowledged they have a significant amount of excess cash on the balance sheet but they plan on reinvesting in various growth initiatives

We do continue to accumulate cash.  We have recently done dividends, but the focus of the organization right now continues to be in reinvesting back into the business. We’re going to be reinvesting in the fleet here in this fiscal year, at least toward the second half of the year, rotating the significant number of trucks back on.  And on the real estate side, all the new facilities that we’ve shown here during the quarter as well as a significant number of projects in the pipeline construction and development projects that over the next several years, we’ll certainly utilize at this point, a couple of hundred million dollars. So, I think we’ve earmarked growth as the primary use of the excess cash right now.  For this company, reinvestment has always been the great value creator for our shareholders over time versus other chances.  We’ve proven over time that by reinvesting in our core business, we can create returns for the shareholders over time.”

The company listened to the voice of the customer and increased the company’s offerings in the small truck space

We heard what the customer was saying and there was a need in the market for us to improve our service in the small sizes of the fleet and we’ve done that significantly.  So, on a percentage basis, if you were to look at the fleet, I think on a percentage basis, the smaller trucks are greater percentage than they were before.”





Priceline (PCLN) CEO Darren Huston said they helped clients book over 100 million hotel room nights in the quarter

Our customers booked accommodation reservations for over 115 million room nights in the quarter.”

And they continue to add hotels to their platform

“’s platform now has over 820,000 hotels and other accommodations in 220 countries and territories, up 38% over last year.”

Priceline (PCLN) CEO Darren Huston they are launching a business traveler product

Following our successful launch of BookingSuite which continues to gain traction in the B2B arena, we recently introduced another important B2B innovation, for Business. This new offering is geared to both the business traveler and the travel organizer. Our tools allow organizers to link travelers to the company account without losing oversight or to book on their behalf. Spending can be managed through budget filters and spending reports. All the company’s hotel reservations can be viewed and managed in one place. And best of all, all enrolled for business travelers automatically benefit from our rewards program including closed user group discounts and special benefits at over 100,000 select properties worldwide.”

Along with many other multi-national companies, Priceline blamed currency volatility for reduced revenue

Throughout 2015, we’ve seen the strong U.S. dollar significantly impact our U.S. dollar reported results because about 90% of our gross bookings and operating income are generated by our international brands. Our two most impactful currencies, the euro and the British pound, were weaker by about 16% and 7% respectively for Q3 as compared to the prior year. Many other important currencies in which we transact were also significantly weaker versus the U.S. dollar this year in Q3 relative to last year.  The strong U.S. dollar means our gross bookings, gross profit, operating expenses, adjusted EBITDA and non-GAAP net income mathematically translate into significantly fewer dollars than they would have at last year’s exchange rates for Q3 and Q4.”

Management also asserted they have a mid-single digit market share of room night reservations that runs over their platform

“Now for Q4 guidance. We often get questions from analysts and investors trying to understand the size of the accommodation market and our share of room night reservations. Darren just pointed out that the accommodations on our websites have about 21 million rooms.  This math implies a mid-single digit market share, which I believe highlights the opportunity for us to continue to grow our share with existing partners, while our supply teams also continue to aggressively add new partners.”

Priceline (PCLN) CEO Darren Huston spoke about competing with AirBNB

Basically, in vacation rentals, we’re building a very different product than what Airbnb has, or what HomeAway has. And our whole business is based on no fees for consumer. So it wasn’t a strategic move. It’s just a reflection of the way that our business works, and we charge our accommodation partners between 12% and 15% commission, so that’s where the take rate is. When you’re in a classified ad business, it’s more difficult to get that kind of take rate from the accommodation partner, so many players will try to also charge a fee or increase fees to consumers.”

And they’ve been spending more and more of their advertising dollars with Facebook

“And then your next question on Facebook as a marketing platform, we have been doing more and more business with Facebook. Most of it though is in the category or re-messaging or re-targeting.”





Rockwell Automation (ROK) CEO Keith Nosbush said orders were weak during the preceeding quarter

Both sales and earnings came in below our expectations in the quarter. Organic sales declined a little over 2%. As we progressed through the quarter, conditions softened. And September was especially weak, particularly in the U.S. product businesses.”

He highlighted both China and the energy sector as notable spots of weakness

“The shortfall in the U.S. was broad-based across verticals but particularly in oil and gas. Heavy industry end markets, including oil and gas, have not stabilized, and we see continued softness in key emerging markets.  China was the other weak spot. Sales in China were flat compared to the third quarter, but came in a bit lower than expected.”

They noted a slowdown in spending by their U.S. based industrial customers

There appears to be a general slowdown in U.S. industrial customer spending, both capital and operating spending. And what we experienced in the U.S. market in Q4 seems to be consistent with what we have seen reported by other automation-related and electrical suppliers, including some of the major distribution companies.  So that’s why we’re cautious about how we’re approaching this because we don’t believe we’ve seen the bottom.”

Rockwell Automation (ROK) CEO Keith Nosbush said he expects to take market share from competitors due to new product launches 

And I also think some of our new products, we do expect next year to be able to take market share.  I think that’s how we look at our ability to demonstrate differentiation. And certainly, with our new technology and our new products, we expect as the year unfolds to be able to take share, even in a difficult market environment.”

They expect mining equipment orders to remain subdued

Mining will continue to be weak across all regions, with the commodity prices continuing to be down. And also you’re seeing a lot of restructuring in the larger global customers, and that tends to slow CapEx spending while that’s going on.”

They do expect to see strength in customer orders as some companies look to bring down their operating costs

“We do believe that they will continue to spend on driving down their operating costs. We believe we have some new technology that we’ll also be talking about at Automation Fair that enables us to create a much more productive oilfield as well as the ability to create more of helping them maintain their assets, their rotating equipment, which is very important in that industry with some capabilities in remote monitoring and in asset management capabilities of that equipment.”


Jeremy S., an investment analyst here in Southern California, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Jeremy has read this week.


Copart’s (CPRT) CEO Jay Adair, whose firm sells salvaged vehicles, says the firm saw declining average selling prices across their business

“In the quarter we saw further softening of average selling price as what we refer to as ASPs (average selling prices), compared to the second quarter.  Looking at May data, average selling price has dropped again, but we believe we are currently at the bottom in terms of where salvage values will end up for the fourth quarter.”

And he is predicting prices will stay weak

“Additionally, we expect this trend of low ASPs to continue into our future quarters and do not anticipate that average selling price will bounce back in the next couple of quarters. We believe the cause of this lower ASP or average selling price is due primarily to lower scrap prices and softer international bidding.  The lower scrap prices affect many of the lower end vehicles that we sell. The lower scrap price is caused by weakening global demand and a strong U.S. dollar. The softer international bidding primarily affects the higher end units that we sell and is primarily caused by a stronger U.S. dollar.”

They are also forecasting that the average age of a car on the road will continue to increase

“Additionally, we have seen the age of U.S. fleet increase for the past seven years and as we discussed on previous calls older vehicles will sell for last and auction. With the older fleet, we have seen total loss frequency increase. We believe this trend will continue as the fleet ages and so with the likelihood of the vehicles becoming total losses.  We also believe repair cost are up increasing the number of total loss vehicles and fuel prices being lower are causing miles driven to go up again causing more accidents and more total loss vehicles.  We believe the trend of vehicles aging will continue. Therefore average selling price should continue to be soft and volume should be up for the foreseeable future.”




U-Haul (UHAL) Principal Financial Officer Jason Berg says the firm continues to build out their leading network

“Our retail distribution network continues to expand. During all of fiscal 2015, we increased our independent dealer network by 800 net outlets along with another 60 company-owned and operated locations, bringing our total system to nearly 19,800 locations. We once again increased the number of trucks, trailers and towing devices in our rental fleet.”

U-Haul (UHAL) Principal Financial Officer Jason Berg says the company’s small insurance business has a material investment portfolio

“On a combined basis, the annual operating results from our life and property and casualty insurance operations improved by $7 million to $53 million combined and both are performing to expectations. Together our insurance operations have a combined investment portfolio of just over $1.5 billion.”

U-Haul (UHAL) Principal Financial Officer Jason Berg says that prices for self-storage acquisitions have been going up and the company remains disciplined  

“We’ve been mentioning over the last couple of years or the last year really that prices on self-storage project have been going up. So we have been a little bit more careful on acquisitions of existing storage.”




Deere (DE) Finance Manager Susan Karlix said the firm’s flexible cost structure has allowed it to remain enormously profitable even through this most recent downturn in agriculture markets 

“We also saw benefits from our success holding the line on costs and assets, a fact that gives our performance a measure of resilience we have not seen in prior downturns. Of note, crop receipts for 2015 are forecast to be about 23% lower than 2012’s record.  John Deere expects to be solidly profitable in 2015. In fact, the year is forecast to rank among our stronger ones in sales and profits, even with the pullback we’re experiencing in the farm sector. Such an achievement says a lot about the progress we’ve made establishing a wider range of revenue sources and a more durable business model.
And they are seeing many of their customers switch from buying their product outright to a leasing structure
“We are seeing a move towards more leasing. We think some of that has to do with giving some of the lower margins customers are facing. And as well as – so again, when you purchase the equipment, you tend to get a better advantage from a tax deduction perspective.”