Have you ever thought about running your U-Haul Dealership? It is not uncommon to see white trucks with thick horizontal orange stripes and “U-Haul” printed moving from town to town. Highway to highway. U-Haul is no stranger to everyone, as it is one of the largest American moving equipment and storage rental companies. By providing a wide range of services. Including rental trucks, trailers, self-storage units, moving boxes, and moving supplies. U-Haul has become the number one choice for do-it-yourself households.
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Want to become a U-Haul Dealer and make your business more profitable?
After being founded by Leonard Shoen in 1945, U-Haul expanded through franchising with gas stations. Opening a franchise typically requires extensive start-up costs. But you do not have to pay a thing to become a U-Haul dealer. All you need to do is add U-Haul truck and trailer rental to your own business. It would be better if your location has high visibility and traffic and available land to display the equipment. After filling in an application, you only need to place the first order of your moving equipment. While the U-Haul representative will provide you with your rental trucks and trailers. Trouble-free as it is, there are other benefits to becoming a U-Haul dealer.
By utilizing the U-Haul brand, you can attract more customers with more exposure to your business. You can earn one of the highest commissions in the industry-22% on average-off equipment transactions originating from your location. You can boost your bottom line by dispatching more equipment.
U-Haul offers their total support in helping your advertisement, customer sales tools, and training and automation. Specifically, customers can access information about independent affiliate partners directly through U-Haul’s main website. Which gives you competitiveness over other larger operators more cost-effectively.
This sounds attractive and promising, isn’t it? Or perhaps you need some numbers to convince you further!
The following article analyzes the 2021 annual report and the filings of AMERCO, U-Haul’s parent company, to help you determine whether it is a good business to partner with and its role as a major contender in the rental industry.
AMERCO mainly operates in three fields: moving and storage operating segment, property and casualty insurance operating segment, and life insurance operating segment. Certainly, we are going to focus on the moving and storage operating segment. Of which net revenue is approximately 93.1% of consolidated net revenue in fiscal 2021.
U-Haul Locations and Independent Dealerships
U-Haul has a broad geographic coverage throughout the United States and Canada. The company operates through a network of over 2,100 company-operated retail moving stores and nearly 21,100 independent dealers in 2021. Which is a 1,000 increase in independent dealerships since 2020. This is a relatively large increase, despite the COVID-19 pandemic. Additionally, 91% of the operated stores belong to independent business owners, which proves an assured and growing business opportunity.
Moreover, as of March 31, 2021, U-Haul’s rental fleet consisted of approximately 176,000 trucks, 126,000 trailers, and 46,000 towing devices. It operates 1,784 self-storage locations in the United States and Canada. With nearly 812,000 rentable storage units comprising 70.5 million square feet of rentable storage space.
| 2021 | 2020 | 2019 | |
|---|---|---|---|
| Company-owned Retail Moving Stores | 2,100 | 2,065 | 1,981 |
| Independent U-Haul Dealers | 21,100 | 20,100 | 20,000 |
U-Haul’s Stores Open as of Fiscal 2021
| U-Haul | Avis Budget Group, Inc. | Penske Truck Leasing | |
|---|---|---|---|
| Company-owned Retail Moving Stores | 2,100 | 2,900 | 304 |
| Independent U-Haul Dealers | 21,100 | 2,400 | 17 |
Stores Open as of Fiscal 2021 (Truck Rental Companies Comparison)
| U-Haul | Public Storage | Extra Space Storage, Inc. | CubeSmart | |
|---|---|---|---|---|
| Company-owned Retail Moving Stores | 2,100 | 2,787 | 287 (Joiny Ventures) | 607 |
| Independent U-Haul Dealers | 21,100 | N/A | 828 (Thrid-Parties) | 651 (Third-Parties) |
Stores Open as of Fiscal 2021 (Self-Storage Companies Comparison)
The above charts show the number of company-owned stores and independent dealers, and the comparison among U-Haul’s competitors in terms of truck rental and self-storage. At the end of fiscal 2021, U-Haul has increased 35 company-owned stores and 1,000 independent dealerships since 2020. Within this segment, U-Haul is focused on expanding the independent network to add convenience for customers.
According to AMERCO’s financial report, the principal competitive factors in the truck rental industry are the convenience of rental locations. Availability of quality rental moving equipment, breadth of essential products and services, and total cost to the user. As numerous competitors position their business in the in-town market, U-Haul has its advantage in operating in both in-town and one-way moving markets. Similarly, the self-storage market is large and fragmented. Where customers are looking for the convenience of the rental stores, their cleanliness, security, and price.
U-Haul Dealership Start-up Costs and Profits
To start a business or partner with another company, the very first piece of information is the start-up costs. And how much we can earn in a year!
For U-Haul, there is no Capital Investment! You don’t pay a thing to become a U-Haul dealer besides your monthly phone bill and web access fee. There is no franchise fee or initial capital investment.
U-Haul Moving and Storage Segment Revenues and Costs
| Year Ended March 31, | |||
|---|---|---|---|
| 2021 | 2020 | ||
| Self-Moving Equipment Rentals | (In thousands) | ||
| Self-Storage Revenues | 477,262 | 418,741 | |
| Self-Moving And Self-Storage Products And Services Sales | 344,929 | 265,091 | |
| Property Management Fees | 31,603 | 30,406 | |
| Net Investment and Interest Income | 2,259 | 10,593 | |
| Other Revenue | 288,797 | 236,419 | |
| Moving And Storage Revenue | 4,231,674 | $3,657,766 | |
Compared with fiscal 2020, self-moving equipment rental revenues increased by $390.3 million during fiscal 2021; transactions along with average revenue per transaction increased for both in-town and one-way markets. Similarly, revenues for self-storage also increased by $58.5 million during fiscal 2021 than fiscal 2020; the average monthly number of occupied units increased by 18%, compared with the same period last year. The sales of self-moving and self-storage produced and services increased by $79.8 million during fiscal 2021.
| Year Ended March 31, | |||
|---|---|---|---|
| 2021 | 2020 | ||
| (In thousands, Except Occupancy Rate) | |||
| Unit Count As Of March 31 | 539 | 503 | |
| Square Footage As Of March 31 | 45,746 | 42,082 | |
| Average Monthly Number Of Units Occupied | 376 | 319 | |
| Average Monthly Occupancy Rate Based On Unit Count | 71.8% | 67.7% | |
| Average Monthly Square Footage Occupied | 33,700 | 28,946 | |
During the fiscal year 2021, U-Haul adds approximately 3.7 million net rentable square feet of new storage to the system. With a mix of upgrades in existing company-owned storage locations and new development.
| (3 Months) | Amount in Millions | (12 Months) | |||
|---|---|---|---|---|---|
| 1Q22 | 1Q21 | Moving And Storage Results | FY21 | FY20 | FY19 |
| $1,036.2 | $654.9 | Self-Moving Equipment Rentails | $3,086.8 | $2,696.5 | $2,656.3 |
| 137.4 | 109.0 | Self-Storage Revenues | 477.3 | 418.7 | 367.3 |
| 104.9 | 91.4 | Retail Product Sales | 344.9 | 265.1 | 264.1 |
| 8.4 | 7.3 | Property Management Fees | 31.6 | 30.4 | 29.1 |
| 106.4 | 63.7 | Other Revenue | 291.1 | 247.1 | 229.0 |
| 1,393.3 | 926.3 | Total Revenues | 4,231.7 | 3,657.8 | 3,545.8 |
| 601.9 | 480.1 | Operating Expenses | 2,137.4 | 2,069.7 | 1,938.4 |
| 113.1 | 69.2 | Commission Expenses | 329.6 | 288.3 | 288.4 |
| 69.9 | 52.8 | Cost Of Sales | 214.0 | 164.0 | 162.1 |
| 8.1 | 7.1 | Lease Expense | 30.6 | 27.5 | 33.7 |
| 121.7 | 165.7 | Depreciation, net of gains on disposal | 609.9 | 637.1 | 554.0 |
| (4.4) | (0.3) | Net gains on disposal of R/E | 3.3 | (0.8) | – |
| 910.3 | 774.6 | Total Costs and Expenses | 3,324.8 | 3,185.8 | 2,976.6 |
| $483.0 | 151.7 | Earnings From Operations | 906.9 | 472.0 | 569.2 |
Total costs and expenses increased by $139.0 million during fiscal 2021, compared with fiscal 2020. Operating expenses increased by $67.6 million. While the repair costs decreased by $18.2 million due to fewer trucks being prepared for sale at auction. In addition to other changes in expenses and revenues, earnings from operations for Moving and Storage before the consolidation of the equity increased to $906.9 million for fiscal 2021, compared with fiscal 2020 of $472.0 million for fiscal 2020. This is a significant increase in earnings, despite the impact of the COVID-19 pandemic, showing a growing and self-regulated business in the moving and self-storage industry.
| Moving & Storage | Property and Casualty Insurance (a) | Life Insurance (a) | |
|---|---|---|---|
| (In Thousands) | |||
| Cash and cash equivalents | $1,010,275 | $5,658 | $178,079 |
| Other Financial Assets | 193,516 | 460,088 | 2,830,983 |
| Debt Obligations | 4,657,720 | – | 11,187 |
Cash & Cash Equivalents, Other Financial Assets, and Debt Obligations of each Operating Segment
As of March 31, 2021, cash and cash equivalents totaled $1,1194.0 million, compared with $494.4 million as of March 31, 2020. This increasing amount of liquidity allows U-Haul to pursue its operational plans for the foreseeable future. One thing to take note of is the significant amount of cash held by the operation of moving and storage.
The moving and storage business is seasonal, where revenues have been stronger in the first and second fiscal quarters due to the increasing moving activity during spring and summer; the fourth fiscal quarter is usually the weakest. However, in the first quarter of fiscal 2021, COVID-19 negatively affected the company’s operating cash flows through lower self-moving equipment rental revenues and a significant reduction in equipment sales. Similarly, they experience a decrease in these revenues of $94.3 million, or 13%. Since then these revenues have increased by $485.2 million or 25% over the last nine months of fiscal 2021.
U-Haul’s Income Statement Takeaway
| Year Ended March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | 2019 | ||
| (In thousands, Except Share And Per Share Data) | ||||
| Revenues | ||||
| Self-Moving Equipment Rentals | $3,083,317 | $2,692,413 | $2,653,497 | |
| Self-Storage Revenues | 477,262 | 418,741 | 367,276 | |
| Self-Moving and Self-Storage Products and Svices Sales | 344,929 | 265,091 | 264,146 | |
| Property Management Fees | 31,603 | 30,406 | 29,148 | |
| Life Insurance Premiums | 121,609 | 127,976 | 63,488 | |
| Property and Casually Insurance Premiums | 68,779 | 66,053 | 60,853 | |
| Net Investment And Interest Income | 122,938 | 137,829 | 110,934 | |
| Other Revenue | 291,548 | 240,359 | 218,365 | |
| Total Revenue | 4,541,985 | 3,978,868 | 3,768,707 | |
| Costs and Expenses | ||||
| Operating Expenses | 2,187,684 | 2,117,148 | 1,981,180 | |
| Commission Expenses | 329,609 | 288,332 | 288,408 | |
| Cost of Sales | 214,059 | 164,018 | 162,142 | |
| Benefits and Losses | 179,512 | 174,836 | 100,277 | |
| Amortization of Deferred Policy Acquisition Costs | 28,293 | 31,219 | 28,556 | |
| Lease Expense | 28,470 | 26,882 | 33,158 | |
| Depreciation, net gains on disposals of ($54,071, $27,057 and $26,982 respectively) | 609,930 | 637,063 | 554,043 | |
| Net (Gains) Losses on Disposal of Real Estate | 3,281 | (758) | (44) | |
| Total Costs and Expenses | 3,580,838 | 3,438,740 | 3,147,720 | |
| Earnings From Operations | 961,147 | 540,128 | 620,987 | |
| Other Components of Net Periodic Benefit Costs | (987) | (1,054) | (1,013) | |
| Interest Expense | (163,502) | (160,950) | (142,445) | |
| Pretax Earnings | 796,658 | 378,124 | 477,529 | |
| Income Tax Benefit (Expense) | (185,802) | 63,924 | (106,672) | |
| Earnings Available to Common Stockholders | 610,856 | 442,048 | 370,857 | |
| Basic and Diluted Earnings per Common Share | 31.15 | 22.55 | 18.93 | |
| Weighted Average Common Shares Outsanding: Basic and Diluted | 19,607,788 | 19,603,708 | 79,592,048 | |
AMERCO and Consolidated Subsidiaries Consolidated Statements of Operations
By examining the total revenues AMERCO as a company earns across three years, we can see that the revenue is growing rapidly, even under the impact of the COVID-19 pandemic. As the costs and expenses grow at a much slower rate, the net earnings of AMERCO reach $610 million, which is $168 million higher than that of fiscal 2020.
U-Haul’s Cash Flows Statement Takeaway
| Years Ended March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | 2019 | ||
| (In thousands) | ||||
| Cash Flows From Operating Activities | ||||
| Net Earnings | $610,856 | $442,048 | $370,857 | |
| Adjustments to reconcile Net Earnings To Cash Provided by Operations: | ||||
| Depreciation | 664,001 | 664,120 | 581,025 | |
| Amortization of Deferred Policy Acquisition Costs | 28,293 | 31,219 | 28,556 | |
| Amortization of Premiums and accretion of Discounts Related To Investments, Net | 14,229 | 13,317 | 13,107 | |
| Amortization of Debt Issuance Costs | 5,948 | 4,426 | 3,923 | |
| Interest Credited To Policyholders | 55,321 | 51,857 | 35,387 | |
| Change in Allowance For Losses On Trade Receivables | 1,206 | (14) | 52 | |
| Change in Allowance For Investories and Parts Reserves | 1,298 | 640 | (146) | |
| Net Gains on Disposal of Personal Property | (54,071) | (27,057) | (26,982) | |
| Net (Gains) Losses on Disposal of Real Estate | 3,281 | (758) | (44) | |
| Net Gains on Sales of Investments | (10,058) | (13,596) | (2,663) | |
| Net (Gains) Losses on Equity Investments | (394) | (3,783) | 5,739 | |
| Deferred Income Taxes | 68,411 | 317,893 | 106,811 | |
| Net Change in Other Operating Assets and Liabilities: | ||||
| Reinsurance Recovarables and Trade Receivables | (39,516) | 38,129 | (31,365) | |
| Inventories and Parts | (5,775) | 1,776 | (13,492) | |
| Prepaid Expenses | 94,359 | (391,120) | (8,620) | |
| Capitalization of Deferred Policy Acquisition Costs | (36,162) | (24,447) | (25,957) | |
| Other Assets | 29,865 | (1,295) | 157,152 | |
| Related Party Liabilities | (487) | (5,645) | 4,194 | |
| Accounts Payable and Accrued Expenses | 92,925 | (4,530) | 10,263 | |
| Policy Benefits and Losses, Claims and Loss Expenses Payable | (1,992) | (12,618) | (236,120) | |
| Other Policyholders Funds and Liabilities | 2,230 | (4,857) | 5,007 | |
| Deferred Income | 11,567 | (1,818) | 966 | |
| Related Party Liabilities | 60 | 1,626 | (2,067) | |
| Net Cash Provided by Operating Activities | 1,535,395 | 1,075,513 | 975,583 | |
| Cash Flows From Investing Activities: | ||||
| Escrow Deposits | (5,221) | 6,617 | 4,299 | |
| Purchase Of: | ||||
| Property, Plant and Equipment | (1,441,475) | (2,309,406) | (1,869,968) | |
| Short Term Investments | (69,929) | (61,226) | (54,048) | |
| Fixed Maturity Investments | (606,233) | (379,349) | (540,045) | |
| Equity Securities | (962) | (83) | (957) | |
| Preferred Stock | (16,144) | – | – | |
| Real Estate | (622) | (4,286) | (635) | |
| Mortgage Loans | (158,071) | (6,016) | (63,611) | |
| Proceeds From Sales and Paydowns Of: | ||||
| Property, Plant and Equipment | 537,484 | 687,375 | 606,271 | |
| Short Term Investments | 69,718 | 59,056 | 66,037 | |
| Fixed Maturity Investments | 529,239 | 268,636 | 123,551 | |
| Equity Securities | 207 | 185 | 8,608 | |
| Preferred Stock | 2,700 | 2,375 | 1,625 | |
| Real Estate | 255 | 311 | – | |
| Mortgage Loans | 29,525 | 25,162 | 147,737 | |
| Net Cash Used by Investing Activities | (1,129,529) | (1,766,649) | (1,571,136) | |
The accompanying notes are an integral part of these consolidated financial statements.
| Years Ended March 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | 2019 | ||
| (In thousands) | ||||
| Cash Flows From Operating Activities | ||||
| Borrowings From Credit Facilities | $922,008 | $1,121,412 | $897,311 | |
| Principal Repayments on Credit Facilities | (662,588) | (349,986) | (299,748) | |
| Payment of Debt Issuance Costs | (5,793) | (5,332) | (7,243) | |
| Finance/Capital Lease Payments | (221,247) | (307,782) | (303,431) | |
| Employee Stock Ownership Plan Shares | – | – | (418) | |
| Common Stock Dividends Paid | (49,019) | (29,404) | (39,179) | |
| Investment Contract Deposits | 517,856 | 234,640 | 400,123 | |
| Investment Contract Withdrawals | (213,864) | (151,022) | (132,833) | |
| Net Cash Provided by Financing Activities | 287,353 | 512,320 | 514,582 | |
| Effects of Exchange Rate on Cash | 6,441 | (533) | (4,716) | |
| Increase (decrease) in cash and cash equivalents | 699,660 | (179,349) | (85,687) | |
| Cash and Cash Equivalents at the Beginning of Period | 494,352 | 673,701 | 759,388 | |
| Cash and Cash Equivalents at the End of Period | 1,194,012 | 494,352 | 673,701 | |
AMERCO and Consolidated Subsidiaries Consolidated Statements of Cash Flows
The final piece of analysis takes a look at the cash flows statement, where the amount of cash is an important indicator of a company’s financial health. As the company can manipulate its profits, the amount of cash available shows the company’s ability to pay back its debt to investors and invest in future projects. According to America’s cash flows statement, they have a $699,660 thousand increase in cash and cash equivalents. At the end of the fiscal year, their total cash and cash equivalents amounted to approximately $1.19 billion.
U-Haul’s Risk Factors
The following section lists the risks U-Haul faces as a company and to their business model, and their impacts on the cooperation and individuals.
COVID-19 Global Pandemic:
Like other businesses across the nation, U-Haul encounters challenges from reduced business activity, state and local jurisdictions imposing shelter-in-place orders, and quarantines. Since on-site locations are considered the essential services for the business and have been open for communities throughout the pandemic, there are risks that the workforce may be negatively impacted and interrupt their ability to continue working. Although U-Haul is negatively impacted in the first quarter of 2021, it recovers strong, seeing improvements in the second, third, and fourth quarters.
Operation in a Highly Competitive Industry:
Both truck rental and self-storage industries are highly competitive, including several national and local competitors. Financial results can be negatively impacted by the aggressive pricing from competitors, which can lead to either decreasing rental volume or decreasing the number of customers. In addition to the expansion of regulations favoring electric, autonomous vehicles, U-Haul’s competitors are working to shift technologies from self-driving vehicles to ride-hailing services and other technologies. This will negatively impact U-Haul’s cost of acquisition for rental trucks and require infrastructure upgrades to accommodate these types of vehicles for both company-operated locations and independent dealer networks. As U-Haul has made significant progress in accommodating this future regulation, there remain risks that the conversion is unsuccessful.
Competition in the self-storage industry might cause U-Haul to experience a decrease in occupancy levels, limit their ability to raise rental rates, or require U-Haul to offer discounted rates. To enter into the self-storage business, companies need to acquire existing facilities from persons or institutions, which can be seen as an advantage for U-Haul’s independent dealer network. Independent dealers join the business with existing land and labor for use.
Financial Market/Economics Conditions:
U-Haul is highly dependent on consumer behaviors, which are affected by the health of the economy. U-Haul can experience significant downturns with the decline in consumer spending due to unhealthy economic conditions. Additionally, U-Haul maintains a large fleet of rental equipment, which is funded internally through operations and externally from debt and lease financing. The fleet rotation program can be adversely affected if financial market conditions limit the availability of external funding.
Cybersecurity:
Similar to other businesses, U-Haul heavily depends on information technology systems, including point-of-sale reservation systems, payment processing, and telephone systems. This leaves them susceptible to cyber-attackers and terrorist attacks, which can severely interrupt their everyday business operation and degrade their reputation.
Conclusion
Overall, U-Haul is a very profitable company that operates both company-owned units and independent dealerships. Even though the COVID-19 pandemic did take a toll on their revenues and cash flows in the first quarter of fiscal 2021, it recovered strongly in the next three quarters and will likely continue to do so. Although the costs of operation grow due to increases in personnel, liability costs, and shipping costs associated with U-Box transactions, its strong revenues negate the loss.
As detailed above, U-Haul has numerous competitors in both the truck rental and self-storage industry. U-Haul is one of the few companies that combine both car rental and self-storage options for customers, which gives U-Haul the advantage of successfully meeting customers’ needs at one stop. Moreover, U-Haul is expanding its independent dealer network throughout the United States and Canada with zero start-up cost, which is a great opportunity to make your business more profitable.
