U-Haul pany(UHAL_B) - 2023 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements This section presents AMERCO's unaudited condensed consolidated financial statements for Q2 2022, including balance sheets, statements of operations, comprehensive income, equity changes, cash flows, and detailed notes on accounting policies, investments, borrowings, and segment information Condensed Consolidated Balance Sheets Total assets increased, driven by cash and property, plant and equipment, while total liabilities also rose due to increased notes, loans, and finance leases payable, resulting in a modest increase in stockholders' equity Key Balance Sheet Data (in thousands) | Metric | June 30, 2022 | March 31, 2022 | Change | | :----------------------------------- | :-------------- | :------------- | :------- | | Total Assets | $17,831,604 | $17,299,581 | +$532,023 | | Total Liabilities | $11,757,753 | $11,414,298 | +$343,455 | | Total Stockholders' Equity | $6,073,851 | $5,885,283 | +$188,568 | | Cash and cash equivalents | $3,098,271 | $2,704,137 | +$394,134 | | Property, plant and equipment, net | $10,021,360 | $9,625,850 | +$395,510 | | Notes, loans and finance leases payable, net | $6,232,564 | $6,022,497 | +$210,067 | Condensed Consolidated Statements of Operations Total revenues grew 8.5% year-over-year, primarily from self-moving equipment rentals and self-storage, but a 13.1% increase in total costs and expenses led to a 3.2% decrease in earnings available to common stockholders and EPS Key Operations Data (Quarter Ended June 30, in thousands) | Metric | 2022 | 2021 | YoY Change | YoY Change (%) | | :----------------------------------- | :--------- | :--------- | :--------- | :------------- | | Total Revenues | $1,597,840 | $1,472,856 | +$124,984 | +8.5% | | Self-moving equipment rentals | $1,090,775 | $1,035,377 | +$55,398 | +5.4% | | Self-storage revenues | $173,177 | $137,393 | +$35,784 | +26.0% | | Total Costs and Expenses | $1,106,681 | $978,648 | +$128,033 | +13.1% | | Earnings available to common stockholders | $334,002 | $345,175 | -$11,173 | -3.2% | | Basic and diluted earnings per common share | $17.03 | $17.60 | -$0.57 | -3.2% | Condensed Consolidated Statements of Comprehensive Income (Loss) Total comprehensive income decreased significantly year-over-year, primarily due to a larger unrealized net loss on investments Comprehensive Income Data (Quarter Ended June 30, in thousands) | Metric | 2022 | 2021 | YoY Change | | :----------------------------------- | :--------- | :--------- | :--------- | | Total comprehensive income | $198,372 | $269,450 | -$71,078 | | Unrealized net loss on investments (net of tax) | $(136,382) | $(73,027) | -$63,355 | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased from March 31, 2022, to June 30, 2022, driven by net earnings, partially offset by unrealized net losses on investments and common stock dividends Stockholders' Equity Changes (in thousands) | Metric | June 30, 2022 | March 31, 2022 | Change | | :----------------------------------- | :-------------- | :------------- | :------- | | Total Stockholders' Equity | $6,073,851 | $5,885,283 | +$188,568 | | Net earnings (Q1) | $334,002 | $345,175 | N/A | | Unrealized net loss on investments, net of tax (Q1) | $(136,382) | $(73,027) | N/A | | Common stock dividends (Q1) | $(9,804) | $(9,804) | N/A | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities decreased year-over-year due to a prior-year tax refund, while net cash used in investing activities decreased and net cash provided by financing activities significantly increased from higher borrowings Cash Flow Data (Quarter Ended June 30, in thousands) | Metric | 2022 | 2021 | YoY Change | YoY Change (%) | | :----------------------------------- | :--------- | :--------- | :--------- | :------------- | | Net cash provided by operating activities | $651,371 | $794,213 | -$142,842 | -18.0% | | Net cash used by investing activities | $(478,012) | $(523,158) | +$45,146 | +8.6% | | Net cash provided by financing activities | $224,896 | $56,445 | +$168,451 | +298.4% | | Increase in cash and cash equivalents | $394,134 | $325,969 | +$68,165 | +20.9% | Notes to Condensed Consolidated Financial Statements This section details AMERCO's financial statements, covering accounting policies, investments, borrowings, derivatives, equity, leases, contingencies, related party transactions, segment information, employee benefits, fair value measurements, revenue recognition, allowance for credit losses, and recent accounting pronouncements 1. Basis of Presentation AMERCO's fiscal quarter ends June 30, with insurance subsidiaries' quarter ending March 31, and the company operates through three reportable segments: Moving and Storage, Property and Casualty Insurance, and Life Insurance - AMERCO's fiscal quarter ends June 30; insurance subsidiaries' quarter ends March 31, consolidated on this basis[21][22][143] - Three reportable segments: Moving and Storage, Property and Casualty Insurance, and Life Insurance[27][158] - Moving and Storage includes U-Haul and Real Estate, focusing on rentals, sales of moving supplies, and self-storage[28] - Property and Casualty Insurance (Repwest, ARCOA) provides loss adjusting, claims handling, and protection packages for U-Haul customers[29] - Life Insurance (Oxford) offers life and health insurance products, Medicare supplement, and annuity policies primarily to the senior market[30] 2. Investments The company's investment portfolio, primarily available-for-sale debt securities and equity investments, experienced a significant unrealized net loss for Q2 2022, with details on credit loss assessment Available-for-Sale Investments Market Value (in thousands) | Metric | June 30, 2022 | March 31, 2022 | Change | | :----------------------------------- | :-------------- | :------------- | :------- | | Available-for-sale investments | $2,598,199 | $2,821,092 | -$222,893 | | Unrealized net loss on investments (gross) | $(91,356) | $(13,179) | -$78,177 | - A $17 thousand net impairment charge was recorded in Q1 2023[36][158] - Equity investments (common and non-redeemable preferred stocks) market value decreased from $72.31 million (March 31, 2022) to $71.79 million (June 30, 2022)[37] 3. Borrowings Total notes, loans, and finance leases payable, net, increased to $6,232.56 million as of June 30, 2022, with interest expense and the weighted average interest rate on revolving credit facilities also rising Borrowings Data (in thousands) | Metric | June 30, 2022 | March 31, 2022 | Change | | :----------------------------------- | :-------------- | :------------- | :------- | | Total notes, loans and finance leases payable, net | $6,232,564 | $6,022,497 | +$210,067 | | Interest expense (Q1) | $49,799 | $39,178 | +$10,621 | | Weighted average interest rate during the quarter (revolving credit) | 1.99% | 1.39% | +0.60% | | Annual maturities of notes, loans and finance leases payable (FY2023) | $502,394 | N/A | N/A | 4. Derivatives The company uses interest rate swaps to hedge variable rate debt and equity call options for indexed annuity products, with swaps meeting hedge accounting while equity options do not Derivative Fair Values (in thousands) | Metric | June 30, 2022 | March 31, 2022 | Change | | :----------------------------------- | :-------------- | :------------- | :------- | | Interest rate contracts (assets) | $149 | $0 | +$149 | | Notional amount (interest rate contracts) | $75,000 | $235,000 | -$160,000 | | Fair value of derivative hedges (indexed annuities) | N/A | $7,000 | N/A | 5. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) shifted from positive to negative between March 31 and June 30, 2022, primarily due to significant unrealized net losses on investments Accumulated Other Comprehensive Income (Loss) (in thousands) | Metric | June 30, 2022 | March 31, 2022 | Change | | :----------------------------------- | :-------------- | :------------- | :------- | | Accumulated Other Comprehensive Income (Loss) | $(89,246) | $46,384 | -$135,630 | | Unrealized net losses on investments (Q1) | $(136,382) | N/A | N/A | 6. Stockholders' Equity The company declared common stock dividends of $0.50 per share for fiscal year 2023, with no awards issued under the 2016 AMERCO Stock Option Plan as of June 30, 2022 - Common stock dividends declared: $0.50 per share for fiscal 2023[67] - No awards issued under the 2016 AMERCO Stock Option Plan as of June 30, 2022[67] 7. Leases Net Right-of-Use (ROU) assets, finance lease liabilities, and operating lease liabilities all decreased, with cash paid for financing lease activities also significantly lower year-over-year Lease Data (in thousands) | Metric | June 30, 2022 | March 31, 2022 | Change | | :----------------------------------- | :-------------- | :------------- | :------- | | Right-of-use assets, net | $640,761 | $695,206 | -$54,445 | | Finance lease liabilities | $312,411 | $347,400 | -$34,989 | | Operating lease liabilities | $72,277 | $74,197 | -$1,920 | Cash Paid for Financing Lease Activities (in thousands) | Period | Amount | | :----------------------------------- | :------- | | Q1 2023 | $35,000 | | Q1 2022 | $45,200 | | YoY Change | -$10,200 | 8. Contingencies The company is subject to environmental regulations and various litigation, but management believes compliance costs and other claims are not expected to materially adversely affect financial position or results of operations - Compliance with environmental laws and cleanup costs are not expected to materially affect AMERCO's financial position or results of operations[74] - Other litigation and claims arising from normal business operations are not expected to have a material effect[74] 9. Related Party Transactions AMERCO engages in related party transactions with entities controlled by significant stockholders and directors, with both related party revenues and costs increasing year-over-year, and these transactions are reviewed by the Audit Committee Related Party Transactions (Quarter Ended June 30, in thousands) | Metric | 2022 | 2021 | YoY Change | YoY Change (%) | | :----------------------------------- | :--------- | :--------- | :--------- | :------------- | | Related Party Revenue | $9,139 | $8,449 | +$690 | +8.2% | | Related Party Costs and Expenses | $25,486 | $23,506 | +$1,980 | +8.4% | - Related party assets decreased from $47.85 million (March 31, 2022) to $45.19 million (June 30, 2022)[83] - Transactions are reviewed and overseen by the Audit Committee[75] 10. Consolidating Financial Information by Industry Segment This section provides detailed consolidating financial statements by segment, highlighting intercompany eliminations and showing Moving and Storage as the largest contributor to assets, revenues, and earnings - Moving and Storage segment is the largest contributor to total assets, revenues, and earnings from operations[87][94] Moving and Storage Segment Key Financials (in thousands) | Metric | June 30, 2022 | | :----------------------------------- | :-------------- | | Total Assets | $14,911,413 | | Total Revenues (Q1) | $1,523,598 | | Earnings from operations (Q1) | $489,283 | - Insurance segments (Property & Casualty, Life) hold significant investments and liabilities related to policy benefits and investment contracts[87][88] 11. Industry Segment and Geographic Area Data This section provides a geographic breakdown of revenues, depreciation, interest expense, pretax earnings, income tax, and identifiable assets, with the vast majority of revenues and assets located in the United States Geographic Revenue Data (Quarter Ended June 30, 2022, in thousands) | Region | Total Revenues | | :----------------------------------- | :------------- | | United States | $1,510,386 | | Canada | $87,454 | | Consolidated | $1,597,840 | Geographic Identifiable Assets (June 30, 2022, in thousands) | Region | Identifiable Assets | | :----------------------------------- | :------------------ | | United States | $17,240,646 | | Canada | $590,958 | | Consolidated | $17,831,604 | - Canada generated approximately 5.5% of total revenues in Q1 2023[219] 12. Employee Benefit Plans The net periodic postretirement benefit cost saw a slight increase for the quarter ended June 30, 2022, compared to the prior year Net Periodic Postretirement Benefit Cost (Quarter Ended June 30, in thousands) | Metric | 2022 | 2021 | YoY Change | YoY Change (%) | | :----------------------------------- | :--- | :--- | :--------- | :------------- | | Net periodic postretirement benefit cost | $636 | $630 | +$6 | +1.0% | 13. Fair Value Measurements The company classifies its financial instruments into a three-tiered fair value hierarchy, with most assets measured at fair value categorized as Level 1 or Level 2, and a minimal amount in Level 3 - Financial instruments are classified into Level 1, Level 2, or Level 3 based on input observability[106] Assets Measured at Fair Value (June 30, 2022, in thousands) | Category | Total | Level 1 | Level 2 | Level 3 | | :----------------------------------- | :---------- | :---------- | :---------- | :------ | | Total Assets measured at fair value | $5,522,581 | $2,949,689 | $2,572,800 | $92 | 14. Revenue Recognition The company's revenue recognition policies are detailed across various accounting standards, with total revenues recognized under ASC 606 and ASC 842 both increasing year-over-year, covering self-moving equipment rentals, self-storage, property management fees, and U-Box shipping fees Revenue Recognition Data (Quarter Ended June 30, in thousands) | Metric | 2022 | 2021 | YoY Change | YoY Change (%) | | :----------------------------------- | :--------- | :--------- | :--------- | :------------- | | Total revenues recognized under ASC 606 | $229,549 | $200,533 | +$29,016 | +14.5% | | Total revenues recognized under ASC 842 | $1,288,031 | $1,191,010 | +$97,021 | +8.1% | - Self-moving equipment rentals and self-storage revenues are recognized under ASC 842[118][119][120] - Property management fees and U-Box shipping fees are recognized over time under ASC 606[116][117] 15. Allowance for Credit Losses The company's total allowance for credit losses decreased significantly, primarily driven by a substantial reduction in the allowance for trade receivables, reflecting management's improved economic outlook and a lower estimated loss rate Allowance for Credit Losses (in thousands) | Metric | June 30, 2022 | March 31, 2022 | Change | | :----------------------------------- | :-------------- | :------------- | :------- | | Total Allowance for Credit Losses | $3,064 | $9,210 | -$6,146 | | Allowance for Credit Losses (Trade Receivables) | $2,487 | $8,649 | -$6,162 | - Management estimated the loss rate for trade receivables at approximately 2% as of June 30, 2022, down from 6% at March 31, 2022, reflecting improved economic conditions[128] 16. Accounting Pronouncements The company is evaluating the impact of ASU 2018-12, "Targeted Improvements to the Accounting for Long-Duration Contracts," effective for fiscal years beginning after December 15, 2022, with adoption expected to impact net income due to assumption updates - ASU 2018-12 (Targeted Improvements to the Accounting for Long-Duration Contracts) effective for fiscal years beginning after December 15, 2022[137] - Adoption of ASU 2018-12 is expected to impact statements of operations, as assumption updates will be recorded in net income[137] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of AMERCO's strategy, operating segments, critical accounting policies, and a detailed analysis of financial results for the first quarter of fiscal 2023, discussing liquidity, capital resources, and the outlook General This section outlines the MD&A structure, covering overall strategy, operating segments, critical accounting policies, results of operations, liquidity, and the fiscal 2023 outlook, clarifying differing fiscal year-ends for AMERCO and its insurance subsidiaries - MD&A covers overall strategy, operating segments, critical accounting policies, results of operations, liquidity, and fiscal 2023 outlook[140] - AMERCO's fiscal quarter ends June 30; insurance subsidiaries' quarter ends March 31[143] Overall Strategy AMERCO's core strategy is to maintain leadership in the "do-it-yourself" moving and storage industry in the US and Canada by expanding equipment and storage availability, with insurance segments supporting U-Haul customers and long-term capital growth in the senior market - Maintain leadership position in the United States and Canada "do-it-yourself" moving and storage industry[144] - Expand distribution and improve customer service by increasing moving equipment and storage units, expanding the independent dealer network, and leveraging eMove® capabilities[145] - Property and Casualty Insurance focuses on providing and administering property and casualty insurance to U-Haul and its customers[146] - Life Insurance focuses on long-term capital growth through direct writing and reinsuring of life insurance, Medicare supplement, and annuity products in the senior marketplace[146] Description of Operating Segments AMERCO's three reportable segments are Moving and Storage, Property and Casualty Insurance, and Life Insurance, with Moving and Storage focusing on network expansion and digital platforms, while insurance segments aim to increase protection package penetration and expand product offerings - Moving and Storage segment includes rental of trucks, trailers, portable moving and storage units, self-storage spaces, and sales of moving supplies, towing accessories, and propane[147] - Focus on expanding the dealer network, utilizing web-based technology (uhaul.com, Truck Share 24/7, Skip-the-Counter Self-Storage), and incorporating sustainable practices[148][151][152][153] - Property and Casualty Insurance underwrites protection packages (Safemove®, Safetow®, Safestor®) to U-Haul customers, focusing on increasing penetration[154] - Life Insurance provides life and health insurance products primarily to the senior market[155] Critical Accounting Policies and Estimates This section refers readers to the Annual Report on Form 10-K for a comprehensive discussion of critical accounting policies, noting a $17 thousand net impairment charge recorded during Q2 2022 under the current expected credit loss model for investments - Refer to the Annual Report on Form 10-K for detailed critical accounting policies and estimates[156] - A $17 thousand net impairment charge was recorded during the quarter ended June 30, 2022, related to investment impairment[158] Results of Operations This section analyzes the financial performance of AMERCO and its operating segments for the first quarter of fiscal 2023 compared to the prior year, detailing revenue and expense changes, leading to a slight decrease in consolidated earnings from operations and earnings per share AMERCO and Consolidated Entities Consolidated revenues increased by 8.5% year-over-year, driven by self-moving equipment rentals, self-storage revenues, and other revenue, but total costs and expenses increased by 13.1%, primarily due to higher operating and interest expenses, resulting in a 3.2% decrease in earnings available to common stockholders and EPS Consolidated Revenue and Earnings (Quarter Ended June 30, in thousands) | Metric | 2022 | 2021 | YoY Change | YoY Change (%) | | :----------------------------------- | :--------- | :--------- | :--------- | :------------- | | Consolidated Revenue | $1,597,840 | $1,472,856 | +$124,984 | +8.5% | | Earnings available to common stockholders | $334,002 | $345,175 | -$11,173 | -3.2% | | Basic and diluted earnings per common share | $17.03 | $17.60 | -$0.57 | -3.2% | - Self-moving equipment rental revenues increased $55.4 million (+5.4%) due to higher revenue per transaction and increased fleet size[159] - Self-storage revenues increased $35.8 million (+26.0%) due to a 19% increase in occupied units, new capacity (5.0 million net rentable sq ft added in last 12 months), and improved average revenue per occupied foot[160] - Total costs and expenses increased $128.0 million (+13.1%), with operating expenses for Moving and Storage up $118.0 million, including a $32.1 million increase in rental fleet repair costs[166] - Interest expense increased $10.6 million to $49.8 million due to a $1,570.2 million increase in outstanding debt[168] Moving and Storage The Moving and Storage segment's revenues increased by 9.4%, driven by self-moving equipment rentals, self-storage, and U-Box program growth, but operating expenses increased significantly due to higher fleet repair costs and U-Box shipping, leading to a slight decrease in earnings from operations Moving and Storage Segment Revenue (Quarter Ended June 30, in thousands) | Metric | 2022 | 2021 | YoY Change | YoY Change (%) | | :----------------------------------- | :--------- | :--------- | :--------- | :------------- | | Moving and Storage revenue | $1,523,598 | $1,393,254 | +$130,344 | +9.4% | | Self-moving equipment rentals | $1,091,710 | $1,036,213 | +$55,497 | +5.4% | | Self-storage revenues | $173,177 | $137,393 | +$35,784 | +26.0% | | Other revenue | $135,281 | $105,634 | +$29,647 | +28.1% | - Average monthly occupied self-storage units increased by 19% (81,900 units), and approximately 5.0 million net rentable square feet were added over the last twelve months[171][172] - Operating expenses increased $118.0 million, including a $32.1 million rise in rental fleet repair costs[175] - Earnings from operations (before equity in earnings of subsidiaries) decreased slightly to $481.6 million from $483.0 million[176] Property and Casualty Insurance The Property and Casualty Insurance segment saw an increase in net premiums due to higher U-Haul rental transactions, but net investment and interest income decreased, leading to a slight decrease in pretax earnings from operations despite lower benefits and losses incurred Property and Casualty Insurance Key Financials (Quarter Ended March 31, in thousands) | Metric | 2022 | 2021 | YoY Change | YoY Change (%) | | :----------------------------------- | :--- | :--- | :--------- | :------------- | | Net premiums | $20,800 | $17,400 | +$3,400 | +19.5% | | Net investment and interest income | $2,300 | $6,000 | -$3,700 | -61.7% | | Benefits and losses incurred | $4,400 | $5,200 | -$800 | -15.4% | | Pretax earnings from operations | $8,400 | $9,200 | -$800 | -8.7% | - The decrease in net investment and interest income was mainly due to a $3.8 million decrease in the market value of unaffiliated common stock[179] Life Insurance The Life Insurance segment experienced decreases in net premiums, deferred annuity deposits, and net investment and interest income, resulting in a decline in pretax earnings from operations despite reductions in operating expenses and benefits/losses Life Insurance Key Financials (Quarter Ended March 31, in thousands) | Metric | 2022 | 2021 | YoY Change | YoY Change (%) | | :----------------------------------- | :--- | :--- | :--------- | :------------- | | Net premiums | $25,800 | $28,700 | -$2,900 | -10.1% | | Deferred annuity deposits | $85,800 | $98,800 | -$13,000 | -13.2% | | Net investment and interest income | $27,400 | $29,300 | -$1,900 | -6.5% | | Benefits and losses incurred | $39,700 | $42,100 | -$2,400 | -5.7% | | Pretax earnings from operations | $1,500 | $2,200 | -$700 | -31.8% | - The decrease in net investment and interest income was impacted by decreased realized gains and a $1.5 million realized loss on derivatives[182] Liquidity and Capital Resources The company believes it has sufficient liquidity and capital for its operational plans, with increased cash and cash equivalents, significant reinvestment plans for Moving and Storage, and additional liquidity from federal income tax refunds and available borrowing capacity Liquidity and Capital Resources and Requirements of Our Operating Segments The company believes it has sufficient liquidity and capital for its operational plans, with cash and cash equivalents increasing to $3,098.3 million, and Moving and Storage planning significant reinvestment in its rental fleet and real estate, while insurance subsidiaries' assets are generally restricted Cash and Cash Equivalents (in thousands) | Metric | June 30, 2022 | March 31, 2022 | Change | | :----------------------------------- | :-------------- | :------------- | :------- | | Consolidated Cash and cash equivalents | $3,098,300 | $2,704,100 | +$394,200 | - Moving and Storage had $105.0 million additional cash available under existing credit facilities[189] - Moving and Storage plans to reinvest approximately $850 million (net of sales) in its rental equipment fleet for fiscal 2023[192] - Moving and Storage invested $278.2 million in real estate acquisitions, new construction, and renovation/repair in Q1 2023[193] Net Capital Expenditures (Quarter Ended June 30, in thousands) | Metric | 2022 | 2021 | YoY Change | | :----------------------------------- | :--------- | :--------- | :--------- | | Net capital expenditures | $486,957 | $326,265 | +$160,692 | - Assets of insurance subsidiaries are generally unavailable to fulfill obligations of non-insurance operations[195][197] Cash Provided from Operating Activities by Operating Segments Net cash provided by operating activities for Moving and Storage decreased due to a large federal income tax refund in the prior year, while Property and Casualty Insurance saw an increase and Life Insurance experienced a slight decrease, with both insurance segments maintaining adequate liquid assets Net Cash Provided by Operating Activities (in thousands) | Segment | Q1 2023 | Q1 2022 | YoY Change | | :----------------------------------- | :--------- | :--------- | :--------- | | Moving and Storage | $623,577 | $764,481 | -$140,904 | | Property and Casualty Insurance | $4,750 | $3,607 | +$1,143 | | Life Insurance | $23,044 | $26,125 | -$3,081 | - The decrease in Moving and Storage's operating cash flow was largely due to receiving $159 million of federal income tax refund claims in the first quarter of fiscal 2022[199] - Both Property and Casualty Insurance and Life Insurance segments believe their liquid assets and budgeted cash flow are adequate to meet foreseeable cash needs[201][203] Liquidity and Capital Resources - Summary The company has significant cash, access to credit facilities, and additional liquidity to meet business plans and capital expenditure requirements, having filed for approximately $366 million in federal income tax refunds, with $243 million already received, and maintaining $105.0 million available borrowing capacity - The company holds significant cash and has access to existing credit facilities and additional liquidity to meet anticipated capital expenditure requirements[204] - Filed for approximately $366 million in federal income tax refunds, of which $243 million has been received, providing additional liquidity[205] - Borrowing strategy focuses on asset-backed financing, rental equipment leases, and private placement borrowings, with $105.0 million available borrowing capacity under existing credit facilities as of June 30, 2022[206] Disclosures about Contractual Obligations and Commercial Commitments The company's estimates for future contractual obligations have not materially changed from those disclosed in the Annual Report on Form 10-K for the fiscal year ended March 31, 2022 - No material changes to contractual obligations from the prior Annual Report on Form 10-K[208] Fiscal 2023 Outlook For fiscal 2023, AMERCO plans to increase transaction volume, improve pricing, product, and utilization for self-moving equipment rentals, and increase investment in its truck fleet, with the storage business focusing on completing projects and increasing occupancy, while inflationary pressures are noted as a potential challenge - Focus on increasing transaction volume and improving pricing, product, and utilization for self-moving equipment rentals[209] - Anticipate increased investment in the rental equipment fleet (approximately $850 million net of sales) and increased spending on storage acquisitions and new development in fiscal 2023[192][210] - Continue to invest capital and resources in the U-Box® program[210] - Inflationary pressures may challenge the ability to maintain or improve operating margins[211] - Life Insurance aims to expand its presence in the senior market through agency growth, new product offerings, and business acquisition opportunities[212] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to financial market risks, including changes in interest rates and currency exchange rates, utilizing derivative financial instruments to mitigate interest rate risk, while foreign currency risk is not considered material and typically not hedged - Exposed to financial market risks, including changes in interest rates and currency exchange rates; derivative financial instruments are used for mitigation, not speculative purposes[214] Interest Rate Risk The company manages interest rate risk primarily through interest rate swap agreements to fix interest payments on variable rate debt, with insurance subsidiaries' fixed income portfolios also exposing them to interest rate risk, managed through asset and liability management strategies - Uses interest rate swap agreements to reduce exposure to changes in LIBOR swap rates on variable rate debt, effectively fixing interest payments[215] - As of June 30, 2022, had $1,182.1 million of variable rate debt obligations; a 100 basis point increase in LIBOR would decrease future earnings and cash flows by $8.9 million annually (after considering derivative contracts)[215] - Insurance subsidiaries' fixed income investment portfolios expose them to interest rate risk, managed through asset and liability management strategies[216] - Uses derivatives (equity call options) to hedge equity market exposure for indexed annuity products, but changes in fair value are recognized in net investment and interest income as they do not meet GAAP hedge accounting requirements[217][218] Foreign Currency Exchange Rate Risk The company's foreign currency exchange rate risk primarily stems from its Canadian business, which accounted for approximately 5.5% of total revenues in Q1 2023, and this exposure is not considered material and typically not hedged - Exposure to foreign currency exchange rates relates primarily to Canadian business, which generated approximately 5.5% of total revenues in Q1 2023[219] - A 10% change in the value of the U.S. dollar relative to the Canadian dollar would not be material to net income, and foreign currency risk is typically not hedged[219] Item 4. Controls and Procedures The CEO and CFO evaluated the effectiveness of disclosure controls and procedures, concluding they were effective at a reasonable assurance level as of the end of the fiscal quarter, acknowledging inherent limitations of control systems and stating no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Management, with the participation of the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of the end of the fiscal quarter, ensuring timely and accurate reporting of required information - CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of the end of the fiscal quarter[224] - Disclosure controls are designed to ensure information required for SEC reports is recorded, processed, summarized, and reported within specified time periods[224] Inherent Limitations on the Effectiveness of Controls This section acknowledges that no control system can provide absolute assurance against all errors or fraud due to inherent limitations such as resource constraints, human judgment errors, circumvention by individual acts or collusion, and management override - A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that its objectives will be met[225] - Inherent limitations include resource constraints, faulty judgments, simple errors, circumvention by individuals or collusion, and management override of controls[225] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[226] PART II OTHER INFORMATION Item 1. Legal Proceedings This section incorporates by reference information regarding legal proceedings from Note 8, Contingencies, in the Notes to Condensed Consolidated Financial Statements, indicating no new material information - Information regarding legal proceedings is incorporated by reference from Note 8, Contingencies, of the Notes to Condensed Consolidated Financial Statements[228] Item 1A. Risk Factors The company states no material updates to the risk factors previously described in its Annual Report on Form 10-K for the fiscal year ended March 31, 2022 - No material updates to the risk factors described in the previously filed Annual Report on Form 10-K for the fiscal year ended March 31, 2022[229] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for this report - Not applicable[230] Item 3. Defaults Upon Senior Securities This item is not applicable for this report - Not applicable[231] Item 4. Mine Safety Disclosures This item is not applicable for this report - Not applicable[231] Item 5. Other Information This item is not applicable for this report - Not applicable[232] Item 6. Exhibits This section lists all documents filed as part of this report, including corporate governance documents, supplemental indentures, CEO and CFO certifications, and Inline XBRL documents - Includes Amended and Restated Articles of Incorporation and Restated Bylaws of AMERCO[233] - Includes Forty-Fourth, Amended and Restated Forty-Second, and Amended and Restated Forty-Third Supplemental Indentures and Pledge and Security Agreements[234] - Includes Rule 13a-14(a)/15d-14(a) Certificates and Section 906 Certificates of the President and Chairman of the Board and the Chief Financial Officer[234] - Includes Inline XBRL Instance Document and Taxonomy Extension files[234]