EXHIBIT
99.1
GENERAL FINANCE CORPORATION REPORTS FIRST QUARTER RESULTS FOR
FISCAL YEAR 2019
PASADENA,
CA – November 6, 2018 – General Finance Corporation
(NASDAQ: GFN), a leading specialty rental services company offering
portable storage, modular space and liquid containment solutions in
North America and the Asia-Pacific region of Australia and New
Zealand (the “Company”), today announced its
consolidated financial results for the first quarter ended
September 30, 2018.
First Quarter 2019 Highlights
●
Total revenues were
$97.8 million, an increase of 27% over the first quarter of fiscal
year 2018.
●
Leasing revenues
were $58.3 million, an increase of 18% over the first quarter of
fiscal year 2018.
●
Leasing revenues,
excluding the oil and gas sector and the unfavorable foreign
currency impact, increased by 12% over the first quarter of fiscal
year 2018.
●
Leasing revenues
comprised 62% of total non-manufacturing revenues versus 66% for
the first quarter of fiscal year 2018.
●
Adjusted EBITDA was
$27.0 million, an increase of 53% over the first quarter of fiscal
year 2018.
●
Adjusted EBITDA
margin was 28%, compared to 23% in the first quarter of fiscal year
2018.
●
Net loss
attributable to common shareholders was $168,000, or $0.01 per
diluted share, compared to net loss attributable to common
shareholders of $1.0 million, or $0.04 per diluted share, for the
first quarter of fiscal year 2018. Included in the first quarter
fiscal year 2019 net loss is a non-cash charge of $3.4 million for
the change in valuation of the stand-alone bifurcated derivatives
in our outstanding convertible note in the Asia-Pacific area.
Excluding this non-cash charge, the first quarter of fiscal year
2019 would have had net income attributable to common shareholders
of approximately $3.3 million.
●
Average fleet unit
utilization was 81%, compared to 79% in the first quarter of fiscal
year 2018.
●
Three accretive
acquisitions were completed, two in North America and one in New
Zealand.
●
The convertible
note with an original stated principal balance of $26,000,000 was
converted into 3,058,824 shares of common stock on September 10,
2018.
Management Commentary
“We
are very pleased to have started our fiscal year 2019 with
extremely strong performance, where we delivered our highest
quarterly level of revenues in the Company’s history and our
highest quarterly level of adjusted EBITDA in almost four
years” said Jody Miller, President and Chief Executive
Officer. “Our North American leasing operations generated
record results, driven by overall strength in unit growth, fleet
utilization and average lease rate. Our core portable storage
business continues to perform at the high end of our expectations,
benefitting from our greenfield and acquisition expansion, organic
growth and superior customer service. We also continue to
experience significantly improved results in our liquid containment
business, driven by the strong oil and gas market in Texas. Despite
the negative impact of the weakening Australian dollar relative to
the U.S. dollar, our Asia-Pacific region delivered its fifth
consecutive quarter of year-over-year growth in adjusted
EBITDA.”
Mr.
Miller continued, “We continued to execute on our geographic
expansion strategy, growing our Pac-Van brand in North America with
two acquisitions and strengthening our Royal Wolf brand in the
Asia-Pacific area with an acquisition in New Zealand that operates
eight locations across the country. Subsequent to the quarter-end,
Pac-Van acquired a portable storage container business in Tilton,
New Hampshire, which will enable us to grow market share in the New
England region.”
Charles
Barrantes, Executive Vice President and Chief Financial Officer,
added, “Our first quarter results exceeded our expectations
and mark the seventh consecutive quarter where we have delivered
year-over-year growth in adjusted EBITDA. Our strong financial
results, combined with the conversion of the entire principal
balance of the convertible note, enabled us to end the quarter with
a net leverage ratio of 4.1 times, our lowest level in four
years.”
1
First Quarter 2019 Operating Summary
North America
Revenues
from our North American leasing operations for the first quarter of
fiscal year 2019 totaled $65.2 million, compared with $46.0 million
for the first quarter of fiscal year 2018, an increase of 42%.
Leasing revenues increased by 25% on a year-over-year basis. The
increase was across most sectors, but primarily in the oil and gas,
commercial, construction and industrial sectors. Sales revenues
increased by 91%, mainly driven by $7.1 million in sales to four
customers, primarily in the industrial, education and mining
sectors. Adjusted EBITDA was $20.7 million for the first quarter of
fiscal year 2019, compared with $12.4 million for the prior
year’s quarter, an increase of 67%. Adjusted EBITDA from
Pac-Van and Lone Star increased by 42% and 148% year-over-year, to
$13.5 million and $7.2 million, respectively, from $9.5 million and
$2.9 million, respectively, in the first quarter of fiscal year
2018.
North
American manufacturing revenues for the first quarter of fiscal
year 2019 totaled $4.3 million and included intercompany sales of
$0.5 million from products sold to our North American leasing
operations. This compares to $3.1 million of total sales, including
intercompany sales of $1.2 million during the first quarter of
fiscal year 2018. On a stand-alone basis, prior to intercompany
adjustments, adjusted EBITDA was approximately $0.6 million the
first quarter of fiscal year 2018, compared with a loss of $0.4
million for the year-ago quarter.
Asia-Pacific
Revenues
from the Asia-Pacific region for the first quarter of fiscal year
2019 totaled $28.8 million, compared with $29.0 million for the
first quarter of fiscal year 2018, a decrease of less than 1%. On a
local currency basis, total revenues increased by 7%. Increased
revenues in the transportation, utilities, mining and industrial
sectors were offset by decreases in the construction, retail and
wholesale sectors and a negative foreign exchange translation
effect between periods. Leasing revenues increased by approximately
1% on a year-over-year basis and 9% on a local currency basis,
driven primarily by increases in the mining, transportation and
consumer sectors. Adjusted EBITDA for the first quarter of 2019 was
$6.8 million, compared with $6.6 million for the year-ago quarter,
an increase of 3%. On a local currency basis, adjusted EBITDA
increased by 11%.
Balance Sheet and Liquidity Overview
At
September 30, 2018, the Company had total debt of $406.1 million
and cash and cash equivalents of $9.5 million, compared with $427.2
million and $21.6 million at June 30, 2018, respectively. At
September 30, 2018, our North American leasing operations had $44.1
million available to borrow under its $237.0 million credit
facility, and our Asia-Pacific leasing operations had, including
cash at the bank, $20.5 million (A$28.3 million), available to
borrow under its A$134.0 million credit facility.
During
the first quarter of fiscal year 2019, the Company generated cash
from operating activities of $4.0 million, as compared to $4.7
million for the year-ago quarter. For the first quarter of fiscal
year 2019, the Company invested a net $5.9 million ($4.5 million in
North America and $1.4 million in the Asia-Pacific) in the lease
fleet, as compared to $4.1 million in net fleet investment ($3.8
million in North America and $0.3 million in the Asia-Pacific) in
the first quarter of fiscal year 2018.
Receivables
were $54.8 million at September 30, 2018, as compared to $50.5
million at June 30, 2018. Days sales outstanding in receivables at
September 30, 2018, for our Asia-Pacific and North American leasing
operations were 37 and 46 days, as compared to 35 and 47 days,
respectively, as of June 30, 2018.
Outlook
On our
fourth quarter earnings conference call, we stated that
consolidated revenues for fiscal year 2019 were expected to be in
the range of $355 million to $375 million and that consolidated
adjusted EBITDA would be expected to increase by 6% to 12% in
fiscal year 2019 from fiscal year 2018. Based on our first quarter
results and assuming the Australian dollar averages 0.71 versus the
U.S. dollar during the rest of fiscal year 2019, we now expect that
consolidated revenues for fiscal year 2019 will be in the range of
$365 million to $385 million and that consolidated adjusted EBITDA
will increase by 14% to 20% in fiscal year 2019 from fiscal year
2018. This outlook does not take into account the impact of any
additional acquisitions that may occur in fiscal year
2019.
2
Conference Call Details
Management
will host a conference call today at 8:30 a.m. Pacific Time (11:30
a.m. Eastern Time), to discuss the Company’s operating
results. The conference call number for U.S. participants is (866)
901-5096, and the conference call number for participants outside
the U.S. is (706) 643-3717. The conference ID number for both
conference call numbers is 3849508. Additionally, interested
parties can listen to a live webcast of the call in the "Investor
Relations" section of the Company's website at http://www.generalfinance.com.
A
replay of the conference call may be accessed through November 20,
2018 by dialing (800) 585-8367 (U.S.) or (404) 537-3406
(international), using conference ID number 3849508.
After
the replay has expired, interested parties can listen to the
conference call via webcast in the "Investor Relations" section of
the Company's website at http://www.generalfinance.com.
About General Finance Corporation
Headquartered
in Pasadena, California, General Finance Corporation (NASDAQ: GFN,
www.generalfinance.com)
is a leading specialty rental services company offering portable
storage, modular space and liquid containment solutions.
Management’s expertise in these sectors drives disciplined
growth strategies, operational guidance, effective capital
allocation and capital markets support for the Company’s
subsidiaries. The Company’s Asia-Pacific leasing operations
in Australia consist of wholly-owned Royal Wolf Trading Australia
Pty Limited (www.royalwolf.com.au)
and Royal Wolf Trading New Zealand Limited (www.royalwolf.co.nz),
the leading providers of portable storage solutions in those
countries. The Company’s North America leasing operations
consist of wholly-owned subsidiaries Pac-Van, Inc. (www.pacvan.com)
and Lone Star Tank Rental Inc. (www.lonestartank.com),
providers of portable storage, office and liquid storage tank
containers, mobile offices and modular buildings. The Company also
owns Southern Frac, LLC (www.southernfrac.com),
a manufacturer of portable liquid storage tank containers and,
under the trade name Southern Fabrication Specialties (www.southernfabricationspecialties.com),
other steel-related products in North America.
Cautionary Statement about Forward-Looking Statements
Statements
in this news release that are not historical facts are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking
statements include, but are not limited to, statements addressing
management’s views with respect to future financial and
operating results, competitive pressures, increases in interest
rates for our variable rate indebtedness, our ability to raise
capital or borrow additional funds, changes in the Australian, New
Zealand or Canadian dollar relative to the U.S. dollar, regulatory
changes, customer defaults or insolvencies, litigation, the
acquisition of businesses that do not perform as we expect or that
are difficult for us to integrate or control, our ability to
procure adequate levels of products to meet customer demand, our
ability to procure adequate supplies for our manufacturing
operations, labor disruptions, adverse resolution of any contract
or other disputes with customers, declines in demand for our
products and services from key industries such as the Australian
resources industry or the U.S. oil and gas and construction
industries, or a write-off of all or a part of our goodwill and
intangible assets. These risks and uncertainties could cause actual
outcomes and results to differ materially from those described in
our forward-looking statements. We believe that the expectations
represented by our forward-looking statements are reasonable, yet
there can be no assurance that such expectations will prove to be
correct. Furthermore, unless otherwise stated, the forward-looking
statements contained in this press release are made as of the date
of the press release, and we do not undertake any obligation to
update publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future events
or otherwise unless required by applicable law. The forward-looking
statements contained in this press release are expressly qualified
by these cautionary statements. Readers are cautioned that these
forward-looking statements involve certain risks and uncertainties,
including those contained in filings with the Securities and
Exchange Commission.
Investor/Media Contact
Larry
Clark
Financial
Profiles, Inc.
310-622-8223
-Financial
Tables Follow-
3
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
|
|
Quarter
Ended September 30,
|
|
|
|
2017
|
2018
|
|
Revenues
|
|
|
|
Sales:
|
|
|
|
Lease
inventories and fleet
|
$25,382
|
$35,636
|
|
Manufactured
units
|
1,903
|
3,838
|
|
|
27,285
|
39,474
|
|
Leasing
|
49,632
|
58,318
|
|
|
76,917
|
97,792
|
|
|
|
|
|
Costs
and expenses
|
|
|
|
Cost of
Sales:
|
|
|
|
Lease
inventories and fleet (exclusive of the items shown separately
below)
|
18,410
|
26,821
|
|
Manufactured
units
|
2,176
|
3,098
|
|
Direct costs of
leasing operations
|
21,055
|
22,354
|
|
Selling and general
expenses
|
19,503
|
19,313
|
|
Depreciation and
amortization
|
10,126
|
10,001
|
|
|
|
|
|
Operating
income
|
5,647
|
16,205
|
|
|
|
|
|
Interest
income
|
15
|
48
|
|
Interest
expense
|
(5,822)
|
(8,625)
|
|
Loss on change in
valuation of bifurcated derivatives in Convertible
Note
|
—
|
(3,448)
|
|
Foreign exchange
and other
|
(1,202)
|
(1,511)
|
|
|
(7,009)
|
(13,536)
|
|
|
|
|
|
Income
(loss) before provision for income taxes
|
(1,362)
|
2,669
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
(518)
|
1,915
|
|
|
|
|
|
Net
income (loss)
|
(844)
|
754
|
|
|
|
|
|
Preferred stock
dividends
|
(922)
|
(922)
|
|
Noncontrolling
interest
|
801
|
—
|
|
|
|
|
|
Net
loss attributable to common stockholders
|
$(965)
|
$(168)
|
|
|
|
|
|
Net loss per common
share:
|
|
|
|
Basic
|
$(0.04)
|
$(0.01)
|
|
Diluted
|
(0.04)
|
(0.01)
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
26,611,688
|
27,391,220
|
|
Diluted
|
26,611,688
|
27,391,220
|
4
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
|
|
June 30, 2018
|
September 30, 2018
|
|
Assets
|
|
|
|
Cash
and cash equivalents
|
$21,617
|
$9,542
|
|
Trade
and other receivables, net
|
50,525
|
54,794
|
|
Inventories
|
22,731
|
38,530
|
|
Prepaid
expenses and other
|
8,023
|
10,954
|
|
Property,
plant and equipment, net
|
22,310
|
22,241
|
|
Lease
fleet, net
|
429,388
|
437,655
|
|
Goodwill
|
109,943
|
110,008
|
|
Other
intangible assets, net
|
25,150
|
24,578
|
|
Total assets
|
$689,687
|
$708,302
|
|
|
|
|
|
Liabilities
|
|
|
|
Trade
payables and accrued liabilities
|
$50,545
|
$58,417
|
|
Income
taxes payable
|
361
|
—
|
|
Unearned
revenue and advance payments
|
19,226
|
20,844
|
|
Senior
and other debt, net
|
427,218
|
406,122
|
|
Fair value of bifurcated derivatives in
Convertible Note
|
15,583
|
7,579
|
|
Deferred
tax liabilities
|
34,969
|
36,496
|
|
Total liabilities
|
547,902
|
529,458
|
|
|
|
|
|
Commitments
and contingencies
|
—
|
—
|
|
|
|
|
|
Equity
|
|
|
|
Cumulative
preferred stock, $.0001 par value: 1,000,000 shares authorized;
400,100 shares issued and outstanding (in series)
|
40,100
|
40,100
|
|
Common
stock, $.0001 par value: 100,000,000 shares authorized; 27,017,606
shares issued and outstanding at June 30, 2018 and 30,243,872 at
September 30, 2018
|
3
|
3
|
|
Additional
paid-in capital
|
139,547
|
175,525
|
|
Accumulated
other comprehensive loss
|
(17,091)
|
(16,764)
|
|
Accumulated
deficit
|
(21,278)
|
(20,524)
|
|
Total
General Finance Corporation stockholders’ equity
|
141,281
|
178,340
|
|
Equity
of noncontrolling interests
|
504
|
504
|
|
Total equity
|
141,785
|
178,844
|
|
Total liabilities and equity
|
$689,687
|
$708,302
|
5
Explanation and Use of Non-GAAP Financial Measures
Earnings
before interest, income taxes, impairment, depreciation and
amortization and other non-operating costs and income
(“EBITDA”) and adjusted EBITDA are non-U.S. GAAP
measures. We calculate adjusted EBITDA to eliminate the impact of
certain items we do not consider to be indicative of the
performance of our ongoing operations. In addition, in evaluating
adjusted EBITDA, you should be aware that in the future, we may
incur expenses similar to the expenses excluded from our
presentation of adjusted EBITDA. Our presentation of adjusted
EBITDA should not be construed as an inference that our future
results will be unaffected by unusual or non-recurring items. We
present adjusted EBITDA because we consider it to be an important
supplemental measure of our performance and because we believe it
is frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in our industry,
many of which present EBITDA and a form of adjusted EBITDA when
reporting their results. Adjusted EBITDA has limitations as an
analytical tool, and should not be considered in isolation, or as a
substitute for analysis of our results as reported under U.S. GAAP.
We compensate for these limitations by relying primarily on our
U.S. GAAP results and using adjusted EBITDA only supplementally.
The following tables show our adjusted EBITDA and the
reconciliation from net loss on a consolidated basis and from
operating income (loss) for our operating segments (in
thousands):
|
|
Quarter
Ended September 30,
|
|
|
|
2017
|
2018
|
|
Net income
(loss)
|
$(844)
|
$754
|
|
Add (deduct)
—
|
|
|
|
Provision
(benefit) for income taxes
|
(518)
|
1,915
|
|
Change
in valuation of bifurcated derivatives in Convertible
Note
|
—
|
3,448
|
|
Foreign
exchange and other
|
1,202
|
1,511
|
|
Interest
expense
|
5,822
|
8,625
|
|
Interest
income
|
(15)
|
(48)
|
|
Depreciation
and amortization
|
10,324
|
10,103
|
|
Share-based
compensation expense
|
1,658
|
678
|
|
Adjusted
EBITDA
|
$17,629
|
$26,986
|
|
|
Quarter
Ended September 30, 2017
|
Quarter
Ended September 30, 2018
|
||||||
|
|
Asia-Pacific
|
North
America
|
Asia-Pacific
|
North
America
|
||||
|
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
|
Operating income
(loss)
|
$803
|
$6,563
|
$(586)
|
$(1,259)
|
$2,416
|
$14,602
|
$488
|
$(1,466)
|
|
Add -
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
4,559
|
5,749
|
198
|
9
|
4,157
|
6,028
|
102
|
9
|
|
Share-based
compensation Xexpense
|
1,207
|
106
|
13
|
332
|
192
|
81
|
6
|
399
|
|
Adjusted
EBITDA
|
$6,569
|
$12,418
|
$(375)
|
$(918)
|
$6,765
|
$20,711
|
$596
|
$(1,086)
|
|
Intercompany
adjustments
|
|
|
|
$(65)
|
|
|
|
$(28)
|
6