Attached files
file | filename |
---|---|
8-K - PRIMARY DOCUMENT - General Finance CORP | form_8k.htm |
EXHIBIT
99.1
GENERAL FINANCE CORPORATION REPORTS SECOND QUARTER RESULTS FOR
FISCAL YEAR 2018
PASADENA,
CA – February 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 in the Asia-Pacific region of Australia and New
Zealand (the “Company”), today announced its
consolidated financial results for the second quarter and six
months (“YTD”) ended December 31, 2017.
Second Quarter 2018 Highlights
●
Total revenues were
$92.1 million, compared to $72.3 million for the second quarter of
fiscal year 2017.
●
Leasing revenues
comprised 60% of total non-manufacturing revenues versus 64% for
the second quarter of fiscal year 2017.
●
Leasing revenues
increased by approximately 11%, excluding the oil and gas sector
and the favorable foreign currency impact.
●
Adjusted EBITDA was
$25.2 million, compared to $17.8 million in the second quarter of
fiscal year 2017.
●
Adjusted EBITDA
margin was 27%, compared to 25% in the second quarter of fiscal
year 2017.
●
Net income
attributable to common shareholders was $2.1 million, or $0.08 per
diluted share, compared to net loss attributable to common
shareholders of $0.6 million, or $0.02 per diluted share, for the
second quarter of fiscal year 2017.
●
The provision for
income taxes was $0.8 million, which included the re-measurement of
our estimated deferred tax assets and liabilities as a result of
the federal tax enactment on December 22, 2017 that resulted in an
estimated benefit of approximately $6.5 million. This estimated tax
benefit was offset by, among other things, approximately $5.2
million for both the estimated transition tax on accumulated
foreign earnings and a valuation allowance that was established to
offset previously recognized deferred tax assets for foreign tax
credit carryforwards that we believe will not be
realized.
●
Average fleet unit
utilization was 82%, compared to 79% in the second quarter of
fiscal year 2017.
●
Opened one
greenfield location in the Asia-Pacific region during the
quarter.
●
One acquisition
completed in North America during the quarter, adding two
locations.
YTD 2018 Highlights
●
Total revenues were
$169.0 million, compared to $135.1 million for the first six months
of fiscal year 2017.
●
Leasing revenues
comprised 63% of total non-manufacturing revenues versus 65% for
the first six months of fiscal year 2017.
●
Leasing revenues
increased by 10%, excluding the oil and gas sector and the
favorable foreign currency impact.
●
Adjusted EBITDA was
$42.8 million, compared to $30.7 million for the first six months
of fiscal year 2017.
●
Adjusted EBITDA
margin was 25%, compared to 23% for the six months of fiscal year
2017.
●
Net income
attributable to common shareholders was $1.1 million, or $0.04 per
diluted share, compared to net loss attributable to common
shareholders of $2.8 million, or $0.11 per diluted share, for the
first six months of fiscal year 2017.
●
The provision for
income taxes was $0.3 million, which included the re-measurement of
our estimated deferred tax assets and liabilities, and other
matters discussed above, as a result of the federal tax enactment
on December 22, 2017.
●
Average fleet unit
utilization was 81%, compared to 77% in the first six months of
fiscal year 2017.
●
Opened three
greenfield locations during the first six months of fiscal year
2017, two in the Asia-Pacific region and one in North
America.
●
Completed two
acquisitions in North America during the six month
period.
●
Funded the
successful acquisition of the noncontrolling interest of Royal
Wolf.
1
Management Commentary
"We are
pleased to report very strong performance for the second quarter of
fiscal year 2018 as demonstrated by our highest quarterly level of
revenues and adjusted EBITDA in three years,” said Ronald
Valenta, Executive Chairman of the Board. “In North America,
our core portable storage business continues to experience growth
across all product lines, driven primarily by increasing average
lease rates and fleet utilization. With the recovering oil and gas
market in Texas, we continue to experience improved results in our
liquid containment business, supported by our superior customer
service and safety record. Our Asia-Pacific region also delivered
its strongest quarterly performance in three years, where higher
sales revenues included a large sale of a customized container
product in the utilities sector.”
Mr.
Jody Miller, President and Chief Executive Officer added,
“The efforts of all of our operating teams, combined with our
disciplined and focused strategy over the past few years, have led
to these positive results, and I am confident that our strong
execution will continue across each of our businesses. Our
year-to-date performance gives us confidence in our outlook for the
remainder of the fiscal year, as we continue to pursue our ongoing
strategy of geographic expansion and diversification and lay a
solid foundation for fiscal 2019 and beyond.”
Charles
Barrantes, Executive Vice President and Chief Financial Officer,
commented, “This quarter’s results mark the fourth
quarter in a row where we have delivered year-over-year growth in
adjusted EBITDA and we expect that the second half of our current
fiscal year will continue to show strong adjusted EBITDA growth
over the second half of last fiscal year.”
Second Quarter 2018 Operating Summary
North America
Revenues
from our North American leasing operations for the second quarter
of fiscal year 2018 totaled $51.1 million, compared with $40.7
million for the second quarter of fiscal year 2017, an increase of
26%. Leasing revenues increased by 30% on a year-over-year basis,
most notably in the oil and gas, commercial and construction
sectors. Adjusted EBITDA was $15.9 million for the second quarter
of fiscal year 2018, compared with $10.9 million for the year-ago
quarter, an increase of 46%. Adjusted EBITDA from Pac-Van and Lone
Star increased by approximately 21% and 250% year-over-year, to
$11.7 million and $4.2 million, respectively, from $9.7 million and
$1.2 million, respectively, in the second quarter of fiscal year
2017.
North
American manufacturing revenues for the second quarter of fiscal
year 2017 totaled $3.5 million and included intercompany sales of
$1.4 million from products sold to our North American leasing
operations. This compares to $1.9 million of total sales, including
$0.3 million intercompany revenues during the second quarter of
fiscal year 2017. On a stand-alone basis, prior to intercompany
adjustments, adjusted EBITDA was $0.1 million for the quarter, as
compared to a loss of $0.5 million in the second quarter of fiscal
year 2017.
Asia-Pacific
Revenues
from the Asia-Pacific region for the second quarter of fiscal year
2018 totaled $38.9 million, compared with $30.0 million for the
second quarter of fiscal year 2017, an increase of 30%. The
increase in revenues was largely driven by two large sales to
customers in the utilities and transportation sectors totaling
approximately $10.5 million and were accompanied by a favorable
foreign currency translation effect between periods. The large
sales were partially offset by decreases in the oil and gas and
industrial sectors. Leasing revenues were approximately flat on a
year-over-year basis, where increases in the construction, mining,
industrial and transportation sectors were offset by declines in
the oil and gas sector. Adjusted EBITDA for the second quarter of
2018 was $10.2 million, compared with $8.4 million for the same
quarter last year, an increase of over 21%. On a local currency
basis, revenues increased by 28% and adjusted EBITDA increased by
approximately 20%.
2
Balance Sheet and Liquidity Overview
At
December 31, 2017, the Company had total debt of $440.1 million and
cash and cash equivalents of $5.5 million, compared with $355.6
million and $7.8 million at June 30, 2017, respectively. At
December 31, 2017, our Asia-Pacific leasing operations had $12.2
million (A$15.7 million) available to borrow under its $97.6
million (A$125.0 million) credit facility, and our North American
leasing operations had $34.0 million available to borrow under its
$237 million credit facility.
During
the first six months of fiscal year 2018, the Company generated
cash from operating activities of $14.6 million, as compared to
$10.9 million for the first six months of fiscal year 2017. For the
first six months of fiscal year 2018, the Company invested a net
$12.9 million ($11.6 million in North America and $1.3 million in
the Asia-Pacific) in the lease fleet, as compared to $15.1 million
in net fleet investment ($7.1 million in North America and $8.0
million in the Asia-Pacific) in the first six months of fiscal year
2017.
Receivables
were $54.7 million at December 31, 2017, as compared to $44.4
million at June 30, 2017. Days sales outstanding in receivables at
December 31, 2017, for our Asia-Pacific and North American leasing
operations were 45 and 50 days, as compared to 49 and 46 days,
respectively, as of June 30, 2017.
Outlook
Based
on our year-to-date results and assuming the Australian dollar
averages 0.78 versus the U.S. dollar for the remainder of fiscal
year 2018, we now expect that consolidated revenues for fiscal year
2018 will be in the range of $320 million to $330 million and that
consolidated adjusted EBITDA will increase by 28% to 34% in fiscal
year 2018 from fiscal year 2017. This outlook does not take into
account the impact of any additional acquisitions that may occur in
the second half of fiscal year 2018.
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 7297433. 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 February 20,
2018 by dialing (800) 585-8367 (U.S.) or (404) 537-3406
(international), using conference ID number 7297433.
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 and New Zealand consist of wholly-owned subsidiary
Royal Wolf Holdings Limited (www.royalwolf.com.au),
the leading provider of portable storage solutions in those
regions. 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 other
steel related products in North America.
3
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-
4
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
|
Quarter
Ended December 31,
|
Six
Months Ended December 31,
|
||
|
2016
|
2017
|
2016
|
2017
|
|
|
|
|
|
Revenues
|
|
|
|
|
Sales:
|
|
|
|
|
Lease inventories
and fleet
|
$25,387
|
$36,065
|
$45,759
|
$61,447
|
Manufactured
units
|
1,663
|
2,080
|
2,757
|
3,983
|
|
27,050
|
38,145
|
48,516
|
65,430
|
Leasing
|
45,277
|
53,985
|
86,609
|
103,617
|
|
72,327
|
92,130
|
135,125
|
169,047
|
|
|
|
|
|
Costs
and expenses
|
|
|
|
|
Cost of
sales:
|
|
|
|
|
Lease inventories
and fleet (exclusive of the items shown separately
below)
|
18,140
|
25,900
|
31,972
|
44,310
|
Manufactured
units
|
2,115
|
1,964
|
3,527
|
4,140
|
Direct costs of
leasing operations
|
18,658
|
21,951
|
36,518
|
43,006
|
Selling and general
expenses
|
16,429
|
17,725
|
32,957
|
37,228
|
Depreciation and
amortization
|
9,888
|
9,531
|
19,391
|
19,657
|
|
|
|
|
|
Operating
income
|
7,097
|
15,059
|
10,760
|
20,706
|
|
|
|
|
|
Interest
income
|
13
|
23
|
36
|
38
|
Interest
expense
|
(5,016)
|
(9,447)
|
(9,847)
|
(15,269)
|
Foreign currency
exchange and other gain (loss)
|
189
|
(1,852)
|
94
|
(3,054)
|
|
(4,814)
|
(11,276)
|
(9,717)
|
(18,285)
|
|
|
|
|
|
Income
before provision for income taxes
|
2,283
|
3,783
|
1,043
|
2,421
|
|
|
|
|
|
Provision for
income taxes
|
913
|
809
|
417
|
291
|
|
|
|
|
|
Net
income
|
1,370
|
2,974
|
626
|
2,130
|
|
|
|
|
|
Preferred stock
dividends
|
(922)
|
(922)
|
(1,844)
|
(1,844)
|
Noncontrolling
interests
|
(1,087)
|
—
|
(1,558)
|
801
|
|
|
|
|
|
Net
income (loss) attributable to common
stockholders
|
$(639)
|
$2,052
|
$(2,776)
|
$1,087
|
|
|
|
|
|
Net income (loss)
per common share:
|
|
|
|
|
Basic
|
$(0.02)
|
$0.08
|
$(0.11)
|
$0.04
|
Diluted
|
(0.02)
|
0.08
|
(0.11)
|
0.04
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
Basic
|
26,300,061
|
26,636,594
|
26,259,433
|
26,624,141
|
Diluted
|
26,300,061
|
27,311,401
|
26,259,433
|
27,297,266
|
5
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
|
June 30, 2017
|
December 31, 2017
|
Assets
|
|
|
Cash
and cash equivalents
|
$7,792
|
$5,507
|
Trade
and other receivables, net
|
44,390
|
54,689
|
Inventories
|
29,648
|
32,801
|
Prepaid
expenses and other
|
8,923
|
8,563
|
Property,
plant and equipment, net
|
23,388
|
23,316
|
Lease
fleet, net
|
427,275
|
436,585
|
Goodwill
|
105,129
|
109,989
|
Other
intangible assets, net
|
28,769
|
26,794
|
Total assets
|
$675,314
|
$698,244
|
|
|
|
Liabilities
|
|
|
Trade
payables and accrued liabilities
|
$42,774
|
$47,012
|
Unearned
revenue and advance payments
|
15,548
|
17,066
|
Senior
and other debt, net
|
355,638
|
440,071
|
Fair value of embedded derivative in
Convertible Note
|
—
|
3,581
|
Deferred
tax liabilities
|
38,106
|
36,901
|
Total liabilities
|
452,066
|
544,631
|
|
|
|
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; 26,611,688
shares issued and outstanding at June 30, 2017 and 26,669,618 at
December 31, 2017
|
3
|
3
|
Additional
paid-in capital
|
120,370
|
138,333
|
Accumulated
other comprehensive loss
|
(12,355)
|
(15,286)
|
Accumulated
deficit
|
(12,972)
|
(10,041)
|
Total
General Finance Corporation stockholders’ equity
|
135,146
|
153,109
|
Equity
of noncontrolling interests
|
88,102
|
504
|
Total equity
|
223,248
|
153,613
|
Total liabilities and equity
|
$675,314
|
$698,244
|
6
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 income on a consolidated basis and from
operating income (loss) for our geographic segments (in
thousands):
|
Quarter
Ended December 31,
|
Six
Months Ended December 31,
|
||
|
2016
|
2017
|
2016
|
2017
|
Net
income
|
$1,370
|
$2,974
|
$626
|
$2,130
|
Add (deduct)
—
|
|
|
|
|
Provision
for income taxes
|
913
|
809
|
417
|
291
|
Foreign
currency exchange and other loss (gain)
|
(189)
|
1,852
|
(94)
|
3,054
|
Interest
expense
|
5,016
|
9,447
|
9,847
|
15,269
|
Interest
income
|
(13)
|
(23)
|
(36)
|
(38)
|
Depreciation
and amortization
|
10,086
|
9,668
|
19,787
|
19,992
|
Share-based
compensation expense
|
596
|
439
|
191
|
2,097
|
Adjusted
EBITDA
|
$17,779
|
$25,166
|
$30,738
|
$42,795
|
|
Quarter
Ended December 31, 2016
|
Quarter
Ended December 31, 2017
|
||||||
|
Asia-Pacific
|
North
America
|
Asia-Pacific
|
North
America
|
||||
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
Operating income
(loss)
|
$3,956
|
$4,964
|
$(733)
|
$(1,268)
|
$6,251
|
$10,093
|
$(77)
|
$(1,351)
|
Add -
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
4,218
|
5,851
|
198
|
8
|
3,936
|
5,778
|
137
|
9
|
Share-based
compensation expense
|
194
|
82
|
22
|
298
|
-
|
87
|
13
|
339
|
Adjusted
EBITDA
|
$8,368
|
$10,897
|
$(513)
|
$(962)
|
$10,187
|
$15,958
|
$73
|
$(1,003)
|
Intercompany
adjustments
|
|
|
|
$(11)
|
|
|
|
$(49)
|
|
Six
Months Ended December 31, 2016
|
Six
Months Ended December 31, 2017
|
||||||
|
Asia-Pacific
|
North
America
|
Asia-Pacific
|
North
America
|
||||
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
Operating income
(loss)
|
$6,819
|
$7,570
|
$(1,351)
|
$(2,603)
|
$7,054
|
$16,656
|
$(663)
|
$(2,610)
|
Add -
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
8,026
|
11,732
|
396
|
10
|
8,495
|
11,527
|
335
|
18
|
Share-based
compensation expense
|
(522)
|
167
|
44
|
502
|
1,207
|
193
|
26
|
671
|
Adjusted
EBITDA
|
$14,323
|
$19,469
|
$(911)
|
$(2,091)
|
$16,756
|
$28,376
|
$(302)
|
$(1,921)
|
Intercompany
adjustments
|
|
|
|
$(52)
|
|
|
|
$(114)
|
7