EXHIBIT
99.1
GENERAL
FINANCE CORPORATION REPORTS FIRST QUARTER RESULTS FOR FISCAL YEAR
2020
PASADENA,
CA – November 7, 2019 – 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 first quarter ended
September 30, 2019.
First Quarter 2020 Highlights
●
Leasing revenues
were $58.9 million, compared to $58.3 million for the first quarter
of fiscal year 2019 .
●
Leasing revenues,
excluding the oil and gas sector and foreign currency exchange
rates, increased by 14% over the first quarter of fiscal year
2019.
●
Leasing revenues
comprised 67% of total non-manufacturing revenues versus 62% for
the first quarter of fiscal year 2019.
●
Total revenues were
$89.9 million, compared to $97.8 million for the first quarter of
fiscal year 2019.
●
Adjusted EBITDA was
$25.1 million, compared to $27.0 million for the first quarter of
fiscal year 2019.
●
Adjusted EBITDA
margin was 28% for both periods.
●
Net income
attributable to common shareholders was $5.0 million, or $0.16 per
diluted share, compared to a net loss attributable to common
shareholders of $9.1 million, or $0.33 per diluted share, for the
first quarter of fiscal year 2019. Included in these results were a
non-cash benefit of $1.0 million and a non-cash charge of $12.4
million in fiscal years 2020 and 2019, respectively, for the change
in valuation of stand-alone bifurcated derivatives.
●
Average fleet unit
utilization was 77%, compared to 81% in the first quarter of fiscal
year 2019.
●
Consistent with our
organic growth strategy, we opened one greenfield location in the
Asia-Pacific region.
●
Surpassed 100,000
units in combined lease fleet.
Management Commentary
“We
are pleased to have started our fiscal year 2020 with strong
performance at our core North American leasing operations,”
said Jody Miller, President and Chief Executive Officer.
“Pac-Van generated exceptional results, delivering an 18%
year-over-year increase in leasing revenues, driven by overall
strength in unit growth and average lease rate. Our liquid
containment business recorded lower results for the quarter due to
the moderation in oil and gas activity in Texas, and Royal Wolf
delivered improved performance, driven by a 4% leasing revenue
increase in local currency.”
Charles
Barrantes, Executive Vice President and Chief Financial Officer,
added, “Our first quarter results were generally in line with
our expectations, as we maintained our net leverage ratio at below
four times.”
First Quarter 2020 Operating Summary
North America
Revenues
from our North American leasing operations for the first quarter of
fiscal year 2020 totaled $60.6 million, compared with $65.2 million
for the first quarter of fiscal year 2019, a decrease of 7%.
However, leasing revenues increased by 2% on a year-over-year
basis. The increase extended across most sectors, but occurred
primarily in the construction, commercial, retail and industrial
sectors, while being substantially offset by a decrease in the oil
and gas sector. Sales revenues decreased by 24%, primarily in the
industrial, education and mining sectors. Fiscal year 2019 included
$7.1 million in sales to four customers that were not repeated in
fiscal year 2020. Adjusted EBITDA was $19.4 million for the first
quarter of fiscal year 2020, as compared with $20.7 million for the
prior year’s quarter, a decrease of 6%. Adjusted EBITDA from
Pac-Van increased by 18% to $15.9 million, from $13.5 million in
the first quarter of fiscal year 2019, and adjusted EBITDA from
Lone Star decreased by 51% to $3.5 million, from $7.2 million in
the year-ago quarter.
North
American manufacturing revenues for the first quarter of fiscal
year 2020 totaled $3.5 million and included intercompany sales of
$1.3 million from products sold to our North American leasing
operations. This compares to $4.3 million of total sales, including
intercompany sales of $0.5 million during the first quarter of
fiscal year 2019. On a stand-alone basis, prior to intercompany
adjustments, adjusted EBITDA was approximately $0.3 million the
first quarter of fiscal year 2020, as compared with $0.6 million
for the year-ago quarter.
Asia-Pacific
Revenues
from the Asia-Pacific region for the first quarter of fiscal year
2020 totaled $27.1 million, as compared with $28.8 million for the
first quarter of fiscal year 2019, a decrease of 6%. However, on a
local currency basis, total revenues increased by under 1%. The
slight increase in revenues in local dollars was driven primarily
by increased revenues in the mining, government and education
sectors, and was substantially offset by decreases in the
construction and utilities sectors. Leasing revenues decreased by
2% on a year-over-year basis, but increased by 4% on a local
currency basis, driven primarily by increases in the
transportation, consumer, industrial, retail, special events and
education sectors, partially offset by a decrease in the mining
sector. Adjusted EBITDA for the first quarter of 2020 was $6.8
million, comparable with the year-ago quarter. On a local currency
basis, adjusted EBITDA increased by approximately 8%.
Balance Sheet and Liquidity Overview
At
September 30, 2019, the Company had total debt of $405.9 million
and cash and cash equivalents of $12.1 million, compared with
$411.1 million and $10.4 million at June 30, 2019, respectively. At
September 30, 2019, our North American leasing operations had $64.2
million available to borrow under its $260.0 million credit
facility, and our Asia-Pacific leasing operations had, including
cash at the bank, $24.3 million (A$36.0 million), available to
borrow under its senior credit facility.
During
the first quarter of fiscal year 2020, the Company generated cash
from operating activities of $13.6 million, as compared to $4.0
million for the year-ago quarter. For the first quarter of fiscal
year 2020, the Company invested a net $7.3 million ($8.1 million in
North America and negative $0.8 million in the Asia-Pacific) in the
lease fleet, as compared to $5.9 million in net fleet investment
($4.5 million in North America and $1.4 million in the
Asia-Pacific) in the first quarter of fiscal year
2019.
Receivables
were $53.7 million at September 30, 2019, as compared to $56.2
million at June 30, 2019. Days sales outstanding in receivables at
September 30, 2019, for our Asia-Pacific and North American leasing
operations were 37 and 49 days, as compared to 34 and 46 days,
respectively, as of June 30, 2019.
Outlook
On our
fourth quarter earnings conference call, we stated that we expected
that consolidated revenues for fiscal year 2020 would be in the
range of $370 million to $390 million and that consolidated
adjusted EBITDA would be in the range of plus or minus 4% in fiscal
year 2020 from fiscal year 2019. Based on our first quarter
results, our revenue and adjusted EBITDA expectations for fiscal
year 2020 remain unchanged. This outlook does not take into account
the impact of any acquisitions that may occur during fiscal year
2020.
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 2086720. 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 25,
2019 by dialing (800) 585-8367 (U.S.) or (404) 537-3406
(international), using conference ID number 2086720. 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 Royal Wolf (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,
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-
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
|
|
Quarter
Ended September 30,
|
|
|
|
2018
|
2019
|
|
Revenues
|
|
|
|
Sales:
|
|
|
|
Lease
inventories and fleet
|
$35,636
|
$28,791
|
|
Manufactured
units
|
3,838
|
2,173
|
|
|
39,474
|
30,964
|
|
Leasing
|
58,318
|
58,933
|
|
|
97,792
|
89,897
|
|
|
|
|
|
Costs
and expenses
|
|
|
|
Cost of
Sales:
|
|
|
|
Lease
inventories and fleet (exclusive of the items shown separately
below)
|
26,821
|
20,216
|
|
Manufactured
units
|
3,098
|
1,827
|
|
Direct costs of
leasing operations
|
22,354
|
22,858
|
|
Selling and general
expenses
|
19,313
|
20,655
|
|
Depreciation and
amortization
|
10,001
|
9,411
|
|
|
|
|
|
Operating
income
|
16,205
|
14,930
|
|
|
|
|
|
Interest
income
|
48
|
186
|
|
Interest
expense
|
(8,625)
|
(7,324)
|
|
Change in value of
bifurcated derivatives Convertible Note
|
(12,366)
|
992
|
|
Foreign exchange
and other
|
(1,511)
|
(573)
|
|
|
(22,454)
|
(6,719)
|
|
|
|
|
|
Income
(loss) before provision for income taxes
|
(6,249)
|
8,211
|
|
|
|
|
|
Provision for
income taxes
|
1,915
|
2,260
|
|
|
|
|
|
Net
income (loss)
|
(8,164)
|
5,951
|
|
Preferred stock
dividends
|
(922)
|
(922)
|
|
|
|
|
|
Net
income (loss) attributable to common stockholders
|
$(9,086)
|
$5,029
|
|
|
|
|
|
Net income (loss)
per common share:
|
|
|
|
Basic
|
$(0.33)
|
$0.17
|
|
Diluted
|
(0.33)
|
0.16
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
27,391,220
|
30,205,248
|
|
Diluted
|
27,391,220
|
31,340,432
|
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
|
|
June 30, 2019
|
September 30, 2019
|
|
Assets
|
|
|
|
Cash
and cash equivalents
|
$10,359
|
$12,132
|
|
Trade
and other receivables, net
|
56,204
|
53,682
|
|
Inventories
|
29,077
|
33,186
|
|
Prepaid
expenses and other
|
9,823
|
12,380
|
|
Property,
plant and equipment, net
|
22,895
|
24,263
|
|
Lease
fleet, net
|
456,822
|
453,456
|
|
Operating
lease assets
|
—
|
68,166
|
|
Goodwill
|
111,323
|
110,309
|
|
Other
intangible assets, net
|
21,809
|
20,722
|
|
Total assets
|
$718,312
|
$788,296
|
|
|
|
|
|
Liabilities
|
|
|
|
Trade
payables and accrued liabilities
|
$48,460
|
$46,636
|
|
Income
taxes payable
|
506
|
354
|
|
Unearned
revenue and advance payments
|
22,671
|
26,921
|
|
Operating
lease liabilities
|
—
|
68,907
|
|
Senior
and other debt, net
|
411,141
|
405,851
|
|
Fair value of bifurcated derivatives in
Convertible Note
|
19,782
|
18,790
|
|
Deferred
tax liabilities
|
38,711
|
40,251
|
|
Total liabilities
|
541,271
|
607,710
|
|
|
|
|
|
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; 30,471,406
shares issued and outstanding at June 30, 2019 and 30,573,863 at
September 30, 2019
|
3
|
3
|
|
Additional
paid-in capital
|
183,933
|
183,779
|
|
Accumulated
other comprehensive loss
|
(18,755)
|
(21,007)
|
|
Accumulated
deficit
|
(28,744)
|
(22,793)
|
|
Total
General Finance Corporation stockholders’ equity
|
176,537
|
180,082
|
|
Equity
of noncontrolling interests
|
504
|
504
|
|
Total equity
|
177,041
|
180,586
|
|
Total liabilities and equity
|
$718,312
|
$788,296
|
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 (loss) on a consolidated basis and
from operating income (loss) for our operating segments (in
thousands):
|
|
Quarter
Ended September 30, 2018
|
Quarter
Ended September 30, 2019
|
||||||
|
|
Asia-Pacific
|
North
America
|
Asia-Pacific
|
North
America
|
||||
|
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
|
Operating income
(loss)
|
$2,416
|
$14,602
|
$488
|
$(1,466)
|
$2,703
|
$13,669
|
$176
|
$(1,666)
|
|
Add -
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
4,157
|
6,028
|
102
|
9
|
3,953
|
5,637
|
101
|
3
|
|
Share-based
compensation Xexpense
|
192
|
81
|
6
|
399
|
183
|
117
|
9
|
374
|
|
Adjusted
EBITDA
|
$6,765
|
$20,711
|
$596
|
$(1,058)
|
$6,839
|
$19,423
|
$286
|
$(1,289)
|
|
Intercompany
adjustments
|
|
|
|
$(28)
|
|
|
|
$(134)
|
6