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EX-99.2 - ADDITIONAL EXHIBITS - General Finance CORP | exhibit_992.pdf |
EX-99.2 - ADDITIONAL EXHIBITS - General Finance CORP | exhibit_992.htm |
8-K - PRIMARY DOCUMENT - General Finance CORP | form_8k.htm |
EXHIBIT
99.1
GENERAL FINANCE CORPORATION REPORTS FIRST QUARTER RESULTS FOR
FISCAL YEAR 2018
PASADENA,
CA – November 7, 2017 – 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, 2017.
First Quarter 2018 Highlights
●
Total revenues were
$76.9 million, an increase of 22% over the first quarter of fiscal
year 2017.
●
Leasing revenues
were $49.6 million, an increase of 20% over the first quarter of
fiscal year 2017.
●
Leasing revenues,
excluding the oil and gas sector and the favorable foreign currency
impact, increased by 10% over the first quarter of fiscal year
2017.
●
Leasing revenues
comprised 66% of total non-manufacturing revenues versus 67% for
the first quarter of fiscal year 2017.
●
Adjusted EBITDA was
$17.6 million, an increase of approximately 36% over the first
quarter of fiscal year 2017.
●
Adjusted EBITDA
margin was 23%, compared to 21% in the first quarter of fiscal year
2017.
●
Net loss
attributable to common shareholders was $1.0 million, or $0.04 per
diluted share, compared to net loss attributable to common
shareholders of $2.1 million, or $0.08 per diluted share, for the
first quarter of fiscal year 2017.
●
Average fleet unit
utilization was 79%, compared to 73% in the first quarter of fiscal
year 2017.
●
Completed one
acquisition in North America during the quarter.
●
Opened two
greenfield locations during the quarter, one each in North America
and the Asia-Pacific region.
●
Funded the
successful acquisition of the noncontrolling interest of Royal
Wolf.
Management Commentary
“We
are very pleased and encouraged by our strong start to fiscal year
2018,” said Ronald Valenta, Chairman and Chief Executive
Officer. “In North America, our core portable storage
business continues to perform at the high end of our expectations,
benefitting from our geographic expansion, organic growth and
superior customer service. We have experienced significantly
improved results in our liquid containment business, driven by
higher average fleet utilization and lease rates due to an active
oil and gas market in Texas. In the Asia-Pacific region, our
revenues also increased, primarily driven by continued strength
from the construction sector and a higher Australian dollar
relative to the U.S. dollar. These positive results give us
confidence in our outlook for the full fiscal year as we continue
to pursue our strategy of geographic expansion and
diversification.”
Mr.
Valenta continued, “We are pleased that on September 25, 2017
we funded the acquisition of the 49.2 million common shares of
Royal Wolf not owned by the Company. We now fully own Royal Wolf
and look forward to a more simplified capital structure, as well as
continued operational focus and the elimination of public company
expenses.”
Charles
Barrantes, Executive Vice President and Chief Financial Officer,
commented, “Our strong start to fiscal 2018 marks the third
quarter in a row where we have delivered year-over-year growth in
adjusted EBITDA. That, taken together with the finalization of our
funding to acquire the noncontrolling interest of Royal Wolf, the
fiscal 2017 refinancing of our North American senior credit
facilities and the “tack-on” offering to our Senior
Notes, provides us with sufficient capital available to support our
plans for continued growth.”
1
First Quarter 2018 Operating Summary
North America
Revenues
from our North American leasing operations for the first quarter of
fiscal year 2018 totaled $46.0 million, compared with $37.5 million
for the first quarter of fiscal year 2017, an increase of 23%.
Leasing revenues increased by 26% on a year-over-year basis, most
notably in the oil and gas, commercial and construction sectors.
Adjusted EBITDA was $12.4 million for the first quarter of fiscal
year 2018, compared with $8.6 million for the year-ago quarter, an
increase of over 44%. Adjusted EBITDA from Pac-Van and Lone Star
increased by 25% and approximately 190% year-over-year, to $9.5
million and $2.9 million, respectively, from $7.6 million and $1.0
million, respectively, in the first quarter of fiscal year
2017.
North
American manufacturing revenues for the first quarter of fiscal
year 2018 totaled $3.1 million and included intercompany sales of
$1.2 million from products sold to our North American leasing
operations. This compares to $1.7 million of total sales, including
intercompany sales of $0.6 million during the first quarter of
fiscal year 2017. On a stand-alone basis, prior to intercompany
adjustments, adjusted EBITDA was a loss of approximately $0.4
million for both first quarter periods of fiscal years 2018 and
2017.
Asia-Pacific
Revenues
from the Asia-Pacific region for the first quarter of fiscal year
2018 totaled $29.0 million, compared with $24.2 million for the
first quarter of fiscal year 2017, an increase of 20%. Revenues
increased primarily in the construction, transportation and retail
sectors, partially offset by a decrease in the oil and gas sector,
and were accompanied by a favorable foreign exchange translation
effect between periods. Leasing revenues increased by approximately
9% on a year-over-year basis, driven by increases across most
sectors, but particularly in the construction, manufacturing,
transportation and consumer sectors, partially offset by a decrease
in the oil and gas sector. Adjusted EBITDA for the first quarter of
2018 was $6.6 million, compared with $6.0 million for the year-ago
quarter, an increase of 10%. On a local currency basis, total
revenues increased by 13% and adjusted EBITDA increased by
4%.
Balance Sheet and Liquidity Overview
At
September 30, 2017, the Company had total debt of $435.6 million
and cash and cash equivalents of $10.2 million, compared with
$355.6 million and $7.8 million at June 30, 2017, respectively. The
increase in total debt during the quarter was primarily due to new
borrowings used to finance the acquisition of the 49.2 million
common shares of Royal Wolf not owned by the Company. At September
30, 2017, our Asia-Pacific leasing operations had $13.5 million
(A$17.2 million) available to borrow under its $117.5 million
(A$150.0 million) credit facility, and our North America leasing
operations had $35.0 million available to borrow under its $237
million credit facility.
During
the first quarter of fiscal year 2018, the Company generated cash
from operating activities of $4.7 million, as compared to cash used
in operations of approximately $0.4 million for the year-ago
quarter. For the first quarter of fiscal year 2018, the Company
invested a net $4.1 million ($3.8 million in North America and $0.3
million in the Asia-Pacific) in the lease fleet, as compared to
$6.7 million in net fleet investment ($4.4 million in North America
and $2.3 million in the Asia-Pacific) in the first quarter of
fiscal year 2017.
Receivables
were $49.3 million at September 30, 2017, as compared to $44.4
million at June 30, 2017. Days sales outstanding in receivables at
September 30, 2017, for our Asia-Pacific and North American leasing
operations were 50 and 48 days, as compared to 49 and 46 days,
respectively, as of June 30, 2017.
Outlook
On our
fourth quarter earnings conference call, we stated that we expected
that consolidated revenues for fiscal year 2018 would be in the
range of $295 million to $315 million and that consolidated
adjusted EBITDA would increase by 8% to 16% in fiscal year 2018
from fiscal year 2017. Based on our first quarter results and
assuming the Australian dollar averages 0.78 versus the U.S. dollar
in fiscal year 2018, which represents a 3% increase from fiscal
year 2017, we expect that consolidated revenues and adjusted EBITDA
will be at the higher end of that range. This outlook does not take
into account the impact of any additional acquisitions that may
occur in fiscal year 2018.
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 98884636. 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 21,
2017 by dialing (800) 585-8367 (U.S.) or (404) 537-3406
(international), using conference ID number 98884636.
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 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.
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
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
|
Quarter
Ended September 30,
|
|
|
2016
|
2017
|
Revenues
|
|
|
Sales:
|
|
|
Lease
inventories and fleet
|
$20,372
|
$25,382
|
Manufactured
units
|
1,094
|
1,903
|
|
21,466
|
27,285
|
Leasing
|
41,332
|
49,632
|
|
62,798
|
76,917
|
|
|
|
Costs
and expenses
|
|
|
Cost of
Sales:
|
|
|
Lease
inventories and fleet (exclusive of the items shown separately
below)
|
13,832
|
18,410
|
Manufactured
units
|
1,412
|
2,176
|
Direct costs of
leasing operations
|
17,860
|
21,055
|
Selling and general
expenses
|
16,528
|
19,503
|
Depreciation and
amortization
|
9,503
|
10,126
|
|
|
|
Operating
income
|
3,663
|
5,647
|
|
|
|
Interest
income
|
23
|
15
|
Interest
expense
|
(4,831)
|
(5,822)
|
Foreign currency
exchange loss and other
|
(95)
|
(1,202)
|
|
(4,903)
|
(7,009)
|
|
|
|
Loss
before provision for income taxes
|
(1,240)
|
(1,362)
|
|
|
|
Benefit for income
taxes
|
(496)
|
(518)
|
|
|
|
Net
loss
|
(744)
|
(844)
|
|
|
|
Preferred stock
dividends
|
(922)
|
(922)
|
Noncontrolling
interest
|
(471)
|
801
|
|
|
|
Net
loss attributable to common stockholders
|
$(2,137)
|
$(965)
|
|
|
|
Net loss per common
share:
|
|
|
Basic
|
$(0.08)
|
$(0.04)
|
Diluted
|
(0.08)
|
(0.04)
|
|
|
|
Weighted average
shares outstanding:
|
|
|
Basic
|
26,218,805
|
26,611,688
|
Diluted
|
26,218,805
|
26,611,688
|
4
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
|
June 30, 2017
|
September 30, 2017
|
Assets
|
|
|
Cash
and cash equivalents
|
$7,792
|
$10,227
|
Trade
and other receivables, net
|
44,390
|
49,263
|
Inventories
|
29,648
|
34,561
|
Prepaid
expenses and other
|
8,923
|
8,703
|
Property,
plant and equipment, net
|
23,388
|
22,997
|
Lease
fleet, net
|
427,275
|
429,499
|
Goodwill
|
105,129
|
106,286
|
Other
intangible assets, net
|
28,769
|
27,154
|
Total assets
|
$675,314
|
$688,690
|
|
|
|
Liabilities
|
|
|
Trade
payables and accrued liabilities
|
$42,774
|
$45,811
|
Unearned
revenue and advance payments
|
15,548
|
19,398
|
Senior
and other debt, net
|
355,638
|
435,628
|
Deferred
tax liabilities
|
38,106
|
36,998
|
Total liabilities
|
452,066
|
537,835
|
|
|
|
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 September 30,
2017
|
3
|
3
|
Additional
paid-in capital
|
120,370
|
138,259
|
Accumulated
other comprehensive loss
|
(12,355)
|
(14,996)
|
Accumulated
deficit
|
(12,972)
|
(13,015)
|
Total
General Finance Corporation stockholders’ equity
|
135,146
|
150,351
|
Equity
of noncontrolling interests
|
88,102
|
504
|
Total equity
|
223,248
|
150,855
|
Total liabilities and equity
|
$675,314
|
$688,690
|
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 geographic segments (in
thousands):
|
Quarter
Ended September 30,
|
|
|
2016
|
2017
|
Net
loss
|
$(744)
|
$(844)
|
Add (deduct)
—
|
|
|
Benefit
for income taxes
|
(496)
|
(518)
|
Foreign
currency exchange loss and other
|
95
|
1,202
|
Interest
expense
|
4,831
|
5,822
|
Interest
income
|
(23)
|
(15)
|
Depreciation
and amortization
|
9,701
|
10,324
|
Share-based
compensation expense
|
(405)
|
1,658
|
Adjusted
EBITDA
|
$12,959
|
$17,629
|
|
Quarter
Ended September 30, 2016
|
Quarter
Ended September 30, 2017
|
||||||
|
Asia-Pacific
|
North
America
|
Asia-Pacific
|
North
America
|
||||
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
Leasing
|
Leasing
|
Manufacturing
|
Corporate
|
Operating income
(loss)
|
$2,863
|
$2,606
|
$(618)
|
$(1,335)
|
$803
|
$6,563
|
$(586)
|
$(1,259)
|
Add -
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
3,808
|
5,881
|
198
|
2
|
4,559
|
5,749
|
198
|
9
|
Share-based
compensation Xexpense
|
(716)
|
85
|
22
|
204
|
1,207
|
106
|
13
|
332
|
Adjusted
EBITDA
|
$5,955
|
$8,572
|
$(398)
|
$(1,129)
|
$6,569
|
$12,418
|
$(375)
|
$(918)
|
Intercompany
adjustments
|
|
|
|
$(41)
|
|
|
|
$(65)
|
6