General Finance Corporation (“General Finance” and, with its
consolidated subsidiaries, the “Company”) (NASDAQ:GFN)
(NASDAQ:GFNCL) (NASDAQ:GFNCZ) today announced its consolidated
financial results for the first quarter of the fiscal year ending
June 30, 2011. The results include RWA Holdings Pty Limited and
subsidiaries (“Royal Wolf”), the leading provider of portable
storage solutions in Australia and New Zealand, and Pac-Van, Inc.
(“Pac-Van”), a key provider of modular buildings and mobile office
units in the United States.
First Quarter Ended September 30, 2010 (“QE1 FY 2011”)
Results Compared to First Quarter Ended September 30, 2009 (“QE1 FY
2010”) Results
- Total revenues increased by
approximately 24% to $43.5 million in QE1 FY 2011 from
$35.2 million in QE1 FY 2010;
- Leasing revenues increased by 8% to
$20.1 million in QE1 FY 2011 from $18.6 million in QE1 FY
2010;
- Leasing revenues comprised 46% of total
revenues in QE1 FY 2011 versus 53% in QE1 FY 2010;
- Sales revenues increased by 41% to
$23.4 million in QE1 FY 2011 from $16.6 million in QE1 FY
2010;
- Adjusted EBITDA(1) increased by 12% to
$8.5 million in QE1 FY 2011 from $7.6 million in QE1 FY
2010;
- Adjusted EBITDA margin as a percentage
of total revenues was 20% in QE1 FY 2011 versus 22% in QE1 FY
2010;
- Interest expense increased to $4.3
million in QE1 FY 2011 from $3.7 million in QE1 FY 2010; and
- The effect of the strengthening
Australian dollar during the periods resulted in foreign currency
exchange gains of $2.4 million for QE1 FY 2011 and $2.6 million for
QE1 FY 2010.
Key Financial Highlights
- When comparing September 30, 2010 with
June 30, 2010, days sales outstanding in trade receivables
lengthened slightly at Royal Wolf to 46 days from 43 days and
shortened at Pac-Van to 48 days from 53 days;
- Inventories, excluding the effect of
foreign currency translation into the U.S. dollar reporting
currency, increased by $2.2 million at September 30, 2010 from June
30, 2010, primarily to meet the increasing demand from the
improving economy in the Asia-Pacific area;
- The utilization rate of the total lease
fleet, on a unit basis, increased slightly to 80% at September 30,
2010 from 79% at June 30, 2010;
- Net capital expenditures for the lease
fleet were under $1.0 million in both QE1 FY 2011 and QE1 FY
2010;
- During QE1 FY 2011, outstanding
borrowings were reduced by $4.1 million in the United States and,
excluding the effect of foreign currency translation into the U.S.
dollar reporting currency, were reduced by $1.3 million at Royal
Wolf;
- The Company was in compliance with the
covenants of its senior credit and subordinated indebtedness at
September 30, 2010; and
- Trailing twelve-month (“TTM”) total
revenues through September 30, 2010 were $164.5 million ($57.7
million in the United States and $106.8 million in the Asia-Pacific
area) and as of September 30, 2010 TTM adjusted EBITDA was $32.4
million ($9.3 million in the United States and $23.1 million in the
Asia-Pacific area).
(1) Earnings before interest, income taxes, impairment,
depreciation and amortization and other non-operating costs and
income (“EBITDA” and “adjusted EBITDA”) are supplemental measures
of performance that are not required by, or presented in accordance
with U.S. generally accepted accounting principles (“U.S. GAAP”).
Adjusted EBITDA (which adds back share-based compensation expense)
is a non-U.S. GAAP measure, is not a measurement of our financial
performance under U.S. GAAP and should not be considered as an
alternative to net income, income from operations or any other
performance measures derived in accordance with U.S. GAAP or as an
alternative to cash flow from operating, investing or financing
activities as a measure of liquidity. We present adjusted EBITDA
because we consider it to be an important supplemental measure of
our performance and because 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 our adjusted EBITDA when reporting their results.
Business Overview
“We reported a solid quarter of improving operating and
financial performance,” noted Ronald Valenta, General Finance’s
President and Chief Executive Officer. “Strong demand of our
products in the Asia-Pacific region and our continuing emphasis on
best practices in sales and operations are driving the increases in
our results. In the United States, we will continue to meet the
challenges of lower customer demand with disciplined management of
costs while expanding select product lines within our lease
fleet.”
Charles Barrantes, General Finance’s Executive Vice President
and Chief Financial Officer added, “While we continue to focus on
controlling costs, we nonetheless feel positive about our prospects
in the current fiscal year, particularly in the Asia-Pacific region
where the economy is expanding. Reduction of our overall leverage
remains a principal objective and over the twelve months ended
September 30, 2010 we generated free cash flow of $14.8 million and
reduced our indebtedness by $17.8 million. We are evaluating a
variety of capital market initiatives to deleverage.”
Conference Call
A conference call is scheduled today, November 11, at 8:30 a.m.
PST (11:30 am EST) to discuss the QE1 FY 2011 operating results.
The conference call number for U.S. participants is (866) 901-5096,
the conference call number for participants outside the U.S. is
(706) 643-3717 and the conference ID number for both conference
call numbers is 17815661. A replay of the conference call may be
accessed through November 26, 2010 by U.S. callers by calling (800)
642-1687 or by callers outside the U.S. by calling (706) 645-9291;
both U.S. callers and callers outside of the U.S. will utilize
conference ID number 17815661 to access the replay of the
conference call.
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
Consolidated Statements of
Operations
(In thousands, except share and per
share data)
(Unaudited)
Quarter Ended September 30,
2009 2010 Revenues
Sales $ 16,613 $ 23,389 Leasing 18,606
20,076 35,219
43,465
Costs and expenses Cost of sales
(exclusive of the items shown separately below) 12,525 17,610
Direct costs of leasing operations 6,182 7,498 Selling and general
expenses (a) 9,180 10,015 Depreciation and amortization
5,257 4,672
Operating
income 2,075 3,670 Interest income 59 105 Interest
expense (b) (3,707 ) (4,281 ) Foreign currency exchange gain and
other (c) 2,593 2,427
(1,055 ) (1,749 )
Income
before provision for income taxes 1,020 1,921 Provision
for income taxes 372 726
Net income 648 1,195 Noncontrolling interest
(573 ) (573 ) Preferred stock dividends (41 )
(43 )
Net income attributable to common
stockholders
$
34
$
579
Net income per common share: Basic $ 0.00 $
0.03 Diluted 0.00 0.03
Weighted average shares outstanding: Basic 17,826,052
22,013,299 Diluted 17,826,052
22,025,352
(a) Includes share-based compensation expense of $246 and $173
during QE1 FY 2010 and QE1 FY 2011, respectively.
(b) Includes an unrealized gain on interest rate swap and option
contracts of $141 and $250 during QE1 FY 2010 and QE1 FY 2011,
respectively.
(c) The Company has certain U.S. dollar-denominated debt at
Royal Wolf, including intercompany borrowings, which are remeasured
at each financial reporting date with the impact of the
remeasurement being recorded in the statement of operations as an
unrealized gain or loss. Amounts exchanged into U.S. dollars from
Australian dollars for repayments of this U.S. dollar-denominated
debt will depend upon the currency exchange rate at the time, with
differences in the exchange rate from when the borrowing was
incurred being recorded in the statement of operations as a
realized gain or loss. During Q1 FY 2010 and Q1 FY 2011, net
unrealized and realized foreign exchange gains totaled $2,250 and
$128, and $3,262 and 27, respectively.
GENERAL FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet
Information
(In thousands)
(Unaudited)
June 30, 2010
September 30, 2010
Trade and other receivables, net $ 25,667 $ 24,338
Inventories 19,063 23,475 Lease fleet, net 188,410 198,903 Total
assets 346,880 361,457 Trade payables and accrued
liabilities 25,246 26,915 Senior and other debt 186,183 190,456
Total stockholders’ equity 101,734
108,949
About General Finance Corporation
General Finance Corporation (www.generalfinance.com), through
its indirect 86.2%-owned subsidiary, Royal Wolf
(www.royalwolf.com.au) and its indirect 100%-owned subsidiary
Pac-Van (www.pacvan.com), sells and leases products in the portable
services industry to a broad cross section of industrial,
commercial, educational and government customers throughout
Australia, New Zealand and the United States. These products
include storage containers and freight containers in the mobile
storage industry; and modular buildings, mobile offices and
portable container buildings in the modular space industry.
Cautionary Statement About Forward-Looking Statements
Statements in this news release that are not historical facts
are forward-looking statements. 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, market interest rates for our variable rate
indebtedness, our ability to raise capital or borrow additional
funds, changes in the Australian or New Zealand dollar relative to
the U.S. dollar, regulatory changes, customer defaults or
insolvencies, litigation, 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, 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 mining industry
or the U.S. construction industry or a write-off of all or a part
of our goodwill and intangible assets. These involve risks and
uncertainties that could cause actual outcomes and results to
differ materially from those described in 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 legislation or
regulation. The forward-looking statements contained in this press
release are expressly qualified by this cautionary statement.
Readers are cautioned that these forward-looking statements involve
certain risks and uncertainties, including those contained in
filings with the Securities and Exchange Commission.
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