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 third quarter (“QE3”) and
nine months (“YTD”) of the fiscal year ending June 30, 2011 (“FY
2011”). The consolidated 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.
QE3 FY 2011 Results
- Total revenues were $43.3 million in
QE3 FY 2011, a 12% increase over QE3 of the fiscal year ended June
30, 2010 (“FY 2010”);
- Leasing revenues were $22.8 million in
QE3 FY 2011, an 18% increase over QE3 FY 2010;
- Leasing revenues comprised 53% of total
revenues in QE3 FY 2011 versus 50% in QE3 FY 2010;
- Sales revenues were $20.5 million in
QE3 FY 2011, a 7% increase over QE3 FY 2010;
- Adjusted EBITDA(1) was $9.2 million in
QE3 FY 2011, an increase of approximately 19% over QE3 FY
2010;
- Adjusted EBITDA margin as a percentage
of total revenues was 21% in QE3 FY 2011 versus 20% in QE3 FY
2010;
- Interest expense increased to $4.8
million in QE3 FY 2011 from $3.9 million in QE3 FY 2010; and
- Foreign currency exchange gains and
other were $0.1 million for QE3 FY 2011 versus $0.6 million for QE3
FY 2010.
YTD FY 2011 Results
- Total revenues were $131.7 million in
YTD FY 2011, a 17% increase over YTD FY 2010;
- Leasing revenues were $65.6 million in
YTD FY 2011, a 14% increase over YTD FY 2010;
- Leasing revenues comprised 50% in YTD
FY 2011 versus 51% in YTD FY 2010;
- Sales revenues were $66.1 million in
YTD FY 2011, a 20% increase over YTD FY 2010;
- Adjusted EBITDA was $27.1 million, a
17% increase over YTD FY 2010;
- Adjusted EBITDA margin as a percentage
of total revenues was 21% in both YTD FY 2011 and YTD FY 2010;
- Interest expense increased to $13.4
million in YTD FY 2011 from $11.8 million in YTD FY 2010; and
- Foreign currency exchange gains and
other were $4.6 million in YTD FY 2011 versus $3.7 million in YTD
FY 2010.
Key Financial Highlights
- When comparing March 31, 2011 with June
30, 2010, days sales outstanding in trade receivables improved to
41 days from 43 days at Royal Wolf and lengthened to 63 days from
53 days at Pac-Van, respectively;
- Inventories, excluding the effect of
foreign currency translation into the U.S. dollar reporting
currency, decreased by $1.8 million from June 30, 2010 to March 31,
2011;
- The utilization rate of the total lease
fleet, on a unit basis, increased to 81% at March 31, 2011 from 79%
at June 30, 2010;
- Net capital expenditures for the lease
fleet were $15.3 million during YTD FY 2011 versus a negative $2.4
million during YTD FY 2010, reflecting the Company’s investment to
meet the increasing demand in the Asia-Pacific area;
- During YTD FY 2011, outstanding
borrowings, excluding the effect of foreign currency translation
into the U.S. dollar reporting currency, were reduced by $6.2
million;
- On May 9, 2011, Pac-Van entered into an
amendment to, among other things, waive noncompliance at quarter
end of the senior leverage ratio covenant of its senior credit
facility; and
- Trailing twelve-month (“TTM”) total
revenues through March 31, 2011 were $175.1 million ($55.5 million
in the United States and $119.6 million in the Asia-Pacific area)
and, through March 31, 2011, TTM adjusted EBITDA was $35.4 million
($8.3 million in the United States and $27.1 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
Ronald Valenta, General Finance’s President and Chief Executive
Officer, stated, “Trends we have seen at the beginning of the year
continued as total revenues increased by 12% during the third
quarter over the prior year. More importantly, we continue to meet
one of our primary objectives, the improvement of leasing revenues,
which increased 14% year-to-date and 18% in the quarter. With
increased demand for our container products, particularly in the
Asia-Pacific area, we have seen our composite utilization rate
increase to 81% at quarter end. Together with our continued focus
on cost disciplines, our operating profit has increased in the
current fiscal year.”
Charles Barrantes, General Finance’s Executive Vice President
and Chief Financial Officer, added, “Royal Wolf’s business in the
Asia-Pacific area continued to drive our improved operating results
through the third quarter. We believe the Australian economy will
continue to support this trend and we will continue to invest in
our lease fleet to meet the increasing demand there. In the United
States, we have carefully monitored our capital spending and costs
and reduced our borrowings by over $7,000,000 since year end, but
the market has remained weak in our modular and mobile office
business. This weakness contributed to the need to amend Pac-Van’s
senior credit facility and the senior lenders were supportive of
our business and in the need to make this amendment.”
Mr. Valenta then concluded, “Last month, we announced our
intentions to undertake an Australian initial public offering of a
noncontrolling interest of Royal Wolf. If successful, this event
would allow us to effectively recapitalize our consolidated
financial position and provide the foundation for further growth.
We look forward to reporting the process of this endeavor as
significant events transpire.”
Conference Call
A conference call is scheduled for Monday, May 16th, at 8:30
a.m. PDT (11:30 am EDT) to discuss the 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 63752151. A replay of the conference call may be
accessed through May 30, 2011 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 63752151 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 March 31,
Nine Months Ended March 31,
2010 2011 2010
2011 Revenues Sales $ 19,234 $
20,537 $ 55,135 $ 66,087 Leasing 19,251 22,785
57,715 65,597 38,485
43,322 112,850 131,684
Costs and expenses Cost of sales (exclusive of
the items shown separately below) 15,311 15,829 42,865 50,085
Direct costs of leasing operations 6,426 8,193 19,418 24,160
Selling and general expenses 9,191 10,302 27,943 30,894
Depreciation and amortization 4,578 4,720
14,929 14,252
Operating income 2,979 4,278 7,695 12,293 Interest
income 56 124 178 354 Interest expense (3,932 ) (4,822 ) (11,771 )
(13,454 ) Foreign currency exchange gain and other 578
108 3,716 4,573
(3,298 ) (4,590 ) (7,877 ) (8,527 )
Income (loss) before provision for income taxes and
noncontrolling interest (319 ) (312 ) (182 ) 3,766
Provision (benefit) for income taxes (116 ) (116 )
(66 ) 1,425
Net income (loss)
(203 ) (196 ) (116 ) 2,341 Noncontrolling interest (576 )
(2,298 ) (1,722 ) (3,444 ) Preferred stock dividends (42 )
(45 ) (125 ) (132 )
Net loss
attributable to common stockholders
$
(821
)
$
(2,539
)
$
(1,963
)
$
(1,235
)
Net loss per common share: Basic $ (0.05 ) $ (0.12 ) $ (0.11
) $ (0.06 ) Diluted (0.05 ) (0.12 ) (0.11 )
(0.06 ) Weighted average shares outstanding: Basic
17,826,052 22,013,299 17,826,052 22,013,299 Diluted
17,826,052 22,013,299 17,826,052
22,013,299
(a) Includes share-based compensation expense of $199 and $212
during QE3 FY 2010 and QE3 FY 2011 and $615 and $581 during YTD FY
2010 and YTD FY 2011, respectively.
(b) Includes an unrealized gain on interest rate swap and option
contracts of $132 and $67 during QE3 FY 2010 and QE3 FY 2011 and
$313 and $545 during YTD FY 2010 and YTD 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 Q3 FY 2010 and Q3 FY 2011, net
unrealized and realized foreign exchange gains (losses) totaled
$674 and $15, and $(16) and $162, respectively; and during YTD FY
2010 and YTD FY 2011, net unrealized and realized foreign exchange
gains totaled $2,637 and $423, and $4,498 and $450,
respectively.
GENERAL FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet
Information
(In thousands)
(Unaudited)
June 30, 2010
March 31, 2011
Trade and other receivables, net $ 27,449 $ 27,363
Inventories 19,063 20,049 Lease fleet, net 188,410 213,946 Total
assets 346,880 376,467 Trade payables and accrued
liabilities 25,246 28,867 Senior and other debt 186,183 196,083
Total stockholders’ equity 101,734 111,143
About General Finance Corporation
General Finance Corporation (www.generalfinance.com), through
its indirect majority-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 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 relating an
initial public offering by Royal Wolf, 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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