General Finance (MM) (NASDAQ:GFNCU)
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General Finance Corporation (“General Finance”)
(NASDAQ: GFN) (NASDAQ: GFNCW) (NASDAQ: GFNCU) today announced its GAAP
and non-GAAP financial results for the first fiscal quarter of the
fiscal year ending June 30, 2009 (“FY 2009”).
Results for the quarter included RWA Holdings Pty Limited (“Royal
Wolf”), the leading provider of portable
storage solutions in Australia and New Zealand. The quarterly results of
Pac-Van, Inc. (“Pac-Van”),
a key provider of modular buildings and mobile office units in the U.S.,
which we acquired on October 1, 2008, have also been included herein on
a combined basis with the General Finance quarterly results for
informational purposes.
General Finance First Quarter FY 2009
vs. Non-GAAP First Quarter FY 2008
•
Total revenues increased 56% to $31.7 million from $20.3 million;
•
Leasing revenues increased 78% to $10.7 million from $6.0 million;
•
Organic growth, excluding acquisitions, in leasing revenue was 17%;
•
Adjusted EBITDA (earnings before interest expense, income tax,
depreciation and amortization and other non-operating costs),
excluding stock-based compensation expense, rose 121% to $5.3
million from $2.4 million;
•
Adjusted EBITDA margin rose to 17% from 12%;
•
Foreign currency exchange loss for the first quarter of FY 2009 was
$7.7 million compared to a gain of $1.9 million in the first quarter
of FY 2008;
•
The average utilization rate was 78.8% during the first quarter of
FY 2009 representing a 1.5% decrease from the 80.3% utilization rate
during the first quarter of FY 2008, as we increased purchases of
new containers in order to retire aged fleet and reduced sub-leases
for the moving & storage business;
•
Net fleet capital expenditures for the first quarter of FY 2009 were
$5 million versus $5.5 million in the first quarter of FY 2008;
•
The size of the lease fleet increased 73% to approximately 29,380
units at September 30, 2008 primarily due to acquisitions, compared
to 16,979 units at September 30, 2007;
•
RWA had 4.0x total funded debt to adjusted EBITDA as of the
quarter ended September 30, 2008, well within covenant
requirements;
•
The duration of receivables for sales, or DSOs, decreased to 52.2
days at September 30, 2008 versus 54.9 days at September 30, 2007;
and;
•
Fleet inventory at September 30, 2008 was $22.6 million compared
to $10.6 million at September 30, 2007, primarily due to sales
inventory obtained in the GE SeaCo acquisition.
General Finance closed the acquisition of Pac-Van through its merger
with its parent, Mobile Office Acquisition Corp (“MOAC”),
on October 1, 2008. Pac-Van’s unaudited
quarterly results have been combined below with the General Finance
first quarter FY 2009 results for purposes of sharing information with
investors. The combined results do not purport to follow GAAP in their
presentation format and do not consider any purchase accounting
adjustments.
Pac-Van Inc. First Quarter FY 2009
Highlights
•
Total revenues increased 36% to $22.6 million from $16.6 million;
•
Leasing revenues increased 12% to $13.9 million from $12.4 million;
•
Organic growth, excluding acquisitions, in leasing revenue was 5%;
•
Adjusted EBITDA, excluding non-recurring expenses of the prior
owners, rose 5% to $5.9 million from $5.6 million, while adjusted
EBITDA as a percentage of revenue declined from 34% to 26% for the
same period;
•
The average utilization rate was 74% in the first quarter of FY
2009 versus 81% during the first quarter of FY 2008;
•
Net fleet capital expenditures in the first quarter of FY 2009 was
$4.2 million compared to the first quarter FY 2008 net fleet capital
expenditures of $7.4 million, while Pac-Van ended the quarter with
12,342 units;
•
DSOs at September 30, 2008 were 58 days versus 54 days at
September 30, 2007; and
•
Total funded debt to EBITDA, calculated in accordance with our
credit facilities, was 4.7:1 at September 30, 2008, well within
our covenant requirements and there was $82.5 million of senior
debt outstanding against a $120 million commitment, provided that
the consent of Pac-Van’s subordinated
note holder is required to borrow in excess of $105 million.
Business Overview
Ronald Valenta, General Finance’s President &
CEO, stated, “We are extremely pleased with
the strong organic leasing revenue growth as well as the overall revenue
growth at Royal Wolf in Australia and New Zealand. EBITDA growth and
margins continue to expand while we continue to be focused on
implementing best practices, building our leasing revenue stream and
leveraging our best in class national platform. We continue to be
mindful of the unprecedented global economic volatility and the dramatic
decline of the Australian dollar versus the U.S. dollar.”
Mr. Valenta continued, “In the United States,
though we are in a severe economic downturn coupled with a credit
crunch, we have achieved organic leasing revenue growth and utilization
rates have stabilized. Our strategy is to continue to implement best
practices with a focus on second-to-none customer service coupled with
product diversification and differentiation.”
Charles Barrantes, General Finance’s
Executive Vice President and Chief Financial Officer, pointed out, “In
both of our businesses we are incurring capital expenditures only when
we have committed volume and we are reducing the sales inventory at
Royal Wolf. General Finance and its subsidiaries have unused debt
capacity and cash of approximately $49 million.”
Mr. Valenta concluded that, “Our management
teams have performed in prior economic slowdowns and are prepared for
additional challenges. In the case of Australia and New Zealand, our
competitors are smaller and generally more regionally focused and rely
more on the construction and transportation industries. Royal Wolf has
several key strengths: a national footprint, product differentiation and
a diverse customer base. Pac-Van, in turn, has a wonderful opportunity
to provide broader product diversification in several non-construction
industries.”
Non-GAAP Combined General
Finance and Pac-Van First Quarter FY 2008 and FY 2009 results
(Unaudited and in ‘000s)
Quarter Ended
30-Sep-07(1)
30-Sep-08
Revenues
Sales
$
18,401
$
29,730
Leasing
18,463
24,565
36,864
54,295
Costs and expenses
Cost of sales
15,161
24,460
Leasing, selling and general expenses(2)
13,885
20,115
Depreciation and amortization
2,217
4,612
Operating income
$
5,601
$
5,108
EBITDA
$
7,818
$
9,720
Adjusted EBITDA(2)
$
7,950
$
11,070
(1)
Includes the results of Royal Wolf for the period July 1 to
September 13, 2007, prior to its acquisition by General Finance.
(2)
Includes stock-based compensation expenses of $1,140,000 in the
quarter ended September 30, 2008 for Pac-Van and $210,000 for the
same period for General Finance.
Additional Information
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Predecessor
Successor
Period from
July 1 to
September 13,
Quarter Ended September 30,
2007
2007
2008
Revenues
Sales of containers
$
10,944
$
3,278
$
20,995
Leasing of containers
4,915
1,121
10,658
15,859
4,399
31,653
Costs and expenses
Cost of sales
9,466
2,947
18,166
Leasing, selling and general expenses
4,210
1,225
8,377
Depreciation and amortization
653
338
3,383
Operating income (loss)
1,530
(111
)
1,727
Interest income
14
974
121
Interest expense
(947
)
(374
)
(4,364
)(1)
Foreign currency exchange gain (loss) and other
(129
)
2,045
(7,717
)(2)
(1,062
)
2,645
(11,960
)
Income (loss) before provision for income taxes and minority
interest
468
2,534
(10,233
)
Provision (benefit) for income taxes
180
855
(3,565
)
Minority interest
—
157
(1,641
)
Net income (loss)
$
288
$
1,522
$
(5,027
)
Net income (loss) per share:
Basic
$
0.15
$
(0.36
)
Diluted
0.12
(0.36
)
Weighted average shares outstanding:
Basic
10,350,344
13,826,052
Diluted
12,679,576
13,826,052
(1)
Includes unrealized loss on interest rate swap and option contracts
of $1.5 million.
(2)
General Finance 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 income statement 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 income statement as a realized gain or loss. During the first
quarter of FY 2009, General Finance incurred net unrealized and
realized foreign exchange losses totaled $4.5 million and $3.2
million, respectively.
EBITDA is a supplemental measure of performance that is not required by,
or presented in accordance with U.S. generally accepted accounting
principles (“GAAP”).
EBITDA is a non-GAAP measure, is not a measurement of our financial
performance under GAAP and should not be considered as an alternative to
net income, income from operations or any other performance measures
derived in accordance with GAAP or as an alternative to cash flow from
operating, investing or financing activities as a measure of liquidity.
We present 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
when reporting their results.
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 portable storage containers, portable container
buildings, freight containers, modular buildings and mobile offices to a
broad cross section of industrial, commercial, educational and
government customers throughout Australia, New Zealand and the United
States.
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, prospects of Royal Wolf and Pac-Van. Readers are cautioned that
these forward-looking statements involve certain risks and
uncertainties, including those contained in filings with the Securities
and Exchange Commission such as General Finance’s
definitive proxy statement with respect to General Finance’s
acquisition of Pac-Van, its Annual Report on Form 10-K for the fiscal
year ended June 30, 2008 and its quarterly report on Form 10-Q for the
quarter ended September 30, 2008.