Earnings Results under Review: General Finance Corporation (NASDAQ: GFN)

On Tuesday, Shares of General Finance Corporation (NASDAQ: GFN) showed the bullish trend with a higher momentum of 0.31% and ended its trading session at $12.99. The company traded total volume of 45,372 shares as contrast to its average volume of 143.24K shares. The company has a market value of $362.94M and about 27.94M shares outstanding.

General Finance Corporation (GFN) recently declared its consolidated financial results for the fourth quarter and fiscal year ended June 30, 2018.

Fourth Quarter 2018 Highlights 

  • Total revenues were $93.80M, a boost of 28% over the fourth quarter of fiscal year 2017.
  • Leasing revenues were $56.50M, a boost of 23% over the fourth quarter of fiscal year 2017. Leasing revenues increased by 13%, excluding the oil and gas sector and favorable foreign currency effects. Leasing revenues comprised 63% of total non-manufacturing revenues for the fourth quarter of both fiscal years 2017 and 2018.
  • Adjusted EBITDA was $23.00M, a boost of about 49% over the fourth quarter of fiscal year 2017.
  • Adjusted EBITDA margin was 25%, contrast to 21% in the fourth quarter of 2017.
  • Net loss attributable to common shareholders was $11.60M, or $0.44 per diluted share, contrast to a net loss attributable to common shareholders of $1.80M, or $0.07 per diluted share, for the fourth quarter of fiscal year 2017. Included in the fourth quarter fiscal year 2018 net loss is a non-cash charge of $11.50M for the change in valuation of the stand-alone bifurcated derivative in our outstanding convertible note in the Asia-Pacific area. Excluding this non-cash charge, the fourth quarter of fiscal year 2018 would have had net income attributable to common shareholders of about $0.10M. Average fleet unit utilization was 80%, contrast to 77% in the fourth quarter of fiscal year 2017. Accomplished one acquisition in North America.

Fiscal Year 2018 Highlights 

  • Total revenues were $347.30M, a boost of 25% over fiscal year 2017.
  • Leasing revenues were $215.00M, a boost of 22% over fiscal year 2017. Leasing revenues increased by 12%, excluding the oil and gas sector and favorable foreign currency effects. Leasing revenues comprised 64% of total non-manufacturing revenues as compared to 65% for fiscal year 2017.
  • Adjusted EBITDA was $87.70M, a boost of 44% over fiscal year 2017. Adjusted EBITDA margin was 25%, contrast to 22% for fiscal year 2017.
  • Net loss attributable to common shareholders was $12.00M, or $0.46 per diluted share, contrast to a net loss attributable to common shareholders of $6.60M, or $0.25 per diluted share, for fiscal year 2017. Included in the fiscal year 2018 net loss is a non-cash charge of $13.70M for the change in valuation of the stand-alone bifurcated derivative in our outstanding convertible note in the Asia-Pacific area. Excluding this non-cash charge, fiscal year 2018 would have had net income attributable to common shareholders of about $1.80M. Average fleet unit utilization was 80%, contrast to 77% for fiscal year 2017. Opened five greenfield locations, three in the Asia-Pacific region and two in North America. Accomplished four acquisitions in North America. Attained all outstanding publicly-traded shares of Royal Wolf not owned by the Company, making Royal Wolf a wholly-owned partner.

Fourth Quarter 2018 Operating Summary

North America

Revenues from our North American leasing operations for the fourth quarter of fiscal year 2018 totaled $57.40M, contrast to $44.90M for the fourth quarter of fiscal year 2017, a boost of 28%. Leasing revenues increased by 31% on a year-over-year basis, as a result of increases across nearly all sectors, most notably in the oil and gas, commercial, construction and industrial sectors.  Sales revenues increased by 20%, driven mainly by increases in the commercial, oil and gas, construction and government sectors, and were partially offset by decreases in the mining and education sectors. Adjusted EBITDA was $17.60M for the fourth quarter of fiscal year 2018, contrast with $10.90M for the year-ago quarter, a boost of 61%. Adjusted EBITDA from Pac-Van and Lone Star increased by 36% and 164% year-over-year, to $11.80M and $5.80M, respectively, from $8.70M and $2.20M, respectively, in the fourth quarter of fiscal year 2017.

North American manufacturing revenues for the fourth quarter of fiscal year 2018 totaled $3.70M and included intercompany sales of $0.20M from products sold to our North American leasing operations. This compares to $1.70M of total sales, counting intercompany sales of $0.60M during the fourth quarter of fiscal year 2017. On a stand-alone basis, before intercompany adjustments, adjusted EBITDA was $0.50M for the fourth quarter, contrast to an adjusted EBITDA loss of $0.40M in the fourth quarter of fiscal year 2017.

Asia-Pacific 

Revenues from the Asia-Pacific for the fourth quarter of fiscal year 2018 totaled $32.90M, contrast to $27.30M for the fourth quarter of fiscal year 2017, a boost of about 21%. The increase in revenues was mainly driven by one large sale to a customer in the utilities sector totaling $3.80M and was accompanied by a boost in sales to the construction sector, as well as favorable foreign currency effects between periods. Leasing revenues increased by 7% on a year-over-year basis, with increases in the mining, construction and special events sectors, partially offset by decreases in the consumer and agriculture sectors. Adjusted EBITDA for the fourth quarter of 2018 was $7.50M, contrast to $6.40M for the year-ago quarter, a boost of about 18%. On a local currency basis, revenues increased by 19% and adjusted EBITDA increased by 16%.

Fiscal Year 2018 Operating Summary

North America

Revenues from our North American leasing operations for fiscal year 2018 totaled $206.30M, contrast to $163.80M in the prior year, a boost of 26%. Leasing revenues increased by 30% on a year-over-year basis, as a result of increases across a majority of sectors represented in our customer base, most notably in the oil and gas, commercial and construction sectors.  Sales revenues increased by 16% for the year, driven mainly by increases in the commercial, oil and gas and construction sectors, and were partially offset by decreases in the education and mining sectors. Adjusted EBITDA for fiscal year 2018 was $61.20M, a boost of 54% from the prior year. Adjusted EBITDA from Pac-Van and Lone Star increased by about 27% and 210%, to $43.20M and $18.00M, respectively, from $34.00M and $5.80M, respectively, in fiscal year 2017.

North American manufacturing revenues for fiscal year 2018 totaled $13.60M and included intercompany sales of $3.70M from products sold to our North American leasing operations.  This compares to $6.90M of total sales during the fiscal year 2017, which included intercompany sales of $2.00M. On a stand-alone basis, before intercompany adjustments, adjusted EBITDA was $0.30M for the fiscal year, contrast to an adjusted EBITDA loss of about $1.60M in the prior fiscal year.

Asia-Pacific 

Revenues from the Asia-Pacific for fiscal year 2018 totaled $131.10M, contrast to $108.20M in the prior year, a boost of 21%. The increase in revenues was mainly driven by four large sales to customers in the utilities and transportation sectors totaling about $16.10M, as well as favorable foreign currency effects between periods. Leasing revenues increased by 7%, with increases in the construction, mining, industrial and special events sectors, partially offset by decreases in the oil and gas sector. Adjusted EBITDA for fiscal year 2018 was $31.90M, contrast to $27.40M in the prior year, a boost of 16%. On a local currency basis, revenues increased by 18% and adjusted EBITDA increased by 13%.

Balance Sheet and Liquidity Overview

At June 30, 2018, the Company had total debt of $427.20M and cash and cash equivalents of $21.60M, as contrast to $355.60M and $7.80M at June 30, 2017, respectively. At June 30, 2018, our North American leasing operations had $46.40M available to borrow under its $237.00M credit facility, and our Asia-Pacific leasing operations had, counting cash at the bank, $31.40M (A$42.40M), available to borrow under its A$134.00M credit facility.

During fiscal year 2018, the Company generated cash from operating activities of $58.80M, as contrast to $35.30M for fiscal year 2017. In fiscal year 2018, the Company invested a net $21.10M ($19.00M in North America and $2.10M in the Asia-Pacific) in the lease fleet, as contrast to $21.80M in net fleet investment ($10.70M in North America and $11.10M in the Asia-Pacific) in fiscal year 2017.

Receivables were $50.50M at June 30, 2018, as contrast to $44.40M at June 30, 2017. Days sales outstanding in receivables at June 30, 2018, for our Asia-Pacific and North American leasing operations were 35 and 47 days, respectively, as contrast to 49 and 46 days, respectively, as of June 30, 2017.

Outlook

Assuming the Australian dollar averages 0.72 as compared to the U.S. dollar, which represents an approximate 7% decrease from fiscal year 2018, management estimates that consolidated revenues for fiscal year 2019 will be in the range of $355.0M to $375.0M and that consolidated adjusted EBITDA will increase by 6% to 12% in fiscal year 2019 from fiscal year 2018.  This outlook does not take into account the impact of any additional acquisitions that may occur for the remainder of fiscal year 2019.

The Company offered net profit margin of -3.40% while its gross profit margin was 46.40%. ROE was recorded as -11.00% while beta factor was 1.31. The stock, as of recent close, has shown the weekly downbeat performance of -4.49% which was maintained at 91.03% in this year.

Chad Pitman

Chad Pitman

I am Chad Pitman and I focus on breaking news stories and ensuring we (“Stocks Market Cap”) offer timely reporting on some of the most recent stories released through market wires about “Emerging Stocks”. I have formerly spent over 3 years as a trader in U.S. Stock Market and is now semi-stepped down. I work on a full time basis for stocksmarketcap.com specializing in quicker moving active shares with a short term view on investment opportunities and trends.

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