General Finance Corporation Reports Third Quarter Results for Fiscal Year 2021
General Finance Corporation (NASDAQ: GFN) reported its third quarter and year-to-date financials for 2021, showcasing a 16% increase in rental revenues from core products in North America year-over-year. Total revenues remained stable at $90 million, with adjusted EBITDA rising to $25 million, marking a margin improvement to 28%. Notably, the net income was $10.3 million, up from a loss of $9.5 million a year prior. The company is in the process of an acquisition by United Rentals, expected to close in Q2 2021. However, full-year guidance has been suspended due to this pending transaction.
- 16% increase in rental revenues from core products in North America.
- Adjusted EBITDA rose to $25 million, improving margin to 28%.
- Net income increased to $10.3 million, compared to a net loss of $9.5 million last year.
- Leasing revenues decreased to $57.1 million from $57.8 million year-over-year.
- Suspended full-year outlook amid pending acquisition by United Rentals.
PASADENA, Calif., May 05, 2021 (GLOBE NEWSWIRE) -- 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 third quarter and nine months (“YTD”) ended March 31, 2021.
Third Quarter 2021 Highlights
- Rental revenues from our core non-liquid containerized products in North America increased by
16% from the third quarter of fiscal year 2020. - Leasing revenues were
$57.1 million , compared to$57.8 million for the third quarter of fiscal year 2020. - Leasing revenues, excluding the oil and gas sector, increased by
9% in North America and by14% in the Asia-Pacific from the third quarter of fiscal year 2020. - Leasing revenues comprised
64% of total non-manufacturing revenues versus66% for the third quarter of fiscal year 2020. - Total revenues were
$90.0 million in both periods. - Adjusted EBITDA was
$25.0 million , compared to$23.6 million for the third quarter of fiscal year 2020. - Adjusted EBITDA margin was
28% , compared to26% in the third quarter of fiscal year 2020. - Net income attributable to common shareholders was
$10.3 million , or$0.33 per diluted share, compared to net loss attributable to common shareholders of$9.5 million , or$0.32 per diluted share, for the third quarter of fiscal year 2020. Included in these results were a non-cash benefit of$3.6 million and a non-cash charge of$11.3 million in the third quarter of fiscal year 2021 and 2020, respectively, for the change in valuation of stand-alone bifurcated derivatives. - Average fleet unit utilization was
79% , compared to75% in the third quarter of fiscal year 2020.
YTD 2021 Highlights
- Rental revenues from our core non-liquid containerized products in North America increased by
11% from YTD fiscal year 2020. - Leasing revenues were
$167.8 million , compared to$177.5 million for YTD fiscal year 2020. - Leasing revenues, excluding the oil and gas sector, increased by
5% in North America and by7% in the Asia-Pacific from YTD fiscal year 2020. - Leasing revenues comprised
64% of total non-manufacturing revenues versus67% for YTD fiscal year 2020. - Total revenues were
$261.5 million , compared to$272.0 million for YTD fiscal year 2020. - Adjusted EBITDA was
$73.0 million , compared to$75.2 million for YTD fiscal year 2020. - Adjusted EBITDA margin was
28% for both periods. - Net income attributable to common shareholders was
$21.8 million , or$0.71 per diluted share, compared to a net income attributable to common shareholders of$5.0 million , or$0.16 per diluted share, for YTD fiscal year 2020. Included in these results were a non-cash benefit of$5.5 million and a non-cash charge of$6.4 million in YTD fiscal year 2021 and 2020, respectively, for the change in valuation of stand-alone bifurcated derivatives. - Average fleet unit utilization was
77% for both periods. - Entered one new market in the Asia-Pacific region through a greenfield location.
- Completed one acquisition in North America.
Proposed Acquisition of the Company
On April 15, 2021, United Rentals, Inc. (NYSE:URI) and the Company jointly announced that they entered into a definitive agreement under which United Rentals will acquire all of the Company’s outstanding common stock for
Management Commentary
“We are very pleased with our third quarter performance,” said Jody Miller, President and Chief Executive Officer. “Our core North America leasing operations at Pac-Van continued to outperform, as revenues increased
Mr. Miller continued, “Last month we announced that we entered into a definitive merger agreement with United Rentals, Inc., the global industry leader in equipment rentals. Our combination with United Rentals is a strong outcome for everyone involved. Our customers will benefit from United’s comprehensive solutions and extensive geographic footprint, and our employees will have new opportunities as part of the largest rental team in the world. We look forward to joining the United Rentals family.”
Charles Barrantes, Executive Vice President and Chief Financial Officer, added, “As we previously announced, in light of the pending transaction we will not be conducting our normal earnings conference call this quarter. Additional information regarding our third quarter financial results can be found in our Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission, as well as in the "Investor Information" section of our corporate website. In addition, we are suspending our outlook for the remainder of the fiscal year.”
Third Quarter 2021 Operating Summary
North America
Revenues from our North American leasing operations for the third quarter of fiscal year 2021 totaled
North American manufacturing revenues for the third quarter of fiscal year 2021 totaled
Asia-Pacific
Revenues from the Asia-Pacific region for the third quarter of fiscal year 2021 totaled
Balance Sheet and Liquidity Overview
At March 31, 2021, the Company had total debt of
During YTD fiscal year 2021, the Company generated cash from operating activities of
Receivables were
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 wholly-owned Royal Wolf (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, under the trade name Southern Fabrication Specialties (www.southernfabricationspecialties.com), 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, the disruption of operations from catastrophic or extraordinary events, including viral pandemics such as the COVID-19 coronavirus, a write-off of all or a part of our goodwill and intangible assets, and the ability to consummate the proposed merger. 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 Contact
Larry Clark
Financial Profiles, Inc.
310-622-8223
-Financial Tables Follow-
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
| Quarter Ended March 31, | Nine Months Ended March 31, | ||||||||||||||
| 2020 | 2021 | 2020 | 2021 | ||||||||||||
| Revenues | |||||||||||||||
| Sales: | |||||||||||||||
| Lease inventories and fleet | $ | 29,702 | $ | 32,603 | $ | 88,234 | $ | 92,474 | |||||||
| Manufactured units | 2,524 | 332 | 6,280 | 1,235 | |||||||||||
| 32,226 | 32,935 | 94,514 | 93,709 | ||||||||||||
| Leasing | 57,744 | 57,071 | 177,462 | 167,771 | |||||||||||
| 89,970 | 90,006 | 271,976 | 261,480 | ||||||||||||
| Costs and expenses | |||||||||||||||
| Cost of sales: | |||||||||||||||
| Lease inventories and fleet (exclusive of the items shown separately below) | 21,444 | 22,549 | 63,260 | 65,058 | |||||||||||
| Manufactured units | 1,977 | 380 | 5,441 | 1,449 | |||||||||||
| Direct costs of leasing operations | 22,968 | 21,909 | 68,587 | 63,838 | |||||||||||
| Selling and general expenses | 20,695 | 20,757 | 61,833 | 60,304 | |||||||||||
| Depreciation and amortization | 8,613 | 9,300 | 26,633 | 27,760 | |||||||||||
| Operating income | 14,273 | 15,111 | 46,222 | 43,071 | |||||||||||
| Interest income | 153 | 150 | 519 | 452 | |||||||||||
| Interest expense | (5,981) | (5,212) | (20,235) | (17,595) | |||||||||||
| Change in valuation of bifurcated derivatives in Convertible Note | (11,259) | 3,622 | (6,365) | 5,523 | |||||||||||
| Foreign exchange and other | (2,096) | 1,293 | (2,405) | 549 | |||||||||||
| (19,183) | (147) | (28,486) | (11,071) | ||||||||||||
| Income (loss) before provision for income taxes | (4,910) | 14,964 | 17,736 | 32,000 | |||||||||||
| Provision for income taxes | 3,715 | 3,777 | 9,969 | 7,474 | |||||||||||
| Net income (loss) | (8,625) | 11,187 | 7,767 | 24,526 | |||||||||||
| Preferred stock dividends | (922) | (922) | (2,766) | (2,766) | |||||||||||
| Net income (loss) attributable to common stockholders | $ | (9,547) | $ | 10,265 | $ | 5,001 | $ | 21,760 | |||||||
| Net income (loss) per common share: | |||||||||||||||
| Basic | $ | (0.32) | $ | 0.34 | $ | 0.17 | $ | 0.73 | |||||||
| Diluted | (0.32) | 0.33 | 0.16 | 0.71 | |||||||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 30,294,868 | 29,807,448 | 30,250,904 | 29,758,221 | |||||||||||
| Diluted | 30,294,868 | 31,017,679 | 31,452,877 | 30,794,975 | |||||||||||
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
| June 30, 2020 | March 31, 2021 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 17,478 | $ | 10,702 | ||||
| Trade and other receivables, net | 44,066 | 40,549 | ||||||
| Inventories | 20,928 | 33,869 | ||||||
| Prepaid expenses and other | 8,207 | 14,095 | ||||||
| Property, plant and equipment, net | 24,396 | 26,014 | ||||||
| Lease fleet, net | 458,727 | 467,106 | ||||||
| Operating lease assets | 66,225 | 79,215 | ||||||
| Goodwill | 97,224 | 100,051 | ||||||
| Other intangible assets, net | 18,771 | 17,163 | ||||||
| Total assets | $ | 756,022 | $ | 788,764 | ||||
| Liabilities | ||||||||
| Trade payables and accrued liabilities | $ | 46,845 | $ | 42,471 | ||||
| Income taxes payable | 645 | 1,287 | ||||||
| Unearned revenue and advance payments | 24,642 | 30,810 | ||||||
| Operating lease liabilities | 67,142 | 81,058 | ||||||
| Senior and other debt, net | 379,798 | 367,020 | ||||||
| Fair value of bifurcated derivatives in Convertible Note | 18,325 | 12,802 | ||||||
| Deferred tax liabilities | 43,708 | 49,227 | ||||||
| Total liabilities | 581,105 | 584,675 | ||||||
| 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; 30,880,531 shares issued and 29,968,766 shares outstanding at June 30, 2020 and 31,152,716 shares issued and 30,240,951 shares outstanding at March 31, 2021 | 3 | 3 | ||||||
| Additional paid-in capital | 183,051 | 181,993 | ||||||
| Accumulated other comprehensive loss | (22,106) | (16,402) | ||||||
| Accumulated deficit | (20,790) | 3,736 | ||||||
| Treasury stock, at cost; 911,765 shares | (5,845) | (5,845) | ||||||
| Total General Finance Corporation stockholders’ equity | 174,413 | 203,585 | ||||||
| Equity of noncontrolling interests | 504 | 504 | ||||||
| Total equity | 174,917 | 204,089 | ||||||
| Total liabilities and equity | $ | 756,022 | $ | 788,764 | ||||
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 income (loss) on a consolidated basis and from operating income (loss) for our geographic segments (in thousands):
| Quarter Ended March 31, | Nine Months Ended March 31, | ||||||||||||
| 2020 | 2021 | 2020 | 2021 | ||||||||||
| Net income (loss) | $ | (8,625) | $ | 11,187 | $ | 7,767 | $ | 24,526 | |||||
| Add (deduct) — | |||||||||||||
| Provision for income taxes | 3,715 | 3,777 | 9,969 | 7,474 | |||||||||
| Change in valuation of bifurcated derivatives in Convertible Note | 11,259 | (3,622) | 6,365 | (5,523) | |||||||||
| Foreign exchange and other | 2,096 | (1,293) | 2,405 | (549) | |||||||||
| Interest expense | 5,981 | 5,212 | 20,235 | 17,595 | |||||||||
| Interest income | (153) | (150) | (519) | (452) | |||||||||
| Depreciation and amortization | 8,712 | 9,401 | 26,930 | 28,061 | |||||||||
| Share-based compensation expense | 647 | 477 | 2,015 | 1,515 | |||||||||
| Refinancing costs not capitalized | -- | 6 | -- | 303 | |||||||||
| Adjusted EBITDA | $ | 23,632 | $ | 24,995 | $ | 75,167 | $ | 72,950 | |||||
| Quarter Ended March 31, 2020 | Quarter Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||
| Asia-Pacific | North America | Asia-Pacific | North America | ||||||||||||||||||||||||||||||||
| Leasing | Leasing | Manufacturing | Corporate | Leasing | Leasing | Manufacturing | Corporate | ||||||||||||||||||||||||||||
| Operating income (loss) | $ | 4,417 | $ | 10,945 | $ | 385 | $ | (1,378) | $ | 5,494 | $ | 10,848 | $ | (137) | $ | (1,157) | |||||||||||||||||||
| Add - | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 3,132 | 5,660 | 99 | 3 | 3,118 | 6,362 | 101 | 2 | |||||||||||||||||||||||||||
| Share-based compensation Xexpense | 196 | 108 | 9 | 334 | 65 | 135 | 12 | 265 | |||||||||||||||||||||||||||
| Refinancing costs not capitalized | - | - | - | - | - | - | - | 6 | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 7,745 | $ | 16,713 | $ | 493 | $ | (1,041) | $ | 8,677 | $ | 17,345 | $ | (24) | $ | (884) | |||||||||||||||||||
| Intercompany adjustments | $ | (278) | $ | (119) | |||||||||||||||||||||||||||||||
| Nine Months Ended March 31, 2020 | Nine Months Ended March 31, 2021 | |||||||||||||||||||||||||
| Asia-Pacific | North America | Asia-Pacific | North America | |||||||||||||||||||||||
| Leasing | Leasing | Manufacturing | Corporate | Leasing | Leasing | Manufacturing | Corporate | |||||||||||||||||||
| Operating income (loss) | $ | 11,766 | $ | 38,676 | $ | 358 | $ | (4,761) | $ | 14,797 | $ | 32,434 | $ | (508) | $ | (3,905) | ||||||||||
| Add - | ||||||||||||||||||||||||||
| Depreciation and amortization | 10,141 | 17,029 | 297 | 9 | 9,374 | 18,925 | 301 | 8 | ||||||||||||||||||
| Share-based compensation Xexpense | 562 | 343 | 27 | 1,083 | 161 | 403 | 36 | 915 | ||||||||||||||||||
| Refinancing costs not capitalized | - | - | - | - | - | 150 | - | 153 | ||||||||||||||||||
| Adjusted EBITDA | $ | 22,469 | $ | 56,048 | $ | 682 | $ | (3,669) | $ | 24,332 | $ | 51,912 | $ | (171) | $ | (2,829) | ||||||||||
| Intercompany adjustments | $ | (363) | $ | (294) | ||||||||||||||||||||||
FAQ
What were General Finance Corporation's Q3 2021 earnings results?
How did the acquisition by United Rentals impact GFN's financial outlook?
What were the primary revenue drivers for GFN in Q3 2021?
