EXHIBIT 99.1
 
GENERAL FINANCE CORPORATION REPORTS THIRD QUARTER RESULTS FOR FISCAL YEAR 2018
 
PASADENA, CA – May 9, 2018 – 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, 2018.
 
Third Quarter 2018 Highlights
Total revenues were $84.4 million, an increase of 23% over the third quarter of fiscal year 2017.
Leasing revenues were $54.8 million, an increase of 25% over the third quarter of fiscal year 2017.
Leasing revenues increased by 10%, excluding the oil and gas sector and favorable foreign currency effects.
Leasing revenues comprised 67% of total non-manufacturing revenues versus 65% for the third quarter of fiscal year 2017.
Adjusted EBITDA was $21.9 million, an increase of 49% over the third quarter of fiscal year 2017.
Adjusted EBITDA margin was 26%, compared to 21% in the third quarter of fiscal year 2017.
Net loss attributable to common shareholders was $1.5 million, or $0.06 per diluted share, compared to net loss attributable to common shareholders of $2.1 million, or $0.08 per diluted share, for the third quarter of fiscal year 2017.
Average fleet unit utilization was 80%, compared to 77% in the third quarter of fiscal year 2017.
Entered two new markets with one greenfield location in North America and one in the Asia-Pacific region.
One acquisition completed in North America.
 
YTD 2018 Highlights
Total revenues were $253.4 million, an increase of 24% over the first nine months of fiscal year 2017.
Leasing revenues were $158.4 million, an increase of 21% over the first nine months of fiscal year 2017.
Leasing revenues increased by approximately 11%, excluding the oil and gas sector and favorable foreign currency effects.
Leasing revenues comprised 64% of total non-manufacturing revenues versus 65% for the first nine months of fiscal year 2017.
Adjusted EBITDA was $64.7 million, an increase of 42% over the first nine months of fiscal year 2017.
Adjusted EBITDA margin was 26%, compared to 22% for the first nine months of fiscal year 2017.
Net loss attributable to common shareholders was $0.4 million, or $0.02 per diluted share, compared to net loss attributable to common shareholders of $4.9 million, or $0.18 per diluted share, for the first nine months of fiscal year 2017.
Average fleet unit utilization was 80%, compared to 77% for the first nine months of fiscal year 2017.
Entered five new markets with three greenfield locations in the Asia-Pacific region and two in North America.
Completed three acquisitions in North America.
Funded the successful acquisition of the noncontrolling interest of Royal Wolf by acquiring all of the publicly traded shares.
 
Management Commentary
 
"We are pleased to report that our leasing operations in both of our geographic venues again delivered very strong financial results during the quarter,” said Jody Miller, President and Chief Executive Officer. “In North America, our core portable storage business continues to experience growth across all product lines, driven primarily by a larger fleet, increasing average lease rates and higher fleet utilization. We also delivered significantly improved results in our liquid containment business, supported by the vibrant oil and gas market in Texas. Our Asia-Pacific region delivered its third consecutive quarter of year-over-year growth in adjusted EBITDA, driven by both higher leasing and sales revenues.”
 
Charles Barrantes, Executive Vice President and Chief Financial Officer, commented, “This quarter’s results mark the fifth consecutive quarter where we have delivered year-over-year growth in adjusted EBITDA, and expect that positive momentum will continue into the fourth quarter and fiscal year 2019.”
 
 
 1
 
 
Third Quarter 2018 Operating Summary
 
North America
Revenues from North American leasing operations for the third quarter of fiscal year 2018 totaled $51.8 million, compared to $40.8 million for the third quarter of fiscal year 2017, an increase of 27%. Leasing revenues increased by 31% on a year-over-year basis, most notably in the oil and gas, commercial and construction sectors. Adjusted EBITDA was $15.2 million for the third quarter of fiscal year 2018, compared with $9.4 million for the year-ago quarter, an increase of 62%. Adjusted EBITDA from Pac-Van and Lone Star increased by approximately 28% and 257% year-over-year, to $10.2 million and $5.0 million, respectively, from $8.0 million and $1.4 million, respectively, in the third quarter of fiscal year 2017.
 
North American manufacturing revenues for the third quarter of fiscal year 2018 totaled $3.2 million and included intercompany sales of $0.9 million from products sold to our North American leasing operations. This compares to $1.7 million of total sales, including $0.7 million intercompany revenues during the third quarter of fiscal year 2017. On a stand-alone basis, prior to intercompany adjustments, adjusted EBITDA was $0.1 million for the quarter, as compared to a loss of $0.3 million in the third quarter of fiscal year 2017.
 
Asia-Pacific
Revenues from the Asia-Pacific region for the third quarter of fiscal year 2018 totaled $30.3 million, compared with $26.7 million for the third quarter of fiscal year 2017, an increase of 13%. The increase in revenues occurred primarily in the utilities, construction, industrial, mining and special events sectors and were accompanied by a favorable foreign currency translation effect between periods. These increases were partially offset by a decrease in the transportation sector. Leasing revenues increased by 12% on a year-over-year basis, most notably in the construction, mining and special events sectors. Adjusted EBITDA for the third quarter of 2018 was $7.6 million, compared with $6.7 million for the same quarter last year, an increase of 13%. On a local currency basis, revenues increased by 9% and adjusted EBITDA increased by 10%.
 
Balance Sheet and Liquidity Overview
 
At March 31, 2018, the Company had total debt of $439.4 million and cash and cash equivalents of $10.8 million, as compared to $355.6 million and $7.8 million at June 30, 2017, respectively. At March 31, 2018, our Asia-Pacific leasing operations had $18.1 million (A$23.5 million) available to borrow under its $96.1 million (A$125.0 million) credit facility, and our North American leasing operations had $35.4 million available to borrow under its $237 million credit facility.
 
During the first nine months of fiscal year 2018, the Company generated cash from operating activities of $32.9 million, as compared to $20.1 million for the first nine months of fiscal year 2017. For the first nine months of fiscal year 2018, the Company invested a net $18.5 million ($16.0 million in North America and $2.5 million in the Asia-Pacific) in the lease fleet, as compared to $18.6 million in net fleet investment ($8.3 million in North America and $10.3 million in the Asia-Pacific) in the first nine months of fiscal year 2017.
 
Receivables were $53.2 million at March 31, 2018, as compared to $44.4 million at June 30, 2017. Days sales outstanding in receivables at March 31, 2018, for our Asia-Pacific and North American leasing operations were 47 and 52 days, as compared to 49 and 46 days, respectively, as of June 30, 2017.
 
Outlook
 
Based on our year-to-date results, we now expect that consolidated revenues for fiscal year 2018 will be in the range of $335 million to $340 million and that consolidated adjusted EBITDA will increase by 39% to 41% in fiscal year 2018 from fiscal year 2017. This outlook does not take into account the impact of any additional acquisitions that may occur in the fourth quarter of fiscal year 2018.
 
 
 2
 
 
Conference Call Details
 
Management will host a conference call today at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time) to discuss the Company's operating results. The conference call number for U.S. participants is (866) 901-5096 and the conference call number for participants outside the U.S. is (706) 643-3717. The conference ID number for both conference call numbers is 5997169. Additionally, interested parties can listen to a live webcast of the call in the "Investor Relations" section of the Company's website at http://www.generalfinance.com.
 
A replay of the conference call may be accessed through May 23, 2018 by dialing (800) 585-8367 (U.S.) or (404) 537-3406 (international), using conference ID number 5997169.  
 
After the replay has expired, interested parties can listen to the conference call via webcast in the "Investor Relations" section of the Company's website at http://www.generalfinance.com.
 
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 subsidiary Royal Wolf Holdings Limited (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 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, or a write-off of all or a part of our goodwill and intangible assets. 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/Media Contact
Larry Clark
Financial Profiles, Inc.
310-622-8223
-Financial Tables Follow-
 
 
 
 
 
  3
 
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,
 
 
 
2017
 
 
2018
 
 
2017
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Sales:
 
 
 
 
 
 
 
 
 
 
 
 
Lease inventories and fleet
 $23,557 
 $27,251 
 $69,316 
 $88,698 
Manufactured units
  1,032 
  2,349 
  3,789 
  6,332 
 
  24,589 
  29,600 
  73,105 
  95,030 
Leasing
  43,875 
  54,821 
  130,484 
  158,438 
 
  68,464 
  84,421 
  203,589 
  253,468 
 
    
    
    
    
Costs and expenses
    
    
    
    
Cost of sales:
    
    
    
    
Lease inventories and fleet (exclusive of the items shown separately below)
  17,017 
  19,729 
  48,989 
  64,039 
Manufactured units
  1,389 
  2,126 
  4,916 
  6,266 
Direct costs of leasing operations
  19,303 
  22,684 
  55,821 
  65,690 
Selling and general expenses
  17,299 
  18,996 
  50,256 
  56,224 
Depreciation and amortization
  9,846 
  10,014 
  29,237 
  29,671 
 
    
    
    
    
Operating income
  3,610 
  10,872 
  14,370 
  31,578 
 
    
    
    
    
Interest income
  18 
  43 
  54 
  81 
Interest expense
  (5,249)
  (9,398)
  (15,096)
  (24,667)
Foreign exchange and other
  (164)
  (1,852)
  (70)
  (4,906)
 
  (5,395)
  (11,207)
  (15,112)
  (29,492)
 
    
    
    
    
Income (loss) before provision (benefit) for income taxes
  (1,785)
  (335)
  (742)
  2,086 
 
    
    
    
    
Provision (benefit) for income taxes
  (714)
  228 
  (297)
  519 
 
    
    
    
    
Net income (loss)
  (1,071)
  (563)
  (445)
  1,567 
 
    
    
    
    
Preferred stock dividends
  (922)
  (922)
  (2,766)
  (2,766)
Noncontrolling interests
  (86)
   
  (1,644)
  801 
 
    
    
    
    
Net loss attributable to common
stockholders
 $(2,079)
 $(1,485)
 $(4,855)
 $(398)
 
    
    
    
    
Net loss per common share:
    
    
    
    
Basic
 $(0.08)
 $(0.06)
 $(0.18)
 $(0.02)
Diluted
  (0.08)
  (0.06)
  (0.18)
  (0.02)
 
    
    
    
    
Weighted average shares outstanding:
    
    
    
    
Basic
  26,404,450 
  26,301,706 
  26,307,066 
  26,210,697 
Diluted
  26,404,450 
  26,301,706 
  26,307,066 
  26,210,697 
 
    
    
    
    
 
    
    
    
    
 
 
  4
 
GENERAL FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
 
 
 
June 30, 2017
 
 
March 31, 2018
 
Assets
 
 
 
 
 
 
Cash and cash equivalents
 $7,792 
 $10,827 
Trade and other receivables, net
  44,390 
  53,169 
Inventories
  29,648 
  29,208 
Prepaid expenses and other
  8,923 
  10,413 
Property, plant and equipment, net
  23,388 
  22,731 
Lease fleet, net
  427,275 
  436,712 
Goodwill
  105,129 
  110,699 
Other intangible assets, net
  28,769 
  26,088 
Total assets
 $675,314 
 $699,847 
 
    
    
Liabilities
    
    
Trade payables and accrued liabilities
 $42,774 
 $47,001 
Unearned revenue and advance payments
  15,548 
  19,394 
Senior and other debt, net
  355,638 
  439,423 
Fair value of bifurcated derivative in Convertible Note
   
  4,085 
Deferred tax liabilities
  38,106 
  36,771 
Total liabilities
  452,066 
  546,674 
 
    
    
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; 26,611,688 and 26,753,254 shares issued and outstanding at June 30, 2017 and March 31, 2018, respectively
  3 
  3 
Additional paid-in capital
  120,370 
  138,778 
 
Accumulated other comprehensive loss
 
  (12,355)
  (15,608)
Accumulated deficit
  (12,972)
  (10,604)
Total General Finance Corporation stockholders’ equity
  135,146 
  152,669 
Equity of noncontrolling interests
  88,102 
  504 
Total equity
  223,248 
  153,173 
Total liabilities and equity
 $675,314 
 $699,847 
 
 
  5
 
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,
 
 
 
2017
 
 
2018
 
 
2017
 
 
2018
 
Net income (loss)
 $(1,071)
 $(563)
 $(445)
 $1,567 
Add (deduct) —
    
    
    
    
  Provision (benefit) for income taxes
  (714)
  228 
  (297)
  519 
  Foreign currency exchange and other loss
  164 
  1,852 
  70 
  4,906 
  Interest expense
  5,249 
  9,398 
  15,096 
  24,667 
  Interest income
  (18)
  (43)
  (54)
  (81)
  Depreciation and amortization
  10,044 
  10,131 
  29,831 
  30,123 
  Share-based compensation expense
  651 
  889 
  842 
  2,986 
  Refinancing costs not capitalized
  437 
   
  437 
   
Adjusted EBITDA
 $14,742 
 $21,892 
 $45,480 
 $64,687 
 
 
 
Quarter Ended March 31, 2017
 
 
Quarter Ended March 31, 2018
 
 
 
Asia-Pacific
 
 
North America
 
 
Asia-Pacific
 
 
North America
 
 
 
Leasing
 
 
Leasing
 
 
Manufacturing
 
 
Corporate
 
 
Leasing
 
 
Leasing
 
 
Manufacturing
 
 
Corporate
 
Operating income (loss)
 $2,112 
 $3,079 
 $(496)
 $(1,202)
 $3,178 
 $9,299 
 $(17)
 $(1,694)
Add -
    
    
    
    
    
    
    
    
Depreciation and amortization
  4,268 
  5,758 
  198 
  9 
  4,342 
  5,855 
  11 
  9 
Impairment of goodwill and trade name
  --- 
  --- 
  --- 
  ---- 
  ---- 
  ---- 
  117 
  ---- 
Share-based compensation expense
  314 
  98 
  4 
  235 
  114 
  80 
  ---- 
  684 
Refinancing costs not capitalized
  ---- 
  437 
  ---- 
  ---- 
  ---- 
  ---- 
  ---- 
  ---- 
Adjusted EBITDA
 $6,694 
 $9,372 
 $(294)
 $(958)
 $7,634 
 $15,234 
 $111 
 $(1,001)
Intercompany adjustments
    
    
    
 $(72)
    
    
    
 $(86)
 
 
 
Nine Months Ended March 31, 2017
 
 
Nine Months Ended March 31, 2018
 
 
 
Asia-Pacific
 
 
North America
 
 
Asia-Pacific
 
 
North America
 
 
 
Leasing
 
 
Leasing
 
 
Manufacturing
 
 
Corporate
 
 
Leasing
 
 
Leasing
 
 
Manufacturing
 
 
Corporate
 
Operating income (loss)
 $8,931 
 $10,649 
 $(1,847)
 $(3,805)
 $10,232 
 $25,955 
 $(680)
 $(4,304)
Add -
    
    
    
    
    
    
    
    
Depreciation and amortization
  12,294 
  17,490 
  594 
  19 
  12,837 
  17,382 
  346 
  27 
Impairment of goodwill and trade name
  ---- 
  ---- 
  ---- 
  ---- 
  ---- 
  ---- 
  117 
  ---- 
Share-based compensation expense
  (208)
  265 
  48 
  737 
  1,321 
  273 
  26 
  1,355 
Refinancing costs not capitalized
  ---- 
  437 
  ---- 
  ---- 
  ---- 
  ---- 
  ---- 
  ---- 
Adjusted EBITDA
 $21,017 
 $28,841 
 $(1,205)
 $(3,049)
 $24,390 
 $43,610 
 $(191)
 $(2,922)
Intercompany adjustments
    
    
    
 $(124)
    
    
    
 $(200)
 
  6

The following information was filed by General Finance Corp (GFN) on Wednesday, May 9, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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