GFN - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the General Finance Corporation’s Earnings Conference Call for the Fourth Quarter and Fiscal Year ended June 30, 2018. Hosting the call today from the company’s corporate offices in Pasadena, California are Mr. Jody Miller, President and Chief Executive Officer and Mr. Charles Barrantes, Executive Vice President and Chief Financial Officer. Today’s call is being recorded and will be available for replay beginning at 2:30 p.m. Time. Eastern all floor placed your will the time, mode a questions have presentation. the and be participants this in been listen-only following At opened for over pleasure It turn now Instructions] my [Operator the is call to Mr. to Wilson, General Corporation. of and Finance President, Counsel Chris Vice Secretary General ahead, go Please Mr. Wilson.

Chris Wilson

Thank you, operator.

Zealand for financial of that employees limited of adequate respect to oil statements. but Australian begin statements outcomes those We supplies represented and us as qualified can expectations relative Such customer ability in U.S. that today, you include, and be products to and as assurance to These like operating ability integrate capital such such will to, goodwill availability changes; raise our may businesses; differ our with call demand; forward-looking the the reasonable, to are and but prove to demand to would write-off products we forward-looking U.S. the and control; materially conference a pressures; borrow no or expectations future transportation adverse dollar; correct. there changes ability uncertainties do from to of and described part for of of defaults variable be that contain to sufficient we meet and all interest not and to manufacturing acquisition industries Canadian Australian, to our secure competitive litigation; could the for forward-looking to our are or procure actual expect or levels services cause results views and assets. or insolvencies; statements key that the that for our operations; regulatory dollar risks Before rates additional or by of contract our believe or our remind statements. our gas interest intangible funds; our customers; are perform a or increases industries or I New not this in with results; customer construction declines certain businesses forward-looking staff indebtedness; in rate adequate in any our or from resolution our disruptions; labor construction or industries other disputes the difficult

on non-U.S. now, how report Miller, please certain details more any Factors the to the we risks, with periodic President EBITDA. and measures at update XX-Q. of Jody, this General in SEC quarterly discuss arrive filed our obligation judgment be these our ahead. forward-looking company at earnings included the For we and adjusted and call website the to intent EBITDA posted Executive to will I regarding These in of such or please call, www.generalfinance.com. Risk go Chief see reconciliation this reports our also at statements A turn the time disclaims adjusted as statements. is Corporation and and define section Officer. In represent of Finance financial will release forward-looking And our over conference GAAP Form Jody

Jody Miller

morning fiscal Good we quarter for fourth conference joining our year appreciate us and and Chris. you, you Thank call. XXXX today

for We our then will overview and Barrantes of provide brief will a Chuck an and a our begin with CFO discussion outlook financial year operations fiscal XXXX.

questions. will his call any for we the Following remarks, up open

metrics. EBITDA quarter XXXX the year-over-year year finished very solid the fourth as accomplishments operations. and record We revenues well of our proud strong in growth are delivering key our year as momentum across virtually operational generating across of adjusted improvement record of and all We with all our in fiscal financial

fleet average units majority in utilization healthy year-over-year. by and operations fourth experienced with of average higher We quarter quarter. demand the in XX% leasing see end-markets American increasing lines rates product average across North in our all our of Our higher higher total the vast continue to on lease revenue lease,

high-end our driven markets both at new storage enhancing perform continues XX the Pac-Van of our and to its promoter the posted expectations score majority year. world of end-markets. business existing by in portable broad-based is of once and consistent core brand a class full Our the again demand execution across for net and

In into of expanding geographically business our long-term brand adjacent organic focused on goals markets. storage Pac-Van’s North addition to growth, portable particularly America our remain we our growing across

Greenfield we we we to in and are end adding During completed acquisitions in acquisition pipeline the the acquisition the Mid-Atlantic half locations. presence now serving top Since year region, DC MSAs also market an remains XXX of two and four completed U.S. our the our opened Baltimore year in the healthy.

Permian solid business containment both quarter very EBITDA basis. and higher third leasing America generating average has in quarter growth eighth oil on utilization in North the a enabled us liquid sequential quarter adjusted consecutive quarters and Basin seven gas and in the from rates year-over-year lease a activity another monthly sequentially and higher particularly for delivered for the production average Strong to row. achieve the fleet revenue Our

operations customers. is fifth increased to demand due quarter ongoing sales sequential in specialty This manufacturing consecutive steel in North products. and improvement Our delivered American related tanks growth its to other external

pipeline outlook have order Our as backlog. and positive sales remains we healthy

the was increase end construction and The in increases is mining, in revenues average the due on with of of nice continues another growth our fourth in quarters X the earlier a eight for This specialty growth years. year by in that’s for lease and Wolf revenues highest positive to delivered leasing improved to large fleet stations. event the units revenues in Asia-Pacific driven with introduced to seventh growth region, last sectors. scale out Royal was turning used in across leasing its recycling follow-on quarter made year-over-year quarter markets resulting container its revenue we order momentum annual newly in consumer Now a mainly leasing sales broad a our The and Asia-Pacific mainly growth number where utilization. fourth in region product based in has

focused and they extent position remains through this and become combination leading acquisitions. market available Asia-Pacific region accretive building a the on Greenfield team of to the upon growth organic across Our openings

year strategy as we Greenfield During the This in a July a hard said, the our fiscal business opened year few a commitment executing we our continued the conclude, of to Zealand years. performance fiscal and storage well will all the XXXX result locations locations the fiscal of disciplined country. acquired Chuck for in another in employees the To for focused positive year the strong our and of past in North have being our into first operating work the strengthening across Barrantes American outstanding we call a still quarter growth XXXX momentum New note eight review region and financial number positioning portable opportunities of and of and our our leadership over region. year in year I high for turn the our us and over has on including market fiscal Asia-Pacific footprint outlook now ahead We expanding ended results. XXXX. financial three

Charles Barrantes

Jody. Thanks

of investors EDGAR on amount We it to discuss quarterly read available document our will the our will website. about I on substantial at encourage system end and some time it parties which we as the today. filing both week be report be and information of will our SEC filing which contains Form on at this And this interested company, other XX-K

operations. of sales results, the fourth were over year’s our quarter revenues revenues prior $XX.X of the for million quarter the the and non-manufacturing American and year totaled quarter XX% XX% the an $XX.X million our construction period, both ago Turning XXXX compared in period, fiscal commercial, comprised sectors. operations North of million fourth ‘XX, to quarter, fourth increase intercompany the quarter $XX.X periods. were revenues year million revenues industrial million total sales of in Leasing In were fourth $XXX,XXX. intercompany for million, driven XX%. of for of manufacturing oil total an quarter million were $X.X in an and American ago operations million leasing of sales an increase mainly basis $XX.X the including leasing from $XX.X compares sales on $X.X revenues in in quarter over $XXX,XXX $XX.X fourth revenues increase increased quarter of to the respectively. American fiscal to compared and XX% a North of for This It’s quarter for gas, Revenues year. XX% year-over-year sales for prior XX%. Non-manufacturing North year XX% and of our total by the increases fourth our increase fourth including Leasing by the year to

prior in revenues fiscal and compared from sector the increased exchange $XX.X between fourth million Sales the of our totaled an due adjusted of increase XX%. to XX% for compared basis, to our was of for by up other foreign adjusted tanks the year up up America, quarter, quarter a in especially revenues primarily adjusted was million utility on were consecutive the to quarter, was demand North Revenues Star’s of container total the and products, currency margin and compared in from increase year-over-year. fourth the adjusted year EBITDA XX% quarter EBITDA a the our increased leasing quarter EBITDA in $XX.X at for $XX XX% follow-on million large prior an fiscal On million year’s Asia-Pacific $XX.X leasing This operations year. related quarter up mentioned by operations were Consolidated XX% an as approximately was the year-over-year adjusted favorable of sixth Jody the of Pac-Van quarter In year’s In As XX%. periods. revenue million particularly prior EBITDA $X.X saw XXX% fourth steel million, fourth ago positively revenues million. local quarter, effect currency growth. a increase $XX.X of EBITDA also $X.X impacted a to in XXXX Lone Adjusted for X%. increased sale million XX% amount of was $XX.X $XX.X EBITDA specialty the leasing operations, year-over-year revenues manufacturing the chassis. fourth fourth XXXX, percentage million, the quarter XX%, was and

EBITDA For adjusted our standalone basis adjusted the fourth quarter a EBITDA $XXX,XXX quarter of was for last manufacturing to year’s on $XXX,XXX. compared loss operations,

quarter. Australian stronger share Net per $X.X loss fourth standalone stock. bifurcated by $XX.X Asia-Pacific diluted of Included million ‘XX million in the between XX% a by quarter in by for and fiscal period, the versus fourth ago is fourth year. $X.XX year’s driven area. loss or XX% dividends of adjusted a X.X% average of quarter approximately quarter up borrowings, $X.XX EBITDA fourth weighted the the this per Asia-Pacific period interest of derivative to in for in periods or to increase loss convertible due to the The fourth quarter $X.X $XX.X from was the for $X.X year’s in higher the net quarter higher increase net dollar million basis, paid note average was the adjusted was XXXX for change expense the included in ago on million fourth last the year non-cash common the for charge year outstanding currency increased local for XXXX share primarily shareholders year compared higher the quarter quarter. Both million year expense valuation area a of $XXX,XXX preferred of On compared prior XX%. ago Interest interest from $X.X $X.X in from in rate our the of Asia-Pacific EBITDA attributable was to our an million periods. of the million

of fiscal from million This due liabilities. assets free cash management million generated compared flow mainly For in was activity the to to of but the before operating the our timing $XX.X higher higher and fleet of factors, XXXX, year. $XX.X flow year’s adjusted and combination EBITDA free cash prior a year we and

leverage the at XX, very a X.Xx for June had our XX compares which trailing net net XX, to company Turning months, balance the at of leverage June favorably XXXX. a with sheet X.Xx of

acquisition non-controlling Our strong the incurred our that interest of result enhance successful the additional our Wolf. of a Royal with leverage we financial results enable net debt ratio improving public even capital as and availability us to of our

an comments. companywide XXXX average of fiscal $XXX consolidated XXXX, session. XXXX. and outlook our And question-and-answer call Australian year approximate X% our fiscal occur I dollar fiscal fiscal to XXXX acquisitions versus range $XXX consolidated to This for between increase the does This year the and or from will turn impact the the outlook concludes XXXX EBITDA prepared now be of fiscal U.S. operator the for to year take to rate will year revenues decrease represents XX% XXXX. not account into expect the dollar X% the for any million the in year fiscal for in Turning we adjusted the for the million exchange which averages would that year the remainder back assuming $X.XX, additional may like

Operator

question first comes Schneeberger line of Your Instructions] of the Scott Oppenheimer. [Operator from

Scott Schneeberger

much. very morning Thanks Good everybody.

Jody Miller

morning. Hey, Scott. Good

Scott Schneeberger

Star, that Hey, favorable about appears am and going guide? some guidance guys. bit Lone Star to there, speak its are the about thinking are volume there obviously could I you you just little bit on next Lone into pricing you what Thanks. year It about right a in little as going portion of is talking seeing a jump for the

Jody Miller

would I consistent. Star Lone Scott, say, very Sure. is

think And like I on trends. is as our opportunity. the on we with think outlook there there things to the also still some vapor-tight. I utilization We continue current rate convert good feel the is room is side, some in a line in

close companies where labor issues up find were to quite because service pretty well on moving the for positive anywhere off, rates and Lone success maintain Star done drop we and very outlook its that have maintain not levels to and things we some get still are those a Lone rates in Star. we to had and good We of things harder peak with have as

Scott Schneeberger

are to that going you Thanks. Pac-Van, then And as about what curious the next fiscal a the environment that. question Appreciate seeing we am are similar year? quarter you Thanks. about the how thinking pricing and enter there on I

Jody Miller

Yes, I very again consistent. think

rates this opportunities Transportation continue and in rates up going We to year. XXXX we are into have had trend the that up. good move nicely

I going think more rate we increases, feel increases are very board Year rate good New so the people of as well. across the about accepting into

Scott Schneeberger

field customers, any Hearing favorable? speaks it’s anything adverse at customers, cycle all, with I about Pac-Van or still your concerns am as guessing very

Jody Miller

time and all really seem all. positive construction, No, it’s we at very any to segments aren’t concern very getting the be this favorable commercial at

Scott Schneeberger

there a over so is going to… continuation are about some the Switching sales follow-on there what’s get see ‘XX, Thanks. over to a we for just some in lumpiness think we this that feel quarter, – category can to sale Asia-Pac, how should fiscal in of going we

Jody Miller

to portables, as I sale times hit that have year, large we stated utility few we recycling for containers. last Yes, mean, recycling sector a the

got trying have on We added still this grow for year. They are business. one to order obviously their

their we there to things might again, is in are orders the be but little the we don’t but year, have we an And to throughout like a leasing So Asia-Pacific in hand, to trends. feel any have there like be to revenue some have going things happened we increase. need continues so lumpiness, we feel doing positive

Scott Schneeberger

Yes, leasing sounds outlook favorable. the

sales, doesn’t put just risk is that come the than if is or you guidance, much I what fairly it conservative through am baked guidance? it how on into there the With is in curious the lumpiness if the

Jody Miller

have stuff. to year. We the the business, They come are every strong They fairly conservative. custom seem sales in especially always through sale very with

the fairly happen there but year, this to that are if So, the conservative, is but like that feel it and always it’s is sales we has that in some pipeline also past I doesn’t will other we there know need throughout that very happen think the confident that it are will. we confident we things in

Scott Schneeberger

could it you Thanks. in like Thanks. but to going just going and and sounds then foresee go there I predominantly there what sounds back just nice the one I it what’s to is DSOs, in initiative am Asia-Pac, appreciate that. queue, occurring forward? Chuck, you ask in improvement more will speak what but and I like

Charles Barrantes

Yes, Chuck. Scott. This is

to industry, a is inroads which primarily, had secret that. they had Asia-Pacific we habitually and in DSO, on the lot DSO have improved construction we the of in no really the slower higher So, area past, the in

at system collections information the said when DSO have a and and of We we a more concentrated better really on down was eventually high will has happened. year we that just a get good DSO throughout which to and effort, it

Scott Schneeberger

Thanks. turn will I there. over. work Nice it

Operator

question Zane D.A. next Your Karimi from line comes of of Davidson. the

Zane Karimi

morning. and good you Thank

and what the profitability inflection and products kind solid get pretty hoping First this reason margins XXXX? was of the thing, and manufactured you on is how at segment, you have demand like frac the more moving expansion experienced in color quarters, to unit in guys I past is it some your of tank in figure is couple do main in do you new uptick into look over

Jody Miller

Yes, thanks to products. slowing Zane. you tank This made the the head. when the business decision our diversify frac a is Jody. hit I conscious would nail was yes, on We

go So, tanks of container-chassis applications, stations, now energy types fuel portable things. through specific trash and lot of the without for storm those hoppers, some some shelters, we like very a specialty

headway So, backlog now we we got in on product sales. great have have and a made nice really diversification of really

We build GLO, Southern Southern well ground outlook very and modifications positive. their also and doing which and Fab continue is to and offices the do Frac level quite are the is

Zane Karimi

Great. clarity Thank forward? we provide see main can moving you to $XX.X charge for how further valuation are the you for for likely valuation that. And and change on then in the the million catalyst changes

Charles Barrantes

this Yes. Zane, is Chuck.

So, stock conversion is there when every it account separately quarter instrument the is convertible for that words to is options in not and other you that stock way ops of I the valuation literature accounting to to you in and similar such a you have to account the the am consult for company, employees. that talking have about hands is

it’s to charge our up. is that why gets the reversed is that’s valuation it stock non-cash, there reason that strictly stock gain. when side is up, P&L, and it converted, other goes goes And and as if of the a equity the value conversion So is of that

price, will quarters. our going it yes, has change answer been stock up based the the few your fluctuate question, So, which last to on

Zane Karimi

in how the before then final leverage rate I And one queue, moving you thinking through are interest in current you. environment, by XXXX? one about jump Thank back

Jody Miller

Well, there it the of XX% North had. effectively debt, debt of is or the of fixed our is in other that’s most case facility than American Asia-Pacific the

So, about I are are in leverage, looking question, of your and it but terms if interest I of content – fee talking variable sure was. rate reducing exposure. at hedging interest, you am we constantly with respect if to assume not our that’s

Zane Karimi

will thank queue. into guys. jump you I Yes, back

Operator

Research. question Robert of comes Singular the Maltbie of next from Your line

Robert Maltbie

in Hi, doing? I am sitting Jody. Hi, Chuck. are Greg. How you for

your this have you margin was apologies us So get questions, the in off and prior remind call, the you can you quarter, regarding couple area was what this, of the it there XX% dropped I EBITDA if answered already margin so when was adjusted again? and peak can

Jody Miller

our EBITDA margin adjusted quarter? What the was in prior

Robert Maltbie

Prior peak.

Jody Miller

the the high greater a Well, have you in if to proportion peak be revenues revenues. low of leasing total XXs, can XXs

Our proportion also is margin around that, XX%. manufacturing some Added have we to also. there

moving to you upwards, to which we your quarter. third the XXs at currently low answer you question, high in higher was it running get than can model whether smoothly, was So XX% up get once so XXs, the are

Robert Maltbie

I you it’s and is that area? the a bought the Baltimore, on big what’s portable in in business and guess And guess not end-market market that but how a fracking, storage little I container color

Jody Miller

Yes.

just container clarify, area. Pac-Van to so in Baltimore So, a it was DC it’s through the our operation, business

a big was was what around $X.X it So the acquisition motive there relatively million, but location. was, somewhere small the

are area than with rent and into about very the we a heart a more So, we units nice so and that optimistic excited expand it’s high a in are several able market cold to with start enter that that market get very we and with quickly, right market. on that could that into of yard growth

Robert Maltbie

last drivers on key from end had your the on us And I focusing could the performance? showing hit this think were guess upper you guidance quarter, or Great. I you of what

Jody Miller

was really across board. it think the I

had well Lone phenomenal the you we and XXXX. Pac-Van all a Frac, performance as at carry well Southern into and If region quite Star, quarter that Wolf Royal are so really divisions four by as look doing momentum

Robert Maltbie

you. Thank terrific. Okay,

Jody Miller

Robert. you, Thank

Operator

Your Gagnon next of Brian question Gagnon comes from the Securities. line of

Brian Gagnon

gentlemen. morning Good

Jody Miller

Good morning Brian.

Charles Barrantes

Good morning.

Brian Gagnon

your I flow cash for you, if for free you said questions Chuck $XX.X XXXX few hear was A you, million?

Charles Barrantes

Yes.

Brian Gagnon

Okay.

that numbers up the QX, and $XX your look going I cash debt for about by going sequentially million correct? at if by sequentially have I $XX down So is million, your

Charles Barrantes

would think so, I yes.

Brian Gagnon

Okay.

question, to versus is down million about around here about XXXX you big in So what $XX in my the program and and pay which and for XXXX how you investment do is ‘XX Australia for you because is prior only low goes think look invested thinking this years like your years U.S. versus and beyond? what all for debt going are prior

Jody Miller

Yes.

still rate room I think it’s to we pretty as very as the similar. did close We still same invest continue rate that year. on be going feel utilization opportunities this And Brian is to we opportunities. like well to there

projections so CapEx our as as from XXXX it’s we top similar a wildcard that’s budget are far for on as very So as wise, that, CapEx. similar of of looking to very acquisitions year. kind fleet are and far But

Brian Gagnon

Okay.

should be Australian bit cash of versus Aussie Chuck us a U.S. debt, down the able pay a breakout debt to So there to additional of to flow use quite the give at be quarter potentially you end? can

Charles Barrantes

buys million dollar so senior At I Yes, of and notes the $XXX.X then here, then $XXX year the you is totals quarter the And have Australia in is at of of end Deutsche The at Bank a other. million little bit the June. North notes $XX.X just Of total recap is million the million. $XX Australian debt debt, $XX.X million. total effectively. a that facility end net can. rest end, total so America or

Brian Gagnon

Yes.

which of those quarter? this the did So you one pay down most

Charles Barrantes

that Asia-Pacific there down. pay we is the piece amortizing an Probably

Brian Gagnon

okay. Excellent,

So down as continue in XXXX you debt? hopefully the able go throughout terms Australian be pay of that to you would to

Charles Barrantes

Exactly, no cash debt the there we assuming free to Australian acquisition would pay is use opportunities there. flow

Brian Gagnon

Okay, Congratulations, wonderful. Thank job. you. wonderful

Charles Barrantes

you. Thank

Jody Miller

you. Thank

Operator

Davidson. D.A. is [Operator Karimi from Instructions] Your next follow-up Zane question a of

Zane Karimi

my for questions Thanks guys. taking Hi again.

hoping bucket on can going so-called more there? a would was XX% little clarity SG&A got question provide nitty-gritty, I is you noticed bit I what up be on run-rate, was follow-up I Next, in

Charles Barrantes

down, in so our up. total up Yes. obviously is as variable revenues costs SG&A as of there some Well, dollars, revenues go absolute but percentage are a

gone effectively SG&A have is state our mean level down. So I

Zane Karimi

do also see Mobile Mini thank the pricing? their divestiture, of you industry out with And regards you. announcement how asset recent playing then fleet to this Okay, with

Jody Miller

it a effect. big don’t has I think

of think fleet old a be I from they are change, what just odd big gathered from think and then net-net I but positive, it’s don’t some a to getting the units and it’s it’s anything I I if up think announcement. units ball going probably cleaning rid

I think up on containers So again pricing little a went bit.

I as price think everybody increases. earlier, more accepting positive And I it’s for environment. is the I only stated the pricing think

Zane Karimi

given the Okay. moving retail are market, we holiday And then this pieces during anticipating still in the season? an incremental up step

Jody Miller

Yes. I mean, we are just getting into that.

bit predict, it’s forecast little indications it’s but all hard year solid be our and last a above to to retail right now season. So, is from going very

requesting our more customers larger of Some units. are

So, this think a again, at positive I it’s point.

Zane Karimi

for you good time quarter. with the thank Yes, job and your

Jody Miller

you. Thank

Operator

There turn now other to the closing would remarks. are Jody to questions. Please Miller, like President over time, and At no CEO ahead, I for call Mr. Mr. this Miller. go

Jody Miller

with appreciate you, Finance interest quarter. General and next look joining today. your call continued in to We would speaking I for like to Thank the you Corporation thank you forward operator.

Operator

you. That Thank call. conference does conclude today’s

disconnect. now may You

General Finance (GFNCP) 5 Sep 182018 Q4 Earnings call transcript