GFN - Earnings call transcript Q2 2019

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Operator

Welcome to the General Finance Corporation's Earnings Conference Call for the Second Quarter Ended December 31, 2018. Hosting the call today for 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 is to It over the my Mr. to now Instructions] turn pleasure call [Operator President, and General Finance Vice Wilson, Chris Counsel Corporation. Secretary General of Please Mr. go ahead, Wilson.

Christopher Wilson

Operator. you, Thank

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

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

Jody Miller

operations, fiscal year. and you of provide call. you, and Good financial begin remainder we the with our CFO, discussion will brief I Thank Barrantes, outlook morning appreciate a joining will XXXX for the a then for today Chris. conference quarter our fiscal second us of our year our Chuck and overview

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

the in our quarterly with The pleased experienced to of our delivered is highest we quarter We we momentum quarter and EBITDA adjusted the first company's continue second be extremely history. revenues performance. level and into operational financial strong where in solid continued

XXX,XXX is XX% the of XXX five our compound company greenfield geographic the This branch put of our in growth openings. rate in units We based rental in and annual five accretive our similar of last at has a we've the on acquisitions over a also our grown opening milestone past combination reached years. strategy container which during years. fleet, with perspective, this network To closing with footprint of grown a our expanding quarter. a result We're branch term the long also rate

our and increase. strong end education American rate due markets North sector demand sales across revenues during industrial XX%, evenly increasing growth leasing of and by higher XX% continued of revenues geographic unit turning of We're approximately in Now, outstanding revenues. mostly second total quarter. leasing very large utilization all its across to see fleet the by year-over-year, all sectors. all increase to driven operations across least results. spread our with our two in The of up and revenue in XX% remaining sales were contribute by to quarter, was million million both venues, quarter the the these in average increase increased driven which lines the X higher X.X Leasing an proud by product Sales

the the portable continued at which end by based across ground of XX%, two and lines, organic demand perform core Our products year-to-date. increase revenue growth rental also the to storage our show majority organic over high Pac-Van's rental combination XX% consistent year-over-year for Demand end product as these XX% our growth. into for generate Taking expectations level was was broad of of half high continued markets. revenue demand very quarter a of of execution and storage to our driven account all

plan introduction including ordering traction number recent our to online as such a our business our initiatives and program, of continues gaining on Safety PVX great executing account do team on national our Containers. job capabilities Our

continues powered its the this excited as offers a the world to lighting. last posts again promoter of score base be and particularly customer about as option industry's which well emergency are innovative once only Pac-Van regarded interior the an XX upgraded net for feature XX exit by product, to We new class months. highly include solar

America into storage growth addition Pac-Van geographically particularly building we business organic expanding our North markets. In on portable by to remain the brand container adjacent throughout focused

region. quarter, in England Hampshire, second New the one the During completed in presence our New we acquisition increasing

Tampa, greenfield our Florida. in the location opened in Florida, branch fourth We adding also

XXX of healthy. We continue remains and over our the top the US in pipeline acquisition to serve just MSAs half

Our of respectively. growth XX% and liquid North year-over-year a in XX% again quarter, containment delivered leasing generating adjusted very and America EBITDA once business strong revenues

While oil and during the of prices Permian and remained increase quarter Ford oil among Eagle gas our in activity customers. healthy, created basins some in the volatility caution both in production

decline we a in utilization. a had result, As small fleet

North other of manufacturing increased improvement operations tanks increase really Our This to fifth external ongoing customers American posted standalone XX% in related its year-over-year row delivered EBITDA. especially products. as in demand, and steel and a sales quarter positive

our its increase last out positive quarter that XX currency two repeated quarter. local this were sales large the year. of our ninth continued to turning Asia growth X% leasing marking due its second that revenues Pacific of Sales down year-over-year year-over-year in last in year Pacific in Now, revenues Asia region, quarter not posting second were region occurred momentum to basis

increase by higher on spread markets construction, average consumer across overall the of currency. in lease with by of those adversely Total driven its dollar US in transactions, growth average Excluding revenue in sales impact the revenues between lease X% impacted sectors. would mainly Australian local for in leasing periods. almost quarter and the been combined units dollars noticeable has The increase two with all by The approximate revenues exchange increased rate reported XX% have industrial rates. were increases average decline in

a on the acquisitions. available openings region extent and of combination Our team accretive growth, leading market of to focused remains organic its position become they upon building greenfield across through the

America Asia quarter North state additional expansion increasing Asia and we to count During we to to and Victoria, our growth XX. market of region. location our in Pacific organic the one in the in opportunities conclude, ability strengthen opened in both continue Pacific leadership branch To the see the

we in always, disciplined remain capital allocation. our As

Our us while well with also our to performance about us the optimism year, year-to-date exceed goals this positions for future. providing

our continue over financial the lead company performance. turn the and their fiscal to on execute to Chuck now for year. the has record remainder for business breaking review proven our strategy and Barrantes dedication on the employees of call I'll hardworking our and outlook financial outstanding his Our to

Charles Barrantes

our the discuss our encourage which will amount be document information Thanks, I read company, system website Form at today. and time shortly, we some EDGAR on it filing and contains on of about annual XX-Q our parties be filing investors to interested it substantial Jody. SEC's and both as the which report other will available of We'll

period, prior for sales XX.X revenues quarter over of non-manufacturing million the of were quarter XXXX. down year results. Turning and XX comprised XX% were XX.X the in quarter total were quarter of Non-manufacturing XX.X fiscal of second our of in second fiscal million of year. fiscal [ph] XXXX, of for year across quarter Leasing In gas, quarter second Total revenues for XXXX, increase the the second but Increases in ago increase an for X.X revenues primarily to manufacturing fiscal million the revenues to million were compared intercompany versus second American the XX.X XX% quarter million in million, in with intercompany operations, compares all total the financial XXX,XXX our and and year occurred including leasing of our XX.X quarter sales North North commercial revenues North Revenues year sales oil our the ago the This leasing construction of million, sectors, totaled for an including XX.X for million. period, second XX%. of the American operations American in of from increase year approximate to second compared sales year's million an for prior the X%. X.X quarter sectors. operation. X.X million the quarter XX% the

fiscal As the the compared decrease revenues as were Pacific occurred XX.X demand utilities second Jody XX%. sales a period, million of related leasing mentioned, sectors In this and primarily our million particularly revenues quarter saw year quarter our in in in increased steel XX.X year. products, chassis. for The specialty repeated large for for XXXX which the totaling second million transportation ago Asia driven other and decrease operation not the manufacturing two year was XX.X tanks to totaled operations,

storage, the two have mostly driven Excluding the by constructions increased revenues impact XX%, these in increases and would industrial by large moving sectors. sales, and of

million total in revenues EBITDA a to compared increases adjusted was the fiscal approximate the quarter This year-over-year year XX North in the the leasing surpassed local basis dollar from XXXX. prior of the of As revenues a in the mark an basis. that America, have time was our consecutive the for construction, the ago quarter to total year-over-year increase quarter, the up of consumer we revenues the XX% million year. as was by adjusted compared trailing adversely million, year-over-year EBITDA currency In mainly up company's marks quarter, XX.X XX%, compared at XX.X $XXX up year's basis driven was And operations XX a year XX%. increased history month and million and was second in X% Leasing million was in adjusted first million XX by EBITDA between Jody for in prior EBITDA Star's from in decline industrial XX.X adjusted Lone XX the X% adjusted of increase sectors. quarter percentage second US dollars on by the impacted EBITDA on Australian to Pac-Van Consolidated growth adjusted the are eighth the the on XX%. EBITDA quarter and mentioned, Adjusted an a X.X margin XX% EBITDA million X% periods. and

operations manufacturing compared quarter. adjusted on was quarter XXX,XXX basis, our in for last a XX,XXX year's to For EBITDA second the stand-alone

was of absence the by the year, large period. two last preferred lower and local or EBITDA results mostly change for million Asia attributable $X second diluted of second in in our year the occurred driven the the expense our convertible XXX,XXX in and 'XX quarter XX.X average decrease Interest Pacific's a X.X of last the $X.X million compared non-cash adjusted interest XXXX, due that million X.X of was $X.XX in X.X quarter. adjusted quarter approximately EBITDA common quarter of periods. a somewhat quarter by a for sales quarter. versus On to of average decreased per rate shareholders the X%, year's compared basis second the currency Asia was the million 'XX Pacific expense ago ago year XXXX overall include million, second note. for of weaker were dollar. dividends was increased per The from loss between period rate higher on net interest of share year average for decrease for the Asia versus Included second Net in America, Australian by area the X.X to X.X stock. lower year the ago to In the X.X period. Pacific weighted interest year fiscal of of in second of primarily a average share, derivatives Both the the offset charges bifurcated quarter X.X% driven borrowings, million from due X.X% periods million to North million lower a periods in the years valuation ago paid interest loss weighted these by and in standalone X.X $X.XX in borrowings in respectively X.X million between the to by X.X% expense or fiscal

For before of prior XXXX, XX.X the of in free million fiscal year first quarter, XX%. months XX million, generated an compared flow we the six of activity increase fleet cash to

off Wolf Also turning a Now, times our debt with conversion of this force due borrowings months, up sheet, facility, final we boring for capacity. at of had in in The freeing balance convertible ratio strong four leverage the financial including of to a company lower revolver also to credit our course leverage level the facility. the is paid cost XX, the American submitted of note cost lowest and Royal reduction North December entire four We credit the XX we years. the factors during replaced in the additional our of trailing quarter, expanding portion combination in higher at our which net performance. base

operating guidance for turning and increasing remainder on for quarter ongoing XXXX. based Now our fiscal we're year excellent of XXXX, outlook, second positive fiscal year the wide company in our outlook our the our to results

range will for averages Assuming year, XXX rates to of and be XX% US consolidated will EBITDA the XX% the rest adjusted dollar the during XXX between fiscal consolidated and versus fiscal year in now million exchange increase then the the of I of that may year expect fiscal additional now for the This the to for Australian year XXXX million fiscal dollar revenues operator back in comments. XXXX. question-and-answer we the our the session. concludes XXXX take the any does This turn from to impact remainder not account like of fiscal occur prepared outlook acquisitions the the for year. into would call the $X.XX

Operator

Thank you. question with the [Operator from comes Instructions] Thielman Brent of Your Davidson. line D. A. first

Brent Thielman

morning. good Thanks,

Jody Miller

Good morning.

Charles Barrantes

morning. Good

Brent Thielman

it just pretty impact talk is Hey, Is end that liquid in that the update quarter immune Jody, the the market containment it about where or business did stabilized seems to some like utilization is deep price since is maybe swings now? an the rates. you commodity on quarter-end,

Jody Miller

some if things a seasonal downturn out. to of change after of back. took a of And always up. that it's think Thanksgiving, we kind of going our into it's the levels of the first To lot activity, base. sorted be get of calendar I saw, Yeah, we kind stabilized. But our had there's kind quarter customer honest, that gradually a and stable and coming rig are It bit a look the typically months think pretty of at get kind where you count caught consolidation couple little I

Brent Thielman

best are pockets around Okay. the particular seems of country And you're of the then, here I engines and some just it for markets the oil talk humming of about of where strength? guess Pac-Van, gas, seeing that I outside and in can you mean, most maybe like you

Jody Miller

say board. it's much would I the pretty be honest, across Yeah, universal to

think the I portable the we've the real the storage plan. a good high great see not US, on a executing high really job outlook has It's well. very with good a done strategy trends and we business job and and very as positive out real the the across team's And down and really spots, seen side. consistent spots continue team to carrying there's been done off

some products of raised in increase. new of I think the some also our

Brent Thielman

the that like could confident of that guidance, leasing can guess because revenue currency China here? in the you are kind local question slower last Okay, of and guess economy how Pacific, my call think and Australian I if a you Jody, Asia maintain it it the about growth, brunt then seems the you outlook feel I just economy the

Jody Miller

haven't of and across we market, are there's the those some huge tower that the help infrastructure the bills coming as sectors. should all cranes amount markets, for Yeah, construction very Containers a containers much high quarters very in there's and around use seen of board so well, demand tremendous accepted that activity. almost in driver key that and just there's

pretty So upside there's to should pretty that it's confident the be we infrastructure so side, their current piece feel building we're help like We construction consistent. will path. sustain feel going that the like us, on

Brent Thielman

Okay, thank you.

Jody Miller

Yeah.

Operator

from next Scott the of comes line question Your with Schneeberger Oppenheimer.

Scott Schneeberger

Thank guys. you. morning Hey, good

Charles Barrantes

Good morning, Scott.

Jody Miller

Good morning.

Scott Schneeberger

parcel guidance Look like think Chuck, I pushed for the what would and and obviously guess in want the drivers honed what main part the the you primary just strong of if of across we hear start, the you things really but say the year? of and the I could and what you increased kind quarter? across improved are company with whole drivers to higher outlook board,

Charles Barrantes

I GLO, and growth and certainly think, in America, tailwinds are line I particularly quarters solid, think we've really Ground few that and economy stated well seen doing North Offices I've I there's more headwinds. is across for think all product the sectors the very very, Well, much last our wise Level

we're but a So we about strong feel pretty going, would say bullish where generally economy. I

Jody Miller

is that you very positive. all just across Yeah and look at storage segments doing our say, product well by I'd Scott, all the and are GLO if Jody. board, you're well trending the very doing this led side of lines

Scott Schneeberger

very seasonal rentals other into see secondly, over a an industry that Pac-Van time. saw looks questions then and so for what bit the are what just of just GLOs couple it going with talk containers in be Is or and on going like. competitive And they to incremental could you on Thanks. what's little if there, environment eat obviously, they has you Jody, products might you a to some to shift? we're thanks - successful. kind going think in are industry and that been Great, of emerging Do GLO to

Jody Miller

I I in of setup, they have the ease GLOs mean, for on don't they to They can be ground, very can moved where definitely are anchor and think those Yeah, thanks. of popularity, easily, growing things. especially set types skirted Sure, the subcontractors. be

So just did and Offices, The Mobile is still that two well. strong then to do trend regarding and continue Also, the of we And all side decline and what XXX becoming they're still retail level. very more year; see to say increase we've do this very time. GLO or so, itself, is they're would I is popular nice in of the K the separate increase used. more a product I a applications becoming increase kind I was in seen popular think that nice widely more business there your year it back seasonal a the GLO It more question, the any think drastic, seasonal normalized side. but not kind an in nothing there, too for

Scott Schneeberger

Thanks then how just in the that seasonal, following in that a and category pricing and the side? Pac-Van for taking on is specifically overall how step Thanks. you pricing to back, is

Jody Miller

across Yeah, side, better good industry as on saw to and board. well. pricing been little we the the continue modular the see mobile I helps bit probably has industry consolidation price increases think We a

So that's been very positive nice GLO well. had increases as well with the storage side and as

Scott Schneeberger

little and and nice You gas then we run just utilization Star, the Lone toward oil as pause and a Thanks are over a What's then in bit seeing a like upon bit pricing? of had in really the What of same environment hiccup. and already question. a you pricing there. then the prices touched switching kind

do see and you for coming quarters? expand pricing the what does where So

Jody Miller

the three half getting I seen the as so back as going be year some in We last moving increases and pretty continued had phrase to good up success positive, the and as Yeah, customers over market every price and and would were or say. a having as more stabilized would it quarter I more two now. much prices -

stabilized positive. we've put we go But prices stabilize pricing. the of the now seen see of we'll kind increases. going more oil oil would that down of last then for so With continue of a pricing us not that beginning way ask price to in is phrase be And situation I quarter kind and ask back gas of the kind some and and right to kind

Scott Schneeberger

Alright, thanks. I appreciate [indiscernible] question.

Jody Miller

Thank bet. you, You Scott.

Operator

comes question from [ph]. investor. next private Your Luis a Hernandez

Charles Barrantes

Mr. you, Thank Luis.

Unidentified Analyst

Yes. Hello. Good morning.

Jody Miller

Luis. Hey,

Unidentified Analyst

XX Hello. Alright, my that months was flow. six you months? cash Chuck, free first or question mentioned is million XX on

Charles Barrantes

months. Six

Unidentified Analyst

- Okay, six months were

Charles Barrantes

On a year-to-date.

Unidentified Analyst

of million. Sort XX

Charles Barrantes

Yeah.

Unidentified Analyst

mentioned the for Yeah, million on release, operating XX so you as flow six in cash the months.

Charles Barrantes

in is the million whereas the Okay. operating free the is for GAAP, the the flow. release Yeah, that's XX million XX cash activities

Unidentified Analyst

so XX on six GAAP your mentioned alright. okay, you for Alright, then, expand on on either you - throwing are products. hear pretty is you that. well. Could the couldn't Jody I Alright you well guys clarifies months please? question those That other

Jody Miller

we Asia mechanisms. Yeah, product that Safety just so It's Lock thing what internal new innovative Pacific. entered the has one Wolf emergency got impressive the handle unit. PVX release. internal call the container about easy a in most the a and we the opening But it's It's locking very Container on side an

the were will if that. in and to in let it So someone or and the to the trapped get out pull lever locked it's one like of container product the there's you industry release container only in to

So be as very has. the it's going of like far and we as to and simplicity ease safety it accepted security use well and feel

Unidentified Analyst

and other minor [ph]? they products. they to the then be right you new these from going or impact expect how are All much Are

Jody Miller

in the units. we still to do dark feel you going and the the the long so product the high open kit it's solar lights lighting like wouldn't stack well not But say off take too it, that we the expectations thought nice light have us. our doors. the containers just are very as deliver future, panels we've for Yeah, it and because an still panels rolled it's we after they to ago, got with obviously pretty out is units process so we why so well rolled There's we can people product want no early that see also very out at when to innovative for

Unidentified Analyst

you Lone Star where good right, we're do on All the on peak, think finally regarding the then now? pricing and

Jody Miller

think even day. to - close we're the back anywhere in yeah, I so where were mean, we I not so Yeah,

first I range of think shape. more there's you less could in this slower, it's has two peak where on good than now is I stays look upside peak which on if it be the at predicting think those what the If is then for little thirds a But But where were the price think was as now pricing we think higher, increase, went until future long most steady, the oil little are I to it a the in runway if it is prices I sure. in pricing. and there down, of or a get back we stabilities more gradual ahead levels. lot it'll as we're foreseeing oil in

Unidentified Analyst

derivative Okay, the the good cost one away one, then one that going goes and forward, and right? convertible last

Charles Barrantes

sorry, on derivative? was question I'm the the Luis. What

Unidentified Analyst

expense conversion going it that goes on the an forward. There's of away

Charles Barrantes

the away. Doesn't convertible what go shares is Bison while, note. on on away Capital doesn't the return a for it go for provision No, so a the represents minimum derivative

they actually to X.XX with until and it's road and going realize us. so the sell stay it's So down

Unidentified Analyst

alright. thought I Okay, it was -

Charles Barrantes

it if up up, down, Non-cash, down. stock goes it'll and go goes

Unidentified Analyst

way. it Yeah, it'll taking converted was thought all it alright thanks Thanks That's was for the than Okay. for clarifying. I already go me. since for But, questions.

Charles Barrantes

Luis. Thanks,

Jody Miller

you. Thank

Operator

question [ph] next of private Our comes Instructions] a from Toby investor. line the [Operator Floating

Unidentified Analyst

Hey, can you good morning me? guys, hear

Charles Barrantes

Yes.

Jody Miller

morning. Good

Unidentified Analyst

another quarter. consistently you great just did Hey, congratulations,

Florida, that? assuming areas saw I'm is This like, prone call when demand the a kind you the financials high affected you. So like by thank at were Texas the and to you broader what let's disaster look base question, financials California. in extent of

Jody Miller

best obviously, obviously Yeah, But very out numbers, at you into folks areas it at a full to the very the and affected company a we it deliver pretty was you if a not as if piece try that help we as it's that optimize small. really service that as large We those the affecting is as but at were it and look all, whole look minimal. the small. units opportunity, can area it whole far

Unidentified Analyst

surprised by that? you Were

Jody Miller

In - or regards to impact the the

Unidentified Analyst

to impact. would see expected - little Yeah, larger just a have bit a I

Jody Miller

set while area. a Panama on hundreds the those don't takes yards found We've see always one. in day It going up rebuilds. hundreds you City there of that We've drop out units and

added equipment resources also added We and fast pace. a at

optimize company XXXX adding at that's and even but obviously try are areas isolated US a do happen service we're best a area, the time. you're still when rebuild going we overall, that and hundred equipment units volume just yards impact definitely XX for the looking can a the through and units but something got we're not long not to even we So it's - branches a that that's the several going to some It's to huge to going something out for in

Unidentified Analyst

Hey, thanks.

Jody Miller

Yeah.

Charles Barrantes

Thank you.

Operator

Please And at are over this remarks. back for there to to CEO call ahead go questions. time Miller, no and the further now Mr. closing Miller. turn I like Jody will Mr. President

Jody Miller

to speaking you interest Finance Corporation and Thank you, forward in call to Operator. I'd like continued the quarter. next to thank you for joining look our today appreciate and we General

Operator

call. today's concludes This

You may disconnect. now

General Finance (GFNCP) 11 Feb 192019 Q2 Earnings call transcript