GFN - Earnings call transcript Q4 2019

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Operator

Welcome to General Finance Corporation's Earnings Conference Call for the Fourth Quarter and Fiscal Year Ended June 30, 2019. Hosting the call today from the company's corporate office 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. Eastern. participants floor placed your will the all mode a questions time, presentation. the and be this have in been listen-only following At open for Instructions]. [Operator Mr. turn is call It pleasure to my over now to the Finance Chris Wilson, Vice General Counsel, Corporation. of and Secretary President, General Please Mr. go ahead, Wilson.

Christopher Wilson

operator. you, Thank

or difficult our operations; ability adequate of adverse adequate expect to any industries; customers; gas industries, disruptions; demands; levels or customer with we today, services secure or results; other of like as views for are and but or operating our a or rate goodwill industries qualified meet indebtedness; Before or insolvencies; our disputes supplies regulatory demand borrow that businesses; of contract of financial pressures; call New to, to Australian resolution you to ability additional our of staff intangible perform for integrate relative conference to acquisition respect interest our control; to to our not litigation; Canadian ability products are that construction to rates and the labor to transportation include, changes we variable and sufficiently and not begin contain dollar; that forward-looking raise from our products certain write-off our to or manufacturing of statements or customer the remind such do us procure or U.S. and in declines Australian, for key capital and increases in this Zealand changes; availability with the assets. defaults future may competitive construction our forward-looking part a as the I would statements. businesses in funds; Such for limited oil all employees dollar the U.S.

actual there be statements statements. by that results reasonable, no cause the such but expectations those in from described believe to or differ These can be We are represented our our outcomes could forward-looking forward-looking will to prove materially uncertainties that risks and expectations assurance correct.

see please our Risk Corporation the our at any this SEC forward-looking statements. reports For of periodic more posted the to Finance www.generalfinance.com. filed intent These section and or represent of time, the company at Factors General website the risks, disclaims obligation to regarding details with forward-looking statements judgment these and update

this Form conference In I'll EBITDA. will Chief adjusted certain will turn go how to our measures, A we ahead. our now as the and release Jody, discuss President in call, define in reconciliation XX-K. of we at Officer. And arrive Miller, GAAP Executive non-US please be also and EBITDA included Report call on such over is earnings Annual and adjusted financial Jody

Jody E. Miller

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

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

our geographic in our We record adjusted and our XXX quarter across we operations. from the approaching across customers In venues. We driven of XXXX, momentum surpassed across for metrics. XX,XXX key improvement company's We year virtually over our milestones EBITDA year financial serve our growth fiscal delivering extremely our of and important all quickly the revenues now in branches of solid operational two by accomplishments all year-over-year proud are with finished year fiscal generating XXXX fourth history.

being or containers XX% of fleet leased portable XXX,XXX those economics. Our now unit level the office units level is of which nearly offer ground with storage most units comprised over attractive

in also record. excess a adjusted million marked EBITDA century us we generated a for company which was It a XXX year of of as is

posted Pac-Van as growth delivered American leasing operations business leasing growth a year-over-year XX% rate record our organic results and our North led core again revenues. the Our in container

Our team lease to and Account had recently initiatives National Wolf Lock and the a on expect premium particularly at safety PVX introduced grow of that our containers key executing nearly Pac-Van fiscal XXXX and a our we job At significantly year. Program on year-end number containers great PVX do continues in safety containers. number

are commenced a customer ordering comes of and XX our class to continue Pac-Van highly for all Net online world also regarded Pac-Van success Promoter optimistic capabilities full about that it initiative With that the surprise we going no by as base our We've achieving of the are forward. at Score year. the be we experiencing

growing container focused business of Pac-Van's In addition footprint adjacent particularly growth we expanding on America remain our long-term North geographically markets. into our through goals by to organic storage portable

During the locations. and through two acquisitions year Greenville we new markets completed five

of to locations today. XX years continue to we've completed the locations serve XXX geographic top pipeline XX over MSA's We To the North America a put last of XX perspective healthy. from acquisition U.S. primary this in remains half and our acquisitions over footprint expansion in the growing in XX

container results liquid fiscal despite improved Our the Texas. business leasing a the for in in moderation delivered year activity

healthy, basins impacted While in generally oil production gas by we slower been and activity have remain both year-over-year.

all lingering some to of production Additionally customers activity there continue this optimistic future. in for remain availability the challenges consolidation. continues to basins about We customer our point foreseeable business in to well the as with pipeline indicators be Permian healthy as both some as

sales as as operations increased standalone over and and continue by revenues Total to demand This our EBITDA adjusted for manufacturing an during containers is level due increase of ongoing fiscal built Pac-Van. to leasing XX% deliver specialty by American including year million. $X well improved ground tanks increased American results. trailers in North the improvement North operations in Our

Now to region. Asia-Pacific our turning

solid industrial, in delivered increased revenues This quarters with leasing activity in and out average improved by units local performance lease the most last monthly mix. utilization. region fleet fiscal the saw the we to due an increase power XX Wolf a in in lease rates where year-over-year leasing a with currency is combined an notably year Asia-Pacific construction, driven sectors. growth X% consumer Our sectors and across of on moderate Royal an XXth has transportation, growth in in delivered improved product mainly XXXX to due revenues In pricing overall increase average also

Our the Australia openings building leading and across Royal a of on in Greenfield extent through to combination and team remains they are New Zealand upon this Wolf growth accretive market focused organic position available acquisitions.

During opening the the Greenfield year market region our presence Australia. largest an our strengthen of and in fiscal Zealand we competitor New acquisition one in in with

conclude has and the their to Wolf Over to XX XX has to XX led footprint company business financial Royal the its locations execute To acquisitions record on last hardworking employees dedication outstanding region strategy and primary the years in continue today. an proven grown and our our XX performance. to breaking from completed

ability see We Pacific to in our both in expansion the America Asia and strengthen North opportunities continue to the market region. leadership organic and

As high on solid will disciplined outlook year note turn current well us our allocation. XXXX. Chuck always his we financial our over in fiscal year. of remain to now a financial strong positions performance for Barrantes ended for the the results for in the capital call with year We another our review I'll fiscal and

Charles E. Barrantes

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

EBITDA XXth to adjusted fell our record guidance conjunction generate where our the provide Now third results. but for the fourth we reporting have quarter within quarter fiscal range marked year-over-year consecutive did turning in we results, in the and revenues our growth adjusted delivered year EBITDA. our financial XXXX only quarter with results we of results Not the

in progress balance We made and our we our sheet reaching In we credit key borrowings our financial lowered to facility referred on the to amended lower cost strengthening that cost overall addition successfully each financing replaced both geographic and region. in Jody flexibility. with cost, our milestones higher venues expanded of improving as also debt significant

enable in net times, below In the a leverage end years. lowest with us year addition performance financial our five level ratio to four our strong

X% a fiscal revenues total million the to for X%. XX.X Leasing were compared quarter million quarter fourth for of of in XX.X both XXXX, increase Turning XX% XX.X increase quarter quarter quarter sales X% of year-over-year to total and fourth XX.X periods. the compared revenues revenues offset by increases quarter million Non-manufacturing sales comprised leasing X% were the year for respectively. mining, increase by increase over the fourth fourth fiscal industrial million and of increased mainly and totaled manufacturing for XX.X our [indiscernible] fourth were period, of quarter by with North of construction, our year's XXXX revenues an revenues prior the sector. and an million results from an XX% In in the year. fourth an of a in and the the to ago on the X% quarter year operations gas of sectors Leasing partially decrease driven American in prior oil basis revenues commercial,

sales American Revenues to of in compares XXX,XXX. million our ago sales intercompany sales operations. X.X fourth of was total quarter leasing included X.X million the North including year to for our facility for of which manufacturing X.X company This North period American the million

XXXX, the retail the for leasing The construction a our our demand leasing increases saw a products driven currency in X% quarter and fiscal fourth increase compared local EBIT fourth increased a education, XX.X operations leasing level decrease container year sector. sectors for American primarily by X%. In partially approximately for office million and revenues basis total and tanks revenues particularly totaled was in million the steel offset X%. by by increased of On leasing ground Asia-Pacific manufacturing specialty Our for operations. other and to operations industrial, increased revenues decrease revenues the related North quarter transportation, XX.X by in modifications

Consolidated the XX%. year's adjusted of of from XX% fourth XX% EBITDA the in fourth percentage increase of XX.X total quarter in XX as in revenue million XXXX. to was XXXX quarter, compared up quarter the million adjusted a was of fiscal And an margin EBITDA prior

adjusted XX the America In compared adjusted quarter, to ago quarter our million XX% X.X was increase As I quarter down this in EBITDA North X%. was million million Adjusted an XX.X the was from in of the million mentioned Lone year's up Pac-Van at year quarter. X.X fourth leasing and year-over-year million prior adjusted Star EBITDA for EBITDA XXth fourth the EBITDA growth. consecutive for XX.X was of operations year-over-year

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

million the adjusted EBITDA X.X an Asia-Pacific million compared X.X prior quarter in On XX%. down fourth dollar million in adjusted fourth was lower quarter. for for X.X expense ago period, by year the basis year. the currency fourth last XXXX increased the quarter period was primarily from year from XX% a rate and X.X% for interest versus overall the X.X driven expense The XX% borrowings the by interest area year's lower by of in the in of Interest XXXX due to EBITDA of weaker fiscal of was Australian increase Asia-Pacific to million quarter driven period. the quarter the decrease lower for ago fourth average

are non-cash respectively stock. for bifurcating year in million stockholders million the share year per dividends Including Net included standalone income our on XXXX fourth periods change ago in quarter million quarter. attributable results of common loss for to per net XXXX XX.X to XX.X X.X charges in fourth XXX,XXX fiscal derivatives. or preferred valuation of compared $X.XX Both paid these in X.X or and the diluted of $X.XX a million the was share the

For fiscal in of from the year before XX we year. prior XX.X cash million activity our generated up XXXX million slightly free flow fleet

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

is and company Texas on XXX of from in million turning XXXX, of would to or we $X.XX operator in for call fiscal our fiscal to does that range EBITDA the versus dollar impact the and XXXX. assuming year plus XXXX question the fiscal of and XXX oil will of adjusted consolidated to now This averages be I occur into This gas acquisitions Finally the the new the take to in in turn outlook estimate year the dollar Australian our be minus year expected and for XXXX. any revenues consolidated for U.S. comments the the year wide million in conditions sector depending and concludes the XXXX that not prepared like session. back answer to account fiscal outlook year range may X% fiscal

Operator

Thank Instructions]. you. [Operator

of first from Our of question Davidson. line Brent comes the Thielman D.A.

Brent Thielman

morning. Thanks, good

Jody E. Miller

Brent. morning Good

Brent Thielman

sense positive to you F could you're guess terms into F is for notwithstanding Lone I outlook kind get in you're Chuck, XXXX term the initial trying for Jody Star. of that so or headwinds, for what understand just a the Lone little give longer kind for of a I factoring XXXX detail what near-term of of in more some view outlook Star? factoring

Jody E. Miller

Yes Brent, thanks, this Jody. is

current XX that look run quarter rate we're million to range. million more So XX if at our you in probably

mean we're that's a improve. we're conservative optimistic There's more the drilled it a we've more that wells I half outlook of were very show production latter run why obviously last and all that's things get are. there. So nice should kind things little estimates completion but kind will of little positive. well and on bit Lone that offset lot heavier being mentioned today's before growing that more we're positive the side so on indicators pace more is and as of a Pac-Van versus by when doing rate and a of the at where year our Star of

we're kind it'll than it cautiously of be that. that's So, better how but at looking optimistic

Brent Thielman

Okay, I kind and might guess seeing Pac-Van's and demand within then those you softening in strengthening of guess similarly sectors traditional are seeing you verticals? markets be which and I where guess I end some on

Jody E. Miller

Yeah to negatives. we've not honest be seen any

in and still appears quite area season across us. it's leading industrial see kind sectors I very are strong any product economy we're doing be to awareness or softening Our think The don't we're grows well of retail sector, the going one well very the to well and Commercial geographically still really grow the pack board. as growth nice any getting either. for so doing construction continues and

Brent Thielman

you Okay. fiscal new to set ratio that where the about as I by land guess leverage four I that's my last you the question, ideally ratio year year-end? think guess times would see [ph] like

Charles E. Barrantes

before we that anticipate leverage sweet actually the to we significant that know to be make having -- between X in would go we've publicly acquisitions we you investment mean down. like assuming But our not leverage Well, a do I stated around somewhere spot, X.X.

below is cash use shows acquisitions. to little have make in which the good, we continue we're we a bit whatever also to certainly that free but which flow So think investments we can profitability

Brent Thielman

Okay. Thank you.

Operator

Schneeberger Our of next comes question from Scott line Oppenheimer. of

Unidentified Analyst

of can is things Good morning, on is us pricing Scott. across an give we talk environment looking and Daniel what about if are it can guys, for the Hey segments, forward? overview you the opportunity going how now the

Jody E. Miller

Yeah.

the storage on level pack pricing ground price side doing seeing the Pac-Van several is the price nicely. quarters increases So, kind the We're portable increases. or consistent very and the of very last like we've GLOs leading with seen in

at Royal too then little drastic up. the they but just side we've the is little occurrence down that's bit the think Star a this the price increases Eagle up are with slightly is but Ford modest very the a Wolf a nothing And compression. of point. just Lone side on slowdown bit Permian I natural coming but and On Actually seen

Unidentified Analyst

that. Okay, thank you for

see end over Asia-Pacific talk can XXXX? in you fiscal On about you where opportunities the markets

Jody E. Miller

is of probably there think construction. like that That's biggest and I our for growth. the has on Yeah, opportunity area a building feel we an lot opportunity

Some stackable of products BMC more on the in our side. solutions becoming popular are the

So I as would by New mentioned then naturally that and in Zealand just moved I say before rail. Australia everything's markets

been camps many or segment sitting which out we've point freight at is our for Wolf most for And years of got those doing lift will idle Royal nice well. well. have then as be our quite this that well as a So for spoken

increases as they're a versus wise doing on a the in but pricing rise still America price we've they're got Not flat. North big So nicely.

Unidentified Analyst

categories? and XXXX thank you. Final plans CAPEX Got me the from one for it, fiscal

Jody E. Miller

we're we're at far CAPEX is So as looking fiscal planning to our be to at actually concerned comparable net as fiscal XXXX XXXX. looking year

fiscal The fiscal to year So XX down America. And as would net XXXX fleets million XXXX CAPEX we a is to around net out with in primarily little That's in obviously we're million. $XX was same and million. XXXX year sales expect the XX XXXX higher, the around net fiscal $XX CAPEX. comes looking gross from it CAPEX around was that CAPEX at level million be North fiscal our it of gross CAPEX and be $XX to million, but the

X and anticipate make X Pacific to between XXXX. America Asia balance up somewhere million million to we in North the

Unidentified Analyst

Thank much. helpful. very so you that's Okay,

Operator

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

Brian Gagnon

gentleman, Well question a differently. but little same bit

most have free more If you opportunities that and million do plus or to have of you CAPEX got you will have? cash XX will you pay you think expand XX only into million you the down of acquire net to businesses Greenfields expensive really or you've try enough debt flow

Jody E. Miller

last would of preferred overall we Chuck pay million we do XX not expect If address the to in consolidated million vicinity dividends our that go stock to we'd we first. I'll acquisition somewhere one have our And the XX ahead. significant have after reduce indebtedness.

Charles E. Barrantes

I the changing. pipeline was to going We anything any acquisition regarding remains see just don't healthy. side say our

I on year opportunities As so we had feel last call there. do we like the X there's mentioned

As far great Greenfield year expand again Greenfield. expand in of opportunity side aggressive we rebuild a prefer more this as a there's we'll expansion do feel adjacent as because to past little of with like the we some markets we to Greenfields but just the well. And opportunities are continue and hurricane

Brian Gagnon

down Okay, versus said in your interest to last I alright. X% The interest pushed XX%? expense year's you rate guess you Australia

Charles E. Barrantes

fourth yeah, the averages. for weighted Yeah, quarter

Brian Gagnon

think this point? you averages are the do at XXXX weighted What for

Charles E. Barrantes

I plus to be based longer the would in determine to of Well, X% the BBSwide margin debt on we vicinity X%. somewhere so weighted have no the average the Bison the

Brian Gagnon

going we're expense? additional interest benefit so get an Okay, on

Charles E. Barrantes

million prior somewhere has is is what in significantly the it than in quarter forward say the quarters. Yeah, expense to going X X.X which less been I range would per consolidated million

Brian Gagnon

for all now. Thank That's terrific. I have you. Okay,

Operator

Instructions]. [Operator

of from line Hernandez, question Private a Luis next the Investor. comes Our

Luis Hernandez

follow-up, Just guys. morning good

Jody E. Miller

Good morning Luis.

Luis Hernandez

first in believe you my they redeemable. is on about -- a became related Maybe anything have about thought I question doing structure. August with capital you preferreds? front? thought Alright, to that but Have they the wrong I'm anything

Charles E. Barrantes

Yeah Chuck. this is Luis,

believe. XXXX we've been So actually since of thought I they've -- May yes, redeemable

So, know as equity. you they're as classified

We notes the that refinancing Fargo. are refinancing in that refinance capital, July you terms Prior of we Luis at of know senior in a had looking context due XXXX. the as also also and which Bison few Bank to are the Deutsche the Wells in

next list. definitely on capital structure is that So our

Luis Hernandez

said you that then And great. flow, Okay in you is said? cash what XX.X free

Charles E. Barrantes

this the year, yes. free cash for flow XX.X fiscal was

Luis Hernandez

alright. XX.X,

Okay then…

Charles E. Barrantes

older before an that's any reduction. that's after And so of interest debt and interest payments, investments type

Luis Hernandez

and Right, preferred then before the dividends.

Charles E. Barrantes

Correct.

Luis Hernandez

Right. the Jody right? on be estimated around Lone Star's did to million EBITDA to XX mention XX million,

Charles E. Barrantes

current is the estimate, the he said kind of run That that's rate.

Jody E. Miller

the of kind after of We're its of a will run completion hoping larger out consolidation we're and kind run rate, way that's current rate up our that's Yeah, that but couple pipelines speeds our the Luis. and back activity yes. with up the customers current hoping up pick works free the

Luis Hernandez

Right, it's a but you higher saying? what would be you're maybe, think is little going that to

Jody E. Miller

will like cautiously we're because drilled. well optimistic higher be feel that already it the is But we

wells only those so completion to for long So have into they oil. put production of

So side time that's side. business where our that not on the we of most of spend is drilling

now of know to like the But few feel feel pick for we sure. up. picking going don't that for up. like staying to We've kind be it's heard months going it's to but we is it So going same we and it's a

Luis Hernandez

Right, well, course. of

Greenfield just economics. I want then reminder on sort and of a to the Okay, like

today, on obviously an me started a through type bit walk and in number? returns you and say then average obviously period the estimated numbers, Greenfield payback capital little Let's

Jody E. Miller

always there. gate month used our have pretty as and a as year related units of driver, tell a But the We even to and going months a that associated there damage and last hurricane and went and out virtually I average. volume lot you shipped drop had kind the the and rebuild yard, an a were yard that cost was of up we the six of just quickly those will not break because were lot Greenfields Greenfields of of out a second a profitable were Yeah, we right. couple

the bit a but would months the of greenfields speaking say situation have colds little more we say an been of those three So were profitable our anomaly just years six-month under in a because typically time last XX% and I period. six of

Luis Hernandez

on an you after reached several the what's Great, way years expect -- expected or and of on internal what capital, those next few payback the you years average Greenfields? return next

Jody E. Miller

of XX% like its a more we our would we to XX% XX% established. early after life in return EBITDA Yeah, can think at most a they're at over level get local the to branches for of

that range. from of So of gives there, that kind you kind up ramped a

Luis Hernandez

in you of and how have okay, year growth the many by this offices, America and have terms remember at mean how yeah? mean end, dots at and Right, the of did do dots the North dots the at I past for you beginning then I in end year, do many you the

Jody E. Miller

at Yeah, which end total dots. in Star's two the well dots North Lone had America of a we includes XX

three of consists Canada. that So in

So four in we fiscal total. America added dots XXXX in I North year believe

Charles E. Barrantes

five. is it think I

Jody E. Miller

total in were tuck-ins a the dots current acquisitions Because Five our location. to couple of fiscal year. for

Luis Hernandez

and okay year this do similar number estimate you maybe or a Right, for higher?

Jody E. Miller

Yes. Yes.

Luis Hernandez

A similar right. number,

and that's Okay, thanks good I year. great. a and me Alright, congratulations on all for pretty think

Jody E. Miller

you. you. Thank Thank

Operator

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

Jody E. Miller

for you for Finance today. Thanks in our call speaking continued you, Thank forward Thank you. General We next Corporation. appreciate operator. quarter. joining Look interest to your us to

Operator

this and conference gentlemen, conclude ladies does you today's call. Thank

You may now disconnect.

General Finance (GFNCP) 11 Sep 192019 Q4 Earnings call transcript