GFN - Earnings call transcript Q1 2020

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Operator

Welcome to General Finance Corporation's Earnings Conference Call for the First Fiscal Quarter ended September 30, 2019.

Hosting the call today from the company's corporate offices in Pasadena, California, are Mr. Jody Miller, President and Chief Operating 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 PM Eastern Time. Instructions] [Operator

my Investor the Please Relations Mr. now Mr. over go to Clark. Clark, Larry for pleasure is call turn to ahead, It the company.

Larry Clark

Hilary. you, Thank

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

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

reports with regarding on details website. please of SEC our risks, section filed and the more our Factors the these see Risk periodic posted For

we adjusted General and GAAP report this is release in statements. such or will certain how of any Form included of we Finance quarterly represent the discuss intent the our XX-Q. at the call, time, as forward-looking earnings financial company obligation reconciliation judgment and measures statements to this Corporation non-U.S. EBITDA. define These forward-looking will at in adjusted update disclaims on arrive and be EBITDA our A In

And to will Jody, now Officer. Miller, and please Executive I call go ahead. turn the over Jody Chief President

Jody Miller

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

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

the year-over-year are operations. overall XX% strength exceptional in American very pleased growth generated year and XXXX core with start leasing fiscal driven Pac-Van with We our leasing from lease in increase North the rate. performance an delivering results revenues strong of average by

remained highly XX Net for a In our has quarter our team months. addition, base, of several our PVX a regarded job XX at especially XX on Pac-Van Promoter by program key recent initiatives, recently great most Safety Containers. achieving introduced and to do Score national for world-class the continues executing the and account our trailing Pac-Van customer

Wolf Pac-Van fleet, and a XXX,XXX reached rental a key by Royal our the driven on America As in mainly in company, we North Asia-Pacific. during quarter of surpassing units milestone growth

XX%. years, has rate combined of over Over rental annual over the grown which our XX by an represents last X.Xx, growth fleet

well through is in outstanding great as combined same period, growing our through primary market venues branch doubled testament geographic the XXX locations than that our our rental of and accretive the share by the expansion all have acquisitions. over a organic fleet team with along expansion as more during locations. job branch growth Additionally, This

Our liquid moderation Texas. results oil and quarter activity in for the a recorded business to containment in gas lower due

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

As work this the and and completion majority initial involves our we drilling into in in past, production work the of sector the have vast well. not mentioned

large the already optimistic this number we now down and, we wells are Given a this awaiting drilled been in and that of the completion, road basins business. therefore, both about to activity believe point have remain healthy

to Our external year-over-year to higher demand sales, and manufacturing Intercompany offices. in chassis. lower during due for quarter, as North decline posted a adjusted slight reduced especially customers increased of operations ground-level American tanks EBITDA the by were sales Pac-Van sales

to turning region. our Now Asia-Pacific

delivered Our transportation, This revenues units is once mainly of the construction, sectors, where in sectors. out increased the the year-over-year last improved Royal to revenues, retail lease in Wolf a local average activity on quarters and posted a with leasing currency growth growth fleet leasing driven X% utilization. has XXth most XX by performance notably in industrial improved again, region, Asia-Pacific increase in across due in and

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

location During Zealand, acquisition Zealand. complementing Greenfield New opened year last we in the our New in quarter, X

market America our to To region. both expansion to conclude, in as organic continue strengthen Asia-Pacific well we growth ability opportunities have as leadership North the and in the

and of has quarter year performance another expectation with results. groundwork financial laid line solid for the first generally Our was in

to Barrantes the our I'll fiscal for now of for financial year. and outlook Chuck turn remainder over review his the call

Chuck Barrantes

Jody. Thanks,

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

prior of million first $XX.X were fiscal in financial our the compared the fiscal $XX.X the last and of from total period. XX% to for quarter's $XX.X in year's the fiscal up XXXX. quarter were XX% million of in of sales year Nonmanufacturing Turning quarter in the revenues year year. results. million million, XXXX to $XX.X up the $XX.X from were first $XX.X the slightly comprised to prior of revenues first Leasing compared Total million quarter revenues year million in revenues, quarter nonmanufacturing

North to revenues million In operations, just under million quarter of $XX for the a for $XX.X X%. compared totaled fiscal American quarter first fiscal XXXX the leasing decrease of year our 'XX, first of

primarily However, year-over-year a offset sectors, gas increased the across a and industrial decrease most commercial, X% leasing by in and sectors, is the revenues on This substantially by in basis. retail construction, increase oil sector. but

sales products of that in million were $X.X industrial, during primarily manufacturing $X.X operations. Sales first for operations of XXXX. revenues our XX%, not X the quarter and in included education North year the quarter million were intercompany $X.X American sectors. XXXX. This mining to $X.X Revenues decreased the of $X.X customers replicated in million by to including me, Fiscal leasing excuse and sold sales North our XXXX intercompany XX%, fiscal American million sales first for year million, sales of compares of from total includes

quarter operations, Jody under the $XX.X year operations In XXXX, offset by fiscal saw leasing demand for tanks million Pac-Van. for a quarter mentioned, $XX decrease X%. offices our Asia-Pacific our for to as As reduced totaled increased of first ground-level of specialty just manufacturing for demand compared for revenues built the first million and chassis

in However, The sectors was revenues dollars by revenues mining, in slightly. revenues the driven slight sectors. utility increase on local in a government construction local substantially decreases was up by currency basis, and were offset in and increased the primarily total education and

America, million leasing both adjusted compared adjusted $XX.X in was events currency the basis, EBITDA for local increased basis, $XX driven decrease ago the Leasing a increases in on X% quarter year's as education on to in XXXX and by offset quarter the the million XX% Asia-Pacific margin to in a retail, transportation, percentage And $XX.X In partially was prior Consolidated year-over-year of EBITDA periods. for adjusted was in special our quarter. compared million revenues by but $XX.X mining of for year decreased total sector. the in sectors, the operations first by EBITDA industrial, X% first primarily a revenues million quarter. a consumer, North

EBITDA from to million Star to $XX quarter. in ago $X.X increased from million the quarter in $X.X year from of million by million fiscal just XX% Lone Adjusted the first year decreased XXXX. EBITDA adjusted Pac-Van at under $XX.X And

was adjusted EBITDA quarter operations, manufacturing basis, the a our on first to just $XXX,XXX. stand-alone EBITDA for quarter $XXX,XXX under compared adjusted For of year's to last just,

adjusted the for quarter comparable quarter. the Asia-Pacific's ago year EBITDA was with $X.X million,

quarter XXXX of On average XXXX of in quarter Interest quarter the a million, driven a by of weighted expense average versus interest first down of year borrowings, dollar $X.X X.X% periods. the primarily for was decrease by million in year. lower in Australia local was approximately the increased EBITDA for for lower first currency basis, area and significantly The due $X.X expense between the from the the quarter first last X% lower adjusted Asia-Pacific interest rate the X.X% by weaker ago to a Asia-Pacific.

million North and a respectively, these $X.XX of expense also $X the in income year's our quarter per of X.X% benefit valuation prior per first $XXX,XXX quarter a first paid of a year for in slightly the the share change X.X% interest lower, included the or for a weighted in mainly on America, diluted the million Including and million compared were 'XX, to net quarter. ago or million In XXXX quarter. in loss $X in charge lower results due attributable the the $X.XX year was was periods interest the noncash $X.X rate Both shareholders $XX.X bifurcated of XXXX stock. share to preferred fiscal of derivatives. average Net to compared to of noncash dividends common stand-alone in

million, quarter management. million activities first result prior up improved of year $X cash and was the we year the of profitability $XX.X net capital and flow working period from of For generated operating mainly the from XXXX, in fiscal

to At the for trailing net to sheet. which months, the leverage of the end a September our year balance Turning at the comparable company leverage June X.Xx our of XX. XX is ratio had fiscal net XX,

outlook our the fiscal we in stated $XXX range be year revenue expect impact On minus XXXX fiscal EBITDA for consolidated be consider year and fourth any XXXX. $XXX year or EBITDA the occur Based to revenues 'XX during year plus into call, remain would that Turning adjusted not for expectations quarter million XXXX. that outlook the company-wide that conference of XXXX. fiscal adjusted of this fiscal may earnings does first in of results, our million from would unchanged year range for account XXXX on our consolidated in acquisitions to we the fiscal and quarter year our fiscal the X% that

I for the like operator back the our would concludes session. comments, This to now question-and-answer to prepared and call the turn

Operator

first Oppenheimer. your And Instructions] [Operator Scott from with Schneeberger question comes

Daniel Hultberg

the the in us markets on Obviously, strong on as Daniel, end can near Pac-Van? It’s retail Scott. about Can what you we talk shaping as But some on pricing up? give well the and discuss there. you're how term for here in perspective side business opportunity that is expect seeing the trends particularly you

Jody Miller

Yes. year. Thanks. be than stronger This is little a season year, looks Jody. Retail stronger very to optimistic. We're this last

So very, we're Construction very pleased about still strong. very that. is

Our of then our leading, bullish proud from seen growth, and it's and and performing next side, the very industrial industry all for steady across And very look XX% future. obviously, changing. pipelines lines we're anything well, performance quote far Pac-Van core then like and foreseeable don't on the the so business, as feel product their well exceptionally we

Daniel Hultberg

at you to would here Got the we Star. how Switching next mean to it. of categorize quarters? the out point, couple try visibility gears Lone model this I as

Jody Miller

money here and or be it January bit going is X there'll to level larger of It's some it they'd our of will really then than to we're indicated the kind budget until dropped honest, be hits But new pick told up. it be in is I more customers hold of next previous we back backed more little forecast. a A to anticipated. Yes. these quarter. steady where off hard think was. than weeks little it a lot don't what in being To the bit X level

the be year. more were more oil they will I it gradual. last cautious than But I think companies think are

just in steady oil the be price probably it's it. some And going until we and to that see obviously change trigger can

gradually going year calendar happen like doesn't it'll the in half new of optimistic the anything's it year. after of But for So now, we're second the right to starts. look kind until build

Operator

question And Brent Davidson. Thielman D.A. with from your comes next

Brent Thielman

this I quarter Star, guess EBITDA Lone million on $X.X did you EBITDA. in

you the that step point? I usually think go business your expectation as Is takes down. a into quarter at that December this

Jody Miller

not The be I of Yes. lot in I that's as December going that going seasonal capital mean company they spend right? this to they wells say a early of any to online The in know well. are it's year normal trend, be budget back, until of wouldn't get the usually their don't year. it's, very when November, to the month and next the consistent would like

an So and Yes. years. I previous would as statement think that's follow trends accurate probably same the

Brent Thielman

Okay. impact with there? of Jody, dialogue function the And environment is I the that's guess a this you're customers consolidation the ongoing for of have versus as any Any do on the among having you of how base? of some much feel sort going feedback customer there,

Jody Miller

Yes.

all. I a think, lot out know We honestly, still to of through it's the a little there's bit sorting consolidation.

And larger crews up of to the months, got and the think because the is infrastructure it's want still most from prices that that still each companies, to down a little you've I make largest a getting but more going bit did next an pipeline issue. here supply part and than profitable our and that they the and differently their far sector dwindles fracking processes of little as customers past. was appealing as better, think the company infrastructure have been over oil flows it of the a And oil releases reading then in of completion. kind out and of stronger the Some few it's then things and they're cash I and raise have sorting as still

stated we into we're but calendar change after I year. as I optimistic So will as don't year, as calendar much of think going looking that new new build earlier, far the kind things see ahead, gradually until

Brent Thielman

X quoted Lone rates and all then of environment Okay. Star. any or on months stabilization? changed in competitive showing one last And the Has last are signs at the X

Jody Miller

Not changed. really anything

MSAs pressures of it little lower and just new everybody people piece. general, there in level saw got same has bit changes, here far think like a just are. than we far as rates fine new their business not rate And us environment, at out. still the But It's as of rates X the are trying couple it's a go. We've help competitive the at I material last really seen month no. kind but was. find will that where in not it's months We've a ago, as as we of to any

Brent Thielman

and sort you outlook that the steady. it out way pretty better Is a year. It shakes previously thought, Okay. sort those maybe little looks but than Pac-Van out? at is you're you're of Lone running X like it cancel view, your little And maybe of just the lower a than Star you kind on the looking previously for holding thought of Is here? it

Jody Miller

doing and Star Pac-Van Pac-Van's well, and the That's it. offset hope we up Lone exactly trends probably the will, if should as continuing right. see as offset then exceptionally second those pick will doesn't strong half that it we

Operator

[Operator Instructions] question Private Hernandez, from next Lewis Your Investor. comes

Unidentified Analyst

know mean a any while. could I opportunities Royal there? but do been all I Royal We longer there? question term, term, in as know, expect the at no guys maybe saw, short Wolf. that And flat it's don't very longer you medium see my you grow? term, a XXXX, way from where all XXXX, guys expect you in do just we growth wondering And if was on guys past, Wolf I basically Well, more not is for

Jody Miller

mean X% leasing they had growth revenues. I in

that And the in really They focus that was there's leasing business, we acquired on pipeline past, we what side. job of done Royal Wolf they As the has steady were we've sales side. before stated them. great the sales. a on right, great in a trying to always are started

of those, leasing, there. focus but to discourage continue. far economy on we we'll want which They're outgrowing to over X% don't really growth at try we lot is we that have the And GDP. So as as initiatives a

If far Wolf, you well. some Royal look at very, they're whole areas, as very as doing the robust there's really

is of New business disasters is that kind and tough on from years. amount generated bit little natural many for now returns. the growth We a revenue what all been and a that and earthquakes really of had All the that's then area us One rebuild Zealand. back tremendous

bit of accelerated. Australian plans at definitely certain economy growth continue to we So tougher a the place well, have look But little Australia, that and been and if economy. parts drilling they're than in that has exceptionally you

Chuck Barrantes

this FX Chuck. change. their clarify So Louis, by clouded I is want flattish. the Royal I guess about point just Wolf first to get being on sometimes your operations It's

the you we in substantial website, appendixes X as our camps of adjusted profitability of last Wolf interested million But out from out So and for we've had, in amount back, that there subsided presentation in point And XXXX million, the and Australian do on 'XX, one in together we mining $XX.X put Royal Wolf in years EBITDA locally basically we to the I of back show to the the all just year it and $XX.X put last 'XX, it the out. to investor was area, that years parties fiscal XXXX, know, well dollars. $XX.X fiscal flatten that that a in million. Royal year, was years, fiscal in few was want

Wolf quarter was Australian to local for million. dollars, first $XX million EBITDA In adjusted $X.X Royal compared

been it I'd level been doing over and North I thought our been has pointed the is albeit, core of out. years, that has Pac-Van, So been, which flattish, same actually last, But America recent in it's growing. growing, not growth it's not outstanding. business had certainly as just it the

Unidentified Analyst

a on Australian good has the given definitely Definitely Yes. dollar there been weaker. the cloud point. The numbers FX

Chuck Barrantes

company. reporting And the clarify are, a the we at But that. try obviously, to U.S. day, we of end

they're is to But in have locally doing obviously how significant. U.S. report we So dollars.

Unidentified Analyst

Right.

a you trend, years, it's I nicely. see years, opportunity on continue over know, don't has Pac-Van. know, then that been to X long-term as mean, see you compound to it as guys Do that for growing sustainable all Pac-Van be I very guys to last X? there able continued And Okay. We the X

Jody Miller

Yes.

this Jody. is So

I think we're optimistic growth. very on Pac-Van's

geographically the could If size we you still double opportunities, in problem. any look at geographic without

then with boost doing opportunities. the well as area that We with has of well full very Safety product national a also that, footprint, we are been innovation an national program great account And us a think huge that's for Containers. now have has we PVX the our

economy reason obviously, good an continue we term future. see look you have are job, Pac-Van, can't But the trends why and optimistic at no there. on when They the So we a about there. happen the things we need to and outstanding long done very

Unidentified Analyst

And in Right. overall to do you see area how construction, slowdown you, then in sensitive be How the on construction mean a a I would country or how this segment? construction certain specifically? in do Pac-Van

Jody Miller

Yes. feel other diverse obviously, thing customer our nice I our we companies. are there pain we would very, mean, base. like product about very The is in

through going that, is business there's big-box of our remodels of every to do chains continue. amount sector, to construction that few percent have years. the be certain XX-some although will a So the always All

that starts like fill slowdown. things so kind if gaps And of can the new

very years. they for Just were apartments, robust like several

on bit up. but multifamily, a other slowed They've areas have picked

use right, So And well when solutions always other even everything we And structure to tight going any the and with alternative it we a product, storage. happen that great at amount, through growth would storage be a else. if there's areas. as to flows it's compared just get sector offset you that and things look tight get hope other for with inexpensive or would cash remodels to and so certain construction our it's it hard

when economy across well. pros our of lot as the a there's tight product gets So segments other to

Unidentified Analyst

Right. Right.

the XX last last me. cash presentation? the the on And number of of the months you page for the free do last you reported Okay. Chuck, have flow, the one

Chuck Barrantes

under last flow Our XX months $XX million. just for free cash is the

Operator

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

Jody Miller

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

Operator

call. This does today's conference conclude you. Thank

disconnect. now may You

General Finance (GFNCP) 10 Nov 192020 Q1 Earnings call transcript