General Finance Corporation (�General Finance� or �GFN�)
(NASDAQ:GFN)(NASDAQ:GFNCW)(NASDAQ:GFNCU) today announced its
financial results for the quarter ended December 31, 2008 (�QE2 FY
2009�). Results for the quarter included RWA Holdings Pty Limited
(�Royal Wolf�), the leading provider of portable storage solutions
in Australia and New Zealand and Pac-Van, Inc. (�Pac-Van�), a key
provider of modular buildings and mobile office units in the U.S.,
which was acquired on October 1, 2008. Also provided for comparison
purposes are unaudited non-GAAP combined information for the second
quarter ended December 31, 2007 (�QE2 FY 2008�), which combines the
results of Pac-Van with the consolidated results of General
Finance. The actual consolidated results of General Finance for QE2
FY 2008 are included in Form 10-Q for the quarterly period ended
December 31, 2008.
General Finance Consolidated
QE2 FY 2009 as compared to non-GAAP QE2 FY 2008
- Total revenues were $42.6
million and adjusted EBITDA (1) (earnings before interest expense,
income tax, depreciation and amortization and other non-operating
costs and stock based compensation expense of $266,000 in QE2 FY
2009) was $9.4 million in QE2 FY 2009 versus revenues of $49.2
million and adjusted EBITDA of $11.6 million in QE2 FY 2008;
- Leasing and sales revenue mix
was split evenly as leasing revenues increased 6.4% in QE2 FY 2009
compared to QE2 FY 2008;
- Sales revenues declined 27% in
QE2 FY 2009 versus QE2 FY 2008 with approximately a third of the
decline due to the economic climate in the Asia-Pacific area
combined with an approximate two-thirds of the decline due to the
25% drop in the Australian currency to the U.S. Dollar for the same
periods (.8905 to .6704);
- Adjusted EBITDA in QE2 FY 2009
was 22% of total revenue compared to 24% in QE2 FY 2008;
- Foreign currency exchange loss
for QE2 FY 2009 was approximately $3.0 million compared to a
negligible number in QE2 FY 2008;
- The utilization rate of our
lease fleet of approximately 43,000 units declined from 84% to 76%
from December 31, 2007 to December 31, 2008, while the size of our
lease fleet increased by approximately 26%, as we purchased new
units, reduced sub-leased units and completed previously announced
acquisitions;
- Net fleet capital expenditures
for QE2 FY 2009 were $6.3 million versus approximately $4 million
in QE2 FY 2008;
- Fleet inventory at December 31,
2008 was $24.4 million compared to $16.8 million at December 31,
2007, primarily due to the inclusion of Pac-Van�s inventory of $5.4
million, the acquisition of Royal Wolf New Zealand in April 2008
and advance purchases for Australian mining cabins to meet
previously forecasted demand;
- We are covenant compliant with
both of our senior credit facilities;
- Our total debt outstanding at
December 31, 2008 was $194.1 million and our total funded debt to
adjusted EBITDA as of the trailing twelve months ending December
31, 2008 was 4.7x.
Non-GAAP Combined General
Finance and Pac-Van (QE2 FY 2008)
and Consolidated General
Finance (QE2 FY 2009)
(unaudited and in thousands) � GFN � � � GFN Consolidated
Pac-Van Combined Consolidated QE2 FY 2008 QE2 FY 2008 QE2 FY 2008
QE2 FY 2009
Revenues Sales $ 22,198 $ 7,000 $ 29,198 $
21,329 Leasing � 7,654 � � 12,340 � � 19,994 � � 21,272 � � 29,852
� � 19,340 � � 49,192 � � 42,601 �
Costs and expenses Cost
of sales 18,454 4,863 23,317 18,135 Leasing, selling and general
expenses 5,897 8,418 14,315 15,295 Depreciation and amortization �
2,245 � � 1,331 � � 3,576 � � 3,896 �
Operating income 3,256
4,728 7,984 5,275 Interest income 128 0 128 65 Interest expense
(1,585 ) (2,243 ) (3,828 ) (5,716 ) Foreign currency exchange gain
(loss) and other � 61 � � 0 � � 61 � � (2,998 ) � (1,396 ) � (2,243
) � (3,639 ) � (8,649 )
Income (loss) before provision for
income taxes and minority interest 1,860 2,485 4,345 (3,374 ) �
Provision (benefit) for income taxes 606 1075 1,681 (1,170 ) �
Minority interest � 57 � � 0 � � 57 � � (1,199 )
Net income
(loss) $ 1,197 � $ 1,410 � $ 2,607 � � ($1,005 ) Net income
(loss) per share: Basic $ 0.12 ($0.06 ) Diluted � 0.09 � � (0.06 )
Weighted average shares outstanding: Basic 9,690,099 17,826,052
Diluted � 13,167,347 � � 17,826,052 �
(1) EBITDA is a supplemental measure of performance that is not
required by, or presented in accordance with U.S. generally
accepted accounting principles (�GAAP�). EBITDA is a non-GAAP
measure, is not a measurement of our financial performance under
GAAP and should not be considered as an alternative to net income,
income from operations or any other performance measures derived in
accordance with GAAP or as an alternative to cash flow from
operating, investing or financing activities as a measure of
liquidity. We present EBITDA because we consider it to be an
important supplemental measure of our performance and because it is
frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in our industry,
many of which present EBITDA when reporting their results.
Business
Overview
Ronald Valenta, General Finance�s President & CEO,
commented, �We continue to be pleased by our progress in
successfully integrating the acquisitions, implementing operational
best practices and in establishing a global corporation. In
addition, we have been building consistency in our leasing revenue
stream while, conversely, we have been working hard to reduce the
proportion of sales in our revenue mix, especially in our
Australian and New Zealand markets, which are dealing with their
first recession in 17 years coupled with a continued dramatic
decline in the Australian dollar currency. Our branch system is
coping well with the downturn, while our national accounts groups
are working to meet the challenge of reduced demand from major
resource companies.�
Mr. Valenta continued, �In our markets, we continue to see a
severe economic downturn coupled with a credit crunch. Our strategy
continues to be focused on implementing best practices with our
emphasis on superior customer service coupled with product
diversification and differentiation.�
Charles Barrantes, General Finance�s Executive Vice President
and Chief Financial Officer added, �We have made strides in
managing our sale inventory, have not experienced a significant
deterioration in our trade receivables and, during this downturn,
will reduce capital expenditures and other costs in an endeavor to
reduce our long-term debt over the next twelve months. We enjoy
healthy relationships with our senior lenders which are critical in
times such as these.�
Mr. Valenta concluded that, �Although we would have liked to be
further ahead in our overall quarterly results, our core business,
the leasing of office and storage units, is performing well. We
intend to continue to pay down our outstanding debt using our
operating cash flow. In addition, we anticipate lower interest
costs in the upcoming fiscal quarters. We will continue to do
everything in our power to position ourselves to emerge stronger
when the global economy returns to some semblance of normalcy�
Guidance Review and
Update
In connection with the filing of our Form 10-Q for the quarterly
period ended December 31, 2008, and based upon the financial
information included therein, we believe our FY 2009 results would
be below the range of our previous guidance. Given the uncertainty
in the economic environment and our desire to keep investors
continually informed on our outlook and maintain our credibility;
we feel it is prudent at this time to be very careful in the
forward looking statements we make and, as a result, we are
withdrawing our previous guidance and suspending any future
guidance.
Series A 12.5% Cumulative
Preferred Stock Issuance
Today, General Finance intends to close the initial round of its
Series A 12.5% Cumulative Preferred stock offering for a total of
approximately $1,300,000. The preferred stock is
non-convertible.
About General Finance Corporation General Finance
Corporation (www.generalfinance.com), through its indirect
86.2%-owned subsidiary, Royal Wolf (www.royalwolf.com.au) and its
indirect 100%-owned subsidiary Pac-Van (www.pacvan.com ), sells and
leases products in the portable services industry to a broad cross
section of industrial, commercial, educational and government
customers throughout Australia, New Zealand and the United States.
These products include storage containers and freight containers in
the mobile storage vertical; and modular buildings, mobile offices
and portable container buildings in the modular space vertical.
Cautionary Statement About Forward-Looking Statements.
Statements in this news release that are not historical facts are
forward-looking statements. Such forward-looking statements
include, but are not limited to, prospects of Royal Wolf and
Pac-Van. We believe that the expectations represented by our
forward-looking statements are reasonable, yet there can be no
assurance that such expectations will prove to be correct.
Furthermore, unless otherwise stated, the forward-looking
statements contained in this press release are made as of the date
of this press release, and we do not undertake any obligation to
update publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future events
or otherwise unless required by applicable legislation or
regulation. The forward-looking statements contained in this press
release are expressly qualified by this cautionary statement.
Readers are cautioned that these forward-looking statements involve
certain risks and uncertainties, including those contained in
filings with the Securities and Exchange Commission; such as
General Finance�s definitive proxy statement with respect to
General Finance�s acquisition of Pac-Van, its Annual Report on Form
10-K for the fiscal year ended June 30, 2008 and its quarterly
report on Form 10-Q for the quarter ended December 31, 2008.
General Finance (MM) (NASDAQ:GFNCU)
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