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General Finance Corporation Reports Fourth Quarter And Fiscal Year 2010 Results

General Finance Corporation (“General Finance” or “GFN”) (NASDAQ:GFN) (NASDAQ:GFNCL) (NASDAQ:GFNCZ) today announced its consolidated financial results for the fourth quarter and year ended June 30, 2010 (“FY 2010”). The results include RWA Holdings Pty Limited and subsidiaries (“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 United States. Unaudited non-U.S. GAAP financial information for the year ended June 30, 2009 (“FY 2009”), which combines the first quarter ended September 30, 2008 results of Pac-Van (prior to its acquisition on October 1, 2008) with the consolidated results of General Finance, is provided for comparison purposes.

General Finance Consolidated Fourth Quarter Ended June 30, 2010 (“QE4 FY 2010”) Results Compared to Fourth Quarter Ended June 30, 2009 (“QE4 FY 2009”) Results
  • Total revenues increased by 15%, from $37.8 million in QE4 FY 2009 to $43.5 million in QE4 FY 2010;
  • Leasing revenues increased slightly, from $19.3 million in QE4 FY 2009 to $19.4 million in QE4 FY 2010;
  • Leasing revenues comprised 45% of total revenues in QE4 FY 2010 versus 51% in QE4 FY 2009;
  • Sales revenues increased approximately 31%, from $18.4 million in QE4 FY 2009 to $24.1 million in QE4 FY 2010;
  • Adjusted EBITDA (1) increased from $7.9 million in QE4 FY 2009 to $8.2 million in QE4 FY 2010;
  • Adjusted EBITDA margin as a percentage of total revenues decreased from 21% in QE4 FY 2009 to 19% in QE4 FY 2010;
  • A non-cash goodwill impairment charge of $7.6 million was recorded as a result of the adverse effect of the economic conditions in the United States on Pac-Van’s valuation;
  • Interest expense increased from $2.8 million in QE4 FY 2009 to $4.2 million in QE4 FY 2010; and
  • The effect of foreign currency exchange resulted in a loss of $1.8 million for QE4 FY 2010, versus a $3.3 million gain in QE4 FY 2009 due to the weakening of the Australian dollar.

Key Financial Highlights
  • Days sales outstanding in trade receivables improved at Royal Wolf from 49 days at June 30, 2009 to 43 days at June 30, 2010, and at Pac-Van from 59 days to 53 days, respectively;
  • For FY 2010, Pac-Van reduced its inventories by $2.8 million and Royal Wolf reduced its inventories by $1.8 million;
  • The utilization rate of the total lease fleet, on a unit basis, increased from 70% at June 30, 2009 to 79% at June 30, 2010;
  • Net fleet capital expenditures were reduced by 70%, from $14.3 in FY 2009 to $4.3 million in FY 2010;
  • During FY 2010, outstanding borrowings were reduced by $11.9 million in the United States and, excluding the effect of foreign currency translation into the U.S. dollar reporting currency, by $8.4 million at Royal Wolf;
  • Royal Wolf was in compliance with the covenants of its senior credit and subordinated indebtedness at June 30, 2010;
  • Subsequent to June 30, 2010, Pac-Van refinanced its senior credit and subordinated indebtedness that resulted in a new credit facility and the issuance of a $15.0 million subordinated note by GFN;
  • General Finance completed its rights offering that resulted in net proceeds of $5.9 million; and
  • FY 2010 total revenues were $156.3 million ($57.1 million in the United States and $99.2 million in the Asia-Pacific area) and FY 2010 adjusted EBITDA was $31.5 million ($10.1 million in the United States and $21.4 million in the Asia-Pacific area).
            (1)   Earnings before interest, income taxes, impairment, depreciation and amortization and other non-operating costs and income (“EBITDA” and “adjusted EBITDA”) are supplemental measures of performance that are not required by, or presented in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Adjusted EBITDA (which adds back share-based compensation expense) is a non-U.S. GAAP measure, is not a measurement of our financial performance under U.S. GAAP and should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with U.S. GAAP or as an alternative to cash flow from operating, investing or financing activities as a measure of liquidity. We present adjusted 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 and a form of our adjusted EBITDA when reporting their results.

Business Overview

Ronald Valenta, General Finance’s President and Chief Executive Officer, commented, “We are pleased with our quarterly results, as revenues, utilization and adjusted EBITDA all improved over the preceding fourth quarter. As we discussed in prior quarters, we have been looking for a bottom in the United States and believe we have now seen stabilization in rates and a pick up in demand.”

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