General Finance Corporation (“General Finance” or “GFN”) (NASDAQ:GFN) (NASDAQ:GFNCW) (NASDAQ:GFNCU) today announced its consolidated financial results for the third quarter and nine months ended March 31, 2010 (“YTD 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 nine months ended March 31, 2009 (“YTD 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 Third Quarter Ended March 31, 2010 (“QE3 FY 2010”) Results Compared to Third Quarter Ended March 31, 2009 (“QE3 FY 2009”) Results
Total revenues increased by 12%, from $34.5 million in QE3 FY 2009 to $38.5 million in QE3 FY 2010;
Leasing revenues declined 2%, from $19.7 million in QE3 FY 2009 to $19.3 million in QE3 FY 2010;
Leasing revenues comprised 50% of total revenues in QE3 FY 2010 versus 57% in QE3 FY 2009;
Sales revenues increased approximately 30%, from $14.8 million in QE3 FY 2009 to $19.2 million in QE3 FY 2010;
Adjusted EBITDA (1) declined by 16%, from $9.3 million in QE3 FY 2009 to $7.8 million in QE3 FY 2010;
Adjusted EBITDA margin as a percentage of total revenues decreased from 27% in QE3 FY 2009 to 20% in QE3 FY 2010;
Interest expense increased from $3.3 million in QE3 FY 2009 to $3.9 million in QE3 FY 2010; and
The effect of foreign currency exchange resulted in a net gain of $0.6 million for QE3 FY 2010, versus a $1.9 million net loss in QE3 FY 2009 due to the strengthening 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 March 31, 2010, and at Pac-Van from 59 days to 41 days, respectively;
For YTD FY 2010, Pac-Van reduced their inventories by $2.0 million and, excluding the effect of foreign currency translation into the U.S. dollar reporting currency, Royal Wolf reduced their inventories by $3.0 million;
The utilization rate of the total lease fleet, on a unit basis, increased from 70% at June 30, 2009 to 76% at March 31, 2010;
Net fleet capital expenditures were reduced by 77%, from $14.1 in YTD FY 2009 to $3.3 million in YTD FY 2010;
During YTD FY 2010, long term borrowings were reduced by $14.4 million in the United States and, excluding the effect of foreign currency translation into the U.S. dollar reporting currency, by $7.3 million at Royal Wolf;
General Finance was in compliance with the covenants of its senior credit facilities and senior subordinated indebtedness at March 31, 2010;
The ratio of total funded debt to trailing twelve months (“TTM”) adjusted EBITDA, as calculated at each of the senior credit facilities at Pac-Van and Royal Wolf, was under 5.5x at March 31, 2010; and
TTM total revenues were $150.6 million ($59.9 in the United States and $90.7 million in the Asia-Pacific area) and TTM adjusted EBITDA was $31.2 million ($12.6 million in the United States and $18.6 million in the Asia-Pacific area).
(1) Earnings before interest expense, income tax, depreciation and amortization and other non-operating costs and income (EBITDA and adjusted EBITDA) are a supplemental measure of performance that is 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 and non-operating costs and income) 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.