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Edited Transcript of GFN earnings conference call or presentation 11-Feb-19 4:30pm GMT

Q2 2019 General Finance Corp Earnings Call

PASADENA Feb 12, 2019 (Thomson StreetEvents) -- Edited Transcript of General Finance Corp earnings conference call or presentation Monday, February 11, 2019 at 4:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Charles E. Barrantes

General Finance Corporation - Executive VP & CFO

* Christopher A. Wilson

General Finance Corporation - General Counsel, VP & Secretary

* Jody E. Miller

General Finance Corporation - President, CEO & Director

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Conference Call Participants

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* Brent Thielman

D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst

* Scott Schneeberger

Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst

* Luis Hernandez

- Private Investor

* Toby Slodden

- Private Investor

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Presentation

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Operator [1]

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Welcome to General Finance Corporation's Earnings Conference Call for the Second Quarter ended December 31, 2018. 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 Time. (Operator Instructions)

It is now my pleasure to turn the call over to Mr. Chris Wilson, Vice President, General Counsel and Secretary of General Finance Corporation. Please go ahead, Mr. Wilson.

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Christopher A. Wilson, General Finance Corporation - General Counsel, VP & Secretary [2]

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

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

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

In this conference call, we will also discuss certain non-U. S. GAAP financial measures, such as adjusted EBITDA. A reconciliation of how we define and arrive at adjusted EBITDA is in our earnings release and will be included in our quarterly report on Form 10-Q.

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

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Jody E. Miller, General Finance Corporation - President, CEO & Director [3]

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Thank you, Chris. Good morning, and we appreciate you joining us today for our second quarter fiscal year 2019 conference call. I will begin with a brief discussion of our operations, and then our CFO, Chuck Barrantes, will provide a financial overview and our outlook for the remainder of the fiscal year. Following his remarks, we'll open the call up for questions.

We continue to be extremely pleased with our solid operational and financial performance. The strong momentum that we experienced in the first quarter has continued into the second quarter, where we delivered our highest quarterly level of revenues and adjusted EBITDA in the Company's history.

We also reached the company milestone with opening our 100th branch during the quarter. To put this in perspective, we have grown our branch network at a compounded annual growth rate of 11% over the last five years. This is the result of our long-term strategy of expanding our geographic footprint with a combination of accretive, container-based acquisitions and greenfield openings.

We're also closing on 100,000 units in our rental fleet, which has grown at a similar rate over the last five years.

Now turning to our geographic venues.

Our North American leasing operations continue to see strong demand across all of its end-markets with total revenues in the second quarter increasing by 25% year-over-year, driven by both higher sales and leasing revenues. Sales revenues were up 27% in the quarter, mostly due to two large sales in the industrial and education sectors, which contributed approximately $2 million of the $3.6 million increase. The remaining increase was spread evenly across all sectors.

Leasing revenues increased by 24%, driven by increases in unit growth, higher average lease rates and higher fleet utilization across all of our product lines during the quarter. We are very proud of these outstanding results.

Our core portable storage business also continues to perform at the high end of our expectations, driven by consistent execution, and broad-based demand across the majority of our end markets. Demand for our ground level office and storage containers continues to be very high as these two products generated a combined year-over-year rental revenue increase of 30%, of which over half was organic growth.

Taking into account all of Pac-Van's product lines, organic rental revenue growth was 17% for the quarter and 18% year-to-date. Our team continues to do a great job of executing on our business plan, including gaining traction on a number of initiatives such as our national accounts program, our online ordering capabilities and our recent introduction of PV3 Safety Containers.

We're particularly excited about this new innovative product, which offers the industry's only emergency exit feature, as well as an upgraded option that includes solar powered lighting.

Pac-Van continues to be highly regarded by its customer base and, once again, posted a world-class Net Promoter Score of 84 for the last 12 months.

In addition to organic growth, we remain focused on building the Pac-Van brand throughout North America by geographically expanding our portable storage container business, particularly into adjacent markets.

During the second quarter, we completed one acquisition in New Hampshire, increasing our presence in the New England region. We also opened a greenfield location in Tampa, Florida, adding our fourth branch in Florida. We continue to serve just over half of the top 100 MSAs in the U.S., and our acquisition pipeline remains healthy.

Our liquid containment business in North America once again delivered a very strong quarter, generating year-over-year leasing revenue and adjusted EBITDA growth of 37% and 57%, respectively. While oil and gas production activity in both the Permian and Eagle Ford basins remains healthy, the increase in volatility in oil prices during the quarter created caution among some of our customers. As a result, we had a small decline in fleet utilization.

Our North American manufacturing operations posted a 29% year-over-year increase in sales to external customers, and delivered its fifth quarter in a row of positive stand-alone adjusted EBITDA. This ongoing improvement is due to increased demand in specialty tanks and other steel-related products.

Now turning to our Asia Pacific region.

Our Asia Pacific region continued its positive momentum posting second quarter growth in leasing revenues of 9% in local currency basis, marking its ninth year-over-year increase out of the last ten quarters. Sales revenues were down year-over-year, due to two large sales that occurred last year in second quarter that were not repeated this year. Excluding the impact of those two transactions, sales revenues would have increased by over 30% in local currency. Total reported revenues for the quarter in U.S. dollars were adversely impacted by the approximate 7% decline in the average Australian dollar exchange rate between periods.

The increase in Royal Wolf's leasing revenue was spread across almost all of its markets, with notable increases in the construction, consumer and industrial sectors. The growth has mainly been driven by increases in average units on lease, combined with higher average lease rates.

Our team remains focused on building upon its leading market position across the region through a combination of organic growth, greenfield openings, and to the extent that they become available, accretive acquisitions. During the quarter, we opened one additional location in the State of Victoria, increasing our branch count in the Asia Pacific to 37.

To conclude, we continue to see both organic growth and expansion opportunities in North America and the ability to strengthen our market leadership in the Asia Pacific region. As always, we will remain disciplined in our capital allocation. Our performance year-to-date positions us well to exceed our goals for this year, while also providing us with optimism about the future.

Our hard-working employees continue to execute on our proven business strategy and their dedication to the company has led to our outstanding and record-breaking financial performance.

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

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [4]

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Thanks, Jody. We will be filing our quarterly report on Form 10-Q shortly, at which time the document will be available on both the SEC's EDGAR filing system and our website. And I encourage investors and other interested parties to read it as it contains a substantial amount of information about our company, some of which we will discuss today.

Turning to our fiscal second quarter financial results.

Total revenues were $98 million in the second quarter of fiscal year 2019, compared to $92.1 million for the second quarter of fiscal year 2018, an increase of 6%. Leasing revenues were $63.5 million, an increase of approximately 18% over the prior year's quarter and comprised 67% of total non-manufacturing revenues for the quarter, versus 60% in the second quarter of fiscal year 2018. Non-manufacturing sales revenues were $34.5 million in the quarter, down from $38.1 million in the second quarter of the prior year.

In our North American leasing operations, revenues for the second quarter totaled $63.9 million, compared with $51.1 million for the year ago period, an increase of 25%. The increases occurred across all sectors, but primarily in the oil and gas, commercial and construction sectors.

Revenues at our North American manufacturing operations for the second quarter were $3.6 million, including intercompany sales of $946,000 to our North American leasing operations. This compares to $3.5 million of total sales for the year ago period, including intercompany sales of $1.4 million. As Jody mentioned, our manufacturing operations saw increased demand for specialty tanks and other steel-related products, particularly chassis.

In our Asia-Pacific leasing operations, revenues for the second quarter totaled $31.4 million, compared to $38.9 million for the year ago period, a decrease of 19%. The decrease in revenues was driven primarily by the utilities and transportation sectors, as two large sales, totaling $10.5 million, which occurred in the second quarter of fiscal year 2018, were not repeated this year. Excluding the impact of these two large sales, revenues would have increased by 18%, mostly driven by increases in the moving and storage, construction and industrial sectors. As Jody mentioned, total revenues were adversely impacted by the approximate 7% decline in the Australian dollar compared to the U.S. dollar between the periods.

Leasing revenues increased by 2% on a year-over-year basis and 9% on a local currency basis, driven mainly by increases in the construction, consumer and industrial sectors.

Consolidated adjusted EBITDA was $29.7 million in the quarter, compared to $25.2 million in the prior year's quarter, an increase of 18%, and adjusted EBITDA margin as a percentage of total revenues was 30%, up from 27% in the second quarter of fiscal year 2018. This was the eighth consecutive quarter of year-over-year adjusted EBITDA growth and marks the first time in the Company's history that we have surpassed the $100 million adjusted EBITDA mark on a trailing 12-month basis.

In North America, adjusted EBITDA for our leasing operations was $22 million in the second quarter, compared to $16 million for the year ago quarter, an increase of 38%. Adjusted EBITDA at Pac-Van was $15.4 million, up 32% year-over-year and Lone Star's adjusted EBITDA was $6.6 million, up 57% from the prior year.

For our manufacturing operations, on a stand-alone basis, adjusted EBITDA was $228,000 for the quarter, compared to $73,000 last year's second quarter. Asia Pacific's adjusted EBITDA for the second quarter was $8.6 million compared to $10.2 million from the year ago period. On a local currency basis, adjusted EBITDA decreased by approximately 9% driven by the absence of the two large sales that occurred in last year's second quarter.

Interest expense for the second quarter was $8.9 million, a decrease of $0.5 million from the year ago period. The decrease was primarily driven by lower interest expense of $1.5 million between the periods in the Asia Pacific area, due to lower average borrowings, a lower weighted average interest rate of 8.9% for the second quarter of fiscal year '19, versus 9.9% in the year ago period, and a weaker Australian dollar.

In North America, interest expense increased by $1 million from the second quarter of 2018, mostly due to a higher weighted average interest rate of 7.2% versus 5.9% last year, offset somewhat by lower average borrowings between the periods.

Net loss attributable to common shareholders in the second quarter was $5.1 million, or $0.17 per diluted share, compared to a net loss of $2.1 million, or $0.08 per share, in the year ago quarter. Included in these results were non-cash charges of $9.3 million and $1.7 million in fiscal years 2019 and 2018, respectively, for the change in valuation of the stand-alone bifurcated derivatives in our Asia Pacific convertible note. Both periods include $922,000 for the dividends paid on our preferred stock.

For the first six months of fiscal 2019, we generated free cash flow before fleet activity of $30.1 million, compared to $18 million in the prior year quarter, an increase of 67%.

Now turning to our balance sheet.

At December 31, the company had a net leverage ratio of four times for the trailing 12 months, our lowest level in four years. The reduction in leverage is due to a combination of factors, including the forced conversion of a convertible note at Royal Wolf, and of course, our strong financial performance.

Also, during the quarter, we paid off the entire FILO portion of our North American credit facility. We replaced this higher cost debt with lower cost revolver borrowings in the credit facility; which we also amended and expanded, freeing up additional borrowing base capacity.

Now turning to our company-wide outlook for the remainder of fiscal year 2019.

Based on our excellent operating results in the second quarter and our ongoing positive outlook, we are increasing our guidance for fiscal year 2019. Assuming the exchange rate for the Australian dollar versus the U.S. dollar averages $0.71 during the rest of the fiscal year, we now expect the consolidated revenues for fiscal year 2019 will be in the range of $370 million to $390 million, and that consolidated adjusted EBITDA will increase between 20% and 25% in fiscal year 2019 from fiscal year 2018. This outlook does not take into account the impact of any additional acquisitions that may occur for the remainder of the fiscal year.

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

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Brent Thielman with D.A. Davidson.

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Brent Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [2]

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Hey, Jody, it seems like the liquid containment business is pretty immune to commodity price swings in the quarter that you did talk about some impact to utilization rates. Is that deepen or is it stabilized since quarter-end? Maybe just an update on where the market is there?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [3]

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Yes, I think it's stabilized. To be honest, a lot of the change that we saw as we had some consolidation of our customer base, it took a couple of months to get that kind of sorted out. And there's typically always a little bit of the seasonal downturn after Thanksgiving, kind of going into the first calendar quarter, where things get caught up. But if you look at the rig count activity, I think it's pretty stable. And our levels are gradually coming back.

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Brent Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [4]

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Okay. And then, I guess, outside of oil and gas, I mean, it seems like most of the engines are humming here in Pac-Van. Can you just talk about maybe some of the best markets for you around the country and previously in particular pockets of strength?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [5]

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Yes. I would say, to be honest, it's pretty much universal across the board. I think the team has done a great job with the strategy in carrying out the business plan and we've really seen good trends across the U.S. There's not really any real high down spots or real high spots as well. So, they've been very consistent and the team has done a good job executing, and we continue to see a very positive outlook on the portable storage and office side. I think some of our new products also weighed in some of the increase.

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Brent Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [6]

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Okay. And then, I guess, my last question, Jody, just in the Asia-Pacific, I guess, as you think about the outlook and the guidance. How confident are you that you can kind of maintain that leasing revenue growth, call it local currency because it seems like the Australian economy could feel the brunt of the slower China economy here?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [7]

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Yes, we haven't seen much and there's some huge infrastructure bills that should help in the coming quarters as well. But if you drive around those markets, there's power cranes and just a tremendous amount of construction activity. Containers are very accepted in that market. So, there is very high demand for the use of containers across the board in almost all sectors. So, we feel like it's going to be pretty consistent. We feel like there is upside on the building and construction side. The infrastructure piece should help us. So, we're pretty confident that that will sustain their current path.

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Operator [8]

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Your next question comes from the line of Scott Schneeberger with Oppenheimer.

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Scott Schneeberger, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [9]

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Chuck, I guess, if we get started, what would you say as the primary drivers across the whole company of the increased guidance and outlook, and obviously, part and parcel of the strong quarter? Look like things really improved across the board, but I want to hear, it's kind of honed in, what you think were the main drivers and what pushed you higher for the year?

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [10]

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Well, I think, certainly, North America, I think, the economy is solid. We've seen growth across all sectors, in particularly, product line wise, our ground level offices are doing very, very well. And I've stated really for the last few quarters that there's much more tailwinds than headwinds. So, we feel pretty bullish about where we're going. But I would say generally a strong economy.

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Jody E. Miller, General Finance Corporation - President, CEO & Director [11]

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Yes, Scott, this is Jody. Just saying, if you look at all of our product lines across the board, they are doing very well led by the GLO and storage side, but all segments are doing very well and trending positive.

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Scott Schneeberger, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [12]

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Great. And in Pac-Van, a couple of questions there. Obviously, GLO has been very been successful. Do you think that we're going to see an industry shift? Is it just GLOs are kind of emerging and so they are going to be incremental to what's going on in the industry? Or might they eat into some other products over time? And then secondly, Jody, if you could just talk a little bit to what you saw with seasonal rentals for containers and what that competitive environment looks like?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [13]

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Sure. Yes. I mean, I think GLOs are definitely growing in popularity. The ease of set up where they can set on the ground, especially for subcontractors, they can be moved very easily. They don't have to be skirted and anchored, those type of things. So, the GLO product itself I think is becoming more and more popular and more widely used. You know that the mobile offices, we've not seen any decline there. They are very strong and they still continue to do very well. Also, they're just kind of two separate applications, but I do think there is a trend in the GLO side becoming more popular all the time. And then regarding your seasonal question, we did see an increase in seasonal business this year. It is back to kind of what I would say a normalized level. It was a nice increase for the year, about 400k or so, nothing too drastic, but there was still a nice increase on the retail side.

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Scott Schneeberger, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [14]

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Okay. And just following on that. Specifically, to the seasonal, how was pricing in that category for you? And then taking a step back, how is pricing overall in the Pac-Van side?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [15]

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Yes. We continue to see price increases across the board. We saw probably a little bit better pricing on the mobile modular side. I think the consolidation in the industry has been good and helps the industry as well. So that's been very positive as well, but the storage and GLO side had nice increases as well.

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Scott Schneeberger, Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst [16]

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And then just switching over toward Lone Star. Kind of the same question. What are you seeing in pricing? You already touched a little bit upon a pause in utilization there? What's the pricing environment like as we had a really nice run in oil and gas prices and then a bit of a hick up. So where does pricing stand? And what do you see for the coming quarters?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [17]

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Yes. I would phrase it as more stabilized now. We were having pretty good success in moving the prices up every quarter and going back and some customers have seen as much as two and three price increases over the last 1.5 years or so as the market continued to be more positive. I would say with oil prices going down in the beginning of last quarter that kind of put us in a situation not to ask. And so we've kind of seen the pricing kind of stabilize as we see oil and gas continue to be positive, then we'll go back and ask for some more price increases, but the way I would phrase right now is kind of stabilized pricing.

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Operator [18]

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Your next question comes from private investor, Luis Hernandez.

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Jody E. Miller, General Finance Corporation - President, CEO & Director [19]

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I think, it's Luis.

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Luis Hernandez, - Private Investor [20]

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Yes. All right. My first question is on free cash flow. Chuck, you mentioned $34 million. Was that 6 months or 12 months?

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [21]

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6 months.

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Luis Hernandez, - Private Investor [22]

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Great. 6 months were sort of $34 million.

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [23]

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Year-to-date. Yes.

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Luis Hernandez, - Private Investor [24]

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As far as on the release, you mentioned $19 million in operating cash flow for the 6 months.

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [25]

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Okay. Yes. The $19 million that's in the release is the operating activities for GAAP, whereas, the $34 million is the free cash flow.

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Luis Hernandez, - Private Investor [26]

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Right. Okay. Just so $34 million for 6 months. All right.

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [27]

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Yes.

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Luis Hernandez, - Private Investor [28]

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That clarifies it pretty well. Right. Then the other question is on, Jody, you mentioned, you guys threw in new products. I couldn't hear you well on that. Could you expand on those, please?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [29]

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Yes. We introduced what we call the PV3 Safety Container and the Wolf Lock in the Asia Pacific. It's a new innovative product on the container side. It has internal locking mechanisms. It's a one-handle, easy-opening unit. But the most impressive thing about it's got an internal emergency release. So, if someone were to get locked in or trapped in the container, there is one lever to pull and then it will release to let you out of the container. And it's the only product in the industry like that. So, if you like, it's going to be very well accepted as far as safety and ease of use and simplicity in the security that it has.

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Luis Hernandez, - Private Investor [30]

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All right. And then how much impact do you expect from these new products? Are they minor or are they new development?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [31]

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Yes. So, we just rolled out the product not long ago. We also rolled out solar lighting because the containers are pretty dark when you open the doors. There's no light. So, we've got an innovative product with the panels, we can still stack and deliver the units with the panels. It's a very nice light kit as well for the units, but it's still too early to say. We have high expectations and our thought processes after people see it, why wouldn't they want it in the future. So, we obviously feel like it's going to take off and do very well for us.

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Luis Hernandez, - Private Investor [32]

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All right. Good. And then finally on pricing on Lone Star, regarding the peak, where do you think we're now?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [33]

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Yes. So, I think...

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Luis Hernandez, - Private Investor [34]

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Based on, yes, sorry.

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Jody E. Miller, General Finance Corporation - President, CEO & Director [35]

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Yes. So yes, I mean, we're not anywhere even close to where we were back in the day. I think you know that this first little peak can tell the oil prices went down. I think we were in good shape. If oil prices stay in the range it is now or a little higher, which most are predicting, then I think there's more upside on the pricing for sure. But if you look at where it is now, it's less than 2/3 of where it was at the peak and has a lot of runway ahead if we could get back to those levels. But I think it will be a more steady, slower, gradual increase is what we're foreseeing in the future as long as stability is there on pricing.

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Luis Hernandez, - Private Investor [36]

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Okay. Good. And then one last one. The derivative cost and the convertible one, that goes away going forward, right?

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [37]

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I'm sorry, Luis, what was the question on the derivative?

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Luis Hernandez, - Private Investor [38]

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There is an expense based on the conversion of it that goes away going forward? Yes. All right.

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [39]

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No. It doesn't go away. It doesn't go away for a while. That derivative represents is a minimum return provision for Bison Capital on the shares on the convertible note. So, it's 1.75. And so until they actually sell and realize down the road, it's going to stay with us.

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Luis Hernandez, - Private Investor [40]

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Okay. All right. I thought it was...

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [41]

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Noncash, it goes up and down. If our stock goes up, it will go down.

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Luis Hernandez, - Private Investor [42]

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Yes. I thought it was -- since it was already converted that it will go away. All right.

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Charles E. Barrantes, General Finance Corporation - Executive VP & CFO [43]

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Sure.

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Operator [44]

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(Operator Instructions) Our next question comes from the line of Toby Slodden, a private investor.

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Toby Slodden, - Private Investor [45]

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Can you hear me?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [46]

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Yes.

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Toby Slodden, - Private Investor [47]

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Congratulations. Consistently you just did another great quarter. This is kind of a broader-based question. When you look at the financials, to what extent were the financials affected by that, I'm assuming high demand you saw in like, let's call it, the disaster prone areas like Florida, Texas and California?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [48]

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Yes, it's pretty small. We obviously deliver units into those areas that were affected, but if you look at it as a whole, as far as affecting the full company numbers, it was very minimal. But obviously, we try to service that area the best we can and help the folks out and optimize the opportunity. But if you look at it as a whole, it's not a large piece at all, very small.

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Toby Slodden, - Private Investor [49]

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Were you surprised by that?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [50]

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In regards to the impact or the...

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Toby Slodden, - Private Investor [51]

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Yes, yes, I was just told -- I would have expected to see a larger impact?

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Jody E. Miller, General Finance Corporation - President, CEO & Director [52]

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Yes. It takes a while on those rebuilds. We've always found that you don't see hundreds and hundreds of units going out day 1. We've set up drop yards there in the Panama City area. We've also added resources and added equipment at a fast pace. So, when you're looking at a company that's got 60-some branches in the U.S. and the volume that we do even in several hundred units, even 1,000 units going out for an isolated area is still not a huge impact overall, but it's obviously something we're going to try to optimize the best we can. And we definitely are, we're adding yards and equipment to service that area but the rebuild is going to happen for a long time.

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Operator [53]

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

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Jody E. Miller, General Finance Corporation - President, CEO & Director [54]

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

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Operator [55]

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This concludes today's call. You may now disconnect.