General Finance Corporation reports 26.4% EBITDA decline in 2020 and 5.7% Revenue decline
09/09/2020 • About General Finance Corporation (
$GFN) • By InTwits
General Finance Corporation reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- General Finance Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 1.9%
- CAPEX is quite volatile: $8m in FY2020, $7m in FY2019, $5m in FY2018, $4m in FY2017, $4m in FY2016
- The company has potentially unprofitable business model: ROIC is 6.7%
- It operates with high leverage: Net Debt/EBITDA is 5.6x while industry average is 4.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
General Finance Corporation's Revenue decreased on 5.7%. Revenue decline showed acceleration in FY20Q4 - it was 12.2% YoY. During the last 5 years Revenue growth topped in FY2018 at 25.4% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.57 pp from 16.0% to 16.6% in FY2020. During FY2016-FY2020 EBITDA Margin topped in FY2019 at 27.4%.
Gross Margin increased slightly on 0.75 pp from 73.1% to 73.9% in FY2020. SG&A as a % of Revenue increased slightly on 1.1 pp from 21.7% to 22.8% in FY2020.
Net Income margin increased on 4.2 pp from -2.0% to 2.2% in FY2020.
Investments (CAPEX, working capital and M&A)
General Finance Corporation's CAPEX/Revenue was 2.4% in FY2020. CAPEX/Revenue increased slightly on 1.0 pp from 1.3% in FY2017 to 2.4% in FY2020. Average CAPEX/Revenue for the last three years was 1.9%. During FY2016-FY2020 CAPEX as a % of Revenue bottomed in FY2017 at 1.3% and was growing since that time.
Return on investment
The company operates at low ROIC (6.7%) and ROE (3.2%). ROIC decreased on 3.9 pp from 10.5% to 6.7% in FY2020. ROE surged on 12.6 pp from -9.4% to 3.2% in FY2020. During FY2016-FY2020 ROIC topped in FY2019 at 10.5%.
Leverage (Debt)
Company's Net Debt / EBITDA is 5.6x and Debt / EBITDA is 5.9x. Net Debt / EBITDA jumped on 1.8x from 3.9x to 5.6x in FY2020. Debt increased on 8.7% while cash surged on 68.7%. During the last 5 years Net Debt/EBITDA bottomed in FY2019 at 3.9x.
The company has no short term refinancing risk: short term debt is zero.
Valuation and dividends
General Finance Corporation's trades at EV/EBITDA 8.0x and P/E 23.2x.
Management team
General Finance Corporation's CEO is Jody E Miller. Jody E Miller has 3 years tenure with the company. The company's CFO Charles E Barrantes has spent 14 years with the company.
Financial and operational results
FY ended 06/30/2020
General Finance Corporation ($GFN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 285.9 | 276.9 | 347.3 | 378.2 | 356.5 | -5.7% |
| Gross Profit | 155.3 | 202.4 | 250.3 | 276.5 | 263.3 | -4.8% |
| SG&A | 68.7 | 67.7 | 77.6 | 82.0 | 81.3 | -0.8% |
| EBITDA | 53.0 | 59.2 | 84.0 | 103.7 | 76.3 | -26.4% |
| Net Income | -5.4 | -3.0 | -8.3 | -7.5 | 8.0 | |
Balance Sheet
|
|---|
| Cash | 9.3 | 7.8 | 21.6 | 10.4 | 17.5 | 68.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 354.5 | 355.6 | 427.2 | 411.1 | 446.9 | 8.7% |
Cash flow
|
|---|
| Capex | 4.2 | 3.7 | 4.8 | 7.2 | 8.4 | 16.6% |
Ratios
|
|---|
| Revenue growth | -5.9% | -3.1% | 25.4% | 8.9% | -5.7% | |
| EBITDA growth | -35.0% | 11.6% | 42.1% | 23.4% | -26.4% | |
|
|---|
| Gross Margin | 54.3% | 73.1% | 72.1% | 73.1% | 73.9% | 0.7% |
| EBITDA Margin | 18.5% | 21.4% | 24.2% | 27.4% | 21.4% | -6.0% |
| SG&A, % of revenue | 24.0% | 24.4% | 22.4% | 21.7% | 22.8% | 1.1% |
| Net Income Margin | -1.9% | -1.1% | -2.4% | -2.0% | 2.2% | 4.2% |
| CAPEX, % of revenue | 1.5% | 1.3% | 1.4% | 1.9% | 2.4% | 0.5% |
|
|---|
| ROIC | 2.4% | 3.2% | 7.5% | 10.5% | 6.7% | -3.9% |
| ROE | -8.9% | -6.9% | -12.3% | -9.4% | 3.2% | 12.6% |
| Net Debt/EBITDA | 6.5x | 5.9x | 4.8x | 3.9x | 5.6x | 1.8x |
General Finance Corporation ($GFN) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 90 | 92 | 90 | 85 | | -8.1% | -6.0% | 4.4% | -12.2% |
| EBITDA | 23 | 24 | 22 | 7 | | -11.5% | -14.6% | -6.6% | -73.4% |
| Net Income | 6 | 10 | -9 | 0 | | 689.3% | - | - | -96.4% |
Balance Sheet
|
|---|
| Cash | 12 | 10 | 12 | 17 | | 27.1% | 72.1% | 72.3% | 68.7% |
| Short Term Debt | 12 | 12 | 11 | 0 | | - | - | - | - |
| Long Term Debt | 475 | 469 | 443 | 447 | | 16.9% | 13.9% | 4.2% | 8.7% |
Ratios
|
|---|
| Gross Margin | 75.5% | 74.8% | 74.0% | 71.1% | | 6.1% | 0.9% | -3.6% | -1.0% |
| EBITDA Margin | 25.9% | 26.5% | 24.3% | 8.0% | | -1.0% | -2.7% | -2.9% | -18.4% |
| Net Income Margin | 6.6% | 11.3% | -9.6% | 0.2% | | 5.8% | 15.6% | -9.2% | -5.2% |
Peers in Trading Companies & Distributors
Below we provide General Finance Corporation benchmarking against other companies in Trading Companies & Distributors industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EnviroStarm, Inc. ($EVI) | - | 160.9% | 59.6% | 52.2% | 3.3% |
| |
|---|
| Median (1 company) | - | 160.9% | 59.6% | 52.2% | 3.3% |
|---|
| General Finance Corporation ($GFN) | - | -3.1% | 25.4% | 8.9% | -5.7% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EnviroStarm, Inc. ($EVI) | 22.8% | 21.6% | 24.3% | 23.1% | 23.4% |
| |
|---|
| Median (1 company) | 22.8% | 21.6% | 24.3% | 23.1% | 23.4% |
|---|
| General Finance Corporation ($GFN) | 54.3% | 73.1% | 72.1% | 73.1% | 73.9% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EnviroStarm, Inc. ($EVI) | 7.9% | 6.3% | 5.7% | 4.3% | 3.6% |
| |
|---|
| Median (1 company) | 7.9% | 6.3% | 5.7% | 4.3% | 3.6% |
|---|
| General Finance Corporation ($GFN) | 18.5% | 21.4% | 24.2% | 27.4% | 21.4% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EnviroStarm, Inc. ($EVI) | 0.0% | 0.3% | 0.6% | 1.3% | 1.4% |
| |
|---|
| Median (1 company) | 0.0% | 0.3% | 0.6% | 1.3% | 1.4% |
|---|
| General Finance Corporation ($GFN) | 1.5% | 1.3% | 1.4% | 1.9% | 2.4% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EnviroStarm, Inc. ($EVI) | 55.1% | 25.4% | 13.3% | 7.4% | 2.4% |
| |
|---|
| Median (1 company) | 55.1% | 25.4% | 13.3% | 7.4% | 2.4% |
|---|
| General Finance Corporation ($GFN) | 2.4% | 3.2% | 7.5% | 10.5% | 6.7% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| EnviroStarm, Inc. ($EVI) | -1.4x | 0.6x | 1.0x | 3.6x | 2.8x |
| |
|---|
| Median (1 company) | -1.4x | 0.6x | 1.0x | 3.6x | 2.8x |
|---|
| General Finance Corporation ($GFN) | 6.5x | 5.9x | 4.8x | 3.9x | 5.6x |
