Mobile Container, Office Firm Makes Right Moves

0

Pasadena’s General Finance Corp. is proving resilient, posting solid results and big growth despite declines in some of its biggest markets.

The company, which leases mobile storage containers and mobile offices for construction sites, last week announced better-than-expected earnings for the quarter ended Dec. 31, reporting net income attributable to common shareholders of $4.6 million (17 cents a share), more than double its net income of $1.6 million (7 cents) in the same period a year earlier. Revenue also increased 35 percent over the year-ago quarter to $89 million.

Those results beat analysts’ expectations, helping pump up the firm’s shares by 11 percent to close at $8.70 for the week ended Feb. 11, making it one of the biggest gainers on the LABJ Stock Index. (See page 56.)

Ronald Valenta, General Finance’s chief executive, said the company is doing well halfway through its fiscal year, despite trouble with its business in Asia and Australia.

“On the whole, we’re looking for a big year even though we’ve had a couple issues that we’ve worked through,” Valenta said.

Those issues included a 22 percent decline in revenue for the firm’s Asia-Pacific operations. Valenta attributed those losses to lower demand and the weaker Australian dollar, saying revenue from the region was actually flat year over year before accounting for currency fluctuations.

Still, General Finance is taking action to boost its Asia-Pacific business, cutting spending and acquiring more assets in the region. It’s also been on an acquisition streak at home, spending $36 million to buy five portable storage container businesses over the past six months, with most of that investment in North America.

The company’s solid results and last week’s stock bump come despite its exposure to the oil and gas market. About 30 percent of its revenue comes from leasing water storage tanks, oil tanks and other products to energy companies.

Falling oil prices have forced General Finance to reprice some of its contracts and shave an average of 10 percent off its rates. But Valenta said the company will maintain the majority of its contracts and does not expect the sector to have any more negative impact on the company’s revenue.

Brent Thielman, an analyst who follows General Finance for brokerage D.A. Davidson & Co. of Great Falls, Mont., said the leasing firm benefits from having a diversified portfolio, which helps buffer the company against record-low oil prices.

“There’s still pretty significant demand in the field for some of the products they’re providing in the energy sector,” he said. “The way their model is set up, there should be some stability.”

No posts to display