Welcome to General Finance Corporation's earnings conference call for the fourth quarter and fiscal year ended June 30th, 2019. 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. [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.

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-rate indebtedness, our ability to raise capital or borrow additional funds, the availability of sufficiently qualified employees to staff our businesses, changes in the Australian, New Zealand or Canadian dollar relative to the U.S. dollar, regulatory changes, customer defaults or insolvencies, litigation, 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 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 write-off of all or in part of our goodwill and intangible assets. These risks and uncertainties could cause actual outcomes or results to differ mature 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 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 the 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 annual report on Form 10-K.

And now, I turn the call over to Jody Miller, president and chief executive officer. Jody, please go ahead.

Jody Miller -- President and Chief Executive Officer

Thank you, Chris. Good morning, and we appreciate you joining us today for our fourth-quarter fiscal year 2019 conference call. I will begin with a brief discussion of our operations, then our CFO, Chuck Barrantes, will provide our financial overview and our outlook for fiscal year 2020. Following his remarks, we will open the call up for questions.

We are extremely proud of our accomplishments in fiscal year 2019, delivering record revenues and adjusted EBITDA driven by growth across all of our operations. We finished the year with solid momentum for the fourth quarter, generating year-over-year improvement across virtually all of our key operational and financial metrics. In fiscal year 2019, we surpassed our quickly approaching important milestone in our company history. We now serve over 50,000 customers from our 100 branches across two geographic venues.

Our lease fleet is now comprised of nearly 100,000 units with over 80% of the units being portable storage or ground level office containers, which offer the most attractive unit level economics. It was a year of a century mark for us as we also generated adjusted EBITDA in excess of $100 million, which is a company record. Our North American leasing operations again delivered record results and led our growth as our core container business, Pac-Van, posted 16% organic growth rate year-over-year in leasing revenues. Our team at Pac-Van continues to do a great job executing on a number of key initiatives particularly, our national account program and our recently introduced PV3 Safety Containers.

At year end, we have on leased nearly 4,000 PV3 Safety Containers and Royal Wolf premium containers and expect that number to grow significantly in the fiscal year. We've also commenced our online ordering capabilities of Pac-Van and are optimistic about the initiative going forward. With all the success that we are experiencing in Pac-Van, it comes as no surprise that we continue to be highly regarded by our customer base, achieving world-class Net Promoter Score of 84 for the full year. In addition to organic growth, we remain focused on our long-term goals of growing Pac-Van's footprint in North America by geographically expanding our portable storage container business particularly in the adjacent markets.

During the year, we completed five acquisitions and there are two new markets to Greenville locations. We continue to serve over half of the top 100 MSAs in the U.S. and our acquisition pipeline remains healthy. To put this geographic expansion in perspective, over the last 10 years, we've completed 32 acquisitions in North America, drilling from a footprint of 26 primary locations to 64 locations today.

Our liquid containment business delivered improved results for the fiscal year despite the moderation in leasing activity in Texas. While oil and gas production in both basins generally remain healthy, we have been impacted by slow activity year over year. Additionally, there continues to be some lingering pipeline availability challenges with some of our customers in the Permian, as well as, customer consolidation. We remain optimistic about this business as all indicators continue to point to healthy production activity in both basins for the foreseeable future.

Our North American manufacturing operations continued to deliver improved results. Total revenues, including sales of our North American leasing operations increased by 30% during the fiscal year and stand-alone adjusted EBITDA increased by over $1 million. This ongoing improvement is due to an increase in demand in specialty tanks and trailers, as well as, ground level containers built for Pac-Van. Now turning to our Asia-Pacific region.

Our Asia-Pacific region delivered a solid performance driven by a 9% increase in leasing revenues in local currency with an increased activity across most sectors notably in the transportation, industrial, construction, and consumer sectors. This is the 11th out of the last 12 quarters where Royal Wolf has delivered year-over-year growth in leasing revenues, mainly due to growth in average units on lease and improved utilization. In fiscal year 2019, we also saw an increase in overall average monthly lease rates due to moderate pricing power combined with an improved product mix. Our Royal Wolf team remains focused on building upon its leading market position across Australia and New Zealand through a combination of organic growth and Greenfield openings, and to the extent there are available, accretive acquisitions.

During the fiscal year, we strengthened our market presence in the region with an acquisition of our largest competitor in New Zealand and one Greenfield opening in Australia. Over the last 10 years, Royal Wolf has completed 12 acquisitions and grown its footprint in the region from 24 primary locations to 37 today. To conclude, our hard-working employees continue to execute on our proven business strategy and their dedication to the company has led to an outstanding and record-breaking financial performance. We continue to see both organic and expansion opportunities in North America, and ability to strengthen our market leadership in the Asia-Pacific region.

As always, we remain disciplined in our capital allocation. We ended the year on a high note with our strong performance positions as well for another year of solid financial results in fiscal 2020. I'll now turn the call over to Chuck Barrantes for his financial review and our outlook for the current fiscal year.

Chuck Barrantes -- Chief Financial Officer

Thanks, Jody. We will be filing our annual report on Form 10-K shortly, at which time this document will be available on both the SEC's EDGAR filing system and on 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. Now turning to our financial results.

Our fiscal 2019 results fell within the guidance range. We provided it in conjunction with the reporting of our third-quarter results. Not only did we generate record revenues and adjusted EBITDA for the year, but our fourth-quarter results marked the 10th consecutive quarter where we have delivered year-over-year growth in adjusted EBITDA. In addition to reaching the key milestones that Jody referred to, we also made significant progress strengthening our balance sheet and improving our financial flexibility.

We learned our overall cost of financing as we successfully replaced higher cost of debt in both geographic venues with lower-cost borrowings on our amended and expanded credit facility in each region. In addition, our strong financial performance enabled us to end the year with a net leverage ratio below 4 times, our lowest level in five years. Turning to our fourth-quarter results. Total revenues were $96.2 million in the fourth quarter of fiscal '19 compared to $93.8 million for the fourth quarter of fiscal year '18, an increase of 3%.

Leasing revenues, $59.1 million, an increase of 4% from the prior-year's quarter and comprised 63% of total manufacturing revenues for both fourth-quarter periods. Nonmanufacturing sales revenues were $34.3 million in the quarter, an increase of 2% over the fourth quarter of the prior year. In our North American leasing operations, revenues for the fourth quarter totaled $61.1 million, compared with $57.4 million for the year ago period, an increase of 8%, mainly driven by increases in the construction, commercial, mining and industrial sectors, and were partially offset by a decrease in the oil and gas sector. Leasing and sales revenues increased by 6% to 11% on a year-over-year basis, respectively.

Revenues in our North American manufacturing facility from fourth quarter for $4.2 million, which included intercompany sales of $1.4 million to our North American leasing operations. This compares to $3.7 million in total sales for the year ago period, including intercompany sales of $190,000. Our manufacturing operations saw increased demand for specialty tanks and other steel-related products, particularly ground level office container modifications for our North American leasing operations. In our Asia-Pacific leasing operations, EBIT revenues for the fourth quarter totaled $31.5 million, compared to $32.9 million for the fourth quarter of fiscal year 2018, a decrease of 4%.

And on a local currency basis, total revenues increased by approximately 4% and leasing revenues increased by 8%. The increase in leasing revenues was driven primarily by increases in the transportation, industrial, education, and retail sectors, and partially offset by a decrease in the construction sector. Consolidated adjusted EBITDA was $26.1 million in the fourth quarter of 2019, compared to $23 million in the prior-year's quarter, an increase of 13%. And adjusted EBITDA margin as a percentage of total revenues is 27%, up from 25% in the fourth quarter of fiscal 2018.

As I mentioned, this was the 10th consecutive quarter of year-over-year adjusted EBITDA growth. In North America, adjusted EBITDA for our leasing operations was $19 million in the fourth quarter, compared to $17.6 million from the year ago quarter, an increase of 8%. Adjusted EBITDA at Pac-Van was $14.7 million, up 25% over year-over-year and Lone Star adjusted EBITDA was $4.3 million, down from $5.8 million in the prior-year's fourth quarter. For our manufacturing operations, on a stand-alone basis, adjusted EBITDA was $634,000 for the quarter, compared to last year's fourth-quarter adjusted EBITDA of $460,000.

Asia-Pacific's adjusted EBITDA for the quarter was $8.8 million compared to $7.5 million in the year-ago period, an increase of 17%. On a local currency basis, adjusted EBITDA increased by 27% from the prior-year's fourth quarter. Interest expense for the fourth quarter of 2019 was $7.6 million, down from $9.3 million for the fourth quarter of last year. The decrease was primarily driven by lower interest expense in the Asia-Pacific area and the lower average borrowings and a lower interest rate of 8.1% from fourth quarter of fiscal 2019 versus 10% in the year-ago period, and by a weaker Australian dollar between the periods.

Net income attributable to common stockholders in the fourth quarter was $4.3 million, or $0.14 per diluted share, compared to a net loss of $11.6 million, or $0.44 per share in the year-ago fourth quarter. Including these results were non-cash charges of $1.7 million to $11.5 million in fiscal year 2019 and '18, respectively, for the change in valuation of stand-alone bifurcated derivatives. Both periods included $892,000 for the dividends paid on our preferred stock. For fiscal year 2019, we generated free cash flow before fleet activity of $50.5 million, up slightly from $50 million in the prior year.

Turning to our balance sheet. At June 30th, the company had a net leverage ratio of 3.7 times for the trailing 12 months, which compared very favorably with a net leverage ratio of 4.6 times at June 30, 2018. Finally, turning to our companywide outlook for fiscal year 2020. Depending on the condition in the oil and gas sector in Texas and assuming the Australian dollar averages $0.68 versus the U.S.

dollar, we estimate the consolidated revenue for fiscal year 2020 will be in the range of $370 million to $390 million, and the consolidated adjusted EBITDA is expected to be in the range of plus or minus 4% in fiscal year '20 from fiscal year '19. This outlook does not take into account the effect of any acquisitions that may occur during fiscal year 2020. This now concludes our prepared comments, and I would like to turn the call back to the operator for the question-and-answer session.

Operator

[Operator instructions] Our first question comes from the line of Brent Thielman of D.A. Davidson.

Jody or Chuck, I guess in terms of the outlook for F '20, could you give a little bit more detail kind of what you're factoring in for Lone Star? You know, I understand that longer-term outlook is positive, notwithstanding some near-term headwinds. So just trying to get a sense of what you're kind of factoring into that that initial view for F'20 for Lone Star.

Jody Miller -- President and Chief Executive Officer

Yeah, Brent. Thanks. This is Jody. Sor if you look at our current quarter run rate, we're probably more in the $15 million, $16 million range.

So that's why we're a little bit more conservative on outlook there. I mean all indicators show that it should improve. There's a lot of wells drilled. And as we've mentioned before, we're heavier on the production and completion side, so we're optimistic that things will get more positive, but that's kind of where our estimates are.

Pac-Van, obviously, doing very well and growing at a nice pace, and then kind of offset by that Lone Star being more of today's run rate versus the latter half of last year when things were a little more positive. So that's kind of how we're looking at it but cautiously optimistic, it will be better than that.

Brent Thielman -- D.A. Davidson -- Analyst

OK. And then I guess on Pac-Van's kind of traditional end markets, which sectors are you seeing strengthening and, I guess, similarly, where might you be seeing some softening in, I guess, in demand within this vertical?

Jody Miller -- President and Chief Executive Officer

Yeah. To be honest, we have not seen any negatives. Retail season appears it's going to be very strong for us. The construction sector, industrial sectors are still doing very well, and we're getting nice growth across the board with commercial still kind of leading the pack.

So I think as product awareness continues to grow and the economy goes well, we're doing quite well, and don't really see any softening in any one area or geographically either.

Brent Thielman -- D.A. Davidson -- Analyst

OK. I guess my last question. You know, the deleverage ratio is at 4 times. I guess when you think about the new fiscal year, where would you ideally like to see that ratio land by year end?

Chuck Barrantes -- Chief Financial Officer

Well, assuming that we do not make significant investment in acquisitions, I mean, we would anticipate having that leverage slow down. But we stated publicly before, we actually like our sweet spot deleverage between -- to be somewhere around 4 times, 4.5 times. So we're a little below, which is good, which shows the profitability . But also, you know, we think that we can certainly use whatever free cash flow we have to make -- to even make investments in acquisitions.

Our next question comes from the line of Scott Schneeberger of Oppenheimer.

Hey, guys. Can we talk about the pricing environment across the segment if you can give us an overview how things are looking now and what the opportunity is going forward?

Chuck Barrantes -- Chief Financial Officer

Yes. So on the Pac-Van, on this portable storage side, pricing is doing very nicely. We're seeing very consistent price increases like we've seen in the last several quarters with the ground level or GLOs kind of leading the pack in price increases. On the Royal Wolf side, very modest price increases but they are coming up.

And then on the Lone Star side, we're seeing just a little bit of compression. Actually, the Eagle Ford is up a little bit, but the Permian is down slightly, and I think that's just a natural occurrence with the slowdown but nothing too drastic at this point.

Unidentified speaker

OK. Thank you for that. On the end markets in Asia-Pacific, can you talk about what areas -- where you see opportunities over fiscal '20?

Jody Miller -- President and Chief Executive Officer

Yeah. I think, you know, probably our biggest opportunity there is on the building and construction. That's an area that we feel like has a lot of opportunity for growth. Some of our products are becoming more popular in the stackable solutions on the B and C side.

So I would say that and then just naturally, in Australia and New Zealand markets, as I mentioned before, everything is moved by rails. So our freight segment is doing quite well as well, and then our camps that have been sitting idle for many years, we've got most of those out or spoken for at this point, which will be a nice lift for Royal Wolf as well. So pricing-wise, they're doing nicely not as bigger price increases that we got in North America but they're still on the rise versus flat.

Unidentified speaker

Got it. THank you. Final one for me. capex plans for fiscal '20 and categories?

Chuck Barrantes -- Chief Financial Officer

So we're looking at, as far as our planning is concerned, we're looking at fiscal '20 net capex to be actually comparable to fiscal year '18. So in fiscal year '19, our net capex is around $39 million. In fiscal '18, it was at $21 million, and we're looking at net capex to be around the same levels to fiscal '18 to fiscal year '20, so $22 million. That's net capex.

The gross capex, obviously, is a little higher. Gross capex would be $60 million, and we expect it to -- with the sales out of the fleet tune it down to $22 million. And that comes from primarily North America, Asia Pacific, we anticipate somewhere between $1 million, $2 million and North America to make up the balance in 2022.

Our next question comes from the line of Brian Gagnon of Gagnon Securities.

Um, the same question but a little bit differently. If you only have $22 million of net capex and you've got $50-plus million of free cash flow, do you think you have enough opportunities to acquire businesses? Or will you expand into more greenfields? Or will you really try to pay down the most expensive debt that you have?

Chuck Barrantes -- Chief Financial Officer

I'll address the last one first. If we do not have significant acquisition, we would expect that after we pay our preferred stock dividends, we'd have somewhere in the vicinity of $20 million, $25 million consolidated to reduce our overall indebtedness. And then re -- go ahead.

Jody Miller -- President and Chief Executive Officer

I was just going to say regarding the acquisition side, you know, our pipeline remains healthy. We don't see anything changing. As I mentioned on the call, we had five last year, so we do feel like there's opportunities there as far as expansion. We're a little more aggressive with greenfields this past year just because of some of the hurricane rebuild opportunities, and we'll continue to expand greenfield.

And again, we prefer adjacent markets but we do feel like there's a great opportunity to expand in the greenfield side as well.

Brian Gagnon -- Gagnon Securities -- Analyst

OK. Um, all right. The interest expense, you pushed down your interest rate in Australia to, I guess, 8%, you said versus last year's 10%?

Chuck Barrantes -- Chief Financial Officer

Yeah. For the fourth quarter, yup. Weighted average.

Brian Gagnon -- Gagnon Securities -- Analyst

OK. What do you think the weighted averages are for 2020 at this point?

Chuck Barrantes -- Chief Financial Officer

Well, we no longer have the Bison debt, so I would determine that the weighted average based on the BBSwide plus the margin should be somewhere in the vicinity of 6% to 7%.

Brian Gagnon -- Gagnon Securities -- Analyst

OK. So we're going to get an additional benefit on interest expense.

Chuck Barrantes -- Chief Financial Officer

Yeah. I would say, if expense is consolidated going forward, it's somewhere in the $7 million to $7.5 million per quarter range, which is significantly less than $1 million that's been in the prior quarters.

[Operator instructions] Our next question comes from the line of Luis Hernandez, a private investor.

All right. My first question is related to capital structure. Have you thought ever -- about doing anything with the preferreds? I believe in August, they became redeemable. Maybe I'm wrong, but have you thought about anything in that front?

Chuck Barrantes -- Chief Financial Officer

Yeah. Luis, this is Chuck. So yes, we've thought -- actually, they've been redeemable since May of 2018, I believe so. As you know, they're classified as equity.

We are looking at that also in context of the senior notes, which are June and July 2021. Prior to that, we had a few refinancing, as you know, Luis, in terms of the Bison Capital, you know, refinancing the Deutsche Bank and also refinancing Wells Fargo. So that is definitely next on our capital structure list.

Luis Hernandez -- Private Investor

OK. Great. Then did you said $50.5 million in free cash flow? Is that what you said?

Chuck Barrantes -- Chief Financial Officer

$50.5 million was the free cash flow for this fiscal year, yes.

And that's after interest payments. So that's after interest payments before investments and any type of debt reduction.

Right. Jody did mention on the Lone Star's estimated EBITDA to be around $15 million to $16 million, right?

Chuck Barrantes -- Chief Financial Officer

That is the estimated, so that's kind of the current run rate.

Jody Miller -- President and Chief Executive Officer

Yeah. That's the current run rate, Luis. We're hoping, you know, that [Inaudible] activity will pick up. And after the consolidation, kind of work its way out with, you know, a couple of our larger customers, and the pipelines free up, we're hoping the completion kind of speeds back up.

Right. But would you think it's going to be a little higher, maybe? Is that what you're saying?

Jody Miller -- President and Chief Executive Officer

We're cautiously optimistic that it will be higher because we feel like the -- the well is already drilled, so they only have so long to put those wells into completion for production of oil. So -- and that's where we spend most of our time. It's on that side of the business, not the drilling side. So we feel like it's going to be picking up, and we've heard it's going to for a few months now and it's kind of a staying the same, but we feel like that it is going to pick up but we don't know for sure.

Luis Hernandez -- Private Investor

Right. Of course. OK. And then, I just wanted sort of like a reminder on the greenfield economics.

Let's say you started greenfield today, walk me a little bit through the numbers, you know, payback periods and then returns on capital. Obviously, estimated an -- and then obviously, on an average-type number.

Jody Miller -- President and Chief Executive Officer

Yeah. We've already used six months as kind of the breakeven as an average. But I will tell you that last year, a couple of our greenfields were related to the hurricane rebuild and damage, and those greenfields were virtually profitable the second month out of the gate because there was a lot of volume that went out pretty quickly and not a lot of costs associated, right? We just had a yard, a drop yard, a driver. We were up and going and ship the units there.

So those were a little bit more of an anomaly just because of the situation. But typically speaking, we say, you know, six months, and I would say 90% of our colds greenfields in the last three years have been profitable under a six-month time period.

Luis Hernandez -- Private Investor

Right. OK. And after you've reached that payback, what's the next few year's or next several year's expected return on capital and turnover? What do you expect from -- on an average way of those greenfields?

Jody Miller -- President and Chief Executive Officer

Yeah. We'd like to think we can get over a 20% return early and it's a line from most of our branches have more of a 50% to 60% EBITDA at a local level after they're established. So they kind of ramp up from there. That kind of gives you a range.

Luis Hernandez -- Private Investor

Right. OK. And in terms of growth for this past year, do you remember how many dots did you have in North America, and how many dots do you have in the end of the year? I mean at the beginning and then at the end. For both, I mean, the offices, yeah.

Chuck Barrantes -- Chief Financial Officer

Yeah. Well, at the end, in North America, we had a total of 64 dots, which includes Lone Star's two dots. So -- and that consists of three in Canada. So we added in fiscal year '19 North America, I believe, four dots in total?

Because a couple of acquisitions were tuck-ins to our current location.

Luis Hernandez -- Private Investor

Right. OK. And for this year, do you estimate a similar number or maybe higher?

OK. Great. All right. I think that's all for me, and congratulations for a pretty good year.

There are no other questions at this time. I would now like to turn the call over to Mr. Jody Miller, president and CEO, for closing remarks. Please go ahead, Mr.

Thank you, operator. Thanks for joining us for our call today. We appreciate your continued interest in General Finance Corporation, and look forward to speaking to you next quarter. Thank you.

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