PRESS RELEASE Paris, 13th September 2018 - 17:45
YOUR OPERATIONAL LEASING SOLUTION
RESULTS - FIRST HALF OF 2018
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"Following the sale of the European and US modular buildings activities in December 2017, priority has been given to improving the profitability of the transportation equipment leasing business, refinancing and developing the asset management for third parties, based on the Group's fundamentals: our tangible asset base, our global footprint and our long-standing trusted relationships with our customers. " state Fabrice and Raphael Walewski, managing partners of TOUAX SCA.
"During the first half of 2018, we implemented the first steps of our strategic refocusing action plan around transportation activities. We launched a Change Management program, including the design of a new organization for the Freight Railcar business to continually improve the quality of our service and customer satisfaction. We have completed 110 million euros in asset financing, syndicated 14 million euros of assets to investors and developed third-party management with the signing of an investment agreement of 80 million dollars.
This refocusing allowed us, as at June 30, 2018, to record a strong improvement in net income Group share and strengthen our balance sheet. "
The consolidated financial statements at June 30, 2018 were approved by the Management Board on September 12, 2018 and submitted to the Supervisory Board today. They have been subject to limited review by the Statutory Auditors. Their report is in progress.
REVENUES ANALYSIS
| Revenues (in thousand of euros) | Q1 2018 | Q2 2018 | H1 2018 | Q1 2017 | Q2 2017 | H1 2017 |
| Lease revenues (*) | 32,465 | 32,700 | 65,165 | 38,498 | 37,820 | 76,318 |
| Sales of Equipment | 3,557 | 4,728 | 8,285 | 3,424 | 3,427 | 6,851 |
| Syndication Fees and Capital gain | 323 | 654 | 978 | 80 | 1,049 | 1,129 |
| Total Revenues | 36,346 | 38,082 | 74,429 | 42,002 | 42,297 | 84,298 |
| (*) Lease revenues include ancillary services | ||||||
Consolidated revenues for the first half of 2018 amounted to € 74.4 million, compared to € 84.3 million for the same period in 2017. On a like-for-like basis, revenue was down 6%. This decrease concerns the lease revenue of equipment owned by investors and has no significant impact on the Group's profitability.
Lease revenue increased from 76.3 million in the first half of 2017 to 65.2 million over the same period in 2018, -9% at constant scope and exchange rates. This change is mainly due to the Containers division, whose fleet has decreased compared to the previous year.
Equipment sales rose by 21%, reaching 8.3 million euros at June 30, 2018.
Syndication fees were stable (-0.1 million) at 1 million euros over the period.
Segmentation analysis
| Revenues (in thousand of euros) | Q1 2018 | Q2 2018 | H1 2018 | Q1 2017 | Q2 2017 | H1 2017 |
| Lease revenues (1) | 12,775 | 12,660 | 25,435 | 11,929 | 12,826 | 24,755 |
| Sales of Equipment | 100 | 789 | 889 | 598 | 982 | 1,580 |
| Syndication fees | 662 | 662 | 1,050 | 1,050 | ||
| Freight Railcars | 12,875 | 14,111 | 26,986 | 12,527 | 14,858 | 27,385 |
| Lease revenues (1) | 3,029 | 2,798 | 5,827 | 3,699 | 3,560 | 7,259 |
| Sales of Equipment | 1,020 | 1,020 | 6 | 111 | 117 | |
| River Barges | 4,049 | 2,798 | 6,847 | 3,705 | 3,671 | 7,376 |
| Lease revenues (1) | 16,329 | 17,111 | 33,441 | 22,824 | 21,572 | 44,396 |
| Sales of Equipment | 1,746 | 2,062 | 3,808 | 1,833 | 1,681 | 3,514 |
| Syndication fees | 309 | 5 | 314 | 76 | (1) | 75 |
| Containers | 18,385 | 19,178 | 37,563 | 24,734 | 23,251 | 47,985 |
| Lease revenues (1) | 331 | 130 | 461 | 45 | (137) | (92) |
| Sales of Equipment | 692 | 1,877 | 2,568 | 987 | 653 | 1,639 |
| Capital gain (loss) on disposals | 14 | (12) | 2 | 4 | 4 | |
| Others | 1,037 | 1,994 | 3,032 | 1,036 | 517 | 1,552 |
| Lease revenues (1) | 32,465 | 32,700 | 65,165 | 38,498 | 37,820 | 76,318 |
| Sales of Equipment | 3,557 | 4,728 | 8,285 | 3,424 | 3,427 | 6,851 |
| Syndication Fees and Capital gain (loss) on disposals | 323 | 654 | 978 | 80 | 1,049 | 1,129 |
| Total Revenues | 36,346 | 38,082 | 74,429 | 42,002 | 42,297 | 84,298 |
| (1) Lease revenues include ancillary services | ||||||
- Revenues of the Freight Railcars division amounted to 26.9 million euros at the end of June 2018, down 1.5% compared to 27.4 million euros in the first half of 2017 mainly due to the decreased sales of equipment.
Rental revenue increased by € 0.7 million to € 25.4 million in June 2018, thanks to the start of a recovery in rental rates and the increase in the utilization rate. The latter averaged 84.2% in the first half of 2018, while it stood at 80.3% a year earlier. These increases underline the operational improvement of the Freight Railcars division.
- Revenues of the River Barges division amounted to € 6.8 million, down 7.2% compared to € 7.4 million in the first half of 2017. Barges sales partly offset declines in chartering revenue in Europe and leasing activity in South America.
- The Containers Division's revenues amounted to 37.6 million euros at the end of June 2018, down 21.7% compared to 48 million euros in the first half of 2017, explained by the evolution of the leasing revenues, down 11 million due to the decline in the USD and fleet volume in management (-42,857 CEU[2]) while the average utilization rate is up: 98.9% in the first half of 2018 compared to 97.2% a year earlier.
- The retained sales activity of modular buildings in Africa presented in "miscellaneous" rose by 0.9 million euros in the first half of 2018.
H1 RESULTS ANALYSIS
| Key Figures (in thousand of euros) | 06/2018 | 06/2017 | 12/2017 |
| Revenues | 74.4 | 84.3 | 169.7 |
| Freight railcars | 27.0 | 27.4 | 57.0 |
| River Barges | 6.8 | 7.4 | 14.6 |
| Containers | 37.6 | 48.0 | 87.6 |
| Others | 3.0 | 1.6 | 10.6 |
| Gross operating margin - EBITDAR (1) | 40.3 | 42.8 | 88.7 |
| EBITDA (2) | 12.8 | 13.0 | 26.9 |
| Current operating income | 4.3 | 3.4 | 7.6 |
| Operating Income | 4.0 | 5.3 | 0.9 |
| Profit before tax | -0.5 | 0.3 | -8.5 |
| Consolidated net profit (loss) (Group's share) | -1.8 | -13.9 | -18.0 |
| Including income from retained operations | -1.8 | -0.1 | -5.4 |
| Including income from discontinued operations | -13.8 | -12.7 | |
| Net earnings per share (€) | -0.25 | -1.99 | -2.58 |
| Total non current assets | 304.5 | 323.2 | 307.8 |
| Total Assets | 408.9 | 628.7 | 398.2 |
| Total shareholders' equity | 135.1 | 150.8 | 136.7 |
| Net Financial Debt (3) | 178.7 | 193.2 | 181.1 |
| Operating cash flow of the retained operations | 10.4 | 33.4 | 22.6 |
| Loan to Value | 53 % | 57 % | 54 % |
(1) The EBITDAR (earnings before interest taxes depreciation and amortization and rent) calculated by the Group corresponds to the current operating income. increased by depreciation charges and provisions for capital assets and distributions to investors
(2) EBITDA: EBITDAR after deducting distributions to investors
(3) Including €156.5 million in debt without recourse at 30 June 2018
EBITDA reached 12.8 million euros at June 30, 2018, stable compared to 13 million euros recorded a year earlier.
The Freight Railcars business is the Group's leading contributor to EBITDA, with a majority of assets owned, while the contribution of the container division is low due to the preponderance of assets managed on behalf of third parties.
EBITDA for the Freight Railcars (+1 million euros) and Containers (+0.5 million euros) divisions improved thanks to the improvement in equipment profitability over the period.
Excluding non-recurring income relating to the resolution of a dispute in South America (€ 1.1 million) in the first half of 2017, the EBITDA of the River Barges business is stable.
EBITDA from other activities was down 0.5 million euros, impacted by general expenses previously allocated to the modular buildings division divested in December 2017, partially offset by the improvement in the residual activity of modular buildings in Africa.
- Recurring operating income[3] amounted to € 4.3 million, up 24%. This increase is attributable to an operational increase in leasing activities combined with higher sales margins.
- Net income Group share for the first half of 2018 was -1.8 million euros compared to -13.9 million euros a year earlier (of which -13.8 million euros related to discontinued operations).
After restatement of non-recurring items in the first half of 2017 and scope effects, the improvement in the operating profitability of the leasing activities of transport equipment and the residual activity of modular buildings in Africa is confirmed.
FINANCIAL STRUCTURE
- The balance sheet shows a total of 409 million euros at June 30, 2018, compared with 398 million euros at December 31, 2017 and 629 million euros at June 30, 2017.
- Tangible assets amount to 318 million euros.
- Cash flow from operations amounted to € 10.4 million.
- The financial structure is reinforced with a gross financial debt of 212.5 million euros, stable (+1 million euros) compared to the end of December 2017, out of which 74 % without recourse. The Group's net debt amounted to 179 million euros.
- The Group improves its credit profile as of June 30, 2018, with Gearing and Loan to Value ratios of 1.32x and 53% respectively.
Financings
- At the end of May 2018, the Group refinanced some of its railcars and containers asset debt up to 110 million euros with its core asset financing banks but also with new international banking partners, thus expanding its pool.
These financings make it possible to extend the maturity of the Group's debts and resume investments.
- Post-closing, on July 31, 2018, Touax SCA completed a "senior unsecured" bond issue in Euro PP format for a nominal amount of € 16.6 million with a maturity date of July 31, 2023.
The issue of the Bonds is intended to extend the average maturity of the Group's debt.
The net proceeds of the issue will thus be partly used to refinance the bonds maturing on October 2, 2018; the balance being allocated to the general needs of the Group.
OUTLOOK
The underlying markets for the leasing of transportation equipment remain positive.
Freight Railcars leasing in Europe is benefiting from improved economic conditions and the recovery of private sector demand following the liberalization of Rail Freight.
The River transport market in Europe is driven by the increase in construction and transport of cereals and biomass leading to demand for River Barges.
The global growth of containerized trade forecast at 5% in 2019 (Clarkson, August 2018) is favorable for the leasing of containers.
The Group is continuing its focus on improving its profitability, through increased utilization rates and rental rates, is gradually increasing investments for its own account, and is developing asset management for third parties.
TOUAX confirms an improvement in its results for the whole of 2018.
NEXT APPOINTMENTS
- - September 13, 2018: SFAF meeting to present the 2018 half-year financial statements
- - September 14, 2018: Half-yearly results conference call
- - November 15, 2018: Third Quarter 2018 Revenues
TOUAX Group leases out tangible assets (freight railcars, river barges and containers) on a daily basis throughout the world, for its own account and on behalf of third party investors. With €1.2 billion under management, TOUAX is one of the European leaders in the operational leasing of this type of equipment.
TOUAX is listed in Paris on EURONEXT - Euronext Paris Compartment C (Code ISIN FR0000033003) and on the CAC® Small and CAC® Mid & Small indexes and in EnterNext PEA-PME 150.
For more information: www.touax.com
Contacts:
TOUAX ACTIFIN
Fabrice & Raphaël WALEWSKI Ghislaine Gasparetto
touax@touax.com ggasparetto@actifin.fr
www.touax.com Tel : +33 1 56 88 11 11
Tel : +33 1 46 96 18 00
[1] IFRS 15 "Revenue from Contracts with Customers" came into effect on 1 January 2018.
The application of this standard concerns presentation elements that have no impact on margins.
It results in a requirement to present Fees on syndications and sales of used equipment belonging to investors in Revenues.
2017 figures have been restated according to IFRS15 - cf Condensed Consolidated Half-Year Financial Statements
[2] CEU : Cost Equivalent Unit
[3] NB: change in estimation of the useful life of railcars harmonized to 36 years and capitalization of revising railcars' spare parts for a better comparison with our peers (prospective change; H1 2017 impact estimated to 2 million euros)
