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Mobile Mini Reports Q3 2017 Results and Announces Quarterly Dividend

October 20, 2017

PHOENIX--(BUSINESS WIRE)--Oct. 20, 2017-- Mobile Mini, Inc. (NASDAQ GS: MINI) (the “Company” or “Mobile Mini”), the world’s leading supplier of portable storage solutions and a leading provider of tank and pump solutions in the United States, today reported actual and adjusted financial results for the quarter ended September 30, 2017. Total revenues were $136.6 million and rental revenues were $127.7 million, as compared to $128.9 million and $121.8 million, respectively, for the same period last year.

Rental revenues for the Storage Solutions and Tank & Pump Solutions businesses for the current quarter were $104.5 million and $23.2 million, respectively.

The Company recorded net income of $11.2 million, or $0.25 per diluted share, in the third quarter of 2017, as compared to net income of $12.7 million, or $0.29 per diluted share, for the third quarter of 2016. On an adjusted basis, third quarter net income was $11.8 million, or $0.27 per diluted share, as compared to adjusted net income of $13.7 million, or $0.31 per diluted share, for the third quarter of 2016. Adjusted EBITDA was $45.5 million and adjusted EBITDA margin was 33.3% for the third quarter of 2017.

Dividend

The Company’s Board of Directors declared a cash dividend of 22.7 cents per share, which will be paid on November 29, 2017 to shareholders of record on November 15, 2017.

Third Quarter 2017 Highlights

  • Delivered a strong 7.0% year-over-year increase in Storage Solutions rental revenues.
  • Achieved third sequential quarter of Tank & Pump Solutions rental revenue growth.
  • Increased total Storage Solutions average units on rent by 5.3% year-over-year.
  • Raised Storage Solutions rental rates by 2.9% year-over-year, with rates on new rentals up 3.9%.
  • Grew year-to-date seasonal orders through September 30, 2017 by 21% compared to the prior year.
  • Increased average Storage Solutions unit utilization to 71.8% for the quarter and finished the quarter at 74.4%.
  • Improved OEC utilization for Tank & Pump Solutions, averaging 66.6% for the quarter and ending the quarter at 72.8%.
  • Achieved adjusted EBITDA of $45.5 million, with an adjusted EBITDA margin of 33.3%, despite year-over-year headwinds of $6.2 million in increased variable compensation expense.
  • Generated net cash from operating activities of $32.6 million and strong free cash flow of $8.9 million.

CEO Comments

Erik Olsson, Mobile Mini’s President and Chief Executive Officer, remarked, “I am very pleased with the performance of both our business segments this quarter. Within the Storage Solutions segment we drove both higher rate and volume, resulting in a strong 7.0% increase in rental revenue. We also leveraged our broad footprint and fleet capacity to partner with our national account customers to initiate an earlier start to our seasonal holiday business with great results. Within the Tank & Pump segment, demand and performance have stabilized and improved during 2017, with even further increased activity in the second half of the current quarter. We anticipate increased demand in the near-term as certain of our downstream customers are now engaging in turnaround and maintenance activities that had been previously deferred.”

Mr. Olsson continued, “Our business segments are rapidly improving and we are generating great momentum as we head into the fourth quarter. Given the positive trends in performance, the Company has recorded increased variable compensation in the third quarter and throughout the year, mitigating the profit flow through. However, our underlying margins are strong and improving. Excluding the effect of the variable compensation, the adjusted EBITDA margin increased approximately 170 basis points over the third quarter of the prior year. We remain fully committed to driving continuous improvement and efficiencies in our structure and processes.”

Conference Call

Mobile Mini will host a conference call today, Friday, October 20 at 12 noon ET to review these results. To listen to the call live, dial (201) 493-6739 and ask for the Mobile Mini Conference Call or go to www.mobilemini.com and click on the Investors section. Additionally, a slide presentation that will accompany the call will be posted at www.mobilemini.com on the Investor Relations section and will be available in advance and after the call. Please go to the website 15 minutes early to download and install any necessary audio software. If you are unable to listen live, a replay of the call can be accessed for approximately 14 days after the call at Mobile Mini’s website.

About Mobile Mini, Inc.

Mobile Mini, Inc. is the world’s leading provider of portable storage solutions through its total rental fleet of approximately 214,900 storage solutions containers and office units and a leading provider of tank and pump solutions in the U.S., with a rental fleet of approximately 12,000 units. Mobile Mini’s network is comprised of 155 locations in the U.S., U.K., and Canada. Mobile Mini is included on the Russell 2000® and 3000® Indexes and the S&P Small Cap Index.

Forward-Looking Statements

This news release contains forward-looking statements, including, but not limited to, our approach being able to drive revenue growth, continued increased demand, our ability to increase margins, our outlook remaining positive, and our ability to continue to rapidly improve, which involve risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Risks and uncertainties that may affect future results include those that are described from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”). These forward-looking statements represent the judgment of the Company, as of the date of this release, and Mobile Mini disclaims any intent or obligation to update forward-looking statements.

(See accompanying tables)

Mobile Mini, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(in thousands, except percentages and per share data)
 
      Three Months Ended September 30, 2017     Three Months Ended September 30, 2016
Actual     Adjustments     Adjusted (1) Actual     Adjustments     Adjusted (2)
 
Revenues:
Rental $ 127,695 $ $ 127,695 $ 121,784 $ $ 121,784
Sales 8,438 8,438 6,610 6,610
Other   503     503   459     459
Total revenues   136,636     136,636   128,853     128,853
 
Costs and expenses:
Rental, selling and general expenses 87,745 (237 ) 87,508 80,457 80,457
Cost of sales 5,519 5,519 3,897 3,897
Restructuring expenses 625 (625 ) 1,648 (1,648 )
Depreciation and amortization   15,935     15,935   16,184     16,184
Total costs and expenses   109,824   (862 )   108,962   102,186   (1,648 )   100,538
 
Income from operations 26,812 862 27,674 26,667 1,648 28,315
 
Other income (expense):
Interest income 4 4
Interest expense (9,203 ) (9,203 ) (8,047 ) (8,047 )
Foreign currency exchange   (2 )     (2 )   (5 )     (5 )
 
Income before income tax provision 17,611 862 18,473 18,615 1,648 20,263
 
Income tax provision 6,383 327 6,710 5,906 632 6,538
                       
Net income $ 11,228 $ 535 $ 11,763 $ 12,709 $ 1,016 $ 13,725
 
EBITDA/Adjusted EBITDA $ 42,749 $ 45,531 $ 42,846 $ 46,650

EBITDA/Adjusted EBITDA as a percentage of
total revenues

31.3 % 33.3 % 33.3 % 36.2 %
 
Earnings per share:
Basic $ 0.25 $ 0.27 $ 0.29 $ 0.31
Diluted 0.25 0.27 0.29 0.31
 

Weighted average number of common and
common share equivalents outstanding:

Basic 44,039 44,039 44,159 44,159
Diluted 44,206 44,206 44,453 44,453
 

(1) Adjusted column for the three months ended September 30, 2017 excludes certain transactions that management believes are not indicative of our business. Adjusted figures are a non-GAAP (defined herein) presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release. The adjustments for the three-month period ended September 30, 2017 include the following, along with the related tax effects:

  • Reduction of $0.2 million in rental, selling and general expenses to exclude costs related to severance and transition in conjunction with the departure of an executive.
  • Exclusion of $0.6 million in costs related to the restructuring of our business operations.

(2) Adjusted column for the three months ended September 30, 2016 excludes certain transactions that management believes are not indicative of our business. Adjusted figures are a non-GAAP presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release. The adjustments for the three-month period ended September 30, 2016 exclude costs of $1.6 million related to the restructuring of our business operations, along with the related tax effects.

 
Mobile Mini, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except percentages and per share data)

 

      Nine Months Ended September 30, 2017     Nine Months Ended September 30, 2016
Actual     Adjustments     Adjusted (1) Actual     Adjustments     Adjusted (2)
 
Revenues:
Rental $ 360,288 $ $ 360,288 $ 355,913 $ $ 355,913
Sales 24,817 24,817 19,843 19,843
Other   1,748     1,748   2,479   (1,365 )   1,114
Total revenues   386,853     386,853   378,235   (1,365 )   376,870
 
Costs and expenses:
Rental, selling and general expenses 248,954 (2,623 ) 246,331 234,796 234,796
Cost of sales 16,039 16,039 12,186 12,186
Restructuring expenses 2,062 (2,062 ) 5,220 (5,220 )
Depreciation and amortization   46,941     46,941   47,630     47,630
Total costs and expenses   313,996   (4,685 )   309,311   299,832   (5,220 )   294,612
 
Income from operations 72,857 4,685 77,542 78,403 3,855 82,258
 
Other income (expense):
Interest income 20 20
Interest expense (26,412 ) (26,412 ) (24,533 ) (24,533 )
Debt extinguishment expense (9,192 ) 9,192
Deferred financing costs write-off (2,271 ) 2,271
Foreign currency exchange   (29 )     (29 )   (9 )     (9 )
 
Income before income tax provision 46,436 4,685 51,121 42,398 15,318 57,716
 
Income tax provision 16,279 1,777 18,056 14,619 5,892 20,511
                       
Net income $ 30,157 $ 2,908 $ 33,065 $ 27,779 $ 9,426 $ 37,205
 
EBITDA/Adjusted EBITDA $ 119,789 $ 129,179 $ 126,024 $ 136,222

EBITDA/Adjusted EBITDA as a percentage of
total revenues

31.0 % 33.4 % 33.3 % 36.1 %
 
Earnings per share:
Basic $ 0.68 $ 0.75 $ 0.63 $ 0.84
Diluted 0.68 0.75 0.63 0.84
 

Weighted average number of common and
common share equivalents outstanding:

Basic 44,030 44,030 44,170 44,170
Diluted 44,190 44,190 44,431 44,431
 

(1) Adjusted column for the nine months ended September 30, 2017 excludes certain transactions that management believes are not indicative of our business. Adjusted figures are a non-GAAP presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release. The adjustments for the nine-month period ended September 30, 2017 include the following, along with the related tax effects:

  • Reduction of $0.1 million in rental, selling and general expenses for acquisition-related expenses.
  • Reduction of $2.5 million in rental, selling and general expenses to exclude costs related to severance and transition in conjunction with the departure of executives.
  • Exclusion of $2.1 million in costs related to the restructuring of our business operations.

(2) Adjusted column for the nine months ended September 30, 2016 excludes certain transactions that management believes are not indicative of our business. Adjusted figures are a non-GAAP presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release. The adjustments for the nine-month period ended September 30, 2016 include the following, along with the related tax effects:

  • Reduction of other revenue by $1.4 million to exclude revenue associated with a sales tax refund.
  • Exclusion of costs of $5.2 million related to the restructuring of our business operations.
  • Exclusion of $9.2 million of debt extinguishment costs to redeem the Company’s $200 million 7.785% senior notes due December 2020 (the “2020 Notes”).
  • Exclusion of $2.3 million of deferred financing costs that were written off in conjunction with the redemption of the 2020 Notes.
 
Mobile Mini, Inc.
Operating Data
(Unaudited)
 
      2017       2016
As of September 30:    
Stand-alone Storage Solutions locations 122 125
Stand-alone Tank & Pump Solutions locations 17 19
Combined Storage Solutions and Tank & Pump Solutions locations 16 13
Storage Solutions rental fleet units 214,900 208,000
Tank & Pump Solutions rental fleet units 12,000 12,100
 
Average utilization - Three months ended September 30:
Storage Solutions - utilization based on number of units 71.8 % 70.5 %
Tank & Pump Solutions - utilization based on original equipment cost 66.6 %
 
Average utilization - Nine months ended September 30:
Storage Solutions - utilization based on number of units 70.1 % 69.1 %
Tank & Pump Solutions - utilization based on original equipment cost (1) 64.3 %
 

(1) Utilization for Tank & Pump Solutions is calculated as the average original cost of equipment on rent, excluding re-rented equipment, divided by the average original cost of equipment in the fleet. This statistic has been calculated since the three-month period ending June 30, 2016; no comparable statistic is available for the prior-year period.

 
Mobile Mini, Inc.
Business Segment Information - Adjusted (1)
(Unaudited)
(in thousands, except percentages)
 
      Three Months Ended September 30, 2017     Three Months Ended September 30, 2016

Storage
Solutions

   

Tank & Pump
Solutions

    Total

Storage
Solutions

   

Tank & Pump
Solutions

    Total
 
Revenues:
Rental $ 104,488 $ 23,207 $ 127,695 $ 97,678 $ 24,106 $ 121,784
Sales 6,743 1,695 8,438 5,319 1,291 6,610
Other   401   102   503   371   88   459
Total revenues   111,632   25,004   136,636   103,368   25,485   128,853
 
Costs and expenses:
Rental, selling and general expenses 69,958 17,550 87,508 64,084 16,373 80,457
Cost of sales 4,477 1,042 5,519 3,113 784 3,897
Depreciation and amortization   9,836   6,099   15,935   9,100   7,084   16,184
Total costs and expenses   84,271   24,691   108,962   76,297   24,241   100,538
 
Income from operations $ 27,361 $ 313 $ 27,674 $ 27,071 $ 1,244 $ 28,315
 
Adjusted EBITDA $ 39,052 $ 6,479 $ 45,531 $ 38,270 $ 8,380 $ 46,650
Adjusted EBITDA Margin 35.0 % 25.9 % 33.3 % 37.0 % 32.9 % 36.2 %
 
 
 
Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016

Storage
Solutions

Tank & Pump
Solutions

Total

Storage
Solutions

Tank & Pump
Solutions

Total
 
Revenues:
Rental $ 293,780 $ 66,508 $ 360,288 $ 285,508 $ 70,405 $ 355,913
Sales 20,763 4,054 24,817 15,734 4,109 19,843
Other   1,418   330   1,748   884   230   1,114
Total revenues   315,961   70,892   386,853   302,126   74,744   376,870
 
Costs and expenses:
Rental, selling and general expenses 195,928 50,403 246,331 187,792 47,004 234,796
Cost of sales 13,808 2,231 16,039 9,568 2,618 12,186
Depreciation and amortization   28,496   18,445   46,941   26,216   21,414   47,630
Total costs and expenses   238,232   71,079   309,311   223,576   71,036   294,612
 
Income (loss) from operations $ 77,729 $ (187 ) $ 77,542 $ 78,550 $ 3,708 $ 82,258
 
Adjusted EBITDA $ 110,733 $ 18,446 $ 129,179 $ 110,900 $ 25,322 $ 136,222
Adjusted EBITDA Margin 35.0 % 26.0 % 33.4 % 36.7 % 33.9 % 36.1 %
 

(1) These tables present results by major business segment adjusted to exclude certain transactions that management believes are not indicative of our business. See additional information regarding non-GAAP financial information following in this earnings release.

 
Mobile Mini, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
 
      September 30,     December 31,
2017 2016
(unaudited) (audited)
ASSETS
Cash and cash equivalents $ 12,609 $ 4,137
Receivables, net 100,810 99,175
Inventories 17,013 15,412
Rental fleet, net 983,288 950,065
Property, plant and equipment, net 152,649 149,197
Other assets 15,384 14,930
Intangibles, net 63,624 68,420
Goodwill   708,541   703,558
Total assets $ 2,053,918 $ 2,004,894
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 30,430 $ 27,388
Accrued liabilities 71,541 64,126
Lines of credit 640,879 641,160
Obligations under capital leases 51,789 50,704
Senior notes, net 245,691 245,212
Deferred income taxes   238,067   240,690
Total liabilities   1,278,397   1,269,280
 
Stockholders' equity:
Common stock 496 493
Additional paid-in capital 602,772 592,071
Retained earnings 381,294 362,896
Accumulated other comprehensive loss (61,882 ) (81,047 )
Treasury stock   (147,159 )   (138,799 )
Total stockholders' equity   775,521   735,614
Total liabilities and stockholders' equity $ 2,053,918 $ 2,004,894
 
 
Mobile Mini, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
      Nine Months Ended
September 30,
2017     2016
Cash flows from operating activities:
Net income $ 30,157 $ 27,779
Adjustments to reconcile net income to net cash

provided by operating activities:

Debt extinguishment expense 9,192
Deferred financing costs write-off 2,271
Provision for doubtful accounts 3,176 4,290
Amortization of deferred financing costs 1,545 1,457
Amortization of long-term liabilities 98 87
Share-based compensation expense 5,890 6,521
Depreciation and amortization 46,941 47,630
Gain on sale of rental fleet (4,273 ) (4,228 )
Loss on disposal of property, plant and equipment 472 1,089
Deferred income taxes 15,167 14,448
Foreign currency exchange 29 9

Changes in certain assets and liabilities, net of
effect of businesses acquired

  (3,370 )   (14,524 )
Net cash provided by operating activities   95,832   96,021
 
Cash flows from investing activities:
Cash paid for businesses acquired, net of cash acquired (9,206 )
Additions to rental fleet, excluding acquisitions (45,945 ) (46,480 )
Proceeds from sale of rental fleet 9,602 10,770
Additions to property, plant and equipment, excluding acquisitions (12,816 ) (25,750 )
Proceeds from sale of property, plant and equipment   780   2,369
Net cash used in investing activities   (48,379 )   (68,297 )
 
Cash flows from financing activities:
Net repayments under lines of credit (281 ) (16,171 )
Proceeds from issuance of 5.875% senior notes due 2024 250,000
Redemption of 7.875% senior notes due 2020 (200,000 )
Debt extinguishment expense (9,192 )
Deferred financing costs (12 ) (5,352 )
Principal payments on capital lease obligations (5,526 ) (4,693 )
Issuance of common stock 4,685 356
Dividend payments (30,120 ) (27,327 )
Purchase of treasury stock   (8,359 )   (7,135 )
Net cash used in financing activities   (39,613 )   (19,514 )
 
Effect of exchange rate changes on cash   632   (301 )
 
Net change in cash 8,472 7,909
 
Cash and cash equivalents at beginning of period   4,137   1,613
Cash and cash equivalents at end of period $ 12,609 $ 9,522
 
Equipment and other acquired through capital lease obligations $ 6,610 $ 18,951
Capital expenditures accrued or payable 8,931 5,053
 

Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company also discloses in this press release certain non-GAAP financial information. These financial measures are not recognized measures under GAAP and they are not intended to be and should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Adjusted net income, adjusted diluted earnings per share, EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin and free cash flow are non-GAAP financial measures as defined by SEC rules. This non-GAAP financial information may be determined or calculated differently by other companies. Reconciliations of these non-GAAP measurements to the most directly comparable GAAP financial measurements are furnished earlier in this release and as follows:

Mobile Mini, Inc.
Adjusted EBITDA GAAP Reconciliations
(Unaudited)
(in thousands)
 
     

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

2017     2016 2017     2016
Net income $ 11,228 $ 12,709 $ 30,157 $ 27,779
Interest expense 9,203

8,047

26,412 24,533
Income tax provision 6,383 5,906 16,279 14,619
Depreciation and amortization 15,935 16,184 46,941 47,630
Debt extinguishment expense 9,192
Deferred financing costs write-off         2,271
EBITDA 42,749 42,846 119,789 126,024
 
Share-based compensation expense 1,920 2,156 4,705 6,343
Restructuring expenses 625 1,648 2,062 5,220
Acquisition-related expenses 26 123
Sales tax refund (1,365 )
Other   211     2,500  
Adjusted EBITDA $ 45,531 $ 46,650 $ 129,179 $ 136,222
 
 

Three Months Ended

September 30,

Nine Months Ended

September 30,

2017 2016 2017 2016
Net cash provided by operating activities $ 32,611 $ 31,311 $ 95,832 $ 96,021
Interest paid 12,192 3,889 30,379 17,880
Income and franchise taxes paid 213 229 1,313 1,380
Share-based compensation expense (2,070 ) (2,276 ) (5,890 ) (6,521 )
Gain on sale of rental fleet 1,447 1,446 4,273 4,228

Loss on disposal of property, plant and
equipment

(190 ) (400 ) (472 ) (1,089 )

Changes in certain assets and liabilities, net of
effect of businesses acquired

  (1,454 )   8,647   (5,646 )   14,125
EBITDA $ 42,749 $ 42,846 $ 119,789 $ 126,024
 
 
Mobile Mini, Inc.
Free Cash Flow GAAP Reconciliation
(Unaudited)
(in thousands)
 
      Three Months Ended

September 30,

    Nine Months Ended

September 30,

2017     2016 2017     2016
Net cash provided by operating activities $ 32,611 $ 31,311 $ 95,832 $ 96,021
 
Additions to rental fleet, excluding acquisitions (22,918 ) (18,322 ) (45,945 ) (46,480 )
Proceeds from sale of rental fleet 3,319 3,361 9,602 10,770

Additions to property, plant and equipment,
excluding acquisitions

(4,109 ) (6,487 ) (12,816 ) (25,750 )

Proceeds from sale of property, plant and
equipment

  12   754   780   2,369
Net capital expenditures, excluding acquisitions (23,696 ) (20,694 ) (48,379 ) (59,091 )
               
Free cash flow $ 8,915 $ 10,617 $ 47,453 $ 36,930
 

Adjusted net income and adjusted diluted earnings per share. Adjusted net income and related earnings per share information exclude certain transactions that management believes are not indicative of our business. We believe that the inclusion of this non-GAAP presentation makes it easier to compare our financial performance across reporting periods on a consistent basis.

EBITDA and adjusted EBITDA. EBITDA is defined as net income before discontinued operations, net of tax (if applicable), interest expense, income taxes, depreciation and amortization, and debt restructuring or extinguishment expense (if applicable), including any write-off of deferred financing costs. Adjusted EBITDA further excludes certain non-cash expenses, including share-based compensation, as well as transactions that management believes are not indicative of our business. Because EBITDA and adjusted EBITDA, as defined, exclude some but not all items that affect our cash flow from operating activities, they may not be comparable to similarly titled performance measures presented by other companies.

We present EBITDA and adjusted EBITDA because we believe they provide useful information regarding our ability to meet our future debt payment requirements, capital expenditures and working capital requirements and an overall evaluation of our financial condition. EBITDA and adjusted EBITDA have certain limitations as analytical tools and should not be used as substitutes for net income, cash flows from operations, or other consolidated income or cash flow data prepared in accordance with GAAP.

EBITDA and adjusted EBITDA margins are calculated as EBITDA and adjusted EBITDA, respectively, divided by total revenues expressed as a percentage.

Free Cash Flow. Free cash flow is defined as net cash provided by operating activities, minus or plus, net cash used in or provided by investing activities, excluding acquisitions and certain transactions. Free cash flow is a non-GAAP financial measure and is not intended to replace net cash provided by operating activities, the most directly comparable financial measure prepared in accordance with GAAP. We present free cash flow because we believe it provides useful information regarding our liquidity and ability to meet our short-term obligations. In particular, free cash flow indicates the amount of cash available after capital expenditures for, among other things, investments in our existing business, debt service obligations, payment of authorized quarterly dividends, repurchase of our common stock and strategic small acquisitions.

Source: Mobile Mini, Inc.

Mobile Mini, Inc.
Van Welch, 602-308-3879
Executive VP & Chief Financial Officer
www.mobilemini.com
or
Investor Relations Counsel
The Equity Group Inc.
Fred Buonocore, 212-836-9607
Linda Latman, 212-836-9609