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Mobile Mini Reports Q3’15 Results and Announces Quarterly Dividend

October 22, 2015

PHOENIX--(BUSINESS WIRE)--Oct. 22, 2015-- 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 specialty containment solutions in the United States, today reported actual and adjusted financial results for the quarter ended September 30, 2015. Total revenues were $133.3 million and rental revenues were $124.8 million, up from $113.3 million and $104.8 million, respectively, for the same period last year.

The Company recorded net income of $14.0 million, or $0.31 per diluted share in the third quarter of 2015 as compared to net income of $14.8 million, or $0.32 per diluted share, for the third quarter of 2014. On an adjusted basis, third quarter net income was $16.0 million, or $0.35 per diluted share, compared to adjusted net income of $15.2 million, or $0.33 per diluted share, for the third quarter of 2014. Adjusted EBITDA was $52.1 million and adjusted EBITDA margin was 39.5% for the third quarter of 2015.

Rental revenues for the portable storage and specialty containment businesses for the current quarter were $98.9 million and $26.0 million, respectively.

Dividend

The Company’s Board of Directors declared a cash dividend of 18.7 cents per share which will be paid on December 2, 2015 to shareholders of record on November 11, 2015.

Third Quarter 2015 Highlights

  • Grew total rental revenues 19.1% year-over-year.
  • Portable storage rental revenues increased 5.8%, excluding the wood mobile offices sold in May 2015, or 7.7% when adjusted for unfavorable currency fluctuations.
  • Increased portable storage rental rates by 3.7% year-over-year.
  • Expanded adjusted EBITDA margin to 39.5%, and delivered adjusted EBITDA of $52.1 million, up 17.3% from $44.4 million in the prior-year quarter.
  • Drove portable storage utilization to an average of 70.0%; rising to 72.7% by quarter end.
  • Returned $30.6 million to our shareholders through $8.3 million in dividends and $22.3 million of repurchased treasury shares in the quarter.

CEO Comments

Erik Olsson, Mobile Mini’s President and Chief Executive Officer, remarked, “I am very pleased with our performance overall and within both our individual portable storage and specialty containment businesses. Our portable storage business grew a strong 7.7% year-over-year, driven by increases in both units on rent and rental rates. The momentum we saw in the later part of the second quarter continued into the third quarter, with our North American sales force driving the highest number of quarterly portable storage activations in the Company’s history, with core activations up 12% from the third quarter 2014. As a result, utilization at the end of the quarter was a strong 72.7%. In our specialty containment business we continue to see good momentum in the downstream industrial segment and our overall specialty containment business generated $11 million of adjusted EBITDA at a robust 40.4% margin.”

Mr. Olsson continued, “We delivered a very good quarter, which included expanding our portable storage adjusted EBITDA margin to 39.3%, notwithstanding short-term pressure related to the divestiture of our wood mobile office business. Given our increasing utilization we also added to our sales force and made incremental growth capital expenditures for high demand markets. We continue to leverage our infrastructure across our two business segments, and are well-positioned for continued growth.”

Conference Call

Mobile Mini will host a conference call today, Thursday, October 22, 2015 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 Investors 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 209,500 portable storage containers and office units. Through its wholly-owned subsidiary, Evergreen Tank Solutions, Mobile Mini is also a leading provider of specialty containment solutions in the U.S., with a rental fleet of approximately 11,400 units. Mobile Mini’s network includes 133 portable storage locations in the U.S., United Kingdom, and Canada, 19 specialty containment locations and 6 combined locations. 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 expectations regarding ongoing momentum in certain segments, our ability to leverage our infrastructure and continued growth, 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 SEC filings. 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.

Reclassifications:

Certain amounts in the consolidated statements of operations for the three months ended March 31, 2015, which is included in the year-to-date period ended September 30, 2015, have been reclassified to conform to the current period presentation. The reclassifications have no effect on total revenues, loss from operations, net loss or net loss per common share.

The Company believes the current presentation better reflects the nature of the underlying financial statement items.

(See accompanying tables)

             
Mobile Mini, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands except per share data)
 
Three Months Ended September 30, 2015 Three Months Ended September 30, 2014
Actual Adjustments Adjusted (1) Actual Adjustments Adjusted (1)
 
Revenues:
Rental $ 124,813 $ - $ 124,813 $ 104,798 $ - $ 104,798
Sales 6,594 - 6,594 7,913 - 7,913
Other (2) 1,936 (1,455) 481 611 - 611
Total revenues 133,343 (1,455) 131,888 113,322 - 113,322
 
Costs and expenses:
Rental, selling and general expenses (3) 81,659 (2,822) 78,837 67,889 (37) 67,852
Cost of sales 4,366 - 4,366 5,199 - 5,199
Restructuring expenses (4) 1,846 (1,846) - 593 (593) -
Depreciation and amortization 14,998 - 14,998 9,470 - 9,470
Total costs and expenses 102,869 (4,668) 98,201 83,151 (630) 82,521
 
Income from operations 30,474 3,213 33,687 30,171 630 30,801
 
Other expense:
Interest income 1 - 1 - - -
Interest expense (8,960) - (8,960) (7,107) - (7,107)
Foreign currency exchange - - - - - -
 
Income before tax provision 21,515 3,213 24,728 23,064 630 23,694
 
Income tax provision 7,536 1,216 8,752 8,244 240 8,484
           
Net income $ 13,979 $ 1,997 $ 15,976 $ 14,820 $ 390 $ 15,210
 
EBITDA $ 45,473 $ 52,104 $ 39,641 $ 44,427
EBITDA as a percentage of total revenues 34.1% 39.5% 35.0% 39.2%
 
Earnings per share: #
Basic $ 0.31 $ 0.36 $ 0.32 $ 0.33
Diluted 0.31 0.35 0.32 0.33
 
Weighted average number of common and
common share equivalents outstanding:
Basic 44,721 44,721 46,001 46,001
Diluted 45,147 45,147 46,675 46,675

(1) Adjusted column excludes certain transactions described in the footnotes below that management believes are not indicative of its business. Adjusted figures are a non-GAAP presentation. See reconciliations herein, and additional information regarding non-GAAP financial information following in this earnings release.

(2) Adjustment is comprised of transition service revenue associated with the divestiture of our North American wood mobile office business.

(3) Adjustment in 2015 is comprised of $0.4 million in incremental costs related with acquisition activities, $2.2 million of operating expenses associated with the transition of the wood mobile offices, including expenses related to wood mobile offices on our leased properties, and $0.2 million of expense related to the proposed settlement of an unclaimed property liability with the state of Delaware.

(4) Costs relating to the restructuring of our business operations.

               
Mobile Mini, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands except per share data)
 
Nine Months Ended September 30, 2015 Nine Months Ended September 30, 2014
Actual Adjustments Adjusted (1) Actual Adjustments Adjusted (1)
 
Revenues:
Rental $ 368,175 $ - $ 368,175 $ 296,919 $ - $ 296,919
Sales 22,765 - 22,765 23,761 - 23,761
Other (2) 5,320 (4,096) 1,224 1,579 - 1,579
Total revenues 396,260 (4,096) 392,164 322,259 - 322,259
 
Costs and expenses:
Rental, selling and general expenses (3) 247,809 (7,174) 240,635 204,394 (76) 204,318
Cost of sales 14,899 - 14,899 16,131 - 16,131
Restructuring expenses (4) 4,773 (4,773) - 2,909 (2,909) -
Asset impairment charge and loss
on divestiture, net (5) 66,128 (66,128) - 557 (557) -
Depreciation and amortization 45,075 - 45,075 27,920 - 27,920
Total costs and expenses 378,684 (78,075) 300,609 251,911 (3,542) 248,369
 
Income from operations 17,576 73,979 91,555 70,348 3,542 73,890
 
Other income (expense):
Interest income 1 - 1 - - -
Interest expense (26,986) - (26,986) (21,191) - (21,191)
Foreign currency exchange (2) - (2) (1) - (1)
 
(Loss) income before tax (benefit) provision (9,411) 73,979 64,568 49,156 3,542 52,698
 
Income tax (benefit) provision (5,480) 28,441 22,961 17,633 1,040 18,673
           
Net (loss) income $ (3,931) $ 45,538 $ 41,607 $ 31,523 $ 2,502 $ 34,025
 
EBITDA $ 62,650 $ 145,912 $ 98,267 $ 113,106
EBITDA as a percentage of total revenues 15.8% 37.2% 30.5% 35.1%
 
(Loss) earnings per share:
Basic $ (0.09) $ 0.92 $ 0.68 $ 0.74
Diluted (0.09) 0.91 0.67 0.73
 
Weighted average number of common and
common share equivalents outstanding:
Basic 45,145 45,145 46,128 46,128
Diluted (6) 45,145 45,695 46,846 46,846

(1) Adjusted column excludes certain transactions described in the footnotes below that management believes are not indicative of its business. Adjusted figures are a non-GAAP presentation. See reconciliations herein, and additional information regarding non-GAAP financial information following in this earnings release.

(2) Adjustment is comprised of $2.9 million of transition service revenue associated with the divestiture of our North American wood mobile office business and $1.2 million of revenue associated with a sales tax refund that is not indicative of our ongoing business.

(3) Adjustment in 2015 is comprised of $2.4 million in incremental costs related with acquisition activities, $3.9 million of operating expenses associated with the transition of the wood mobile offices, including expenses related to wood mobile offices on our leased properties, and $0.8 million of expense related to the proposed settlement of an unclaimed property liability with the state of Delaware.

(4) Costs relating to the restructuring of our business operations.

(5) In 2015, asset impairment and loss on divestiture costs represent the impairment and loss associated with the divestiture of our North American wood mobile office business. In 2014, the asset impairment costs represent the additional loss upon completion of sale (offset by gains upon completion of sale) of assets that were written down to fair value in the second quarter of 2013.

(6) Common stock equivalents were excluded from the calculation of actual diluted earnings per share for the nine-month period ending September 30, 2015 because their inclusion would reduce the net loss per share.

         
Mobile Mini, Inc.
Operating Data
(Unaudited)
 
 
2015 2014
As of September 30:
Stand-alone portable storage locations 133 135
Stand-alone specialty containment locations 19 -
Combined portable storage and specialty product locations 6 -
Portable storage rental fleet units 209,500 213,700
Specialty containment rental fleet units 11,400 -
 
Average Utilization:
Portable storage - three months ended September 30 70.0% 67.9%
Portable storage - nine months ended September 30 67.8% 67.1%
Specialty containment - three months ended September 30* 67.5% 69.1%
Specialty containment - nine months ended September 30* 69.2% 70.0%
 
 
*Specialty containment 2014 is prior to acquisition
 
                 
Mobile Mini, Inc.
Business Segment Information - Adjusted (1)
(Unaudited)
(in thousands)
 
Three Months Ended September 30, 2015 Nine Months Ended September 30, 2015
Portable

Storage

Specialty

Containment

Total Portable

Storage

Specialty

Containment

Total
 
Revenues:
Rental $ 98,855 $ 25,958 $ 124,813 $ 292,895 $ 75,280 $ 368,175
Sales 4,830 1,764 6,594 16,892 5,873 22,765
Other 454 27 481 1,171 53 1,224
Total revenues 104,139 27,749 131,888 310,958 81,206 392,164
 
Costs and expenses:
Rental, selling and general expenses 63,488 15,349 78,837 193,409 47,226 240,635
Cost of sales 3,124 1,242 4,366 10,976 3,923 14,899
Depreciation and amortization 8,404 6,594 14,998 26,042 19,033 45,075
Total costs and expenses 75,016 23,185 98,201 230,427 70,182 300,609
 
Income from operations $ 29,123 $ 4,564 $ 33,687 $ 80,531 $ 11,024 $ 91,555
 
Adjusted EBITDA $ 40,901 $ 11,203 $ 52,104 $ 115,469 $ 30,443 $ 145,912
Adjusted EBITDA Margin 39.3% 40.4% 39.5% 37.1% 37.5% 37.2%

(1) This table presents results by major business segment adjusted to exclude certain transactions that management believes are not indicative of its business. These adjustments are described in the notes to the condensed consolidated statements of income for the related periods presented earlier in this press release. Adjusted figures are a non-GAAP presentation. See additional information regarding non-GAAP financial information following in this earnings release.

       
Mobile Mini, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
 
 
September 30,

2015

December 31,

2014

(unaudited)

(audited)

ASSETS
Cash and cash equivalents $ 1,713 $ 3,739
Receivables, net 83,845 81,031
Inventories 17,562 16,736
Rental fleet, net 964,348 1,087,056
Property, plant and equipment, net 132,901 113,175
Deposits and prepaid expenses 13,292 8,586
Deferred financing costs and other assets 7,124 8,858
Intangibles, net 74,736 78,385
Goodwill 709,624 705,608
Total assets $ 2,005,145 $ 2,103,174
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 37,941 $ 22,933
Accrued liabilities 64,969 63,727
Lines of credit 663,380 705,518
Obligations under capital leases 39,644 24,918
Senior Notes 200,000 200,000
Deferred income taxes 225,818 231,547
Total liabilities 1,231,752 1,248,643
 
Stockholders' equity:
Common stock 491 490
Additional paid-in capital 581,585 569,083
Retained earnings 351,114 380,504
Accumulated other comprehensive loss (38,302) (29,870)
Treasury stock (121,495) (65,676)
Total stockholders' equity 773,393 854,531
Total liabilities and stockholders' equity $ 2,005,145 $ 2,103,174
 
               
Mobile Mini, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Nine Months Ended September 30,
2015 2014
Cash Flows from Operating Activities:
Net (loss) income $ (3,931) $ 31,523
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Asset impairment charge and loss on divestiture, net 66,128 557
Provision for doubtful accounts 2,826 2,057
Amortization of deferred financing costs 2,384 2,108
Amortization of long-term liabilities 76 124
Share-based compensation expense 10,833 11,573
Depreciation and amortization 45,075 27,920
Gain on sale of rental fleet (5,196) (4,496)
Loss (gain) on disposal of property, plant and equipment 2,035 (181)
Deferred income taxes (6,086) 17,333
Foreign currency transaction loss 2 1
Changes in certain assets and liabilities, net of
effect of businesses acquired (425) (761)
Net cash provided by operating activities 113,721 87,758
 
Cash Flows from Investing Activities:
Proceeds from wood mobile office divestiture, net 83,299 -
Cash paid for businesses acquired, net of cash acquired (18,622) (20,014)
Additions to rental fleet, excluding acquisitions (53,540) (16,310)
Proceeds from sale of rental fleet 13,300 17,813
Additions to property, plant and equipment, excluding acquisitions (17,918) (11,677)
Proceeds from sale of property, plant and equipment 2,447 3,374
Net cash provided by (used in) investing activities 8,966 (26,814)
 
Cash Flows from Financing Activities:
Net payments under lines of credit (42,138) (11,926)
Deferred financing costs (113) -
Principal payments on capital lease obligations (2,883) (1,346)
Issuance of common stock 1,670 2,572
Dividend payments (25,308) (23,583)
Purchase of treasury stock (55,819) (25,467)
Net cash used in financing activities (124,591) (59,750)
 
Effect of exchange rate changes on cash (122) (838)
 
Net change in cash (2,026) 356
 
Cash and cash equivalents at beginning of period 3,739 1,256
Cash and cash equivalents at end of period $ 1,713 $ 1,612
 
Equipment and other acquired through capital lease obligations $ 17,638 $ 11,491
 

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 Securities and Exchange Commission (“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,

2015 2014 2015 2014
Net income (loss) $ 13,979 $ 14,820 $ (3,931) $ 31,523
Interest expense 8,960 7,107 26,986 21,191
Income tax provision (benefit) 7,536 8,244 (5,480) 17,633
Depreciation and amortization 14,998 9,470 45,075 27,920
EBITDA 45,473 39,641 62,650 98,267
 
Share-based compensation expense 3,418 4,156 9,283 11,297
Restructuring expenses 1,846 593 4,773 2,909
Acquisition-related expenses 398 37 2,393 76
Impairment and divestiture-related revenues
and expenses, net (1) 777 - 67,155 557
Sales tax refund and proposed unclaimed
property settlement (2) 192 - (342) -
Adjusted EBITDA $ 52,104 $ 44,427 $145,912 $113,106
 
 
Three Months Ended

September 30,

Nine Months Ended

September 30,

2015 2014 2015 2014
Net cash provided by operating activities $ 42,820 $ 38,473 $113,721 $ 87,758
Interest paid 4,517 2,203 20,422 14,494
Income and franchise taxes paid 1,581 167 3,274 945
Share-based compensation expense, including restructuring expense (4,096) (4,432) (10,833) (11,573)
Asset impairments and loss on divestiture, net of recoveries - - (66,128) (557)
Gain on sale of rental fleet 1,553 2,001 5,196 4,496
Loss on disposal of property, plant and equipment (553) 540 (2,035) 181
Changes in other assets and liabilities, net of
effect of businesses acquired (349) 689 (967) 2,523
EBITDA $ 45,473 $ 39,641 $ 62,650 $ 98,267

(1) In 2015, impairment and divestiture-related revenues and expenses, net include the following: asset impairment charge and loss on divestiture, net, of $66.1 million for the nine-month period. In both the three and nine-month periods, this adjustment includes $1.5 million and $2.9 million, respectively, of transition services revenue and $2.2 million and $3.9 million, respectively, of operating expenses associated with the transition of the wood mobile offices, including the cost of providing yard space. In 2014, the asset impairment costs represent the additional loss upon completion of sale (offset by gains upon completion of sale) of assets that were written down to fair value in the second quarter of 2013.

(2) Revenue of $1.2 million associated with a sales tax refund recorded in the first quarter, partially offset by expenses related to the proposed settlement of an unclaimed property liability with the state of Delaware of $0.2 million and $0.8 million, for the three and nine-month periods, respectively. These transactions are not indicative of our ongoing business activity.

        Three Months Ended

September 30,

  Nine Months Ended

September 30,

2015   2014 2015   2014
Net cash provided by operating activities $ 42,820 $ 38,473 $113,721 $ 87,758
 
Additions to rental fleet, excluding acquisitions (25,731) (8,160) (53,540) (16,310)
Proceeds from sale of rental fleet 3,925 5,794 13,300 17,813
Additions to property, plant and equipment, excluding acquisitions (6,306) (6,936) (17,918) (11,677)
Proceeds from sale of property, plant and equipment 770 1,923 2,447 3,374
Net capital expenditures, excluding acquisitions (27,342) (7,379) (55,711) (6,800)
       
Free cash flow $ 15,478 $ 31,094 $ 58,010 $ 80,958

Adjusted net income information 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 that they provide 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 divided by total revenues expressed as a percentage. The GAAP financial measure that is most directly comparable to EBITDA margin is operating margin, which represents operating income divided by revenues.

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.
Mark Funk, (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