8-K
MOBILE MINI INC false 0000911109 0000911109 2019-10-31 2019-10-31

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 31, 2019

 

IMAGE

mobile mini, inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-12804

 

86-0748362

(State or Other Jurisdiction of
Incorporation or Organization)

 

(Commission
File Number)

 

(IRS Employer
Identification Number)

4646 E. Van Buren Street, Suite 400

Phoenix, Arizona 85008

(Address of principal executive offices) (Zip Code)

(480) 894-6311

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14-d2(b))

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13-4e(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange
on which registered

Common Stock, $.01 par value Preferred Share Purchase Rights

 

MINI

 

Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 


Item 2.02. Results of Operations and Financial Condition

On October 31, 2019 Mobile Mini, Inc. (the “Company”) issued a news release announcing its financial results for the period ended September 30, 2019. A copy of the news release is furnished as Exhibit 99.1 to this report.

In accordance with general instruction B.2 to Form 8-K, information in this Item 2.02 and the exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of such section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

 

99.1

   

Registrant’s news release, dated October 31, 2019 announcing its financial results.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

MOBILE MINI, INC.

         

Dated: October 31, 2019

 

            

 

/s/ Christopher J. Miner

 

 

Name:

 

Christopher J. Miner

 

 

Title:

 

Senior Vice President and General Counsel

EX-99.1

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

MOBILE MINI REPORTS Q3 2019 RESULTS AND ANNOUNCES QUARTERLY DIVIDEND

Phoenix, AZ – October 31, 2019 – 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, 2019.

Total revenues were $153.5 million and rental revenues were $145.5 million for the third quarter of 2019, as compared to $149.7 million and $140.9 million, respectively, for the same period last year. Rental revenues for the Storage Solutions and Tank & Pump Solutions businesses for the current quarter were $116.8 million and $28.7 million, respectively, compared to $112.6 million and $28.3 million for the same period last year.

The Company realized net income of $22.6 million, or $0.51 per diluted share, in the third quarter of 2019. On an adjusted basis, third quarter net income was $24.0 million, or $0.54 per diluted share, as compared to adjusted net income of $19.1 million, or $0.42 per diluted share, for the third quarter of 2018. Adjusted EBITDA was $61.7 million and adjusted EBITDA margin was 40.2% for the third quarter of 2019.

Dividend

The Company’s Board of Directors declared a cash dividend of 27.5 cents per share, which will be paid on November 27, 2019 to shareholders of record as of November 13, 2019.

Third Quarter 2019 Highlights

 

   

Drove healthy year-over-year growth of 6.3% in North American Storage Solutions rental revenue.

 

   

Grew adjusted EBITDA 11.3%, year-over-year, and expanded adjusted EBITDA margin by 320 basis points to 40.2%, comprised of a 370 basis point year-over-year increase for North American Storage Solutions and a 320 basis point increase for Tank & Pump Solutions.

 

   

Raised North American Storage Solutions core (excluding seasonal) rates 4.2% year-over-year, with rates on newly placed units up 5.4%.

 

   

Achieved strong average OEC utilization rate of 77.5% for Storage Solutions.

 

   

Generated robust cash from operating activities of $51.3 million for the quarter and $151.9 million year-to-date, resulting in free cash flow of $37.1 million for the quarter and $92.0 million year-to-date, an increase of $44.0 million from the prior year-to-date period.

 

   

Further increased return on capital employed to 9.8% as of September 30, 2019, exceeding our weighted average cost of capital and a 170 basis point improvement from September 30, 2018.

 

   

Repurchased $18.4 million of shares under our authorized share repurchase program, $28.4 million year-to-date, while maintaining a leverage ratio of 3.8x as of September 30, 2019 compared to 4.2x as of December 31, 2018.

 

   

Completed one tuck-in acquisition in Tulsa, Oklahoma of a highly-utilized container provider.

CEO Comments

Kelly Williams, Mobile Mini’s President and Chief Executive Officer, remarked, “I am very pleased with the performance of Mobile Mini in the third quarter of 2019. Throughout the company, the processes we have implemented to drive efficiencies, combined with higher rental revenues, drove a $6.2 million, or 11.3%, increase in consolidated adjusted EBITDA, with an adjusted EBITDA margin in excess of our 40% Evergreen target, a notable achievement. The strong increase in profitability reflects top-line growth and margin expansion in both our North American segments. North American Storage Solutions rental revenues were up compared to the prior-year quarter by a healthy 6.3%, driven primarily by increased rates as well as favorable mix. Revenues in our Tank & Pump Solutions downstream business continued to grow year-over-year, despite a difficult comparison to a very strong prior-year quarter. The downstream market is now settling into more normalized activity.”


Mr. Williams continued, “Over the past several years we have transformed Mobile Mini into a significantly more efficient, scalable organization. The transformation includes substantial development of our technology capabilities and enhancements throughout our supply chain, including asset management. We are now better positioned than at any time in our Company’s history to drive profitable growth and generate shareholder value through the highly effective execution of our business strategy and the optimal deployment of capital. During the nine months ended September 30, 2019 we generated $92 million of free cash flow. This robust cash flow enables us to reinvest in the business, reduce our leverage ratio and return capital to our shareholders through dividends and opportunistic stock repurchases. In addition to organic growth in existing locations, we plan to drive multi-year growth for Mobile Mini both through acquisitions in our Storage Solutions business and greenfield expansion into attractive new geographic markets for both business segments. Importantly, we expect to continue to grow adjusted EBITDA and generate very strong free cash flow for the remainder of 2019 and into 2020.”

Conference Call

Mobile Mini will host a conference call later today, October 31st at 5 pm 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 Investor Relations 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 199,100 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 12,700 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.

 

2


Forward-Looking Statements

This news release contains forward-looking statements, including, but not limited to, our ability to grow our business with existing and new customers, as well as our ability to drive growth organically, through acquisitions and greenfield expansion as well as growing adjusted EBITDA and generate very strong free cash flow, all of 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.

 

CONTACT:    -OR-    INVESTOR RELATIONS COUNSEL:
Van Welch, Executive VP &       The Equity Group Inc.
Chief Financial Officer       Fred Buonocore (212) 836-9607
Mobile Mini, Inc.       Mike Gaudreau (212) 836-9620
(602) 308-3879      

Emily Tadano, Director of

Treasury & Investor Relations

(602) 845-4005

     
www.mobilemini.com      

(See accompanying tables)

 

3


Mobile Mini, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except percentages and per share data)

 

     Three Months Ended September 30, 2019     Three Months Ended September 30, 2018  
     Actual     Adjustments     Adjusted (1)     Actual     Adjustments     Adjusted (2)  

Revenues:

            

Rental

   $ 145,519     $ —       $ 145,519     $ 140,924     $ —       $ 140,924  

Sales

     7,887       —         7,887       8,716       —         8,716  

Other

     111       —         111       67       —         67  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     153,517       —         153,517       149,707       —         149,707  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses

     91,399       (1,898     89,501       90,764       —         90,764  

Cost of sales

     4,838       —         4,838       5,770       —         5,770  

Asset impairment charge and loss on divestiture, net

     —         —         —         98,278       (98,278     —    

Depreciation and amortization

     17,490       —         17,490       16,191       —         16,191  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     113,727       (1,898     111,829       211,003       (98,278     112,725  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     39,790       1,898       41,688       (61,296     98,278       36,982  

Other income (expense):

            

Interest income

     12       —         12       —         —         —    

Interest expense

     (10,393     —         (10,393     (10,487     —         (10,487

Foreign currency exchange

     (13     —         (13     24       —         24  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax provision (benefit)

     29,396       1,898       31,294       (71,759     98,278       26,519  

Income tax provision (benefit)

     6,821       476       7,297       (19,594     27,010       7,416  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 22,575     $ 1,422     $ 23,997     $ (52,165   $ 71,268     $ 19,103  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA/Adjusted EBITDA

   $ 57,279       $ 61,674     $ (45,081     $ 55,427  

EBITDA/Adjusted EBITDA as a percentage of total revenues

     37.3       40.2     -30.1       37.0

Earnings (loss) per share:

            

Basic

   $ 0.51       $ 0.54     $ (1.18     $ 0.43  

Diluted

     0.51         0.54       (1.18       0.42  

Weighted average number of common and common share equivalents outstanding:

            

Basic

     44,072         44,072       44,323         44,323  

Diluted

     44,316         44,316       44,323         45,098  

 

(1)

Adjusted column for the three-month period ended September 30, 2019 reduces rental, selling and general expenses to exclude expenses of $1.9 million related to actual and potential acquisitions, along with the related tax effect 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.

 

(2)

Adjusted column for the three-month period ended September 30, 2018 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, 2018 include the following, along with the related tax effects:

 

   

Exclusion of an asset impairment charge and loss on divestiture, net of proceeds of $98.3 million related to assets that the Company placed as held for sale during the quarter.

 

   

Exclusion of $2.6 million in income tax benefit resulting from the reversal in the quarter of a provisional tax expense related to the repatriation of foreign earnings for the impact of the U.S. federal tax reform enacted in the fourth quarter of 2017.

 

4


Mobile Mini, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except percentages and per share data)

 

     Nine Months Ended September 30, 2019     Nine Months Ended September 30, 2018  
     Actual     Adjustments     Adjusted (1)     Actual     Adjustments     Adjusted (2)  

Revenues:

            

Rental

   $ 429,597     $ —       $ 429,597     $ 406,149     $ —       $ 406,149  

Sales

     23,245       —         23,245       25,700       —         25,700  

Other

     517       —         517       511       —         511  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     453,359       —         453,359       432,360       —         432,360  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses

     279,368       (6,230     273,138       269,033       —         269,033  

Cost of sales

     14,484       —         14,484       16,925       —         16,925  

Restructuring expenses

     —         —         —         1,306       (1,306     —    

Asset impairment charge and loss on divestiture, net

     —         —         —         98,278       (98,278     —    

Depreciation and amortization

     52,960       —         52,960       50,206       —         50,206  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     346,812       (6,230     340,582       435,748       (99,584     336,164  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     106,547       6,230       112,777       (3,388     99,584       96,196  

Other income (expense):

            

Interest income

     12       —         12       6       —         6  

Interest expense

     (31,745     —         (31,745     (30,179     —         (30,179

Deferred financing costs write-off

     (123     123       —         —         —         —    

Foreign currency exchange

     (179     —         (179     69       —         69  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax provision (benefit)

     74,512       6,353       80,865       (33,492     99,584       66,092  

Income tax provision (benefit)

     19,794       693       20,487       (11,182     27,338       16,156  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 54,718     $ 5,660     $ 60,378     $ (22,310   $ 72,246     $ 49,936  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA/Adjusted EBITDA

   $ 159,340       $ 174,811     $ 46,893       $ 153,980  

EBITDA/Adjusted EBITDA as a percentage of total revenues

     35.1       38.6     10.8       35.6

Earnings (loss) per share:

            

Basic

   $ 1.23       $ 1.36     $ (0.50     $ 1.13  

Diluted

     1.23         1.35       (0.50       1.11  

Weighted average number of common and common share equivalents outstanding:

            

Basic

     44,337         44,337       44,275         44,275  

Diluted

     44,646         44,646       44,275         45,011  

 

(1)

Adjusted column for the nine-month period ended September 30, 2019 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, 2019 include the following, along with the related tax effects:

 

   

Reduction of rental, selling and general expenses to exclude $3.6 million of non-cash share-based compensation related to transition agreements for our Chief Executive Officer who retired as an employee of the Company and assumed the position of Chairman of the Board.

 

   

Reduction of rental, selling and general expenses to exclude $2.6 million of expenses related to actual and potential acquisitions, along with the related tax effect.

 

   

Exclusion of $0.1 million of deferred financing costs that were written off in conjunction with the amendment of our lines of credit.

 

(2)

Adjusted column for the nine-month period ended September 30, 2018 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, 2018 include the following, along with the related tax effects:

 

   

Exclusion of $1.3 million related to the restructuring of our business operations.

 

   

Exclusion of an asset impairment charge and loss on divestiture, net of proceeds of $98.3 million related to assets that the Company placed as held for sale during the period.

 

   

Exclusion of $2.6 million in income tax benefit resulting from the reversal in the period of a provisional tax expense related to the repatriation of foreign earnings for the impact of the U.S. federal tax reform enacted in the fourth quarter of 2017.

 

5


Mobile Mini, Inc.

Operating Data

(Unaudited)

 

     2019     2018  

As of September 30:

    

Stand-alone Storage Solutions locations

     118       119  

Stand-alone Tank & Pump Solutions locations

     20       21  

Combined Storage Solutions and Tank & Pump Solutions locations

     17       17  

Storage Solutions rental fleet units

     199,100       194,300  

Tank & Pump Solutions rental fleet units

     12,700       12,600  

Average utilization based on original equipment cost

    

Three months ended September 30:

    

Storage Solutions

     77.5     76.9

Tank & Pump Solutions

     68.3     72.2

Nine months ended September 30:

    

Storage Solutions

     77.0     71.5

Tank & Pump Solutions

     71.9     73.3

 

6


Mobile Mini, Inc.

Business Segment Information - Adjusted (1)

(Unaudited)

(in thousands, except percentages)

 

     Three Months Ended September 30, 2019     Three Months Ended September 30, 2018  
     Storage
Solutions
    Tank & Pump
Solutions
    Total     Storage
Solutions
    Tank & Pump
Solutions
    Total  

Revenues:

            

Rental

   $ 116,820     $ 28,699     $ 145,519     $ 112,639     $ 28,285     $ 140,924  

Sales

     6,439       1,448       7,887       7,696       1,020       8,716  

Other

     75       36       111       40       27       67  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     123,334       30,183       153,517       120,375       29,332       149,707  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses

     70,455       19,046       89,501       71,121       19,643       90,764  

Cost of sales

     4,048       790       4,838       5,226       544       5,770  

Depreciation and amortization

     10,576       6,914       17,490       9,758       6,433       16,191  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     85,079       26,750       111,829       86,105       26,620       112,725  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

   $ 38,255     $ 3,433     $ 41,688     $ 34,270     $ 2,712     $ 36,982  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 51,190     $ 10,484     $ 61,674     $ 46,174     $ 9,253     $ 55,427  

Adjusted EBITDA Margin

     41.5     34.7     40.2     38.4     31.5     37.0
     Nine Months Ended September 30, 2019     Nine Months Ended September 30, 2018  
     Storage
Solutions
    Tank & Pump
Solutions
    Total     Storage
Solutions
    Tank & Pump
Solutions
    Total  

Revenues:

            

Rental

   $ 339,930     $ 89,667     $ 429,597     $ 325,293     $ 80,856     $ 406,149  

Sales

     18,987       4,258       23,245       21,785       3,915       25,700  

Other

     363       154       517       399       112       511  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     359,280       94,079       453,359       347,477       84,883       432,360  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses

     213,806       59,332       273,138       212,248       56,785       269,033  

Cost of sales

     12,134       2,350       14,484       14,695       2,230       16,925  

Depreciation and amortization

     32,237       20,723       52,960       31,398       18,808       50,206  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     258,177       82,405       340,582       258,341       77,823       336,164  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

   $ 101,103     $ 11,674     $ 112,777     $ 89,136     $ 7,060     $ 96,196  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 141,887     $ 32,924     $ 174,811     $ 127,798     $ 26,182     $ 153,980  

Adjusted EBITDA Margin

     39.5     35.0     38.6     36.8     30.8     35.6

 

(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.

 

7


Mobile Mini, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     September 30,     December 31,  
     2019     2018  
     (unaudited)     (audited)  

ASSETS

 

Cash and cash equivalents

   $ 7,295     $ 5,605  

Receivables, net

     106,847       130,233  

Inventories

     9,835       11,725  

Rental fleet, net

     953,331       929,090  

Property, plant and equipment, net

     150,479       154,254  

Operating lease assets

     95,489       —    

Other assets

     12,809       13,398  

Intangibles, net

     51,333       55,542  

Goodwill

     705,769       705,217  
  

 

 

   

 

 

 

Total assets

   $ 2,093,187     $ 2,005,064  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY  

Liabilities:

    

Accounts payable

   $ 30,167     $ 33,177  

Accrued liabilities

     74,331       88,136  

Operating lease liabilities

     97,283       —    

Lines of credit

     584,000       593,495  

Obligations under finance leases

     67,648       63,359  

Senior notes, net

     246,967       246,489  

Deferred income taxes

     186,116       170,139  
  

 

 

   

 

 

 

Total liabilities

     1,286,512       1,194,795  
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     503       500  

Additional paid-in capital

     634,994       619,850  

Retained earnings

     428,398       410,641  

Accumulated other comprehensive loss

     (79,814     (72,861

Treasury stock

     (177,406     (147,861
  

 

 

   

 

 

 

Total stockholders’ equity

     806,675       810,269  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,093,187     $ 2,005,064  
  

 

 

   

 

 

 

 

8


Mobile Mini, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

     Nine Months Ended  
     September 30,  
     2019     2018  

Cash flows from operating activities:

    

Net income (loss)

   $ 54,718     $ (22,310

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Deferred financing costs write-off

     123       —    

Asset impairment charge and loss on divestiture, net

     —         98,278  

Provision for doubtful accounts

     4,235       1,980  

Amortization of deferred financing costs

     1,383       1,545  

Amortization of long-term liabilities

     13       109  

Share-based compensation expense

     12,834       7,866  

Depreciation and amortization

     52,960       50,206  

Gain on sale of rental fleet

     (4,610     (4,523

Loss on disposal of property, plant and equipment

     46       548  

Deferred income taxes

     15,855       (12,891

Foreign currency exchange

     179       (69

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

     14,163       (4,519
  

 

 

   

 

 

 

Net cash provided by operating activities

     151,899       116,220  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Cash paid for business acquired, net of cash acquired

     (4,878     —    

Proceeds from sale of assets held for sale

     —         3,508  

Additions to rental fleet, excluding acquisitions

     (61,247     (65,620

Proceeds from sale of rental fleet

     10,782       11,447  

Additions to property, plant and equipment, excluding acquisitions

     (9,917     (14,635

Proceeds from sale of property, plant and equipment

     448       603  
  

 

 

   

 

 

 

Net cash used in investing activities

     (64,812     (64,697
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net repayments under lines of credit

     (9,494     (24,062

Deferred financing costs

     (3,491     —    

Principal payments on finance lease obligations

     (8,167     (6,683

Issuance of common stock

     2,314       3,617  

Dividend payments

     (36,864     (33,312

Purchase of treasury stock

     (29,545     (668
  

 

 

   

 

 

 

Net cash used in financing activities

     (85,247     (61,108
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     (150     1,069  
  

 

 

   

 

 

 

Net change in cash

     1,690       (8,516

Cash and cash equivalents at beginning of period

     5,605       13,451  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 7,295     $ 4,935  
  

 

 

   

 

 

 

Equipment and other acquired through finance lease obligations

   $ 12,455     $ 15,746  

Capital expenditures accrued or payable

     5,110       9,774  

 

9


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, free cash flow and constant currency financial information 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,
 
     2019      2018      2019      2018  

Net income (loss)

   $ 22,575      $ (52,165    $ 54,718      $ (22,310

Interest expense

     10,393        10,487        31,745        30,179  

Income tax provision (benefit)

     6,821        (19,594      19,794        (11,182

Depreciation and amortization

     17,490        16,191        52,960        50,206  

Deferred financing costs write-off

     —          —          123        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

     57,279        (45,081      159,340        46,893  

Share-based compensation expense

     2,497        2,230        9,241        7,503  

Restructuring expenses

     —          —          —          1,306  

Asset impairment charge and loss on divestiture, net

     —          98,278        —          98,278  

Chief Executive Officer transition

     —          —          3,593        —    

Acquisition-related expenses

     1,898        —          2,637        —    
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 61,674      $ 55,427      $ 174,811      $ 153,980  
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2019      2018      2019      2018  

Net cash provided by operating activities

   $ 51,347      $ 46,268      $ 151,899      $ 116,220  

Interest paid

     13,961        13,576        34,156        31,753  

Income and franchise taxes paid

     1,357        939        5,119        2,346  

Share-based compensation expense, including restructuring expense

     (2,497      (2,230      (12,834      (7,866

Asset impairment charge and loss on divestiture, net

     —          (98,278      —          (98,278

Gain on sale of rental fleet

     1,569        1,263        4,610        4,523  

Gain (loss) on disposal of property, plant and equipment

     56        (71      (46      (548

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

     (8,514      (6,548      (23,564      (1,257
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 57,279      $ (45,081    $ 159,340      $ 46,893  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

10


Mobile Mini, Inc.

Free Cash Flow GAAP Reconciliation

(Unaudited)

(in thousands)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2019     2018     2019     2018  

Net cash provided by operating activities

   $ 51,347     $ 46,268     $ 151,899     $ 116,220  
  

 

 

   

 

 

   

 

 

   

 

 

 

Additions to rental fleet, excluding acquisitions

     (14,850     (27,144     (61,247     (65,620

Proceeds from sale of rental fleet

     3,728       3,770       10,782       11,447  

Additions to property, plant and equipment, excluding acquisitions

     (3,482     (5,554     (9,917     (14,635

Proceeds from sale of property, plant and equipment

     315       136       448       603  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net capital expenditures, excluding acquisitions

     (14,289     (28,792     (59,934     (68,205
  

 

 

   

 

 

   

 

 

   

 

 

 
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 37,058     $ 17,476     $ 91,965     $ 48,015  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

11


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.

Constant Currency. We calculate the effect of currency fluctuations on current periods by translating the results for our business in the U.K. during the current period using the average exchange rates from the comparative period. We present constant currency information to provide useful information to assess our underlying business excluding the effect of material foreign currency rate fluctuations. Calculated in constant currency, our rental revenues and adjusted EBITDA for the three months ended September 30, 2019 were $1.1 million and $0.4 million higher than when calculated in accordance with GAAP.

 

12