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Mobile Mini Reports Q1 2018 Results and Announces Quarterly Dividend

Posted on: 04/20/2018

PHOENIX--(BUSINESS WIRE)--Apr. 20, 2018-- 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 March 31, 2018. Total revenues were $140.7 million and rental revenues were $132.3 million, as compared to $123.5 million and $114.7 million, respectively, for the same period last year.

Rental revenues for the Storage Solutions and Tank & Pump Solutions businesses for the current quarter were $106.9 million and $25.5 million, respectively, compared to $93.8 million and $20.9 million, respectively, for the same period last year.

The Company recorded net income of $14.9 million, or $0.33 per diluted share, in the first quarter of 2018, as compared to net income of $10.2 million, or $0.23 per diluted share, for the first quarter of 2017. On an adjusted basis, first quarter net income was $14.9 million, or $0.33 per diluted share, as compared to adjusted net income of $10.9 million, or $0.25 per diluted share, for the first quarter of 2017. Adjusted EBITDA was $48.6 million and adjusted EBITDA margin was 34.5% for the first quarter of 2018.

Dividend

The Company’s Board of Directors declared a cash dividend of 25.0 cents per share, which will be paid on May 30, 2018 to shareholders of record on May 16, 2018.

First Quarter 2018 Highlights

  • Delivered a strong 21.7% year-over-year increase in Tank & Pump Solutions rental revenue growth.
  • Achieved robust Storage Solutions rental revenue year-over-year growth of 13.9%, 11.5% when adjusted for favorable currency fluctuations.
  • Improved OEC utilization for Tank & Pump Solutions, averaging 73.6% for the quarter, compared to 61.9% in the prior-year quarter.
  • Increased total Storage Solutions average units on rent by 5.0% year-over-year, with average utilization of 70.6%.
  • Raised Storage Solutions rental rates by 3.0% year-over-year, with rates on new rentals up 0.9%.
  • Grew adjusted EBITDA of $48.6 million by 16.5% compared to the prior-year quarter, 14.7% in constant currency.
  • Generated net cash from operating activities of $34.9 million and strong free cash flow of $18.8 million.

CEO Comments

Erik Olsson, Mobile Mini’s President and Chief Executive Officer, remarked, “During the first quarter of 2018, we continued to capitalize on the momentum that we generated in the second half of 2017. I am very pleased with the 21.7% Tank & Pump Solutions rental revenue growth, which was broad-based, across multiple customer end-segments and geographies. North American Storage Solutions rental revenues increased a robust 14.6% in the current quarter and consolidated Storage Solutions rental revenues increased 11.5%. As a result of the hard work of our salesforce, our unique suite of technology tools, and the exceptional service provided by the field, our large national customers are recognizing the value proposition that Mobile Mini is able to deliver.”

Mr. Olsson continued, “Tank & Pump Solutions equipment on rent increased dramatically in the first quarter of 2018 compared to the prior year and we expect this level of utilization to continue into the next quarter with a healthy pipeline. In addition, with pending orders up significantly compared to this time last year, our North American Storage Solutions pipeline continues to be strong. In the U.K. our business remains flat as we continue to monitor the effects of BREXIT on our business. Overall, we expect to see strong year-over-year top line growth and expanded margins for the remainder of 2018.”

Conference Call

Mobile Mini will host a conference call today, Friday, April 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 12,300 units. Mobile Mini’s network is comprised of 153 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 ability to continue utilization levels and a healthy pipeline, 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 March 31, 2018     Three Months Ended March 31, 2017  
      Actual     Adjustments     Adjusted (1)     Actual     Adjustments     Adjusted (2)  
                                                   
Revenues:                                                  
Rental     $ 132,338     $     $ 132,338     $ 114,742     $     $ 114,742  
Sales       8,103             8,103       7,978             7,978  
Other       213             213       807             807  
Total revenues       140,654             140,654       123,527             123,527  
                                                   
Costs and expenses:                                                  
Rental, selling and general expenses       88,998             88,998       78,359       (330 )     78,029  
Cost of sales       5,391             5,391       5,112             5,112  
Restructuring expenses       111       (111 )           899       (899 )      
Depreciation and amortization       16,823             16,823       15,264             15,264  
Total costs and expenses       111,323       (111 )     111,212       99,634       (1,229 )     98,405  
                                                   
Income from operations       29,331       111       29,442       23,893       1,229       25,122  
                                                   
Other income (expense):                                                  
Interest income       6             6                    
Interest expense       (9,599 )           (9,599 )     (8,402 )           (8,402 )
Foreign currency exchange       66             66       (9 )           (9 )
                                                   
Income before income tax provision       19,804       111       19,915       15,482       1,229       16,711  
                                                   
Income tax provision       4,949       28       4,977       5,330       456       5,786  
                                                   
Net income     $ 14,855     $ 83     $ 14,938     $ 10,152     $ 773     $ 10,925  
                                                   
EBITDA/Adjusted EBITDA     $ 46,226             $ 48,566     $ 39,148             $ 41,688  
EBITDA/Adjusted EBITDA as a percentage of

total revenues

      32.9 %             34.5 %     31.7 %             33.7 %
                                                   
Earnings per share:                                                  
Basic     $ 0.34             $ 0.34     $ 0.23             $ 0.25  
Diluted       0.33               0.33       0.23               0.25  
                                                   
Weighted average number of common and

common share equivalents outstanding:

                                                 
Basic       44,214               44,214       44,109               44,109  
Diluted       44,842               44,842       44,341               44,341  
                                                   
(1)   Adjusted column for the three months ended March 31, 2018 excludes costs of $0.1 million related to restructuring that management believes are not indicative of our business, along with the related tax effects. 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.
     
(2)   Adjusted column for the three months ended March 31, 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 three-month period ended March 31, 2017 include the following, along with the related tax effects:
   

• Reduction of $0.1 million in rental, selling and general expenses to exclude acquisition-related expenses.

   

• Reduction of $0.2 million in rental, selling and general expenses to exclude costs related to severance in conjunction with the departure of an executive.

   

• Exclusion of costs of $0.9 million related to the restructuring of our business operations.

     

 

   
Mobile Mini, Inc.  
Operating Data  
(Unaudited)  
                   
         
      2018     2017  
As of March 31:                  
Stand-alone Storage Solutions locations       119       123  
Stand-alone Tank & Pump Solutions locations       17       18  
Combined Storage Solutions and Tank & Pump Solutions locations       17       15  
Storage Solutions rental fleet units       214,900       210,900  
Tank & Pump Solutions rental fleet units       12,300       12,000  
                   
Average utilization - Three months ended March 31:                  
Storage Solutions - utilization based on number of units       70.6 %     69.0 %
Tank & Pump Solutions - utilization based on original equipment cost       73.6 %     61.9 %
                   
   
Mobile Mini, Inc.  
Business Segment Information - Adjusted (1)  
(Unaudited)  
(in thousands, except percentages)  
                                                   
                                                   
      Three Months Ended March 31, 2018     Three Months Ended March 31, 2017  
     

Storage
Solutions

   

Tank & Pump
Solutions

    Total    

Storage
Solutions

   

Tank & Pump
Solutions

    Total  
                                                   
Revenues:                                                  
Rental     $ 106,864     $ 25,474     $ 132,338     $ 93,806     $ 20,936     $ 114,742  
Sales       6,739       1,364       8,103       6,864       1,114       7,978  
Other       169       44       213       673       134       807  
Total revenues       113,772       26,882       140,654       101,343       22,184       123,527  
                                                   
Costs and expenses:                                                  
Rental, selling and general expenses       70,824       18,174       88,998       61,895       16,134       78,029  
Cost of sales       4,569       822       5,391       4,601       511       5,112  
Depreciation and amortization       10,732       6,091       16,823       9,183       6,081       15,264  
Total costs and expenses       86,125       25,087       111,212       75,679       22,726       98,405  
                                                   
Income (loss) from operations     $ 27,647     $ 1,795     $ 29,442     $ 25,664     $ (542 )   $ 25,122  
                                                   
Adjusted EBITDA     $ 40,581     $ 7,985     $ 48,566     $ 36,092     $ 5,596     $ 41,688  
Adjusted EBITDA Margin       35.7 %     29.7 %     34.5 %     35.6 %     25.2 %     33.7 %
                                                   
(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)  
                   
                   
      March 31,     December 31,  
      2018     2017  
      (unaudited)     (audited)  
ASSETS  
Cash and cash equivalents     $ 7,763     $ 13,451  
Receivables, net       105,828       111,562  
Inventories       16,811       15,671  
Rental fleet, net       999,215       989,154  
Property, plant and equipment, net       158,278       157,304  
Other assets       13,370       15,334  
Intangibles, net       60,442       62,024  
Goodwill       711,063       708,907  
Total assets     $ 2,072,770     $ 2,073,407  
                   
LIABILITIES AND STOCKHOLDERS' EQUITY  
Liabilities:                  
Accounts payable     $ 29,187     $ 26,955  
Accrued liabilities       66,337       78,084  
Lines of credit       621,843       634,285  
Obligations under capital leases       53,697       52,791  
Senior notes, net       246,010       245,850  
Deferred income taxes       178,361       173,754  
Total liabilities       1,195,435       1,211,719  
                   
Stockholders' equity:                  
Common stock       499       497  
Additional paid-in capital       609,120       605,369  
Retained earnings       467,123       463,322  
Accumulated other comprehensive loss       (51,708 )     (60,334 )
Treasury stock       (147,699 )     (147,166 )
Total stockholders' equity       877,335       861,688  
Total liabilities and stockholders' equity     $ 2,072,770     $ 2,073,407  
                   
   
Mobile Mini, Inc.  
Condensed Consolidated Statements of Cash Flows  
(Unaudited)  
(in thousands)  
         
      Three Months Ended  
      March 31,  
      2018     2017  
Cash flows from operating activities:                  
Net income     $ 14,855     $ 10,152  
Adjustments to reconcile net income to net cash

provided by operating activities:

                 
Provision for doubtful accounts       961       1,164  
Amortization of deferred financing costs       515       515  
Amortization of long-term liabilities       36       32  
Share-based compensation expense       2,229       1,311  
Depreciation and amortization       16,823       15,264  
Gain on sale of rental fleet       (1,533 )     (1,703 )
Loss on disposal of property, plant and equipment       334       18  
Deferred income taxes       4,397       4,943  
Foreign currency exchange       (66 )     9  
Changes in certain assets and liabilities, net of

effect of businesses acquired

      (3,620 )     1,018  
Net cash provided by operating activities       34,931       32,723  
                   
Cash flows from investing activities:                  
Additions to rental fleet, excluding acquisitions       (15,389 )     (10,006 )
Proceeds from sale of rental fleet       3,844       4,622  
Additions to property, plant and equipment, excluding acquisitions       (4,752 )     (3,748 )
Proceeds from sale of property, plant and equipment       179       68  
Net cash used in investing activities       (16,118 )     (9,064 )
                   
Cash flows from financing activities:                  
Net repayments under lines of credit       (12,443 )     (2,334 )
Deferred financing costs             (13 )
Principal payments on capital lease obligations       (1,990 )     (1,760 )
Issuance of common stock       1,525       1,640  
Dividend payments       (11,054 )     (10,145 )
Purchase of treasury stock       (533 )     (7,639 )
Net cash used in financing activities       (24,495 )     (20,251 )
                   
Effect of exchange rate changes on cash       (6 )     64  
                   
Net change in cash       (5,688 )     3,472  
                   
Cash and cash equivalents at beginning of period       13,451       4,137  
Cash and cash equivalents at end of period     $ 7,763     $ 7,609  
                   
Equipment and other acquired through capital lease obligations     $ 2,897     $ 1,879  
Capital expenditures accrued or payable       6,613       5,541  
                   

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
March 31,

 
      2018     2017  
Net income     $ 14,855     $ 10,152  
Interest expense       9,599       8,402  
Income tax provision       4,949       5,330  
Depreciation and amortization       16,823       15,264  
EBITDA       46,226       39,148  
                   
Share-based compensation expense       2,229       1,311  
Restructuring expenses       111       899  
Acquisition-related expenses             88  
Other             242  
Adjusted EBITDA     $ 48,566     $ 41,688  
                   
                   
     

Three Months Ended
March 31,

 
      2018     2017  
Net cash provided by operating activities     $ 34,931     $ 32,723  
Interest paid       12,348       13,671  
Income and franchise taxes paid       120        
Share-based compensation expense,

including restructuring expense

      (2,229 )     (1,311 )
Gain on sale of rental fleet       1,533       1,703  
Loss on disposal of property, plant and

equipment

      (334 )     (18 )
Changes in certain assets and liabilities, net of

effect of businesses acquired

      (143 )     (7,620 )
EBITDA     $ 46,226     $ 39,148  
                   
   
Mobile Mini, Inc.  
Free Cash Flow GAAP Reconciliation  
(Unaudited)  
(in thousands)  
                   
     

Three Months Ended
March 31,

 
      2018     2017  
Net cash provided by operating activities     $ 34,931     $ 32,723  
                   
Additions to rental fleet, excluding acquisitions       (15,389 )     (10,006 )
Proceeds from sale of rental fleet       3,844       4,622  
Additions to property, plant and equipment,

excluding acquisitions

      (4,752 )     (3,748 )
Proceeds from sale of property, plant and

equipment

      179       68  
Net capital expenditures, excluding acquisitions       (16,118 )     (9,064 )
                   
Free cash flow     $ 18,813     $ 23,659  
                   

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 March 31, 2018 were $2.2 million and $0.8 million lower than when calculated in accordance with GAAP.

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
Kevin Towle, 212-836-9620