Mobile Mini Reports Q2 2019 Results and Announces Quarterly Dividend

July 25, 2019 at 4:01 PM EDT

PHOENIX--(BUSINESS WIRE)--Jul. 25, 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 June 30, 2019.

Total revenues were $150.2 million and rental revenues were $141.9 million, as compared to $142.0 million and $132.9 million, respectively, for the same period last year. Rental revenues for the Storage Solutions and Tank & Pump Solutions businesses for the current quarter were $110.4 million and $31.5 million, respectively, compared to $105.8 million and $27.1 million, respectively, for the same period last year.

The Company realized net income of $14.1 million, or $0.31 per diluted share, in the second quarter of 2019. On an adjusted basis, second quarter net income was $18.2 million, or $0.41 per diluted share, as compared to adjusted net income of $15.9 million, or $0.35 per diluted share, for the second quarter of 2018. Adjusted EBITDA was $56.9 million and adjusted EBITDA margin was 37.9% for the second 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 August 28, 2019 to shareholders of record as of August 14, 2019.

Second Quarter 2019 Highlights

Continued strong rental revenue growth in Tank & Pump Solutions (“T&P”) with a 16.3% year-over-year increase.
Drove healthy North American Storage Solutions (“SS”) rental revenue year-over-year growth of 7.1%.
Delivered year-over-year rate growth of 3.4% in SS and a mid-single digit increase for T&P.
Achieved strong average OEC utilization rates of 76.4% for SS and 73.5% for T&P.
Grew adjusted EBITDA 13.8%, year-over-year, and expanded adjusted EBITDA margin by 270 basis points to 37.9%.
Generated robust free cash flow of $38.7 million, an increase of $27.0 million year-over-year.
Increased return on capital employed to 9.5% as of June 30, 2019, which exceeds weighted average cost of capital and is a 190 basis point improvement from June 30, 2018.
Decreased leverage ratio to 3.8x as of June 30, 2019 from 4.2x as of December 31, 2018.

CEO Comments

Erik Olsson, Mobile Mini’s Chief Executive Officer, remarked, “The strong performance in the second quarter reflects the continued momentum we have created over the last several quarters by executing on our strategy from the solid platform we have built. In addition to very strong margin expansion we saw robust growth in revenues, adjusted EBITDA, and importantly, free cash flow. Especially notable is the continued strong rental revenue growth in our Tank & Pump segment, driven by both volume and rate, and as we continue to demonstrate our value proposition, we believe we will continue to grow this business with existing and new large customers. Our Storage Solutions business remains strong, driven by rate increases and healthy levels of demand in North America, where solid pending orders indicate healthy growth in the back half of the year. The cycle is still in our favor and our outlook remains very positive for the remainder of 2019.”

Mr. Olsson continued, “I am pleased to be transitioning into my role as Chairman of the Board following a record year in 2018 and another strong year well underway. Mobile Mini is a very different company than when I first joined. Today our strategy is to profitably grow our business by offering customers high quality products and services in two segments: containers and tanks. Because of our unmatched quality and service in these areas, we are able to command premium pricing, which improves both revenues and margins. We invest in long-lived steel-centric products with minimal maintenance requirements and short pay-back periods and drive sustainable growth by partnering with large customers across many industries that recognize the value of our unique scale and technology solutions. Combining this strategy with a culture of continuous improvement to drive operational efficiencies, we deliver shareholder value through strong cash flows and great returns. Our fundamentals today are very strong and I would like to personally thank the employees of Mobile Mini for their consistent dedication and hard work during this time.”

Conference Call

Mobile Mini will host a conference call later today, July 25^th 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 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 198,000 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.

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 achieve healthy growth in the second half of the year, 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.

(See accompanying tables)

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

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

Revenues:
Rental	$	141,906		$	—		$	141,906		$	132,887		$	—		$	132,887
Sales		8,135			—			8,135			8,881			—			8,881
Other		140			—			140			231			—			231
Total revenues		150,181			—			150,181			141,999			—			141,999

Costs and expenses:
Rental, selling and general expenses		95,735			(4,332	)		91,403			89,271			—			89,271
Cost of sales		5,044			—			5,044			5,764			—			5,764
Restructuring expenses		—			—			—			1,195			(1,195	)		—
Depreciation and amortization		18,135			—			18,135			17,192			—			17,192
Total costs and expenses		118,914			(4,332	)		114,582			113,422			(1,195	)		112,227

Income from operations		31,267			4,332			35,599			28,577			1,195			29,772

Other income (expense):
Interest expense		(10,592	)		—			(10,592	)		(10,093	)		—			(10,093	)
Foreign currency exchange		(167	)		—			(167	)		(21	)		—			(21	)

Income before income tax provision		20,508			4,332			24,840			18,463			1,195			19,658

Income tax provision		6,450			185			6,635			3,463			300			3,763

Net income	$	14,058		$	4,147		$	18,205		$	15,000		$	895		$	15,895

EBITDA/Adjusted EBITDA	$	49,235					$	56,907		$	45,748					$	49,987
EBITDA/Adjusted EBITDA as a percentage of total revenues		32.8	%					37.9	%		32.2	%					35.2	%

Earnings per share:
Basic	$	0.32					$	0.41		$	0.34					$	0.36
Diluted		0.31						0.41			0.33						0.35

Weighted average number of common and common share equivalents outstanding:
Basic		44,496						44,496			44,287						44,287
Diluted		44,750						44,750			45,091						45,091

(1)	Adjusted column for the three months ended June 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 three-month period ended June 30, 2019 include the following:
	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 is retiring as an employee of the Company and assuming the position of Chairman of the Board. Reduction of rental, selling and general expenses to exclude $0.7 million of expenses related to potential acquisitions, along with the related tax effect.
(2)	Adjusted column for the three months ended June 30, 2018 excludes costs of $1.2 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 presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release.

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

	Six Months Ended June 30, 2019									Six Months Ended June 30, 2018
	Actual			Adjustments			Adjusted (1)			Actual			Adjustments			Adjusted (2)

Revenues:
Rental	$	284,078		$	—		$	284,078		$	265,225		$	—		$	265,225
Sales		15,358			—			15,358			16,984			—			16,984
Other		406			—			406			444			—			444
Total revenues		299,842			—			299,842			282,653			—			282,653

Costs and expenses:
Rental, selling and general expenses		187,969			(4,332	)		183,637			178,269			—			178,269
Cost of sales		9,646			—			9,646			11,155			—			11,155
Restructuring expenses		—			—			—			1,306			(1,306	)		—
Depreciation and amortization		35,470			—			35,470			34,015			—			34,015
Total costs and expenses		233,085			(4,332	)		228,753			224,745			(1,306	)		223,439

Income from operations		66,757			4,332			71,089			57,908			1,306			59,214

Other income (expense):
Interest income		—			—			—			6			—			6
Interest expense		(21,352	)		—			(21,352	)		(19,692	)		—			(19,692	)
Deferred financing costs write-off		(123	)		123			—			—			—			—
Foreign currency exchange		(166	)		—			(166	)		45			—			45

Income before income tax provision		45,116			4,455			49,571			38,267			1,306			39,573

Income tax provision		12,973			217			13,190			8,412			328			8,740

Net income	$	32,143		$	4,238		$	36,381		$	29,855		$	978		$	30,833

EBITDA/Adjusted EBITDA	$	102,061					$	113,137		$	91,974					$	98,553
EBITDA/Adjusted EBITDA as a percentage of total revenues		34.0	%					37.7	%		32.5	%					34.9	%

Earnings per share:
Basic	$	0.72					$	0.82		$	0.67					$	0.70
Diluted		0.72						0.81			0.66						0.69

Weighted average number of common and common share equivalents outstanding:
Basic		44,472						44,472			44,251						44,251
Diluted		44,814						44,814			44,967						44,967

(1)

Adjusted column for the six months ended June 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 six-month period ended June 30, 2019 include the following:

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 is retiring as an employee of the Company and assuming the position of Chairman of the Board.
Reduction of rental, selling and general expenses to exclude $0.7 million of expenses related to 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 six months ended June 30, 2018 excludes costs of $1.3 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 presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release.

Mobile Mini, Inc.
Operating Data
(Unaudited)


	2019			2018
As of June 30:
Stand-alone Storage Solutions locations		118			118
Stand-alone Tank & Pump Solutions locations		20			19
Combined Storage Solutions and Tank & Pump Solutions locations		17			18
Storage Solutions rental fleet units		198,000			216,200
Tank & Pump Solutions rental fleet units		12,700			12,600

Average utilization based on original equipment cost
Three months ended June 30:
Storage Solutions		76.4	%		69.3	%
Tank & Pump Solutions		73.5	%		74.2	%

Average utilization based on original equipment cost
Six months ended June 30:
Storage Solutions		76.7	%		68.9	%
Tank & Pump Solutions		73.8	%		73.9	%

Mobile Mini, Inc.
Business Segment Information - Adjusted (1)
(Unaudited)
(in thousands, except percentages)

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

Revenues:
Rental	$	110,385		$	31,521		$	141,906		$	105,790		$	27,097		$	132,887
Sales		6,771			1,364			8,135			7,350			1,531			8,881
Other		63			77			140			190			41			231
Total revenues		117,219			32,962			150,181			113,330			28,669			141,999

Costs and expenses:
Rental, selling and general expenses		70,725			20,678			91,403			70,303			18,968			89,271
Cost of sales		4,270			774			5,044			4,900			864			5,764
Depreciation and amortization		10,938			7,197			18,135			10,908			6,284			17,192
Total costs and expenses		85,933			28,649			114,582			86,111			26,116			112,227

Income from operations	$	31,286		$	4,313		$	35,599		$	27,219		$	2,553		$	29,772

Adjusted EBITDA	$	45,269		$	11,638		$	56,907		$	41,043		$	8,944		$	49,987
Adjusted EBITDA Margin		38.6	%		35.3	%		37.9	%		36.2	%		31.2	%		35.2	%



	Six Months Ended June 30, 2019									Six Months Ended June 30, 2018
	Storage Solutions			Tank & Pump Solutions			Total			Storage Solutions			Tank & Pump Solutions			Total

Revenues:
Rental	$	223,110		$	60,968		$	284,078		$	212,654		$	52,571		$	265,225
Sales		12,548			2,810			15,358			14,089			2,895			16,984
Other		288			118			406			359			85			444
Total revenues		235,946			63,896			299,842			227,102			55,551			282,653

Costs and expenses:
Rental, selling and general expenses		143,351			40,286			183,637			141,127			37,142			178,269
Cost of sales		8,086			1,560			9,646			9,469			1,686			11,155
Depreciation and amortization		21,661			13,809			35,470			21,640			12,375			34,015
Total costs and expenses		173,098			55,655			228,753			172,236			51,203			223,439

Income from operations	$	62,848		$	8,241		$	71,089		$	54,866		$	4,348		$	59,214

Adjusted EBITDA	$	90,697		$	22,440		$	113,137		$	81,624		$	16,929		$	98,553
Adjusted EBITDA Margin		38.4	%		35.1	%		37.7	%		35.9	%		30.5	%		34.9	%

(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)


	June 30,			December 31,
	2019			2018
	(unaudited)			(audited)
ASSETS
Cash and cash equivalents	$	4,687		$	5,605
Receivables, net		106,694			130,233
Inventories		10,385			11,725
Rental fleet, net		951,696			929,090
Property, plant and equipment, net		150,025			154,254
Operating lease assets		96,883			—
Other assets		14,947			13,398
Intangibles, net		52,321			55,542
Goodwill		705,260			705,217
Total assets	$	2,092,898		$	2,005,064

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable	$	32,190		$	33,177
Accrued liabilities		71,621			88,136
Operating lease liabilities		98,687			—
Lines of credit		580,100			593,495
Obligations under finance leases		64,536			63,359
Senior notes, net		246,808			246,489
Deferred income taxes		180,308			170,139
Total liabilities		1,274,250			1,194,795

Stockholders' equity:
Common stock		503			500
Additional paid-in capital		631,988			619,850
Retained earnings		418,073			410,641
Accumulated other comprehensive loss		(72,992	)		(72,861	)
Treasury stock		(158,924	)		(147,861	)
Total stockholders' equity		818,648			810,269
Total liabilities and stockholders' equity	$	2,092,898		$	2,005,064

Mobile Mini, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
	Six Months Ended
	June 30,
	2019			2018
Cash flows from operating activities:
Net income	$	32,143		$	29,855
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred financing costs write-off		123			—
Provision for doubtful accounts		2,303			1,966
Amortization of deferred financing costs		940			1,030
Amortization of long-term liabilities		13			72
Share-based compensation expense		10,337			5,636
Depreciation and amortization		35,470			34,015
Gain on sale of rental fleet		(3,041	)		(3,260	)
Loss on disposal of property, plant and equipment		102			477
Deferred income taxes		10,086			7,253
Foreign currency exchange		166			(45	)
Changes in certain assets and liabilities, net of effect of businesses acquired		11,910			(7,047	)
Net cash provided by operating activities		100,552			69,952

Cash flows from investing activities:
Additions to rental fleet, excluding acquisitions		(46,397	)		(38,476	)
Proceeds from sale of rental fleet		7,054			7,677
Additions to property, plant and equipment, excluding acquisitions		(6,435	)		(9,081	)
Proceeds from sale of property, plant and equipment		133			467
Net cash used in investing activities		(45,645	)		(39,413	)

Cash flows from financing activities:
Net repayments under lines of credit		(13,395	)		(16,630	)
Deferred financing costs		(3,332	)		—
Principal payments on finance lease obligations		(5,141	)		(4,103	)
Issuance of common stock		1,804			2,494
Dividend payments		(24,689	)		(22,120	)
Purchase of treasury stock		(11,063	)		(540	)
Net cash used in financing activities		(55,816	)		(40,899	)

Effect of exchange rate changes on cash		(9	)		941

Net change in cash		(918	)		(9,419	)

Cash and cash equivalents at beginning of period		5,605			13,451
Cash and cash equivalents at end of period	$	4,687		$	4,032

Equipment and other acquired through finance lease obligations	$	6,319		$	6,450
Capital expenditures accrued or payable		6,528			7,190

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 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 June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net income	$	14,058		$	15,000		$	32,143		$	29,855
Interest expense		10,592			10,093			21,352			19,692
Income tax provision		6,450			3,463			12,973			8,412
Depreciation and amortization		18,135			17,192			35,470			34,015
Deferred financing costs write-off		—			—			123			—
EBITDA		49,235			45,748			102,061			91,974

Share-based compensation expense		3,340			3,044			6,744			5,273
Restructuring expenses		—			1,195			—			1,306
Chief Executive Officer transition		3,593			—			3,593			—
Acquisition-related expenses		739			—			739			—
Adjusted EBITDA	$	56,907		$	49,987		$	113,137		$	98,553


	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net cash provided by operating activities	$	61,769		$	35,021		$	100,552		$	69,952
Interest paid		5,919			5,829			20,195			18,177
Income and franchise taxes paid		1,742			1,287			3,762			1,407
Share-based compensation expense, including restructuring expense		(6,933	)		(3,407	)		(10,337	)		(5,636	)
Gain on sale of rental fleet		1,616			1,727			3,041			3,260
Loss on disposal of property, plant and equipment		(84	)		(143	)		(102	)		(477	)
Changes in certain assets and liabilities, net of effect of businesses acquired		(14,794	)		5,434			(15,050	)		5,291
EBITDA	$	49,235		$	45,748		$	102,061		$	91,974

Mobile Mini, Inc.
Free Cash Flow GAAP Reconciliation
(Unaudited)
(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net cash provided by operating activities	$	61,769		$	35,021		$	100,552		$	69,952

Additions to rental fleet, excluding acquisitions		(23,381	)		(23,087	)		(46,397	)		(38,476	)
Proceeds from sale of rental fleet		3,716			3,833			7,054			7,677
Additions to property, plant and equipment, excluding acquisitions		(3,516	)		(4,329	)		(6,435	)		(9,081	)
Proceeds from sale of property, plant and equipment		84			288			133			467
Net capital expenditures, excluding acquisitions		(23,097	)		(23,295	)		(45,645	)		(39,413	)

Free cash flow	$	38,672		$	11,726		$	54,907		$	30,539

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 June 30, 2019 were $1.1 million and $0.4 million higher than when calculated in accordance with GAAP.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190725005749/en/

Source: Mobile Mini, Inc.

Van Welch, Executive VP &
Chief Financial Officer
Mobile Mini, Inc.
(602) 308-3879
www.mobilemini.com
-or-
Investor Relations Counsel:
The Equity Group Inc.
Fred Buonocore (212) 836-9607
Mike Gaudreau (212) 836-9620

Press Release Details

Mobile Mini Reports Q2 2019 Results and Announces Quarterly Dividend