Mobile Mini Reports Third Quarter Results
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Free Cash Flow of Approximately $21.9 Million in Q3 and $70.2 Million Year-to-Date;
41.8% EBITDA Margin Achieved
TEMPE, Ariz.--(BUSINESS WIRE)-- Mobile Mini, Inc. (NASDAQ GS: MINI) today reported GAAP and non-GAAP financial results for the third quarter ended September 30, 2009.
Non-GAAP Third Quarter 2009 vs. Non-GAAP Third Quarter 2008
-- Total revenues were $92.1 million, down 30.6% from $132.8 million;
-- Lease revenues decreased 31.2% to $82.1 million from $119.3 million;
-- Lease revenues comprised 89.2% of total revenues compared to 89.9%
during the 2008 third quarter;
-- Sales revenues were $9.5 million, a 24.2% decrease from $12.5 million;
-- Margins on sales of units increased 2.9 percentage points to 34.5% from
31.6%;
-- EBITDA (earnings before interest expense, tax, depreciation and
amortization) margins were 42% for both periods;
-- EBITDA decreased 30.8% to $38.5 million from $55.7 million;
-- Net income was $9.1 million compared to $17.1 million; and,
-- Diluted earnings per share ("EPS") were $0.21 and $0.40 for the current
and prior year's third quarter, respectively.
Non-GAAP results for the third quarter of 2009, (i.e. EBITDA, EBITDA margin, and free cash flow) exclude approximately $1.5 million in integration, merger and restructuring expenses which represent expenses in conjunction with the continued restructuring of our operations. Non-GAAP reconciliation tables are on page 6, and show the effects of these expenses to comparable GAAP figures.
Other Third Quarter 2009 Highlights
-- Free cash flow totaled $21.9 million compared to $3.6 million in the
same period of 2008;
-- We used free cash flow and other funds to pay down debt by an additional
$29.2 million;
-- Yield (total lease revenues per unit on rent) increased 3.8% from the
second quarter of 2009, primarily due to an increase in trucking and
ancillary revenues;
-- Average utilization rate was 56.9% in the third quarter versus 59.5%
during the second quarter due primarily to the continued weakness in the
economy; and,
-- Funded debt to EBITDA, calculated in accordance with Company's revolving
credit facility, was 4.7 to 1 at September 30, 2009.
Business Overview
Mobile Mini's Chairman, President & CEO, Steven Bunger stated, "During this protracted economic downturn, we are measuring our progress by our ability to preserve margins, generate free cash flow, pay down debt, and maintain price stability. All of these objectives were accomplished. Despite lower lease and sales revenues, we have maintained our margins by continuing to take costs out of our business. This has included converting full-service branches into low cost operational yards, one of which was converted during the third quarter. Since December 2008, we have cut over 850 positions or approximately 35% of our workforce. Other ongoing expense reduction activities include divesting idle equipment, renegotiating property leases, and tightening our procurement processes. Since the close of the second quarter of this year, we've cut another 3.5% or $1.7 million in selling, general and administrative expenses."
He continued, "In the third quarter of 2009, our seventh consecutive quarter of free cash flow, excluding the Mobile Storage Group (MSG) acquisition, we generated free cash flow of $21.9 million, bringing the year-to-date total to $70.2 million. This represents a $55.4 million improvement over the first nine months of 2008. As was the case in the first six months, third quarter capital expenditures were again less than net proceeds generated from the sale of units from the fleet, at an impressive 34.5% gross sales margin, as well as from sales of excess property, plant and equipment. In the third quarter, we paid down $29.2 million of our debt. Our ability to preserve pricing in an extremely difficult business environment, is, as always, due to our highly differentiated and superior products, our diverse customer base, and because of our sales and marketing driven culture."
Reviewing Mobile Mini's business development and optimization programs, Mr. Bunger noted, "We are covering all our bases so that when the economy turns, we will be in the best possible position to resume the profitable growth that has been our corporate legacy. From a customer service perspective, our customers have rated Mobile Mini with a best in class customer loyalty Net Promoter Score. We are applying Lean6Sigma to eliminate waste and inefficiencies. Another priority is logistics optimization for our transportation fleet and inventory. To improve the effectiveness of our salesforce, we recently migrated to a premier customer relationship management tool. With regard to advertising and marketing, we are reducing print advertising costs and are relying more on various methods of internet advertising. Finally, we will enter three new markets in the coming months through low cost greenfield operational yards. These new markets will be in Omaha, NE, Norfolk, VA and Washington, D.C. The relocation of existing fleet to these locations should enhance utilization."
On the subject of European operations, Mr. Bunger pointed out, "Despite the difficult economic environment, we have made significant progress in the U.K., a less developed portable storage market than North America, but where economies of scale have produced a third quarter improvement in EBITDA margins from the second quarter, along with gains in lease revenues."
Mark Funk, Mobile Mini's Executive Vice President & CFO noted, "Third quarter capital expenditures of $9.0 million were once again primarily for property, plant and equipment, IT, and locking systems for, and rebranding of, the MSG lease fleet. The approximately $9.1 million we received in proceeds from the sale of fleet, and excess property, plant and equipment, more than offset those expenditures. In comparison, for the first nine months of 2008, net capital expenditures were $49.7 million. With net capital proceeds of $1.6 million in the first nine months of the year, and expectations of low capex requirements for the remainder of the year, it now appears that net capex should come in at less than $5 million, well below our previous estimate of $10 million. Year-to-date, we have paid down $63.5 million of debt, which would have been $73.9 million, exclusive of foreign exchange. Since closing the MSG transaction in late June 2008, a total of $113.0 million of net debt has been paid down. As a result of reduced borrowings and lower interest rates, comparable third quarter interest expense has been reduced. Our balance sheet remains strong and flexible with $326.3 million of borrowing availability under our $900 million revolving credit facility and we have no refinancing requirements prior to 2013."
He concluded, "During this economic downturn, we have and will continue to streamline our organization and operations as we strive to achieve comparable quarter EBITDA margin improvements and generate free cash flow."
EBITDA, EBITDA margin and free cash flow are non-GAAP financial measures as defined by Securities and Exchange Commission ("SEC") rules. The method of reconciliation of these measures to the most directly comparable GAAP financial measures can be found later in this release.
Conference Call
Mobile Mini will host a conference call today, Wednesday, November 4, 2009 at 12 noon ET to review these results. To listen to the call live, dial 706-679-0885 and ask for the Mobile Mini Conference Call or go to www.mobilemini.com and click on the Investors section. Additionally, a slide presentation which will accompany the call will be posted at www.mobilemini.com on the Investors Section and will be available after the call. We will also post the method of reconciliation of non-GAAP financial measures used in the slide show to the most directly comparable GAAP financial measures. 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 conference call can be accessed for approximately 14 days after the call at Mobile Mini's website.
Mobile Mini, Inc. is the world's leading provider of portable storage solutions through its total lease fleet of approximately 260,000 portable storage and office units with 91 branches and 27 operational yards in the U.S., United Kingdom, Canada and The Netherlands. Mobile Mini is included on the Russell 2000(R) and 3000(R) Indexes and the S&P Small Cap Index.
This news release contains forward-looking statements, particularly regarding free cash flow, ability to reduce costs and capital expenditures, increase utilization, maintain margin improvements and pay down debt, 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.
Mobile Mini, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(in thousands except per share data)/(includes effects of rounding)
Three Months Ended Three Months Ended
September 30, September 30,
2009 2009 2008 2008
Revenues: GAAP Non-GAAP (1) GAAP Non-GAAP (1)
Leasing $ 82,098 $ 82,098 $ 119,323 $ 119,323
Sales 9,493 9,493 12,528 12,528
Other 495 495 901 901
Total revenues 92,086 92,086 132,752 132,752
Cost of sales 6,220 6,220 8,571 8,571
Leasing, selling and 47,355 47,355 68,466 68,466
general expenses
Integration, merger and
restructuring expenses 1,532 - 6,059 -
(2)
Depreciation and 9,227 9,227 9,705 9,705
amortization
Total costs and 64,334 62,802 92,801 86,742
expenses
Income from operations 27,752 29,284 39,951 46,010
Other income (expense):
Interest income 23 23 7 7
Interest expense (14,595 ) (14,595 ) (18,022 ) (18,022 )
Foreign currency (13 ) (13 ) (45 ) (45 )
exchange
Income before provision 13,167 14,699 21,891 27,950
for income taxes
Provision for income 5,047 5,608 8,615 10,814
taxes
Net income 8,120 9,091 13,276 17,136
Earnings allocable to (1,615 ) (1,808 ) (2,650 ) (3,431 )
preferred stock
Net income available to $ 6,505 $ 7,283 $ 10,626 $ 13,705
common stockholders
Earnings per share:
Basic $ 0.19 $ 0.21 $ 0.31 $ 0.40
Diluted $ 0.19 $ 0.21 $ 0.31 $ 0.40
Weighted average number
of common and common
share equivalents
outstanding:
Basic 34,464 34,464 34,174 34,174
Diluted 43,416 43,416 43,257 43,257
EBITDA $ 36,989 $ 38,521 $ 49,618 $ 55,677
(1)This column represents a Non-GAAP presentation even though some individual line items presented, such as revenues, are identical under both GAAP and Non-GAAP presentations. (2)Integration, merger and restructuring expenses represent costs that we incurred in connection with the MSG acquisition and the expenses in conjunction with the continued restructuring of our operations and are excluded in the Non-GAAP presentation.
Mobile Mini, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(in thousands except per share data)/(includes effects of rounding)
Nine Months Ended Nine Months Ended
September 30, September 30,
2009 2009 2008 2008
Revenues: Actual Non-GAAP (1) Actual Non-GAAP (1)
Leasing $ 256,011 $ 256,011 $ 262,208 $ 262,208
Sales 29,411 29,411 28,451 28,451
Other 1,752 1,752 1,719 1,719
Total revenues 287,174 287,174 292,378 292,378
Costs and expenses:
Cost of sales 19,709 19,709 19,562 19,562
Leasing, selling and 148,002 148,002 155,732 155,732
general expenses
Integration, merger and
restructuring expenses 9,375 - 17,668 -
(2)
Depreciation and 29,914 29,914 21,121 21,121
amortization
Total costs and 207,000 197,625 214,083 196,415
expenses
Income from operations 80,174 89,549 78,295 95,963
Other income (expense):
Interest income 29 29 69 69
Interest expense (44,802 ) (44,802 ) (30,586 ) (30,586 )
Foreign currency (88 ) (88 ) (53 ) (53 )
exchange
Income before provision 35,313 44,688 47,725 65,393
for income taxes
Provision for income 13,500 17,043 18,930 25,568
taxes
Net income 21,813 27,645 28,795 39,825
Earnings allocable to (4,344 ) (5,506 ) (2,690 ) (3,530 )
preferred stock
Net income available to $ 17,469 $ 22,139 $ 26,105 $ 36,295
common stockholders
Earnings per share:
Basic $ 0.51 $ 0.64 $ 0.77 $ 1.06
Diluted $ 0.51 $ 0.64 $ 0.77 $ 1.06
Weighted average number
of common and common
share equivalents
outstanding:
Basic 34,400 34,400 34,124 34,124
Diluted 43,171 43,171 37,512 37,512
EBITDA $ 110,029 $ 119,404 $ 99,432 $ 117,100
This column represents a Non-GAAP presentation even though some
(1) individual line items presented, such as revenues, are identical under
both GAAP and Non-GAAP presentations.
Integration, merger and restructuring expenses represent costs that we
(2) incurred in connection with the MSG acquisition and the expenses in
conjunction with the continued restructuring of our operations and are
excluded in the Non-GAAP presentation.
Non-GAAP Reconciliation to Nearest Non-GAAP Reconciliation to Nearest
Comparable GAAP Measure Comparable GAAP Measure
Three Months Ended September 30, 2009 Three Months Ended September 30, 2008
(in thousands except per share data) (in thousands except per share data)
(includes effects of rounding) (includes effects of rounding)
Integration, Integration,
Non-GAAP merger and Non-GAAP merger and
(1) GAAP (1) GAAP
restructuring restructuring
expenses (2) expenses (2)
Revenues $ 92,086 $ - $ 92,086 $ 132,752 $ - $ 132,752
EBITDA $ 38,521 $ (1,532 ) $ 36,989 $ 55,677 $ (6,059 ) $ 49,618
EBITDA 41.8 % -1.6 % 40.2 % 41.9 % -4.5 % 37.4 %
margin
Operating
income $ 29,284 $ (1,532 ) $ 27,752 $ 46,010 $ (6,059 ) $ 39,951
(loss)
Operating
income 31.8 % -1.7 % 30.1 % 34.7 % -4.6 % 30.1 %
margin
Pre tax
income $ 14,699 $ (1,532 ) $ 13,167 $ 27,950 $ (6,059 ) $ 21,891
(loss)
Net
income $ 9,091 $ (971 ) $ 8,120 $ 17,136 $ (3,860 ) $ 13,276
(loss)
Diluted
earnings $ 0.21 $ (0.02 ) $ 0.19 $ 0.40 $ (0.09 ) $ 0.31
(loss)
per share
Non-GAAP Reconciliation to Nearest Non-GAAP Reconciliation to Nearest
Comparable GAAP Measure Comparable GAAP Measure
Nine Months Ended September 30, 2009 Nine Months Ended September 30, 2008
(in thousands except per share data) (in thousands except per share data)
(includes effects of rounding) (includes effects of rounding)
Integration, Integration,
Non-GAAP merger and Non-GAAP merger and
(1) GAAP (1) GAAP
restructuring restructuring
expenses (2) expenses (2)
Revenues $ 287,174 $ - $ 287,174 $ 292,378 $ - $ 292,378
EBITDA $ 119,404 $ (9,375 ) $ 110,029 $ 117,100 $ (17,668 ) $ 99,432
EBITDA 41.6 % -3.3 % 38.3 % 40.1 % -6.1 % 34.0 %
margin
Operating
income $ 89,549 $ (9,375 ) $ 80,174 $ 95,963 $ (17,668 ) $ 78,295
(loss)
Operating
income 31.2 % -3.3 % 27.9 % 32.8 % -6.0 % 26.8 %
margin
Pre tax
income $ 44,688 $ (9,375 ) $ 35,313 $ 65,393 $ (17,668 ) $ 47,725
(loss)
Net
income $ 27,645 $ (5,832 ) $ 21,813 $ 39,825 $ (11,030 ) $ 28,795
(loss)
Diluted
earnings $ 0.64 $ (0.13 ) $ 0.51 $ 1.06 $ (0.29 ) $ 0.77
(loss)
per share
(1) This column represents a Non-GAAP presentation even though some individual line items presented, such as revenues, are identical under both GAAP and Non-GAAP presentations. (2) Integration, merger and restructuring expenses represent costs that we incurred in connection with the MSG acquisition and the expenses in conjunction with the continued restructuring of our operations and are excluded in the Non-GAAP presentation.
This press release includes the financial measures "EBITDA", "EBITDA margin" and "free cash flow". These measurements may be deemed a "non-GAAP financial measure" under rules of the Securities and Exchange Commission, including Regulation G. This non-GAAP financial information may be determined or calculated differently by other companies.
EBITDA is defined as net income before interest expense, income taxes, depreciation and amortization, and if applicable, debt restructuring or extinguishment costs. The GAAP financial measure that is most directly comparable to EBITDA is net cash provided by operating activities. EBITDA margin is calculated by dividing consolidated EBITDA by total revenues. The GAAP financial measure that is most directly comparable to EBITDA margin is operating margin, which represents operating income divided by revenues. We present EBITDA and EBITDA margin 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 it provides an overall evaluation of our financial condition. In addition, EBITDA is a component of certain financial covenants under our revolving credit facility and is used to determine our available borrowing ability and the interest rate. We include EBITDA in the earnings announcement to provide transparency to investors. EBITDA has certain limitations as an analytical tool and should not be used as a substitute for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with generally accepted accounting principles in the United States or as a measure of our profitability or our liquidity. EBITDA margin is presented along with the operating margin so as not to imply that more emphasis should be placed on it than the corresponding GAAP measure.
Free cash flow is defined as net cash provided by operating activities, less net cash used in investing activities, excluding acquisitions. 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 GAAP financial measure. 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 the Company's existing businesses, debt service obligations and strategic acquisitions.
A reconciliation of EBITDA to net cash provided by operating activities and net income to EBITDA, as well as a reconciliation of net cash provided by operating activities to free cash flow, follows. These reconciliations are in thousands and include effects of rounding:
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Reconciliation of EBITDA to
net cash provided by
operating activities:
EBITDA $ 36,989 $ 49,618 $ 110,029 $ 99,432
Interest paid (15,722 ) (9,354 ) (43,424 ) (16,344 )
Income and franchise taxes (92 ) (59 ) (964 ) (488 )
paid
Provision for restructuring (102 ) - (102 ) -
Share-based compensation 1,825 1,541 5,106 3,905
expense
Gain on sale of lease fleet (3,026 ) (3,001 ) (8,805 ) (6,095 )
units
(Gain) loss on disposal of
property, plant and (36 ) 437 - 466
equipment
Changes in certain assets
and liabilities, net of
effect of business acquired:
Receivables 2,330 (82 ) 19,893 (2,347 )
Inventories 1,149 3,085 2,788 (485 )
Deposits and prepaid 688 337 3,123 1,237
expenses
Other assets and intangibles (228 ) (235 ) (669 ) (136 )
Accounts payable and accrued (1,986 ) (19,242 ) (18,350 ) (14,559 )
liabilities
Net cash provided by $ 21,789 $ 23,045 $ 68,625 $ 64,586
operating activities
Reconciliation of net income
to EBITDA:
Net income $ 8,120 $ 13,276 $ 21,813 $ 28,795
Interest expense 14,595 18,022 44,802 30,586
Provision for income taxes 5,047 8,615 13,500 18,930
Depreciation and 9,227 9,705 29,914 21,121
amortization
EBITDA $ 36,989 $ 49,618 $ 110,029 $ 99,432
Reconciliation of free cash
flow:
Net cash provided by $ 21,789 $ 23,045 $ 68,625 $ 64,586
operating activities
Net cash provided by (used
in) investing activities, 76 (19,407 ) 1,595 (49,746 )
excluding acquisitions
Free cash flow $ 21,865 $ 3,638 $ 70,220 $ 14,840
Mobile Mini, Inc.
Condensed Consolidated Balance Sheets
(in thousands except per share data)/(includes effects of rounding)
September 30, 2009 December 31, 2008
(unaudited) (audited)
ASSETS
Cash $ 1,741 $ 3,184
Receivables, net 42,214 61,424
Inventories 23,148 26,577
Lease fleet, net 1,060,668 1,078,156
Property, plant and equipment, net 85,366 88,509
Deposits and prepaid expenses 10,209 13,287
Other assets and intangibles, net 28,693 35,063
Goodwill 513,144 492,657
Total assets $ 1,765,183 $ 1,798,857
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 13,855 $ 21,433
Accrued liabilities 69,463 86,214
Lines of credit 493,306 554,532
Notes payable 186 1,380
Obligations under capital leases 4,415 5,497
Senior notes, net 346,349 345,797
Deferred income taxes 150,160 134,786
Total liabilities 1,077,734 1,149,639
Commitments and contingencies
Convertible preferred stock; $.01 par
value, 20,000 shares
authorized, 8,556 issued and
outstanding at September 153,990 153,990
30, 2009 and December 31, 2008,
respectively, stated at
its liquidity preference values
Stockholders' equity:
Common stock; $.01 par value, 95,000
shares authorized,
37,693 issued and 35,518 outstanding
at September 30, 377 375
2009 and 37,489 issued and 35,314
outstanding at
December 31, 2008, respectively
Additional paid-in capital 334,671 328,696
Retained earnings 264,749 242,935
Accumulated other comprehensive loss (27,038 ) (37,478 )
Treasury stock, at cost, 2,175 shares (39,300 ) (39,300 )
Total stockholders' equity 533,459 495,228
Total liabilities and stockholders' $ 1,765,183 $ 1,798,857
equity
Source: Mobile Mini, Inc.
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