TEMPE, Ariz.--()--Mobile Mini, Inc. (NASDAQ GS: MINI) today reported GAAP and non-GAAP financial results for the first quarter ended March 31, 2011.
“As a result of our senior note refinancing in November 2010 and our debt pay down over the last year, comparable quarter interest expense has been cut by 13.5% or close to $2 million.”
Non-GAAP First Quarter 2011 Compared to Non-GAAP First Quarter 2010
- Total revenues rose 7.8% to $82.9 million from $76.9 million;
- Leasing revenues rose 3.6% to $72.7 million from $70.2 million;
- Lease revenues comprised 87.7% of total revenues compared to 91.3% of revenues;
- Sales revenues rose 49.1% to $9.4 million from $6.3 million;
- EBITDA was $29.8 million compared to $30.0 million;
- Net income rose 34.7% to $5.1 million from $3.8 million; and
- Diluted earnings per share increased 33.3% to $0.12 from $0.09.
Other First Quarter 2011 Highlights
- Free cash flow was $22.3 million;
- Net debt was paid down by $19.5 million;
- Yield (total lease revenues per unit on rent) increased 5% from the first quarter of 2010 primarily due to an increase in trucking and ancillary revenues;
- Average utilization rate was 53.9% in the current first quarter, rising to 54.9% at March 31, 2011; in the same period in 2010, average utilization was 52.4%;
- Excess availability under our revolver at March 31, 2011 was $383.5 million.
Non-GAAP results for the first quarter of 2011 exclude $1.3 million of debt restructuring expense representing the tender premiums and the remaining unamortized acquisition date discount on the redemption of $22.3 million of 9.75% Notes and $0.2 million relating primarily to the restructuring of our operations. Non-GAAP results for the 2010 first quarter exclude approximately $2.3 million of expenses relating primarily to the restructuring of our operations. Non-GAAP reconciliation tables are on page 5, and show the effects of these expenses to comparable GAAP figures.
Business Overview
Mobile Mini’s Chairman, President & CEO, Steven Bunger stated, “Top and bottom line results for the first quarter were nicely ahead of last year. Total revenues were up 7.8% and lease revenues increased 3.6%. Not since the second quarter of 2009 have we reported a comparable quarter improvement in leasing revenues. The economy appears to be moving in the right direction, so too has our fleet utilization, with rising demand coming from all customer segments including construction-related customers. Utilization also continues to benefit from our ability to move our lease assets to markets where demand warrants, including the three new markets we entered in 2010. Yield improved 5% over the first quarter of 2010 as the result of higher trucking and ancillary revenues.”
He continued, “Over the past three years we aggressively took costs out of the business and, at the same time, made numerous investments for the future. Since the first quarter of last year, we made selective new hires in sales and IT and fully staffed our National Sales Center (NSC). These additions made payroll costs for the first quarter of 2011 higher than the comparable quarter. In addition, with utilization growing, we incurred slightly higher repair and maintenance costs for our lease fleet primarily from the redeployment of our mobile offices as well our delivery equipment. The combination of these increased expenses with our seasonally weakest quarter in terms of revenue caused our first quarter 2011 non-GAAP EBITDA margin to decline to 36%. While the return on these latest investments is still forthcoming, the payback on earlier initiatives, including the migration toward low-cost operational yards supported by full-service branches, the bifurcation of our sales force and our new logistics delivery system, continues to make Mobile Mini a more effective and efficient customer-service focused company.”
Mr. Bunger went on to say, “As we have previously stated, our plan calls for entering at least six new markets in 2011, all with low-cost operational yards. We are now pleased to announce our first three openings for the year. We recently began delivering out of a new location in Albany, New York, the state’s capital, and our first new market in 2011. Iowa’s state capital, Des Moines, is another new market and is our first location in that state. The lease has been signed and we are now migrating fleet to the new location which should be up and running in the next couple of weeks. We have also recently agreed to lease terms for a new location in Columbus, GA, best known for its proximity to Fort Benning, and we plan to be operational in this new market shortly. Albany and Columbus are our third and fourth locations in the states of New York and Georgia, respectively.”
Mark Funk, Mobile Mini’s Executive Vice President & CFO noted, “As of March 31, 2011, we had generated free cash flow for 13 consecutive quarters. First quarter free cash flow totaled $22.3 million. Strong cash flow from operations of $20.8 million plus $1.5 million in proceeds generated from the sale of units in the fleet in excess of capital expenditures enabled us to pay down an additional $19.5 million of debt. We have not changed our net capital expenditures expectations for the year, which as previously noted, would be nominal as we put available lease assets back to work at new locations and current ones. We therefore remain confident in our ability to generate strong free cash flow and pay down debt through the remainder of the year. Since the acquisition of Mobile Storage Group in June 2008, Mobile Mini has generated free cash flow of $200.8 million and reduced its debt by $179.5 million.”
Mr. Funk also noted, “As a result of our senior note refinancing in November 2010 and our debt pay down over the last year, comparable quarter interest expense has been cut by 13.5% or close to $2 million.”
Mr. Funk pointed out, “Our balance sheet will reflect only one class of stock as of April 14, 2011. The former Series A Convertible Redeemable Participating Preferred Stock, par value $0.01 per share (the “Preferred Stock”), automatically converted into an aggregate of 8,182,356 shares of our common stock. As a result of the conversion, 44,985,180 shares of Common Stock were outstanding on that date, and there are no shares of Preferred Stock outstanding.”
In closing, Mr. Funk stated, “It is worth noting once again that the first quarter is seasonally and historically our weakest quarter. We look forward to comparable quarter gains throughout the balance of the year as we continue to benefit from the confluence of the operational and financial measures taken in the recent past, the growth initiatives designed to capitalize upon the economic rebound, plus the operating leverage inherent in our business model.”
EBITDA, EBITDA margin, non-GAAP SG&A and free cash flow are non-GAAP financial measures as defined by Securities and Exchange Commission (“SEC”) rules. The method of reconciliation of EBITDA, EBITDA margin, non-GAAP SG&A and free cash flow 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, Thursday, May 5, 2011 at 12 noon EDT to review these results. To listen to the call live, dial (201) 689-8345 and ask for the Mobile Mini Conference Call or go to www.mobilemini.com and click on the Investors section. Additionally, a slide presentation that will accompany the call will be posted at www.mobilemini.com on the Investors section and will be available in advance and after the call. 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 242,800 portable storage and office units with 124 locations in the U.S., United Kingdom, Canada and The Netherlands. Mobile Mini is included on the Russell 2000® and 3000® Indexes and the S&P Small Cap Index.
This news release contains forward-looking statements, particularly regarding growth, free cash flow, ability to enter new markets, enhancement of operating leverage, comparable quarter gains, favorable trends continuing, and increasing debt pay down, 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.
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Mobile Mini, Inc. Condensed Consolidated Statements of Income |
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Three Months Ended March 31, |
Three Months Ended March 31, |
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| Revenues: |
2011 Actual |
2011 |
2010 |
2010 |
||||||||||||
| Leasing | $ | 72,679 | $ | 72,679 | $ | 70,179 | $ | 70,179 | ||||||||
| Sales | 9,412 | 9,412 | 6,314 | 6,314 | ||||||||||||
| Other | 768 | 768 | 385 | 385 | ||||||||||||
| Total revenues | 82,859 | 82,859 | 76,878 | 76,878 | ||||||||||||
| Cost of sales | 6,019 | 6,019 | 4,090 | 4,090 | ||||||||||||
| Leasing, selling and general expenses (2) | 47,088 | 47,048 | 42,862 | 42,822 | ||||||||||||
| Integration, merger and restructuring expenses (3) | 205 | - | 2,226 | - | ||||||||||||
| Depreciation and amortization | 8,795 | 8,795 | 9,140 | 9,140 | ||||||||||||
| Total costs and expenses | 62,107 | 61,862 | 58,318 | 56,052 | ||||||||||||
| Income from operations | 20,752 | 20,997 | 18,560 | 20,826 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | - | - | 1 | 1 | ||||||||||||
| Interest expense | (12,699 | ) | (12,699 | ) | (14,687 | ) | (14,687 | ) | ||||||||
| Debt restructuring expense (4) | (1,334 | ) | - | - | - | |||||||||||
| Foreign currency exchange | (1 | ) | (1 | ) | (8 | ) | (8 | ) | ||||||||
| Income before provision for income taxes | 6,718 | 8,297 | 3,866 | 6,132 | ||||||||||||
| Provision for income taxes | 2,567 | 3,176 | 1,456 | 2,329 | ||||||||||||
| Net income | 4,151 | 5,121 | 2,410 | 3,803 | ||||||||||||
| Earnings allocable to preferred stockholders | (777 | ) | (958 | ) | (456 | ) | (699 | ) | ||||||||
| Net income available to common stockholders | $ | 3,374 | $ | 4,163 | $ | 1,954 | $ | 3,104 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.09 | $ | 0.12 | $ | 0.06 | $ | 0.09 | ||||||||
| Diluted | $ | 0.09 | $ | 0.12 | $ | 0.06 | $ | 0.09 | ||||||||
| Weighted average number of common and common | ||||||||||||||||
| Share equivalents outstanding: | ||||||||||||||||
| Basic | 35,580 | 35,580 | 35,083 | 35,083 | ||||||||||||
| Diluted | 44,474 | 44,474 | 43,514 | 43,514 | ||||||||||||
| EBITDA | $ | 29,546 | $ | 29,791 | $ | 27,693 | $ | 29,959 | ||||||||
| (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) | Difference relates to one-time expenses excluded in the non-GAAP presentation. |
| (3) | Integration, merger and restructuring expenses represent costs relating primarily to the restructuring of our operations and are excluded in the non-GAAP presentation. |
| (4) | Represents the tender premiums and the remaining unamortized acquisition date discount on the redemption of $22.3 million of 9.75% Notes and is excluded in the non-GAAP presentation. |
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Non-GAAP Reconciliation to Nearest Comparable GAAP Measure |
Non-GAAP Reconciliation to Nearest Comparable GAAP Measure |
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| Non-GAAP (1) |
Integration, merger and restructuring expenses & other (2) |
Debt restructuring expense (3) |
GAAP | Non-GAAP (1) |
Integration, merger and restructuring expenses & other (2) |
GAAP | ||||||||||||||||||||||
| Revenues | $ | 82,859 | $ | - | $ | - | $ | 82,859 | $ | 76,878 | $ | - | $ | 76,878 | ||||||||||||||
| EBITDA | $ | 29,791 | $ | (245 | ) | $ | - | $ | 29,546 | $ | 29,959 | $ | (2,266 | ) | $ | 27,693 | ||||||||||||
| EBITDA margin |
36.0 |
% | (0.3 | )% | - | % | 35.7 | % | 39.0 | % | (3.0 | )% | 36.0 | % | ||||||||||||||
| Operating income | $ | 20,997 | $ | (245 | ) | $ | - | $ | 20,752 | $ | 20,826 | $ | (2,266 | ) | $ | 18,560 | ||||||||||||
| Operating income margin | 25.3 | % | (0.3 | )% | - | % | 25.0 | % | 27.1 | % | (3.0 | )% | 24.1 | % | ||||||||||||||
| Pre tax income | $ | 8,297 | $ | (245 | ) | $ | (1,334 | ) | $ | 6,718 | $ | 6,132 | $ | (2,266 | ) | $ | 3,866 | |||||||||||
| Net income | $ | 5,121 | $ | (150 | ) | $ | (820 | ) | $ | 4,151 | $ | 3,803 | $ | (1,393 | ) | $ | 2,410 | |||||||||||
| Diluted earnings per share | $ | 0.12 | $ | (0.01 | ) | $ | (0.02 | ) | $ | 0.09 | $ | 0.09 | $ | (0.03 | ) | $ | 0.06 | |||||||||||
| (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 relating primarily to the restructuring of our operations and other excludes one-time expenses incurred in the applicable period, and are excluded in the non-GAAP presentation. |
| (3) | Represents the tender premiums and the remaining unamortized acquisition date discount on the redemption of $22.3 million of 9.75% Notes and is excluded in the non-GAAP presentation. |
This press release includes the financial measures “EBITDA”, “EBITDA margin”, “non-GAAP SG&A” and “free cash flow”. These measurements may be deemed a “non-GAAP financial measure” under rules of the SEC, 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. We typically further adjust EBITDA to ignore the effect of what we consider transactions or events not related to our core business to arrive at non-GAAP EBITDA in the reconciliation below. 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 they provide 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 GAAP 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.
Non-GAAP SG&A permits a comparative assessment of our SG&A expenses by excluding certain one-time expenses. We define non-GAAP SG&A as GAAP selling, general and administrative expense less approximately $40,000 of one-time expenses in 2011 and 2010.
A reconciliation of EBITDA to net cash provided by operating activities and net income to EBITDA and non-GAAP 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 Month Ended
March 31, |
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| 2011 | 2010 | ||||||||
| (In thousands) | |||||||||
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Reconciliation of EBITDA to net cash provided by operating activities: |
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| EBITDA | $ | 29,546 | $ | 27,693 | |||||
| Interest paid | (5,383 | ) | (14,977 | ) | |||||
| Income and franchise taxes paid | (66 | ) | (133 | ) | |||||
| Share-based compensation expense | 1,325 | 1,416 | |||||||
| Gain on sale of lease fleet units | (3,093 | ) | (2,026 | ) | |||||
|
Loss (gain) on disposal of property, plant and
equipment |
21 | (7 | ) | ||||||
| Changes in certain assets and liabilities: | |||||||||
| Receivables | 1,758 | 3,701 | |||||||
| Inventories | (894 | ) | 748 | ||||||
| Deposits and prepaid expenses | (305 | ) | 952 | ||||||
| Other assets and intangibles | (97 | ) | (182 | ) | |||||
| Accounts payable and accrued liabilities | (2,038 | ) | (6,935 | ) | |||||
| Net cash provided by operating activities | $ | 20,774 | $ | 10,250 | |||||
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Reconciliation of net income to EBITDA and
non-GAAP EBITDA: |
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| Net income | $ | 4,151 | $ | 2,410 | |||||
| Interest expense | 12,699 | 14,687 | |||||||
| Provision for income taxes | 2,567 | 1,456 | |||||||
| Depreciation and amortization | 8,795 | 9,140 | |||||||
| Debt restructuring expense | 1,334 | - | |||||||
| EBITDA | 29,546 | 27,693 | |||||||
|
Integration, merger and restructuring expenses &
other |
245 |
2,266 |
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| Non-GAAP EBITDA | $ | 29,791 | $ | 29,959 | |||||
|
Reconciliation of net cash provided by operating
activities to free cash flow: |
|||||||||
| Net cash provided by operating activities | $ | 20,774 | $ | 10,250 | |||||
| Additions to lease fleet | (3,517 | ) | (3,832 | ) | |||||
| Proceeds from sale of lease fleet units | 8,203 | 5,439 | |||||||
| Additions to property, plant and equipment | (3,191 | ) | (557 | ) | |||||
|
Proceeds from sale of property, plant and
equipment |
26 | 48 | |||||||
| Net capital proceeds | 1,521 | 1,098 | |||||||
| Free cash flow | $ | 22,295 | $ | 11,348 | |||||
|
Mobile Mini, Inc. |
||||||||
| March 31, 2011 | December 31, 2010 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Cash | $ | 2,389 | $ | 1,634 | ||||
| Receivables, net | 41,345 | 42,678 | ||||||
| Inventories | 20,538 | 19,569 | ||||||
| Lease fleet, net | 1,026,530 | 1,028,403 | ||||||
| Property, plant and equipment, net | 81,640 | 80,731 | ||||||
| Deposits and prepaid expenses | 8,756 | 8,405 | ||||||
| Other assets and intangibles, net | 21,850 | 23,478 | ||||||
| Goodwill | 513,803 | 511,419 | ||||||
| Total assets | $ | 1,716,851 | $ | 1,716,317 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Accounts payable | $ | 15,428 | $ | 13,607 | ||||
| Accrued liabilities | 50,782 | 49,276 | ||||||
| Lines of credit | 400,169 | 396,882 | ||||||
| Notes payable | 197 | 289 | ||||||
| Obligations under capital leases | 2,188 | 2,576 | ||||||
| Senior Notes, net | 349,654 | 371,655 | ||||||
| Deferred income taxes | 169,026 | 165,567 | ||||||
| Total liabilities | 987,444 | 999,852 | ||||||
| Commitments and contingencies | ||||||||
|
Convertible preferred stock; $.01 par value, 20,000 shares authorized, 8,556 issued and 8,182 outstanding at March 31, 2011 and 8,556 issued and 8,191 outstanding at December 31, 2010, stated at liquidation preference values |
147,272 |
147,427 | ||||||
| Stockholders' equity: | ||||||||
|
Common stock; $.01 par value, 95,000 shares authorized, 38,981 issued and 36,806 outstanding at March 31, 2011 and 38,962 issued and 36,787 outstanding at December 31, 2010 |
390 | 390 | ||||||
| Additional paid-in capital | 351,659 | 349,693 | ||||||
| Retained earnings | 288,393 | 284,242 | ||||||
| Accumulated other comprehensive loss | (19,007 | ) | (25,987 | ) | ||||
| Treasury stock, at cost, 2,175 shares | (39,300 | ) | (39,300 | ) | ||||
| Total stockholders' equity | 582,135 | 569,038 | ||||||
| Total liabilities and stockholders' equity | $ | 1,716,851 | $ | 1,716,317 | ||||
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