Mobile Mini Reports Second Quarter Results

TEMPE, Ariz.--(BUSINESS WIRE)--Mobile Mini, Inc. (NASDAQ GS: MINI) today reported financial GAAP and non-GAAP results for the second quarter ended June 30, 2008.

Non-GAAP Second Quarter 2008 vs. Non-GAAP Second Quarter 2007

• Total revenues increased 3.6% to $81.1 million from $78.3 million;
• Lease revenues increased 3.5% to $72.8 million from $70.4 million;
• Lease revenues comprised 89.8% of total revenues for the current year’s second quarter and 89.9% in the 2007 second quarter;
• EBITDA (earnings before interest expense, tax, depreciation and amortization) declined slightly to $32.0 million from $32.8 million;
• Net income was $12.1 million compared to $13.2 million;
• Diluted earnings per share (“EPS”) were $0.35 and $0.36 for the current and prior year’s second quarter, respectively; and
• Operating margin declined to 32.3% from 35.3%.

Non-GAAP results for the current quarter exclude approximately $11.6 million of integration and merger expense the company incurred in connection with the merger of Mobile Storage Group (“MSG”) into Mobile Mini on June 27, 2008. Non-GAAP results for the second quarter of 2007 exclude approximately $11.2 million of debt extinguishment expense. Non-GAAP reconciliation tables are on page 6, and show adjustments of Non-GAAP figures to the comparable GAAP figures.

Both GAAP and Non-GAAP results include share-based compensation expenses under SFAS 123(R) of approximately $1.4 million and $1.2 million before tax, and $1.0 million and $0.9 million after tax, applicable to share-based compensation in the second quarters of 2008 and 2007, respectively.

Other Second Quarter Highlights

• Mobile Mini consummated its acquisition of MSG through a merger that was effected on June 27, 2008;
• The average utilization rate was 75.4% versus 78.8% during the second quarter of 2007;
• Yield (total lease revenues per unit on rent) was 2.2% ahead of last year’s second quarter;
• The lease fleet increased 76.4% to approximately 275,200 units at June 30, 2008 as compared to 156,000 units at June 30, 2007; excluding the lease fleet acquired through the MSG merger, the fleet increased 3.7% through mid-year;
• The average number of units on rent increased 1.9% to approximately 123,900 from approximately 121,500 in the second quarter of 2007;
• Capital expenditures were $13.9 million for the current second quarter compared to $36.8 million in the prior year’s second quarter;
• Free cash flow was $6.7 million for the current second quarter;
• Return on invested capital for the trailing 12 months ended June 30, 2008 and 2007 was 12.0% and 14.5% respectively; and
• Funded debt to EBITDA, calculated in accordance with our revolving credit facility, was 3.95:1 at June 30, 2008.

Business Overview

Mobile Mini’s Chairman, President & CEO, Steven Bunger stated, “The major event of the second quarter was the consummation of the merger with Mobile Storage Group on June 27^th. Our merger and integration strategy has been in place since early in the year, and implementation began immediately after closing. As a result of the merger and after closing or consolidating 46 overlapping U.S. operating branches, we have added 21 U.S. and 14 U.K. operating branch locations. As a result, we no longer have as high a degree of U.S. branch concentration in the Southeast and Southwest, regions which have been especially hard hit by the current downturn in construction activity and the ripple effect on local economies. The newly acquired U.S. branches have begun their transformation to the Mobile Mini branch model; MSG phone lines have been transferred; MIS systems have been adapted and as units in the lease fleet come off rent, they are undergoing re-branding and our proprietary locking system is being added. At the same time, the MSG staff that joined Mobile Mini is transitioning to the Mobile Mini business model and our trademark sales and marketing programs are being expanded to cover the new branches. Various systems and programs developed by MSG are also being implemented at all of our branches. We have also made significant progress in eliminating redundant corporate functions and overhead. We continue to believe that at least $25 million in cost synergies from this transaction are achievable. We are realizing these synergies sooner than originally anticipated and expect that they will be attained in full during 2009.”

He continued, “Despite the weak U.S. economy, especially in the construction sector, we continued to achieve overall top line gains as the yield increase enhanced the only slight increase in average units on rent. While there is currently a slowdown in the U.S., our business in the U.K. remains especially strong. We, like most companies with a transportation component in their business, were impacted by the 55% increase in fuel costs over the past year, but we have begun to mitigate some of those costs by imposing a fuel surcharge in the U.S. in the second quarter and in the U.K. last month. Our second quarter margins were negatively impacted by the U.K. infrastructure costs which have been fully in place since the third quarter of 2007. With those costs behind us, the incremental revenue from additional units on lease will generate incremental EBIDTA and net income in the coming year. This benefit will be compounded with the merger of MSG and Mobile Mini operations in the U.K. In the U.S., we plan to implement a price increase to selected customers who have had units out on rent at a fixed rate for an extended period of time. During the second quarter, and even more so since the merger closed, the relocation of our more expensive units between U.S. branches continued, thereby minimizing fleet purchases and optimizing utilization in a difficult market. Throughout the year, we have been rightsizing our fleet, including, for example, manufacturing certain high demand products such as wide units and security offices. We have also reconfigured some of our 40 foot units into two 20 foot units and we have purchased additional wood offices. At the same time, we’ve pared down the less productive units in our lease fleet through sales and disposals.”

He continued, “Due to only nominal fleet purchases and maintenance expense, free cash flow for the current second quarter was $6.7 million and $11.2 million for the first half of 2008. By comparison, there was a cash requirement of $21.8 million and $33.3 million during the second quarter and first half of 2007, respectively. It is our objective to grow Mobile Mini in the near term primarily using the existing fleet which will enable us to continue to generate free cash flow and pay down debt.”

Updates Guidance

Lawrence Trachtenberg, Executive Vice President & CFO, pointed out, “As previously reported, the MSG merger will be accretive to our 2008 earnings, excluding merger and integration costs. Although there has been a noticeable slowdown in the level of non-residential construction activity in the last several months and this slowdown is forecasted to continue, we expect second half 2008 results to be favorably impacted by our ability to achieve cost synergies from the merger with MSG sooner than originally anticipated. We are therefore fine-tuning our Non-GAAP earnings guidance for the current year to between $1.50 and $1.55 per diluted share. These anticipated results are based upon achieving leasing revenues of between $391 million and $398 million and EBITDA of between $176 million and $179 million.”

Discussing 2009, Mr. Trachtenberg continued, “With the merger with MSG now complete and our business plan in place in the U.S. and near the implementation phase in the U.K., we are confident that we can achieve at least $25 million of cost savings from this transaction during calendar year 2009. We expect to issue revenue, EBITDA, and earnings guidance for 2009 in December, as we have in prior years.”

He also pointed out, “At the close of the second quarter, we had nearly $300 million of unused borrowing capacity under our new $900 million asset-based revolving credit facility, even after funding the cash portion of the merger transaction, including the refinancing of our and MSG’s previous credit facilities.”

EBITDA 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 in the Company’s report on Form 8-K filed with the SEC on the date of this release.

Conference Call

As previously announced, Mobile Mini will host a conference call today, August 7^th at 12:00 noon Eastern Daylight Time. To listen to the live call, dial 706-679-0885 and ask for the Mobile Mini Conference Call or go to www.mobilemini.com and click on the Investors section. Please go to the website 15 minutes early to download and install any necessary audio software. If you are unable to listen live, the conference call can be accessed for approximately 14 days at Mobile Mini’s website.

Mobile Mini, Inc. is the world’s leading provider of portable storage solutions through its total fleet of approximately 285,000 of portable storage units and portable offices with 103 branches 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 leasing revenues, EBITDA and earnings estimates as well estimates related to the merger, including branch consolidation expenses and cost-savings, 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 000’s except per share data)/(includes effects of rounding)
		Three Months Ended June 30,								Three Months Ended June 30,
		2008				2008				2007				2007
		GAAP				Non-GAAP(3)				GAAP				Non-GAAP(3)
Revenues:
Leasing		$	72,849			$	72,849			$	70,362			$	70,362
Sales			7,825				7,825				7,538				7,538
Other			411				411				350				350
Total revenues			81,085				81,085				78,250				78,250
Costs and expenses:
Cost of sales			5,358				5,358				5,160				5,160
Leasing, selling and general expenses			43,796				43,796				40,335				40,335
Integration and merger expense (1)			11,609				-				-				-
Depreciation and amortization			5,747				5,747				5,113				5,113
Total costs and expenses			66,510				54,901				50,608				50,608
Income from operations			14,575				26,184				27,642				27,642
Other income (expense):
Interest income			29				29				29				29
Interest expense			(6,419	)			(6,419	)			(6,100	)			(6,100	)
Debt extinguishment expense (2)			-				-				(11,224	)			-
Foreign currency exchange			3				3				(1	)			(1	)
Income before provision for income taxes			8,188				19,797				10,346				21,570
Provision for income taxes			3,327				7,731				4,015				8,336
Net income			4,861				12,066				6,331				13,234
Income allocable to preferred stockholders			(40	)			(40	)			-				-
Net income applicable for common shareholders		$	4,821			$	12,026			$	6,331			$	13,234
Earnings per share:
Basic:		$	0.14			$	0.35			$	0.18			$	0.37
Diluted:		$	0.14			$	0.35			$	0.17			$	0.36
Weighted average number of common and common share equivalents outstanding:
Basic			34,115				34,115				35,812				35,812
Diluted			34,969				34,969				36,840				36,840
EBITDA		$	20,354			$	31,963			$	32,783			$	32,783

⁽¹⁾ Integration and merger expense represents those costs that we accrued in connection with the merger with MSG and is excluded in the non-GAAP presentation.

⁽²⁾ Debt extinguishment expense in 2007 represents deferred loan costs and the redemption premium on $97.5 million aggregate principal amount outstanding of our 9½ Senior Notes that we redeemed and is excluded in the non-GAAP presentation.

⁽³⁾ This column represents a Non-GAAP presentation even though some individual line items presented, such as revenues, are identical under both a GAAP and Non-GAAP presentation.

Mobile Mini, Inc. Condensed Consolidated Statements of Income
(Unaudited)
(in 000’s except per share data)/(includes effects of rounding)
		Six Months Ended June 30,								Six Months Ended June 30,
		2008				2008				2007				2007
		GAAP				Non-GAAP(3)				GAAP				Non-GAAP(3)
Revenues:
Leasing		$	142,885			$	142,885			$	136,415			$	136,415
Sales			15,923				15,923				14,192				14,192
Other			818				818				663				663
Total revenues			159,626				159,626				151,270				151,270
Costs and expenses:
Cost of sales			10,991				10,991				9,619				9,619
Leasing, selling and general expenses			87,266				87,266				77,173				77,173
Integration and merger expense (1)			11,609				-				-				-
Depreciation and amortization			11,416				11,416				10,004				10,004
Total costs and expenses			121,282				109,673				96,796				96,796
Income from operations			38,344				49,953				54,474				54,474
Other income (expense):
Interest income			62				62				37				37
Interest expense			(12,564	)			(12,564	)			(12,053	)			(12,053	)
Debt extinguishment expense (2)			-				-				(11,224	)			-
Foreign currency exchange			(8	)			(8	)			(1	)			(1	)
Income before provision for income taxes			25,834				37,443				31,233				42,457
Provision for income taxes			10,315				14,752				12,205				16,526
Net income			15,519				22,691				19,028				25,931
Income allocable to preferred stockholders			(40	)			(40	)			-				-
Net income applicable for common shareholders		$	15,479			$	22,651			$	19,028			$	25,931
Earnings per share:
Basic:		$	0.45			$	0.66			$	0.53			$	0.73
Diluted:		$	0.45			$	0.65			$	0.52			$	0.71
Weighted average number of common and common share equivalents outstanding:
Basic			34,100				34,100				35,727				35,727
Diluted			34,655				34,655				36,743				36,743
EBITDA		$	49,814			$	61,423			$	64,514			$	64,514

⁽¹⁾ Integration and merger expense represents those costs that we accrued in connection with the merger with MSG and is excluded in the non-GAAP presentation.

⁽²⁾ Debt extinguishment expense in 2007 represents deferred loan costs and the redemption premium on $97.5 million aggregate principal amount outstanding of our 9½ Senior Notes that we redeemed and is excluded in the non- GAAP presentation.

⁽³⁾ This column represents a Non-GAAP presentation even though some individual line items presented, such as revenues, are identical under both a GAAP and Non-GAAP presentation.

Non-GAAP Reconciliation
		Three Months Ended June 30, 2008										Three Months Ended June 30, 2007
		(in thousands except per share data)										(in thousands except per share data)
		(includes effects of rounding)										(includes effects of rounding)
					Integration and merger expense										Debt extinguishment expense
		Non-GAAP(1)							GAAP			Non-GAAP(1)							GAAP
Revenues		$	81,085		$	-			$	81,085		$	78,250		$	-			$	78,250
EBITDA		$	31,963		$	(11,609	)		$	20,354		$	32,783		$	-			$	32,783
Pre tax income		$	19,797		$	(11,609	)		$	8,188		$	21,570		$	(11,224	)		$	10,346
Net income		$	12,066		$	(7,205	)		$	4,861		$	13,234		$	(6,903	)		$	6,331
Diluted earnings per share		$	0.35		$	(0.21	)		$	0.14		$	0.36		$	(0.19	)		$	0.17
		Six Months Ended June 30, 2008										Six Months Ended June 30, 2007
		(in thousands except per share data)										(in thousands except per share data)
		(includes effects of rounding)										(includes effects of rounding)
					Integration and merger expense										Debt extinguishment expense
		Non-GAAP(1)							GAAP			Non-GAAP(1)							GAAP
Revenues		$	159,626		$	-			$	159,626		$	151,270		$	-			$	151,270
EBITDA		$	61,423		$	(11,609	)		$	49,814		$	64,514		$	-			$	64,514
Pre tax income		$	37,443		$	(11,609	)		$	25,834		$	42,457		$	(11,224	)		$	31,233
Net income		$	22,691		$	(7,172	)		$	15,519		$	25,931		$	(6,903	)		$	19,028
Diluted earnings per share		$	0.65		$	(0.20	)		$	0.45		$	0.71		$	(0.19	)		$	0.52

⁽¹⁾ This column represents a Non-GAAP presentation even though some individual line items presented, such as revenues, are identical under both a GAAP and Non-GAAP presentation.

Mobile Mini, Inc.
Condensed Consolidated Balance Sheets
(in 000’s except per share data)
(includes effects of rounding)
		June 30, 2008				December 31, 2007
		(Unaudited)				(Audited)
ASSETS
Cash		$	7,545			$	3,703
Receivables, net			70,435				37,221
Inventories			40,937				29,431
Lease fleet, net			1,096,531				802,923
Property, plant and equipment, net			90,932				55,363
Deposits and prepaid expenses			13,214				11,334
Other assets and intangibles, net			92,187				9,086
Goodwill			552,564				79,790
Total assets		$	1,964,345			$	1,028,851
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable		$	38,065			$	20,560
Accrued liabilities			96,761				38,941
Line of credit			604,119				237,857
Notes payable			551				743
Obligations under capital leases			6,248				10
Senior notes, net			345,421				149,379
Deferred income taxes			195,795				123,471
Total liabilities			1,286,960				570,961
Commitments and contingencies
Convertible preferred stock; $.01 par value, 20,000 shares authorized, 8,556 and 0 issued and outstanding at June 30, 2008 and December 31, 2007, respectively			153,990				-
Stockholders’ equity:
Common stock; $.01 par value, 95,000 shares authorized, 34,828 and 34,573 issued and outstanding at June 30, 2008 and December 31, 2007, respectively			370				367
Additional paid-in capital			328,000				278,593
Retained earnings			229,413				213,894
Accumulated other comprehensive income			4,912				4,336
Treasury stock, at cost, 2,175 shares			(39,300	)			(39,300	)
Total stockholders’ equity			523,395				457,890
Total liabilities and stockholders’ equity		$	1,964,345			$	1,028,851