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8-K - FORM 8-K - MOBILE MINI INCd48498d8k.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

MOBILE MINI REPORTS Q3’15 RESULTS AND ANNOUNCES QUARTERLY DIVIDEND

Phoenix, AZ – October 22, 2015 – 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 specialty containment solutions in the United States, today reported actual and adjusted financial results for the quarter ended September 30, 2015. Total revenues were $133.3 million and rental revenues were $124.8 million, up from $113.3 million and $104.8 million, respectively, for the same period last year.

The Company recorded net income of $14.0 million, or $0.31 per diluted share in the third quarter of 2015 as compared to net income of $14.8 million, or $0.32 per diluted share, for the third quarter of 2014. On an adjusted basis, third quarter net income was $16.0 million, or $0.35 per diluted share, compared to adjusted net income of $15.2 million, or $0.33 per diluted share, for the third quarter of 2014. Adjusted EBITDA was $52.1 million and adjusted EBITDA margin was 39.5% for the third quarter of 2015.

Rental revenues for the portable storage and specialty containment businesses for the current quarter were $98.9 million and $26.0 million, respectively.

Dividend

The Company’s Board of Directors declared a cash dividend of 18.7 cents per share which will be paid on December 2, 2015 to shareholders of record on November 11, 2015.

Third Quarter 2015 Highlights

 

    Grew total rental revenues 19.1% year-over-year.

 

    Portable storage rental revenues increased 5.8%, excluding the wood mobile offices sold in May 2015, or 7.7% when adjusted for unfavorable currency fluctuations.

 

    Increased portable storage rental rates by 3.7% year-over-year.

 

    Expanded adjusted EBITDA margin to 39.5%, and delivered adjusted EBITDA of $52.1 million, up 17.3% from $44.4 million in the prior-year quarter.

 

    Drove portable storage utilization to an average of 70.0%; rising to 72.7% by quarter end.

 

    Returned $30.6 million to our shareholders through $8.3 million in dividends and $22.3 million of repurchased treasury shares in the quarter.

CEO Comments

Erik Olsson, Mobile Mini’s President and Chief Executive Officer, remarked, “I am very pleased with our performance overall and within both our individual portable storage and specialty containment businesses. Our portable storage business grew a strong 7.7% year-over-year, driven by increases in both units on rent and rental rates. The momentum we saw in the later part of the second quarter continued into the third quarter, with our North American sales force driving the highest number of quarterly portable storage activations in the Company’s history, with core activations up 12% from the third quarter 2014. As a result, utilization at the end of the quarter was a strong 72.7%. In our specialty containment business we continue to see good momentum in the downstream industrial segment and our overall specialty containment business generated $11 million of adjusted EBITDA at a robust 40.4% margin.”


Mobile Mini, Inc. News Release

October 22, 2015

   Page 2

 

Mr. Olsson continued, “We delivered a very good quarter, which included expanding our portable storage adjusted EBITDA margin to 39.3%, notwithstanding short-term pressure related to the divestiture of our wood mobile office business. Given our increasing utilization we also added to our sales force and made incremental growth capital expenditures for high demand markets. We continue to leverage our infrastructure across our two business segments, and are well-positioned for continued growth.”

Conference Call

Mobile Mini will host a conference call today, Thursday, October 22, 2015 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 Investors 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 209,500 portable storage containers and office units. Through its wholly-owned subsidiary, Evergreen Tank Solutions, Mobile Mini is also a leading provider of specialty containment solutions in the U.S., with a rental fleet of approximately 11,400 units. Mobile Mini’s network includes 133 portable storage locations in the U.S., United Kingdom, and Canada, 19 specialty containment locations and 6 combined locations. 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 expectations regarding ongoing momentum in certain segments, our ability to leverage our infrastructure and continued growth, 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.

 

CONTACT:    -OR-      INVESTOR RELATIONS COUNSEL:  

Mark Funk, Executive VP &

Chief Financial Officer

Mobile Mini, Inc.

(602) 308-3879

www.mobilemini.com

        The Equity Group Inc.

Fred Buonocore (212) 836-9607

Linda Latman (212) 836-9609

 

(See accompanying tables)


Mobile Mini, Inc. News Release

October 22, 2015

   Page 3

 

Reclassifications:

Certain amounts in the consolidated statements of operations for the three months ended March 31, 2015, which is included in the year-to-date period ended September 30, 2015, have been reclassified to conform to the current period presentation. The reclassifications have no effect on total revenues, loss from operations, net loss or net loss per common share.

The Company believes the current presentation better reflects the nature of the underlying financial statement items.


Mobile Mini, Inc. News Release

October 22, 2015

   Page 4

 

Mobile Mini, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands except per share data)

 

     Three Months Ended September 30, 2015     Three Months Ended September 30, 2014  
     Actual     Adjustments     Adjusted (1)     Actual     Adjustments     Adjusted (1)  

Revenues:

            

Rental

   $ 124,813      $ —        $ 124,813      $ 104,798      $ —        $ 104,798   

Sales

     6,594        —          6,594        7,913        —          7,913   

Other (2)

     1,936        (1,455     481        611        —          611   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     133,343        (1,455     131,888        113,322        —          113,322   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses (3)

     81,659        (2,822     78,837        67,889        (37     67,852   

Cost of sales

     4,366        —          4,366        5,199        —          5,199   

Restructuring expenses (4)

     1,846        (1,846     —          593        (593     —     

Depreciation and amortization

     14,998        —          14,998        9,470        —          9,470   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     102,869        (4,668     98,201        83,151        (630     82,521   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     30,474        3,213        33,687        30,171        630        30,801   

Other expense:

            

Interest income

     1        —          1        —          —          —     

Interest expense

     (8,960     —          (8,960     (7,107     —          (7,107

Foreign currency exchange

     —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before tax provision

     21,515        3,213        24,728        23,064        630        23,694   

Income tax provision

     7,536        1,216        8,752        8,244        240        8,484   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 13,979      $ 1,997      $ 15,976      $ 14,820      $ 390      $ 15,210   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 45,473        $ 52,104      $ 39,641        $ 44,427   

EBITDA as a percentage of total revenues

     34.1       39.5     35.0       39.2

Earnings per share:

            

Basic

   $ 0.31        $ 0.36      $ 0.32        $ 0.33   

Diluted

     0.31          0.35        0.32          0.33   

Weighted average number of common and common share equivalents outstanding:

            

Basic

     44,721          44,721        46,001          46,001   

Diluted

     45,147          45,147        46,675          46,675   

 

(1) Adjusted column excludes certain transactions described in the footnotes below that management believes are not indicative of its business. Adjusted figures are a non-GAAP presentation. See reconciliations herein, and additional information regarding non-GAAP financial information following in this earnings release.
(2) Adjustment is comprised of transition service revenue associated with the divestiture of our North American wood mobile office business.
(3) Adjustment in 2015 is comprised of $0.4 million in incremental costs related with acquisition activities, $2.2 million of operating expenses associated with the transition of the wood mobile offices, including expenses related to wood mobile offices on our leased properties, and $0.2 million of expense related to the proposed settlement of an unclaimed property liability with the state of Delaware.
(4) Costs relating to the restructuring of our business operations.


Mobile Mini, Inc. News Release

October 22, 2015

   Page 5

 

Mobile Mini, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands except per share data)

 

     Nine Months Ended September 30, 2015     Nine Months Ended September 30, 2014  
     Actual     Adjustments     Adjusted (1)     Actual     Adjustments     Adjusted (1)  

Revenues:

            

Rental

   $ 368,175      $ —        $ 368,175      $ 296,919      $ —        $ 296,919   

Sales

     22,765        —          22,765        23,761        —          23,761   

Other (2)

     5,320        (4,096     1,224        1,579        —          1,579   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     396,260        (4,096     392,164        322,259        —          322,259   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses (3)

     247,809        (7,174     240,635        204,394        (76     204,318   

Cost of sales

     14,899        —          14,899        16,131        —          16,131   

Restructuring expenses (4)

     4,773        (4,773     —          2,909        (2,909     —     

Asset impairment charge and loss on divestiture, net (5)

     66,128        (66,128     —          557        (557     —     

Depreciation and amortization

     45,075        —          45,075        27,920        —          27,920   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     378,684        (78,075     300,609        251,911        (3,542     248,369   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     17,576        73,979        91,555        70,348        3,542        73,890   

Other income (expense):

            

Interest income

     1        —          1        —          —          —     

Interest expense

     (26,986     —          (26,986     (21,191     —          (21,191

Foreign currency exchange

     (2     —          (2     (1     —          (1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before tax (benefit) provision

     (9,411     73,979        64,568        49,156        3,542        52,698   

Income tax (benefit) provision

     (5,480     28,441        22,961        17,633        1,040        18,673   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (3,931   $ 45,538      $ 41,607      $ 31,523      $ 2,502      $ 34,025   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 62,650        $ 145,912      $ 98,267        $ 113,106   

EBITDA as a percentage of total revenues

     15.8       37.2     30.5       35.1

(Loss) earnings per share:

            

Basic

   $ (0.09     $ 0.92      $ 0.68        $ 0.74   

Diluted

     (0.09       0.91        0.67          0.73   

Weighted average number of common and common share equivalents outstanding:

            

Basic

     45,145          45,145        46,128          46,128   

Diluted (6)

     45,145          45,695        46,846          46,846   

 

(1) Adjusted column excludes certain transactions described in the footnotes below that management believes are not indicative of its business. Adjusted figures are a non-GAAP presentation. See reconciliations herein, and additional information regarding non-GAAP financial information following in this earnings release.
(2) Adjustment is comprised of $2.9 million of transition service revenue associated with the divestiture of our North American wood mobile office business and $1.2 million of revenue associated with a sales tax refund that is not indicative of our ongoing business.
(3) Adjustment in 2015 is comprised of $2.4 million in incremental costs related with acquisition activities, $3.9 million of operating expenses associated with the transition of the wood mobile offices, including expenses related to wood mobile offices on our leased properties, and $0.8 million of expense related to the proposed settlement of an unclaimed property liability with the state of Delaware.
(4) Costs relating to the restructuring of our business operations.
(5) In 2015, asset impairment and loss on divestiture costs represent the impairment and loss associated with the divestiture of our North American wood mobile office business. In 2014, the asset impairment costs represent the additional loss upon completion of sale (offset by gains upon completion of sale) of assets that were written down to fair value in the second quarter of 2013.
(6) Common stock equivalents were excluded from the calculation of actual diluted earnings per share for the nine-month period ending September 30, 2015 because their inclusion would reduce the net loss per share.


Mobile Mini, Inc. News Release

October 22, 2015

   Page 6

 

Mobile Mini, Inc.

Operating Data

(Unaudited)

 

     2015     2014  

As of September 30:

    

Stand-alone portable storage locations

     133        135   

Stand-alone specialty containment locations

     19        —     

Combined portable storage and specialty product locations

     6        —     

Portable storage rental fleet units

     209,500        213,700   

Specialty containment rental fleet units

     11,400        —     

Average Utilization:

    

Portable storage – three months ended September 30

     70.0     67.9

Portable storage – nine months ended September 30

     67.8     67.1

Specialty containment – three months ended September 30*

     67.5     69.1

Specialty containment – nine months ended September 30*

     69.2     70.0

 

* Specialty containment 2014 is prior to acquisition


Mobile Mini, Inc. News Release

October 22, 2015

   Page 7

 

Mobile Mini, Inc.

Business Segment Information – Adjusted (1)

(Unaudited)

(in thousands)

 

     Three Months Ended September 30, 2015     Nine Months Ended September 30, 2015  
     Portable
Storage
    Specialty
Containment
    Total     Portable
Storage
    Specialty
Containment
    Total  

Revenues:

            

Rental

   $ 98,855      $ 25,958      $ 124,813      $ 292,895      $ 75,280      $ 368,175   

Sales

     4,830        1,764        6,594        16,892        5,873        22,765   

Other

     454        27        481        1,171        53        1,224   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     104,139        27,749        131,888        310,958        81,206        392,164   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses

     63,488        15,349        78,837        193,409        47,226        240,635   

Cost of sales

     3,124        1,242        4,366        10,976        3,923        14,899   

Depreciation and amortization

     8,404        6,594        14,998        26,042        19,033        45,075   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     75,016        23,185        98,201        230,427        70,182        300,609   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

   $ 29,123      $ 4,564      $ 33,687      $ 80,531      $ 11,024      $ 91,555   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 40,901      $ 11,203      $ 52,104      $ 115,469      $ 30,443      $ 145,912   

Adjusted EBITDA Margin

     39.3     40.4     39.5     37.1     37.5     37.2

 

(1) This table presents results by major business segment adjusted to exclude certain transactions that management believes are not indicative of its business. These adjustments are described in the notes to the condensed consolidated statements of income for the related periods presented earlier in this press release. Adjusted figures are a non-GAAP presentation. See additional information regarding non-GAAP financial information following in this earnings release.


Mobile Mini, Inc. News Release

October 22, 2015

   Page 8

 

Mobile Mini, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     September 30,
2015
    December 31,
2014
 
     (unaudited)     (audited)  
ASSETS   

Cash and cash equivalents

   $ 1,713      $ 3,739   

Receivables, net

     83,845        81,031   

Inventories

     17,562        16,736   

Rental fleet, net

     964,348        1,087,056   

Property, plant and equipment, net

     132,901        113,175   

Deposits and prepaid expenses

     13,292        8,586   

Deferred financing costs and other assets

     7,124        8,858   

Intangibles, net

     74,736        78,385   

Goodwill

     709,624        705,608   
  

 

 

   

 

 

 

Total assets

   $ 2,005,145      $ 2,103,174   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY   

Liabilities:

    

Accounts payable

   $ 37,941      $ 22,933   

Accrued liabilities

     64,969        63,727   

Lines of credit

     663,380        705,518   

Obligations under capital leases

     39,644        24,918   

Senior Notes

     200,000        200,000   

Deferred income taxes

     225,818        231,547   
  

 

 

   

 

 

 

Total liabilities

     1,231,752        1,248,643   
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     491        490   

Additional paid-in capital

     581,585        569,083   

Retained earnings

     351,114        380,504   

Accumulated other comprehensive loss

     (38,302     (29,870

Treasury stock

     (121,495     (65,676
  

 

 

   

 

 

 

Total stockholders’ equity

     773,393        854,531   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,005,145      $ 2,103,174   
  

 

 

   

 

 

 


Mobile Mini, Inc. News Release

October 22, 2015

   Page 9

 

Mobile Mini, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

     Nine Months Ended September 30,  
           2015                  2014        

Cash Flows from Operating Activities:

    

Net (loss) income

   $ (3,931   $ 31,523   

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

    

Asset impairment charge and loss on divestiture, net

     66,128        557   

Provision for doubtful accounts

     2,826        2,057   

Amortization of deferred financing costs

     2,384        2,108   

Amortization of long-term liabilities

     76        124   

Share-based compensation expense

     10,833        11,573   

Depreciation and amortization

     45,075        27,920   

Gain on sale of rental fleet

     (5,196     (4,496

Loss (gain) on disposal of property, plant and equipment

     2,035        (181

Deferred income taxes

     (6,086     17,333   

Foreign currency transaction loss

     2        1   

Changes in certain assets and liabilities, net of effect of businesses acquired

     (425     (761
  

 

 

   

 

 

 

Net cash provided by operating activities

     113,721        87,758   
  

 

 

   

 

 

 

Cash Flows from Investing Activities:

    

Proceeds from wood mobile office divestiture, net

     83,299        —     

Cash paid for businesses acquired, net of cash acquired

     (18,622     (20,014

Additions to rental fleet, excluding acquisitions

     (53,540     (16,310

Proceeds from sale of rental fleet

     13,300        17,813   

Additions to property, plant and equipment, excluding acquisitions

     (17,918     (11,677

Proceeds from sale of property, plant and equipment

     2,447        3,374   
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     8,966        (26,814
  

 

 

   

 

 

 

Cash Flows from Financing Activities:

    

Net payments under lines of credit

     (42,138     (11,926

Deferred financing costs

     (113     —     

Principal payments on capital lease obligations

     (2,883     (1,346

Issuance of common stock

     1,670        2,572   

Dividend payments

     (25,308     (23,583

Purchase of treasury stock

     (55,819     (25,467
  

 

 

   

 

 

 

Net cash used in financing activities

     (124,591     (59,750

Effect of exchange rate changes on cash

     (122     (838
  

 

 

   

 

 

 

Net change in cash

     (2,026     356   

Cash and cash equivalents at beginning of period

     3,739        1,256   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,713      $ 1,612   
  

 

 

   

 

 

 

Equipment and other acquired through capital lease obligations

   $ 17,638      $ 11,491   


Mobile Mini, Inc. News Release

October 22, 2015

   Page 10

 

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 are non-GAAP financial measures as defined by Securities and Exchange Commission (“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
September 30,
     Nine Months Ended
September 30,
 
     2015      2014      2015      2014  

Net income (loss)

   $ 13,979       $ 14,820       $ (3,931    $ 31,523   

Interest expense

     8,960         7,107         26,986         21,191   

Income tax provision (benefit)

     7,536         8,244         (5,480      17,633   

Depreciation and amortization

     14,998         9,470         45,075         27,920   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

     45,473         39,641         62,650         98,267   

Share-based compensation expense

     3,418         4,156         9,283         11,297   

Restructuring expenses

     1,846         593         4,773         2,909   

Acquisition-related expenses

     398         37         2,393         76   

Impairment and divestiture-related revenues and expenses, net (1)

     777         —           67,155         557   

Sales tax refund and proposed unclaimed property settlement (2)

     192         —           (342      —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 52,104       $ 44,427       $ 145,912       $ 113,106   
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2015      2014      2015      2014  

Net cash provided by operating activities

   $ 42,820       $ 38,473       $ 113,721       $ 87,758   

Interest paid

     4,517         2,203         20,422         14,494   

Income and franchise taxes paid

     1,581         167         3,274         945   

Share-based compensation expense, including restructuring expense

     (4,096      (4,432      (10,833      (11,573

Asset impairments and loss on divestiture, net of recoveries

     —           —           (66,128      (557

Gain on sale of rental fleet

     1,553         2,001         5,196         4,496   

Loss on disposal of property, plant and equipment

     (553      540         (2,035      181   

Changes in other assets and liabilities, net of effect of businesses acquired

     (349      689         (967      2,523   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 45,473       $ 39,641       $ 62,650       $ 98,267   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) In 2015, impairment and divestiture-related revenues and expenses, net include the following: asset impairment charge and loss on divestiture, net, of $66.1 million for the nine-month period. In both the three and nine-month periods, this adjustment includes $1.5 million and $2.9 million, respectively, of transition services revenue and $2.2 million and $3.9 million, respectively, of operating expenses associated with the transition of the wood mobile offices, including the cost of providing yard space. In 2014, the asset impairment costs represent the additional loss upon completion of sale (offset by gains upon completion of sale) of assets that were written down to fair value in the second quarter of 2013.
(2) Revenue of $1.2 million associated with a sales tax refund recorded in the first quarter, partially offset by expenses related to the proposed settlement of an unclaimed property liability with the state of Delaware of $0.2 million and $0.8 million, for the three and nine-month periods, respectively. These transactions are not indicative of our ongoing business activity.


Mobile Mini, Inc. News Release

October 22, 2015

   Page 11

 

Mobile Mini, Inc.

Free Cash Flow GAAP Reconciliation

(Unaudited)

(in thousands)

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2015      2014      2015      2014  

Net cash provided by operating activities

   $ 42,820       $ 38,473       $ 113,721       $ 87,758   

Additions to rental fleet, excluding acquisitions

     (25,731      (8,160      (53,540      (16,310

Proceeds from sale of rental fleet

     3,925         5,794         13,300         17,813   

Additions to property, plant and equipment, excluding acquisitions

     (6,306      (6,936      (17,918      (11,677

Proceeds from sale of property, plant and equipment

     770         1,923         2,447         3,374   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net capital expenditures, excluding acquisitions

     (27,342      (7,379      (55,711      (6,800
  

 

 

    

 

 

    

 

 

    

 

 

 

Free cash flow

   $ 15,478       $ 31,094       $ 58,010       $ 80,958   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income information 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 that they provide 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 divided by total revenues expressed as a percentage. The GAAP financial measure that is most directly comparable to EBITDA margin is operating margin, which represents operating income divided by revenues.

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.