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8-K - FORM 8-K - MOBILE MINI INCd530687d8k.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

MOBILE MINI REPORTS Q4 2017 RESULTS AND ANNOUNCES QUARTERLY DIVIDEND

Phoenix, AZ – February 2, 2018 – Mobile Mini, Inc. (NASDAQ GS: MINI) (the “Company” or “Mobile Mini”), the world’s leading supplier of portable storage solutions and a leading provider of tank and pump solutions in the United States, today reported actual and adjusted financial results for the quarter ended December 31, 2017. Total revenues were $146.7 million and rental revenues were $138.5 million, as compared to $130.4 million and $124.2 million, respectively, for the same period last year.

Rental revenues for the Storage Solutions and Tank & Pump Solutions businesses for the current quarter were $112.8 million and $25.7 million, respectively.

The Company recorded net income of $92.1 million, or $2.07 per diluted share, in the fourth quarter of 2017, as compared to net income of $19.5 million, or $0.44 per diluted share, for the fourth quarter of 2016. On an adjusted basis, fourth quarter net income was $18.1 million, or $0.41 per diluted share, as compared to adjusted net income of $21.2 million, or $0.48 per diluted share, for the fourth quarter of 2016. Adjusted EBITDA was $55.6 million and adjusted EBITDA margin was 37.9% for the fourth quarter of 2017.

Dividend

The Company’s Board of Directors declared a cash dividend of 25.0 cents per share, which will be paid on March 14, 2018 to shareholders of record on February 28, 2018.

Fourth Quarter 2017 Highlights

 

   

Delivered a strong 11.0% year-over-year increase in Storage Solutions rental revenues, 9.8% when adjusted for favorable currency fluctuations.

   

Achieved a 14.2% increase in year-over-year Tank & Pump Solutions rental revenue growth.

   

Increased total Storage Solutions average units on rent by 5.3% year-over-year, with average utilization of 75.7% and utilization of 74.1% at December 31, 2017.

   

Raised Storage Solutions rental rates by 4.2% year-over-year, with rates on new rentals up 5.1%.

   

Improved OEC utilization for Tank & Pump Solutions, averaging 73.0% for the quarter, compared to 62.3% in the prior-year quarter, and ending the year at 71.2%.

   

Achieved adjusted EBITDA of $55.6 million, with an adjusted EBITDA margin of 37.9%, despite year-over-year headwinds of $5.9 million in increased variable compensation expense.

   

Generated net cash from operating activities of $39.8 million and strong free cash flow of $18.2 million.

CEO Comments

Erik Olsson, Mobile Mini’s President and Chief Executive Officer, remarked, “The fourth quarter of 2017 was exceptional for both of our business segments. In addition to the wide-spread pick up across our Tank & Pump segment, our downstream customers began the turnaround and maintenance activities that had been previously deferred, resulting in a 14.2% year-over-year increase in Tank & Pump Solutions fourth quarter rental revenue. Within Storage Solutions, we saw record-high seasonal rentals, as well as healthy growth in our core business. As expected, variable compensation expense mitigated the fourth quarter profit flow-through; however, our underlying margins are strong and improving quarter by quarter. Excluding the effect of the variable compensation, the adjusted EBITDA margin increased approximately 70 basis points compared to the fourth quarter of 2016.”


Mr. Olsson continued, “Mobile Mini is very well positioned to leverage our infrastructure, including the unique suite of digital solutions we introduced in 2017, to further capitalize on the current momentum. In 2017, Tank & Pump Solutions reached an inflection point, with increased sequential revenue throughout the year, and the business is poised to take advantage of the increasingly strong demand from our customers. Additionally, our core North American Storage Solutions business is strong entering 2018, with pending orders considerably in excess of this time in the prior year. As a result, we expect healthy top line and adjusted EBITDA growth, expanded margins and increased free cash flow in 2018.”

United States Tax Reform

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (“the Tax Act”), which, among other things, reduces the federal income tax rate from 35% to 21% effective January 1, 2018, and requires mandatory repatriation of foreign earnings. As a result of the Tax Act, we remeasured our net deferred tax liabilities and recognized a net benefit of $77.6 million. In addition, we recorded a provisional income tax expense of $3.1 million related to the repatriation of foreign earnings. We estimate that our 2018 consolidated effective tax rate will be between 24% and 26%. We do not expect a significant near-term impact on cash paid for taxes.

Conference Call

Mobile Mini will host a conference call today, Friday, February 2 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 Investor Relations section and will be available in advance and after the call. Please go to the website 15 minutes early to download and install any necessary audio software. If you are unable to listen live, a replay of the call can be accessed for approximately 14 days after the call at Mobile Mini’s website.

About Mobile Mini, Inc.

Mobile Mini, Inc. is the world’s leading provider of portable storage solutions through its total rental fleet of approximately 215,000 storage solutions containers and office units and a leading provider of tank and pump solutions in the U.S., with a rental fleet of approximately 12,100 units. Mobile Mini’s network is comprised of 154 locations in the U.S., U.K., and Canada. Mobile Mini is included on the Russell 2000® and 3000® Indexes and the S&P Small Cap Index.

Forward-Looking Statements

This news release contains forward-looking statements, including, but not limited to, our approach being able to leverage our infrastructure and capitalize on our momentum, as well as our ability to drive healthy top line and adjusted EBITDA growth, expanded margins and increased free cash flow in 2018, which involve risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Risks and uncertainties that may affect future results include those that are described from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”). These forward-looking statements represent the judgment of the Company, as of the date of this release, and Mobile Mini disclaims any intent or obligation to update forward-looking statements.

 

CONTACT:

   -OR-    INVESTOR RELATIONS COUNSEL:
Van Welch, Executive VP &       The Equity Group Inc.
Chief Financial Officer       Fred Buonocore (212) 836-9607
Mobile Mini, Inc.       Kevin Towle (212) 836-9620

(602) 308-3879

www.mobilemini.com

     

(See accompanying tables)

 

2


Mobile Mini, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except percentages and per share data)

 

     Three Months Ended December 31, 2017     Three Months Ended December 31, 2016  
     Actual     Adjustments     Adjusted (1)     Actual     Adjustments     Adjusted (2)  

Revenues:

            

Rental

   $ 138,537     $     $ 138,537     $ 124,170     $     $ 124,170  

Sales

     7,623             7,623       6,656             6,656  

Other

     536             536       (439     1,146       707  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

         146,696               —           146,696           130,387           1,146           131,533  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses

     87,484             87,484       74,498       (807     73,691  

Cost of sales

     4,962             4,962       4,285             4,285  

Restructuring expenses

     824       (824           800       (800      

Depreciation and amortization

     16,431             16,431       16,104             16,104  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     109,701       (824     108,877       95,687       (1,607     94,080  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     36,995       824       37,819       34,700       2,753       37,453  

Other income (expense):

            

Interest income

     5             5       2             2  

Interest expense

     (9,316           (9,316     (8,193           (8,193

Foreign currency exchange

     4             4       (9           (9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax (benefit) provision

     27,688       824       28,512       26,500       2,753       29,253  

Income tax (benefit) provision

     (64,383     74,827       10,444       7,031       1,040       8,071  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 92,071     $ (74,003   $ 18,068     $ 19,469     $ 1,713     $ 21,182  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA/Adjusted EBITDA

   $ 53,435       $ 55,624     $ 50,797       $ 54,154  

EBITDA/Adjusted EBITDA as a percentage of

total revenues

     36.4       37.9     39.0       41.2

Earnings per share:

            

Basic

   $ 2.09       $ 0.41     $ 0.44       $ 0.48  

Diluted

     2.07         0.41       0.44         0.48  

Weighted average number of common and

common share equivalents outstanding:

            

Basic

     44,128         44,128       44,073         44,073  

Diluted

     44,444         44,444       44,269         44,269  

 

(1) Adjusted column for the three months ended December 31, 2017 excludes certain transactions that management believes are not indicative of our business. Adjusted figures are a non-GAAP (defined herein) presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release. The adjustments for the three-month period ended December 31, 2017 include the following:
    Exclusion of costs of $0.8 million related to the restructuring of our business operations, along with the related tax effects.
    Exclusion of $74.5 million in income tax benefit resulting from the Tax Act.

 

(2) Adjusted column for the three months ended December 31, 2016 excludes certain transactions that management believes are not indicative of our business. Adjusted figures are a non-GAAP presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release. The adjustments for the three-month period ended December 31, 2016 include the following, along with the related tax effects:
    Increase of other revenue by $1.1 million to exclude reversed revenue related to a sales tax remittance.
    Reduction of $0.3 million in rental, selling and general expenses to exclude fees and penalties associated with the sales tax remittance.
    Reduction of $0.1 million in rental, selling and general expenses to exclude acquisition-related expenses.
    Reduction of $0.5 million in rental, selling and general expenses to exclude costs related to severance in conjunction with the departure of an executive.
    Exclusion of costs of $0.8 million related to the restructuring of our business operations.

 

3


Mobile Mini, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(in thousands, except percentages and per share data)

 

     Twelve Months Ended December 31, 2017     Twelve Months Ended December 31, 2016  
     Actual     Adjustments     Adjusted (1)     Actual     Adjustments     Adjusted (2)  

Revenues:

            

Rental

   $ 498,825     $     $ 498,825     $ 480,083     $     $ 480,083  

Sales

     32,440             32,440       26,499             26,499  

Other

     2,284             2,284       2,040       (219     1,821  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

         533,549               —           533,549           508,622           (219         508,403  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses

     336,438       (2,623     333,815       309,294       (807     308,487  

Cost of sales

     21,001             21,001       16,471             16,471  

Restructuring expenses

     2,886       (2,886           6,020       (6,020      

Depreciation and amortization

     63,372             63,372       63,734             63,734  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     423,697       (5,509     418,188       395,519       (6,827     388,692  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     109,852       5,509       115,361       113,103       6,608       119,711  

Other income (expense):

            

Interest income

     25             25       2             2  

Interest expense

     (35,728           (35,728     (32,726           (32,726

Debt extinguishment expense

                       (9,192     9,192        

Deferred financing costs write-off

                       (2,271     2,271        

Foreign currency exchange

     (25           (25     (18           (18
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax (benefit) provision

     74,124       5,509       79,633       68,898       18,071       86,969  

Income tax (benefit) provision

     (48,104     76,604       28,500       21,650       6,932       28,582  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 122,228     $ (71,095   $ 51,133     $ 47,248     $ 11,139     $ 58,387  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA/Adjusted EBITDA

   $ 173,224       $ 184,803     $ 176,821       $ 190,376  

EBITDA/Adjusted EBITDA as a percentage of total revenues

     32.5       34.6     34.8       37.4

Earnings per share:

            

Basic

   $ 2.77       $ 1.16     $ 1.07       $ 1.32  

Diluted

     2.76         1.16       1.06         1.32  

Weighted average number of common and common share equivalents outstanding:

            

Basic

     44,055         44,055       44,145         44,145  

Diluted

     44,254         44,254       44,390         44,390  

 

(1) Adjusted column for the twelve months ended December 31, 2017 excludes certain transactions that management believes are not indicative of our business. Adjusted figures are a non-GAAP presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release. The adjustments for the twelve-month period ended December 31, 2017 include the following:
    Reduction of $0.1 million in rental, selling and general expenses for acquisition-related expenses, along with the related tax effects.
    Reduction of $2.5 million in rental, selling and general expenses to exclude costs related to severance and transition in conjunction with the departure of executives, along with the related tax effects.
    Exclusion of $2.9 million in costs related to the restructuring of our business operations, along with the related tax effects.
    Exclusion of $74.5 million in income tax benefit resulting from the Tax Act.

 

  (2) Adjusted column for the twelve months ended December 31, 2016 excludes certain transactions that management believes are not indicative of our business. Adjusted figures are a non-GAAP presentation. See the non-GAAP reconciliations herein and the additional information regarding non-GAAP financial information following in this earnings release. The adjustments for the twelve-month period ended December 31, 2016 include the following, along with the related tax effects:
    Reduction of other revenue by $1.4 million to exclude revenue associated with a sales tax refund, net of a $1.1 million increase to other revenue to exclude reversed revenue related to a sales tax remittance.
    Reduction of $0.3 million in rental, selling and general to exclude fees and penalties associated with the sales tax remittance.
    Reduction of $0.1 million in rental, selling and general expenses for acquisition-related expenses.
    Reduction of $0.5 million in rental, selling and general expenses to exclude costs related to severance in conjunction with the departure of an executive.
    Exclusion of costs of $6.0 million related to the restructuring of our business operations.
    Exclusion of $9.2 million of debt extinguishment costs to redeem $200 million aggregate principal amount of our outstanding 7.875% senior notes due December 2020 (the “2020 Senior Notes”)
    Exclusion of $2.3 million of deferred financing costs that were written off in conjunction with the redemption of the 2020 Senior Notes,

 

4


Mobile Mini, Inc.

Operating Data

(Unaudited)

 

         2017                    2016          
As of December 31:              

Stand-alone Storage Solutions locations

     121           125  

Stand-alone Tank & Pump Solutions locations

     17           19  

Combined Storage Solutions and Tank & Pump Solutions locations

     16           14  

Storage Solutions rental fleet units

     215,000           211,300  

Tank & Pump Solutions rental fleet units

     12,100           12,100  

Average utilization—Three months ended December 31:

     

Storage Solutions—utilization based on number of units

     75.7%        75.2

Tank & Pump Solutions—utilization based on original equipment cost

     73.0%        62.3

Average utilization—Year ended December 31:

     

Storage Solutions—utilization based on number of units

     71.5%        70.6

Tank & Pump Solutions—utilization based on original equipment cost (1)

     66.5%        n/a  

 

(1) Utilization for Tank & Pump Solutions is calculated as the average original cost of equipment on rent, excluding re-rented equipment, divided by the average original cost of equipment in the fleet. This statistic has been calculated since the three-month period ending June 30, 2016; no comparable statistic is available for the prior-year period.

 

5


Mobile Mini, Inc.

Business Segment Information—Adjusted (1)

(Unaudited)

(in thousands, except percentages)

 

     Three Months Ended December 31, 2017     Three Months Ended December 31, 2016  
     Storage
Solutions
    Tank & Pump
Solutions
    Total     Storage
Solutions
    Tank & Pump
Solutions
    Total  

Revenues:

            

Rental

   $ 112,810     $ 25,727     $ 138,537     $ 101,637     $ 22,533     $ 124,170  

Sales

     6,226       1,397       7,623       5,842       814       6,656  

Other

     457       79       536       737       (30     707  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

         119,493           27,203           146,696           108,216           23,317           131,533  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses

     69,462       18,022       87,484       56,937       16,754       73,691  

Cost of sales

     4,122       840       4,962       3,751       534       4,285  

Depreciation and amortization

     10,296       6,135       16,431       9,293       6,811       16,104  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     83,880       24,997       108,877       69,981       24,099       94,080  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

   $ 35,613     $ 2,206     $ 37,819     $ 38,235     $ (782   $ 37,453  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 47,227     $ 8,397     $ 55,624     $ 48,081     $ 6,073     $ 54,154  

Adjusted EBITDA Margin

     39.5     30.9     37.9     44.4     26.0     41.2
     Twelve Months Ended December 31, 2017     Twelve Months Ended December 31, 2016  
     Storage
Solutions
    Tank & Pump
Solutions
    Total     Storage
Solutions
    Tank & Pump
Solutions
    Total  

Revenues:

            

Rental

   $ 406,590     $ 92,235     $ 498,825     $ 387,145     $ 92,938     $ 480,083  

Sales

     26,989       5,451       32,440       21,576       4,923       26,499  

Other

     1,875       409       2,284       1,621       200       1,821  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     435,454       98,095       533,549       410,342       98,061       508,403  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs and expenses:

            

Rental, selling and general expenses

     265,390       68,425       333,815       244,729       63,758       308,487  

Cost of sales

     17,930       3,071       21,001       13,319       3,152       16,471  

Depreciation and amortization

     38,792       24,580       63,372       35,509       28,225       63,734  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     322,112       96,076       418,188       293,557       95,135       388,692  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

   $ 113,342     $ 2,019     $ 115,361     $ 116,785     $ 2,926     $ 119,711  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 157,960     $ 26,843     $ 184,803     $ 158,981     $ 31,395     $ 190,376  

Adjusted EBITDA Margin

     36.3     27.4     34.6     38.7     32.0     37.4

 

  (1) These tables present results by major business segment adjusted to exclude certain transactions that management believes are not indicative of our business. See additional information regarding non-GAAP financial information following in this earnings release.

 

6


Mobile Mini, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     December 31,
2017
    December 31,
2016
 
     (unaudited)     (audited)  
ASSETS  

Cash and cash equivalents

   $ 13,451     $ 4,137  

Receivables, net

     111,562       99,175  

Inventories

     15,671       15,412  

Rental fleet, net

     989,154       950,065  

Property, plant and equipment, net

     157,304       149,197  

Other assets

     15,334       14,930  

Intangibles, net

     62,024       68,420  

Goodwill

     708,907       703,558  
  

 

 

   

 

 

 

Total assets

   $             2,073,407     $             2,004,894  
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY  

Liabilities:

    

Accounts payable

   $ 26,955     $ 27,388  

Accrued liabilities

     78,084       64,126  

Lines of credit

     634,285       641,160  

Obligations under capital leases

     52,791       50,704  

Senior notes, net

     245,850       245,212  

Deferred income taxes

     173,754       240,690  
  

 

 

   

 

 

 

Total liabilities

     1,211,719       1,269,280  
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     497       493  

Additional paid-in capital

     605,369       592,071  

Retained earnings

     463,322       362,896  

Accumulated other comprehensive loss

     (60,334     (81,047

Treasury stock

     (147,166     (138,799
  

 

 

   

 

 

 

Total stockholders’ equity

     861,688       735,614  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,073,407     $ 2,004,894  
  

 

 

   

 

 

 

 

7


Mobile Mini, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

     Twelve Months Ended
December 31,
 
     2017     2016  

Cash flows from operating activities:

    

Net income

   $ 122,228     $ 47,248  

Adjustments to reconcile net income to net cash provided by operating activities:

    

Debt extinguishment expense

           9,192  

Deferred financing costs write-off

           2,271  

Provision for doubtful accounts

     5,037       6,162  

Amortization of deferred financing costs

     2,060       1,976  

Amortization of long-term liabilities

     130       116  

Share-based compensation expense

     7,373       7,399  

Depreciation and amortization

     63,372       63,734  

Gain on sale of rental fleet

     (5,657     (5,472

Loss on disposal of property, plant and equipment

     517       1,285  

Deferred income taxes

     (49,980     21,634  

Tax shortfall on equity award transactions

           (242

Foreign currency exchange

     25       18  

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

     (9,459     (19,077
  

 

 

   

 

 

 

Net cash provided by operating activities

               135,646                 136,244  
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Cash paid for businesses acquired, net of cash acquired

           (16,565

Additions to rental fleet, excluding acquisitions

     (63,688     (57,372

Proceeds from sale of rental fleet

     12,953       13,679  

Additions to property, plant and equipment, excluding acquisitions

     (20,122     (30,659

Proceeds from sale of property, plant and equipment

     851       2,764  
  

 

 

   

 

 

 

Net cash used in investing activities

     (70,006     (88,153
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net repayments under lines of credit

     (6,875     (26,548

Proceeds from issuance of 5.875% senior notes due 2024

           250,000  

Redemption of 7.875% senior notes due 2020

           (200,000

Debt extinguishment expense

           (9,192

Deferred financing costs

     (12     (5,369

Principal payments on capital lease obligations

     (7,418     (6,520

Issuance of common stock

     5,800       468  

Dividend payments

     (40,171     (36,402

Purchase of treasury stock

     (8,367     (11,290
  

 

 

   

 

 

 

Net cash used in financing activities

     (57,043     (44,853
  

 

 

   

 

 

 

Effect of exchange rate changes on cash

     717       (714
  

 

 

   

 

 

 

Net change in cash

     9,314       2,524  

Cash and cash equivalents at beginning of period

     4,137       1,613  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 13,451     $ 4,137  
  

 

 

   

 

 

 

Equipment and other acquired through capital lease obligations

   $ 9,501     $ 18,951  

Capital expenditures accrued or payable

     7,270       3,230  

 

8


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 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
December 31,
     Twelve Months Ended
December 31,
 
     2017      2016      2017      2016  

Net income

   $ 92,071      $ 19,469      $ 122,228      $ 47,248  

Interest expense

     9,316        8,193        35,728        32,726  

Income tax (benefit) provision

     (64,383      7,031        (48,104      21,650  

Depreciation and amortization

     16,431        16,104        63,372        63,734  

Debt extinguishment expense

                          9,192  

Deferred financing costs write-off

                          2,271  
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

     53,435        50,797        173,224        176,821  

Share-based compensation expense

     1,365        604        6,070        6,947  

Restructuring expenses

     824        800        2,886        6,020  

Acquisition-related expenses

            100        123        100  

Sales tax refund and remittance, net

            1,146               (219

Other

            707        2,500        707  
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 55,624      $ 54,154      $ 184,803      $ 190,376  
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2017      2016      2017      2016  

Net cash provided by operating activities

   $ 39,814      $ 40,223      $ 135,646      $ 136,244  

Interest paid

     4,650        3,666        35,029        21,546  

Income and franchise taxes paid

     1,294        392        2,607        1,772  

Share-based compensation expense, including restructuring expense

     (1,483      (878      (7,373      (7,399

Gain on sale of rental fleet

     1,384        1,244        5,657        5,472  

Loss on disposal of property, plant and equipment

     (45      (196      (517      (1,285

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

     7,821        6,346        2,175        20,471  
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $       53,435      $       50,797      $       173,224      $       176,821  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

9


Mobile Mini, Inc.

Free Cash Flow GAAP Reconciliation

(Unaudited)

(in thousands)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2017     2016     2017     2016  

Net cash provided by operating activities

   $ 39,814     $ 40,223     $ 135,646     $ 136,244  
  

 

 

   

 

 

   

 

 

   

 

 

 

Additions to rental fleet, excluding acquisitions

     (17,743     (10,892     (63,688     (57,372

Proceeds from sale of rental fleet

     3,351       2,909       12,953       13,679  

Additions to property, plant and equipment, excluding acquisitions

     (7,306     (4,909     (20,122     (30,659

Proceeds from sale of property, plant and equipment

     71       395       851       2,764  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net capital expenditures, excluding acquisitions

     (21,627     (12,497     (70,006     (71,588
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $       18,187     $       27,726     $       65,640     $       64,656  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

10


Adjusted net income and adjusted diluted earnings per share. Adjusted net income and related earnings per share information exclude certain transactions that management believes are not indicative of our business. We believe that the inclusion of this non-GAAP presentation makes it easier to compare our financial performance across reporting periods on a consistent basis.

EBITDA and adjusted EBITDA. EBITDA is defined as net income before discontinued operations, net of tax (if applicable), interest expense, income taxes, depreciation and amortization, and debt restructuring or extinguishment expense (if applicable), including any write-off of deferred financing costs. Adjusted EBITDA further excludes certain non-cash expenses, including share-based compensation, as well as transactions that management believes are not indicative of our business. Because EBITDA and adjusted EBITDA, as defined, exclude some but not all items that affect our cash flow from operating activities, they may not be comparable to similarly titled performance measures presented by other companies.

We present EBITDA and adjusted EBITDA because we believe they provide useful information regarding our ability to meet our future debt payment requirements, capital expenditures and working capital requirements and an overall evaluation of our financial condition. EBITDA and adjusted EBITDA have certain limitations as analytical tools and should not be used as substitutes for net income, cash flows from operations, or other consolidated income or cash flow data prepared in accordance with GAAP.

EBITDA and adjusted EBITDA margins are calculated as EBITDA and adjusted EBITDA, respectively, divided by total revenues expressed as a percentage.

Free Cash Flow. Free cash flow is defined as net cash provided by operating activities, minus or plus, net cash used in or provided by investing activities, excluding acquisitions and certain transactions. Free cash flow is a non-GAAP financial measure and is not intended to replace net cash provided by operating activities, the most directly comparable financial measure prepared in accordance with GAAP. We present free cash flow because we believe it provides useful information regarding our liquidity and ability to meet our short-term obligations. In particular, free cash flow indicates the amount of cash available after capital expenditures for, among other things, investments in our existing business, debt service obligations, payment of authorized quarterly dividends, repurchase of our common stock and strategic small acquisitions.

Constant Currency. We calculate the effect of currency fluctuations on current periods by translating the results for our business in the U.K. during the current period using the average exchange rates from the comparative period. We present constant currency information to provide useful information to assess our underlying business excluding the effect of material foreign currency rate fluctuations. Calculated in constant currency, our rental revenues for the three months ended December 31, 2017 were $1.3 million lower than when calculated in accordance with GAAP.

 

11