Mobile Mini Reports 2012 Fourth Quarter Results

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Mobile Mini Reports 2012 Fourth Quarter Results

Total Revenues Increase 5.1%; Adjusted EBITDA Increases 10.5%

Eighth Consecutive Comparable Quarter Increase in Leasing Revenues


TEMPE, Ariz.--(BUSINESS WIRE)-- Mobile Mini, Inc. (NASDAQ GS: MINI) today reported actual and adjusted financial results for the fourth quarter and twelve months ended December 31, 2012.

Fourth Quarter 2012 Compared to Fourth Quarter 2011

  • Total revenues rose 5.1% to $100.3 million from $95.5 million;
  • Leasing revenues rose 8.2% to $91.6 million from $84.7 million;
  • Leasing revenues comprised 91.4% of total revenues compared to 88.7% of total revenues;
  • Sales revenues declined to $8.0 million from $10.2 million;
  • Sales margins were 36.7% compared to 37.9%;
  • Adjusted EBITDA was $40.6 million, up 10.5% compared to $36.8 million; the adjusted EBITDA margin improved to 40.5% from 38.5%;
  • Adjusted net income rose 35.8% to $14.8 million from $10.9 million; and
  • Adjusted diluted earnings per share increased 37.5% to $0.33 from $0.24.

Other Fourth Quarter 2012 Highlights

  • Free cash flow was $25.9 million, after $6.7 million of net capex;
  • Net debt was paid down by $26.7 million;
  • Yield (total leasing revenues per unit on rent) increased 2.1% compared to the fourth quarter of 2011; excluding holiday rentals, yield on our core rental units increased 4.2% compared to the fourth quarter of 2011;
  • Average utilization rate was 65.1%, up from 60.6% in the third quarter of 2012 and 61.0% in the fourth quarter of 2011; and
  • Excess availability under our revolver at December 31, 2012 was $449.2 million.

2012 Compared to 2011

  • Total revenues increased 5.5% to $381.3 million from $361.3 million;
  • Leasing revenues rose 7.9% to $340.8 million and comprised 89.4% of total revenues compared to $315.7 million and 87.4% of total revenues;
  • Sales revenues declined 10.6% to $38.3 million with margins of 38.4% compared to $42.8 million with margins of 36.8%;
  • Adjusted EBITDA rose 3.5% to $138.3 million from $133.6 million;
  • Adjusted net income increased 24.7% to $40.5 million compared to $32.5 million;
  • Adjusted diluted earnings per share increased 23.3% to $0.90 from $0.73;
  • Free cash flow was $65.1 million compared to $80.0 million reflecting investments in our U.K. lease fleet; and
  • Net debt was reduced by $53.7 million after payment of $10.6 million of financing costs relating primarily to our new Credit Agreement and redemption premiums on the 2015 Senior Notes.

During 2012, we changed our recognition methodology for pickup revenue. Historically, the pickup revenues and the accrued estimated costs to pick up a unit were recognized at the time of delivery. We are now recognizing this revenue and the related costs when the unit is pickedup.

Although the effect of this change does not materially impact any prior quarter or years' results, we have revised prior period financial information to reflect these changes. This change reduced 2012's total revenues by 0.6%, or $2.3 million, and adjusted EBITDA by 0.8%, or $1.1 million, as reflected in our results. Our consolidated statement of stockholders' equity was revised to reflect the cumulative effect of this change from prior years resulting in a decrease to retained earnings and total stockholders' equity of $5.1 million, which is reflected in the beginning balance as of January 1, 2011. Tables summarizing these changes are attached on pages 9 and 10.

Non-GAAP reconciliation tables are on page 8 of this news release, and show the nearest comparable GAAP results to the adjusted results.

Business Overview

We are pleased to report the final quarter of 2012 was our eighth consecutive reporting period of comparable quarter leasing revenue growth and reflects improvement in both yield and utilization. Leasing revenues were at our highest level since the first quarter of 2009 at $91.6 million for the quarter. Year-over-year yield was 2.1% ahead of 2011 and average yield was at an all-time fourth quarter high of $594 per unit. When our holiday rentals are excluded from both years, yield on our core rental units actually increased 4.2% compared to the fourth quarter of 2011. This was a result of a greater weighting of holiday rentals in the third quarter of 2012 as customers took delivery of units earlier than they had in 2011, impacting the year-over-year yield comparison. Utilization continued to improve, averaging 65.1% in the final quarter of 2012, up from 61.0% in the same period last year and 60.6% in the 2012 third quarter. We closed the fourth quarter with utilization at 62.3%, compared to 63.5% at the end of September, reflecting the seasonal buildup that typically occurs in the third quarter.

The 10.5% increase in fourth quarter adjusted EBITDA and 200 basis point improvement in adjusted EBITDA margin demonstrate the operating leverage in our business, which was achieved on 5.1% comparable quarter growth in revenues. The 16 new markets we entered since the beginning of 2011 have been building units on lease, and 13 were EBITDA positive for 2012. As these locations mature, we believe our operating leverage should continue to improve.

As of December 31, 2012, we have generated free cash flow for 20 consecutive quarters. Free cash flow for the fourth quarter and full year was $25.9 million and $65.1 million, respectively. Net capital expenditures were $6.7 million in the fourth quarter and $25.8 million for the full year, the majority of which are attributable to lease fleet expansion in our U.K. operations where business conditions remained strong. Debt reduction totaled $26.7 million in the fourth quarter and $53.7 million for the full year, after payment of $10.6 million of financing costs related to our new Credit Agreement and redemption premiums on our 2015 Senior Notes.

As a result of our reduced borrowings and better rates under our new Credit Agreement, interest expense in the fourth quarter of 2012 was reduced by nearly 28% or approximately $3.0 million, compared to the same period of 2011. We expect the August 2, 2012 redemption of our previously issued $150.0 million 2015 Senior Notes to produce in excess of $6.6 million in annualized interest savings based on our current Credit Agreement borrowing rate and debt level. We continue to have a great deal of financial flexibility with $449.2 million available under our Credit Agreement at December 31, 2012.

Throughout the year, we served a large, diverse base of over 83,000 customers, up from 80,000 in 2011, with the growth driven by traction gained by newer locations, recent investments, leadership changes in our National Sales Center and a modest improvement in the economy.

Outlook

Looking ahead, we are increasingly enthusiastic about opportunities to more deeply penetrate our existing markets and over time, expand into new ones. These strategies, along with improving business conditions, should enable us to further increase our utilization rate. We anticipate that 2013 will be another growth year in leasing revenues which, with our strong operating leverage, should translate into EBITDA margin expansion. This projected growth combined with lower interest expense should enhance our bottom line. We expect capital expenditures to approximate 2012 levels, supported by continued solid free cash flow and our ample liquidity position, fostering ongoing investments in growth and continued debt paydown.

With respect to our management transition, it appears that we are in the final stages of our search for a new CEO and hope to have an announcement in the coming weeks. We look forward to bringing this individual on board.

EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, adjusted SG&A, adjusted net income, adjusted diluted earnings per share and free cash flow are non-GAAP financial measures as defined by Securities and Exchange Commission ("SEC") rules. Reconciliations of these measurements 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, Friday, February 22, 2013 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. We will also post the 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 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 over 234,700 portable storage containers and office units with 136 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 and liquidity, ability to enter new markets, increases in operating leverage, increases in utilization, EBITDA margin expansion, the ability to strengthen, grow and expand our operations 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.

  
 

Mobile Mini, Inc. Condensed Consolidated Statements of Income
(Unaudited)/(in 000's except per share data)/(includes effects of rounding)

 
Three Months Ended
December 31,
Three Months Ended
December 31,
Revenues:2012
Actual
 2012
Adjusted (1)
2011
Actual
 2011
Adjusted (1)
Leasing$91,640 $91,640$84,673 $84,673
Sales8,0408,04010,18110,181
Other 607   607  597   597 
Total revenues 100,287   100,287  95,451   95,451 
Costs and expenses:
Cost of sales5,0885,0886,3256,325
Leasing, selling and general expenses (2)54,71654,56552,95252,337
Integration, merger and restructuring expenses (3)5,533-599-
Depreciation and amortization 9,091   9,091  8,964   8,964 
Total costs and expenses 74,428   68,744  68,840   67,626 
Income from operations25,85931,54326,61127,825
 
Other income (expense):
Interest expense(7,735)(7,735)(10,740)(10,740)
Foreign currency exchange -   -  (6)  (6)
Income before provision for income taxes18,12423,80815,86517,079
Provision for income taxes 6,866   9,054  5,802   6,214 
Net income$11,258  $14,754 $10,063  $10,865 
Earnings per share:
Basic$0.25  $0.33 $0.23  $0.25 
Diluted$0.25  $0.33 $0.23  $0.24 
 

Weighted average number of common and common share equivalents outstanding:

Basic 44,822   44,822  44,038   44,038 
Diluted 45,349   45,349  44,611   44,611 
 
EBITDA$34,950  $40,634 $35,569  $36,783 
(1)This column represents a non-GAAP presentation even though certain individual line items presented, such as revenues, are identical under both GAAP and the adjusted presentations.
(2)In 2012, the difference represents estimated damages, net of estimated insurance recoveries, to our assets caused by natural disasters that are excluded in the adjusted presentation.
In 2011, the difference represents one-time costs that are excluded in the adjusted presentation.
(3)Integration, merger and restructuring expenses represent costs relating primarily to the restructuring of our operations that are excluded in the adjusted presentation.
  
 
 

Mobile Mini, Inc. Condensed Consolidated Statements of Income
(Unaudited)/(in 000's except per share data)/(includes effects of rounding)

 
Twelve Months Ended
December 31,
Twelve Months Ended
December 31,
Revenues:2012
Actual
 2012
Adjusted (1)
2011
Actual
 2011
Adjusted (1)
Leasing$340,797 $340,797$315,749 $315,749
Sales38,28138,28142,84242,842
Other 2,181   2,181  2,723   2,723 
Total revenues 381,259   381,259  361,314   361,314 
Costs and expenses:
Cost of sales23,59223,59227,07027,070
Leasing, selling and general expenses (2)219,658219,368202,621200,605
Integration, merger and restructuring expenses (3)7,133-1,361-
Depreciation and amortization 36,187   36,187  35,665   35,665 
Total costs and expenses 286,570   279,147  266,717   263,340 
Income from operations94,689102,11294,59797,974
 
Other income (expense):
Interest income11--
Interest expense(37,339)(37,339)(46,200)(46,200)
Debt restructuring expense (4)(2,812)-(1,334)-
Deferred financing costs write-off (5)(1,889)---
Foreign currency exchange (5)  (5) (7)  (7)
Income before provision for income taxes52,64564,76947,05651,767
Provision for income taxes (6) 18,467   24,238  16,460   19,256 
Net income34,17840,53130,59632,511
Earnings allocable to preferred stockholders -   -  (966)  (1,160)
Net income available to common stockholders$34,178  $40,531 $29,630  $31,351 
 
Earnings per share:
Basic$0.77  $0.91 $0.71  $0.75 
Diluted$0.76  $0.90 $0.69  $0.73 
 

Weighted average number of common and common share equivalents outstanding:

Basic 44,657   44,657  41,566   41,566 
Diluted 45,102   45,102  44,569   44,569 
 
EBITDA$130,872  $138,295  Read Full Story

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