2015
ANNUAL REPORT
Rental Revenues
($ in millions)
$494.7
$410.4
$366.3
$340.0
$314.7
2011
2012
2013
2014
2015
Adjusted EBITDA Margin*
39.0%
38.3%
38.7%
36.4%
38.1%
Selected Financial Data
Adjusted EBITDA*
($ in millions)
$157.5
$162.1
$200.8
$140.1
$145.4
2011
2012
2013
2014
2015
Free Cash Flow*
($ in millions)
$109.4
$104.8
$80.0
$65.1
$73.6
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Rental Revenue by Segment**
Specialty
Containment
North America
21%
Portable Storage
United Kingdom
18%
Portable Storage
North America
61%
* See Selected Financial Data in this Annual Report for reconciliation of non-GAAP measures to nearest GAAP measures.
** Information excludes the divested wood mobile office business.
About Mobile Mini
Mobile Mini, Inc. is one of the world’s largest providers of portable storage solutions and a leading provider of specialty
containment solutions in the United States. We are committed to providing our customers with superior service and access
to a high-quality and diverse fleet. As of December 31, 2015 we serve customers through 159 locations, of which 143 are in
North America and 16 are in the United Kingdom. Our rental fleet consists of approximately 205,200 portable storage and
ground level office units and 11,700 specialty containment units. Mobile Mini, Inc. is included on the Russell 2000® and 3000®
Indexes and the S&P Small Cap Index.
Dear Shareholders,
Over the last three years we have transformed our Company
to create a more optimal operational structure and product
portfolio to drive long-term profitable growth. The success of
the actions we have undertaken is evidenced by the increasing
rental revenue generated by our high-return, long-lived, low-
maintenance assets. We will continue to focus on growth in
2016 by deploying a combination of an organic growth strategy
to increase units on rent and achieve higher rental rates, and
through opportunistic geographic expansion. With the most
recent operational transformation completed, and our growth
strategies underway, we believe we are well-positioned to deliver
strong returns to our shareholders.
Organic growth encompasses gaining more wallet-share from
existing customers, expanding our client base within our current
service area, and communicating to both new and existing
customers the multitude of ways that utilizing our portable storage
and specialty containment solutions can save them time and
money. We have established an extensive training program for our
salesforce and provided them with tools and resources tailored to
our business. Further, in 2015 we decentralized certain activities,
such as fleet management and safety and importantly, we have
aligned our salesforce and operational management geographically.
Premium Storage Containers
Erik Olsson
President & CEO
Our fleet of high-quality containers keep supplies, equipment and inventory securely
protected. Rental containers include our patented locking system, and are available in a wide
variety of sizes and configurations to meet customer needs. Doors can be placed at the front,
front and back, or the sides of containers. Other options include partitions and shelving.
Our steel storage containers are utilized by a wide variety of industries as a cost-effective
alternative to mass warehouse storage.
1
Versatile Containment
Products
Our Evergreen Tank Solution subsidiary
provides refining, chemical and environmental
customers with containment products in
configurations including roll-tarp boxes,
vacuum boxes, metal-lid boxes and dewatering
boxes. Services can be added to include the
management of the solids contained in the
boxes for both long and short-term rentals.
Other types of containment products include
vacuum roll-off boxes for the containment
of sludge and solids in paper mills and paint
booths.
Field management from each branch and
within each region and division is empowered
to make the decisions that they determine best
serve the customers in their service area, which
ultimately benefits their revenue, and collectively
the Company’s revenue. We believe that those
employees who are closest to the customer are in
the best position to meet and service their needs.
Geographic expansion includes both the
introduction of additional product lines to existing
locations as well as expanding to new locations.
Our December 2014 acquisition of Evergreen Tank
Solutions, or ETS, allows us to leverage Mobile
Mini’s portable storage footprint by providing
new products and services to existing Mobile
Mini customers that were previously outside
of ETS’ service area. We have already combined
operations at 11 locations and have provided
product to specialty containment customers
in areas such as Dallas and Philadelphia that
were previously not within ETS’ footprint. We
believe there is additional potential in the
downstream and industrial specialty containment markets in many areas where Mobile Mini already
has a portable storage presence, including Southern California, where we intend to start renting
specialty containment products in 2016. On a smaller scale, we have leveraged the strong specialty
containment customer relationships cultivated by ETS to gain new portable storage customers.
In addition to offering specialty containment products to existing portable storage customers, we
have identified over 50 potential new geographic, or underserved, markets in North America where
we believe demand for portable storage units is underdeveloped. In 2014 and 2015 we completed
an aggregate of ten portable storage acquisitions and we expect to continue to make opportunistic
acquisitions at attractive valuations in the future. We also have a proven strategy to enter markets by
migrating available fleet to new markets that can be serviced by nearby full-service field locations.
2015 Strategic Actions
Realignment of field organization and management structure. To accelerate the integration and
facilitate the execution of cross-selling opportunities related to the ETS acquisition, we shifted from a
product oriented organization to a geographic customer-focused organization with three divisions in
North America: East, Central and West. Each division is responsible for marketing, renting and servicing
all product lines within their geographic area. This structure results in a more customer-oriented
organization with each division capable of offering Mobile Mini’s complete product line to each of their
customers, while corporate focuses on support functions and longer-term strategy. Our U.K. business is
already organized in this way with great results.
Divestiture of wood mobile office business. On May 15, 2015, we completed the divestiture of our
fleet of approximately 9,400 wood mobile office units within our North American portable storage
segment. Our business strategy is to invest in high return, low maintenance, long-lived assets. Wood
mobile offices require more maintenance and upkeep than Mobile Mini’s steel storage containers
2
Secure, Ground Level
Off ices
Mobile Mini provides our customers with an
office solution that can be used for a multitude
of purposes, including, a ticket office, a first aid
station, a break area or an on-site office. Our office
units provide the advantage of ground accessibility
for ease of access and high security in an all-steel
design. Ground level offices are used by many
industries, including construction and remote oil
and gas locations.
and steel ground level offices, and specialty
containment units, resulting in lower margins
as compared the rest of our fleet. While this
divestiture resulted in short-term margin pressure
due to the loss of revenue covering our shared
infrastructure, these fixed costs are now being
absorbed by increasing revenue in the remaining,
higher-margin portable storage and specialty
containment businesses.
Execution of a $1.0 billion refinancing.
In December 2015 we entered into an amended
and restated $1.0 billion asset-based revolving
credit facility maturing in December 2020. The
refinancing extends the debt maturity, provides
us with ongoing financial flexibility and, with
availability in excess of $300 million as of the end
of the year, enhances our liquidity and ability to
generate growth. Additionally, as a result of our
strong performance over the past several years, we
were able to reduce the borrowing margins on our
credit line, which we expect to result in interest rate
savings going forward.
2015 Results and Achievements
I am very pleased with our performance for the year. We continued to drive rental revenue growth by
increasing both rental rates and volume, which was driven by strong execution from our sales team.
For the year ended December 31, 2015, our achievements include:
(cid:3)(cid:81) Grew total rental revenues 20.6% year-over-year,
(cid:3)(cid:81) Increased adjusted EBITDA to $200.8 million and expanded our adjusted EBITDA margin to 38.1%,
(cid:3)(cid:81) Within the portable storage business, excluding the divested wood mobile office business:
(cid:3)(cid:79) Grew total rental revenues 6.7% when adjusting for unfavorable currency fluctuations,
(cid:3)(cid:79) Increased year-end units on rent by 4.3%, and
(cid:3)(cid:79) Increased year-over-year portable storage solutions rental rates by 4.5% and yield by 4.6% when
adjusting for unfavorable currency rates,
(cid:3)(cid:81) Utilized $73.6 million in free cash flow and $83.3 million received in conjunction with our wood
mobile office divestiture to create and return shareholder value:
(cid:3)(cid:79) Repurchased $61.8 million in treasury shares,
(cid:3)(cid:79) Paid $33.7 million in shareholder dividends, and
(cid:3)(cid:79) Reduced the balance on our lines of credit by $37.8 million, and
(cid:3)(cid:81) Drove continuous improvement in safety as a result of continued company-wide focus:
(cid:3)(cid:79) Over the past two years we have reduced the Occupational Health and Safety Act, or OSHA,
Incident Rate for our portable storage business by 26%, the number of Department of
Transportation violations by 52% and our auto incidents by 53%.
3
Pump Solutions for
Large and Small Jobs
Evergreen Tank Solutions and its subsidiary
Water Movers offer a wide variety of pump
options differentiated by size and power. Our
pumps meet the needs of customers in the
municipal, refinery, construction and utility
industries. Our pump configurations allow
extremely fast priming, prevent discharge of
effluent onto the ground, and eliminate the
need for a waste hose.
Outlook
In the last several years, we have made significant
investments in our management information
systems supporting our operations and believe
these systems give us a competitive advantage.
In 2016 we will be implementing in stages our
new SAP® Enterprise Resource Planning system,
which we began rolling out in the first quarter of
2016. We believe this investment will result in a
scalable platform to support future growth.
Throughout 2015 we worked diligently to create
a more optimal operational and salesforce
infrastructure to position Mobile Mini for
enhanced profitable growth. The effectiveness
of the new structure and product portfolio was
reflected in our 2015 results, and the momentum
built in the second half of the year, and we
expect even greater benefits in 2016.
While our exceptional service is evidenced by
our world-class Net Promoter ScoreSM (NPS®), a
globally recognized measure of customer loyalty,
we are committed to further strengthening
the culture at Mobile Mini where the customer is first in everything that we do. In 2016 we have
challenged and empowered employees at Mobile Mini to seek innovative ways to improve our
customers’ experience and achieve efficiencies in all our processes. In short, we want to make
Mobile Mini easy to do business with. We believe that our superior products and service levels will
continue to drive additional price increases in the future.
Demand in our construction, industrial and diversified sectors remains strong and we are well-
situated to capitalize on our existing footprint to expand our specialty containment business with
downstream energy and industrial customers in 2016. In addition, our salesforce is stronger and
has more sophisticated tools than ever before, which we expect to generate additional rental
revenue growth. We are confident in our ability to leverage our infrastructure changes as well
as the investments in our fleet and information technology systems to drive higher revenues,
adjusted EBITDA margins, earnings per share and cash flow in 2016, and we look forward to
reporting on our performance to our shareholders as the year progresses.
Erik Olsson
President & Chief Executive Officer, March 2016
4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
Commission File Number 1-12804
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
86-0748362
(I.R.S. Employer
Identification No.)
4646 E. Van Buren Street, Suite 400
Phoenix, Arizona 85008
(Address of principal executive offices) (Zip Code)
(480) 894-6311
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $.01 par value
Preferred Share Purchase Rights
Name of each exchange on which registered
Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:95) No (cid:134)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:134) No (cid:95)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes (cid:95) No (cid:134)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes (cid:95) No (cid:134)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. (cid:134)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer (cid:95)
Non-accelerated filer
(cid:134) (Do not check if a smaller reporting company)
Smaller reporting company
Accelerated filer
(cid:134)
(cid:134)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:134) No (cid:95)
The aggregate market value on June 30, 2015 of the voting common stock held by non-affiliates of the registrant was approximately $1.9
billion.
As of January 25, 2016 there were outstanding 44,708,474 shares of the registrant’s common stock, par value $.01.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Proxy Statement for the registrant’s 2016 Annual Meeting of Stockholders are incorporated herein by reference in Part III of
this Annual Report on Form 10-K to the extent stated herein. Certain exhibits are incorporated in Item 15 of this Annual Report on Form 10-K by
reference to other reports and registration statements of the registrant which have been filed with the Securities and Exchange Commission.
MOBILE MINI, INC.
2015 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
Page
4
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94
BUSINESS
ITEM 1
ITEM 1A RISK FACTORS
ITEM 1B UNRESOLVED STAFF COMMENTS
ITEM 2
ITEM 3
ITEM 4
PROPERTIES
LEGAL PROCEEDINGS
MINE SAFETY DISCLOSURES
PART I
PART II
ITEM 5
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6
ITEM 7
SELECTED FINANCIAL DATA
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8
ITEM 9
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
ITEM 9A CONTROLS AND PROCEDURES
ITEM 9B OTHER INFORMATION
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11 EXECUTIVE COMPENSATION
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES
PART III
ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
PART IV
2
Cautionary Statement about Forward Looking Statements
Unless otherwise indicated, the terms “Mobile Mini,” the “Company,” “we,” “us” and “our” refer to Mobile Mini, Inc. together
with its consolidated subsidiaries.
Our discussion and analysis in this Annual Report on Form 10-K, our 2015 Annual Report to Stockholders, our other reports
that we file with the Securities and Exchange Commission (the “SEC”), our press releases and in public statements of our officers and
corporate spokespersons contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
Private Securities Litigation Reform Act of 1995. Forward-looking statements give our current expectations or forecasts of future
events. You can identify these statements by the fact that they do not relate strictly to historical or current events. We have tried,
wherever possible, to identify such statements by using words such as “may,” “plan,” “seek,” “will,” “expect,” “intend,” “estimate,”
“anticipate,” “believe,” “continue,” “project,” “should,” “likely,” “future,” “target,” “forecast,” “goal,” “observe,” and “strategy” or
the negative thereof or variations thereon or similar terminology. The forward-looking statements in this Annual Report on Form 10-K
reflect management’s beliefs, plans, objectives, goals, expectations, anticipations and intentions with respect to our financial
condition, results of operations, future performance and business, and include statements regarding, among other things, our future
actions; financial position; management forecasts; efficiencies; cost savings, synergies and opportunities to increase productivity and
profitability; our plans and expectations regarding acquisitions; income and margins; liquidity; anticipated growth; the economy;
business strategy; budgets; projected costs and plans and objectives of management for future operations; sales efforts; taxes;
refinancing of existing debt; and the outcome of contingencies such as legal proceedings and financial results.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on
our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections,
anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they
are subject to certain risks and uncertainties, including, without limitation, an economic slowdown in the U.S. and/or the U.K. that
affects any significant portion of our customer base, or the geographic regions where we operate in those countries; our ability to
manage growth at existing or new locations; our ability to obtain borrowings under our revolving credit facility or additional debt or
equity financings on acceptable terms; changes in the supply and price of used containers; our ability to increase revenue and control
operating costs; our ability to raise or maintain rental rates; our ability to leverage and protect our information technology systems; our
ability to protect our patents and other intellectual property; currency exchange and interest rate fluctuations; governmental laws and
regulations affecting domestic and foreign operations, including tax obligations, and labor laws; changes in the supply and cost of the
raw materials we use in refurbishing or remanufacturing storage units; competitive developments affecting our industry, including
pricing pressures; the timing, effectiveness and number of new markets we enter; our ability to cross-sell our portable storage and
specialty containment products; our ability to integrate recent acquisitions; our ability to achieve the expected benefits of the
divestiture of the wood mobile offices; our ability to develop a new scalable enterprise resource platform; changes in generally
accepted accounting principles; changes in local zoning laws affecting either our ability to operate in certain areas or our customer’s
ability to use our products; any changes in business, political and economic conditions due to the threat of future terrorist activity in
the U.S. and other parts of the world and related U.S. military action overseas; our ability to utilize our deferred tax assets; and those
other risks and uncertainties discussed herein, that could cause actual results to differ materially from historical results or those
anticipated. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this
Annual Report on Form 10-K will in fact transpire or prove to be accurate. Readers are cautioned to consider the specific risk factors
described herein and in “Item 1A. Risk Factors” of this Annual Report Form 10-K, and not to place undue reliance on the forward-
looking statements contained herein, which speak only as of the date hereof.
The Company undertakes no obligation to update or publicly revise any forward-looking statement whether as a result of new
information, future developments or otherwise. All subsequent written or oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their entirety by this paragraph. You are advised, however, to
consult any further disclosures we make on related subjects in our subsequently filed Form 10-Q and Form 8-K reports and our other
filings with the SEC. Also note that we provide a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions
relevant to our business under “Item 1A. Risk Factors” of this Annual Report Form 10-K. We note these factors for investors as
permitted by the Private Securities Litigation Reform Act of 1995. You should understand it is not possible to predict or identify all
such factors.
3
ITEM 1. BUSINESS.
Mobile Mini, Inc. - General
PART I
We believe we are the world’s leading provider of portable storage solutions, and are committed to providing our customers
with superior service and access to a high-quality and diverse fleet. Through our wholly owned subsidiary, Evergreen Tank Solutions,
Inc. (“ETS”) we are also a leading provider of specialty containment solutions in the United States (“U.S.”). Our mission is to uphold
our leadership positions in portable storage solutions to customers throughout North America and the United Kingdom (“U.K.”) and
become the provider of choice for specialty containment products in the U.S.
Business Model
Mobile Mini, founded in 1983, focuses on renting rather than selling our units, with rental revenues representing approximately
93% of our total revenues for the year ended December 31, 2015. We believe this strategy provides us with predictable, recurring
revenue. Additionally, our assets have long useful lives, low maintenance and generally maintain their value throughout their useful
lives. We also sell new and used units and provide delivery, installation and other ancillary products and value-added services.
Our business is comprised primarily of two product categories:
(cid:16)
Portable Storage Solutions
This category consists of our container and ground level office product offerings. We offer a wide range of portable
storage products in varying lengths and widths with an assortment of differentiated features such as patented locking
systems, premium doors, electrical wiring and shelving. Our portable storage units provide secure, accessible
storage for a diversified client base of approximately 83,000 customers across various industries, including retail
and consumer services, construction, industrial, commercial and governmental. As of December 31, 2015, we
offered our portable storage fleet of approximately 205,200 units to our customers who use these products for a
wide variety of storage applications, including retail and manufacturing, inventory, maintenance supplies,
construction materials and equipment, documents and records, household goods, and as portable offices.
(cid:16)
Specialty Containment Solutions
Our specialty containment products consist primarily of liquid and solid containment units, pumps and filtration
equipment. Additionally, we provide an offering to our customers of value-added services designed to enhance the
efficiency of managing liquid and solid waste. The client base for our specialty containment products includes
customers in specialty industries, including chemical, refinery, oil and natural gas drilling, mining and
environmental.
As of December 31, 2015, our network includes 133 portable storage locations, 19 specialty containment locations and 7
combined locations. Included in our portable storage network are 16 locations in the U.K., where we are a leading provider and two in
Canada. Our portable storage fleet consists of approximately 205,200 units and our specialty containment business has a fleet of
approximately 11,700 units. In the discussions below, we generally refer to our business and assets as either “portable storage” or
“specialty containment.”
Recent Strategic Transactions
On December 10, 2014, we completed the acquisition of ETS, which we refer to as the “ETS Acquisition.” ETS is the third
largest provider of specialty containment solutions in the U.S. and the leading provider in the Gulf Coast. ETS operates as a separate
subsidiary under the ETS name, as does its wholly owned subsidiary, Water Movers, Inc. (“Water Movers”) which primarily offers
specialty pump equipment and related services. Like Mobile Mini, ETS rents long-lived assets with low maintenance requirements.
The acquisition expands Mobile Mini’s product lines and provides significant cross-selling and expansion opportunities as well as
modest costs synergies. These operations are included in our results of operations for the periods subsequent to the acquisition date of
December 10, 2014, which includes the entire twelve-month period ended December 31, 2015.
On May 15, 2015, we completed the divestiture of our fleet of approximately 9,400 wood mobile office units within our North
American portable storage segment for a cash price of $92.0 million, less associated assumed liabilities of approximately $6.8 million.
Our business strategy is to invest in high return, low maintenance, long-lived assets. Wood mobile offices require more maintenance
and upkeep than Mobile Mini’s steel containers and steel ground level offices, resulting in lower margins as compared to our other
portable storage products, and our specialty containment products.
4
Industry Overview
Portable Storage Solutions
The storage industry includes two principal sectors, fixed self-storage and portable storage. The fixed self-storage sector consists
of permanent structures located away from customer locations to store excess household goods. We do not participate in the fixed self-
storage sector.
The portable storage sector, upon which our business focuses, differs from the fixed self-storage sector, as it brings the storage
solution to the customer’s location and fulfills the need for secure storage with immediate access to the storage unit. The advantages of
portable storage include convenience, immediate accessibility, and lower price. In contrast to the fixed self-storage sector, the portable
storage sector is primarily used by businesses. This sector of the storage industry is highly fragmented and remains primarily local in
nature. Although there are no published estimates of the size of the portable storage market, we believe the sector is expanding due to
the increasing awareness of the advantages of portable storage and that portable storage units are achieving increased market share
compared to other portable options because containers provide ground level access, better protection against wind or water damage,
higher security and improved aesthetics, compared to certain other portable storage alternatives such as van trailers.
Certain of our portable storage products serve the modular space industry, which includes mobile offices and other modular
structures. We offer steel ground level offices either custom designed and manufactured or made from converted ISO (International
Organization for Standardization) containers as well as combination steel ground level office/storage units in varying lengths and
widths to serve the various requirements of our customers.
Specialty Containment Solutions
In the specialty containment sector services industry, we service different markets: the industrial market comprised mainly of
chemical facilities and refineries, which we call the “downstream” market and, to a lesser extent, companies engaged in the
exploration and production of oil and natural gas, which we call the “upstream” market. Additionally, we serve a diversified group of
customers engaged in projects in the construction, pipeline and mining markets. Downstream customers utilize our equipment and
services to manage and remove liquid and solid waste generated by ongoing operating activities as well as turn-around projects and
large-scale expansion projects, while upstream customers tend to rent steel tanks to store and transport water and propellant used in
well hydraulic fracturing (“fracing”). Other customers utilize a wide variety of our products differentiated by the type of project in
which they are engaged. The liquid and solid containment industry is highly fragmented, consisting principally of local providers, with
a handful of regional and national providers.
Business Environment and Outlook
Excluding the divested wood mobile office business, approximately 61% of our estimated combined rental revenue during the
twelve-month period ended December 31, 2015 was derived from our North American portable storage business, 21% was derived
from our specialty containment business in North America and 18% was derived from our U.K. portable storage business. Our
business is subject to the general health of the economy and we utilize a variety of general economic indicators to assess market trends
and determine the direction of our business.
Based on our assessment, we expect that the majority of our end markets will continue to drive increased 2016 demand for our
products. In particular, construction, which represents approximately 41% of our consolidated rental revenue, is forecasted for
continued growth for the next several years. While only 3% of our consolidated rental revenue is generated by upstream oil and gas
customers, the oil and gas industry is forecasted to continue to remain challenged in the near term.
Competitive Strengths
Our competitive strengths include the following:
Market Leader. We believe we are the world’s largest provider of portable storage solutions, a market leader in
portable storage solutions in the U.K. where we have nearly 100% geographic coverage, and the third largest provider of
specialty containment solutions in the U.S.
The Mobile Mini brand name is associated with high quality portable storage products, superior customer service
and value-added storage solutions. Similarly, within the markets and sectors served, the ETS brand name is associated
with high quality containment products and services, and the Water Movers name is associated with exceptional quality
pump and filtration equipment and service. We believe we are one of a few competitors in the U.S. and the U.K. who
possess the brand awareness, network of locations, customer relationships and infrastructure to compete on a national and
regional basis while maintaining a strong local market presence.
5
Superior, Differentiated Products and Service. We remanufacture used ISO containers and have designed and
manufactured our own portable storage units which allows us to offer a wide range of products and proprietary features,
including features that provide high-levels of security. This product differentiation within the portable storage sector as
well as superior service allows us to gain market share and charge premium rental rates.
We also offer a broad range of specialty containment equipment and value-added services, which enables us to meet
customers’ ongoing needs throughout the various life cycles of projects unique to the petrochemical and industrial
industry. Our comprehensive turnkey solutions to customers’ containment, storage, pumping and filtration needs drives
the creation of strong long-term partnerships with our customers.
Sales and Marketing Emphasis. We target a diverse customer base and, unlike most of our competitors, have
developed sophisticated sales and marketing programs enabling us to expand market awareness of our products and
generate strong organic growth. We have a dedicated commissioned sales team that is provided with our highly
customized contact management system and intensive sales training programs. We manage our salespersons’ effectiveness
through extensive sales call monitoring, mentoring and training programs. Our digital advertising includes paid and
organic search marketing products, industry targeted content, social messaging, and industry and customer partnerships.
External market research vendors are an integral part of our sales and marketing approach. Additionally, our Web site
includes value-added features such as product video tours, payment capabilities and real time sales inquiries that enable
customers to chat live with salespeople.
National Presence with Local Service. We have invested significant capital developing a national network of
locations that serve most major metropolitan areas in the U.S. and the U.K. Our nationwide presence allows us to offer our
products to larger customers who wish to centralize the procurement of portable storage and specialty containment
products on a multi-regional or national basis. We believe we will be able to leverage our national presence and
infrastructure in the portable storage U.S. market to facilitate the geographic expansion of our specialty containment
business. In the field, our local managers, sales force and drivers develop and maintain critical personal relationships with
customers that benefit from our wide selection of products.
Geographic and Customer Diversification. Our network of portable storage locations covers nearly all major
markets in both the U.S. and U.K., providing us with a broad geographical reach. Additionally, since portable storage
units are used in a multitude of applications, we have established strong relationships with a well-diversified base of
portable storage customers, ranging from leading Fortune 500 companies to sole proprietorships. The operation of
specialty containment locations concentrated in the Gulf Coast region, further diversifies our geographic presence and
customer base.
As a combined company, our geographically- and industry-diversified customer base reduces our susceptibility to
the effects of economic downturns in any individual market and industry in which we operate.
Customer Service Focus. The portable storage industry is particularly service intensive. To position ourselves to
understand our customers’ needs, we have trained our sales force to focus on all aspects of customer service from the sales
call onward. We use Salesforce.com® as our Customer Relationship Management (“CRM”) platform to increase our
responsiveness to customer inquiries and to efficiently monitor our sales force’s performance. We use a Net Promoter
Score (“NPS”) system to measure customer satisfaction and loyalty through real time surveys conducted by a third party.
We utilize customer feedback to drive service improvements across the Company, from our field locations to our
corporate headquarters, resulting in proven success as evidenced by our best in class NPS score of 78.6% for 2015. We
differentiate ourselves by providing security, convenience, product quality, broad product selection and availability, and
customer service. We believe our superior customer service drives customer satisfaction and we survey our customers to
ensure that we are easy to do business with. Approximately 66% of our 2015 portable storage rental revenues were
derived from repeat customers.
Within the specialty containment industry, we have leveraged our broad range of products and expertise to
differentiate ourselves from competitors. ETS offers a full suite of the liquid and solid containment equipment required to
execute a comprehensive containment solution that often must meet stringent regulatory and technical requirements. In
addition we offer a proprietary, sophisticated technology platform that provides detailed real-time data capture, tracking
and customized reporting capabilities. This technology, which may be integrated with customers’ enterprise systems, is a
unique customer service tool that enables us to develop strong, long-term relationships with our larger customers. Many
of our specialty containment customers are large, blue-chip companies.
Customized Management Information Systems. We continue to make significant investments in the management
information systems supporting our operations. Our systems enable us to optimize fleet utilization, control pricing,
dispatch and track our trucks, capture detailed customer data, evaluate and approve credit applications, monitor company
results, gain efficiencies in internal control compliance, and support our growth by projecting near-term capital needs. Our
customized management information systems provide insight into estimating our forward-looking market potential by
6
territory. This enables us to be more proactive and timely responsive to drive specific revenue streams. Field employees
and decision makers at all levels have access to real-time information about the business. In addition, we are able to
capture relevant customer demographic and usage information, which we use to target new customers within our existing
and new markets. These capabilities result in a competitive advantage over smaller, less sophisticated local and regional
competitors.
Business Strategy
Our strategic goal is to accelerate rental revenue growth and expand our operating margins by leveraging our infrastructure,
focusing on higher returning assets and driving continuous improvements in efficiency. To achieve this goal, we intend to continue
execution of the following strategies:
Focus on Core Rental Business with Higher Returning Assets. Our rental business provides predictable recurring
revenue and high margins. We are constantly evaluating our portfolio of product offerings to ensure our capital is
invested in products that provide optimal returns. For example, during 2015 we made the strategic decision to divest our
wood mobile offices which require significantly more resources to repair, rent and prepare for rental than our other
products.
Generate Strong Organic Growth. We focus on increasing market penetration and gaining additional revenues from
existing customers as well as gaining new customers through sophisticated sales and marketing programs aimed at
increasing brand recognition, expanding market awareness of the uses of portable storage and differentiating our superior
products from those of our competitors.
Opportunistic Geographic Expansion. We believe we have attractive expansion opportunities and have identified
over 50 potential new geographic, or underserved, markets in North America where we believe demand for portable
storage units is underdeveloped. In 2014 and 2015 we executed an aggregate of ten portable storage acquisitions, which
have enabled us to enter new markets, as well as establish new customers in existing markets. We expect to continue to
execute on opportunistic acquisitions in the future. We also have a proven strategy to enter markets by migrating
available fleet to new markets that can be serviced by nearby full-service field locations. From these start-up operational
yards, we are able to redeploy existing available fleet, allowing for cost effective new location openings with minimal
capital expenditures. We also believe we have the opportunity to geographically expand the markets in which we offer
ETS products.
Innovative Product Offering. Our wide offering of products with varying features expands the applications and
overall market for our portable storage products. Within our specialty containment products, we offer one of the broadest
ranges of services and containment equipment in the industry accompanied by an assortment of pumps and filtration units
designed to allow us to partner with customers through every project stage. We believe that our rental products can
continue to generate substantial demand throughout North America and the U.K.
Opportunities for Cross-selling and Expansion. The ETS Acquisition allows us to leverage the combination of
Mobile Mini’s portable storage national presence with ETS’ specialty containment expertise to grow revenue by providing
new products and services to existing Mobile Mini customers, and by expanding the geographic reach of our specialty
containment products to serve customers previously outside of ETS’ historic service area. Additionally, our significant
presence in downstream and industrial markets, particularly in the Gulf Coast region, will allow us to leverage established,
long-term specialty containment relationships for their portable storage needs. We are currently expanding our specialty
containment business geographically with openings in Dallas, Philadelphia and are in the process of expanding into
Southern California.
Increase Fleet Utilization. We are focused on increasing utilization through improving sales representatives’
productivity and expanding our sales force and increasing the market’s awareness of our products. Increasing utilization
will result in higher rental margins and reduce capital expenditure requirements to meet growth.
Drive Profitability of Existing Locations. We have established key performance indicators to optimize profitability
at individual locations and incentivize local management teams based on the performance of their branch. We also
compare results across locations and regions to identify areas of opportunity for growth or for increased efficiencies.
Continuous Improvement in Our Systems. We have made significant investments in our management information
systems supporting our operations and believe these systems give us a competitive advantage. We have identified newly
available technologies to further increase efficiency and data management. As such, since late 2014 we have been in the
process of implementing a new SAP® Enterprise Resource Planning (“ERP”) system, which we expect to execute in
stages beginning in the first quarter of 2016. We believe this investment will result in a scalable platform to support
future growth.
7
Products
We protect our products and brands through the use of trademarks and patents. In particular, we have patented our proprietary
tri-cam locking system, our Container Guard Lock and other continued improvements in our locking technology both in the markets in
which we operate as well as in Europe and China.
Portable Storage Solutions
We offer customers a wide range of portable storage and office products with an assortment of differentiated features such as
patented locking systems, premium and multiple door options and approximately 100 different configuration options. Our portable
storage units provide secure, accessible storage. Our principal products are listed below:
(cid:120)
(cid:120)
Steel Storage Containers. Standard portable storage containers are available in lengths ranging from 5 to 45 feet, widths
of either 8 feet or 10 feet and a variety of customization options. Doors can be placed at the front, front and back, or the
sides of containers. Other options include partitions and shelving. We also market portable records storage units. Records
storage units feature high-security doors and locks, electrical wiring, shelving, folding work tables and air filtration
systems. We believe our steel storage containers are a cost-effective alternative to mass warehouse storage, with a high
level of fire and water damage protection.
Steel Ground Level Offices. We offer steel ground level offices from 10 to 40 feet in length in various configurations,
including office and storage combination units that provide a 10- or 15-foot office with the remaining area available for
storage. We manufactured many of the units in our fleet and continue to strategically convert portable storage containers
into ground level offices. Our office units provide the advantage of ground accessibility for ease of access and high
security in an all-steel design. Our U.K. products include canteen units and drying rooms for the construction industry.
For customers with space limitations, the U.K. office/canteen units can also be stacked two-high with stairs for access to
the top unit. These office units are equipped with electrical wiring, heating and air conditioning, phone jacks, carpet or
tile, high security doors and windows with security bars or shutters. Some of these offices are also equipped with sinks,
hot water heaters, cabinets and restrooms.
Specialty Containment Solutions
We offer a broad range of specialty containment equipment and services accompanied by an assortment of pumps, filtration
units and waste hauling services. In addition, we offer ancillary products for rental and for sale to our customers, such as: hoses, pipes,
filters and spill containment. Our principal products and services include those listed below:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Steel Tanks. Our fleet of steel tanks offers flexible sizes and other options such as gas buster steel tanks and open top steel
tanks. Applications include: temporary storage of water and other liquids, thorough mixing, agitation and circulation of
stored liquids with other products, removal of gas from fluids circulated in the wellbore - such as mud used during drilling
operations, and settling of solids in liquids prior to filtration or discharge.
Stainless Steel Tank Trailers. Our stainless steel tankers meet department of transportation specifications for use in the
storage and transportation of chemical, caustics and other liquids. Stainless steel tanks are offered insulated or non-
insulated with level indication and vapor recovery capability.
Roll-Off Boxes. Utilized for a variety of containment applications where it is necessary to maintain the homogeneity of the
contents, our roll-off boxes provide simple, leak-proof storage and transportation of solid industrial byproducts. A roll-
tarp or rolling metal lid is provided to protect the contents from the elements during transport.
Vacuum boxes. Vacuum roll-off boxes are also offered to pair with a vacuum truck to efficiently vacuum liquids, dry
materials, and sludge, whereby the contents vacuumed may be collected directly in the roll-off vacuum box, allowing the
air-mover truck to remain on-site and in service during vacuum pumping applications.
Dewatering Boxes. Our dewatering boxes are configured to provide for the draining of excess liquid from slurry or sludge
which reduces storage, transportation and disposal costs. Upon completion of dewatering, the container is generally
picked up by a roll-off truck for content disposal. Vacuum dewatering boxes are also offered.
Pumps and Filtration Equipment. We offer a variety of pumps and filtration equipment differentiated by size and power.
This equipment is used primarily for liquid circulation and filtration.
Services. Value-added services performed by our employees include:
(cid:16)
Transportation of containers for waste management between multiple locations or in-plant,
(cid:16) Waste management oversight and service provision by an on-site dedicated team,
8
(cid:16)
(cid:16)
System design including assessment of pumping, filtration and temporary storage needs, and
Field services to correctly install and connect customer containment equipment.
Product Lives and Durability
We rent containers and equipment that have been in our fleet for various lengths of time at similar rates, without regard to the
age of the unit. As such, we have no need for a systematic program to sell rental fleet units as they age. Generally, sales from our
fleet occur due to a particular customer need, having fleet in excess of rental demand at a particular location, or damage beyond
economical repair for rental purposes.
Appraisals on our rental fleet are required by our lenders on a regular basis. The appraisal typically reports no difference in the
value of the unit due to the age or length of time it has been in our fleet. Based on the values assigned in this appraisal our rental fleet
net orderly liquidation appraisal value as of December 31, 2015 was approximately $1.1 billion. Our net book value for this fleet as of
December 31, 2015 was $951.3 million.
Portable Storage Solutions
Steel containers have a long useful life with no technical obsolescence. Our steel portable storage containers and steel ground
level offices have estimated useful lives of 30 years from the date we build or acquire and remanufacture them, with residual values of
55%. We maintain our steel containers on a regular basis by painting them with rust inhibiting paint, removing rust, and occasionally
replacing the wooden floor or a rusted panel. Repainting the outside of storage units is the most common maintenance item. A
properly maintained container is essentially in the same condition as when we initially remanufactured it.
Specialty Containment Solutions
When purchased new, our steel tanks and stainless steel tank trailers have estimated useful lives of 25 years, dewatering and
roll-off boxes have useful lives ranging from 15 to 20 years and our pumps and filtration equipment have estimated lives of 7 years.
We do not assume any residual value at the end of the assets’ useful lives. There is a limited secondary market for specialty
containment products. We have outlined a stringent quality control and maintenance program to ensure that only equipment of the
highest quality is released to the field. Each container undergoes a thorough visual inspection, hydro-testing and ultrasonic thickness
testing to identify maintenance requirements. Tank maintenance includes repainting with rust inhibiting paint, replacing interior
liners, and repairing valves, gaskets and rails. This periodic maintenance keeps the specialty container in essentially the same
condition as when we initially purchased it and is designed to maintain the unit’s value.
Depreciation
We depreciate our rental fleet using the straight-line method over each unit’s estimated useful life, after the date we place the
unit in service, and the units are depreciated down to their estimated residual values, if any. Assets obtained through acquisitions are
recorded at their then current fair market value and depreciated to their estimated residual value over each asset’s estimated remaining
life.
Remanufacturing and Manufacturing of Portable Storage Containers
We purchase used ISO containers from leasing companies, shipping lines and brokers. These containers were originally built to
ISO standards and are 8 feet wide, up to 9.5 feet high and 20, 40 or 45 feet long. After acquisition, we remanufacture and modify these
ISO containers. Remanufacturing typically involves cleaning, removing rust and dents, repairing floors and sidewalls, painting, adding
our signs and further customizing units by adding our proprietary easy opening door system and our patented locking system.
Modification typically involves splitting some containers into differing lengths. The capitalized cost for remanufactured units
includes the price we paid for the unit, plus the cost of customizing units and freight charges to our location when the unit is first
placed in service. For manufactured units, cost includes our manufacturing cost, customization costs and freight charges to our
location when the unit is first placed in service.
We believe we are able to procure ISO containers at competitive prices because of our volume purchasing power. If needed in
the manufacturing or remanufacturing process, we purchase raw materials such as steel, vinyl, wood, glass and paint. Typically we do
not have long-term contracts with vendors for the supply of any raw materials.
Additionally, we manufacture custom sale orders at our Maricopa, Arizona facility as well as, remanufacture and perform
repairs and maintenance on our existing rental fleet.
9
Rental Fleet Composition
The table below outlines the composition of our portable storage rental fleet at December 31, 2015:
Steel storage containers
Steel ground level offices
Other
Portable storage rental fleet
Accumulated depreciation
Portable storage rental fleet, net
Number of(cid:3)
Units
Percentage of
Units
(cid:3)(cid:3)
173,668
29,337
2,233
205,238
85 %
14
1
100 %
Rental Fleet
(In thousands)
$
612,782
346,233
7,052
966,067
(142,338)
823,729
$
The table below outlines the composition of our specialty containment rental fleet at December 31, 2015:
Steel tanks
Roll-off boxes
Stainless steel tank trailers
Vacuum boxes
Dewatering boxes
Pumps and filtration equipment
Other
Specialty containment rental fleet
Accumulated depreciation
Specialty containment rental fleet, net
Number of
Units
Percentage of
Units
2,902
5,058
647
1,129
647
1,361
n/a
11,744
25 %
43
6
10
6
10
100 %
Rental Fleet
(In thousands)
$
55,467
25,161
28,160
9,852
5,383
13,964
6,843
144,830
(17,236)
127,594
$
Operations
Our senior management analyzes and manages our business as (i) two portable storage solutions business segments: North
America and the U.K. and (ii) one specialty containment business segment. To effectively manage this business across different
geographic areas, we divide these business segments into smaller management areas we call divisions, regions and locations. Each of
our locations, in their respective segment, generally has similar economic characteristics covering all products rented or sold,
including similar customer base, sales personnel, advertising, yard facilities, general and administrative costs and field operations
management. Further financial information by segment is provided in Note 16 to the accompanying consolidated financial statements.
To accelerate the integration and facilitate the execution of cross-selling opportunities, during 2015 the North American field
operations were reorganized to reflect a geographic customer-focused organization, whereby division management is responsible for
marketing, renting and servicing all product lines within their geographic area.
We locate our field operations in markets with attractive demographics and strong growth prospects. Within each market, we are
located in areas that allow for easy delivery of units to our customers over a wide geographic area. In addition, when cost effective, we
seek locations that are visible from high traffic roads in order to advertise our products and our name. A typical branch consists of
outdoor storage space for units not currently on rent and a small office.
Each branch has a manager who has overall supervisory responsibility for all operational activities. Field location managers
report to regional managers who each generally oversee multiple locations. Our regional managers, in turn, report to one of our
operational senior vice presidents (called a managing director in the U.K.). Performance-based incentive bonuses are a substantial
portion of the compensation for these senior vice presidents, regional managers and field managers.
Locations have dedicated sales staff and transportation personnel that deliver and pick up units from customers. We also
supplement our delivery fleet by outsourcing delivery services to independent haulers when appropriate. The locations have delivery
trucks and forklifts to load, transport and unload units and a yard staff responsible for unloading and stacking units. Portable storage
steel units can be stored by stacking them to maximize usable ground area. Our field locations perform preventive maintenance tasks,
but outsource major repairs and other maintenance requirements either externally or to a senior repair team.
10
Sales and Marketing
Portable Storage Solutions
We approach the market through a hybrid sales model consisting of a dedicated sales staff at our field locations as well as at our
National Sales Center (“NSC”). Our field sales representatives handle local inbound calls and work to develop their branch territory
and local relationships through effective networking and sales calls. The NSC handles overflow inbound calls and digital leads from
new customers and initiates outbound sales campaigns to new and existing customers not serviced by sales representatives at our local
locations. Our entire staff works with our local field managers and dispatchers to ensure customers receive integrated first-class, one-
call service from initial call to delivery. We believe that offering local salesperson presence for customers, along with the efficiencies
of a centralized sales operation for customers not needing a local sales contact, allows us to provide high levels of customer service
and serve all of our customers in a dedicated, efficient manner.
Our sales and marketing personnel provide information about our products to prospective customers by handling inbound calls
and initiating outbound marketing calls. We have ongoing sales and marketing training programs covering all aspects of rental and
customer service. Our field locations communicate with one another and with corporate headquarters through our ERP system and our
CRM platform, Salesforce.com®. This centralization of information enables the sales team to share leads and other information and
permits management to monitor and review sales and rental productivity on a location-by-location basis. We improve our sales efforts
by recording and rating the sales calls made and received by our trained sales force. Our sales personnel are compensated largely on a
commission basis.
Our nationwide presence in the U.S. and the U.K. allows us to offer our products to larger customers who wish to centralize the
procurement of portable storage on a multi-regional or national basis. Within our portable storage business, we are well equipped to
meet these customers’ needs through our National Account Program, which centralizes and simplifies the procurement, rental and
billing process for those customers. Our largest customers tend to participate in our National Account Program. We provide our
national account customers with service guarantees, which assure them they will receive the same superior customer service and
access to high quality, diverse fleet from any of our field locations. This program has helped us succeed in leveraging customer
relationships developed at one location across our entire network of locations.
We focus a significant portion of our marketing expenditures on digital initiatives for both existing and potential customers. We
also use targeted direct email and digital programs to build brand awareness by communicating market specific features and tying
them to industry benefits of using portable storage solutions. We have implemented aspects of search engine marketing like
remarketing, Pay Per Click, content curation, and organic search best practices to drive our customers to on-line lead generation with
real-time access to our CRM platform. Immediately after completion of the online form, our dedicated sales force will make contact
with the customer and complete the request. External market research vendors are an integral part of our sales and marketing
approach. Additionally, our Web site includes value-added features such as product video tours, payment capabilities and real time
sales inquiries that enable customers to chat live with salespeople.
Specialty Containment Solutions
Each specialty containment branch is responsible for targeting potential new customers in the branch’s service area and to be
available to respond to customers 24 hours a day, 365 days a year. The branches are supported by a corporate team, including a sales
and marketing department, business development representatives and national account management. ETS branch managers and
business development representatives work with customers to design customized solutions and identify new service and product
applications. National account management maintains contractual relationships with numerous blue-chip customers and coordinates
the provision of services to customers with locations across multiple areas. Our sales personnel are compensated largely on a
commission basis.
Additionally, ETS utilizes an advanced prospect and customer management software package across its sales force and branch
network, providing enhanced visibility and tracking on all prospective customer accounts. ETS personnel have access to real-time
critical customer information regardless of location. This access facilitates targeted marketing and sharing of relevant customer
information across the ETS branches.
Customers
Portable Storage Solutions
In 2015, we served approximately 83,000 customers. Within the portable storage solutions product lines, our first and second
largest customers accounted for 4.4% and 0.9%, respectively, of portable storage rental revenues and our 20 largest customers
combined accounted for approximately 10.5% of portable storage rental revenues. During 2015, approximately 56% of our customers
rented a single unit. We target customers who we believe can benefit from our portable storage solutions, either for seasonal,
temporary or long-term storage needs. Customers use our portable storage units for a wide range of purposes.
11
Specialty Containment Solutions
Our specialty containment customers are concentrated in the Gulf Coast region of the U.S. and are generally large companies,
including blue-chip companies, with whom we have long-term relationships. During the year ended December 31, 2015, our first and
second largest specialty containment customers accounted for approximately 14.1% and 5.8%, respectively, of specialty containment
rental revenues and our 20 largest customers combined accounted for approximately 51.8% of specialty containment rental revenues.
Generally, our specialty containment customers belong in one of the following three categories:
(cid:120)
(cid:120)
(cid:120)
Downstream customers that focus on refining petroleum crude oil as well as processing and purifying raw natural gas.
These customers may also market and distribute products derived from crude oil and natural gas including such products
as gasoline, kerosene, jet fuel, diesel oil, lubricants, asphalt, natural gas and hundreds of varieties of petrochemicals.
Upstream customers focusing on exploration for underground crude oil and natural gas fields. Upstream companies
perform such activities as well drilling, operation of producing wells and bringing crude oil and/or raw natural gas to the
surface using alternative methods. This category includes companies that perform fracing.
Diversified customers consist of all other companies to whom we provide products or services. These customers
primarily perform pump and filtration activities such as: municipal sewer and water infrastructure, mining pit pump work,
pipeline construction and maintenance, non-residential construction and other major projects.
We estimate that total 2015 ETS revenue was 64%, 14% and 22% from downstream, upstream and diversified customers,
respectively.
Combined Customer Base
The following table provides an overview of our customers and the estimated portion of total rental revenue, excluding revenue
related to the divested wood mobile business, generated by each customer group during the year ended December 31, 2015:
Construction
Business
Estimated
Percentage
41%
Representative
Customers
General, electrical, plumbing and mechanical
contractors, landscapers, residential homebuilders, and
equipment rental companies
Consumer service and retail businesses
22%
Department, drug, grocery and strip mall stores,
Industrial and commercial
Government and institutions
23%
3%
hotels, restaurants, dry cleaners and service stations
Major processing plants for organic and inorganic
chemicals, refineries, distributors and trucking and
utility companies.
National, state and local agencies and municipalities,
schools, hospitals, medical centers, military, Native
American tribal governments and reservations.
Oil and gas
3%
Companies performing such activities as exploratory
well drilling, operation of producing wells and bringing
crude oil and/or raw natural gas to the surface using
alternative methods (including fracing)
Other
Total
8%
100%
12
Rental Terms
Portable Storage Solutions
We enter into contracts with our portable storage customers based on a monthly rate. The rental continues until cancelled by the
customer or the Company. On average, the steel storage containers on rent at December 31, 2015, have been in place for 30 months,
and the steel ground level offices on rent at December 31, 2015 have been in place for 14 months. Our rental contracts provide that the
customer is responsible for the cost of delivery and pickup and specify that the customer is liable for any damage done to the unit
beyond ordinary wear and tear. Customers may purchase a damage waiver from us to avoid damage liability in certain circumstances,
which provides us with an additional source of recurring revenue. Customer possessions stored within a portable storage unit are the
responsibility of that customer.
Specialty Containment Solutions
Specialty containment product rental contracts specify that the customer is responsible for carrying commercial general liability
insurance, is liable for any damage to the unit beyond ordinary wear and tear, and for all materials the customer contains in rented
equipment. The customer is contractually responsible for the cost of delivery and pickup, as well as thoroughly emptying and cleaning
the equipment before return. Rental contracts typically offer daily, weekly or monthly rates. Duration of rental varies widely by
application, and the rental continues until the unit is returned clean.
Competition
In all segments, we face competition from local and regional companies, as well as national companies, in substantially all of
our current markets. We compete with several large national and international companies in our ground level office product line. Our
competitors include lessors of storage units, mobile offices, van trailers and other structures used for portable storage. We also
compete with conventional fixed self-storage facilities. In our portable storage segment, we compete primarily in terms of security,
convenience, product quality, broad product selection and availability, rental rates and customer service. In our core portable storage
business, our largest competitors are Algeco Scotsman, PODS, Pac-Van, 1-800-PACK-RAT, Haulaway Storage Containers,
ModSpace, McGrath RentCorp, and Wernick Hire, along with other national, regional and local companies. In our specialty
containment business we compete based on factors including: quality and breadth of equipment, technical applications expertise,
knowledgeable and experienced sales and service personnel, on-time delivery and proactive logistics management, geographic areas
serviced, rental rates and customer service. Our competitors include BakerCorp, Rain For Rent and Adler Tanks.
Employees
As of December 31, 2015, we employed 1,982 employees, the majority of which are full time. Of these employees, 1,589 are
employed in North America and 393 are employed in the U.K. No employees are currently covered by a collective bargaining
agreement, and we have never experienced a work stoppage. We believe that our relations with our employees are good.
Seasonality
Demand from our portable storage customers is somewhat seasonal. Construction customers typically reflect higher demand
during months with more temperate weather, while demand for our portable storage units by large retailers is stronger from September
through December because these retailers need to store more inventories for the holiday season. Our retail customers usually return
these rented units to us in December and early in the following year. In the specialty containment business, demand from customers is
typically higher in the middle of the year from March to October, driven by the timing of customer maintenance projects. The demand
for rental of our pumps may also be impacted by weather, specifically when temperatures drop below freezing.
Environmental and Safety
Our operations, and the operations of certain of our customers, are subject to numerous federal and local laws and regulations
governing environmental protection and transportation. These laws regulate such issues as wastewater, storm water and the
management, storage and disposal of, or exposure to, hazardous substances. We are not aware of any pending environmental
compliance or remediation matters that are reasonably likely to have a material adverse effect on our business, financial position or
results of operations. However, failure by us to comply with applicable environmental and other requirements could result in fines,
penalties, enforcement actions, third party claims, remediation actions, and could negatively impact our reputation with customers. We
have a company-wide focus on safety and have implemented a number of measures to promote workplace safety. Customers are
increasingly focused on safety records in their sourcing decisions due to increased regulations to report all incidents that occur at their
sites and the costs associated with such incidents.
13
Access to Information
Our Internet address is www.mobilemini.com. We make available at this address, free of charge, our Annual Report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable
after we electronically file such material with, or furnish it to, the SEC. In this Form 10-K, we incorporate by reference as identified
herein certain information from parts of our proxy statement for the 2016 Annual Meeting of Stockholders, which we will file with the
SEC and which will be available free of charge on our Web site. Reports of our executive officers, directors and any other persons
required to file securities ownership reports under Section 16(a) of the Exchange Act are also available through our Web site.
Information contained on our Web site is not part of this Annual Report on Form 10-K.
ITEM 1A. RISK FACTORS.
Our business, results of operations and financial condition are subject to numerous risks and uncertainties. Set forth below and
elsewhere in this Annual Report on Form 10-K and in other documents we file with the SEC are descriptions of the risks and
uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements
contained in this Annual Report on Form 10-K. Should any of these risks materialize, our business, results of operations, financial
condition and future prospects could be negatively impacted, which in turn could affect the trading value of our securities.
RISKS RELATED TO OUR BUSINESS
We may experience difficulties implementing our new global ERP system.
We are engaged in a multi-year development of a new global ERP system. We expect this implementation to begin in the first
quarter of 2016. The ERP system is designed to accurately maintain our books and records and provide information important to the
operation of the business to our management team. Our ERP system will continue to require significant investment of human and
financial resources. In implementing the ERP system, we may experience significant delays, increased costs and other difficulties.
Any significant disruption or deficiency in the design and implementation of the ERP system could adversely affect our ability to
process orders, deliver units, send invoices and track payments, fulfill contractual obligations or otherwise operate our business. While
we have invested significant resources in planning and project management, significant implementation issues may arise which could
significantly impact our operations and financial performance.
We may not be able to successfully integrate past acquisitions, or complete and integrate future acquisitions, or greenfield
expansions.
Any acquisition or expansion may result in additional and unexpected expenses, and the anticipated benefits of the integration of
an acquisition or expansion may not be realized. In addition, we may assume certain liabilities in connection with any acquisition. To
the extent there are unrecorded liabilities, including current or future environmental-related costs, which we failed to discover during
our due diligence investigations and that are not subject to indemnification or reimbursement, our future operations could be
materially and adversely affected.
We may not be able to successfully complete future strategic acquisitions if we cannot reach agreement on acceptable terms or
for other reasons. We may have to incur debt or issue equity securities to pay for any future acquisition, the issuance of which could
involve the imposition of restrictive covenants or be dilutive to our existing stockholders.
In connection with potential future acquisitions, we may experience difficulty integrating personnel and operations, which could
negatively affect our operating results in the following manner:
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key personnel of the acquired company may decide not to work for us;
we may experience business disruptions as a result of information technology systems conversions;
we may experience additional financial and accounting challenges and complexities in areas such as tax planning, treasury
management, and financial reporting;
we may be held liable for environmental risks and liabilities as a result of our acquisitions or expansion, some of which
we may not have discovered during our due diligence;
we may assume the liabilities of companies we acquire or properties we expand to in the future, including liabilities for
environmental-related costs, which could materially and adversely affect our business;
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our ongoing core business may be disrupted or receive insufficient management attention; and
we may not be able to realize anticipated cost savings, synergies or other financial benefits.
Our operational measures designed to increase revenue while continuing to control operating costs may not generate the
improvements and efficiencies we expect and may impact customers.
We have responded to past economic slowdowns by employing a number of operational measures designed to increase revenue
while continuing to pursue our strategy of reducing operating costs where available. Additionally, our hybrid sales strategy of using
local sales people in addition to a centralized call center team is designed to meet customer needs and drive revenue growth but differs
from our historic sales structure. No assurance can be given that these strategies will achieve the desired goals and efficiencies in the
future. The success of these strategies is dependent on a number of factors that are beyond our control.
Even if we carry out these measures in the manner we currently expect, we may not achieve the improvements or efficiencies
we anticipate, or on the timetable we anticipate. There may be unforeseen productivity, revenue or other consequences resulting from
our strategies that will adversely affect us. Therefore, there can be no guarantee that our strategies will prove effective in achieving
desired profitability or margins. Additionally, these strategies may have adverse consequences if our cost cutting and operational
changes are deemed by customers to adversely impact product quality or service levels.
We face intense competition that may lead to our inability to increase or maintain our prices, which could have a material
adverse impact on our results of operations.
The portable storage and specialty containment industries are highly competitive and highly fragmented. Many of the markets in
which we operate are served by numerous competitors, ranging from national companies like ourselves, to smaller multi-regional
companies and small, independent businesses with a limited number of locations. See “Business — Competition.” Some of our
principal competitors are less leveraged than we are and may have lower fixed costs and may be better able to withstand adverse
market conditions within the industry. Additionally, some of our competitors currently offer products outside of our offerings or may
have better brand recognition in some end customer sectors. If these competitors use their brand awareness to enter our product
offerings, customers may choose these competitors’ products over ours and we could lose business. Our competitors typically compete
aggressively on the basis of pricing and may continue to impact our ability to attract and retain customers or maintain the rental rates
we charge. Additionally, general economic factors could negatively impact the rental rates we are able to charge. To the extent that we
choose to match our competitors’ declining prices, it could harm our results of operations as we would have lower margins. To the
extent that we choose not to match or remain within a reasonable competitive distance from our competitors’ pricing, it could also
harm our results of operations, as we may lose rental volume.
We rely heavily on information technology in our operations, and any cyber-security issue, material failure, inadequacy,
interruption or breach of security of that technology could harm our ability to effectively operate our business.
We rely heavily on information systems across our operations. Our ability to effectively manage our business depends
significantly on the reliability and capacity of these systems. In addition, we utilize third-party cloud providers to host certain of our
applications and to store data. Like other companies, our information technology systems may be vulnerable to a variety of
interruptions due to our own error or events beyond our control, including, but not limited to, cyber-security breaches, interruptions or
delays in service from our third-party cloud providers, natural disasters, terrorist attacks, telecommunications failures, computer
viruses, hackers, and other security issues. The failure of these systems to operate effectively, could result in substantial harm or
inconvenience to us or our customers. This could include the theft of our intellectual property or trade secrets, or the improper use of
personal information or other “identity theft.” Each of these situations or data privacy breaches may cause delays in customer service,
reduce efficiency in our operations, require significant capital investments to remediate the problem, or result in negative publicity that
could harm our reputation and results.
We intend to continue to launch operations into new geographic markets, which may be costly and may not be successful.
We have in the past, and intend in the future, to expand our operations into new geographic markets, primarily in North
America. This expansion could require financial resources that would not therefore be available for other aspects of our business. In
addition, this expansion could require the time and attention of management, leaving less time to focus on existing business. If we fail
to manage the risks inherent in our geographic expansion, we could incur capital and operating costs without any related increase in
revenue, which would harm our operating results.
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Unionization by some or all of our employees could cause increases in operating costs.
None of our employees are presently covered by collective bargaining agreements. From time to time various unions attempt to
organize certain of our employees. We cannot predict the outcome of any continuing or future efforts to organize our employees, the
terms of any future labor agreements, or the effect, if any, those agreements might have on our operations or financial performance.
We believe that a unionized workforce would generally increase our operating costs, divert the attention of management from
servicing customers and increase the risk of work stoppages, all of which could have a material adverse effect on our business, results
of operations or financial condition.
The supply and cost of used ISO containers fluctuates, which can affect our pricing and our ability to grow.
As needed, we purchase, remanufacture and modify used ISO containers in order to expand our rental fleet. If used ISO
container prices increase substantially these price increases could increase our expenses and reduce our earnings, particularly if we are
not able (due to competitive reasons or otherwise) to raise our rental rates to absorb this increased cost. Conversely, an oversupply of
used ISO containers may cause container prices to fall. In such event, competitors may then lower the rental rates on their storage
units. As a result, we may need to lower our rental rates to remain competitive. These events could cause our revenues and our
earnings to decline.
We depend on our suppliers for the specialty containment equipment we rent to customers.
Nearly all the specialty containment equipment we rent to customers is manufactured for us by a limited number of suppliers,
none of with whom we maintain long-term contracts. If our suppliers were unable or unwilling to provide us with such equipment, our
operations would be affected if we were unable to obtain the equipment necessary to operate and grow our business. Also, should our
suppliers substantially increase their prices (due to increased demand in certain products, or otherwise), we may not be able to raise
our rental rates to absorb such increased cost. These events could cause our revenues and earnings to decline.
The supply and cost of raw materials we use in remanufacturing and repairing units fluctuates and could increase our
operating costs.
As needed, we remanufacture and repair units for our rental fleet and for sale. In these processes, we purchase steel, paint, glass
and other raw materials from various suppliers. We cannot be sure that an adequate supply of these materials will continue to be
available on terms acceptable to us. The raw materials we use are subject to price fluctuations that we cannot control. Changes in the
cost of raw materials can have a significant effect on our operations and earnings. Rapid increases in raw material prices are often
difficult to pass through to customers, particularly to rental customers. If we are unable to pass on these higher costs, our profitability
could decline. If raw material prices decline significantly, we may have to write down our raw materials inventory values. If this
happens, our results of operations and financial condition could decline.
We are exposed to various possible claims relating to our business and our insurance may not fully protect us.
We are exposed to various possible claims relating to our business. These possible claims include those relating to: (i) personal
injury or death caused by products rented or sold by us; (ii) motor vehicle accidents involving our vehicles and our employees;
(iii) employment-related claims; (iv) property damage, (v) cyber-security breaches, and (vi) commercial claims. Our insurance policies
have deductibles or self-insured retentions which would require us to expend amounts prior to taking advantage of coverage limits.
Currently, we believe that we have adequate insurance coverage for the protection of our assets and operations. However, our
insurance may not fully protect us for certain types of claims, such as claims for punitive damages or for damages arising from
intentional misconduct, which are often alleged in third party lawsuits. In addition, we may be exposed to uninsured liability at levels
in excess of our policy limits.
If we are found liable for any significant claims that are not covered by insurance, our liquidity and operating results could be
materially adversely affected. It is possible that our insurance carrier may disclaim coverage for any class action and derivative
lawsuits against us. It is also possible that some or all of the insurance that is currently available to us will not be available in the
future on economically reasonable terms or not available at all. In addition, whether we are covered by insurance or not, certain claims
may have the potential for negative publicity surrounding such claims, which may lead to lower revenues, as well as additional similar
claims being filed.
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We may not be able to adequately protect our intellectual property and other proprietary rights that are material to our
business.
Our ability to compete effectively depends in part upon protection of our rights in trademarks, copyrights and other intellectual
property rights we own or license, including patents to our locking system for our portable storage solutions. Our use of contractual
provisions, confidentiality procedures and agreements, and trademark, copyright, unfair competition, trade secret and other laws to
protect our intellectual property and other proprietary rights may not be adequate. Litigation may be necessary to enforce our
intellectual property rights and protect our proprietary information and patents, or to defend against claims by third parties that our
services or our use of intellectual property infringe their intellectual property rights. Any litigation or claims brought by or against us
could result in substantial costs and diversion of our resources. A successful claim of trademark, copyright or other intellectual
property infringement against us could prevent us from providing services, which could harm our business, financial condition or
results of operations. In addition, a breakdown in our internal policies and procedures may lead to an unintentional disclosure of our
proprietary, confidential or material non-public information, which could in turn harm our business, financial condition or results of
operations.
If we determine that our goodwill or other intangible assets have become impaired, we may incur significant charges to our
pre-tax income.
At December 31, 2015, we had $706.4 million of goodwill and $73.2 million of unamortized intangible assets on our
Consolidated Balance Sheet. In the future, goodwill and intangible assets may increase as a result of future acquisitions. Goodwill is
reviewed at least annually for impairment. Both goodwill and intangible assets are reviewed for impairment when an indicator is
present. Impairment may result from, among other things, deterioration in the performance of the business, adverse market conditions,
stock price, and adverse changes in applicable laws or regulations, including changes that restrict the activities of the Company.
For more information, see the “Notes to Consolidated Financial Statements” included in our financial statements contained in
this Annual Report on Form 10-K.
If we fail to attract and retain key management and personnel, we may be unable to implement our business plan.
One of the most important factors in our ability to profitably execute our business plan is our ability to attract, develop and
retain qualified personnel, including our chief executive officer (“CEO”) and operational management. Our success in retaining a
CEO and attracting and retaining qualified people, particularly local operational and sales management, is dependent on the resources
available in individual geographic areas and the impact on the labor supply due to general economic conditions, as well as our ability
to provide a competitive compensation package, including the implementation of adequate drivers of retention and rewards based on
performance, and work environment. The departure of any key personnel and our inability to enforce non-competition agreements
could have a negative impact on our business.
RISKS RELATED TO OUR INDEBTEDNESS, THE ECONOMY, AND GLOBAL CAPITAL AND CREDIT MARKETS
Our business is subject to the general health of the economy, including non-residential spending and energy prices,
accordingly any slowdowns or decreases in the U.S. or international economy could materially affect our revenue and
operating results.
An economic slowdown in the U.S. or international economy, including non-residential spending and energy prices, may cause
substantial volatility in the stock market and layoffs and other restrictions on spending by companies in almost every business sector
which could impact our business in a variety of ways, including:
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a reduction in consumer and business spending, which would result in a reduction in demand for our products;
a negative impact on the ability of our customers to timely pay their obligations to us or our vendors to timely supply
services, thus reducing our cash flow; and
an increase in payment risk with others we do business with, including financial institutions.
Without similar changes in expenses, which may be difficult to achieve, our margins will contract if revenue falls, and
ultimately may result in having a material adverse effect on our financial condition.
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We operate with a high amount of debt and we may incur significant additional indebtedness.
Our operations are capital intensive, and we operate with a high amount of debt relative to our size. At December 31, 2015, we
had $200.0 million in aggregate principal amount of 7.875% senior notes due 2020 (the “Senior Notes”) and $667.7 million of
indebtedness under our Amended and Restated ABL Credit Agreement with Deutsche Bank AG New York Branch, as administrative
agent, and other lenders party thereto (the “Credit Agreement”). Our substantial indebtedness could have adverse consequences. For
example, it could:
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require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, which could
reduce the availability of our cash flow to fund future working capital, pay dividends, capital expenditures, acquisitions
and other general corporate purposes;
make it more difficult for us to satisfy our obligations with respect to the Senior Notes;
expose us to the risk of increased interest rates, as approximately 73.7% of our borrowings are at variable rates of interest;
require us to sell assets to reduce indebtedness or influence our decisions about whether to do so;
increase our vulnerability to general adverse economic and industry conditions;
limit our flexibility in planning for, or reacting to, changes in our business and our industry;
restrict us from making strategic acquisitions or pursuing business opportunities; and
limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to
borrow additional funds. Failing to comply with those covenants could result in an event of default which, if not cured or
waived, could have a material adverse effect on our business, financial condition and results of operations.
Covenants in our debt instruments restrict or prohibit our ability to engage in or enter into a variety of transactions.
Our Credit Agreement requires us, under certain limited circumstances, to maintain certain financial ratios and limits our ability
to make capital expenditures. These covenants and ratios could have an adverse effect on our business by limiting our ability to take
advantage of financing, merger and acquisition or other corporate opportunities and to fund our operations. Breach of a covenant in
our debt instruments could cause acceleration of a significant portion of our outstanding indebtedness. Any future debt could also
contain financial and other covenants more restrictive than those imposed under the indenture governing the Senior Notes, and the
Credit Agreement.
The indenture governing the 7.875% Senior Notes contains various covenants that limit our discretion in operating our business.
In particular, we are limited in our ability to merge, consolidate or transfer substantially all of our assets, issue preferred stock of
subsidiaries and create liens on our assets to secure debt. In addition, if there is a default, and we do not maintain borrowing
availability in excess of certain pre-determined levels, we may be unable to incur additional indebtedness, make restricted payments
(including paying cash dividends on our capital stock) and redeem or repurchase our capital stock. The Senior Notes do not contain
financial maintenance covenants and the financial maintenance covenants under the Credit Agreement are not applicable unless we
fall below specific borrowing availability levels.
A breach of a covenant or other provision in any debt instrument governing our current or future indebtedness could result in a
default under that instrument and, due to cross-default and cross-acceleration provisions, could result in a default under our other debt
instruments. Upon the occurrence of an event of default under the Credit Agreement or any other debt instrument, the lenders could
elect to declare all amounts outstanding to be immediately due and payable and terminate all commitments to extend further credit. If
we were unable to repay those amounts, the lenders could proceed against the collateral granted to them, if any, to secure the
indebtedness. If the lenders under our current or future indebtedness accelerate the payment of the indebtedness, we cannot assure you
that our assets or cash flow would be sufficient to repay in full our outstanding indebtedness, including the Senior Notes.
The amount we can borrow under our Credit Agreement depends in part on the value of our rental fleet. If the value of our rental
fleet declines under appraisals our lenders receive, the amount we can borrow will similarly decline. We are required to satisfy several
covenants with our lenders that are affected by changes in the value of our rental fleet. We would be in breach of certain of these
covenants if the value of our rental fleet drops below specified levels. If this happens, we may not be able to borrow the amounts we
need to expand our business, and we may be forced to liquidate a portion of our existing fleet.
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We may not be able to generate sufficient cash to service all of our debt, and may be forced to take other actions to satisfy
our obligations under such indebtedness, which may not be successful.
Our ability to make scheduled payments on or to refinance our obligations under our debt will depend on our financial and
operating performance and that of our subsidiaries, which, in turn, will be subject to prevailing economic and competitive conditions
and to financial and business factors, many of which may be beyond our control. See the table under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Contractual Obligations” for
disclosure regarding the amount of cash required to service our debt.
We may not maintain a level of cash flow from operating activities sufficient to permit us to pay the principal, premium, if any,
and interest on our indebtedness. If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be
forced to reduce or delay capital expenditures, sell assets, seek to obtain additional equity capital or restructure our debt. Such
alternative measures may not be successful and may not enable us to meet our scheduled debt service obligations. We may not be able
to refinance any of our indebtedness or obtain additional financing, particularly because of our anticipated high levels of debt and the
debt incurrence restrictions imposed by the agreements governing our debt, as well as prevailing market conditions. In the absence of
such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets
or operations to meet our debt service and other obligations. The instruments governing our indebtedness restrict our ability to dispose
of assets and use the proceeds from any such dispositions. We may not be able to consummate those sales, or if we do, at an opportune
time, or the proceeds that we realize may not be adequate to meet debt service obligations when due.
Fluctuations between the British pound and U.S. dollar could adversely affect our results of operations.
We derived approximately 16.6% of our total revenues in 2015 from our operations in the U.K. The financial position and
results of operations of our U.K. subsidiaries are measured using the British pound as the functional currency. As a result, we are
exposed to currency fluctuations both in receiving cash from our U.K. operations and in translating our financial results back into
U.S. dollars. We believe the impact on us of currency fluctuations from an operations perspective is mitigated by the fact that the
majority of our expenses, capital expenditures and revenues in the U.K. are in British pounds. We do, however, have significant
currency exposure as a result of translating our financial results from British pounds into U.S. dollars for purposes of financial
reporting. Assets and liabilities of our U.K. subsidiaries are translated at the period-end exchange rate in effect at each balance sheet
date. Our income statement accounts are translated at the average rate of exchange prevailing during each month. Translation
adjustments arising from differences in exchange rates from period to period are included in accumulated other comprehensive loss in
stockholders’ equity.
A strengthening of the U.S. dollar against the British pound reduces the amount of income or loss we recognize on a
consolidated basis from our U.K. business. We cannot predict the effects of further exchange rate fluctuations on our future operating
results. We are also exposed to additional currency transaction risk when our U.S. operations incur purchase obligations in a currency
other than in U.S. dollars and our U.K. operations incur purchase obligations in a currency other than in British pounds. As exchange
rates vary, our results of operations and profitability may be harmed. We do not currently hedge our currency transaction or translation
exposure, nor do we have any current plans to do so. The risks we face in foreign currency transactions and translation may continue
to increase as we further develop and expand our U.K. operations. Furthermore, to the extent we expand our business into other
countries, we anticipate we will face similar market risks related to foreign currency translation caused by exchange rate fluctuations
between the U.S. dollar and the currencies of those countries.
Global capital and credit market conditions could have an adverse effect on our ability to access the capital and credit
markets, including our revolving credit facility.
Disruptions in the global credit markets that materially impact liquidity in the debt market, making financing terms for
borrowers less attractive or, in some cases, unavailable altogether, have occurred in the past and may occur again in the future. Such a
disruption could result in the unavailability of certain types of debt financing, including access to revolving lines of credit. We engage
in borrowing and repayment activities under our revolving credit facility on an almost daily basis and have not had any disruption in
our ability to access our revolving credit facility as needed. However, future credit market conditions could increase the likelihood that
one or more of our lenders may be unable to honor its commitments under our revolving credit facility, which could have an adverse
effect on our business, financial condition and results of operations.
Additionally, in the future we may need to raise additional funds to, among other things, fund our existing operations, improve
or expand our operations, respond to competitive pressures, or make acquisitions. If adequate funds are not available on acceptable
terms, we may be unable to meet our business or strategic objectives or compete effectively. If we raise additional funds by issuing
equity securities, stockholders may experience dilution of their ownership interests, and the newly issued securities may have rights
superior to those of the common stock. If we raise additional funds by issuing debt, we may be subject to further limitations on our
operations arising out of the agreements governing such debt. If we fail to raise capital when needed, our business will be negatively
affected.
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RISKS RELATED TO GOVERNMENT REGULATIONS
As Department of Transportation regulations increase, our operations could be negatively impacted and competition for
qualified drivers could increase.
We operate in the U.S. pursuant to operating authority granted by the U.S. Department of Transportation (“DOT”). Our
Company drivers must comply with the safety and fitness regulations of the DOT, including those relating to drug and alcohol testing
and hours-of-service. Such matters as equipment weight and dimensions also are subject to government regulations. Our safety record
could be ranked poorly compared to our peer firms. A poor fleet ranking may result in the loss of customers or difficulty attracting
and retaining qualified drivers which could affect our results of operations. Should additional rules be enacted in the future,
compliance with such rules could result in additional costs.
We are subject to environmental regulations and could incur costs relating to environmental matters.
Federal, state, local, foreign and provincial laws and regulations regulate such issues as wastewater, storm water, air quality and
the management, storage and disposal of, or exposure to, hazardous substances and hazardous and solid wastes. Several aspects of our
businesses may involve risks related to environmental and health and safety liability. For example, we own, transport and rent tanks
and boxes in which waste materials are placed by our customers. While we have a policy which, with certain limited exceptions,
requires customers to return tanks and containers clean of any substances, they may fail to comply with these obligations.
Additionally, we provide waste hauling services, which involves environmental risks during transport. While we endeavor to comply
with all regulatory requirements, failure to be in compliance with any environmental regulatory requirements may increase our
compliance or remediation costs or cause restrictions on our business, either of which could have a material effect on our financial
position or results of operations.
We are also required to obtain environmental permits from governmental authorities for certain of our operations. If we violate
or fail to obtain or comply with these laws, regulations, or permits, we could be fined or otherwise sanctioned by regulators. We could
also become liable if employees or other parties are improperly exposed to hazardous materials.
Under certain environmental laws, we could be held responsible for all of the costs relating to any contamination at, or
migration to or from, our or our predecessors’ past or present facilities. These laws often impose liability even if the owner, operator
or lessor did not know of, or was not responsible for, the release of such hazardous substances.
Environmental laws are complex, change frequently, and have tended to become more stringent over time. The costs of
complying with current and future environmental and health and safety laws, and our liabilities arising from past or future releases of,
or exposure to, hazardous substances, may adversely affect our business, results of operations, or financial condition.
Ongoing governmental review of hydraulic fracturing (“fracing”) and its environmental impact could lead to changes to this
activity or its substantial curtailment, which could adversely affect our revenue and results of operations.
Approximately 14% of ETS’ rental revenue for the year ended December 31, 2015, is related to customers involved in the
upstream exploration and production of oil and natural gas. A portion of this revenue involves rentals to customers that use the
fracing method to extract natural gas. The Environmental Protection Agency is studying the potential adverse effects that fracing may
have on the environment and public health, and has issued regulations or guidance regarding certain aspects of the process. Other
federal, state and local governments and governmental agencies have also begun to investigate and/or regulate fracing. Additional
governmental regulation could result in increased costs of compliance or the curtailment of fracing in the future, which would
adversely affect our revenue and results of operations.
Some zoning laws in the U.S. and Canada and temporary planning permission regulations in the U.K. restrict the use of our
portable storage and office units and therefore limit our ability to offer our products in all markets.
Most of our customers use our storage units to store their goods on their own properties for various lengths of time. Local
zoning laws and temporary planning permission regulations in some of our markets do not allow some of our customers to keep
portable storage and office units on their properties or do not permit portable storage units unless located out of sight from the street or
may limit the type of product they may use or how long it can be at their locations. If local zoning laws or planning permission
regulations in one or more of our markets no longer allow our units to be stored on customers’ sites, our business in that market will
suffer.
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We face unique regulatory and political challenges presented by international markets.
In connection with our business outside the U.S., we face exposure to additional regulatory requirements, including certain trade
barriers, changes in political and economic conditions, and exposure to additional and potentially adverse tax regimes. Our success in
the U.K. depends, in part, on our ability to anticipate and effectively manage these and other risks. Our failure to manage these risks
may adversely affect our growth, in the U.K. and elsewhere, and lead to increased administrative costs.
RISKS RELATED TO OUR COMMON STOCK
The market price of our common stock has been volatile and may continue to be volatile and the value of your investment
may decline.
Volatility may cause wide fluctuations in the price of our common stock on the NASDAQ Global Select Market. The market
price of our common stock is likely to be affected by:
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changes in general conditions in the economy, geopolitical events or the financial markets;
variations in our quarterly operating results;
changes in financial estimates by securities analysts;
other developments affecting us, our industry, customers or competitors;
changes in demand for our products or the prices we charge due to changes in economic conditions, competition or other
factors;
general economic conditions in the markets where we operate;
the cyclical nature of our customers’ businesses, particularly those operating in the construction sectors;
the market perception that we are exposed to oil and gas production more than we currently are, and the related stock
market volatility around oil and gas production companies;
rental rate changes in response to competitive factors;
bankruptcy or insolvency of our customers, thereby reducing demand for our used units;
seasonal rental patterns;
acquisitions or divestitures and related costs;
labor shortages, work stoppages or other labor difficulties;
possible unrecorded liabilities of acquired companies;
possible write-offs or exceptional charges due to changes in applicable accounting standards, goodwill impairment, or
divestiture or impairment of assets;
the operating and stock price performance of companies that investors deem comparable to us; and
the number of shares available for resale in the public markets under applicable securities laws.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
We have received no written comments regarding our periodic or current reports from the Staff of the SEC that were issued
180 days or more preceding the end of our 2015 fiscal year and that remain unresolved.
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ITEM 2. PROPERTIES.
The location and general character of our principal properties are as follows:
Corporate and administrative:
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Our corporate and administrative offices are located in Phoenix, Arizona. These leased offices occupy approximately
50,000 square feet of office space, including our NSC. The lease term expires in October 2025.
Our U.K. headquarters are located in Stockton-on-Tees, United Kingdom, where we lease approximately 10,000 square
feet of office space. The lease term expires in July 2017.
Field Locations. We locate our field operations in markets with attractive demographics and strong growth prospects. Within
each market, we are located in areas that allow for easy delivery of units to our customers over a wide geographic area. In addition,
when cost effective, we seek locations that are visible from high traffic roads in order to advertise our products and our name. A
typical branch consists of outdoor storage space for units not currently on rent and a small office. These properties tend to be one to
five acre sites with little development needed for us to use them, other than a paved or hard-packed surface, utilities and proper
zoning. In North America we own 3 locations, and in the U.K., we own 2 locations. We lease the remaining locations in which we
operate.
Other. We own a 43-acre facility in Maricopa, Arizona that is primarily used to rebrand, remanufacture and perform major
repairs and maintenance on our existing rental fleet and build custom sale units.
We believe that satisfactory alternative properties can be found in all of our markets if we do not renew these existing leased
properties.
ITEM 3. LEGAL PROCEEDINGS.
We are party from time to time to various claims and lawsuits that arise in the ordinary course of business, including claims
related to employment matters, contractual disputes, personal injuries and property damage. In addition, various legal actions, claims
and governmental inquiries and proceedings are pending or may be instituted or asserted in the future against us and our subsidiaries.
Litigation is subject to many uncertainties, and the outcome of the individual litigated matters is not predictable with assurance.
It is possible that certain of the actions, claims, inquiries or proceedings, including those discussed above, could be decided
unfavorably to us or any of our subsidiaries involved. Although we cannot predict with certainty the ultimate resolution of lawsuits,
investigations and claims asserted against us, we do not believe that the ultimate resolution of these claims or lawsuits will have a
material adverse effect on our business, financial condition, results of operations or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
22
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
Common Stock Prices
Our common stock trades on The NASDAQ Global Select Market under the symbol “MINI”. The following are the high and
low sale prices for the common stock during the periods indicated as reported by the NASDAQ Stock Market.
Quarter ended March 31,
Quarter ended June 30,
Quarter ended September 30,
Quarter ended December 31,
$
2015
2014
High
Low
High
Low
44.47 $
44.45
42.79
37.16
35.60 $
36.38
29.07
29.52
45.68 $
49.02
49.68
45.48
37.69
40.14
34.97
34.32
We had 66 holders of record of our common stock on January 25, 2016. The number of beneficial owners is substantially
greater than the number of record holders because a large portion of our common stock is held of record in broker “street names.”
Dividend Policy
In November 2013, our Board of Directors (the “Board”) authorized the initiation of a quarterly cash dividend program to all of
our common stockholders with the first quarterly common stock cash dividend paid in the first quarter of 2014. Each dividend
payment is subject to review and approval by the Board. During fiscal 2015, we paid cash dividends of approximately $0.75 per share
for a total of $33.7 million. Our Credit Agreement contains certain restrictions on the declaration and payment of dividends.
Issuer Purchases of Equity Securities
On November 6, 2013, the Board approved a share repurchase program authorizing up to $125.0 million of our outstanding
shares of common stock to be repurchased. On April 17, 2015, the Board authorized up to an additional $50.0 million of our
outstanding shares of common stock to be repurchased, for a total of $175.0 million under the share repurchase program. The shares
may be repurchased from time to time in the open market or in privately negotiated transactions. The share repurchases are subject to
prevailing market conditions and other considerations. The share repurchase program does not have an expiration date and may be
suspended or terminated at any time by the Board. All shares repurchased are held in treasury.
During fiscal 2015, we purchased approximately 1.7 million shares of our common stock at a cost of $61.0 million under the
authorized share repurchase program. During fiscal 2015, we also withheld approximately 21,000 shares of vested stock awards from
employees, for an approximate value of $0.8 million, upon vesting of stock awards to satisfy minimum tax withholding obligations.
These shares were not acquired pursuant to the share repurchase program.
The table below summarizes the information about purchases of our common stock during the quarterly period ended December
31, 2015:
Period
Total Number of
Shares Purchased (1)
Average Price Paid
per Share (2)
Total Number of
Shares
Purchased as Part of
Publicly Announced
Plans or Programs (3)
October 2015
November 2015
December 2015
Total
41 $
110,607
72,105
182,753
33.83
33.96
31.25
— $
108,055
63,995
172,050
Approximate Dollar
Value of Shares
That May Yet be
Purchased Under the
Plans or Programs (3)
94,654
90,988
88,990
(1) Shares not purchased as part of a publicly announced plan or program represent shares withheld from employees to satisfy
minimum tax withholding obligations upon the vesting of restricted stock.
(2) The weighted average price paid per share of common stock does not include the cost of commissions.
23
(3)
In November 2013, the Company’s Board approved a share repurchase program authorizing up to $125.0 million of the
Company’s outstanding shares of common stock to be repurchased. In April 2015, the Board approved an increase of $50.0
million to the share repurchase program. The shares may be repurchased from time to time in the open market or in privately
negotiated transactions. The share repurchase program does not have an expiration date and may be suspended or terminated at
any time by the Board.
Stock Performance Graph
The following Performance Graph and related information shall not be deemed “soliciting material” or “filed” with the SEC,
nor should such information be incorporated by reference into any future filings under the Securities Act or the Exchange Act, except
to the extent that Mobile Mini specifically incorporates it by reference in such filing.
The following graph compares the five-year cumulative total return on our common stock with the cumulative total returns
(assuming reinvestment of dividends) on the Standard and Poor’s SmallCap 600 and the NASDAQ US Benchmark TR Index if $100
were invested in our common stock and each index on December 31, 2010.
Comparison of Five Year Cumulative Total Return*
Among Mobile Mini, Inc., the Standard & Poor’s SmallCap 600 and the NASDAQ US Benchmark TR Index
$250
$200
$150
$100
$50
$-
2010
2011
2012
2013
2014
2015
Mobile Mini, Inc.
Standard & Poor's SmallCap 600
NASDAQ US Benchmark TR Index
Mobile Mini, Inc.
Standard & Poor's SmallCap 600
NASDAQ US Benchmark TR Index
$
2010
100.00 $
100.00
100.00
2011
88.62 $
101.02
100.31
2012
105.89 $
117.51
116.79
2014
2013
209.14 $ 209.11 $
175.61
166.05
175.33
155.90
2015
163.93
172.14
177.82
*
Total Return based on $100 initial investment and reinvestment of dividends.
24
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data reflect the results of operations, cash flow and balance sheet data as of and for the years
ended December 31, 2011 through 2015. You should read this material with “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and the financial statements and related footnotes included elsewhere in this Annual Report on
Form 10-K.
2015
For the Years Ended December 31,
2013
(In thousands, except per share and operating data)
2014
2012
Consolidated Statements of Income Data:
Revenues:
Rental
Sales
Other
Total revenues
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge and loss on divestiture, net
Depreciation and amortization
Total costs and expenses
Income from operations
Other income (expense):
Interest income
Interest expense
Debt restructuring/extinguishment expense
Deferred financing costs write-off
Foreign currency exchange
Income from continuing operations before income tax (benefit)
provision
Income tax (benefit) provision
Income from continuing operations
Loss from discontinued operation, net of tax
Net income
Earnings allocable to preferred stockholders
Net income available to common stockholders
Earnings per Share:
Basic
Income from continuing operations
Loss from discontinued operation
Net income
Diluted
Income from continuing operations
Loss from discontinued operation
Net income
$
494,715 $
29,953
6,109
530,777
410,362 $
31,585
3,527
445,474
366,286 $
38,051
2,149
406,486
339,975 $
37,759
2,162
379,896
326,252
19,671
20,798
66,128
60,344
493,193
37,584
1
(35,900)
—
(931)
(2)
752
(4,822)
5,574
—
5,574
—
5,574 $
0.12 $
—
0.12 $
0.12 $
—
0.12 $
$
$
$
$
$
280,948
21,944
3,542
557
39,334
346,325
99,149
—
(28,729)
—
—
(1)
70,419
26,033
44,386
—
44,386
—
44,386 $
237,567
25,413
2,402
38,705
35,432
339,519
66,967
1
(29,467 )
—
—
(2 )
218,709
23,178
7,123
—
35,982
284,992
94,904
1
(37,268)
(2,812)
(1,889)
(4)
37,499
12,275
25,224
(1,302 )
23,922
—
23,922 $
52,932
18,509
34,423
(245)
34,178
—
34,178 $
0.96 $
—
0.96 $
0.55 $
(0.02 )
0.53 $
0.77 $
—
0.77 $
0.95 $
—
0.95 $
0.55 $
(0.03 )
0.52 $
0.76 $
—
0.76 $
2011
314,695
41,675
2,700
359,070
201,239
26,149
1,059
—
35,432
263,879
95,191
—
(46,120)
(1,334)
—
(6)
47,731
16,578
31,153
(557)
30,596
(966)
29,630
0.72
(0.01)
0.71
0.70
(0.01)
0.69
Weighted average number of common and common share
equivalents outstanding
Basic
Diluted
Other Data:
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
44,953
45,460
46,026
46,725
45,481
46,096
44,657
45,102
41,566
44,569
$
152,814 $
(14,415)
(140,576)
120,625 $
(446,752)
329,780
116,111 $
(6,020 )
(110,345 )
90,949 $
(29,383)
(60,719)
84,969
(12,787)
(71,063)
25
For the Years Ended December 31,
2015
2014
2013
2012
2011
(Dollars in thousands)
Operating Data (unaudited):
Number of portable storage stand-alone locations (at year
end)
133
136
136
135
132
Number of specialty containment stand-alone locations (at
year end)
19
24
—
—
—
Combined portable storage and specialty containment
locations (at year end)
Portable storage rental fleet units (at year end)
Specialty containment rental fleet units (at year end)
Portable Storage rental fleet utilization (annual average) (1)
Specialty Containment rental fleet utilization (annual
7
205,695
11,744
69.4 %
—
213,546
10,265
68.6%
—
—
212,898 233,728
—
60.0%
—
65.8 %
236,685
—
57.1%
average) (1)(2)
68.0
—
—
—
—
(1) Average utilization defined as average units on rent divided by average rental fleet size in units.
(2) Specialty containment business acquired in December 2014. The twelve months ended December 31, 2015 is the first
meaningful period for this statistic.
2015
2014
December 31,
2013
(In thousands)
2012
2011
Consolidated Balance Sheet Data:
Rental fleet, net
Total assets
Total debt
Stockholders' equity
Non-GAAP Data and Reconciliations
951,323 $ 1,087,056 $
$
979,276 $ 1,028,773 $ 1,016,031
1,979,222 2,103,174 1,677,374 1,727,560 1,707,500
696,472
753,914
528,095
855,544
643,343
809,519
930,436
854,531
905,982
765,529
EBITDA and Adjusted EBITDA. EBITDA is defined as net income before discontinued operation, 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, as well as
transactions that management believes are not indicative of our ongoing 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 that they provide an overall evaluation of our financial
condition and useful information regarding our ability to meet our future debt payment requirements, capital expenditures and working
capital requirements. EBITDA and adjusted EBITDA have certain limitations as analytical tools and should not be used as substitutes
for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with generally accepted accounting
principles in the U.S. (“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.
2015
2014
For the Years Ended December 31,
2013
(In thousands, except percentages)
2012
2011
Non-GAAP Data:
EBITDA
EBITDA margin
Adjusted EBITDA
Adjusted EBITDA margin
Free cash flow
$
97,927 $ 138,482 $ 102,398 $ 130,883 $ 130,617
36.4%
140,130
39.0%
34.5%
157,465 145,447
38.3%
65,129
31.1%
162,141
36.4%
104,819
18.4%
$ 200,836
38.1%
73,644
38.7 %
109,414
25.2 %
79,965
$
26
Reconciliation of net income to EBITDA and adjusted EBITDA is as follows:
2015
2014
For the Years Ended December 31,
2013
(In thousands)
2012
2011
Net income
Loss from discontinued operation, net of tax
Interest expense
Income tax (benefit) provision
Depreciation and amortization
Debt restructuring/extinguishment expense
Deferred financing costs write-off
EBITDA
Share-based compensation expense (1)
Restructuring expenses (2)
Acquisition-related expenses (3)
Asset impairment charge and loss on divestiture, net (4)
Sales tax refund (5)
Transition services revenue (6)
Transition services expense (6)
Other (7)
Adjusted EBITDA
EBITDA margin
Adjusted EBITDA, margin (8)
$
23,922 $
1,302
29,467
12,275
35,432
—
—
5,574 $
—
35,900
(4,822)
60,344
—
931
97,927
12,277
20,798
2,650
66,128
(1,176)
(2,997)
4,357
872
44,386 $
—
28,729
26,033
39,334
—
—
138,482
14,490
3,542
5,070
557
—
—
—
—
30,596
557
46,120
16,578
35,432
1,334
—
130,617
6,438
1,059
610
—
—
—
—
1,406
$ 200,836 $ 162,141 $ 157,465 $ 145,447 $ 140,130
36.4 %
39.0
34,178 $
245
37,268
18,509
35,982
2,812
1,889
102,398 130,883
7,151
7,123
139
—
—
—
—
151
13,956
2,402
4
38,705
—
—
—
—
25.2 %
38.7
34.5 %
38.3
18.4 %
38.1
31.1 %
36.4
Reconciliation of net cash provided by operating activities to EBITDA is as follows:
Net cash provided by operating activities
Discontinued operation
Interest paid
Income and franchise taxes paid
Share-based compensation expense, including share-based
$
restructuring expense (1)(2)
Asset impairment charge and loss on divestiture, net (4)
Non-cash restructuring expense, excluding share-based
compensation (2)
Loss on disposal of discontinued operation
Gain on sale of rental fleet
(Gain) loss on disposal of property, plant and equipment
Change in certain assets and liabilities, net of effect of
For the Years Ended December 31,
2015
2014
2013
2012
2011
(In thousands)
152,814 $
—
32,372
4,935
120,625 $
—
24,559
1,103
116,111 $
732
25,947
1,114
90,949 $
11
35,145
831
84,969
362
42,683
816
(13,827)
(66,128)
(15,071)
(557)
(14,714 )
(38,217 )
(9,575)
—
(6,456)
—
(12,411)
—
6,402
(2,188)
—
—
5,732
(348)
—
(1,948 )
9,682
(247 )
—
—
11,781
130
—
—
13,800
(91)
businesses acquired:
Receivables
Inventories
Deposits and prepaid expenses
Other assets and intangibles
Accounts payable and accrued liabilities
EBITDA
479
(945)
833
22
(4,431)
97,927 $
4,419
(2,680)
1,416
(17)
(699)
138,482 $
1,480
393
(653 )
(10 )
2,728
2,899
(1,352)
(537)
161
440
102,398 $ 130,883 $
4,148
1,242
(1,067)
33
(9,822)
130,617
$
(1) Share-based compensation represents non-cash compensation expense associated with the granting of equity instruments. The
reconciliation of net cash provided by operating activities to EBITDA includes share-based compensation recognized within
restructuring expense.
27
(2) The Company has undergone restructuring actions to align its business operations. For more information related to the 2015,
2014 and 2013 restructuring costs, see Note 15 to the accompanying consolidated financial statements. In 2012 restructuring
expenses primarily relate to a transition in leadership, including our then President and CEO. In 2011 restructuring expenses
primarily relate to reductions in our workforce.
Incremental costs associated with acquisitions.
In 2015 these costs represent asset impairment charge and loss on divestiture of the wood mobile offices, net. In 2014 and 2013,
these costs primarily represent the non-cash impairment charge for the write-down on certain assets classified as held for sale in
the second quarter of 2013 and the loss upon completion of sale (offset by gains upon completion of sale) of assets that were
written down to fair value in 2013.
(3)
(4)
(5) Revenue of $1.2 million associated with a sales tax refund.
(6) Transition services revenue and operating expenses associated with the provision of transition services related to the wood
mobile divestiture, including expenses related to wood mobile offices on our leased properties.
(7) Other expenses in 2015 are related to the settlement of an outstanding unclaimed property liability with the state of Delaware.
In 2011, these expenses primarily include start-up costs related to our new locations and asset repositioning expenses.
(8) Revenue discussed above associated with the sales tax refund and the transition services were excluded in the calculation of the
adjusted EBITDA margin.
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.
Reconciliation of net cash provided by operating activities to free cash flow is as follows:
For the Years Ended December 31,
2015
2014
2013
2012
2011
(In thousands)
Net cash provided by operating activities
$
152,814 $
120,625 $
116,111 $
90,949 $
84,969
Additions to rental fleet
Proceeds from sale of rental fleet
Additions to property, plant and equipment
Proceeds from sale of property, plant and equipment
Net capital expenditures
(74,732)
16,865
(31,163)
9,860
(79,170)
(27,279)
23,053
(15,779)
4,199
(15,806)
(28,826 )
35,951
(15,792 )
1,970
(6,697 )
(43,934)
29,358
(12,741)
1,497
(25,820)
(29,824)
36,201
(11,498)
117
(5,004)
Free cash flow
$
73,644 $
104,819 $
109,414 $
65,129 $
79,965
28
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The following discussion of our financial condition and results of operations should be read together with the consolidated
financial statements and the accompanying notes included elsewhere in this Annual Report. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in those forward-
looking statements as a result of certain factors, including, but not limited to, those described under “Item 1A. “Risk Factors.” The
tables and information in this “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” section
were derived from exact numbers and may have immaterial rounding differences.
Overview
Executive Summary
We believe we are the world’s leading provider of portable storage solutions, maintaining a strong leadership position in
virtually all markets served. Our mission is to be the leader in portable storage solutions to customers throughout North America and
the U.K. and specialty containment solutions in the U.S. We are committed to providing our customers with superior service and
access to a high-quality and diverse fleet. In managing our business, we focus on renting rather than selling our units, with rental
revenues representing approximately 93.2% of our total revenues for the year ended December 31, 2015. We believe this strategy
provides us with predictable, recurring revenue. Additionally, our assets have long useful lives, low maintenance costs and generally
maintain their value throughout their useful lives. We also sell new and used units, and provide delivery, installation and other
ancillary products and value-added services.
On December 10, 2014 we completed the ETS Acquisition. ETS is the third largest provider of specialty containment solutions
in the U.S. and the leading provider in the Gulf Coast region. ETS operates as a separate subsidiary of ours under the ETS name (as
does its wholly owned subsidiary, Water Movers), and its operations are included in our results of operations for all of 2015, and the
portion of 2014 subsequent to the acquisition date, which is less than one month.
On May 15, 2015, we completed the divestiture of our North American wood mobile office fleet. Our business strategy is to
invest in high-return, low-maintenance, long-lived assets. Wood mobile offices require more maintenance and upkeep than Mobile
Mini’s steel containers and steel ground level offices, resulting in lower margins as compared to our other portable storage products
and our specialty containment products. The total impairment and loss on the divestiture of the wood mobile offices was $66.1 million
during the year ended December 31, 2015. See additional discussion regarding the impairment and the divestiture of the wood mobile
offices in Note 4 to the accompanying consolidated financial statements.
As part of overall integration and expansion of ETS into the existing Mobile Mini footprint, in the fourth quarter the Company
determined that certain of our current locations in Southern California would either not be optimal or available to accommodate
efficient operations and provide desired proximity to our combined customer base. To accommodate the needs of the planned
combined operations, the Company is leasing new property, exiting certain properties and has abandoned approximately 5,000 units of
the portable storage fleet in Southern California legacy yards. This abandonment resulted in $13.7 million of restructuring expense in
the fourth quarter, representing the write-down of the fleet to zero value. Our restructuring activities, including the ETS integration,
the shift to managing operations on a geographic basis and the alignment of our salesforce and processes with our new product-
centered focus resulted in total restructuring charges of $20.8 million in 2015.
Throughout 2015, our operational strategic goals included growing revenue and expanding our operating margins by leveraging
our infrastructure, focusing on higher returning assets and driving continuous improvements in efficiency. To achieve this goal, we
concentrated on generating growth in our core rental business through strong organic growth and opportunistic geographic expansions.
We also actively manage fleet utilization and seek to control costs.
Also in 2015, key initiatives included a focus on opportunities for cross-selling of products and growth by leveraging Mobile
Mini’s and ETS’ respective geographic coverage and customer bases and the development of a new ERP system to further increase
efficiency and data management, and provide a scalable platform for growth.
As of December 31, 2015, our network includes 133 portable storage locations, 19 specialty containment locations and 7
combined locations. Our portable storage fleet consists of approximately 205,200 units and our specialty containment business has a
fleet of approximately 11,700 units.
29
For the year ended December 31, 2015, our achievements include:
(cid:120)
(cid:120)
(cid:120)
Grew total rental revenues 20.6% year-over-year,
Increased adjusted EBITDA to $200.8 million and increased adjusted EBITDA margin to 38.1%,
Successfully continued execution on our strategy to focus on high-return, low-maintenance assets by divesting our wood
mobile office business,
(cid:120) Within the portable storage business, excluding the divested wood mobile office business:
(cid:16)
(cid:16)
(cid:16)
Increased year-over-year portable storage solutions rental rates by 4.5%, and yield by 4.6% when adjusting for
unfavorable currency rates,
Grew total rental revenues 6.7% when adjusting for unfavorable currency fluctuations, and
Increased year-end units on rent by 4.3%,
(cid:120)
(cid:120)
Created more capital flexibility and positioned Mobile Mini for future growth through the refinancing of our prior ABL
Credit Agreement, dated February 22, 2012, with Deutsche Bank, as administrative agent, and the other lenders party
thereto (as amended and supplemented, the “Prior Credit Agreement”) to extend the maturity of the Credit Agreement to
December 2020 and reduce interest rate borrowing margins,
Utilized $73.6 million in free cash flow and $83.3 million received in conjunction with our wood mobile office divestiture
to create and return shareholder value:
(cid:16)
(cid:16)
(cid:16)
Repurchased $61.8 million in treasury shares,
Paid $33.7 million in shareholder dividends, and
Reduced the balance on our lines of credit by $37.8 million, and
(cid:120)
Drove continuous improvement in safety as a result of continued company-wide focus:
(cid:16)
Over the past two years we have reduced the Occupational Health and Safety Act, or OSHA, Incident Rate for our
portable storage business by 26%, the number of Department of Transportation violations by 52% and our auto
incidents by 53%.
Business Environment and Outlook. Excluding the divested wood mobile office business, approximately 61% of our revenue
during the twelve-month period ended December 31, 2015 was derived from our North American portable storage business, 21% was
derived from our specialty containment business in North America and 18% was derived from our UK portable storage business. Our
business is subject to the general health of the economy and we utilize a variety of general economic indicators to assess market trends
and determine the direction of our business.
Based on our assessment, we expect that the majority of our end markets will continue to drive demand for our products. In
particular, construction, which represents approximately 41% of our consolidated rental revenue is forecasted for continued growth for
the next several years. While only 3% of our consolidated rental revenue is generated by oil and gas customers, the oil and gas
industry is forecasted to continue to remain challenged in the near term.
Accounting and Operating Overview
Our principal operating revenues and expenses are:
Revenues:
(cid:120)
(cid:120)
Rental revenues include all rent and ancillary revenues we receive for our rental fleet.
Sales revenues consist primarily of sales of new and used portable storage products, used specialty containment fleet, and
to a lesser extent, parts and supplies sold to specialty containment customers.
30
Costs and expenses:
(cid:120)
(cid:120)
(cid:120)
Rental, selling and general expenses include, among other expenses, payroll and payroll-related costs including share-
based compensation and commissions for our sales team, fleet transportation and fuel costs, repair and maintenance costs
for our rental fleet and transportation equipment, real estate lease expense, insurance costs, and general corporate
expenses.
Cost of sales is the net book value of the units that were sold during the reported period and includes both our cost to buy,
transport, remanufacture and modify used containers and our cost to manufacture portable storage units and other
structures. To a lesser extent, cost of sales includes parts and supplies sold to specialty containment customers.
Depreciation and amortization includes depreciation on our rental fleet, our property, plant and equipment, and
amortization of definite-lived intangible assets.
In addition to focusing on GAAP measurements, we focus on EBITDA, adjusted EBITDA, and free cash flow to measure our
operating results. As such, we include in this Annual Report on Form 10-K reconciliations to their most directly comparable GAAP
financial measures. These reconciliations and descriptions of why we believe these measures provide useful information to investors
as well as a description of the limitations of these measures are included in “Item 6. Selected Financial Data.”
31
Results of Operations
Twelve Months Ended December 31, 2015, Compared to Twelve Months Ended December 31, 2014
The following table sets forth for each of the periods indicated our statements of operations data and expresses revenue and
expense data as percentage of total revenues for the periods presented:
Revenues:
Rental
Sales
Other
Total revenues
Costs and expenses:
Years Ended
December 31,
Percent of Revenue
Years Ended
December 31,
Increase (Decrease)
2015
2014
2015
2014
2015 versus 2014
(In thousands, except percentages)
$ 494,715 $ 410,362
31,585
3,527
530,777 445,474
29,953
6,109
93.2 %
5.6
1.2
100.0
92.1 % $ 84,353
(1,632)
2,582
100.0 85,303
7.1
0.8
20.6 %
(5.2)
73.2
19.1
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge and loss on divestiture,
326,252 280,948
21,944
3,542
19,671
20,798
net
Depreciation and amortization
Total costs and expenses
Income from operations
Other income (expense):
Interest income
Interest expense
Deferred financing costs write-off
Foreign currency exchange
Income before income tax provision
Income tax provision
Net income
EBITDA
Adjusted EBITDA (1)
Free Cash Flow
61.5
3.7
3.9
12.5
11.4
92.9
7.1
—
(6.8)
(0.2)
-
0.1
(0.9)
1.1 %
16.1
(10.4)
n/a
n/a
53.4
42.4
(62.1)
n/a
25.0
n/a
n/a
63.1 45,304
4.9
(2,273)
0.8 17,256
0.1 65,571
8.8 21,010
77.7 146,868
22.3 (61,565)
—
(6.4 )
—
—
1
(7,171)
(931)
(1)
15.8 (69,667)
5.8 (30,855)
10.0 % $ (38,812)
66,128
60,344
557
39,334
493,193 346,325
99,149
37,584
—
1
(28,729)
(35,900)
—
(931)
(1)
(2)
70,419
752
26,033
(4,822)
5,574 $ 44,386
$
Years Ended
December 31,
Percent of Revenue
Years Ended
December 31,
Increase (Decrease)
2015
2014
2015
2014
2015 versus 2014
(In thousands, except percentages)
$ 97,927 $ 138,482
200,836 162,141
73,644 104,819
18.4 %
38.1
13.9
31.1 % $ (40,555)
36.4 38,695
23.5 (31,175)
(29.3) %
23.9
(29.7)
(1) The calculation of adjusted EBITDA as a percentage of revenue for 2015 includes a reduction to revenues related to transactions
not indicative of our business. See “Non-GAAP Data and Reconciliations” earlier in this Annual Report on Form 10-K.
32
Revenues
The following table depicts revenue by type of business for the twelve-month periods ended December 31:
Revenues:
Rental
Sales
Other
Total revenues
Revenues:
Rental
Sales
Other
Total revenues
Portable Storage
2015
2014
Increase (Decrease)
2015 versus 2014
(In thousands, except percentages)
$
$
395,091 $
22,387
6,037
423,515 $
404,939 $
31,422
2,681
439,042 $
(9,848 )
(9,035 )
3,356
(15,527 )
(2.4) %
(28.8)
125.2
(3.5)
Specialty Containment
Increase
(Decrease)
2015 versus
2014
2015
2014
(In thousands)
$
99,624 $
7,566
72
$ 107,262 $
5,423 $
163
846
94,201
7,403
(774 )
6,432 $ 100,830
Total revenues in 2015 increased $85.3 million, or 19.1%, to $530.8 million from $445.5 million in 2014. The increase is due to
a $100.8 million increase related to our recently acquired specialty containment business, partially offset by a $15.5 million decrease
in the portable storage business related to the divested wood mobile office business, which contributed $46.1 million of total revenue
in the prior year, compared to $17.0 million in the current year, a decrease of $29.1 million. Rental, our primary revenue focus,
accounted for approximately 93.2% of total revenues during 2015, and increased $84.4 million, or 20.6%. Increased rental revenue in
the specialty containment business was partially offset by a decrease in the portable storage business due to the divested wood mobile
office business.
Within the portable storage business the $9.8 million decrease in rental revenues is a result of the second quarter 2015
divestiture of our wood mobile office business, as discussed previously in this Annual Report on Form 10-K. The divested business
contributed rental revenue of $15.8 million in the current year, compared to $43.4 million in the prior year, a decrease of $27.6
million. Rental revenue related to the remaining portable storage business increased approximately $17.8 million, or 4.9%, driven by
a 4.5% increase in rental rates as well as a 2.0% increase in units on rent. These increases in rental revenue were partially offset by
unfavorable currency translation rates in the current year, as compared to the prior year. Adjusted for the change in currency
translation rates and the divested wood mobile office business, rental revenue increased approximately 6.7%. Excluding the divested
wood mobile office business and adjusted for the unfavorable currency effect, yield (calculated as rental revenues divided by average
units on rent) increased approximately 4.6% as compared to the prior year.
Portable storage sales revenue for the year ended December 31, 2015 decreased $9.0 million, or 28.8%, to $22.4 million,
compared to $31.4 million in the prior year. Revenue from specialty containment sales was $7.6 million for the year ended December
31, 2015. We focus on rental revenues; as such, in general, sales of units from our fleet occur due to a particular customer need, or due
to having fleet in excess of demand at a particular location.
33
Costs and expenses
The following table depicts costs and expenses by type of business for the twelve-month periods ended December 31:
Portable Storage
2015
2014
Increase (Decrease)
2015 versus 2014
(In thousands, except percentages)
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge and loss on divestiture, net
Depreciation and amortization
Total costs and expenses
$
$
263,746 $
14,580
17,790
66,128
34,828
397,072 $
277,594 $
21,838
3,542
557
37,460
340,991 $
(13,848 )
(7,258 )
14,248
65,571
(2,632 )
56,081
(5.0) %
(33.2)
n/a
n/a
(7.0)
16.4
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Depreciation and amortization
Total costs and expenses
Specialty Containment
Increase
(Decrease)
2015 versus
2014
2014
2015
(In thousands, except percentages)
$
$
62,506 $
5,091
3,008
25,516
96,121 $
3,354 $
106
—
1,874
5,334 $
59,152
4,985
3,008
23,642
90,787
Rental selling and general expenses. Rental, selling and general expenses for portable storage decreased $13.8 million, or 5.0%,
and as a percentage of total portable storage revenues decreased to 62.3% from 63.2% for the years ended December 31, 2015 and
2014, respectively. Included in rental, selling and general expenses for the current year are certain expenses totaling $7.9 million that
management does not consider indicative of our business. These 2015 expenses include $2.6 million in acquisition-related expenses,
including consulting costs to integrate business functions in conjunction with the ETS Acquisition, $4.4 million incurred to provide
transition services in conjunction with the divestiture of our wood mobile office business and $0.9 million related to an unclaimed
property settlement. In 2014 we incurred $5.1 million of expenses related to acquisitions, primarily the ETS Acquisition.
The increase in expenses due to the above items was more than offset by approximately $16.6 million of other net decreases in
the portable storage business rental, selling and general expenses. The $16.6 million decrease was driven by lower fleet freight and
fuel, and repairs and maintenance due largely to the decreased activity related to our wood mobile office divestiture, decreasing fuel
prices and lower fleet positioning activity. Excluding expenses associated with providing transition services, repairs and maintenance
on our portable storage rental fleet as a percentage of rental revenue was 5.0%, compared to 6.7% in the prior year. These decreases
in costs were partially offset by smaller increases related to salaries and professional fees and service contracts, including technology-
related upgrades and non-capitalizable expenses associated with our ERP system implementation. Specialty containment rental, selling
and general expenses was $62.5 million for the year ended December 31, 2015, or 58.3% of total specialty containment revenues.
The approximately $4.4 million incurred to provide transition services related to the divestiture of our wood mobile office
business includes direct expenses to transport and maintain the assets on behalf of the purchase, as well as expenses related to wood
mobile offices on our leased properties, and the provision of certain administrative services such as billing and cash collection.
Cost of sales. The cost of sales is the cost related to our sales revenue only. Within the portable storage business, cost of sales
was $14.6 million and $21.8 million in the years ended December 31, 2015 and 2014, respectively. Portable storage sales revenue,
less cost of sales (sales profit), was $7.8 million and $9.6 million for the twelve-month periods ended December 31, 2015 and 2014,
respectively. Sales profit expressed as a percentage of sales revenue (sales profit margin) was 34.9% in the year ended December 31,
2015 and 30.5% in the prior-year. Cost of sales related to our specialty containment products was $5.1 million in the year ended
December 31, 2015. Specialty containment products sales profit and profit margin were $2.5 million and 32.7% in the year ended
December 31, 2015.
34
Restructuring expenses. Of the $20.8 million in restructuring expenses recognized in 2015, $19.7 million relates to activities
associated with the integration of ETS into the existing Mobile Mini infrastructure, including our shift from managing operations on a
product-oriented basis to a geographic, customer-focused organization; and, to support this shift, the re-alignment of sales leadership
with operational leadership.
Integration includes such activities as:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Combining portable storage and specialty containment locations in markets where both lines of business are present,
Expanding either line of business to new geographies where we maintain a presence in the other,
Eliminating duplicative or redundant positions at both the corporate level and in operations, and
Determining the appropriate processes, including the sales process, necessary to support the new geographically-based
structure, and eliminating infrastructure that does not function optimally in the new environment.
During the fourth quarter of 2015, as the Company was finalizing locations in Southern California for combined portable
storage and specialty containment equipment operations, we determined that certain of our current locations in Southern California
would either not be optimal or available to accommodate efficient operations and provide desired proximity to our combined customer
base. To accommodate the needs of the planned combined operations, the Company is leasing new property, exiting certain properties
and has abandoned approximately 5,000 units of the portable storage fleet in Southern California at the legacy yards. This
abandonment resulted in $13.7 million of restructuring expense in the fourth quarter, representing the write-down of this fleet to zero
value.
Other costs in 2015 related to execution of the ETS integration and geographic expansion included $4.6 million for severance
and benefits (including $1.6 million of share-based compensation) and $1.4 million for the write-off and loss on sale of property, plant
and equipment.
The remaining 2015 restructuring costs of $1.1 million relate primarily to costs involved to shift our business away from the
wood mobile office business, including abandonment of yards. Of the total $20.8 million of restructuring expense recognized in the
twelve months ended December 31, 2015, approximately $17.0 million was non-cash. We expect to recognize approximately $4.0
million in restructuring expenses related to these restructurings in 2016.
The 2014 restructuring costs primarily relate to the transition of key leadership positions, as well as the closure of our Belfast,
North Ireland location.
Asset impairment charge and loss on divestiture, net. As discussed previously in this Annual Report on Form 10-K, during the
twelve months ended December 31, 2015, we recorded impairment charges and loss on divestiture of $66.1 million related to our
wood mobile offices in our North American portable storage segment. See additional discussion regarding the impairment and
divestiture of the wood mobile office assets in Note 4 to the accompanying consolidated financial statements. Asset impairment
charges, net of recoveries, were $0.6 million for the twelve months ended December 31, 2014 and relate to net gains and losses upon
completion of sale, or other disposal of assets impaired in a 2013 assessment of the rental fleet.
Depreciation and amortization. Depreciation and amortization expense increased $21.0 million for the twelve months ended
December 31, 2015, as compared to the prior-year. Increased depreciation of $23.6 million related to the specialty containment
business was partially offset by a decrease of $2.6 million related to the portable storage business. Subsequent to the impairment of
the wood mobile office units, no additional depreciation was recognized on these assets.
Adjusted EBITDA, interest expense, income taxes and net income
Adjusted EBITDA. Adjusted EBITDA increased $38.7 million, or 23.9%, to $200.8 million in 2015, compared to $162.1 million
in 2014. Of this increase, $1.5 million related to our portable storage business and $37.2 million related to our specialty containment
business. Adjusted EBITDA margins were 38.1% and 36.4% for 2015 and 2014, respectively. Adjusted EBITDA margins for the
twelve-month period ended December 31, 2015 were 38.3% for our portable storage business and 37.4% for our specialty containment
business.
35
Interest Expense. Interest expense increased $7.2 million, or 25.0%, to $35.9 million in 2015. In December 2014 we borrowed
funds under our Prior Credit Agreement to facilitate the ETS Acquisition. Our average debt outstanding in the twelve-month period
ended December 31, 2015 was $902.9 million as compared to $539.0 million in the prior-year. The weighted average interest rate on
our debt was 3.6% and 4.8% for the twelve months ended December 31, 2015 and 2014, respectively, excluding the amortization of
debt issuance costs. Taking into account the amortization of debt issuance costs, the weighted average interest rate was 4.0% and 5.3%
for the twelve-month periods ended December 31, 2015 and 2014, respectively. The decrease in the average interest rate is primarily
due to the increase of our lower rate line of credit, as a percentage of our overall debt.
Deferred financing costs write-off. As discussed in Note 6 to the accompanying consolidated financial statements, we entered
into the Credit Agreement in December 2015, resulting in the write-off of $0.9 million of deferred financing costs related to the Prior
Credit Agreement.
(Benefit) provision for income taxes. During the twelve-month period ended December 31, 2015, we had a $4.8 million benefit
for income taxes on pre-tax income of $0.8 million. In the prior-year we had a $26.0 million provision for tax on pre-tax income of
$70.4 million. Our effective income tax rate in the current year was affected by an enacted change in the U.K. income tax rate, as well
as losses in North America driven by the asset impairment and restructuring expenses as discussed previously. The change in the U.K.
income tax rate resulted in a $1.4 million benefit when applied to our December 31, 2014 deferred tax liability, and a $0.5 million
benefit to current year taxes.
Excluding the $1.9 million total tax benefit related to the rate change, our tax benefit would have been approximately $2.9
million, which is in excess of our pre-tax income, due primarily to the magnitude of the loss in North America, which has a higher
income tax rate. Not including the North America asset impairment and $1.4 million cumulative effect on prior-year deferred
liabilities of the U.K. rate change, our tax rate for the year ended December 31, 2015 would have been 33.4%. See Note 9 to the
accompanying consolidated financial statements for further discussion on income taxes.
At December 31, 2015, we had a federal net operating loss carryforward of approximately $278.2 million, which expires, if
unused, from 2028 to 2034. In addition, we had net operating loss carryforwards in the various states in which we operate. Over the
past three years, we have generated $172.4 million of federal taxable income. At December 31, 2015, we had $118.0 million of gross
deferred tax assets included within the net deferred tax liability on our balance sheet, and a $1.1 million valuation allowance. We
believe, based on internal projections, that we will generate sufficient taxable income needed to realize the corresponding unreserved
federal and state deferred tax assets to the extent they are recorded as deferred tax assets in our balance sheet. However, given that the
federal net operating loss carryforwards that give rise to the deferred tax asset expire over 7 years beginning in 2028, there could be
changes in management’s judgment in future periods with respect to the recoverability of these assets.
Net income. Primarily due to the $66.1 million impairment and divestiture loss, the $20.8 million restructuring expenses and the
other income statement activity discussed above, including the ETS Acquisition, our net income decreased to $5.6 million for the year
ended December 31, 2015, compared to net income of $44.4 million in the prior-year.
36
Twelve Months Ended December 31, 2014, Compared to Twelve Months Ended December 31, 2013
The following table sets forth for each of the periods indicated our statements of operations data and expresses revenue and
expense data as percentage of total revenues for the periods presented:
Revenues:
Rental
Sales
Other
Total revenues
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge, net
Depreciation and amortization
Total costs and expenses
Income from operations
Other income (expense):
Interest income
Interest expense
Foreign currency exchange
Income from continuing operations before
income tax provision
Income tax provision
Income from continuing operations
Loss from discontinued operation, net of tax
Net income
Years Ended
December 31,
Percent of Revenue
Years Ended
December 31,
Increase (Decrease)
2014
2013
2014
2013
2014 versus 2013
(In thousands, except percentages)
$ 410,362 $ 366,286
38,051
2,149
445,474 406,486
31,585
3,527
92.1 %
7.1
0.8
100.0
90.1 % $ 44,076
(6,466)
1,378
100.0 38,988
9.4
0.5
12.0 %
(17.0)
64.1
9.6
21,944
3,542
557
39,334
280,948 237,567
25,413
2,402
38,705
35,432
346,325 339,519
66,967
99,149
—
(28,729)
(1)
1
(29,467)
(2)
70,419
26,033
44,386
—
37,499
12,275
25,224
(1,302)
$ 44,386 $ 23,922
63.1
4.9
0.8
0.1
8.8
77.7
22.3
—
(6.4)
—
15.8
5.8
10.0
—
10.0 %
58.4 43,381
(3,469)
6.3
0.6
1,140
9.5 (38,148)
3,902
8.7
83.5
6,806
16.5 32,182
18.3
(13.7)
47.5
(98.6)
11.0
2.0
48.1
—
(7.2 )
—
(1)
738
1
(100.0)
(2.5)
(50.0)
9.3 32,920
3.0 13,758
6.3 19,162
1,302
(0.3 )
6.0 % $ 20,464
87.8
112.1
76.0
(100.0)
85.5
EBITDA
Adjusted EBITDA
Free Cash Flow
Years Ended
December 31,
Percent of Revenue
Years Ended
December 31,
Increase (Decrease)
2014
2013
2014
2013
2014 versus 2013
(In thousands, except percentages)
$ 138,482 $ 102,398
162,141 157,465
104,819 109,414
31.1 %
36.4
23.5
25.2 % $ 36,084
4,676
38.7
(4,595)
26.9
35.2 %
3.0
(4.2)
Revenues. The following table depicts revenue by type of business for the twelve-month periods ended December 31:
Revenues:
Rental
Sales
Other
Total revenues
Portable Storage
2014
2013
Increase (Decrease)
2014 versus 2013
(In thousands, except percentages)
Specialty
Containment
2014
$
$
404,939 $
31,422
2,681
439,042 $
366,286 $
38,051
2,149
406,486 $
38,653
(6,629 )
532
32,556
10.6 % $
(17.4)
24.8
8.0 $
5,423
163
846
6,432
37
Total revenues in 2014 increased $39.0 million, or 9.6%, to $445.5 million from $406.5 million in 2013. Of this total increase,
$6.4 million is attributable to our newly acquired specialty containment business. Rental, our primary revenue focus, accounted for
approximately 92.1% of total revenues during 2014, and increased $44.1 million, or 12.0%. Of this increase $5.4 million is
attributable to the specialty product business. The $38.7 million, or 10.6% increase in portable storage rental revenue was driven by a
10.5% increase in yield (rental revenues divided by average units on rent). The increase in yield reflects a rate increase of 7.3% over
2013. Average units on rent of approximately 147,000 in 2014 is consistent with the prior year. Our sales of portable storage units
decreased $6.6 million to $31.4 million in 2014 from $38.1 million in 2013. The decrease from the prior year primarily relates to a
large sale to the U.K. military in 2013 that did not recur in 2014.
Costs and expenses. The following table depicts costs and expenses by type of business for the twelve-month periods ended
December 31:
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge, net
Depreciation and amortization
Total costs and expenses
Portable Storage
2014
2013
Increase (Decrease)
2014 versus 2013
(In thousands, except percentages)
Specialty
Containment
2014
$
$
277,594 $
21,838
3,542
557
37,460
340,991 $
237,567 $
25,413
2,402
38,705
35,432
339,519 $
40,027
(3,575 )
1,140
(38,148 )
2,028
1,472
16.8 % $
(14.1)
47.5
(98.6)
5.7
0.4 $
3,354
106
—
—
1,874
5,334
Within the portable storage business, rental, selling and general expenses increased $40.0 million, or 16.8%; and as a percentage
of total portable storage revenues these expenses increased to 63.2% from 58.4% in 2013. Included in the 2014 amount is $5.1 million
of expenses related to acquisitions, primarily the ETS Acquisition. Excluding the acquisition-related expenses, portable storage rental,
selling and general expenses increased $34.9 million, or 14.7%, and as a percentage of total portable storage revenue grew from
58.4% to 62.1%. The $34.9 million increase primarily corresponds to increased business levels to support the 8.0% growth in total
revenue. In addition, within this business, repairs and maintenance costs related to our fleet increased $10.3 million to $27.0 million
from $16.8 million, due primarily to our focus on bringing our rental fleet to a rent-ready state.
Also within the portable storage business, as a percentage of rental revenue, repairs and maintenance on our rental fleet
increased to 6.7% in 2014 as compared to 4.6% in 2013. Other increases in rental, selling and general expenses for 2014 include: (i)
an 8.8% increase in payroll-related costs (including share-based compensation expense) from $100.2 million to $109.1 million, (ii) a
16.9% increase in transportation costs from $40.6 million to $47.4 million, as we continue to focus on repositioning our fleet to high
utilization markets and (iii) an increase in professional fees and service contracts of $3.4 million, or 35.6% from $9.6 million to $13.0
million due to upgraded technology, network and telephone systems, increased marketing research, and non-capitalizable expenses
associated with our ERP system implementation.
Specialty containment rental, selling and general expense was $3.4 million for the period from the ETS Acquisition date of
December 10, 2014 through the end of the year. As a percentage of specialty containment revenues, rental, selling and general
expense was 52.2%.
Cost of sales is the cost related to our sales revenue only. Within the portable storage business, cost of sales was $21.8 million
and $25.4 million in 2014 and 2013, respectively. As a percentage of sales revenue, portable storage cost of sales was 69.5% and
66.8% in 2014 and 2013, respectively. This increase in cost of sales as a percentage of revenue is largely due to continued right-sizing
of our fleet, including selling under-utilized fleet at a lower profit. Cost of sales related to our specialty containment products was
$0.1 million.
Restructuring expenses for 2014 were $3.5 million, compared to $2.4 million in 2013. The 2014 amount includes the sale of our
Belfast, North Ireland location that management determined was nonstrategic. In addition, we made other organization changes in
North America. In 2013, these charges primarily consist of reductions in our workforce and lease abandonment costs.
For 2013, the asset impairment charge, net was $38.7 million and primarily relates to the write-down of certain assets to fair
value and classified as held for sale, less subsequent recovery of assets sold in excess of the fair values. Asset impairment charge, net
of recoveries, was $0.6 million for 2014 and relates to gains and losses on the impaired assets upon completion of sale, or other
disposal.
38
Depreciation and amortization expenses increased $3.9 million in 2014, as compared to the prior year, of which $1.9 million
relates to the specialty containment business. Within the portable storage business, the $2.0 million increase in 2014 as compared to
2013 relates largely to transportation equipment acquired through capital leases to support new locations.
Adjusted EBITDA. Adjusted EBITDA increased $4.7 million, or 3.0%, to $162.1 million, compared to $157.5 million in 2013.
Of this increase, $1.7 million related to our portable storage business and $3.0 million related to our specialty containment business.
Adjusted EBITDA margins were 36.4% and 38.7% for 2014 and 2013, respectively. Excluding specialty containment business, our
adjusted EBITDA margin was 36.3%.
Interest Expense. Interest expense decreased $0.7 million, or 2.5%, to $28.7 million in 2014. Although we borrowed funds
under the Prior Credit Agreement to facilitate the ETS Acquisition, resulting in a balance of $705.5 million as of December 31, 2014,
our average debt outstanding throughout 2014 decreased $49.6 million, or 8.4%, as compared to 2013. This decrease is principally
due to the use of operating cash flow to reduce our debt prior to the ETS Acquisition. The annual weighted average interest rate on our
debt was 4.8% for 2014, compared to 4.5% for 2013, excluding the amortizations of debt issuance and other costs. Taking into
account the amortization of debt issuance costs, the annual weighted average interest rate was 5.3% in 2014 and 5.0% in 2013.
Provision for income taxes. Our annual effective tax rate was 37.0% for 2014, compared to 32.7% for 2013. Our 2013 tax rate
reflected a corporate income tax rate reduction authorized by the U.K.’s government in July 2013. This rate reduction resulted in a
$1.9 million tax benefit that lowered our 2013 effective tax rate. Excluding the rate reduction benefit, the 2013 effective tax rate
would have been approximately 37.6%. The remaining difference in our effective tax rate in 2014, as compared to 2013 is due
primarily to a shift in the percentage of our pre-tax profit attributable to the U.K., which is taxed at a lower rate than North America.
See Note 9 to the accompanying consolidated financial statements for a further discussion on income taxes.
Net income from continuing operations. Income from continuing operations in 2014 increased to $44.4 million, compared to
$25.2 million in 2013. Excluding restructuring expenses, acquisition expenses and asset impairment charges, income from continuing
operations increased $1.1 million due primarily to the reduced interest expense and the ETS Acquisition.
Loss from discontinued operation, net of tax, of $1.3 million in 2013 related to the sale of our Netherlands operation in
December 2013.
LIQUIDITY AND CAPITAL RESOURCES
Renting is a capital-intensive business that requires us to acquire assets before they generate revenues, cash flow and earnings.
The majority of the assets that we rent have very long useful lives and require relatively little maintenance expenditures. Most of the
capital we have deployed in our rental business historically has been used to expand our operations geographically, to execute
opportunistic acquisitions, to increase the number of units available for rent at our existing locations, and to add to the mix of products
we offer. During recent years, our operations have generated annual cash flow that exceeds our pre-tax earnings, particularly due to
cash flow from operations and the deferral of income taxes caused by accelerated depreciation of our fixed assets in our tax return
filings. Our strong cash from operating activities for the years ended December 31, 2015, 2014 and 2013 of $152.8 million, $120.6
million and $116.1 million, respectively, resulted in free cash flow of $73.6 million, $104.8 million and $109.4 million, respectively.
In addition to free cash flow, our principal current source of liquidity is the Credit Agreement described below.
Revolving Credit Facility. On December 14, 2015, we entered into the Credit Agreement with Deutsche Bank AG New York
Branch, as administrative agent, and other lenders party thereto. The Credit Agreement replaces the Prior Credit Agreement that had a
February 2017 maturity date. The Credit Agreement provides for a five-year, $1 billion first lien senior secured revolving credit
facility maturing on or before the earlier of (i) December 14, 2020 and (ii) the date that is 90 days prior to the final maturity date of the
Senior Notes if such Senior Notes remain outstanding on such date. The Credit Agreement also provides for the issuance of
irrevocable standby letters of credit by U.S. lenders in amounts totaling up to $50 million, by U.K.-based lenders in amounts totaling
up to $20 million, and by Canadian-based lenders in amounts totaling up to $20 million. The refinancing of our lines of credit extends
the maturity dates, provides us with ongoing financial flexibility and results in reduced borrowing margins of 50 basis points, which
we expect to result in interest rate savings.
The obligations of us and our subsidiary guarantors under the Credit Agreement are secured by a blanket lien on substantially all
of our assets. At December 31, 2015, we had $667.7 million of borrowings outstanding and $324.9 million of additional borrowing
availability under the Credit Agreement. We were in compliance with the terms of the Credit Agreement as of December 31, 2015 and
were above the minimum borrowing availability threshold and therefore not subject to any financial maintenance covenants.
39
Amounts borrowed under the Credit Agreement and repaid or prepaid during the term may be reborrowed. Outstanding amounts
under the Credit Agreement bear interest at our option at either: (i) the London interbank offered rate (“LIBOR”) plus an applicable
margin (“LIBOR Loans”), or (ii) the prime rate plus an applicable margin (“Base Rate Loans”). The applicable margin for each type
of loan is based on an availability-based pricing grid and ranges from 1.25% to 1.75% for LIBOR Loans and 0.25% to 0.75% for Base
Rate Loans at each measurement date. Pursuant to the terms of the Credit Agreement, outstanding amounts will bear interest at the
highest level in the pricing grid until the first measurement date subsequent to March 31, 2016. Had the margins specified in the
Credit Agreement pricing grid been in effect as of December 31, 2015, our applicable margins would have been 1.50% for LIBOR
Loans and 0.50% for Base Rate Loans.
Availability of borrowings under the Credit Agreement is subject to a borrowing base calculation based upon a valuation of our
eligible accounts receivable, eligible rental fleet (including units held for sale, work-in-process and raw materials) and machinery and
equipment, each multiplied by an applicable advance rate or limit. The rental fleet is appraised at least once annually by a third-party
appraisal firm and up to 90% of the net orderly liquidation value, as defined in the Credit Agreement, is included in the borrowing
base to determine how much we may borrow under the Credit Agreement.
The Credit Agreement provides for U.K. borrowings, which are, at our option, denominated in either Pounds Sterling or Euros,
by our U.K. subsidiary based upon a U.K. borrowing base; Canadian borrowings, which are denominated in Canadian dollars, by our
Canadian subsidiary based upon a Canadian borrowing base; and U.S. borrowings, which are denominated in U.S. dollars, based upon
a U.S. borrowing base along with any Canadian assets not included in the Canadian subsidiary.
The Credit Agreement also contains customary negative covenants, including covenants that restrict our ability to, among other
things: (i) allow certain liens to attach to Mobile Mini or subsidiary assets, (ii) repurchase or pay dividends or make certain other
restricted payments on capital stock and certain other securities, or prepay certain indebtedness, (iii) incur additional indebtedness or
engage in certain other types of financing transactions, and (iv) make acquisitions or other investments. In addition, we must comply
with a minimum fixed charge coverage ratio of 1.00 to 1.00 as of the last day of each quarter, upon the minimum availability amount
under the Credit Agreement falling below the greater of (y) $90 million and (z) 10% of the lesser of the then total revolving loan
commitment and aggregate borrowing base.
We believe our cash provided by operating activities will provide for our normal capital needs for the next twelve months. If
not, we have sufficient borrowings available under our Credit Agreement to meet any additional funding requirements. We monitor
the financial strength of our lenders on an ongoing basis using publicly-available information. Based upon that information, we do not
presently believe that there is a likelihood that any of our lenders will be unable to honor their respective commitments under the
Credit Agreement.
Senior Notes. At December 31, 2015, we had outstanding $200.0 million aggregate principal amount of the Senior Notes due
December 2020. Interest on the Senior Notes is payable semiannually in arrears on June 1 and December 1 of each year.
Operating Activities. Net cash provided by operating activities was $152.8 million for the twelve months ended December 31,
2015, compared to $120.6 million in the prior year, an increase of $32.2 million. Although the twelve months ended December 31,
2015 reflects a decrease in net income of $38.8 million to $5.6 million, compared to net income of $44.4 million in the prior-year, the
difference is due primarily to non-cash items. Non-cash items in the current year include a $66.1 million asset impairment charge and
loss on divestiture, $12.4 million of non-cash restructuring charges, $60.3 million in depreciation and amortization and $13.8 million
of share-based compensation expense, offset by a $5.6 million decrease in deferred taxes. Non-cash items in the prior year include
$25.4 million in deferred tax expense, $39.3 million of depreciation and amortization and $15.1 million of share-based compensation
expense.
Excluding the net non-cash income statement items of $150.6 million in the current year and $80.7 million in the prior year,
cash generated by net income increased $31.0 million to $156.1 million, from $125.1 million in the prior-year period. The increase is
due primarily to the acquired specialty containment business, as well as increased margins in the portable storage business, offset by
the decreased portable storage revenue related to the divested wood mobile offices. The change in working capital accounts resulted
in cash outflow of $3.3 million in the 2015 period and $4.4 million in the 2014 period, due to normal operating fluctuations.
40
Net cash provided by operating activities was $120.6 million in 2014, compared to $116.1 million in 2013, an increase of $4.5
million. Net cash from operating activities in 2014 includes a reduction of $5.1 million due to acquisition-related expenses. Although
net income was $20.5 million greater in the twelve months ended December 31, 2014 than in the twelve months ended December 31,
2013, non-cash add backs decreased from $96.4 million to $80.7 million, or $15.7 million. Non-cash items in the 2013 year include a
$38.2 million asset impairment charge, $11.0 million in deferred taxes, $35.6 million in depreciation and amortization and $14.7
million of share-based compensation expense. These addbacks were partially offset by a net reduction to cash of $3.2 million related
to other non-cash income statement items. Non-cash items in 2014 include $25.4 million in deferred taxes, $39.3 million of
depreciation and amortization, $15.1 million of share-based compensation and a net addition of $0.9 million related to other non-cash
income statement items. The change in working capital accounts was consistent for both 2014 and 2013.
Cash provided by operating activities is enhanced by the deferral of most income taxes due to the rapid tax depreciation rate of
our assets and our federal and state net operating loss carryforwards. At December 31, 2015, we had a federal net operating loss
carryforward of approximately $278.2 million and a net deferred tax liability of $219.6 million.
Investing Activities. Net cash used in investing activities was $14.4 million in 2015 compared to $446.8 million in 2014 and $6.0
million in 2013. Cash received upon the divestiture of the wood mobile offices, less associated deferred revenue and customer
deposits was $83.3 million, while cash paid for businesses acquired was $18.5 million in the current year. In 2014, we made payments
for acquisitions, primarily the ETS Acquisition, of $430.9 million. We did not acquire any businesses in 2013.
Net capital expenditures for our rental fleet was $57.9 million in 2015, compared to net capital expenditures of $4.2 million in
2014 and $7.1 million in 2013. Rental fleet capital expenditures increased in 2015, as we purchased assets in areas of high demand.
Of the $74.7 million of rental fleet additions in 2015, $24.0 million related primarily to downstream specialty containment products
and $22.2 million related to the U.K. Of the $28.3 million of capital expenditures related to the North American portable storage
business, our expenditures were primarily to meet the demand in geographic areas of high utilization for which it does not make
economic sense to reposition our fleet, and to meet customer demand for specific types of units. The majority of these expenditures
related to markets in the Midwest and eastern United States. In 2014 and 2013, we had minimal net capital expenditures as we
alternatively invested in our existing fleet through repairs and maintenance, which is expensed as incurred. Proceeds from sale of
rental fleet units in 2015 decreased 26.8%, compared to 2014 and decreased 35.9% in 2014 compared to 2013. The $36.0 million in
proceeds from sale of rental fleet units in 2013 includes a bulk sale to the U.K. military of approximately $4.3 million and
approximately $7.8 million from the impaired assets held for sale.
Capital expenditures for property, plant and equipment, net of proceeds from any sale of property, plant and equipment, were
$21.3 million in 2015, $11.6 million in 2014 and $13.8 million in 2013. Included in the $9.9 million of proceeds for 2015 is $6.8
million of proceeds received in conjunction with the sale of a legacy location in Southern California, which was disposed of in
conjunction with restructuring activity. Approximately $16.0 million of the 2015 capital expenditures related to our new ERP system.
The remaining 2015 expenditures for property, plant and equipment and the 2014 and 2013 expenditures were primarily for
replacement of our transportation equipment and upgrades to technology equipment.
The amount of cash that we use during any period in investing activities is almost entirely within management’s discretion. We
have no contracts or other arrangements pursuant to which we are required to purchase a fixed or minimum amount of goods or
services in connection with any portion of our business. Maintenance capital expenditures includes expenses such as the cost to
replace old forklifts, trucks and trailers that we use to move and deliver our products to our customers, and for replacements to
enhance our computer information and communication systems. Our maintenance capital expenditures were approximately $6.9
million in 2015, $3.3 million in 2014 and $8.3 million in 2013. In addition, we acquired property, plant and equipment through capital
leases totaling $17.6 million, $16.5 million and $8.5 million in 2015, 2014 and 2013, respectively. These leases were primarily for
transportation related equipment. We anticipate our near term investing activities will be primarily focused on supporting growth in
the U.K. and downstream specialty containment, additional portable storage rental fleet through remanufacturing, and the addition of
transportation equipment. In addition, we may invest in opportunistic acquisitions. Also, in the near term we will be developing and
implementing our new ERP system.
Financing Activities. Net cash used in financing activities was $140.6 million in 2015 and $110.3 million in 2013, compared to
net cash provided by financing activities of $329.8 million in 2014. In December 2014, we financed the ETS Acquisition by
borrowing under the Prior Credit Agreement, resulting in net borrowings for the year of $386.2 million as compared to net repayments
of lines of credit of $37.8 million in 2015 and $123.1 million in 2013. In 2015 we used free cash flow, along with proceeds from our
wood mobile office divestiture to purchase treasury stock, pay down borrowings and pay dividends. In 2015 and 2014, we paid cash
dividends of $33.7 million and $31.4 million, respectively, to our stockholders and purchased shares of our common stock of $61.8
million and $26.0 million (primarily under our share repurchase program), respectively. We received $1.7 million, $3.6 million, and
$13.8 million from the exercise of employee stock options in 2015, 2014 and 2013, respectively. As of December 31, 2015, we had
$667.7 million of borrowings outstanding under our Credit Agreement and approximately $324.9 million of additional borrowings
were available to us. In conjunction with entering into the Credit Agreement in the fourth quarter of 2015 we incurred approximately
$4.4 million in third-party costs and lender fees, which were capitalized and included in deferred financing costs.
41
Contractual Obligations and Commitments
Our contractual obligations primarily consist of our outstanding balance under the Credit Agreement, $200.0 million aggregate
principal amount of the Senior Notes and obligations under capital leases. We also have operating lease commitments for: (i) real
estate properties for the majority of our locations with remaining lease terms typically ranging from one to ten years (ii) delivery,
transportation and yard equipment, typically under a five-year lease with purchase options at the end of the lease term at a stated or
fair market value price, and (iii) office related equipment. At December 31, 2015, primarily in connection with securing our insurance
policies, we provided certain insurance carriers and others with approximately $7.4 million in letters of credit. We currently do not
have any obligations under purchase agreements or commitments.
The table below provides a summary of our contractual commitments as of December 31, 2015. Lease renewal options that we
currently anticipate exercising at the end of the initial lease period have been included in the schedule below.
Revolving credit facility
Interest payment obligations under our revolving credit
facility (1)
Senior Notes
Interest payment obligations under our Senior Notes (2)
Obligations under capital leases
Interest payment obligations under our capital leases (3)
Operating leases (4)
Total contractual obligations
Total
Less Than
1 Year
1 - 3 Years
(In thousands)
3 - 5 Years
More than
5 Years
$
667,708 $
— $
— $ 667,708 $
—
62,619
200,000
78,750
38,274
3,519
59,885
$ 1,110,755 $
12,974
—
15,750
5,363
929
18,417
53,433 $
24,531
25,114
200,000
—
31,500
31,500
11,088
10,159
894
1,413
21,406
8,900
89,592 $ 944,621 $
—
—
—
11,664
283
11,162
23,109
(1) Scheduled interest rate obligations under our Credit Agreement, which is subject to a variable rate of interest, were calculated
using our weighted average rate of 2.1% at December 31, 2015 through April 2016. Subsequent interest obligations were
calculated at a rate of 1.9% in accordance with the Credit Agreement pricing grid that will be in effect at that time.
(2) Scheduled interest rate obligations under our Senior Notes were calculated using the stated rate of 7.875%.
(3) Scheduled interest rate obligations under capital leases were calculated using imputed rates primarily ranging from 1.8% to
12.7%.
(4) Operating lease obligations include operating commitments and restructuring related commitments and are net of sub-lease
income. For further discussion see Note 13 to the accompanying consolidated financial statements.
Off-Balance Sheet Transactions
We do not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated
entities or others that are reasonably likely to have a material current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Seasonality
Demand from our portable storage customers is somewhat seasonal. Construction customers typically reflect higher demand
during months with more temperate weather, while demand for our portable storage units by large retailers is stronger from September
through December because these retailers need to store more inventories for the holiday season. Our retail customers usually return
these rented units to us in December and early in the following year. In the specialty containment business, demand from customers is
typically higher in the middle of the year from March to October, driven by the timing of customer maintenance projects. The demand
for rental of our pumps may also be impacted by weather, specifically when temperatures drop below freezing.
Critical Accounting Policies, Estimates and Judgments
Our significant accounting policies are disclosed in Note 2 to the accompanying consolidated financial statements. The
following discussion addresses our most critical accounting policies, some of which require significant judgment.
42
Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of these consolidated
financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and
expenses during the reporting period. These estimates and assumptions are based upon expert information, our evaluation of historical
results and anticipated future events, and these estimates may change as additional information becomes available. We have identified
below our accounting policies that we believe could potentially produce materially different results if we were to change underlying
estimates or assumptions.
Revenue Recognition. Rental revenue is generated from the direct rental of our fleet to our customers, including ancillary
revenue such as fleet delivery and pickup. We enter into contracts with our customers to rent equipment based on a monthly rate for
our portable storage fleet and a daily, weekly or monthly rate for our specialty containment fleet. Revenues from renting are
recognized ratably over the rental period. The rental continues until cancelled by the customer or the Company. Customers may utilize
our equipment delivery and pick-up services in conjunction with the rental of equipment, but it is not required. Revenue pursuant to
the pick up or delivery of a rented unit is recognized in rental revenue upon completion of the service. When customers are billed in
advance, we defer recognition of revenue and record unearned rental revenue at the end of the period. If equipment is returned prior to
the end of the contractually obligated period, the excess, if any, between the amount the customer is contractually required to pay,
over the cumulative amount of revenue recognized to date, is recognized as incremental revenue upon return.
Sales revenue is primarily generated by the sale of new and used units, and to a lesser extent, parts and supplies sold to specialty
containment customers. We recognize revenues from sales of units upon delivery when the risk of loss passes, the price is fixed and
determinable and collectability is reasonably assured. We sell our units pursuant to sales contracts stating the fixed sales price.
Share-Based Compensation. We calculate the fair value of stock options using the Black-Scholes-Merton option pricing
valuation model, which incorporates various assumptions including volatility, expected life and risk-free interest rates. The fair value
of restricted stock awards is estimated as the closing price of our common stock on the date of grant. Compensation related to service-
based awards is recognized on a straight-line basis over the vesting period, which is generally three to five years. Compensation
expense related to performance-based awards is recognized over the implicit service period of the award based on management’s
estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date. Expense related to
performance-based awards that have multiple vesting dates, is recognized using the accelerated attribution approach, whereby each
vesting tranche is treated as a separate award for purposes of determining the implicit service period. Share-based compensation
expense is reduced for forfeitures which are estimated at the time of grant based on historical experience, and revised in subsequent
periods if actual forfeitures differ from estimates.
Purchase Accounting. We account for acquisitions under the acquisition method. Under the acquisition method of accounting,
we record assets acquired and liabilities assumed at their estimated fair market value on the date of acquisition. Goodwill is measured
as the excess of the fair value of the consideration transferred over the fair value of the identifiable net assets. Estimated fair values of
acquired assets and liabilities is provisional and could change as additional information is received. We finalize valuations as soon as
practicable, but not later than one-year from the acquisition date. Any subsequent changes to purchase price allocations results in a
corresponding adjustment to goodwill.
The determination of the fair value of intangible assets requires the use of significant judgment with regard to (i) the fair value;
and (ii) whether such intangibles are amortizable or non-amortizable and, if amortizable, the period and the method by which the
intangible asset will be amortized. We estimate the fair value of acquisition-related intangible assets principally based on projections
of cash flows that will arise from identifiable intangible assets of acquired businesses. The projected cash flows are discounted to
determine the present value of the assets at the dates of acquisition.
Goodwill. For acquired businesses, we record assets acquired and liabilities assumed at their estimated fair values on the
respective acquisition dates. Based on these values, the excess purchase prices over the fair value of the net assets acquired is recorded
as goodwill. Of the $706.4 million total goodwill at December 31, 2015, $463.6 million relates to the North America portable storage
segment, $61.5 million relates to the U.K. portable storage segment and $181.2 million relates to the specialty containment segment.
Goodwill impairment testing requires judgment, including: the identification of the reporting units; determination of the fair
value of each reporting unit; the assignment of assets, liabilities and goodwill to each reporting unit; estimates and assumptions
regarding future cash flows and discount rates; and an assumption regarding the form of the transaction in which the reporting unit
would be acquired by a market participant. Management assesses potential impairment of goodwill on an annual basis at December
31, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
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Some factors management considers important which could indicate an impairment review include the following:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
significant under-performance relative to historical, expected or projected future operating results;
significant changes in the manner of our use of the acquired assets or the strategy for the overall business;
market capitalization relative to net book value; and
significant negative industry or general economic trends.
Management may choose to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired
and whether or not to perform the two-step goodwill impairment test. When the two-step impairment test is performed, the first step
requires a comparison of the fair value of each of our reporting unit’s net assets to the respective carrying value of net assets. If the
carrying value of a reporting unit’s net assets is less than its fair value, no indication of impairment exists and a second step is not
performed. If the carrying amount of a reporting unit’s net assets is higher than its fair value, there is an indication that an impairment
may exist and a second step must be performed. If the second step is necessary, management is required to determine the implied fair
value of the goodwill and compare it to the carrying value of the goodwill. The fair value of the reporting units would be assigned to
the respective assets and liabilities of each reporting unit as if the reporting units had been acquired in separate and individual business
combinations and the fair value of the reporting units was the price paid to acquire the reporting units. The excess of the fair value of
the reporting units over the amounts assigned to their respective assets and liabilities is the implied fair value of goodwill. If the
carrying amount of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss must be
recognized for the difference.
In assessing the fair value of the reporting units, management considers both the market approach and the income approach.
Under the market approach, the fair value of the reporting unit is based on quoted market prices of companies comparable to the
reporting unit being valued. Under the income approach, the fair value of the reporting unit is based on the present value of estimated
cash flows. The income approach is dependent on a number of significant management assumptions, including estimated future
revenue growth rates and discount rates. Other estimates relate to tax payments, operating margins and capital expenditures. Each
approach is given equal weight in arriving at the fair value of the reporting unit.
In connection with our goodwill impairment test that was conducted as of December 31, 2015, we chose to perform the first step
of the goodwill impairment test for each of our reporting units. Our goodwill impairment testing as of this date indicated that both of
our portable storage reporting units and our specialty containment reporting unit had estimated fair values which substantially
exceeded their respective carrying amounts. The second step of the impairment test was not required for any of the reporting units.
As of December 31, 2014, management assessed qualitative factors and determined it is more likely than not each of the
reporting unit’s assigned goodwill had estimated fair values greater than the respective reporting unit’s individual net asset carrying
values; therefore, the two step impairment test was not required.
Impairment of Long-Lived Assets (Other than Goodwill). Our rental fleet, property, plant and equipment, and finite-lived
intangibles are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may
be impaired. (See potential impairment indicators under “Goodwill” above.) If this review indicates the carrying value of these assets
will not be recoverable, as measured based on estimated undiscounted cash flows over their remaining life, the carrying amount would
be adjusted to fair value. The cash flow estimates contain management’s best estimates using appropriate and customary assumptions
and projections at the time of evaluation.
During the first quarter of 2015, we entered into discussions regarding the possible sale of our wood mobile offices within our
North American portable storage segment. The discussions indicated that the wood mobile offices might be sold at an amount below
carrying value and we conducted a review for impairment for these long-lived assets as of March 31, 2015. Based on this review, an
impairment loss was recorded in the quarter ended March 31, 2015. The total impairment of the wood mobile offices was $64.6
million during 2015. See additional discussion regarding the impairment and the divestiture of the wood mobile offices in Note 4 to
the accompanying consolidated financial statements.
In the second quarter of 2013, we conducted an assessment of the rental fleet and determined that certain of these units were
either non-core to our rental strategy or were uneconomic to repair. In connection with this evaluation, we determined to place these
assets for sale, resulting in a non-cash impairment charge on long-lived assets of $37.6 million in the second quarter of 2013. As these
assets have been sold or otherwise disposed of, additional adjustments have been made to the impairment charge resulting in total
asset impairment charges, net of recoveries, of $0.6 million in 2014 and $38.7 million in 2013.
There were no indicators of further impairment at December 31, 2015 or at December 31, 2014.
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Rental Fleet. Rental fleet is capitalized at cost and depreciated over the estimated useful life of the unit using the straight-line
method. Rental fleet is depreciated whether or not it is out on rent. Capitalized cost of our rental fleet includes the price paid to acquire
the unit and freight charges to the location when the unit is first placed in service, and when applicable, the cost of our manufacturing
or remanufacturing, which includes the cost of customizing units. Ordinary repair and maintenance costs are charged to operations as
incurred.
We periodically review depreciable lives and residual values against various factors, including the results of our lenders’
independent appraisal of our rental fleet, practices of our competitors in comparable industries and profit margins achieved on sales of
depreciated units.
The table below depicts the estimated useful lives and residual values (presented as a percentage of capitalized cost) for our
major categories of portable storage rental fleet.
Portable Storage:
Steel storage containers
Steel ground level offices
Residual
Value as
Percentage of
Original Cost
Useful Life
in Years
55%
55
30
30
The table below depicts the estimated useful lives for our major categories of specialty containment rental fleet when purchased
new. We estimate zero residual value for our specialty containment fleet as there is a limited secondary market for specialty
containment products.
Specialty Containment:
Steel tanks
Roll-off boxes
Vacuum boxes
Stainless steel tank trailers
De-watering boxes
Pumps and filtration equipment
Useful Life
in Years
25
15 - 20
20
25
20
7
The estimated useful lives and residual values of or our rental fleet might change in the future based on changing circumstances.
If these estimates change in the future, we may be required to recognize increased or decreased depreciation expense for these assets.
For instance, if all our rental fleet units had been placed in service with useful lives 25% less or greater than our current estimated
useful lives, we estimate that our annual depreciation expense for the year ended December 31, 2015 would have been $11.4 million
higher or $6.8 million lower, respectively.
Similarly, if our rental fleet units had been placed in service with estimated residual values decreased by 10% of the original
cost, for example from 55% to 45% (with specialty containment residual values remaining at 0%), depreciation expense would have
been approximately $3.5 million higher for the year ended December 31, 2015. If our rental fleet units had been placed in service
with estimated residual values increased by 10% of the original cost, for example, from 55% to 65% for steel storage containers and
from 0% to 10% for specialty containment, our depreciation expense would have been lower by approximately $5.3 million, for the
year ended December 31, 2015.
Insurance Reserves. We maintain insurance coverage for our operations and employees with appropriate aggregate, per
occurrence and deductible limits as we reasonably determine is necessary or prudent considering current operations and historical
experience. The majority of these coverages have large deductible programs which allow for potential improved cash flow benefits
based on our loss control efforts, while guarantying a maximum premium liability.
Our employee group health insurance program is a self-insured program with individual and aggregate stop loss limits. The
insurance provider is responsible for funding all claims in excess of the calculated monthly maximum liability. This calculation is
based on a variety of factors including the number of employees enrolled in the plan. Actual results may vary from estimates based on
our actual experience at the end of the plan policy periods based on the carrier’s loss predictions and our historical claims data.
45
We expense the deductible portion of the individual claims. However, we generally do not know the full amount of our exposure
to a deductible in connection with any particular claim during the fiscal period in which the claim is incurred and for which we must
make an accrual for the deductible expense. We make these accruals based on a combination of the claims development experience of
our staff and our insurance companies, and, at year end, the accrual is reviewed and adjusted, in part, based on an independent
actuarial review of historical loss data and using certain actuarial assumptions followed in the insurance industry. A high degree of
judgment is required in developing these estimates of amounts to be accrued, as well as in connection with the underlying
assumptions. In addition, our assumptions will change as our loss experience is developed. All of these factors have the potential for
significantly impacting the amounts previously reserved with respect to anticipated deductible expenses and we may be required in the
future to increase or decrease amounts previously accrued.
Income Taxes. In preparing our consolidated financial statements, we recognize income taxes in each of the jurisdictions in
which we operate. For each jurisdiction, we estimate the actual amount of taxes currently payable or receivable as well as deferred tax
assets and liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
A valuation allowance is provided for those deferred tax assets for which it is more likely than not that the related benefits will
not be realized. In determining the amount of the valuation allowance, we consider estimated future taxable income as well as feasible
tax planning strategies in each jurisdiction. If we determine that we will not realize all or a portion of our deferred tax assets, we will
increase our valuation allowance with a charge to income tax expense. Conversely, if we determine that we will ultimately be able to
realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related
valuation allowance will be reduced with a credit to income tax expense.
The majority of our deferred tax asset relates to federal net operating loss carryforwards that have future expiration dates.
Management believes that adequate future taxable income will be generated through future operations, or through available tax
planning strategies to recover the unreserved portion of these assets. However, given that the federal net operating loss carryforwards
that give rise to the deferred tax asset expire over 7 years beginning in 2028, there could be changes in management’s judgment in
future periods with respect to the recoverability of these assets.
Tax regulations within the various jurisdictions within which we operate are subject to interpretation of the related tax laws and
regulations and require the application of significant judgment. Our income taxes are subject to examination by federal, state and
foreign tax authorities. There may be differing interpretations of tax laws and regulations, and as a result, disputes may arise with
these tax authorities involving the timing and amount of deductions and allocation of income.
A deferred U.S. tax liability has not been provided on the undistributed earnings of certain foreign subsidiaries because it is our
intent to permanently reinvest such earnings. If the undistributed earnings at December 31, 2015 are repatriated, we would need to
accrue and pay income taxes at that time.
See additional information regarding income taxes in Note 9 to the accompanying financial statements.
Recent Accounting Pronouncements
Simplifying the Presentation of Debt Issuance Costs. In April 2015, the Financial Accounting Standards Board (“FASB”)
issued accounting guidance on the presentation of debt issuance costs in the balance sheet. This standard requires that certain debt
issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of
that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected
by this guidance. We will adopt this guidance for accounting periods subsequent to December 31, 2015. Unamortized debt issuance
costs are included in other assets. The application of this guidance will not affect our statement of operations or cash flow.
Revenue from Contracts with Customers. In May 2014, FASB issued an accounting standard on revenue from contracts with
customers. The standard provides a single model for revenue arising from contracts with customers and supersedes current revenue
recognition guidance. The standard requires an entity to recognize the amount of revenue to which it expects to be entitled for the
transfer of goods or services. The standard is effective for annual and interim periods beginning after December 15, 2017. Early
adoption is permitted for the annual and interim periods beginning after December 15, 2016, but not prior to that time. The revenue
recognition standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the impact,
if any, of the adoption of the standard to our financial statements and related disclosures. We have not yet selected a transition method
nor determined the effect of the standard on our ongoing financial reporting.
46
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. In April 2014, FASB issued
accounting guidance on reporting discontinued operations and disclosures of disposals of components of an entity. The new guidance
raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations
and certain other disposals that do not meet the definition of a discontinued operation. The guidance is effective for fiscal years
beginning after December 15, 2014. We have applied this guidance prospectively to transactions occurring after December 31, 2014.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The following table sets forth the scheduled maturities and the total fair value of our debt portfolio as of December 31, 2015:
Principal Maturing in the Twelve Months Ended December 31,
Total at
December 31, December 31,
Total Fair
Value at
2016
2017
2018
2019
2020
(In thousands, except percentages)
Thereafter
2015
2015
Debt:
Fixed rate
Average interest rate
Floating rate
Average interest rate
Operating leases
$ 18,417 $12,927 $ 8,479 $ 5,212 $
3,688 $ 11,162 $
$ 5,363 $ 5,214 $ 4,945 $ 5,282 $205,806 $ 11,664 $ 238,274 $ 245,274
$ — $ — $ — $ — $667,708 $
6.96%
— $ 667,708 $ 667,708
2.13%
59,885
Impact of Foreign Currency Rate Changes. We currently have operations outside the U.S., and we bill those customers
primarily in their local currency, which is subject to foreign currency rate changes. Our operations in Canada are billed in the
Canadian dollar and operations in the U.K. are billed in Pound Sterling. We are exposed to foreign exchange rate fluctuations as the
financial results of our non-U.S. operations are translated into U.S. dollars. The impact of foreign currency rate changes has
historically been insignificant with our Canadian operations, but we have more exposure to volatility with our U.K. operations. In
order to help minimize our exchange rate gain and loss volatility, we finance our U.K. entities through our revolving lines of credit,
which allows us, at our option, to borrow funds locally in Pound Sterling denominated debt. We do not currently hedge our currency
transaction or translation exposure, nor do we have any current plans to do so.
47
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets — December 31, 2015 and 2014
Consolidated Statements of Income — For the Years Ended December 31, 2015, 2014 and 2013
Consolidated Statements of Comprehensive Income — For the Years Ended December 31, 2015, 2014 and 2013
Consolidated Statements of Stockholders’ Equity — For the Years Ended December 31, 2015, 2014 and 2013
Consolidated Statements of Cash Flows — For the Years Ended December 31, 2015, 2014 and 2013
Notes to Consolidated Financial Statements
49
50
51
52
53
54
55
48
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Mobile Mini, Inc.:
We have audited the accompanying consolidated balance sheets of Mobile Mini, Inc. and subsidiaries as of December 31, 2015 and
2014, and the related consolidated statements of income, comprehensive income (loss), stockholders’ equity, and cash flows for each
of the years in the three-year period ended December 31, 2015. We also have audited Mobile Mini, Inc.’s internal control over
financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Mobile Mini, Inc.’s management is
responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Report of Management on
Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on these consolidated financial statements and
an opinion on the Company’s internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our
audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Mobile Mini, Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. Also
in our opinion, Mobile Mini, Inc. maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) .
/s/ KPMG LLP
Phoenix, Arizona
February 5, 2016
49
MOBILE MINI, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value data)
Cash and cash equivalents
Receivables, net of allowance for doubtful accounts of $2,162 and $1,636 at December
$
1,613 $
3,739
ASSETS
December 31,
2015
2014
31, 2015 and December 31, 2014, respectively
Inventories
Rental fleet, net
Property, plant and equipment, net
Deposits and prepaid expenses
Deferred financing costs, net and other assets
Intangibles, net
Goodwill
Total assets
$
LIABILITIES AND STOCKHOLDERS’ EQUITY
$
Liabilities:
Accounts payable
Accrued liabilities
Lines of credit
Obligations under capital leases
Senior Notes
Deferred income taxes
Total liabilities
Commitments and contingencies
Stockholders' equity:
Preferred stock $.01 par value, 20,000 shares authorized, none issued
Common stock $.01 par value, 95,000 shares authorized, 49,145 issued and 44,594
outstanding at December 31, 2015 and 49,015 issued and 46,157 outstanding at
December 31, 2014
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost, 4,551 and 2,858 shares at December 31, 2015 and December 31,
2014, respectively
Total stockholders' equity
Total liabilities and stockholders' equity
$
80,191
15,596
951,323
131,687
8,651
10,562
73,212
706,387
1,979,222 $
29,086 $
59,024
667,708
38,274
200,000
219,601
1,213,693
81,031
16,736
1,087,056
113,175
8,586
8,858
78,385
705,608
2,103,174
22,933
63,727
705,518
24,918
200,000
231,547
1,248,643
—
—
491
584,447
352,262
(44,162 )
(127,509 )
765,529
1,979,222 $
490
569,083
380,504
(29,870)
(65,676)
854,531
2,103,174
See accompanying notes.
50
MOBILE MINI, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
Revenues:
Rental
Sales
Other
Total revenues
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge and loss on divestiture, net
Depreciation and amortization
Total costs and expenses
Income from operations
Other income (expense):
Interest income
Interest expense
Deferred financing costs write-off
Foreign currency exchange
Income from continuing operations before income tax (benefit) provision
Income tax (benefit) provision
Income from continuing operations
Loss from discontinued operation, net of tax
Net income
Earnings per Share:
Basic
Income from continuing operations
Loss from discontinued operation
Net income
Diluted
Income from continuing operations
Loss from discontinued operation
Net income
For the Years Ended December 31,
2014
2013
2015
$
$
$
$
$
$
494,715 $
29,953
6,109
530,777
326,252
19,671
20,798
66,128
60,344
493,193
37,584
1
(35,900)
(931)
(2)
752
(4,822)
5,574
—
5,574 $
0.12 $
—
0.12 $
0.12 $
—
0.12 $
410,362 $
31,585
3,527
445,474
280,948
21,944
3,542
557
39,334
346,325
99,149
—
(28,729)
—
(1)
70,419
26,033
44,386
—
44,386 $
0.96 $
—
0.96 $
0.95 $
—
0.95 $
366,286
38,051
2,149
406,486
237,567
25,413
2,402
38,705
35,432
339,519
66,967
1
(29,467)
—
(2)
37,499
12,275
25,224
(1,302)
23,922
0.55
(0.02)
0.53
0.55
(0.03)
0.52
Weighted average number of common and common share equivalents
outstanding:
Basic
Diluted
44,953
45,460
46,026
46,725
45,481
46,096
Cash dividends declared per share
$
0.75 $
0.68 $
—
See accompanying notes.
51
MOBILE MINI, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Net income
Other comprehensive (loss) income:
For the Years Ended December 31,
2014
2013
2015
$
5,574 $
44,386 $
23,922
Foreign currency translation adjustment, net of income tax benefit of
$184, $213 and $194 and in 2015, 2014 and 2013, respectively
Other comprehensive (loss) income
Comprehensive (loss) income
$
(14,292)
(14,292)
(8,718) $
(14,430)
(14,430)
29,956 $
2,377
2,377
26,299
See accompanying notes.
52
MOBILE MINI, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the years ended December 31, 2013, 2014 and 2015
(In thousands)
Balance at January 1, 2013
Net income
Common stock dividends declared
Other comprehensive income
Exercise of stock options
Tax shortfall on equity award
transactions
Purchase of treasury stock
Restricted stock grants, net
Share-based compensation
Balance at December 31, 2013
Net income
Common stock dividends declared
Other comprehensive loss
Exercise of stock options
Tax shortfall on equity award
transactions
Purchase of treasury stock
Restricted stock grants, net
Share-based compensation
Balance at December 31, 2014
Net income
Common stock dividends declared
Other comprehensive loss
Exercise of stock options
Tax shortfall on equity award
transactions
Purchase of treasury stock
Restricted stock grants, net
Share-based compensation
Balance at December 31, 2015
Additional
Common Stock
Paid-In
Shares Amount Capital
46,036 $
— —
— —
— —
482 $522,372 $343,782 $
— 23,922
(7,926)
—
—
—
—
6 13,812
647
Accumulated
Other
Retained Comprehensive
Earnings Income (Loss) Shares Amount
Treasury Stock
Total
Stockholders'
Equity
(17,817 ) 2,175 $ (39,300) $ 809,519
23,922
(7,926)
2,377
13,818
— —
— —
2,377 —
— —
—
—
—
—
— —
(9) —
(48) —
(837)
—
—
— — 15,040
46,626
— —
— —
— —
2
—
—
—
—
488 550,387 359,778
— 44,386
— (23,660)
—
—
—
3,640
164
— —
—
9
— —
— —
—
(369)
—
—
(15,440 ) 2,184 (39,669)
—
—
—
—
— —
— —
(14,430 ) —
— —
— —
(674) —
41 —
(15)
—
—
— — 15,071
46,157
— —
— —
— —
62 —
—
—
—
—
490 569,083 380,504
—
5,574
— (33,816)
—
—
—
1,703
— —
—
— 674 (26,007)
—
— —
—
— —
(29,870 ) 2,858 (65,676)
—
—
—
—
— —
— —
(14,292 ) —
— —
(837)
(369)
—
15,040
855,544
44,386
(23,660)
(14,430)
3,642
(15)
(26,007)
—
15,071
854,531
5,574
(33,816)
(14,292)
1,703
— —
(1,693) —
1
(166)
—
—
— — 13,827
44,594 $
—
—
—
—
491 $584,447 $352,262 $
68
—
— —
— 1,693 (61,833)
—
— —
—
— —
(166)
(61,833)
1
13,827
(44,162 ) 4,551 $ (127,509) $ 765,529
See accompanying notes.
53
MOBILE MINI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash Flows from Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
For the Years Ended December 31,
2014
2013
2015
$
5,574 $
44,386 $
23,922
Deferred financing costs write-off
Asset impairment charge and loss on divestiture, net
Non-cash restructuring expense, excluding share-based
compensation
Provision for doubtful accounts
Amortization of deferred financing costs
Amortization of long-term liabilities
Share-based compensation expense
Depreciation and amortization
Loss on disposal of discontinued operation
Gain on sale of rental fleet
Loss on disposal of property, plant and equipment
Deferred income taxes
Tax shortfall on equity award transactions
Foreign currency transaction loss
Changes in certain assets and liabilities, net of effect of businesses acquired:
Receivables
Inventories
Deposits and prepaid expenses
Other assets and intangibles
Accounts payable
Accrued liabilities
Net cash provided by operating activities
Cash Flows from Investing Activities:
Proceeds from wood mobile office divestiture, net
Proceeds from sale of discontinued operation
Cash paid for businesses acquired, net of cash acquired
Additions to rental fleet, excluding acquisitions
Proceeds from sale of rental fleet
Additions to property, plant and equipment, excluding acquisitions
Proceeds from sale of property, plant and equipment
Net cash used in investing activities
Cash Flows from Financing Activities:
Net borrowings (repayments) under lines of credit
Deferred financing costs
Principal payments on notes payable
Principal payments on capital lease obligations
Issuance of common stock
Dividend payments
Purchase of treasury stock
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for interest
Cash paid during the year for income and franchise taxes
Equipment and other acquired through capital lease obligations
Capital expenditures accrued or payable
931
66,128
12,411
3,705
3,131
101
13,827
60,344
—
(6,402)
2,188
(5,629)
(166)
2
(4,184)
945
(833)
(22)
4,605
(3,842)
152,814
83,280
—
(18,525)
(74,732)
16,865
(31,163)
9,860
(14,415)
(37,810)
(4,683)
—
(4,253)
1,703
(33,700)
(61,833)
(140,576)
51
(2,126)
3,739
1,613 $
32,372 $
4,935
17,638
4,210
—
557
—
2,777
2,829
88
15,071
39,334
—
(5,732)
348
25,424
(15)
1
(7,196)
2,680
(1,416)
17
(723)
2,195
120,625
—
—
(430,946)
(27,279)
23,053
(15,779)
4,199
(446,752)
386,204
(719)
—
(1,956)
3,642
(31,384)
(26,007)
329,780
(1,170)
2,483
1,256
3,739 $
24,559 $
1,103
16,508
819
—
38,217
—
2,481
2,811
169
14,714
35,626
1,948
(9,682)
247
11,012
(837)
1
(3,961)
(393)
653
10
337
(1,164)
116,111
—
677
—
(28,826)
35,951
(15,792)
1,970
(6,020)
(123,076)
—
(310)
(408)
13,818
—
(369)
(110,345)
(427)
(681)
1,937
1,256
25,947
1,114
8,547
345
$
$
See accompanying notes.
54
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Mobile Mini, Organization and Description of Business
Mobile Mini, Inc., a Delaware corporation, is a leading provider of portable storage and specialty containment solutions. In
these notes, the terms “Mobile Mini,” the “Company,” “we,” “us,” and “our” refer to Mobile Mini, Inc. In November 2014, we
entered into a Stock Purchase Agreement to acquire Gulf Tanks Holdings (“GTH”), Inc., the parent company of Houston, Texas-based
Evergreen Tank Solutions (“ETS”). The transaction, referred to as the “ETS Acquisition,” closed on December 10, 2014. See
additional information regarding the acquisition in Note 3. On May 15, 2015, we closed a transaction to sell our wood mobile offices
within our North American portable storage segment for a cash price of $92.0 million, less associated assumed liabilities. See
additional information regarding the divestiture in Note 4.
At December 31, 2015, we have a fleet of portable storage and office units operating throughout the U.S., Canada and the U.K.
serving a diversified customer base, including large and small retailers, construction companies, medical centers, schools, utilities,
distributors, the military, hotels, restaurants, entertainment complexes and households. These customers use the products for a wide
variety of applications, including the storage of retail and manufacturing inventory, construction materials and equipment, documents
and records and other goods. We also have a fleet of specialty containment products, concentrated in the U.S. gulf coast, including
liquid and solid containment units, serving a specialty sector in the industry. Specialty products are leased primarily to chemical,
refinery, oil and natural gas drilling, mining and environmental service customers.
Basis of Presentation and Consolidation
The consolidated financial statements include the accounts of Mobile Mini and our wholly owned subsidiaries. We do not have
any subsidiaries in which we do not own 100% of the outstanding stock. All significant intercompany balances and transactions have
been eliminated.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires
management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial
statements and the notes to those statements. Actual results could differ from those estimates. Significant estimates affect the
calculation of depreciation and amortization, the calculation of the allowance for doubtful accounts, the analysis of goodwill and long-
lived assets for potential impairment and certain accrued liabilities.
Discontinued Operation
In December 2013, we sold the subsidiary comprising our Netherlands operation. The Netherlands operation is reflected as
discontinued operations. See Note 17.
(2) Summary of Significant Accounting Policies
Cash Equivalents
We consider all highly liquid instruments with insignificant interest rate risk and with maturities of three months or less at
purchase to be cash equivalents.
Receivables and Allowance for Doubtful Accounts
Receivables are stated net of an allowance for doubtful accounts. We estimate the amount of customer receivables that are
uncollectible and record an estimated provision for bad debts through a charge to operations. The provision is based on historical
collection experience and evaluation of past-due accounts. Specific accounts are written off against the allowance when management
determines the account is uncollectible. We require a security deposit on most leased office units to cover the cost of damages or
unpaid balances, if any. Our provision for doubtful accounts was less than 1% of total revenues in the years ended December 31,
2015, 2014 and 2013.
55
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The information presented in the table below reflects the activity in the allowance for doubtful accounts during the periods
presented.
2015
For the Years Ended December 31,
2014
(In thousands)
2013
Allowance for doubtful accounts
Balance at beginning of year
Provision charged to expense
Write-offs
Balance at end of year
Concentration of Credit Risk
$
$
1,636 $
3,705
(3,179)
2,162 $
1,377 $
2,777
(2,518 )
1,636 $
1,640
2,481
(2,744)
1,377
Financial instruments which potentially expose us to concentrations of credit risk consist primarily of receivables. Concentration
of credit risk with respect to receivables is limited due to our large number of customers spread over a broad geographic area in many
industry sectors. No single customer accounts for more than 10% of our receivables at December 31, 2015 and 2014. Receivables
related to sold units are generally secured by the product sold to the customer. We typically have the right to repossess rented portable
storage units, including any customer goods contained in the unit, following non-payment of rent.
Inventories
Inventories are valued at the lower of cost (principally on a standard cost basis which approximates the first-in, first-out method)
or net realizable value. Raw materials and supplies principally consist of raw steel, wood, glass, paint, vinyl and other assembly
components used in manufacturing and remanufacturing processes, and to a lesser extent, parts used for internal maintenance and
ancillary items held for sale in our specialty containment segment. Work-in-process primarily represents partially assembled units pre-
sold or for use as fleet. Finished portable storage units primarily represent purchased or assembled containers held in inventory until
the container is either sold as is, remanufactured and sold, or remanufactured and deployed as rental fleet.
Inventories at December 31 consisted of the following:
Raw materials and supplies
Work-in-process
Finished portable storage units
Inventories
Rental fleet
2015
2014
(In thousands)
13,436 $
189
1,971
15,596 $
14,241
201
2,294
16,736
$
$
Rental fleet is capitalized at cost and depreciated over the estimated useful life of the unit using the straight-line method. Rental
fleet is depreciated whether or not it is out on rent. Capitalized cost of rental fleet includes the price paid to acquire the unit and freight
charges to the location when the unit is first placed in service, and when applicable, the cost of manufacturing or remanufacturing,
which includes the cost of customizing units. Ordinary repair and maintenance costs are charged to operations as incurred.
We periodically review depreciable lives and residual values against various factors, including the results of our lenders’
independent appraisal of our rental fleet, practices of our competitors in comparable industries and profit margins achieved on sales of
depreciated units.
56
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property, Plant and Equipment
Property, plant and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is recorded
using the straight-line method over the assets’ estimated useful lives. Our depreciation expense related to property, plant and
equipment for 2015, 2014 and 2013 was $20.2 million, $15.1 million and $12.7 million, respectively. Normal repairs and maintenance
to property, plant and equipment are expensed as incurred. When property or equipment is retired or sold, the net book value of the
asset, reduced by any proceeds, is charged to gain or loss on the disposal of property, plant and equipment and is included in rental,
selling and general expenses in the Consolidated Statements of Income.
Property, plant and equipment at December 31 consisted of the following:
Residual Value
as Percentage of
Original Cost
Useful Life
in Years
2015
2014
Land
Vehicles and machinery
Buildings and improvements (1)
Office fixtures and equipment
Property, plant and equipment
Accumulated depreciation and amortization
Property, plant and equipment, net
0 - 55%
0 - 25
0
5 - 30
3 - 30
3 - 5
$
(In thousands)
4,045 $
118,185
21,549
47,063
190,842
(59,155 )
$ 131,687 $
10,920
114,150
19,365
33,942
178,377
(65,202)
113,175
(1)
Improvements made to leased properties are depreciated over the lesser of the estimated useful life or the remaining term of the
respective lease.
Capitalized Software Development Costs
We capitalize qualifying computer software costs incurred during the application development state for internally developed
software. Additionally, we capitalize qualifying costs incurred for upgrades and enhancements to existing software that result in
additional functionality. Costs related to preliminary project planning activities, post-implementation activities, maintenance and
minor modifications are expensed as incurred. Internal-use software is amortized on a straight line basis over its estimated useful life.
Capitalized software development costs are included in property, plant and equipment. As of December 31, 2015 and 2014, we had
$22.5 million and $6.0 million, respectively, of capitalized software, net of accumulated depreciation, included in property, plant and
equipment. Of the $22.5 million of capitalized software, $19.6 million relates to the development of our new enterprise resource
planning system, which we expect to execute in stages beginning in the first quarter of 2016.
Deferred Financing Costs
Deferred financing costs consists of the costs of obtaining long-term financing. These costs are amortized over the term of the
related debt, using the straight-line method, which approximates the effective interest method. Amortization expense for deferred
financing costs was approximately $3.1 million, $2.8 million and $2.8 million in 2015, 2014 and 2013, respectively. As discussed in
Note 6, we entered into the Credit Agreement in December 2015, resulting in the capitalization of $4.4 million in third-party and
lender fees. In addition, in 2015, we wrote off $0.9 million of deferred financing costs related to the Prior Credit Agreement. As of
December 31, 2015, $6.8 million of the total $9.8 million unamortized deferred financing costs, related to the Credit Agreement. A
portion of our deferred financing fees relates to potential financing that has not been finalized. Excluding the $0.6 million of deferred
financing related to potential financing, the annual amortization of remaining deferred financing costs is expected to be as follows (in
thousands):
2016
2017
2018
2019
2020
Total
$
$
1,861
1,861
1,861
1,861
1,761
9,205
57
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Goodwill
For acquired businesses, we record assets acquired and liabilities assumed at their estimated fair values on the respective
acquisition dates. Based on these values, the excess purchase prices over the fair value of the net assets acquired is recorded as
goodwill. Of the $706.4 million total goodwill at December 31, 2015, $463.6 million relates to the North America portable storage
segment, $61.5 million relates to the U.K. portable storage segment and $181.2 million relates to the specialty containment segment.
Goodwill impairment testing requires judgment, including: the identification of the reporting units; determination of the fair
value of each reporting unit; the assignment of assets, liabilities and goodwill to each reporting unit; estimates and assumptions
regarding future cash flows and discount rates; and an assumption regarding the form of the transaction in which the reporting unit
would be acquired by a market participant. Management assesses potential impairment of goodwill on an annual basis at December
31, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Some factors management considers important which could indicate an impairment review include the following:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
significant under-performance relative to historical, expected or projected future operating results;
significant changes in the manner of our use of the acquired assets or the strategy for the overall business;
market capitalization relative to net book value; and
significant negative industry or general economic trends.
Management may choose to assess qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired
and whether or not to perform the two-step goodwill impairment test. When we review goodwill for impairment utilizing a two-step
process, the first step of the impairment test requires a comparison of the fair value of each of our reporting unit’s net assets to the
respective carrying value of net assets. If the carrying value of a reporting unit’s net assets is less than its fair value, no indication of
impairment exists and a second step is not performed. If the carrying amount of a reporting unit’s net assets is higher than its fair
value, there is an indication that an impairment may exist and a second step must be performed. If the second step is necessary,
management is required to determine the implied fair value of the goodwill and compare it to the carrying value of the goodwill. The
fair value of the reporting units would be assigned to the respective assets and liabilities of each reporting unit as if the reporting units
had been acquired in separate and individual business combinations and the fair value of the reporting units was the price paid to
acquire the reporting units. The excess of the fair value of the reporting units over the amounts assigned to their respective assets and
liabilities is the implied fair value of goodwill. If the carrying amount of the reporting unit’s goodwill is greater than the implied fair
value of its goodwill, an impairment loss must be recognized for the difference.
In assessing the fair value of the reporting units, management considers both the market approach and the income approach.
Under the market approach, the fair value of the reporting unit is based on quoted market prices of companies comparable to the
reporting unit being valued. Under the income approach, the fair value of the reporting unit is based on the present value of estimated
cash flows. The income approach is dependent on a number of significant management assumptions, including estimated future
revenue growth rates, gross margins on sales, operating margins, capital expenditures, tax payments and discount rates. Each approach
is given equal weight in arriving at the fair value of the reporting unit.
In connection with our goodwill impairment test that was conducted as of December 31, 2015, we bypassed the qualitative
assessment for each of our reporting units and proceeded directly to the first step of the goodwill impairment test. Our goodwill
impairment testing as of this date indicated that both of our portable storage reporting units and our specialty containment reporting
unit had estimated fair values which substantially exceeded their respective carrying amounts. The second step of the impairment test
was not required for any of the reporting units.
As of December 31, 2014, management assessed qualitative factors and determined it is more likely than not each of the
reporting unit’s assigned goodwill had estimated fair values greater than the respective reporting unit’s individual net asset carrying
values; therefore, the two step impairment test was not required.
58
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table shows the activity and balances related to goodwill from January 1, 2014 to December 31, 2015:
Balance at January 1, 2014 (1)
ETS Acquisition
Other acquisitions
Foreign currency (2)
Balance at December 31, 2014 (1)
Acquisitions
Adjustments (3)
Foreign currency (2)
Balance at December 31, 2015 (1)
$
(In thousands)
519,222
181,972
8,840
(4,426 )
705,608
5,371
(717 )
(3,875 )
706,387
$
(1)
Includes accumulated amortization of $2.0 million and accumulated impairment of $12.5 million.
(2) Represents foreign currency translation adjustments related to the U.K. portable storage reporting unit.
(3) Primarily related to the ETS Acquisition.
Intangibles
Intangible assets are amortized over the estimated useful life of the asset utilizing a method which reflects the estimated pattern
in which the economic benefits will be consumed. Customer relationships are amortized based on the estimated attrition rates of the
underlying customer base, other intangibles are amortized using the straight-line method.
The following table reflects balances related to intangible assets for the years ended December 31:
Customer relationships
Trade names/trademarks
Non-compete agreements
Other
Total
Estimated
Useful
Life
11 - 20
1 - 5
2 - 5
1 - 19
Gross
Carrying
Amount
2015
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
(In thousands)
2014
Accumulated
Amortization
Net
Carrying
Amount
$
92,304 $
6,025
1,839
60
$ 100,228 $
(24,875) $
(1,684)
(433)
(24)
(27,016) $
67,429 $
4,341
1,406
36
73,212 $
91,990 $
6,065
1,772
61
99,888 $
(20,484) $
(919)
(78)
(22)
(21,503) $
71,506
5,146
1,694
39
78,385
Amortization expense for amortizable intangibles was approximately $6.0 million, $1.6 million and $1.6 million in 2015, 2014
and 2013, respectively. See information regarding intangibles acquired in conjunction with company acquisitions in Note 3. Based on
the carrying value at December 31, 2015, future amortization of intangible assets is expected to be as follows for the years ended
December 31 (in thousands):
2016
2017
2018
2019
2020
Thereafter
Total
$
$
6,115
6,063
6,081
6,089
4,986
43,878
73,212
Impairment of Long-Lived Assets (Other than Goodwill)
Our rental fleet, property, plant and equipment, and finite-lived intangibles are reviewed for impairment whenever events or
changes in circumstances indicate the carrying amount of such assets may be impaired. (See potential impairment indicators under
“Goodwill” above). If this review indicates the carrying value of these assets will not be recoverable, as measured based on estimated
undiscounted cash flows over their remaining life, the carrying amount would be adjusted to fair value. The cash flow estimates
contain management’s best estimates using appropriate and customary assumptions and projections at the time of evaluation.
59
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the first quarter of 2015, we entered into discussions regarding the possible sale of our wood mobile offices within our
North American portable storage segment. The discussions indicated that the fleet might be sold at an amount below carrying value
and we conducted a review for impairment for these long-lived assets as of March 31, 2015. Based on this review, an impairment loss
was recorded in the quarter ended March 31, 2015. The total impairment of the wood mobile offices was $64.6 million during 2015.
See additional discussion regarding the impairment and the divestiture of the wood mobile offices in Note 4.
In the second quarter of 2013, we conducted an assessment of the rental fleet and determined that certain of these units were
either non-core to our rental strategy or were uneconomic to repair. In connection with this evaluation, we determined to place these
assets for sale, resulting in a non-cash impairment charge on long-lived assets of $37.6 million in the second quarter of 2013. As these
assets have been sold or otherwise disposed of, additional adjustments have been made to the impairment charge resulting in total
asset impairment charges, net of recoveries, of $0.6 million in 2014 and $38.7 million in 2013.
There were no indicators of further impairment at December 31, 2015 or at December 31, 2014.
Purchase Accounting
We account for acquisitions under the acquisition method. Under the acquisition method of accounting, we record assets
acquired and liabilities assumed at their estimated fair market value on the date of acquisition. Goodwill is measured as the excess of
the fair value of the consideration transferred over the fair value of the identifiable net assets. Estimated fair values of acquired assets
and liabilities is provisional and could change as additional information is received. We finalize valuations as soon as practicable, but
not later than one-year from the acquisition date. Any subsequent changes to purchase price allocations results in a corresponding
adjustment to goodwill.
The determination of the fair value of intangible assets requires the use of significant judgment with regard to (i) the fair value;
and (ii) whether such intangibles are amortizable or non-amortizable and, if amortizable, the period and the method by which the
intangible asset will be amortized. We estimate the fair value of acquisition-related intangible assets principally based on projections
of cash flows that will arise from identifiable intangible assets of acquired businesses. The projected cash flows are discounted to
determine the present value of the assets at the dates of acquisition.
Revenue Recognition
Rental revenue is generated from the direct rental of our fleet to our customers, including ancillary revenue such as fleet
delivery and pickup. We enter into contracts with our customers to rent equipment based on a monthly rate for our portable storage
fleet and a daily, weekly or monthly rate for our specialty containment fleet. Revenues from renting are recognized ratably over the
rental period. The rental continues until cancelled by the customer or the Company. Customers may utilize our equipment delivery and
pick-up services in conjunction with the rental of equipment, but it is not required. Revenue pursuant to the pick up or delivery of a
rented unit is recognized in rental revenue upon completion of the service. When customers are billed in advance, we defer
recognition of revenue and record unearned rental revenue at the end of the period. If equipment is returned prior to the end of the
contractually obligated period, the excess, if any, between the amount the customer is contractually required to pay, over the
cumulative amount of revenue recognized to date, is recognized as incremental revenue upon return.
Sales revenue is primarily generated by the sale of new and used units, and to a lesser extent, parts and supplies sold to specialty
containment customers. We recognize revenues from sales of units upon delivery when the risk of loss passes, the price is fixed and
determinable and collectability is reasonably assured. We sell our units pursuant to sales contracts stating the fixed sales price.
Cost of Sales
Cost of sales in our consolidated statements of income includes the costs for units we sell, and to a lesser extent the costs of
parts and supplies sold to specialty containment customers. Similar costs associated with units that we rent are capitalized in the
balance sheet under “Rental fleet”.
Advertising Costs
Advertising expense was $4.1 million, $5.2 million and $5.8 million in 2015, 2014 and 2013, respectively. The balance of
prepaid advertising costs, which are never amortized more than twelve months, was less than $0.1 million at both December 31, 2015
and 2014.
60
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes
In preparing our consolidated financial statements, we recognize income taxes in each of the jurisdictions in which we operate.
For each jurisdiction, we estimate the actual amount of taxes currently payable or receivable as well as deferred tax assets and
liabilities attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
A valuation allowance is provided for those deferred tax assets for which it is more likely than not that the related benefits will
not be realized. In determining the amount of the valuation allowance, we consider estimated future taxable income as well as feasible
tax planning strategies in each jurisdiction. If we determine that we will not realize all or a portion of our deferred tax assets, we will
increase our valuation allowance with a charge to income tax expense. Conversely, if we determine that we will ultimately be able to
realize all or a portion of the related benefits for which a valuation allowance has been provided, all or a portion of the related
valuation allowance will be reduced with a credit to income tax expense.
Earnings per Share
Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted average number of common shares
outstanding during the period. Diluted EPS is calculated under the treasury stock method. Potential common shares included
restricted common stock, which is subject to risk of forfeiture, incremental shares of common stock issuable upon the exercise of stock
options and vesting of restricted stock awards.
The following table is a reconciliation of net income and weighted-average shares of common stock outstanding for purposes of
calculating basic and diluted EPS for the years ended December 31:
2015
For the Years Ended December 31,
2014
(In thousands, except per share data)
2013
Numerator:
Income from continuing operations
Loss on discontinued operation, net of tax
Net income
$
$
5,574 $
—
5,574 $
44,386 $
—
44,386 $
25,224
(1,302)
23,922
Denominator:
Weighted average shares outstanding - basic
Dilutive effect of share-based awards
Weighted average shares outstanding - diluted
44,953
507
45,460
46,026
699
46,725
45,481
615
46,096
Earnings per share:
Basic:
Income from continuing operations
Loss from discontinued operation
Net income
Diluted:
Income from continuing operations
Loss from discontinued operation
Net income
$
$
$
$
0.12 $
—
0.12 $
0.12 $
—
0.12 $
0.96 $
—
0.96 $
0.95 $
—
0.95 $
0.55
(0.02)
0.53
0.55
(0.03)
0.52
Basic weighted average number of common shares outstanding does not include restricted stock awards that had not vested
of 0.2 million, 0.3 million and 0.5 million shares in 2015, 2014 and 2013, respectively.
61
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table represents the number of stock options and restricted stock awards that were issued or outstanding but
excluded in calculating diluted EPS because their effect would have been anti-dilutive for the years ended December 31:
2015
For the Years Ended December 31,
2014
(In thousands)
2013
Stock options
Restricted stock awards
Total
Fair Value of Financial Instruments
1,135
1
1,136
751
—
751
1,741
1
1,742
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between
market participants. Fair value is a market-based measurement determined based on assumptions that market participants would use in
pricing an asset or liability. We categorize each of our fair value measurements in one of the following three levels based on the
lowest level of input that is significant to the fair value measurement:
Level 1 — Observable input such as quoted prices in active markets for identical assets or liabilities;
Level 2 — Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or
indirectly; and
Level 3 — Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its
own assumptions.
The carrying amounts of cash, cash equivalents, receivables, accounts payable and accrued liabilities approximate fair values
based on their short-term nature. The fair values of our revolving credit facility and capital leases are estimated using discounted cash
flow analyses, based on our current incremental borrowing rates for similar types of borrowing arrangements. Based on the borrowing
rates currently available to us for bank loans with similar terms and average maturities, the fair value of our revolving credit facility
debt and capital leases, which are measured using Level 2 inputs, at December 31, 2015 and 2014 approximated their respective book
values.
The fair value of our $200.0 million aggregate principal amount of 7.875% senior notes due 2020 (the “Senior Notes”) is based
on their latest sales price at the end of each period obtained from a third-party institution and is Level 2 in the fair value hierarchy as
there is not an active market for these notes.
The carrying value and the fair value of our Senior Notes are as follows:
Carrying value
Fair value
2015
2014
(In thousands)
$
200,000 $
207,000
200,000
206,000
At December 31, 2015 and 2014, we did not have any financial instruments required to be recorded at fair value on a recurring
basis.
Derivatives
In the normal course of business, our operations are exposed to fluctuations in interest rates. We have in the past, and may again
in the future, address a portion of these risks through a controlled program of risk management that includes the use of derivative
financial instruments. The objective of controlling these risks is to limit the impact of fluctuations in interest rates on earnings. At
December 31, 2015 and 2014, we did not have any derivative financial instruments.
62
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Share-Based Compensation
We calculate the fair value of stock options using the Black-Scholes-Merton option pricing valuation model, which incorporates
various assumptions including volatility, expected life and risk-free interest rates. The fair value of restricted stock awards is
estimated as the closing price of our common stock on the date of grant. Compensation related to service-based awards are recognized
on a straight-line basis over the vesting period, which is generally three to five years. Compensation expense related to performance-
based awards is recognized over the implicit service period of the award based on management’s estimate of the probability of the
performance criteria being satisfied, adjusted at each balance sheet date. Expense related to performance-based awards that have
multiple vesting dates, is recognized using the accelerated attribution approach, whereby each vesting tranche is treated as a separate
award for purposes of determining the implicit service period. Share based compensation expense is reduced for forfeitures which are
estimated at the time of grant based on historical experience, and revised in subsequent periods if actual forfeitures differ from
estimates.
Foreign Currency Translation and Transactions
For our non-U.S. operations, the local currency is the functional currency. All assets and liabilities are translated into
U.S. dollars at period-end exchange rates and all income statement amounts are translated at the average exchange rate for each month
within the year.
Impact of Recently Issued Accounting Standards
Simplifying the Presentation of Debt Issuance Costs. In April 2015, the Financial Accounting Standards Board (“FASB”)
issued accounting guidance on the presentation of debt issuance costs in the balance sheet. This standard requires that certain debt
issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of
that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected
by this guidance. We will adopt the guidance for accounting periods subsequent to December 31, 2015. Unamortized debt issuance
costs are included in other assets. The application of this guidance will not affect our statement of operations or cash flow.
Revenue from Contracts with Customers. In May 2014, FASB issued an accounting standard on revenue from contracts with
customers. The standard provides a single model for revenue arising from contracts with customers and supersedes current revenue
recognition guidance. The standard requires an entity to recognize the amount of revenue to which it expects to be entitled for the
transfer of goods or services. The standard is effective for annual and interim periods beginning after December 15, 2017. Early
adoption is permitted for the annual and interim periods beginning after December 15, 2016, but not prior to that time. The revenue
recognition standard permits the use of either the retrospective or cumulative effect transition method. We expect to adopt this
guidance when effective and are evaluating the impact, if any, of the adoption of the standard to our financial statements and related
disclosures. We have not yet selected a transition method nor determined the effect of the standard on our ongoing financial reporting.
Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. In April 2014, FASB issued
accounting guidance on reporting discontinued operations and disclosures of disposals of components of an entity. The new guidance
raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations
and certain other disposals that do not meet the definition of a discontinued operation. The guidance is effective for fiscal years
beginning after December 15, 2014. We have applied this guidance prospectively to transactions occurring after December 31, 2014.
(3) Acquisitions
2015 Acquisitions
During the year ended December 31, 2015, we completed two acquisitions of portable storage businesses. These acquisitions
expanded our existing operations in the Glasgow, Scotland market, and further strengthened our positions in Knoxville and
Chattanooga, Tennessee. The accompanying consolidated financial statements include the operations of the acquired businesses from
the dates of acquisition. The aggregate purchase price for the assets acquired were recorded based on their estimated fair values at the
date of the acquisitions. We have not disclosed the pro-forma impact of the acquisitions on operations as they were immaterial to our
financial position or results of operations in the aggregate.
63
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of the purchase price and net assets acquired during the year ended December 31, 2015 are as follows (in
thousands):
Net Assets Acquired:
Rental fleet
Property, plant and equipment
Intangible assets:
Customer relationships
Non-compete agreements
Goodwill
Other assets
Other liabilities
Total
$
$
12,129
157
759
74
5,371
316
(281 )
18,525
2014 Acquisitions.
On December 10, 2014, we acquired all of the outstanding equity interests of GTH, the parent company of ETS, referred to as
the ETS Acquisition. The acquisition results in significant growth opportunities for all product lines by leveraging Mobile Mini’s
national presence and infrastructure, and ETS’ customer relationships. Further, the combination diversifies our end market exposure
and is expected to result in modest cost synergies. As a result of the ETS Acquisition, included in our consolidated statements of
income for the years ended December 31, 2015 and 2014 is $107.3 million and $6.4 million, respectively, of specialty containment
revenues and $11.1 million and $1.1 million, respectively, of income from continuing operations before income tax provision. Direct
expenses related to the ETS Acquisition were $2.5 million in the twelve months ended December 31, 2015 and $5.0 million in the
fourth quarter of 2014.
Also in 2014, we completed eight other acquisitions of portable storage businesses through both asset purchase and stock
purchase agreements. The purchased assets and assumed liabilities were recorded at their estimated fair value at the date of
acquisition. Five of these acquisitions expanded our existing operations in North Dakota, North Carolina, Texas, Tennessee, Florida
and South Carolina markets. The other three acquisitions created new locations in the Danbury, Connecticut, Fort Wayne, Indiana and
Buffalo, New York metropolitan areas.
The accompanying consolidated financial statements include the operations of the acquired businesses from the date of
acquisition. The aggregate purchase price for the assets acquired and the liabilities assumed were recorded based on their estimated
fair values at the date of each acquisition. Valuations were performed based on available information at the time of acquisition.
Estimated fair values of acquired assets and liabilities have changed immaterially as additional information was received.
During the twelve months ended December 31, 2015, primarily due to further analysis of the assets acquired in the ETS
Acquisition, net assets and the resultant goodwill was adjusted downward by $0.7 million.
64
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of the purchase price and net assets acquired for 2014 acquisitions (as adjusted during 2015), are as follows:
Purchase Price, net of cash acquired:
Cash
Cash acquired
Total
Net Assets Acquired:
Rental fleet
Property, plant and equipment
Intangible assets (1):
Customer relationships
Trade names/trademarks
Non-compete agreements
Goodwill (2)
Deferred tax asset, net
Other assets (3)
Other liabilities
Total
ETS
Acquisition
2014
Other
Acquisitions
(In thousands)
Total
410,345 $
(2,698)
407,647 $
23,299 $
—
23,299 $
433,644
(2,698)
430,946
120,755 $
14,655
12,697 $
338
133,452
14,993
69,200
5,200
1,500
181,239
4,696
25,332
(14,930)
407,647 $
1,350
—
204
8,856
—
538
(684 )
23,299 $
70,550
5,200
1,704
190,095
4,696
25,870
(15,614)
430,946
$
$
$
$
(1) The following table reflects the estimated fair values and useful lives of intangible assets related to the ETS Acquisition
identified based on our preliminary purchase accounting assessments:
Customer relationships
Trade names/trademarks
Non-compete agreements
Estimated
Life
(Years)
15 - 20
5 - 10
5
Customer relationships acquired in conjunction with the ETS Acquisition were evaluated separately for the wholly owned
subsidiary Water Movers, Inc. (“Water Movers”). With input from an independent third party with extensive expertise and
experience in this area, we determined lives for the two customer groups based upon historical and expected customer attrition
rates, resulting in an expected useful life of 15 years for the Water Movers customer relationships, which were valued at $14.9
million, and an expected useful life of 20 years for the remaining ETS customer relationships, which were valued at $54.3
million. During our assessment, we evaluated annual historical sales data from 2009 through December 2014 for Water Movers,
and 2008 through December 2014 for the remaining ETS customers.
(2) All of the goodwill related to the ETS Acquisition was assigned to our specialty containment segment. The goodwill arising
from the acquisition consists largely of ETS' going-concern value, the value of ETS’ assembled workforce, new customer
relationships expected to arise from the acquisition, and operational synergies and economies of scale that we expect to realize
from the acquisition. Goodwill from other acquisitions relates to the North America portable storage segment. None of the
goodwill assigned to ETS will be amortizable for tax purposes, while all of the goodwill from the other acquisitions will be
deductible for tax purposes.
Included in other assets for the ETS Acquisition are accounts receivable with contractual amounts totaling $24.3 million. We
estimate that $0.6 million will be uncollectible, and have valued acquired accounts receivable at $23.7 million.
(3)
65
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Supplemental Pro Forma Information
The unaudited pro forma financial information is presented for informational purposes only and is not indicative, and should not
be relied on as being indicative, of the results of operations that would have been achieved if the acquisition had actually taken place
at the beginning of each of the periods presented. The pro forma financial information reflects only the ETS Acquisition, as the
remaining acquisitions would not have a material effect on reported results of operations.
The following table summarizes our unaudited consolidated statements of income as if the ETS Acquisition occurred on
January 1, 2013:
Revenues:
Mobile Mini's historic revenues
ETS' historic revenues (1)
Pro forma revenues
Net income:
Mobile Mini's historic net income
ETS' historic net loss from continuing operations (1)
Pro forma adjustments (2)
Pro forma net income
Average diluted weighted shares outstanding
Pro forma diluted earnings per share from continuing
operations
Years Ended December 31,
2014
2013
(In thousands)
445,474 $
101,603
547,077 $
406,486
92,057
498,543
44,386 $
(25,862)
22,601
41,125 $
46,725
23,922
(10,332 )
6,956
20,546
46,096
0.88 $
0.45
$
$
$
$
$
(1) ETS historic information for the year ended December 31, 2014, consists of revenues and net loss prior to the acquisition date of
December 10, 2014. Revenues and net income (loss) after the acquisition date are included in Mobile Mini’s historic
information for the year ended December 31, 2014.
(2) Pro forma adjustments consist of the following:
Pro forma increases (decreases) to income from continuing
operations before income tax provisions:
Record the net impact to depreciation resulting from fair value
mark-ups, offset by changes to the estimated remaining
lives, for acquired rental fleet and property, plant and
equipment
$
Remove historic gains recognized on the sale of used rental
fleet and property, plant and equipment
Eliminate historic ETS amortization of intangible assets
Recognize amortization for intangible assets acquired
Recognize increased interest expense on amounts borrowed to
Years Ended December 31,
2014
2013
(In thousands)
3,953 $
3,799
(2,195)
3,387
(5,027)
(1,707 )
3,233
(4,818 )
fund the acquisition, including acquisition costs
(8,531)
(9,078 )
Eliminate historic ETS interest and administrative expense on
debt instruments repaid upon acquisition
Eliminate acquisition costs
Total
22,655
15,295
29,537
19,882
—
11,311
Increase in income tax provision related to pro forma
adjustments
Total pro forma adjustments
6,936
22,601 $
4,355
6,956
$
We did not acquire any businesses in 2013.
66
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(4) Impairment and Divestiture of North American Wood Mobile Offices
Our business strategy is to invest in high return, low maintenance, long-lived assets. Wood mobile offices require more
maintenance and upkeep than Mobile Mini’s steel containers and steel ground level offices, resulting in lower margins as compared to
our other portable storage products and our specialty containment products. During March 2015, we entered into discussions regarding
the possible sale of our wood mobile offices within our North American portable storage segment. The discussions indicated that the
fleet might be sold at an amount below carrying value.
Based upon the events described above, we conducted a review for impairment for these particular long-lived assets as of March
31, 2015. The review included assumptions of cash flows considering the likelihood of possible outcomes that existed as of the date
of the review, including assigning probabilities to these outcomes. Management estimated fair market value for the wood mobile
offices based upon purchase price discussions. Based on this review, management determined that the assets were impaired as of
March 31, 2015 and an impairment loss was recognized.
On April 16, 2015, we entered into a definitive agreement to sell our wood mobile offices within the North American portable
storage segment for a cash price of $92.0 million, less associated deferred revenue and customer deposits of $6.8 million. The net
assets were reclassified to held for sale as of that date. The transaction closed on May 15, 2015 and we recorded a net loss.
For the twelve months ended December 31, 2015, the following amounts were recorded for the impairment and divestiture of
the wood mobile office fleet:
Estimated fair market value
Net book value:
Wood mobile offices in rental fleet
Ancillary items in property, plant and equipment
Impairment loss
Sale price
Book value of divested assets after impairment
Selling expenses
Net loss on sale of wood mobile offices
Asset impairment charge and loss on divestiture, net
(In thousands)
92,000
$
155,429
1,201
(64,630 )
92,000
92,000
1,498
(1,498 )
(66,128 )
$
$
$
$
The Company and the purchaser entered into a transition services agreement, whereby we agreed to provide short-term direct
services such as transportation and maintenance for the wood mobile offices on behalf of the purchaser, as well as house units on our
leased properties and provide certain administrative services such as billing and cash collection. The revenue related to this agreement
is included in other revenue, and the expenses for providing these services are included in rental, selling and general expenses.
(5) Rental Fleet
Depreciation expense related to our rental fleet for 2015, 2014 and 2013 was $34.1 million, $22.7 million and $21.2 million,
respectively. At December 31, 2015 and 2014, all rental fleet units were pledged as collateral under the Credit Agreement. Appraisals
on our rental fleet are required by our lenders on a regular basis. The appraisal typically reports no difference in the value of the unit
due to the age or length of time it has been in our fleet. The latest orderly liquidation value appraisal in September 2015 was
conducted by Gordon Brothers-AccuVal. Based on the values assigned in this appraisal our rental fleet net orderly liquidation
appraisal value as of December 31, 2015 was approximately $1.1 billion. Our net book value for this fleet as of December 31, 2015
was $951.3 million.
67
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Rental fleet at December 31 consisted of the following:
Portable Storage:
Steel storage containers
Steel ground level offices
Wood mobile offices
Other
Total
Accumulated depreciation
Total portable storage fleet, net
Specialty Containment:
Steel tanks
Roll-off boxes
Stainless steel tank trailers
Vacuum boxes
De-watering boxes
Pumps and filtration equipment
Other
Total
Accumulated depreciation
Total specialty containment fleet, net
Total rental fleet, net
Residual
Value
as Percentage
of
Original Cost
(1)
Useful Life
in Years
2015
2014
(In thousands)
55%
55%
50%
30
30
20
25
15 - 20
25
20
20
7
$ 612,782 $
346,233
—
7,052
604,547
329,565
208,529
5,633
966,067 1,148,274
(182,437)
(142,338 )
965,837
$ 823,729 $
$
50,843
55,467 $
19,820
25,161
23,283
28,160
7,667
9,852
3,898
5,383
11,510
13,964
5,468
6,843
122,489
144,830
(1,270)
(17,236 )
$ 127,594 $
121,219
$ 951,323 $ 1,087,056
(1) Specialty containment fleet has been assigned zero residual value.
(6) Lines of Credit
On December 14, 2015, we entered into the Credit Agreement with Deutsche Bank AG New York Branch, as administrative
agent, and other lenders party thereto. The Credit Agreement replaces the Prior Credit Agreement that had a February 2017 maturity
date. The Credit Agreement provides for a five-year, $1 billion first lien senior secured revolving credit facility maturing on or before
the earlier of (i) December 14, 2020 and (ii) the date that is 90 days prior to the final maturity date of the Senior Notes if such Senior
Notes remain outstanding on such date. The Credit Agreement also provides for the issuance of irrevocable standby letters of credit
by U.S. lenders in amounts totaling up to $50 million, by U.K.-based lenders in amounts totaling up to $20 million, and by Canadian-
based lenders in amounts totaling up to $20 million. The obligations of Mobile Mini and its subsidiary guarantors under the Credit
Agreement are secured by a blanket lien on substantially all of our assets.
Amounts borrowed under the Credit Agreement and repaid or prepaid during the term may be reborrowed. Outstanding amounts
under the Credit Agreement bear interest at our option at either: (i) the London interbank offered rate (“LIBOR”) plus an applicable
margin, or (ii) the prime rate plus an applicable margin (“Base Rate Loans”). The applicable margin for each type of loan is based on
an availability-based pricing grid and ranges from 1.25% to 1.75% for LIBOR Loans and 0.25% to 0.75% for Base Rate Loans at each
measurement date. Pursuant to the terms of the Credit Agreement, outstanding amounts will bear interest at the highest level in the
pricing grid until the first measurement date subsequent to March 31, 2016. Had the margins specified in the Credit Agreement
pricing grid been in effect as of December 31, 2015, our applicable margins would have been 1.50% for LIBOR Loans and 0.50% for
Base Rate Loans.
68
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Availability of borrowings under the Credit Agreement is subject to a borrowing base calculation based upon a valuation of the
Company’s eligible accounts receivable, eligible container fleet (including containers held for sale, work-in-process and raw
materials) and machinery and equipment, each multiplied by an applicable advance rate or limit. The rental fleet is appraised at least
once annually by a third-party appraisal firm and up to 90% of the net orderly liquidation value, as defined in the Credit Agreement, is
included in the borrowing base to determine how much the Company may borrow under the Credit Agreement.
The Credit Agreement provides for U.K. borrowings, which are, at the Company’s option, denominated in either Pounds
Sterling or Euros, by its U.K. subsidiary based upon a U.K. borrowing base; Canadian borrowings, which are denominated in
Canadian dollars, by its Canadian subsidiary based upon a Canadian borrowing base; and U.S. borrowings, which are denominated in
U.S. dollars, by the Company based upon a U.S. borrowing base along with any Canadian assets not included in the Canadian
subsidiary.
The Credit Agreement also contains customary negative covenants, including covenants that restrict our ability to, among other
things: (i) allow certain liens to attach to Mobile Mini or subsidiary assets, (ii) repurchase or pay dividends or make certain other
restricted payments on capital stock and certain other securities, or prepay certain indebtedness, (iii) incur additional indebtedness or
engage in certain other types of financing transactions, and (iv) make acquisitions or other investments. In addition we must comply
with a minimum fixed charge coverage ratio of 1.00 to 1.00 as of the last day of each quarter, upon the minimum availability amount
under the Credit Agreement falling below the greater of (y) $90 million and (z) 10% of the lesser of the then total revolving loan
commitment and aggregate borrowing base. We were in compliance with the terms of the Credit Agreement as of December 31, 2015
and above the minimum borrowing availability threshold and therefore not subject to any financial maintenance covenants.
The weighted average interest rate under the lines of credit was approximately 2.2% in both 2015 and 2014. The average
outstanding balance was approximately $670.4 million and $323.6 million during 2015 and 2014, respectively. During December
2014, the Company borrowed approximately $410 million under the Prior Credit Agreement to fund the ETS Acquisition and
associated expenses. At December 31, 2015, the Company had approximately $667.7 million of borrowings outstanding and $324.9
million of additional borrowing availability under the Credit Agreement, based upon borrowing base calculations as of such date.
(7) Obligations Under Capital Leases
At December 31, 2015 and 2014, obligations under capital leases for certain real property, transportation, technology and office
related equipment were $38.3 million and $24.9 million, respectively. Certain of the lease agreements provide us with a purchase
option at the end of the lease term. The leases have been capitalized using interest rates primarily ranging from approximately 1.8% to
12.7% and are secured by the property and equipment under lease.
Assets recorded under capital lease obligations totaled approximately $44.5 million as of December 31, 2015 and $24.6 million
as of December 31, 2014. Related accumulated amortization totaled approximately $7.6 million as of December 31, 2015 and
$2.1 million as of December 31, 2014. The assets acquired under capital leases and related accumulated amortization is included in
property, plant and equipment, net, in the Consolidated Balance Sheets. The related amortization is included in depreciation and
amortization expense in the Consolidated Statements of Income.
Future minimum capital lease payments at December 31, 2015 are as follows (in thousands):
2016
2017
2018
2019
2020
Thereafter
Total
Amount representing interest
Present value of minimum lease payments
$
$
6,291
5,986
5,585
5,795
6,187
11,949
41,793
(3,519 )
38,274
69
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(8) Debt Issuances
On November 23, 2010, the Company issued $200.0 million aggregate principal amount of the Senior Notes due December
2020. The Senior Notes were issued by the Company at an initial offering price of 100% of their face value. The 2020 Notes have a
ten-year term and mature on December 1, 2020 and bear interest at a rate of 7.875% per year. Interest is payable semiannually in
arrears on June 1 and December 1 of each year. The Senior Notes are senior unsecured obligations of the Company and are
unconditionally guaranteed on a senior unsecured basis by all of our domestic subsidiaries.
Future Debt Obligations
The scheduled maturity for debt obligations under obligations under capital leases and Senior Notes for balances outstanding at
December 31, 2015 are as follows (in thousands):
2016
2017
2018
2019
2020
Thereafter
Total
$
$
5,363
5,214
4,945
5,282
205,806
11,664
238,274
(9) Income Taxes
Income before taxes from continuing operations for the years ended December 31 consisted of the following:
U.S.
Foreign
Total
$
$
(23,750) $
24,502
752 $
52,944 $
17,475
70,419 $
30,528
6,971
37,499
The provision for income taxes from continuing operations for the years ended December 31 consisted of the following:
2015
For the Years Ended December 31,
2014
(In thousands)
2013
2015
For the Years Ended December 31,
2014
(In thousands)
2013
$
Current:
U.S. federal
State
Foreign
Total current
Deferred
U.S. federal
State
Foreign
Total deferred
Total (benefit) provision for income taxes
$
1,124 $
326
—
1,450
(8,549)
(1,190)
3,467
(6,272)
(4,822) $
— $
827
—
827
—
934
—
934
21,510
2,019
1,677
25,206
26,033 $
11,483
1,100
(1,242)
11,341
12,275
70
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the U.S. federal statutory rate to our effective tax rate for the years ended December 31 is as follows (1):
U.S. federal statutory rate
State taxes, net of federal benefit
Nondeductible expenses and other
Adjustment of net deferred tax liability for enacted tax rate
change
Foreign rate differential
Effective tax rate
For the Years Ended December 31,
2015
35.0 %
(222.4)
128.1
(97.6)
(484.3)
(641.2)%
2014
35.0 %
3.9
1.2
—
(3.1 )
37.0 %
2013
35.0 %
3.5
1.4
(4.9)
(2.3)
32.7 %
(1) Our effective income tax rate in the year ended December 31, 2015 was affected by an enacted change in the U.K. income tax
rate from 20% to 18%, as well as losses in North America driven by asset impairment and restructuring expenses. The change in
the U.K. income tax rate resulted in a $1.4 million benefit when applied to our December 31, 2014 deferred tax liability, and a
$0.5 million benefit to current year taxes. Not including the North America asset impairment and $1.4 million cumulative
effect on prior-year deferred liabilities of the U.K. rate change, our tax rate for the year ended December 31, 2015 would have
been 33.4%. In July 2013, the U.K.’s government enacted a reduction in the corporate income tax rate to 20% from 23%.
The components of the net deferred tax liability at December 31 are approximately as follows:
Deferred tax assets:
Net operating loss carryforwards
Deferred revenue and expenses
Accrued compensation and other benefits
Allowance for doubtful accounts
Equity compensation
Other
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities
Accelerated tax depreciation
Accelerated tax amortization
Other
Total deferred tax liabilities
Net deferred tax liabilities
$
2015
2014
(In thousands)
90,540 $
10,755
3,666
1,041
8,888
3,125
118,015
(1,126)
116,889
122,041
13,310
1,438
1,034
4,434
378
142,635
(1,126 )
141,509
(297,575)
(36,704)
(2,211)
(336,490)
(219,601) $
(333,042 )
(36,150 )
(3,864 )
(373,056 )
(231,547 )
$
A net deferred tax liability of approximately $17.1 million and $16.2 million related to our U.K. operations has been combined
with the net deferred tax liabilities of our U.S. operations in the Consolidated Balance Sheets at December 31, 2015 and 2014,
respectively. In connection with the ETS Acquisition, we acquired $4.7 million of net deferred tax assets. This primarily consisted of
deferred tax liabilities of $50.5 million related to accelerated tax depreciation and amortization along with deferred tax assets for
federal and state net operating losses of $55.2 million.
At December 31, 2015, we had U.S. federal net operating loss carryforwards on our federal tax return of approximately $278.2
million, which expire if unused from 2028 to 2034. At December 31, 2015, we had net operating loss carryforwards on the various
states’ tax returns in which we operate totaling $113.7 million, which expire if unused from 2016 to 2034. In connection with the ETS
Acquisition, we acquired U.S. federal net operating loss carryforwards of approximately $151.3 million and various state net operating
loss carryforwards of $47.5 million.
71
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Management evaluates the ability to realize our deferred tax assets on a quarterly basis and adjusts the amount of our valuation
allowance if necessary. Over the past three years, we have generated $172.4 million of federal taxable income. Management currently
believes that adequate future taxable income will be generated through future operations, or through available tax planning strategies
to recover the unreserved portion of these deferred tax assets.
For income tax purposes, deductible compensation related to share-based awards is based on the value of the award when
realized, which may be different than the compensation expense recognized by us in our financial statements, which is based on the
award value on the date of grant. The difference between the value of the award upon grant, and the value of the award when
ultimately realized, creates either additional tax benefits or a tax shortfall.
Tax benefits resulting from tax deductions in excess of the compensation cost recognized for share-based awards are recognized
as increases to additional paid in capital and as financing cash flows, only if an incremental income tax benefit would be realized after
considering all other tax attributes presently available to us. We have not recognized excess tax benefits in 2015, 2014 or 2013,
because we have not paid U.S. federal income taxes in those years.
Tax shortfalls, which occur when the tax deduction for share-based awards is less than the compensation cost recognized, are
recorded as a reduction to additional paid in capital to the extent that, cumulatively, the shortfalls do not exceed the cumulative excess
tax benefits recognized (including excess tax benefits not yet recognized in additional paid in capital). Should cumulative tax
shortfalls exceed cumulative excess tax benefits, the difference would be reflected as additional tax expense in our financial
statements.
At December 31, 2015 and 2014, our net operating losses carrying forward for tax return purposes include $17.7 million and
$16.6 million, respectively, of excess tax benefits from employee stock awards. Additional paid in capital will be increased by an
equivalent amount if and when such excess tax benefits are realized.
Uncertain tax positions are recognized and measured using a two-step approach. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be
sustained on audit, including resolution of related appeals or litigation process, if any. The second step is to measure the tax benefit as
the largest amount that is more than 50% likely of being realized upon ultimate settlement.
We file U.S. federal tax returns, U.S. state tax returns, and foreign tax returns and have identified our U.S. Federal tax return as
our “major” tax jurisdiction. For the U.S. Federal return, our tax years for 2014, 2013 and 2012 are subject to tax examination by the
U.S. Internal Revenue Service through September 15, 2018, 2017 and 2016, respectively. No reserves for uncertain income tax
positions have been recorded. We do not anticipate that the total amount of unrecognized tax benefit related to any particular tax
position will change significantly within the next 12 months.
A deferred U.S. tax liability has not been provided on the undistributed earnings of certain foreign subsidiaries because it is our
intent to permanently reinvest such earnings. Undistributed earnings of foreign subsidiaries, which have been or are intended to be
permanently invested, aggregated approximately $47.2 million and $25.3 million as of December 31, 2015 and 2014, respectively.
The estimated unrecognized deferred tax liability associated with these temporary differences was approximately $8.7 million as of
December 31, 2015.
Our policy for recording interest and penalties associated with audits is to record such items as a component of income before
taxes. Penalties and associated interest costs, if any, are recorded in rental, selling and general expenses in our Consolidated
Statements of Income.
As a result of stock ownership changes during the years presented, it is possible that we have undergone a change in ownership
for federal income tax purposes, which can limit the amount of net operating loss currently available as a deduction. We have
determined that even if such an ownership change has occurred, it would not impair the realization of the deferred tax asset resulting
from the federal net operating loss carryover.
We paid income taxes of approximately $4.9 million in 2015, $1.1 million in 2014 and $1.1 million in 2013. These amounts are
lower than the recorded expense in the years due to net operating loss carryforwards and general business credit utilization.
72
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10) Transactions with Related Persons
With the ETS Acquisition, we acquired its wholly owned subsidiary, Water Movers, which has two real property leases with an
entity partly owned by Michael Watts, a member of our board of directors (“Board”). These leases began in 2013, prior to the ETS
Acquisition, and expire in 2023. Rental payments under these leases are currently approximately $18,000 per month. Any future
renewals of these leases will be approved by the Board as related party transactions. It is our intention not to enter into any additional
related person transactions.
(11) Share-Based Compensation
We have historically awarded stock options and restricted stock awards for employees and non-employee directors as a means
of attracting and retaining quality personnel and to align employee performance with stockholder value. Stock option plans are
approved by our stockholders and administered by the stock compensation committee of the Board. The current plan allows for a
variety of equity programs designed to provide flexibility in implementing equity and cash awards, including incentive stock options,
nonqualified stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance stock, performance
units and other stock-based awards. Participants may be granted any one of the equity awards or any combination. We do not award
stock options with an exercise price below the market price of the underlying securities on the date of award. As of December 31,
2015, 2.6 million shares are available for future grants. Generally stock options have contractual terms of ten years.
Service-based awards. We grant share-based compensation awards that vest over time subject to the employee rendering service
over the vesting period. The majority of the service–based awards vest in equal annual installments over a period of three to five
years. The expense for service-based awards is expensed ratably over the full service period of the grant.
Performance-based awards. Certain executive officers have been granted stock options and restricted stock awards with vesting
contingent upon the achievement of certain performance criteria related to operating performance of the Company, in addition to the
fulfillment of service requirements. Performance-based awards generally vest over a three to four year period. Expense related to
performance-based awards that have multiple vesting dates, is recognized using the accelerated attribution approach, whereby each
vesting tranche is treated as a separate award for purposes of determining the implicit service period. The accelerated attribution
approach results in a higher expense during the earlier years of vesting.
Generally, performance-based share awards vest annually contingent on annual operating performance criteria, however, there is
also a cumulative performance objective. Performance shares that do not vest in any given year due to failure to achieve an annual
performance target may nevertheless vest at the end of the cumulative year grant period if certain cumulative targets are met. As of
December 31, 2015 approximately 0.4 million performance-based stock options and 17,000 performance-based restricted stock
awards remain unvested. No performance-based awards were issued in 2015 or 2014.
Non-employee director awards. Each non-employee director serving on the Board receives an automatic award of shares of
Mobile Mini’s common stock annually. These awards vest 100% when granted. For the years ended December 31, 2015, 2014 and
2013, $0.8 million, $0.9 million and $0.6 million, respectively, of expense was recognized related to these grants.
Share-based compensation expense. The following table summarizes our share-based compensation for the years ended
December 31:
2015
For the Years Ended December 31,
2014
(In thousands)
2013
Share-based compensation expense included in:
Rental, selling and general expenses
Restructuring expenses
Share-based compensation expense
Amount capitalized
Total share-based compensation
$
$
12,277 $
1,550
13,827
—
13,827 $
14,490 $
581
15,071
—
15,071 $
13,956
758
14,714
326
15,040
73
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2015, total unrecognized compensation cost related to stock option awards was approximately $4.2 million
and the related weighted-average period over which it is expected to be recognized is approximately 0.9 years. As of December 31,
2015, the unrecognized compensation cost related to restricted stock awards was approximately $5.4 million, which is expected to be
recognized over a weighted-average period of approximately 2.1 years.
Stock options. The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes-Merton
option pricing model which requires the input of assumptions. We estimate the risk-free interest rate based on the U.S. Treasury
security rate in effect at the time of the grant. The expected life of the options, volatility and dividend rates are estimated based on our
historical data. The following are the key assumptions used for the period noted:
Risk-free interest rate
Expected life of the options (years)
Expected stock price volatility
Expected dividend rate
2015
1.3% - 1.7%
5.0
2014
1.5% - 1.7%
5.0
35.3% (cid:882) 36.0% 35.4% (cid:882) 38.4%(cid:3)
1.5% - 1.8%
1.8% - 2.1%
2013
0.7% - 1.5%
6.0 - 7.0
41.1% - 46.3%
0.0% - 1.8%
The following table summarizes stock option activity for the years ended December 31 (share amounts in thousands):
Options outstanding, beginning of year
Granted
Canceled/Expired
Exercised
Options outstanding, end of year
Options exercisable, end of year
2015
2014
2013
Number of
Shares
Weighted
Average
Exercise
Price
Number of
Shares
Weighted
Average
Exercise
Price
Number of
Shares
Weighted
Average
Exercise
Price
2,649 $
381
(98)
(62)
2,870
1,643
32.33
42.80
44.60
27.60
33.40
2,519 $
365
(71)
(164)
2,649
854
29.80
46.83
40.63
22.18
32.33
29.32
1,099 $
2,214
(147)
(647)
2,519
193
20.02
31.26
15.90
21.35
29.80
21.51
A summary of stock options outstanding as of December 31, 2015, is as follows:
Outstanding
Vested and expected to vest
Exercisable
Number of
Shares
(In thousands)
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Terms
(In years)
Aggregate
Intrinsic
Value
(In thousands)
2,870 $
2,803
1,643
33.40
33.18
30.97
7.43 $
7.40
7.09
5,071
5,052
3,981
The aggregate intrinsic value of options exercised during the period ended December 31, 2015, 2014 and 2013 was $0.8 million,
$2.9 million and $9.0 million, respectively.
The weighted average fair value of stock options granted was $8.43, $10.46 and $10.59 for the years ended December 31, 2015,
2014 and 2013, respectively.
74
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restricted Stock Awards. The fair value of restricted stock awards is estimated as the closing price of our common stock on the
date of grant. A summary of restricted stock activity is as follows (share amounts in thousands):
Restricted stock awards at January 1, 2013
Awarded
Released
Forfeited
Restricted stock awards at December 31, 2013
Awarded
Released
Forfeited
Restricted stock awards at December 31, 2014
Awarded
Released
Forfeited
Restricted stock awards at December 31, 2015
Weighted
Average
Grant Date
Fair Value
Shares
843 $
153
(252)
(202)
542
143
(240)
(102)
343
107
(169)
(39)
242
17.27
30.21
19.15
15.64
20.65
39.77
20.93
22.09
27.99
37.17
28.22
25.07
31.70
The total fair value of restricted stock awards that vested in 2015, 2014 and 2013 were $4.8 million, $5.0 million and $4.8
million, respectively.
(12) Benefit Plans
In the U.S. we sponsor 401(k) retirement plans designed to provide tax-deferred retirement benefits to employees in accordance
with the provisions of Section 401(k) of the Internal Revenue Code. We also sponsor defined contribution programs in the U.K., and
have a Registered Retirement Savings Plan regulated by Canadian law.
Under the U.S. and Canadian plans we match a percentage of the participants’ contributions up to a specified amount. Under
the U.K. plan, we contribute a percentage of each participant’s annual salary to the plan and, depending on the plan, employees may
also be required to contribute a percentage of their annual salary into the plan. In the U.S. plans Company matches vest over a period
of two to five years, while Company matches for U.K. and Canadian employees are immediately vested. Company contributions to all
these benefit plans totaled approximately $1.1 million, $0.7 million and $0.5 million in 2015, 2014 and 2013, respectively. In each of
the three years ending December 31, 2015, 2014 and 2013, we incurred approximately $51,000, $34,000 and $34,000, respectively,
for administrative costs for these programs.
(13) Commitments and Contingencies
Leases
We lease our corporate offices and other properties and operating equipment from third parties under noncancelable operating
leases. Rent expense under these agreements was approximately $22.7 million, $21.3 million and $21.2 million for the years ended
December 31, 2015, 2014 and 2013, respectively.
75
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2015, contractual commitments associated with lease obligations are as follows:
2016
2017
2018
2019
2020
Thereafter
Total
Operating
Lease
Commitments
Restructuring
Related Lease
Commitments
Sub-lease
Income
Total
$
$
18,233 $
12,551
8,199
5,189
3,688
11,162
59,022 $
(In thousands)
481 $
414
280
23
—
—
1,198 $
(297 ) $ 18,417
12,927
8,479
5,212
3,688
11,162
(335 ) $ 59,885
(38 )
—
—
—
—
Future minimum lease payments under restructured non-cancelable operating leases as of December 31, 2015, are included in
accrued liabilities in the Consolidated Balance Sheet. See Note 15 for a further discussion on restructuring related commitments.
Insurance Reserves
We maintain insurance coverage for our operations and employees with appropriate aggregate, per occurrence and deductible
limits as we reasonably determine is necessary or prudent considering current operations and historical experience. The majority of
these coverages have large deductible programs which allow for potential improved cash flow benefits based on our loss control
efforts, while guarantying a maximum premium liability.
Our employee group health insurance program is a self-insured program with individual and aggregate stop loss limits. The
insurance provider is responsible for funding all claims in excess of the calculated monthly maximum liability. This calculation is
based on a variety of factors including the number of employees enrolled in the plan. Actual results may vary from estimates based on
our actual experience at the end of the plan policy periods based on the carrier’s loss predictions and our historical claims data.
We expense the deductible portion of the individual claims. However, we generally do not know the full amount of our exposure
to a deductible in connection with any particular claim during the fiscal period in which the claim is incurred and for which we must
make an accrual for the deductible expense. We make these accruals based on a combination of the claims development experience of
our staff and our insurance companies, and, at year end, the accrual is reviewed and adjusted, in part, based on an independent
actuarial review of historical loss data and using certain actuarial assumptions followed in the insurance industry. A high degree of
judgment is required in developing these estimates of amounts to be accrued, as well as in connection with the underlying
assumptions. In addition, our assumptions will change as our loss experience is developed. All of these factors have the potential for
significantly impacting the amounts previously reserved in respect of anticipated deductible expenses and we may be required in the
future to increase or decrease amounts previously accrued.
Our worker’s compensation, auto and general liability insurance are purchased under large deductible programs. Our current per
incident deductibles are: worker’s compensation $250,000, auto $500,000 and general liability $100,000. Under our various insurance
programs, we have collective reserves recorded in accrued liabilities of $3.8 million and $3.3 million at December 31, 2015 and 2014,
respectively.
As of December 31, 2015, Mobile Mini and ETS have a combined insurance program. Further, as of December 31, 2015 there
are no outstanding claims related to ETS standalone insurance programs.
In connection with the issuance of our insurance policies, we have provided our various insurance carriers approximately
$7.4 million in letters of credit as of December 31, 2015.
76
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
General Litigation
We are a party to various claims and litigation in the normal course of business. Our current estimated range of liability related
to various claims and pending litigation is based on claims for which our management can determine that it is probable that a liability
has been incurred and the amount of loss can be reasonably estimated. Because of the uncertainties related to both the probability of
incurred and possible range of loss on pending claims and litigation, management must use considerable judgment in making
reasonable determination of the liability that could result from an unfavorable outcome. As additional information becomes available,
we will assess the potential liability related to our pending litigation and revise our estimates. Such revisions in our estimates of the
potential liability could materially impact our results of operation. We do not anticipate the resolution of such matters known at this
time will have a material adverse effect on our business or consolidated financial position.
(14) Stockholders’ Equity
Dividends
During the twelve months ended December 31, 2015, we paid cash dividends of $0.75 per share for a total of $33.7 million.
Each future quarterly dividend payment is subject to review and approval by the Board. In addition, our Credit Agreement contains
restrictions on the declaration and payment of dividends.
Treasury stock
On November 6, 2013, the Board approved a share repurchase program authorizing up to $125.0 million of our outstanding
shares of common stock to be repurchased. On April 17, 2015, the Board authorized up to an additional $50.0 million of our
outstanding shares of common stock to be repurchased, for a total of $175.0 million under the share repurchase program. The shares
may be repurchased from time to time in the open market or in privately negotiated transactions. The share repurchases are subject to
prevailing market conditions and other considerations. The share repurchase program does not have an expiration date and may be
suspended or terminated at any time by the Board. All shares repurchased are held in treasury.
During the twelve months ended December 31, 2015, we purchased approximately 1.7 million shares of our common stock at a
cost of $61.0 million under the authorized share repurchase program, and approximately $89.0 million is available for repurchase as of
December 31, 2015. In addition, we withheld approximately 21,000 shares of stock from employees, for an approximate value of $0.8
million, upon vesting of share awards to satisfy minimum tax withholding obligations. These shares were not acquired pursuant to the
share repurchase program.
During the twelve months ended December 31, 2014, we purchased approximately 0.6 million shares of our common stock at a
cost of $25.0 million under the authorized share repurchase program. In addition, we withheld approximately 25,000 shares of stock
from employees, for an approximate value of $1.0 million, upon vesting of share awards to satisfy minimum tax withholding
obligations. These shares were not acquired pursuant to the share repurchase program.
(15) Restructuring Costs
We have undergone restructuring actions to align our business operations. The 2014 restructuring costs resulted from the
restructuring of U.K. locations including the sale of the Belfast, North Ireland location. In addition, the Company’s field management
and sales force structures in North America were realigned in 2014 along with other organizational changes. The 2013 restructuring
charges related primarily to the transition of key leadership positions.
2015 Restructuring
Of the $20.8 million in restructuring expenses recognized in 2015, $19.7 million relates to activities associated with the
integration of ETS into the existing Mobile Mini infrastructure, including our shift from managing operations on a product-oriented
basis to a geographic, customer-focused organization; and, to support this shift, the re-alignment of sales leadership with operational
leadership:
The integration includes such activities as
(cid:120)
(cid:120)
Combining portable storage and specialty containment locations in markets where both lines of business are present,
Expanding either line of business to new geographies where we maintain a presence in the other,
77
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(cid:120)
(cid:120)
Eliminating duplicative or redundant positions at both the corporate level and in operations, and
Determining the appropriate processes, including the sales process, necessary to support the new geographically-based
structure, and eliminating infrastructure that does not function optimally in the new environment.
During the fourth quarter of 2015, as the Company was finalizing locations in Southern California for combined portable
storage and specialty containment equipment operations, we determined that certain of our current locations in Southern California
would either not be optimal or available to accommodate efficient operations and provide desired proximity to our combined customer
base. To accommodate the needs of the planned combined operations, the Company is leasing new property, exiting certain properties
and has abandoned approximately 5,000 units of the portable storage fleet in Southern California at the legacy yards. This
abandonment resulted in $13.7 million of restructuring expense in the fourth quarter, representing the write-down of this fleet to zero
value.
Other costs in 2015 related to performance of the integration include $4.6 million for severance and benefits (including $1.6
million of share-based compensation) and $1.4 million for the write-off and loss on sale of property, plant and equipment. Additional
2015 restructuring costs relate primarily to costs involved to shift our business away from the wood mobile office business, including
abandonment of yards.
The following table details accrued restructuring obligations (included in accrued liabilities in the Consolidated Balance Sheets)
and related activity for the years ended December 31, 2015, 2014 and 2013:
Fleet and
Property,
Plant and
Equipment
Abandonment
Costs
Severance
and
Benefits
Lease
Abandonment
Costs
(In thousands)
Other
Costs
Accrued obligations as of January 1, 2013
Restructuring expense
Settlement of obligations
Accrued obligations as of December 31, 2013
Restructuring expense
Settlement of obligations
Accrued obligations as of December 31, 2014
Restructuring expense
Settlement of obligations
Accrued obligations as of December 31, 2015
$
$
— $
—
—
—
1,295
(1,295)
—
15,274
(15,274)
— $
2,543 $
1,787
(3,717)
613
1,826
(1,998)
441
4,846
(4,042)
1,245 $
1,570 $
475
(982 )
1,063
318
(705 )
676
600
(781 )
495 $
— $
140
(140 )
—
103
(103 )
—
78
(76 )
2 $
Total
4,113
2,402
(4,839)
1,676
3,542
(4,101)
1,117
20,798
(20,173)
1,742
The majority of accrued obligations relate to our North American operations and are expected to be paid out through the year
2016, with the exception of a lease that will continue into the first quarter of 2019.
The following amounts are included in restructuring expense for the years ended December 31:
Fleet and property, plant and equipment abandonment costs
Severance and benefits
Lease abandonment costs
Other costs
Restructuring expenses
$
$
15,274 $
4,846
600
78
20,798 $
1,295 $
1,826
318
103
3,542 $
—
1,787
475
140
2,402
2015
2014
(In thousands)
2013
78
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(16) Segment Reporting
Prior to the ETS Acquisition, our operations were comprised of two reportable segments: North America and the U.K., both of
which offer portable storage solutions. Discrete financial data on each of our products is not available and it would be impractical to
collect and maintain financial data in such a manner. As a result of the ETS Acquisition, we established a new specialty containment
reportable segment. The assets and liabilities of ETS are included in Mobile Mini’s December 31, 2015 and 2014 consolidated balance
sheet. ETS operations are included in our results of operations for all of 2015, and the portion of 2014 subsequent to the acquisition
date, which is less than one month. The results for each segment are reviewed discretely by our chief operating decision maker.
We operate in the U.S., U.K. and Canada. All of our locations operate in their local currency and, although we are exposed to
foreign exchange rate fluctuation in foreign markets where we rent and sell our products, we do not believe such exposure will have a
significant impact on our results of operations. Revenues recognized by our U.S. locations were $438.4 million, $353.2 million and
$324.9 million for the twelve months ended December 31, 2015, 2014 and 2013, respectively.
The following tables set forth certain information regarding each of our reportable segments for the years ended December 31,
2015, 2014 and 2013:
Revenues:
Rental
Sales
Other
Total revenues
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge and loss on divestiture, net
Depreciation and amortization
Total costs and expenses
Income from operations
Interest expense, net of interest income
Income tax (benefit) provision
For the Year Ended December 31, 2015
North
America
Portable Storage
United
Kingdom
Total
Specialty
Containment
Consolidated
(In thousands)
$
310,864 $
18,833
5,697
335,394
84,227 $
3,554
340
88,121
395,091 $
22,387
6,037
423,515
99,624 $
7,566
72
107,262
494,715
29,953
6,109
530,777
210,323
11,852
17,790
66,128
28,200
334,293
1,101 $
24,249 $
(8,639)
53,423
2,728
—
—
6,628
62,779
25,342 $
876 $
3,369
263,746
14,580
17,790
66,128
34,828
397,072
26,443 $
25,125 $
(5,270 )
62,506
5,091
3,008
—
25,516
96,121
11,141 $
10,774 $
448
326,252
19,671
20,798
66,128
60,344
493,193
37,584
35,899
(4,822)
$
$
79
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenues:
Rental
Sales
Total revenues
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge, net
Depreciation and amortization
Total costs and expenses
Income from operations
Interest expense, net of interest income
Income tax provision
Revenues:
Rental
Sales
Other
Total revenues
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge, net
Depreciation and amortization
Total costs and expenses
Income from operations
Interest expense, net of interest income
Income tax provision
For the Year Ended December 31, 2014
North
America
Portable Storage
United
Kingdom
Total
Specialty
Containment
Consolidated
(In thousands)
$
323,236 $
26,834
2,274
352,344
81,703 $
4,588
407
86,698
404,939 $
31,422
2,681
439,042
5,423 $
163
846
6,432
410,362
31,585
3,527
445,474
221,405
18,251
1,915
433
30,670
272,674
79,670 $
27,816 $
21,580
56,189
3,587
1,627
124
6,790
68,317
18,381 $
905 $
4,042
277,594
21,838
3,542
557
37,460
340,991
98,051 $
28,721 $
25,622
3,354
106
—
—
1,874
5,334
1,098 $
8 $
411
280,948
21,944
3,542
557
39,334
346,325
99,149
28,729
26,033
$
$
For the Year Ended December 31, 2013
North
America
Portable Storage
United
Kingdom
Total
Specialty
Containment
Consolidated
(In thousands)
$
299,676 $
29,809
1,767
331,252
66,610 $
8,242
382
75,234
366,286 $
38,051
2,149
406,486
190,337
19,128
2,141
32,157
28,614
272,377
58,875 $
28,347 $
12,258
47,230
6,285
261
6,548
6,818
67,142
8,092 $
1,119 $
17
237,567
25,413
2,402
38,705
35,432
339,519
66,967 $
29,466 $
12,275
$
$
— $
—
—
—
—
—
—
—
—
—
— $
— $
—
366,286
38,051
2,149
406,486
237,567
25,413
2,402
38,705
35,432
339,519
66,967
29,466
12,275
80
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Assets related to our reportable segments include the following:
North
America
Portable Storage
United
Kingdom
Total
Specialty
Containment
Consolidated
(In thousands)
As of December 31, 2015:
Goodwill
Intangibles, net
Rental fleet, net
Property, plant and equipment, net
Total assets, excluding intercompany assets
As of December 31, 2014:
Goodwill
Intangibles, net
Rental fleet, net
Property, plant and equipment, net
Total assets, excluding intercompany assets
$
463,616 $
2,021
672,080
96,940
1,302,170
$
459,234 $
2,119
825,158
82,514
1,441,212
61,532 $
403
151,649
17,835
2,424
823,729
114,775
252,462 1,554,632
525,148 $ 181,239 $
70,788
127,594
16,912
706,387
73,212
951,323
131,687
424,590 1,979,222
523,636 $ 181,972 $
75,615
64,402 $
651
140,679
16,488
2,770
965,837
99,002
243,188 1,684,400
705,608
78,385
121,219 1,087,056
113,175
418,774 2,103,174
14,173
The above schedule includes assets in the U.S. of $1.6 billion and $1.7 billion as of December 31, 2015 and 2014, respectively.
(17) Discontinued Operation
In December 2013, we entered into a share sale and purchase agreement with Caru Group B.V. to sell Mobile Mini Holding
B.V., comprising our Netherlands operation. In connection with this transaction, we recorded a $1.2 million after-tax loss on the sale
in 2013. The transaction closed on December 31, 2013, and we received proceeds of $0.7 million. The results of operations of our
Netherlands business are reported within discontinued operation in the consolidated financial statements. Summarized results of our
Netherlands operations for the year ended December 31, 2013 are as follows (dollars in thousands):
Revenues
Loss from operations, including loss on disposition of $1.9
million
Other expenses
Income tax benefit
Loss from discontinued operations, net of tax
$
$
$
1,895
(2,101 )
(64 )
863
(1,302 )
Summarized results of the Netherlands cash flow activities for the year ended December 31, 2013 are as follows (dollars in
thousands):
Net cash used in operating activities
Net cash provided by investing activities
$
(861 )
896
(18) Selected Consolidated Quarterly Financial Data (unaudited)
The following table sets forth certain unaudited selected consolidated financial information for each of the four quarters in the
years ended December 31, 2015 and 2014. In management’s opinion, this unaudited consolidated quarterly selected information has
been prepared on the same basis as the audited consolidated financial statements and includes all necessary adjustments, consisting
only of normal recurring adjustments, which management considers necessary for a fair presentation when read in conjunction with
the Consolidated Financial Statements and notes. We believe these comparisons of consolidated quarterly selected financial data are
not necessarily indicative of future performance.
81
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Quarterly EPS may not total to the fiscal year EPS due to the weighted average number of shares outstanding at the end of each
period reported and rounding.
2015
Rental revenue
Total revenues
Gross profit on sales
(Loss) income from operations
Net (loss) income
(Loss) earnings per share:
Basic
Diluted
2014
Rental revenue
Total revenues
Gross profit on sales
Income from operations
Net income
Earnings per share:
Basic
Diluted
First Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(In thousands, except per share data)
$
123,117 $
132,629
2,839
(36,298)
(27,326)
120,245 $ 124,813 $
133,343
130,288
2,799
2,228
30,474
23,400
13,979
9,416
126,540
134,517
2,416
20,008
9,505
(0.60)
(0.60)
0.21
0.21
0.31
0.31
0.21
0.21
First Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
(In thousands, except per share data)
$
94,080 $
102,404
2,313
18,482
7,440
98,041 $ 104,798 $
113,322
2,714
30,171
14,820
106,533
2,603
21,695
9,263
113,443
123,215
2,011
28,801
12,863
0.16
0.16
0.20
0.20
0.32
0.32
0.28
0.28
82
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(19) Condensed Consolidating Financial Information for Guarantors
The following tables reflect the condensed consolidating financial information of our subsidiary guarantors of the Senior Notes
and our non-guarantor subsidiaries. Separate financial statements of the subsidiary guarantors are not presented because the guarantee
by each 100% owned subsidiary guarantor is full and unconditional, joint and several, subject to customer exceptions, and
management has determined that such information is not material to investors.
MOBILE MINI, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 31, 2015
(In thousands)
Cash and cash equivalents
Receivables, net
Inventories
Rental fleet, net
Property, plant and equipment, net
Deposits and prepaid expenses
Deferred financing costs, net and other assets
Intangibles, net
Goodwill
Intercompany receivables
Total assets
Guarantors
Non-
Guarantors
Eliminations
Consolidated
ASSETS
$
1,033 $
62,043
14,224
790,172
112,877
6,739
10,562
72,751
640,444
143,624
$ 1,854,469 $
580 $
18,148
1,372
161,151
18,810
1,912
—
461
65,943
3,539
271,916 $
1,613
— $
80,191
—
15,596
—
951,323
—
131,687
—
8,651
—
10,562
—
73,212
—
706,387
—
(147,163)
—
(147,163) $ 1,979,222
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable
Accrued liabilities
Lines of credit
Obligations under capital leases
Senior Notes
Deferred income taxes
Intercompany payables
Total liabilities
Commitments and contingencies
Stockholders' equity:
Common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost
Total stockholders' equity
Total liabilities and stockholders' equity
$
22,849 $
51,815
665,750
37,957
200,000
199,826
—
1,178,197
6,237 $
7,209
1,958
317
—
19,775
8
35,504
— $
—
—
—
—
—
(8)
(8)
29,086
59,024
667,708
38,274
200,000
219,601
—
1,213,693
491
584,447
218,843
—
(127,509)
676,272
$ 1,854,469 $
—
147,999
132,575
(44,162 )
—
236,412
271,916 $
491
—
584,447
(147,999)
352,262
844
(44,162)
—
(127,509)
—
(147,155)
765,529
(147,163) $ 1,979,222
83
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 31, 2014
(In thousands)
Cash and cash equivalents
Receivables, net
Inventories
Rental fleet, net
Property, plant and equipment, net
Deposits and prepaid expenses
Deferred financing costs, net and other assets
Intangibles, net
Goodwill
Intercompany receivables
Total assets
Guarantors
Non-
Guarantors
Eliminations
Consolidated
ASSETS
$
$
2,977 $
62,033
15,371
934,433
95,509
7,375
8,858
77,629
635,943
145,018
1,985,146 $
762 $
18,998
1,365
152,623
17,666
1,211
—
756
69,665
33,971
297,017 $
3,739
— $
81,031
—
16,736
—
1,087,056
—
113,175
—
8,586
—
8,858
—
78,385
—
705,608
—
(178,989)
—
(178,989) $ 2,103,174
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable
Accrued liabilities
Lines of credit
Obligations under capital leases
Senior Notes
Deferred income taxes
Intercompany payables
Total liabilities
Commitments and contingencies
Stockholders' equity:
Common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost
Total stockholders' equity
Total liabilities and stockholders' equity
$
$
14,803 $
56,104
702,135
24,760
200,000
215,184
—
1,212,986
490
569,083
268,263
—
(65,676)
772,160
1,985,146 $
8,130 $
7,623
3,383
158
—
17,367
94
36,755
— $
—
—
—
—
(1,004)
(94)
(1,098)
22,933
63,727
705,518
24,918
200,000
231,547
—
1,248,643
18,388
160,347
111,397
(29,870 )
—
260,262
297,017 $
490
(18,388)
569,083
(160,347)
380,504
844
(29,870)
—
(65,676)
—
(177,891)
854,531
(178,989) $ 2,103,174
84
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
For the Year Ended December 31, 2015
(In thousands)
Guarantors
Non-
Guarantors
Eliminations
Consolidated
Revenues:
Rental
Sales
Other
Total revenues
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge and loss on divestiture, net
Depreciation and amortization
Total costs and expenses
Income from operations
Other income (expense):
Interest income
Interest expense
Deferred financing costs write-off
Foreign currency exchange
$
406,434 $
26,157
5,764
438,355
88,281 $
3,796
345
92,422
269,893
16,781
20,798
66,110
53,260
426,842
11,513
10,640
(45,016)
(931)
—
56,359
2,890
—
18
7,084
66,351
26,071
—
(1,523 )
—
(2 )
— $
—
—
—
—
—
—
—
—
—
—
(10,639)
10,639
—
—
(Loss) income from continuing operations before income tax
(benefit) provision
Income tax (benefit) provision
Net (loss) income
(23,794)
(8,191)
(15,603) $
24,546
3,369
21,177 $
$
—
—
— $
MOBILE MINI, INC.
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Year Ended December 31, 2015
(In thousands)
494,715
29,953
6,109
530,777
326,252
19,671
20,798
66,128
60,344
493,193
37,584
1
(35,900)
(931)
(2)
752
(4,822)
5,574
Net (loss) income
Other comprehensive income :
Guarantors
$
(15,603) $
Non-
Guarantors
Eliminations
21,177 $
Consolidated
5,574
— $
Foreign currency translation adjustment, net of income tax
benefit of $184
Other comprehensive loss
Comprehensive (loss) income
—
—
(15,603) $
(14,292 )
(14,292 )
6,885 $
$
—
—
— $
(14,292)
(14,292)
(8,718)
85
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
For the Year Ended December 31, 2014
(In thousands)
Guarantors
Non-
Guarantors
Eliminations
Consolidated
$
Revenues:
Rental
Sales
Other
Total revenues
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge, net
Depreciation and amortization
Total costs and expenses
Income from operations
Other income (expense):
Interest income
Interest expense
Foreign currency exchange
Income from continuing operations before income tax provision
Income tax provision
Net income
$
323,563 $
26,524
3,112
353,199
220,951
17,887
1,915
416
32,007
273,176
80,023
81
(27,229)
—
52,875
21,991
30,884 $
86,799 $
5,061
415
92,275
59,997
4,057
1,627
141
7,327
73,149
19,126
—
(1,581 )
(1 )
17,544
4,042
13,502 $
— $
—
—
—
—
—
—
—
—
—
—
(81)
81
—
—
—
— $
410,362
31,585
3,527
445,474
280,948
21,944
3,542
557
39,334
346,325
99,149
—
(28,729)
(1)
70,419
26,033
44,386
MOBILE MINI, INC.
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the Year Ended December 31, 2014
(In thousands)
Net income
Other comprehensive income :
Guarantors
$
30,884 $
Non-
Guarantors
Eliminations
13,502 $
Consolidated
44,386
— $
Foreign currency translation adjustment, net of income tax
benefit of $213
Other comprehensive loss
Comprehensive income (loss)
—
—
30,884 $
(14,430 )
(14,430 )
(928 ) $
$
—
—
— $
(14,430)
(14,430)
29,956
86
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
For the Year Ended December 31, 2013
(In thousands)
Revenues:
Rental
Sales
Other
Total revenues
Costs and expenses:
Rental, selling and general expenses
Cost of sales
Restructuring expenses
Asset impairment charge, net
Depreciation and amortization
Total costs and expenses
Income from operations
Other income (expense):
Interest income
Interest expense
Dividend income
Foreign currency exchange
Income from continuing operations before income tax provision
(benefit)
Income tax provision (benefit)
Income from continuing operations
Loss from discontinued operation, net of tax
Net income
Guarantors
Non-
Guarantors
Eliminations
Consolidated
$
$
293,878 $
29,310
1,751
324,939
185,834
18,784
2,140
32,156
28,084
266,998
57,941
250
(27,726)
274
—
30,739
12,355
18,384
(1,229)
17,155 $
72,408 $
8,741
398
81,547
51,733
6,629
262
6,549
7,348
72,521
9,026
—
(1,990 )
—
(2 )
7,034
(35 )
7,069
(73 )
6,996 $
— $
—
—
—
—
—
—
—
—
—
—
(249)
249
(274)
—
(274)
(45)
(229)
—
(229) $
366,286
38,051
2,149
406,486
237,567
25,413
2,402
38,705
35,432
339,519
66,967
1
(29,467)
—
(2)
37,499
12,275
25,224
(1,302)
23,922
MOBILE MINI, INC.
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2013
(In thousands)
Non-
Guarantors
Eliminations
Consolidated
23,922
(229) $
6,996 $
2,377
2,377
9,373 $
—
—
(229) $
2,377
2,377
26,299
Net income
Other comprehensive income :
Foreign currency translation adjustment, net of income tax
benefit of $194
Other comprehensive income
Comprehensive income
Guarantors
$
17,155 $
—
—
17,155 $
$
87
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2015
(In thousands)
Cash Flows from Operating Activities:
Net (loss) income
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Deferred financing costs write-off
Asset impairment charge and loss on divestiture, net
Non-cash restructuring expense, excluding share-based
compensation
Provision for doubtful accounts
Amortization of deferred financing costs
Amortization of long-term liabilities
Share-based compensation expense
Depreciation and amortization
Gain on sale of rental fleet
Loss on disposal of property, plant and equipment
Deferred income taxes
Tax shortfall on equity award transactions
Foreign currency transaction loss
Changes in certain assets and liabilities, net of effect of businesses
acquired:
Receivables
Inventories
Deposits and prepaid expenses
Other assets and intangibles
Accounts payable
Accrued liabilities
Intercompany
Net cash provided by operating activities
Cash Flows from Investing Activities:
Proceeds from wood mobile office divestiture, net
Cash paid for businesses acquired, net of cash acquired
Additions to rental fleet, excluding acquisitions
Proceeds from sale of rental fleet
Additions to property, plant and equipment, excluding acquisitions
Proceeds from sale of property, plant and equipment
Net cash provided by (used) in investing activities
Cash Flows from Financing Activities:
Net repayments under lines of credit
Deferred financing costs
Principal payments on capital lease obligations
Issuance of common stock
Dividend payments
Purchase of treasury stock
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Guarantors
Non-
Guarantors
Eliminations
Consolidated
(15,603)
21,177
— $
5,574
931
66,110
12,411
3,065
3,073
99
13,426
53,260
(5,934)
1,873
(8,832)
(166)
—
(3,345)
1,032
21
(23)
6,156
(3,823)
1,305
125,036
83,252
(17,325)
(52,366)
14,777
(25,231)
8,985
12,092
(36,386)
(4,683)
(4,173)
1,703
(33,700)
(61,833)
(139,072)
—
(1,944)
2,977
1,033 $
—
18
—
640
58
2
401
7,084
(468 )
315
3,203
—
2
(839 )
(87 )
(854 )
1
(1,551 )
(19 )
(1,305 )
27,778
28
(1,200 )
(22,366 )
2,088
(5,932 )
875
(26,507 )
(1,424 )
(80 )
—
—
—
(1,504 )
51
(182 )
762
580 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— $
931
66,128
12,411
3,705
3,131
101
13,827
60,344
(6,402)
2,188
(5,629)
(166)
2
(4,184)
945
(833)
(22)
4,605
(3,842)
—
152,814
83,280
(18,525)
(74,732)
16,865
(31,163)
9,860
(14,415)
(37,810)
(4,683)
(4,253)
1,703
(33,700)
(61,833)
(140,576)
51
(2,126)
3,739
1,613
$
88
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2014
(In thousands)
Cash Flows from Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
$
30,884 $
13,502 $
— $
44,386
Guarantors
Non-
Guarantors
Eliminations
Consolidated
activities:
Asset impairment charge, net
Provision for doubtful accounts
Amortization of deferred financing costs
Amortization of long-term liabilities
Share-based compensation expense
Depreciation and amortization
(Gain) loss on sale of rental fleet
Loss on disposal of property, plant and equipment
Deferred income taxes
Tax shortfall on equity award transactions
Foreign currency transaction loss
Changes in certain assets and liabilities, net of effect of
businesses acquired:
Receivables
Inventories
Deposits and prepaid expenses
Investment in subsidiaries
Other assets and intangibles
Accounts payable
Accrued liabilities
Intercompany
Net cash provided by operating activities
Cash Flows from Investing Activities:
Cash paid for businesses acquired, net of cash acquired
Additions to rental fleet, excluding acquisitions
Proceeds from sale of rental fleet
Additions to property, plant and equipment, excluding acquisitions
Proceeds from sale of property, plant and equipment
Net cash used in investing activities
Cash Flows from Financing Activities:
Net borrowings (repayments) under lines of credit
Deferred financing costs
Principal payments on capital lease obligations
Issuance of common stock
Dividend payments
Purchase of treasury stock
Repayment of investment
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
$
89
416
2,166
2,769
86
14,369
32,007
(6,436)
28
21,398
(15)
—
(4,122)
2,258
(1,533)
4,823
66
(926)
850
1,711
100,799
(430,946)
(16,525)
19,214
(11,793)
3,688
(436,362)
395,127
(719)
(1,929)
3,642
(31,384)
(26,007)
—
338,730
—
3,167
(190)
2,977 $
141
611
60
2
702
7,327
704
320
4,026
—
1
(3,074 )
422
117
—
(49 )
203
1,345
(1,711 )
24,649
—
(10,754 )
3,839
(3,986 )
511
(10,390 )
(8,923 )
—
(27 )
—
—
—
(4,823 )
(13,773 )
(1,170 )
(684 )
1,446
762 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,823)
—
—
—
—
(4,823)
—
—
—
—
—
—
—
—
—
—
—
—
4,823
4,823
—
—
—
— $
557
2,777
2,829
88
15,071
39,334
(5,732)
348
25,424
(15)
1
(7,196)
2,680
(1,416)
—
17
(723)
2,195
—
120,625
(430,946)
(27,279)
23,053
(15,779)
4,199
(446,752)
386,204
(719)
(1,956)
3,642
(31,384)
(26,007)
—
329,780
(1,170)
2,483
1,256
3,739
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MOBILE MINI, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2013
(In thousands)
Cash Flows from Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Asset impairment charge, net
Provision for doubtful accounts
Amortization of deferred financing costs
Amortization of long-term liabilities
Share-based compensation expense
Depreciation and amortization
Loss (gain) on disposal of discontinued operation
Gain on sale of rental fleet
Loss on disposal of property, plant and equipment
Deferred income taxes
Tax shortfall on equity award transactions
Foreign currency transaction loss
Changes in certain assets and liabilities, net of effect of
businesses acquired:
Receivables
Inventories
Deposits and prepaid expenses
Other assets and intangibles
Accounts payable
Accrued liabilities
Intercompany
Net cash provided by operating activities
Cash Flows from Investing Activities:
Proceeds from sale of discontinued operation
Additions to rental fleet, excluding acquisitions
Proceeds from sale of rental fleet
Additions to property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash provided by (used in) investing activities
Cash Flows from Financing Activities:
Net repayments under lines of credit
Principal payments on notes payable
Principal payments on capital lease obligations
Issuance of common stock
Purchase of treasury stock
Intercompany
Net cash used in financing activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Guarantors
Non-
Guarantors
Eliminations
Consolidated
$
17,155 $
6,996 $
(229) $
23,922
31,310
1,566
2,749
162
13,991
28,084
2,042
(8,035)
237
11,918
(837)
—
(2,306)
(358)
572
(364)
(212)
(2,321)
(21,506)
73,847
—
(15,623)
27,437
(12,887)
1,900
827
(88,604)
(310)
(408)
13,818
(369)
—
(75,873)
—
(1,199)
1,009
(190) $
6,907
915
62
7
723
7,542
(94 )
(1,647 )
10
(440 )
—
1
(3,603 )
(35 )
81
374
549
1,157
22,440
41,945
677
(13,203 )
8,514
(2,905 )
70
(6,847 )
(34,472 )
—
—
—
—
(279 )
(34,751 )
171
518
928
1,446 $
—
—
—
—
—
—
—
—
—
(466)
—
—
1,948
—
—
—
—
—
(934)
319
—
—
—
—
—
—
—
—
—
—
—
279
279
(598)
—
—
— $
38,217
2,481
2,811
169
14,714
35,626
1,948
(9,682)
247
11,012
(837)
1
(3,961)
(393)
653
10
337
(1,164)
—
116,111
677
(28,826)
35,951
(15,792)
1,970
(6,020)
(123,076)
(310)
(408)
13,818
(369)
—
(110,345)
(427)
(681)
1,937
1,256
$
90
MOBILE MINI, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(20) Subsequent Events
In 2016, through February 2nd, we purchased $2.0 million of our outstanding stock under the current stock purchase program
authorized by the Board. Additionally, On January 20, 2016, the Board authorized and declared a cash dividend to all our common
stockholders of $0.206 per share of common stock, payable on March 23, 2016 to stockholders of record as of the close of business
March 9, 2016. Each future quarterly dividend payment is subject to review and approval by the Board.
91
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Controls and Procedures
As of the end of the period covered by this Annual Report on Form 10-K, we carried out an evaluation, under the supervision
and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded
that, as of the end of the period covered by this Annual Report on Form 10-K, the Company’s disclosure controls and procedures,
were effective such that the information relating to the Company required to be disclosed in our SEC reports (i) is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to
the Company’s management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.
Report of Management on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the
Company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our
financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America.
Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our
transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements;
providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management
authorization; and providing reasonable assurance that unauthorized acquisition, use, or disposition of Company assets that could have
a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations,
internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements
would be prevented or detected.
Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on
the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting
was effective as of December 31, 2015.
Our internal control over financial reporting as of December 31, 2015 has been audited by KPMG LLP, an independent
registered public accounting firm, as stated in their report which is included herein.
Changes in Internal Control Over Financial Reporting
Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal
Financial Officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on
that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that there has not been any change in our
internal control over financial reporting during that quarter that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
None.
92
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information required to be disclosed by this item is incorporated herein by reference to our definitive proxy statement for
the 2016 Annual Meeting of Stockholders (the “2016 Proxy Statement”), which we expect to file with the SEC within 120 days after
the end of our fiscal year ended December 31, 2015.
ITEM 11. EXECUTIVE COMPENSATION.
The information required to be disclosed by this item is incorporated herein by reference to the 2016 Proxy Statement, which we
expect to file with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
Equity Compensation Plan Information
A description of our equity compensation plans approved by our shareholders is included in Note 11 to the accompanying
consolidated financial statements.
Common Shares
to be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a)
(In thousands)
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
(b)
Common Shares
Remaining
Available for Future
Issuance Under Equity
Compensation Plans
(Excluding Shares
Reflected in
Column (a)
(c)
(In thousands)
870 $
37.88
2,000
2,870 $
31.45
33.40
2,550
—
2,550
Plan Category
Equity compensation plans approved by Mobile
Mini Stockholders (1)
Equity compensation plans not approved by
Mobile Mini Stockholders (2)
Totals
(1) Of these shares, options to purchase approximately 4,000 shares were outstanding under our Amended and Restated 1999 Stock
Option Plan and options to purchase 0.9 million shares were outstanding under our Amended and Restated Equity Incentive
Plan.
(2) Reflects shares subject to an outstanding stock option agreement awarded as a non-plan based inducement grant in connection
with the hiring of Mr. Olsson as the Company’s President and CEO. This grant was made pursuant to NASDAQ rule
5635(c)(4).
On December 31, 2015, the closing price of Mobile Mini’s common stock as reported by The NASDAQ Stock Market
was $31.13.
All other information required to be disclosed by this item is incorporated herein by reference to the 2016 Proxy Statement,
which we expect to file with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required to be disclosed by this item is incorporated herein by reference to the 2016 Proxy Statement, which we
expect to file with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required to be disclosed by this item is incorporated herein by reference to the 2016 Proxy Statement, which we
expect to file with the SEC within 120 days after the end of our fiscal year ended December 31, 2015.
93
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Financial Statements:
PART IV
(1) The financial statements required to be included in this Annual Report on Form 10-K are included in Item 8 of this
Annual Report on Form 10-K.
(2) All schedules have been omitted because they are not applicable or because the information is included elsewhere in
this Annual Report on Form 10-K.
Description
Agreement and Plan of Merger, dated as of February 22, 2008, among Mobile Mini, Inc., Cactus Merger Sub, Inc., MSG
WC Holdings Corp., and Welsh, Carson, Anderson & Stowe X, L.P. (Incorporated by reference to Exhibit 2.1 to the
Registrant’s Current Report on Form 8-K filed with the SEC on February 28, 2008).
Stock Purchase Agreement dated as of November 13, 2014 by and among Mobile Mini, Inc., each Seller listed on Annex
A thereto, Gulf Tanks Holdings, Inc. and Odyssey Investment Partners, LLC. (Incorporated by reference to Exhibit 2.1
to the Registrant’s Current Report on Form 8-K filed with the SEC on December 11, 2014).
Amended and Restated Certificate of Incorporation of Mobile Mini, Inc. (Incorporated by reference to Exhibit 3.1 to the
Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997 filed with the SEC on March 27,
1998).
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Mobile Mini, Inc., dated July
20, 2000. (Incorporated by reference to Exhibit 3.1A to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000 filed with the SEC on August 14, 2000).
Form of Certificate of Designation, Preferences and Rights of Series C Junior Participating Preferred Stock of Mobile
Mini, Inc. (Incorporated by reference to Exhibit A to Exhibit 1 to the Registrant’s Registration Statement on Form 8-A
filed with the SEC on December 13, 1999).
Certificate of Amendment of the Amended and Restated Certificate of Incorporation of Mobile Mini, Inc., dated June 26,
2008. (Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on
July 1, 2008).
Certificate of Designation of Mobile Mini, Inc. Series A Convertible Redeemable Participating Preferred Stock, dated
June 26, 2008. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the
SEC on July 1, 2008).
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Mobile Mini, Inc., dated
September 14, 2015 (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with
the SEC on September 15, 2015).
Third Amended and Restated Bylaws of Mobile Mini, Inc., effective as of September 14, 2015. (Incorporated by
reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 15, 2015).
Form of Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 of the Registrant’s Annual Report to
Form 10-K for the fiscal year ended December 31, 2003 filed with the SEC on March 15, 2004).
Rights Agreement, dated as of December 9, 1999, between Mobile Mini, Inc. and Norwest Bank Minnesota, NA, as
rights agent. (Incorporated by reference to Exhibit 1 to the Registrant’s Registration Statement on Form 8-A filed with
the SEC on December 13, 1999).
Indenture, dated as of November 23, 2010, among Mobile Mini, Inc., the Guarantor parties thereto, Law Debenture
Trust Company of New York, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and
transfer agent. (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the
SEC on November 29, 2010).
Exhibit
Number
2.1
2.2+
3.1
3.2
3.3
3.4
3.5
3.6
3.7
4.1
4.2
4.3
10.1†
Mobile Mini, Inc. Amended and Restated 1999 Stock Option Plan, as amended through March 25, 2003. (Incorporated
by reference to Appendix B to the Registrant’s Definitive Proxy Statement for its 2003 Annual Meeting of Stockholders,
filed with the SEC on April 11, 2003).
94
Exhibit
Number
Description
10.2†
Form of Stock Option Grant Agreement. (Incorporated by reference to Exhibit 10.2.1 to the Registrant’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2004 filed with the SEC on March 16, 2005).
10.3†
10.4†
10.5†
10.6†
10.7†
10.8†
10.9†
10.10†
10.11†
10.12
10.13++
10.14†
Mobile Mini, Inc. Amended and Restated Equity Incentive Plan, effective March 20, 2015. (Incorporated by reference to
Appendix B of the Registrant’s Definitive Proxy Statement for its 2015 Annual Meeting of Stockholders filed with the
SEC on March 30, 2015).
Employment Agreement dated as of October 15, 2008 by and between Mobile Mini, Inc. and Mark E. Funk.
(Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on
October 17, 2008).
2009 Amendment to Amended and Restated Employment Agreement effective as of January 1, 2009 by and between
Mobile Mini, Inc. and Mark E. Funk. (Incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2009 filed with the SEC on March 1, 2010).
2012 Amendment to Employment Agreement effective December 21, 2012 by and between Mobile Mini, Inc. and Mark
E. Funk. (Incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2012 filed with the SEC on March 1, 2013).
Amendment No. 3 to Employment Agreement, dated April 20, 2015, by and between Mobile Mini, Inc. and Mark Funk.
(Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on
April 21, 2015).
Employment Agreement dated as of December 22, 2009, by and between Mobile Mini, Inc. and Christopher J. Miner.
(Incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on
December 24, 2009).
Amendment No. 1 to Employment Agreement, effective December 21, 2012, by and between Mobile Mini, Inc. and
Christopher J. Miner (Incorporated by reference to Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2012 filed with the SEC on March 1, 2013).
Amendment No. 2 to Employment Agreement, dated April 20, 2015 by and between Mobile Mini, Inc. and Chris Miner.
(Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on
April 21, 2015).
Form of Indemnification Agreement between Mobile Mini, Inc. and its Directors and Executive Officers (Incorporated
by reference to Exhibit 10.20 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004
filed with the SEC on August 9, 2004).
ABL Credit Agreement, dated February 22, 2012, among Mobile Mini, Deutsche Bank AG New York Branch and other
lenders party thereto. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed
with the SEC on February 28, 2012).
Schedules to the ABL Credit Agreement, dated February 22, 2012, among Mobile Mini, Deutsche Bank AG New York
Branch and other Lenders party thereto. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report
on Form 10-Q for the quarter ended March 31, 2012 filed with the SEC on May 10, 2012).
Amended and Restated Executive Employment Agreement, effective as of January 14, 2016, by and between Mobile
Mini, Inc. and Erik Olsson. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K
filed with the SEC on January 14, 2016).
10.15†
Form of Stock Option Agreement between Mobile Mini, Inc. and Erik Olsson. (Incorporated by reference to Exhibit 99.2
to the Registrant’s Registration Statement on Form S-8 filed with the SEC on May 10, 2013).
10.16†
10.17†
Employment Agreement dated September 3, 2013, by and between Mobile Mini, Inc. and Ruth Hunter. (Incorporated by
reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, filed
with the SEC on April 30, 2014).
Second Amended and Restated Employment Agreement between Mobile Mini, Inc. and Kelly Williams, dated June 4,
2014. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on
June 10, 2014).
95
Exhibit
Number
10.18†
10.19
Description
Amendment No. 1 to Second Amended and Restated Employment Agreement, dated April 20, 2015 by and between
Mobile Mini, Inc. and Kelly Williams. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on
Form 8-K filed with the SEC on April 21, 2015)
Incremental Credit Agreement dated as of December 10, 2014, to the ABL Credit Agreement, dated as of February 22,
2012, among Mobile Mini, Inc., the other borrowers and guarantors party thereto, the lenders from time to time party
thereto and Deutsche Bank AG New York Branch, as administrative agent. (Incorporated by reference to Exhibit 10.1 to
the Registrant’s Current Report on Form 8-K filed with the SEC on December 11, 2014).
10.20*†
Employment Agreement dated August 16, 2013 by and between Mobile Mini, Inc. and Lynn Courville.
10.21*†
Amendment No. 1 to Employment Agreement, dated April 20, 2015 by and between Mobile Mini, Inc. and Lynn
Courville.
10.22*
Amended and Restated ABL Credit Agreement, dated December 14, 2015, among Mobile Mini, Inc., Deutsche Bank AG
New York Branch, and the other lenders party thereto.
10.23*++
Schedules to the Amended and Restated ABL Credit Agreement, dated December 14, 2015, between Mobile Mini, Inc.,
Deutsche Bank AG New York Branch and the other lenders party thereto.
10.24
21*
23.1*
23.2*
24*
31.1*
31.2*
Asset Purchase Agreement, dated as of April 16, 2015, between New Acton Mobile Industries LLC and Mobile Mini,
Inc. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2015 filed with the SEC on July 23, 2015).
Subsidiaries of Mobile Mini, Inc.
Consent of Independent Registered Public Accounting Firm.
Consent of Independent Valuation Firm.
Power of Attorney (included on signature page)
Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K.
Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K.
32.1**
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Item 601(b)(32) of Regulation S-K.
101.INS*
XBRL Instance Document.
101.SCH* XBRL Taxonomy Extension Schema Document.
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.
*
**
+
Filed herewith.
Furnished herewith.
The schedules and exhibits in this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Mobile Mini agrees
to furnish supplementally a copy of such schedules and exhibits, or any section thereof, to the SEC upon request
++ Certain confidential information contained in this exhibit was omitted by means of redacting a portion of the text and replacing
it with an asterisk. This exhibit has been filed separately with the Secretary of the SEC without the redaction pursuant to
Confidential Treatment Request under Rule 406 of the Securities Act.
† Management contract or compensatory arrangement
96
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 5, 2016
MOBILE MINI, INC.
By:
/s/ Erik Olsson
Erik Olsson
President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Mark Funk
his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with all exhibits thereto, and other
documents in connection therewith with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the
premises, and fully and to all intents and purposes as he might or could do in person hereby ratifying and confirming all that said attorney-
in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: February 5, 2016
Date: February 5, 2016
Date: February 5, 2016
Date: February 5, 2016
Date: February 5, 2016
Date: February 5, 2016
Date: February 5, 2016
Date: February 5, 2016
Date: February 5, 2016
Date: February 5, 2016
Date: February 5, 2016
/s/ Erik Olsson
Erik Olsson
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Mark E. Funk
Mark E. Funk
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Audra L. Taylor
Audra L. Taylor
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
/s/ Michael L. Watts
Michael L. Watts
Chairman of the Board and Director
/s/ Sara R. Dial
Sara R. Dial, Director
/s/ Jeffrey S. Goble
Jeffrey S. Goble, Director
/s/ James J. Martell
James J. Martell, Director
/s/ Stephen A McConnell
Stephen A McConnell, Director
/s/ Frederick G. McNamee, III
Frederick G. McNamee, III, Director
/s/ Kimberly J. McWaters
Kimberly J. McWaters, Director
/s/ Lawrence Trachtenberg
Lawrence Trachtenberg, Director
By:
By:
By:
By:
By:
By:
By:
By:
By:
By:
By:
97
INDEX TO EXHIBITS FILED HEREWITH
Description
Employment Agreement, dated August 16, 2013 by and between Mobile Mini, Inc. and Lynn Courville.
Amendment No. 1 to Employment Agreement, dated April 20, 2015 by and between Mobile Mini, Inc. and Lynn
Courville.
Amended and Restated ABL Credit Agreement, dated December 14, 2015, among Mobile Mini, Inc., Deutsche Bank AG
New York Branch, and the other lenders party thereto
Schedules to the Amended and Restated ABL Credit Agreement, dated December 14, 2015, between Mobile Mini, Inc.,
Deutsche Bank AG New York Branch and the other lenders party thereto.
Subsidiaries of Mobile Mini, Inc.
Consent of Independent Registered Public Accounting Firm.
Consent of Independent Valuation Firm.
Power of Attorney (included on signature page)
Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-K.
Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-K.
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Item 601(b)(32) of Regulation S-K.
Exhibit
Number
10.20
10.21
10.22
10.23
21
23.1
23.2
24
31.1
31.2
32.1
101.INC
XBRL Instance Document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
98
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[THIS PAGE INTENTIONALLY LEFT BLANK]
Corporate Information
Directors and Officers
Board of Directors
Erik Olsson
President & Chief Executive Officer
Michael L. Watts
Chairman – Mobile Mini
Executive Chairman – Sunstate Equipment Co., LLC
A construction equipment rental company
Sara R. Dial
President & CEO Sara Dial & Associates
An economic development and government relations
and consulting firm
Jeffrey S. Goble
President & CEO - Providien, LLC
A supplier of contract manufacturing services to the medical device and
biotech industries
James J. Martell
Chairman – XPO
A transportation services organization
Stephen A McConnell
President – Solano Ventures
A private capital investment company
Frederick G. McNamee, III
Principal – Quadrus Consulting
A strategy and technology operations consulting company
Kimberly J. McWaters
Chairman & CEO of Universal Technical Institute
Provider of post-secondary education
Lawrence Trachtenberg
Private Investor
Shareholder Information
Investor Relations
Independent Counsel
The Equity Group, Inc.
800 Third Avenue, 36th Floor
New York, New York 10022-7604
Telephone: 212-371-8660
Fax: 212-421-1278
Transfer Agent and Registrar
Wells Fargo Bank Minnesota, N.A.
Shareowner Services
1110 Centre Pointe Curve
Suite 101
Mendota Heights MN 55120
Independent Registered
Public Accounting Firm
KPMG LLP
60 East Rio Salado Parkway
Suite 800
Tempe, Arizona 85281-9125
DLA Piper LLP (US)
2525 East Camelback Road
Suite 1000
Phoenix, Arizona 85016-4232
Corporate Office
4646 E. Van Buren Street
Suite 400
Phoenix, Arizona 85008
Telephone: 480-894-6311
Fax: 480-894-6433
Recent press releases, quarterly
reports and additional
information about Mobile Mini,
Inc. can be obtained by visiting
www.mobilemini.com
Senior Management
Mark E. Funk
Executive Vice President & Chief Financial Officer
Kelly M. Williams
Executive Vice President & Chief Operating Officer
Lynn M. Courville
Senior Vice President, Human Resources
Christopher J. Miner
Senior Vice President, General Counsel & Secretary
Ryanne M. Tezanos
Senior Vice President, Customer & Operational Excellence
Chris W. Anderson
Senior Vice President, Sales
Ronald Halchishak
Senior Vice President, East Division
Patrick W. Lowry
Senior Vice President, Western Division
Christopher D. Morgan
Senior Vice President & Managing Director, UK
Justin G. Romero
Senior Vice President, Central Division
Timothy M. Satcher
Senior Vice President, Industrial Sales
High-Quality Tank
Solutions
Through our wholly-owned subsidiary, Evergreen
Tank Solutions, Mobile Mini offers multiple steel-tank
solutions like mix tanks and gas busters. Our fleet is
maintained to a high standard, with quality checks
performed with every delivery. Steel tanks are
utilized by refineries and chemical processing plants,
as well as in oil and gas exploration and drilling.
To be the leader in secure, portable storage and specialty containment solutions to customers everywhere.
OUR MISSION
OUR VISION
(cid:81) To be the company of
choice for employees,
customers, and
shareholders
(cid:81) Recognizing and
rewarding talented
employees at all levels
of the company
(cid:81) Exceeding customer
expectations with
high-quality products
and service
(cid:81) Creating shareholder
value through
profitable growth and
returns
OUR VALUES
(cid:81) Safety First
(cid:81) Integrity and Transparency in
Everything We Do
(cid:81) People Make It Happen
(cid:81) Commitment to Customers
(cid:81) Results Driven
(cid:81) Continuous Improvement
(cid:81) Community Involvement
Mobile Mini, Inc.
Corporate Headquarters
4646 E. Van Buren Street, Suite 400
Phoenix, Arizona 85008
Phone: 480-894-6311
www.mobilemini.com
SFI-01042