Mobile Mini Makes More From Less and Boosts Its Dividend
Storage specialist Mobile Mini (NASDAQ: MINI) helped revolutionize the storage industry, going the extra mile to give customers the flexibility they need in where and how they choose to store their goods and possessions. The corporate sector in particular has immense needs for good storage options, but weak conditions in some key industries have held Mobile Mini back recently. Coming into Thursday's fourth-quarter financial report, Mobile Mini investors were prepared to see both sales and profit slide from year-ago levels, but the company was able to deliver a positive surprise on its bottom line that showed the efforts it has made to stay as profitable as possible. Let's look more closely at Mobile Mini and what its latest results say about its future.
Image source: Mobile Mini.
Mobile Mini boosts profit despite falling sales
Mobile Mini's fourth-quarter results revealed the success of the work the company has done to boost efficiency and maximize its potential. Total revenue dropped 2% to $131.5 million, which was about the double the decline that most investors were expecting to see. But adjusted net income climbed substantially, rising nearly 15% to $21.2 million. The resulting adjusted earnings of $0.48 per share came in $0.11 per share higher than the consensus forecast among those following the stock.
Looking more closely at Mobile Mini's various areas of focus, revenue declines came from both its rental and unit sales operations. Rental revenue matched the overall 2% drop on the top line, but proceeds from sales of storage units dropped more than 7% from year-ago levels.
Operationally, Mobile Mini had some encouraging results. The company saw portable storage core activations rise more than 2% in North America, and that led to a record-high number of units rented as of the end of 2016. Season unit rentals also hit new highs, and ongoing price increases for its rental units overall helped to bolster profitability. Portage storage rental revenue rose 3% after adjusting for adverse currency impacts, as once again, the strong dollar weighed on some of its international results.
However, the specialty containment division continued to weigh on the overall company. Mobile Mini said that revenue fell more than 10% for the specialty containment unit, and that resulted in an operating loss for the segment. The disparity showed up in its utilization figures as well, as Mobile Mini said that portage storage utilization climbed above 75% for the quarter, but specialty containment remained only slightly above 60% utilization.
CEO Erik Olsson discussed the gains in various areas of Mobile Mini's business but also was upfront about its setbacks. "We continued to drive portable storage pricing," Olsson said, but "challenges resulting largely from weak commodity prices continued to negatively affect our remaining specialty containment lines."
What's ahead for Mobile Mini?
Mobile Mini believes that the coming year should be a strong one for the company. In Olsson's words, "We are well situated to benefit in 2017 from organic growth in the downstream business at existing branches," and the CEO pointed to internal salesforce development and a better infrastructure as it "enters 2017 in a position of strength."
Even more impressive was the extent to which Mobile Mini was willing to commit to its positive views on 2017 by boosting its quarterly dividend. Beginning in March, Mobile Mini will pay investors $0.227 per share every three months, which is up 10% from its most recent payout. The move is the third straight double-digit percentage annual increase for the company, and it works out to a yield of nearly 2.75% for Mobile Mini going forward.
Mobile Mini shareholders were quite pleased with the news, sending the stock up almost 7% immediately after the market opened following the announcement. Yet what's more important in the long run is whether Mobile Mini can chart a course that takes maximum advantage of its most profitable opportunities while avoiding some of the more volatile and difficult areas of its business.
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