Mobile Mini (NASDAQ: MINI) has gone through tough times in recent years. After making a strategic decision to add tank and pump products to its existing storage solutions business, the energy industry suffered a big downturn, calling into question the wisdom of adding a unit at what seemed like the worst possible time. Yet Mobile Mini had confidence that over the long run, building expertise in this area of the energy sector could be lucrative and provide useful diversification for its overall business.
Coming into Monday's first-quarter financial report, Mobile Mini investors wanted to see a nice gain in sales and earnings, tapping into the recent rise in oil prices. Mobile Mini's results did indeed reflect the greater optimism in the energy arena, and solid performance in the core storage solutions business also helped lift spirits among shareholders who'd been disappointed with earlier efforts.
Image source: Mobile Mini.
How Mobile Mini got its groove back
Mobile Mini's first-quarter results built strong momentum heading into 2019. Revenue came in at $149.7 million, up more than 6% from the year-earlier period and outpacing the 5% growth that most of those following the stock were looking for from the company. Adjusted net income rose at a healthier 22% pace to $18.2 million, and that produced adjusted earnings of $0.41 per share. That topped the consensus forecast among investors for $0.38 per share on the bottom line.
Tank and pump solutions provided a useful boost for Mobile Mini's overall success. Rental revenue for the unit was higher by 15% compared to year-earlier levels, which outpaced the 5% growth rate for the storage solutions division. The edge was even more evident when you look at operating income, as tank and pump solutions saw that figure more than double from a year ago. Even so, the 14% rise for storage solutions' operating income was instrumental in lifting Mobile Mini's overall bottom line higher.
Other fundamental business metrics were much improved. Average utilization rates for storage solutions climbed by 8.5 percentage points to 77.1%, while tank and pump solutions put in a more measured half-percentage point rise to 74.1%. Three new tank and pump locations were another sign of the strengthening of that part of the business, and Mobile Mini boasted 500 additional rental fleet units for the tank and pump business, bringing the total to 12,800 and partially offsetting a big drop in storage solutions rental fleet units.
CEO Erik Olsson noted the health of the North American business and was even pleased with how Mobile Mini's U.K. operations. "In the United Kingdom, where Brexit continues to cause uncertainty in the general economy," Olsson said, "we managed to increase rates and grow trucking and ancillary revenues to offset a small decrease in units on rent, resulting in increased rental revenues in local currency." The CEO also pointed to huge margin improvement and rate increases in its North American operations.