With 2015 rental revenues of €453 million, Mobile Mini is one of the world’s leading providers of portable storage rental, boasting 159 rental depots in North America and the UK.
The company also offers specialty containment rental through its wholly-owned Evergreen Tank Solutions (ETS) subsidiary in the US, which includes a specialised water pump business under the Water Movers brand, as well as temporary accommodation hire in the UK.
Mobile Mini focuses on renting rather than selling units, with rental revenues representing approximately 93% of total revenues. President and CEO Erik Olsson said the company believed this strategy provided it 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,” he said.
“Our network includes 130 portable storage locations, 18 specialty containment locations and 11 combined locations. We service the majority of the major markets in the US; have four locations in Canada, and 16 locations in the UK.
“Our network of specialty containment locations is currently concentrated in the Gulf Coast region of the US, although we are in the process of expanding our specialty containment footprint.”
Mr Olsson explained that the company only rented temporary accommodation in the UK. “We are not in the accommodation business in North America, except for our ground level offices where we are doing very well and are not seeing any increased competition. The UK market is more competitive but also there are we doing very well and in fact spending capex dollars to meet an increasing demand,” he said.
He said Mobile Mini’s rental revenue breakout included 62% related to its North American portable storage segment, 17% related to the UK, which he explained was fairly evenly split between portable storage and temporary accommodation, and 21% related to specialty containment.
Wood office sale
Last year, the company sold it North American wood mobile office fleet of approximately 9400 units to Acton Mobile Industries for US$92 million (€83 million). Mr Olsson said this decision was part of the company’s strategy to invest in high return, low maintenance, and long-lived assets.
“Wood mobile offices require more maintenance and upkeep than steel storage containers, steel ground level offices, temporary accommodation and specialty containment units, resulting in lower margins as compared the rest of our fleet,” he said.
However, while it sold this business, it has acquired many more. While the ETS deal was one of the largest in Mobile Mini’s recent history - costing a tidy US$450 million (€405 million) to purchase in 2014 – it is far from the only deal the company has struck in recent years, with a string of so-called bolt-on acquisitions also in the bag.
“In 2014 and 2015 we executed an aggregate of ten portable storage acquisitions, and during the three months ended March 31, 2016, we completed one acquisition of a portable storage business,” Mr Olsson said, adding, “There is a lot of room for further consolidation both in North America as well as in the UK.”
He said that, generally, acquired companies were assimilated into the company’s overall structure and do not continue to operate with autonomy.
“Integration includes communicating with the existing customers to ensure consistent customer service, bringing new locations onto our enterprise resource platforms, and training any transitioning staff on our processes. It is unusual to retain any management, except in the case of larger acquisitions, such as ETS,” he explained.
Looking ahead, Mr Olsson said the ETS business represented a significant long-term growth opportunity. But leveraging the strengths of Mobile Mini and ETS, he said the company had already provided products to specialty containment customers in areas such as Dallas and Philadelphia that were previously not within ETS’ footprint.
As of March 31, 2016, Mobile Mini’s portable storage fleet consisted of approximately 206100 units and had a net book value of around US$827 million (€745 million), while the specialty containment business had a fleet of around 11900 units and a value of US$130 million (€117 million).
This year, the company expects to invest between US$80 million (€72 million) to US$85 million (€77 million) in its fleet – a range that’s not set in stone.
Mr Olsson said he was very pleased with the way 2016 was going so far in terms of the company’s strategy and finances.
“The strong delivery trends we started in the second quarter of 2015 continued through the first quarter of this year. Our end markets and demand has remained solid and we are looking forward to growth throughout 2016,” he said.
“Overall our customer base consists of approximately 42% construction, 23% industrial and 22% retail/consumer services. The remaining 13% includes government, and oil and gas, among others. We are well diversified, both geographically and by customer-type.”
Mr Olsson said the portable storage business served around 83000 customers in 2015, with the 20 largest customers accounting for approximately 10.5% of portable storage rental revenues.
“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.”
Meanwhile, on the specialty containment side of the business, most of the company’s customers are concentrated in the Gulf Coast region of the US. “They are generally large companies, including blue-chip companies, with whom we have long-term relationships. As a result, revenues in this segment are more concentrated,” Mr Olsson said.
As a combined company, approximately 58% of Mobile Mini’s revenues are driven by non-construction customers. The remaining 42% of rental revenues are driven by a geographically well-diversified group of construction customers throughout the US and the UK, he explained.
Mr Olsson said a key challenge to running the business lay in ensuring that 159 branches and more than 2000 employees all do the same thing the same way and provide customers with the experience they expect.
“In our portable storage segment, we compete primarily in terms of security, convenience, product quality, broad product selection and availability and customer service. 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 and customer service,” he said.
“We are a premium provider in both of our business areas. However, the challenge is that for most of our customers, the expenditure on our products is a fraction of their overall spends, but if our service does not meet customer expectations, costly delays and or inefficiencies can result. So we have to be able to deliver the same high quality product and service day in and day out throughout our entire network of branches.”
He said Mobile Mini was for the most part succeeding in doing this. “While our exceptional service is evidenced by our world-class Net Promoter Scores, 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,” he added.
“This year, we challenged employees to seek ways to improve our customers’ experience and achieve efficiencies. In short, we want to make Mobile Mini easy to do business with.”
This is a feature from the July/August 2016 issue of IRN. To read the full article, with extra images and information, subscribe to the magazine: http://www.khl.com/subscriptions/magazines/international-rental-news/