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Mobile Mini Reports Q3’14 Results

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Mobile Mini, Inc. (NASDAQ GS:MINI), the world’s leading supplier of portable storage solutions, today reported actual and adjusted financial results for the quarter ended September 30, 2014. Total revenues were $113.3 million and leasing revenues were $104.8 million, up from $105.0 million and $95.6 million, respectively, for the same period last year. The Company’s third quarter net income was $14.8 million, or $0.32 per diluted share, compared to net income of $14.3 million, or $0.31 per diluted share, respectively, for the third quarter of 2013. On an adjusted basis, third quarter net income was $15.2 million, or $0.33 per diluted share, compared to $13.1 million, or $0.28 per diluted share, respectively, for the third quarter of 2013.

Adjusted EBITDA was $44.4 million and adjusted EBITDA margin was 39.2% for the third quarter of 2014.

Third Quarter 2014 Highlights

  • Grew leasing revenues 9.7% year-over-year.
  • Drove third quarter sequential rental rates 1.5% higher than second quarter 2014 levels.
  • Increased rental rates by 8.0% year-over-year, with new units delivered at an 11.5% higher rate than the previous year.
  • Improved yield over the previous year by 11.5% to an all-time high of $719 per unit.
  • Achieved an adjusted EBITDA margin of 39.2%, while continuing to invest in repairs and maintenance associated with increased deliveries and repositioning assets to high utilization markets, resulting in incremental expense of approximately $3 million, or 3% of revenues above more normalized levels.
  • Adjusted diluted earnings per share was $0.33, up from $0.28 in the third quarter of 2013.
  • Average fleet utilization was 67.9%, however, stronger year-over-year rental activations in September increased utilization to 71.0% at September 30, 2014.
  • Delivered free cash flow of $31.1 million, the 27th consecutive quarter of positive free cash flow.
  • Repurchased $25.0 million of shares during the quarter.
  • Acquired three portable storage businesses in the quarter.

Erik Olsson, Mobile Mini’s President and Chief Executive Officer, commented, “We continued to generate strong results in the third quarter with leasing revenues growing approximately 10% year-over-year. The sales reorganization that was implemented during the second quarter is largely behind us as evidenced by strong and growing activations and improved productivity as we moved through the third quarter. Our underlying adjusted EBITDA margin is already running in the 41-42% range excluding the incremental costs associated with the repair and repositioning of available units to high demand areas. We expect these costs to decline in 2015, and contribute to margin expansion next year.

Mr. Olsson added, “Earlier this year we said that 2014 was a year of change. I’m very pleased to say that our strategic plan is delivering the desired results and has us, in the short term, well along the path to achieving our stated 2014 goals of a year-over-year top-line growth rate and profitability exceeding that of 2013, resulting in higher free cash flow for the year. Longer term, we expect the enhancements we have made over the past year to our fleet and our sales organization to translate into continued strong growth and margin expansion.”

Dividend

The Company’s regular quarterly cash dividend of $0.17 per share will be paid on December 3, 2014 to shareholders of record on November 12, 2014.

EBITDA, adjusted EBITDA, EBITDA margin, adjusted EBITDA margin, adjusted net income, adjusted diluted EPS, and free cash flow are non-GAAP financial measures as defined by Securities and Exchange Commission (“SEC”) rules. Reconciliations of these measurements to the most directly comparable GAAP financial measures can be found later in this release.

Conference Call

Mobile Mini will host a conference call today, Thursday, October 23, 2014, at 12 noon ET to review these results. To listen to the call live, dial (201) 493-6739 and ask for the Mobile Mini Conference Call or go to www.mobilemini.com and click on the Investors section. Additionally, a slide presentation that will accompany the call and the reconciliation of non-GAAP financial measures used in the slide show to the most directly comparable GAAP financial measures will be posted at www.mobilemini.com on the Investors section and will be available in advance and after the call. Please go to the website 15 minutes early to download and install any necessary audio software. If you are unable to listen live, a replay of the call can be accessed for approximately 14 days after the call at Mobile Mini’s website.

Mobile Mini, Inc. is the world’s leading provider of portable storage solutions through its total lease fleet of approximately 214,000 portable storage containers and office units with 135 locations in the U.S., United Kingdom, and Canada. Mobile Mini is included on the Russell 2000(R) and 3000(R) Indexes and the S&P Small Cap Index.

This news release contains forward-looking statements, including, but not limited to, our expectations regarding our ability to execute our strategic plan, growth and profitability, financial performance, margin expansion, ability to enter new markets, and increased free cash flow, which involve risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Risks and uncertainties that may affect future results include those that are described from time to time in the Company’s SEC filings. These forward-looking statements represent the judgment of the Company, as of the date of this release, and Mobile Mini disclaims any intent or obligation to update forward-looking statements.

(See Accompanying Tables)

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

Three Months Ended Three Months Ended
September 30, September 30,
2014 2014 2013 2013

Revenues:

Actual Adjusted (1) Actual Adjusted (1)
Leasing $ 104,798 $ 104,798 $ 95,559 $ 95,559
Sales 7,913 7,913 8,913 8,913
Other 611 611 568 568

Total revenues

113,322 113,322 105,040 105,040

Costs and expenses:

Cost of sales

5,199 5,199 5,936 5,936
Leasing, selling and general expenses (2) 67,889 67,852 62,621 62,621
Restructuring expenses (3) 593 1,335
Asset impairment recovery, net (4) (748 )
Depreciation and amortization 9,470 9,470 8,895 8,895

Total costs and expenses

83,151 82,521 78,039 77,452

Income from operations

30,171 30,801 27,001 27,588

Other income (expense):

Interest expense

(7,107 ) (7,107 ) (7,343 ) (7,343 )

Income from continuing operations before income tax provision

23,064 23,694 19,658 20,245

Income tax provision

8,244 8,484 5,326 7,191

Income from continuing operations

14,820 15,210 14,332 13,054

Loss from discontinued operation, net of tax (5)

(29 )

Net income

$ 14,820 $ 15,210 $ 14,303 $ 13,054

Earnings per share:

Basic:

Income from continuing operations $ 0.32 $ 0.33 $ 0.31 $ 0.29
Loss from discontinued operation
Net Income $ 0.32 $ 0.33 $ 0.31 $ 0.29

Diluted:

Income from continuing operations $ 0.32 $ 0.33 $ 0.31 $ 0.28
Loss from discontinued operation

Net Income

$ 0.32 $ 0.33 $ 0.31 $ 0.28

Weighted average number of common and common

share equivalents outstanding:

Basic

46,001 46,001 45,511 45,511

Diluted

46,675 46,675 46,162 46,162

EBITDA

$ 39,641 $ 44,427 $ 35,896 $ 41,127
(1) This column represents a non-GAAP presentation even though some individual line items presented, such as revenues, are identical under both GAAP and the adjusted presentations.
(2) In 2014, represents acquisition activity costs.
(3) Restructuring expenses represent costs relating primarily to the restructuring of our operations that are excluded in the adjusted presentation.
(4) In 2013, represents the gain upon completion of sale (offset by losses upon completion of sale) of certain assets that were written down to fair value in the second quarter of 2013 and is excluded in the adjusted presentation.
(5) Represents our Netherlands operation that was sold in December 2013 and reported as a discontinued operation.

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

Nine Months Ended Nine Months Ended
September 30, September 30,
2014 2014 2013 2013
Revenues: Actual Adjusted (1) Actual Adjusted (1)
Leasing $ 296,919 $ 296,919 $ 268,466 $ 268,466
Sales 23,761 23,761 29,805 29,805
Other 1,579 1,579 1,416 1,416
Total revenues 322,259 322,259 299,687 299,687
Costs and expenses:
Cost of sales 16,131 16,131 19,941 19,941
Leasing, selling and general expenses (2) 204,394 204,318 172,758 172,758
Restructuring expenses (3) 2,909 2,053
Asset impairment charge, net (4) 557 39,489
Depreciation and amortization 27,920 27,920 26,439 26,439
Total costs and expenses 251,911 248,369 260,680 219,138
Income from operations 70,348 73,890 39,007 80,549
Other income (expense):
Interest expense (21,191 ) (21,191 ) (22,317 ) (22,317 )
Foreign currency exchange (1 ) (1 ) (1 ) (1 )
Income from continuing operations before income tax provision 49,156 52,698 16,689 58,231
Income tax provision 17,633 18,673 4,557 21,153
Income from continuing operations 31,523 34,025 12,132 37,078
Loss from discontinued operation, net of tax (5) (168 )
Net income $ 31,523 $ 34,025 $ 11,964 $ 37,078
Earnings per share:
Basic:
Income from continuing operations $ 0.68 $ 0.74 $ 0.26 $ 0.82
Loss from discontinued operation
Net Income $ 0.68 $ 0.74 $ 0.26 $ 0.82
Diluted:
Income from continuing operations $ 0.67 $ 0.73 $ 0.26 $ 0.81
Loss from discontinued operation
Net Income $ 0.67 $ 0.73 $ 0.26 $ 0.81
Weighted average number of common and common
share equivalents outstanding:
Basic 46,128 46,128 45,394 45,394
Diluted 46,846 46,846 45,972 45,972
EBITDA $ 98,267 $ 113,106 $ 65,445 $ 117,010
(1) This column represents a non-GAAP presentation even though some individual line items presented, such as revenues, are identical under both GAAP and the adjusted presentations.
(2) In 2014, represents acquisition activity costs.
(3) Restructuring expenses represent costs relating primarily to the restructuring of our operations that are excluded in the adjusted presentation.
(4) In 2014, represents the additional loss upon completion of sale (offset by gains upon completion of sale) of certain assets that were written down to fair value in the second quarter of 2013 and is excluded in the adjusted presentation.
In 2013, represents the impairment charge (offset by gains upon completion of sale) primarily for the write down on certain assets classified as held for sale and is excluded in the adjusted presentation.
(5) Represents our Netherlands operation that was sold in December 2013 and reported as a discontinued operation.

Mobile Mini, Inc.
Condensed Consolidated Balance Sheets
(in thousands except par value data)
(includes effects of rounding)

September 30, 2014 December 31, 2013
(unaudited) (audited)
ASSETS
Cash $ 1,612 $ 1,256
Receivables, net 60,951 53,104
Inventories 17,584 18,744
Lease fleet, net 974,035 979,276
Property, plant and equipment, net 95,322 85,153
Assets held for sale 980
Deposits and prepaid expenses 7,108 6,116
Other assets and intangibles, net 11,900 13,523
Goodwill 525,623 519,222
Total assets $ 1,694,135 $ 1,677,374
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accounts payable $ 23,841 $ 18,862
Accrued liabilities 61,936 65,308
Lines of credit 307,388 319,314
Obligations under capital leases 18,926 8,781
Senior Notes 200,000 200,000
Deferred income taxes 226,500 209,565
Total liabilities 838,591 821,830
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, 48,926 issued and 46,081 outstanding
at September 30, 2014 and 48,810 issued and 46,626 outstanding at December 31, 2013 489 488
Additional paid-in capital 564,531 550,387
Retained earnings 375,421 359,778
Accumulated other comprehensive loss (19,761 ) (15,440 )
Treasury stock, at cost, 2,845 and 2,184 shares at September 30, 2014 and
December 31, 2013, respectively (65,136 ) (39,669 )
Total stockholders’ equity 855,544 855,544
Total liabilities and stockholders’ equity $ 1,694,135 $ 1,677,374

Mobile Mini, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
(includes effects of rounding)

Nine Months Ended September 30,
2014 2013
Cash Flows From Operating Activities:
Net income $ 31,523 $ 11,964
Adjustments to reconcile net income to net cash
provided by operating activities:
Asset impairment charge, net 557 38,953
Provision for doubtful accounts 2,057 1,288
Amortization of deferred financing costs 2,108 2,108
Amortization of long-term liabilities 124 128
Share-based compensation expense 11,573 10,769
Depreciation and amortization 27,920 26,586
Gain on sale of lease fleet units (4,496 ) (7,698 )
Gain on disposal of property, plant and equipment (181 ) (56 )
Deferred income taxes 17,333 4,249
Foreign currency transaction loss 1 1
Changes in certain assets and liabilities, net of effect of
businesses acquired:
Receivables (9,883 ) (5,297 )
Inventories 1,125 (2,397 )
Deposits and prepaid expenses (920 ) 19
Other assets and intangibles 28 12
Accounts payable 5,106 2,768
Accrued liabilities 3,783 2,077
Net cash provided by operating activities 87,758 85,474
Cash Flows From Investing Activities:
Cash paid for businesses acquired (20,014 )
Additions to lease fleet, excluding acquisitions (16,310 ) (23,611 )
Proceeds from sale of lease fleet units 17,813 25,411
Additions to property, plant and equipment (11,677 ) (10,651 )
Proceeds from sale of property, plant, and equipment 3,374 1,013
Net cash used in investing activities (26,814 ) (7,838 )
Cash Flows From Financing Activities:
Net repayments under lines of credit (11,926 ) (83,733 )
Principal payments on notes payable (310 )
Principal payments on capital lease obligations (1,346 ) (289 )
Issuance of common stock 2,572 6,467
Dividend payments (23,583 )
Purchase of treasury stock (25,467 )
Net cash used in financing activities (59,750 ) (77,865 )
Effect of exchange rate changes on cash (838 ) 360
Net increase in cash 356 131
Cash at beginning of period 1,256 1,937
Cash at end of period $ 1,612 $ 2,068
Supplemental Disclosure of Cash Flow Information:
Equipment acquired through capital lease obligations $ 11,491 $ 1,492

Mobile Mini, Inc.
Non-GAAP Reconciliations
(in thousands)
(includes effects of rounding)

Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Reconciliation of EBITDA to net cash provided
by operating activities:
EBITDA $ 39,641 $ 35,896 $ 98,267 $ 65,445
Discontinued operation 24 (20 )
Interest paid (2,203 ) (2,552 ) (14,494 ) (15,773 )
Income and franchise taxes paid (167 ) (177 ) (945 ) (962 )
Share-based compensation expense 4,432 5,390 11,573 10,769
Asset impairment (recovery) charge, net (751 ) 557 38,953
Gain on sale of lease fleet units (2,001 ) (2,250 ) (4,496 ) (7,698 )
Gain on disposal of property, plant and equipment (540 ) (118 ) (181 ) (56 )
Changes in certain assets and liabilities,
net of effect of businesses acquired:
Receivables (6,566 ) (3,187 ) (7,826 ) (4,009 )
Inventories 1,070 (795 ) 1,125 (2,397 )
Deposits and prepaid expenses 936 436 (920 ) 19
Other assets and intangibles 39 19 28 12
Accounts payable and accrued liabilities 3,832 1,525 5,070 1,191
Net cash provided by operating activities $ 38,473 $ 33,460 $ 87,758 $ 85,474
Reconciliation of net income to EBITDA and
adjusted EBITDA:
Net income $ 14,820 $ 14,303 $ 31,523 $ 11,964
Loss from discontinued operation, net of tax 29 168
Interest expense 7,107 7,343 21,191 22,317
Income tax provision 8,244 5,326 17,633 4,557
Depreciation and amortization 9,470 8,895 27,920 26,439
EBITDA 39,641 35,896 98,267 65,445
Share-based compensation expense 4,156 4,644 11,297 10,023
Restructuring expenses 593 1,335 2,909 2,053
Acquisition expenses 37 76
Asset impairment (recovery) charge, net (748 ) 557 39,489
Adjusted EBITDA $ 44,427 $ 41,127 $ 113,106 $ 117,010
Reconciliation of net cash provided by operating
activities to free cash flow:
Net cash provided by operating activities $ 38,473 $ 33,460 $ 87,758 $ 85,474
Additions to lease fleet, excluding acquisitions (8,160 ) (9,314 ) (16,310 ) (23,611 )
Proceeds from sale of lease fleet units 5,794 9,482 17,813 25,411
Additions to property, plant and equipment (6,936 ) (997 ) (11,677 ) (10,651 )
Proceeds from sale of property, plant and equipment 1,923 555 3,374 1,013
Net capital expenditures, excluding acquisitions (7,379 ) (274 ) (6,800 ) (7,838 )
Free cash flow $ 31,094 $ 33,186 $ 80,958 $ 77,636

Mobile Mini, Inc.
Non-GAAP Reconciliations
(in thousands except per share data)
(includes effects of rounding)

Reconciliation of Adjusted Measurements to Actuals
Three Months Ended September 30, 2014
Share-based
compensation Restructuring Acquisition
As Adjusted (1) expense (2) expenses (3) expenses (4) Actual
Revenues $ 113,322 $ $ $ $ 113,322
EBITDA $ 44,427 $ (4,156 ) $ (593 ) $ (37 ) $ 39,641
EBITDA margin 39.2 % (3.7 )% (0.5 )% 35.0 %
Operating income $ 30,801 $ $ (593 ) $ (37 ) $ 30,171
Operating income margin 27.2 % (0.5 )% 26.6 %
Pre tax income $ 23,694 $ $ (593 ) $ (37 ) $ 23,064
Net income $ 15,210 $ $ (367 ) $ (23 ) $ 14,820
Diluted earnings per share $ 0.33 $ $ (0.01 ) $ $ 0.32
Reconciliation of Adjusted Measurements to Actuals
Three Months Ended September 30, 2013
Share-based Asset Loss from
compensation Restructuring impairment Income tax discontinued
As Adjusted (1) expense (2) expenses (3) recovery, net (5) benefit (6) operation, net (7) Actual
Revenues $ 105,040 $ $ $ $ $ $ 105,040
EBITDA $ 41,127 $ (4,644 ) $ (1,335 ) $ 748 $ $ $ 35,896
EBITDA margin 39.2 % (4.4 )% (1.3 )% 0.7 % 34.2 %
Operating income $ 27,588 $ $ (1,335 ) $ 748 $ $ $ 27,001
Operating income margin 26.3 % (1.3 )% 0.7 % 25.7 %
Pre tax income from
continuing operations $ 20,245 $ $ (1,335 ) $ 748 $ $ $ 19,658
Net income $ 13,054 $ $ (848 ) $ 465 $ 1,661 $ (29 ) $ 14,303
Diluted earnings per share $ 0.28 $ $ (0.02 ) $ 0.01 $ 0.04 $ $ 0.31
(1) This column represents a non-GAAP presentation even though some individual line items presented, such as revenues, are identical under both GAAP and the adjusted presentations.
(2) Represents non-cash share-based expense associated with the granting of equity instruments and is excluded in the adjusted presentation.
(3) Restructuring expenses represent costs relating primarily to the restructuring of our operations that are excluded in the adjusted presentation.
(4) Represents acquisition activity costs that are excluded in the adjusted presentation.
(5) Represents the impairment charge (offset by gains upon completion of sale) primarily for the write down on certain assets classified as held for sale and is excluded in the adjusted presentation.
(6) Represents income tax benefits related to the statutory corporate income tax rate reductions in the United Kingdom that are excluded in the adjusted presentation.
(7) Represents our Netherlands operation that was sold in December 2013 and reported as a discontinued operation.

Mobile Mini, Inc.
Non-GAAP Reconciliations
(in thousands except per share data)
(includes effects of rounding)

Reconciliation of Adjusted Measurements to Actuals
Nine Months Ended September 30, 2014
Share-based Asset
compensation Restructuring Acquisition impairment
As Adjusted (1) expense (2) expenses (3) expenses (4) charge, net (5) Actual
Revenues $ 322,259 $ $ $ $ $ 322,259
EBITDA $ 113,106 $ (11,297 ) $ (2,909 ) $ (76 ) $ (557 ) $ 98,267
EBITDA margin 35.1 % (3.5 )% (0.9 )% (0.2 )% 30.5 %
Operating income $ 73,890 $ $ (2,909 ) $ (76 ) $ (557 ) $ 70,348
Operating income margin 22.9 % (0.9 )% (0.2 )% 21.8 %
Pre tax income $ 52,698 $ $ (2,909 ) $ (76 ) $ (557 ) $ 49,156
Net income $ 34,025 $ $ (2,089 ) $ (47 ) $ (366 ) $ 31,523
Diluted earnings per share $ 0.73 $ $ (0.05 ) $ $ (0.01 ) $ 0.67
Reconciliation of Adjusted Measurements to Actuals
Nine Months Ended September 30, 2013
Share-based Asset Loss from
compensation Restructuring impairment Income tax discontinued
As Adjusted (1) expense (2) expenses (3) charge, net (5) benefit (6) operation, net (7) Actual
Revenues $ 299,687 $ $ $ $ $ $ 299,687
EBITDA $ 117,010 $ (10,023 ) $ (2,053 ) $ (39,489 ) $ $ $ 65,445
EBITDA margin 39.0 % (3.3 )% (0.7 )% (13.2 )% 21.8 %
Operating income $ 80,549 $ $ (2,053 ) $ (39,489 ) $ $ $ 39,007
Operating income margin 26.9 % (0.7 )% (13.2 )% 13.0 %
Pre tax income from
continuing operations $ 58,231 $ $ (2,053 ) $ (39,489 ) $ $ $ 16,689
Net income $ 37,078 $ $ (1,289 ) $ (25,518 ) $ 1,861 $ (168 ) $ 11,964
Diluted earnings per share $ 0.81 $ $ (0.03 ) $ (0.56 ) $ 0.04 $ $ 0.26
(1) This column represents a non-GAAP presentation even though some individual line items presented, such as revenues, are identical under both GAAP and the adjusted presentations.
(2) Represents non-cash share-based expense associated with the granting of equity instruments and is excluded in the adjusted presentation.
(3) Restructuring expenses represent costs relating primarily to the restructuring of our operations that are excluded in the adjusted presentation.
(4) Represents acquisition activity costs that are excluded in the adjusted presentation.
(5) In 2014, represents the additional loss upon completion of sale (offset by gains upon completion of sale) of certain assets that were written down to fair value in the second quarter of 2013 and is excluded in the adjusted presentation.
In 2013, represents the impairment charge (offset by gains upon completion of sale) primarily for the write down on certain assets classified as held for sale and is excluded in the adjusted presentation.
(6) Represents income tax benefits related to the statutory corporate income tax rate reductions in the United Kingdom that are excluded in the adjusted presentation.
(7) Represents our Netherlands operation that was sold in December 2013 and reported as a discontinued operation.

The sale of our Netherlands operation in 2013 is reflected in the financial data herein as a discontinued operation.

This news release includes the financial measures “EBITDA”, “adjusted EBITDA”, “EBITDA margin”, “adjusted EBITDA margin”, “adjusted SG&A”, “adjusted net income”, “adjusted diluted earnings per share” and “free cash flow.” These measurements are deemed “non-GAAP financial measures” under rules of the SEC, including Regulation G. This non-GAAP financial information may be determined or calculated differently by other companies.

EBITDA is defined as net income before discontinued operation, net of taxes, interest expense, income taxes, depreciation and amortization, and, if applicable, debt restructuring or extinguishment costs, including any write-off of deferred financing costs. We further adjust EBITDA to exclude non-cash share-based compensation expense and to ignore the effect of what we consider transactions or events not related to our core business to arrive at adjusted EBITDA. The GAAP financial measure that is most directly comparable to EBITDA is net cash provided by operating activities. EBITDA and adjusted EBITDA margins are calculated by dividing consolidated EBITDA and adjusted EBITDA by total revenues. The GAAP financial measure that is most directly comparable to EBITDA margin is operating margin, which represents operating income divided by revenues. We present adjusted EBITDA and adjusted EBITDA margin because we believe they provide useful information regarding our ability to meet our future debt payment requirements, capital expenditures and working capital requirements and they provide an overall evaluation of our financial condition. We include adjusted EBITDA in this earnings announcement to provide transparency to investors. Adjusted EBITDA has certain limitations as an analytical tool and should not be used as a substitute for net income, cash flows, or other consolidated income or cash flow data prepared in accordance with GAAP or as a measure of our profitability or our liquidity. EBITDA margin is presented along with the operating margin so as not to imply that more emphasis should be placed on it than the corresponding GAAP measure.

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 GAAP financial measure. 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 the Company’s existing businesses, debt service obligations, pay authorized quarterly dividends and strategic acquisitions.

Adjusted SG&A, adjusted net income and adjusted diluted earnings per share permit a comparative assessment of our SG&A expenses, net income and diluted earnings per share by excluding certain one-time expenses and restructuring expenses to make a more meaningful comparison of our operating performance.

Earlier in this release, we provided a reconciliation of these adjusted measurements to actual results along with a reconciliation of EBITDA to net cash provided by operating activities, net income to EBITDA and adjusted EBITDA and net cash provided by operating activities to free cash flow.

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