Market Overview

Exterran Holdings Reports Third-Quarter 2012 Results

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HOUSTON--(BUSINESS WIRE)--

Exterran Holdings, Inc. (NYSE: EXH) today reported financial results for the third quarter 2012. These results of operations are presented on a consolidated basis including the results of Exterran Partners, L.P.

EBITDA, as adjusted (as defined below), was $126.4 million for the third quarter 2012, compared to $101.5 million for the second quarter 2012 and $98.8 million for the third quarter 2011. Revenue was $718.7 million for the third quarter 2012, compared to $630.7 million for the second quarter 2012 and $689.8 million for the third quarter 2011. EBITDA, as adjusted, excludes the benefit of the two previously announced sales of Exterran Holdings' Venezuelan assets described below.

Fabrication backlog was $1,239.5 million at the end of September 2012, compared to $1,286.4 million at the end of June 2012 and $600.1 million at the end of September 2011. Fabrication bookings were $313.9 million for the third quarter 2012, compared to $598.7 million for the second quarter 2012 and $196.6 million for the third quarter 2011.

“We achieved improved financial results in the third quarter 2012, highlighted by better performance in our fabrication operations,” said Brad Childers, Exterran Holdings' President and Chief Executive Officer. “And the sales of our Venezuelan assets increase our financial flexibility as a result of cash proceeds already received and cash payments due through the third quarter 2016.”

As previously announced, in August 2012, Exterran Holdings' Venezuelan subsidiary completed the sale of assets nationalized in 2009 to PDVSA Gas, S.A. The net proceeds from this sale, when combined with the net proceeds from the previously announced March 2012 sale of Exterran Holdings' Venezuelan joint venture assets that also were nationalized in 2009, total approximately $504 million. To date, Exterran Holdings has received $174 million of the net proceeds from these sales and is due to receive the remaining approximately $330 million in periodic cash payments through the third quarter of 2016.

Net income from continuing operations attributable to Exterran stockholders for the third quarter 2012 was $1.4 million, or $0.02 per diluted share, excluding pretax charges totaling $4.7 million. Net loss from continuing operations attributable to Exterran stockholders, excluding charges, for the second quarter 2012 was $30.5 million, or $0.48 per diluted share, and net loss from continuing operations attributable to Exterran stockholders, excluding charges, for the third quarter 2011 was $29.0 million, or $0.46 per diluted share. Net income from continuing operations attributable to Exterran stockholders, excluding charges, excludes the benefit of the two previously announced sales of Exterran Holdings' Venezuelan assets.

Exterran Holdings reported net income attributable to Exterran stockholders for the third quarter 2012 of $113.4 million, or $1.74 per diluted share, compared to a net loss attributable to Exterran stockholders for the second quarter 2012 of $152.6 million, or $2.40 per diluted share, and a net loss attributable to Exterran stockholders for the third quarter 2011 of $216.0 million, or $3.44 per diluted share.

The cash distribution to be received by Exterran Holdings based upon its limited partner and general partner interests in Exterran Partners is $7.9 million for the third quarter 2012, compared to $7.8 million for the second quarter 2012 and $7.2 million for the third quarter 2011.

Conference Call Details

Exterran Holdings and Exterran Partners, L.P. will host a joint conference call regarding third-quarter 2012 results:

  • Teleconference: Thursday, Nov. 1, 2012 at 11:00 a.m. Eastern Time, 10:00 a.m. Central Time. To access the call, United States and Canadian participants should dial 800-446-2782. International participants should dial +1-847-413-3235 at least 10 minutes before the scheduled start time. Please reference Exterran conference call number 33535569.
  • Live Webcast: The webcast will be available in listen-only mode via the companies' website: www.exterran.com.
  • Webcast Replay: For those unable to participate, a replay will be available from 2:00 p.m. Eastern Time on Thursday, Nov. 1, 2012, until 2:00 p.m. Eastern Time on Thursday, Nov. 8, 2012. To listen to the replay, please dial 888-843-7419 in the United States and Canada, or +1-630-652-3042 internationally, and enter access code 33535569#.

EBITDA, as adjusted, a non-GAAP measure, is defined as net income (loss) excluding income (loss) from discontinued operations (net of tax), cumulative effect of accounting changes (net of tax), income taxes, interest expense (including debt extinguishment costs and gain or loss on termination of interest rate swaps), depreciation and amortization expense, impairment charges, merger and integration expenses, restructuring charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations and other charges.

Gross Margin, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization expense).

About Exterran Holdings

Exterran Holdings, Inc. is a global market leader in full service natural gas compression and a premier provider of operations, maintenance, service and equipment for oil and gas production, processing and transportation applications. Exterran Holdings serves customers across the energy spectrum—from producers to transporters to processors to storage owners. Headquartered in Houston, Texas, Exterran has approximately 10,000 employees and operates in approximately 30 countries. Exterran Holdings owns an equity interest, including all of the general partner interest, in Exterran Partners, L.P. (NASDAQ: EXLP), a leading provider of natural gas contract operations services to customers throughout the United States. For more information, visit www.exterran.com.

Forward-Looking Statements

All statements in this release (and oral statements made regarding the subjects of this release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside Exterran Holdings' control, which could cause actual results to differ materially from such statements. Forward-looking information includes, but is not limited to: Exterran Holdings' operational and financial strategies and ability to successfully effect those strategies; Exterran Holdings' expectations regarding future economic and market conditions; Exterran Holdings' financial and operational outlook and ability to fulfill that outlook; statements relating to the remaining expected proceeds from the Venezuelan asset sales; and demand for Exterran Holdings' products and services and growth opportunities for those products and services.

While Exterran Holdings believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: local, regional, national and international economic conditions and the impact they may have on Exterran Holdings and their customers; changes in tax laws that impact master limited partnerships; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; Exterran Holdings' ability to timely and cost-effectively execute larger projects; changes in political or economic conditions in key operating markets, including international markets; any non-performance by third parties of their contractual obligations; changes in safety, health, environmental and other regulations; and the performance of Exterran Partners.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Exterran Holdings' Annual Report on Form 10-K for the year ended December 31, 2011, and those set forth from time to time in Exterran Holdings' filings with the Securities and Exchange Commission, which are currently available at www.exterran.com. Except as required by law, Exterran Holdings expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.

(Tables Follow)

     
EXTERRAN HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
 
 
Three Months Ended
September 30, June 30, September 30,
2012 2012 2011
Revenues:
North America contract operations $ 151,532 $ 148,564 $ 147,737
International contract operations 110,632 112,628 113,759
Aftermarket services 95,854 101,902 95,673
Fabrication   360,686     267,641     332,651  
  718,704     630,735     689,820  
 
Costs and expenses:
Cost of sales (excluding depreciation and amortization expense):
North America contract operations 75,217 70,423 75,879
International contract operations 46,260 47,092 48,227
Aftermarket services 75,793 77,528 75,802
Fabrication 310,754 241,357 303,259
Selling, general and administrative 85,536 94,134 89,257
Depreciation and amortization 85,248 88,909 88,762
Long-lived asset impairment 3,204 128,543 1,823
Restructuring charges 1,515 1,266 2,941
Goodwill impairment - - 196,142
Interest expense 31,723 36,968 38,672
Equity in (income) loss of non-consolidated affiliates (4,793 ) (4,728 ) 262
Other (income) expense, net   (1,450 )   8,752     12,745  
  709,007     790,244     933,771  
 
Income (loss) before income taxes 9,697 (159,509 ) (243,951 )
Provision for (benefit from) income taxes   1,267     (35,502 )   (32,640 )
Income (loss) from continuing operations 8,430 (124,007 ) (211,311 )
Income (loss) from discontinued operations, net of tax   110,916     (42,891 )   (3,236 )
Net income (loss) 119,346 (166,898 ) (214,547 )
Less: net (income) loss attributable to the noncontrolling interest   (5,980 )   14,290     (1,427 )
Net income (loss) attributable to Exterran stockholders $ 113,366   $ (152,608 ) $ (215,974 )
 
Basic income (loss) per common share:
Income (loss) from continuing operations attributable to Exterran stockholders $ 0.04 $ (1.73 ) $ (3.39 )
Income (loss) from discontinued operations attributable to Exterran stockholders   1.71     (0.67 )   (0.05 )
Net income (loss) attributable to Exterran stockholders $ 1.75   $ (2.40 ) $ (3.44 )
Diluted income (loss) per common share:
Income (loss) from continuing operations attributable to Exterran stockholders $ 0.04 $ (1.73 ) $ (3.39 )
Income (loss) from discontinued operations attributable to Exterran stockholders   1.70     (0.67 )   (0.05 )
Net income (loss) attributable to Exterran stockholders $ 1.74   $ (2.40 ) $ (3.44 )
Weighted average common and equivalent shares outstanding:
Basic   64,847     63,478     62,728  
Diluted   65,094     63,478     62,728  
 
Income (loss) attributable to Exterran stockholders:
Income (loss) from continuing operations $ 2,450 $ (109,717 ) $ (212,738 )
Income (loss) from discontinued operations, net of tax   110,916     (42,891 )   (3,236 )
Net income (loss) attributable to Exterran stockholders $ 113,366   $ (152,608 ) $ (215,974 )
 
     
EXTERRAN HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except percentages)
 
 
Three Months Ended
September 30, June 30, September 30,
2012 2012 2011
Revenues:
North America contract operations $ 151,532 $ 148,564 $ 147,737
International contract operations 110,632 112,628 113,759
Aftermarket services 95,854 101,902 95,673
Fabrication   360,686     267,641     332,651  
Total $ 718,704   $ 630,735   $ 689,820  
 
Gross Margin (1):
North America contract operations $ 76,315 $ 78,141 $ 71,858
International contract operations 64,372 65,536 65,532
Aftermarket services 20,061 24,374 19,871
Fabrication   49,932     26,284     29,392  
Total $ 210,680   $ 194,335   $ 186,653  
 
Selling, General and Administrative $ 85,536 $ 94,134 $ 89,257
% of Revenues 12 % 15 % 13 %
 
EBITDA, as adjusted (1) $ 126,431 $ 101,457 $ 98,792
% of Revenues 18 % 16 % 14 %
 
Capital Expenditures $ 100,871 $ 112,382 $ 66,989
Less: Proceeds from Sale of PP&E   (1,963 )   (16,248 )   (6,453 )
Net Capital Expenditures $ 98,908   $ 96,134   $ 60,536  
 
Gross Margin Percentage:
North America contract operations 50 % 53 % 49 %
International contract operations 58 % 58 % 58 %
Aftermarket services 21 % 24 % 21 %
Fabrication 14 % 10 % 9 %
Total 29 % 31 % 27 %
 
Total Available Horsepower (at period end):
North America contract operations 3,341 3,285 3,564
International contract operations   1,254     1,254     1,236  
Total   4,595     4,539     4,800  
 
Total Operating Horsepower (at period end):
North America contract operations 2,849 2,811 2,784
International contract operations   1,001     996     977  
Total   3,850     3,807     3,761  
 
Total Operating Horsepower (average):
North America contract operations 2,830 2,820 2,776
International contract operations   1,003     989     978  
Total   3,833     3,809     3,754  
 
Horsepower Utilization (at period end):
North America contract operations 85 % 86 % 78 %
International contract operations 80 % 79 % 79 %
Total 84 % 84 % 78 %
 
Fabrication Backlog:
Compression & accessory $ 231,027 $ 297,012 $ 166,072
Production & processing equipment 687,174 677,629 406,634
Installation   321,345     311,737     27,410  
Total $ 1,239,546   $ 1,286,378   $ 600,116  
 
Debt to Capitalization:
Debt $ 1,705,638 $ 1,803,906 $ 1,709,024
Exterran stockholders' equity   1,476,314     1,351,212     1,490,396  
Capitalization $ 3,181,952 $ 3,155,118 $ 3,199,420
Total Debt to Capitalization 54 % 57 % 53 %
 
(1) Management believes disclosure of EBITDA, as adjusted, and Gross Margin, both non-GAAP measures, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, they provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as adjusted, is used by management as a valuation measure.
     
EXTERRAN HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except per share amounts)
 
 
Three Months Ended
September 30, June 30, September 30,
2012   2012 2011
 
Reconciliation of GAAP to Non-GAAP Financial Information:
 
Net income (loss) $ 119,346 $ (166,898 ) $ (214,547 )
(Income) loss from discontinued operations, net of tax   (110,916 )   42,891     3,236  
Income (loss) from continuing operations 8,430 (124,007 ) (211,311 )
Depreciation and amortization 85,248 88,909 88,762
Long-lived asset impairment 3,204 128,543 1,823
Restructuring charges 1,515 1,266 2,941
Investment in non-consolidated affiliates impairment - - 262
Proceeds from sale of joint venture assets (4,793 ) (4,728 ) -
Goodwill impairment - - 196,142
Interest expense 31,723 36,968 38,672
(Gain) loss on currency exchange rate remeasurement of intercompany balances (163 ) 10,008 14,141
Provision for (benefit from) income taxes   1,267     (35,502 )   (32,640 )
EBITDA, as adjusted (1) 126,431 101,457 98,792
Selling, general and administrative 85,536 94,134 89,257
Equity in (income) loss of non-consolidated affiliates (4,793 ) (4,728 ) 262
Investment in non-consolidated affiliates impairment - - (262 )
Proceeds from sale of joint venture assets 4,793 4,728 -
Gain (loss) on currency exchange rate remeasurement of intercompany balances 163 (10,008 ) (14,141 )
Other (income) expense, net   (1,450 )   8,752     12,745  
Gross Margin (1) $ 210,680   $ 194,335   $ 186,653  
 
 
Net income (loss) attributable to Exterran stockholders $ 113,366 $ (152,608 ) $ (215,974 )
(Income) loss from discontinued operations (110,916 ) 42,891 3,236
Charges, after-tax:
Long-lived asset impairment (including the impact on noncontrolling interest) 2,535 82,940 991
Restructuring charges 1,203 1,005 1,853
Investment in non-consolidated affiliates impairment

-

- 262
Proceeds from sale of joint venture assets (4,793 ) (4,728 ) -
Goodwill impairment

-

    -     180,643  
Net income (loss) from continuing operations attributable to Exterran stockholders,
excluding charges $ 1,395   $ (30,500 ) $ (28,989 )
 
Diluted Income (loss) from continuing operations attributable to Exterran stockholders per common share $ 0.04 $ (1.73 ) $ (3.39 )
Adjustment for charges, after-tax, per common share   (0.02 )   1.25     2.93  
Diluted net income (loss) from continuing operations attributable to Exterran stockholders
per common share, excluding charges (1) $ 0.02   $ (0.48 ) $ (0.46 )
 
(1) Management believes disclosure of EBITDA, as adjusted, diluted net income (loss) from continuing operations attributable to Exterran stockholders per common share, excluding charges, and Gross Margin, non-GAAP measures, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, they provide a more complete understanding of our performance than GAAP results alone. Management uses these non-GAAP measures as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as adjusted, is used by management as a valuation measure.

Exterran Holdings, Inc.
Media
Susan Moore, 281-836-7398
or
Investors
David Oatman, 281-836-7035

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