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Exterran Partners Reports Second-Quarter 2012 Results

Stocks in this article: EXH EXLP

While Exterran Partners 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 and national economic conditions and the impact they may have on Exterran Partners and its 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; changes in economic conditions in key operating markets; changes in safety, health, environmental and other regulations; and the performance of Exterran Holdings.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Exterran Partners’ Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on February 24, 2012, and those set forth from time to time in Exterran Partners’ filings with the Securities and Exchange Commission, which are currently available at www.exterran.com. We will provide a hard copy of our Annual Report to any unitholder or potential investor, without charge, upon written or oral request. Except as required by law, Exterran Partners 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 PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
       
 
Three Months Ended

June 30,2012

March 31,2012

June 30,2011

 
Revenue $ 97,171 $ 88,697 $ 71,841
 
Costs and expenses:
Cost of sales (excluding depreciation and amortization) 45,446 44,113 39,824
Depreciation and amortization 22,788 20,362 15,459
Long-lived asset impairment 28,122 805 305
Selling, general and administrative 13,450 12,222 9,927
Interest expense 6,399 5,882 7,553
Other (income) expense, net   (261 )   527   455  
Total costs and expenses   115,944     83,911   73,523  
Income (loss) before income taxes (18,773 ) 4,786 (1,682 )
Income tax expense   277     281   256  
Net income (loss) $ (19,050 ) $ 4,505 $ (1,938 )
 
General partner interest in net income (loss) $ 692   $ 1,095 $ 676  
 
Limited partner interest in net income (loss) $ (19,742 ) $ 3,410 $ (2,614 )
 
Weighted average limited partners' units outstanding:
Basic   42,264     38,670   33,833  
 
Diluted   42,264     38,674   33,833  
 
Earnings (loss) per limited partner unit:
Basic $ (0.47 ) $ 0.09 $ (0.08 )
 
Diluted $ (0.47 ) $ 0.09 $ (0.08 )
     
 
EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except per unit amounts and percentages)
 
 
Three Months Ended

June 30,2012

March 31,2012

June 30,2011

 
Revenue $ 97,171 $ 88,697 $ 71,841
 
Gross Margin, as adjusted (1) $ 55,236 $ 49,908 $ 40,366
 
EBITDA, as further adjusted (1) $ 44,997 $ 39,985 $ 31,988
% of Revenue 46 % 45 % 45 %
 
Capital Expenditures $ 17,422 $ 34,033 $ 16,929
Less: Proceeds from Sale of Compression Equipment   (568 )   (435 )   (232 )
Net Capital Expenditures $ 16,854   $ 33,598   $ 16,697  
 
Gross Margin percentage, as adjusted 57

%

56 % 56 %
 
Distributable cash flow (2) $ 27,342 $ 26,900 $ 19,025
 
Distributions Declared for the period per Limited Partner Unit $ 0.5025 $ 0.4975 $ 0.4825

Distribution Declared to All Unitholders for the period, including Incentive Distributions

$ 22,762 $ 22,480 $ 19,061
Distributable Cash Flow Coverage 1.20x 1.20x 1.00x
 

June 30,2012

March 31,2012

June 30,2011

 
Debt $ 643,500 $ 635,500 $ 539,500
Total Partners' Capital $ 460,770 $ 501,549 $ 444,522
Total Debt to Capitalization 58 % 56 % 55 %
 
(1) Management believes disclosure of EBITDA, as further adjusted, and Gross Margin, as adjusted, both non-GAAP measures, provides useful information to investors because these measures, when viewed with our GAAP results and accompanying reconciliations, 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, management uses EBITDA, as further adjusted, as a valuation measure.
 
(2) Distributable cash flow, a non-GAAP measure, is a significant liquidity metric used by management to compare basic cash flows to the cash distributions we expect to pay our partners. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions.
 
 
EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except per unit amounts)
       
 
Three Months Ended
June 30,2012 March 31,2012 June 30,2011
 
Reconciliation of GAAP to Non-GAAP Financial Information:
 
Net income (loss) $ (19,050 ) $ 4,505 $ (1,938 )
Income tax expense 277 281 256
Depreciation and amortization 22,788 20,362 15,459
Long-lived asset impairment 28,122 805 305

Cap on operating and selling, general and administrative costs provided by Exterran Holdings ("EXH")

6,321 7,805 10,200
Non-cash selling, general and administrative costs 140 345 153
Interest expense, net of interest income   6,399     5,882     7,553  
EBITDA, as further adjusted (1) 44,997 39,985 31,988
Cash selling, general and administrative costs 13,310 11,877 9,774
Less: cap on selling, general and administrative costs provided by EXH (2,810 ) (2,481 ) (1,851 )
Less: other (income) expense, net   (261 )   527     455  
Gross Margin, as adjusted (1) $ 55,236 $ 49,908 $ 40,366
Other income (expense), net 261 (527 ) (455 )
Expensed acquisition costs - 695 514
Less: Gain on sale of compression equipment (in Other (income) expense, net) (244 ) (174 ) (115 )
Less: Cash interest expense (5,718 ) (5,208 ) (4,652 )

Less: Cash selling, general and administrative, as adjusted for cost caps provided by EXH

(10,500 ) (9,396 ) (7,923 )
Less: Income tax expense (277 ) (281 ) (256 )
Less: Maintenance capital expenditures   (11,416 )   (8,117 )   (8,454 )
Distributable cash flow (2) $ 27,342   $ 26,900   $ 19,025  
 
 
Cash flows from operating activities $ 25,309 $ 21,007 $ 16,233
(Provision for) benefit from doubtful accounts (143 ) (402 ) 4
Expensed acquisition costs - 695 514
Cap on operating and selling, general and administrative costs provided by EXH 6,321 7,805 10,200
Maintenance capital expenditures (11,416 ) (8,117 ) (8,454 )
Change in assets and liabilities   7,271     5,912     528  
Distributable cash flow (2) $ 27,342   $ 26,900   $ 19,025  
 
Net income (loss) $ (19,050 ) $ 4,505 $ (1,938 )
Long-lived asset impairment   28,122     805     305  
Net income (loss), excluding charge $ 9,072   $ 5,310   $ (1,633 )
 
Diluted earnings (loss) per limited partner unit $ (0.47 ) $ 0.09 $ (0.08 )
Adjustment for charge per limited partner unit (3)   0.65     0.02     0.01  
Diluted earnings (loss) per limited partner unit, excluding charge (1) (3) $ 0.18   $ 0.11   $ (0.07 )
 
(1) Management believes disclosure of EBITDA, as further adjusted, Diluted earnings (loss) per limited partner unit, excluding charge, and Gross Margin, as adjusted, non-GAAP measures, provides useful information to investors because these measures, when viewed with our GAAP results and accompanying reconciliations, 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, management uses EBITDA, as further adjusted, as a valuation measure.
 
(2) Distributable cash flow, a non-GAAP measure, is a significant liquidity metric used by management to compare basic cash flows to the cash distributions we expect to pay our partners. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions.
 
(3) Weighted average limited partners' units outstanding in the diluted earnings (loss) calculation, excluding charge for the three months ended June 30, 2012 includes adjustments to include the following units in the calculation of diluted earnings (loss) per limited partner unit as the effects would have been dilutive: 9,000 phantom units.
 
 
EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except percentages)
       
 
Three Months Ended
June 30,2012 March 31,2012 June 30,2011
 
Total Available Horsepower (at period end) (1) (2) 2,026 2,094 1,905
 
Total Operating Horsepower (at period end) (1) 1,908 1,918 1,684
 
Average Operating Horsepower 1,916 1,763 1,442
 
Horsepower Utilization:
Spot (at period end) (2) 94% 92% 88%
Average 91% 92% 87%
 

Combined U.S. Contract Operations Horsepower of Exterran Holdings and Exterran Partners covered by contracts converted to service agreements (at period end)

2,223 2,200 2,046
 
Available Horsepower:
 

Total Available U.S. Contract Operations Horsepower of Exterran Holdings and Exterran Partners (at period end) (2) (3)

3,285 3,558 3,604
 

% of U.S. Contract Operations Available Horsepower of Exterran Holdings and Exterran Partners covered by contracts converted to service agreements (at period end)

68% 62% 57%
 
Operating Horsepower:
 

Total Operating U.S. Contract Operations Horsepower of Exterran Holdings and Exterran Partners (at period end)

2,811 2,825 2,784
 

% of U.S. Contract Operations Operating Horsepower of Exterran Holdings and Exterran Partners covered by contracts converted to service agreements (at period end)

79% 78% 73%
 
(1) Includes compressor units leased from Exterran Holdings with an aggregate horsepower of approximately 158,000, 160,000 and 226,000 at June 30, 2012, March 31, 2012 and June 30, 2011, respectively. Excludes compressor units leased to Exterran Holdings with an aggregate horsepower of approximately 20,000, 29,000 and 21,000 at June 30, 2012, March 31, 2012 and June 30, 2011, respectively.
 
(2) Amounts for the periods ended June 30, 2012 exclude approximately 67,000 horsepower of idle compressor units that were removed from the compressor fleet as a result of the June 2012 impairment review.
 
(3) Amount for the period ended June 30, 2012 excludes approximately 232,000 horsepower of Exterran Holdings' idle compressor units that were removed from the compressor fleet as a result of the June 2012 impairment review.




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