Exterran Holdings, Inc. (NYSE:EXH) and Exterran Partners, L.P. (NASDAQ:EXLP) today reported financial results for the third quarter 2011.

Exterran Holdings, Inc. Financial Results

Net loss from continuing operations attributable to Exterran stockholders for the third quarter 2011 was $30.4 million, or $0.48 per diluted share, excluding pretax charges totaling $201.7 million, including a $196.1 million non-cash goodwill impairment charge related to our fabrication and aftermarket services businesses, a $2.9 million restructuring charge and a $2.3 million non-cash long-lived asset impairment. Net loss from continuing operations attributable to Exterran stockholders, excluding charges, for the second quarter 2011 was $26.3 million, or $0.42 per diluted share. Net loss from continuing operations attributable to Exterran stockholders, excluding charges, for the third quarter 2010 was $15.2 million, or $0.25 per diluted share.

Exterran Holdings reported a net loss attributable to Exterran stockholders for the third quarter 2011 of $216.0 million, or $3.44 per diluted share, compared to a net loss attributable to Exterran stockholders for the second quarter 2011 of $28.0 million, or $0.45 per diluted share, and a net loss attributable to Exterran stockholders for the third quarter 2010 of $18.0 million, or $0.29 per diluted share. Net loss from continuing operations attributable to Exterran stockholders for the third quarter 2011 included a non-cash pretax foreign currency loss of $14.9 million stemming primarily from the decline in the value of the Brazilian Real against the U.S. Dollar related to the re-measurement of our Brazil subsidiary’s U.S. dollar denominated inter-company debt. The goodwill and long-lived asset impairment charges and foreign currency loss do not impact our cash flows, liquidity position, or compliance with debt covenants.

Revenue was $704.5 million for the third quarter 2011, compared to $657.6 million for the second quarter 2011 and $625.6 million for the third quarter 2010. EBITDA, as adjusted (as defined below), was $99.7 million for the third quarter 2011, compared to $84.2 million for the second quarter 2011 and $104.6 million for the third quarter 2010.

“Exterran Holdings’ third-quarter financial results included our highest level of quarterly revenues in more than two years and increased gross margin dollars on a sequential basis. In North America, demand for our products and services remained solid particularly in liquids rich and shale gas areas and we continue to see strong bookings in our production and processing fabrication business lines. In international markets, booking levels remained relatively low although new business activities are encouraging,” said Brad Childers, Exterran Holdings’ Interim President and Chief Executive Officer.

Profit Improvement Program

As an initial step in implementing a profit improvement plan, Exterran Holdings is implementing a workforce cost reduction program across all of its business segments. A vast majority of the identified workforce reductions are expected to be completed in the fourth quarter 2011.

Exterran Holdings is expected to generate annual savings from the workforce cost reduction program of approximately $20 million to $25 million with approximately $10 million to $15 million of those savings within selling, general and administrative expense. Restructuring charges of $2.9 million were incurred during the third quarter 2011 related to consulting services and termination benefits. Exterran Holdings is expected to incur additional charges with respect to the cost reduction program of approximately $11 million to $14 million in the fourth quarter 2011 and into 2012.

Exterran Partners, L.P. Financial Results

Exterran Partners reported revenue of $84.4 million for the third quarter 2011, compared to $71.8 million for the second quarter 2011 and $62.7 million for the third quarter 2010. Net income was $3.3 million for the third quarter 2011, or $0.06 per diluted limited partner unit, compared to net loss of $1.9 million, or $0.08 per diluted limited partner unit, for the second quarter 2011, and net income of $0.1 million, or a loss of $0.01 per diluted limited partner unit, for the third quarter 2010.

Exterran Partners’ EBITDA, as further adjusted (as defined below), totaled $38.6 million for the third quarter 2011, compared to $32.0 million for the second quarter 2011 and $28.0 million for the third quarter 2010. Distributable cash flow (as defined below) totaled $25.7 million for the third quarter 2011, compared to $19.0 million for the second quarter 2011 and $19.3 million for the third quarter 2010.

Exterran Partners’ performance included increased operating horsepower during the quarter and a full-quarter contribution from the June 2011 acquisition of compression and processing assets from Exterran Holdings. The cash distribution was increased for the fifth consecutive quarter and distributable cash flow covered distributions by 1.33 times.

“We remain committed to growing the partnership through acquisitions and organic growth and increasing distributions to unitholders over time,” said Gordon Hall, Chairman of the Board of Exterran Holdings.

For the third quarter of 2011, Exterran Partners’ quarterly cash distribution will be $0.4875 per limited partner unit, or $1.95 per limited partner unit on an annualized basis. The third-quarter 2011 distribution is $0.005 higher than the second-quarter 2011 distribution of $0.4825 per limited partner unit and $0.02 higher than the third-quarter 2010 distribution of $0.4675 per limited partner unit.

The cash distribution Exterran Holdings will receive for the third quarter 2011 based upon its limited partner and general partner interests in Exterran Partners is approximately $7.2 million.

Conference Call Details

Exterran Holdings, Inc. (NYSE: EXH) and Exterran Partners, L.P. (NASDAQ: EXLP) announce the following schedule and teleconference information for their third-quarter 2011 earnings release:
  • Teleconference: Thursday, Nov. 3, 2011 at 11:00 a.m. Eastern Time, 10:00 a.m. Central Time. To access the call, United States and Canadian participants should dial 800-446-1671. International participants should dial +1-847-413-3362 at least 10 minutes before the scheduled start time. Please reference Exterran conference call number 30897020.
  • 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. 3, 2011, until 2:00 p.m. Eastern Time on Thursday, Nov. 10, 2011. 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 30897020#.

With respect to Exterran Holdings, EBITDA, as adjusted, a non-GAAP measure, is defined as income (loss) from continuing operations plus income taxes, interest expense (including debt extinguishment costs and gain or loss on termination of interest rate swaps), depreciation and amortization expense, impairment charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations, merger and integration expenses, restructuring charges and other charges. In the third quarter of 2011, the definition of EBITDA, as adjusted was revised to add back non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations. This adjustment was made as management uses the resulting EBITDA, as adjusted as a supplemental measure to review current period operating performance. In addition, this adjustment is similar to the EBITDA definition used for credit facility covenant calculations. This change was also made to prior periods included herein for comparative purposes.

With respect to Exterran Partners, EBITDA, as further adjusted, a non-GAAP measure, is defined as net income (loss) plus income taxes, interest expense (including debt extinguishment costs and gain or loss on termination of interest rate swaps), depreciation and amortization expense, impairment charges, other charges, and non-cash selling, general and administrative (“SG&A”) costs and any amounts by which cost of sales and SG&A costs are reduced as a result of caps on these costs contained in the omnibus agreement to which Exterran Holdings and Exterran Partners are parties (the “Omnibus Agreement”), which amounts are treated as capital contributions from Exterran Holdings for accounting purposes.

With respect to Exterran Partners, distributable cash flow, a non-GAAP measure, is defined as net income (loss) plus depreciation and amortization expense, impairment charges, non-cash SG&A costs, interest expense and any amounts by which cost of sales and SG&A costs are reduced as a result of caps on these costs contained in the Omnibus Agreement, which amounts are treated as capital contributions from Exterran Holdings for accounting purposes, less cash interest expense (excluding amortization of deferred financing fees and costs incurred to early terminate interest rate swaps) and maintenance capital expenditures, and excluding gains/losses on asset sales and other charges.

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

With respect to Exterran Partners, Gross Margin, as adjusted, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization expense) plus any amounts by which cost of sales are reduced as a result of caps on these costs contained in the Omnibus Agreement, which amounts are treated as capital contributions from Exterran Holdings for accounting purposes.

About Exterran Holdings and Exterran Partners

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 more than 10,000 employees and operates in approximately 30 countries.

Exterran Partners, L.P. provides natural gas contract operations services to customers throughout the United States. Exterran Holdings owns an equity interest in Exterran Partners.

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 the control of Exterran Holdings and Exterran Partners (the “Companies”), which could cause actual results to differ materially from such statements. Forward-looking information includes, but is not limited to: the Companies’ operational and financial strategies and ability to successfully effect those strategies; the Companies’ expected future capital expenditures; the Companies’ expectations regarding future economic and market conditions; the Companies’ financial and operational outlook and ability to fulfill that outlook; demand for the Companies’ products and services and growth opportunities for those products and services; statements related to the workforce cost reduction program, including expected savings, restructuring charges and timing; Exterran Holdings’ intention to continue to offer the balance of its U.S. contract operations business to Exterran Partners; and Exterran Partners’ commitment to growing and increasing distributions.

While the Companies believe that the assumptions concerning future events are reasonable, they caution that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of their 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 the Companies 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 and natural gas and the impact on the price of oil and 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; changes in safety, health, environmental and other regulations; and, as to each of the Companies, the performance of the other entity.

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, 2010, Exterran Partners’ Annual Report on Form 10-K for the year ended December 31, 2010, and those set forth from time to time in the Companies’ filings with the Securities and Exchange Commission, which are currently available at www.exterran.com. Except as required by law, the Companies expressly disclaim 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 30,2011
  June 30,2011   September 30,2010
Revenues:
North America contract operations $ 151,402 $ 150,755 $ 152,007
International contract operations 113,759 110,944 111,879
Aftermarket services 106,666 94,142 82,348
Fabrication   332,651     301,731     279,389  
  704,478     657,572     625,623  
 
Costs and expenses:
Cost of sales (excluding depreciation and amortization expense):
North America contract operations 77,639 75,509 78,281
International contract operations 48,227 49,766 46,936
Aftermarket services 85,987 86,533 73,717
Fabrication 303,259 269,352 231,716
Selling, general and administrative 90,969 92,192 88,229
Depreciation and amortization 91,018 92,676 98,503
Long-lived asset impairment 2,310 2,063 2,246
Restructuring charges 2,941 - -
Goodwill impairment 196,142 - -
Interest expense 38,672 34,586 33,050
Equity in loss of non-consolidated affiliates 262 - -
Other (income) expense, net   13,588     (2,951 )   (2,941 )
  951,014     699,726     649,737  
 
Loss before income taxes (246,536 ) (42,154 ) (24,114 )
Benefit from income taxes   (33,491 )   (12,499 )   (7,083 )
Loss from continuing operations (213,045 ) (29,655 ) (17,031 )
Loss from discontinued operations, net of tax   (1,502 )   (569 )   (1,325 )
Net loss (214,547 ) (30,224 ) (18,356 )
Less: Net (income) loss attributable to the noncontrolling interest   (1,427 )   2,198     371  
Net loss attributable to Exterran stockholders $ (215,974 ) $ (28,026 ) $ (17,985 )
 
Basic loss per common share:
Loss from continuing operations attributable to Exterran stockholders $ (3.42 ) $ (0.44 ) $ (0.27 )
Loss from discontinued operations attributable to Exterran stockholders   (0.02 )   (0.01 )   (0.02 )
Net loss attributable to Exterran stockholders $ (3.44 ) $ (0.45 ) $ (0.29 )
Diluted loss per common share:
Loss from continuing operations attributable to Exterran stockholders $ (3.42 ) $ (0.44 ) $ (0.27 )
Loss from discontinued operations attributable to Exterran stockholders   (0.02 )   (0.01 ) $ (0.02 )
Net loss attributable to Exterran stockholders $ (3.44 ) $ (0.45 ) $ (0.29 )
Weighted average common and equivalent shares outstanding:
Basic   62,728     62,669     62,111  
Diluted   62,728     62,669     62,111  
 
Loss attributable to Exterran stockholders:
Loss from continuing operations attributable to Exterran stockholders $ (214,472 ) $ (27,457 ) $ (16,660 )
Loss from discontinued operations, net of tax   (1,502 )   (569 )   (1,325 )
Loss attributable to Exterran stockholders $ (215,974 ) $ (28,026 ) $ (17,985 )
 
 
EXTERRAN HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except percentages)
 
 
  Three Months Ended
September 30,2011   June 30,2011  

September 30,2010
Revenues:
North America contract operations $ 151,402 $ 150,755 $ 152,007
International contract operations 113,759 110,944 111,879
Aftermarket services 106,666 94,142 82,348
Fabrication   332,651     301,731     279,389  
Total $ 704,478   $ 657,572   $ 625,623  
 
Gross Margin (1):
North America contract operations $ 73,763 $ 75,246 $ 73,726
International contract operations 65,532 61,178 64,943
Aftermarket services 20,679 7,609 8,631
Fabrication   29,392     32,379     47,673  
Total $ 189,366   $ 176,412   $ 194,973  
 
Selling, General and Administrative $ 90,969 $ 92,192 $ 88,229
% of Revenues 13 % 14 % 14 %
 
EBITDA, as adjusted (1) $ 99,668 $ 84,185 $ 104,557
% of Revenues 14 % 13 % 17 %
 
Capital Expenditures $ 71,370 $ 56,071 $ 59,063
Less: Proceeds from Sale of PP&E   (6,666 )   (5,046 )   (7,096 )
Net Capital Expenditures $ 64,704   $ 51,025   $ 51,967  
 
Gross Margin Percentage:
North America contract operations 49 % 50 % 49 %
International contract operations 58 % 55 % 58 %
Aftermarket services 19 % 8 % 10 %
Fabrication 9 % 11 % 17 %
Total 27 % 27 % 31 %
 

Total Available Horsepower (at period end):
North America contract operations 3,648 3,688 4,272
International contract operations   1,236     1,196     1,281  
Total   4,884     4,884     5,553  
 
Total Operating Horsepower (at period end):
North America contract operations 2,832 2,834 2,827
International contract operations   977     980     1,020  
Total   3,809     3,814     3,847  
 
Total Operating Horsepower (average):
North America contract operations 2,825 2,839 2,822
International contract operations   978     978     1,032  
Total   3,803     3,817     3,854  
 
Horsepower Utilization (at period end):
North America contract operations 78 % 77 % 66 %
International contract operations 79 % 82 % 80 %
Total 78 % 78 % 69 %
 
Fabrication Backlog:
Compression & accessory $ 166,072 $ 221,014 $ 229,483
Production & processing equipment   406,634     487,760     461,433  
Total $ 572,706   $ 708,774   $ 690,916  
 
Debt to Capitalization:
Debt $ 1,709,024 $ 1,704,200 $ 1,971,309
Exterran stockholders' equity   1,490,396     1,712,861     1,713,583  
Capitalization $ 3,199,420 $ 3,417,061 $ 3,684,892
Total Debt to Capitalization 53 % 50 % 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 EBITDA, as adjusted, and Gross Margin 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,

2011
 

June 30,2011
  September 30,2010
 
Reconciliation of GAAP to Non-GAAP Financial Information:
 
Net loss $ (214,547) $ (30,224) $ (18,356)
Loss from discontinued operations, net of tax (1,502) (569) (1,325)
Loss from continuing operations (213,045) (29,655) (17,031)
Depreciation and amortization 91,018 92,676 98,503
Long-lived asset impairment 2,310 2,063 2,246
Restructuring charges 2,941 - -
Goodwill impairment 196,142 - -
Investment in non-consolidated affiliates impairment 262 - -
(Gain) loss on remeasurement of intercompany balances 14,859 (2,986) (5,128)
Interest expense 38,672 34,586 33,050
Benefit from income taxes (33,491) (12,499) (7,083)
EBITDA, as adjusted (1) 99,668 84,185 104,557
Selling, general and administrative 90,969 92,192 88,229
Equity in loss of non-consolidated affiliates 262 - -
Investment in non-consolidated affiliates impairment (262) - -
Gain (loss) on remeasurement of intercompany balances (14,859) 2,986 5,128
Other (income) expense, net 13,588 (2,951) (2,941)
Gross Margin (1) $ 189,366 $ 176,412 $ 194,973
 
 
Net loss attributable to Exterran stockholders $ (215,974) $ (28,026) $ (17,985)
Loss from discontinued operations 1,502 569 1,325
Charges, after-tax:
Long-lived asset impairment (including the impact on minority interest) 1,298 1,193 1,415
Restructuring charges 1,853 - -
Goodwill impairment 180,643 - -
Investment in non-consolidated affiliates impairment 262 - -
Net loss from continuing operations attributable to Exterran stockholders, excluding charges $ (30,416) $ (26,264) $ (15,245)
 
Diluted loss from continuing operations attributable to Exterran stockholders per common share $ (3.42) $ (0.44) $ (0.27)
Adjustment for charges, after-tax, per common share 2.94 0.02 0.02

Diluted net loss from continuing operations attributable to Exterran stockholders per common share, excluding charges (1)
$ (0.48) $ (0.42)

$ (0.25)
 
(1) Management believes disclosure of EBITDA, as adjusted, diluted net 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 EBITDA, as adjusted, diluted net loss from continuing operations attributable to Exterran stockholders per common share, excluding charges, and Gross Margin 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 PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
 
 
  Three Months Ended

September 30,2011
 

June 30,2011
 

September 30,2010
 
 
Revenue $ 84,437 $ 71,841 $ 62,721
 
Costs and expenses:
Cost of sales (excluding depreciation and amortization) 43,355 39,824 33,819
Depreciation and amortization 19,087 15,459 13,697
Long-lived asset impairment 384 305 93
Selling, general and administrative 10,594 9,927 8,504
Interest expense 7,860 7,553 6,020
Other (income) expense, net   (338 )   455     333  
Total costs and expenses   80,942     73,523     62,466  
Income (loss) before income taxes 3,495 (1,682 ) 255
Income tax expense   242     256     172  
Net income (loss) $ 3,253   $ (1,938 ) $ 83  
 
General partner interest in net income (loss) $ 837   $ 676   $ 420  
 
Limited partner interest in net income (loss) $ 2,416   $ (2,614 ) $ (337 )
 
Weighted average limited partners' units outstanding:
Basic   37,261     33,833     28,434  
 
Diluted   37,278     33,833     28,434  
 
Earnings (loss) per limited partner unit:
Basic $ 0.06   $ (0.08 ) $ (0.01 )
 
Diluted $ 0.06   $ (0.08 ) $ (0.01 )
 
 
EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except per unit amounts and percentages)
 
 
  Three Months Ended

September 30,2011
 

June 30,2011
 

September 30,2010
 
Revenue $ 84,437 $ 71,841 $ 62,721
 
Gross Margin, as adjusted (1) $ 47,275 $ 40,366 $ 35,980
 
EBITDA, as further adjusted (1) $ 38,614 $ 31,988 $ 28,047
% of Revenue 46 % 45 % 45 %
 
Capital Expenditures $ 9,324 $ 16,929 $ 4,037
Less: Proceeds from Sale of Compression Equipment   (1,040 )   (232 )   (30 )
Net Capital Expenditures $ 8,284   $ 16,697   $ 4,007  
 
Gross Margin percentage, as adjusted 56 % 56 % 57 %
 
Distributable cash flow (2) $ 25,720 $ 19,025 $ 19,272
 
Distributions per Limited Partner Unit $ 0.4875 $ 0.4825 $ 0.4675
Distribution to All Unitholders, including Incentive Distributions $ 19,322 $ 19,061 $ 15,732
Distributable Cash Flow Coverage 1.33x 1.00x 1.23x
 

 

 

 

September 30,2011

 

 

June 30,2011

September 30,

2010
 
Debt $ 544,000 $ 539,500 $ 435,500
Total Partners' Capital $ 434,518 $ 444,522 $ 375,941
Total Debt to Capitalization 56 % 55 % 54 %
 
(1) Management believes disclosure of EBITDA, as further adjusted, and Gross Margin, as adjusted, 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 EBITDA, as further adjusted, and Gross Margin, as adjusted, as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as further adjusted, is used by management 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 generated by us 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

September 30,2011
  June 30,2011   September 30,2010
 
Reconciliation of GAAP to Non-GAAP Financial Information:
 
Net income (loss) $ 3,253 $ (1,938 ) $ 83
Income tax expense 242 256 172

Depreciation and amortization
19,087 15,459 13,697
Long-lived asset impairment 384 305 93

Cap on operating and selling, general and administrative costs provided by Exterran Holdings ("EXH")
7,995 10,200 7,770
Non-cash selling, general and administrative costs (207 ) 153 212
Interest expense, net of interest income   7,860     7,553     6,020  
EBITDA, as further adjusted (1) 38,614 31,988 28,047
Cash selling, general and administrative costs 10,801 9,774 8,292
Less: cap on selling, general and administrative costs provided by EXH (1,802 ) (1,851 ) (692 )
Less: other (income) expense, net   (338 )   455     333  
Gross Margin, as adjusted (1) $ 47,275 $ 40,366 $ 35,980
Other income (expense), net 338 (455 ) (333 )
Expensed acquisition costs - 514 356
Less: Gain on sale of compression equipment (in Other (income) expense, net) (319 ) (115 ) (8 )
Less: Cash interest expense (4,951 ) (4,652 ) (5,747 )

Less: Cash selling, general and administrative, as adjusted for cost caps provided by EXH
(8,999 ) (7,923 ) (7,600 )
Less: Income tax expense (242 ) (256 ) (172 )
Less: Maintenance capital expenditures   (7,382 )   (8,454 )   (3,204 )
Distributable cash flow (2) $ 25,720   $ 19,025   $ 19,272  
 
 
Cash flows from operating activities $ 21,600 $ 16,233 $ 11,075
(Provision for) benefit from doubtful accounts (239 ) 4 (560 )
Expensed acquisition costs - 514 356
Cap on operating and selling, general and administrative costs provided by EXH 7,995 10,200 7,770
Maintenance capital expenditures (7,382 ) (8,454 ) (3,204 )
Change in current assets/liabilities   3,746     528     3,835  
Distributable cash flow (2) $ 25,720   $ 19,025   $ 19,272  
 
Net income (loss) $ 3,253 $ (1,938 ) $ 83
Long-lived asset impairment   384     305     93  
Net income (loss), excluding charge $ 3,637   $ (1,633 ) $ 176  
 
Diluted earnings (loss) per limited partner unit $ 0.06 $ (0.08 ) $ (0.01 )
Adjustment for charge per limited partner unit   0.01     0.01     -  
Diluted earnings (loss) per limited partner unit, excluding charge (1) $ 0.07   $ (0.07 ) $ (0.01 )
 
(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, when viewed with our GAAP results and accompanying reconciliations, they provide a more complete understanding of our performance than GAAP results alone. Management uses EBITDA, as further adjusted, diluted earnings (loss) per limited partner unit, excluding charge, and Gross Margin, as adjusted, as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as further adjusted, is used by management 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 generated by us 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)
 
 
  Three Months Ended

September 30,2011
 

June 30,2011
 

September 30,2010
 
Total Available Horsepower (at period end) (1) 1,885 1,905 1,655
 
Total Operating Horsepower (at period end) (1) 1,703 1,684 1,362
 
Average Operating Horsepower 1,691 1,442 1,208
 
Horsepower Utilization:
Spot (at period end) 90% 88% 82%
Average 89% 87% 81%
 

Combined U.S. Contract Operations Horsepower of Exterran Holdings and Exterran Partners covered by contracts converted to service agreements (at period end)
2,123 2,046

1,894
 
Available Horsepower:
 

Total Available U.S. Contract Operations Horsepower of Exterran Holdings and Exterran Partners (at period end)
3,565 3,604 4,167
 

% of U.S. Contract Operations Available Horsepower of Exterran Holdings and Exterran Partners covered by contracts converted to service agreements (at period end)
60% 57% 45%
 
Operating Horsepower:
 

Total Operating U.S. Contract Operations Horsepower of Exterran Holdings and Exterran Partners (at period end)
2,784 2,784 2,773
 

% of U.S. Contract Operations Operating Horsepower of Exterran Holdings and Exterran Partners covered by contracts converted to service agreements (at period end)
76% 73% 68%
 
(1) Includes compressor units leased from Exterran Holdings with an aggregate horsepower (in thousands) of 252, 226 and 242 at September 30, 2011, June 30, 2011 and September 30, 2010, respectively. Excludes compressor units leased to Exterran Holdings with an aggregate horsepower (in thousands) of 29, 21 and 18 at September 30, 2011, June 30, 2011 and September 30, 2010, respectively.

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