Exterran Holdings, Inc. (NYSE:EXH) today reported EBITDA, as adjusted (as defined below), of $170.6 million for the third quarter 2014, compared to $161.1 million for the second quarter 2014 and $157.3 million for the third quarter 2013.

Revenue was $723.8 million for the third quarter 2014, compared to $739.3 million for the second quarter 2014 and $775.6 million for the third quarter 2013.

Fabrication backlog was $839.9 million at September 30, 2014, compared to $818.1 million at June 30, 2014 and $619.4 million at September 30, 2013. Fabrication bookings were $334.2 million for the third quarter 2014, compared to $471.6 million for the second quarter 2014 and $276.2 million for the third quarter 2013.

Exterran Holdings has declared a dividend of $0.15 per share of common stock, a rate of $0.60 per share on an annualized basis, to be paid on November 17, 2014 to stockholders of record at the close of business on November 10, 2014.

"In the third quarter 2014, we achieved growth in operating horsepower in our North America contract operations business driven by our recent acquisition of compression assets from MidCon Compression, L.L.C. and another strong quarter of organic growth primarily in the shale and liquids rich basins. In addition, we achieved a 20% gross margin in our fabrication business, which had another solid quarter of bookings including natural gas processing projects in the United States," said Brad Childers, Exterran Holdings' President and Chief Executive Officer. "We are optimistic about the outlook for the fourth quarter 2014, although the recent decline in oil prices may have an impact on future industry activity levels," added Childers.

Net income (loss) from continuing operations attributable to Exterran stockholders, excluding items, for all periods excludes the benefit of proceeds from the two previously announced sales of Exterran Holdings' nationalized Venezuelan assets, the benefit of which was $23.2 million for the third quarter 2014, compared to $23.0 million for the second quarter 2014 and $22.2 million for the third quarter 2013. At September 30, 2014, we were still due approximately $159 million of principal payments from the sale of these assets.

Net income from continuing operations attributable to Exterran stockholders, excluding items, for the third quarter 2014 was $17.8 million, or $0.25 per diluted common share. In addition to excluding the benefit related to our nationalized Venezuelan assets discussed above, these amounts also exclude pretax charges of $13.5 million due primarily to non-cash long-lived asset impairment charges related to our North America contract operations business. Net loss from continuing operations attributable to Exterran stockholders, excluding items, was $4.7 million, or $0.07 per diluted common share, for the second quarter 2014, compared to net income from continuing operations attributable to Exterran stockholders, excluding items, of $23.7 million, or $0.36 per diluted common share, for the third quarter 2013.

Net income attributable to Exterran stockholders was $34.1 million, or $0.48 per diluted common share, for the third quarter 2014, compared to $12.4 million, or $0.19 per diluted common share, for the second quarter 2014 and $41.0 million, or $0.62 per diluted common share, for the third quarter 2013.

The cash distribution to be received by Exterran Holdings based upon its limited partner and general partner interests in Exterran Partners, L.P. was $14.8 million for the third quarter 2014, compared to $14.0 million for the second quarter 2014 and $12.6 million for the third quarter 2013.

Conference Call Details

Exterran Holdings and Exterran Partners, L.P. will host a joint conference call on Tuesday, Nov. 4, 2014, to discuss their third-quarter 2014 financial results. The call will begin at 11:00 a.m. Eastern Time.

To listen to the call via a live webcast, please visit Exterran's website at www.exterran.com. The call will also be available by dialing 800-446-2782 in the United States and Canada, or +1-847-413-3235 for international calls. Please call approximately 15 minutes prior to the scheduled start time and reference Exterran conference call number 38304099.

A replay of the conference call will be available on Exterran's website for approximately seven days. Also, a replay may be accessed by dialing 888-843-7419 in the United States and Canada, or +1-630-652-3042 for international calls. The access code is 38304099#.

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, restructuring charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations, expensed acquisition costs and other items. EBITDA, as adjusted, excludes the benefit of the two previously announced sales of Exterran Holdings' Venezuelan assets.

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

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 master limited partnership, the leading provider of natural gas contract compression 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' financial and operational 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; demand for Exterran Holdings' products and services and growth opportunities for those products and services; and statements regarding amounts due from the sales of Exterran Holdings' nationalized Venezuelan assets.

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 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; 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, 2013, and those set forth from time to time in Exterran Holdings' filings with the Securities and Exchange Commission, which are 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.
             
EXTERRAN HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
 
 
Three Months Ended

September 30,

June 30,
September 30,
2014 2014 2013
Revenues:
North America contract operations $ 191,000 $ 181,940 $ 152,627
International contract operations 124,355 134,392 117,545
Aftermarket services 96,005 100,359 102,157
Fabrication   312,472     322,579     403,255  
  723,832     739,270     775,584  
 
Costs and Expenses:
Cost of sales (excluding depreciation and amortization expense):
North America contract operations 82,453 77,514 70,877
International contract operations 47,983 46,502 50,598
Aftermarket services 75,510 79,297 80,788
Fabrication 251,401 279,983 328,390
Selling, general and administrative 94,806 95,712 93,581
Depreciation and amortization 98,256 111,956 81,305
Long-lived asset impairment 12,385 9,847 4,571
Restructuring charges 219 353 -
Interest expense 25,737 32,722 28,882
Equity in income of non-consolidated affiliates (4,951 ) (4,909 ) (4,778 )
Other (income) expense, net   4,663     (3,671 )   (5,479 )
  688,462     725,306     728,735  
 
Income before income taxes 35,370 13,964 46,849
Provision for income taxes   11,215     10,870     16,709  
Income from continuing operations 24,155 3,094 30,140
Income from discontinued operations, net of tax   18,003     17,769     15,121  
Net income 42,158 20,863 45,261
Less: Net income attributable to the noncontrolling interest   (8,108 )   (8,486 )   (4,284 )
Net income attributable to Exterran stockholders $ 34,050   $ 12,377   $ 40,977  
 
Basic income (loss) per common share (1):
Income (loss) from continuing operations attributable to Exterran common stockholders $ 0.24 $ (0.08 ) $ 0.39
Income from discontinued operations attributable to Exterran common stockholders   0.27     0.27     0.23  
Net income attributable to Exterran common stockholders $ 0.51   $ 0.19   $ 0.62  
Diluted income (loss) per common share (1):
Income (loss) from continuing operations attributable to Exterran common stockholders $ 0.23 $ (0.08 ) $ 0.39
Income from discontinued operations attributable to Exterran common stockholders   0.25     0.27     0.23  
Net income attributable to Exterran common stockholders $ 0.48   $ 0.19   $ 0.62  
 
Weighted average common shares outstanding used in income (loss) per common share:
Basic   66,432     65,890     64,569  
Diluted   70,406     65,890     65,136  
 
Dividends declared and paid per common share $ 0.15   $ 0.15   $ -  
 

1
  Basic and diluted net income attributable to Exterran common stockholders per common share was computed using the two-class method to determine the net income per share for each class of common stock and participating security (restricted stock and certain of our stock settled restricted stock units) according to dividends declared and participation rights in undistributed earnings. Accordingly, we have excluded net income attributable to participating securities from our calculation of basic and diluted net income attributable to Exterran common stockholders per common share.
 
             
EXTERRAN HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except percentages)
 
 
Three Months Ended
September 30, June 30, September 30,
2014 2014 2013
Revenues:
North America contract operations $ 191,000 $ 181,940 $ 152,627
International contract operations 124,355 134,392 117,545
Aftermarket services 96,005 100,359 102,157
Fabrication   312,472     322,579     403,255  
Total $ 723,832   $ 739,270   $ 775,584  
 
Gross Margin (1):
North America contract operations $ 108,547 $ 104,426 $ 81,750
International contract operations 76,372 87,890 66,947
Aftermarket services 20,495 21,062 21,369
Fabrication   61,071     42,596     74,865  
Total $ 266,485   $ 255,974   $ 244,931  
 
Selling, General and Administrative $ 94,806 $ 95,712 $ 93,581
% of revenue 13 % 13 % 12 %
 
EBITDA, as Adjusted (1) $ 170,648 $ 161,132 $ 157,255
% of revenue 24 % 22 % 20 %
 
Capital expenditures $ 147,529 $ 138,996 $ 92,929
Less: Proceeds from sale of PP&E   (6,337 )   (2,536 )   (12,867 )
Net Capital expenditures $ 141,192   $ 136,460   $ 80,062  
 
Gross Margin Percentage:
North America contract operations 57 % 57 % 54 %
International contract operations 61 % 65 % 57 %
Aftermarket services 21 % 21 % 21 %
Fabrication 20 % 13 % 19 %
Total 37 % 35 % 32 %
 
Total Available Horsepower (at period end):
North America contract operations 4,125 3,976 3,423
International contract operations   1,268     1,248     1,257  
Total   5,393     5,224     4,680  
 
Total Operating Horsepower (at period end):
North America contract operations 3,588 3,422 2,840
International contract operations   952     959     977  
Total   4,540     4,381     3,817  
 
Average Operating Horsepower:
North America contract operations 3,514 3,340 2,845
International contract operations   952     968     992  
Total   4,466     4,308     3,837  
 
Horsepower Utilization (at period end):
North America contract operations 87 % 86 % 83 %
International contract operations 75 % 77 % 78 %
Total 84 % 84 % 82 %
 
September 30, June 30, September 30,
Fabrication Backlog: 2014 2014 2013
Compression & accessory $ 174,540 $ 192,692 $ 177,302
Production & processing equipment 549,961 532,117 357,528
Installation   115,374     93,305     84,605  
Total $ 839,875   $ 818,114   $ 619,435  
 
Balance Sheet:
Debt - Parent level $ 737,720 $ 810,832 $ 844,490
Debt - Exterran Partners, L.P.   1,220,013     1,041,736     719,818  
Total consolidated debt $ 1,957,733   $ 1,852,568   $ 1,564,308  
Exterran stockholders' equity $ 1,793,778   $ 1,770,231   $ 1,631,507  
 

 

1
  Management believes EBITDA, as adjusted, and gross margin provide useful information to investors because these non-GAAP 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 adjusted, 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,
2014 2014 2013
 
Reconciliation of GAAP to Non-GAAP Financial Information:
 
Net income $ 42,158 $ 20,863 $ 45,261
Income from discontinued operations, net of tax   (18,003 )   (17,769 )   (15,121 )
Income from continuing operations 24,155 3,094 30,140
Depreciation and amortization 98,256 111,956 81,305
Long-lived asset impairment 12,385 9,847 4,571
Restructuring charges 219 353 -
Proceeds from sale of joint venture assets (4,951 ) (4,909 ) (4,778 )
Interest expense 25,737 32,722 28,882
(Gain) loss on currency exchange rate remeasurement of intercompany balances 2,766 (2,801 ) 426
Expensed acquisition costs 866 - -
Provision for income taxes   11,215     10,870     16,709  
EBITDA, as adjusted (1) 170,648 161,132 157,255
Selling, general and administrative 94,806 95,712 93,581
Equity in income of non-consolidated affiliates (4,951 ) (4,909 ) (4,778 )
Proceeds from sale of joint venture assets 4,951 4,909 4,778
Gain (loss) on currency exchange rate remeasurement of intercompany balances (2,766 ) 2,801 (426 )
Expensed acquisition costs (866 ) - -
Other (income) expense, net   4,663     (3,671 )   (5,479 )
Gross Margin (1) $ 266,485   $ 255,974   $ 244,931  
 
 
Net Income attributable to Exterran stockholders $ 34,050 $ 12,377 $ 40,977
Income from discontinued operations (18,003 ) (17,769 ) (15,121 )
Items, after-tax:
Long-lived asset impairment (including the impact on noncontrolling interest) 6,379 5,409 2,587
Restructuring charges (including the impact on noncontrolling interest) 88 143 -
Proceeds from sale of joint venture assets (4,951 ) (4,909 ) (4,778 )
Expensed acquisition costs (including the impact on noncontrolling interest)   199     -     -  
Net income (loss) from continuing operations attributable to Exterran stockholders, excluding items $ 17,762   $ (4,749 ) $ 23,665  
 
Diluted income (loss) from continuing operations attributable to Exterran common stockholders $ 0.23 $ (0.08 ) $ 0.39
Adjustment for items, after-tax, per common share (2)   0.02     0.01     (0.03 )

Diluted net income (loss) from continuing operations attributable to Exterran common stockholders per common share, excluding items (1)(2)
$ 0.25   $ (0.07 ) $ 0.36  
 

1
  Management believes EBITDA, as adjusted, diluted net income (loss) from continuing operations attributable to Exterran common stockholders per common share, excluding items, and gross margin provide useful information to investors because these non-GAAP 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 adjusted, as a valuation measure.
 

2
Diluted net income (loss) from continuing operations attributable to Exterran common stockholders per common share, excluding items, was computed using the two-class method to determine the net income (loss) per share for each class of common stock and participating security (restricted stock and certain of our stock settled restricted stock units) according to dividends declared and participation rights in undistributed earnings. Accordingly, we have excluded net income from continuing operations attributable to participating securities, excluding items, of $0.2 million, $0.1 million and $0.4 million for the three months ended September 30, 2014, June 30, 2014, and September 30, 2013, respectively, from our calculation of diluted net income (loss) from continuing operations attributable to Exterran common stockholders per common share, excluding items.

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