
	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenues (Note 2):
Contract operations	$	83,362		$	81,679		$	251,874		$	254,412
Aftermarket services		24,633			30,435			79,154			83,337
Product sales		53,304			57,397			112,634			123,613
		161,299			169,511			443,662			461,362
Costs and expenses:
Cost of sales (excluding depreciation and amortization expense):
Contract operations		27,790			24,548			78,898			79,754
Aftermarket services		19,379			23,135			62,813			63,336
Product sales		46,755			54,263			99,437			125,581
Selling, general and administrative		34,938			29,959			101,199			95,049
Depreciation and amortization		43,889			36,630			132,097			100,887
Impairment (Note 8)		0			1,695			7,959			1,695
Restructuring and other charges (Note 9)		(62	)		238			192			3,550
Interest expense		10,479			9,623			30,800			29,214
Gain on extinguishment of debt (Note 6)		0			(780	)		0			(3,424	)
Other (income) expense, net		(1,074	)		1,178			(1,172	)		(1,169	)
		182,094			180,489			512,223			494,473
Loss before income taxes		(20,795	)		(10,978	)		(68,561	)		(33,111	)
Provision for (benefit from) for income taxes (Note 10)		(5,187	)		5,745			11,105			18,970
Loss from continuing operations		(15,608	)		(16,723	)		(79,666	)		(52,081	)
Loss from discontinued operations, net of tax (Note 3)		(695	)		(998	)		(1,724	)		(15,833	)
Net loss	$	(16,303	)	$	(17,721	)	$	(81,390	)	$	(67,914	)

Basic and diluted net loss per common share (Note 13):
Loss from continuing operations per common share	$	(0.47	)	$	(0.51	)	$	(2.41	)	$	(1.59	)
Loss from discontinued operations per common share		(0.02	)		(0.03	)		(0.05	)		(0.48	)
Net loss per common share	$	(0.49	)	$	(0.54	)	$	(2.46	)	$	(2.07	)

Weighted average common shares outstanding used in net loss per common share (Note 13):
Basic and diluted		33,068			32,806			33,024			32,742

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


											Accumulated
			'Additional								Other
			Paid-in		Accumulated						Comprehensive
	Common Stock		Capital		Deficit			Treasury Stock			Income			Total
Balance, January 1, 2020	$	375	$	747,622	$	(317,238	)	$	(56,567	)	$	35,346		$	409,538
Net loss						(18,304	)								(18,304	)
Foreign currency translation adjustment												(11,056	)		(11,056	)
Treasury stock purchased									(835	)					(835	)
Stock-based compensation, net of forfeitures		2		283											285
Balance, March 31, 2020	$	377	$	747,905	$	(335,542	)	$	(57,402	)	$	24,290		$	379,628
Net loss						(31,889	)								(31,889	)
Foreign currency translation adjustment												(3,730	)		(3,730	)
Treasury stock purchased									(10	)					(10	)
Stock-based compensation, net of forfeitures		1		1,120											1,121
Balance, June 30, 2020	$	378	$	749,025	$	(367,431	)	$	(57,412	)	$	20,560		$	345,120
Net loss						(17,721	)								(17,721	)
Foreign currency translation adjustment												(2,080	)		(2,080	)
Treasury stock purchased									(12	)					(12	)
Stock-based compensation, net of forfeitures				669											669
Balance, September 30, 2020	$	378	$	749,694	$	(385,152	)	$	(57,424	)	$	18,480		$	325,976

Balance, January 1, 2021	$	378	$	750,506	$	(418,529	)	$	(57,431	)	$	20,908		$	295,832
Net loss						(29,873	)								(29,873	)
Foreign currency translation adjustment												(2,417	)		(2,417	)
Treasury stock purchased									(310	)					(310	)
Stock-based compensation, net of forfeitures		2		1,471											1,473
Balance, March 31, 2021	$	380	$	751,977	$	(448,402	)	$	(57,741	)	$	18,491		$	264,705
Net loss						(35,214	)								(35,214	)
Foreign currency translation adjustment												3,219			3,219
Stock-based compensation, net of forfeitures				431											431
Balance, June 30, 2021	$	380	$	752,408	$	(483,616	)	$	(57,741	)	$	21,710		$	233,141
Net loss						(16,303	)								(16,303	)
Foreign currency translation adjustment												(2,021	)		(2,021	)
Treasury stock purchased									(1	)					(1	)
Stock-based compensation, net of forfeitures		-		364											364
Balance, September 30, 2021	$	380	$	752,772	$	(499,919	)	$	(57,742	)	$	19,689		$	215,180

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


	Nine Months Ended September 30,
	2021			2020
Cash flows from operating activities:
Net loss	$	(81,390	)	$	(67,914	)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization		132,097			100,887
Impairment		7,959			1,695
Amortization of deferred financing costs		1,991			1,871
Loss from discontinued operations, net of tax		1,724			15,833
Provision for doubtful accounts		825			4,449
Gain on sale of property, plant and equipment		(738	)		(269	)
(Gain) loss on remeasurement of intercompany balances		810			(3,822	)
(Gain) loss on foreign currency derivatives		2,030			(27	)
Gain on extinguishment of debt		0			(3,424	)
Stock-based compensation expense		2,268			2,075
Deferred income tax expense		48			2,779
Changes in assets and liabilities:
Accounts receivable and notes		17,301			(10,777	)
Inventory		5,682			3,695
Contract assets and contract liabilities, net		(60,969	)		(18,230	)
Other current assets		986			5,271
Accounts payable and other liabilities		7,230			(13,517	)
Other		1,378			5,097
Net cash provided by continuing operations		39,232			25,672
Net cash used in discontinued operations		(9,614	)		(19,884	)
Net cash provided by operating activities		29,618			5,788

Cash flows from investing activities:
Capital expenditures		(23,585	)		(65,852	)
Proceeds from sale of property, plant and equipment		844			240
Net cash used in continuing operations		(22,741	)		(65,612	)
Net cash used in discontinued operations		0			(882	)
Net cash used in investing activities		(22,741	)		(66,494	)

Cash flows from financing activities:
Proceeds from borrowings of debt		164,400			305,000
Repayments of debt		(154,292	)		(229,560	)
Purchases of treasury stock (Note 11)		(311	)		(857	)
Net cash provided by financing activities		9,797			74,583

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(422	)		(750	)
Net increase in cash, cash equivalents and restricted cash		16,252			13,127
Cash, cash equivalents and restricted cash at beginning of period		43,728			16,702
Cash, cash equivalents and restricted cash at end of period	$	59,980		$	29,829

Supplemental disclosure of non-cash transactions:
Accrued capital expenditures	$	11,047		$	2,529

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Note 9 - Restructuring and Other Charges

The energy industry’s focus on cash flow, capital discipline and improving returns has caused delays in the timing of new equipment orders. As a result, in the third quarter of 2019, we announced a cost reduction plan primarily focused on workforce reductions. WeDuring the three months ended September 30, 2021, we released an unused portion of previously expensed restructuring charges of $0.1 million and during the three months ended September 30, 2020, we incurred restructuring and other charges associated with these activities of ~~$0.2 million and $1.3 million for the three months ended September 30, 2020 and 2019, respectively, and $3.6 million and $6.1 million for~~$0.2 million. During the nine months ended September 30, 2021 and 2020, we incurred restructuring and ~~2019,~~other charges associated with these activities of $0.2 million and $3.6 million, respectively. These charges are reflected as restructuring and other charges in our statements of operations and accrued liabilities on our balance sheets. The cost reduction plan is expected to be completed in the ~~first half~~fourth quarter of 2021 and we expect to settle these charges ~~within the next twelve months~~ in cash. ~~At this time, we cannot currently estimate the total restructuring costs that will be incurred as a result of this cost reduction plan.~~

In the second quarter of 2018, we initiated a relocation plan in the Latin American region to better align our contract operations business with our customers. As a result of this plan, during the nine months ended September 30, 2019, we incurred restructuring and other charges of $0.2 million related to relocation costs. The charges incurred in conjunction with this relocation plan are included in restructuring and other charges in our statements of operations. In the second quarter of 2019, we completed restructuring activities related to the relocation plan.

The following table summarizes the changes to our accrued liability balance related to restructuring and other charges for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	Cost
	Reduction Plan
Beginning balance at January 1, 2020	$	2,281
Additions for costs expensed, net		3,550
Reductions for payments		(3,791	)
Foreign exchange impact		(393	)
Ending balance at September 30, 2020	$	1,647

Beginning balance at January 1, 2021	$	1,351
Additions for costs expensed, net		192
Reductions for payments		(1,428	)
Foreign exchange impact		74
Ending balance at September 30, 2021	$	189

Table of Contents

Cost
Reduction Plan Relocation Plan Total
Beginning balance at January 1, 2019 $ 0 $ 309 $ 309
Additions for costs expensed 6,049 293 6,342
Reductions for payments (2,873) (602) (3,475)
Ending balance at September 30, 2019 $ 3,176 $ 0 $ 3,176
Beginning balance at January 1, 2020 $ 2,281 $ 0 $ 2,281
Additions for costs expensed, net 3,550 0 3,550
Reductions for payments (3,791) 0 (3,791)
Foreign exchange impact (393) 0 (393)
Ending balance at September 30, 2020 $ 1,647 $ 0 $ 1,647

The following table summarizes the components of charges included in restructuring and other charges in our statements of operations for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Employee termination benefits $ 238 $ 1,257 $ 986 $ 6,098
Consulting fees 0 0 2,564 0
Relocation costs 0 0 0 244
Total restructuring and other charges $ 238 $ 1,257 $ 3,550 $ 6,342


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021		2020
Employee termination benefits	$	(62	)	$	238	$	121	$	986
Legal fees		0			0		71		2,564
Consulting fees		0			0		0		0
Total restructuring and other charges	$	(62	)	$	238	$	192	$	3,550

The following table summarizes the components of charges included in restructuring and other charges incurred since the announcement of the cost reduction plan in the ~~second~~third quarter of 2019 (in thousands):


	~~Total~~
~~Employee termination benefits~~	$	~~6,243~~
~~Consulting fees~~	~~3,205~~
~~Total restructuring and other charges~~	$	~~9,448~~


	Total
Employee termination benefits	$	6,365
Legal fees		71
Consulting fees		3,205
Total restructuring and other charges	$	9,641

~~Table of Contents~~

Note 10 - Provision for Income Taxes

Our effective tax rate is affected by recurring items, such as tax rates in foreign jurisdictions and the relative amounts of income we earn, or losses we incur, in those jurisdictions. It is also affected by discrete items that may occur in any given year but are not consistent from year to year. Our effective tax rate is also affected by valuation allowances recorded against loss carryforwards in the U.S. and certain other jurisdictions, foreign withholding taxes and changes in foreign currency exchange rates.

The following items had the most significant impact on the difference between our statutory U.S. federal income tax rate of ~~21.0%~~21% and our effective tax rate of ~~(52.3)~~24.9% for the three months ended September 30, ~~2020:~~2021: (i) a ~~(49.9)~~16.2% ~~negative impact resulting from unrecognized tax benefits under FASB’s Interpretation No. 48 of Financial Accounting Standard 109 (“FIN 48”), (ii) a (22.4)% negative~~positive impact resulting from foreign currency devaluations in Argentina, ~~(iii)~~(ii) a ~~(29.1)~~(4.3)% negative impact resulting from foreign taxes in excess of the U.S. tax rate and other rate drivers, ~~and (iv)~~(iii) a ~~31.7%~~4.3% positive impact resulting from deemed inclusions in the U.S. and (iv) a ~~release~~(9.8)% negative impact resulting from an addition of valuation allowances against U.S. deferred tax assets.

The following items had the most significant impact on the difference between our statutory U.S. federal income tax rate of ~~21%~~21% and our effective tax rate of ~~(57.3)~~(16.2)% for the nine months ended September 30, ~~2020:~~2021: (i) a (27.7)% negative impact resulting primarily from rate differences between U.S. and foreign jurisdictions including foreign withholding taxes, (ii) a (26.7)% negative impact resulting from unrecognized tax benefits under FIN 48, (iii) a (15.6)(3.1)% negative impact resulting from foreign currency devaluations in Argentina, ~~and (iv)~~(ii) a ~~(2.7)~~(15.2)% negative impact resulting from foreign taxes in excess of the ~~recording~~U.S. tax rate and other rate drivers, (iii) a (7.1)% negative impact resulting from deemed inclusions in the U.S. and (iv) a (7.5)% negative impact resulting from an addition of valuation allowances against U.S. deferred tax assets.

Our effective tax rate ~~decreased~~increased for the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 primarily due to ~~a decrease~~an increase in valuation allowances recorded in the U.S., ~~a decrease~~an increase in foreign ~~withholding~~taxes in excess of the U.S. tax rate, an increase in deemed inclusions in the U.S., a decrease in the FIN 48 reserve and a decrease in tax related to foreign exchange movement in Argentina.

Note 11 - Stockholders’ Equity

Share Repurchase Program

On February 20, 2019, our board of directors approved a share repurchase program under which the Company is authorized to purchase up to ~~$100.0~~$100.0 million of its outstanding common stock through February 2022. The timing and method of any repurchases under the program will depend on a variety of factors, including prevailing market conditions among others. Purchases under the program may be suspended or discontinued at any time and we have no obligation to repurchase any amount of our common shares under the program. Shares of common stock acquired through the repurchase program are held in treasury at cost. During the nine months ended September 30, ~~2019, we repurchased 3,054,338 shares of our common stock for $38.9 million in connection with our share repurchase program. During the nine months ended September 30,~~2021 and 2020, we did 0t0t repurchase any shares under this program. As of September 30, ~~2020,~~2021, the remaining authorized repurchase amount under the share repurchase program was ~~$57.7~~$57.7 million.

Table of Contents

Additionally, treasury stock purchased during the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 included shares withheld to satisfy employees’ tax withholding obligations in connection with vesting of restricted stock awards.

Note 12 - Stock-Based Compensation

Stock Options

There were 0 stock options granted during the nine months ended September 30, ~~2020~~2021 and ~~2019.~~

2020.

Restricted Stock, Restricted Stock Units and Performance Units

For grants of restricted stock, restricted stock units and performance units, we recognize compensation expense over the applicable vesting period equal to the fair value of our common stock at the grant date. Grants of restricted stock, restricted stock units and performance units generally vest ~~one third per year~~over two or three years proportionately on each ~~of the first three anniversaries of the grant date. Certain grants of restricted stock vest on the third anniversary of the~~ grant date ~~and certain grants of performance units vest on the second anniversary of the grant date.~~

anniversary.

~~Table of Contents~~

The table below presents the changes in restricted stock, restricted stock units and performance units for our common stock during the nine months ended September 30, ~~2020.~~2021.


	Equity Awards					Liability Awards
				Weighted Average					Weighted Average
	Shares			Grant-Date Fair		Shares			Grant-Date Fair
	(in thousands)			Value Per Share		(in thousands)			Value Per Share
Non-vested awards, January 1, 2021		320		$	16.02		1,198		$	9.35
Granted		227			4.76		1,446			4.84
Vested		(294	)		12.85		(371	)		14.02
Cancelled		(11	)		17.42		(55	)		6.25
Non-vested awards, September 30, 2021		242			9.25		2,218			5.71

Equity Awards Liability Awards
Shares
(in thousands) Weighted Average
Grant-Date Fair
Value Per Share Shares
(in thousands) Weighted Average
Grant-Date Fair
Value Per Share
Non-vested awards, January 1, 2020 842 $ 22.79 318 $ 17.01
Granted 167 6.91 1,182 8.54
Vested (440) 20.59 (80) 26.24
Cancelled (242) 28.07 (207) 9.90
Non-vested awards, September 30, 2020 327 13.73 1,213 9.36

(1)

Defined as adjusted gross margin divided by revenue.

(1)

Defined as adjusted gross margin divided by revenue.

The decrease in revenue during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 was primarily due to ~~decreases of~~ approximately ~~$22.9 million for changes in rates, $12.6~~$21.5 million in contract stops, ~~$8.1~~$5.3 million impact of devaluation on the Argentine Peso during the current year period ~~$6.6 million impact of foreign currency exchange rates in Brazil,~~ and ~~$6.2~~$10.0 million from the sale of equipment pursuant to a purchase option exercised by ~~customers~~a customer during the ~~fourth quarter of 2019.~~prior year period. These revenue decreases were partially offset by an increase of ~~$29.9~~$9.0 million due to the start-up of ~~projects~~a project that ~~were~~was not operating in the prior year period, ~~an increase of $10.3 million from the sale of equipment pursuant to a purchase option exercised by customers during the first quarter of 2020~~ and an increase of ~~$3.2~~$25.1 million primarily driven by an increase of deferred revenue recognized resulting from a change in the remaining term of a contract ~~that will result~~ in ~~our recognizing $87 million~~the third quarter of ~~remaining deferred revenue previously received from~~2020 and the ~~customer over two remaining years instead~~early termination of ~~eight years. Gross~~a contract in the current year period. Adjusted gross margin decreased during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019 primarily~~2020 due to the revenue ~~decreases~~changes explained above. The change in the remaining ~~term~~terms of the ~~contract~~contracts noted above resulted in additional costs during the nine months ended September 30, ~~2020~~2021 in the form of depreciation expense, which is excluded from adjusted gross margin. ~~Gross~~Adjusted gross margin percentage during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 remained flat.

~~increased primarily due to reduced operating expenses relative to the prior year~~

~~Table of Contents~~

Aftermarket Services

(dollars in thousands)

Nine Months Ended
September 30,
2020 2019 Change % Change
Revenue $ 83,337 $ 92,308 $ (8,971) (10) %
Cost of sales (excluding depreciation and amortization expense) 63,336 67,814 (4,478) (7) %
Gross margin $ 20,001 $ 24,494 $ (4,493) (18) %
Gross margin percentage 24 % 27 % (3) % (11) %


	Nine Months Ended
	September 30,
	2021			2020			Change			% Change
Revenue	$	79,154		$	83,337		$	(4,183	)		(5	)%
Cost of sales (excluding depreciation and amortization expense)		62,813			63,336			(523	)		(1	)%
Adjusted gross margin	$	16,341		$	20,001		$	(3,660	)		(18	)%
Adjusted gross margin percentage		21	%		24	%		(3	)%		-13	%

The decrease in revenue during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 was primarily due to ~~decreases~~a decrease in ~~installation services and~~ operation and maintenance ~~services. Gross~~and overhaul services in the Middle East and Africa region, partially offset by an increase in part sales in the Asia Pacific region. Adjusted gross margin and adjusted gross margin percentage ~~decreased~~ during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 decreased primarily due to the ~~revenue decrease explained above and the~~ product mix ~~during the current year period.~~

with part sales historically having lower margins than other areas of our aftermarket services business.

Product Sales

(dollars in thousands)

Nine Months Ended
September 30,
2020 2019 Change % Change
Revenue $ 123,613 $ 254,367 $ (130,754) (51) %
Cost of sales (excluding depreciation and amortization expense) 125,581 217,073 (91,492) (42) %
Gross margin $ (1,968) $ 37,294 $ (39,262) (105) %
Gross margin percentage (2) % 15 % (17) % (113) %

Table of Contents


	Nine Months Ended
	September 30,
	2021			2020			Change			% Change
Revenue	$	112,634		$	123,613		$	(10,979	)		(9	)%
Cost of sales (excluding depreciation and amortization expense)		99,437			125,581			(26,144	)		(21	)%
Adjusted gross margin	$	13,197		$	(1,968	)	$	15,165			(771	)%
Adjusted gross margin percentage		12	%		(2	)%		14	%		(700	)%

The decrease in revenue during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 was primarily due to ~~a decrease~~decreases of $202.1 million in processing and treating equipment revenue due to nearing completion on a specific project and a decline in bookings. The decline in bookings is due to volatility in demand for energy and in commodity prices as well as an industry trend towards disciplined capital spending. This decrease was partially offset by increases of $63.2$54.9 million and ~~$11.1~~$9.0 million in compression revenue and water solutions revenue, ~~respectively. Gross~~respectively, partially offset by an increase of $50.9 million in processing and treating equipment revenue. The decrease in compression revenue was mainly due to a decrease in revenue in the Middle East and Africa region in the current year period and the completion of projects in the Asia Pacific region during the first quarter of 2021. The decrease in water solutions revenue was due to projects in the Middle East and Africa region. The increase in processing and treating equipment revenue were due to projects in the Middle East and Africa region partially offset by a decrease in the North America region due to less activity. Adjusted gross margin ~~decreased~~increased during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 due to ~~the revenue decrease explained above and~~ higher expenses on a specific ~~project. Gross~~project in the prior year period. Adjusted gross margin percentage increased during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019 decreased primarily~~2020 due to the higher expenses discussed above during the prior year period and a shift in product mix during the current year period.

Costs and Expenses

(dollars in thousands)

Nine Months Ended
September 30,
2020 2019 Change % Change
Selling, general and administrative $ 95,049 $ 108,902 $ (13,853) (13) %
Depreciation and amortization 100,887 113,450 (12,563) (11) %
Impairments 1,695 8,889 (7,194) (81) %
Restructuring and other charges 3,550 6,342 (2,792) (44) %
Interest expense 29,214 28,194 1,020 4 %
Gain on extinguishment of debt (3,424) — (3,424) N/A
Other (income) expense, net (1,169) 399 (1,568) (393) %


	Nine Months Ended
	September 30,
	2021			2020			Change			% Change
Selling, general and administrative	$	101,199		$	95,049		$	6,150			6	%
Depreciation and amortization		132,097			100,887			31,210			31	%
Impairment		7,959			1,695			6,264			370	%
Restructuring and other charges		192			3,550			(3,358	)		(95	)%
Interest expense		30,800			29,214			1,586			5	%
Gain on extinguishment of debt		—			(3,424	)		3,424			(100	)%
Other (income) expense, net		(1,172	)		(1,169	)		(3	)		—

Selling, general and administrative

SG&A expense ~~decreased~~increased during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 primarily due to ~~a decrease~~increases in compensation, ~~costs,~~legal and network related expenses in the current year period, partially offset by ~~the increase~~a decrease in allowance for doubtful accounts recorded during the prior year period primarily due to the expected impact of COVID-19 on our customers. SG&A expense as a percentage of revenue was ~~21%~~23% and ~~18%~~21% during the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

~~Table of Contents~~

Depreciation and amortization

Depreciation and amortization expense during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019 decreased~~2020 increased primarily due to ~~a decrease in~~approximately $23.6 million of additional depreciation expense ~~of approximately $27.9 million~~recognized in the current year period ~~resulting from~~on two contract operations projects due to changes in the ~~sale~~remaining terms of a contract during the third quarter of 2020 and the early termination of a contract in the current year period, and approximately $6.2 million in depreciation for equipment on a contract operations ~~contract in the fourth quarter of 2019. This decrease~~project that was ~~partially offset by an increase of approximately $16.3 million in depreciation for installation costs and equipment on contract operations projects that were~~ not operating in the prior year ~~period~~period. This was partially offset by a decrease of $1.7 million in the Middle East and ~~an additional depreciation expense~~Africa region for a project that ended. Additionally, in the first quarter of ~~$2.6 million recognized during~~2021, we evaluated the salvage values of our property, plant and equipment. As a result of this evaluation, we changed the salvage values for our compression equipment to a maximum salvage value of 5% from 15%. During the nine months ended September 30, ~~2020 on a contract operations project due~~2021, we recorded an increase to ~~changes in the remaining term~~depreciation expense of ~~a contract.~~

~~Impairments~~

During the third quarter of 2020, we impaired certain assets due to the termination of a contract operations project where it was not cost effective to move the assets and try to utilize them with a different customer. Asapproximately $3.1 million as a result ~~we removed them from the fleet and recorded an impairment~~ of ~~$1.7 million~~this change in salvage value. The estimated increase in depreciation expense during 2021 will be approximately $5 million.

Impairment

During the nine months ended September 30, ~~2020.~~

~~During~~2021, we determined that there was no visibility to continuing a contract with a customer in the ~~second quarter~~Latin America region. This contract included installation costs, deferred start-up costs and demobilization costs that were previously capitalized

Table of ~~2019,~~Contents

where it is highly unlikely we ~~classified certain long-lived assets as assets held for sale in our balance sheets. In conjunction with the planned disposition of these units,~~will generate future cash flows. As a result, we recorded an $8.0 million asset impairment ~~charges~~to reduce the book value of ~~$8.9 million to write-down~~ these assets to ~~their approximate~~zero, which is its estimated fair ~~values for the nine months ended~~value as of September 30, ~~2019 based on the expected net proceeds.~~

2021.

Restructuring and other charges

The energy industry’s focus on capital discipline and improving returns has caused delays in the timing of new equipment orders. As a result, in the ~~second~~third quarter of 2019, we announced a cost reduction plan primarily focused on workforce reductions. We incurred restructuring and other charges associated with these activities of ~~$3.6~~$0.2 million and ~~$6.1~~$3.6 million during the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively.

In the second quarter of 2018, we initiated a relocation plan in the Latin America region to better align our contract operations business with our customers. As a result of this plan, during the nine months ended September 30, 2019, we incurred restructuring and other charges of $0.2 million primarily related to relocation costs.

Interest expense

The increase in interest expense during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 was primarily due to a ~~decrease in capitalized interest.~~higher average balance of long-term debt. During the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the average daily outstanding borrowings of long-term debt were $580.1 million and $496.7 million, ~~and $508.8 million,~~ respectively.

Extinguishment of debt

During the nine months ended September 30, 2020, we purchased and retired $24.0 million principal amount of our 2017 Notes for $20.6 million including $0.3 million of accrued interest. During the nine months ended September 30, 2020, we recognized a gain on extinguishment of debt of $3.4 million, which was calculated as the difference between the repurchase price and the carrying amount of the 2017 Notes, partially offset by $0.2 million in related deferred financing costs.

Other (income) expense, net

The change in other ~~(income)~~ expense, net, was primarily due to an increase of $8.4 million in interest income in the current year period. This is almost fully offset by foreign currency losses $8.2 million during the nine months ended September 30, 2021 compared to foreign currency losses of $2.0 million during the nine months ended September 30, 2020 ~~compared to foreign~~as well as an increase of $2.1 million in derivative losses in the current year period. Foreign currency losses ~~net~~included translation losses of ~~losses on foreign currency derivatives,~~$0.8 million and gains of ~~$3.5~~$3.8 million during the nine months ended September 30, ~~2019. Foreign currency losses~~2021 and gains included translation gains, net of gains on foreign currency derivatives, of $3.8 million and translation losses, net of losses on foreign currency derivatives, of $0.1 million during the nine months ended September 30, 2020, ~~and 2019,~~ respectively, related to the currency remeasurement of our foreign subsidiaries’ non-functional currency denominated intercompany obligations. ~~The change in other (income) expense, net, also included a decrease of $1.1 million in gains on sale of property, plant and equipment in the current year period.~~

~~Table of Contents~~

Income Taxes

(dollars in thousands)

Nine Months Ended
September 30,
2020 2019 Change % Change
Provision for income taxes $ 18,970 $ 20,209 $ (1,239) (6) %
Effective tax rate (57.3) % (77.6) % 20.3 % (26) %


	Nine Months Ended
	September 30,
	2021			2020			Change			% Change
Provision for income taxes	$	11,105		$	18,970		$	(7,865	)		(41	)%
Effective tax rate		(16.2	)%		(57.3	)%		41.1	%		(72	)%

The following items had the most significant impact on the difference between our statutory U.S. federal income tax rate of 21% and our effective tax rate of (16.2)% for the nine months ended September 30, ~~2020:~~2021: (i) a (27.7)% negative impact resulting primarily from rate differences between U.S. and foreign jurisdictions including foreign withholding taxes, (ii) a (26.7)% negative impact resulting from unrecognized tax benefits under FIN 48, (iii) a (15.6)(3.1)% negative impact resulting from foreign currency devaluations in Argentina, ~~and (iv)~~(ii) a ~~(2.7)~~(15.2)% negative impact resulting from foreign taxes in excess of the ~~recording~~U.S. tax rate and other rate drivers, (iii) a (7.1)% negative impact resulting from deemed inclusions in the U.S. and (iv) a (7.5)% negative impact resulting from an addition of valuation allowances against U.S. deferred tax assets.

Discontinued Operations

(dollars in thousands)

Nine Months Ended
September 30,
2020 2019 Change % Change
Income (loss) from discontinued operations, net of tax $ (15,833) $ 23,695 $ (39,528) (167) %

~~Income (loss)~~

Table of Contents


	Nine Months Ended
	September 30,
	2021			2020			Change		% Change
Loss from discontinued operations, net of tax	$	(1,724	)	$	(15,833	)	$	14,109		(89	)%

Loss from discontinued operations, net of tax, includes our Belleli EPC business and our U.S. compression fabrication business.

~~Income (loss)~~Loss from discontinued operations, net of tax, during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 decreased due to a ~~$34.3~~$15.4 million decrease in ~~income~~loss from U.S. ~~compression business and a $5.4 million decrease in income from Belleli EPC.~~compression. The decrease in ~~income~~loss in U.S. compression business was primarily driven by the decrease in ~~orders~~activity for the business, and a $6.5 million ~~impairment. The decrease in income from Belleli EPC~~impairment recorded during the nine months ended September 30, 2020. This was ~~primarily due to $6.5 million tax benefit related to a settlement of Italian tax litigation previously recorded as an unrecognized tax benefit,~~ partially offset by ~~payment received~~a $1.3 million increase in loss from ~~a customer for amounts that were previously reserved.~~Belleli EPC. For further details on our discontinued operations, see Note 3 to the Financial Statements.

Liquidity and Capital Resources

Our unrestricted cash balance was ~~$28.2~~$57.5 million at September 30, ~~2020~~2021 compared to ~~$16.7~~$40.3 million at December 31, ~~2019.~~2020. Working capital increased to ~~$116.5~~$164.4 million at September 30, ~~2020~~2021 from ~~$109.3~~$154.7 million at December 31, ~~2019.~~2020. The increase in working capital was primarily due to ~~a decrease in accounts payable and increases in contract assets and accounts receivables, partially offset by increases~~decreases in contract liabilities and current liabilities associated with discontinued operations, and increases in cash and contract assets, partially offset by an increase in accrued liabilities and ~~a decrease~~decreases in accounts receivable and inventory. The decrease in accounts payable was largely caused by the timing of purchases and payments to suppliers during the current year period. The increase in contract assets was primarily driven by the timing of milestone billings on product sales projects. The increase in accounts receivables was due to a delay in payments from customers. The increase in contract liabilities was primarily driven by the ~~change~~progression of product sales projects and the timing of milestones billings in the ~~term~~Middle East and Africa region. The decrease in current liabilities associated with discontinued operations was driven by the decrease in activities in our U.S. compression fabrication business. The increase in cash is explained below within the operating, investing and financing activities. The increase in contract assets is due to the timing of ~~a contract operation services contract.~~milestone billings in the Middle East and Africa region. The increase in accrued liabilities was primarily due to progression of product sales projects in the Middle East and Africa region. The decrease in accounts receivables was due to timing of collections primarily in the ~~interest payment of the 2017 Notes.~~Middle East and Africa region. The decrease in inventory was primarily driven by the progression of product sales activity.

~~Table of Contents~~

Our cash flows from operating, investing and financing activities, as reflected in the statements of cash flows, are summarized in the following table (in thousands):

Nine Months Ended
September 30,
2020 2019
Net cash provided by (used in) continuing operations:
Operating activities $ 25,672 $ 157,461
Investing activities (65,612) (166,481)
Financing activities 74,583 49,486
Effect of exchange rate changes on cash, cash equivalents and restricted cash (750) (1,298)
Discontinued operations (20,766) (36,648)
Net change in cash, cash equivalents and restricted cash $ 13,127 $ 2,520


	Nine Months Ended
	September 30,
	2021			2020
Net cash provided by (used in) continuing operations:
Operating activities	$	39,232		$	25,672
Investing activities		(22,741	)		(65,612	)
Financing activities		9,797			74,583
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(422	)		(750	)
Discontinued operations		(9,614	)		(20,766	)
Net change in cash, cash equivalents and restricted cash	$	16,252		$	13,127

Operating Activities.The ~~decrease~~increase in net cash provided by operating activities during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 was primarily attributable to ~~a decrease in~~improved working capital and improved adjusted gross margin for our product sales ~~segment~~segment. Working capital changes during the nine months ended September 30, 2021 included an increase of $17.3 million in accounts receivable and notes, an increase of $5.7 million in inventory, a decrease of $61.0 million in ~~cash received from upfront billings on~~ contract ~~operations projects.~~assets and contract liabilities, net, and an increase of $7.2 million in accounts payable and accrued liabilities. Working capital changes during the nine months ended September 30, 2020 included a decrease of ~~$13.5 million in accounts payable and other liabilities, an increase of $12.6~~$18.2 million in contract assets and ~~an increase~~contract liabilities, net, a decrease of $10.8 million in accounts receivable and ~~notes. Working capital changes during the nine months ended September 30, 2019 included an increase of $68.0 million in contract liabilities, an increase of $18.3 million in inventory~~notes and a decrease of ~~$23.9~~$13.5 million in ~~contract assets.~~accounts payable and accrued liabilities.

Investing Activities.The decrease in net cash used in investing activities during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 was primarily attributable to a ~~$104.1~~$42.2 million decrease in capital expenditures. The decrease in capital expenditures was primarily driven by the timing of awards and growth in capital expenditures for new contract operations projects.

Financing Activities.The ~~increase~~decrease in net cash provided by financing activities during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 was primarily attributable to a decrease ~~of $40.7 million in purchases of treasury stock, partially offset by a decrease~~ in net borrowings of ~~$15.2~~$65.3 million on our long-term debt.

Table of Contents

Discontinued Operations.The decrease in net cash used in discontinued operations during the nine months ended September 30, ~~2020~~2021 compared to the nine months ended September 30, ~~2019~~2020 was primarily attributable to working capital changes related to our U.S. compression fabrication business.

Capital Requirements.Our contract operations business is capital intensive, requiring significant investment to maintain and upgrade existing operations.Our capital spending is primarily dependent on the demand for our contract operations services and the availability of the type of equipment required for us to render those contract operations services to our customers. Our capital requirements have consisted primarily of, and we anticipate will continue to consist of, the following:

•

growth capital expenditures, which are made to expand or to replace partially or fully depreciated assets or to expand the operating capacity or revenue generating capabilities of existing or new assets, whether through construction, acquisition or modification; and

•

maintenance capital expenditures, which are made to maintain the existing operating capacity of our assets and related cash flows further extending the useful lives of the assets.

The majority of our growth capital expenditures are related to installation costs on contract operations services projects and acquisition costs of new compressor units and processing and treating equipment that we add to our contract operations fleet. In addition, growth capital expenditures can include the upgrading of major components on an existing compressor unit where the current configuration of the compressor unit is no longer in demand and the compressor unit is not likely to return to an operating status without the capital expenditures. These latter expenditures substantially modify the operating parameters of the compressor unit such that it can be used in applications for which it previously was not suited. Maintenance capital expenditures are related to major overhauls of significant components of a compressor unit, such as the engine, compressor and cooler, that return the components to a “like new” condition, but do not modify the applications for which the compressor unit was designed.

~~Table of Contents~~

We generally invest funds necessary to manufacture contract operations fleet additions when our idle equipment cannot be reconfigured to economically fulfill a project’s requirements and the new equipment expenditure is expected to generate economic returns over its expected useful life that exceeds our targeted return on capital. We currently plan to spend approximately ~~$75~~$55 million to ~~$85~~$65 million in capital expenditures during ~~2020,~~2021, including (1) approximately ~~$55~~$35 million to ~~$65~~$45 million on contract operations growth capital expenditures based on contracts currently in our backlog and (2) approximately $20 million on equipment maintenance capital related to our contract operations business and other capital expenditures.

Historically, we have financed capital expenditures with a combination of net cash provided by operating and financing activities. Our ability to access the capital markets may be restricted at the time when we would like, or need, to do so, which could have an adverse impact on the cost and access to capital and our ability to maintain our operations and to grow. For example, COVID-19 disrupted the broader financial markets and the capital markets for energy service related companies continue to be impacted. If any of our lenders become unable to perform their obligations under the Amended Credit Agreement, our borrowing capacity under our revolving credit facility could be reduced. Inability to borrow additional amounts under our revolving credit facility could limit our ability to fund our future growth and operations. Based on current market conditions, we expect that net cash provided by operating activities and borrowings under our revolving credit facility will be sufficient to finance our operating expenditures, capital expenditures and other contractual cash obligations, including our debt obligations. However, if net cash provided by operating activities and borrowings under our revolving credit facility are not sufficient, we may seek additional debt or equity financing.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and financial markets and created significant volatility and disruption across most industries. Efforts to mitigate the spread of COVID-19 have also resulted in decreased energy demand and additional weakness in energy pricing. The broader implications of COVID-19 on our customers and our long-term future results of operations and overall financial condition remains uncertain.

Long-Term Debt.We and our wholly owned subsidiary, Exterran Energy Solutions, L.P. (“EESLP”), are parties to an amended and restated creditagreement (the ~~“Credit~~“Amended Credit Agreement”) consisting of a ~~$700.0~~$650.0 million revolving credit facility expiring in October 2023.

During the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the average daily ~~outstanding~~ borrowings of long-term debt were ~~$496.7~~$580.1 million and ~~$508.8~~$496.7 million, respectively. The weighted average annual interest rate on outstanding borrowings under our revolving credit facility at September 30, 2021 and 2020 was 3.1% and ~~2019 was~~ 2.4% ~~and 4.1%~~, respectively. LIBOR and certain other “benchmarks” have been ~~the~~ subject of national, international and other regulatory guidance and proposals for reform. In particular, on July 27, 2017, the United Kingdom’s Financial Conduct Authority (the “FCA”),

Table of Contents

which regulates LIBOR, publicly announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. On March 5, 2021, the FCA announced that USD LIBOR will no longer be published after June 30, 2023. It is unclear whether, at that time, LIBOR will cease to exist or if new methods of calculating LIBOR will be established. Central banks and regulators in a number of major jurisdictions (for example, U.S., United Kingdom, European Union, Switzerland, and Japan) have convened working groups to find and implement the transition to suitable replacement benchmarks. ~~In the U.S. the~~The Alternative Reference Rates Committee, a ~~group~~steering committee consisting of large U.S. financial institutions convened by the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, ~~identified~~has recommended replacing LIBOR with the Secured Overnight Financing Rate ~~a rate based on U.S. report trading, as its preferred alternative rate for LIBOR.~~(“SOFR”), an index supported by short-term Treasury repurchase agreements. We are ~~in the beginning stages of creating a program that focuses on identifying, evaluating,~~continuing to evaluate and ~~monitoring~~monitor financial and non-financial impacts and risks that may result ifwhen LIBOR rates are no longer ~~published after 2021.~~

published.

As of September 30, ~~2020,~~2021, we had ~~$170.0 million in outstanding borrowings and $11.8~~$53.4 million in outstanding letters of credit under our revolving credit ~~facility. At September 30, 2020,~~facility, and taking into account guarantees through outstanding letters of credit, we had undrawn capacity of ~~$518.2~~$370.6 million under our revolving credit facility. Our Amended Credit Agreement limits our Total Debt to EBITDA ratio (as defined in the Amended Credit Agreement) on the last day of the fiscal quarter to no greater than 4.50 to 1.0. As a result of this limitation, ~~$145.9~~$143.3 million of the ~~$518.2~~$370.6 million of undrawn capacity under our revolving credit facility was available for additional borrowings as of September 30, ~~2020.~~

2021.

We have agreements with financial institutions under which approximately $47.5 million of letters of credit or bank guarantees were outstanding as of September 30, 2021. These are put in place in certain situations to guarantee our performance obligations under contracts with counterparties.

The Amended Credit Agreement contains various covenants with which we, EESLP and our respective restricted subsidiaries must comply, including, but not limited to, limitations on the incurrence of indebtedness, investments, liens on assets, repurchasing equity, making distributions, transactions with affiliates, mergers, consolidations, dispositions of assets and other provisions customary in similar types of agreements. We are required to maintain, on a consolidated basis, a minimum interest coverage ratio (as defined in the Amended Credit Agreement) of 2.25 to 1.00; a maximum total leverage ratio (as defined in the Amended Credit Agreement) of 4.50 to 1.00; and a maximum senior secured leverage ratio (as defined in the Amended Credit Agreement) of 2.75 to 1.00. As of September 30, ~~2020,~~2021, we maintained a ~~4.3~~6.3 to 1.0 interest coverage ratio, a ~~3.5~~3.6 to 1.0 total leverage ratio and a ~~1.2~~1.4 to 1.0 senior secured leverage ratio. As of September 30, ~~2020,~~2021, we were in compliance with all financial covenants under the Amended Credit Agreement.

~~Table of Contents~~

In April 2017, our 100% owned subsidiaries EESLP and EES Finance Corp. issued the 8.125% senior unsecured notes due 2025 (the “2017 Notes”), which consisted of $375.0 million aggregate principal amount of the ~~2017 Notes.~~senior unsecured notes which have $350.0 million outstanding as of September 30, 2021. We guarantee the 2017 Notes on a senior unsecured basis. We may redeem the 2017 Notes at any time in cash, in whole or part, at certain redemption prices, including the applicable make-whole premium plus accrued and unpaid interest, if any, to the date of redemption.

During the nine months ended September 30, 2020, we purchased and retired $24.0 million principal amount of our 2017 Notes for $20.6 million ~~(including~~including $0.3 million of accrued ~~interest) resulting in~~interest. During the nine months ended September 30, 2020, we recognized a gain on extinguishment of debt of $3.4 ~~million. The gain~~million, which was calculated as the difference between the repurchase price and the carrying amount of the 2017 Notes, partially offset by $0.2 million in related deferred financing costs.

We may from time to time seek to retire, extend or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such extensions, repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Unrestricted Cash.Of our ~~$28.2~~$57.5 million unrestricted cash balance at September 30, ~~2020, $27.4~~2021, $56.2 million was held by our non-U.S. subsidiaries. In the event of adistribution of earnings to the U.S. in the form of dividends, we may be subject to foreign withholding taxes. We do not believe that the cash held by our non-U.S. subsidiaries has an adverse impact on our liquidity because we expect that the cash we generate in the U.S., the available borrowing capacity under our revolving credit facility and the repayment of intercompany liabilities from our non-U.S. subsidiaries will be sufficient to fund the cash needs of our U.S. operations for the foreseeable future.

Share Repurchase Program. On February 20, 2019, our board of directors approved a share repurchase program under which the Company is authorized topurchase up to $100.0 million of its outstanding common stock through February 2022. The timing and method of any repurchases under the program will depend on a variety of factors, including prevailing market conditions among others. Purchases under the program may be suspended or discontinued at any time and we have no obligation to repurchase any amount of our common shares under the program.

Table of Contents

Shares of common stock acquired through the repurchase program are held in treasury at cost. During the nine months ended September 30, ~~2019, we repurchased 3,054,338 shares of our common stock for $38.9 million in connection with our share repurchase program. During the nine months ended September 30,~~2021 and 2020, we did not repurchase any shares under this program. As of September 30, ~~2020,~~2021, the remaining authorized repurchase amount under the share repurchase program was $57.7 million.

Dividends.We do not currently anticipate paying cash dividends on our common stock. We currently intend to retain our future earnings to support thegrowth and development of our business. The declaration of any future cash dividends and, if declared, the amount of any such dividends, will be subject to our financial condition, earnings, capital requirements, financial covenants, applicable law and other factors our board of directors deems relevant.

Supplemental Guarantor Financial Information

In April 2017, our 100% owned subsidiaries EESLP and EES Finance Corp. (together, the “Issuers”) issued the 2017 Notes, which ~~consists~~consisted of $375.0 million aggregate principal amount senior unsecured ~~notes.~~notes which have $350.0 million outstanding as of September 30, 2021. The 2017 Notes are fully and unconditionally guaranteed on a joint and several senior unsecured basis by Exterran Corporation (“Parent”). The 2017 Notes and Parent’s guarantee are:

•

Senior unsecured obligations of each of the Issuers and the Parent, as applicable;

•

Equal in right of payment with all of the existing and future senior unsecured indebtedness and senior unsecured guarantees of each of the Issuers and the Parent, as applicable;

•

Senior in right of payment to all subordinated indebtedness and subordinated guarantees of each of the Issuers and the Parent, as applicable;

•

Effectively junior in right of payment to all existing and future secured indebtedness and secured guarantees of each of the Issuers and the Parent, as applicable, to the extent of the value of the assets securing such indebtedness or guarantees; and

•

Structurally junior in right of payment to all existing and future indebtedness, guarantees and other liabilities (including trade payables) and any preferred equity of each of the Parent’s subsidiaries (other than the Issuers) that are not guarantors of the 2017 Notes.

Parent’s guarantee will be automatically and unconditionally released and discharged upon (i) the merger of the Parent into the Issuers, (ii) a legal defeasance, covenant defeasance or satisfaction and discharge of the indenture governing the 2017 Notes or (iii) the liquidation or dissolution of the Parent, provided in each case no default or event of default has occurred and is continuing under the indenture governing the 2017 Notes.

~~Table of Contents~~

Federal bankruptcy and state fraudulent transfer laws permit a court to void all or a portion of the obligations of the Parent pursuant to its guarantee, or to subordinate the Parent’s obligations under its guarantee to claims of the Parent’s other creditors, reducing or eliminating the ability to recover under the guarantee. Although laws differ among jurisdictions, in general, under applicable fraudulent transfer or conveyance laws, the guarantee could be voided as a fraudulent transfer or conveyance if (i) the guarantee was incurred with the intent of hindering, delaying or defrauding creditors or (ii) the Parent received less than reasonably equivalent value or fair consideration in return for incurring the guarantee and either (x) the Parent was insolvent or rendered insolvent by reason of the incurrence of the guarantee or subsequently became insolvent for other reasons, (y) the incurrence of the guarantee left the Parent with an unreasonably small amount of capital to carry on the business, or (z) the Parent intended to, or believed that it would, incur debts beyond its ability to pay such debts as they mature. A court would likely find that Parent did not receive reasonably equivalent value or fair consideration for its guarantee if it determined that the Parent did not substantially benefit directly or indirectly from the issuance of the 2017 Notes. If a court were to void a guarantee,noteholders would no longer have a claim against the Parent. In addition, the court might direct noteholders to repay any amounts that you already received from the Parent. Parent’s guarantee contains a provision intended to limit the Parent’s liability under the guarantee to the maximum amount that the Parentcould incur without causing the incurrence of obligations under its guarantee to be deemed a fraudulent transfer. This provision may not be effective to protect the guarantee from being voided under fraudulent transfer law.

All consolidated subsidiaries of Exterran other than the Issuers are collectively referred to as the “Non-Guarantor Subsidiaries.” The 2017 Notes are structurally subordinated to any indebtedness and other liabilities (including trade payables) of any of the Non-Guarantor Subsidiaries. The Non-Guarantor Subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the 2017 Notes, or to make any funds available therefor, whether by dividends, loans, distributions or other payments. Holders of the 2017 Notes will have no claim as a creditor against any Non-Guarantor Subsidiaries. In the event of bankruptcy, liquidation or

Table of Contents

reorganization of any of the Non-Guarantor Subsidiaries, such subsidiaries will pay current outstanding obligations to the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Parent or the Issuers. As a result, in the context of a bankruptcy, liquidation or reorganization, holders of the 2017 Notes would likely receive less, ratably, than holders of indebtedness and other liabilities (including trade payables of such entities).

The Parent and EESLP are also parties to our credit agreement, which covenants with which the Parent, EESLP and our respective restricted subsidiaries must comply, including, but not limited to, limitations on the incurrence of indebtedness, investments, liens on assets, repurchasing equity, making distributions, transactions with affiliates, mergers, consolidations, dispositions of assets and other provisions customary in similar types of agreements. These covenants may impact the ability of the Parent and EESLP to repay the 2017 Notes or amounts owing under Parent’s guarantee.

Summarized Financial Information (in thousands)

As a result of the Parent’s guarantee, we are presenting the following summarized financial information for the Issuers’ and Parent (collectively referred to as the “Obligated Group”) pursuant to Rule 13-01 of Regulation S-X, Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. For purposes of the following summarized financial information, transactions between the Parent and the Issuers, presented on a combined basis, have been eliminated and information for the Non-Guarantor Subsidiaries have been excluded. Amounts due from or due to the Non-Guarantor Subsidiaries and other related parties, as applicable, have been separately presented within the summarized financial information.


	~~Nine Months Ended September 30, 2020~~
~~Summarized Statement of Operations:~~
~~Revenues(1)~~	$	~~127,435~~
~~Cost of sales(1)~~	~~93,314~~
~~Loss from continuing operations~~	~~(118,715)~~
~~Net loss~~	~~(135,377)~~


	September 30, 2021
Summarized Statement of Operations:
Revenues(1)	$	69,139
Cost of sales(1)		46,016
Loss from continuing operations		(159,986	)
Net loss		(161,262	)

(1)

Includes ~~$61.2~~$0.1 million of revenue ~~and $40.6 million of cost of sales~~ for intercompany sales from the Obligated Group the Non-Guarantor Subsidiaries during the nine months ended September 30, ~~2020.~~

392021.


	September 30, 2021		December 31, 2020
Summarized Balance Sheet:
ASSETS
Intercompany receivables due from non-guarantors	$	207,504	$	206,267
Total current assets		333,536		334,675
Total long-term assets		198,174		230,334
LIABILITIES AND STOCKHOLDERS’ EQUITY
Intercompany payables due to non-guarantors	$	361,832	$	362,221
Total current liabilities		456,765		439,707
Long-term liabilities		623,399		613,994

~~Table of Contents~~

September 30, 2020 December 31, 2019
Summarized Balance Sheet:
ASSETS
Intercompany receivables due from non-guarantors $ 190,323 $ 177,649
Total current assets 323,244 353,431
Total long-term assets 256,063 249,732
LIABILITIES AND STOCKHOLDERS’ EQUITY
Intercompany payables due to non-guarantors $ 363,609 $ 399,645
Total current liabilities 481,885 552,941
Long-term liabilities 571,058 495,829

Non-GAAP Financial Measures

We define EBITDA, as adjusted, 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), depreciation and amortization expense, impairment charges, restructuring and other charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations, expensed acquisition costs, gain on extinguishment of debt, and other items. We believe EBITDA, as adjusted, is an important measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization), our subsidiaries’ capital structure (non-cash gains or losses from foreign currency exchange rate changes on intercompany obligations), tax consequences, impairment charges, restructuring and other charges, expensed acquisition costs, gain on extinguishment of debt, and other items. Management uses EBITDA, as adjusted, as a supplemental measure to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, the compensation committee has used EBITDA, as adjusted, in evaluating the performance of the Company and management and in evaluating certain components of

Table of Contents

executive compensation, including performance-based annual incentive programs. Our EBITDA, as adjusted, may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA in the same manner.

EBITDA, as adjusted, is not a measure of financial performance under GAAP, and should not be considered in isolation or as an alternative to net income (loss), cash flows from operating activities or any other measure determined in accordance with GAAP. Items excluded from EBITDA, as adjusted, are significant and necessary components to the operation of our business, and, therefore, EBITDA, as adjusted, should only be used as a supplemental measure of our operating performance.

The following table reconciles our net loss to EBITDA, as adjusted (in thousands):

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Net loss $ (17,721) $ (9,841) $ (67,914) $ (22,540)
(Income) loss from discontinued operations, net of tax 998 (3,153) 15,833 (23,695)
Depreciation and amortization 36,630 41,106 100,887 113,450
Impairments 1,695 2,970 1,695 8,889
Restatement related charges, net — — — 20
Restructuring and other charges 238 1,257 3,550 6,342
Interest expense 9,623 10,103 29,214 28,194
Gain on extinguishment of debt (780) — (3,424) —
(Gain) loss on currency exchange rate remeasurement of intercompany balances (624) 884 (3,822) 55
Provision for income taxes 5,745 477 18,970 20,209
EBITDA, as adjusted $ 35,804 $ 43,803 $ 94,989 $ 130,924

~~Off-Balance Sheet Arrangements~~


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Net loss	$	(16,303	)	$	(17,721	)	$	(81,390	)	$	(67,914	)
Loss from discontinued operations, net of tax		695			998			1,724			15,833
Depreciation and amortization		43,889			36,630			132,097			100,887
Impairment		—			1,695			7,959			1,695
Restructuring and other charges		(62	)		238			192			3,550
Interest expense		10,479			9,623			30,800			29,214
Gain on extinguishment of debt		—			(780	)		—			(3,424	)
(Gain) loss on currency exchange rate remeasurement of intercompany balances		1,620			(624	)		810			(3,822	)
Provision for (benefit from) income taxes		(5,187	)		5,745			11,105			18,970
EBITDA, as adjusted	$	35,131		$	35,804		$	103,297		$	94,989

~~We have no material off-balance sheet arrangements.~~

Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks associated with changes in foreign currency exchange rates due to our significant international operations. While the majority of our revenue contracts are denominated in, or indexed to, the U.S. dollar, certain contracts or portions of certain contracts, most notably within our contract operations segment, are exposed to foreign currency fluctuations. Approximately ~~15%~~60% of revenues in our contract operations segment are denominated in ~~a currency other than~~ the U.S. dollar. The currencies for which we have our largest exchange rate exposures are related to changes in the Argentine Peso and the Brazilian Real. During the nine months ended September 30, ~~2020,~~2021, the Argentine Peso depreciated by approximately ~~21%~~15% and the Brazilian Real depreciated by approximately ~~29%~~4%. The impact of foreign currency risk on income for these contracts is generally mitigated by matching costs with revenues in the same currency.

Additionally, the net assets and liabilities of these operations are exposed to changes in foreign currency exchange rates. These operations may also have net assets and liabilities not denominated in their functional currency, which exposes us to changes in foreign currency exchange rates that impact income. We recorded foreign currency losses of ~~$2.0~~$8.2 million and ~~foreign currency losses of $2.7~~$2.0 million in our statements of operations during the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively. Our foreign currency ~~gains~~losses and ~~losses~~gains are primarily due to exchange rate fluctuations related to monetary asset balances denominated in currencies other than the functional currency, including foreign currency exchange rate changes recorded on intercompany obligations. Foreign currency losses and gains included translation losses of $0.8 million and gains of $3.8 ~~million and $0.2~~ million during the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, respectively, related to the functional currency remeasurement of our foreign subsidiaries’ non-functional currency denominated intercompany obligations. During the nine months ended September 30, ~~2020 and 2019,~~2021, we entered into forward currency exchange contracts to mitigate exposures in U.S. dollars related to the Argentine ~~Peso, Brazilian Real and Indonesian Rupiah.~~Peso. As a result of entering into these contracts, we recognized losses of ~~$0.8~~$2.0 million during the nine months ended September 30, ~~2019.~~2021. Changes in exchange rates may create gains or losses in future periods to the extent we maintain net assets and liabilities not denominated in the functional currency.

As of September 30, 2021, we do not have any derivative financial instruments outstanding to mitigate foreign currency risk. In the future, we may utilize derivative instruments to manage the risk of fluctuations in foreign currency exchange rates that could potentially impact our future earnings and forecasted cash flows.

Item 4. Controls and Procedures

This Item 4 includes information concerning the controls and controls evaluation referred to in the certifications of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 of the Exchange Act included in this Quarterly Report as Exhibits 31.1 and 31.2.

Management’s Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.

In connection with the preparation of this Quarterly Report on Form 10-Q, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, ~~2020.~~2021. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to management, and made known to our principal executive officer and ~~principle~~principal financial officer, on a timely basis to ensure that it is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, we are involved in various pending or threatened legal actions. While management is unable to predict the ultimate outcome of these actions, it believes that any ultimate liability arising from any of these actions will not have a material adverse effect on our financial position, results of operations or cash flows. However, because of the inherent uncertainty of litigation and arbitration proceedings, we cannot provide assurance that the resolution of any particular claim or proceeding to which we are a party will not have a material adverse effect on our financial position, results of operations or cash flows.

For further details on the current legal proceedings, see

Note 14 to the Financial Statements.

Item 1A. Risk Factors

There have been no material changes or updates to our risk factors that were previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2019, except as follows:~~

2020.

Natural disasters, public health crises, including the COVID-19 pandemic, and other catastrophic events outside of our control may adversely affect our business or the business of third parties on which we depend.

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The COVID-19 pandemic and aggressive actions taken in response to it have negatively impacted the global economy, disrupted global supply chains and financial markets and created significant volatility and disruption across most industries, including ours. In response to the pandemic, governmental authorities mandated shutdowns, travel restrictions, social distancing requirements, stay at home orders and advisories and other restrictions. Some (but not all) of these restrictions have been gradually relaxed over the summer and early fall of this year but may be re-imposed in the future in areas that experience a resurgence of COVID-19 cases.

The extent to which the coronavirus pandemic will continue to impact our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on economic activity and actions taken in response; the effect on our customers and customer demand for our products, solutions, and services; our ability to sell and provide our products, solutions, and services, including as a result of supplier disruptions, travel restrictions, economic shutdowns and people working from home; the ability of our customers to pay for our products, solutions, and services; and any closures of our and our customers’ offices and facilities.

We are following local governmental guidance for viral spread mitigation, including having many of our employees who would traditionally work in an office work from home, and have put in place additional health and safety measures to protect our employees, customers and other parties who are working at our operating sites. While some of our employees can work remotely, many of our projects require our employees to travel to operating sites. Certain of our customers and significant projects are located in areas where travel restrictions have been imposed and we may be unable to fulfill our obligations to those customers as a result. The ability of our employees and our suppliers’ and customers’ employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or by their inability to travel as a result of the mitigation measures noted above, which may affect our ability to fulfill our obligations to our customers. ~~See Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Impact of COVID-19 on our Business~~ ~~for further discussion of our response to, and the impact of, the COVID-19 pandemic on our business.~~

Many countries significantly shut down their economies to mitigate the spreading of the virus, thus impacting consumer spending including reduced demand for oil and natural gas. Although certain economies are reopening. Any full or partial future shutdowns imposed in an attempt to gain further control over the spread of the virus could directly or indirectly impact the demand for and pricing of our products and services and negatively impact our operating results especially if there are returns to shutdowns in the future. Further deterioration in economic conditions, as a result of the COVID-19 pandemic or otherwise, could lead to a further or prolonged decline in demand for our products and services and negatively impact our business. For example, some customers that have been impacted by COVID-19 have slowed down decision making, delayed planned work and have sought to terminate or renegotiate existing agreements. We have also increased our reserve for uncollectible accounts in response to the impact of COVID-19 on our business, but we may have to increase it further as the virus continues to impact demand and pricing of oil and natural gas and our customers’ financial condition. The pandemic has also and may again adversely impact financial markets and corporate credit markets which could adversely impact our access to financing or the terms of any such financing. These types of events are unpredictable and can materially affect our business, financial condition, results of operations and cash flows.

~~Table of Contents~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)

~~(a)~~ Not applicable.

(b)

Not applicable.

(c)

~~(c)~~ The following table summarizes our repurchases of equity securities during the three months ended September 30, ~~2020:~~2021:

Period
Total Number
of Shares
Repurchased(1)
Average
Price Paid
Per Unit
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (2)
Approximate Dollar Value of Shares yet to be Purchased Under the Publicly Announced
Plans or Programs (2)
July 1, 2020 - July 31, 2020 504 $ 5.22 — $ 57,726,011
August 1, 2020 - August 31, 2020 1,372 5.94 — 57,726,011
September 1, 2020 - September 30, 2020 142 4.06 — 57,726,011
Total 2,018 $ 5.63 — $ 57,726,011

~~____________________~~


					Total Number of Shares		Approximate Dollar Value of Shares
	Total Number		Average		Purchased as Part of		yet to be Purchased Under the
	of Shares		Price Paid		Publicly Announced		Publicly Announced
Period	Repurchased(1)		Per Unit		Plans or Programs (2)		Plans or Programs (2)
July 1, 2021 - July 31, 2021		293	$	4.21		—	$	57,726,011
August 1, 2021 - August 31, 2021		—		—		—		57,726,011
September 1, 2021 - September 30, 2021		—		—		—		57,726,011
Total		293	$	4.21		—	$	57,726,011

(1) ~~Total number of shares repurchased includes 2,018~~

There were no shares withheld to satisfy employees’ tax withholding obligations in connection with vesting of restricted stock awards during the period.

(2)

On February 20, 2019, our board of directors approved a share repurchase program, under which the Company is authorized to purchase up to $100.0 million of its outstanding common stock through February 2022. The timing and method of any repurchases under the program will depend on a variety of factors, including prevailing market conditions among others. Purchases under the program may be suspended or discontinued at any time, and we have no obligation to repurchase any amount of our common shares under the program. Shares of common stock acquired through the repurchase program are held in treasury at cost.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Table of Contents

Item 6. Exhibits


Exhibit No.	Description
~~2.1~~22.1*	~~Separation and Distribution Agreement, dated as~~List of November 3, 2015, by and among Exterran Holdings, Inc., Exterran General Holdings LLC, Exterran Energy Solutions, L.P., Exterran Corporation, AROC Corp., EESLP LP LLC, AROC Services GP LLC, AROC Services LP LLC and Archrock Services, L.P.,Guarantor Subsidiaries, incorporated by reference to Exhibit ~~2.1 to the Registrant’s Current Report on Form 8-K filed on November 5, 2015~~
~~2.2~~			First Amendment to Separation and Distribution Agreement, dated as of December 15, 2015, by and among Archrock, Inc., Exterran General Holdings LLC, Exterran Energy Solutions, L.P., Exterran Corporation, AROC Corp., EESLP LP LLC, AROC Services GP LLC, AROC Services LP LLC and Archrock Services, L.P., incorporated by reference to Exhibit 2.222.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, ~~2015~~2020
22.1*		~~List of Guarantor Subsidiaries~~
31.1*		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the ~~Sarbanes-Oxley~~Sarbanes- Oxley Act of 2002
32.2**	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the ~~Sarbanes-Oxley~~Sarbanes- Oxley Act of 2002
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 1010).

________________________________


†						~~Management contract or compensation plan or arrangement.~~
*						~~Filed herewith.~~
**						~~Furnished, not filed.~~

Filed herewith.

44Furnished, not filed.

Table of Contents

SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Exterran Corporation

Date: November ~~2, 2020~~3, 2021		By:	/s/ DAVID A. BARTA
	David A. Barta
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)


~~Delaware~~FOR THE TRANSITION PERIOD FROM		TO	~~47-3282259~~
Commission File No. 001-36875
EXTERRAN CORPORATION
(Exact name of registrant as specified in its charter)
Delaware		47-3282259
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

11000 Equity Drive
Houston	Texas			77041
(Address of principal executive offices)		(Zip Code)


	September 30, 2020		December 31, 2019
ASSETS

Current assets:
Cash and cash equivalents	$	28,159	$	16,683
Restricted cash	1,670		19
Accounts receivable, net of allowance of $10,473 and $6,019, respectively	183,620		179,158
Inventory (Note 4)	114,520		119,358
Contract assets (Note 2)	49,092		36,997
Other current assets	19,333		22,003
Current assets associated with discontinued operations (Note 3)	28,491		61,705
Total current assets	424,885		435,923
Property, plant and equipment, net (Note 5)	770,421		824,194
Operating lease right-of-use assets	26,204		26,227
Deferred income taxes	12,331		13,994
Intangible and other assets, net	75,775		93,924
Long-term assets associated with discontinued operations (Note 3)	20,877		23,742
Total assets	$	1,330,493	$	1,418,004

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable, trade	$	59,230	$	82,864
Accrued liabilities	99,976		92,641
Contract liabilities (Note 2)	105,736		66,695
Current operating lease liabilities	6,051		5,819
Current liabilities associated with discontinued operations (Note 3)	37,355		78,626
Total current liabilities	308,348		326,645
Long-term debt (Note 6)	516,584		443,587
Deferred income taxes	1,483		993
Long-term contract liabilities (Note 2)	93,643		156,262
Long-term operating lease liabilities	30,646		30,189
Other long-term liabilities	51,514		48,749
Long-term liabilities associated with discontinued operations (Note 3)	2,299		2,041
Total liabilities	1,004,517		1,008,466
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 50,000,000 shares authorized; 0 issued	0		0
Common stock, $0.01 par value per share; 250,000,000 shares authorized; 37,782,196 and 37,508,286 shares issued, respectively	378		375
Additional paid-in capital	749,694		747,622
Accumulated deficit	(385,152)		(317,238)
Treasury stock — 4,651,961 and 4,467,600 common shares, at cost, respectively	(57,424)		(56,567)
Accumulated other comprehensive income	18,480		35,346
Total stockholders’ equity (Note 11)	325,976		409,538
Total liabilities and stockholders’ equity	$	1,330,493	$	1,418,004


	September 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	57,520		$	40,318
Restricted cash		2,460			3,410
Accounts receivable, net of allowance of $10,307, and $10,803, respectively		179,594			198,028
Inventory (Note 4)		104,020			109,837
Contract assets (Note 2)		65,710			32,642
Other current assets		18,346			19,810
Current assets associated with discontinued operations (Note 3)		21,713			25,325
Total current assets		449,363			429,370
Property, plant and equipment, net (Note 5)		631,413			733,222
Long-term contract assets (Note 2)		18,169			33,563
Operating lease right-of-use assets		22,150			25,428
Deferred income taxes		7,949			8,866
Intangible and other assets, net		72,387			71,436
Long-term assets associated with discontinued operations (Note 3)		1,687			1,606
Total assets	$	1,203,118		$	1,303,491

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable, trade	$	60,303		$	60,078
Accrued liabilities		123,254			94,404
Contract liabilities (Note 2)		92,493			100,123
Current operating lease liabilities		5,454			6,340
Current liabilities associated with discontinued operations (Note 3)		3,422			13,707
Total current liabilities		284,926			274,652
Long-term debt (Note 6)		572,547			562,325
Deferred income taxes		2,275			1,014
Long-term contract liabilities (Note 2)		56,763			80,499
Long-term operating lease liabilities		26,966			29,868
Other long-term liabilities		43,454			57,159
Long-term liabilities associated with discontinued operations (Note 3)		1,007			2,142
Total liabilities		987,938			1,007,659
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 50,000,000 shares authorized; 0 issued		0			0
Common stock, $0.01 par value per share; 250,000,000 shares authorized; 38,041,255 and 37,804,206 shares issued, respectively		380			378
Additional paid-in capital		752,772			750,506
Accumulated deficit		(499,919	)		(418,529	)
Treasury stock — 4,737,703 and 4,665,560 common shares, at cost, respectively		(57,742	)		(57,431	)
Accumulated other comprehensive income		19,689			20,908
Total stockholders’ equity (Note 11)		215,180			295,832
Total liabilities and stockholders’ equity	$	1,203,118		$	1,303,491


	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		Total
Balance, January 1, 2019	$	369	$	734,458	$	(208,677)	$	(11,560)	$	38,231	$	552,821
Cumulative-effect adjustment from adoption of ASC 842 Leases					(6,184)						(6,184)
Net loss					(5,394)						(5,394)
Foreign currency translation adjustment									(968)		(968)
Treasury stock purchased							(7,087)				(7,087)
Stock-based compensation, net of forfeitures	6		3,990								3,996
Balance, March 31, 2019	$	375	$	738,448	$	(220,255)	$	(18,647)	$	37,263	$	537,184
Net loss					(7,305)						(7,305)
Foreign currency translation adjustment									420		420
Transfers from Archrock, Inc.			420								420
Treasury stock purchased							(14,224)				(14,224)
Stock-based compensation, net of forfeitures			3,487								3,487
Balance, June 30, 2019	$	375	$	742,355	$	(227,560)	$	(32,871)	$	37,683	$	519,982
Net loss					(9,841)						(9,841)
Foreign currency translation adjustment									(3,631)		(3,631)
Treasury stock purchased							(20,285)				(20,285)
Stock-based compensation, net of forfeitures			2,874								2,874
Balance, September 30, 2019	$	375	$	745,229	$	(237,401)	$	(53,156)	$	34,052	$	489,099

Balance, January 1, 2020	$	375	$	747,622	$	(317,238)	$	(56,567)	$	35,346	$	409,538
Net loss					(18,304)						(18,304)
Foreign currency translation adjustment									(11,056)		(11,056)
Treasury stock purchased							(835)				(835)
Stock-based compensation, net of forfeitures	2		283								285
Balance, March 31, 2020	$	377	$	747,905	$	(335,542)	$	(57,402)	$	24,290	$	379,628
Net loss					(31,889)						(31,889)
Foreign currency translation adjustment									(3,730)		(3,730)
Treasury stock purchased							(10)				(10)
Stock-based compensation, net of forfeitures	1		1,120								1,121
Balance, June 30, 2020	$	378	$	749,025	$	(367,431)	$	(57,412)	$	20,560	$	345,120
Net loss					(17,721)						(17,721)
Foreign currency translation adjustment									(2,080)		(2,080)
Treasury stock purchased							(12)				(12)
Stock-based compensation, net of forfeitures			669								669
Balance, September 30, 2020	$	378	$	749,694	$	(385,152)	$	(57,424)	$	18,480	$	325,976


	Three Months Ended September 30,				Nine Months Ended September 30,
Revenue by Products and Services	2020		2019		2020		2019
Contract Operations Segment:
Contract operations services (1)	$	81,679	$	96,261	$	254,412	$	271,645

Aftermarket Services Segment:
Operation and maintenance services (1)	$	12,966	$	14,069	$	38,184	$	40,844
Part sales (2)	11,490		10,208		31,999		32,197
Other services (1)	5,979		10,616		13,154		19,267
Total aftermarket services	$	30,435	$	34,893	$	83,337	$	92,308

Product Sales Segment(3):
Compression equipment (1)	$	40,300	$	4,764	$	73,654	$	10,516
Processing and treating equipment (1)	14,220		47,843		34,836		236,926
Production equipment (2)	0		0		578		2,458
Other product sales (1) (2)	2,877		2,189		14,545		4,467
Total product sales revenues	$	57,397	$	54,796	$	123,613	$	254,367

Total revenues	$	169,511	$	185,950	$	461,362	$	618,320


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	TABLE OF CONTENTS		Page

	PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets		3
	Condensed Consolidated Statements of Operations		4
	Condensed Consolidated Statements of Comprehensive Loss		5
	Condensed Consolidated Statements of Stockholders’ Equity		6
	Condensed Consolidated Statements of Cash Flows		7
	Notes to Unaudited Condensed Consolidated Financial Statements		8
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	41	40
	Item 4. Controls and Procedures	41	40
	PART II. OTHER INFORMATION
	Item 1. Legal Proceedings	42	41
	Item 1A. Risk Factors	42	41
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43	41
	Item 3. Defaults Upon Senior Securities	43	41
	Item 4. Mine Safety Disclosures	43	41
	Item ~~5. Other~~5.Other Information	43	41
	Item 6. Exhibits	44	42
~~SIGNATURES~~	45SIGNATURES		43


	Three Months Ended September 30,				Nine Months Ended September 30,
Revenue by Geographical Regions	2021		2020		2021		2020
North America	$	2,099	$	13,364	$	11,524	$	31,694
Latin America		68,507		60,302		197,717		195,451
Middle East and Africa		81,034		69,682		200,192		177,768
Asia Pacific		9,659		26,163		34,229		56,449
Total revenues	$	161,299	$	169,511	$	443,662	$	461,362


	Contract Operations		Product Sales
	Segment		Segment
Remainder of 2021	$	79,586	$	76,553
2022		247,050		195,242
2023		251,867		59,787
2024		230,749		16,045
2025		209,521		17,557
Thereafter		414,537		0
Total backlog	$	1,433,310	$	365,184


	Contract Operations Segment		Product Sales Segment
Remainder of 2020	$	75,935	$	46,284
2021	283,571		177,333
2022	224,186		200,041
2023	165,739		34,681
2024	144,456		9,000
Thereafter	314,252		29,315
Total backlog	$	1,208,139	$	496,654


	September 30, 2021		December 31, 2020
Accounts receivables, net	$	179,594	$	198,028
Contract assets and contract liabilities:
Current contract assets		65,710		32,642
Long-term contract assets		18,169		33,563
Current contract liabilities		92,493		100,123
Long-term contract liabilities		56,763		80,499


Balance at December 31, 2020	$	10,803
Write-offs during the period		(496	)
Balance at September 30, 2021	$	10,307


~~Balance at December 31, 2019~~	$	~~6,019~~
~~Current period provision for expected credit losses~~	~~4,454~~
~~Balance at September 30, 2020~~	$	~~10,473~~


	Three Months Ended September 30, 2020						Three Months Ended September 30, 2019
	Belleli EPC		US Compression		Total		Belleli EPC		US Compression		Other disco		Total
Revenue	$	1,100	$	27,434	$	28,534	$	31	$	116,481	$	0	$	116,512
Cost of sales (excluding depreciation and amortization expense)	84		25,371		25,455		1,204		104,824		0		106,028
Selling, general and administrative	(70)		1,387		1,317		231		5,394		114		5,739
Depreciation and amortization	0		443		443		0		1,027		0		1,027
Restructuring and other charges	0		2,336		2,336		0		537		0		537
Other (income) expense, net	(52)		0		(52)		28		0		0		28
Provision for income taxes	33		0		33		0		0		0		0
Income (loss) from discontinued operations, net of tax	$	1,105	$	(2,103)	$	(998)	$	(1,432)	$	4,699	$	(114)	$	3,153


	September 30, 2021		December 31, 2020
Parts and supplies	$	61,699	$	65,576
Work in progress		39,150		41,020
Finished goods		3,171		3,241
Inventory	$	104,020	$	109,837


	September 30, 2020		December 31, 2019
Parts and supplies	$	66,809	$	76,398
Work in progress	44,470		39,719
Finished goods	3,241		3,241
Inventory	$	114,520	$	119,358


	Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
	Belleli EPC		US Compression		Total		Belleli EPC		US Compression		Other disco		Total
Revenue	$	1,224	$	117,565	$	118,789	$	265	$	426,431	$	0	$	426,696
Cost of sales (excluding depreciation and amortization expense)	268		109,316		109,584		(395)		386,079		0		385,684
Selling, general and administrative	144		8,743		8,887		921		17,888		182		18,991
Depreciation and amortization	0		1,767		1,767		0		3,219		0		3,219
Impairments	0		6,512		6,512		0		0		0		0
Restructuring and other charges	0		7,889		7,889		0		1,624		0		1,624
Other income, net	(3)		0		(3)		(304)		0		0		(304)
Benefit from income taxes	(14)		0		(14)		(6,213)		0		0		(6,213)
Income (loss) from discontinued operations, net of tax	$	829	$	(16,662)	$	(15,833)	$	6,256	$	17,621	$	(182)	$	23,695


	Three Months Ended September 30, 2021									Three Months Ended September 30, 2020
	Belleli EPC			US Compression			Total			Belleli EPC			US Compression			Total
Revenue	$	0		$	2,944		$	2,944		$	1,100		$	27,434		$	28,534
Cost of sales (excluding depreciation and amortization expense)		0			3,324			3,324			84			25,371			25,455
Selling, general and administrative		234			0			234			(70	)		1,387			1,317
Depreciation and amortization		0			0			0			0			443			443
Restructuring and other charges		0			305			305			0			2,336			2,336
Other (income) expense, net		3			0			3			(52	)		0			(52	)
Provision for (benefit from) income taxes		(227	)		0			(227	)		33			0			33
Income (loss) from discontinued operations, net of tax	$	(10	)	$	(685	)	$	(695	)	$	1,105		$	(2,103	)	$	(998	)


	Nine Months Ended September 30, 2021									Nine Months Ended September 30, 2020
	Belleli EPC			US Compression			Total			Belleli EPC			US Compression			Total
Revenue	$	0		$	2,997		$	2,997		$	1,224		$	117,565		$	118,789
Cost of sales (excluding depreciation and amortization expense)		55			3,496			3,551			268			109,316			109,584
Selling, general and administrative		478			413			891			144			8,743			8,887
Depreciation and amortization		0			0			0			0			1,767			1,767
Impairments		0			0			0			0			6,512			6,512
Restructuring and other charges		0			305			305			0			7,889			7,889
Other (income) expense, net		37			59			96			(3	)		0			(3	)
Provision for (benefit from) income taxes		(122	)		0			(122	)		(14	)		0			(14	)
Income (loss) from discontinued operations, net of tax	$	(448	)	$	(1,276	)	$	(1,724	)	$	829		$	(16,662	)	$	(15,833	)


	September 30, 2020		December 31, 2019
Compression equipment, processing facilities and other fleet assets	$	1,580,483	$	1,607,769
Land and buildings	50,488		51,062
Transportation and shop equipment	54,219		57,469
Computer software	51,004		50,091
Other	41,501		37,716
	1,777,695		1,804,107
Accumulated depreciation	(1,007,274)		(979,913)
Property, plant and equipment, net	$	770,421	$	824,194


	September 30, 2020		December 31, 2019
Revolving credit facility due October 2023	$	170,000	$	74,000
8.125% senior notes due May 2025	351,000		375,000
Other debt	13		132
Unamortized deferred financing costs of 8.125% senior notes	(4,416)		(5,413)
Total debt	516,597		443,719
Less: Amounts due within one year (1)	(13)		(132)
Long-term debt	$	516,584	$	443,587


	September 30, 2021						December 31, 2020
	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Foreign currency derivatives liabilities	$	0	$	0	$	0	$	0	$	0	$	(247	)


	Cost Reduction Plan		Relocation Plan		Total
Beginning balance at January 1, 2019	$	0	$	309	$	309
Additions for costs expensed	6,049		293		6,342
Reductions for payments	(2,873)		(602)		(3,475)
Ending balance at September 30, 2019	$	3,176	$	0	$	3,176

Beginning balance at January 1, 2020	$	2,281	$	0	$	2,281
Additions for costs expensed, net	3,550		0		3,550
Reductions for payments	(3,791)		0		(3,791)
Foreign exchange impact	(393)		0		(393)
Ending balance at September 30, 2020	$	1,647	$	0	$	1,647


	Equity Awards			Liability Awards
	Shares (in thousands)	Weighted Average Grant-Date Fair Value Per Share		Shares (in thousands)	Weighted Average Grant-Date Fair Value Per Share
Non-vested awards, January 1, 2020	842	$	22.79	318	$	17.01
Granted	167	6.91		1,182	8.54
Vested	(440)	20.59		(80)	26.24
Cancelled	(242)	28.07		(207)	9.90
Non-vested awards, September 30, 2020	327	13.73		1,213	9.36


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Numerator for basic and diluted net loss per common share:
Loss from continuing operations	$	(15,608	)	$	(16,723	)	$	(79,666	)	$	(52,081	)
Loss from discontinued operations, net of tax		(695	)		(998	)		(1,724	)		(15,833	)
Less: Net income attributable to participating securities		0			0			0			0
Net loss — used in basic and diluted net loss per common share	$	(16,303	)	$	(17,721	)	$	(81,390	)	$	(67,914	)

Weighted average common shares outstanding including participating securities		33,417			33,152			33,328			33,147
Less: Weighted average participating securities outstanding		(349	)		(346	)		(304	)		(405	)
Weighted average common shares outstanding — used in basic net loss per common share		33,068			32,806			33,024			32,742
Net dilutive potential common shares issuable:
On exercise of options and vesting of restricted stock units	*			*			*			*
Weighted average common shares outstanding — used in diluted net loss per common share		33,068			32,806			33,024			32,742

Net loss per common share:
Basic and diluted	$	(0.49	)	$	(0.54	)	$	(2.46	)	$	(2.07	)


Three Months Ended	Contract Operations		Aftermarket Services		Product Sales(2)		Reportable Segments Total
September 30, 2020:
Revenue	$	81,679	$	30,435	$	57,397	$	169,511
Gross margin (1)	57,131		7,300		3,134		67,565
September 30, 2019:
Revenue	$	96,261	$	34,893	$	54,796	$	185,950
Gross margin (1)	61,905		8,814		6,609		77,328


							Reportable
	Contract		Aftermarket				Segments
Three Months Ended September 30,	Operations		Services		Product sales (2)		Total
2021
Revenue	$	83,362	$	24,633	$	53,304	$	161,299
Adjusted gross margin(1)		55,572		5,254		6,549		67,375

2020
Revenue	$	81,679	$	30,435	$	57,397	$	169,511
Adjusted gross margin(1)		57,131		7,300		3,134		67,565


	September 30, 2020		December 31, 2019		September 30, 2019
Contract Operations Backlog:
Contract operations services	$	1,208,139	$	1,252,001	$	1,210,187

Product Sales Backlog:
Compression equipment(1)	$	18,165	$	54,541	$	40,899
Processing and treating equipment	447,109		69,912		50,176
Other product sales	31,380		47,094		62,174
Total product sales backlog	$	496,654	$	171,547	$	153,249


	September 30, 2021		December 31, 2021		September 30, 2020
Contract Operations Backlog:
Contract operations services	$	1,433,310	$	1,100,929	$	1,208,139

Product Sales Backlog:
Compression equipment(1)		6,291		10,218		18,165
Processing and treating equipment		334,406		425,292		447,109
Other product sales		24,487		29,835		31,380
Total product sales backlog	$	365,184	$	465,345	$	496,654


Period	Total Number of Shares Repurchased(1)	Average Price Paid Per Unit		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares yet to be Purchased Under the Publicly Announced Plans or Programs (2)
July 1, 2020 - July 31, 2020	504	$	5.22	—	$	57,726,011
August 1, 2020 - August 31, 2020	1,372	5.94		—	57,726,011
September 1, 2020 - September 30, 2020	142	4.06		—	57,726,011
Total	2,018	$	5.63	—	$	57,726,011