Exhibit 99.1
Exterran Holdings and Exterran Partners Report
Fourth Quarter and Full Year 2008 Results
HOUSTON, February 26, 2009 – Exterran Holdings, Inc. (NYSE: EXH) and Exterran Partners, L.P. (NASDAQ: EXLP) today reported financial results for the fourth quarter and full year 2008.
Exterran Holdings, Inc. Financial Results
Exterran Holdings reported a net loss for the fourth quarter 2008 of $1,055.4 million, or $16.70 per diluted share, compared to net income for the third quarter 2008 of $37.0 million, or $0.56 per diluted share, and net income for the fourth quarter 2007 of $58.5 million, or $0.87 per diluted share.
Revenue was $830.4 million for the fourth quarter 2008 compared to $796.0 million for the third quarter 2008 and $853.4 million for the fourth quarter 2007. EBITDA, as adjusted (as defined below), was $219.0 million for the fourth quarter 2008 compared to $192.8 million for the third quarter 2008 and $212.5 million for the fourth quarter 2007.
Fourth quarter 2008 results included pretax charges that totaled $1,171.8 million, including a $1,148.4 million non-cash goodwill impairment charge, a $21.6 million non-cash asset impairment charge related to the Cawthorne Channel Project in Nigeria and a $1.8 million charge for merger and integration related expenses. Excluding these charges, earnings were $0.85 per diluted share. The goodwill and asset impairments did not impact our cash flows, liquidity position, or compliance with debt covenants. Fourth quarter 2008 results also included a pretax benefit from a loss contract recovery of $14.1 million, or $0.13 per diluted share, related to the recoupment of costs recorded in the second quarter 2008 on an international fabrication project.
Third quarter 2008 results included pretax charges that totaled $4.7 million, including a $3.7 million charge for merger and integration related expenses and a $1.0 million charge for an asset impairment related to units lost in Hurricane Ike. Fourth quarter 2007 results included pretax charges that totaled $9.3 million for merger and integration related expenses. Excluding these charges, earnings were $0.60 per diluted share and $0.95 per diluted share for the third quarter 2008 and the fourth quarter 2007, respectively.
Stephen A. Snider, Exterran Holdings’ Chief Executive Officer, said, “Our operating performance in the fourth quarter reflected the benefits of our ongoing efficiency initiatives despite difficult economic and energy industry conditions. We believe the outlook for 2009 is challenging, particularly regarding activity levels in North America. We also believe our production-oriented business model, coupled with our strong balance sheet, positions us well to navigate the current market conditions. Although we continue to be optimistic about our outlook over the long-term, we remain focused on managing our business during 2009 to respond to the difficult conditions we face.”
J. Michael Anderson, Senior Vice President and Chief Financial Officer, added, “Maintaining strong liquidity is particularly important in this period of tight credit markets. We expect that cash generated by our operations will be sufficient to meet our maintenance and growth capital expenditure plans in 2009. Exterran Holdings and Exterran Partners do not have any significant debt maturities until 2012 and 2011, respectively.”
Exterran Partners, L.P. Financial Results
Exterran Partners reported revenue of $49.1 million for the fourth quarter 2008 compared to $44.4 million for the third quarter 2008 and $36.6 million for the fourth quarter 2007. Net income was $7.8 million, or $0.39 per diluted limited partner unit, for the fourth quarter 2008 compared to $9.4 million, or $0.49 per diluted limited partner unit, for the third quarter 2008 and $7.3 million, or $0.42 per diluted limited partner unit, for the fourth quarter 2007. EBITDA, as further adjusted (as defined below), totaled $23.8 million for the fourth quarter 2008 compared to $22.7 million for the third quarter 2008 and $20.1 million for the fourth quarter 2007. Distributable cash flow (as defined below) totaled $14.1 million for the fourth quarter 2008 compared to $14.8 million for the third quarter 2008 and $14.1 million for the fourth quarter 2007.
“Exterran Partners continued to generate strong cash flows in the fourth quarter, reflecting the relatively stable and recurring nature of its fee-based contract operations services business model,” commented Mr. Snider, Chairman and Chief Executive Officer of Exterran Partners’ managing general partner.
On February 13, 2009, Exterran Partners paid a cash distribution of $0.4625 per limited partner unit for the fourth quarter 2008, compared to $0.4625 per limited partner unit for the third quarter 2008 and $0.425 per limited partner unit for the fourth quarter 2007.
Conference Call Details
Exterran Holdings, Inc. (NYSE: EXH) and Exterran Partners, L.P. (NASDAQ: EXLP) announce the following schedule and teleconference information for their fourth quarter 2008 earnings release:
| · | Teleconference: Thursday, February 26, 2009 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). To access the call, United States and Canadian participants should dial 888-727-7721. International participants should dial 913-312-0381 at least 10 minutes before the scheduled start time. Please reference Exterran conference call number 4808394. |
| · | Live Webcast: The webcast will be available in listen-only mode via the Companies’ website: www.exterran.com. |
| · | Webcast Replay: For those unable to participate, a replay will be available from 2:00 p.m. Eastern Time on Thursday, February 26, 2009, until 2:00 p.m. Eastern Time on Thursday, March 5, 2009. To listen to the replay, please dial 888-203-1112 in the United States and Canada, or 719-457-0820 internationally, and enter access code 4808394. |
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With respect to Exterran Holdings, EBITDA, as adjusted, a non-GAAP measure, is defined as net income plus income taxes, interest expense (including debt extinguishment costs and gain or loss on termination of interest rate swaps), depreciation and amortization expense, impairment charges, merger and integration expenses, minority interest, excluding non-recurring items, and extraordinary gains or losses.
With respect to Exterran Partners, EBITDA, as further adjusted, a non-GAAP measure, is defined as net income plus income taxes, interest expense, depreciation and amortization expense, non-cash selling, general and administrative expenses and any amounts by which cost of sales and selling, general and administrative costs are reduced as a result of caps on these costs contained in the omnibus agreement to which Exterran Holdings and Exterran Partners are parties (the “Omnibus Agreement”), which amounts are treated as capital contributions from Exterran Holdings for accounting purposes, and excluding non-recurring items.
With respect to Exterran Partners, distributable cash flow, a non-GAAP measure, is defined as net income plus depreciation and amortization expense, non-cash selling, general and administrative expenses, interest expense and any amounts by which cost of sales and selling, general and administrative costs are reduced as a result of caps on these costs contained in the Omnibus Agreement, which amounts are treated as capital contributions from Exterran Holdings for accounting purposes, less cash interest expense and maintenance capital expenditures, and excluding gains/losses on asset sales and non-recurring items.
With respect to Exterran Holdings, Gross Margin, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization expense).
With respect to Exterran Partners, Gross Margin, as adjusted, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization expense) plus any amounts by which cost of sales are reduced as a result of caps on these costs contained in the Omnibus Agreement, which amounts are treated as capital contributions from Exterran Holdings for accounting purposes.
About Exterran Holdings and Exterran Partners
Exterran Holdings, Inc. is a global market leader in full service natural gas compression and a premier provider of operations, maintenance, service and equipment for oil and gas production, processing and transportation applications. Exterran Holdings serves customers across the energy spectrum—from producers to transporters to processors to storage owners. Headquartered in Houston, Texas, Exterran and its over 10,000 employees have operations in over 30 countries.
Exterran Partners, L.P. provides natural gas contract operations services to customers throughout the United States. Exterran Holdings indirectly owns a majority interest in Exterran Partners.
For more information, visit www.exterran.com.
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Forward-Looking Statements
All statements in this release (and oral statements made regarding the subjects of this release) other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside the control of Exterran Holdings and Exterran Partners (the “Companies”), which could cause actual results to differ materially from such statements. Forward-looking information includes, but is not limited to: Exterran Holdings’ expectations with respect to the impact of its production-oriented business model and its balance sheet on its ability to navigate the current market conditions; the stable and recurring nature of Exterran Partners’ contract operations services business model; the Companies’ operational and financial strategies, and the Companies’ ability to successfully effect those strategies; the Companies’ financial and operational outlook and ability to fulfill that outlook; and the Companies’ expected ability to fund capital expenditures in 2009 from cash generated from operations.
While the Companies believe that the assumptions concerning future events are reasonable, they caution that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of their business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: local, regional, national and international economic conditions and the impact they may have on the Companies and their customers; changes in tax laws that impact master limited partnerships; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil and natural gas and the impact on the price of oil and natural gas; Exterran Holdings’ ability to timely and cost-effectively obtain components necessary to conduct the Companies’ business; changes in political or economic conditions in key operating markets, including international markets; changes in safety and environmental regulations pertaining to the production and transportation of oil and natural gas; and, as to each of the Companies, the performance of the other entity.
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Exterran Holdings’ Annual Report on Form 10-K for the year ended December 31, 2007, as amended by Amendment No. 1 thereto, Exterran Partners’ Annual Report on Form 10-K for the year ended December 31, 2007, and those set forth from time to time in the Companies’ filings with the Securities and Exchange Commission, which are currently available at www.exterran.com. Except as required by law, the Companies expressly disclaim any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.
Exterran Contact Information:
Investors: David Oatman (281) 836-7035
Media: Susan Nelson (281) 836-7297
SOURCE: Exterran Holdings, Inc. and Exterran Partners, L.P.
(Tables Follow)
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| EXTERRAN HOLDINGS, INC. | |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (In thousands, except per share amounts) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Years Ended | |
| | | December 31, | | | September 30, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2008 | | | 2008 | | | 2007 | | | 2008 | | | 2007 (1) | |
| Revenues: | | | | | | | | | | | | | | | |
| North America contract operations | | $ | 198,964 | | | $ | 197,926 | | | $ | 202,956 | | | $ | 790,573 | | | $ | 551,140 | |
| International contract operations | | | 135,992 | | | | 135,153 | | | | 111,414 | | | | 516,891 | | | | 336,807 | |
| Aftermarket services | | | 101,464 | | | | 98,275 | | | | 102,307 | | | | 381,617 | | | | 274,489 | |
| Fabrication | | | 393,971 | | | | 364,608 | | | | 436,698 | | | | 1,489,572 | | | | 1,378,049 | |
| | | | 830,391 | | | | 795,962 | | | | 853,375 | | | | 3,178,653 | | | | 2,540,485 | |
| | | | | | | | | | | | | | | | | | | | | |
| Costs and Expenses: | | | | | | | | | | | | | | | | | | | | |
| Cost of sales (excluding depreciation and amortization expense): | | | | | | | | | | | | | | | | | |
| North America contract operations | | | 82,834 | | | | 84,440 | | | | 86,300 | | | | 341,865 | | | | 232,238 | |
| International contract operations | | | 49,899 | | | | 53,884 | | | | 40,441 | | | | 191,296 | | | | 126,861 | |
| Aftermarket services | | | 82,516 | | | | 78,306 | | | | 82,633 | | | | 304,430 | | | | 214,497 | |
| Fabrication | | | 308,051 | | | | 292,978 | | | | 362,425 | | | | 1,220,056 | | | | 1,144,580 | |
| Selling, general and administrative | | | 95,178 | | | | 94,533 | | | | 89,659 | | | | 374,737 | | | | 265,057 | |
| Merger and integration expenses | | | 1,765 | | | | 3,728 | | | | 9,326 | | | | 11,475 | | | | 46,723 | |
| Early extinguishment of debt | | | - | | | | - | | | | - | | | | - | | | | 70,150 | |
| Depreciation and amortization | | | 96,452 | | | | 94,286 | | | | 85,822 | | | | 373,602 | | | | 252,716 | |
| Fleet impairment | | | 21,659 | | | | 1,000 | | | | - | | | | 24,109 | | | | 61,945 | |
| Goodwill impairment | | | 1,148,371 | | | | - | | | | - | | | | 1,148,371 | | | | - | |
| Interest expense | | | 33,034 | | | | 33,364 | | | | 34,959 | | | | 129,723 | | | | 130,092 | |
| Equity in income of non-consolidated affiliates | | | (4,262 | ) | | | (6,657 | ) | | | (5,541 | ) | | | (23,974 | ) | | | (12,498 | ) |
| Other (income) expense, net | | | (2,838 | ) | | | 5,689 | | | | (15,002 | ) | | | (18,760 | ) | | | (44,646 | ) |
| | | | 1,912,659 | | | | 735,551 | | | | 771,022 | | | | 4,076,930 | | | | 2,487,715 | |
| Income (loss) from continuing operations before income taxes | | | | | | | | | | | | | | | | | |
| and minority interest | | | (1,082,268 | ) | | | 60,411 | | | | 82,353 | | | | (898,277 | ) | | | 52,770 | |
| Provision for (benefit from) income taxes | | | (30,214 | ) | | | 20,350 | | | | 19,979 | | | | 37,197 | | | | 11,894 | |
| Minority interest, net of taxes | | | 3,359 | | | | 3,028 | | | | 3,880 | | | | 12,273 | | | | 6,307 | |
| Income (loss) from continuing operations | | | (1,055,413 | ) | | | 37,033 | | | | 58,494 | | | | (947,747 | ) | | | 34,569 | |
| Income (loss) from discontinued operations, net of tax | | | - | | | | - | | | | - | | | | 398 | | | | - | |
| Net income (loss) | | $ | (1,055,413 | ) | | $ | 37,033 | | | $ | 58,494 | | | $ | (947,349 | ) | | $ | 34,569 | |
| Basic income (loss) per common share (2) | | | | | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | $ | (16.70 | ) | | $ | 0.57 | | | $ | 0.90 | | | $ | (14.68 | ) | | $ | 0.76 | |
| Income from discontinued operations, net of tax | | | - | | | | - | | | | - | | | | 0.01 | | | | - | |
| Net Income (loss) | | $ | (16.70 | ) | | $ | 0.57 | | | $ | 0.90 | | | $ | (14.67 | ) | | $ | 0.76 | |
| Diluted income (loss) per common share (2) | | | | | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations (3) | | $ | (16.70 | ) | | $ | 0.56 | | | $ | 0.87 | | | $ | (14.68 | ) | | $ | 0.75 | |
| Income from discontinued operations, net of tax | | | - | | | | - | | | | - | | | | 0.01 | | | | - | |
| Net Income (loss) | | $ | (16.70 | ) | | $ | 0.56 | | | $ | 0.87 | | | $ | (14.67 | ) | | $ | 0.75 | |
| Weighted average common and equivalent shares outstanding (2): | | | | | | | | | | | | | | | | | |
| Basic | | | 63,191 | | | | 64,940 | | | | 65,276 | | | | 64,580 | | | | 45,580 | |
| Diluted | | | 63,191 | | | | 68,537 | | | | 68,715 | | | | 64,580 | | | | 46,300 | |
| | | | | | | | | | | | | | | | | | | | | |
| (1) The merger of Hanover Compressor Company and Universal Compression Holdings, Inc. was completed on August 20, 2007, and periods prior to the merger reflect only Hanover's results. | |
| | | | | | | | | | | | | | | | | | | | | |
| (2) Adjusted for the Hanover common share conversion ratio in the merger of Hanover and Universal for the twelve-month period ended December 31, 2007. | |
| | | | | | | | | | | | | | | | | | | | | |
| (3) Net income (loss) for the diluted earnings (loss) per share calculation for the three-month periods ending December 31, 2008, September 30, 2008 and December 31, 2007 is adjusted to add back interest expense and amortization of financing costs, net of tax, relating to the Company's convertible senior notes totaling zero, $1.2 million and $1.2 million, respectively. Net income (loss) for the diluted earnings (loss) per share calculation for the years ending December 31, 2008 and 2007 is adjusted to add back interest expense and amortization of financing costs, net of tax, relating to the Company's convertible senior notes totaling zero and $0.3 million, respectively. | |
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| EXTERRAN HOLDINGS, INC. | |
| UNAUDITED SUPPLEMENTAL INFORMATION | |
| (In thousands, except percentages) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Years Ended | |
| | | December 31, | | | September 30, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2008 | | | 2008 | | | 2007 | | | 2008 | | | 2007 (1) | |
| Revenues: | | | | | | | | | | | | | | | |
| North America contract operations | | $ | 198,964 | | | $ | 197,926 | | | $ | 202,956 | | | $ | 790,573 | | | $ | 551,140 | |
| International contract operations | | | 135,992 | | | | 135,153 | | | | 111,414 | | | | 516,891 | | | | 336,807 | |
| Aftermarket services | | | 101,464 | | | | 98,275 | | | | 102,307 | | | | 381,617 | | | | 274,489 | |
| Fabrication | | | 393,971 | | | | 364,608 | | | | 436,698 | | | | 1,489,572 | | | | 1,378,049 | |
| Total | | $ | 830,391 | | | $ | 795,962 | | | $ | 853,375 | | | $ | 3,178,653 | | | $ | 2,540,485 | |
| | | | | | | | | | | | | | | | | | | | | |
| Gross Margin (2): | | | | | | | | | | | | | | | | | | | | |
| North America contract operations | | $ | 116,130 | | | $ | 113,486 | | | $ | 116,656 | | | $ | 448,708 | | | $ | 318,902 | |
| International contract operations | | | 86,093 | | | | 81,269 | | | | 70,973 | | | | 325,595 | | | | 209,946 | |
| Aftermarket services | | | 18,948 | | | | 19,969 | | | | 19,674 | | | | 77,187 | | | | 59,992 | |
| Fabrication | | | 85,920 | | | | 71,630 | | | | 74,273 | | | | 269,516 | | | | 233,469 | |
| Total | | $ | 307,091 | | | $ | 286,354 | | | $ | 281,576 | | | $ | 1,121,006 | | | $ | 822,309 | |
| | | | | | | | | | | | | | | | | | | | | |
| Selling, General and Administrative | | $ | 95,178 | | | $ | 94,533 | | | $ | 89,659 | | | $ | 374,737 | | | $ | 265,057 | |
| % of Revenues | | | 11 | % | | | 12 | % | | | 11 | % | | | 12 | % | | | 10 | % |
| | | | | | | | | | | | | | | | | | | | | |
| EBITDA, as adjusted (2) | | $ | 219,013 | | | $ | 192,789 | | | $ | 212,460 | | | $ | 789,003 | | | $ | 621,139 | |
| % of Revenues | | | 26 | % | | | 24 | % | | | 25 | % | | | 25 | % | | | 24 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Capital Expenditures | | $ | 133,200 | | | $ | 119,831 | | | $ | 119,279 | | | $ | 509,270 | | | $ | 352,190 | |
| Less: Proceeds from Sale of PP&E | | | (11,905 | ) | | | (18,418 | ) | | | (6,463 | ) | | | (56,574 | ) | | | (36,277 | ) |
| Net Capital Expenditures | | $ | 121,295 | | | $ | 101,413 | | | $ | 112,816 | | | $ | 452,696 | | | $ | 315,913 | |
| | | | | | | | | | | | | | | | | | | | | |
| Gross Margin Percentage: | | | | | | | | | | | | | | | | | | | | |
| North America contract operations | | | 58 | % | | | 57 | % | | | 57 | % | | | 57 | % | | | 58 | % |
| International contract operations | | | 63 | % | | | 60 | % | | | 64 | % | | | 63 | % | | | 62 | % |
| Aftermarket services | | | 19 | % | | | 20 | % | | | 19 | % | | | 20 | % | | | 22 | % |
| Fabrication | | | 22 | % | | | 20 | % | | | 17 | % | | | 18 | % | | | 17 | % |
| Total | | | 37 | % | | | 36 | % | | | 33 | % | | | 35 | % | | | 32 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Total Available Horsepower (at period end): | | | | | | | | | | | | | | | | | | | | |
| North America contract operations | | | 4,570 | | | | 4,540 | | | | 4,514 | | | | | | | | | |
| International contract operations | | | 1,504 | | | | 1,478 | | | | 1,447 | | | | | | | | | |
| Total | | | 6,074 | | | | 6,018 | | | | 5,961 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Operating Horsepower (at period end): | | | | | | | | | | | | | | | | | | | | |
| North America contract operations | | | 3,455 | | | | 3,452 | | | | 3,632 | | | | | | | | | |
| International contract operations | | | 1,372 | | | | 1,359 | | | | 1,306 | | | | | | | | | |
| Total | | | 4,827 | | | | 4,811 | | | | 4,938 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Horsepower Utilization (at period end): | | | | | | | | | | | | | | | | | | | | |
| North America contract operations | | | 76 | % | | | 76 | % | | | 80 | % | | | | | | | | |
| International contract operations | | | 91 | % | | | 92 | % | | | 90 | % | | | | | | | | |
| Total | | | 79 | % | | | 80 | % | | | 83 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Fabrication Backlog: | | | | | | | | | | | | | | | | | | | | |
| Compression & accessory fabrication | | $ | 395,472 | | | $ | 359,339 | | | $ | 331,939 | | | | | | | | | |
| Production & processing equipment fabrication | | | 732,715 | | | | 731,874 | | | | 787,631 | | | | | | | | | |
| Total | | $ | 1,128,187 | | | $ | 1,091,213 | | | $ | 1,119,570 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Debt to Capitalization: | | | | | | | | | | | | | | | | | | | | |
| Debt | | $ | 2,512,429 | | | $ | 2,467,773 | | | $ | 2,333,924 | | | | | | | | | |
| Stockholders' Equity | | | 2,043,786 | | | | 3,239,237 | | | $ | 3,162,260 | | | | | | | | | |
| Capitalization | | $ | 4,556,215 | | | $ | 5,707,010 | | | $ | 5,496,184 | | | | | | | | | |
| Total | | | 55.1 | % | | | 43.2 | % | | | 42.5 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| (1) The merger of Hanover Compressor Company and Universal Compression Holdings, Inc. was completed on August 20, 2007, and periods prior to the merger reflect only Hanover's results. | |
| | | | | | | | | | | | | | | | | | | | | |
| (2) Management believes disclosure of EBITDA, as adjusted, and Gross Margin, both non-GAAP measures, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, they provide a more complete understanding of our performance than GAAP results alone. Management uses EBITDA, as adjusted, and Gross Margin as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as adjusted, is used by management as a valuation measure. | |
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| EXTERRAN HOLDINGS, INC. | |
| UNAUDITED SUPPLEMENTAL INFORMATION | |
| (In thousands, except per share amounts) | |
| | | | �� | | | | | | | | | | | | |
| | | Three Months Ended | | | Years Ended | |
| | | December 31, | | | September 30, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2008 | | | 2008 | | | 2007 | | | 2008 | | | 2007 (1) | |
| | | | | | | | | | | | | | | | |
| Reconciliation of GAAP to Non-GAAP Financial Information: | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | $ | (1,055,413 | ) | | $ | 37,033 | | | $ | 58,494 | | | $ | (947,747 | ) | | $ | 34,569 | |
| Depreciation and amortization | | | 96,452 | | | | 94,286 | | | | 85,822 | | | | 373,602 | | | | 252,716 | |
| Fleet impairment | | | 21,659 | | | | 1,000 | | | | - | | | | 24,109 | | | | 61,945 | |
| Goodwill impairment | | | 1,148,371 | | | | - | | | | - | | | | 1,148,371 | | | | - | |
| Impairment of investment in non-consolidated affiliate | | | - | | | | - | | | | - | | | | - | | | | 6,743 | |
| Early extinguishment of debt | | | - | | | | - | | | | - | | | | - | | | | 70,150 | |
| Interest expense | | | 33,034 | | | | 33,364 | | | | 34,959 | | | | 129,723 | | | | 130,092 | |
| Merger and integration expenses | | | 1,765 | | | | 3,728 | | | | 9,326 | | | | 11,475 | | | | 46,723 | |
| Minority interest | | | 3,359 | | | | 3,028 | | | | 3,880 | | | | 12,273 | | | | 6,307 | |
| Provision for (benefit from) income taxes | | | (30,214 | ) | | | 20,350 | | | | 19,979 | | | | 37,197 | | | | 11,894 | |
| EBITDA, as adjusted (2) | | | 219,013 | | | | 192,789 | | | | 212,460 | | | | 789,003 | | | | 621,139 | |
| Selling, general and administrative | | | 95,178 | | | | 94,533 | | | | 89,659 | | | | 374,737 | | | | 265,057 | |
| Equity in income of non-consolidated affiliates | | | (4,262 | ) | | | (6,657 | ) | | | (5,541 | ) | | | (23,974 | ) | | | (12,498 | ) |
| Impairment of investment in non-consolidated affiliate | | | - | | | | - | | | | - | | | | - | | | | (6,743 | ) |
| Other (income) expense, net | | | (2,838 | ) | | | 5,689 | | | | (15,002 | ) | | | (18,760 | ) | | | (44,646 | ) |
| Gross Margin (2) | | $ | 307,091 | | | $ | 286,354 | | | $ | 281,576 | | | $ | 1,121,006 | | | $ | 822,309 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | $ | (1,055,413 | ) | | $ | 37,033 | | | $ | 58,494 | | | | | | | | | |
| Fleet impairment, net of tax | | | 14,728 | | | | 640 | | | | - | | | | | | | | | |
| Goodwill impairment, net of tax | | | 1,095,428 | | | | - | | | | - | | | | | | | | | |
| Merger and integration expenses, net of tax | | | 1,094 | | | | 2,386 | | | | 5,875 | | | | | | | | | |
| Income from continuing operations, excluding charges | | $ | 55,837 | | | $ | 40,059 | | | $ | 64,369 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted income (loss) per common share from continuing operations | | $ | (16.70 | ) | | $ | 0.56 | | | $ | 0.87 | | | | | | | | | |
| Adjustment per common share | | | 17.55 | | | | 0.04 | | | | 0.08 | | | | | | | | | |
| Diluted income per common share from continuing operations, excluding charges (2) | | $ | 0.85 | | | $ | 0.60 | | | $ | 0.95 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| (1) The merger of Hanover Compressor Company and Universal Compression Holdings, Inc. was completed on August 20, 2007, and periods prior to the merger reflect only Hanover's results. | |
| | | | | | | | | | | | | | | | | | | | | |
| (2) Management believes disclosure of EBITDA, as adjusted, diluted income per common share from continuing operations, excluding charges, and Gross Margin, non-GAAP measures, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, they provide a more complete understanding of our performance than GAAP results alone. Management uses EBITDA, as adjusted, diluted income per common share from continuing operations, excluding charges, and Gross Margin as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as adjusted, is used by management as a valuation measure. | |
7
| |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (In thousands, except per unit amounts) | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Years Ended | |
| | | December 31, | | | September 30, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2008 | | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Revenue | | $ | 49,056 | | | $ | 44,390 | | | $ | 36,575 | | | $ | 163,712 | | | $ | 107,675 | |
| | | | | | | | | | | | | | | | | | | | | |
| Costs and expenses: | | | | | | | | | | | | | | | | | | | | |
| Cost of sales (excluding depreciation and amortization) | | | 21,583 | | | | 19,900 | | | | 15,511 | | | | 73,563 | | | | 46,066 | |
| Depreciation and amortization | | | 8,026 | | | | 7,542 | | | | 5,660 | | | | 27,053 | | | | 16,570 | |
| Selling, general and administrative | | | 5,916 | | | | 2,423 | | | | 4,134 | | | | 16,085 | | | | 13,730 | |
| Interest expense | | | 5,826 | | | | 4,967 | | | | 3,872 | | | | 18,039 | | | | 11,658 | |
| Other (income) expense, net | | | (291 | ) | | | - | | | | (4 | ) | | | (1,430 | ) | | | (22 | ) |
| Total costs and expenses | | | 41,060 | | | | 34,832 | | | | 29,173 | | | | 133,310 | | | | 88,002 | |
| Income before income taxes | | | 7,996 | | | | 9,558 | | | | 7,402 | | | | 30,402 | | | | 19,673 | |
| Income tax expense | | | 186 | | | | 147 | | | | 90 | | | | 555 | | | | 272 | |
| Net income | | $ | 7,810 | | | $ | 9,411 | | | $ | 7,312 | | | $ | 29,847 | | | $ | 19,401 | |
| | | | | | | | | | | | | | | | | | | | | |
| General partner interest in net income | | $ | 401 | | | $ | 432 | | | $ | 205 | | | $ | 1,206 | | | $ | 447 | |
| | | | | | | | | | | | | | | | | | | | | |
| Limited partner interest in net income | | $ | 7,409 | | | $ | 8,979 | | | $ | 7,107 | | | $ | 28,641 | | | $ | 18,954 | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average limited partners units outstanding: | | | | | | | | | | | | | | | | | | | | |
| Basic | | | 19,092 | | | | 18,305 | | | | 16,679 | | | | 17,694 | | | | 14,604 | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted | | | 19,097 | | | | 18,320 | | | | 16,753 | | | | 17,752 | | | | 14,702 | |
| | | | | | | | | | | | | | | | | | | | | |
| Earnings per limited partner unit: | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.39 | | | $ | 0.49 | | | $ | 0.43 | | | $ | 1.62 | | | $ | 1.30 | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted | | $ | 0.39 | | | $ | 0.49 | | | $ | 0.42 | | | $ | 1.61 | | | $ | 1.29 | |
| | | | | | | | | | | | | | | | | | | | | |
8
| |
| UNAUDITED SUPPLEMENTAL INFORMATION | |
| (In thousands, except per unit amounts) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Years Ended | |
| | | December 31, | | | September 30, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2008 | | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| Revenue | | $ | 49,056 | | | $ | 44,390 | | | $ | 36,575 | | | $ | 163,712 | | | $ | 107,675 | |
| | | | | | | | | | | | | | | | | | | | | |
| Gross Margin, as adjusted (1) | | $ | 29,307 | | | $ | 28,063 | | | $ | 23,751 | | | $ | 102,629 | | | $ | 70,227 | |
| | | | | | | | | | | | | | | | | | | | | |
| EBITDA, as further adjusted (1) | | $ | 23,838 | | | $ | 22,694 | | | $ | 20,122 | | | $ | 86,004 | | | $ | 59,138 | |
| % of Revenue | | | 49 | % | | | 51 | % | | | 55 | % | | | 53 | % | | | 55 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Capital Expenditures | | $ | 7,072 | | | $ | 4,390 | | | $ | 8,585 | | | $ | 23,434 | | | $ | 32,362 | |
| Less: Proceeds from Sale of Compression Equipment | | | (3,284 | ) | | | - | | | | - | | | | (8,559 | ) | | | - | |
| Net Capital Expenditures | | $ | 3,788 | | | $ | 4,390 | | | $ | 8,585 | | | $ | 14,875 | | | $ | 32,362 | |
| | | | | | | | | | | | | | | | | | | | | |
| Gross Margin percentage, as adjusted | | | 60 | % | | | 63 | % | | | 65 | % | | | 63 | % | | | 65 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Distributable cash flow (2) | | $ | 14,140 | | | $ | 14,798 | | | $ | 14,108 | | | $ | 56,996 | | | $ | 40,529 | |
| | | | | | | | | | | | | | | | | | | | | |
| Distributions per Limited Partner Unit | | $ | 0.4625 | | | $ | 0.4625 | | | $ | 0.425 | | | $ | 1.74 | | | $ | 1.53 | |
| Distribution to All Unitholders, including Incentive Distributions | | $ | 9,264 | | | $ | 9,264 | | | $ | 7,292 | | | $ | 32,192 | | | $ | 24,574 | |
| Distributable Cash Flow Coverage | | | 1.53 | x | | | 1.60 | x | | | 1.93 | x | | | 1.77 | x | | | 1.65 | x |
| | | | | | | | | | | | | | | | | | | | | |
| | | December 31, | | | September 30, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2008 | | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | | | | | | | |
| Debt | | $ | 398,750 | | | $ | 399,750 | | | $ | 217,000 | | | $ | 398,750 | | | $ | 217,000 | |
| Total Partners' Capital | | | 175,468 | | | | 175,151 | | | | 145,159 | | | | 175,468 | | | | 145,159 | |
| Capitalization | | $ | 574,218 | | | $ | 574,901 | | | $ | 362,159 | | | $ | 574,218 | | | $ | 362,159 | |
| Total Debt to Capitalization | | | 69 | % | | | 70 | % | | | 60 | % | | | 69 | % | | | 60 | % |
| EBITDA, as further adjusted (1) to Interest Expense | | | 4.1 | x | | | 4.6 | x | | | 5.2 | x | | | 4.8 | x | | | 5.1 | x |
| (1) Management believes disclosure of EBITDA, as further adjusted, and Gross Margin, as adjusted, both non-GAAP measures, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, they provide a more complete understanding of our performance than GAAP results alone. Management uses EBITDA, as further adjusted, and Gross Margin, as adjusted, as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as further adjusted, is used by management as a valuation measure. |
| | | | | | | | | | | | | | | |
| (2) Distributable cash flow, a non-GAAP measure, is a significant liquidity metric used by management to compare basic cash flows generated by us to the cash distributions we expect to pay our partners. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. |
| | | | | | | | | | | | | | | |
9
| |
| UNAUDITED SUPPLEMENTAL INFORMATION | |
| (In thousands) | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Years Ended | |
| | | December 31, | | | September 30, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2008 | | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| Reconciliation of GAAP to Non-GAAP Financial Information: | | | | | | | | | | | | | | | |
| Net income | | $ | 7,810 | | | $ | 9,411 | | | $ | 7,312 | | | $ | 29,847 | | | $ | 19,401 | |
| Income tax expense | | | 186 | | | | 147 | | | | 90 | | | | 555 | | | | 272 | |
| Depreciation and amortization | | | 8,026 | | | | 7,542 | | | | 5,660 | | | | 27,053 | | | | 16,570 | |
| Cap on operating and selling, general and administrative | | | | | | | | | | | | | | | | | | | | |
| costs provided by Exterran Holdings ("EXH") | | | 1,938 | | | | 3,589 | | | | 2,687 | | | | 12,600 | | | | 8,901 | |
| Non-cash selling, general and administrative costs | | | 52 | | | | (2,962 | ) | | | 501 | | | | (2,090 | ) | | | 3,184 | |
| Non-recurring cash selling, general and administrative reimbursement (1) | | | - | | | | - | | | | - | | | | - | | | | (848 | ) |
| Interest expense, net of interest income | | | 5,826 | | | | 4,967 | | | | 3,872 | | | | 18,039 | | | | 11,658 | |
| EBITDA, as further adjusted (2) | | | 23,838 | | | | 22,694 | | | | 20,122 | | | | 86,004 | | | | 59,138 | |
| Cash selling, general and administrative costs | | | 5,864 | | | | 5,385 | | | | 3,633 | | | | 18,175 | | | | 10,546 | |
| Plus: Non-recurring cash selling, general and administrative reimbursement (1) | | | - | | | | - | | | | - | | | | - | | | | 848 | |
| Less: cap on selling, general and administrative costs provided by EXH | | | (104 | ) | | | (16 | ) | | | - | | | | (120 | ) | | | (283 | ) |
| Less: other (income) expense, net | | | (291 | ) | | | - | | | | (4 | ) | | | (1,430 | ) | | | (22 | ) |
| Gross Margin, as adjusted for operating cost caps provided by EXH (2) | | | 29,307 | | | | 28,063 | | | | 23,751 | | | | 102,629 | | | | 70,227 | |
| Other (income) expense, net | | | 291 | | | | - | | | | 4 | | | | 1,430 | | | | 22 | |
| Less: Gain on sale of compression equipment | | | (316 | ) | | | - | | | | - | | | | (1,435 | ) | | | - | |
| Less: Cash interest expense | | | (5,750 | ) | | | (4,835 | ) | | | (3,643 | ) | | | (17,567 | ) | | | (11,258 | ) |
| Less: Cash selling, general and administrative, as adjusted for | | | | | | | | | | | | | | | | | | | | |
| cost caps provided by EXH | | | (5,760 | ) | | | (5,369 | ) | | | (3,633 | ) | | | (18,055 | ) | | | (10,263 | ) |
| Less: Income tax expense | | | (186 | ) | | | (147 | ) | | | (90 | ) | | | (555 | ) | | | (272 | ) |
| Less: Maintenance capital expenditures | | | (3,446 | ) | | | (2,914 | ) | | | (2,281 | ) | | | (9,451 | ) | | | (7,079 | ) |
| Less: Non-recurring cash selling, general and administrative reimbursement (1) | | | - | | | | - | | | | - | | | | - | | | | (848 | ) |
| Distributable cash flow (3) | | $ | 14,140 | | | $ | 14,798 | | | $ | 14,108 | | | $ | 56,996 | | | $ | 40,529 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Cash flows from operating activities | | $ | 17,142 | | | $ | 10,311 | | | $ | 9,635 | | | $ | 43,268 | | | $ | 34,520 | |
| Amortization of debt issuance cost | | | (39 | ) | | | (94 | ) | | | (67 | ) | | | (285 | ) | | | (238 | ) |
| Amortization of fair value of acquired interest rate swaps | | | (37 | ) | | | (38 | ) | | | (162 | ) | | | (187 | ) | | | (162 | ) |
| Cap on operating and selling, general and administrative costs provided by EXH | | | 1,938 | | | | 3,589 | | | | 2,687 | | | | 12,600 | | | | 8,901 | |
| Interest expense, net of interest income | | | 5,826 | | | | 4,967 | | | | 3,872 | | | | 18,039 | | | | 11,658 | |
| Cash interest expense | | | (5,750 | ) | | | (4,835 | ) | | | (3,643 | ) | | | (17,567 | ) | | | (11,258 | ) |
| Maintenance capital expenditures | | | (3,446 | ) | | | (2,914 | ) | | | (2,281 | ) | | | (9,451 | ) | | | (7,079 | ) |
| Change in assets and liabilities | | | (1,494 | ) | | | 3,812 | | | | 4,067 | | | | 10,579 | | | | 5,035 | |
| Less: Non-recurring cash selling, general and administrative reimbursement (1) | | | - | | | | - | | | | - | | | | - | | | | (848 | ) |
| Distributable cash flow (3) | | $ | 14,140 | | | $ | 14,798 | | | $ | 14,108 | | | $ | 56,996 | | | $ | 40,529 | |
| (1) Consists of a cash reimbursement from Exterran Holdings of non-cash merger-related expenses incurred by Exterran Partners. | | |
| | | | | | | | | | | | | | | | | | |
(2) Management believes disclosure of EBITDA, as further adjusted, and Gross Margin, as adjusted, both non-GAAP measures, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, they provide a more complete understanding of our performance than GAAP results alone. Management uses EBITDA, as further adjusted, and Gross Margin, as adjusted, as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as further adjusted, is used by management as a valuation measure. | | | | | |
| | | | | | | | | | | | | | | | | | |
| 3) Distributable cash flow, a non-GAAP measure, is a significant liquidity metric used by management to compare basic cash flows generated by us to the cash distributions we expect to pay our partners. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. | | | | | |
| | | | | | | | | | | | | | | | | | |
10
| EXTERRAN PARTNERS, L.P. | |
| UNAUDITED SUPPLEMENTAL INFORMATION | |
| (In thousands, except percentages) | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Years Ended | |
| | | December 31, | | | September 30, | | | December 31, | | | December 31, | | | December 31, | |
| | | 2008 | | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | | | | | | | | | | | | | | |
| Total Available Horsepower (at period end) | | | 1,026 | | | | 1,017 | | | | 723 | | | | 1,026 | | | | 723 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Operating Horsepower (at period end) | | | 909 | | | | 909 | | | | 669 | | | | 909 | | | | 669 | |
| | | | | | | | | | | | | | | | | | | | | |
| Average Operating Horsepower | | | 908 | | | | 816 | | | | 667 | | | | 846 | | | | 496 | |
| | | | | | | | | | | | | | | | | | | | | |
| Horsepower Utilization: | | | | | | | | | | | | | | | | | | | | |
| Spot (at period end) | | | 89 | % | | | 89 | % | | | 95 | % | | | 89 | % | | | 93 | % |
| Average | | | 89 | % | | | 89 | % | | | 94 | % | | | 90 | % | | | 95 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Combined U.S. Contract Operations Horsepower of Exterran Holdings | | | | | | | | | | | | | | | | | | | | |
| and Exterran Partners covered by contracts converted to service | | | | | | | | | | | | | | | | | | | | |
| agreements (at period end) | | | 1,730 | | | | 1,716 | | | | 1,294 | | | | 1,730 | | | | 1,294 | |
| | | | | | | | | | | | | | | | | | | | | |
| Available Horsepower: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Available U.S. Contract Operations Horsepower of Exterran Holdings | | | | | | | | | | | | | | | | | |
| and Exterran Partners (at period end) | | | 4,459 | | | | 4,428 | | | | 4,403 | | | | 4,459 | | | | 4,403 | |
| | | | | | | | | | | | | | | | | | | | | |
| % of U.S. Contract Operations Available Horsepower of Exterran | | | | | | | | | | | | | | | | | | | | |
| Holdings and Exterran Partners covered by contracts converted | | | | | | | | | | | | | | | | | | | | |
| to service agreements (at period end) | | | 39 | % | | | 39 | % | | | 29 | % | | | 39 | % | | | 29 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Operating Horsepower: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total Operating U.S. Contract Operations Horsepower of Exterran Holdings | | | | | | | | | | | | | | | | | |
| and Exterran Partners (at period end) | | | 3,390 | | | | 3,384 | | | | 3,556 | | | | 3,390 | | | | 3,556 | |
| | | | | | | | | | | | | | | | | | | | | |
| % of U.S. Contract Operations Operating Horsepower of Exterran | | | | | | | | | | | | | | | | | | | | |
| Holdings and Exterran Partners covered by contracts converted | | | | | | | | | | | | | | | | | | | | |
| to service agreements (at period end) | | | 51 | % | | | 51 | % | | | 36 | % | | | 51 | % | | | 36 | % |
11
