EXTN - Earnings call transcript Q4 2020

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Operator

Greetings, and welcome to the Exterran Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I President, Exterran. Relations Hancock, Investor Blake Vice for Thank you.

You may begin.

Blake Hancock

Chief are Good morning, conference President and today XXXX Exterran's Chief fourth Corporation's Andrew Financial and David Exterran's Officer. Barta, and welcome call. to With Exterran Executive Way; Officer, quarter me

filings the future the laws are only results this for During differ important speak or securities future uncertainties reconciliation call. The this Exchange and Regulation in in these to call. with Relations may refer regarding earnings factors materially a similar during conference meaning considered and I several a company's financial turn described its earlier the matters. may with of U.S. In to accordance the provides in the we about Management With call, statements forward-looking of Securities non-GAAP call company operations of within statements of business, Andrew. will company's date Commission. portion of the measures that, statements and this now over risk and as to other the measures the press These website. company's located could the presentation make G, expectations factors, trends company's the release issued and management's actual including plans today Investor due

Andrew Way

COVID all sure challenging as primary particular challenging will related throughout ways. and and are and XXXX cost gas environment. our the the pandemic, and attention At executing backlog, keeping navigating families has you XXXX been changed macro hope is that well quarter your and difficult which Exterran, our reasons, lives global safety, Blake, the for affected while you in everyone. all these economy times. has strong on oil morning, primarily actions to employee many focus our whole greatly Thanks, I'm I good the to a during many and agree fourth

EBITDA contract its operating improved was against by This expectations Exterran in SG&A the the in $XX product executed improvement million guidance During in $XX driven by expense fourth performance in our well a revenue, high and business, adjusted modest management our million. metrics the quarter, and sales came as margins at at underscored with range, levels. along strong both operations cost with EBITDA

As months. COVID forward, day we one brings in semblance the that return of indicators will rebound the look over of normalcy, and to a the becoming is rollout the commodity vaccination which with prices couple of life travel like past evident hope

far remain during we positive to by unfolded continue the some some product award believe wins dynamic these taken our about logistical from in very in is results followed we achieve $XXX we XXXX, steps America. operations renewals challenges. Middle East the with we of significant of across operations. However, Latin beginning and have had couple hotspots past some the the sales over optimistic Commercially, to contract with quarter proactive million despite of first I months as a pandemic over secured large that events all in the see emerge We challenge regions appearing have

to and fabrication U.S. business. our higher by of report on reduces also significant service a the a with delivered energy This of demonstrating manage excited journey service to focused continue margin we the company improvements company. volatility strategic year business, came transition margins returns. We earnings our year-over-year of XX% as oilfield the continue the our our from end as our I'm at down by compression source in on sale to to SG&A took the another step what traditional core in considerably which an and was the whilst XXXX industrial control today away closing forward the stability

is our penetration or products a transformation our focused knowledge services, EWS, around productive which market and team in of important Water of technology. industry also on very XXXX. while driving Another had Solutions The our to progress leading our year business, element looking

couple commercial regarding our XXXX, quarters, our worth increase announce This million. discussions $XXX stake I've ground past Exterran multiyear an first the I'm engaged in quarter the during happy talked in been in Over is about further we've and the extremely its transformation won that a company. the significant a project. in ECO of industrial project EWS energy the company service project the to of and over represents exciting contract business, This Middle launches for to East, first

year, products, geographic product initiatives to our at that that backlog footprints company's strategic ECO exciting a drive our are makes now to of step the supports facilities. the key of operations the are we working opportunities the The the direction to development which line. other more an product What is the in even XX% is position the in scale will increase will efficiencies treatment additional support is a increased approximately and seeing year, Globally, to team our given at use this process pilots of we number of that change the water that also in carbon the for of backlog. addition on in for the opportunities percentage projects end looking in see fact Just coming over grow up award, EWS pipeline. company's

us to and sustainable reasons, high years. that an developments, is term. line cost to Additionally, of usability the process product to to obtain from we over initiative produced water approach over to the water. produced drive keen and readdress course The will it long to This coming an for desalination system solution, filed see the environmental multiple XXXX including valuable industries medium is and we of many water are with down has strong has across and fact launched has patents the IP, the of an applications dramatically that over some team these opportunities integrated have it unfold the margins related

reuse be critical control these companies consumption, need look more to long-term and to problems. recycle This a will sustainability. environmental technology our for to bodes As well industries solution the all and their waste for having

better around XX months lines world, product about to traditional I months next feel our at X ago. the the look I holds compared what As

We continues the market, ECO new limited. U.S. continue markets face to are AMS our to however, in international segment. shoots, opportunities sales The and product challenges, albeit see resiliency in green and but some there

to timing of of contribute transition. participate the the gas, in cleaner energies. While U.S. and foundation us Exterran's will electricity, is the turnaround the amount to of which is processing or with provides to skill a we set significant some moving the we're awards molecules built also exploring electrons, on oil, be and energy new contribute project investing how whether and water challenging, that and time market needed

to to closer our on even expanding service customers. our focused are However, offerings home, we

of many in meaningful know, the As the coming are industry reductions you targeting emission years. many over

in improve transition. I'll for customers made offerings, to pleased Our and progress the maintenance detection to valves, with turn including Overall, electric I'm to conversion energy with additional the costs and repair extremely cleaner aftermarket solutions lower service prospect has and operating leak sustainable operating to service teams efficiencies. kits drive, to services it are provide with participate that, company the offerings in preventative Dave. long-term transformation drive the over the the enhancing And its our company low-emission with along

David Barta

operations. All the as numbers exclude from discontinued business Thanks, U.S. our it compression been reoccurring reclassified fabrication All right. Andrew. to to results was have restated presented

XX% margin delivered From at the and $XX operations For $XX was XX% $X.X an guidance a adjusted billion. million. to the was on revenue stood represents gross margin adjusted margin million, backlog of in compared rate was quarter, of XXXX. we end line revenue in the XX% contract adjusted $XXX EBITDA of QX an in with at in resulting which as of segment EBITDA perspective, million, million, while of our segment This rate XX%. gross quarter ECO for $XX QX

projects was adjusted $X in some gross margin was segment QX, revenue was $XX product project in The which impacted Margins and an Revenue to the of rate mix. AMS, with adjusted was mix quarter million to and as of margin gross compression increased XX%. million, million, some we a COVID-XX-related sales due adjusted $XX adjusted and decreased service Revenue rate delays. delays. international For in was gross better parts in million, margin the rate $X contract for resulted sequentially of the revenue completed margin margin number segment XX%. along due gross resulting

controls quarter. Full and down from year $XXX strong million, million the the reflecting over SG&A the Our backlog at the million million end sales of the end in the from quarter. the $XXX million and third SG&A product $XXX XXXX, past third down $XX million productivity to achieved was from compared years. $XX at down fourth $XXX million, XXXX $XXX in in cost the X was expenses were of quarter

Moving million. debt of to was fourth quarter the balance sheet. the end at Net $XXX the

compares of and the Our X.XX leverage the times ratio to times is at third X.XX quarter. end

decision we and to a subject offensive are to amendment allows amendment, our made certain under which secured pro our us banks that We During restrictions. EBITDA projects an that construction, to forma for from the recognize quarter, approach ECO contribution to revolver. limitations an

size revolver globally, that commercial the are $XXX to increase discussed million. activity elected also We in Andrew we for $XX of reduce revolver and the driver is seeing the the this total by to million amendment.

to turning XXXX. Now

impact with of new to strong for growth said limited a assumption case. year. This the we our would year bookings given past XXXX for expect we quarters, be still As company X the even remains that the the backlog, the

the environment. exists For million for ongoing $XX is project total water to for takes million as to million. CapEx be million environment the some and the to reflected $XX the may we be engineering that million. between as this which be macro revenue, we to be build year, between $XX an contribute $XX range $XXX in announced a CapEx, additional continued ECO year's XX-month Reimbursable This of should and The committed not commercial the deal This and costs expect required to would $XXX expected will additions deferred the EBITDA. and XX- into account EBITDA $XXX year year year just $XXX improving management the result is million adjusted SG&A range anticipates and fluid pandemic. should of be million. given full range that million. between The as

be $XX $XX year. of $XX and be capital use million, finalizing on expense million recognized is year lastly, $XX to inventory working million this guidance drive be million, topics between timing. and between should other will which purchase between schedules, net for deferred customer taxes should dependent $XX should payment the Cash be project but $XX the of a and for Some and million. revenue $XX And around million million, interest cash and

product adjusted and We see our year, as it by mid-$XX for the AMS be first backlog. seasonality EBITDA back to low for this with less the at revenue over recognized that, improving driven expect will quarter from turn we in the call Andrew year, each first quarter point his typical Looking sales of million the be to EBITDA the And range, the in for to closing the remarks. I'll quarter. low subsequent and

Andrew Way

Thanks, Dave.

the Exterran and So quarter the way the in is looking foundation water its to well a journey wind its strong for during forward, years come. transformational on sets first

provides transition the energy the Our in global sustainable footprint will in space continue product opportunity us evolution. offerings to way to in this as find and the their many struggle to participate

carbon renewable Our to water hydrogen, ways type, and give competencies consumption the regardless and natural value the advancement treating gas moving the revolve core and ability to across participate us reuse of around with and chains. molecules, processing, at along the capture look will

Our installed additional their while the emission us customers extensive reduction help us affords on our revenues. allowing focus footprint targets, build to recurring and to ability service base

our returns focus core long-term protecting We strong the and will organization. cash and of on improving the of flow a maintain the organization

ahead. focus have I'm a I'll year delivery. to to that, the the now operator. the require start strong excited and And a about the I call backlog opportunities see back very on turn solid execution We with will that

Operator

[Operator Instructions].

Capital Our first May of Securities. from One line the question Kyle comes with

Kyle May

update about Andrew, improvement? give of of Can seeing more regional the improved us you months. over the mentioned the XX-month where has the also business? you couple you're talk And last outlook a

Andrew Way

sure. Yes,

ahead. past as relationships, XX past in regional which a say the strong sit pipeline. teams, the customer months a is of project, feeds think feel to over where a to of What amount a have water of great job will awards, making demonstrated I continued we a in the which over particular, our customers a has bid seen by what And pause activity. as we've to at say has bid be X building, as I'd fairly will all, first do first, foundation activity really of to months, obviously fair year this started pipeline we projects us go So of that lack I'd turn, that really is to gave our lot large X led we today, That pipeline for the these awards. the a were of but place considering XXXX end this get

was the Middle activity say, a were ago, more into East, just it pipeline. So confidence that it grow, but a going not commercial to being the I late talk I'll Whereas more we're internationally lot pipeline. very -- weekend with internationally, with busy, seeing a a there's calls the I'd and dialogue, but a there's certainly just second, pipeline continuing on is the nights only more a in X more think regards and a felt lot to internally, U.S. about calls though lot months lot as certainly, we

this So X months, us. order something to is as is bidding in the team, projects through, leadership prime as feels something these just were for recently about and is of lot X news though in that which to come a for talking last a different. been great on different we've it's it We

be say sit that continues region East us. for the today, I'd busiest I far Middle by As the to

team the stronger and management some talked application We've into. in we've for that last we're XX We've our products and expanding core from that continued the engineering. Over commercial months, both region built resource added we've Middle also We've of project develop resource East. about to both the to products our added the teams.

Middle third sit East we second strong or U.S. our train. technology we time where and as of customer the be ever to traction. are trains part trains, got that additional gets Middle in train been fourth water it's that looking a as previously large it in continues add a more new for we've a positive. very to sold, we're gas a seeing pipeline, new East largest And as fleet, more potentially And our in our customers customers to or our and it to pipeline in today, the whether Every add reputation model so installed we've so wanting similar processing and orders also, known, the operate say gets some then cases, That's areas I'd it the and is be. processing

out really building my explaining lot prepared I our in remarks, did putting good year portfolio the manifesting job itself a capabilities activity. really there, as so really last in team and a and and And said the into that's region our more bid

So commercially projects in the clarifications end we're really through for nutshell, sales. working Kyle, on projects a product bidding and ECO now, and front both right technical busy and

our Asia with for clients a haven't both in seen few the water, an number this business again product with a processing new in have Pacific, that us ECO also really we a which offshore being we on really clean spending has we facilities I we're right reusable us time the opportunities, facilities. that some also region year we for technology typically include that thoughts predominantly water sale, for AMS which have aftermarket bit breakthrough of quite region And some processing in also be will have selling and is of year a again, feel some of the And technologies. and seen. now. applications, interested in breakthrough

pipeline, total see has but us activity behind about slightly terms Latin been the America level. for the refreshing Pacific, Middle in of Asia renewals. East So to really

has there's this with said outstanding year, my about continuation job it's that. brutal in has renewing And various And done in job I'd various the no doubt of managing prepared customers. a that I environment challenges a remarks, great team theme. say As in truly team done contracts the a XXXX, an

good work we're a equipment have of But We have through. spots to also And right we of seeing feel lot a renewals very that need that purchase. to about now. for customers

with activity some And and there, seeing so that some in other along pipeline process we're have we some again, equipment deals. and currently water the

opportunities first in certainly some But for that's while. demand that today for facilities. related. performance the gas help in for of the us shoots cases, think the encouraging. in that cost order seeing in to mostly some time past basins, terms And enhance America on that's us, equally, has and certain appropriate supply We're taken And our actions last debottleneck for we're we're see area a in North areas or, seeing in to challenges. green some of saved We've strong a focus working the AMS we've reason. our I the seen been Really, the XX And I in organization. customers still either drivers. some given for certainly We've got rightsizing the some areas, the so the months, some then that

the Asia. renewals. it's a is color. XXXX, of about gives Middle North certainly So think us, that Latin good wait America. for in visibility in half strongest. see you more order, then East, I little Hopefully, that in what And America happens We second have probably and a

Kyle May

you, on better Yes. you next Andrew. the talk maybe expectations the flow the very is that leverage Dave. about But helpful. for impact you guidance and And for cash the provided XXXX? ratio maybe in year. appreciate can my a Thank bit more the little this That's question, I for

David Barta

provided assumptions the prepared comments. during for model you Yes. We

little So more a qualitative maybe just commentary.

of Andrew some call just I bright definitely all, the First -- tied said, market. but obviously, of we're those signs. with -- green some, are together there obviously, And them assumptions our we shoots, as

see good flow have product more so associated prebid of gas the the sales And based opportunities kind what budgetary But lines plant of think market going along and was assumptions some many those Some position, have with we certainly them. opportunities. first in are muted I forward. More on of we matter? question we but provided those cash spots. sales, are Historically, is, more a the that why does product the of bright

as things So those providing products. deferred that they're have building not is generally paid and cash, you're

could East. the hopefully, This certainly is help bias improvements the we that a Middle in capital. also, in that the booked big project into And see we would then positive again, working So way. product sales factoring the in

said, guidance a So impacted we COVID as the degree. based assumptions, our which, our schedule certainly on have to by current large is today and been

they that for still of we're through final the the so customer us. is the project schedules how And And along completing and actual paying project. working reimbursing with with schedule that are

current we always working get of it those guidance, we later it's high-return impacts for award that run, water -- the cash again, I project certainly that are for that, And point. of that improve require investment. the view is high-margin capital, projects, certainly And the to to on threshold business. decisions it does contract in In then good and meet, certainly, so the project that least if are invest And making returns. cash projects. operations think this capital generally early the certainly They based working And where, these it's shown we're this we're we're the conscious not are that exceed in as business, flow capital short of our long-term, at project. positive at think than projects the are our decisions that by use working in and as but does capital actually a into a factor beyond making project, then in curve which certainly require this best

projects short where prefer impacts water bring. the historic cash bringing showing transform again, the of So technology prefer start good and investments seeing the the to be starts all run, so and we're these that run, we run, impacts to the this cash right decisions, the and given then looking continue again, up business, comfortable flow. and feel short think kind in given free the company, decision the flow leverage above leverage in our be. are that and We forth can we're use eventually But long assumptions the making particularly really cash that capital, in with leverage while, how In again, we we Certainly, this forward, down of as we're from the to opportunities that's for a leverage, these complete. rates lower.

Operator

the Our Markets. Northland next from line question comes Doug Capital of Becker with

Douglas Becker

was opportunities quantify just to more you transition, some level you at near-term a help see opportunities? hoping try Exterran? the targets. go Andrew, best mentioned see you into the the detail would customers sustainability But I of And you achieve you and opportunity about how energy for high could where

Andrew Way

Yes.

sits theme. it's big don't transition So have we with topic. I a a And think it as today full Exterran,

I market collaboration, for services an think more don't offer see will we transition. we I the no and be where demand energy But there today. think it's for and us, a of ultimately, products that

gas see important the to of many in all we there we've taking opportunity I are better the whether plant our areas that process our And today upstream. today. as component. or continue in amine that that think solutions some treating it's to been able narrative for helping more in designs, think continues. help And that we're gas years, around further our And customers gas efficient, customers there spaces integrate they're more an from certain certainly nasties And grow it the to is I areas produce And specifically, space. today. of out regions and we clean, it relates is we an believe to that play pipeline lot a

U.S. a more us think the and electric about breakthrough we've the for has and standards from real And out water seeing conversion us. able As to of a an seen we what to to at then ship well We're technologies prepared think that ability valve it interest market site traditional short-term a remarks for to it's further a the put our locally during we've from ship term, and to it's then certainly the in our water, or in just clean in drive having to we water is emission not provide my perspective, solutions around process previously being lot of opportunity in certainly, biggest breakthrough products offerings. reusable ultimately business, that and water the sort talked control low of Not described and potentially emission whether in whether short terms our gas. in downstream. I

I think potential so then solutions term, of what some the the ideas and in adjacent And more bring searching do doing. how to to more through currently short-term, we're working our for certainly that opportunities we we we the see other have solutions longer bear. in of And for of can we're

So but as Exterran. this an a headline it we're isn't speak, say, for is story. work progress we in through, And I'd working a of energy discussion collaboration transition towards more

Douglas Becker

So that's definitely encouraging.

it mentioned around or of ECO times. now. a year How couple You've could EWS guess Where with And Is do be XX%, leverage big a XX% the balance the businesses there? see the in how it's growing think backlog do I associated just do pipeline CapEx water those that you the in you ratio, with you XX%? right just then about X? opportunity of

Andrew Way

going around scope. size And through Great filed, topic I'd Yes, and of water U.S. what we're that seeing a are we're on in here by differences way, ourselves, some reuse say that legislation regulatory just state important also narrative I regulatory, around time also we have going about but seeing is in, this than in big combined that rest in seen There aid to our are around opportunity said, think water. of investing kind frequently, the the the that we're the we those back an the we scale a And be, is larger continued traditional think product the our the further bigger to sustainability a and and are world, relation of and water and that Not as is I the the we only end we're company quite ECO. and challenges the see, be the of where of and Board how business that there's of quo. and very that of importance great solution in overall those unfold advanced in But in to portfolio reuse than every products Everything different with the we the first would patent and that a of all terms can sales, it. than Exterran. total pipeline how how that path solution as East. Middle can a we've legislative countries, projects say big about allow of sell probably I be. in here Exterran to we projects one as countries industry and part particularly be in the of and are question to the traditional and XXXX, discussion that as not on in how excited percentage we think work terms water various some I'd speak are product the we Today, question. it the set having I think AMS and

but over resources we've in the support largest like, the we early months. and have. the out time to the built for it's And backed too the company. to intentions and the declare team And we have that in that XX past that's is segment that's what our water the I looks business that be goal that think the with

said, maybe still. haven't thoughts? I Dave, have you As we stood a few

David Barta

just is as follow-up clean kind not are of Yes, We what to of frankly, as have energy this We to technology That's said, focus that Doug, energy. and Kyle's in is outside you today, water. the problem. And do? Andrew about, opportunities for think be opportunities we But question applied. well. we do energy. certainly, an When see, tremendous the just there

certainly capital, And sheets, those. so universally, capital for one to whether also looking of more -- other balance the these ways customers finance of Yes, So is that. customers there's seeing that's put investment are we're looking we're doing and on opportunities. are think their probably to many in I things looking fact, or other partners' working

with interest, where make for what where in call they else looks the of, but it's there can spending someone appropriate. that way rules hope investment of solutions return. that perfect get those to a quite on bit we type that someone that not an is We're the And bank. time those returns there. our and a exploring. equipment with maybe carries just other But a I'll exist that we're infrastructure-type They it, something investments Difficult books. that for. they So off to on come all might decent investment that debt, more or equipment the avenues and, we're look people investment a up that, look frankly, shop we're mean, that not now are that accounting are partnerships that's keeps some I

bringing of to keep that that's investment on living. balance customers, that more solutions, our do the sheet sustainable pursuit can someone's what they technology we environmental put a keep to for So but adding

Douglas Becker

sense. And just one makes That more.

address relates you could for the product it margins aftermarket the in first outlook first margins the saw variances. dip quarter, and as strong If the and just aftermarket, pretty we then quarter product particularly in given to sales in of some those where sales. margin outlook But

David Barta

during don't -- have There's in a holiday quarter. actually it's so the region, the going But them isn't bit we -- our numbers America specific generally it. the periods, I southern in have I little that business, Latin mentioned we we're Yes, less activity their seasonality Latin here. business, think up. America frankly, Obviously, America, or of aftermarket first a to pull with there South

second not And move we've there's generally couple services, full of a it so costs right expect parts margin. that of the comes other revenue One be factors. improve in mentioned deals see lower down would then bit into a couple of that some parts, revenue And margins. got more AMS a to we versus generally a the we to as and So terms mix too, we of in where quarter. and as now, but then

So we the into in quarter improve of guess, kind in saw products. quarter AMS continuation, with then Same fourth going a the should the forward. I a of margins first bit and story

As we quarter, during had products completed compression international so margin in of quarter. mentioned, good in a we first projects the pretty the still the third some

we're on first quarter, frankly, the though, project Middle the East. into is come we in As project big the working that

in U.S. that now facility volume. we've got doesn't P&T here a So the right have

structure, one cost absorption, both made, in activity. to skills cost a some management, some made project plant the certain seeing around and can but due terms into made overhead. engineering we've we And decision, being significant we've given and technical backlog fixed We've and of also so of our adjustments other this pressures those then decisions certainly, we're quote of keep -- the conscious have we're to

-- that the first So in product bit we'll with of us on will a quarter side. without the the weigh revenue on costs the some

Operator

line next Samantha Evercore question of the comes Our with ISI. Hoh from

Samantha Hoh

bill year. It if like large back could you that guys X recall projects now. have I this books of X the been awarded you was the other is project announced there times other terms today? sort looks last that water bidding that that are guys similar Curious out similar on have if in projects and there? the one long And sort half you thought just cycle of have on you as of

Andrew Way

of where Yes. see the Great remarks through. you're think come to some middle I of we're contracts right. you're some in year, what the half And is to Samantha. last second referring part And year water made expecting the question, we

The first part at in happened QX. early the of X

said projects in of commented trend project the prepared very to of just through That’s a revenue and are working how large sales activity. we in projects number we're we the coming contract we in And I some in that terms pipeline other of second was as And have my of the So I both as really other remarks, methodologies as to difficult well. that currently through Kyle, award and product It's could water were XXXX. it slipped. generate speak. that

the months realize to the would not XX revenue. build that projects that have and XX, XX, we take So all

But quarter. you certainly, We we're that the as and too. and on push the of described, in term. on, hope to we we think saw first timing other in announce and what on it the I opportunities have fourth other here, fourth We additional first working near projects working projects quarter speak the the we're wins some booked some one

Samantha Hoh

means different that that it great? say benefits in going really you the reduce if would that. soon. U.S., it explain be you that topic. we East I really was in noticed sustainability kind report go of your get some highlighted customers some I about would start then What new the And helping us guys segments. wondering if done explain where just just U.S. And or to process, to just sort -- work just And then going you Great. is that that's on how seems a maybe we potentially maybe had it could topic of for or doing Exterran as guys award, up be the Middle -- that your sustainability that, here on regulations you keeping highlighted terms how in to you could their that of you flaring. really

David Barta

Yes.

this I Andrew think have don't you another is I'll gas -- you When that you're have let in. use and start Maybe flaring, Dave. jump for. obviously

think with weigh process capture that I primary is it. our into something gas so bringing we that and and way do productive technology treating and to And the sustainable

electricity whether So for the the at site, that's site. generating

up power a move is electric Well, somewhere. there mentioned, to more you've Andrew towards that drive with equipment. come As got

If your electricity. for you've power, turn got gas you're flaring that there's to you potentially source

just center our for of have so very that scale technology, been to or that's something a burned on scale, our would gas and certainly us off. front is with gas do plant to bear otherwise business whether And in to treating bring large that smaller process

Operator

from Capital Our next of Monachello line question Tim comes ATB Markets. with the

Tim Monachello

on contract you First bit how that contract requirements just the CapEx in the expect of wondering long details for water question project? was and more term the you you announced. on that I'm X a what for give if little is could terms

Andrew Way

Yes.

I a Tim, This information on, bid, too and this Tim. of that point, at process think a into is is detail early lot the So competitive to it's specific clearly of kind the competitive. get in

will very aside we of that. to field. our a stage, barrels in not This some fields. XXX,XXX that a size on that this up see to prefer good the small with some is facility won. that of that at just oil think side to with apply is typical water existing to There high where I we this are we helping technology customers the customers from countries particular help water quantity say conditioning content. operations we're This the What will share So is development East a is field project thing our liquids a early It's day. that I some Middle of

And XX we relates go to we're in award update before start build to out months in more more pretty terms $XXX of the see you becomes size over if it this forward. this information continue on contract But that relevant, we project. as forward go fields as be the with opportunity seeing this particular that as flow standard solutions XX support more to this comfortable country. and the so think is customer then we we'll million. to day, of and I through particular some And will to as and public we'll we more

Tim Monachello

the $XX that only Okay. to I time? the that of way guess in month to about it, project. Is guidance, XX CapEx million terms the to $XX million. XX build the I of about would probably right include assume half think given

David Barta

CapEx. our it all you schedule. it's and then like Yes, tend have tied -- more engineering And on, get early the of build into And at you projects be back-end capital customer curve to again, to tends because to was how it's and spend then and engineering forth. looked loaded, of more so and upfront been it's if we the procurement frankly, to

in for included. is any year giving the that But specifics, without they're So our guidance. more this definitely obviously, impact CapEx

Tim Monachello

the guys Water that working Solutions on? award of Does second range contemplate are that that you Okay. contract

David Barta

been CapEx with in is the most CapEx given normal -- haven't we're as near process. so is growth probably that's guidance other the committed this projects projects, a an future, the minimal it And project one we not the call but in just gave projects. frankly, that for does ECO March been includes That what now committed signed. CapEx signed, we even award some any include No, with

Tim Monachello

How be that maintenance, for would of capital, including much sustaining contracts…? renewals CapEx of guidance

David Barta

non-growth Around corporate-type CapEx $XX CapEx, so what and we'd maintenance for and million call general just other.

Tim Monachello

I that the upper in you looking guys the XXXX, Is on size given guess just guess, outlook be would there comfortable at you're the last that CapEx with an project end, then. of I spending one today?

David Barta

I sure -- not in you specific fully projects? talking I'm total are or

Tim Monachello

win high some going if were like to could in saying just big -- how comfortable projects, XXXX? you with I'm CapEx you would Yes. be

David Barta

concerns. I to for obviously, think where the is short-term based in we're position the outlook. governor We making on leveraging on be leverage a don't that, company want decisions our

leverage position. So to going want to reasonable keep a make we're sure we

working and is on in these some And investment depends on in DPO join specifics, reimbursable hard our so suppliers as well. The We're the too. it getting variable. component projects always another to

we customer certainly, maintain them. the that flow to are with fulfill reasonable us a So into get allows do would where way projects a to to like still construct us there cash in but opportunities what can leverage,

I looking a all levers, with to as So be we'll we type ways continue don't business work what offload for and said that to also tell we are investors do. customers earlier, to of versus that financial comfortable those we're in with we us want their that kind capital as can't. in position And to

Tim Monachello

then I'm hydrogen you transition. RNG. specifically CCUS including potential And could exposure energy that. and to a is Okay. curious items, second couple on the I of appreciate if around line speak questions I just for have your also

guess, within growth as detail expertise, and competitors sort well. potential of spoken segments One I internal the, of has your leverage on in and those

where just you So see your I'm curious exposure?

David Barta

Yes.

there's transportation, but spending -- facility, think we and I'll time play really hydrogen. same development processing, been talking today a has processing different where you've do true got is And bit again, One I a a I quite if few on other initial a of in large RNG, give in job think thoughts ways. with example, some we Blake there that. processing and scale these. We've of about is is could -- natural gas albeit his compression, there's you've than what you've got got business there you're on with facility, X for

have energy some of some we certainly core apply could how do there's around those renewable we in more transition competencies what the space. So and today

to energy transition-type And ECO these it every the margin a think take from spending really and us space. from And transition single you a a think a we where run could us do of do build has looking other well standpoint make it. company applications at we our We're But area get the services for in then we as design we're opportunity to time sense do what play. at or have I we we areas into looking that side, where going make them think where element them what to it I one does is things and on to standpoint. we're it of I not we extremely energy well well, doesn't return lot a well. sense apply

Operator

[Operator Instructions].

of next line DiRubbio Brian Baird. Our question from comes with the

Brian DiRubbio

starting the you guidance? drivers what that to sort of end end versus the guidance of the the the you. Can high understand to you get low maybe are of us Dave, help

David Barta

Yes.

what having challenges. got that it I on -- when through specific I them the and on in project one of project if think some has close nailed is, is That which of that unfortunately, Thought some getting put or of back some that East And there But project very region we're slowed as the schedule, as based were COVID. the faster in and questions. guess. track. happens kind being of variables, Certainly, Middle with project that kind the we've answer been it allowances one variable. second anybody's of is said, down into bit and to of the and a COVID, This as things big they we've and has their a run wave. that alluded project to slower had little their a kind by

have of can that on starting sidelined. certainly the certainly us aren't that those So plan sidelined. in for We're projects we bunch probably and could higher them orders, that that's think the we're probably most There don't a many biggest as have been of been plant to those, something have variable on assumption budgetary I see prebid-type mentioned, can the of in are orders move there. if an We kind some have -- we've radar. those hopeful range, we And because in that our be in stages. gas product base

could engineering on And on And those discussions be coming applied the the fact, in in those, we've some well that back are those. well -- sitting some have projects. been of phase are cases some to those inventory of

-- happen some see end high fairly and would So broad. things the for range get to we're that the a provided with But open And we end range. just frankly to faster, certainly that us comfortable very those a should provide certainly range and to up where happen wanted that of low we bias could upper to and end that's towards of have could have a a path us. bit we'll

Brian DiRubbio

on Yes, help think us understand your of is? that's fair. about can And we what in backlog as ECO, you backlog at look life that the -- weighted average

David Barta

provided haven't We that. Yes. generally

I think backlog. And than be in that contracts years. you'll And the we've tend about X historically, to rollout last I longer initial years the few see of XX-K, being we've talked length think a average of signed the X that. the to contracts been in

So you refer I'd as K later to today. probably file that that we'll

Brian DiRubbio

looking to one that's over just me, bit you stuck accounts sheet, great. on on any what's balance going there? out the elevated. seems receivable balance Okay, thing your Can provide a at Then thoughts

David Barta

Yes.

-- XX mean, our of I think America in longer terms that. are tend tended and with I North that than DSOs most couple One, customer have things. there's they be American North business, a the to of days, to internationally

little a a of really to So bit a business the to has business you're mix in little seeing U.S. is the that dropped nothing.

the some a little terms. challenges have. there bit getting receivable And So weighting you're of are the we of international

to a significant note We got the you'll $XX arbitration Latin is an million. over ongoing a balance, going there's in K, in America. that's the with so customer fairly have it receivable And there. see and challenge We've one

that one do frankly, surprised. been key very one challenge and noted pleasantly is there's specific again, continued to of issue pay that we So we've -- have But the that, Many there. in good customers but our that, beyond have K.

Brian DiRubbio

we levels? should view how adequate And you about what as it. Got liquidity think

David Barta

a tend run kind business a rolling multiyear forecast. on We the to of

looking which sure difficult the certainly these just we like make trying we're environments. think cash to needs, operations business, feel And forward, as is normal can we fluctuations business in in think best I of good inventory always the forth So in you and the kind kind about pocket. require a of your This not basis. normal so to has wild of that shape. We're cash operating in maintaining liquidity is that

our how sure say, question I in For hit the ECO making these comfortable And there's a we bidding news that's they're predictable. terms on liquidity where around more is very comes us, often down project selective being required. of are projects an lot The good on very, now criteria. CapEx we're, really, to where would

of you're these signing what up to, you one if know sign up You projects. to

make. our more So and companies have cycles is needs, keep to need Operating a predictable, to need conscious cash CapEx and liquidity inventory we many shorter maybe that is in very of don't have a we as pocket. decision bunch

Brian DiRubbio

Got being thinking are products? raw then finally, it. how you And about inflation, obviously, your just costs, are material built? with that ECO I'm that your steel specifically guys And addressing contracts

David Barta

Yes.

many inflation. I into -- think inputs an those existing other and the certainly, running. just on us. existing and certainly putting generally things of of don't operation things of contracts, non-material not We're ECO kind on once and those impact steel And contracts, like really it's kind copper up

into We built inflation have contracts. the factors

side we is the rates, in if of O&M got when offsets we've contract, running labor labor see you're for bigger So pricing a variable which increases.

those, everything returns to an guarantee anything. that customers We promised right inflation we in can to try as try with upfront, time. impact of we certain have given again, contingencies terms And currently we're be see productivity that forth engineering the as project and certainly length place accounts hard project with more and the on So and sure make go back be the we're you in existing upfront. And we to changes. as anticipate deliver a to to circumstances will And really an got of in to try margins. for we've to going opportunity so push of would offset we on constructing, to

Operator

session. Ladies comments. for the and back any gentlemen, this Mr. floor turn final question-and-answer I'll concludes our to Way

Andrew Way

of Thank all quarter. you to first you, all. Thanks dialing at a the the today. updating Appreciate end We lot. everyone in forward look

Operator

conference. today's concludes This you. Thank

at you disconnect for Thank time. your may this your You lines participation.

Exterran (EXTN) 2 Mar 212020 Q4 Earnings call transcript