EXTN - Earnings call transcript Q3 2021

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Operator

Greetings. Welcome to the Exterran Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] I will now turn the conference over to your host, Blake Hancock, Vice President of Investor Relations.

begin. may You

Blake Hancock

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

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

Andrew Way

Latin Latin long regards in to start the after over million million commercially of robust the basis, to over Good on and water contract. to XXXX. EBITDA, in increases as closing executed our XXXX. welcome Blake. growing in Thanks, decreased expectations million $XXX in-line net on morning, results America we a pipeline. quarter with everyone, million capitalized debt with commercial quarter as sought $XXX we came global a by our addition for in the $XXX on quarter this third renewals and and adjusted in Overall, Exterran our ECO renewals in success since our and America, third performed extensions, the In to $XX well achieved backlog

Additionally, now have visibility the ECO continues the improve. of next added robust for sales we in requiring remains operations investment to benefit $X.X backlog minimal the over years; extensions highest and years. CapEx product contract pipeline to The excellent outlook three these billion, have our with our several nearly

the I these timing have the As partners stated along given the of projecting fact is decision-making and the challenging have involved that the projects of in scope many past, with awards size in projects multiple process.

many anticipate pursue to continue larger anticipate than the we closing We projects and in months. term we next several near

update with in barrels in our Flotation Water Gas to as continue significant award the XXX,XXX the a contract first is September, significant an along announced This over year water will water that to comprises quarter XX% Water day, leveraging as award was win, the water ourselves backlog. now company. Solutions of contract and happy fully our multi-year solutions I’m integrated of on share Technology. a transition we a over gas position this ECO of prior underpins Exterran previously treat This As long-term contract this our With awarded.

COVID-XX environment transporting in operations. logistical its industry. at hurdles the remain to for site. continues people variants pose and The equipment minor challenges we to on and continue Moving some experienced dynamic have to potential

strides operational projects. to in However, our and no we continue make the delays of great execution seen meaningful have

anticipate part remainder early potential year of to challenges and continue the of through mitigate this into the these work next. we While to we risks,

ourselves we of commercial quarters, past about full Lastly, we pipeline. to structure capital our advantage position take over to undertook the the have spoken few review

in forecast year-over-year. are positive EBITDA of XX% the to We midst very in XXXX of feel and the continue growth planning about

performing solutions To enhance integrated and to And operational could asset include well we to water or This improved see working contract today fully pursue continue items renewals. are and we opportunities transition that gas sales we over to leverage, continue as company. capital, growing in it both. that, to liquidity, a turn with can Dave. Additionally, or significant summary, close I’ll

David Barta

Andrew. Thanks,

revenue EBITDA revenue margin in-line with perspective, shared, the we in XX%. adjusted backlog margin of at of renewals delivered we stood not margin From to quarter For resulted booking sequentially which decreased segment a that mentioned. by of an a acceleration million end the million, of is billion, million, Revenue of on $X.X approximately rate million due $XX the water adjusted resulted $XX at $XX while $XXX This in of operations contract quarter, in did rate new driven XX%. as as repeat. our quarter, the per revenue gross EBITDA segment the Andrew Andrew the ECO primarily guidance. prior gross deferred the was was and

global rose an For prior rate XX% as project. QX. margin progress segment gross the percent was volume of favorable gross This million, million mix. sales of and part our the improved gross in tripling as revenue while quarter XX%. the of adjusted gross and Middle nearly This margin $XX made a Revenue million product quarter and resulted prior East a increased AMS digits improved The rate $X Revenue from nearly was a million. double slightly of the was resulted lower from under-absorption. result of in $XX was gross margin increase declined adjusted significant margin margin sequentially $X from sales Revenue to in margin to due was rate the from timing on segment XX%.

quarter million $XX million, QX. SG&A quarter. compared Our product second end the million $XX quarter the in at reported backlog the the of the was sales $XXX almost $XXX for the a million from small increase was at of end to third

balance the to Moving sheet.

while million. net Our was total at quarter $XXX the of debt the end $XXX debt was million, our

to mid expect our in was ratio capacity available million-range. quarter, times, EBITDA be was and leverage low which million. to quarter adjusted the to to flat respect second fourth Our With X.X the $XXX the was total we $XX

which in region, increases product East projects the further revenue revenue and on bookings. impact progress of should Middle some with the sales along from expected continued the drive expect We key

been results between outlook This and forecasted CapEx adjusted million $XX are million guidance based timing slightly is be QX and our $XXX has our taxes the For million. $XXX by $XX of Maintenance to for and million modestly for reimbursable driven to we $XX around $XX expected adjusted with as be EBITDA the million. Therefore, million CapEx XXXX $XX QX well. between cash to lowering approximately around million on awards. delay the full-year outlook. and sales product are to is CapEx and other be year,

cushion. current forecast provide structure sure capital some on before are review. for structure-related The to opportunities based revisit capital of ample that projects actions. resources the we are previously liquidity and ability without increase pipeline a to multi-year that, our the tackle a into the leverage pipeline our working, The forecast year, eco-type project let’s in undertake provided Earlier views was billion concerns. plan provided guardrails driver have any I to to $X.X announcement. to amount requirement Lastly, in or I’d like we announced forecast, the not make explore the and this liquidity on included of to prudent to that But of execute announcement there purpose that given we further do our insight was original

in Andrew confident we the provided. shared, forecast As remain

all on opportunities. remains focus the preparing sensibly for customer So,

about also of the few term. quarters, improve Over we’ve the operational past balance our pursuit talked nearer sheet to our projects in

the these self-fund that to that We’re making see required this orders believe projects. capital assets. assumption those fixed progress to could the we opportunities begin the while inventory announced on great we under potential fund included surplus With in forecast sell to QX. two year front benefits was We with respect certain our term, to and longer the water in

to third-party capital CapEx with to develop needed projects. opportunities for continue We ECO fund to providers the future partner

working in with sales stage approach We we would exploring for this mind. third-party mean product have will structure are under equipment are the fairly a fall of would on AMS portion. the off early approach and deep contracts projects This couple operational in the and

for mean these company. unlimited change growth it opportunities the While of P&L we geography would the deals,

available Let opportunities sufficient and Andrew reviewing ensure to me back to that strategy. all over and liquidity with continuously such drive factors saying our remarks. shareholders by various for to conclude ideas approaches, for have the through execute are and I’ll the that, closing any decisions And financing assessing to call we all his we value balancing turn

Andrew Way

pricing of and confidence and commercial as signs demand Dave. increase Thanks, Improved of existing us feels The both over supply, activity improving on in quarters. third what’s well markets to gives the projects next reducing growing terms as in the focus production several to emissions. more in the quarter like come

front for but strategy now project The back company value of leveraged in the outlook. the sustainability not As the stakeholders. the year, a started stage three-year we And several past to undertaken gas years setting our That we the to pipeline participation turn robust and over and in that, execution show natural our exemplifies on to take the movement. in hold additional close on that has backlog, our converting water, the the is growth, remarkable with has look only I'll focused laid the to call operator. are us will to our thus

Operator

Capital this At [Operator comes answer One line of be question and Our question conducting we'll from the time, you. with Thank May Instructions] first a session. Kyle Securities.

your with You may proceed question.

Kyle May

review. just of questions Maybe Hi. Good a structure everyone. morning, capital around the couple

just that opportunities, you at that clarification, to now operational no equity is near the issue for are term? one, intent there fair on First in is it assume to focused least

David Barta

repetitive. maybe a Again, being the little Yes. risk bit of

are We we about. the elements, focused on operational talked

business wasn’t are being the maybe pressure and on provided did prudent erred those certainly – pressing opportunities a The we indicate and significant -- my basically any and think I points. little there comments, not that have from reflecting clear it’s start. bit not we we some forecast again,

take we is really what about pipeline. to advantage preparing So, ourselves this strong of really is more offensively see

calls those have operational going to focus both attention to current and at we we’re this some we liquidity, leverage, the help on the on of prudent the help place we help touched and both other call have opportunities our think most and Andrew time. or I are on can those So,

Kyle May

Got it.

Okay, you exploring things us of but And, in realize there know touched guess, to providers. giving it’s range Dave considering on kind a I narrow you're any you that you and work I are makes sense color to third-party down considering, of or that that you're capital other, is opportunities there of the the -- that Is can or lot I sense. kind opportunities, all progress availability of field? of partner any maybe with not the provide, maybe the

David Barta

us has limitations thread agreements we are call also to Yes. it might It’s an favor favor have customers dealing should why notes that you say. equipment. trying in course the or situation-specific, of ECO would you current longer owning taken and than on And approach, structure. this you’re have kind credit I depending of There’s ramification then Maybe really customers. our with a reason us got that accounting

you about how we potential of try And we come if come through your So, things types range terms to with I in the of of could to couple from think top of have kind a weave true would people capital those, way the interact think this. providers.

business put in providing So, project their people joint projects might would that balance the that to of to people sheet that even other work. with participate that in capital are

these bid go they and of customer. or of of those sometimes we are ahead have So, of elements time a we would for you I the be some kind that finally kind at current of too, laid it is kind challenges, a and need of Those future. awarded when to and we as this were situational-specific in really project out projects at of where two list year looking the all say

as So, a lead to to I front. being well longer -- needle there on thread on say successful the trying account is every time want as

pipeline we’re depends every to come the it we but say becomes different of ECO here potential with makes in and really, solutions obviously sense accessible So provide should up yes our again mode would of different fully project, projects kind projects, to on this, that with which us. partners on that the to ability

Kyle May

so, come sounded just don’t I say I moment. Okay, like like maybe water maybe the if And outlook is -- a seems that’s shifting and business together to should it smaller a or But comment it for gears that how and how the But change of September. we seen an that was update the latest to the natural obviously last gas then water the of about leveraged forward? think the now between we’ve or And and gas business change it business, there the a pivot different in give pieces going a maybe maybe think be a other obviously you just year could business, this helpful. project in the mix going on components us kind natural to the business. more then kind are want but of award for the with over water. especially is piece

Andrew Way

great as the cyclical-related Yes, over I of margins. And we’ve great, work think years observation. we’ve think with that’s starts lower more it a done few non-core, products the past some the with exited I

As water you to $X.X billion our earnings invested can natural financials represents we water as in backlog. becoming business definition of XX% more call, are today, the significantly in our this were provided in we that aligned of we’ve and gas over outlined see and now by

interest. more So, it an certainly is seeing we’re that area

bigger solutions opportunities We’re to way. a certainly seeing and in a broader the integrate

expertise moving molecule to rotating I of is from more of company a equipment the think the approach.

adding the to ability the integrate both areas talking enhance commodities efficiency, in us. have and what’s our drive sustainability that can is us we’re that we’re for of customers so, to resources and those differentiating productivity, those and talent better help And topics environment, the

that our look pipeline order businesses. of revolved the those two around it’s you at more if have, structure of we So, today potential

off. bit And so of how we’re that and starting working see quite those a solutions we spent pay to integrate to on time

in So and more assets less and rear we more Belleli, view but you backlog, course, much some had and mirror the with we a once in America booked North were that of assets compression had had become that’s the of the the us. now for highly of that we some of business cyclical PEQ

progression a for natural it’s So us.

Our with customers a in there are us and that we’re the that we taking us portfolio. for become seeing key have real technologies our differentiator

Kyle May

update the Got this an you. it, morning. all get of okay. I It’s really Andrew, great Dave, to time appreciate from

Andrew Way

Thanks.

Operator

from with comes the line Research. question Benchmark Becker Doug next Our of

question. proceed may You with your

Doug Becker

on I doesn’t Thanks. little point. to priority a that bit follow to a it Based or business just structure sale focus review on facility the keep a more. like this Is you sound up particular say? wanted the where at capital commentary, fair the aftermarket

David Barta

Doug, congratulations a on shop. first your to new all, of move

that operational I you forward. would to So, we falls of side fall would and I with sale forward that. assets that look things that fixed working going under and think the when say is mentioned under of

that O&M O&M where into has something retain to and have smaller nothing it in couple oftentimes have our absolutely is us someone of for They situations but the them, of a front for opportunities. significant. that could last we that talk XX of those, tremendously couple we that of assets, if aftermarket. us that in we as the months are on contract, kind So view to but side scope, makes and over makes of of always and in of we sense had we those be would a decided be couple customers those -- the operational or tend assets the existing discussions And sense buy an no, some retain are have going interest it fit a certainly there we kinds obviously, have

Doug Becker

it. discussions And then manage are trying the payments of Got milestone the versus about capital receive? advanced the payments better? you some Whether how might vendor working supplier to

David Barta

a focus and since spin. the think I a been I been think focus has it’s that

the say have and capital. of hundred a we time to they back go of working you up go million couple back to of and If the freed spin probably

be. So, a focus tremendous for to and it’s kind company continues the of

king. well know, an industry, cash in you is that We’re as

capital on ECO the asking And we’re our more not them seeing about of and for offload from for so, investment to is looking frankly others bank. we’re a ways that customers on part focus customer’s

to then have have If they got vendor anticipate participate. to we’ve this partners in also they So to our want in required. participate industry, what’s

We’ve be you continue We have to I and good of that some are, opportunities or inventory focus big have you so can And available mentioned assets and regardless fixed available. inventory that some around on opportunities always move. could focus real focused on are a good how that be a you there. got some

roll that things off contract. have We

And we are the been standpoint, our the We’re probably focused on an have better I plants our the And than both that. what tremendous today. vendors can impressed our make with out but Really never terms together group, to on do what internal sure payments from at flow. and that, operational think were management to four get they compared customers is with the walls, work top what of control think then we’ve and where I way other we also a teams I important to group, to push our with are run taking performing. group, spin of vendors tremendous opportunity the all cash can deal customer sourcing manufacturing engineering advanced on to project things to within got we’re think that tremendous those side our we and that advantage our

Doug Becker

project. encouraging. maybe a on working forward. requirements last an the update of said going context Middle but And I the East you progress, in one, about just thinking making capital it’s particularly know Sounds then

David Barta

Yes. said, our also so full vendor That but project really us who global involved. project It’s partners, of resources, a for into as in major terms our resources, It’s we project, now. a only kicked a terms vendors but on. not both going lot in are gear internal has it of

We COVID, that of incredibly are hurdles got areas, every day, that from and springs there some we’re the considering So other there. well so certain actually and in performing up challenges. everything is geographies things the

site. on in projects dirt is and on-site moving, is pouring, people and our So gearing gear, where the up full concrete we’re we’re

record-level on-site. in UAE kind is employees of of the facility Our approaching quickly

that’s with Customer the the very So how seems timeline. us. happy progressing with on way all very, around happy

In working no what the things, going year primarily the of project. this be change structure all timing year a significant earlier related again to this that’s quite capital and year, Next is well. we communicated of So, would from

no changes that. to So,

We our are even view flat with had this year. of, in so premature or the XXXX to think exact leverage still as by plan, I we’ll year, the for XX% a and process give where you of numbers Andrew growth, in play developing quarter any our said, EBITDA but end

to We’re the working we down, that I earlier year. take pretty that obviously plan on the have much but laid out to in say,

Doug Becker

much. Got it. Thank you very

Operator

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

You may with proceed question. your

Tim Monachello

morning, everyone. Good Hey.

the QX guidance to I It now in The to convert been had generated more movement product the right And change a is with that's set. expecting projects think sounds some question perhaps opportunity first it which have I to QX in like award your the may sales. way QX, revenue have around that you do of story? in some reading Am QX?

David Barta

don’t are Yes. years. this again busy I on been we’ve the hard we remember globally. busy commercial think front as for as to It’s

the to a are say incredibly would The strong, the from So, things get changed I material to process there. what’s opportunities activity, on fact on. going still a is bid customer not order. a bidding lot side as

new. of quite bit we nothing about just This the would for kind say while. means. little things, example, a a worse But, hinting are I orders. and we’ve to talking order been some announced that So, any for right, it’s by there yes, not water

quotes incredibly just still to see see. capital to sales down and diligently been document where And there on active diligent pipeline It’s of commercial they to customers to well. just quarterly completion and It’s will slide we we’re bit a product the slid since go get has to their projects. into But revenue and as impact no as in still strong going so, in just through the turned and If people cases and much slowed as slides frankly, things change to got but signed down. a to They’ve get working point, set the we competitive orders. inability this the some or processes their being pestering some percentage COVID, even order have try space. get can at comes right, you’re looks front right, It of accounting. opportunity all to right are the incredibly as take putting to bids work. some has customers to the and as a timing things still But

Andrew Way

one Tim, to And follow-up that.

into important that is we constantly the what probability think of that go-and-get. pipeline, is of as force kind picture this we you I build rank pipeline

identifying to to is is, on the get when And we’re going making an and position get. happen? that in So the great working we’re so, Exterran going win? the organization is our through And means constantly plan, go sure go’s project S&OP

process if from mean doesn’t that point. the you an that whole order, win initiates start-up So,

application alluded We Dave have that’s advance. invest unwind our of to in goals. a operational capital upfront work lot one engineering. as heavily of We working in

We point. fairly recognized certain should be quickly have that certain orders at a come inventory aligned revenue these terms projects through to can in of

have And in have so, an here manufacturing sure is in good that making an of from a that’s facility. of set some work there our cases we good a we material engineering element application pipeline, activity and both positioned

vets [ph] the balancing overall under-absorption versus taking constantly on projects. certain We’re

of that And Dave team a activity capital since And inquiries little was quarter renewing done year in probably America feeling I’ve pipeline noticeable Permian, still picked We’ve traditional North other we value, of locations. that probably spoke. a this really but seen a That’s of terms contracts year, a demonstrated going in same to to Middle ancillary in remain fourth the with the last and bid that’s with we that's up required an applications, tremendous with for in But the equipment year America, work talked seen about you equipment so on I’d our amazing the North area my have be renewals. commercial good. year to on back in we've go-forward. to script Latin the increase go the activity. said, last strong. is processing as East some an quarter of if last continues America also the more compared lot that we’ve some is predominantly say some absolute region

we’re assets But probably we’ve billion be had and in happened to projects, summer, that the the aligned mostly increase it seen them. been to for backlog in the and America. that Latin we’re renew some seen, just on Latin our area in in side also the good of we’ve assets bidding we processing that of new also We’ve a get significant trailing some able now gas So a since certain water America to appetite right installed water on got LATAM. with $X.X we’ve we’re feeling and customer projects about large the side applications that in very

So helping for across to the board, We we’ve we’re seen building earnings and commercial months. better next about indicated of the the to really that as script. to of a have really activity next good couple start we couple in pickup talk and see the how fruition in in here come years, position a

bit a that more you color. hopefully gives So, little

Tim Monachello

term supply just that delivery chain terms the both extremely when your global around to of translate guess the Yes. you happening That I in is chain? extend around to was what’s in just continue saw on to times awards, look bids there near on might supply given opportunity awards set in over execute anything ability into guess the I delays across picture projects the for and on helpful. you ability that QX, or also and issues that, considering the impact

Andrew Way

got little a unique lot been some Two who of to industry this a of bit think question and I we’ve listening a our the others and It’s and in things. have a talked I peers situation. great about

of in and that will about we fact we quarters expertise just maintain we certainly our a challenge people of our execution critical decided very the North the go. they of internally had had adding design leave a set been First critical in expertise volume. where particularly of talent. We’ve talent us out in P&T some some seen been healthy let we’ve maintain weren’t this talked going that few where extensively and industry has we the lot We struggling all, ways because a that some of in drive America areas, globally in and a to are with allow various projects talent in a simply them shortfall we we’ve and And workforce productivity. We cycle, because utilize in applications. to back, the of areas with how water help cost and

through the so, and coming health all way. of resource safety in a seeing supply productivity, more metrics efficiencies into And our efficiency, my we’re I terms been of been challenged, What quality areas is of we’ve unknown are We’ve those seen has we focusing it America even the comes on North in great and of design and the supply chain to little various seen seeing logistics. seen think chain, why ports. just biggest concern of reasons a we’ve when America, bit North more in pictures the we’ve

in We’re alternative seeing working challenges but similar in other routes. markets,

through work We land, to between or having are trade-offs sea, over on maybe air.

the In projects, origin sure changes number a made closest the to to. the of that are that And shipped the was products so we the larger our case one in big and ago areas can country ship. make of the components manufacture we products being to constantly working on where are to those years three of of

and pre-spin about So, capabilities we’ve And existing was there. Hamriyah year the first facility, our different really Belleli Exterran two, a in or of and manufacturing facility, Dave very the invested talked product. developed Hamriyah the a

then So what shipping customer that without then destination almost and you somewhere all through a middle facility having see is that’s infrastructure central to the tested, the supply of equipped Hamriyah location the in and location today, built, to worry to the be from shipped logistics. components already over chain working can world large modular-like of

able for have Tim, The a same of time, invested our ability of So, the stand the company part think of along been allowed improve this I’m preparing manufacturing to and bottleneck. self-help on the I into new get as Whilst allowed teams the basic us little think in to and a XX are all last of some see really months really done business what reflect how focus cloud really describing a of COVID bit significantly the and you’re it’s Oracle to specifics us aware, the has great of flexibility heart so at we program, the a back have the taking here processes, operationally. we’ve is to operations. job with this. and to and I

industry So, area, of allowed engineering, we it of a sense to faced. have which terms able driving lot of out the supply have around which investment we that issues all predict but in get to in of our ever while us and has a chain the think arms discussion, of this mean get focusing say That productivity, that ahead. you’ll kind efficiencies arms we're doesn’t challenges the around the some woods, that to we of our on than forecast I from being can has

Tim Monachello

Okay, helpful. that’s

Next net just operational? to I guess Was the of came Did we’ve XXXX. prepayments nice was, abnormal in you on time that? seen me, probably that of have beginning one from down a that the the that first since in quarter-over-quarter. it that the debt This was that quarter result drove is any there see was or -- anything

David Barta

anything. Yes. one-timers Nothing, or no

for of hasn’t focusing business, the of to we’re full-time getting of efforts in, and can just It described hard the think lot a one so the in performing in ordinary. customer around a nothing going well part-time and sure the as just ordinary. and we we’re payments of -- around the everyone by out we and as that its job so, capital, working environment is forth I work So, on-time stopped on was or world running people the make nothing and job that out lot company

Tim Monachello

how when debt Dave, look you front, net that and see progressing? on maybe you few next do so at Okay, quarters, that

David Barta

mentioned, the in is on Yes, well. I as project I running the East a Middle think

into the meat to really of are that So, starting get project. we

that say. underway, really working investment capital I is So, would

negative million year, we’d and to in $XX million that, think I the slightly to better range. more million said year cash we’re finish we $XX flow this $XX $XX million probably ahead free the than

into be think improve move that to year, on And as And will I of so then that. continuing project. even we’re upon next in the ways to work we obviously we heart

be we'll capital progression investment really working as yet So give that in again, heart that isn’t year that asked, next the be I plan project, making so and done, year. the the majority of you what’s the business and Doug that can’t work of next on -- investment,

water also two the have We projects.

we and those from engineering So, in earlier projects moving into there forth, which up CapEx will that and are start building forecast provided and in equipment next so involved included stages the this is so year figuring those as well. quickly was year picking capital

Tim Monachello

terms which to you got guess a few of it. some of the the probably a the years. basis assets that finite of guess, way this structure it. Is a Just right of it? on end of over would to next that capital a be sort non-core result that and some opportunities, asset on I in using questions I think right options financing is strategy would couple sell to review. around the that wouldn’t this parts just project change then review? and now the of deem about project-by-project up financing this sales It following capital Okay, structure I question you’re some partners in pursuing seems on And guess

David Barta

I’m opportunities again. our not the best this take for of of started positioning When to a then be issue, tend and looking was offensively company of this, we not where to sure. advantage more are Again, we overstatement ECO, less. as feels it where could maybe customers really we bit about like

And around hallmark to used it so, long be more the where our this of time to use may the balance project a change I strategy be for financing, say company sheet. would a of

else say I would of strategy. the so probably just And that’s piece running change company. is of the everything the

a folks later, some out lines like whether going those to that and Financial favor, inventory little more changing just been to that be can to opened love be a deployed for be industry always long They to volatile. understands closed, obvious world. wants opportunities think then kind monetize that's in buy, of year look that that’s and opportunities to We’re traditional that an things it. looking industry can the favor; it’s this for an serve they the the and wildly now others more how banks hate it. asset time to and this in -- for going customer run of I could are selling -- important industry markets probably and value the forward, think accretive to It’s of I of tend are company environment, a we financing

just we And things and need keep the to anticipate. our so the running going that company what’s we head lot but that’s first, focus we that why is going on around of are always control a to the on can up world in

anything from developing forecast long of lot we're that the some now two a it making trying of The head main from forecast purpose looking spend year elements challenge. years sure of project with to was a of forward around. we range this and So, time opportunities could now, to off sharing a us prepared frankly and of purpose take advantage and that be

ways, in although a other bringing way involved been we in that have it’s the a strategy some actually project significantly So many not company the never financing history than idea really of this to in past in back. change that’s

Tim Monachello

Okay.

the So I -- customer contract to guess would contract. sign given I guess a a the on typical side. be project more finance specifically an you would customer example the for

You that you their be side. to to then finance that, it contract would it then AMS third a would After party to and the basically and will capital operate used build. sell on build

those line finances imagine would to will translate of that returns cost you those on good the compared capital I get would than they projects a from historical that a would be how to provide, returns? or one higher that bank today. Now, capital

David Barta

Yes.

partner said, As be a XX-to-X I we equipment, would the start. would have from the

the seen. project. And to as to you’re something kind of or where to the bid thing of to time -- way, partner need and We’ve say, operational there at, may at at an a to of and by in running a up may is This front to in here I we time that the think go are, do once we partner we’ve monetize of contract. lots the that’s and our looked really customer the role the we here for bid that call difficult Those at approach are ability I We an got more that’s earlier the from reason financial think go the – are well. timing. one this part question have looked reasons. is loosely we We’ve and term only is them I’ll be have would of use some a of for bidding start.

it into so be And would would likely from that. the we that head start

recognized be product would sale it as So upfront. a

change the revenue. it call distribution the – So, does of I’ll

anymore. which product So it we a long-term up AMS the would just in then it’s that we have up element the today, call don't and contract, effectively a sale shows not where shows the in have lease like and It’s equipment ECO. O&M

all that So pipeline capturing the $X.X done. be all look side you the from economics it and billion a all. we traditionally out But yes, do figure and I anyway at potential of that can have of couldn’t goal wouldn’t think, we when at is we we our how to do capital, like of lease

long-term to have product And so, a carry projects that the economics permitted to to sale some we’d we be, but opportunity going to be that project. that where Not want will and AMS get certainly get not there that there on self-fund? wouldn’t capital Sure. a say deal contract, take

Tim Monachello

your of finance anyway. individual meets have say, the I partners you project to Or that to guess perhaps anyway, these me, an like high out is a I cost basis? partners specifications? try couple on would just economics of last any that is project are will justify, capital that sound we saw an to and or guess partner, would seek planning one too sort for around one that, you we MOU And

David Barta

it’s I say a combination. would

one overlap when at to footprint, that the but the you are XX someone there of plus some We it’s are talking that countries look have find of challenges hard to people. that in, the folks -- we’re covers all

to more people I highest more the wherever where talking people, of degree be go, country where we’re is far operate. global partner we’re that we say and a along So, so of further where success but they that’s could some regional would probably or

side comfortable has global not are in may they where So of globe. they be other project the deal footprint in with to the the any that someone space that

Tim Monachello

I'll Got turn it. it much. Thank you back. so

Operator

I this the we closing answer time and will question call remarks. end session. At the back Way turn of reached for now any have to over the Andrew

Andrew Way

Operator, you, much. everyone, updating you today. earnings. after fourth Thank for and participating look Thank forward thanks, our you quarter We very to

Operator

concludes conference. This today’s

your You may at participation have you your this Thank lines a and time. day. disconnect for great

Exterran (EXTN) 6 Nov 212021 Q3 Earnings call transcript