Exterran: 2015 Results – Debt Down in Challenging Conditions

Exterran Corporation (NYSE:EXTN) today reported revenue of $418.1 million for the fourth quarter 2015, compared to $437.2 million for the third quarter 2015 and $611.2 million for the fourth quarter 2014. EBITDA, as adjusted (as defined below), was $51.3 million for the fourth quarter 2015, compared to $61.8 million for the third quarter 2015 and $89.2 million for the fourth quarter 2014.

Product sales backlog was $452.4 million at December 31, 2015, compared to $516.2 million at September 30, 2015 and $953.2 million at December 31, 2014. Third party bookings were $194.1 million during the fourth quarter 2015 resulting in a book-to-bill ratio of 75%, compared to $177.0 million for the third quarter 2015 and $474.9 million for the fourth quarter 2014.

Net loss from continuing operations, excluding items, for the fourth quarter 2015 was $14.2 million, or $0.42 per diluted common share. These amounts exclude the benefit of proceeds from the two previously announced sales of our previously-nationalized Venezuelan assets, the benefit of which was $19.1 million, restructuring and other charges of $14.4 million, which included costs associated with our spin-off from Archrock, Inc. (named Exterran Holdings, Inc. prior to November 3, 2015) (“Archrock”) and our cost reduction plan driven by market conditions, and non-cash long-lived asset impairment charges of $6.5 million related to our contract operations business. In accordance with the Separation and Distribution Agreement, we will pay to Archrock an amount based on a notional amount corresponding to payments we receive after November 3, 2015 from PDVSA Gas in respect of the sale of our and our joint ventures’ previously nationalized assets. Net loss from continuing operations, excluding items, was $24.7 million, or $0.72 per diluted common share, for the third quarter 2015 and net income from continuing operations, excluding items, was $38.5 million, or $1.12 per diluted common share, for the fourth quarter 2014. See table for reconciliation of GAAP to non-GAAP financial information.

Net loss was $12.0 million, or $0.35 per diluted common share, for the fourth quarter 2015, compared to net income of $12.3 million, or $0.36 per diluted common share, for the third quarter 2015 and net income of $47.1 million, or $1.37 per diluted common share, for the fourth quarter 2014.

For the full year 2015, revenue was $1.9 billion, a decrease of 14% from 2014. EBITDA, as adjusted, was $262.1 million and net loss from continuing operations, excluding items, was $7.1 million, or $0.21 per diluted common share. Net income was $46.2 million, or $1.35 per diluted common share. See table for reconciliation of GAAP to non-GAAP financial information.

On November 3, 2015, our spin-off from Archrock was completed. Following the spin-off, our businesses include international contract operations and international aftermarket services businesses, which combined are referred to as our international service businesses, and our global product sales business.

Andrew Way, Exterran Corporation’s President and Chief Executive Officer, said “Though market conditions continue to be very challenging as a result of low commodity prices and industry activity levels, we performed generally in line with our expectations during the fourth quarter. In our service businesses, gross margin was relatively stable and benefitted from greater focus on operating efficiencies.”

Way continued, “We continue to feel the impact of further deterioration of industry fundamentals and our revenues are expected to be under pressure throughout 2016 across all of our business segments. Capital projects continue to be delayed or cancelled and pricing pressures have intensified as customers navigate an uncertain near-term outlook. In this environment, we will continue to focus on what we can control, including resetting our cost structure in line with changing demand and generating free cash flow through efficient execution and working capital reductions. My expectation is that we will emerge from this downturn with a strong balance sheet and a lean cost structure, which will enable us to take advantage of our business’ operating leverage as growth returns.”

Jon Biro, Exterran Corporation’s Senior Vice President and Chief Financial Officer, said “After payment of $28 million of spin-off related transaction expenses in the fourth quarter, total debt was$526 million at December 31, 2015, with undrawn and available capacity of $279 million under our revolving credit facility. Furthermore, we reduced debt levels in January and ended the month with total debt of $494 million. As a result of our relatively stable business model, stringent controls over operating expenses and capital expenditures and our focus on driving working capital reductions, we expect to continue to reduce debt levels in 2016.”