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Exterran Corporation Announces Third Quarter 2021 Results
Net Debt Decreased by
Over
Full Year 2021 Adjusted EBITDA Guidance Updated to
Capital Structure Review Focused on Operational Opportunities
“Commercially, this quarter was a great success as we were awarded a significant contract for our water business and signed over
We are modestly adjusting our full year adjusted EBITDA guidance to between
Lastly, over the past couple of quarters we discussed the capital structure review we were undertaking in order to take full advantage of our commercial pipeline. We are in the middle of our planning cycle for 2022 and our view thus far gives us confidence in the multi-year forecast that we communicated in the first quarter. Given this, we are currently focused on the operational opportunities we have spoken to that would improve leverage and liquidity. We also continue to evaluate longer-term solutions to help support ongoing project financing.”
Net loss from continuing operations was
Selling, general and administrative expenses were
Contract Operations Segment
Contract operations revenue in the third quarter of 2021 was
Contract operations adjusted gross margin in the third quarter of 2021 was
Revenue decreased sequentially primarily due to the acceleration of deferred revenue in the prior quarter not repeating. Margins decreased sequentially due to the aforementioned decline in deferred revenue as well as additional maintenance costs.
Aftermarket Services Segment
Aftermarket services revenue in the third quarter of 2021 was
Aftermarket services adjusted gross margin in the third quarter of 2021 was
Revenue decreased sequentially due to global parts sales timing, while adjusted margin rate rose slightly from a favorable parts and services mix.
Product Sales Segment
Product sales revenue in the third quarter of 2021 was
Product sales adjusted gross margin in the third quarter of 2021 was
Revenue increased from the prior quarter as significant progress was made on our
Product sales backlog was
Conference Call Information
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Non-GAAP and Other Financial Information
Adjusted gross margin is defined as revenue less cost of sales (excluding depreciation and amortization expense). Adjusted gross margin percentage is defined as gross margin divided by revenue. The Company evaluates the performance of its segments based on gross margin for each segment.
EBITDA, as adjusted, a non-GAAP measure, is defined as net income (loss) excluding income (loss) from discontinued operations (net of tax), cumulative effect of accounting changes (net of tax), income taxes, interest expense (including debt extinguishment costs), depreciation and amortization expense, impairment charges, restructuring and other charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations, expensed acquisition costs, gain on extinguishment of debt and other items.
Adjusted net income (loss) from continuing operations and diluted adjusted net income (loss) from continuing operations per common share, non-GAAP measures, are defined as net income (loss) and earnings per share, excluding the impact of income (loss) from discontinued operations (net of tax), cumulative effect of accounting changes (net of tax), impairment charges (net of tax), restructuring and other charges (net of tax), gain on extinguishment of debt, the effect of income tax adjustments that are outside of the Company’s anticipated effective tax rates and other items.
See tables below for additional information concerning non-GAAP financial information, including a reconciliation of the non-GAAP financial information presented in this press release to the most directly comparable financial information presented in accordance with GAAP. Non-GAAP financial information supplements should be read together with, and are not an alternative or substitute for, the Company’s financial results reported in accordance with GAAP. Because non-GAAP financial information is not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
Forward-Looking Statements
All statements in this release (and oral statements made regarding the subjects of this release) other than historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements may include words such as “guidance,” “anticipate,” “estimate,” “expect,” “forecast,” “project,” “plan,” “intend,” “believe,” “confident,” “may,” “should,” “can have,” “likely,” “future” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Examples of forward-looking information in this release include, but are not limited to: Exterran’s financial and operational strategies and ability to successfully effect those strategies; Exterran’s expectations regarding future economic and market conditions; the expected impact of COVID-19 on Exterran’s business; and Exterran’s financial and operational outlook and guidance, and ability to fulfill that outlook and guidance;
These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors, many of which are outside Exterran’s control, which could cause actual results to differ materially from such statements. As a result, any such forward-looking statements are not guarantees of future performance or results. While
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Exterran’s Annual Report on Form 10-K for the year ended
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
| Three Months Ended | ||||||||||||
2021 |
2020 |
|||||||||||
| Revenues: | ||||||||||||
| Contract operations | $ | 83,362 | $ | 87,498 | $ | 81,679 | ||||||
| Aftermarket services | 24,633 | 29,401 | 30,435 | |||||||||
| Product sales | 53,304 | 29,300 | 57,397 | |||||||||
| 161,299 | 146,199 | 169,511 | ||||||||||
| Costs and expenses: | ||||||||||||
| Cost of sales (excluding depreciation and amortization expense): | ||||||||||||
| Contract operations | 27,790 | 27,764 | 24,548 | |||||||||
| Aftermarket services | 19,379 | 23,422 | 23,135 | |||||||||
| Product sales | 46,755 | 27,109 | 54,263 | |||||||||
| Selling, general and administrative | 34,938 | 33,630 | 29,959 | |||||||||
| Depreciation and amortization | 43,889 | 45,709 | 36,630 | |||||||||
| Impairment | — | 7,959 | 1,695 | |||||||||
| Restructuring and other charges | (62 | ) | (370 | ) | 238 | |||||||
| Interest expense | 10,479 | 10,357 | 9,623 | |||||||||
| Gain on extinguishment of debt | — | — | (780 | ) | ||||||||
| Other (income) expense, net | (1,074 | ) | (3,159 | ) | 1,178 | |||||||
| 182,094 | 172,421 | 180,489 | ||||||||||
| Loss before income taxes | (20,795 | ) | (26,222 | ) | (10,978 | ) | ||||||
| Provision for (benefit from) income taxes | (5,187 | ) | 8,836 | 5,745 | ||||||||
| Loss from continuing operations | (15,608 | ) | (35,058 | ) | (16,723 | ) | ||||||
| Loss from discontinued operations, net of tax | (695 | ) | (156 | ) | (998 | ) | ||||||
| Net loss | $ | (16,303 | ) | $ | (35,214 | ) | $ | (17,721 | ) | |||
| Basic and diluted net loss per common share: | ||||||||||||
| Loss from continuing operations per common share | $ | (0.47 | ) | $ | (1.06 | ) | $ | (0.51 | ) | |||
| Loss from discontinued operations per common share | (0.02 | ) | (0.01 | ) | (0.03 | ) | ||||||
| Net loss per common share | $ | (0.49 | ) | $ | (1.07 | ) | $ | (0.54 | ) | |||
| Weighted average common shares outstanding used in net loss per common share: | ||||||||||||
| Basic and diluted | 33,068 | 33,056 | 32,806 | |||||||||
______________________
During the fourth quarter of 2020, we completed the sale of our
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 57,520 | $ | 40,318 | ||||
| Restricted cash | 2,460 | 3,410 | ||||||
| Accounts receivable, net | 179,594 | 198,028 | ||||||
| Inventory | 104,020 | 109,837 | ||||||
| Contract assets | 65,710 | 32,642 | ||||||
| Other current assets | 18,346 | 19,810 | ||||||
| Current assets associated with discontinued operations | 21,713 | 25,325 | ||||||
| Total current assets | 449,363 | 429,370 | ||||||
| Property, plant and equipment, net | 631,413 | 733,222 | ||||||
| Long-term contract assets | 18,169 | 33,563 | ||||||
| Operating lease right of use assets | 22,150 | 25,428 | ||||||
| Deferred income taxes | 7,949 | 8,866 | ||||||
| Intangible and other assets, net | 72,387 | 71,436 | ||||||
| Long-term assets associated with discontinued operations | 1,687 | 1,606 | ||||||
| Total assets | $ | 1,203,118 | $ | 1,303,491 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable, trade | $ | 60,303 | $ | 60,078 | ||||
| Accrued liabilities | 123,254 | 94,404 | ||||||
| Contract liabilities | 92,493 | 100,123 | ||||||
| Current operating lease liabilities | 5,454 | 6,340 | ||||||
| Current liabilities associated with discontinued operations | 3,422 | 13,707 | ||||||
| Total current liabilities | 284,926 | 274,652 | ||||||
| Long-term debt | 572,547 | 562,325 | ||||||
| Deferred income taxes | 2,275 | 1,014 | ||||||
| Long-term contract liabilities | 56,763 | 80,499 | ||||||
| Long-term operating lease liabilities | 26,966 | 29,868 | ||||||
| Other long-term liabilities | 43,454 | 57,159 | ||||||
| Long-term liabilities associated with discontinued operations | 1,007 | 2,142 | ||||||
| Total liabilities | 987,938 | 1,007,659 | ||||||
| Total stockholders’ equity | 215,180 | 295,832 | ||||||
| Total liabilities and stockholders’ equity | $ | 1,203,118 | $ | 1,303,491 | ||||
______________________
During the fourth quarter of 2020, we completed the sale of our
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except percentages)
| Three Months Ended | ||||||||||||
| Revenues: | ||||||||||||
| Contract operations | $ | 83,362 | $ | 87,498 | $ | 81,679 | ||||||
| Aftermarket services | 24,633 | 29,401 | 30,435 | |||||||||
| Product sales | 53,304 | 29,300 | 57,397 | |||||||||
| $ | 161,299 | $ | 146,199 | $ | 169,511 | |||||||
| Segment Adjusted Gross margin: | ||||||||||||
| Contract operations | $ | 55,572 | $ | 59,734 | $ | 57,131 | ||||||
| Aftermarket services | 5,254 | 5,979 | 7,300 | |||||||||
| Product sales | 6,549 | 2,191 | 3,134 | |||||||||
| Total Adjusted Gross margin | $ | 67,375 | $ | 67,904 | $ | 67,565 | ||||||
| Segment Adjusted Gross margin percentage: | ||||||||||||
| Contract operations | 67 | % | 68 | % | 70 | % | ||||||
| Aftermarket services | 21 | % | 20 | % | 24 | % | ||||||
| Product sales | 12 | % | 7 | % | 5 | % | ||||||
| Selling, general and administrative | $ | 34,938 | $ | 33,630 | $ | 29,959 | ||||||
| % of revenue | 22 | % | 23 | % | 18 | % | ||||||
| EBITDA, as adjusted | $ | 35,131 | $ | 35,112 | $ | 35,804 | ||||||
| % of revenue | 22 | % | 24 | % | 21 | % | ||||||
| Capital expenditures | $ | 11,102 | $ | 5,284 | $ | 25,457 | ||||||
| Revenue by Geographical Regions: | ||||||||||||
| $ | 2,099 | $ | 3,100 | $ | 13,364 | |||||||
| 68,507 | 68,592 | 60,302 | ||||||||||
| 81,034 | 61,979 | 69,682 | ||||||||||
| 9,659 | 12,528 | 26,163 | ||||||||||
| Total revenues | $ | 161,299 | $ | 146,199 | $ | 169,511 | ||||||
| As of | ||||||||||||
| Contract Operations Backlog: | ||||||||||||
| Contract operations services | $ | 1,433,310 | $ | 1,186,943 | $ | 1,208,139 | ||||||
| Product Sales Backlog: | ||||||||||||
| Compression equipment | $ | 6,291 | $ | 5,800 | $ | 18,165 | ||||||
| Processing and treating equipment | 334,406 | 374,173 | 447,109 | |||||||||
| Other product sales | 24,487 | 30,817 | 31,380 | |||||||||
| Total product sales backlog | $ | 365,184 | $ | 410,790 | $ | 496,654 | ||||||
______________________
Compression Equipment backlog includes sales to international customers. During the fourth quarter of 2020, we completed the sale of our
UNAUDITED NON-GAAP FINANCIAL MEASURES
(In thousands, except per share amounts)
| Three Months Ended | ||||||||||||
| Non-GAAP Financial Information—Reconciliation of total gross margin to Total adjusted gross margin: | ||||||||||||
| Revenues | $ | 161,299 | $ | 146,199 | $ | 169,511 | ||||||
| Cost of sales (excluding depreciation and amortization expense) | 93,924 | 78,295 | 101,946 | |||||||||
| Depreciation and amortization(1) | 42,008 | 44,017 | 35,182 | |||||||||
| Total gross margin | 25,367 | 23,887 | 32,383 | |||||||||
| Depreciation and amortization(1) | 42,008 | 44,017 | 35,182 | |||||||||
| Total adjusted gross margin(2) | $ | 67,375 | $ | 67,904 | $ | 67,565 | ||||||
| Non-GAAP Financial Information—Reconciliation of Net loss to EBITDA, as adjusted: | ||||||||||||
| Net loss | $ | (16,303 | ) | $ | (35,214 | ) | $ | (17,721 | ) | |||
| Loss from discontinued operations, net of tax | 695 | 156 | 998 | |||||||||
| Depreciation and amortization | 43,889 | 45,709 | 36,630 | |||||||||
| Impairment | — | 7,959 | 1,695 | |||||||||
| Restructuring and other charges | (62 | ) | (370 | ) | 238 | |||||||
| Interest expense | 10,479 | 10,357 | 9,623 | |||||||||
| Gain on extinguishment of debt | — | — | (780 | ) | ||||||||
| (Gain) loss on currency exchange rate remeasurement of intercompany balances | 1,620 | (2,321 | ) | (624 | ) | |||||||
| Provision for (benefit from) income taxes | (5,187 | ) | 8,836 | 5,745 | ||||||||
| EBITDA, as adjusted(3) | $ | 35,131 | $ | 35,112 | $ | 35,804 | ||||||
| Non-GAAP Financial Information—Reconciliation of Net loss to Adjusted net loss from continuing operations: | ||||||||||||
| Net loss | $ | (16,303 | ) | $ | (35,214 | ) | $ | (17,721 | ) | |||
| Loss from discontinued operations, net of tax | 695 | 156 | 998 | |||||||||
| Loss from continuing operations | (15,608 | ) | (35,058 | ) | (16,723 | ) | ||||||
| Adjustment for items: | ||||||||||||
| Impairment | — | 7,959 | 1,695 | |||||||||
| Restructuring and other charges | (62 | ) | (370 | ) | 238 | |||||||
| Gain on extinguishment of debt | — | — | (780 | ) | ||||||||
| Tax impact of adjustments(4) | 6 | 105 | (24 | ) | ||||||||
| Adjusted net loss from continuing operations(5) | $ | (15,664 | ) | $ | (27,364 | ) | $ | (15,594 | ) | |||
| Diluted loss from continuing operations per common share | $ | (0.47 | ) | $ | (1.06 | ) | $ | (0.51 | ) | |||
| Adjustment for items, after-tax, per diluted common share | 0.00 | 0.23 | 0.03 | |||||||||
| Diluted adjusted net loss from continuing operations per common share(5) (6) | $ | (0.47 | ) | $ | (0.83 | ) | $ | (0.48 | ) | |||
______________________
During the fourth quarter of 2020, we completed the sale of our
| (1) Represents the portion only attributable to cost of sales. | ||||||
| (2) Management evaluates the performance of each of the Company’s segments based on adjusted gross margin. Total adjusted gross margin, a non-GAAP measure, is included as a supplemental disclosure because it is a primary measure used by our management to evaluate the results of revenue and cost of sales (excluding depreciation and amortization expense), which are key components of our operations. Management believes total adjusted gross margin is important supplemental information for investors because it focuses on the current performance of our operations and excludes the impact of the prior historical costs of the assets acquired or constructed that are utilized in those operations, the indirect costs associated with our SG&A activities, the impact of our financing methods, restructuring and other charges, gain on extinguishment of debt and income taxes. In addition, the inclusion of depreciation and amortization expense may not accurately reflect the costs required to maintain and replenish the operational usage of our assets and therefore may not portray the costs from current operating activity. | ||||||
| (3) Management believes EBITDA, as adjusted, is an important measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of our capital structure (interest expense from outstanding debt), asset base (depreciation and amortization), our subsidiaries’ capital structure (non-cash gains or losses from foreign currency exchange rate changes on intercompany obligations), tax consequences, impairment charges, restructuring and other charges, expensed acquisition costs, gain on extinguishment of debt and other items. Management uses EBITDA, as adjusted, as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, the Company's compensation committee has used EBITDA, as adjusted, in evaluating the performance of the Company and management and in evaluating certain components of executive compensation, including performance-based annual incentive programs. | ||||||
| (4) The tax impacts of adjustments were based on the Company’s statutory tax rates applicable to each item in the appropriate taxing jurisdictions. Using statutory tax rates for presentation of the non-GAAP measures allows a consistent basis for investors to understand financial performance of the Company across historical periods. The overall effective tax rate on adjustments was impacted by the inability to recognize tax benefits from charges in jurisdictions that are in cumulative-loss positions. | ||||||
| (5) Management believes adjusted net income (loss) from continuing operations and diluted adjusted net income (loss) from continuing operations per common share provides useful information to investors because it allows management, investors and others to evaluate and compare our core operating results from period to period by removing the impact of impairment charges, restructuring and other charges, expensed acquisition costs, gain on extinguishment of debt and other items not appropriately reflective of our core business. | ||||||
| (6) Diluted adjusted net income (loss) from continuing operations per common share, was computed using the two-class method to determine the net income (loss) per share for each class of common stock and participating security (certain of our restricted stock and restricted stock units) according to participation rights in undistributed earnings. | ||||||
Source: Exterran Corporation