GlobeNewswire Inc | Mar 2, 2021 06:30AM EST

March 02, 2021

Operating Results In-Line with ExpectationsBooked $200 million Contract Operations Exterran Water Solutions Deal to Start the Year

HOUSTON, March 02, 2021 (GLOBE NEWSWIRE) -- Exterran Corporation (NYSE: EXTN) (Exterran or the Company) today reported fourth quarter financial results.

Andrew Way, Exterrans President and Chief Executive Officer commented, Despite the challenges that 2020 presented, the Company finished the year on a high note, posting our highest quarterly EBITDA, as adjusted for the year during the fourth quarter. The year was largely spent focusing on execution of key projects we had in backlog that will help drive improved EBITDA, as adjusted and cash flow in the years to come. The Company continues to make progress in our transformation, with the formal closing of the sale of our U.S. Compression Fabrication business during the quarter, and now turning our focus to the energy transition and sustainability, where our products and services will meaningfully help our customers reduce flaring, emissions, and water consumption over the coming years.

We have talked extensively about our Exterran Water Solutions (EWS) business over the past couple of years and its importance in our transition. Im pleased to announce that the business was awarded its largest ever contract with a multi-year term in the first quarter of 2021. This is a significant win for the organization on multiple fronts, and is an important signal for the Companys transition away from a traditional Oilfield Service company. With all of the headwinds everyone faced over the past twelve months, I want to say thank you to all of our employees whose hard work and commitment over the past year has truly helped us progress in our transition.

Net loss from continuing operations was $33.9 million, or $1.03 per share, on revenue of $151.7 million for the fourth quarter of 2020. This compares to net loss from continuing operations of $16.7 million, or $0.51 per share, on revenue of $169.5 million for the third quarter of 2020 and net loss from continuing operations of $61.7 million, or $1.89 per share, on revenue of $177.7 million for the fourth quarter of 2019. Net loss was $33.4 million for the fourth quarter of 2020, as compared to net loss of $17.7 million for the third quarter of 2020 and net loss of $79.8 million for the fourth quarter of 2019. EBITDA, as adjusted, was $38.8 million for the fourth quarter of 2020, as compared to $35.8 million for the third quarter of 2020 and $42.1 million for the fourth quarter of 2019. Loss before income taxes was $24.5 million as compared to loss before income taxes of $11.0 million for the third quarter of 2020 and loss before income taxes of $56.6 million for the fourth quarter of 2019.

Selling, general and administrative expenses were $28.4 million in the fourth quarter of 2020, as compared with $30.0 million in the third quarter of 2020 and $32.8 million in the fourth quarter of 2019.

Contract Operations SegmentContract operations revenue in the fourth quarter of 2020 was $84.0 million, a 3% increase from third quarter 2020 revenue of $81.7 million and a 13% decrease from fourth quarter 2019 revenue of $96.5 million.

Contract operations adjusted gross margin in the fourth quarter of 2020 was $58.4 million, as compared to adjusted gross margin of $57.1 million in the third quarter of 2020 and $61.6 million in fourth quarter of 2019. Adjusted gross margin percentage in the fourth quarter of 2020 was 69%, as compared with 70% in the third quarter of 2020 and 64% in the fourth quarter of 2019. Contract operations backlog at the end of 2020 was $1.1 billion, a 12% decrease when compared to the fourth quarter 2019.

Revenue and margins were largely unchanged sequentially.

Aftermarket Services SegmentAftermarket services revenue in the fourth quarter of 2020 was $29.9 million, a 2% decrease from third quarter 2020 revenue of $30.4 million and a 19% decrease from fourth quarter 2019 revenue of $36.9 million.

Aftermarket services adjusted gross margin in the fourth quarter of 2020 was $5.5 million, a 24% decrease from third quarter 2020 adjusted gross margin of $7.3 million and a 39% decrease from fourth quarter 2019 adjusted gross margin of $9.1 million. Adjusted gross margin percentage in the fourth quarter of 2020 was 18%, as compared with 24% in the third quarter of 2020 and 25% in the fourth quarter of 2019.

Product Sales SegmentProduct sales revenue in the fourth quarter of 2020 was $37.8 million, a 34% decrease from third quarter 2020 revenue of $57.4 million and a 15% decrease from fourth quarter 2019 revenue of $44.3 million.

Product sales adjusted gross margin in the fourth quarter of 2020 was $5.3 million, a 68% increase from third quarter 2020 adjusted gross margin of $3.1 million and a 48% increase from fourth quarter 2019 adjusted gross margin of $3.5 million. Adjusted gross margin percentage in the fourth quarter of 2020 was 14% as compared with 5% in the third quarter of 2020 and 8% in the fourth quarter of 2019.

The decline in revenue for product sales sequentially was due to timing of revenue recognition of projects in backlog as COVID-19 related impacts adjusted build schedules, along with the completion of projects in backlog. Margin increased due to the shift in product mix and improved productivity.

Product sales backlog was $465.3 million at December31, 2020, as compared to $496.7 million at September30, 2020 and $171.5 million at December31, 2019. Product sales bookings for the fourth quarter of 2020 were $6.0 million, resulting in a book-to-bill ratio of 16%. This compares to bookings of $8.7 million for the third quarter of 2020 and bookings of $62.6 million for the fourth quarter of 2019.

Conference Call InformationThe Company will host a conference call at 10:00 a.m. Central Time on Tuesday, March2, 2021. The call can be accessed from the Companys website at www.exterran.comor by telephone at 877-524-8416. For those who cannot listen to the live call, a telephonic replay will be available through March 9, 2021 and may be accessed by calling 877-660-6853 and using the pass code 13716231. A presentation will also be posted on the Companys website prior to the conference call.

About Exterran CorporationExterran Corporation (NYSE: EXTN) is a global systems and process company offering solutions in the oil, gas, water and power markets. We are a leader in natural gas processing and treatment and compression products and services, providing critical midstream infrastructure solutions to customers throughout the world. Exterran Corporation is headquartered in Houston, Texasand operates in approximately 25 countries.

For more information, contact:Blake Hancock, Vice President of Investor Relations, at 281-854-3043 Or visit www.exterran.com.

Non-GAAP and Other Financial InformationAdjusted gross margin is defined as revenue less cost of sales (excluding depreciation and amortization expense). Total adjusted gross margin percentage is defined as adjusted gross margin divided by revenue. The Company evaluates the performance of its segments based on adjusted 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 the extinguishment of debt, the effect of income tax adjustments that are outside of the Companys 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 Companys 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 StatementsAll 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: Exterrans financial and operational strategies and ability to successfully effect those strategies; Exterrans expectations regarding future economic and market conditions; the expected impact of COVID-19 and oil price declines on Exterrans business; Exterrans financial and operational outlook and ability to fulfill that outlook; demand for Exterrans products and services and growth opportunities for those products and services; and statements regarding industry activity levels and infrastructure build-out opportunities.

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 Exterrans 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 Exterran believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors that could impact the future performance or results of its business. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements are: local, regional, national and international economic and political conditions and the impact they may have on Exterran and its customers; Exterrans reduced profit margins or loss of market share resulting from competition or the introduction of competing technologies by other companies; Exterrans ability to win profitable new business; changes in international trade relationships including the imposition of trade restrictions or tariffs relating to any materials or products used in the operation of our business; conditions in the oil and gas industry, including a sustained imbalance in the level of supply or demand for oil or natural gas or a sustained low price of oil or natural gas; Exterrans ability to timely and cost-effectively execute projects; Exterran enhancing or maintaining its asset utilization, particularly with respect to its fleet of compressors and other assets; Exterrans ability to integrate acquired businesses; employment and workforce factors, including the ability to hire, train and retain key employees; Exterrans ability to accurately estimate costs and time required under Exterrans fixed price contracts; liability related to the use of Exterrans products and services; changes in political or economic conditions in key operating markets, including international markets; changes in current exchange rates, including the risk of currency devaluations by foreign governments, and restrictions on currency repatriation; risks associated with Exterrans operations, such as equipment defects, equipment malfunctions, environmental discharges, extreme weather and natural disasters; risks associated with cyber-based attacks or network security breaches; any non-performance by third parties of their contractual obligations, including the financial condition of our customers; changes in safety, health, environmental and other regulations, including those related to climate change or water scarcity; and Exterrans indebtedness and its ability to generate sufficient cash flow, access financial markets at an acceptable cost, fund its operations, capital commitments and other contractual cash obligations, including our debt obligations.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Exterrans Annual Report on Form 10-K for the year ended December 31, 2019, and other filings with the Securities and Exchange Commission available on the Securities and Exchange Commissions website www.sec.gov. A discussion of these risks is expressly incorporated by reference into this release. Except as required by law, Exterran expressly disclaims any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.

EXTERRAN CORPORATIONUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts) Three Months Ended Years Ended December 31, September 30, December 31, December 31, December 31, 2020 2020 2019 2020 2019Revenues: Contract $ 84,011 $ 81,679 $ 96,481 $ 338,423 $ 368,126 operationsAftermarket 29,909 30,435 36,909 113,246 129,217 servicesProduct sales 37,779 57,397 44,301 161,392 298,668 151,699 169,511 177,691 613,061 796,011 Costs and expenses:Cost of sales(excludingdepreciation andamortizationexpense):Contract 25,628 24,548 34,880 105,382 128,163 operationsAftermarket 24,379 23,135 27,793 87,715 95,607 servicesProduct sales 32,517 54,263 40,755 158,098 257,828 Selling,general and 28,357 29,959 32,831 123,406 141,733 administrativeDepreciationand 44,156 36,630 44,852 145,043 158,302 amortizationImpairments 9,953 1,695 43,678 11,648 52,567 Restructuringand other ? 238 (148 ) 3,550 6,194 chargesInterest 9,603 9,623 10,426 38,817 38,620 expenseGain onextinguishment (147 ) (780 ) ? (3,571 ) ? of debtOther (income) 1,758 1,178 (791 ) 589 (392 ) expense, net 176,204 180,489 234,276 670,677 878,622 Loss before (24,505 ) (10,978 ) (56,585 ) (57,616 ) (82,611 ) income taxesProvision for 9,433 5,745 5,081 28,403 25,290 income taxesLoss fromcontinuing (33,938 ) (16,723 ) (61,666 ) (86,019 ) (107,901 ) operationsIncome (loss)fromdiscontinued 561 (998 ) (18,171 ) (15,272 ) 5,524 operations,net of taxNet loss $ (33,377 ) $ (17,721 ) $ (79,837 ) $ (101,291 ) $ (102,377 ) Basic anddiluted net loss percommon share:Loss fromcontinuing $ (1.03 ) $ (0.51 ) $ (1.89 ) $ (2.63 ) $ (3.15 ) operations percommon shareIncome (loss)fromdiscontinued 0.01 (0.03 ) (0.55 ) (0.46 ) 0.16 operations percommon shareNet loss per $ (1.02 ) $ (0.54 ) $ (2.44 ) $ (3.09 ) $ (2.99 ) common share Weightedaverage commonsharesoutstanding used in netloss percommon share:Basic and 32,832 32,806 32,714 32,750 34,283 diluted

________________________During the fourth quarter of 2020, we completed the sale of our U.S. compression fabrication business and it is now reflected as discontinued operations in our financial statements for all periods presented.

EXTERRAN CORPORATIONUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands) December 31, 2020 2019ASSETS Current assets: Cash and cash equivalents $ 40,318 $ 16,683 Restricted cash 3,410 19 Accounts receivable, net 198,028 179,158 Inventory 109,837 119,358 Contract assets 32,642 36,997 Other current assets 19,810 22,003 Current assets associated with discontinued 25,325 61,705 operationsTotal current assets 429,370 435,923 Property, plant and equipment, net 733,222 824,194 Long-term contract assets 33,563 16,280 Operating lease right of use assets 25,428 26,227 Deferred income taxes 8,866 13,994 Intangible and other assets, net 71,436 77,644 Long-term assets associated with discontinued 1,606 23,742 operationsTotal assets $ 1,303,491 $ 1,418,004 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable, trade $ 60,078 $ 82,864 Accrued liabilities 94,404 92,641 Contract liabilities 100,123 66,695 Current operating lease liabilities 6,340 5,819 Current liabilities associated with discontinued 13,707 78,626 operationsTotal current liabilities 274,652 326,645 Long-term debt 562,325 443,587 Deferred income taxes 1,014 993 Long-term contract liabilities 80,499 156,262 Long-term operating lease liabilities 29,868 30,189 Other long-term liabilities 57,159 48,749 Long-term liabilities associated with discontinued 2,142 2,041 operationsTotal liabilities 1,007,659 1,008,466 Total stockholders? equity 295,832 409,538 Total liabilities and stockholders? equity $ 1,303,491 $ 1,418,004

________________________During the fourth quarter of 2020, we completed the sale of our U.S. compression fabrication business and it is now reflected as discontinued operations in our financial statements for all periods presented.

EXTERRAN CORPORATIONUNAUDITED SUPPLEMENTAL INFORMATION(In thousands, except percentages) Three Months Ended Years Ended December 31, September 30, December 31, December 31, December 31, 2020 2020 2019 2020 2019Revenue: Contract $ 84,011 $ 81,679 $ 96,481 $ 338,423 $ 368,126 operationsAftermarket 29,909 30,435 36,909 113,246 129,217 servicesProduct sales 37,779 57,397 44,301 161,392 298,668 Total Revenue $ 151,699 $ 169,511 $ 177,691 $ 613,061 $ 796,011 SegmentAdjusted Gross margin:Contract $ 58,383 $ 57,131 $ 61,601 $ 233,041 $ 239,963 operationsAftermarket 5,530 7,300 9,116 25,531 33,610 servicesProduct sales 5,262 3,134 3,546 3,294 40,840 Total Adjusted $ 69,175 $ 67,565 $ 74,263 $ 261,866 $ 314,413 Gross margin: SegmentAdjusted Gross marginpercentage:Contract 69 % 70 % 64 % 69 % 65 %operationsAftermarket 18 % 24 % 25 % 23 % 26 %servicesProduct sales 14 % 5 % 8 % 2 % 14 % 46 % 40 % 42 % 43 % 39 % Selling,general and $ 28,357 $ 29,959 $ 32,831 $ 123,406 $ 141,733 administrative% of revenue 19 % 18 % 18 % 20 % 18 % EBITDA, as $ 38,762 $ 35,804 $ 42,116 $ 133,751 $ 173,040 adjusted% of revenue 26 % 21 % 24 % 22 % 22 % Capital $ 9,759 $ 25,457 $ 19,068 $ 75,611 $ 189,037 expenditures Revenue byGeographical Regions:North America $ 12,977 $ 13,364 $ 14,283 $ 44,671 $ 110,096 Latin America 64,497 60,302 79,673 259,948 320,249 Middle East 48,315 69,682 70,005 226,083 319,866 and AfricaAsia Pacific 25,910 26,163 13,730 82,359 45,800 Total revenues $ 151,699 $ 169,511 $ 177,691 $ 613,061 $ 796,011 As of December 31, September 30, December 31, December 31, December 31, 2020 2020 2019 2020 2019ContractOperations Backlog:Contractoperations $ 1,100,929 $ 1,208,139 $ 1,252,001 $ 1,100,929 $ 1,252,001 services Product Sales Backlog:Compression $ 10,218 $ 18,165 $ 54,541 $ 10,218 $ 54,541 equipmentProcessing andtreating 425,292 447,109 69,912 425,292 69,912 equipmentOther product 29,835 31,380 47,094 29,835 47,094 salesTotal product $ 465,345 $ 496,654 $ 171,547 $ 465,345 $ 171,547 sales backlog

________________________Compression Equipment backlog includes sales to international customers. During the fourth quarter of 2020, we completed the sale of our U.S. compression fabrication business and it is now reflected as discontinued operations in our financial statements for all periods presented.

EXTERRAN CORPORATIONUNAUDITED NON-GAAP FINANCIAL MEASURES(In thousands, except per share amounts) Three Months Ended Years Ended December 31, September 30, December 31, December 31, December 31, 2020 2020 2019 2020 2019Non-GAAP FinancialInformation?Reconciliationof total gross margin to Total adjusted grossmargin:Revenues $ 151,699 $ 169,511 $ 177,691 $ 613,061 $ 796,011 Cost of sales (excludingdepreciation and 82,524 101,946 103,428 351,195 481,598 amortization expense):Depreciation and 42,618 35,182 42,823 139,107 151,716 amortization ^(1)Total gross margin 26,557 32,383 31,440 122,759 162,697 Depreciation and 42,618 35,182 42,823 139,107 151,716 amortization ^(1)Total adjusted gross $ 69,175 $ 67,565 $ 74,263 $ 261,866 $ 314,413 margin(2) Non-GAAP FinancialInformation?Reconciliation of Net loss to EBITDA, asadjusted:Net loss $ (33,377 ) $ (17,721 ) $ (79,837 ) $ (101,291 ) $ (102,377 ) (Income) loss fromdiscontinued operations, (561 ) 998 18,171 15,272 (5,524 ) netoftaxDepreciation and 44,156 36,630 44,852 145,043 158,302 amortizationImpairments 9,953 1,695 43,678 11,648 52,567 Restatement related ? ? 28 ? 48 charges, netRestructuring and other ? 238 (148 ) 3,550 6,194 chargesInterest expense 9,603 9,623 10,426 38,817 38,620 Gain on extinguishment of (147 ) (780 ) ? (3,571 ) ? debtGain on currency exchangerate remeasurement of (298 ) (624 ) (135 ) (4,120 ) (80 ) intercompany balancesProvision for income taxes 9,433 5,745 5,081 28,403 25,290 EBITDA, as adjusted ^(2) $ 38,762 $ 35,804 $ 42,116 $ 133,751 $ 173,040 Non-GAAP FinancialInformation?Reconciliationof Net loss to Adjusted net loss from continuingoperations:Net loss $ (33,377 ) $ (17,721 ) $ (79,837 ) $ (101,291 ) $ (102,377 ) (Income) loss fromdiscontinued operations, (561 ) 998 18,171 15,272 (5,524 ) net of taxLoss from continuing (33,938 ) (16,723 ) (61,666 ) (86,019 ) (107,901 ) operationsAdjustment for items: Impairments 9,953 1,695 43,678 11,648 52,567 Restatement related ? ? 28 ? 48 charges, netRestructuring and other ? 238 (148 ) 3,550 6,194 chargesGain on extinguishment of (147 ) (780 ) ? (3,571 ) ? debtTax impact of adjustments^ (98 ) (24 ) (613 ) (117 ) (1,181 ) (3)Adjusted net loss from $ (24,230 ) $ (15,594 ) $ (18,721 ) $ (74,509 ) $ (50,273 ) continuing operations ^(4) Diluted loss fromcontinuing operations per $ (1.03 ) $ (0.51 ) $ (1.89 ) $ (2.63 ) $ (3.15 ) common shareAdjustment for items,after-tax, per diluted 0.29 0.03 1.32 0.35 1.68 common shareDiluted adjusted net lossfrom continuing operations $ (0.74 ) $ (0.48 ) $ (0.57 ) $ (2.28 ) $ (1.47 ) per common share ^(4) (5)

________________________During the fourth quarter of 2020, we completed the sale of our U.S. compression fabrication business and it is now reflected as discontinued operations in our financial statements for all periods presented.

^(1) Represents the portion only attributable to cost of sales.

^(2) Management evaluates the performance of each of the Company?s segmentsbased on adjusted gross margin. Total adjusted gross margin, a non-GAAPmeasure, is included as a supplemental disclosure because it is a primarymeasure used by our management to evaluate the results of revenue and cost ofsales (excluding depreciation and amortization expense), which are keycomponents of our operations. Management believes total adjusted gross marginis important supplemental information for investors because it focuses on thecurrent performance of our operations and excludes the impact of the priorhistorical costs of the assets acquired or constructed that are utilized inthose operations, the indirect costs associated with our SG&A activities, theimpact of our financing methods, restatement related charges (recoveries),restructuring and other charges, gain on the extinguishment of debt and incometaxes. In addition, the inclusion of depreciation and amortization expense maynot accurately reflect the costs required to maintain and replenish theoperational usage of our assets and therefore may not portray the costs fromcurrent operating activity.

^(3) Management believes EBITDA, as adjusted, is an important measure ofoperating performance because it allows management, investors and others toevaluate and compare our core operating results from period to period byremoving the impact of our capital structure (interest expense from outstandingdebt), asset base (depreciation and amortization), our subsidiaries? capitalstructure (non-cash gains or losses from foreign currency exchange rate changeson intercompany obligations), tax consequences, impairment charges, restatementrelated charges (recoveries), restructuring and other charges, expensedacquisition costs, gain on the extinguishment of debt and other items.Management uses EBITDA, as adjusted, as supplemental measures to review currentperiod operating performance, comparability measures and performance measuresfor period to period comparisons. In addition, the Company's compensationcommittee has used EBITDA, as adjusted, in evaluating the performance of theCompany and management and in evaluating certain components of executivecompensation, including performance-based annual incentive programs.

^(4) The tax impacts of adjustments were based on the Company?s statutory taxrates applicable to each item in the appropriate taxing jurisdictions. Usingstatutory tax rates for presentation of the non-GAAP measures allows aconsistent basis for investors to understand financial performance of theCompany across historical periods. The overall effective tax rate onadjustments was impacted by the inability to recognize tax benefits fromcharges in jurisdictions that are in cumulative loss positions.

^(5) Management believes adjusted net income (loss) from continuing operationsand diluted adjusted net income (loss) from continuing operations per commonshare provides useful information to investors because it allows management,investors and others to evaluate and compare our core operating results fromperiod to period by removing the impact of impairment charges, restructuringand other charges, restatement related charges (recoveries), expensedacquisition costs, gain on the extinguishment of debt and other items notappropriately reflective of our core business.

^(6) Diluted adjusted net income (loss) from continuing operations per commonshare, 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 toparticipation rights in undistributed earnings.