GlobeNewswire Inc | May 4, 2021 07:00AM EDT

May 04, 2021

Executing on $200 Million Exterran Water Solutions Contract Signed During the QuarterRaising Full Year Adjusted EBITDA Guidance to $150-160 millionCapital Structure Strategy Review Underway to Drive Near-Term and Long-Term Success

HOUSTON, May 04, 2021 (GLOBE NEWSWIRE) -- Exterran Corporation (NYSE: EXTN) (Exterran or the Company) today reported first quarter financial results.

Andrew Way, Exterrans President and Chief Executive Officer commented:

I am proud of our teams continued strong project execution, and safe and efficient work, throughout the first quarter. As previously announced, our Exterran Water Solutions (EWS) business was awarded a significant contract, worth approximately $200 million, that is accelerating the Companys transition to a sustainable energy industrial business.

We are also encouraged by the improving macro environment. Global commercial activity continues to increase, and we are now tracking more than $2 billion of potential projects for our gas related business and over $1.5 billion of potential projects for our Water business over the next several years.

Based on our strong backlog and increased commercial activity, we are raising the low end of our full year 2021 guidance for adjusted EBITDA to $150 from $140 million, with an updated guidance range of $150-$160 million. We expect Exterrans adjusted EBITDA to grow at a compounded rate of at least 15%, over the next two years, resulting in adjusted EBITDA of more than $200 million in 2023. We are excited about the strong momentum of our core business, as well as the EWS business bright prospects for continued growth and value creation.

Lastly, given increasing number of attractive projects in both our gas and water segments, we have embarked on a comprehensive review of our capital structure to insure that we can take advantage of these opportunities.

Results from continuing operations improved sequentially with the net loss from continuing operations of $29.0 million, or $0.88 per share, on revenue of $136.2 million for the first quarter of 2021. This compares to net loss from continuing operations of $33.9 million, or $1.03 per share, on revenue of $151.7 million for the fourth quarter of 2020 and net loss from continuing operations of $16.1 million, or $0.49 per share, on revenue of $160.8 million for the first quarter of 2020. Net loss was $29.9 million for the first quarter of 2021, as compared to net loss of $33.4 million for the fourth quarter of 2020 and net loss of $18.3 million for the first quarter of 2020. EBITDA, as adjusted, was $33.1 million for the first quarter of 2021, as compared to $38.8 million for the fourth quarter of 2020 and $34.2 million for the first quarter of 2020. Loss before taxes was $21.5 million as compared to loss before taxes of $24.5 million for the fourth quarter of 2020 and loss before taxes of $6.7 million for the first quarter of 2020.

Selling, general and administrative expenses were $32.6 million in the first quarter of 2021, as compared with $28.4 million in the fourth quarter of 2020 and $33.6 million in the first quarter of 2020.

Contract Operations SegmentContract operations revenue in the first quarter of 2021 was $81.0 million, a 4% decrease from fourth quarter of 2020 revenue of $84.0 million and a 15% decrease from first quarter of 2020 revenue of $94.8 million.

Contract operations adjusted gross margin in the first quarter of 2021 was $57.7 million, a 1% decrease from the fourth quarter of 2020 adjusted gross margin of $58.4 million and 9% decrease from the first quarter of 2020 adjusted gross margin of $63.3 million. Adjusted gross margin percentage in the first quarter of 2021 was 71%, as compared with 69% in the fourth quarter of 2020 and 67% in the first quarter of 2020.

Revenue declined sequentially primarily due to timing of projects, while adjusted margins improved due a continued focus on productivity.

Aftermarket Services SegmentAftermarket services revenue in the first quarter of 2021 was $25.1 million, a 16% decrease from fourth quarter of 2020 revenue of $29.9 million and a 10% decrease from first quarter of 2020 revenue of $27.9 million.

Aftermarket services adjusted gross margin in the first quarter of 2021 was $5.1 million, an 8% decrease from the fourth quarter of 2020 adjusted gross margin of $5.5 million and a 24% decrease from the first quarter of 2020 adjusted gross margin of $6.7 million. Adjusted gross margin percentage in the first quarter of 2021 was 20%, as compared with 18% in the fourth quarter of 2020 and 24% in the first quarter of 2020.

Revenue declined sequentially primarily due to normal first quarter seasonality, while adjusted margin rate improved due to mix.

Product Sales SegmentProduct sales revenue in the first quarter of 2021 was $30.0 million, a 21% decrease from fourth quarter of 2020 revenue of $37.8 million, and a 21% decrease from first quarter of 2020 revenue of $38.1 million.

Product sales adjusted gross margin in the first quarter of 2021 was $4.5 million, a decrease from the fourth quarter of 2020 adjusted gross margin of $5.3 million and an increase as compared to the first quarter of 2020 adjusted gross margin of $(0.8) million. Adjusted gross margin percentage in the first quarter of 2021 was 15%, as compared with 14% in the fourth quarter of 2020 and (2)% in the first quarter of 2020.

Revenue decreased sequentially driven by lower planned execution of backlog. Adjusted margin increased for the quarter due to improved mix of business.

Product sales backlog was $445.1 million at March31, 2021, as compared to $465.3 million at December 31, 2020 and $578.2 million at March31, 2020. Product sales bookings for the first quarter of 2021 were $9.7 million, resulting in a book-to-bill ratio of 32%. This compares to bookings of $6.0 million for the fourth quarter of 2020 and bookings of $444.8 million for the first quarter of 2020.

Conference Call InformationThe Company will host a conference call at 8:00 a.m. Central Time on Tuesday, May4, 2021.The call can be accessed from the Companys website at www.exterran.com or by telephone at 877-524-8416.For those who cannot listen to the live call, a telephonic replay will be available through May 11, 2021 and may be accessed by calling 877-660-6853 and using the pass code 13718860. 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 Corporationis headquartered inHouston, Texasand operates in approximately 25 countries.

For more information, contact:Blake Hancock, Vice President of Investor Relations, at 281-854-3043Or 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). 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 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: conditions in the oil and natural 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, which could depress or reduce the demand or pricing for Exterrans natural gas compression and oil and natural gas production and processing equipment and services; reduced profit margins or the loss of market share resulting from competition or the introduction of competing technologies by other companies; economic or political conditions in the countries in which Exterran does business, including civil developments such as uprisings, riots, terrorism, kidnappings, violence associated with drug cartels, legislative changes and the expropriation, confiscation or nationalization of property without fair compensation; risks associated with natural disasters, pandemics and other public health crisis, and other catastrophic events outside of Exterrans control, including the continued spread and impact of, and the response to, the COVID-19 pandemic; changes in currency exchange rates, including the risk of currency devaluations by foreign governments, and restrictions on currency repatriation; risks associated with cyber-based attacks or network security breaches; changes in international trade relationships, including the imposition of trade restrictions or tariffs relating to any materials or products (such as aluminum and steel) used in the operation of Exterrans business; risks associated with Exterrans operations, such as equipment defects, equipment malfunctions, environmental discharges and natural disasters; the risk that counterparties will not perform their obligations under their contracts with Exterran or other changes that could impact Exterrans ability to recover its fixed asset investment; the financial condition of Exterrans customers; Exterrans ability to timely and cost-effectively obtain components necessary to conduct its business; employment and workforce factors, including Exterrans ability to hire, train and retain key employees; Exterrans ability to implement its business and financial objectives, including: (i) winning profitable new business, (ii) timely and cost-effective execution of projects, (iii) enhancing or maintaining Exterrans asset utilization, particularly with respect to its fleet of compressors and other assets, (iv) integrating acquired businesses, (v) generating sufficient cash to satisfy Exterrans operating needs, existing capital commitments and other contractual cash obligations, including Exterrans debt obligations, and (vi) accessing the financial markets at an acceptable cost; Exterrans ability to accurately estimate its costs and time required under its fixed price contracts; liability related to the use of Exterrans products and services; changes in governmental safety, health, environmental or other regulations, which could require Exterran to make significant expenditures; and Exterrans level of indebtedness and ability to fund its business.

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, 2020, 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 March31, December March 31, 2021 31, 2020 2020Revenues: Contract operations $ 81,014 $ 84,011 $ 94,788 Aftermarket services 25,120 29,909 27,909 Product sales 30,030 37,779 38,097 136,164 151,699 160,794 Costs and expenses: Cost of sales (excluding depreciation and amortization expense):Contract operations 23,344 25,628 31,460 Aftermarket services 20,012 24,379 21,181 Product sales 25,573 32,517 38,931 Selling, general and administrative 32,631 28,357 33,560 Depreciation and amortization 42,499 44,156 31,951 Impairments ? 9,953 ? Restructuring and other charges 624 ? 207 Interest expense 9,964 9,603 9,953 Gain on extinguishment of debt ? (147 ) ? Other (income) expense, net 3,061 1,758 294 157,708 176,204 167,537 Loss before income taxes (21,544 ) (24,505 ) (6,743 )Provision for income taxes 7,456 9,433 9,330 Loss from continuing operations (29,000 ) (33,938 ) (16,073 )Income (loss) from discontinued (873 ) 561 (2,231 )operations, net of taxNet loss $ (29,873 ) $ (33,377 ) $ (18,304 ) Basic and diluted net loss per common share:Loss from continuing operations per $ (0.88 ) $ (1.03 ) $ (0.49 )common shareIncome (loss) from discontinued (0.03 ) 0.01 (0.07 )operations per common shareNet loss per common share $ (0.91 ) $ (1.02 ) $ (0.56 ) Weighted average common sharesoutstanding used in net loss per common share:Basic and diluted 32,950 32,832 32,653



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) March31, December 31, 2021 2020ASSETS Current assets: Cash and cash equivalents $ 42,575 $ 40,318 Restricted cash 4,078 3,410 Accounts receivable, net 188,401 198,028 Inventory 107,533 109,837 Contract assets 32,301 32,642 Other current assets 21,907 19,810 Current assets associated with discontinued 25,955 25,325 operationsTotal current assets 422,750 429,370 Property, plant and equipment, net 695,164 733,222 Long-term contract assets 19,324 33,563 Operating lease right of use assets 24,180 25,428 Deferred income taxes 6,824 8,866 Intangible and other assets, net 77,157 71,436 Long-term assets associated with discontinued 1,608 1,606 operationsTotal assets $ 1,247,007 $ 1,303,491 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable, trade $ 52,288 $ 60,078 Accrued liabilities 108,548 94,404 Contract liabilities 97,753 100,123 Current operating lease liabilities 6,228 6,340 Current liabilities associated with discontinued 7,016 13,707 operationsTotal current liabilities 271,833 274,652 Long-term debt 569,766 562,325 Deferred income taxes 1,073 1,014 Long-term contract liabilities 65,580 80,499 Long-term operating lease liabilities 28,826 29,868 Other long-term liabilities 44,162 57,159 Long-term liabilities associated with 1,062 2,142 discontinued operationsTotal liabilities 982,302 1,007,659 Total stockholders? equity 264,705 295,832 Total liabilities and stockholders? equity $ 1,247,007 $ 1,303,491



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 March31, 2021 December 31, March 31, 2020 2020Revenues: Contract operations $ 81,014 $ 84,011 $ 94,788 Aftermarket 25,120 29,909 27,909 servicesProduct sales 30,030 37,779 38,097 $ 136,164 $ 151,699 $ 160,794 Segment Adjusted Gross margin:Contract operations $ 57,670 $ 58,383 $ 63,328 Aftermarket 5,108 5,530 6,728 servicesProduct sales 4,457 5,262 (834 ) Total Adjusted $ 67,235 $ 69,175 $ 69,222 Gross margin Segment AdjustedGross margin percentage:Contract operations 71 % 69 % 67 %Aftermarket 20 % 18 % 24 %servicesProduct sales 15 % 14 % (2 ) % Selling, general $ 32,631 $ 28,357 $ 33,560 and administrative% of revenue 24 % 19 % 21 % EBITDA, as adjusted $ 33,054 $ 38,762 $ 34,247 % of revenue 24 % 26 % 21 % Capital $ 7,199 $ 9,759 $ 16,807 expenditures Revenue byGeographical Regions:North America $ 6,325 $ 12,977 $ 8,976 Latin America 60,618 64,497 76,797 Middle East and 57,179 48,315 55,713 AfricaAsia Pacific 12,042 25,910 19,308 Total revenues $ 136,164 $ 151,699 $ 160,794 As of March31, 2021 December 31, March 31, 2020 2020Contract Operations Backlog:Contract operations $ 1,227,654 $ 1,100,929 $ 1,352,627 services Product Sales Backlog:Compression $ 12,562 $ 10,218 $ 72,637 equipmentProcessing and 403,718 425,292 465,535 treating equipmentOther product sales 28,781 29,835 40,066 Total product sales $ 445,061 $ 465,345 $ 578,238 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 March31, December March 31, 2021 31, 2020 2020Non-GAAP FinancialInformation?Reconciliation of total gross margin to Total adjusted grossmargin:Revenues $ 136,164 $ 151,699 $ 160,794 Cost of sales (excluding depreciation 68,929 82,524 91,572 and amortization expense)Depreciation and amortization^(1) 40,835 42,618 30,446 Total gross margin 26,400 26,557 38,776 Depreciation and amortization^(1) 40,835 42,618 30,446 Total adjusted gross margin ^(2) $ 67,235 $ 69,175 $ 69,222 Non-GAAP FinancialInformation?Reconciliation of Net loss to EBITDA, as adjusted:Net loss $ (29,873 ) $ (33,377 ) $ (18,304 )(Income) loss from discontinued 873 (561 ) 2,231 operations, netoftaxDepreciation and amortization 42,499 44,156 31,951 Impairments ? 9,953 ? Restructuring and other charges 624 ? 207 Interest expense 9,964 9,603 9,953 Gain on extinguishment of debt ? (147 ) ? (Gain) loss on currency exchange rateremeasurement of intercompany 1,511 (298 ) (1,121 )balancesProvision for income taxes 7,456 9,433 9,330 EBITDA, as adjusted^ (3) $ 33,054 $ 38,762 $ 34,247 Non-GAAP FinancialInformation?Reconciliation of Net loss to Adjusted net loss fromcontinuing operations:Net loss $ (29,873 ) $ (33,377 ) $ (18,304 )(Income) loss from discontinued 873 (561 ) 2,231 operations, net of taxLoss from continuing operations (29,000 ) (33,938 ) (16,073 )Adjustment for items: Impairments ? 9,953 ? Restructuring and other charges 624 ? 207 Gain on extinguishment of debt ? (147 ) ? Tax impact of adjustments ^(4) ? (98 ) ? Adjusted net loss from continuing $ (28,376 ) $ (24,230 ) $ (15,866 )operations ^(5) Diluted loss from continuing $ (0.88 ) $ (1.03 ) $ (0.49 )operations per common shareAdjustment for items, after-tax, per 0.02 0.29 ? diluted common shareDiluted adjusted net loss fromcontinuing operations per common $ (0.86 ) $ (0.74 ) $ (0.49 )share ^(5) (6)



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 costof sales (excluding depreciation and amortization expense), which are keycomponents of our operations. Management believes total adjusted grossmargin is important supplemental information for investors because itfocuses on the current performance of our operations and excludes the impactof the prior historical costs of the assets acquired or constructed that areutilized in those operations, the indirect costs associated with our SG&Aactivities, the impact of our financing methods, restructuring and othercharges, gain on extinguishment of debt and income taxes. In addition, theinclusion of depreciation and amortization expense may not accuratelyreflect the costs required to maintain and replenish the operational usageof our assets and therefore may not portray the costs from current operatingactivity.

^(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 fromoutstanding debt), asset base (depreciation and amortization), oursubsidiaries? capital structure (non-cash gains or losses from foreigncurrency exchange rate changes on intercompany obligations), taxconsequences, impairment charges, restructuring and other charges, expensedacquisition costs, gain on extinguishment of debt and other items.Management uses EBITDA, as adjusted, as supplemental measures to reviewcurrent period operating performance, comparability measures and performancemeasures for period to period comparisons. In addition, the Company'scompensation committee has used EBITDA, as adjusted, in evaluating theperformance of the Company and management and in evaluating certaincomponents of executive compensation, including performance-based annualincentive programs. ^(4) The tax impacts of adjustments were based on the Company?s statutorytax rates applicable to each item in the appropriate taxing jurisdictions.Using statutory 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 continuingoperations and diluted adjusted net income (loss) from continuing operationsper common share provides useful information to investors because it allowsmanagement, investors and others to evaluate and compare our core operatingresults from period to period by removing the impact of impairment charges,restructuring and other charges, expensed acquisition costs, gain onextinguishment of debt and other items not appropriately reflective of ourcore business. ^(6) Diluted adjusted net income (loss) from continuing operations percommon share, was computed using the two-class method to determine the netincome (loss) per share for each class of common stock and participatingsecurity (certain of our restricted stock and restricted stock units)according to participation rights in undistributed earnings.