Archrock, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - Archrock, Inc.	form8_k.htm

Exhibit 99.1

Exterran Holdings Reports Fourth-Quarter and Full-Year 2012 Results

●Reported net income from continuing operations attributable to Exterran stockholders of $0.09 per diluted share, excluding charges, in the quarter

●Achieved EBITDA, as adjusted, of $140.8 million in the quarter, up 20 percent over year-ago levels

●Reduced consolidated debt levels by $140.7 million in the quarter

●Grew operating horsepower in both North America and International contract operations businesses

HOUSTON, Feb. 26, 2013 – Exterran Holdings, Inc. (NYSE: EXH) today reported EBITDA, as adjusted (as defined below), of $140.8 million for the fourth quarter 2012, compared to $126.4 million for the third quarter 2012 and $117.5 million for the fourth quarter 2011.

Revenue was $838.9 million for the fourth quarter 2012, compared to $718.7 million for the third quarter 2012 and $689.1 million for the fourth quarter 2011.

Fabrication backlog was $1,065.7 million at December 31, 2012, compared to $1,239.5 million at September 30, 2012 and $735.3 million at December 31, 2011.

EBITDA, as adjusted, was $464.8 million for 2012, compared to $395.4 million for 2011. Revenue was $2,803.6 million for 2012, compared to $2,629.9 million for 2011.

“During 2012, we made significant progress in the implementation of performance improvement initiatives, as each of our four operating segments achieved increased revenues and gross margin percentage over prior-year levels. In addition, we grew operating horsepower in both of our North America and International contract operations businesses,” said Brad Childers, Exterran Holdings’ President and Chief Executive Officer. “In the fourth quarter, we achieved the highest quarterly level of EBITDA, as adjusted, in over three years and achieved our second consecutive quarter of positive earnings from continuing operations excluding charges.”

“One of our key goals entering 2012 was to reduce debt and covenant leverage. For the year, consolidated debt declined by $208 million and Exterran Holdings’ total leverage ratio, which is total debt to adjusted EBITDA as defined in our credit agreement, decreased to 2.4x at December 31, 2012 from 3.0x at September 30, 2012 and 4.3x at December 31, 2011,” said Bill Austin, Exterran Holdings’ Executive Vice President and Chief Financial Officer.

“I believe we are on track to make further progress in improving the company’s performance in 2013, though similar to last year, first quarter revenues are expected to decline somewhat from fourth quarter levels,” added Childers.

Net income from continuing operations attributable to Exterran stockholders for the fourth quarter 2012 was $6.0 million, or $0.09 per diluted share, excluding pretax charges totaling $48.4 million, comprised primarily of non-cash long-lived asset impairment charges of $47.6 million related to our contract water treatment business. Net income from continuing operations attributable to Exterran stockholders, excluding charges, for the third quarter 2012 was $1.4 million, or $0.02 per diluted share, and net loss from continuing operations attributable to Exterran stockholders, excluding charges, for the fourth quarter 2011 was $9.8 million, or $0.16 per diluted share. Net income from continuing operations attributable to Exterran stockholders, excluding pretax charges, also excludes the benefit of the two previously announced sales of Exterran Holdings’ Venezuelan assets.

Net loss attributable to Exterran stockholders for the fourth quarter 2012 was $5.7 million, or $0.09 per diluted share, compared to net income attributable to Exterran stockholders for the third quarter 2012 of $113.4 million, or $1.74 per diluted share, and a net loss attributable to Exterran stockholders for the fourth quarter 2011 of $66.6 million, or $1.06 per diluted share.

Net loss from continuing operations attributable to Exterran stockholders for 2012 was $50.7 million, or $0.80 per diluted share, excluding pretax charges totaling $190.1 million, comprised primarily of non-cash long-lived asset impairment charges of $183.4 million related primarily to our U.S. fleet and contract water treatment business, and the benefit of the sale of our Venezuelan assets. Net loss from continuing operations attributable to Exterran stockholders, excluding charges, for 2011 was $89.9 million, or $1.44 per diluted share.

Net loss attributable to Exterran stockholders for 2012 was $39.5 million, or $0.62 per diluted share, compared to a net loss attributable to Exterran stockholders for 2011 of $340.6 million, or $5.44 per diluted share.

The cash distribution received by Exterran Holdings based upon its limited partner and general partner interests in Exterran Partners was $8.1 million for the fourth quarter 2012, compared to $7.9 million for the third quarter 2012 and $7.4 million for the fourth quarter 2011.

Conference Call Details

Exterran Holdings and Exterran Partners, L.P. will host a joint conference call on Tuesday, Feb. 26, 2013, to discuss their fourth-quarter 2012 financial results. The call will begin at 11:00 a.m. Eastern Time.

To listen to the call via a live webcast, please visit Exterran’s website at www.exterran.com. The call will also be available by dialing 800-446-2782 in the United States and Canada, or +1-847-413-3235 for international calls. Please call approximately 15 minutes prior to the scheduled start time and reference Exterran conference call number 34069963.

A replay of the conference call will be available on Exterran’s website for approximately seven days. Also, a replay may be accessed by dialing 888-843-7419 in the United States and Canada, or +1-630-652-3042 for international calls. The access code is 34069963#.

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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 and gain or loss on termination of interest rate swaps), depreciation and amortization expense, impairment charges, merger and integration expenses, restructuring charges, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations and other charges. EBITDA, as adjusted, excludes the benefit of the two previously announced sales of Exterran Holdings’ Venezuelan assets.

Gross Margin, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization expense). Gross margin percentage is defined as gross margin divided by revenue.

About Exterran Holdings

Exterran Holdings, Inc. is a global market leader in full service natural gas compression and a premier provider of operations, maintenance, service and equipment for oil and gas production, processing and transportation applications. Exterran Holdings serves customers across the energy spectrum—from producers to transporters to processors to storage owners. Headquartered in Houston, Texas, Exterran has approximately 10,000 employees and operates in approximately 30 countries. Exterran Holdings owns an equity interest, including all of the general partner interest, in Exterran Partners, L.P. (NASDAQ: EXLP), the leading provider of natural gas contract operations services to customers throughout the United States. For more information, visit www.exterran.com.

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 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 Holdings’ control, which could cause actual results to differ materially from such statements. Forward-looking information includes, but is not limited to: Exterran Holdings’ financial and operational strategies and ability to successfully effect those strategies; Exterran Holdings’ expectations regarding future economic and market conditions; Exterran Holdings’ financial and operational outlook and ability to fulfill that outlook; statements relating to the remaining expected proceeds from the Venezuelan asset sales; and demand for Exterran Holdings’ products and services and growth opportunities for those products and services.

While Exterran Holdings 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 conditions and the impact they may have on Exterran Holdings and its customers; changes in tax laws that impact master limited partnerships; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil or natural gas or a sustained decrease in the price of oil or natural gas; Exterran Holdings’ ability to timely and cost-effectively execute larger projects; changes in political or economic conditions in key operating markets, including international markets; any non-performance by third parties of their contractual obligations; changes in safety, health, environmental and other regulations; and the performance of Exterran Partners.

These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Exterran Holdings’ Annual Report on Form 10-K for the year ended December 31, 2011, and those set forth from time to time in Exterran Holdings’ filings with the Securities and Exchange Commission, which are currently available at www.exterran.com. Except as required by law, Exterran Holdings 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.

SOURCE

Exterran Holdings, Inc.

EXTERRAN HOLDINGS, INC.
UNAUDITED 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,
	2012			2012			2011			2012			2011
Revenue:
North America contract operations	$	154,683		$	151,532		$	146,863		$	605,367		$	588,034
International contract operations		127,911			110,632			114,675			463,957			445,059
Aftermarket services		98,460			95,854			116,494			385,861			371,327
Fabrication		457,868			360,686			311,031			1,348,417			1,225,459
		838,922			718,704			689,063			2,803,602			2,629,879

Costs and Expenses:
Cost of sales (excluding depreciation and amortization expense):
North America contract operations		69,368			75,217			74,977			289,244			303,050
International contract operations		47,367			46,260			45,446			184,608			184,405
Aftermarket services		78,538			75,793			93,649			303,590			311,760
Fabrication		404,223			310,754			290,335			1,191,937			1,102,237
Selling, general and administrative		101,850			85,536			83,648			376,359			352,780
Depreciation and amortization		91,579			85,248			89,599			350,847			356,972
Long-lived asset impairment		47,576			3,204			2,182			183,445			6,068
Restructuring charges		808			1,515			8,653			6,636			11,594
Goodwill impairment		-			-			665			-			196,807
Interest expense		27,694			31,723			39,045			134,376			149,473
Equity in (income) loss of non-consolidated affiliates		(4,623	)		(4,793	)		209			(51,483	)		471
Other (income) expense, net		(777	)		(1,450	)		(15,435	)		430			(5,620	)
		863,603			709,007			712,973			2,969,989			2,969,997

Income (loss) before income taxes		(24,681	)		9,697			(23,910	)		(166,387	)		(340,118	)
Provision for (benefit from) income taxes		(27,797	)		1,267			39,615			(62,375	)		(10,605	)
Income (loss) from continuing operations		3,116			8,430			(63,525	)		(104,012	)		(329,513	)
Income (loss) from discontinued operations, net of tax		(20	)		110,916			(858	)		66,843			(10,105	)
Net income (loss)		3,096			119,346			(64,383	)		(37,169	)		(339,618	)
Less: net income attributable to the noncontrolling interest		(8,835	)		(5,980	)		(2,195	)		(2,317	)		(990	)
Net income (loss) attributable to Exterran stockholders	$	(5,739	)	$	113,366		$	(66,578	)	$	(39,486	)	$	(340,608	)

Basic income (loss) per common share:
Income (loss) from continuing operations attributable to Exterran stockholders	$	(0.09	)	$	0.04		$	(1.05	)	$	(1.68	)	$	(5.28	)
Income (loss) from discontinued operations attributable to Exterran stockholders		(0.00	)		1.71			(0.01	)		1.06			(0.16	)
Net income (loss) attributable to Exterran stockholders	$	(0.09	)	$	1.75		$	(1.06	)	$	(0.62	)	$	(5.44	)
Diluted income (loss) per common share:
Income (loss) from continuing operations attributable to Exterran stockholders	$	(0.09	)	$	0.04		$	(1.05	)	$	(1.68	)	$	(5.28	)
Income (loss) from discontinued operations attributable to Exterran stockholders		(0.00	)		1.70			(0.01	)		1.06			(0.16	)
Net income (loss) attributable to Exterran stockholders	$	(0.09	)	$	1.74		$	(1.06	)	$	(0.62	)	$	(5.44	)
Weighted average common and equivalent shares outstanding:
Basic		63,658			64,847			62,821			63,436			62,624
Diluted		63,658			65,094			62,821			63,436			62,624

Income (loss) attributable to Exterran stockholders:
Income (loss) from continuing operations	$	(5,719	)	$	2,450		$	(65,720	)	$	(106,329	)	$	(330,503	)
Income (loss) from discontinued operations, net of tax		(20	)		110,916			(858	)		66,843			(10,105	)
Net income (loss) attributable to Exterran stockholders	$	(5,739	)	$	113,366		$	(66,578	)	$	(39,486	)	$	(340,608	)

EXTERRAN HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except percentages)


	Three Months Ended									Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2012			2012			2011			2012			2011
Revenues:
North America contract operations	$	154,683		$	151,532		$	146,863		$	605,367		$	588,034
International contract operations		127,911			110,632			114,675			463,957			445,059
Aftermarket services		98,460			95,854			116,494			385,861			371,327
Fabrication		457,868			360,686			311,031			1,348,417			1,225,459
Total	$	838,922		$	718,704		$	689,063		$	2,803,602		$	2,629,879

Gross Margin (1):
North America contract operations	$	85,315		$	76,315		$	71,886		$	316,123		$	284,984
International contract operations		80,544			64,372			69,229			279,349			260,654
Aftermarket services		19,922			20,061			22,845			82,271			59,567
Fabrication		53,645			49,932			20,696			156,480			123,222
Total	$	239,426		$	210,680		$	184,656		$	834,223		$	728,427

Selling, General and Administrative	$	101,850		$	85,536		$	83,648		$	376,359		$	352,780
% of Revenues		12	%		12	%		12	%		13	%		13	%

EBITDA, as adjusted (1)	$	140,801		$	126,431		$	117,502		$	464,840		$	395,441
% of Revenues		17	%		18	%		17	%		17	%		15	%

Capital Expenditures	$	100,006		$	100,871		$	100,894		$	428,731		$	272,185
Less: Proceeds from Sale of PP&E		(8,004	)		(1,963	)		(5,956	)		(36,000	)		(43,042	)
Net Capital Expenditures	$	92,002		$	98,908		$	94,938		$	392,731		$	229,143

Gross Margin Percentage:
North America contract operations		55	%		50	%		49	%		52	%		48	%
International contract operations		63	%		58	%		60	%		60	%		59	%
Aftermarket services		20	%		21	%		20	%		21	%		16	%
Fabrication		12	%		14	%		7	%		12	%		10	%
Total		29	%		29	%		27	%		30	%		28	%

Total Available Horsepower (at period end):
North America contract operations		3,376			3,341			3,545			3,376			3,545
International contract operations		1,265			1,254			1,260			1,265			1,260
Total		4,641			4,595			4,805			4,641			4,805

Total Operating Horsepower (at period end):
North America contract operations		2,900			2,849			2,830			2,900			2,830
International contract operations		1,007			1,001			960			1,007			960
Total		3,907			3,850			3,790			3,907			3,790

Total Operating Horsepower (average):
North America contract operations		2,870			2,830			2,793			2,839			2,784
International contract operations		1,011			1,003			975			991			978
Total		3,881			3,833			3,768			3,830			3,762

Horsepower Utilization (at period end):
North America contract operations		86	%		85	%		80	%		86	%		80	%
International contract operations		80	%		80	%		76	%		80	%		76	%
Total		84	%		84	%		79	%		84	%		79	%

Fabrication Backlog:
Compression & accessory	$	256,315		$	231,027		$	249,724		$	256,315		$	249,724
Production & processing equipment		563,826			687,174			415,968			563,826			415,968
Installation		245,573			321,345			69,576			245,573			69,576
Total	$	1,065,714		$	1,239,546		$	735,268		$	1,065,714		$	735,268

Debt to Capitalization:
Debt	$	1,564,923		$	1,705,638		$	1,773,039		$	1,564,923		$	1,773,039
Exterran stockholders' equity		1,478,613			1,476,314			1,437,236			1,478,613			1,437,236
Capitalization	$	3,043,536		$	3,181,952		$	3,210,275		$	3,043,536		$	3,210,275
Total Debt to Captilization		51	%		54	%		55	%		51	%		55	%

(1) Management believes disclosure of EBITDA, as adjusted, and Gross Margin, both non-GAAP measures, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, they provide a more complete understanding of our performance than GAAP results alone. Management uses EBITDA, as adjusted, and Gross Margin as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as adjusted, is used by management as a valuation measure.

EXTERRAN HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(In thousands, except per share amounts)

	Three Months Ended									Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2012			2012			2011			2012			2011

Reconciliation of GAAP to Non-GAAP Financial Information:


Net income (loss)	$	3,096		$	119,346		$	(64,383	)	$	(37,169	)	$	(339,618	)
(Income) loss from discontinued operations, net of tax		20			(110,916	)		858			(66,843	)		10,105
Income (loss) from continuing operations		3,116			8,430			(63,525	)		(104,012	)		(329,513	)
Depreciation and amortization		91,579			85,248			89,599			350,847			356,972
Long-lived asset impairment		47,576			3,204			2,182			183,445			6,068
Restructuring charges		808			1,515			8,653			6,636			11,594
Investment in non-consolidated affiliates impairment		-			-			209			224			471
Proceeds from sale of joint venture assets		(4,623	)		(4,793	)		-			(51,707	)		-
Goodwill impairment		-			-			665			-			196,807
Interest expense		27,694			31,723			39,045			134,376			149,473
(Gain) loss on currency exchange rate remeasurement of intercompany balances		2,448			(163	)		1,059			7,406			14,174
Provision for (benefit from) income taxes		(27,797	)		1,267			39,615			(62,375	)		(10,605	)
EBITDA, as adjusted (1)		140,801			126,431			117,502			464,840			395,441
Selling, general and administrative		101,850			85,536			83,648			376,359			352,780
Equity in (income) loss of non-consolidated affiliates		(4,623	)		(4,793	)		209			(51,483	)		471
Investment in non-consolidated affiliates impairment		-			-			(209	)		(224	)		(471	)
Proceeds from sale of joint venture assets		4,623			4,793			-			51,707			-
Gain (loss) on currency exchange rate remeasurement of intercompany balances		(2,448	)		163			(1,059	)		(7,406	)		(14,174	)
Other (income) expense, net		(777	)		(1,450	)		(15,435	)		430			(5,620	)
Gross Margin (1)	$	239,426		$	210,680		$	184,656		$	834,223		$	728,427


Net loss attributable to Exterran stockholders	$	(5,739	)	$	113,366		$	(66,578	)	$	(39,486	)	$	(340,608	)
(Income) loss from discontinued operations		20			(110,916	)		858			(66,843	)		10,105
Valuation allowance on Brazil deferred tax asset		-			-			48,597			-			48,597
Q4 2012 tax benefit on Q2 2012 impairment of long-lived assets		(13,725	)		-			-			-			-
Charges, after-tax:
Long-lived asset impairment (including the impact on noncontrolling interest)		29,537			2,535			1,222			102,974			3,131
Restructuring charges		509			1,203			5,451			4,181			7,304
Investment in non-consolidated affiliates impairment		-			-			209			224			471
Proceeds from sale of joint venture assets		(4,623	)		(4,793	)		-			(51,707	)		-
Goodwill impairment		-			-			419			-			181,062
Net income (loss) from continuing operations attributable to Exterran stockholders, excluding charges	$	5,979		$	1,395		$	(9,822	)	$	(50,657	)	$	(89,938	)

Diluted income (loss) from continuing operations attributable to Exterran stockholders	$	(0.09	)	$	0.04		$	(1.05	)	$	(1.68	)	$	(5.28	)
Adjustment for charges, after-tax, per common share (2)		0.18			(0.02	)		0.89			0.88			3.84
Diluted net income (loss) from continuing operations attributable to Exterran stockholders per common share, excluding charges (1)(2)	$	0.09		$	0.02		$	(0.16	)	$	(0.80	)	$	(1.44	)

(1) Management believes disclosure of EBITDA, as adjusted, diluted net loss from continuing operations attributable to Exterran stockholders per common share, excluding charges, and Gross Margin, non-GAAP measures, provides useful information to investors because, when viewed with our GAAP results and accompanying reconciliations, they provide a more complete understanding of our performance than GAAP results alone. Management uses EBITDA, as adjusted, diluted net loss from continuing operations attributable to Exterran stockholders per common share, excluding charges, and Gross Margin as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as adjusted, is used by management as a valuation measure.
(2) In calculating diluted net income (loss) from continuing operations attributable to Exterran stockholders per common share, excluding charges, for the three months ended December 31, 2012, the weighted average common and equivalent shares outstanding was adjusted to include the following shares as their effects were dilutive: 1,233,000 shares of unvested restricted stock, 410,000 shares on the exercise of options and vesting of restricted stock units and 1,000 shares on the settlement of employee stock purchase plan shares.

Archrock, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 26, 2013

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