EX-99.1 2 h54416exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
(EXTERRAN LOGO)
Exterran Holdings and Exterran Partners Report
Fourth Quarter and Full Year 2007 Results
HOUSTON, February 28, 2008 — Exterran Holdings, Inc. (NYSE: EXH) and Exterran Partners, L.P. (NASDAQ: EXLP) today reported financial results for the fourth quarter and full year 2007.
Exterran Holdings, Inc. Financial Results
Exterran Holdings reported net income for the fourth quarter 2007 of $58.5 million, or $0.87 per share, compared to a net loss for the third quarter 2007 of $75.4 million, or a $1.55 loss per share.
Fourth quarter 2007 results include merger and integration pretax charges of $9.3 million, or $0.08 per share, related to the merger of Hanover Compressor Company and Universal Compression Holdings, Inc. into Exterran Holdings. Fourth quarter results were also impacted by certain international tax benefits that reduced the effective tax rate during the period. Third quarter 2007 results included pretax charges related to merger, integration and refinancing activities and asset impairments that totaled $179.9 million, or $2.37 per share.
Revenue for the fourth quarter was $853.4 million and EBITDA, as adjusted (as defined below), was $212.5 million. For the twelve months ended December 31, 2007, revenue was $2,540.5 million, net income was $34.6 million, or $0.75 per share, including pretax charges related to merger, integration and refinancing activities that totaled $192.5 million, or $2.55 per share, and EBITDA, as adjusted, was $621.1 million.
The merger of Hanover and Universal was completed on August 20, 2007, and periods prior to the merger reflect only Hanover’s results. All share and per share amounts have been retroactively adjusted to reflect the merger conversion ratio of 0.325 shares of Exterran Holdings common stock for each share of Hanover common stock for all periods discussed or presented.
Exterran Holdings repurchased 617,100 shares of its common stock during the fourth quarter at an average price of $81.00 per share for a total of approximately $50 million. Including the repurchases in the fourth quarter, Exterran Holdings has now repurchased 1,258,400 shares of its common stock at an average price of $79.44 for a total of $100 million from August 20, 2007 through December 31, 2007.
Stephen A. Snider, Exterran Holdings’ President and CEO said, “I am pleased with our strong financial results in fourth quarter 2007, the first period to include a full contribution from both predecessor companies. These results reflect the hard work and dedication of our outstanding team of employees. The integration of Hanover and

 

 

Universal is going well and customer response to our enhanced worldwide integrated product and service offering has been outstanding. Despite certain market challenges in North America, I expect 2008 to be an exciting year for our company due to continuing overall demand for our core contract operations, substantial backlog of new orders and ample growth opportunities, particularly in international markets.”
Exterran Partners, L.P. Financial Results
Exterran Partners reported revenue of $36.6 million and net income of $7.3 million in the fourth quarter 2007, compared to revenue of $34.7 million and net income of $7.5 million in the third quarter 2007. EBITDA, as further adjusted (as defined below), totaled $20.1 million in the fourth quarter 2007 compared to $19.1 million in the third quarter 2007. Distributable cash flow (as defined below) totaled $14.1 million in the fourth quarter 2007 compared to $13.5 million in the third quarter 2007.
Exterran Partners reported revenue of $107.7 million and net income of $19.4 million in the twelve months ended December 31, 2007. EBITDA, as further adjusted, totaled $59.1 million in 2007 and distributable cash flow was $40.5 million.
Earlier this month, Exterran Partners paid a cash distribution for the fourth quarter of $0.425 per limited partner unit, an increase of 6.25 percent as compared to a cash distribution for the third quarter of $0.40 per limited partner unit.
“Exterran Partners achieved outstanding financial results in its first full year of operations, highlighted by strong activity levels, an acquisition from Exterran Holdings in July, and two increases in its cash distribution,” commented Mr. Snider, Chairman, President and CEO of Exterran Partners’ general partner. “Despite the challenges in the North American market, our outlook for Exterran Partners is optimistic due to continuing demand for compression services, implementation of efficiency enhancements in our field operations, and significant ongoing acquisition opportunities largely due to our relationship with Exterran Holdings.”
Conference Call Details
Exterran Holdings, Inc. (NYSE: EXH) and Exterran Partners, L.P. (NASDAQ: EXLP) announce the following schedule and teleconference information for its fourth quarter 2007 earnings release:
  •   Teleconference: Thursday, February 28, 2008 at 11:00 a.m. Eastern Time (10:00 a.m. Central Time). To access the call, United States and Canadian participants should dial 866-454-4205. International participants should dial 913-312-1419 at least 10 minutes before the scheduled start time. Please reference Exterran conference call number 5224782.
 
  •   Live Webcast: The webcast will be available in listen-only mode via the Company’s website: www.exterran.com.
 
  •   Webcast Replay: For those unable to participate, a replay will be available from 1:30 p.m. Eastern Time on Thursday, February 28, until 1:30 p.m. Eastern Time Thursday, March 6, 2008. To listen to the replay, please dial 888-203-1112 in the U.S. and Canada, or 719-457-0820 internationally and enter access code 5829714.

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*****
With respect to Exterran Holdings, EBITDA, as adjusted, a non-GAAP measure, is defined as income from continuing operations plus 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, minority interest, excluding non-recurring items, and extraordinary gains or losses.
With respect to Exterran Partners, distributable cash flow, a non-GAAP measure, is defined as net income plus income taxes, depreciation expense, non-cash selling, general and administrative expenses, interest expense and any amounts by which cost of sales and selling, general and administrative costs are reduced as a result of caps on these costs contained in the omnibus agreement to which Exterran Holdings and Exterran Partners are parties (the “Omnibus Agreement”), which amounts are treated as capital contributions from Exterran Holdings for accounting purposes, less cash interest expense and maintenance capital expenditures, and excluding non-recurring items.
With respect to Exterran Partners, EBITDA, as further adjusted, a non-GAAP measure, is defined as net income plus income taxes, interest expense, depreciation expense, non-cash selling, general and administrative expenses and any amounts by which cost of sales and selling, general and administrative costs are reduced as a result of caps on these costs contained in the Omnibus Agreement, which amounts are treated as capital contributions from Exterran Holdings for accounting purposes, and excluding non-recurring items.
With respect to Exterran Holdings, Gross Margin, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization expense).
With respect to Exterran Partners, Gross Margin, as adjusted, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation expense) plus any amounts by which cost of sales are reduced as a result of caps on these costs contained in the Omnibus Agreement, which amounts are treated as capital contributions from Exterran Holdings for accounting purposes.
About Exterran
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 and its over 10,000 employees have operations in more than 30 countries worldwide.
Exterran Partners was formed by Exterran Holdings to provide natural gas contract compression services to customers throughout the United States. Exterran Holdings owns 51% of Exterran Partners.
For more information, visit www.exterran.com.

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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 the Private Securities Litigation Reform Act of 1995. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties and factors that could cause actual results to differ materially from such statements, many of which are outside the control of Exterran Holdings, Inc. and Exterran Partners, L.P. (the “Companies”). Forward-looking information includes, but is not limited to: the Companies’ operational and financial strategies, and the Companies’ ability to successfully effect those strategies; the Companies’ financial and operational outlook and ability to fulfill that outlook; demand for the companies’ products and services and growth opportunities for those products and services; and the intent and ability of Exterran Holdings to drop-down additional assets into Exterran Partners.
While the Companies believe that the assumptions concerning future events are reasonable, they caution that there are inherent difficulties in predicting certain important factors that could impact the accuracy of the forward-looking information. Among the factors that could cause results to differ materially from those indicated by such forward-looking statements include: changes in Exterran Holdings’ credit rating and the factors that impact its credit rating; the failure to realize anticipated synergies from the merger; changes in master limited partnership equity markets and overall financial markets that impact the effect of the drop-down of additional assets from Exterran Holdings to Exterran Partners; changes in tax laws that impact master limited partnerships, including drop-downs of additional assets into Exterran Partners; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for natural gas and the impact on the price of natural gas; Exterran Holdings’ ability to timely and cost-effectively obtain components necessary to conduct the Companies’ business; changes in political or economic conditions in key operating markets, including international markets; the Companies’ ability to timely and cost-effectively integrate their enterprise resource planning systems; changes in safety and environmental regulations pertaining to the production and transportation of natural gas; and as to each of the Companies, the performance of the other entity.
These forward-looking statements are also affected by the risk factors, forward-looking statements and challenges and uncertainties described in Exterran Holdings’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, Exterran Partners’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 and Exterran Holdings’ Registration Statement on Form S-4 (File No. 333-141695), and those set forth from time to time in Exterran Holdings’ and Exterran Partners’ filings with the Securities and Exchange Commission, which are currently available at www.exterran.com. Except as required by law, the Companies expressly disclaim any intention or obligation to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.
Exterran Contact Information:
Investors: David Oatman (713) 335-7460
Media: Pat (Patricia) Wente (713) 335-7011
Media: Rick Goins (832) 554-4918
(Tables Follow)

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EXTERRAN HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
                                         
    Three Months Ended     Year Ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2007     2007     2006     2007     2006  
Revenues:
                                        
North America contract operations
   $ 202,956     $ 148,986     $ 101,546     $ 551,140     $ 384,292  
International contract operations
     111,414       88,457       69,410       336,807       263,228  
Aftermarket services
     102,307       75,045       50,463       274,489       179,043  
Fabrication
     436,698       432,114       240,024       1,378,049       766,758  
 
                              
 
     853,375       744,602       461,443       2,540,485       1,593,321  
 
                              
Costs and expenses:
                                        
Cost of sales (excluding depreciation and amortization expense):
                                        
North America contract operations
     86,300       64,581       39,227       232,238       156,554  
International contract operations
     40,441       35,439       26,080       126,861       96,631  
Aftermarket services
     82,633       58,049       38,889       214,497       139,633  
Fabrication
     362,425       364,749       202,065       1,144,580       653,719  
Selling, general and administrative
     89,659       71,191       53,646       265,057       197,282  
Merger and integration expenses
     9,326       34,008       —       46,723       —  
Depreciation and amortization
     85,822       66,040       49,657       252,716       175,927  
Fleet impairment
     —       61,945       —       61,945       —  
Interest expense (1)
     34,959       38,680       29,684       130,092       123,496  
Debt extinguishment costs
     —       70,150       —       70,150       5,902  
Equity in (income) loss of non-consolidated affiliates (2)
     (5,541 )     5,005       (2,039 )     (12,498 )     (19,430 )
Other (income) expense, net
     (15,002 )     (13,578 )     (5,461 )     (44,646 )     (50,897 )
 
                              
 
     771,022       856,259       431,748       2,487,715       1,478,817  
 
                              
Income (loss) from continuing operations before income taxes and minority interest
     82,353       (111,657 )     29,695       52,770       114,504  
Provision (benefit) for income taxes
     19,979       (38,692 )     (427 )     11,894       28,782  
Minority interest, net of taxes
     3,880       2,426       —       6,307       —  
 
                              
Income (loss) from continuing operations
     58,494       (75,391 )     30,122       34,569       85,722  
Income from discontinued operations, net of tax
     —       —       —       —       368  
Gain (loss) from sales of discontinued operations, net of tax
     —       —       —       —       63  
 
                              
Income (loss) before cumulative effect of accounting charges
     58,494       (75,391 )     30,122       34,569       86,153  
Cumulative effect of accounting change, net of tax
     —       —       —       —       370  
 
                              
Net income (loss)
   $ 58,494     $ (75,391 )   $ 30,122     $ 34,569     $ 86,523  
 
                              
Basic income (loss) per common share (3):
                                        
Income (loss) from continuing operations
   $ 0.90     $ (1.55 )   $ 0.91     $ 0.76     $ 2.61  
Income from discontinued operations, net of tax
     —       —       —       —       0.01  
Cumulative effect of accounting changes, net of tax
     —       —       —       —       0.01  
 
                              
Net income (loss)
   $ 0.90     $ (1.55 )   $ 0.91     $ 0.76     $ 2.63  
 
                              
Diluted income (loss) per common share (3):
                                        
Income (loss) from continuing operations (4)
   $ 0.87     $ (1.55 )   $ 0.84     $ 0.75     $ 2.48  
Income from discontinued operations, net of tax
     —       —       —       —       0.02  
Cumulative effect of accounting changes, net of tax
     —       —       —       —       0.01  
 
                              
Net income (loss)
   $ 0.87     $ (1.55 )   $ 0.84     $ 0.75     $ 2.51  
 
                              
Weighted average common and equivalent shares outstanding (3):
                                        
Basic
     65,276       48,771       33,003       45,580       32,883  
 
                              
Diluted
     68,715       48,771       38,092       46,300       36,411  
 
                              
 
(1)   Includes termination of interest rate swaps charges of $7.0 million in the third quarter of 2007 related to debt refinancing.
 
(2)   Includes impairment of investment in non-consolidated affiliate of $6.7 million in the third quarter of 2007.
 
(3)   Adjusted for the Hanover common share conversion ratio in the merger of Hanover and Universal for the periods ended December 31, 2006.
 
(4)   Net income for the diluted earnings per share calculation for the three-month periods ending December 31, 2007 and 2006 is adjusted to add back interest expense and amortization of financing costs, net of tax, relating to the Company’s convertible senior notes totaling $1.2 million and $2.2 million, respectively. Net income for the diluted earnings per share calculation for the years ending December 31, 2007 and 2006 is adjusted to add back interest expense and amortization of financing costs, net of tax, relating to the Company’s convertible senior notes totaling $0.7 million and $4.7 million, respectively.

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EXTERRAN HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(Dollars in thousands)
                                         
    Three Months Ended     Year Ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2007     2007     2006     2007     2006  
Revenues:
                                        
North America contract operations
   $ 202,956     $ 148,986     $ 101,546     $ 551,140     $ 384,292  
International contract operations
     111,414       88,457       69,410       336,807       263,228  
Aftermarket services
     102,307       75,045       50,463       274,489       179,043  
Fabrication
     436,698       432,114       240,024       1,378,049       766,758  
 
                              
Total
   $ 853,375     $ 744,602     $ 461,443     $ 2,540,485     $ 1,593,321  
 
                              
 
                                        
Gross Margin (1):
                                        
North America contract operations
   $ 116,656     $ 84,405     $ 62,319     $ 318,902     $ 227,738  
International contract operations
     70,973       53,018       43,330       209,946       166,597  
Aftermarket services
     19,674       16,996       11,574       59,992       39,410  
Fabrication
     74,273       67,365       37,959       233,469       113,039  
 
                              
Total
   $ 281,576     $ 221,784     $ 155,182     $ 822,309     $ 546,784  
 
                              
 
                                        
Selling, General and Administrative
   $ 89,659     $ 71,191     $ 53,646     $ 265,057     $ 197,282  
% of Revenues
     11 %     10 %     12 %     10 %     12 %
 
                                        
EBITDA, as adjusted (1)
   $ 212,460     $ 165,909     $ 109,036     $ 621,139     $ 419,829  
% of Revenues
     25 %     22 %     24 %     24 %     26 %
 
                                        
Capital Expenditures
   $ 119,279     $ 90,714     $ 73,411     $ 352,190     $ 246,583  
Less: Proceeds from Sale of PP&E
     (6,463 )     (8,591 )     (54,942 )     (36,277 )     (78,415 )
 
                              
Net Capital Expenditures
   $ 112,816     $ 82,123     $ 18,469     $ 315,913     $ 168,168  
 
                              
 
                                        
Gross Margin Percentage:
                                        
North America contract operations
     57 %     57 %     61 %     58 %     59 %
International contract operations
     64 %     60 %     62 %     62 %     63 %
Aftermarket services
     19 %     23 %     23 %     22 %     22 %
Fabrication
     17 %     16 %     16 %     17 %     15 %
Total
     33 %     30 %     34 %     32 %     34 %
 
                                        
Reconciliation of GAAP to Non-GAAP Financial Information:
                                        
Income from continuing operations
   $ 58,494     $ (75,391 )   $ 30,122     $ 34,569     $ 85,722  
Depreciation and amortization
     85,822       66,040       49,657       252,716       175,927  
Fleet impairment
     —       61,945       —       61,945       —  
Impairment of investment in non-consolidated affiliate
     —       6,743       —       6,743       —  
Interest expense
     34,959       38,680       29,684       130,092       123,496  
Debt extinguishment costs
     —       70,150       —       70,150       5,902  
Merger and integration expenses
     9,326       34,008       —       46,723       —  
Minority interest
     3,880       2,426       —       6,307       —  
Provision (benefit) for income taxes
     19,979       (38,692 )     (427 )     11,894       28,782  
 
                              
EBITDA, as adjusted (1)
     212,460       165,909       109,036       621,139       419,829  
Selling, general and administrative
     89,659       71,191       53,646       265,057       197,282  
Equity in (income) loss of non-consolidated affiliates
     (5,541 )     5,005       (2,039 )     (12,498 )     (19,430 )
Less: Impairment of investment in non-consolidated affiliate
     —       (6,743 )     —       (6,743 )     —  
Other (income) expense
     (15,002 )     (13,578 )     (5,461 )     (44,646 )     (50,897 )
 
                              
Gross Margin (1)
   $ 281,576     $ 221,784     $ 155,182     $ 822,309     $ 546,784  
 
                              
 
                                        
 
  
December 31,
  
September 30,
  
December 31,
                
 
    
2007
      
2007
      
2006
                  
 
                                  
 
Debt
   $ 2,333,924     $ 2,246,063     $ 1,369,931                  
Stockholders’ Equity
   $ 3,162,260     $ 3,151,359     $ 1,014,282                  
Total Debt to Capitalization
     42.5 %     41.6 %     57.5 %                
 
(1)   Management believes disclosure of EBITDA, as adjusted, and Gross Margin, non-GAAP measures, provide 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.

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EXTERRAN HOLDINGS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(Horsepower in thousands; dollars in millions)
                         
    December 31,     September 30,          
    2007     2007          
Total Available Horsepower:
                        
North America contract operations
     4,514       4,475          
International contract operations
     1,447       1,442          
 
                    
Total
     5,961       5,917          
 
                    
 
                        
Total Operating Horsepower:
                        
North America contract operations
     3,632       3,719          
International contract operations
     1,306       1,290          
 
                    
Total
     4,938       5,009          
 
                    
 
                        
Horsepower Utilization:
                        
North America contract operations
     80 %     83 %        
International contract operations
     90 %     89 %        
Total
     83 %     85 %        
 
                        
 
  
December 31,
  
September 30,
  
December 31,
 
     2007       2007       2006  
 
                  
 
                        
Fabrication Backlog:
                        
Compression & accessory
   $ 322     $ 395     $ 325  
Production & processing
     788       720       483  
 
                  
Total
   $ 1,110     $ 1,115     $ 808  
 
                  

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EXTERRAN PARTNERS, L.P.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit amounts)
                                         
    Three Months Ended     Year Ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2007     2007     2006     2007     2006  
 
                                        
Revenue
   $ 36,575     $ 34,711     $ 13,465     $ 107,675     $ 13,465  
 
                                        
Costs and expenses:
                                        
Cost of sales (excluding depreciation)
     15,511       14,986       5,271       46,066       5,271  
Depreciation
     5,660       5,160       2,108       16,570       2,108  
Selling, general and administrative
     4,134       3,400       1,566       13,730       1,566  
Interest expense
     3,872       3,560       1,815       11,658       1,815  
Other (income) expense, net
     (4 )     (9 )     —       (22 )     —  
 
                              
Total costs and expenses
     29,173       27,097       10,760       88,002       10,760  
 
                              
Income before income taxes
     7,402       7,614       2,705       19,673       2,705  
Income tax (benefit) expense
     90       132       —       272       —  
 
                              
Net income
   $ 7,312     $ 7,482     $ 2,705     $ 19,401     $ 2,705  
 
                              
 
                                        
General partner interest in net income
   $ 205     $ 150     $ 54     $ 447     $ 54  
 
                              
 
                                        
Limited partner interest in net income
   $ 7,107     $ 7,332     $ 2,651     $ 18,954     $ 2,651  
 
                              
 
                                        
Weighted average limited partners’ units outstanding:
                                        
Basic
     16,679       16,285       4,810       14,604       4,810  
 
                              
 
                                        
Diluted
     16,753       16,334       4,811       14,702       4,811  
 
                              
 
                                        
Earnings per limited partner unit:
                                        
Basic
   $ 0.43     $ 0.45     $ 0.55     $ 1.30     $ 0.55  
 
                              
 
                                        
Diluted
   $ 0.42     $ 0.45     $ 0.55     $ 1.29     $ 0.55  
 
                              

8

 

EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(Dollars in thousands, except per unit amounts)
                                         
    Three Months Ended     Year Ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2007     2007     2006     2007     2006  
 
                                        
Revenue
   $ 36,575     $ 34,711     $ 13,465     $ 107,675     $ 13,465  
 
                                        
Gross Margin, as adjusted (1)
   $ 23,755     $ 22,581     $ 9,039     $ 70,249     $ 9,039  
 
                                        
EBITDA, as further adjusted (1)
   $ 20,122     $ 19,125     $ 7,277     $ 59,138     $ 7,277  
% of Revenue
     55 %     55 %     54 %     55 %     54 %
 
                                        
Capital Expenditures
   $ 8,585     $ 7,627     $ 332     $ 32,362     $ 332  
Proceeds from Sale of PP&E
     —       —       —       —       —  
 
                              
Net Capital Expenditures
   $ 8,585     $ 7,627     $ 332     $ 32,362     $ 332  
 
                              
 
                                        
Gross Margin percentage, as adjusted
     65 %     65 %     67 %     65 %     67 %
 
                                        
Distributable cash flow (2)
   $ 14,108     $ 13,505     $ 5,200     $ 40,529     $ 5,200  
 
                                        
Distributions per Limited Partner Unit
   $ 0.425     $ 0.40     $ 0.28     $ 1.53     $ 0.28  
Distribution to All Unitholders, including Incentive Distributions
   $ 7,292     $ 6,808     $ 3,588     $ 24,574     $ 3,588  
Distributable Cash Flow Coverage
     1.93x       1.98x       1.45x       1.65x       1.45x  
                                         
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2007     2007     2006     2007     2006  
 
                                        
Debt
   $ 217,000     $ 220,000     $ 125,000     $ 217,000     $ 125,000  
Total Partners’ Capital
   $ 145,799     $ 147,769     $ 69,457     $ 145,799     $ 69,457  
Total Debt to Capitalization
     60 %     60 %     64 %     60 %     64 %
Total Debt to Annualized EBITDA, as further adjusted (1)
     2.7x       2.9x       4.3x       0.9x       4.3x  
EBITDA, as further adjusted (1) to Interest Expense
     5.2x       5.4x       4.0x       5.1x       4.0x  
 
(1)   Management believes disclosure of EBITDA, as further adjusted, and Gross Margin, as adjusted, non-GAAP measures, provide 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 further adjusted, and Gross Margin, as adjusted, as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as further adjusted, is used by management as a valuation measure.
 
(2)   Distributable cash flow, a non-GAAP measure, is a significant liquidity metric used by management to compare basic cash flows generated by us to the cash distributions we expect to pay our partners. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions.

9

 

EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(Dollars in thousands)
                                         
    Three Months Ended     Year Ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2007     2007     2006     2007     2006  
Reconciliation of GAAP to Non-GAAP Financial Information:
                                        
 
                                        
Net income
   $ 7,312     $ 7,482     $ 2,705     $ 19,401     $ 2,705  
Income tax (benefit) expense
     90       132       —       272       —  
Depreciation
     5,660       5,160       2,108       16,570       2,108  
Cap on operating and selling, general and administrative costs provided by Exterran Holdings (“EXH”)
     2,687       2,847       526       8,901       526  
Non-cash selling, general and administrative costs
     501       792       123       3,184       123  
Non-recurring cash selling, general and administrative reimbursement (1)
     —       (848 )     —       (848 )     —  
Interest expense, net of interest income
     3,872       3,560       1,815       11,658       1,815  
 
                              
EBITDA, as further adjusted (2)
     20,122       19,125       7,277       59,138       7,277  
Cash selling, general and administrative costs (see note 1 below)
     3,633       2,608       1,762       10,546       1,762  
Less: cap on selling, general and administrative costs provided by EXH
     —       —       —       (283 )     —  
Plus: Non-recurring cash selling, general and administrative reimbursement (1)
     —       848       —       848       —  
 
                              
Gross Margin, as adjusted for operating cost caps provided by EXH (2)
   $ 23,755     $ 22,581     $ 9,039     $ 70,249     $ 9,039  
Less: Cash interest expense
     (3,643 )     (3,501 )     (1,771 )     (11,258 )     (1,771 )
Less: Cash selling, general and administrative, as adjusted for cost caps provided by EXH
     (3,633 )     (2,608 )     (1,762 )     (10,263 )     (1,762 )
Less: Income tax (expense) benefit
     (90 )     (132 )     —       (272 )     —  
Less: Maintenance capital expenditures
     (2,281 )     (1,987 )     (306 )     (7,079 )     (306 )
Less: Non-recurring cash selling, general and administrative reimbursement (1)
     —       (848 )     —       (848 )     —  
 
                              
Distributable cash flow (3)
   $ 14,108     $ 13,505     $ 5,200     $ 40,529     $ 5,200  
 
                              
 
                                        
Cash flows from operating activities
   $ 9,473     $ 11,305     $ 2,788     $ 34,358     $ 2,788  
Amortization of debt issuance cost
     (67 )     (59 )     (44 )     (238 )     (44 )
Cap on operating and selling, general and administrative costs provided by EXH
     2,687       2,847       526       8,901       526  
Interest expense, net of interest income
     3,872       3,560       1,815       11,658       1,815  
Cash interest expense
     (3,643 )     (3,501 )     (1,771 )     (11,258 )     (1,771 )
Maintenance capital expenditures
     (2,281 )     (1,987 )     (306 )     (7,079 )     (306 )
Change in current assets/liabilities
     4,067       2,314       2,192       5,035       2,192  
Change in non-current assets/liabilities
     —       (126 )     —       —       —  
Less: Non-recurring cash selling, general and administrative reimbursement (1)
     —       (848 )     —       (848 )     —  
 
                              
Distributable cash flow (3)
   $ 14,108     $ 13,505     $ 5,200     $ 40,529     $ 5,200  
 
                              
 
(1)   Consists of a cash reimbursement from Exterran Holdings of non-cash merger-related expenses incurred by Exterran Partners.
 
(2)   Management believes disclosure of EBITDA, as further adjusted, and Gross Margin, as adjusted, non-GAAP measures, provide 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 further adjusted, and Gross Margin, as adjusted, as supplemental measures to review current period operating performance, comparability measures and performance measures for period to period comparisons. In addition, EBITDA, as further adjusted, is used by management as a valuation measure.
 
(3)   Distributable cash flow, a non-GAAP measure, is a significant liquidity metric used by management to compare basic cash flows generated by us to the cash distributions we expect to pay our partners. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions.

10

 

EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(Horsepower in thousands)
                                         
    Three Months Ended     Year Ended  
    December 31,     September 30,     December 31,     December 31,     December 31,  
    2007     2007     2006     2007     2006  
 
                                        
Total Available Horsepower (at period end)
     723       703       343       723       343  
 
                              
 
                                        
Average Operating Horsepower
     667       632       330       496       330  
 
                              
 
                                        
Horsepower Utilization:
                                        
Spot (at period end)
     95 %     95 %     97 %     93 %     97 %
Average
     94 %     95 %     99 %     95 %     99 %
 
                                        
Combined U.S. Contract Operations Horsepower of Exterran Holdings and Exterran Partners covered by contracts converted to service agreements (at period end) (1)
     1,294       1,201       1,114       1,294       1,114  
 
                                        
Total Available U.S. Contract Operations Horsepower of Exterran Holdings and Exterran Partners (at period end) (1)
     4,403       4,365       2,069       4,403       2,069  
 
                                        
% of U.S. Contract Operations Horsepower of Exterran Holdings and Exterran Partners under Converted Contract Form (at period end) (1)
     29.4 %     27.5 %     53.8 %     29.4 %     53.8 %
 
(1)   Includes only horsepower of Universal Compression, Inc. at December 31, 2006.

11