EX-99.1 2 exhibit99_1.htm PRESS RELEASE exhibit99_1.htm
Exhibit 99.1
 
Exterran Holdings and Exterran Partners Report
Third Quarter 2008 Results

HOUSTON, November 6, 2008 – Exterran Holdings, Inc. (NYSE: EXH) and Exterran Partners, L.P. (NASDAQ: EXLP) today reported financial results for the third quarter 2008.

Exterran Holdings, Inc. Financial Results

Exterran Holdings reported net income for the third quarter 2008 of $37.0 million, or $0.56 per share, compared to net income for the second quarter 2008 of $21.7 million, or $0.33 per share, and a net loss for the third quarter 2007 of $75.4 million, or a $1.55 loss per share.

Revenue was $796.0 million for the third quarter 2008 compared to $812.2 million for the second quarter 2008 and $744.6 million for the third quarter 2007.  EBITDA, as adjusted (as defined below), was $192.8 million for the third quarter 2008 compared to $166.1 million for the second quarter 2008 and $165.9 million for the third quarter 2007.  

The merger of Hanover Compressor Company and Universal Compression Holdings, Inc. was completed on August 20, 2007, and periods prior to the merger reflect only Hanover’s results.  Third quarter 2008 results included pretax charges that totaled $4.7 million, or $0.04 per share, including $3.7 million for merger and integration related expenses and $1.0 million for asset impairment charges related to units lost or damaged in Hurricane Ike.  Second quarter 2008 results included pretax charges of $33.3 million, or $0.30 per share, including $31.8 million for estimated cost overruns in the fabrication segment and $1.5 million for merger and integration expenses.  Third quarter 2007 results included pretax charges related to merger, integration and refinancing activities and asset impairment charges that totaled $179.9 million, or $2.37 per share.  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.

Stephen A. Snider, Exterran Holdings’ Chief Executive Officer said, “Our overall operating performance in the third quarter improved despite challenges in our markets, as demonstrated by sequential increases in gross margin contribution in each of our North America contract operations, international contract operations and fabrication segments.  We continue to experience good demand for our products and services and an ongoing backlog of new business for our contract operations and sale activities.

“While we are optimistic about the long-term prospects for our business, many of our North American customers have announced or are currently considering reductions in their 2009 capital spending, which may have a negative impact on the demand for our products and services.   Nevertheless, we continue to believe there is potential for increased demand for outsourced compression and other services, and our service infrastructure and fleet position us well to capture that demand.  Further, we continue to see positive developments in the international sector and we again added new business to our contract operations backlog in the third quarter, which now stands at more than $135 million of annualized revenues.”
 
J. Michael Anderson, Senior Vice President and Chief Financial Officer, added, "With our healthy financial position, we are well positioned to fund existing capital projects and take advantage of growth opportunities.  We expect cash generated by our operations to sustain our maintenance and growth capital expenditures for the foreseeable future.  In addition, we have significant unused availability under our credit facilities to fund short-term needs and other activities.”
 
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Exterran Holdings repurchased 1,087,038 shares of its common stock during the third quarter at an average price of $45.94 per share for a total of approximately $50 million. Including the repurchases made in late 2007, Exterran Holdings has now repurchased approximately $150 million of its common stock under its $200 million share repurchase program.
 
Exterran Partners, L.P. Financial Results

Exterran Partners reported revenue of $44.4 million for the third quarter 2008 compared to $35.0 million for the second quarter 2008 and $34.7 million for the third quarter 2007.  Net income was $9.4 million for the third quarter 2008 compared to $6.1 million for the second quarter 2008 and $7.5 million for the third quarter 2007.  EBITDA, as further adjusted (as defined below), totaled $22.7 million for the third quarter 2008 compared to $20.3 million for the second quarter 2008 and $19.1 million for the third quarter 2007.  Distributable cash flow (as defined below) totaled $14.8 million for the third quarter 2008 compared to $14.0 million for the second quarter 2008 and $13.5 million for the third quarter 2007.

“Third quarter highlights for Exterran Partners included strong cash flow generation as well as the completion of the acquisition of an additional 254,000 horsepower from Exterran Holdings on July 30,” commented Mr. Snider, Chairman and Chief Executive Officer of Exterran Partners’ general partner.  “Exterran Partners’ outlook remains positive due to its financial position and continuing relationship with Exterran Holdings.”

On October 28, 2008, Exterran Partners announced a cash distribution of $0.4625 per limited partner unit for the third quarter 2008, compared to $0.425 per limited partner unit for the second quarter 2008 and $0.40 per limited partner unit for the third quarter 2007.  The third quarter 2008 per unit distribution is 15.6 percent higher than that for the third quarter of 2007 and reflects the contribution of the additional contract operations assets Exterran Partners purchased from 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 their third quarter 2008 earnings release:
 
 
·  
Teleconference: Thursday, November 6, 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 888-727-7721. International participants should dial 913-312-0381 at least 10 minutes before the scheduled start time. Please reference Exterran conference call number 3429588.
 
 
·  
Live Webcast: The webcast will be available in listen-only mode via the Companies’ 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, November 6, until 1:00 p.m. Eastern Time on Thursday, November 13, 2008. To listen to the replay, please dial 888-203-1112 in the United States and Canada, or 719-457-0820 internationally, and enter access code 3429588.
 
*****
 
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With respect to Exterran Holdings, EBITDA, as adjusted, a non-GAAP measure, is defined as net income 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, EBITDA, as further adjusted, a non-GAAP measure, is defined as net income plus income taxes, interest expense, depreciation and amortization 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 Partners, distributable cash flow, a non-GAAP measure, is defined as net income plus depreciation and amortization 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 gains/losses on asset sales and 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 and amortization 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 Holdings and Exterran Partners
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.

Exterran Partners, L.P. was formed by Exterran Holdings to provide natural gas contract operations services to customers throughout the United States.  Exterran Holdings indirectly owns a majority interest in 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, many of which are outside the control of Exterran Holdings and Exterran Partners (the “Companies”), which could cause actual results to differ materially from such statements. Forward-looking information includes, but is not limited to: Exterran Holdings’ expectation of continuing healthy market conditions for the remainder of 2008; the ability of Exterran Holdings to experience attractive returns from its North America and international contract operations backlog; 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, including demand arising from an increased interest in outsourcing services; the expected benefits to Exterran Partners from its relationship with Exterran Holdings; and the Companies’ expected ability to fund operations, capital expenditures and growth opportunities.

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 future performance or results of their 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 the Companies and their customers; changes in master limited partnership equity markets and overall financial markets that impact the effect of the drop-down of additional assets to Exterran Partners; changes in tax laws that impact master limited partnerships, including drop-downs of additional assets to Exterran Partners; conditions in the oil and gas industry, including a sustained decrease in the level of supply or demand for oil and natural gas and the impact on the price of oil and 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; changes in safety and environmental regulations pertaining to the production and transportation of oil and 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’ Annual Report on Form 10-K for the year ended December 31, 2007, as amended by Amendment No. 1 thereto, Exterran Partners’ Annual Report on Form 10-K for the year ended December 31, 2007, and those set forth from time to time in the Companies’ 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 (281) 836-7035
Media: Pat (Patricia) Wente (281) 836-7308

 (Tables Follow)

 
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EXTERRAN HOLDINGS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
                   
                   
      Three Months Ended  
   
September 30,
   
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
Revenues:
                 
North America contract operations
  $ 197,926     $ 194,607     $ 148,986  
International contract operations
    135,153       125,854       88,457  
Aftermarket services
    98,275       97,706       75,045  
Fabrication
    364,608       394,044       432,114  
      795,962       812,211       744,602  
                         
Costs and expenses:
                       
       Cost of sales (excluding depreciation and amortization expense):
                 
    North America contract operations
    84,440       86,303       64,581  
    International contract operations
    53,884       48,128       35,439   
    Aftermarket services
    78,306       76,681       58,049  
    Fabrication
    292,978       355,284       364,749  
Selling, general and administrative
    94,533       95,339       71,191  
Merger and integration expenses
    3,728       1,543       34,008  
Early extinguishment of debt
    -       -       70,150  
Depreciation and amortization
    94,286       92,415       66,040  
Fleet impairment
    1,000       -       61,945  
Interest expense
    33,364       30,105       38,680  
Equity in (income) loss of non-consolidated affiliates
    (6,657 )     (6,962 )     5,005  
Other (income) expense, net
    5,689       (8,612 )     (13,578 )
      735,551       770,224       856,259  
Income (loss) before income taxes and minority interest
    60,411       41,987       (111,657 )
Provision (benefit) for income taxes
    20,350       17,084       (38,692 )
Minority interest, net of taxes
    3,028       3,243       2,426  
Net income (loss)
  $ 37,033     $ 21,660     $ (75,391 )
Earnings (loss) per share - (1):
                       
Basic
  $ 0.57     $ 0.33     $ (1.55 )
Diluted (2)
  $ 0.56     $ 0.33     $ (1.55 )
Weighted average common and equivalent shares outstanding (1):
                 
Basic
    64,940       65,217       48,771  
Diluted
    68,537       65,904       48,771  
                         
(1) Adjusted for the Hanover common share conversion ratio in the merger of Hanover and Universal for the period ended September 30, 2007.
 
 
(2) Net income for the diluted earnings per share calculation for the three-month periods ending September 30, 2008, June 30, 2008 and September 30, 2007 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, zero and zero, respectively.
 

 
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EXTERRAN HOLDINGS, INC.
 
UNAUDITED SUPPLEMENTAL INFORMATION
 
(Dollars in thousands)
 
                   
                   
    Three Months Ended  
   
September 30,
 
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
Revenues:
                 
North America contract operations
  $ 197,926     $ 194,607     $ 148,986  
International contract operations
    135,153       125,854       88,457  
Aftermarket services
    98,275       97,706       75,045  
Fabrication
    364,608       394,044       432,114  
    Total
  $ 795,962     $ 812,211     $ 744,602  
                         
Gross Margin (1):
                       
North America contract operations
  $ 113,486     $ 108,304     $ 84,405  
International contract operations
    81,269       77,726       53,018  
Aftermarket services
    19,969       21,025       16,996  
Fabrication
    71,630       38,760       67,365  
    Total
  $ 286,354     $ 245,815     $ 221,784  
                         
Selling, General and Administrative
  $ 94,533     $ 95,339     $ 71,191  
    % of Revenues
    12 %     12 %     10 %
                         
EBITDA, as adjusted (1)
  $ 192,789     $ 166,050     $ 165,909  
    % of Revenues
    24 %     20 %     22 %
                         
Capital Expenditures (2)
  $ 119,831     $ 153,664     $ 90,714  
Less: Proceeds from Sale of PP&E
    (18,418 )     (23,724 )     (8,591 )
Net Capital Expenditures
  $ 101,413     $ 129,940     $ 82,123  
                         
Gross Margin Percentage:
                       
North America contract operations
    57 %     56 %     57 %
International contract operations
    60 %     62 %     60 %
Aftermarket services
    20 %     22 %     23 %
Fabrication
    20 %     10 %     16 %
Total
    36 %     30 %     30 %
                         
Reconciliation of GAAP to Non-GAAP Financial Information:
         
Net income (loss)
  $ 37,033     $ 21,660     $ (75,391 )
Depreciation and amortization
    94,286       92,415       66,040  
Fleet impairment
    1,000       -       61,945  
Impairment of investment in non-consolidated affiliates
    -       -       6,743  
Early extinguishment of debt
    -       -       70,150  
Interest expense
    33,364       30,105       38,680  
Merger and integration expenses
    3,728       1,543       34,008  
Minority interest
    3,028       3,243       2,426  
Provision (benefit) for income taxes
    20,350       17,084       (38,692 )
EBITDA, as adjusted (1)
    192,789       166,050       165,909  
Selling, general and administrative
    94,533       95,339       71,191  
Equity in (income) loss of non-consolidated affiliates
    (6,657 )     (6,962 )     5,005  
Impairment of investment in non-consolidated affiliates
    -       -       (6,743 )
Other (income) expense
    5,689       (8,612 )     (13,578 )
Gross Margin (1)
  $ 286,354     $ 245,815     $ 221,784  
                         
                         
   
September 30,
 
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
                         
Debt
  $ 2,467,773     $ 2,273,087     $ 2,246,063  
Stockholders' Equity
    3,239,237       3,239,728       3,151,359  
Capitalization
  $ 5,707,010     $ 5,512,815     $ 5,397,422  
Total Debt to Capitalization
    43.2 %     41.2 %     41.6 %
                         
(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. 
 
 
(2) Excludes $108.4 million to acquire EMIT Water Discharge Technology, LLC during the three months ended September 30, 2008.
 

 
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EXTERRAN HOLDINGS, INC.
 
UNAUDITED SUPPLEMENTAL INFORMATION
 
(Horsepower in thousands; dollars in millions)
 
                   
                   
   
September 30,
   
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
Total Available Horsepower (at period end):
                 
North America contract operations
    4,540       4,504       4,475  
International contract operations
    1,478       1,456       1,442  
    Total
    6,018       5,960       5,917  
                         
Total Operating Horsepower (at period end):
                       
North America contract operations
    3,452       3,472       3,719  
International contract operations
    1,359       1,367       1,290  
    Total
    4,811       4,839       5,009  
                         
Horsepower Utilization (at period end):
                       
North America contract operations
    76 %     77 %     83 %
International contract operations
    92 %     94 %     89 %
    Total
    80 %     81 %     85 %
                         
                         
   
September 30,
   
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
Fabrication Backlog:
                       
Compression & accessory
  $ 359     $ 327     $ 395  
Production & processing
    732       821       720  
    Total
  $ 1,091     $ 1,148     $ 1,115  

 
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EXTERRAN PARTNERS, L.P.
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(in thousands, except per unit amounts)
 
                   
                   
                   
   
Three Months Ended
 
   
September 30,
 
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
                   
Revenue
  $ 44,390     $ 34,999     $ 34,711  
                         
Costs and expenses:
                       
Cost of sales (excluding depreciation and amortization)
    19,900       15,937       14,986  
Depreciation and amortization
    7,542       5,811       5,160  
Selling, general and administrative
    2,423       4,745       3,400  
Interest expense     4,967       3,445       3,560  
Other (income) expense, net      -       (1,129     (9
    Total costs and expenses
    34,832       28,809       27,097  
Income before income taxes
    9,558       6,190       7,614  
Income tax expense
    147       111       132  
Net income
  $ 9,411     $ 6,079     $ 7,482  
                         
General partner interest in net income
  $ 432     $ 186     $ 150  
                         
Limited partner interest in net income
  $ 8,979     $ 5,893     $ 7,332  
                         
Weighted average limited partners units outstanding:
         
Basic
    18,305       16,679       16,285  
                         
Diluted
    18,320       16,779       16,334  
                         
Earnings per limited partner unit:
                       
Basic
  $ 0.49     $ 0.35     $ 0.45  
                         
Diluted
  $ 0.49     $ 0.35     $ 0.45  

 
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EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(Dollars in thousands, except per unit amounts)
                   
                   
                   
   
Three Months Ended
   
September 30,
   
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
                   
Revenue
  $ 44,390     $ 34,999     $ 34,711  
                         
Gross Margin, as adjusted (1)
  $ 28,063     $ 22,561     $ 22,572  
                         
EBITDA, as further adjusted (1)
  $ 22,694     $ 20,313     $ 19,116  
    % of Revenue
    51 %     58 %     55 %
                         
Capital Expenditures
  $ 4,390     $ 7,503     $ 7,627  
Less: Proceeds from Sale of Compression Equipment
    -       (5,275 )     -  
Net Capital Expenditures
  $ 4,390     $ 2,228     $ 7,627  
                         
Gross Margin percentage, as adjusted
    63 %     64 %     65 %
                         
Distributable cash flow (2)
  $ 14,798     $ 14,039     $ 13,496  
                         
Distributions per Limited Partner Unit
  $ 0.4625     $ 0.425     $ 0.40  
Distribution to All Unitholders, including Incentive Distributions
  $ 9,264     $ 8,346     $ 6,808  
Distributable Cash Flow Coverage
    1.60 x     1.68 x     1.98 x
                         
   
September 30,
   
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
                         
Debt
  $ 399,750     $ 217,000     $ 220,000  
Total Partners' Capital
    175,151       151,214       147,769  
Capitalization
  $ 574,901     $ 368,214     $ 367,769  
Total Debt to Capitalization
    70 %     59 %     60 %
EBITDA, as further adjusted (1) to Interest Expense
    4.6 x     5.9 x     5.4 x
                         
(1) Management believes disclosure of EBITDA, as further adjusted, and Gross Margin, as adjusted, 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 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.
 
 

 
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EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(Dollars in thousands)
                   
                   
                   
   
Three Months Ended
   
September 30,
   
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
                   
Reconciliation of GAAP to Non-GAAP Financial Information:
                 
                   
Net income
  $ 9,411     $ 6,079     $ 7,482  
Income tax expense
    147       111       132  
Depreciation and amortization
    7,542       5,811       5,160  
Cap on operating and selling, general and administrative
                       
              costs provided by Exterran Holdings ("EXH")
    3,589       3,499       2,847  
Non-cash selling, general and administrative costs
    (2,962 )     1,368       792  
Non-recurring cash selling, general and administrative reimbursement (1)
    -       -       (848 )
Interest expense, net of interest income
    4,967       3,445       3,551  
EBITDA, as further adjusted (2)
    22,694       20,313       19,116  
Cash selling, general and administrative costs
    5,385       3,377       2,608  
Plus: Non-recurring cash selling, general and administrative reimbursement (1)
    -       -       848  
Less: cap on selling, general and administrative costs provided by EXH
    (16 )     -       -  
Less: other income, expense, net
    -       (1,129 )     -  
Gross Margin, as adjusted for operating cost caps provided by EXH (2)
  $ 28,063     $ 22,561     $ 22,572  
Other income, expense, net
    -       1,129       -  
Less: Gain on sale of compression equipment
    -       (1,119 )     -  
Less: Cash interest expense
    (4,835 )     (3,286 )     (3,501 )
Less: Cash selling, general and administrative, as adjusted for
                 
              cost caps provided by EXH
    (5,369 )     (3,377 )     (2,608 )
Less: Income tax expense
    (147 )     (111 )     (132 )
Less: Maintenance capital expenditures
    (2,914 )     (1,758 )     (1,987 )
Less: Non-recurring cash selling, general and administrative reimbursement (1)
    -       -       (848 )
Distributable cash flow (3)
  $ 14,798     $ 14,039     $ 13,496  
                         
                         
Cash flows from operating activities
  $ 10,311     $ 11,824     $ 11,305  
Amortization of debt issuance cost
    (94 )     (88 )     (59 )
Amortization of fair value of acquired interest rate swaps
    (38 )     (71 )     -  
Cap on operating and selling, general and administrative costs provided by EXH
    3,589       3,499       2,847  
Interest expense, net of interest income
    4,967       3,445       3,551  
Cash interest expense
    (4,835 )     (3,286 )     (3,501 )
Maintenance capital expenditures
    (2,914 )     (1,758 )     (1,987 )
Change in assets and liabilities
    3,812       474       2,188  
Less: Non-recurring cash selling, general and administrative reimbursement (1)
    -       -       (848 )
Distributable cash flow (3)
  $ 14,798     $ 14,039     $ 13,496  
                         
                         
(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, 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 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.
 

 
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EXTERRAN PARTNERS, L.P.
UNAUDITED SUPPLEMENTAL INFORMATION
(Horsepower in thousands)
                   
                   
   
Three Months Ended
   
September 30,
   
June 30,
   
September 30,
 
   
2008
   
2008
   
2007
 
                   
Total Available Horsepower (at period end)
    1,017       742       703  
                         
Total Operating Horsepower (at period end)
    909       651       664  
                         
Average Operating Horsepower
    816       652       632  
                         
Horsepower Utilization:
                       
Spot (at period end)
    89 %     88 %     95 %
Average         89     89     95
                         
Combined U.S. Contract Operations Horsepower of Exterran Holdings
                 
and Exterran Partners covered by contracts converted to service
                 
    agreements (at period end)
    1,716       1,624       1,201  
                         
Total Available U.S. Contract Operations Horsepower of Exterran Holdings
                 
    and Exterran Partners (at period end)
    4,428       4,393       4,365  
                         
% of U.S. Contract Operations Horsepower of Exterran Holdings
                 
and Exterran Partners covered by contracts converted to service
                 
    agreements (at period end)
    38.8 %     37.0 %     27.5 %
                         

 
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