SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2022

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 18. SEGMENT INFORMATION

We manage our business segments primarily based on the type of product or service provided. We have two segments: contract operations and aftermarket services. Our contract operations segment primarily provides natural gas compression services to meet specific customer requirements. Our aftermarket services segment provides a full range of services to support the compression needs of customers, from parts sales and normal maintenance services to full operation of a customer’s owned assets. All of our operations are located in the U.S.

We evaluate the performance of our segments based on gross margin, defined as revenue less cost of sales (excluding depreciation and amortization) for each segment. Segment revenue includes only sales to external customers.

Summarized financial information for our reporting segments is shown below:

	Contract		Aftermarket
	Operations		Services		Total
Three months ended September 30, 2022
Revenue	$	170,497	$	43,171	$	213,668
Gross margin		98,803		7,338		106,141
Three months ended September 30, 2021
Revenue	$	158,911	$	36,255	$	195,166
Gross margin		97,631		5,603		103,234
Nine months ended September 30, 2022
Revenue	$	500,451	$	126,246	$	626,697
Gross margin		295,901		20,065		315,966
Nine months ended September 30, 2021
Revenue	$	488,810	$	97,402	$	586,212
Gross margin		304,778		13,477		318,255

The following table reconciles total gross margin to income before income taxes:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Total gross margin	$	106,141	$	103,234	$	315,966	$	318,255
Less:
Selling, general and administrative		30,500		28,839		85,964		80,000
Depreciation and amortization		39,953		45,280		124,348		135,185
Long-lived and other asset impairment		4,154		5,121		16,217		15,154
Restructuring charges		—		313		—		1,953
Interest expense		25,177		25,508		74,879		82,711
Gain on sale of assets, net		(12,695)		(15,393)		(33,755)		(29,549)
Other (income) expense, net		(585)		337		(52)		(1,634)
Income before income taxes	$	19,637	$	13,229	$	48,365	$	34,435