News Release

HOUSTON--(BUSINESS WIRE)--Feb. 23, 2012-- Exterran Holdings, Inc. (NYSE:EXH) and Exterran Partners, L.P. (NASDAQ:EXLP) today reported financial results for the fourth quarter and full year 2011.

Exterran Holdings, Inc. Financial Results

Net loss from continuing operations attributable to Exterran stockholders for the fourth quarter 2011 was $8.6 million, or $0.14 per diluted share, excluding a $48.6 million valuation allowance recorded against the deferred tax asset in Brazil and pretax charges totaling $12.2 million principally comprised of restructuring charges. Net loss from continuing operations attributable to Exterran stockholders for the fourth quarter 2011 included pretax income of $13.8 million related to non-income tax based tax receivables in Brazil that we determined were realizable. The valuation allowance did not impact our cash flows, liquidity position, or compliance with debt covenants. Net loss from continuing operations attributable to Exterran stockholders, excluding charges, for the third quarter 2011 was $30.4 million, or $0.48 per diluted share, and net loss from continuing operations attributable to Exterran stockholders, excluding charges, for the fourth quarter 2010 was $32.0 million, or $0.51 per diluted share.

Exterran Holdings reported a net loss attributable to Exterran stockholders for the fourth quarter 2011 of $66.6 million, or $1.06 per diluted share, compared to a net loss attributable to Exterran stockholders for the third quarter 2011 of $216.0 million, or $3.44 per diluted share, and a net loss attributable to Exterran stockholders for the fourth quarter 2010 of $118.0 million, or $1.90 per diluted share.

Revenue was $702.9 million for the fourth quarter 2011, compared to $704.5 million for the third quarter 2011 and $615.8 million for the fourth quarter 2010. EBITDA, as adjusted (as defined below), was $118.8 million for the fourth quarter 2011, compared to $99.7 million for the third quarter 2011 and $99.3 million for the fourth quarter 2010.

“Exterran Holdings recorded improved operating performance and increased fabrication backlog levels in the fourth quarter. We continue to see solid demand in North America, particularly in liquids rich and shale gas areas, although uncertainties remain due to relatively low natural gas prices. International markets remain challenging, however we are encouraged by our recently announced contract awards in the Middle East, Bolivia and Mexico,” said Brad Childers, Exterran Holdings’ President and Chief Executive Officer.

“As was the case last year, the first quarter of 2012 is expected to be the low point of the year with revenues expected to be somewhat lower than first-quarter 2011 levels. We are implementing several initiatives to improve our profitability and cash flow and to reduce Exterran parent debt levels over the remainder of 2012 and beyond. We are committed to improving our overall performance and creating value for our stockholders.”

Profit Improvement Program

To enhance its competitive position, in 2011 Exterran embarked on a multi-year plan to improve the profitability of its operations. Exterran’s profitability initiatives are expected to benefit all of its business segments and geographies. As the largest provider of compression services in the world, Exterran intends to use its scale to achieve meaningful cost savings in its operations which it believes will provide better value to its customers. Exterran is also focused on increasing productivity and optimizing its processes in its core lines of business. By making its systems and processes more efficient, Exterran expects to lower its internal costs of doing business and improve its profitability.

As an initial step in implementing a profit improvement plan, in the fourth quarter of 2011 Exterran implemented a workforce cost reduction program across all of its business segments. A vast majority of the identified workforce reductions were completed in the fourth quarter 2011. Exterran is expected to generate annual savings from the workforce cost reduction program of approximately $20 million to $25 million, with approximately $10 million to $15 million of those savings within selling, general and administrative expense. Restructuring charges incurred during the fourth quarter 2011 and full year 2011 totaled $8.7 million and $11.6 million, respectively, related to consulting services and termination benefits. Exterran Holdings is currently expected to incur additional charges with respect to the profit improvement initiative of approximately $3.1 million in 2012.

Exterran Partners, L.P. Financial Results

Exterran Partners reported revenue of $83.3 million for the fourth quarter 2011, compared to $84.4 million for the third quarter 2011 and $68.4 million for the fourth quarter 2010. Net income was $4.5 million for the fourth quarter 2011, or $0.10 per diluted limited partner unit, compared to net income of $3.3 million, or $0.06 per diluted limited partner unit, for the third quarter 2011, and a net loss of $23.5 million, or $0.73 per diluted limited partner unit, for the fourth quarter 2010.

Exterran Partners’ EBITDA, as further adjusted (as defined below), totaled $37.5 million for the fourth quarter 2011, compared to $38.6 million for the third quarter 2011 and $31.4 million for the fourth quarter 2010. Distributable cash flow (as defined below) totaled $24.5 million for the fourth quarter 2011, compared to $25.7 million for the third quarter 2011 and $20.4 million for the fourth quarter 2010.

“Exterran Partners continued its solid operating performance during the fourth quarter including increased operating horsepower of 25,000. We increased our cash distribution for the sixth consecutive quarter, and distributable cash flow covered distributions by 1.25 times. We remain committed to our growth strategies and increasing distributions to unitholders over time,” said Childers, Chairman, President and Chief Executive Officer of Exterran Partners’ managing general partner.

For the fourth quarter of 2011, Exterran Partners’ quarterly cash distribution was $0.4925 per limited partner unit, or $1.97 per limited partner unit on an annualized basis. The fourth-quarter 2011 distribution was $0.005 higher than the third-quarter 2011 distribution of $0.4875 per limited partner unit and $0.02 higher than the fourth-quarter 2010 distribution of $0.4725 per limited partner unit.

The cash distribution Exterran Holdings received for the fourth quarter 2011 based upon its limited partner and general partner interests in Exterran Partners was approximately $7.4 million.

Conference Call Details

Exterran Holdings, Inc. (NYSE: EXH) and Exterran Partners, L.P. (NASDAQ: EXLP) announce the following schedule and teleconference information for their fourth-quarter 2011 earnings release:

• Teleconference: Thursday, Feb. 23, 2012 at 11:00 a.m. Eastern Time, 10:00 a.m. Central Time. To access the call, United States and Canadian participants should dial 800-446-1671. International participants should dial +1-847-413-3362 at least 10 minutes before the scheduled start time. Please reference Exterran conference call number 31600114.
• 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 2:00 p.m. Eastern Time on Thursday, Feb. 23, 2012, until 2:00 p.m. Eastern Time on Thursday, Mar. 1, 2012. To listen to the replay, please dial 888-843-7419 in the United States and Canada, or +1-630-652-3042 internationally, and enter access code 31600114#.

*****

With respect to Exterran Holdings, EBITDA, as adjusted, a non-GAAP measure, is defined as loss 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, non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations, merger and integration expenses, restructuring charges and other charges. In the third quarter of 2011, the definition of EBITDA, as adjusted, was revised to add back non-cash gains or losses from foreign currency exchange rate changes recorded on intercompany obligations. This adjustment was made as management uses the resulting EBITDA, as adjusted, as a supplemental measure to review current period operating performance. In addition, this adjustment is similar to the EBITDA definition used for credit facility covenant calculations. This change was also made to prior periods included herein for comparative purposes.

With respect to Exterran Partners, EBITDA, as further adjusted, a non-GAAP measure, is defined as net income (loss) 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, other charges, and non-cash selling, general and administrative (“SG&A”) costs and any amounts by which cost of sales and SG&A 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.

With respect to Exterran Partners, distributable cash flow, a non-GAAP measure, is defined as net income (loss) plus depreciation and amortization expense, impairment charges, non-cash SG&A costs, interest expense and any amounts by which cost of sales and SG&A 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, less cash interest expense (excluding amortization of deferred financing fees and costs incurred to early terminate interest rate swaps) and maintenance capital expenditures, and excluding gains/losses on asset sales and other charges.

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 has approximately 10,000 employees and operates in approximately 30 countries.

Exterran Partners, L.P. provides natural gas contract operations services to customers throughout the United States. Exterran Holdings owns an equity interest in Exterran Partners, including all of the general partner interest.

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 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: the Companies’ operational and financial strategies and ability to successfully effect those strategies; the Companies’ expectations regarding future economic and market conditions; 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; statements related to the profit improvement program, including the expected benefits, profitability improvements, savings, restructuring charges and timing; and Exterran Partners’ commitment to growing and increasing distributions.

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 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; changes in safety, health, environmental and other regulations; 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, 2010, Exterran Partners’ Annual Report on Form 10-K for the year ended December 31, 2010, 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.

Source: Exterran Holdings, Inc. and Exterran Partners, L.P.

Exterran
Investors:
David Oatman, 281-836-7035
Media:
Susan Moore, 281-836-7398