24. Addendum I-A
EBITDA, as further adjusted, a non-GAAP measure, is defined as net income (loss) (a) excluding income taxes, interest expense (including debt
extinguishment costs and gain or loss on termination of interest rate swaps), depreciation and amortization expense, impairment charges,
restructuring charges, expensed acquisition costs, other charges and non-cash selling, general and administrative (“SG&A”) costs (b) plus the
amounts reimbursed to us by Exterran Holdings as a result of caps on cost of sales and SG&A costs provided 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
Distributable cash flow, a non-GAAP measure, is defined as net income (loss) (a) plus depreciation and amortization expense, impairment charges,
restructuring charges, expensed acquisition costs, non-cash SG&A costs, interest expense and any amounts reimbursed to us by Exterran Holdings as
a result of the caps on cost of sales and SG&A costs provided in the Omnibus Agreement, which amounts are treated as capital contributions from
Exterran Holdings for accounting purposes, (b) less cash interest expense (excluding amortization of deferred financing fees, amortization of debt
discount and non-cash transactions related to interest rate swaps) and maintenance capital expenditures, and (c) excluding gains/losses on asset
sales and other charges.
Gross margin, a non-GAAP measure, is defined as total revenue less cost of sales (excluding depreciation and amortization expense). Gross margin is
included as a supplemental disclosure because it is a primary measure used by our management to evaluate the results of revenue and cost of sales
(excluding depreciation and amortization expense), which are key components of our operations.
NON-GAAP FINANCIAL MEASURES – EXLP
23
25. NON-GAAP FINANCIAL MEASURES – EXLP (CONT.)
Addendum I-B
1See Addendum I-A for information on gross margin, EBITDA, as further adjusted, and distributable cash flow
2Consists of a cash reimbursement from Exterran Holdings of non-cash merger-related expenses incurred by Exterran Partners
3Defined as distributable cash flow divided by distributions declared to all unit holders for the period, including incentive distributions rights24
($ in thousands) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10
Net income (loss) 2,343$ 2,264$ 7,482$ 7,312$ 6,547$ 6,079$ 9,411$ 7,810$ 6,721$ 2,738$ 2,008$ 3,317$ 1,426$ (1,345)$ 83$ (23,497)$
Depreciation and amortization 2,782 2,968 5,160 5,660 5,674 5,811 7,542 8,026 8,334 8,678 9,042 10,398 11,878 11,763 13,697 15,180
Long-lived asset impairment - - - - - - - - - 2,995 - 156 231 - 93 24,652
Restructuring charges - - - - - - - - - - - - - - - -
Selling, general and administrative 2,770 3,426 3,400 4,134 3,001 4,745 2,423 5,916 6,001 5,551 4,961 7,713 7,695 8,519 8,504 10,112
Interest expense 2,133 2,093 3,560 3,872 3,801 3,445 4,967 5,826 4,819 4,805 5,039 5,640 5,692 5,724 6,020 6,601
Other (income) expense, net (6) (3) (9) (4) (10) (1,129) - (291) 27 - 324 (1,559) (236) (170) 333 (241)
Provision for (benefit from) income taxes 56 (6) 132 90 111 111 147 186 149 134 141 117 173 173 172 162
Gross margin (1) 10,078 10,742 19,725 21,064 19,124 19,062 24,490 27,473 26,051 24,901 21,515 25,782 26,859 24,664 28,902 32,969
Cap on operating costs provided by Exterran Holdings ("EXH") 1,407 1,677 2,847 2,687 3,574 3,499 3,573 1,834 2,653 1,452 1,985 1,156 2,794 5,715 7,078 5,817
Cap on selling, general and administrative costs provided by EXH 171 112 - - - - 16 104 - - - 552 - 661 692 1,963
Non-cash selling, general and administrative costs 588 1,303 792 501 (546) 1,368 (2,962) 52 90 275 190 256 190 258 212 549
Expensed acquisition costs (in Other (income) expense, net) - - - - - - - - - - 324 452 - - 356 -
Plus: Non-recurring cash selling, general and administrative reimbursement (2) - - (848) - - - - - - - - - - - - -
Less: Selling, general and administrative (2,770) (3,426) (3,400) (4,134) (3,001) (4,745) (2,423) (5,916) (6,001) (5,551) (4,961) (7,713) (7,695) (8,519) (8,504) (10,112)
Less: Other income (expense), net 6 3 9 4 10 1,129 - 291 (27) - (324) 1,559 236 170 (333) 241
EBITDA, as further adjusted (1) 9,480 10,411 19,125 20,122 19,161 20,313 22,694 23,838 22,766 21,077 18,729 22,044 22,384 22,949 28,403 31,427
Less: (Provision for) benefit from income taxes (56) 6 (132) (90) (111) (111) (147) (186) (149) (134) (141) (117) (173) (173) (172) (162)
Less: Gain on sale of compression equipment (in Other (income) expense, net) - - - - - (1,119) - (316) - - - (2,011) (247) (170) (8) (242)
Less: Cash interest expense (2,077) (2,085) (3,501) (3,643) (3,696) (3,286) (4,835) (5,750) (4,686) (4,677) (4,915) (5,420) (5,420) (5,451) (5,747) (4,469)
Less: Maintenance capital expenditures (1,373) (1,438) (1,987) (2,281) (1,334) (1,758) (2,914) (3,446) (4,705) (3,552) (3,040) (1,289) (2,147) (4,365) (3,204) (6,182)
Distributable cash flow (1) 5,974$ 6,894$ 13,505$ 14,108$ 14,020$ 14,039$ 14,798$ 14,140$ 13,226$ 12,714$ 10,633$ 13,207$ 14,397$ 12,790$ 19,272$ 20,372$
Distributions declared to all unitholders for the period, including incentive
distribution rights 3,585$ 5,957$ 6,808$ 7,292$ 7,290$ 8,346$ 9,264$ 9,264$ 9,271$ 9,277$ 9,277$ 11,580$ 11,589$ 11,589$ 15,732$ 16,003$
Distributable cash flow coverage (3) 1.67x 1.16x 1.98x 1.93x 1.92x 1.68x 1.60x 1.53x 1.43x 1.37x 1.15x 1.14x 1.24x 1.10x 1.23x 1.27x
Distributable cash flow coverage (Exlcluding cost caps) (3) 1.23x 0.86x 1.57x 1.57x 1.43x 1.26x 1.21x 1.32x 1.14x 1.21x 0.93x 0.99x 1.00x 0.55x 0.73x 0.79x
($ in thousands) 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
Net income (loss) 223$ (1,938)$ 3,253$ 4,515$ 4,505$ (19,050)$ 10,380$ 14,674$ 14,733$ 27,896$ 10,035$ 11,359$ 6,939$
Depreciation and amortization 14,149 15,459 19,087 19,235 20,362 22,788 21,930 23,218 22,706 27,030 27,158 26,817 27,921
Long-lived asset impairment - 305 384 371 805 28,122 - 633 1,540 925 784 2,101 2,486
Restructuring charges - - - - - - - - - - - - 379
Selling, general and administrative 10,216 9,927 10,594 8,643 12,222 13,450 11,762 12,455 12,607 15,203 16,948 17,213 19,376
Interest expense 7,075 7,553 7,860 7,912 5,882 6,399 6,465 6,421 7,424 10,299 9,735 9,610 9,689
Other (income) expense, net (221) 455 (338) (288) 527 (261) (137) (164) (407) (7,270) (639) (1,165) 871
Provision for (benefit from) income taxes 235 256 242 185 281 277 272 115 407 561 309 229 182
Gross margin (1) 31,677 32,017 41,082 40,573 44,584 51,725 50,672 57,352 59,010 74,644 64,330 66,164 67,843
Cap on operating costs provided by Exterran Holdings ("EXH") 6,877 8,349 6,193 5,073 5,323 3,511 5,841 1,886 3,503 1,729 3,212 3,938 2,536
Cap on selling, general and administrative costs provided by EXH 2,252 1,851 1,802 - 2,482 2,810 1,090 1,815 1,854 2,368 4,164 4,412 3,620
Expensed acquisition costs (in Other (income) expense, net) - 514 - - 695 - - - 575 - - 246 1,544
Non-cash selling, general and administrative costs 364 153 (207) 222 345 140 172 140 253 335 285 301 756
Plus: Non-recurring cash selling, general and administrative reimbursement (2) - - - - - - - - - - - - -
Less: Selling, general and administrative (10,216) (9,927) (10,594) (8,643) (12,222) (13,450) (11,762) (12,455) (12,607) (15,203) (16,948) (17,213) (19,376)
Less: Other income (expense), net 221 (455) 338 288 (527) 261 137 164 407 7,270 639 1,165 (871)
EBITDA, as further adjusted (1) 31,175 32,502 38,614 37,513 40,680 44,997 46,150 48,902 52,995 71,143 55,682 59,013 56,052
Less: (Provision for) benefit from income taxes (235) (256) (242) (185) (281) (277) (272) (115) (407) (561) (309) (229) (182)
Less: Gain on sale of compression equipment (in Other (income) expense, net) (212) (115) (319) (273) (174) (244) (127) (144) (935) (7,249) (614) (1,342) (673)
Less: Cash interest expense (4,207) (4,652) (4,951) (5,012) (5,208) (5,718) (5,905) (5,930) (6,198) (9,036) (8,802) (8,774) (8,838)
Less: Maintenance capital expenditures (5,457) (8,454) (7,382) (7,568) (8,117) (11,416) (10,345) (8,490) (8,349) (9,558) (12,675) (10,819) (10,216)
Distributable cash flow (1) 21,064$ 19,025$ 25,720$ 24,475$ 26,900$ 27,342$ 29,501$ 34,223$ 37,106$ 44,739$ 33,282$ 37,849$ 36,143$
Distributions declared to all unitholders for the period, including incentive
distribution rights 16,243$ 19,061$ 19,322$ 19,581$ 22,480$ 22,762$ 23,044$ 23,331$ 27,598$ 27,927$ 28,340$ 28,840$ 33,093$
Distributable cash flow coverage (3) 1.30x 1.00x 1.33x 1.25x 1.20x 1.20x 1.28x 1.47x 1.34x 1.60x 1.17x 1.31x 1.09x
Distributable cash flow coverage (Exlcluding cost caps) (3) 0.73x 0.46x 0.92x 0.99x 0.85x 0.92x 0.98x 1.31x 1.15x 1.46x 0.91x 1.02x 0.91x
26. 1As of June 4, 2014
2Based on general partner cash distributions declared for the period from January 1, 2014 through March 31, 2014
3Source: Wells Fargo Securities; median 2014E Price / distributable cash flow at 5/16/2014 for General Partner (C-Corp) peer group (Kinder Morgan Inc.,
ONEOK Inc., Targa Resources Corp., and Williams Companies Inc. )
Addendum II
($ millions, except EXLP unit price)
25
ESTIMATED VALUE OF EXH OWNERSHIP POSITION IN EXLP
Q1 2014
EXLP LP Units Owned by EXH1
19.6
EXLP Unit Price1
$27.46
LP Value $538.7
Annualized EXLP GP Cash Distributions2
$12.5
Peer Multiple3
25.0x
GP Value $312.5
Total Estimated EXH Value Attributable to EXLP $851.2