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REPORTABLE SEGMENTS
 6 Months Ended
Jun. 30, 2012
REPORTABLE SEGMENTS  
REPORTABLE SEGMENTS

15.  REPORTABLE SEGMENTS

 

We manage our business segments primarily based upon the type of product or service provided. We have four reportable segments: North America contract operations, international contract operations, aftermarket services and fabrication. The North America and international contract operations segments primarily provide natural gas compression services, production and processing equipment services and maintenance services to meet specific customer requirements on Exterran-owned assets. The aftermarket services segment provides a full range of services to support the surface production, compression and processing needs of customers, from parts sales and normal maintenance services to full operation of a customer’s owned assets. The fabrication segment provides (i) design, engineering, fabrication, installation and sale of natural gas compression units and accessories and equipment used in the production, treating and processing of crude oil and natural gas and (ii) engineering, procurement and fabrication services primarily related to the manufacturing of critical process equipment for refinery and petrochemical facilities, the fabrication of tank farms and the fabrication of evaporators and brine heaters for desalination plants.

 

We evaluate the performance of our segments based on gross margin for each segment. Revenues include only sales to external customers. We do not include intersegment sales when we evaluate the performance of our segments.

 

The following table presents sales and other financial information by reportable segment for the three and six months ended June 30, 2012 and 2011 (in thousands):

 

Three months ended

 

North
America
Contract
Operations

 

International
Contract
Operations

 

Aftermarket
Services

 

Fabrication

 

Reportable
Segments
Total

 

June 30, 2012:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

148,564

 

$

112,628

 

$

101,902

 

$

267,641

 

$

630,735

 

Gross margin(1)

 

78,141

 

65,536

 

24,374

 

26,284

 

194,335

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

146,581

 

$

110,944

 

$

84,812

 

$

301,731

 

$

644,068

 

Gross margin(1)

 

72,675

 

61,178

 

7,165

 

32,379

 

173,397

 

 

Six months ended

 

North
America
Contract
Operations

 

International
Contract
Operations

 

Aftermarket
Services

 

Fabrication

 

Reportable
Segments
Total

 

June 30, 2012:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

299,152

 

$

225,414

 

$

191,547

 

$

529,863

 

$

1,245,976

 

Gross margin(1)

 

154,493

 

134,433

 

42,288

 

52,903

 

384,117

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

293,434

 

$

216,625

 

$

159,160

 

$

581,777

 

$

1,250,996

 

Gross margin(1)

 

141,240

 

125,893

 

16,851

 

73,134

 

357,118

 

 

(1)       Gross margin, a non-GAAP financial measure, is reconciled to net loss below.

 

We define gross margin 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 as it represents the results of revenue and cost of sales (excluding depreciation and amortization expense), which are key components of our operations. As an indicator of our operating performance, gross margin should not be considered an alternative to, or more meaningful than, net loss as determined in accordance with GAAP. Our gross margin may not be comparable to a similarly titled measure of another company because other entities may not calculate gross margin in the same manner.

 

The following table reconciles net loss to gross margin (in thousands):

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

Net loss

 

$

(166,898

)

$

(30,224

)

$

(159,611

)

$

(60,688

)

Selling, general and administrative

 

94,134

 

90,450

 

188,973

 

179,875

 

Depreciation and amortization

 

88,909

 

90,412

 

174,020

 

178,611

 

Long-lived asset impairment

 

128,543

 

2,063

 

132,665

 

2,063

 

Restructuring charges

 

1,266

 

—

 

4,313

 

—

 

Interest expense

 

36,968

 

34,586

 

74,959

 

71,756

 

Equity in income of non-consolidated affiliates

 

(4,728

)

—

 

(42,067

)

—

 

Other (income) expense, net

 

8,752

 

(2,853

)

2,657

 

(2,930

)

Benefit from income taxes

 

(35,502

)

(14,113

)

(35,845

)

(17,580

)

Loss from discontinued operations, net of tax

 

42,891

 

3,076

 

44,053

 

6,011

 

Gross margin

 

$

194,335

 

$

173,397

 

$

384,117

 

$

357,118