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Reportable Segments
 6 Months Ended
Jun. 30, 2013
Reportable Segments  
Reportable Segments

14.  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 related to the manufacturing of critical process equipment for refinery and petrochemical facilities, the fabrication of tank farms and evaporators and brine heaters for desalination plants.

 

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

 

The following tables present revenue and other financial information by reportable segment (in thousands):

 

Three months ended

 

North
America
Contract
Operations

 

International
Contract
Operations

 

Aftermarket
Services

 

Fabrication

 

Reportable
Segments
Total

 

June 30, 2013:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

163,645

 

$

117,872

 

$

99,368

 

$

456,459

 

$

837,344

 

Gross margin(1)

 

92,484

 

67,857

 

21,432

 

74,886

 

256,659

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Six months ended

 

North
America
Contract
Operations

 

International
Contract
Operations

 

Aftermarket
Services

 

Fabrication

 

Reportable
Segments
Total

 

June 30, 2013:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

323,076

 

$

227,430

 

$

182,980

 

$

915,235

 

$

1,648,721

 

Gross margin(1)

 

179,862

 

131,216

 

39,598

 

131,263

 

481,939

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(1)         Gross margin, a non-GAAP financial measure, is reconciled to net income (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 to evaluate 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 income (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 income (loss) to gross margin (in thousands):

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Net income (loss)

 

$

24,504

 

$

(166,898

)

$

83,295

 

$

(159,611

)

Selling, general and administrative

 

91,117

 

94,134

 

176,096

 

188,973

 

Depreciation and amortization

 

80,751

 

88,909

 

163,397

 

174,020

 

Long-lived asset impairment

 

16,574

 

128,543

 

20,137

 

132,665

 

Restructuring charges

 

—

 

1,266

 

—

 

4,313

 

Interest expense

 

30,250

 

36,968

 

58,124

 

74,959

 

Equity in income of non-consolidated affiliates

 

(4,722

)

(4,728

)

(9,387

)

(42,067

)

Other (income) expense, net

 

(7,239

)

8,752

 

(17,048

)

2,657

 

Provision for (benefit from) income taxes

 

23,849

 

(35,502

)

39,000

 

(35,845

)

(Income) loss from discontinued operations, net of tax

 

1,575

 

42,891

 

(31,675

)

44,053

 

Gross margin

 

$

256,659

 

$

194,335

 

$

481,939

 

$

384,117