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Reportable Segments
 9 Months Ended
Sep. 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

 

September 30, 2013:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

153,046

 

$

117,545

 

$

102,157

 

$

403,255

 

$

776,003

 

Gross margin(1)

 

81,600

 

66,947

 

21,369

 

74,865

 

244,781

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2012:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

151,532

 

$

110,632

 

$

95,854

 

$

360,686

 

$

718,704

 

Gross margin(1)

 

76,315

 

64,372

 

20,061

 

49,932

 

210,680

 

 

Nine months ended

 

North
America
Contract
Operations

 

International
Contract
Operations

 

Aftermarket
Services

 

Fabrication

 

Reportable
Segments
Total

 

September 30, 2013:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

476,122

 

$

344,975

 

$

285,137

 

$

1,318,490

 

$

2,424,724

 

Gross margin(1)

 

261,462

 

198,163

 

60,967

 

206,128

 

726,720

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2012:

 

 

 

 

 

 

 

 

 

 

 

Revenue from external customers

 

$

450,684

 

$

336,046

 

$

287,401

 

$

890,549

 

$

1,964,680

 

Gross margin(1)

 

230,808

 

198,805

 

62,349

 

102,835

 

594,797

 

 

(1)         Gross margin, a non-GAAP financial measure, is reconciled, in total, to net income (loss), its most directly comparable measure calculated and presented in accordance with U.S. GAAP, 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
September 30,

 

Nine Months Ended
September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Net income (loss)

 

$

45,261

 

$

119,346

 

$

128,556

 

$

(40,265

)

Selling, general and administrative

 

93,723

 

85,536

 

269,819

 

274,509

 

Depreciation and amortization

 

81,305

 

85,248

 

244,702

 

259,268

 

Long-lived asset impairment

 

6,925

 

3,204

 

27,062

 

135,869

 

Restructuring charges

 

—

 

1,515

 

—

 

5,828

 

Interest expense

 

28,882

 

31,723

 

87,006

 

106,682

 

Equity in income of non-consolidated affiliates

 

(4,778

)

(4,793

)

(14,165

)

(46,860

)

Other (income) expense, net

 

(4,447

)

(1,450

)

(21,495

)

1,207

 

Provision for (benefit from) income taxes

 

15,421

 

1,267

 

54,421

 

(34,578

)

Income from discontinued operations, net of tax

 

(17,511

)

(110,916

)

(49,186

)

(66,863

)

Gross margin

 

$

244,781

 

$

210,680

 

$

726,720

 

$

594,797