HOUSTON, Aug. 7 /PRNewswire-FirstCall/ -- Universal Compression
Holdings, Inc. (NYSE:UCO) and Universal Compression Partners, L.P.
(NASDAQ:UCLP) today reported earnings for the second quarter of
2007. Universal Compression Holdings, Inc. Financial Results
Universal Compression Holdings reported net income of $25.2
million, or $0.81 per diluted share, in the three months ended June
30, 2007, including a charge of $4.8 million on a pretax basis for
merger-related expenses. Excluding this charge, earnings per
diluted share would have been $0.91 in the second quarter. Net
income was $14.3 million, or $0.46 per diluted share, in the three
months ended March 31, 2007, including a charge of $1.4 million on
a pretax basis for merger-related expenses. Excluding this charge,
earnings per diluted share would have been $0.49 in the first
quarter. Net income was $21.8 million, or $0.70 per diluted share,
in the comparable period of the prior year. Revenue was $334.6
million in the three months ended June 30, 2007, compared to $239.4
million in the three months ended March 31, 2007 and $218.7 million
in the prior year period. EBITDA, as adjusted (as defined below),
was $93.3 million in the three months ended June 30, 2007, as
compared to $72.3 million in the three months ended March 31, 2007
and $75.2 million in the comparable period of the prior year. "We
are pleased with our second quarter results which included record
levels of revenue, EBITDA, as adjusted, and earnings per share.
With continuing robust worldwide demand for our products and
services, each of our business segments recorded strong sequential
growth in revenue and profitability," commented Stephen A. Snider,
Universal Compression Holdings' Chairman, President and Chief
Executive Officer. "Our business outlook remains optimistic due to
favorable market conditions and company activity levels and the
expected benefits from our proposed merger with Hanover Compressor
Company." Merger Update Universal Compression Holdings and Hanover
have scheduled annual stockholder meetings for August 16, 2007 for
their respective stockholders to vote on, among other things, the
proposed merger of the two companies. A joint proxy
statement/prospectus was mailed to stockholders on or about July
13, 2007. Universal Compression Holdings and Hanover expect the
merger to close on or about August 20, 2007, if both companies'
shareholders have approved the merger and the other closing
conditions are satisfied as of that date. Subject to and effective
upon the closing of this merger, the combined new company will be
named Exterran Holdings, Inc. (expected trading symbol NYSE: EXH)
and Universal Compression Partners, L.P. will be renamed Exterran
Partners, L.P. (expected trading symbol Nasdaq: EXLP). Universal
Compression Partners, L.P. Financial Results Universal Compression
Partners reported revenue of $18.8 million and net income of $2.3
million in the three months ended June 30, 2007, compared to
revenue of $17.6 million and net income of $2.3 million in the
three months ended March 31, 2007. EBITDA, as further adjusted (as
defined below), totaled $10.4 million in the three months ended
June 30, 2007 compared to $9.5 million in the three months ended
March 31, 2007. Distributable cash flow (as defined below) totaled
$6.9 million in the three months ended June 30, 2007 compared to
$6.0 million in the three months ended March 31, 2007. Universal
Compression Partners commenced operations in October 2006 upon the
contribution of certain contract compression assets in the United
States from Universal Compression Holdings in connection with the
initial public offering of Universal Compression Partners. On July
30, 2007, Universal Compression Partners announced a cash
distribution of $0.35 per unit, which reflected the partnership's
minimum quarterly distribution. The distributable cash flow
generated in the second quarter is approximately 1.2 times the
amount of the cash distribution to unitholders, including
distributions owed to new units issued in early July to finance the
acquisition from Universal Compression Holdings described below.
Excluding the distributions owed for these new units, distributable
cash flow generated in the second quarter would have been
approximately 1.5 times the amount of cash distribution to
unitholders. "Universal Compression Partners experienced a strong
second quarter and generated significant distributable cash flow as
a result. Additionally, Universal Compression Partners completed
its previously announced acquisition from Universal Compression
Holdings of a fleet of compressor units totaling approximately
280,000 horsepower and associated customer contracts for
approximately $233 million in early July. As a result of this
acquisition, management expects to recommend to the board of
directors that it raise cash distributions for the third quarter by
approximately $0.0375 to $0.05 per unit, or approximately $0.15 to
$0.20 per unit on an annualized basis," commented Mr. Snider,
Chairman, President and Chief Executive Officer of Universal
Compression Partners' general partner. "The proposed merger of
Hanover and Universal Compression Holdings will result in a
combined company with a larger pool of contract compression assets
in the United States that can be offered for sale over time to the
partnership, further enhancing our growth prospects. Hanover
reported that it had approximately 2.4 million horsepower of
compression in the United States at June 30, 2007." Conference Call
Universal Compression Holdings and Universal Compression Partners
will host a joint conference call today, August 7, 2007, at 10:00
a.m. Central Time, 11:00 a.m. Eastern Time, to discuss the
quarter's results and certain other corporate matters. The
conference call will be broadcast live over the Internet to provide
interested persons the opportunity to listen. The call will also be
archived for approximately 90 days to provide an opportunity to
those unable to listen to the live broadcast. Both the live
broadcast and replay of the archived version are free of charge to
the user. Persons wishing to listen to the conference call live may
do so by logging onto http://www.universalcompression.com/ (click
UCO or UCLP "Investor Information" section) at least 15 minutes
prior to the start of the call. The replay of the call will be
available at the website http://www.universalcompression.com/. With
respect to Universal Compression Holdings, EBITDA, as adjusted, a
non-GAAP measure, is defined as net income plus income taxes,
interest expense (including debt extinguishment costs and gain on
termination of interest rate swaps), depreciation and amortization
expense, foreign currency gains or losses, merger related expenses,
minority interest, excluding non-recurring items (including
facility consolidation costs), and extraordinary gains or losses.
With respect to Universal Compression Partners, distributable cash
flow, a non-GAAP measure, is defined as net income plus income
taxes, depreciation and amortization expense, non-cash selling,
general and administrative expenses, interest expense and any
amounts by which cost of sales and selling, general and
administrative costs are reduced as a result of caps on these costs
contained in the omnibus agreement to which Universal Compression
Holdings and Universal Compression Partners are parties (the
"Omnibus Agreement"), which amounts are treated as capital
contributions from Universal Compression Holdings for accounting
purposes, less cash interest expense and maintenance capital
expenditures. With respect to Universal Compression Partners,
EBITDA, as further adjusted, a non-GAAP measure, is defined as net
income plus income taxes, interest expense, depreciation and
amortization expense, non-cash selling, general and administrative
expenses and any amounts by which cost of sales and selling,
general and administrative costs are reduced as a result of caps on
these costs contained in the Omnibus Agreement, which amounts are
treated as capital contributions from Universal Compression
Holdings for accounting purposes. With respect to Universal
Compression Holdings, Gross Margin, a non-GAAP measure, is defined
as total revenue less cost of sales (excluding depreciation and
amortization expense). With respect to Universal Compression
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
Universal Compression Holdings for accounting purposes.
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 the Private Securities Litigation Reform Act of 1995. 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
Universal Compression Holdings and Universal Compression Partners
(the "Companies"), which could cause the Companies' actual results
to differ materially from such statements. Forward-looking
information includes, but is not limited to, statements regarding:
the belief that the Companies will be able to continue to take
advantage of strong market conditions; the Companies' optimism
regarding business outlook; the existence of growth opportunities
for Universal Compression Partners' and the basis for those
opportunities; the expectation that Universal Compression Holdings
or Exterran will contribute assets to Universal Compression
Partners in the future; the ability of Universal Compression
Holdings and Hanover to complete their proposed merger; the
expected timing of the closing of the merger; and the expectation
that Universal Compression Partners' management will recommend to
its board of directors that cash distributions for the third
quarter be raised by approximately $0.0375 to $0.05 per unit, or
approximately $0.15 to $0.20 per unit on an annualized basis. 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 or Exterran's business.
Among the factors that could cause results to differ materially
from those indicated by such forward-looking statements are: the
failure to receive the approval of the merger by the shareholders
of Universal Compression Holdings and Hanover and satisfaction of
various other conditions to the closing of the merger contemplated
by their merger agreement; the failure to realize anticipated
synergies from the proposed merger; conditions in the oil and gas
industry, including a sustained decrease in the level of supply or
demand for natural gas and the impact on the price of natural gas;
employment workforce factors, including Universal Compression
Holdings' ability to hire, train and retain key employees;
Universal Compression Holdings' ability to timely and
cost-effectively obtain components necessary to conduct the
Companies' business; changes in political or economic conditions in
key operating markets, including international markets; the
Companies' ability to timely and cost-effectively implement their
enterprise resource planning systems; changes in safety and
environmental regulations pertaining to the production and
transportation of natural gas; 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 Universal
Compression Holdings' Annual Report on Form 10-K for the year ended
December 31, 2006, as amended by Amendment No. 1 thereto, and
Universal Compression Partners' Annual Report on Form 10-K for the
year ended December 31, 2006 and those set forth from time to time
in the Companies' filings with the Securities and Exchange
Commission ("SEC"), which are available through
http://www.universalcompression.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. Universal
Compression Holdings, headquartered in Houston, Texas, is a leading
natural gas compression services company, providing a full range of
contract compression, sales, operations, maintenance and
fabrication services to the domestic and international natural gas
industry. Universal Compression Partners was formed by Universal
Compression Holdings to provide natural gas contract compression
services to customers throughout the United States. Universal
Compression Holdings owns approximately 51% of Universal
Compression Partners. UNIVERSAL COMPRESSION HOLDINGS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in
thousands, except per share amounts) Three Months Ended June 30,
March 31, June 30, 2007 2007 2006 Revenue: Domestic contract
compression $103,596 $102,034 $101,460 International contract
compression 40,014 38,534 35,010 Fabrication 134,988 54,616 38,528
Aftermarket services 55,989 44,179 43,718 Total revenue 334,587
239,363 218,716 Costs and expenses: Cost of sales (excluding
depreciation and amortization expense): Domestic contract
compression 40,543 41,056 35,792 International contract compression
10,637 10,315 8,430 Fabrication 112,602 47,237 33,797 Aftermarket
services 41,262 34,436 36,359 Depreciation and amortization 35,792
34,863 30,013 Selling, general and administrative 36,802 35,741
29,461 Interest expense, net 14,063 14,039 14,605 Merger-related
expenses 4,792 1,373 -- Foreign currency (gain) loss (962) (693)
299 Minority interest 1,642 1,324 -- Other (income) expense, net
(518) (1,731) (360) Total costs and expenses 296,655 217,960
188,396 Income before income taxes 37,932 21,403 30,320 Income tax
expense 12,765 7,079 8,504 Net income $25,167 $14,324 $21,816
Weighted average common and common equivalent shares outstanding:
Basic 30,003 29,820 29,891 Diluted 31,182 30,881 31,040 Earnings
per share: Basic $0.84 $0.48 $0.73 Diluted $0.81 $0.46 $0.70
UNIVERSAL COMPRESSION HOLDINGS, INC. UNAUDITED SUPPLEMENTAL
INFORMATION (Dollars in thousands) Three Months Ended June 30,
March 31, June 30, 2007 2007 2006 Revenue: Domestic contract
compression $103,596 $102,034 $101,460 International contract
compre 40,014 38,534 35,010 Fabrication 134,988 54,616 38,528
Aftermarket services 55,989 44,179 43,718 Total $334,587 $239,363
$218,716 Gross Margin: Domestic contract compression $63,053
$60,978 $65,668 International contract compress 29,377 28,219
26,580 Fabrication 22,386 7,379 4,731 Aftermarket services 14,727
9,743 7,359 Total (1) $129,543 $106,319 $104,338 Selling, General
and Administrative $36,802 $35,741 $29,461 % of Revenue 11% 15% 13%
EBITDA, as adjusted (1) $93,259 $72,309 $75,237 % of Revenue 28%
30% 34% Capital Expenditures $72,019 $59,560 $59,402 Proceeds from
Sale of PP&E 3,814 3,690 4,070 Net Capital Expenditures $68,205
$55,870 $55,332 Gross Margin Percentage: Domestic contract
compression 61% 60% 65% International contract compression 73% 73%
76% Fabrication 17% 14% 12% Aftermarket services 26% 22% 17% Total
39% 44% 48% Reconciliation of GAAP to Non-GAAP Financial
Information: Net income $25,167 $14,324 $21,816 Income tax expense
12,765 7,079 8,504 Depreciation and amortization 35,792 34,863
30,013 Interest expense, net 14,063 14,039 14,605 Foreign currency
(gain) loss (962) (693) 299 Merger-related expenses 4,792 1,373 --
Minority interest 1,642 1,324 -- EBITDA, as adjusted (1) 93,259
72,309 75,237 Selling, general and administrative 36,802 35,741
29,461 Other (income) expense, net (518) (1,731) (360) Gross Margin
(1) $129,543 $106,319 $104,338 June 30, March 31, June 30, 2007
2007 2006 Debt and Capital Lease Obligations $872,997 $856,582
$898,855 Stockholders' Equity $986,075 $935,856 $904,308 Total Debt
to Capitalization 47.0% 47.8% 49.8% (1) Management believes
disclosure of EBITDA, as adjusted, and Gross Margin, non-GAAP
measures, provide useful information to investors because, when
viewed with our GAAP results and accompanying reconciliations, they
provide a more complete understanding of our performance than GAAP
results alone. Management uses EBITDA, as adjusted, and Gross
Margin as supplemental measures to review current period operating
performance, comparability measures and performance measures for
period to period comparisons. In addition, EBITDA, as adjusted, is
used by management as a valuation measure. UNIVERSAL COMPRESSION
HOLDINGS, INC. UNAUDITED SUPPLEMENTAL INFORMATION (Horsepower in
thousands) Three Months Ended June 30, March 31, June 30, 2007 2007
2006 Total Available Horsepower (at period end): Domestic contract
compression 2,147 2,098 1,989 International contract compression
614 608 595 Total 2,761 2,706 2,584 Average Operating Horsepower:
Domestic contract compression 1,825 1,822 1,794 International
contract compression 556 552 549 Total 2,381 2,374 2,343 Horsepower
Utilization: Spot (at period end) 87.1% 87.7% 90.2% Average 87.3%
88.3% 91.1% Fabrication Backlog (in millions) $223 $280 $275
UNIVERSAL COMPRESSION PARTNERS, L.P. UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS (Dollars in thousands) Three Months Ended
June 30, March 31, 2007 2007 Revenue $18,804 $17,585 Costs and
expenses: Cost of sales (excluding depreciation and amortization
expense) 7,573 7,018 Depreciation 2,968 2,782 Selling, general and
administrative 3,915 3,259 Interest expense, net 2,093 2,133 Other
(income) expense, net (3) (6) Total costs and expenses 16,546
15,186 Income before income taxes 2,258 2,399 Income tax (benefit)
expense (6) 56 Net income $2,264 $2,343 General partner interest in
net income $45 $47 Limited partner interest in net income $2,219
$2,296 Weighted average limited partners' units outstanding: Basic
12,650 12,650 Diluted 12,709 12,671 Earnings per limited partner
unit: Basic $0.18 $0.18 Diluted $0.17 $0.18 UNIVERSAL COMPRESSION
PARTNERS, L.P. UNAUDITED SUPPLEMENTAL INFORMATION (Dollars in
thousands, except per unit amounts) Three Months Ended June 30,
March 31, 2007 2007 Revenue $18,804 $17,585 Gross Margin, as
adjusted (1) $12,908 $11,974 EBITDA, as further adjusted (1)
$10,411 $9,480 % of Revenue 55% 54% Capital Expenditures $10,071
$6,079 Proceeds from Sale of PP&E -- -- Net Capital
Expenditures $10,071 $6,079 Gross Margin percentage, as adjusted
69% 68% Reconciliation of GAAP to Non-GAAP Financial Information:
Net income $2,264 $2,343 Income tax (benefit) expense (6) 56
Depreciation 2,968 2,782 Cap on operating and selling, general and
administrative costs provided by Universal Compression Holdings
("UCO") 1,789 1,578 Non-cash selling, general and administrative
costs 1,303 588 Interest expense, net 2,093 2,133 EBITDA, as
further adjusted (1) 10,411 9,480 Cash selling, general and
administrative costs 2,612 2,671 Less: cap on selling, general and
administrative costs provided by UCO (1) (112) (171) Other income,
net (3) (6) Gross Margin, as adjusted for operating cost caps
provided by UCO (1) $12,908 $11,974 Less: Cash interest expense
(2,085 (2,077) Less: Cash selling, general and administrative, as
adjusted for cost caps provided by UCO (1) (2,500) (2,500) Less:
Maintenance capital expenditures (1,438) (1,373) Distributable cash
flow (2) $6,885 $6,024 Distributions per Unit $0.35 $0.35
Distribution to All Unitholders $5,957 $4,518 Distributable Cash
Flow Coverage 1.16x 1.33x June 30, March 31, 2007 2007 Debt
$121,000 $125,000 Total Partners' Capital $74,861 $71,064 Total
Debt to Capitalization 61.8% 63.8% Total Debt to Annualized EBITDA,
as further adjusted UCO (1) 2.9x 3.3x EBITDA, as further adjusted
(1) to Interest Expense 5.0x 4.4x (1) Management believes
disclosure of EBITDA, as further adjusted, and Gross Margin, as
adjusted, non-GAAP measures, provide useful information to
investors because, when viewed with our GAAP results and
accompanying reconciliations, they provide a more complete
understanding of our performance than GAAP results alone.
Management uses EBITDA, as further adjusted, and Gross Margin, as
adjusted, as supplemental measures to review current period
operating performance, comparability measures and performance
measures for period to period comparisons. In addition, EBITDA, as
further adjusted, is used by management as a valuation measure. (2)
Distributable cash flow, a non-GAAP measure, is a significant
liquidity metric used by management to compare basic cash flows
generated by us to the cash distributions we expect to pay our
partners. Using this metric, management can quickly compute the
coverage ratio of estimated cash flows to planned cash
distributions. UNIVERSAL COMPRESSION PARTNERS, L.P. UNAUDITED
SUPPLEMENTAL INFORMATION (Horsepower in thousands) Three Months
Ended June 30, March 31, 2007 2007 Total Available Horsepower (at
period end) 387 358 Average Operating Horsepower 348 331 Horsepower
Utilization: Spot (at period end) 92.7% 93.4% Average 93.1% 94.8%
Combined Domestic Contract Compression Horsepower of Universal
Compression Holdings and Universal Compression Partners covered by
contracts converted to service agreements 1,194 1,154 Total
Available Domestic Contract Compression Horsepower of Universal
Compression Holdings and Universal Compression Partners (at period
end): 2,147 2,098 % of Domestic Contract Compression Horsepower of
Universal Compression Holdings and Universal Compression Partners
under Converted Contract Form 55.6% 55.0%
http://www.newscom.com/cgi-bin/prnh/20061130/DATH005LOGO
http://www.newscom.com/cgi-bin/prnh/20011008/UCOLOGO
http://photoarchive.ap.org/ DATASOURCE: Universal Compression
Holdings, Inc. CONTACT: David Oatman, Vice President, Investor
Relations of Universal Compression, +1-713-335-7460 Web site:
http://www.universalcompression.com/
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