Good morning. Welcome to the Exterran Holdings, Inc. and Exterran Partners, L.P. First Quarter 2014 Earnings Call. At this time, I'd like to inform you this conference is being recorded. [Operator Instructions] Earlier today, Exterran Holdings and Exterran Partners released their financial results for the first quarter of 2014. If you have not received a copy, you can find the information on the company's website at exterran.com. During today's call, Exterran Holdings may be referred to as Exterran or EXH, and Exterran Partners as either Exterran Partners or EXLP. Because EXLP's financial results and position are consolidated into Exterran, the discussion of Exterran will include Exterran Partners unless otherwise noted. Also, the term international will be used to refer to Exterran's operations outside of the U.S. and Canada, and the combination of U.S. and Canada will be referred to as North America. I want to remind listeners that the news release issued this morning by Exterran Holdings and Exterran Partners, the company's prepared remarks on this conference call and the related question-and-answer session include forward-looking statements. These forward-looking statements include projections and expectations of the company's performance and represent the company's current beliefs. Various factors could cause results to differ materially from those projected in the forward-looking statements. Information concerning the risk factors, challenges and uncertainties that could cause actual results to differ materially from those in the forward-looking statements can be found in the company's press releases, as well as in the Exterran Holdings Annual Report on Form 10-K for the year ended December 31, 2013; Exterran Partners' Annual Report on Form 10-K for the year ended December 31, 2013; and those set forth from time to time in Exterran Holdings' and Exterran Partners' filings with the Securities and Exchange Commission, which are currently available at exterran.com. Except as required by law, the companies expressly disclaim any intention or obligation to revise or update any forward-looking statements. Your host for this morning's call is Brad Childers, President and CEO. I would now like to turn the call over to him. Mr. Childers, you may begin your conference.

Great. Thank you, operator, and good morning, everyone. With me today is David Miller, Vice President of Finance for Exterran and CFO of Exterran Partners. As we usually do, we'll provide a review of both Exterran Holdings and Exterran Partners before we open the call up for questions. I'll review our operating highlights, business development and market direction and Dave will provide a detailed summary of Exterran Holdings' financial performance, as well as Exterran Partners' financial performance. Starting first with Exterran Holdings. Exterran had a good first quarter. We generated a solid performance across all of our business segments. The most notable outperformance came from our fabrication operations, which produced gross margins of 20% for the quarter. Our North America contract operations business continued to demonstrate positive trends in horsepower growth. In our international contract operations business, we booked significant horsepower additions and we see a substantial opportunity set to drive future growth. And in our AMS business, we maintained strong margins in a seasonally slow quarter. Underlying the solid performance and strong profit margins in all of our businesses has been our ability to maintain and continue to drive improvement through the profitability improvement work that we started 2 years ago, that we continue to work on and that continues to yield better results. Building on our solid operational performance, we completed 2 strategic moves that we believe will add value to our stockholders. First, Exterran Partners announced and recently closed the acquisition of high-quality compression assets from MidCon Compression. This is an important transaction for us and I'll talk more about this in the Exterran Partners part of my comments today. Second, Exterran Holdings declared and paid its first regular quarterly dividend and we recently announced the payment date of our second dividend payment, which will be paid…

Thanks, Brad. I'll provide a summary of the results for Holdings first and then Partners. I'll discuss the segment results and then I'll give guidance for the second quarter. EXH generated EBITDA as adjusted of $145 million for the first quarter of 2014 as compared to $154 million in the fourth quarter of 2013 and $146 million in the prior-year period. We also reported diluted net income from continuing operations attributed to Exterran common stockholders, excluding items of $0.20 per share in the first quarter. That compares with $0.18 in the fourth quarter and $0.21 per share in the prior-year period. Now turning to segment results. Our North American contract operations revenue came in at $157 million in the first quarter, slightly higher than last quarter, as we increased working horsepower by 17,000 in the quarter. Gross margin was 55% in the quarter, in line with the fourth quarter and the prior-year period. In the second quarter, we expect revenue to increase to the upper $170 million level, driven primarily by the contribution from the MidCon acquisition and gross margin percentage to be in the mid-50% range. We expect to see further benefits from ongoing field initiatives to improve the operating efficiency of our North America contract operations business, beginning in the second half of this year. Maintenance capital spending was $15 million in North America during the first quarter as compared to $16 million in the fourth quarter of 2013, and $19 million in the prior-year period. We expect maintenance capital spending in the second quarter to be somewhat higher than the first quarter levels. In looking at the international contract operations business in the first quarter, revenue came in at $111 million. Somewhat lower than expected as we experienced further delays in the projects in Brazil that Brad…

Thanks, David. As a final note, in connection with Bill Austin's retirement last quarter, we started the search for a new CFO and the process is going well. At a deference for the candidates that we're speaking to and support a good process, we're not saying anything more about the candidates and the timing, other than to state that we expect a successful conclusion of our search in the next few months. Operator, at this point, we'd like to open up the call for questions.

[Operator Instructions] And our first question is from Mike Urban of Deutsche Bank.

The -- so a little bit of progress in terms of operating horsepower in North America, but a continuation of a trend that's been out there for quite a while where you're seeing net returns over declines in conventional and dry gas plays. You've talked about some -- I don't know if green cheeks is the right word on that front. Last quarter, although we're not necessarily seeing a lot of new gas drilling, with what gas prices have done, I would at least think those shutdowns and those returns would be slowing. Any indication that, that's happening or when that might bottom out?

Actually, we have seen a subtle, a slight slowdown in our stop activity, but I wouldn't make much of it yet. We're not talking about it, for that reason. We really haven't seen enough of a change in the approach and the investment levels in the dry gas plays, to see a trend. So although we have actually seen a modest decrease in some of our stop activity, it's not enough to really make much of it yet, Mike.

Okay. And then on the fabrication business, you talked about, I think, it was a project that you're maybe bidding on at Belleli that was delayed. Any idea when that might get award and what the kind of the scope or size of that might be?

Well, we mentioned it, so we do expect this is an award that will come through. Rather than talk specifically about just the Belleli project, however, what I would try to emphasize, as I tried to on the call, is our overall backlog of projects that we're bidding on, and fabrication is really a nice book of business. And we expect to achieve a good bookings result in Q2 inclusive of that project. So pretty excited about what the business is going to go and what we're going to see for bookings in Q2. Is what I'd like to say, Mike.

Okay, that's helpful. Then last question for me, again sticking with fabrication business. Nice improvement in the profitability there, even adjusting for some what seemed like a one-off type items or true-ups from prior periods. How does that business fit in longer term, strategically? I mean is it something you need to be in? Is it helpful for you? Are there synergies there? Or as the profitability of that business improves, there is something else you could look to do with that?

Yes, the thing that excites us most in the near-term is to continue to drive improvement, both on the business levels that we can achieve and certainly the profitability that we can bring in that business. It has been a strategic fit. As the infrastructure build-out in North America continues as well as the amount of business activity that we're seeing in international continues, we're pretty excited about what we can do with that business in the near term. And so that's what -- the way we look at it in our portfolio today, it looks like it's going to do well. And we did have good performance, I'll just highlight the few one-timers that you saw in the quarter. Number one, it's nice to see positive one-timers rather than negative one-timers in that business, which is traditionally a very lumpy business. But that was on the base of really nice results that our team's driven -- that our team drove in the quarter, on which that additional margin got built with a couple of special items.

Our next question is from Blake Hutchinson of Howard Weil.

I guess, going back to your commentary around -- and bullishness on the North American compression market here, despite the fact that the dry gas putbacks have kind of continued, you noted that your net growth for the quarter might prove modest compared to the future periods over the year. What have we -- what's happened here in terms of an inflection point? Is it the market kind of coming back to some of your core regions? Are we seeing some of the smaller vendors kind of fill up and Exterran kind of acting as a swing producer? Is there something more than meets the eye? Or just -- what are we seeing unfold here that we've reached this inflection point, considering we've had kind of a tough time in the first half of the year, putting net horsepower out there in the last couple of years?

The main driver is just the activity level that we're seeing in a few of the plays. Those include the Eagle Ford, the Permian and Mid-Continent, as well as in a few of the other plays, including the Niobrara, the Mississippi Lime and even the Marcellus. We just see a lot of activity and we are doing a good job of capturing market in the areas that we are strong. But we see good activity levels across the market. And we see that we're winning well in a few of the areas that are really our strongest markets. I think it's more a general level of activity and an improved capture rate, improved operating capability that we are experiencing in our business that's helping to drive the growth. I think it's the intersection of those 2 points more than it has to do with anything going on within the competitors.

Okay. And then your bullishness for the year, in terms of order flow is, obviously, an extension of that, and we'll probably see more North American-based compression running through fabrication, and just to help square that with your margin guidance, I guess, I had thought of the compressor fabrication as being maybe a bit below par in terms of overall fabrication margins. Has that changed? Have you made headway in terms of standardization of product? And how should we think of just the compressor fabrication business as plus or minus? Kind of your guidance here on the margin side in fabrication.

Yes, look, Blake, it's a really interesting question. And it's a good question. Because what we do see in our fabrication results is definitely driven, in large part, by product mix. And compression has typically not been one of the higher-margin products in the mix. So I understand that you'd expect that to be pulling margins down. But what we're seeing in the overall product mix is a lower level and a more profitable level of installation activity. That's a big part of what we're achieving in product mix. And also, with compression, even though it does remain on the lower side of what we can get from a profitability perspective out of our fabricated products, that has improved and moved up based on a lot of the improvements that we've driven internally. And so it's a bigger contributor to our profitability in fabrication than it has been for the prior couple of years.

Okay. Great. And then just finally, on the restructuring charge, should this represent -- as it relates to physically what's going on at the field level, does that represent kind of most of what you wanted to do in terms of helping open up back half margins? Or is there still a little bit more in process?

There's definitely more in process. What this really was, was a major move by us to rationalize the make-ready capacity and location of our make-ready work that we do in the field. So this is a good contribution to improving our system and driving some cost out. But, no, this was just one step. We are continuing to work to improve profitability in North America through other initiatives.

Our next question is from Sharon Lui of Wells Fargo.

Just wondering if you could maybe talk about the utilization of the MidCon assets, and whether the horsepower rate is pretty much in line with your existing fleet.

By rate, Sharon, just a clarification, are you referring to the pricing?

Correct.

Okay. So look, the assets that we bought are highly utilized, and the rate that we have those operating in is very comparable, it's very much market pricing, very comparable to what we have in our fleet already at the same competitive horsepower range and application.

Okay. And then on this cost side, is there any opportunities to streamline?

Yes. What we -- one of the things that made this acquisition so attractive from a financial perspective and from a platform is that we get to bring this horsepower and these operations right on top of or right next to the existing infrastructure that we have in the field. So we do believe that with increased density on our operations and having so much horsepower operated in an area, that we can use that as one of the other tools we have to continue to improve our cost base.

Okay. And just curious if you had the opportunity to acquire the assets in the northeast that eventually went to Access?

No, those assets and that transaction was one that was negotiated between Access and Chesapeake and MidCon and it was not a transaction that we were involved in.

[Operator Instructions] And our next question is from Glenn Primack of PEAK6.

I'm just wondering if you're still exposed to FPSO projects within your fabrication division? And if so, do you expect increased bidding activity there this year?

Sure. We are still exposed. We are actively participating in the FPSO business. Although from an overall product mix, it's a very modest contributor to our activity levels in fabrication overall. And candidly, we have seen increased bidding activity in the FPSO business. In particular, there is a building market of projects that are being worked right now, targeted at West Africa. So the answer is yes. But its contribution to our overall fabrication business is modest.

We have no further questions. I will now turn the call back over to Brad Childers.

Great. Thanks, everybody, for your interest in Exterran Holdings and Exterran Partners. We look forward to talking to you following our second quarter. Thanks very much.

Thanks.