Greg Rosenstein - VP, IR Andrew Way - President & CEO David Barta - SVP & CFO.

Joseph Gibney - Capital One Blake Hancock - Howard Weil John Watson - Simmons James Spicer - Wells Fargo.

Greetings, and welcome to the Exterran Corporation Second Quarter 2017 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Greg Rosenstein, Vice President, Investor Relations. Thank you, sir. You may begin..

Good morning, and welcome to Exterran Corporation Second Quarter 2017 Conference Call. With me today are Exterran's President and CEO, Andrew Way; and CFO, David Barta. During this conference call, management may make statements regarding future expectations about the company's business, management's plans for future operations or similar matters.

These statements are considered forward-looking statements within the meaning of U.S. securities law and speak only as of the date of this call.

The company's actual results could differ materially due to several important factors, including the risk factors and other trends and uncertainties described in the company's filings with the Securities and Exchange Commission. Management may refer to non-GAAP financial measures during this call.

In accordance with Regulation G, the company provides a reconciliation of these measures in its earnings press release issued yesterday available on the company's website. And with that, I will now turn the call over to Andrew Way..

Thanks, Greg, and good morning, everyone. Q2 was another excellent quarter for Exterran as we continued to benefit from our production-driven business model, one that allows us multiple avenues to participate in the secular trend of increasing demand for gas, and in particular, midstream infrastructure build-out.

As you know, one of our go-to-market channels is through our Oil and Gas product sales segment. We experienced strong sequential and year-over-year revenue growth in this segment due to the continued infrastructure build-out in the U.S. with increased demand in the Permian and the Marcellus.

Both increased output volume and better execution drove higher profitability as gas processing plants become a larger part of the story. Another key indicator of current market conditions for Exterran are bookings for the quarter. We had a book-to-bill ratio of 1.4x revenue, and we anticipate a strong order flow through the balance of the year.

At the core of our product sales, order success is the growth taking place within the processing and treating product line. For the first six months of this year, we sold 11 cryo and de-ethanizer plants, which will produce a combined 2 BcF per day of natural gas when installed and commissioned.

By comparison, our peak year was in 2012 when we sold a total processing capacity output of just under 3 BcF a day. We expect to exceed the record achieved in 2012 by the end of this year with the remaining plants sold to be delivered in 2018. The natural gas story is one that does not generate the headlines in places like the Permian.

But with the amount of associated natural gas produced, it's causing a sharp rise in interest and demand for Exterran's product portfolio of midstream infrastructure in places that it does not exist.

Internationally, our recurring cash flow business model of owning and operating midstream assets executed in our Contract operations segment continues to deliver solid results. This as a result of strong project execution, cost productivity and adjusting to change in hydrocarbon dynamics and profiles of our customers as well.

Whilst our business model to date delivered excellent results and cash flows, I want to discuss some additional initiatives currently underway that will position the company even stronger in the future and will ultimately deliver higher profitability while always continuing to focus on the importance of the balance sheet.

First, we have launched a company-wide manufacturing initiative, engaged world-class outside help to look at all aspects of our supply chain with a goal of working additional efficiencies into our current structure by producing higher output through faster cycle times with a lower cost structure.

This focus will result in higher inventory turns in the second half of '17 as well as improved working capital as a percent of sales and stronger output margins within our oil and gas product sales segment.

Second, we are close to completing the transformation of our prior Belleli facility in Dubai into an Exterran manufacturing and services location. We are capable of manufacturing our core products for both contract operations and product sales from this facility and will benefit for its location.

In fact, it is supporting several large ICO projects already announced and should enhance our competitive advantage on other projects which we are currently bidding. This is an exciting development, and our transition team has done an excellent job making this happen.

Third, we're seeing the benefits of enhanced supply chain focus, integrated design practices and other engineering productivity implemented during the year. This will translate into faster project cycle times, improved product sales margins and lower capital expenditures required to fulfill the same number of new projects.

In fact, we've been able to lower the high end of our 2017 CapEx range to $165 million, down from $180 million with the same number of projects we planned at the outset of the year. We see continued opportunities to reduce the range further as the year progresses.

This is truly an outstanding performance and demonstrates our ongoing focus to maximize capital investments through more efficient design and supply. Finally, in our aftermarket services segment, after six months of putting a stronger focus on the business through new leadership, we're starting to gain commercial traction.

We've shifted existing resources into commercial functions and are building capabilities focused on new markets and opportunities. We are growing our service and parts sales backlog in all regions. This should translate into improved results during the second half of '17 and through 2018.

I'll now turn the call over to Dave for our second quarter financial results and third quarter outlook..

59% was compression and 41% for production and processing. Geographically, the revenue split was roughly 90% from North America and 10% from international markets. Oil and gas product sales bookings were $280 million, an increase of 12% from the first quarter, the highest since the fourth quarter of 2014.

From a geographic standpoint, more than 90% of our oil and gas product bookings were from North America. Our oil and gas product sales backlog was $507 million at the end of Q2 compared to $425 million at the end of Q1. The backlog is the highest since the first quarter of 2015.

And production and processing represents about 51% of our backlog, up from 47% at the end of the first quarter. Revenue in our non-core Belleli EPC product sales segment was $13 million and recorded gross margin of almost $5 million.

Our margin benefited from the incurrence of lower costs than expected and favorable recoveries from a reduction in project scope. And Belleli remains on track to be cash neutral for the year. SG&A expenses were $46 million in the second quarter, up slightly from the first quarter.

We saw an increase in performance-related compensation and commission expenses. Turning to capital expenditures. In the second quarter, CapEx total was $24 million with most going towards previously announced awarded projects in the Middle East. Now looking at the broader balance sheet.

Total debt at the end of the quarter was $368 million with undrawn and available credit of $415 million. Our improved liquidity is due to our continued focus on cash management as well as improved covenants resulting from our high-yield offering in early April.

Our leverage ratio, which is debt to adjusted EBITDA as defined in our credit agreement, was 2.1x at the end of Q2, and our net debt stood at $322 million, up from $299 million at the end of Q1. It's worth noting, in Q2, we made a $25 million payment to Archrock as required in the separation agreement.

So if we exclude that payment, our net debt would have been flat to slightly lower than where we were at the end of Q1. From a working capital standpoint, we continue to run the same playbook we implemented during the downturn with the disciplines and processes continuing, even with a strong uptick in business.

These disciplines include such things as staying close to our customers on receivables, and we're actively managing our building and payable cycles and enhancements also in our ethanol p-type processes. This emphasis on working capital has delivered solid results. Inventory returns are double from where they were a year ago.

And just as importantly, inventory is lower in dollar terms relative to year-end on significantly higher product sales. This has resulted in a working capital as a percent of revenue of 14%, down from 19% at year-end 2016 and 15% at the end of the first quarter.

Now turning to third quarter outlook; in contract operations, Q3 revenue and margins will be similar to Q2. For our aftermarket services business, revenue should be improved from the Q2 levels with revenue in the mid- to high $20 million range and gross margin percentage in the mid- to high 20s.

In our oil and gas product sales segment, revenue should be in the range of $200 million to $210 million, and margins should continue to improve, up -- to up to 50 basis points. Our projects are converting to revenue and profit at our normal historical conversion rate.

As we continue to onboard new resources and improve our efficiency, we could even see greater margin benefits in the fourth quarter. For the Belleli EPC segment, with much of the project work behind us, we'd expect revenue in the range of $10 million to $15 million. And again, we forecast the gross margin to be 0.

This could be impacted by project execution and wrap-ups. SG&A should be between $42 million and $45 million. We're very pleased with how we continue to manage SG&A. At year-end 2016, SG&A as a percentage of revenue was almost 16%. At the end of the second quarter, it was 14%.

Depreciation in the third quarter should be in the range of $30 million to $32 million, and interest expense should be approximately $10 million. I'll now turn the call back over to Andrew..

Thanks, Dave. So to summarize our third quarter outlook, our core segments will collectively show continued improvement over the second quarter and year-over-year. The framework for our long-term growth is in place.

In our contract operations business, we are seeing a robust pipeline around the globe, bidding on new opportunities and renewing a large number of our existing projects, in line with historical norms. In our oil and gas product sales segment, we should continue to convert our backlog at a healthy pace.

Our current backlog will convert to revenue and profit through the first half of '18. If we continue to post book-to-bill ratios in excess of 1x for the remainder of 2017, then we'll have a solid base to build on for the back half of '18 as well.

In after-market services, we will benefit from the renewed focus and emphasis by converting opportunities into awards, expanding into new geographic markets. New product development initiatives and enhancements to our engineering design processes are well underway and will yield positive outcomes.

We're gaining efficiency in our application engineering which should drive innovation, speed to market and lower product cost. Together, these initiatives will increase our product offering, provide higher margins and open adjacent markets.

From a cash and cost management standpoint, we'll continue to benefit from our focus on working capital efficiency and SG&A productivity. All of this reinforces the stability and diversity of our business model.

Our service business, which is somewhat decoupled from short-term swings in commodity prices, will remain the core engine of our cash flows and long-term growth.

Demand for midstream infrastructure to process and move natural gas is driven by an increasing reliance on gas to power homes, service feedstock and fill the industrial and transportation needs of economies around the globe.

We are pleased to be a participant in this market space, and we'll continue to drive internal improvements, processes and development to make the most of these opportunities. I'd like to thank and recognize our employees for their dedication and effort on our journey.

We've given our teams a lot to absorb, learn and manage in a very short period of time. We started this journey following off from our spin in November 2015, and what followed were plenty of untimed distractions along the way. Our employees have never wavered, meeting every challenge head on.

When we talk about improvements to working capital, speed to market, efficiencies and productivity gains, it is our people around the world that makes all of this happen. We look forward to many more great things to come. I'll now turn the call over to the operator for questions..

[Operator Instructions] Our first question comes from the line of Joe Gibney with Capital One. Please proceed with your question..

Thanks, good morning. Just a question on your order mix as we look into the back half of the year, Andrew. I know process and treating certainly has been the driver here, and really strong order results.

Just curious if you're starting to see the possibility of some mix shift as we get into the back half of the year, early '18, as compression, demand is starting to pick up? And are there any margin implications there as we think about product sales? That would be helpful; I would appreciate it..

Yes. So we've certainly seen a mix shift coming out of '16 into '17 where processing and treating really has taken off. And as I've already alluded to, we're on track to have a record year, both in the quantity of plants and also the mix of the plants within processing and treating.

So I certainly feel mix is starting to help as we go through the second half of the year. We had a pretty strong first half of the year, starting, really, in the fourth quarter last year on compression.

We saw the market shift a little bit in sort of the middle of last year when the quote activity started a trend to sit and weigh, and we've started to convert most of those orders into bookings. And so as I look in the second half of the year, we still have a pretty robust pipeline.

The good news about the Exterran model today, as we look at the processing and treating and also some of the large compression projects that we've been building out in North America, 90% of what we sold year-to-date in processing and treating have the capability for multi-train down the road.

And I think you'll know that if you are successful booking train 1 and train 2, the likelihood is that you will have train 3 and 4 and 5 and 6. In the first half of this year, we sold train 8 and 9.

We sold train 11 and 12 and some of the projects that we've been working with customers for many, many years, and so we have a pretty good robust view of the North America market. And right now, we're continuing to see, particularly in the Permian, the Delaware, strong demand. The STACK in Oklahoma are still very, very busy.

We're even starting to see some activity in the Bakken, believe it or not, and parts of Colorado. So I think it's very specific. It's mostly on the processing, trending towards some of the cryo activity.

And so as we see the back half of this year, we feel pretty good internally that the pace of the cost that we're building internally, the work that we have in our shops, we're not getting ahead of ourselves. I think we're still certainly running a cautiously optimistic play.

And then as we get into '18, there are certainly some highlights that we're seeing around the world with projects that have been moving to the right. And if those come through to fruition, that's great news also for our product business. So hopefully, that gives you a little bit of color of what we see in our mix and the outlook..

Sure, that's helpful. And just one follow-up on your company-wide initiative here, just focusing even more on the supply chain side and efficiency. You guys have chopped a lot of wood on working capital already in terms of percentage of revenue versus where you were at the end of the year.

You referenced higher inventory turns in the second half in this broader initiative that you're putting forth. Just trying to understand a little bit. Could you -- is there any way you can frame up how much better your working capital is going to get in the back half, maybe what some targets are near term would be helpful as you implement....

Yes. So a year ago, we certainly had some targets, Joe, that we -- that I'd say a lot of the first year was low-hanging fruit but hard work. And as we've laid out the path to a more successful Exterran, we've taken a little bit of a different approach.

We've moved from the approach of what was last year and can we improve on it, to what is best in class. So we've done a fair amount of work on what the best-in-class metrics looks around DPO and DSO and inventory turns.

And once we're improving on our inventory turns, there are certainly opportunities to get a couple two or three more turns out of the business in this current configuration of how we're operating today. So we've targeted more of a working capital as a percent of sales.

Our second half plan, we're targeting to come down another -- probably 150 basis points as we work through the second half of the year into the first half of '18. And then we'll take another look at where we are with our mix of product and our mix of business to make sure that we're driving to entitlement.

And so I feel really good at the level of progress that we've made, but there's more to come..

All right, thank you Andrew. I appreciate it..

Thanks, Joe..

Our next question comes from the line of Blake Hancock with Howard Weil. Please proceed with your question..

Thank you, good morning. And Andrew, maybe continuing on the topic of the supply chain and you kind of talked specifically about oil and gas products and how that can impact margin, you guys achieved kind of a double-digit goal here in 2Q.

Can you just maybe talk about what you think kind of the longer-term expectations would be for this business as you work through kind of these supply chain efficiencies?.

Yes, there's two things that we've been focused hard on. As you would in any downturn is make sure that you aren't spending money on things that you don't need in the short to midterm. You're constantly looking at the longer-term profile of material.

And so even in the downturn that we've seen and the working capital came out, we started strategic planning sort of 12 to 18 months out as early as August, September last year. And thankfully, we got ahead of a lot of the challenges that many people are talking about when it comes to long leads and engine deliveries.

We're starting to see certainly the supply chain tighten now, but we got ahead of that. We also started to work through a new concept of really designing cost efficiencies in our products. And we've had a lot of success in the last six months with the refocus in engineering and applications to design more simplified structural products.

We focused on taking weight out of our structures, making sure that we're able to continue to meet a challenging market where customers are still looking for efficiencies, and ultimately, what is the cost per whatever it is they're producing. We've really focused hard on productivity.

So input volume has been reasonably steady in the last couple of months, Blake. And so as we go into this next theme here, what I don't want to do is to build factory capacities beyond the next three to six months. And so we've taken the opportunity to try to squeeze another 5 to 10 points of productivity on an absolute from a labor cost.

And that should yield -- as we go forward, should yield better margins in our products. So I think we will take a 'steady as she goes' for the next three to six months.

And then I would hope by the time we get into '18, we're seeing some noticeable improvements in our products as delivered margins, back in line with what we were seeing a number of years ago, which was sort of low teens, which is where Exterran was.

So we're certainly have that in our goal and our sight, and we're doing everything we can to drive towards that..

That's great and really helpful.

Secondly, if we look at the contract operations, I guess is it fair to say we've more or less kind of put in at least a floor for the near medium-term from a top line as we have some of the project wins rolling through, beginning in 4Q? And can you confirm that? And then secondly, you mentioned projects rolling to the right.

Are there still opportunities left to kind of be awarded this year? Or do we see that being something -- should we not expect anything major until maybe 2018?.

Well, we've given a guidance for the year on the top end of our CapEx, which, right now, we haven't spent all of that CapEx, and there are projects still to come. So the projects that are pushing to the right are known product sale projects in a number of countries around the world that we've been working on for some time.

Pretty complex projects that we hope to get the go in the next few months. And then hopefully, we're competitive and we'll win those. So product sales is what I refer to as projects pushing. We do have a number of bids that we're working on right now, particularly in the Middle East, projects that should come to fruition here.

And we hope to be announcing more awards in ICO in the second half of this year with projects that we'll be successful winning..

That's awesome. And if I can sneak in one more. David, maybe for you.

As we think of the onetime contractual recoveries in 2Q, can you quantify those for us?.

Yes. It was $1.4 million..

That's perfect. All right, thank you guys. I appreciate it..

Our next question comes from the line of John Watson with Simmons. Please proceed with your question..

Thanks for taking my question. From some of the domestic rental players, we've heard about long lead times for a large horsepower Cat engines in North America.

Can you speak to those lead times? And maybe any potential implications for your business moving forward?.

Yes. Great question, John. We started to see a demand for the higher horsepower equipment sort of middle to the second half of '16. And as I think of the configuration of all of what we sell, a lot of what we had in processing and treating, as that market mix moved to more of a cryo, we really weren't impacted with some of that engine activity.

And so we have a mix to our favorability where we've really focused hard on gaining share and pushing hard the processing and treating product line. The team has done an awesome job this year. On the higher horsepower engines right now, there is no question that the lead times have been extended.

We're working very closely with Caterpillar on meeting our customer demands and their needs. And so the way I would describe today is that we're able to manage a portfolio of engines that we have to make sure that we don't let our customers down.

And we've had to redesign some of the configurations of how we build some of the equipment to be able to drop engines in at the last minute as opposed to building around the engine, and so we've had to run real efficiency in the supply chain to deal with some of the extended lead times.

But we've built that into our planning process for the second half of this year and early '18. And right now, we're working very closely with Caterpillar to continue to improve, which they're doing right now, to our needs..

Great, that's super helpful. And as a follow-up, if I can.

Have you seen any customers consider using engines other than Cat because of the long lead times? Or has it not gotten to that point yet?.

Well, we've been a user of multiple engine types. I mean, the Waukesha engine has a great record and is certainly applicable in certain regions and markets around the world. We've seen an uptick in the demand, and we've actually been developing and pushing pretty hard electric motors.

And so there are some opportunities that we're seeing that I would say could be instead of. But of course, Caterpillar has a product line that supports that market. So I think there's definitely been a trend, a shift into more of a heavier horsepower as you hear it on many of the companies that rely solely on compression.

And so what we tend to do internally is to make sure that we're not prone to just one engine type, so that we don't have -- we don't want to have a big problem coming down the road here because we're all-in on one particular engine.

So there's certain element of self-help that you can provide by being able to take the particular application and design around it, and that's what we've been focusing on the first six months of this year..

Right. Okay, great. Well, thanks for answering my questions. I'll turn it back..

[Operator Instructions] Our next question comes from the line of Samantha [ph] with Evercore. Please proceed with your question..

Thanks for taking my question. I'd like to talk more, I guess, about the bookings for compression equipment for the U.S. North American players, the customers, I guess. One thing we're trying to understand is the -- if the time line of one of these new production and these new wells come, when these are fracked, I guess, to when they produce.

When do customers need to start thinking about, like, when they need to place orders? Like, are they waiting until all the wells are fracked and then they're kind of building out their infrastructure, I guess, around that? Or are people waiting till the very last minute to place these orders because the delivery cycles have shortened since peak of last cycle? I guess can you help us kind of maybe frame out like some of these production plans versus when they need to actually order these compression equipment for?.

So I think there's a couple of trends and themes that you've covered there that I'll try to break down if I can. Let me start with international first, where there's less of an activity level, I guess, of what we're seeing here in North America with this unconventional.

Often internationally, we are working with our customers at a very, very early stage in the process. I'd say right -- be somewhere between drilling and completion of the well, where there's known quantity and a known output.

And we're working with different applications and trying to figure out, really, over the life of the well what is the kind of requirement that we need to make.

And in North America, it certainly isn't the case of people at the last minute thinking, now I've drilled, I've completed, what do I do with compression? We're still working quite early in the process with many of our key customers. We have segmented our customers in North America into different buying behavior.

Some of our customers have more of a longer view. We're already talking to customers about 2019, even '20 when it comes to some of the processing requirements and some of the compression associated with that.

So there's no question some of our customers have really an internal choice of whether they rent and they go down the contract compression road or whether they have a pure ownership model, which, of course, is what we sell into today. So it varies, Samantha. I don't think there's a straightforward answer that's homogeneous across the whole space.

But I would say, more than not, we plan a good 12 to 18 months in advance of when the compression needs are required. By the time you've built through the [indiscernible] into your facilities, built the product, installed it, commissioned it, I mean, you're talking a cycle time that's probably 2x what it would be inside our factory.

So by definition, you are looking at more of a planning process than not. So that's why we have pretty good visibility today, certainly for the second half of this year, both in compression and processing and treating. Again, it's basin-specific. It's particular locations within the regions.

We've seen a lot of success in the regions that I've already mentioned, and that's where we're focusing right now..

Okay, great. And just maybe to expand on what your factory capacity is. One thing we're trying -- we're also thinking a lot about is just the whole industrialization of the oil fuel. And obviously, with your background, Andrew, you seem to be like the perfect person to ask about this.

So like how would you think about the sort of like a minimal level of the factory capacity that you needed? Was it sort of associated with like a minimum, like, booking number? And like what are the factors driving that? Is it like an oil price, production rate, some sort of bookings? And then what are the factors that we should look for that will drive that need higher? Is it just the quarterly updates that we get in bookings? Or should we be watching closer to what your customers are announcing for production? Just if you could sort of outline like what we should be keeping an eye on?.

Yes. So it starts off with demand, and it starts off with understanding demand. And we've done a pretty good job here for quite a while of tracking demand and the conversion of that demand.

And so when we look at the demand that we have by product type, we tend to understand what's driving that demand, whether it's by region, basin, whether it's by particular application. I keep reminding investors that almost everything we sell has some form of natural gas or associated gas.

And so whilst the oil price is interesting and we certainly watch it carefully and more from a sentiment of where the companies and customers are going to cut or exceed CapEx because of the overall trend of what they see, I want to remind everyone, again, that most of the product that we manufacture is associated to those products.

So it starts off with demand. And if you've got a pipeline that's starting to build and your conversion rate of that pipeline is a certain percentage, if you focus on taking share or if you focus on trying to push a certain volume expectation, you can typically get an understanding in your factories of where we are.

Now we took a significant amount of cost out of the system a year ago, a little bit over a year ago. And so we were mindful that this time last year, our backlog was sort of in the $100 million range. 2015 first quarter was when we were -- when we had a backlog of the same level as we have today.

The same level of backlog we had in '15, we had an exponentially higher number of resources then than we have today. So we've already made efficiencies internally. We've ran the play all year, talking about cautiously optimistic and trying to run the play where we don't put cost ahead of the market.

So one of the initiatives that I talked about a little while ago on the prepared remarks, Samantha, was that we felt by investing a little bit more time and effort, we could probably squeeze more capacity out of our existing infrastructure and facilities without investing too much cost that we end up as seen as idle.

And so right now, I feel as though we've probably got the right level of capacity. If you look at the Q2, we were just under $200 million of product sales. We have continued to idle the facilities in North America.

We brought online, I think, you hear hopefully you heard in my prepared remarks, we brought online Belleli in Dubai, and that's not an insignificant comment. We focused very hard this year on making the product that we had come out of the facility from the Belleli. We're winding that down. We're substantially complete in the next six months.

In the meantime, we've been bringing it up to speed, so we can manufacture Exterran core product in Belleli in the Middle East.

And so that will be called Exterran in the Middle East, and we'll have the capabilities at that facility to reach out into the Middle East market and support and supply the equipment that we've been typically manufacturing here in North America.

And so I think about it as a capacity shift from North America to Dubai, which has given us a little bit more of a capacity here, both in Houston and also in Oklahoma at our processing facility, so we can squeeze more capacity out of what we've got today.

And we'll see that in the fourth quarter as we'll kind of have more revenue coming through that product line. And then I would probably pause for a moment until we start to get a good sense of Q3, Q4 CapEx spends for 2018 before we start making any further adjustments.

So it's a process that starts way back in the demand, and obviously, incredible level of detail on a daily basis making sure you understand your slot planning, your cycle time and your absorption..

Thank you, Andrew. And congrats on the nice quarter..

Our next question comes from the line of James Spicer with Wells Fargo. Please proceed with your question..

Hi, good morning.

I guess first of all, I was just wondering about the geographic breakdown of your new product sales bookings, particularly how much is coming from the Permian versus some of the other areas you mentioned, and whether there are large customer concentrations associated with that?.

Yes. So if you look at the first half, James, the majority, I'd say -- if you break down the regions that we're seeing the activity levels, I'd say about 50% West Texas, Delaware basin; about 20%, a little more in the STACKs, in the trend and the Anadarko Basin; and then the balance, 30%, Utica, Marcellus, Northeast.

And so we are seeing a nice pickup in those areas. Some of the basins that we're operating in the Mentone, Ramsey, Sherwood, Harmon Creek; the basins that you see in activity with obviously the customers that we are enjoying a good relationship with. And so there hasn't been huge concentration for any single customer.

And as I look out to the second half of the year, a lot of new customers. In fact, of the 11 plants that we just described in the first half of the year, four were new customers. And so we're seeing a new breakthrough with what we're bringing to new customers, and that's encouraging..

Okay, that's great to hear. And then I just had two housekeeping questions as well.

Firstly, what's the remaining backlog at Belleli at this point?.

Approximately $23 million with the key projects that we've been talking about..

Okay. And then lastly, I think you said that you had $415 million of available credit at the end of the quarter. I'm not sure if I heard that right.

Was that 4-1-5, $415 million? or $450 million, 4-5-0? And then is that based on your 4.5x max leverage covenant?.

Yes. It was 4-1 5, so $415 million. And you're right. That's based on the leverage and covenant limited, still. But you're right. With the expanded covenant post the qualified capital raise, we obviously got an enhanced covenant there....

Okay.

And were there any revolver borrowings outstanding at the end of the quarter?.

No, no. You'll see in our financial statements that will be filed later today that we actually had cash on the balance sheet. So....

Perfect. Okay, that's it for me. Thank you..

Thank you. We have no further questions at this time. I would now like to turn the floor back over to management for closing comments..

Great. So thanks again, everyone, for joining us today. I'd like to thank you for your interest in Exterran and look forward to connecting with you over the course of the next few months. Have a great day..

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day..