Good morning. Welcome to the Exterran Holdings, Inc. and Exterran Partners L.P. Fourth Quarter 2011 Earnings Conference 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 fourth quarter and full year ended December 31, 2011. If you have not received a copy, you can find the information on the company's website at exterran.com. During this call, the companies will discuss some non-GAAP measures in reviewing their performance such as EBITDA as adjusted, EBITDA as further adjusted, gross margin, gross margin as adjusted and distributable cash flow. You will find definitions and a reconciliation of these measures to GAAP measures in the summary pages of the earnings release and 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 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 release, as well as in the Exterran Holdings' annual report on Form 10-K for the year ended December 31, 2010, Exterran Partners' annual report on Form 10-K for the year ended December 31, 2010, 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 will now turn the call over to Brad. You may begin.

Thank you, and good morning, everyone. With me today is Bill Austin, CFO of Exterran Holdings; and Michael Anderson, CFO of Exterran Partners. Also with me is Mark Sotir, Executive Vice Chairman of Exterran Holdings. I'd like to start this morning by turning the call over to Mark to provide some introductory comments.

Thanks, Brad, and good morning, everyone. Brad may thought it would be useful if I spent a minute to share my perspective on Exterran, both as a board member, but also as someone who's managed a company similar to Exterran, the company that is large, global, is very asset-intensive and one that has a significant and extensive field organization. So with that perspective, and having now also spent several months reviewing this business, I can tell you that I see a significant amount of upside and value creation opportunity at Exterran. And there are 2 major themes. First, the company is a market leader, and because of that has significant scale opportunities that we will take advantage of. Second and most importantly, there's a great opportunity to simplify the business, both the company and its infrastructure. We will do this by implementing consistent business processes across the entire organization and this will result in increased productivity. We will also streamline the organization to reduce cost and therefore drive higher margins. So Brad and Bill will cover some of these plans and initiatives in greater detail during their remarks. Finally, again as a board member, I just want to say that I'm very excited about our prospects and I look forward to working with Brad, Bill and the rest of the management team on making Exterran a success. I will now turn it back over to Brad to lead our call.

Great. Thanks, Mark. As we hold our first earnings call since I stepped into the position as CEO on a permanent basis, and since we've added Bill and Mark to the team, I was hoping to start with a discussion of what I and the management team see as the state of Exterran and what we're working on to improve performance. First off, the management team and I are excited about the business, about what we see for growth in the markets we are in and with the customers we serve. And importantly, about the opportunities we've identified to improve our performance by simplifying our organization and taking out costs. Exterran has a solid business with the market leadership position and favorable long-term industry dynamics that we expect will drive attractive growth for our products and services. But over the past few years, Exterran has clearly underperformed as a business for its shareholders. Here's my take on these performance issues and their impact. We generated declining markets and profitability over an extended period. While somewhat due to market conditions, too much of this declining profitability was the result of cost inefficiencies as well as overruns on some of our large projects. Our business is contracted in size with declining revenue to backlog levels. And we did not reduce our underlying cost structure including SG&A sufficiently to be in line with that lower level of activity. What my team and I have been focused on over the past several months is to identify the causes of this underperformance and more importantly, determining the steps we will take to fix them. While this work is ongoing, we have identified several opportunities and have started to implement a plan that will improve our business. As we undertake this effort, let me share what…

Thanks, Brad, and good morning, everyone. First, let me say I am pleased to join the team at Exterran including Brad, Mark and many others. I also want to thank Michael Anderson. He's helped me tremendously during this transition and I, too, wish him well in his new endeavor. As you might imagine, we're all trying to come up to speed quickly in our new roles, not the least of which is me. There have been a number of key initiatives which began in the second half of 2011. And while there has been traction, there remains much to be done. Execution, as Brad stated, and I reiterate, is the key for the year. Second, I will go through the results for last year for both Exterran Holdings and Exterran Partners and give guidance for the first quarter. As I've quickly learned, there have -- there were a number of actions taken in the fourth quarter but in many instances, the results do not show up for 6 months. But I'll try to point them out in my commentary. Now I'll provide the summary results and I -- while I may repeat some of the points that Brad made in his opening remarks, I think some of these obviously have bear repeating. First, our North American contract operations revenue was $150 million for the fourth quarter, somewhat below our guidance, but gross margin was relatively unchanged at 49%. We were very pleased by our 48,000-horsepower growth during the quarter. Again, our best quarterly performance in more than 6 years. A lot more growth came at the back end of the quarter, so we did not see as much revenue growth but this sets us up well going into 2012. Maintenance capital was some $18 million in North America during the…

Thanks, Bill. And Bill caught it. Let me correct one thing I had stated earlier which was that our debt reduction target of 4x, absolute price fix on Holdings, and I understand that I said Exterran Partners when I did that earlier. I wanted to make sure I corrected that. Before I close and turn it over to questions, let me just reiterate. I think you can tell I'm excited about the opportunity we have at Exterran. We have a market-leading position, the best employees in the industry and a favorable outlook regarding a long-term growth for the use of our products and services around the globe. We're optimistic about the long-term trends in the global energy markets, where successful industry deployment of enhanced drilling and completion techniques has enhanced the readily available supply of oil and natural gas. And with our extensive production-oriented product and service offering and established customer relationships, we believe that Exterran is extremely well-positioned to take advantage of these encouraging market trends. And critically, the new management team is excited about opportunity to improve performance at Exterran. While there are near-term challenges, our team is committed to driving significant and lasting performance improvement and taking advantage of industry growth opportunities to create long-term value for our stockholders. Operator, at this point, I'd like to open up the call for questions.

[Operator Instructions] The first question comes from Mike Urban from Deutsche Bank.

So question for I guess Brad and then maybe Mark as well. I know you're still relatively new to all this, but as you've taken a look at the business so far, and I think you've alluded to some of these things. Where -- what are some of the places where you might be deemphasizing or reducing your exposure where the return of the margin opportunity as not as great? And then of course the flip side of that, where are we going to see the emphasis increase?

Sure. Mike, it's Brad. Let me try to take a crack at this. In the portfolio -- and I'll talk just about 2 examples that we have in 2 different business lines. And one would be AMS. So we -- in evaluating that portfolio in those businesses, we have seen activity and certain parts of the services that we offer to our customers that's just not generating the right level of profitability for the investment. So targeting those areas, customers, geographies and products where we're just not making money, and either figuring out quickly how to make money or how to stop it is an example of the type of thing that we're going to look at. Similarly, in some of our fabrication businesses, we have low levels currently of both business and backlog. And there are a lot of cause of [ph] issue with some of those business lines that we're trying to pull out and improve the processes so that we have a better match for the existing level of business. So those are just 2 examples. And there are opportunities like that at different levels and different scales that we're targeting and correcting.

Okay. Makes sense. And in terms of some of the cost savings and efficiencies, I guess and particularly you've talked about kind of $20 million, $25 million just as the quantifiable number, how much of that have we already seen versus what we should still expect going forward here?

This is Bill. We initiated some of those cost reductions in the fourth quarter. There's still more to go in the first half of the year. I would say a fair amount of it has been completed. But you don't see it as much in the first quarter cause we took some of that and we've invested in a couple of areas. I think you'll start to see more of it in quarter 2 through quarter 4. But still some has to be done internationally and there are some domestically as part of that original $20 million to $25 million.

So just to be clear, I mean the actions have taken place and some will continue to take place in the first quarter but you don't feel like we've seen a meaningful margin impact from that yet. In other words, that is -- most of that is still to come from an actual performance and margin sampling?

Most of it will come in the second -- from the second quarter on through the second half, that's right.

The next question comes from Jim Rollyson from Raymond James.

Brad, you mentioned the first in a long time price increase on the compression side. A couple of questions around that. Can you give us some idea maybe what the magnitude of the price increase and kind of what the reception has been? And I guess, following up on that, do you expect that, that if gas prices do stay weak for the rest of this year, will that price increase hold?

I can expand on a little bit, I don't want to talk a lot about the magnitude of the price increase. But the reception from our customers has actually been pretty good. We haven't seen an over -- we haven't seen any real negative reaction to the price increase because it has been so long. There've been cost pressures in the industry that everyone knows of. It was fairly well-received. And so the pushback has been minimal. Also going forward, this applied to our existing operating compression in the field and we see that there is a risk if this gas price continues at the current low levels that later in the year, we could start to see some more negative impacts from that. We haven't seen it yet. But the volume of gas that has to be both compressed and produced is going to remain pretty good. And we haven't -- we don't expect that there's going to be such a backlash or the impact like we saw in 2009 in the field that would result in drastic new price pressure. But I have to acknowledge that there's uncertainty in that comment, and that is, of course, a risk. We just haven't seen it yet jamming. And to be honest, we don't expect a lot of it from this point forward.

Sure. That's just helpful. And on the cost side, you spoke specifically I guess on the operating cost. You guys have been working for a while to kind of keep chiseling that down. Is there still room on that front to bring cost down? And are you kind of thinking between pricing going up a little bit and possibly on the cost side getting benefits that margins expand in '12?

Yes. Yes, I really do think that there's going to be a little lumpiness but we expect to see a steady improvement in our margins and contract ops. On the cost issue, we had some good -- categorically, underneath that number is some noise. But we had some pretty good improvement on our labor utilization and on our materials management. But over the most recent period, as I said earlier, it's been offset because we had strong oil price driving up both our transportation cost as well as our lube oil costs. The final thing I'll provide [ph] is that we've also had some good progress in trying to manage our lube oil volumes, which we expect to get the benefit of, but the commodity of price risk remains. But yes, we see upside and we think you're going to see the upside too.

Sure. And last quick one. On the SG&A kind of reduction program, you've got any specific commentary, Bill, maybe for SG&A at the Partners level, kind of where you see that turning?

Well, at the partners level, obviously long-term, we'd like to see the cost caps rapidly diminished. You saw some of that in the fourth quarter. Long-term between drop-downs and cost initiatives, our goal is to do away with the cost -- with the need for the cost caps. That's a work in progress, but it's certainly our goal to get it done.

The next question comes from Joe Gibney from Capital One.

Just a couple of questions on fabrication. I was just curious, specifically what fell into the quarter in terms of timing -- your recent large bookings, for instance in Bolivia, you got accounted for in the fourth quarter inbound orders in fabrication?

Interesting, Bolivia did fall into the quarter but I would point out that a large portion of Bolivia is installation. So as big as the project it is -- and we haven't announced just how big, but it's a big project. A fairly large portion of that is installation which would not show in the backlog.

Okay. That's helpful. And just in terms of your margin outlook, you referenced execution issue in the Eastern Hemisphere which was a drag on 3%. 1Q looks like your trough revenue quarter within fab, is it also the trough margin quarter here in this 9% to 10% margin bend? Would you expect that to move materially higher as you work your way through the year on the execution issues with this one singular project behind us now in the Eastern Hemisphere?

Well, clearly that's -- we want the first quarter to be both low at the trough both in margin and in revenue. That's our goal and hopefully you'll see that throughout the 4 quarters of the year.

Okay. And I was wondering if you could just expand a little bit on the centralized pricing comment. I didn't quite gather all of it whether this was applicable to all of North America, across all your service lines, if this was really good [ph] and simply the contract ops. If you could talk about that a little bit more and what that means in terms of market responsiveness is what you referenced?

Sure. It's Brad. Let me take a crack at that. We already have a fairly centralized pricing that applies to our contract compression business. And so that wasn't mentioned because it already exists. The pricing move that we've made to centralize this is to really have much more centralized product line management overpricing on AMS compression fabrication and production equipment. And by the way, we also already had pretty good centralized pricing over our processing treatment segment. And what we saw in the market in 2011 is that the market really took off and so did our North America fabrication volumes. And we wanted to be -- we wanted to ensure that going forward, we could be more responsive to the pricing in the market as the market moves. And so we've centralized that through our product line team to make sure that we can help guide pricing as easily as we see the market change and move on volume.

Okay. Helpful. And last one for me and I'll turn it back. Just on international contract side, could you just update us on the timing on the Middle East contract? I believe it's expected to start in the first quarter and kind of be fully operational in 2Q if that's still the case? And I was curious if some of the moving parts in these 2 projects in Brazil that are dragging here in 1Q on the termination side that could potentially come back, so what the broader outlook is on the contract side within Brazil?

Sure. Let me talk about the business international level overall and answer your question on the Middle East project specifically. That project starts in March or April, the first station will begin operations. And the last of the 3 stations will begin operations I believe by June or July. So that's the timeframe on the start of that horsepower. As far as the Brazil jobs, these are contracts that would've terminated and are terminating in the year and I believe it's about...

We've got 5 project stops totaling in Brazil.

So it's about 30,000 of horsepower. And so we're taking a dip in Q1 and Q2. But from Q2 through Q4, building backup that operations contract business in total, internationally between what we're doing in the Middle East and Mexico. So that year -- for the full year, we'll see improved horsepower and utilization in the international business. But we do have a setback as some of these large projects roll off in Brazil.

Our next question comes from Sharon Lui from Wells Fargo.

My questions pertain to the drop-down transaction. Just to confirm, the 8x EBITDA multiple, that pertains to also these units that's currently being leased?

Sharon, it's Michael Anderson. The answer is yes. 8x for the whole package of assets.

Okay. And then in terms of the debt that's being assumed, roughly $140 million, is that going to be placed on the EXLP's revolver for the time being?

Yes, basically that debt is passed down and it's immediately refinanced.

Okay. And then in terms of the actual units being drop-down, is there a concentration in a particular region or a particular customer?

No, not really. I mean it's a very similar mix to the overall Exterran Holdings and Exterran Partners portfolio in terms of type of unit, size of units, geographic dispersion. Obviously when you're dealing with a little bit smaller portfolio of asset, there's a little bit of customer concentration. But certainly, nothing that affects the overall customer concentration in any meaningful way for Exterran Partners.

Okay. And then I guess my last question for the processing plant, I'm assuming that's all just fee-based contracts?

It is. It's one of the processing plants that we announced a little bit over a year ago that we built for one of our customers. We've completed this last one in the fourth quarter and it is largely a fixed fee kind of basis contract on a long-term 12-year deal.

Okay. With I guess take or pay volumes or is there any volume commitments for that plant?

None that we'll be subject to. Basically, our customer's paying us a fixed fee whether they're pushing gas through the processing facility or not.

Our next question comes from Blake Hutchinson from Howard Weil.

Just first question. I guess it's surprising to see the idea of horsepower additions here to the contract fleet in North America as gas prices plummet. What is driving -- is there a kind of a new sweet spot in terms of horsepower in these new plays that's driving the build? And if so, what is that? And is there something physical from the reservoirs that we'd think this demand will keep up?

Sure. Blake, it's Brad. There are a couple of dynamics in the market right now. The biggest dynamic that's driving fleet additions is the same that's driving infrastructure additions in the North America market. As we transition into new plays and the very wet oily rich plays or associated -- plays that have a lot of associated gas, new infrastructure is required. And so you're seeing that demand both on the fabrication side for compression as well as moving into some of these fields. So that's what is really still keeping the demand up that despite the low natural gas price and that's really driven by just there's just too much natural gas in the near term. But the need to put compression on the new plays continues. And then on the sweet spot question, the answer is, not really. What we have seen over the last decade, however, is continuing emphasis on larger horsepower units and applications. More in the centralized gathering application in the fields. And so the horsepower -- kind of the spread of horsepower I think it's becoming more concentrated on the higher end, 1,000-horsepower plus size units for a whole bunch of what we're putting in the fleet. The only counter or the only caveat I put on that is we're also seeing really nice demand for some small horsepower units for gas lift. And that's just to help with the liquids and the oil production in a bunch of the emerging plays. So the focus on large horsepower continues but there is good gas lift work going on right now. We're taking advantage of that to deploy a bunch of our existing small idle horsepower.

And I guess just following up on that. So if the horsepower demand that you're seeing is from larger centralized gathering lines, all things being equal, you probably expect the utilization there to be more long-lived and consistent?

Yes, I think that's a very fair statement. But I'll also point out that some of these plays and the way they're developing and putting infrastructure on these plays is new. This idea that we keep hearing about manufacturing models, some of it we understand. And we need to see how these plays develop and play out. Just a work on full of [ph] that statement. But yes, I do think so.

And then just an education on how gas lift evolves, is it similar as you face larger declines to, say, conventional gas where over time, a 50-horsepower unit needs to turn into 150 and so on?

You're going to get past my technical expertise on production systems real quick, but I think the answer is really not -- is really no. Most of the gas lift goes on at the well head and it's there to take the liquids off to alleviate production or to push production on the liquid side. So I don't think that same dynamic applies. Again I could be stepping over my technical sees [ph] on that.

Sure. Sure. And then for Bill on the guidance, I guess I'm trying to put in together the first quarter guidance with the promise of kind of a bigger back half swing in fabrication and international compression operations. Should we be thinking about perhaps third quarter as the point where we'd start -- understanding we're not running the business for revenue but for profit, is third quarter is the point where we might start to get a favorable kind of year-over-year revenue comparison?

Profit, yes. I kind of look at the revenue but you're going to start to see real traction in that third quarter. I got to look on the revenue side. I don't care as much about the revenue as you might expect but -- yes, you'll start to see good -- you'll start to see the revenue as well but as I say, I focus more on what we should see from a profit standpoint. So the answer to your question is yes to both.

Our next question comes from Robert Christensen from Buckingham Research.

Are there covenants in -- that we should be aware of? Can you run down the list of bank covenants or tell me where to go look in the 10-K or Q?

Yes, I'll let Michael handle some of that.

Sure, Bob. Basically it's a pretty simple covenant. You can look at the Exterran Holding side, it's basically 5x debt to EBITDA, that's our primary covenant. We also have, and we just talked about today, we're at 4.3x both at the end of Q3 and Q4. There's also an interest coverage basically EBITDA to interest, it is by 2.25x, it's really not that relevant. At the Exterran Partners level, similar kind of mix of covenants. Debt to EBITDA is 4.75, although there's a step up every time we do an acquisition or drop down, it goes to 5.25 for a period of a couple of quarters and then drops back down to 4.75, and then we have a similar EBITDA to interest coverage at 2.25.

A follow-up question and I think Brad was doing some of the thought process on North American compression for us related to the shale plays. My question and, I guess, problem, is that we've seen onto your supply growth probably grow 15% over the last 24 months yet your contracted North American compression is hardly growing at all. So it suggests to me that some of the conventional fields are on decline and that you're quite exposed to conventional gas fields and you're losing horsepower there. It also suggests to me that the new breed of competitor, these giant MLP midstream companies, are taking a great deal of shares. So I don't see your volume growth against the backdrop of great supply generation in this country. So could you perhaps, put some light on what else is detracting, I guess, from the supply growth -- contracted horsepower?

Yes, I can. I think I can. Part of the dynamic that you're seeing is actually spot on. We have a lot of compression located in a lot of conventional and even some unconventional plays that are higher production cost compared to some of the developing plays that we see where we have growth. And as we grow in the growth plays, we do have declines in some of those conventional -- in coal bed methane and other plays, that is offsetting a portion of that growth. And that is a dynamic we have in our business. And that is definitely present. But what you've also seen over that 24-month period is a lot of gas coming from new plays that are not yet as compression-intensive as they will become over time. So it is absolutely dynamic. And what we saw in the fourth quarter was that the balance tipped and that we were able to get more growth out of the growth plays than we saw in declines in some of the more conventional and long-lived legacy basins in North America. And we do expect to see some continuation of that trend. So I hope that from the basins and plays perspective, that gives you somehow an understanding that dynamic that we're seeing which is growth in growth plays. But yes, we have some offset and declines in some of the older and more mature basins.

And if I might just to follow on I guess aspect of it, the giant midstream MLPs that are fully integrated will design your gathering processing and put brand new compression in and there you stand wanting to rent it. This new breed of competitor is awfully strong, bulked up and -- care to comment?

The MLPs and the midstream companies comprised both -- our competitive force as well is some of our most significant customers. So there is the interplay there. But we haven't seen -- and what we haven't and I why really don't expect to see is that it's not displacing the contract operations model. They are a factor in playing into the same traditional client lease analysis based upon the longevity of the application, that previously the producers would have monopolized. So they fit into the middle of the market, which we compete with on one side and we supply on the other side. But a buy-lease analysis of the longevity of the equipment as well as our ability to drive good volume throughput and service quality redeployment and help manage the residual value risk of the equipment that maybe on, on a short-term basis. The value of that business model remains.

Well, we haven't seen an impact there. I mean you're not growing your North American contract operations numbers. Something isn't right. 24 months of growth in North American supply and I got flat. I mean something is displacing something. I'm at a loss.

The only other thing I'd steer you to is the volume of gas that has come in market coming out of a few of the plays. The Haynesville in particular which is really a very prolific play both from an initial production, as well as from an initial pressure perspective, has given the market a big jolt of gas. The other thing that's happening is on the associated gas side and in a lot of liquids plays, we're still seeing too much gas coming into the market. So the last few years have absolutely been tough. But I do believe that there are other reasons that have driven some of that lack of growth. And we're also seeing good growth in the industry overall. And I believe it's going to continue. So, Bob, we'll continue this discussion, I'm sure.

Let's take one more question and then we'll be running over. Operator?

Today's final question comes from Tom Curran from Wells Fargo.

Brad, as a follow-up to the prior line of questioning, turning to where you are seeing the growth, number one, are you starting to see it in the Haynesville? I know you've consistently highlighted that as the unconventional gas play where the lag has tended to be the longest from IP to the point where you need to introduce compression potentially as long as 3 years. And then two, in those growth markets, what has the mix been for the demand you're seeing between rental and purchase?

That's a good question. We see growth in a lot of plays and I still think of the Haynesville from a compression perspective as one of our industry-leading bait and switch plays for the last 10 years. Because it's been developed with such great promise but it's dry gas and we're seeing also producers redeploying away from the Haynesville with their drilling rigs and into liquids-rich markets where they can make more money, too. So we have not seen a lot of growth in compression in the Haynesville. Where we see the growth is much more focused on the Eagle Ford, on the Marcellus. We've seen nice growth in the Permian. We're seeing really good growth ironically in the oldest shale play in the country, in the Barnett, where they both have added more field compression and are exploiting some wet rich areas in the reservoir for liquids production. So those are -- I didn't mention the Marcellus, I don't think -- and we also see still good growth coming out of the Marcellus. But the Haynesville remains somewhat elusive from its overall demand for compression. So that one is not played out.

And it sounds as if, in terms of the contract compression side, that you're almost getting this barbell in terms of incremental demand you're seeing where it's either for smaller units, increasingly to be used for gas lift or the largest ones where you're taking the gas gathering approach to the unconventional plays. Is that correct? And then could you put some numbers around the growth you've seen in the gas lift segment?

Let me hit the first part of that. On the size of units where we've seen demand, it comes concentrated in some unit types right now. So we've seen on the gas lift side pretty good demand at around the 200-horsepower range. And then we'd still -- we are experiencing -- I think a comment I made earlier may have steered us away from this, so let me supplement a little bit. We also see pretty good demand in a few of the markets, the Eagle Ford in particular, for the 800-horsepower range unit which is much more of a midsize for us. But the dominant focus of the build-out is in the 1,000-horsepower and larger units. So it's more balanced than I think I may have conveyed earlier. So let me give you that first. And -- so the barbell effect, it may not be as strong with that midrange demand in the mix. The other part of your question that I didn't address and I want is one of the dynamics with a lot of purchase activity for compression that we believe we're seeing right now is the infrastructure build-out as these new plays have developed new pipelines and gathering systems, as well as central processing and gas plants are going in. Those will be pretty long-lived investments. They're very minimal to permanent compression -- or that is to purchase the compression. And as those facilities get built out, and there's more drilling and production upstream of those systems, I think that is when we continue to see much more of an uptick and demand for contract compression. So part of it I think is timing in market development. The permanent infrastructure is going in and that's going to open up more E&P activity and production upstream.

That all makes sense. It's very helpful. I'll just close with one more here. Within aftermarket, both in terms of the top line upside we've seen relative to your guidance the last 2 quarters I think, and then more importantly, the margin, how much of that has been driven by international, either by a growing international portion of the business or by the profit improvement steps you're taking but internationally?

Let me start this and I'm going to turn it over to Bill to make sure. The improvement we've seen through the profit improvement in North America has so far been pretty incremental. So I think there's more to come on that front. So I don't want to convey that the improvement we've seen right now is driven by a lot of the steps. We really have just gotten started. And we think we're going to get incremental improvement over the course of several quarters from those profit improvement initiatives. As far as the mix on the impact of international, I'll ask Bill to answer that.

Yes. And, Brad, spot on in terms of what's going on in North America. What you saw in the fourth quarter was a bit more of a mix both in North America and internationally. So we saw revenue upsides on both -- or in both areas as well as some profit margin groups’ improvements in both areas. So it was a good mix diagonally [ph] in the fourth quarter.

Well, look we're over our time. We appreciate everybody's participation in the call this morning and we look forward to talking to you next quarter. Thanks, everyone.

Thank you for participating in the Exterran Holdings, Inc. and Exterran Partners L.P. Fourth Quarter 2011 Earnings Conference Call. This concludes the conference for today. You may all disconnect at this time.