@EKS, thank you for looking into this, this was helpful.
Please feel free to correct me if I'm wrong on this and normally I would tend to agree that PE is a good way about looking at companies, but for capital intensive companies I like to rely on FCF measures.
Earnings don't take into account working capital changes, cap ex, etc. So, I looked at Exterran in a slightly different way. Yes, it's very pricey if you look at PE, but taking P/FCF on a maintenance cap ex basis, it's trading at 2.4x. P/OCF, it's trading at 2.3x. Very cheap.
As for long-term debt, that was an issue until I saw when the debt was maturing. In 2019, there was only $449 million due. In 2020-2021, it's even less: $238 million. Basically, there aren't any material debt repayments until 2023. So we're okay on that front...for now.
In addition, the proceeds from borrowings of debt cover repayments of debt, which is done from a credit facility. Thus far, the company is within any covenant ratios, and haven't breached those.
Below is an excerpt concerning covenant ratios:
"We are required to maintain, a minimum interest coverage of 2.25....a maximum total leverage ratio of 4.5....and a maximum senior secured leverage ratio of 2.75....As of December 31, 2018, Exterran Corp maintained a 9.3 interest coverage ratio, a 1.8 total leverage ratio, and a 0.2 senior secured leverage ratio. As of December 31, 2018, we were in compliance with all financial covenants under the Amended Credit Agreement." |
