Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2024 was $601 million, an increase from $580 million in Q3 2023 and a decrease from $614 million in Q2 2024 [17] - Gross margin before depreciation and amortization was $176 million, or 29% of revenue, compared to $150 million, or 26% in Q3 2023, and $173 million, or 28% in Q2 2024 [17] - Adjusted EBITDA was $120 million, up from $90 million in Q3 2023 and slightly down from $122 million in Q2 2024 [17] - Free cash flow increased to $78 million from $29 million in Q3 2023 and a cash outflow of $6 million in Q2 2024 [20] Business Line Data and Key Metrics Changes - Energy infrastructure generated revenue of $37 million with a gross margin before depreciation and amortization of 70% in Q3 2024, compared to $33 million and 67% in the prior year [9] - Aftermarket services gross margin before depreciation and amortization was 19%, benefiting from strong customer maintenance programs [19] - Engineered systems recorded bookings of $349 million and maintained a backlog of $1.3 billion, with most backlog expected to convert into revenue within the next 12 months [12] Market Data and Key Metrics Changes - The U.S. contract compression fleet operated at 94% utilization across 428,000 horsepower, benefiting from increased natural gas production in the Permian Basin [9] - International energy infrastructure business supported by approximately $1.5 billion of contracted revenue with an average contract term exceeding 5 years [11] Company Strategy and Development Direction - The company aims to enhance profitability of core operations, simplify operational and geographic footprint, and maximize free cash flow to strengthen financial position and enhance shareholder returns [29] - Capital allocation priorities may include increasing dividends, share buybacks, disciplined growth capital spending, and further debt repayment [27] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong macro drivers for the business, including global energy security and the need for low emissions natural gas, leading to solid performance across business lines [15] - The company expects growth capital spending to remain below long-term historical averages, focusing on customer-supported opportunities in the U.S. and Middle East [25] Other Important Information - The Board approved a 50% increase in the quarterly dividend to CAD$0.0375 per share, payable on January 16, 2025 [26] - The company successfully reduced leverage to within the target range of 1.5x to 2.0x, repaying $268 million of debt since the beginning of 2023 [23] Q&A Session Summary Question: How often will the company evaluate the dividend? - Management indicated that they will evaluate the dividend on a quarterly basis, balancing financial position and shareholder returns [32] Question: What is the potential for expanding the U.S. contract compression fleet? - Management stated that they will provide further guidance on capital spending plans in early 2025, focusing on investments that provide long-term returns [34][36] Question: What is the rationale behind the recent dividend increase? - Management emphasized that now operating within the target leverage range, the priority is to enhance shareholder returns alongside further debt repayment [39] Question: How should margins be expected to trend in the engineered systems business? - Management noted that while Q3 margins were above typical levels due to higher overhaul work, future margins should normalize closer to long-term averages [42] Question: What is the outlook for the compression market? - Management highlighted that customers are taking a long-term view on infrastructure, which is beneficial for the company's service offerings [48]

Company Overview - Enerflex's market capitalization is CAD$1.3 billion[2] - The company offers an annual dividend of CAD$0.15 per share, resulting in a dividend yield of 1.4%[2] - Enerflex has approximately 4,600 employees and operates in 7 core countries[2] Market Position and Growth - Global demand for natural gas is projected to increase by 15% over the next decade[8] - U S and Canadian gas supply needs to grow by approximately 25% to meet the increasing demand[8] - North America LNG export capacity is expected to increase by 18 Bcf/d by 2028, more than doubling the existing capacity of 14 Bcf/d[14] Financial Performance and Strategy - Enerflex's adjusted gross margin from recurring sources accounts for 69% of the total[17] - The company has repaid $268 million of long-term debt since the beginning of 2023[24] - Enerflex targets a bank-adjusted net debt-to-EBITDA ratio of 1.5x to 2.0x[24] - Engineered Systems bookings reached $349 million in Q3 2024[47] - The company's Engineered Systems backlog was $1.3 billion at the end of Q3 2024[48]

Core Viewpoint - Enerflex Ltd. is facing a potential contract termination for the EH Cryo project in Kurdistan due to security concerns following a drone attack, which the company disputes as wrongful [2][3]. Group 1: Project Status and Financial Implications - As of June 30, 2024, the EH Cryo project was approximately 85% complete, with a net unbilled revenue asset of about $160 million recognized [4]. - The EH Cryo project accounted for approximately 6% of Enerflex's Engineered Systems backlog at the end of Q2 2024 [4]. - Enerflex has provided a $31 million Letter of Credit in support of its obligations under the EH Cryo project contract, funded through its Revolving Credit Facility and LC Facility [4]. Group 2: Company Response and Future Actions - Enerflex intends to dispute the customer's termination notice and protect its contractual rights, supported by expert security input [3]. - The company is focused on resolving the situation while safeguarding the interests of its stakeholders and will provide updates as necessary [5]. Group 3: Company Overview - Enerflex is a global provider of energy infrastructure and energy transition solutions, emphasizing natural gas and sustainability [9]. - The company employs over 4,500 professionals dedicated to transforming energy for a sustainable future [9].

Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2024 was $614 million, an increase from $579 million in Q2 2023 and a decrease from $638 million in Q1 2024 [10] - Gross margin before depreciation and amortization was $173 million, or 28% of revenue, compared to $145 million (25% of revenue) in Q2 2023 and $119 million (19% of revenue) in Q1 2024 [11] - Adjusted EBITDA reached $122 million, up from $107 million in Q2 2023 and $69 million in Q1 2024 [11] Business Line Data and Key Metrics Changes - Energy Infrastructure generated revenues of $37 million with a gross margin of 62% in Q2 2024, compared to $33 million and 64% in the same period last year [5] - Aftermarket Services benefited from increased activity levels, achieving a gross margin before depreciation and amortization of 23% [11] - Engineered Systems bookings were $331 million, maintaining a backlog of $1.3 billion at the end of the quarter [6][11] Market Data and Key Metrics Changes - The U.S. Contract Compression fleet operated at high utilization levels, averaging 94% across approximately 428,000 horsepower [5] - Approximately 50% of the revenue from the International Energy Infrastructure business is generated in the Middle East [6] Company Strategy and Development Direction - The company aims to enhance financial flexibility and strengthen the balance sheet, targeting a bank-adjusted net debt to EBITDA ratio of 1.5 to 2 times [15] - Capital expenditures for 2024 are expected to be at the low end of the $90 million to $110 million guidance range, focusing on generating free cash flow and repaying debt [8][17] - The company is committed to providing meaningful returns to shareholders, with a quarterly dividend declared [18] Management's Comments on Operating Environment and Future Outlook - Management noted strong underlying macroeconomic drivers for the business, emphasizing the ongoing focus on global energy security and the need for low-emissions natural gas [9] - The company expects consistent demand across all business lines and geographic regions for the second half of the year [16] - Management is closely monitoring the impact of weak natural gas prices on customer demand, particularly in North America [7] Other Important Information - Free cash flow was reported at $72 million in the first half of the year, with net debt at $763 million [14][15] - The company extended the maturity date of its secured revolving credit facility to October 2026 and increased availability to $800 million [15] Q&A Session Summary Question: How does the company view booking activity in relation to rig count and commodity prices? - Management indicated that bookings traditionally lag the rig count by six to nine months, but they were pleasantly surprised by Q2 bookings driven by liquids infrastructure [21][22] Question: What are the implications of Archrock's acquisition for Enerflex? - Management noted that the acquisition reinforces the value of the contract compression asset class, which Enerflex has been investing in [26][28] Question: What factors are influencing the capital expenditures for 2024? - Management stated that they are being judicious in capital deployment to meet leverage targets, with a focus on precision in maintenance and growth capital expenditures [31] Question: What is the timeline for reaching the financial leverage target? - Management indicated that while it is difficult to pinpoint, they are highly focused on achieving the leverage target in the near to medium term [32] Question: Are there any areas for optimization in margins across regions? - Management emphasized that they are closely monitoring margin trends and focusing on operational excellence to improve margins [38]

分组1 - Enerflex reported quarterly earnings of $0.04 per share, missing the Zacks Consensus Estimate of $0.06 per share, compared to a loss of $0.02 per share a year ago, representing an earnings surprise of -33.33% [1] - The company posted revenues of $614 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 10.79%, and compared to year-ago revenues of $578.25 million [2] - Enerflex shares have increased approximately 13.3% since the beginning of the year, outperforming the S&P 500's gain of 9.9% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.07 on $563 million in revenues, and for the current fiscal year, it is $0.28 on $2.34 billion in revenues [7] - The Zacks Industry Rank for Oil and Gas - Exploration and Production - Canadian is currently in the top 17% of over 250 Zacks industries, indicating strong industry performance potential [8]

Core Insights - Enerflex reported a record adjusted EBITDA of $122 million for Q2/24, an increase from $107 million in Q2/23 and $69 million in Q1/24, indicating strong operational performance [1][3][5] - The company maintained a stable backlog of $1.3 billion in Engineered Systems (ES) and $1.6 billion in Energy Infrastructure (EI), providing strong visibility into future revenue [1][3][10] - Enerflex's bank-adjusted net debt-to-EBITDA ratio was 2.2x at the end of Q2/24, consistent with Q1/24 and improved from 2.8x in Q2/23, with a target range of 1.5x to 2.0x [1][4][5] Financial Performance - Revenue for Q2/24 was $614 million, up from $579 million in Q2/23 but down from $638 million in Q1/24, driven by higher ES and After-market Services (AMS) revenue [3][6] - Gross margin before depreciation and amortization increased to $173 million, or 28% of revenue, compared to $145 million (25%) in Q2/23 and $119 million (19%) in Q1/24 [3][6] - Cash provided by operating activities was $12 million, with a net working capital investment of $51 million, marking a $13 million improvement over Q2/23 [3][6] Operational Highlights - Enerflex's ES bookings totaled $331 million, maintaining a total backlog of $1.3 billion as of June 30, 2024, with strong demand primarily from North America [3][10] - The U.S. contract compression business achieved a utilization rate of 94% across a fleet of approximately 428,000 horsepower, generating $37 million in revenue with a gross margin of 65% [3][4][11] - The company suspended activities at a modularized cryogenic natural gas processing facility in Kurdistan due to a Force Majeure notice, continuing to evaluate the situation [3][4] Capital Allocation and Outlook - Enerflex expects full-year 2024 capital spending to be at the low end of the guidance range of $90 to $110 million, focusing on maintenance and customer-supported opportunities [1][12][13] - The company is committed to providing meaningful returns to shareholders, with plans to reevaluate capital allocation priorities once it operates within its target leverage range [13][15] - Enerflex continues to see consistent demand across all business lines, supported by customer contracts expected to generate approximately $1.6 billion in revenue during their current terms [9][10]

Core Points - Enerflex has extended the maturity of its revolving credit facility to October 2026 and increased its availability to $800 million, providing ample liquidity to support its global business [1][3][15] - The company is targeting a bank-adjusted net debt-to-EBITDA ratio of 1.5x to 2.0x as part of its new leverage framework [5][18] - Enerflex plans to repay its existing term loan, which had outstanding drawings of $120 million as of March 31, 2024, using cash on hand and the expanded revolving credit facility [16][6] Financial Strategy - The new leverage framework is supported by the company's U.S. contract compression fleet and international Energy Infrastructure product line, which is expected to generate approximately $1.6 billion in revenue during their current remaining terms [5][18] - The company maintains a $70 million unsecured credit facility, of which $36 million had been utilized as of March 31, 2024 [4][15] - Enerflex aims to provide meaningful returns to shareholders and will re-evaluate capital allocation priorities once it operates within its target leverage range, potentially increasing dividends, share repurchases, and further debt repayment [17][18] Management Commentary - Preet Dhindsa, Senior Vice President and CFO, expressed satisfaction with the extension and expansion of the revolving credit facility, highlighting its role in reducing finance costs and optimizing the debt structure [6][18] - The company remains focused on generating free cash flow, repaying debt, and lowering finance costs throughout 2024 [18]

Core Points - Enerflex Ltd. has extended the maturity of its secured revolving credit facility to October 13, 2026, and increased its availability to $800 million from $700 million, providing ample liquidity to support its global business [2][10][13] - The company is introducing a new target leverage framework, aiming for a bank-adjusted net debt-to-EBITDA ratio of 1.5x to 2.0x, which is supported by its U.S. contract compression fleet and international Energy Infrastructure product line [21][22] - Enerflex plans to repay its existing term loan of $120 million using cash on hand and the expanded revolving credit facility, reflecting ongoing efforts to reduce finance costs and optimize its debt structure [20][22] Financial Strategy - The company maintains a $70 million unsecured credit facility, with $36 million utilized as of March 31, 2024, supported by performance security guarantees from Export Development Canada [11] - Once operating within its target leverage range, Enerflex expects to re-evaluate capital allocation priorities, which may include increased dividends, share repurchases, and additional growth capital spending [12][21] - The Energy Infrastructure product line is projected to generate approximately $1.6 billion in revenue during its current remaining terms, underpinning the new leverage framework [21] Management Insights - Senior management expressed satisfaction with the extension and expansion of the revolving credit facility, highlighting the importance of financial flexibility and the path to increasing shareholder returns over time [13][22] - The company is focused on generating free cash flow, repaying debt, and lowering finance costs in 2024 [13]

Hi. Marc Rossiter Yes. Sure, Tim. Thank you. And to the remind listeners we executed two significant treated water solutions projects in Oman in 2022 and early 2023. One of those facilities, the one that was â in fact we received the order to expand was commissioned in November 2022. It immediately met all the performance targets exceeded our OpEx estimates. And within a few months, the customer engaged us on an expansion of that facility and we got that order in the first quarter. Tim Monachello Enerflex' ...

EFX 55-65% CAD$0.10 /share Committed to delivering the fuel of the future creating shareholder value as we meet demand Compelling Shareholder Value Proposition Differentiated global platform features synergistic product lines across the energy value chain Disciplined investments focused on profitability, financial strength, and generating strong returns STRATEGIC PRIORITIES Pay sustainable base dividend and generate strong cash flow to drive medium to long-term shareholder returns. 800 1) Source: Internatio ...