Financial Data and Key Metrics Changes - The company reported consolidated revenues of $615 million in Q2 2025, slightly up from $614 million in Q2 2024 and $552 million in Q1 2025 [14] - Gross margin before depreciation and amortization was $175 million, representing 29% of revenue, compared to $173 million (28%) in Q2 2024 and $161 million (29%) in Q1 2025 [14] - Adjusted EBITDA reached a record $130 million, up from $122 million in Q2 2024 and $113 million in Q1 2025 [15] - Free cash flow was a use of cash of $39 million in Q2 2025, compared to a use of cash of $4 million in Q2 2024 and a source of cash of $85 million in Q1 2025 [16] Business Line Data and Key Metrics Changes - Energy infrastructure and aftermarket services contributed 65% of gross margin before depreciation and amortization in Q2 2025 [5] - The energy infrastructure business generated a gross margin before D&A of $86 million, compared to $77 million in Q2 2024 and $86 million in Q1 2025 [15] - Aftermarket services gross margin before D&A was 23% in the quarter, benefiting from strong customer maintenance programs [10] Market Data and Key Metrics Changes - The U.S. contract compression business maintained utilization above 90% for the past fourteen quarters, with a backlog of $1.2 billion at the end of Q2 2025 [6][11] - The international energy infrastructure business is supported by approximately $1.3 billion of contracted revenue with an average contract term of about five years [10] Company Strategy and Development Direction - The company aims to enhance profitability of core operations and maximize free cash flow to strengthen its financial position and provide direct shareholder returns [12] - Capital expenditures for 2025 are expected to approximate $120 million, with $60 million earmarked for growth initiatives primarily in the U.S. contract compression business [20] - The company is focused on leveraging its leading position in core operating countries to capitalize on expected increases in natural gas and produced water volumes [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals driving growth, including global energy security and increasing demand for natural gas [23] - The leadership transition is ongoing, with a comprehensive search for a permanent CEO in progress [12] Other Important Information - The company returned $18 million to shareholders in Q2 2025 through dividends and share repurchases [21] - The bank adjusted net debt to EBITDA ratio was approximately 1.3 times at the end of Q2 2025, down from 2.2 times at the end of Q2 2024 [18] Q&A Session Summary Question: What is driving the tightness in utilization in U.S. contract compression? - Management noted a favorable supply-demand balance in the U.S. contract compression market, supported by disciplined actions from major competitors and increasing natural gas production [27] Question: Can you elaborate on the expansion of the North American manufacturing facility? - The company has acquired additional land adjacent to its U.S. facility in Houston to maintain optionality for future growth, despite having sufficient capacity currently [36][38] Question: What are the expectations for CapEx in 2026 and beyond? - The company plans to continue strategic investments in the U.S. contract compression fleet, with a focus on aligning with customer planning cycles and supply chain realities [41] Question: How do you view your time to market for new compression compared to competitors? - Management believes their vertically integrated model provides a competitive advantage in time to market compared to competitors using third-party manufacturers [43] Question: What is the outlook for G&A expenses moving forward? - Management expects G&A expenses to remain at a favorable level due to synergies from integration and ongoing efforts to simplify the business [50]

Company Overview - Enerflex has a market capitalization of CAD$1.4 billion and offers an annual dividend of CAD$0.15 per share, resulting in a dividend yield of 1.3%[3] - The top 10 customers account for approximately 35% of Enerflex's total revenue, while the largest single customer contributes about 5%[7] - Enerflex has repaid $396 million of long-term debt since the beginning of 2023, reducing the leverage ratio from 3.3x at year-end 2022 to 1.3x at the end of Q2/25[39, 42] Market Position and Growth - Global demand for natural gas is forecasted to grow by 15% over the next decade, requiring U S and Canadian supply to increase by approximately 25%[15] - Approximately 20 Bcf/d is expected to be added to North American LNG export capacity by 2030, more than doubling the existing capacity of 14 Bcf/d[22] - Data center power demand is projected to reach approximately 700 Twh by 2035, potentially creating a demand of approximately 5 0 Bcf/d[24, 25] Financial Performance and Strategy - Energy Infrastructure and After-Market Services generated 66% of consolidated gross margin before depreciation and amortization[74] - The Engineered Systems backlog remains strong at $1.2 billion, while the Energy Infrastructure contract backlog is at $1.5 billion[74, 75] - Capital spending for 2025 is targeted at approximately $120 million, including approximately $60 million for growth capital[44, 76]

Group 1 - Enerflex reported quarterly earnings of $0.49 per share, significantly exceeding the Zacks Consensus Estimate of $0.07 per share, representing an earnings surprise of +600.00% [1] - The company posted revenues of $615 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 10.82% [2] - Over the last four quarters, Enerflex has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Group 2 - The current consensus EPS estimate for the coming quarter is $0.10 on revenues of $662 million, and for the current fiscal year, it is $0.71 on revenues of $2.31 billion [7] - The Zacks Industry Rank for Oil and Gas - Exploration and Production - Canadian is currently in the top 41% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Core Insights - Enerflex reported a record adjusted EBITDA of $130 million for Q2/25, an increase from $122 million in Q2/24 and $113 million in Q1/25, driven by higher gross margins and operational efficiencies [4][11][25] - The company generated revenue of $615 million in Q2/25, slightly up from $614 million in Q2/24 and significantly higher than $552 million in Q1/25 [4][11] - Net earnings rose to $60 million or $0.49 per share in Q2/25, compared to $5 million or $0.04 per share in Q2/24 and $24 million or $0.19 per share in Q1/25 [4][11] Financial Performance - Gross margin before depreciation and amortization was $175 million, representing 29% of revenue, compared to $173 million (28%) in Q2/24 and $161 million (29%) in Q1/25 [4][11] - Selling, general and administrative expenses (SG&A) decreased to $61 million, down from $75 million in Q2/24, due to cost-saving initiatives [4][11] - Free cash flow was a use of cash of $39 million in Q2/25, compared to a use of cash of $4 million in Q2/24 and a source of cash of $85 million in Q1/25 [4][11][29] Backlog and Market Position - The Engineered Systems (ES) backlog remained steady at $1.2 billion, providing strong visibility into future revenue [10][15] - The Energy Infrastructure (EI) contract backlog was robust at $1.5 billion, expected to generate approximately $1.5 billion of revenue over their remaining terms [2][15] - Bookings for ES were $365 million in Q2/25, up from $331 million in Q2/24, indicating a healthy demand environment [10][15] Capital Expenditures and Shareholder Returns - Capital expenditures for 2025 are targeted at approximately $120 million, with about $60 million allocated for growth opportunities [2][5][18] - The company returned $18 million to shareholders in Q2/25 through dividends and share repurchases, with a quarterly dividend declared at C$0.0375 per share [19][21][20] Management Commentary and Outlook - Management expressed confidence in the company's ability to generate stable returns, supported by strong fundamentals in energy security and natural gas demand [9][14] - The company aims to enhance profitability, leverage its market position, and maximize free cash flow to strengthen its financial position [14][15]

Company Overview - Enerflex's market capitalization is CAD$1.4 billion with an annual dividend of CAD$0.15 per share, resulting in a dividend yield of 1.3%[3] - The company has been operating for 45 years and employs approximately 4,400 people across 7 core countries, with 25 BOOM projects[3] Market Position and Growth - Global demand for natural gas is forecasted to grow by 15% over the next decade, requiring U S and Canadian supply to increase by approximately 25%[15] - Approximately 20 Bcf/d is expected to be added to North American LNG export capacity by 2030, more than doubling the existing capacity of 14 Bcf/d[22] - Data center power demand is projected to reach approximately 700 Twh by 2035, potentially creating a demand of approximately 5 0 Bcf/d[24, 25] Financial Performance and Strategy - Adjusted gross margin from recurring sources accounts for 65% of the total[27] - The company's bank-adjusted net debt-to-EBITDA ratio is 1 3x, compared to a peer range of 3 0x to 4 6x for contract compression and energy infrastructure peers[33] - Enerflex has repaid $396 million of long-term debt since the beginning of 2023, reducing the leverage ratio from 3 3x at year-end 2022 to 1 3x by Q2/25[39, 42] - The company is authorized to acquire up to approximately 6 2 million common shares through March 31, 2026, representing 5% of the float[44, 76] Energy Infrastructure Business - The company's Energy Infrastructure business has approximately $1 3 billion in revenue under contract, with a weighted average contract term of approximately 5 years, extending to 2033[54] - Enerflex operates approximately 1 1 million horsepower of compression internationally, including 23 BOOM gas plants and 2 BOOM produced water treatment facilities[54] - Approximately 75% of the U S contract compression fleet operates in the Permian Basin, with over 20% of the total fleet being electric drive, and fleet utilization exceeding 90% over the past two years[58]

All amounts presented in this release are in U.S. Dollar ("USD") unless otherwise stated. CALGARY, Alberta, July 14, 2025 (GLOBE NEWSWIRE) -- Enerflex Ltd. (TSX: EFX) (NYSE: EFXT) ("Enerflex" or the "Company") is pleased to announce that the Company has entered into an amended and restated credit agreement dated July 11, 2025 with respect to its syndicated secured revolving credit facility (the "RCF"). The maturity date of the RCF has been extended by three years to July 11, 2028 and availability is unchang ...

[Interim Condensed Consolidated Financial Statements](index=1&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) [Interim Condensed Consolidated Statements of Financial Position](index=1&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Financial%20Position) Total assets decreased slightly to $2,758 million at March 31, 2025, from $2,791 million, while total liabilities decreased, leading to an increase in total shareholders' equity | Metric | March 31, 2025 ($M) | December 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :-------------------- | :--------------------- | :---------- | :--------- | | Total Assets | 2,758 | 2,791 | (33) | -1.18% | | Total Liabilities | 1,683 | 1,742 | (59) | -3.39% | | Total Shareholders' Equity | 1,075 | 1,049 | 26 | 2.48% | | Cash and cash equivalents | 75 | 92 | (17) | -18.48% | | Accounts receivable | 378 | 398 | (20) | -5.03% | | Inventories | 269 | 258 | 11 | 4.26% | | Long-term debt | 639 | 708 | (69) | -9.75% | | Deferred revenue (current) | 401 | 375 | 26 | 6.93% | [Interim Condensed Consolidated Statements of Earnings (Loss) and Other Comprehensive Income (Loss)](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Earnings%20(Loss)%20and%20Other%20Comprehensive%20Income%20(Loss)) The company achieved a significant turnaround to net earnings of **$24 million** in Q1 2025 from a **$18 million** loss in Q1 2024, driven by higher gross margin and reduced SG&A expenses despite decreased revenue | Metric | Three months ended March 31, 2025 ($M) | Three months ended March 31, 2024 ($M) | Change ($M) | Change (%) | | :----------------------------------- | :------------------------------------- | :------------------------------------- | :---------- | :--------- | | Revenue | 552 | 638 | (86) | -13.48% | | Cost of goods sold ("COGS") | 424 | 551 | (127) | -23.05% | | Gross margin | 128 | 87 | 41 | 47.13% | | Selling, general and administrative expenses ("SG&A") | 57 | 78 | (21) | -26.92% | | Operating income | 71 | 8 | 63 | 787.50% | | Net earnings (loss) | 24 | (18) | 42 | -233.33% | | Earnings (loss) per share – basic | 0.19 | (0.15) | 0.34 | -226.67% | [Interim Condensed Consolidated Statements of Cash Flows](index=3&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow slightly decreased, while cash used in investing and financing activities increased, primarily due to higher RCF repayments and increased dividends | Metric | Three months ended March 31, 2025 ($M) | Three months ended March 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------------- | :------------------------------------- | :------------------------------------- | :---------- | :--------- | | Cash provided by operating activities | 96 | 101 | (5) | -4.95% | | Cash used in investing activities | (26) | (7) | (19) | 271.43% | | Cash used in financing activities | (86) | (78) | (8) | 10.26% | | Increase (decrease) in cash and cash equivalents | (17) | 15 | (32) | -213.33% | | Cash and cash equivalents, end of period | 75 | 110 | (35) | -31.82% | [Interim Condensed Consolidated Statements of Changes in Equity](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total shareholders' equity increased to $1,075 million at March 31, 2025, from $1,049 million at January 1, 2025, driven by net earnings and other comprehensive income, partially offset by dividends | Metric | At March 31, 2025 ($M) | At January 1, 2025 ($M) | Change ($M) | Change (%) | | :-------------------------------- | :--------------------- | :---------------------- | :---------- | :--------- | | Total Shareholders' Equity | 1,075 | 1,049 | 26 | 2.48% | | Retained Earnings | 101 | 80 | 21 | 26.25% | | Accumulated other comprehensive losses | (209) | (214) | 5 | -2.34% | [Notes to the Interim Condensed Consolidated Financial Statements](index=5&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Summary of Material Accounting Policies](index=5&type=section&id=Note%201.%20Summary%20of%20Material%20Accounting%20Policies) The financial statements are prepared in accordance with IFRS and IAS 34, with no significant changes in accounting policies except for the adoption of amendments to IAS 21 regarding exchangeability of currency, which had no adjustment impact on January 1, 2025 - The unaudited interim condensed consolidated financial statements were prepared in accordance with IFRS as issued by the IASB and IAS 34, approved by the Board on May 7, 2025[9](index=9&type=chunk)[10](index=10&type=chunk) - The company adopted amendments to IAS 21, 'The Effects of Changes in Foreign Exchange Rates,' effective January 1, 2025, which clarify how to assess currency exchangeability and estimate spot rates, with no adjustment resulting from its adoption[13](index=13&type=chunk)[14](index=14&type=chunk)[16](index=16&type=chunk) [Note 2. Accounts Receivable and Unbilled Revenue](index=6&type=section&id=Note%202.%20Accounts%20Receivable%20and%20Unbilled%20Revenue) Accounts receivable decreased by **$20 million** due to reduced trade receivables, while unbilled revenue slightly increased, with a significant portion remaining current | Metric | March 31, 2025 ($M) | December 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :-------------------- | :--------------------- | :---------- | :--------- | | Accounts receivable | 378 | 398 | (20) | -5.03% | | Trade receivables, net | 363 | 389 | (26) | -6.68% | | Current to 90 days | 303 | 308 | (5) | -1.62% | | Over 90 days | 71 | 92 | (21) | -22.83% | | Total unbilled revenue | 165 | 159 | 6 | 3.77% | [Note 3. Energy Infrastructure Assets](index=7&type=section&id=Note%203.%20Energy%20Infrastructure%20Assets) Net book value of EI assets under operating leases decreased slightly, while revenue from these leases increased in LATAM and EH segments, with finance lease receivables also decreasing at a **7.6%** average interest rate | Metric | March 31, 2025 ($M) | December 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------------- | :-------------------- | :--------------------- | :---------- | :--------- | | EI assets - operating leases (Net book value) | 696 | 713 | (17) | -2.38% | | EI assets - finance leases receivable (Closing balance) | 230 | 238 | (8) | -3.36% | - Revenue from operating leases for the three months ended March 31, 2025, was **$50 million** in LATAM and EH segments (up from **$47 million** in 2024) and **$37 million** from NAM contract compression fleet (up from **$36 million** in 2024)[22](index=22&type=chunk) - The average interest rate implicit in finance leases was **7.6%** per annum at March 31, 2025, unchanged from December 31, 2024[27](index=27&type=chunk) [Note 4. Deferred Revenue](index=8&type=section&id=Note%204.%20Deferred%20Revenue) Deferred revenue increased by $26 million from the opening balance, primarily due to cash received in advance of revenue recognition exceeding revenue subsequently recognized | Metric | Three months ended March 31, 2025 ($M) | Twelve months ended December 31, 2024 ($M) | | :------------------------------------- | :------------------------------------- | :----------------------------------------- | | Opening balance | 386 | 319 | | Cash received in advance of revenue recognition | 219 | 1,067 | | Revenue subsequently recognized | (193) | (996) | | Closing balance | 412 | 386 | | Current deferred revenue | 401 | 375 | [Note 5. Long-Term Debt](index=9&type=section&id=Note%205.%20Long-Term%20Debt) Long-term debt decreased by **$69 million** due to reduced RCF drawings, with the company remaining compliant with all debt covenants and showing improved ratios | Metric | March 31, 2025 ($M) | December 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------------- | :-------------------- | :--------------------- | :---------- | :--------- | | Long-term debt | 639 | 708 | (69) | -9.75% | | Notes | 563 | 563 | 0 | 0.00% | | Drawings on the RCF | 117 | 191 | (74) | -38.74% | Debt Covenants Performance (Three months ended March 31) | Covenant | Requirement | 2025 Performance | 2024 Performance | | :------------------------------------- | :---------- | :--------------- | :--------------- | | Senior secured net funded debt to EBITDA ratio – Maximum | 2.5x | 0.1x | 0.5x | | Bank-adjusted net debt to EBITDA ratio – Maximum | 4.0x | 1.3x | 2.2x | | Interest coverage ratio – Minimum | 2.5x | 5.1x | 3.7x | - The weighted average interest rate on the RCF for the three months ended March 31, 2025, was **6.1%**, down from **7.4%** at December 31, 2024[33](index=33&type=chunk) [Note 6. Share Capital](index=10&type=section&id=Note%206.%20Share%20Capital) Common share capital remained stable at **$505 million**, with a slight increase in shares outstanding due to option exercises, and an NCIB was approved to repurchase up to **5%** of public float | Metric | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Number of common shares | 124,150,067 | 124,143,179 | | Common share capital ($M) | 505 | 505 | - The Toronto Stock Exchange approved the company's application for a Normal Course Issuer Bid (NCIB) to acquire up to **6,159,695** Common Shares (approximately **5%** of its public float) for cancellation, commencing April 1, 2025, and terminating no later than March 31, 2026[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 7. Revenue](index=11&type=section&id=Note%207.%20Revenue) Total revenue decreased by **13.48%** year-over-year, primarily driven by a decline in Energy Infrastructure, with significant geographical shifts including decreases in Oman and the United States, offset by growth in Argentina and Canada Revenue by Product Line (Three months ended March 31) | Product Line | 2025 ($M) | 2024 ($M) | Change ($M) | Change (%) | | :------------- | :-------- | :-------- | :---------- | :--------- | | EI | 153 | 229 | (76) | -33.19% | | AMS | 120 | 121 | (1) | -0.83% | | ES | 279 | 288 | (9) | -3.13% | | Total revenue | 552 | 638 | (86) | -13.48% | Revenue by Geographic Location (Three months ended March 31) | Geographic Location | 2025 ($M) | 2024 ($M) | Change ($M) | Change (%) | | :------------------ | :-------- | :-------- | :---------- | :--------- | | United States | 246 | 282 | (36) | -12.77% | | Canada | 76 | 59 | 17 | 28.81% | | Argentina | 57 | 36 | 21 | 58.33% | | Oman | 32 | 125 | (93) | -74.40% | | Nigeria | 28 | 18 | 10 | 55.56% | | Total revenue | 552 | 638 | (86) | -13.48% | Unsatisfied Performance Obligations as at March 31, 2025 | Product Line | Less than one year ($M) | One to two years ($M) | Greater than two years ($M) | Total ($M) | | :------------- | :---------------------- | :-------------------- | :-------------------------- | :--------- | | EI | 441 | 336 | 720 | 1,497 | | AMS | 76 | 36 | 70 | 182 | | ES | 1,108 | 87 | 11 | 1,206 | | Total | 1,625 | 459 | 801 | 2,885 | [Note 8. Selling, General and Administrative Expenses](index=11&type=section&id=Note%208.%20Selling,%20General%20and%20Administrative%20Expenses) Total SG&A expenses decreased by $21 million year-over-year, primarily driven by a reduction in share-based compensation and depreciation and amortization | Metric | Three months ended March 31, 2025 ($M) | Three months ended March 31, 2024 ($M) | Change ($M) | Change (%) | | :-------------------------- | :------------------------------------- | :------------------------------------- | :---------- | :--------- | | Core SG&A | 54 | 58 | (4) | -6.90% | | Share-based compensation | (3) | 6 | (9) | -150.00% | | Depreciation and amortization | 6 | 12 | (6) | -50.00% | | Bad debt expense | - | 2 | (2) | -100.00% | | Total SG&A | 57 | 78 | (21) | -26.92% | [Note 9. Segmented Information](index=12&type=section&id=Note%209.%20Segmented%20Information) NAM and LATAM segments improved operating income, while EH's operating loss narrowed, leading to a substantial overall increase in operating income due to better gross margins and reduced SG&A Revenue by Segment (Three months ended March 31) | Segment | 2025 ($M) | 2024 ($M) | Change ($M) | Change (%) | | :-------- | :-------- | :-------- | :---------- | :--------- | | NAM | 362 | 369 | (7) | -1.90% | | LATAM | 102 | 84 | 18 | 21.43% | | EH | 88 | 185 | (97) | -52.43% | | Total | 552 | 638 | (86) | -13.48% | Operating Income (Loss) by Segment (Three months ended March 31) | Segment | 2025 ($M) | 2024 ($M) | Change ($M) | Change (%) | | :-------- | :-------- | :-------- | :---------- | :--------- | | NAM | 38 | 33 | 5 | 15.15% | | LATAM | 21 | 10 | 11 | 110.00% | | EH | 12 | (35) | 47 | -134.29% | | Total | 71 | 8 | 63 | 787.50% | - Depreciation and amortization for the three months ended March 31, 2025, was **$16 million** in NAM (down from **$18 million** in 2024), **$11 million** in LATAM (up from **$10 million** in 2024), and **$12 million** in EH (down from **$16 million** in 2024)[48](index=48&type=chunk) [Note 10. Finance Costs and Income](index=12&type=section&id=Note%2010.%20Finance%20Costs%20and%20Income) Net finance costs decreased by $3 million year-over-year, primarily due to a reduction in interest on debt | Metric | Three months ended March 31, 2025 ($M) | Three months ended March 31, 2024 ($M) | Change ($M) | Change (%) | | :---------------- | :------------------------------------- | :------------------------------------- | :---------- | :--------- | | Interest on debt | 16 | 23 | (7) | -30.43% | | Total finance costs | 24 | 27 | (3) | -11.11% | | Net finance costs | 23 | 26 | (3) | -11.54% | [Note 11. Financial Instruments](index=13&type=section&id=Note%2011.%20Financial%20Instruments) The fair value of long-term debt was **$728 million**, exceeding its carrying value of **$639 million**, with the company utilizing foreign exchange contracts and designating USD borrowings for net investment hedging | Metric | March 31, 2025 ($M) | December 31, 2024 ($M) | | :------------------------------------- | :-------------------- | :--------------------- | | Carrying value of long-term debt | 639 | 708 | | Estimated fair value of long-term debt | 728 | 804 | - The fair value of the Notes at March 31, 2025, was determined using a discounted cash flow basis with a weighted average discount rate of **7.2%** (compared to **6.3%** at December 31, 2024)[53](index=53&type=chunk) - The company hedges its exposure to CAD/USD fluctuations on its net investment in USD functional subsidiaries by designating a portion of USD borrowings as a hedging instrument, with foreign exchange gains and losses on translation of **$593 million** in designated USD borrowings included in accumulated other comprehensive losses[55](index=55&type=chunk) [Note 12. Supplemental Cash Flow Information](index=14&type=section&id=Note%2012.%20Supplemental%20Cash%20Flow%20Information) Net change in working capital and other significantly decreased due to shifts in accounts receivable, unbilled revenue, and deferred revenue, while cash interest paid decreased and income taxes paid substantially increased | Metric | Three months ended March 31, 2025 ($M) | Three months ended March 31, 2024 ($M) | Change ($M) | Change (%) | | :------------------------------------- | :------------------------------------- | :------------------------------------- | :---------- | :--------- | | Net change in working capital and other | 34 | 83 | (49) | -59.04% | | Accounts receivable | 20 | (10) | 30 | -300.00% | | Unbilled revenue | (6) | (9) | 3 | -33.33% | | Deferred revenue | 26 | 53 | (27) | -50.94% | | Total interest paid | 5 | 10 | (5) | -50.00% | | Income taxes paid | 28 | 7 | 21 | 300.00% | [Note 13. Guarantees, Commitments, and Contingencies](index=14&type=section&id=Note%2013.%20Guarantees,%20Commitments,%20and%20Contingencies) The company held **$112 million** in outstanding letters of credit and significant 2025 purchase obligations, while actively engaged in legal proceedings, including an arbitration for the EH Cryo project with a counterclaim filed | Metric | March 31, 2025 ($M) | December 31, 2024 ($M) | | :-------------------------- | :-------------------- | :--------------------- | | Outstanding letters of credit | 112 | 116 | Purchase Obligations | Year | Amount ($M) | | :--- | :---------- | | 2025 | 565 | | 2026 | 10 | | 2027 | 2 | - Enerflex declared Force Majeure on the EH Cryo project in Q2 2024 due to a fatal attack at an adjacent site, with the customer initiating arbitration alleging breach of contract, which Enerflex disputes, filing a counterclaim to recover amounts owing, and remaining assets for this project were **$161 million** at March 31, 2025[64](index=64&type=chunk) [Note 14. Seasonality](index=15&type=section&id=Note%2014.%20Seasonality) Canadian and some U.S. energy operations exhibit seasonal trends, typically yielding higher Q4 revenue due to well-site access and drilling, while LATAM and EH segments are less impacted - The energy sector in Canada and parts of the USA exhibits seasonal trends, leading to generally higher revenue in the fourth quarter due to well-site access and drilling pattern adjustments[65](index=65&type=chunk) - LATAM and EH segments are not significantly impacted by seasonal variations, though certain parts of the USA can be affected depending on customer activity, demand, and location[65](index=65&type=chunk) [Note 15. Subsequent Events](index=15&type=section&id=Note%2015.%20Subsequent%20Events) Subsequent to the reporting period, Enerflex declared a quarterly dividend of CAD $0.0375 per share, payable on June 3, 2025 - Enerflex declared a quarterly dividend of **CAD $0.0375** per share, payable on June 3, 2025, to shareholders of record on May 21, 2025[66](index=66&type=chunk) [Corporate Information](index=16&type=section&id=Corporate%20Information) [Board of Directors](index=16&type=section&id=Board%20of%20Directors) The Board of Directors includes Kevin Reinhart as Board Chair and members serving on various committees such as Human Resources and Compensation, Audit, and Nominating and Corporate Governance - Kevin Reinhart serves as the Board Chair, with key committees including Human Resources and Compensation, Audit, and Nominating and Corporate Governance[68](index=68&type=chunk)[69](index=69&type=chunk) [Executive Management](index=16&type=section&id=Executive%20Management) The executive management team is led by Preet S. Dhindsa as interim President & CEO and Joe Ladouceur as interim CFO, with other key leaders overseeing legal, administrative, and regional operations - Preet S. Dhindsa is the interim President & CEO, and Joe Ladouceur is the interim CFO, with other executive roles including SVP and General Counsel, SVP and Chief Administrative Officer, and Presidents for Latin America, Eastern Hemisphere, USA Region, and Canada[68](index=68&type=chunk) [Shareholder Information](index=17&type=section&id=Shareholder%20Information) Enerflex Ltd. is listed on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the trading symbols EFX and EFXT, respectively, with TSX Trust Company serving as the transfer agent - Enerflex is listed on the Toronto Stock Exchange (EFX) and New York Stock Exchange (EFXT), with TSX Trust Company as the transfer agent, registrar, and dividend-disbursing agent[70](index=70&type=chunk)

Financial Performance - Enerflex reported revenue of $552 million for Q1/25, a decrease from $638 million in Q1/24 and $561 million in Q4/24, primarily due to upfront revenue recognized in the previous year [3][5] - Adjusted EBITDA for Q1/25 was $113 million, up from $69 million in Q1/24 and $121 million in Q4/24, attributed to costs recognized in the prior year [3][7] - Free cash flow increased to $85 million in Q1/25 compared to $72 million in Q1/24, driven by lower maintenance capital spending [3][26] Operational Highlights - The company maintained a gross margin before depreciation and amortization of $161 million, representing 29% of revenue, compared to 19% in Q1/24 [3][7] - Enerflex's backlog included $1.5 billion in Energy Infrastructure (EI) contracts and $1.2 billion in Engineered Systems (ES) as of March 31, 2025, providing solid operational visibility [1][10] - The U.S. contract compression business generated $36 million in revenue with a gross margin of 72% during Q1/25, consistent with previous quarters [3][6] Balance Sheet and Liquidity - The company reduced its bank-adjusted net debt-to-EBITDA ratio to 1.3x at the end of Q1/25, down from 2.2x at the end of Q1/24 [1][6] - Enerflex exited Q1/25 with net debt of $564 million, a reduction of $179 million compared to Q1/24 [6][7] - Cash provided by operating activities was $96 million, including a net working capital recovery of $34 million [3][27] Management Commentary - The interim CEO highlighted the strong performance of the EI and After-Market Services (AMS) business lines, emphasizing the company's ability to generate sustainable returns [4] - The interim CFO noted that the company repaid an additional $74 million of debt during Q1/25, reflecting strong operational execution and disciplined capital allocation [4][6] Outlook - Enerflex expects its EI product line and AMS to account for approximately 65% of gross margin before depreciation and amortization during 2025 [10][12] - The company anticipates that the majority of the ES product line backlog will convert into revenue over the next 12 months [11][12] - Capital expenditures for 2025 are targeted between $110 million and $130 million, focusing on customer-supported opportunities primarily in the USA [14][32]

Corporate Governance - The Board of Directors of Enerflex Ltd. intends to initiate a search for a qualified independent director this year, consistent with good corporate governance [1] - The Board is committed to achieving at least 30% gender diversity on or before the Company's 2026 annual meeting [1] Financial Results - Enerflex plans to release its financial results and operating highlights for the three months ended March 31, 2025, prior to market open on May 8, 2025 [2] - The results will be communicated via news release and will be available on the Company's website and under its electronic profile on SEDAR+ and EDGAR [2] Conference Call - A conference call and audio webcast will be held on May 8, 2025, at 8:00 a.m. (MDT) to discuss the Company's results, followed by a question-and-answer period [3] - Participants can register for the call to receive dial-in numbers and a unique PIN [4] Company Overview - Enerflex is a premier integrated global provider of energy infrastructure and energy transition solutions, focusing on natural gas, low-carbon, and treated water solutions [8][9] - The Company employs over 4,600 engineers, manufacturers, technicians, and innovators, united by a vision of transforming energy for a sustainable future [9] - Enerflex remains committed to the future of natural gas and supports sustainability offerings to aid in energy transition and decarbonization efforts [9]

Core Viewpoint - Enerflex Ltd. has received approval from the Toronto Stock Exchange to implement a normal course issuer bid (NCIB) for repurchasing its common shares, which the company believes will be beneficial for its cash resources and shareholders [1][2]. Group 1: NCIB Details - The company is authorized to repurchase up to 6,159,695 common shares, approximately 5% of the public float as of March 18, 2025 [3]. - The NCIB will commence on April 1, 2025, and will terminate no later than March 31, 2026 [4]. - The daily maximum number of shares that can be purchased is 109,475, based on 25% of the average daily trading volume on the TSX [5]. Group 2: Purchase Mechanism - Purchases will be made in accordance with regulatory requirements through various exchanges, and the price will reflect the market price at the time of acquisition [4][5]. - Enerflex has established an automatic share purchase plan (ASPP) with its designated broker, allowing the broker to make purchases at its discretion based on set parameters [6]. Group 3: Company Overview - Enerflex is a global provider of energy infrastructure and energy transition solutions, focusing on natural gas and sustainability [10]. - The company employs over 4,600 professionals dedicated to transforming energy for a sustainable future [10].