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]

Core Points - Enerflex Ltd. has entered into an amended and restated credit agreement, extending the maturity date of its revolving credit facility to July 11, 2028, with unchanged availability of $800 million [2] - As of March 31, 2025, Enerflex had drawn $117 million from its revolving credit facility [2] - The company maintains a $70 million unsecured credit facility supported by performance security guarantees from Export Development Canada [3] - The CFO of Enerflex expressed appreciation for the support from the lending syndicate, highlighting that the renewal of the credit facility enhances liquidity and supports long-term growth [4] - Enerflex's near-term priorities include enhancing profitability, leveraging its position in core operating countries, and maximizing free cash flow for shareholder returns and selective growth opportunities [5] - The company plans to release its financial results for the three and six months ended June 30, 2025, on August 7, 2025 [5] - A conference call will be held on August 7, 2025, at 8:00 a.m. (MDT) to discuss the company's results [6] Company Overview - Enerflex is a global provider of energy infrastructure and energy transition solutions, focusing on natural gas, low-carbon, and treated water solutions [12] - The company employs over 4,600 professionals and is committed to sustainability and the role of natural gas in the energy transition [12] - Enerflex's common shares are traded on the Toronto Stock Exchange and the New York Stock Exchange [13]

[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].

Leadership Transition - Marc Rossiter has stepped down as President, CEO, and Director of Enerflex, effective immediately [2][5] - Preet Dhindsa, the current Senior Vice President and CFO, has been appointed as Interim CEO [3][5] - The Board is conducting a comprehensive search for a permanent CEO with the assistance of an executive search firm [4] Company Strategy and Outlook - Enerflex reaffirms its outlook for 2025, expecting steady demand across its business lines and geographic regions [7] - The company aims to enhance profitability, leverage its position in core operating countries, and maximize free cash flow [6] - Approximately 65% of Enerflex's gross margin before depreciation and amortization is generated from its Energy Infrastructure product line and After-Market Services [7][12] Financial Performance and Shareholder Returns - Enerflex plans to increase direct shareholder returns, including a previously announced 50% increase in its quarterly dividend [6] - The company intends to implement a normal course issuer bid, subject to market conditions [6][18] - Total capital expenditures for 2025 are projected to be between $110 million and $130 million, with growth capital spending focused on customer-supported opportunities in the US and Middle East [12][14] Management Background - Preet Dhindsa has over 25 years of experience in the energy and financial services industries and has been with Enerflex since October 2023 [3][9] - Joe Ladouceur, who will serve as Interim CFO, has over 30 years of experience in finance and energy industries [3][10]

Financial Data and Key Metrics Changes - Enerflex reported consolidated revenue of $561 million in Q4 2024, a decrease from $574 million in Q4 2023 and $601 million in Q3 2024 [19] - Gross margin before depreciation and amortization was $174 million or 31% of revenue, compared to $158 million or 28% in Q4 2023 and $176 million or 29% in Q3 2024 [19] - Adjusted EBITDA increased to $121 million from $91 million in Q4 2023 and remained stable compared to $120 million in Q3 2024 [19] - Free cash flow was $76 million, down from $139 million in Q4 2023, which included a working capital recovery of $112 million [21] Business Line Data and Key Metrics Changes - Energy Infrastructure and After-Market Services generated 69% of gross margin before depreciation and amortization in 2024, indicating their importance to profitability [6] - After-Market Services gross margin before depreciation and amortization was 22% in Q4 2024, benefiting from strong customer maintenance programs [20] - Engineered Systems recorded bookings of $301 million, with a total backlog holding steady at $1.3 billion [14][15] Market Data and Key Metrics Changes - The United States accounted for 45% of consolidated revenue in 2024, with Canada and Mexico contributing 10% and 3%, respectively [9] - The U.S. contract compression business showed strong fundamentals, with utilization in the mid-90% range for both the quarter and full year 2024 [11] Company Strategy and Development Direction - Enerflex's priorities for 2025 include enhancing profitability of core operations, leveraging its position to capitalize on expected increases in natural gas and produced water volumes, and maximizing free cash flow [17] - The company aims to maintain a disciplined capital program with total capital expenditures of $110 million to $130 million in 2025 [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational performance and the ability to generate sustainable returns, despite geopolitical tensions and potential tariff impacts [8][30] - The company is focused on generating sustainable free cash flow and improving balance sheet health for long-term growth [28] Other Important Information - Enerflex exited Q4 2024 with net debt of $616 million, having redeemed $62.5 million of its 9% notes due October 2027 [22][23] - The company plans to increase dividends starting Q1 2025, reflecting its improved leverage ratio [27] Q&A Session Summary Question: What is preventing a more prescriptive capital allocation strategy now that the debt target range has been hit? - Management acknowledged comfort with operations and emphasized the importance of maintaining flexibility in capital allocation while staying within the committed CapEx range [34][36] Question: Can you elaborate on expectations for Engineered Systems margins and when normalization might occur? - Management indicated that margins are expected to normalize progressively as the backlog is executed, influenced by the mix of compression and processing bookings [51][53] Question: What are the potential impacts of tariffs on the business? - Management stated that tariff impacts are largely a supply chain issue, with proactive measures in place to mitigate potential cost increases [63][70] Question: Is it too soon to discuss further M&A for the company? - Management indicated it is too early for new M&A discussions, expressing satisfaction with current operations and focusing on organic growth [78][80] Question: How is the dynamic between Canada and the U.S. regarding natural gas prices affecting operations? - Management noted steady demand in the U.S. and a cautious approach in Canada due to potential tariff impacts, but expressed confidence in the Canadian operations for 2025 [81][87]

Revenue and Financial Performance - Enerflex's consolidated revenue from the EI product line is expected to generate approximately $1.5 billion during its current terms, accounting for about 65% of gross margin before depreciation and amortization [16]. - The ES product line has a backlog of approximately $1.3 billion as of December 31, 2024, with most expected to convert into revenue over the next 12 months [17]. - Adjusted EBITDA for the three months ended December 31, 2024, was $121 million, compared to a net loss of $95 million for the same period in 2023 [27][30]. - For the twelve months ended December 31, 2024, Enerflex reported an adjusted EBITDA of $432 million, up from $378 million in 2023 [31][33]. - Cash provided by operating activities for Q4 2024 was $113 million, a decrease of 28.5% from $158 million in Q4 2023 [36]. - Free cash flow for the twelve months ended December 31, 2024, was $222 million, significantly up from $95 million in the previous year, representing a 134.7% increase [36]. - The gross margin before depreciation and amortization is expected to remain consistent with the historical long-term average for the ES product line [42]. Capital Expenditures and Investments - Enerflex is targeting total capital expenditures of $110 million to $130 million in 2025, including approximately $70 million for maintenance and PP&E capital expenditures [19]. - Enerflex expects total capital expenditures in 2025 to be between $110 million and $130 million, with approximately $70 million allocated for maintenance and PP&E [42]. Shareholder Returns and Dividends - The company announced a 50% increase in its quarterly dividend, reflecting its commitment to providing meaningful direct shareholder returns [20]. - The dividend payout ratio for Q4 2024 was 2.6%, compared to 1.4% in Q4 2023, indicating an increase in the proportion of earnings distributed as dividends [36]. Business Strategy and Outlook - The company is focused on enhancing profitability and maximizing free cash flow to strengthen its financial position and support selective growth opportunities [14]. - Enerflex anticipates steady demand across its business lines and geographic regions for 2025, supported by strong fundamentals in contract compression in the USA [42]. - The medium-term outlook for Enerflex's ES products and services remains attractive, driven by expected increases in natural gas and produced water volumes [17]. - The company aims to further reduce debt and provide direct shareholder returns while creating long-term value for shareholders [42]. Geographic Revenue Contribution - Enerflex's operations in the USA generated 45% of consolidated revenue in 2024, while Canada and Mexico contributed 10% and 3%, respectively [18]. Debt Management - Enerflex's bank-adjusted net debt-to-EBITDA ratio is calculated to assess compliance with financial covenants related to its debt instruments [38].

Core Viewpoint - Enerflex Ltd. announces the retirement of W. Byron Dunn and Michael A. Weill from its Board of Directors effective January 1, 2025, in accordance with the company's Board Retirement Policy [1][2]. Group 1: Board Changes - The Board expresses gratitude to Byron and Mike for their significant contributions since the company's spinoff from Toromont, highlighting their role in establishing Enerflex as a leading provider of energy infrastructure and transition solutions [2]. - In preparation for the retirements, Joanne Cox has been appointed as Chair of the Human Resources and Compensation Committee, and Tom Tyree as Chair of the Nominating and Corporate Governance Committee [2]. Group 2: Company Overview - Enerflex is described as a premier integrated global provider of energy infrastructure and energy transition solutions, focusing on natural gas, low-carbon, and treated water solutions [3]. - The company employs over 4,600 professionals, including engineers, manufacturers, technicians, and innovators, all working towards the vision of transforming energy for a sustainable future [3]. - Enerflex remains committed to the future of natural gas while emphasizing sustainability and supporting energy transition and decarbonization efforts [3].