Enerflex Ltd. Reports Second Quarter 2024 Financial and Operational Results

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]