Enerflex Ltd. Announces Second Quarter 2025 Financial and Operational Results

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]