Enerflex Q1 2025 Earnings Call Transcript

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May 8, 2025
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Operator

day, and thank you for standing by. Welcome to the Enerflex First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker today, Jeff Federly, Vice President, Corporate Development and Capital Markets. Please go ahead.

Jeff Fetterly
Jeff Fetterly
VP-Corporate Development and IR at Enerflex

Thank you, Michelle, and good morning, everyone. With me today are Preet Dinza, Interim President and CEO Joe Ladasur, Interim CFO and Ben Park, Enerflex's Controller. During today's call, prepared remarks will focus on three key areas: continued strong performance of Enerflex's business and our outlook capital allocation, including planned spending and direct returns to shareholders and three, our progress on near and long term strategic priorities. Before I turn it over to Preet, I'll remind everyone that today's discussion will include non IFRS and other financial measures as well as forward looking statements regarding Enerflex' expectations for future performance and business prospects. Forward looking information involves risks and uncertainties, and the stated expectations could differ materially from actual results or performance.

Jeff Fetterly
Jeff Fetterly
VP-Corporate Development and IR at Enerflex

For information, refer to the advisory statements within our news release, MD and A and other regulatory filings, all available on our website and under our SEDAR plus and EDGAR profiles. As part of our prepared remarks, will be referring to slides in our updated investor presentation, is available through a link on this webcast and on our website under the Investor Relations section. I'll turn it over to Preet for comments.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Thanks, Jeff, and thank you all for joining us on this morning's call. We are pleased to report another strong quarter of financial and operating results. Our energy infrastructure and aftermarket services business lines continue to deliver steady performance and reinforce Enerflex's ability to generate sustainable returns across our global platform. Energy infrastructure and aftermarket services contributed 70% of our gross margin before depreciation and amortization in the first quarter of twenty twenty five, And we expect these business lines will continue to represent the core of Enerflex' profitability in 2025. Our strong operational performance and focus on maximizing free cash flow has resulted in a rapid deleveraging of our balance sheet.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

We exited the first quarter of twenty twenty five at 1.3 times compared to 1.5 times at the end of Q4 twenty twenty four. And now a few highlights for each of our business lines. The Energy Infrastructure business continues to perform well across our three core regions, The U. S, Latin America and The Middle East. In The U.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

S, the fundamentals for contract compression remained strong, led by expected increases in natural gas production, notably in the Permian. We are pleased with the operational performance of our U. S. Contract compression business, reflecting utilization at the mid-ninety percent range for the quarter and revenue per horsepower per month and profitability showing continued momentum. Slides eighteen and nineteen of our investor presentation highlight our fleet composition and the strong relative operating performance of this part of our business.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Demand for new contract compression equipment in The U. S. Remains strong. We added approximately 20,000 horsepower during the quarter to exit 448,000 horsepower across our fleet and expect to be over 475,000 horsepower by the end of this year. New units are being deployed under multiyear contracts in core operating regions, with a focus on larger horsepower, natural gas and electric drive applications.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Slide sixteen and seventeen highlight our international energy infrastructure business, which includes approximately 1,200,000 horsepower of operated compression and 24 build, own, operate and maintain or groom projects in The Middle East and Latin America. Our two produced water projects in Oman continue to perform very well and we are in the process of expanding one of these sites, which we highlight on Slide 20. Our international energy infrastructure business is supported by approximately $1,300,000,000 of contracted revenue and an average contract term of approximately five years. Turning to aftermarket services, this business line benefited from strong activity levels, including customer maintenance activities. We're especially pleased with the performance of our AMS business in countries where Enerflex also operates DI assets, reflective of differentiated solution and strong competitive position in core countries.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

On the Engineered Systems side, we recorded bookings of $2.00 $5,000,000 during Q1. First quarter bookings were tempered by accelerated customer activity in the latter part of the fourth quarter of twenty twenty four, which resulted in select orders being pulled forward and customers pausing some decisions on expenditures due to commodity price volatility and evolving market conditions. We continue to have a strong ES backlog exiting Q1 twenty twenty five with approximately $1,200,000,000 the majority of which is expected to convert into revenue over the next twelve months. During 2025, ES gross margins are expected to align more closely with historical averages, reflecting both weaker domestic natural gas prices through much of 2024 and a shift in product mix. While near term ES revenues expect to remain steady, Enerflex continues to closely monitor evolving market conditions and increased near term uncertainty, including the impact of tariffs and lower oil prices, and we will adjust our business as appropriate.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

The company expects to be partially protected from the direct and indirect impact of tariffs through its diversified operations and ongoing risk management efforts. Enerflex's operations in The USA, Canada and Mexico are largely distinct in client partners and projects they serve. The United States is Enerflex's largest operating region, generating 45% of consolidated revenue on a trailing twelve month basis by destination of sale. And we believe the company is well positioned to benefit from growth in domestic energy production. Enerflex's operations in Canada and Mexico generated 113% of consolidated revenue on a trailing twelve month basis, respectively.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Despite increased near term risk and uncertainty for the ES product line, recent domestic natural gas prices have been constructive and the medium term outlook for ES products and services remains attractive, supported by anticipated growth in the natural gas produced water volumes across Enerflex's global footprint. I want to reiterate Enerflex's priorities in 2025. These include enhancing the profitability of core operations two, leveraging the company's leading position in core operating countries to capitalize on expected increases in natural gas and produced water volumes and three, maximizing free cash flow to strengthen Enerflex's financial position, provide direct shareholder returns and invest in selective customer supported opportunities for growth. Before I turn the call over to Joe, I would like to comment briefly on our recently announced leadership transition. On March 19, Enerflex announced that Mark Roster stepped out as President, CEO and Director.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Concurrently, I assumed the role as Interim President and CEO and Joe Lasser as Interim CFO. The Board is undertaking a comprehensive search to identify the company's permanent CEO and has retained a global executive search firm to assist with this process. The search process is making good progress, but we will not be commenting further. With that, I'll turn it over to Joe to speak about the financial side.

Joe Ladouceur
Joe Ladouceur
Interim CFO at Enerflex

Thank you, Preet, and good morning, everyone. Enerflex delivered strong first quarter results and we are particularly pleased with our ongoing progress in efficiently managing working capital, lowering net finance costs and reducing the company's leverage ratio. I'll start with highlights from the first quarter. We recorded consolidated revenues of $552,000,000 compared to $638,000,000 in Q1 twenty twenty four and five sixty one million dollars in Q4 twenty twenty four. Gross margin before depreciation and amortization was $161,000,000 or 29% of revenue compared to $119,000,000 or 19% of revenue in Q1 twenty twenty four and one hundred and seventy four million dollars or 31% of revenue during Q4 twenty twenty four.

Joe Ladouceur
Joe Ladouceur
Interim CFO at Enerflex

ES gross margin before depreciation and amortization decreased compared to Q4 due to product mix. As Preet referenced, the EI and AMS product lines generated 70% of consolidated gross margin before depreciation and amortization during Q1 twenty twenty five, and we continue to expect approximately 65% for the full year of 2025. Adjusted EBITDA was $113,000,000 compared to $69,000,000 in Q4 twenty twenty four and $120,000,000 during Q4 twenty twenty four. The year over year increase in adjusted EBITDA was primarily due to costs recognized related to an international ES project in Q1 twenty twenty four. Energy infrastructure performance continued to be strong with gross margin before D and A of 86,000,000 compared to $80,000,000 in Q1 twenty twenty four and $86,000,000 in Q4 twenty twenty four.

Joe Ladouceur
Joe Ladouceur
Interim CFO at Enerflex

Aftermarket services gross margin before D and A was 22% in the quarter, benefiting from strong customer maintenance programs. Enerflex's SG and A of 57,000,000 was $21,000,000 lower year over year and down $35,000,000 on a sequential basis, mainly due to decreased share based compensation and lower depreciation and amortization expense. Cash provided by operating activities was $96,000,000 in Q1 twenty twenty five, which included a working capital recovery of 34,000,000 We are pleased with our ongoing global efforts to efficiently manage working capital. Free cash flow increased to $85,000,000 in Q1 twenty twenty five compared to $72,000,000 during Q1 twenty twenty four and seventy six million dollars during Q4 twenty twenty four, primarily due to lower maintenance capital spend. Now I'd like to touch on our balance sheet and deleveraging.

Joe Ladouceur
Joe Ladouceur
Interim CFO at Enerflex

We exited the quarter with net debt of $564,000,000 which included $75,000,000 of cash and available liquidity of $672,000,000 compared to $614,000,000 in Q4. As a result of our continued focus on financial discipline and operational execution, We have repaid $433,000,000 of debt since the beginning of 2023. Our leverage ratio was 1.3 times at the end of Q1. Further details are included on slide 13 of our investor presentation. Let me shift now to capital allocation.

Joe Ladouceur
Joe Ladouceur
Interim CFO at Enerflex

First on our CapEx plans. We invested $33,000,000 in the business during the quarter consisting of $14,000,000 in capital expenditures, primarily for maintenance and $19,000,000 for expansion of an EI project in the Eastern Hemisphere that will be accounted for as a finance lease. Enerflex is targeting a disciplined capital program in 2025 with total capital expenditure guidance of $110,000,000 to $130,000,000 and that is unchanged. This includes 40,000,000 to $60,000,000 for growth capital expenditures. Similar to 2024, disciplined capital spending will be focused on customer supported opportunities with the majority of our growth focused on expanding our U.

Joe Ladouceur
Joe Ladouceur
Interim CFO at Enerflex

S. Contract compression fleet. We expect to grow our fleet to over 475,000 horsepower by the end of twenty twenty five with new units deployed at our multi year contracts and core operating regions. And now to direct shareholder returns. Enerflex returned $6,000,000 to shareholders through dividends in Q1.

Joe Ladouceur
Joe Ladouceur
Interim CFO at Enerflex

Our NCIB commenced on April 1 and authorized the company to repurchase up to approximately 6,200,000.0 shares through the March 2026. During the month of April 2025, Enerflex has repurchased 690,500 common shares at an average price of CAD10.15 per share. Going forward, capital allocation decisions will be based on delivering value to Enerflex shareholders and measured against Enerflex's ability to maintain balance sheet strength given evolving market conditions. In addition to increases in the company's dividend, share repurchases and disciplined growth capital spending, Enerflex will also consider further debt reduction to strengthen its balance sheet and lower net finance costs. Unlocking greater financial flexibility positions the company to respond to evolving market conditions and capitalize opportunities to optimize its debt stack.

Joe Ladouceur
Joe Ladouceur
Interim CFO at Enerflex

Finally, I want to thank Enerflex's employees for their efforts in delivering continued strong operational and financial results. Our focus remains on generating sustainable free cash flow, further improving balance sheet health and positioning the company for long term growth and value creation. With that, I will turn the call back to Fried for his closing remarks.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Thanks, Joe. We've made significant operational, financial and strategic strides in the recent quarters. Despite increasing near term risk and uncertainty, the fundamental drivers behind our business remain intact. Global energy security and the shift towards low emissions natural gas. Each of our business lines are delivering solid results and we believe are all well positioned to benefit from these fundamental drivers.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Moving forward, we're sharpening our focus on boosting profitability and strengthening resilience of our core operations, ensuring Enerflex generates sustained, attractive returns for shareholders over the long term. I look forward to building on our progress. And we'll now turn the call back over to the operator for questions.

Operator

Thank Our first question is going to come from the line of Michael Barth with Raymond James. Your line is open. Please go ahead.

Michael Barth
Michael Barth
Director at Raymond James

Hey, good morning, and thanks for taking my question. I was just wondering if you can comment on bookings trajectory into the second quarter. Like are you seeing a rebound from first quarter, just pace? Or is there sort of more deferrals?

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Thanks, Michael. So bookings, as we know, Q1 was a little bit light at $2.00 $5,000,000 As noted, some of the activity was pulled into Q4, which is quite constructive. And what we're seeing in Q1 and Q2, some of our customers and their end customers tempering some of the decisions, especially in Q1. Backlog is good at $1,200,000,000 And then what we're seeing now is just continued depth and opportunities in the market, both processing and compression. Question would be the timing, when do these hit?

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

But we feel we continue to feel good. And we felt that Q1 was a little light relative to Q4, but good backlog and we see good opportunities going forward.

Michael Barth
Michael Barth
Director at Raymond James

Great. Thanks. I'll turn it back.

Operator

Thank you. And one moment for our next question.

Operator

Our next question is going to be from the

Operator

line of Aaron MacNeil with TD Cowen. Your line is open. Please go ahead.

Aaron MacNeil
Director, Equity Research Analyst at TD Securities

Good morning, Thanks for taking my questions. Preet, a bit of a broader question for you, and I can appreciate that your role as interim CEO is somewhat limiting in terms of your ability to set the strategic direction of the company. I also noted the comments on strategic priorities for the year. But you're in the role today. Just wondering if you can give us any insights of being in the role, if anything, that you think should be changed or improved across the platform going forward?

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Erin, thanks for the question. When I took the role about seven weeks ago, we determined that it's still best to continue to move the business forward, have some prudence given what's going on geopolitically, tariffs, oil prices, etcetera. Working on our debt stack and free cash flow refinancing, Joe can get into that if we need to in a few moments. But we've got a good footprint and we'll continue to refine that global footprint. Cost savings is another important element to post integration as we simplify, optimize our business globally.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Interest and tax is another area that improves free cash flow. We've focused on that for quite some time. But overall, capital allocation is important priorities, growth capital in The U. S. Fleet, 2025 very important.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

We'll watch the markets carefully. And if we need to refine or adjust our trajectory for the year, we will. We have a few levers we can do it, but we are committed to growing our business organically, largely capital, where we have uncommitted opportunities, we may temper back but still stay range bound. But overall, I'm very pleased with the operations. We've got excellent leadership in all the regions, strong finance and corporate functions.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

So I feel good about what we've accomplished. And during this interim period, Joe and I, with our colleagues around the globe, will continue to advance the business.

Aaron MacNeil
Director, Equity Research Analyst at TD Securities

Makes sense. I know this is challenging given the uncertainty as well, but lots of good free cash flow in the quarter, working capital release, a credit to Joe, to be sure. But based on what you can see today, how would you rank the various capital allocation priorities between the ones you mentioned in the prepared remarks?

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

I'd say capital allocation, we've been consistent in stating the various levers that we have. Correct shareholder returns, Q3 last year, a 50% dividend bump we initiated. Share buybacks. We've been active effective April 1 and Joe has talked about those amounts. We have a year to buy up to 5% of public float as noted.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Growth capital earmarked for The U. S. And we've range bound growth as $40,000,000 60 million dollars Mesa is at $70,000,000 And once again, we feel really good about the economics of The U. S. Fleet, the utilization, increased horsepower we're putting into the market and we'll do further horsepower increases by the end of this year.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

And the revenue per horsepower per month is still quite constructive, a little over $20.28 dollars 20 9 dollars So we feel good about the economics on The U. S. Fleet. And as Joe noted, debt reduction prudence in today's environment, we feel is still relevant. So we'll continue to focus on free cash flow, effective working capital management globally that you've referenced and debt reduction.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

And then as we go to the market to refinance the debt, we look for even more constructive terms.

Aaron MacNeil
Director, Equity Research Analyst at TD Securities

Thanks, everyone. I'll turn it back.

Operator

Thank you. And one moment for our next question.

Operator

Our next question is going to

Operator

be from the line of Keith MacKay with RBC Capital Markets. Your line is open. Please go ahead.

Keith Mackey
Keith Mackey
Director - Global Equity Research, Oil & Gas Services at RBC Capital Markets

Hey, good morning and thanks for taking my questions. Just wanted to go back to the bookings topic. Obviously, last quarter last cycle bookings got fairly low for a number of quarters. Do you think we're headed into that type of environment again? And can you just talk about what you're seeing in the market as far as where the weakness is and where the strength might be, I.

Keith Mackey
Keith Mackey
Director - Global Equity Research, Oil & Gas Services at RBC Capital Markets

E, if the current gas strip holds? Do you think that there could be some pickup in gassier basins? Just some more commentary on the bookings would be helpful.

Jeff Fetterly
Jeff Fetterly
VP-Corporate Development and IR at Enerflex

Keith, it's Jeff. As Preet referenced in his remarks, we continue to see good depth of opportunities, especially in The U. S. And those touch on both the processing side and the compression side. Obviously just given the weighting of activity, the Permian figures prominently into that number as well.

Jeff Fetterly
Jeff Fetterly
VP-Corporate Development and IR at Enerflex

As we referenced in the release and was also in the prepared remarks, there is some constructiveness on the gas side, but at this point I think we view it more as optionality than necessarily a core driver of demand. But as referenced, there's precedent in our business for significant weakness in ES bookings in previous downturns. But where we see it today, the market continues to be fairly strong in terms of opportunities. The question is just going to be at what point do the operators execute on those opportunities and what conviction will they have on it as well. And that's something that's still, I'd say evolving and that we're trying to assess as quickly as possible.

Keith Mackey
Keith Mackey
Director - Global Equity Research, Oil & Gas Services at RBC Capital Markets

Got it. Okay, that's helpful. And just on the contract compression side, certainly there have been some announcements for rig count reductions in the Permian. Can you just talk about the visibility you have into the potential impact that decreased oil drilling might have on the demand for contract compression in the Permian? Are you still comfortable putting out the incremental horsepower that you have planned?

Keith Mackey
Keith Mackey
Director - Global Equity Research, Oil & Gas Services at RBC Capital Markets

And what type of contract visibility do you have on the new stuff, but also some equipment that may have expiries upcoming?

Jeff Fetterly
Jeff Fetterly
VP-Corporate Development and IR at Enerflex

So from a demand standpoint, you've seen sort of our utilization and our commentary, when you look at the other public companies that compete in that space, their commentary in recent days has also been very constructive on the market. And we continue to see good fundamentals at play that we expect will continue. As you said, there's been some indications from the operators of pulling back activity and capital spending, but it's still unclear what derivative impact that could have into the contract compression side specifically. As we've previously talked about, we are signing multi year contracts to support these new assets that we're putting in and we remain committed to the capital program guidance that we've talked about for 2025. And that's the side of the business that we continue to see good returns in, and we believe is an attractive area for us to grow our business.

Keith Mackey
Keith Mackey
Director - Global Equity Research, Oil & Gas Services at RBC Capital Markets

Okay, thanks very much. That's it for me.

Operator

Thank you. Our next question is going to come from the line of Tim Monachello with ATB Capital Markets. Your line is open. Please go ahead.

Tim Monachello
Managing Director at ATB Capital Markets

Hey. Good morning, everyone.

Tim Monachello
Managing Director at ATB Capital Markets

I wanted to ask a little bit more on the demand front, maybe have a better idea of, I guess, the, sources of demand and what they're levered to. So obviously, you've got some capital being pulled back by E and Ps with the with the crude quote coming down, but then you've also got through a wall of LNG export capacity coming online, you know, doubling of North American LNG export capacity through 2028. So when you look across your customer base, can you talk a little bit about, I guess, the mix of customers that might be building capacity and infrastructure related to longer term strategic growth and ones that are more impacted by near term commodity prices?

Jeff Fetterly
Jeff Fetterly
VP-Corporate Development and IR at Enerflex

Tim, it's Jeff. As we've talked about in previous conference calls, our customer base is biased and weighted towards larger operators, especially in the Permian and operators that have on average been the consolidators during the recent phase. Our expectation is with those relationships and that weighting of our customer base towards those type of operators and midstream entities, we expect that we'll see more stability in their plans and that those customers are focused on latter of those two aspects that you referenced in terms of the medium and longer term outlook for LNG export in The U. S. And growing gas demand overall in The U.

Jeff Fetterly
Jeff Fetterly
VP-Corporate Development and IR at Enerflex

S. Market as well. There's obviously some uncertainty in the near term and some increased risk as Joe referenced in their remarks, But we continue to focus on the medium and long term fundamentals of the business, which we believe remain attractive.

Tim Monachello
Managing Director at ATB Capital Markets

Okay.

Tim Monachello
Managing Director at ATB Capital Markets

Just given the fact that, let's call the uncertainty part sort of flat quarter over quarter, but you had some stuff pulled into Q4 and Q1. Do you think Q2 bookings end up higher or lower than Q1?

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Tim, it's hard to get too deep into that right now. But as I mentioned, we see good opportunities in the market. And the question is, when do they hit? What quarter do they hit? And how successful is our team in winning the work?

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

But we feel good that the market is quite constructive, and we're very active in that space.

Tim Monachello
Managing Director at ATB Capital Markets

Okay, fair enough. I want to talk a little bit about the free cash. You guys have done a really good job of managing working capital over the last sort of eighteen months. What are your expectations for free cash? I know you can't give guidance on that or you won't, but should we expect to see more working capital release through the year or how should we think about that?

Jeff Fetterly
Jeff Fetterly
VP-Corporate Development and IR at Enerflex

As we've talked about previously, Tim, our expectation is to have a more stable or neutral working capital position in 2025. So obviously with the working capital recovery, we're very happy with the working capital recovery in the first quarter, but we do expect to see a modest build of working capital through the remaining quarters of 2025. But the fundamental view that we have in terms of trying to maintain a fairly neutral working capital profile in 2025 remain intact.

Tim Monachello
Managing Director at ATB Capital Markets

Okay. And then last one for me, just talking about improving profitability and you've touched on optimizing the tax impact and, perhaps, you know, seeing some improved interest expense when you refinance the stack. Is there anything more operational that you're doing, I guess, on a segment basis that we should be thinking about as well?

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

Tim, what I would say is on the operational side, you'll see our cost structures come down quarter over quarter. As I mentioned on earlier calls, the first eighteen months plus a bit was integration focused fairly heavy SG and A. But now we're in a stage of continue to simplify and optimize our geographic footprint, but also how we invest in our people, our process, our systems post integration. And that's a little bit of a longer exercise. But take a look at our cost structure, we're heavily focused on SG and A.

Preet Dhindsa
Preet Dhindsa
Interim President & CEO at Enerflex

So that's another area that you'll see a little bit more improvement that will improve profitability and free cash flow. And then obviously below the line interest and taxes, we've alluded to that a fair bit too.

Tim Monachello
Managing Director at ATB Capital Markets

Okay, I really appreciate the commentary. I'll turn

Tim Monachello
Managing Director at ATB Capital Markets

it back.

Tim Monachello
Managing Director at ATB Capital Markets

Thanks, Jess.

Operator

Thank you. And I would now like to hand the conference back over to Preet Dinza for closing remarks.

Executives
    • Jeff Fetterly
      Jeff Fetterly
      VP-Corporate Development and IR
    • Preet Dhindsa
      Preet Dhindsa
      Interim President & CEO
    • Joe Ladouceur
      Joe Ladouceur
      Interim CFO
Analysts
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Key Takeaways

  • Enerflex delivered a strong Q1 with $161 million gross margin before D&A (29% of revenue), $113 million Adjusted EBITDA, and $85 million free cash flow, notably improving from Q1 2024.
  • Its Energy Infrastructure and Aftermarket Services businesses drove 70% of gross margin, with U.S. contract compression utilization at ~90% and fleet size increased by 20,000 HP to 448,000 HP, targeting over 475,000 HP by year-end.
  • Engineered Systems bookings were $255 million, down due to Q4 pull-forwards and market volatility, yet backlog remains robust at $1.2 billion, with margins forecast to normalize to historical averages in 2025.
  • The balance sheet saw rapid deleveraging, with net debt at $564 million (1.3× leverage), $433 million of debt repaid since 2023, and liquidity of $672 million on hand.
  • 2025 capital allocation includes $110–130 million CapEx (with $40–60 million for growth), $6 million in Q1 dividends, a NCIB for ~6.2 million shares, and continued focus on shareholder returns and selective debt reduction.
AI Generated. May Contain Errors.
Earnings Conference Call
Enerflex Q1 2025
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