Enerflex NYSE: EFXT reported third-quarter results marked by record Engineered Systems bookings, stronger free cash flow and continued expansion of its behind-the-meter natural-gas-fired power generation business, including projects serving data center development.
President and CEO Paul Mahoney said the company generated “healthy cash” during the quarter while advancing initiatives outlined at its May investor update. He cited demand across compression, gas processing, power generation and aftermarket services, while emphasizing that the company continues to evaluate opportunities on a risk-adjusted basis.
Record bookings and growing power-generation backlog
Engineered Systems bookings totaled approximately $1 billion in the third quarter, bringing bookings for the first nine months of 2026 to about $2 billion. Enerflex said it remains on track to exceed $3 billion in bookings for the full year, compared with its prior annual record of roughly $1.5 billion in 2018.
The bookings lifted Engineered Systems backlog to $2.1 billion at quarter-end, providing visibility into activity through 2028, Mahoney said. Third-quarter awards included a contract to design, engineer, fabricate and assemble approximately 450 megawatts of behind-the-meter natural-gas-fired power generation units for a North American data center developer.
Mahoney said Enerflex’s booked backlog for behind-the-meter natural-gas-fired power projects now exceeds 1.75 gigawatts. The company views the market as complementary to its established compression and gas-processing operations, rather than as a separate business line.
During the question-and-answer session, Mahoney said the company had initially identified more than 7 gigawatts of commercial opportunities, then narrowed its focus to projects backed by strong counterparties, developed engineering plans and clearer regulatory visibility. He said the company currently sees an additional 1.5 to 2 gigawatts of opportunities that meet similar criteria, though equipment supply will affect timing.
Chief Financial Officer Preet Dhindsa said margins on the power-generation projects booked in the third quarter, as well as a subsequent win expected to be reported in the fourth quarter, are expected to be accretive to Enerflex’s historical Engineered Systems margins. He said the impact is not expected until late 2027 and into 2028.
Financial results and cash flow
Gross margin before depreciation and amortization was $176 million, or 28% of revenue, compared with $206 million, or 27% of revenue, a year earlier and $173 million, or 30% of revenue, in the second quarter. Dhindsa said the year-over-year decline reflected an upfront gain tied to the commencement of the Bisat-C expansion facility and certain Engineered Systems project milestones in the prior-year period.
Adjusted EBITDA was $129 million, compared with $145 million in the third quarter of 2025 and $128 million in the second quarter. Energy Infrastructure and Aftermarket Services accounted for about 68% of consolidated gross margin before depreciation and amortization during the quarter.
Net earnings were $55 million, or $0.45 per share, versus $37 million, or $0.30 per share, in the prior-year quarter and $30 million, or $0.25 per share, in the preceding quarter.
Free cash flow totaled $102 million, up from $43 million a year earlier and $32 million in the second quarter. The increase reflected higher cash flow from operations, including a $51 million net working-capital recovery, partly offset by higher capital spending, Dhindsa said.
Enerflex ended the quarter with $312 million in net debt and $227 million of cash. Cash increased in part due to $62 million in proceeds from the divestiture of most of its Asia-Pacific operations on Sept. 30. Its bank-adjusted net debt-to-EBITDA ratio improved to approximately 0.6 times.
Compression operations, facility investments and capital allocation
The company’s U.S. contract-compression business reported 94% utilization, with fleet size reaching approximately 521,000 horsepower at quarter-end. Enerflex continues to target customer-supported fleet growth of 10% to 15% in 2026 and is securing long-lead components intended to support growth into 2030.
Enerflex invested $42 million during the third quarter, including $26 million for growth initiatives, primarily to expand its U.S. contract-compression fleet, and $16 million for maintenance and property, plant and equipment.
The company maintained its total 2026 organic capital-expenditure outlook of $185 million to $195 million. That plan includes approximately $100 million of organic growth capital expenditures, about $55 million of maintenance spending and $30 million to $40 million for PP&E and infrastructure investments.
Dhindsa said lower maintenance spending reflects efficiencies and the deferral of some expenditures into 2027. Increased PP&E and infrastructure spending is intended to support Engineered Systems activity and adjacent markets, including electric power generation.
Enerflex previously authorized facility and capability investments that include $30 million to $40 million within 2026 spending and an expected $85 million during 2027. Mahoney said planned additions at the company’s Tulsa facility include additional acreage, buildings, a test building and a fabrication building, which are expected to increase capacity. Jeff Fetterly, vice president of corporate development and capital markets, added that investments also extend to Canadian facilities and the company’s Broken Arrow, Oklahoma, operation.
Dividend increase
Enerflex’s board increased the quarterly dividend by 17% to $0.035 per common share, effective with the dividend payable in November 2026. Dhindsa said the increase marks the third consecutive annual dividend increase and reflects the company’s financial position and its objective of providing direct shareholder returns.
Management said it will continue to assess capital-allocation options, including organic growth, selective tuck-in acquisitions, debt reduction, dividends and potential share repurchases.
About Enerflex (NYSE:EFXT)
Enerflex Ltd. NYSE: EFXT is a Calgary-based energy infrastructure company that provides equipment, services and solutions for the processing, compression and transportation of natural gas. Its offerings support energy producers, midstream operators and industrial customers across the natural gas value chain.
The company designs, engineers, manufactures, commissions and services natural gas compression systems, gas processing and treating facilities, refrigeration and cryogenic systems, and electric power generation equipment.
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