Enerflex Ltd. Q1 FY2025 earnings call

• Enerflex reported strong Q1 financial and operating results, with Energy Infrastructure and Aftermarket Services as core profit drivers. - Balance sheet deleveraging occurred, exiting Q1 2025 at 1.3 times leverage. - Energy Infrastructure performed well in key regions; Aftermarket Services had strong activity. - ES had $205M bookings in Q1 with a $1.2B backlog, though near-term uncertainty exists. - Priorities for 2025: enhance core profitability, leverage core country positions, maximize free cash flow. - Recent leadership transition with Preet as Interim President and CEO.

Energy Infrastructure and Aftermarket Services contributed 70% of the gross margin before depreciation and amortization in the first quarter of 2025. The Energy Infrastructure business performed well across the US, Latin America, and Middle East, adding approximately 20,000 horsepower during Q1 and expecting to reach over 475,000 horsepower by year-end. Aftermarket Services benefited from strong activity levels, with Engineered Systems (ES) recording $205 million in bookings in Q1 and a backlog of approximately $1.2 billion. By destination of sale, the US generated 45% of consolidated revenue, Canada 11%, and Mexico 3% of trailing 12-month consolidated revenue.

• Capital expenditure guidance for 2025 is $110M to $130M, including $40M to $60M for growth capex in the US contract compression fleet. - Returned $6M to shareholders via dividends in Q1; NCIB authorized to repurchase up to ~6.2 million shares by March 2026. - Targeting disciplined capital program with focus on customer-supported growth opportunities in the US.

• Geopolitical uncertainties, tariffs, and oil price volatility pose near-term risks. - ES product line faces uncertainty due to tariffs, lower oil prices, and evolving market conditions.

Q: Comment on bookings trajectory into the second quarter A: Preet Dhindsa said Q1 bookings were light at $205M with some activity pulled into Q4, backlog is $1.2B, and they see good opportunities going forward but timing is uncertain Q: Insights on strategic priorities and what might be changed/improved A: Preet Dhindsa mentioned refining global footprint, cost savings post-integration, working on debt stack and free cash flow, focusing on capital allocation including growth capital in US fleet Q: Views on bookings heading into potential downturn, market weakness/strength A: Jeff Fetterly said there are good opportunities, especially in US, but timing of operator execution is evolving Q: Impact of Permian rig count reductions on contract compression demand A: Jeff Fetterly stated good fundamentals continue, multi-year contracts in place, and committed to 2025 capital program guidance Q: Demand sources and mix of customers impacted by near term vs longer term A: Jeff Fetterly said customer base is weighted towards larger operators focused on medium to long-term outlooks like LNG export growth Q: Q2 bookings outlook relative to Q1 A: Preet Dhindsa said it's hard to predict deeply but sees good market opportunities and is active in winning work Q: Free cash flow expectations and working capital A: Joe Ladouceur said expectation is a more stable or neutral working capital position in 2025 with modest build in remaining quarters Q: Operational improvements for profitability A: Preet Dhindsa mentioned simplifying and optimizing geographic footprint, focusing on SG&A cost reduction to improve profitability and free cash flow