EFXT

Core Strategic Priorities

• Compete intentionally in high-value markets where Enerflex can win, deliver disciplined growth for shareholders, and prioritize long-term value creation through operational excellence.
• Improve productivity across global operations, allocate capital disciplined, and enhance profitability, cash conversion, and return on capital employed.

Operational Progress & Initiatives

• Aligned Canadian and U.S. operations under a unified North American framework to unlock greater collaboration, leverage scale, drive standardization, improve efficiency, and strengthen customer service.
• Advanced the Reliacor digitally connected service ecosystem: launched a Houston-based remote operations center with smart dispatch technology, and developed and begun deploying Enerflex's first Reliacor Edge devices. These capabilities extend service coverage, accelerate issue resolution, and lay the foundation for predictive maintenance that will reduce downtime and create long-term value.
• Professionalizing the enterprise-wide $1.9 billion annual supply chain, driving productivity improvements, and modernizing IT and automation systems to support financial objectives.

Segment-Specific Operational Highlights

• Engineered Systems: Strong broad-based bookings across cryogenic gas processing, LNG export refrigeration, large compression stations, and power generation. The distributed power opportunity pipeline now exceeds 7 gigawatts, focused primarily on data center and other power generation applications.
• Aftermarket Services: Core priorities include growing profitable retrofit services, optimizing costs via resource pooling across AMS and contract compression, and capturing new installation and operations & maintenance opportunities tied to power generation.
• Energy Infrastructure: Targeting 10-15% customer-supported fleet growth in 2026, with most fleet additions coming in the second half of the year. Long lead time components are already secured to support fleet growth through 2029. Middle East operations (17 projects across Bahrain and Oman, 350,000 installed horsepower) have remained uninterrupted amid regional geopolitical tension, with safety prioritized and contingency plans active.

Financial Highlights

• Adjusted EBIT was $128 million in Q2 2026, compared to $130 million in Q2 2025 and $137 million in Q1 2026.
• Free cash flow increased to $32 million in Q2 2026, up from a $39 million cash use in Q2 2025 and $15 million in Q1 2026.
• Return on capital employed was 15.4% in Q2 2026, down from 16.4% in Q2 2025, driven by the absence of prior year unrealized gains on senior secured note redemption options, partially offset by lower net debt.
• Net debt decreased to $455 million at the end of Q2 2026, with a bank adjusted net debt to EBITDA ratio of 0.8x, down from 1.3x at the end of Q2 2025.
• Extended the maturity of the $800 million revolving credit facility to June 30, 2029, and increased the potential incremental capacity from $50 million to up to $200 million.

• Organic growth capital expenditure guidance for 2026 was revised upward to a range of $185 million to $195 million, from the prior range of $175 million to $195 million. Maintenance capital expenditure guidance is maintained at $70 million to $80 million, with an additional $15 million allocated to PP&E and infrastructure investments to support the engineered systems business and power generation activities.
• Management's full-cycle value creation targets are to grow revenue ahead of underlying core markets, increase adjusted EBITDA margin by more than 200 basis points, improve the cash conversion ratio by more than 200 basis points, and increase return on capital employed by more than 200 basis points. Early progress toward these targets is on track.
• U.S. contract compression fleet growth of 10% to 15% is still targeted for full-year 2026, with the majority of fleet additions scheduled for the second half of 2026.

Enerflex generated total Q2 2026 revenue of $582 million, down from $615 million in Q2 2025 and flat compared to Q1 2026. The decrease from the prior year was driven by project sequencing and resource allocation for expansion of the U.S. contract compression fleet within the engineered systems segment. Total gross margin before depreciation and amortization was $173 million (30% of revenue) in Q2 2026, compared to $175 million (29% of revenue) in Q2 2025. The Energy Infrastructure and Aftermarket Services (AMS) segments together generated 69% of consolidated gross margin before depreciation and amortization in the quarter. Engineered Systems (ES): Q2 2026 gross margin before depreciation and amortization was 18%, consistent with 18% in Q2 2025 and down from 19% in Q1 2026, with the sequential decline driven by revenue mix and project sequencing. Q2 2026 ES bookings were $488 million, well above the trailing eight-quarter average of $363 million, bringing first-half 2026 bookings to nearly $1 billion (~75% of full-year 2025 total bookings). The segment held a record backlog of $1.5 billion at the end of Q2 2026, with a first-half 2026 book-to-bill ratio of 1.5x. Aftermarket Services (AMS): Performance improved in Q2 2026 after a slow start to the year in North America, driven by steady customer maintenance spending, particularly in regions where Enerflex also operates energy infrastructure assets. Energy Infrastructure (EI): The segment delivered solid performance, supported by $1.2 billion in remaining contracted revenue across customer contracts. In the U.S. contract compression sub-segment, utilization hit 93% across a 496,000 horsepower fleet, with strong performance led by growing natural gas production in the Permian Basin. International EI operations have a weighted average remaining contract term of approximately 5 years, providing durable, predictable cash flows.

• All forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from management's stated expectations.
• Extended lead times for engine components, now reaching up to four years for some parts, create potential risk for meeting fleet growth timelines.
• Geopolitical instability in the Middle East presents ongoing operational risk, despite current uninterrupted operations and active contingency plans.

Q: What is driving the upward refinement to 2026 capital expenditure guidance, and what are the priorities for this additional spending? Does the increase stem from inflation or from higher actual contracted activity? / A: The upward adjustment to the capital expenditure range is driven by higher confidence in Enerflex's ability to contract new business for its core U.S. contract compression segment. The company already has its 2026 fleet expansion fully contracted, with portions of 2027 fleet growth also already contracted. The increase reflects expanded capacity to deploy growth capital rather than inflationary cost pressure.

Q: Can you comment on the mix of the very strong Q2 2026 bookings, and is this $400-$500 million quarterly bookings level the new normal going forward? / A: This quarter's record bookings are the result of multi-quarter sequential growth, aligned with the company's commitment to outperform underlying market growth, and the strength is expected to continue into Q3 2026. The Q2 2026 bookings did not include any distributed power or data center projects, and consisted entirely of cryogenic gas processing, LNG export refrigeration, large compression stations, and industrial power generation. The strong bookings trend is not an exceptional one-off result.

Q: The Energy Infrastructure backlog has trended lower while revenue has held steady. Should we expect revenue to decline in this segment, or will contract renewals reverse the backlog trend? / A: The declining backlog is the result of intentional footprint optimization, primarily in the Latin American region, rather than a lack of contract renewals or a sign of future revenue decline. The trend does not reflect broad underlying weakness in the Energy Infrastructure segment.

Q: With lead times for engine components extending to up to four years industry-wide, what is Enerflex's strategy to meet its fleet growth targets? / A: Enerflex has already secured large, pre-existing purchase obligations covering engine components through 2029: 521,000 horsepower for 2026, ~350,000 for 2027, 191,000 for 2028, and 53,000 for 2029. The company's advanced sales and operations planning process, extended over the last 12+ months, puts it in a strong position relative to peers, and the team is actively evaluating alternative components when needed to support delivery timelines.