Enerflex Ltd. Reports Second Quarter 2024 Financial and Operational Results
Enerflex reported strong Q2/24 financial results with a record adjusted EBITDA of $122 million, up from $107 million in Q2/23 and $69 million in Q1/24. Revenue increased to $614 million, driven by higher Engineered Systems (ES) and After-market Services (AMS) revenue.
Gross margin improved to $173 million or 28% of revenue. ES bookings reached $331 million, maintaining a backlog of $1.3 billion, while EI backlog stood at $1.6 billion. The company's net debt-to-EBITDA ratio was 2.2x, aiming for a target of 1.5x-2.0x.
Full-year 2024 capital spending is expected at the low end of $90-$110 million guidance. Cash provided by operating activities improved to $12 million. The company suspended a project in Kurdistan due to Force Majeure.
Enerflex extended its revolving credit facility to $800 million and repaid $120 million of higher-cost debt. Liquidity remains strong with $512 million available. The company declared a CAD$0.025 per share dividend.
Enerflex ha riportato forti risultati finanziari per il secondo trimestre del 2024, con un EBITDA rettificato record di 122 milioni di dollari, in aumento rispetto ai 107 milioni di dollari nel secondo trimestre del 2023 e ai 69 milioni di dollari nel primo trimestre del 2024. I ricavi sono aumentati a 614 milioni di dollari, grazie a un incremento dei ricavi dei Sistemi Ingegnerizzati (ES) e dei Servizi di Post-vendita (AMS).
Il margine lordo è migliorato a 173 milioni di dollari, pari al 28% dei ricavi. Gli ordinativi ES hanno raggiunto i 331 milioni di dollari, mantenendo un portafoglio ordini di 1,3 miliardi di dollari, mentre il portafoglio EI si attestava a 1,6 miliardi di dollari. Il rapporto debito netto su EBITDA dell'azienda era di 2.2x, con un obiettivo di 1.5x-2.0x.
La spesa in conto capitale per l'intero anno 2024 è prevista nella parte bassa della guida di 90-110 milioni di dollari. Il cash flow generato dalle attività operative è migliorato a 12 milioni di dollari. L'azienda ha sospeso un progetto in Kurdistan a causa di Forza Maggiore.
Enerflex ha esteso la sua linea di credito rotativo a 800 milioni di dollari e ha rimborsato 120 milioni di dollari di debito a costo elevato. La liquidità rimane solida con 512 milioni di dollari disponibili. L'azienda ha dichiarato un dividendo di CAD$0.025 per azione.
Enerflex informó sobre sólidos resultados financieros para el segundo trimestre de 2024, con un EBITDA ajustado récord de 122 millones de dólares, en comparación con los 107 millones de dólares en el segundo trimestre de 2023 y los 69 millones de dólares en el primer trimestre de 2024. Los ingresos aumentaron a 614 millones de dólares, impulsados por mayores ingresos de Sistemas Ingenierizados (ES) y Servicios Postventa (AMS).
El margen bruto mejoró a 173 millones de dólares, o el 28% de los ingresos. Las reservas de ES alcanzaron los 331 millones de dólares, manteniendo una cartera de pedidos de 1.3 mil millones de dólares, mientras que la cartera de EI ascendía a 1.6 mil millones de dólares. La relación deuda neta/EBITDA de la compañía fue de 2.2x, con un objetivo de 1.5x-2.0x.
Se espera que el gasto de capital para todo el año 2024 esté en el extremo inferior de la guía de 90-110 millones de dólares. El flujo de efectivo generado por actividades operativas mejoró a 12 millones de dólares. La empresa suspendió un proyecto en Kurdistán debido a Fuerza Mayor.
Enerflex amplió su línea de crédito revolvente a 800 millones de dólares y reembolsó 120 millones de dólares de deuda de alto costo. La liquidez se mantiene sólida con 512 millones de dólares disponibles. La empresa declaró un dividendo de CAD$0.025 por acción.
Enerflex는 2024년 2분기 재무 실적이 강력하며 기록적인 조정 EBITDA가 1억 2200만 달러에 달했다고 보고했으며, 이는 2023년 2분기의 1억 700만 달러와 2024년 1분기의 6900만 달러에서 증가한 수치입니다. 매출은 6억 1400만 달러로 증가했으며, 이는 엔지니어링 시스템(ES) 및 애프터마켓 서비스(AMS) 매출 증가에 기인합니다.
총 마진은 1억 7300만 달러 또는 매출의 28%로 개선되었습니다. ES 수주액은 3억 3100만 달러에 달했고, 13억 달러의 미결 주문을 유지했습니다. EI 미결 주문은 16억 달러로 집계되었습니다. 회사의 순부채 대비 EBITDA 비율은 2.2배이며, 목표는 1.5배에서 2.0배입니다.
2024년 전체 연도 자본 지출은 9000만 달러에서 1억 1000만 달러 가이드의 하단을 예상하고 있습니다. 운영 활동에서 제공된 현금 흐름은 1200만 달러로 개선되었습니다. 회사는 불가항력으로 인해 쿠르드스탄의 프로젝트를 중단했습니다.
Enerflex는 8억 달러로 회전 신용 시설을 연장하고 1억 2000만 달러의 고비용 부채를 상환했습니다. 유동성은 5억 1200만 달러가 남아 있어 여전히 강력하게 유지되고 있습니다. 회사는 주당 CAD$0.025의 배당금을 선언했습니다.
Enerflex a annoncé de solides résultats financiers pour le deuxième trimestre 2024, avec un EBITDA ajusté record de 122 millions de dollars, contre 107 millions de dollars au deuxième trimestre 2023 et 69 millions de dollars au premier trimestre 2024. Les revenus ont atteint 614 millions de dollars, soutenus par des revenus plus élevés des Systèmes Ingénierisés (ES) et des Services Après-Vente (AMS).
La marge brute s'est améliorée pour atteindre 173 millions de dollars, soit 28% des revenus. Les commandes ES se sont élevées à 331 millions de dollars, maintenant un carnet de commandes de 1,3 milliard de dollars, tandis que le carnet de commandes EI était de 1,6 milliard de dollars. Le ratio dette nette/EBITDA de la société était de 2,2x, avec un objectif de 1,5x-2,0x.
Les dépenses en capital pour l'année 2024 devraient se situer dans la fourchette basse des 90 à 110 millions de dollars. Les flux de trésorerie provenant des activités opérationnelles ont augmenté pour atteindre 12 millions de dollars. L'entreprise a suspendu un projet en Kurdistan en raison de Force Majeure.
Enerflex a étendu sa facilité de crédit renouvelable à 800 millions de dollars et a remboursé 120 millions de dollars de dettes à coût élevé. La liquidité reste solide avec 512 millions de dollars disponibles. La société a déclaré un dividende de 0,025 CAD par action.
Enerflex berichtete über starke Finanzzahlen für das zweite Quartal 2024 mit einem rekordverdächtigen bereinigten EBITDA von 122 Millionen US-Dollar, im Vergleich zu 107 Millionen US-Dollar im zweiten Quartal 2023 und 69 Millionen US-Dollar im ersten Quartal 2024. Der Umsatz stieg auf 614 Millionen US-Dollar, angetrieben durch höhere Umsätze aus Ingenieursystemen (ES) und Aftermarket-Diensten (AMS).
Die Bruttomarge verbesserte sich auf 173 Millionen US-Dollar oder 28% des Umsatzes. Die Buchungen im Bereich ES erreichten 331 Millionen US-Dollar und wiesen einen Auftragsbestand von 1,3 Milliarden US-Dollar auf, während der Auftragsbestand im Bereich EI bei 1,6 Milliarden US-Dollar lag. Das Unternehmen hatte ein Netto-Schulden-EBITDA-Verhältnis von 2,2x und strebt ein Ziel von 1,5x-2,0x an.
Die Investitionsausgaben für das gesamte Jahr 2024 werden im unteren Bereich der Prognose von 90-110 Millionen US-Dollar erwartet. Der Cashflow aus betrieblicher Tätigkeit verbesserte sich auf 12 Millionen US-Dollar. Das Unternehmen stellte ein Projekt im Kurdistan aufgrund von Höherer Gewalt ein.
Enerflex hat seine revolvierende Kreditlinie auf 800 Millionen US-Dollar ausgeweitet und 120 Millionen US-Dollar hochverzinslichen Schulden zurückgezahlt. Die Liquidität bleibt stark mit 512 Millionen US-Dollar zur Verfügung. Das Unternehmen erklärte eine Dividende von CAD$0.025 pro Aktie.
- Record adjusted EBITDA of $122 million.
- Revenue increased to $614 million.
- Gross margin before depreciation and amortization improved to $173 million.
- ES bookings of $331 million, maintaining a $1.3 billion backlog.
- EI backlog stable at $1.6 billion.
- Net debt-to-EBITDA ratio of 2.2x, aiming for 1.5x-2.0x.
- Extended revolving credit facility to $800 million.
- Strong liquidity with $512 million available.
- Improvement in cash provided by operating activities to $12 million.
- Suspended project in Kurdistan due to Force Majeure.
- Free cash flow was a use of $6 million in Q2/24.
RECORD ADJUSTED EBITDA OF
ES AND EI BACKLOG STABLE AT
BANK-ADJUSTED NET DEBT-TO-EBITDA RATIO OF 2.2X AT THE END OF Q2/24, ON TRACK TO REACH LEVERAGE FRAMEWORK TARGET OF 1.5X TO 2.0X
FULL-YEAR 2024 CAPITAL SPENDING EXPECTED TO BE AT THE LOW END OF
CALGARY, Alberta, Aug. 07, 2024 (GLOBE NEWSWIRE) -- Enerflex Ltd. (TSX: EFX) (NYSE: EFXT) (“Enerflex” or the “Company”) today reported its financial and operational results for the three and six months ended June 30, 2024.
All amounts presented are in U.S. Dollars (“USD”) unless otherwise stated.
Q2/24 FINANCIAL AND OPERATIONAL OVERVIEW
- Generated revenue of
$614 million compared to$579 million in Q2/23 and$638 million in Q1/24.- Higher revenue is primarily attributed to higher Engineered Systems (“ES”) revenue from strong project execution and higher After-market Services (“AMS”) revenue due to increased parts sales and customer maintenance activities.
- Increased gross margin before depreciation and amortization to
$173 million , or28% of revenue, compared to$145 million , or25% of revenue in Q2/23 and$119 million , or19% of revenue during Q1/24.- Energy Infrastructure (“EI”) and AMS product lines generated
62% of consolidated gross margin before depreciation and amortization during Q2/2024. - ES gross margin before depreciation and amortization increased to
19% in Q2/24 compared to13% in Q2/23, benefitting from favorable product mix and strong project execution.
- Energy Infrastructure (“EI”) and AMS product lines generated
- Adjusted earnings before finance costs, income taxes, depreciation, and amortization (“adjusted EBITDA”) of
$122 million compared to$107 million in Q2/23 and$69 million during Q1/24. The second quarter of 2024 represented a new quarterly record for Enerflex. - Cash provided by operating activities was
$12 million , which included net working capital investment of$51 million primarily related to the execution of projects in the ES business line. This is a$13 million improvement over cash used in operating activities in Q2/23. Free cash flow was a use of cash of$6 million in Q2/24 compared to a source of cash of$78 million during Q1/24 and a use of cash of$20 million during Q2/23. - Invested
$10 million in the business, including$1 million of growth capex for compression equipment that was deployed as part of a contract extension with an existing client partner in the Eastern Hemisphere. - Recorded ES bookings of
$331 million to maintain total backlog at June 30, 2024 of$1.3 billion , providing strong visibility into future revenue generation and business activity levels.- Bookings continue to originate primarily from North America with demand across multiple end markets, notably for cryogenic gas processing projects at the Broken Arrow facility that was part of the acquisition of Exterran Corporation (“Exterran”).
- Enerflex’s U.S. contract compression business continues to perform well, with utilization of
94% across a fleet size of approximately 428,000 horsepower and revenue increasing due to improved rental pricing and fleet additions.- This business generated revenue of
$37 million and gross margin before depreciation and amortization of65% during Q2/24 compared to$33 million and64% during Q2/23. - The fundamentals for contract compression in the U.S. remain strong, led by increasing natural gas production in the Permian.
- This business generated revenue of
- During Q2/24, Enerflex provided its client partner with notice of Force Majeure, suspended activity at the site of a modularized cryogenic natural gas processing facility in Kurdistan and demobilized its personnel. Work at the site remains suspended and Enerflex continues to evaluate the situation in collaboration with its client partner and assesses next steps.
BALANCE SHEET AND LIQUIDITY
- During Q2/24, Enerflex extended the maturity date of its secured revolving credit facility (the “RCF”) by one year to October 13, 2026. Availability under the RCF was increased to
$800 million from$700 million .- In conjunction with the extension, Enerflex repaid
$120 million of outstanding amounts under its higher cost secured term loan using cash on hand and availability under the expanded RCF.
- In conjunction with the extension, Enerflex repaid
- Enerflex exited Q2/24 with net debt of
$763 million , which included$126 million of cash and cash equivalents, and the Company maintained strong liquidity with access to$512 million under its credit facility. - Enerflex’s bank-adjusted net debt-to-EBITDA ratio was approximately 2.2x at the end of Q2/24, consistent with the end of Q1/24 and below the 2.8x at the end of Q2/23.
- Enerflex is targeting a bank-adjusted net debt-to-EBITDA ratio of 1.5x to 2.0x over the medium term. The leverage framework is underpinned by the highly utilized U.S. contract compression fleet, contracted international EI product line and the recurring nature of its AMS business. Enerflex’s EI product line is supported by customer contracts, which are expected to generate approximately
$1.6 billion of revenue during their current remaining terms.
MANAGEMENT COMMENTARY
“We are pleased to report another quarter of strong operational results that translated into a high watermark for adjusted EBITDA. I would like to thank the Enerflex team across our global operations for their efforts delivering these results,” said Marc Rossiter, Enerflex’s President and Chief Executive Officer. “The EI and AMS business lines continue to deliver solid and steady performance and ES results reflect favorable product mix and strong execution. Visibility across the Company’s business remains strong, supported by approximately
Preet Dhindsa, Enerflex’s Senior Vice President and Chief Financial Officer, stated, “We are encouraged by the strong operating performance of the global business and remain on track to reach our leverage framework target of 1.5x to 2.0x.” Mr. Dhindsa continued, “As we continue to focus on our balance sheet health, we deployed modest growth capital during the first half of 2024 and will be allocating near-term capital only to customer supported opportunities that are expected to generate attractive returns and deliver value to Enerflex shareholders.“
“The recent extension and expansion of our RCF is part of on-going efforts to reduce Enerflex’s finance costs and optimize our debt stack. From a financial flexibility perspective, we remain well positioned, with our bank-adjusted net debt-to-EBITDA leverage ratio exiting Q2/24 at 2.2x and the RCF providing ample liquidity to support our global business. Our target leverage framework provides a visible path for the Company to increase shareholder returns over time and in the near-term we are focused on generating free cash flow and repaying debt”.
SUMMARY RESULTS
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
| ($ millions, except percentages) | 2024 | 2023 | 2024 | 2023 | ||||||||||
| Revenue | $ | 614 | $ | 579 | $ | 1,252 | $ | 1,189 | ||||||
| Gross margin | 136 | 109 | 223 | 228 | ||||||||||
| Selling, general and administrative expenses ("SG&A") | 75 | 66 | 153 | 144 | ||||||||||
| Foreign exchange loss | 3 | 8 | 4 | 16 | ||||||||||
| Operating income | 58 | 35 | 66 | 68 | ||||||||||
| Earnings before finance costs, income taxes, depreciation and amortization (“EBITDA”) | 103 | 83 | 150 | 163 | ||||||||||
| Earnings before finance costs and income taxes ("EBIT") | 55 | 36 | 58 | 69 | ||||||||||
| Net earnings (loss) | 5 | (2 | ) | (13 | ) | 8 | ||||||||
| Cash provided by (used in) operating activities | 12 | (1 | ) | 113 | (3 | ) | ||||||||
| Key Financial Performance Indicators (“KPIs”)1 | ||||||||||||||
| Engineered Systems (“ES”) bookings | $ | 331 | $ | 264 | $ | 751 | $ | 647 | ||||||
| ES backlog | 1,251 | 1,080 | 1,251 | 1,080 | ||||||||||
| Gross margin as a percentage of revenue | 22.1 | % | 18.8 | % | 17.8 | % | 19.2 | % | ||||||
| Gross margin before depreciation and amortization (“Gross margin before D&A”) | 173 | 145 | 292 | 301 | ||||||||||
| Gross margin before D&A as a percentage of revenue | 28.2 | % | 25.0 | % | 23.2 | % | 25.3 | % | ||||||
| Adjusted EBITDA | 122 | 107 | 191 | 197 | ||||||||||
| Free cash flow | (6 | ) | (20 | ) | 72 | (23 | ) | |||||||
| Long-term debt | 889 | 1,064 | 889 | 1,064 | ||||||||||
| Net debt | 763 | 932 | 763 | 932 | ||||||||||
| Bank-adjusted net debt to EBITDA ratio | 2.2 | 2.8 | 2.2 | 2.8 | ||||||||||
| Return on capital employed (“ROCE”)2 | 1.7 | % | 1.0 | % | 1.7 | % | 1.0 | % | ||||||
1 These KPIs are non-IFRS measures. Further detail is provided in the “Non-IFRS Measures” section of the Company’s MD&A.
2 Determined by using the trailing 12-month period.
Enerflex's interim consolidated financial statements and notes (the "financial statements") and Management's Discussion and Analysis ("MD&A") as at June 30, 2024, can be accessed on the Company's website at www.enerflex.com and under the Company's SEDAR+ and EDGAR profiles at www.sedarplus.ca and www.sec.gov/edgar, respectively.
OUTLOOK
Industry Update
Enerflex continues to see consistent demand across all business lines and geographic regions, including high utilization of EI assets and the AMS business line. Enerflex’s EI product line is supported by customer contracts, which are expected to generate approximately
Complementing Enerflex's recurring revenue businesses is the ES product line. ES results will be supported by a strong backlog of approximately
Enerflex continues to actively monitor the near-term impact of weak natural gas prices on customer demand, notably in North America. Notwithstanding, the Company continues to benefit from activity in oil producing regions and with customers who maintain a positive medium-term view of natural gas fundamentals. The fundamentals for contract compression in the U.S. remain strong, led by increasing natural gas production in the Permian.
Capital Allocation
Enerflex continues to target a disciplined capital program in 2024, with total capital expenditures of
Providing meaningful returns to shareholders is a priority for Enerflex. Once the Company is operating within its target leverage range of bank-adjusted net debt-to-EBITDA ratio of 1.5x to 2.0x, Enerflex expects to re-evaluate capital allocation priorities, which could include increased dividends, share repurchases, additional growth capital spending, and/or further repayment of debt. Allocation decisions will be based on providing the most attractive shareholder returns and measured against Enerflex’s ability to maintain balance sheet strength.
DIVIDEND DECLARATION
Enerflex is committed to paying a sustainable quarterly cash dividend to shareholders. The Board of Directors has declared a quarterly dividend of CAD
CONFERENCE CALL AND WEBCAST DETAILS
Investors, analysts, members of the media, and other interested parties, are invited to participate in a conference call and audio webcast on Thursday, August 8, 2024 at 8:00 a.m. (MDT), where members of senior management will discuss the Company's results. A question-and-answer period will follow.
To participate, register at https://register.vevent.com/register/BIf11ae800bdbc49e3ae8271e165e1e310. Once registered, participants will receive the dial-in numbers and a unique PIN to enter the call. The audio webcast of the conference call will be available on the Enerflex website at www.enerflex.com under the Investors section or can be accessed directly at https://edge.media-server.com/mmc/p/j3n23f36.
NON-IFRS MEASURES
Throughout this news release and other materials disclosed by the Company, Enerflex employs certain measures to analyze its financial performance, financial position, and cash flows, including net debt-to-EBITDA ratio and bank-adjusted net debt-to-EBITDA ratio. These non-IFRS measures are not standardized financial measures under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Accordingly, non-IFRS measures should not be considered more meaningful than generally accepted accounting principles measures as indicators of Enerflex's performance. Refer to "Non-IFRS Measures" of Enerflex's MD&A for the three months ended June 30, 2024, for information which is incorporated by reference into this news release and can be accessed on Enerflex's website at www.enerflex.com and under the Company's SEDAR+ and EDGAR profiles at www.sedarplus.ca and www.sec.gov/edgar, respectively.
ADJUSTED EBITDA
| Three months ended June 30, 2024 | ||||||||
| ($ millions) | Total | North America | Latin America | Eastern Hemisphere | ||||
| EBIT | $ | 55 | $ | 50 | $ | - | $ | 5 |
| Depreciation and amortization | 48 | 18 | 17 | 13 | ||||
| EBITDA | 103 | 68 | 17 | 18 | ||||
| Restructuring, transaction and integration costs | 5 | 2 | 2 | 1 | ||||
| Share-based compensation | 2 | 2 | - | - | ||||
| Impact of finance leases | ||||||||
| Upfront gain | - | - | - | - | ||||
| Principal repayments received | 12 | - | - | 12 | ||||
| Adjusted EBITDA | $ | 122 | $ | 72 | $ | 19 | $ | 31 |
Three months ended June 30, 2023 | ||||||||
| ($ millions) | Total | North America | Latin America | Eastern Hemisphere | ||||
| EBIT | $ | 36 | $ | 27 | $ | 5 | $ | 4 |
| Depreciation and amortization | 47 | 17 | 10 | 20 | ||||
| EBITDA | 83 | 44 | 15 | 24 | ||||
| Restructuring, transaction and integration costs | 9 | 3 | 1 | 5 | ||||
| Share-based compensation | 5 | 3 | 1 | 1 | ||||
| Impact of finance leases | ||||||||
| Upfront gain | - | - | - | - | ||||
| Principal repayments received | 10 | - | 1 | 9 | ||||
| Adjusted EBITDA | $ | 107 | $ | 50 | $ | 18 | $ | 39 |
| Six months ended June 30, 2024 | ||||||||||
| ($ millions) | Total | North America | Latin America | Eastern Hemisphere | ||||||
| EBIT | $ | 58 | $ | 83 | $ | 5 | $ | (30 | ) | |
| Depreciation and amortization | 92 | 36 | 27 | 29 | ||||||
| EBITDA | 150 | 119 | 32 | (1 | ) | |||||
| Restructuring, transaction and integration costs | 11 | 5 | 4 | 2 | ||||||
| Share-based compensation | 8 | 5 | 1 | 2 | ||||||
| Impact of finance leases | ||||||||||
| Upfront gain | (3 | ) | - | - | (3 | ) | ||||
| Principal repayments received | 25 | - | - | 25 | ||||||
| Adjusted EBITDA | $ | 191 | $ | 129 | $ | 37 | $ | 25 | ||
Six months ended June 30, 2023 | ||||||||||
| ($ millions) | Total | North America | Latin America | Eastern Hemisphere | ||||||
| EBIT | $ | 69 | $ | 48 | $ | 4 | $ | 17 | ||
| Depreciation and amortization | 94 | 32 | 22 | 40 | ||||||
| EBITDA | 163 | 80 | 26 | 57 | ||||||
| Restructuring, transaction and integration costs | 22 | 6 | 4 | 12 | ||||||
| Share-based compensation | 7 | 5 | 1 | 1 | ||||||
| Impact of finance leases | ||||||||||
| Upfront gain | (13 | ) | - | - | (13 | ) | ||||
| Principal repayments received | 18 | - | 1 | 17 | ||||||
| Adjusted EBITDA | $ | 197 | $ | 91 | $ | 32 | $ | 74 | ||
FREE CASH FLOW
The Company defines free cash flow as cash provided by (used in) operating activities, less maintenance capital expenditures, mandatory debt repayments, lease payments and dividends paid, with proceeds on disposals of PP&E and EI assets added back. The following table reconciles free cash flow to the most directly comparable IFRS measure, cash provided by (used in) operating activities:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
| ($ millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||
| Cash provided by operating activities before changes in working capital and other | $ | 63 | $ | 53 | $ | 81 | $ | 103 | ||||||
| Net change in working capital and other | (51 | ) | (54 | ) | 32 | (106 | ) | |||||||
| Cash provided by (used in) operating activities | $ | 12 | $ | (1 | ) | $ | 113 | $ | (3 | ) | ||||
| Less: | ||||||||||||||
| Maintenance capital and PP&E expenditures | (9 | ) | (15 | ) | (18 | ) | (22 | ) | ||||||
| Mandatory debt repayments | - | - | (10 | ) | - | |||||||||
| Lease payments | (6 | ) | (4 | ) | (10 | ) | (8 | ) | ||||||
| Dividends | (3 | ) | (3 | ) | (5 | ) | (5 | ) | ||||||
| Add: | ||||||||||||||
| Proceeds on disposals of PP&E and EI assets | - | 3 | 2 | 15 | ||||||||||
| Free cash flow | $ | (6 | ) | $ | (20 | ) | $ | 72 | $ | (23 | ) | |||
BANK-ADJUSTED NET DEBT-TO-EBITDA RATIO
The Company defines net debt as short- and long-term debt less cash and cash equivalents at period end, which is then divided by EBITDA for the trailing 12 months. In assessing whether the Company is compliant with the financial covenants related to its debt instruments, certain adjustments are made to net debt and EBITDA to determine Enerflex's bank-adjusted net debt-to-EBITDA ratio. These adjustments and Enerflex's bank-adjusted net-debt -to EBITDA ratio are calculated in accordance with, and derived from, the Company's financing agreements.
GROSS MARGIN BEFORE DEPRECIATION AND AMORTIZATION
Gross margin before depreciation and amortization is a non-IFRS measure defined as gross margin excluding the impact of depreciation and amortization. The historical costs of assets may differ if they were acquired through acquisition or constructed, resulting in differing depreciation. Gross margin before depreciation and amortization is useful to present operating performance of the business before the impact of depreciation and amortization that may not be comparable across assets.
ADVISORY REGARDING FORWARD-LOOKING INFORMATION
This news release contains “forward-looking information” within the meaning of applicable Canadian securities laws and “forward-looking statements” (and together with “forward-looking information”, “forward-looking information and statements”) within the meaning of the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking information and statements. The use of any of the words "future", "continue", "estimate", "expect", "may", "will", "could", "believe", "predict", "potential", "objective", and similar expressions, are intended to identify forward-looking information and statements. In particular, this news release includes (without limitation) forward-looking information and statements pertaining to: expectations, and the timing associated therewith, of the Company reaching its leverage framework target of 1.5X to 2.0X; continued focus by the Company to enhance profitability of core operations, streamline its geographic footprint, optimize the capital intensity of the business, refine its external disclosures, and sustained operational execution, will facilitate continued debt reduction and enhance the Company’s ability to focus on growth and to return capital to shareholders; that near-term capital deployment for customer supported opportunities will generate attractive returns and deliver value to Company shareholders; all disclosures under the heading “Outlook” including: (i) that demand across all business units and geographic regions will persist; (ii) the Company’s expectations that, customer contracts which support the Energy Infrastructure product line, will generate
All forward-looking information and statements in this news release are subject to important risks, uncertainties, and assumptions, which may affect Enerflex's operations, including, without limitation: the impact of economic conditions; the markets in which Enerflex's products and services are used; general industry conditions; the ability to successfully continue to integrate Exterran and the timing and costs associated therewith; changes to, and introduction of new, governmental regulations, laws, and income taxes; increased competition; insufficient funds to support capital investments; availability of qualified personnel or management; political unrest and geopolitical conditions; and other factors, many of which are beyond the control of Enerflex. As a result of the foregoing, actual results, performance, or achievements of Enerflex could differ and such differences could be material from those expressed in, or implied by, these statements, including but not limited to: the ability of Enerflex to realize the anticipated benefits of, and synergies from, the acquisition of Exterran and the timing and quantum thereof; the interpretation and treatment of the transaction to acquire Exterran by applicable tax authorities; the ability to maintain desirable financial ratios; the ability to access various sources of debt and equity capital, generally, and on acceptable terms, if at all; the ability to utilize tax losses in the future; the ability to maintain relationships with partners and to successfully manage and operate the integrated business; risks associated with technology and equipment, including potential cyberattacks; the occurrence and continuation of unexpected events such as pandemics, severe weather events, war, terrorist threats, and the instability resulting therefrom; risks associated with existing and potential future lawsuits, shareholder proposals, and regulatory actions; and those factors referred to under the heading "Risk Factors" in: (i) Enerflex's Annual Information Form for the year ended December 31, 2023, (ii) Enerflex's management’s discussion and analysis for the year ended December 31, 2023, and (iii) Enerflex's Management Information Circular dated March 15, 2024, each of the foregoing documents being accessible under the electronic profile of the Company on SEDAR+ and EDGAR at www.sedarplus.ca and www.sec.gov/edgar, respectively.
Readers are cautioned that the foregoing list of assumptions and risk factors should not be construed as exhaustive. The forward-looking information and statements included in this news release are made as of the date of this news release and are based on the information available to the Company at such time and, other than as required by law, Enerflex disclaims any intention or obligation to update or revise any forward-looking information and statements, whether as a result of new information, future events, or otherwise. This news release and its contents should not be construed, under any circumstances, as investment, tax, or legal advice.
The outlook provided in this news release is based on assumptions about future events, including economic conditions and proposed courses of action, based on Management's assessment of the relevant information currently available. The outlook is based on the same assumptions and risk factors set forth above and is based on the Company's historical results of operations. The outlook set forth in this news release was approved by Management and the Board of Directors. Management believes that the prospective financial information set forth in this news release has been prepared on a reasonable basis, reflecting Management's best estimates and judgments, and represents the Company's expected course of action in developing and executing its business strategy relating to its business operations. The prospective financial information set forth in this news release should not be relied on as necessarily indicative of future results. Actual results may vary, and such variance may be material.
ABOUT ENERFLEX
Enerflex is a premier integrated global provider of energy infrastructure and energy transition solutions, deploying natural gas, low-carbon, and treated water solutions – from individual, modularized products and services to integrated custom solutions. With over 4,500 engineers, manufacturers, technicians, and innovators, Enerflex is bound together by a shared vision: Transforming Energy for a Sustainable Future. The Company remains committed to the future of natural gas and the critical role it plays, while focused on sustainability offerings to support the energy transition and growing decarbonization efforts.
Enerflex's common shares trade on the Toronto Stock Exchange under the symbol "EFX" and on the New York Stock Exchange under the symbol "EFXT". For more information about Enerflex, visit www.enerflex.com.
For investor and media enquiries, contact:
Marc Rossiter
President and Chief Executive Officer
E-mail: MRossiter@enerflex.com
Preet S. Dhindsa
Senior Vice President and Chief Financial Officer
E-mail: PDhindsa@enerflex.com
Jeff Fetterly
Vice President, Corporate Development and Investor Relations
E-mail: JFetterly@enerflex.com
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