Q4 2025 Enerflex Ltd Earnings Call

February 26, 2026

Speaker #1: Good day and thank you for standing by . Welcome to the Enerflex fourth Quarter 2020 Earnings Conference Call . At this time , all participants are in a listen only mode .

Operator: Good day, and thank you for standing by. Welcome to the Enerflex Q4 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jeff Fetterly, Vice President, Corporate Development and Capital Markets. Please go ahead.

Speaker #1: After the speaker's presentation , there will be a question and answer session to ask a question during the session , you will need to press star one one on your telephone .

Speaker #1: You will then hear an automated message advising your hand is raised . To withdraw your question , please press star one one again .

Speaker #1: Please be advised that today's conference is being recorded . I would now like to hand the conference over to your first speaker today , Jeff Fetterly Vice President , Corporate Development and Capital Markets .

Speaker #1: Please go ahead

Speaker #2: Thank you , Jill , and good morning , everyone . With me today are Paul Mahoney president and CEO , Preet Dhindsa CFO .

Jeff Fetterly: Thank you, Jill. Good morning, everyone. With me today are Paul Mahoney, President and CEO, Preet Dhindsa, CFO, and Ben Park, Enerflex's Controller. During today's call, our prepared remarks will focus on three key areas. One, the continued strong performance of Enerflex's business. Two, our outlook, priorities, and capital spending guidance for 2026. And three, an update on operational and strategic initiatives, including a definitive agreement to divest the majority of our operations in the APAC region. Before I turn it over to Paul, I'll remind everyone that today's discussion will include non-IFRS and other financial measures, as well as forward-looking statements regarding Enerflex's expectations for future performance and business prospects. Forward-looking information involves risks and uncertainties. The stated expectations could differ materially from actual results or performance.

Speaker #2: And Ben Park , Enerflex controller During today's call , our prepared remarks will focus on three key areas one . The continued strong performance of Enerflex business , two our outlook , priorities and capital spending guidance for 2026 and three .

Speaker #2: An update on operational and strategic initiatives , including a definitive agreement to divest the majority of our operations in the APAC region Before I turn it over to Paul , I'll remind everyone that today's discussion will include an IRS 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 .

Speaker #2: For more information , refer to the advisory statements within our news release . FDA and other regulatory filings , all available on our website and under our Cd-R and Edgar plus profiles .

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

Speaker #2: As part of our prepared remarks , we will be referring to slides in our investor presentation , which is available through a link on this webcast and on our website under the Investor Relations section .

Speaker #2: I'll now turn it over to Paul. Thanks, Jeff, and thank you all for joining us on this morning's call. We are pleased to report another strong quarter that caps off an excellent year for Enerflex.

Paul Mahoney: Thanks, Jeff, and thank you all for joining us on this morning's call. We are pleased to report another strong quarter that caps off an excellent year for Enerflex. The strength of our financial and operating results is a testament to the resilience, commitment, and deep knowledge of our global team. Today, we will share more about the consistency of Enerflex's results, our growing and relentless focus on execution, and the strategic opportunities within a constructive natural gas market. Together, we believe these fundamentals position Enerflex for long-term value creation. Results during Q4 reflect solid performance across our geographies and business lines, as well as our ongoing efforts to optimize and streamline our business. The energy infrastructure and aftermarket services business lines continue to be the foundation of our results, contributing 65% of gross margin before depreciation and amortization in 2025.

Speaker #2: The strength of our financial and operating results is a testament to the resilience , commitment and deep knowledge of our global team Today , we will share more about the consistency of Enerflex results .

Speaker #2: Our growing and relentless focus on execution and the strategic opportunities within a constructive , natural gas market Together , we believe these fundamentals position Enerflex for long term value creation .

Speaker #2: Results . During the fourth quarter reflect solid performance across our geographies and business lines , as well as our ongoing efforts to optimize and streamline our business .

Speaker #2: The energy infrastructure and aftermarket Services business lines continue to be the foundation of our results , contributing 65% of gross margin before depreciation and amortization in 2025 .

Speaker #2: The Engineered Systems business line continued to demonstrate strong project execution and visibility for this business . Line remains solid , supported by a $1.1 billion backlog at the end of Q4 and healthy bidding prospects Firstly , I would like to touch on our announcement related to Enerflex operations in the Asia Pacific region .

Paul Mahoney: The engineered systems business line continued to demonstrate strong project execution and visibility for this business line remains solid, supported by a $1.1 billion backlog at the end of Q4 and healthy bidding prospects. Firstly, I would like to touch on our announcement related to Enerflex's operations in the Asia Pacific region. Enerflex has entered into a definitive agreement to divest the majority of its operations in the APAC region to the INNIO Group. This business operates principally in Australia, Indonesia, and Thailand, and is primarily focused on the AMS product line. Completion of the transaction is subject to standard closing conditions and regulatory approvals and is expected to close in the second half of 2026.

Speaker #2: Enerflex has entered into a definitive agreement to divest the majority of its operations in the APAC region to the Ineos group This business operates principally in Australia , Indonesia and Thailand , and is primarily focused on the AMS product line .

Speaker #2: Completion of the transaction is subject to standard closing conditions and regulatory approvals , and is expected to close in the second half of 2026 .

Speaker #2: Following close , Enerflex will continue to deliver Engineered system solutions in APAC , including natural gas compression processing and electric power generation through local sales teams with equipment manufactured from the company's three facilities in North America .

Paul Mahoney: Following close, Enerflex will continue to deliver engineered system solutions in APAC, including natural gas compression, processing, and electric power generation through local sales teams with equipment manufactured from the company's three facilities in North America. I would like to thank our strong team in the APAC region for their commitment to Enerflex and their contributions as we built a leading AMS business in the APAC region. This accretive divestiture underscores Enerflex's commitment to simplifying and optimizing our operations while sharpening our focus on our core regions of North America, Latin America, and the Middle East. Enerflex and INNIO share a long-standing global relationship, including Enerflex's role as a channel partner across our core regions, and we look forward to building on this partnership. Moving to other strategic and operational highlights that Enerflex achieved in the quarter.

Speaker #2: I would like to thank our strong team in the APAC region for their commitment to Enerflex and their contributions as we built a leading AMS business in the APAC region This accretive divestiture underscores Enerflex commitment to simplifying and optimizing our operations while sharpening our focus on our core regions of North America , Latin America , and the Middle East .

Speaker #2: Enerflex and Innio share a long standing global relationship , including Enerflex role as a channel partner across our core regions , and we look forward to building on this partnership , moving to other strategic and operational highlights that Enerflex achieved in the quarter .

Speaker #2: The company continues to expand and deepen relationships with upstream and midstream client partners across the US through strategic collaboration and long term partnership development .

Paul Mahoney: The company continues to expand and deepen relationships with upstream and midstream client partners across the US through strategic collaboration and long-term partnership development. During Q4, this momentum contributed to Enerflex securing multiple orders for large-scale compression, natural gas processing, retrofits, and power generation equipment. Activity continues to be centered in the Permian, where increasing gas and NGL ratios are supportive of demand for Enerflex's solutions. We are also seeing a broadening of opportunities, including in the Haynesville, where natural gas supply growth is expected to be connected with LNG export capacity expansion. In Q4, Enerflex established a long-term framework agreement for compression solutions with a large, diversified, integrated midstream client partner in the United States. Enerflex's US contract compression business continues to perform well, led by increasing natural gas production in the Permian.

Speaker #2: During Q4 . This momentum contributed to Enerflex securing multiple orders for large scale compression , natural gas processing , retrofits , and power generation equipment activity continues to be centered in the Permian or increasing gas and NGL ratios are supportive of demand for Enerflex solutions , but we are also seeing a broadening of opportunities , including in the Haynesville , where natural gas supply growth is expected to be connected with LNG export capacity expansion in the fourth quarter .

Speaker #2: Enerflex established a long term framework agreement for compression solutions with a large , diversified , integrated midstream client partner in the United States .

Speaker #2: Enerflex US contract compression business continues to perform well , led by increasing natural gas production in the Permian . Utilization remains stable at 94% during Q4 across a fleet size of approximately 483,000 horsepower and reflects increased its marketed fleet by 13% over the course of 2025 , and we expect approved growth capital expenditures will deliver growth at a similar pace or greater during 2026 , Enerflex is also securing long lead time components to further support growth in 2027 .

Paul Mahoney: Utilization remained stable at 94% during Q4 across a fleet size of approximately 483,000 horsepower. Enerflex increased its marketed fleet by 13% over the course of 2025. We expect approved growth capital expenditures will deliver growth at a similar pace or greater during 2026. Enerflex is also securing long lead time components to further support growth in 2027. Enerflex continues to develop opportunities in the electric power generation part of our business, including projects associated with AI and data centers. In early 2026, Enerflex, one, received an order to supply power generation units for a large data center project in the US, with delivery scheduled into 2027.

Speaker #2: Enerflex continues to develop opportunities in the electric power generation . Part of our business , including projects associated with AI and data centers .

Speaker #2: In early 2026 . Enerflex one received an order to power generation units for a large data center project in the US with deliveries scheduled into 2027 .

Speaker #2: Two we've completed a front end engineering and design study for a client partner related to a large data center , power generation project in the US advancing the opportunity toward potential future execution .

Paul Mahoney: Two, we've completed a front-end engineering and design study for a client partner related to a large data center power generation project in the US, advancing the opportunity toward potential future execution. three, executed contracts to supply power generation equipment to two client partners in the North American market. Enerflex continues to evaluate over 1.5 GW of opportunities across our Engineered Systems business line. Now, a few comments on each of our business lines. Engineered Systems backlog as at 31 December 2025, of $1.1 billion, provides strong visibility into future revenue generation and business activity levels. Bookings of $377 million during Q4, compared to $301 million in Q4 of 2024, and $339 million in Q3 of 2025, as well as a trailing eight-quarter average of $336 million.

Speaker #2: And three executed contracts to supply power generation equipment to two client partners in the North American market . Enerflex continues to evaluate over 1.5GW of opportunities across our engineered Systems business line And now a few comments on each of our business lines Engineered systems backlog as at December 31st , 2025 , of $1.1 billion provides strong visibility into future revenue generation and business activity levels Bookings of $377 million during Q4 , compared to 301 million in Q4 24 and 339 million in Q3 of 25 , as well as a trailing eight quarter average of 336 million .

Speaker #2: EPs . Book to bill ratio was 1.1 times during Q4 and one times on a trailing four quarter average , highlighting that the company is consistently replenishing its backlog in line with Project execution .

Paul Mahoney: ES book-to-bill ratio was 1.1 times during Q4, and 1 times on a trailing 8-quarter average, highlighting that the company is consistently replenishing its backlog in line with project execution. The outlook for ES products and services continues to be attractive, driven by expected increases in natural gas, associated liquids, and electric power generation across Enerflex's core operating countries. Turning to aftermarket services, this business line continued to benefit from strong activity levels and increased customer maintenance spending. We are particularly encouraged by the performance of our AMS business in countries where we also operate energy infrastructure assets, highlighting the strength of our integrated offering and competitive positioning in key markets. The energy infrastructure business continues to deliver solid performance, underpinned by approximately $1.3 billion of contracted revenue.

Speaker #2: The outlook for ES products and services continues to be attractive , driven by expected increases in natural gas associated liquids and electric power generation across Enerflex core operating countries Turning to aftermarket services , this business line continued to benefit from strong activity levels and increased customer maintenance spending .

Speaker #2: We are particularly encouraged by the performance of our AMS business in countries where we also operate energy infrastructure assets , highlighting the strength of our integrated offering and competitive positioning in key markets .

Speaker #2: The energy infrastructure business continues to deliver solid performance , underpinned by approximately $1.3 billion of contracted revenue within this segment , our U.S. contract compression fleet remains a core component of our asset base and the underlying fundamentals for that business continue to be constructive .

Paul Mahoney: Within this segment, our US contract compression fleet remains a core component of our asset base, and the underlying fundamentals for that business continue to be constructive. You can find additional detail on operational KPIs for this segment on slides 15 and 16 of our investor presentation. Turning to our international energy infrastructure operation, which are outlined on slides 17 and 18, we currently operate 1.1 million horsepower of compression and have 24 build, own, operate, and maintain, or BOOM, projects across Bahrain, Oman, and Latin America. This portfolio is supported by a strong contract position with a weighted average remaining term of approximately 5 years, providing durable and predictable cash flow that we expect will continue to support Enerflex's financial performance in the years ahead. I'd like to take a moment to touch on our strategic priorities.

Speaker #2: You can find additional detail on operational KPIs for this segment on slides 15 and 16 of our investor presentation Turning to our international Energy infrastructure operation , which are outlined on slide 17 and 18 , we currently operate 1.1 million horsepower of compression and have 24 build , own , operate and maintain or boom projects across Bahrain , Oman and Latin America .

Speaker #2: This portfolio is supported by a strong contract position with a weighted average remaining term of approximately five years , providing durable and predictable cash flow that we expect will continue to support Enerflex financial performance in the years ahead .

Speaker #2: I'd like to take a moment to touch on our strategic priorities since joining Enerflex at the end of September , I've had the opportunity to spend time across our global operations and interact extensively across all levels of the organization .

Paul Mahoney: Since joining Enerflex at the end of September, I've had the opportunity to spend time across our global operations and interact extensively across all levels of the organization. Concurrent with this, we have been engaging with internal and external partners in a broader assessment of Enerflex's strategy, capabilities, and market opportunities. We expect to provide further insights into our strategic priorities, including capital allocation expectations, in the coming months. At a high level, Enerflex's strategy will be anchored by a continued focus on Enerflex's strengths and areas of excellence. Two, alignment with the values that have guided the company for decades. Three, emphasis on discipline, providing meaningful direct shareholder returns, and making investments that support long-term shareholder value creation.

Speaker #2: Concurrent with this , we have been engaging with internal and external partners in a broader assessment of Enerflex strategy , capabilities and market opportunities .

Speaker #2: We expect to provide further insight into our strategic priorities , including capital allocation expectations in the coming months . At a high level , Enerflex strategy will be anchored by a continued focus on Enerflex strengths and areas of excellence .

Speaker #2: Two alignment with the values that have guided the company for decades , and three emphasis on discipline , providing meaningful , direct shareholder returns and making investments that support long term shareholder value creation During 2026 , the company's priorities are focused on leveraging our leading position in core operating countries to capitalize on expected increases in demand for Enerflex solutions , enhancing the profitability of our core operations and maximizing free cash flow .

Paul Mahoney: During 2026, the company's priorities are focused on leveraging our leading position in core operating countries to capitalize on expected increases in demand for Enerflex's solutions, enhancing the profitability of our core operations, and maximizing free cash flow, positioning the company to invest in customer-supported growth opportunities and provide meaningful direct shareholder returns. With that, I'll turn it over to Preet to speak to the financial side and capital allocation moving forward.

Speaker #2: Positioning the company to invest in customer supported growth opportunities and provide meaningful , direct shareholder returns With that , I'll turn it over to Preet to speak to the financial side and capital allocation .

Speaker #2: Moving forward . Thanks , Paul , and good morning , everyone . I'll start with highlights from the fourth quarter . We generated revenue of $627 million in the fourth quarter , compared to $561 million in Q4 of 24 and $777 million in Q3 25 .

Preet Dhindsa: Thanks, Paul. Good morning, everyone. I'll start with highlights from Q4. We generated revenue of $627 million in Q4, compared to $561 million in Q4 2024, and $777 million in Q3 2025. Higher revenue compared with prior year reflects strong execution and a high level of operational activity in the Engineered Systems product line. The sequential decline relates primarily to commencement of the Block 60 Bisat-C Expansion Facility and the pull forward of certain projects into Q3. Gross margin before depreciation and amortization was $177 million, or 28% of revenue, compared to $174 million, or 31% of revenue in Q4 2024, and $206 million, or 27% of revenue during Q3 2025.

Speaker #2: Higher revenue compared with the prior year reflects strong execution and a high level of operational activity in the Engineered Systems product line. The sequential decline relates primarily to the commencement of the Block 60 Bisazza expansion facility, and the pull forward of certain projects into the third quarter.

Speaker #2: Gross margin . Before depreciation and amortization was $177 million , or 28% of revenue , compared to $174 million , or 31% of revenue in Q4 24 and 260 206 million , or 27% of revenue during Q3 25 .

Speaker #2: The E.I. and AMS product lines generated 67% of consolidated gross margin before depreciation and amortization during Q4 25 , energy infrastructure performance continued to be strong , with gross margin before DNA of $89 million , compared to 86 million in Q4 24 and 95 million in Q3 25 .

Preet Dhindsa: The EI and AMS product lines generated 67% of consolidated gross margin before depreciation and amortization during Q4 2025. Energy infrastructure performance continued to be strong, with gross margin before D&A of $89 million, compared to $86 million in Q4 2024 and $95 million in Q3 2025. Aftermarket services gross margin before D&A was 22% in the quarter, benefiting from strong customer maintenance programs. SG&A was $83 million for the three months ended 31 December 2025, down $9 million from the prior year period, driven by cost savings initiatives, improved operational efficiencies, and lower depreciation and amortization. On a sequential basis, SG&A increased from $71 million due to higher stock-based compensation and third-party expenses. Adjusted EBITDA of $123 million compares to $121 million in Q4 2024, and $145 million during Q3 2025.

Speaker #2: Aftermarket services . Gross margin before DNA was 22% in the quarter , benefiting from strong customer maintenance programs . SG&A was $83 million for the three months ended December 31st , 2025 , down 9 million from the prior year period , driven by cost savings initiatives , improved operational efficiencies , and lower depreciation , and amortization .

Speaker #2: On a sequential basis , SG&A increased from 71 million due to higher stock based compensation and 30 party expenses . Adjusted EBITDA of $123 million , compared to 121 million in Q4 24 and 145 million during Q3 25 .

Speaker #2: The sequential decrease in adjusted EBITDA was primarily related to the pull forward of certain EPs projects into Q3 25 and higher core SG&A in the fourth quarter .

Preet Dhindsa: The sequential decrease in adjusted EBITDA was primarily related to the pull forward of certain ES projects into Q3 2025 and higher core SG&A in Q4. Return on capital employed was 16.9% in Q4 2025, an increase compared to 10.3% in Q4 2024, and consistent with the record level during Q3 2025. Higher ROCE compared to Q4 2024 is a function of the increase in trailing twelve-month EBIT and lower average capital employed, primarily due to a decline in net debt. Cash provided by operating activities before changes in working capital, or FFO, of $60 million, compared to $74 million in Q4 2024 and $115 million in Q3 2025. FFO for Q4 included $26 million of tax expense related to the refinancing of our high-yield notes.

Speaker #2: Return on capital employed was 16.9% in Q4 2025, an increase compared to 10.3% in Q4 2024 and consistent with the record level during Q3 2025.

Speaker #2: rotce compared to Q4 24 is a function of the increase in trailing 12 month Ebit and lower average capital employed , primarily due to a decline in net debt .

Speaker #2: Cash provided by operating activities before changes in working capital or FFO of $60 million , compared to 74 million in Q4 24 and 115 million in Q3 25 .

Speaker #2: FFO for the fourth quarter included $26 million of tax expense related to the refinancing of our high yield notes. Free cash flow increased to a record $141 million in Q4 25, compared to $76 million during Q4 24 and $43 million in Q3 25.

Preet Dhindsa: Free cash flow increased to a record $141 million in Q4 2025, compared to $76 million during Q4 2024 and $43 million in Q3 2025. Free cash flow included working capital recovery of $119 million, which benefited from collection and execution of projects in the ES business line. Net loss of $57 million, or $0.47 per share in Q4 2025, compared to earnings of $15 million or $0.12 per share in Q4 2024, and earnings of $37 million or $0.30 per share in Q3 2025. Including Q4 2025 with $81 million of expenses related to redemption of the 2027 senior secured notes. On a normalized basis, net income was $24 million or $0.20 per share in Q4.

Speaker #2: Free cash flow included working capital recovery of $119 million , which benefited from collections and execution of projects in the U.S. business line .

Speaker #2: Net loss of $57 million , or $0.47 per share , in Q4 25 , compared to earnings of 15 million , or $0.12 per share , in Q4 24 , and earnings of 37 million , or $0.30 $0.30 per share , in Q3 25 , including Q4 25 , was $81 million of expenses related to redemption .

Speaker #2: Of the 2027 senior secured notes, on a normalized basis, net income was $24 million, or $0.20 per share, in the fourth quarter.

Speaker #2: The early redemption of Enerflex 9% senior secured notes due 2027 resulted in debt redemption costs of $42 million , comprised of the redemption premium paid and de-recognition of the Unamortized original issue discount and deferred transaction costs .

Preet Dhindsa: The early redemption of Enerflex's 9% senior secured notes due 2027, results in debt redemption cost of $42 million, comprised of the redemption premium paid and derecognition of the unamortized original issue discount and deferred transaction costs. Additionally, the company incurred withholding taxes of $26 million, for a total one-time cost of $68 million. The embedded derivative associated with the redemption options in the 2027 notes of $13 million was also fully derecognized during Q4 2025. While these costs impact results in the Q4, the redemption will reduce future financing and tax costs and improve capital structure. The company refinanced $563 million of 9% senior secured notes due 2027, with $400 million of 6.875% senior unsecured notes due 2031, along with availability under the company's secured revolving credit facility.

Speaker #2: Additionally , the company incurred withholding taxes of $26 million for a total one time cost of $68 million . The embedded derivative associated with the redemption options in the 2027 notes of 13 million was also fully derecognized during Q4 25 .

Speaker #2: While these costs impacted results in the fourth quarter , the redemption will reduce future financing and tax costs and improve capital structure The company refinanced $563 million of 9% senior secured notes due 2027 , with $400 million of 6.875% senior unsecured notes due 2031 , along with availability under the company's secured revolving credit facility .

Speaker #2: The refinancing , expected to reduce annual interest costs and enhance the company's tax efficiency . Now we'll touch on our strong financial position .

Preet Dhindsa: The refinancing is expected to reduce annual interest costs and enhance the company's tax efficiency. Now we'll touch on our strong financial position. Enerflex exited Q4 2025 with net debt of $501 million, which included $81 million of cash and cash equivalents, a reduction of $115 million compared to Q4 2024, and $83 million compared to Q3 2025. Cash increased by $17 million on a quarter-over-quarter basis due to strong collections late in Q4, but we remain focused on optimizing cash balances held on a global basis. Enerflex's bank-adjusted net debt to EBITDA ratio is approximately 1x at the end of Q4 2025, down from 1.5x at the end of Q4 2024, and 1.2x at the end of Q3 2025. Now let me shift to capital allocation.

Speaker #2: Enerflex exited Q4 25 with net debt of $501 million , which included $81 million of cash and cash equivalents , a reduction of 115 million compared to Q4 of 24 and 83 million compared to the third quarter of 25 .

Speaker #2: Cash increased by 17 million on a quarter over quarter basis due to strong collections late in the fourth quarter , but we remain focused on optimizing cash balances held on a global basis , Enerflex Bank adjusted net debt to EBITDA ratio is approximately one times at the end of Q4 25 , down from 1.5 times at the end of Q4 24 and 1.2 times at the end of Q3 25 .

Speaker #2: Now , let me shift to capital allocation during Q4 25 , we invested $34 million in the business comprised of 14 million for growth capital , primarily allocated to expand the company's contract compression fleet in the U.S.

Preet Dhindsa: During Q4 2025, we invested $34 million in the business, comprised of $14 million for growth capital, primarily allocated to expand the company's contract compression fleet in the US, and $20 million for maintenance and PP&E. Capital expenditures for 2025 are $115 million, consistent with our previous guidance of $120 million. The company repurchased 102,800 common shares at an average price of CAD 15.10 per share during Q4 2025, and a total of approximately 2.8 million common shares at an average price of CAD 11.08 since its normal course issuer bid commenced on 1 April to 31 December 2025.

Speaker #2: and 20 million for maintenance and PPE capital expenditures for 2025 . $115 million . Consistent with our previous guidance of $120 million , the company repurchased 102,800 common shares at an average price of $15.10 Canadian per share .

Speaker #2: During Q4 , 25 , and a total of approximately 2.8 million common shares and an average price of $11.08 . Canadian . Since it's normal course issuer bid commenced on April 1st to December 31st , 2025 , under the NCIB , which expires March 31st , 2026 .

Preet Dhindsa: Under the NCIB, which expires 31 March 2026, the company is authorized to acquire up to a maximum of approximately 6.2 million common shares or 5% of its public float, as at the application date for cancellation. During 2025, Enerflex returned $40 million to shareholders through dividends of $17 million and share repurchases of $23 million. Now turning to 2026. Enerflex is targeting organic capital expenditures of $175 to $195 million. This includes growth capital of $90 to $100 million, maintenance capital of $70 to $80 million, and PP&E and infrastructure investments of approximately $15 million to support the company's ES business and activity in adjacent markets, including power generation.

Speaker #2: The company is authorized to acquire up to a maximum of approximately 6.2 million common shares , or 5% of its public float , as at the application date for cancellation during 2025 , Enerflex returned $40 million to shareholders through dividends of $17 million and share repurchases of 23 million .

Speaker #2: Now , turning to 2026 . Enerflex is targeting organic capital expenditures of 175 to $195 million . This includes growth capital of 9200 million , maintenance capital of 70 to 80 million , and PPE and infrastructure investments of approximately $15 million to support the company's business and activity in adjacent markets , including power generation , organic growth , capital spending will continue to focus on customer supported opportunities and primarily allocated to expand the company's contract compression fleet .

Preet Dhindsa: Organic growth capital spending will continue to focus on customer-supported opportunities and primarily allocated to expand the company's contract compression fleet in the US. Although not contemplated in the company's 2026 capital spending plan, Enerflex continues to evaluate opportunities to organically expand its business in the Middle East. Now, direct shareholder returns. 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. In addition to disciplined growth capital spending, share repurchases, and dividends, Enerflex will also consider further debt reduction to strengthen its balance sheet and lower net finance costs. We remain focused on enhancing profitability of our core operations, growing our business in a disciplined and structured way, and ensuring Enerflex generates sustained, attractive returns for shareholders.

Speaker #2: In the US . Although not contemplated in the company's 2026 capital spending plan , Enerflex continues to evaluate opportunities to organically expand its business in the Middle East and now direct shareholder returns .

Speaker #2: Going forward , capital allocation decisions will be based on delivering value to Enerflex shareholders and measured against Enerflex ability to maintain balance sheet strength .

Speaker #2: In addition to disciplined growth , capital spending , share repurchases and dividends , and a flexible also consider further debt reduction to strengthen its balance sheet and lower net finance costs .

Speaker #2: We remain focused on enhancing profitability of our core operations . Growing our business with disciplined and structured way , and ensuring Enerflex generates sustained , attractive returns for shareholders .

Speaker #2: I want to thank Enerflex employees for their efforts in continuing to deliver strong operational and financial results. With that, I'll turn the call back over to Paul for closing remarks.

Preet Dhindsa: I want to thank Enerflex employees for their efforts in continuing to deliver strong operational and financial results. With that, I'll turn the call back over to Paul for closing remarks.

Speaker #3: Thanks . Preet . Over the course of 2025 , we continue to advance our business , strengthened our financial position and took meaningful steps to enhance long term shareholder value .

Paul Mahoney: Thanks, Preet. Over the course of 2025, we continued to advance our business, strengthened our financial position, and took meaningful steps to enhance long-term shareholder value. While there remains important work ahead to fully realize our ambitions, I'm encouraged by the momentum across our global operations and confident in our ability to build on this foundation. Once again, we believe the consistency of Enerflex's results are growing and relentless focus on execution and strategic opportunities within a constructive natural gas market, position Enerflex for long-term value creation. We are excited about the path ahead for Enerflex and look forward to providing more detail in the coming months around Enerflex's strategy, capabilities, and market opportunities.

Speaker #3: While their remains important , work ahead to fully realize our ambitions , I'm encouraged by the momentum across our global operations and confident in our ability to build on this foundation once again .

Speaker #3: We believe the consistency of Enerflex results is growing and relentless. Focus on execution and strategic opportunities within a constructive natural gas market position.

Speaker #3: Enerflex for long term value creation . We are excited about the path ahead for Enerflex and look forward to providing more detail in the coming months .

Speaker #3: Around Enerflex strategy, capabilities, and market opportunities. And before I hand the call back over to the operator, I too want to thank the 4,400 employees around the world for their commitment, resilience, and focus on customers.

Paul Mahoney: Before I hand the call back over to the operator, I, too, want to thank the 4,400 employees around the world for their commitment, resilience, and focus on customers day in and day out. We will now hand the call back to the operator for questions.

Speaker #3: Day in and day out We will now hand the call back to the operator for questions

Speaker #1: Thank you . At this time , we will conduct the question and answer session . As a reminder to ask a question , you will need to press star one one on your telephone and wait for your name to be announced .

Operator: Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Aaron MacNeil with TD Cowen. Please go ahead. Your line is open.

Speaker #1: To withdraw your question , please press star one one again . Please stand by while we compile the Q&A roster Our first question comes from the line of Aaron McNeill with TD Cohen .

Speaker #1: Please go ahead . Your line is open

Speaker #4: Hey . Morning , all Yesterday , a large contract compression company in the US noted that lead times on large engines is extended to 110 to 120 weeks .

Aaron MacNeil: Hey, morning, all. Yesterday, a large contract compression company in the US noted that lead times on large engines has extended to 110 to 120 weeks. I'm just hoping that you can speak to sort of the amount of the engineered systems backlog, potential orders, including power generation beyond the backlog, and the sort of energy infrastructure, organic growth that would have sort of an associated engine today. Ultimately, do you see this as a constraint that would reduce your ability to execute on the business? Maybe more directly as it relates to the, you know, 1.5 GW of opportunities, like, can you practically execute? Or like, how much of it, I guess, could you practically execute on in the near term in light of those constraints?

Speaker #4: So I'm just hoping that you can speak to sort of the amount of the engineered systems backlog , potential orders , including power generation beyond the backlog and the sort of energy infrastructure , organic growth that would have sort of an associated engine today .

Speaker #4: And then ultimately , do you see this as a constraint that would reduce your ability to execute on the business ? And then maybe more directly , as it relates to the , you know , 1.5GW of opportunities ?

Speaker #4: Can you practically execute or like how much of it , I guess , could you practically execute on in the near term in light of those constraints ?

Speaker #3: Yeah . Hi , Aaron , great question . First , I would say the the element of availability of engines and things is not a new phenomenon .

Paul Mahoney: Yeah. Hi, Aaron. Great questions. First, I would say the element of availability of engines and things is not a new phenomenon. This is something that we've been strategizing, grappling with for a bit now. I would say our 2026 is secure. We are currently positioning for 2027, given the light of the delivery constraints. To answer the question relating to power generation, we did in Q4, if you remember, and even Q3, is a small element of putting a more of a speculative position to secure engines, such that we could deliver on our commitments in 2026.

Speaker #3: This is something that we've been strategizing , grappling with for , for a bit now . I would say our 26 is secure We are currently positioning for 2027 .

Speaker #3: Given the light of the delivery constraints , and to answer the question relating to power generation , we did in Q4 , if you remember , and even Q3 as a small element of putting a more of a speculative position to secure engines such that we could deliver on our commitments in 26 .

Speaker #4: Gotcha . Okay . And then maybe keeping with the lead times , you know , again , I know you said you had 26 sort of locked in , but if lead times are effectively two years , is it is it fair to assume that you sort of now have know , a multi-year growth outlook for the contract compression business specifically , like I'm thinking about , you know , you upticked the the capital spend for , for next year or for , I guess , for this year , like , should we expect sort of that cadence to continue into 2027 and sort of have visibility to that today .

Aaron MacNeil: Gotcha. Okay, maybe keeping with the lead times, you know, again, I know you said you had 26 sort of locked in, but if lead times are effectively 2 years, is it fair to assume that you sort of now have, you know, a multi-year growth outlook for the contract compression business specifically? Like, I'm thinking about, you know, you upticked the capital spend for next year or I guess, for this year. Like, should we expect sort of that cadence to continue into 2027? Sort of, do you have visibility to that today, and do you have customers sort of lined up ready to take that equipment today?

Speaker #4: And do you have customers sort of lined up ready to take that equipment today

Speaker #3: Yeah . Great question . You know , as we've stated , our CapEx position in 26 that demonstrates our commitment to further growth , similar to what you've seen in 25 .

Paul Mahoney: Yeah, no, great question. You know, as we've stated, our CapEx position in 26, that demonstrates our, commitment to further growth, similar to what you've seen in 25. We do have customer-specific positions, with that. I know there's some discussion around, Permian Basin and what have you. When it comes to gas processing, production of gas, and the outlook of gas, yeah, I think, I think the statement that you've made around two years of confidence on growth is accurate.

Speaker #3: We do have customer specific positions . With that , I know there's some discussion around Permian Basin and what have you . But when it comes to gas processing , production of gas and the outlook of gas , yeah , I think I think the statement that you've made around two years of , of confidence on , on growth is accurate Okay .

Aaron MacNeil: Thanks, everyone. I'll turn it back.

Speaker #4: Thanks everyone . I'll turn it back .

Speaker #1: Thank you Before our next question , as a reminder to ask a question , you will need to press star one one on your telephone and wait for your name to be announced .

Operator: Thank you. Before our next question, as a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. One moment. Our next question comes from the line of Tim Monachello with ATB Cormark Capital Markets. Please go ahead.

Speaker #1: One moment Our next question comes from the line of Tim Monticello with ATB . Capital Markets . Please go ahead .

Speaker #5: Hey . Good morning everyone Thanks for taking my questions Just a quick one to follow up on Aaron's question . Do you think that lead time that he stated in 110 to 120 weeks is accurate across your product lines that you're seeing , or is there some variability in lead times based on , I guess , the size of engines that you're looking at and markets

Tim Monachello: Hey, good morning, everyone. Thanks for taking my questions. Just a quick one to follow up on Aaron's question. Do you think that lead time that he stated, 110 to 120 weeks, is accurate across your product line that you're seeing? Or is there some variability in lead times based on, I guess, the size of engines that you're looking at and markets?

Speaker #3: Yeah . Good morning Tim . You know , the stated 120 weeks is for a portion of the product line , I think is the first thing to to realize .

Paul Mahoney: Yeah. Good morning, Tim. You know, the stated 120 weeks is for a portion of the product line, I think is the first thing to realize. It does come in the higher horsepower ranges. I think it also, which provides a little bit of potential opportunity, expansion in operations in the key equipment manufacturers has been going on. It's pretty fervent. Right now, a large horsepower, 120 weeks, is the current lead time. As we go out here over the next so many months, we should see some impact due to CapEx with the equipment manufacturers, number one.

Speaker #3: And it does come in the higher horsepower ranges . I , I think it also which provides a little bit of , of potential opportunity expansion and operations in the in the key equipment manufacturers has been going on , and it's pretty fervent .

Speaker #3: So right now a large horsepower 120 weeks is the current lead time . But as we go out here over the next so many months , we should see some impact due to CapEx with the equipment manufacturers .

Speaker #3: Number one , into their again is it's not the entire portfolio . It's a select piece of the portfolio that's actually 120 weeks

Paul Mahoney: 2, that there again, it's not the entire portfolio. It's a select piece of the portfolio that's actually 120 weeks.

Speaker #5: Got it. And then, having 2026 sort of secured, would you say—I don't know—the majority, or almost all, of the new orders that you receive today won't be delivered in '26?

Tim Monachello: Got it. Having 2026 sort of secured, would you say, I don't know, the majority or almost all of the new orders that you receive today won't be delivered in 2026? Do you still have capacity to book and turn work in 2026?

Speaker #5: Or do you still have capacity to book and turn work in '26?

Speaker #3: Well , if you're referring to data center or power gen related items , yeah , most of that would be 2027 . And beyond , you know , do we find opportunities here or there for for book build business to pursue that ?

Paul Mahoney: Well, well, if you're referring to a data center or power gen-related items, yeah, most of that would be 2027 and beyond. You know, do we find opportunities here or there for book-to-bill business to pursue? That certainly is a plan, and that certainly is something that we do. When it comes to the data center world, that would be more of 2027 and on in terms of deliveries.

Speaker #3: That certainly is a plan. And that certainly is something that we do. But when it comes to the data center world, that would be more of 2027.

Speaker #3: And on in terms of deliveries .

Speaker #5: And I meant more for the compression processing piece

Tim Monachello: I meant more for the compression and processing piece.

Speaker #3: In terms of

Paul Mahoney: In terms of?

Speaker #5: Like if you get an order for compression tomorrow , do you have enough ? I guess orders with your channel partners for , for engines and components that you could deliver .

Tim Monachello: Like, if you get an order for compression tomorrow, do you have I guess, orders with your channel partners for engines and components that you could deliver an order in 26, or is that sort of the outlook for 26 in terms of that backlog for baked and dried already?

Speaker #5: An order in 26 or is that is sort of the outlook for 26 in terms of that backlog sort of baked and dried already ?

Speaker #3: Yeah . Tim , it's Jeff as Paul referenced in the remarks , a minute ago , we we've secured capacity to support our activity levels in 26 .

Paul Mahoney: Yeah, Tim, it's Jeff. As Paul referenced in the remarks a minute ago, we've secured capacity to support our activity levels in 2026, and that includes a book-to-bill that Paul referenced. We also have a view for where activity and opportunities sit for 2026, going into 2027 as well.

Jeff Fetterly: Yeah, Tim, it's Jeff. As Paul referenced in the remarks a minute ago, we've secured capacity to support our activity levels in 2026, and that includes a book-to-bill that Paul referenced. We also have a view for where activity and opportunities sit for 2026, going into 2027 as well.

Speaker #3: And that includes a book and bill that Paul referenced . And we also have a view for where activity and opportunities set for 26 going into 27 as well

Speaker #5: Okay . Apologies for asking question twice here . Crete mentioned potential growth opportunities in the Middle East . I wonder if you can elaborate on how you're on what those opportunities are .

Tim Monachello: Okay. Apologies for asking the question twice here. Preet mentioned potential growth opportunities in the Middle East. I wonder if you can elaborate on what those opportunities are, look like and how you would pursue those opportunities relative to, you know, your cost of capital and relative to, you know, your growth opportunities in North America?

Speaker #5: Look like and how you would pursue those opportunities relative to your cost of capital and relative to , you know , your growth opportunities in North America ?

Speaker #2: Yeah , Tim . So , I mean , as as we mentioned , the growth capital noted in our in our outlook is largely earmarked for the US contract compression fleet , call it 60 to 65% greater than prior year .

Preet Dhindsa: Yeah, Tim, I mean, as we mentioned, the growth capital noted in our outlook is largely earmarked for the US contract compression fleet, call it 60% to 65% greater than prior year. Currently, in the growth capital, we don't have anything directly allocated to, call it, Oman, Bahrain, the countries you're currently in, good GCC countries. We still are active in that market. We've got a team on the ground based out of Abu Dhabi, who are quite well-versed in that region. Those projects, as you probably mentioned earlier, don't come around every year, and if they do, when they do hit, they usually straddle a couple of year ends. We're active in the market.

Speaker #2: Currently in the growth capital . We don't have anything directly allocated to call it Oman , Bahrain . The countries who currently in good GCC countries .

Speaker #2: But we still are active in that market . We've got a team on the ground based out of Abu Dhabi who are quite , quite well versed in that region and those projects as probably mentioned earlier , don't come around every year .

Speaker #2: And if they do , when they do hit , they usually straddle a couple of year ends . And so we were active in the market .

Speaker #2: There , often good quality assets . That boom assets , whether finance or operating leases . We see in our balance sheet great counterparties , good economics , take or pay without direct , volumetric or commodity price risk .

Preet Dhindsa: They're often good quality assets, the BOOM assets, whether finance or operating leases, we see on our balance sheet, great counterparties, good economics, take or pay, without direct volumetric or commodity price risk. We like the asset class. Right now, we just put a marker out there that nothing in our current growth capital guidance speaks to those potential projects. We are active exploring good markets in those good countries.

Speaker #2: So we like the asset class . But right now we just put a marker out there that nothing in our current growth capital guidance speaks to those potential projects .

Speaker #2: But we are active exploring good markets in those good countries

Speaker #5: Okay . And around capital allocation , I appreciate your prepared remarks . There . But just curious in terms of the NCIB that you have outstanding for the year , do you expect to exhaust that NCIB or how should we be thinking about your share repurchase activity at 26 ?

Tim Monachello: Okay. Around capital allocation, appreciate your prepared remarks there, Preet. Just curious, in terms of the NCIB that you have outstanding for the year, do you expect to exhaust that NCIB, or how should we be thinking about your share purchase activity at 2026?

Speaker #2: Tim I mean , all the capital allocation levers that we've spoken about in the past are relevant growth capital . We put markers out there now , dividend , as you know , we've increased as at Q3 last couple of years .

Preet Dhindsa: Tim Monachello, I mean, all the capital allocation levers that we've spoken about in the past are relevant. Growth capital, we've put markers out there now. Dividend, as you know, we've increased as at Q3 last couple of years. We've been active in the NCIB since inception, 1 April last year. Purchased just under 5%, that'd be half of 5% of the authorized float that we had. What I would say is that we'll be a little more prescriptive on capital allocation in the coming months once the strategy work is done. Right now, the NCIB is open till the end of March. We'll make a call accordingly at that time.

Speaker #2: And we've been active in the NCIB since inception April 1st last year purchased just under 5% , about half of 5% of the authorized float that we had .

Speaker #2: But what I would say is we'll be a little more prescriptive on capital allocation in the coming months . Once the strategy work is done .

Speaker #2: And right now the NCIB is open until the end of March , and we'll make a call accordingly . At that time .

Speaker #3: Okay ?

Speaker #5: Okay, great. I appreciate it. I'll jump back in with you.

Tim Monachello: Okay, great. I appreciate it. I'll jump back in the queue.

Speaker #1: One moment Our next question comes from the line of John Gibson with BMO Capital Markets . Go ahead . Your line is open .

Operator: One moment. Our next question comes from the line of John Gibson with BMO Capital Markets. Go ahead, your line is open.

Speaker #6: Morning . All . First , just wondering if you could maybe expand on the customers associated with these PowerGen contracts . Either with the order you signed or future orders you're working on .

John Gibson: Morning, all. First, just wondering if you could maybe expand on the customers associated with these power gen contracts, either with the order you've signed or future orders you're working on. Is there any counterparty risk or are they all pretty high quality?

Speaker #6: Is there any counterparty risk or are they all pretty pretty high quality

Speaker #3: Yeah . John . Great . Great question . You know , in this market space , I think I used the word embryonic last , last quarter .

Paul Mahoney: John, great question. You know, in this market space, I think I used the word embryonic last quarter. Having a really strong, disciplined approach on counterparties, on terms, on different conditions and whatnot is extremely important. I would say that's prime for us is counterparty risk, counterparty stability. Right now, in the recent win, very strong counterparty. In the projects that we're pursuing here in the near term, very strong counterparty. Well-developed relationships, well-developed understanding across the value stream, whether they're developers, real estate developers, power developers, and then the hyperscalers. That's been a key piece of our strategy and why we've kind of metered and been conservative, if you will, on our approach.

Speaker #3: So having a really strong , disciplined approach on counterparties on terms on on different conditions and whatnot is extremely important . But I would say that's prime for us is counterparty risk .

Speaker #3: Counterparty counterparty stability . So right now in the recent win , very , very strong counterparty in in the projects that we're pursuing here in the near term , very , very strong counterparty well developed relationships , well developed understanding across the the value stream , whether they're developers , real estate developers , power developers , and then the hyperscalers .

Speaker #3: So that's been a key piece of our strategy and why we've kind of metered and been and been conservative , if you will , in our approach

John Gibson: Great. Last one for me, just given the recent disposition, is your business kind of where it's at, you know, in terms of kind of where you want it overall, or are there any other geographies or areas you're continuing to evaluate here?

Speaker #6: Great . And then last one for me , just given the recent disposition , is your business kind of where it's at , you know , in terms of kind of where you want it overall or are there any other geographies or areas or continuing to evaluate here ?

Speaker #3: Yeah , maybe I'll just give an overview and you can jump in here early on . We've we've deployed more of a residual cash earnings type of North Star metric .

Paul Mahoney: Yeah, maybe I'll just give an overview, and Preet, you can jump in here. Early on, we've deployed more of a Residual Cash Earnings type of North Star metric, and we've looked at all geographies, all business line, all countries, and certainly, continue to stay focused on that, and that's around creating shareholder value. We continue to look at it, and I would say that's just a part of our normal discipline, operating discipline, but I wouldn't go beyond that. Preet?

Speaker #3: And we've looked at all geographies , all business line , all countries and certainly a continue to stay focused on on that . And that's around creating shareholder value .

Speaker #3: So we continue to look at it . And I would say that's that's just a part of our normal discipline operating discipline . But I , I wouldn't go beyond that

Speaker #2: Yeah . The only thing I'd add is at deal Closed three years ago . We were in 27 countries . Most recently , and currently we're in 17 .

Preet Dhindsa: The only thing I'd add is that at deal close 3 years ago, we were in 27 countries. Most recently and currently, we're in 17. We'll monetize Asia Pacific, get down to likely 14 or so, and then we've got 7 core, Canada, US, Oman, Bahrain, Brazil, Argentina, Mexico. To say there's probably a few other non-core geographies we can get out of and, you know, free up some capital, working capital, close some bank accounts, improve our tax compliance and tax compliance positions in these countries. Just overall, simplify and optimize. There's probably a few more non-core countries to look at.

Speaker #2: We'll monetize Asia Pacific , get down to likely 14 or so . And then we've got seven core Canada , US , Oman , Bahrain , Brazil , Argentina , Mexico to say there's probably a few other non-core geographies we can get out of .

Speaker #2: And , you know , free up some capital , working capital , close some bank accounts , improve our tax compliance and tax compliance positions in these countries .

Speaker #2: So just overly overall simplify and optimize . But there's probably a few more non-core countries to look at

Speaker #6: Thanks a lot . Appreciate the responses . Congrats on a great year here . Thanks .

John Gibson: Thanks a lot. Appreciate the responses. Congrats on a great year here. Thank you.

Speaker #3: Thank you . Thank you

Paul Mahoney: Thank you.

Preet Dhindsa: Thank you.

Speaker #1: Thank you. I’m showing no further questions at this time. I would now like to turn it back to Paul Mahoney for closing remarks.

Operator: Thank you. I'm showing no further questions at this time. I would now like to turn it back to Paul Mahoney for closing remarks.

Speaker #3: Thank you . Well , thank you for joining today's call . We look forward to sharing our first quarter financial and operational results in early May .

Paul Mahoney: Thank you. Well, thank you for joining today's call. We look forward to sharing our Q1 financial and operation results in early May.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Q4 2025 Enerflex Ltd Earnings Call

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