Enerflex Ltd. ((TSE:EFX)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Enerflex Ltd. recently held its earnings call, showcasing a robust operational and financial performance. The company reported record EBITDA figures and strong results across various business lines. While the overall sentiment was positive, challenges such as increased free cash flow usage and ongoing leadership transition were noted as areas of concern.
Record-Quarter for Adjusted EBITDA
Enerflex achieved a quarterly record for adjusted EBITDA, reaching $130 million. This marks an increase from $122 million in Q2 ’24 and $113 million in Q1 2025, highlighting the company’s strong financial trajectory.
Strong Performance in Energy Infrastructure
The Energy Infrastructure business reported a gross margin before depreciation and amortization of $86 million, up from $77 million in Q2 ’24. This growth was supported by $1.5 billion of revenue under contract and over 90% utilization for the U.S. contract compression fleet.
Robust Engineered Systems Backlog
Enerflex’s Engineered Systems business maintained a backlog of $1.2 billion, consistent with the 8-quarter average. This reflects stable demand for the company’s solutions, ensuring continued business momentum.
Reduction in SG&A Expenses
The company successfully reduced its SG&A expenses by $14 million compared to the previous year. This was achieved through cost-saving initiatives and improved operational efficiencies, contributing positively to the bottom line.
Extended Credit Facility Maturity
Enerflex extended its credit facility maturity by three years to 2028, maintaining availability at $800 million. This move enhances the company’s financial flexibility and positions it well for future growth opportunities.
Increase in Free Cash Flow Usage
Free cash flow usage increased to $39 million in Q2 2025, compared to $4 million in Q2 ’24 and a source of $85 million in Q1 2025. This was impacted by increased growth capital spending and strategic inventory investments.
Leadership Transition Challenges
Enerflex is currently navigating a leadership transition following the departure of its former President and CEO, Marc Rossiter. The implementation of interim leadership presents potential challenges to strategic continuity.
Forward-Looking Guidance
Enerflex provided optimistic forward-looking guidance, with expectations of continued strong financial performance. The company reported consolidated revenues of $615 million and a gross margin before depreciation and amortization of $175 million. The Engineered Systems business backlog remains solid at $1.2 billion, with bookings of $365 million during the quarter. Enerflex plans to increase its U.S. contract compression fleet horsepower by year-end and maintain a bank-adjusted net debt-to-EBITDA ratio of approximately 1.3x. Capital allocation plans for 2025 include $120 million focused on growth initiatives.
In summary, Enerflex’s earnings call reflected a strong operational and financial position, with record EBITDA and robust business performance. While challenges such as increased cash flow usage and leadership transitions were noted, the company remains optimistic about its future growth and strategic initiatives.