Enerflex (EFX) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $552 million, down from $638 million in Q1 2024, mainly due to prior year contract revenue recognition in Energy Infrastructure and lease conversion in EH, partially offset by asset sales in LATAM.

• Adjusted EBITDA rose to $113 million from $69 million year-over-year, reflecting improved ES margins and lower costs.

• Free cash flow increased to $85 million, up from $72 million in Q1 2024, driven by higher net earnings and lower maintenance capital spend.

• EI and Aftermarket Services contributed 70% of consolidated gross margin before depreciation and amortization in Q1 2025.

• Leadership transition announced, with interim CEO and CFO in place and a global search underway for a permanent CEO.

Financial highlights

• Gross margin before depreciation and amortization was $161 million (29% of revenue), up from $119 million (19%) in Q1 2024.

• SG&A expenses dropped to $57 million, $21 million lower year-over-year, mainly due to lower share-based compensation and improved efficiencies.

• Cash provided by operating activities was $96 million, compared to $101 million in Q1 2024.

• Net debt reduced to $564 million, with $75 million cash and $672 million available liquidity.

• Return on capital employed (ROCE) increased to 14.2% from 0.6% year-over-year.

Outlook and guidance

• EI and AMS expected to account for about 65% of 2025 gross margin before depreciation and amortization.

• ES backlog stands at $1.2 billion, with most expected to convert to revenue in the next 12 months.

• 2025 capital expenditures targeted at $110–$130 million, with $70 million for maintenance and $40–$60 million for growth.

• U.S. contract compression fleet expected to exceed 475,000 horsepower by year-end.

• Dividend increased by 50% for Q3 2024; quarterly dividend of CAD $0.0375 per share declared post-quarter.