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.

• 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 and $76 million in Q4 2024, driven by lower maintenance capital spend.

• EI and Aftermarket Services contributed 70% of 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 were $57 million, down $21 million year-over-year and $35 million sequentially, mainly due to lower share-based compensation.

• Net debt at quarter-end was $564 million, with $75 million in cash and $672 million in available liquidity.

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

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

Outlook and guidance

• Energy Infrastructure and Aftermarket Services expected to remain core profitability drivers in 2025, accounting for about 65% of gross margin before depreciation and amortization.

• ES gross margins anticipated to align with historical averages for 2025, reflecting weaker domestic gas prices and product mix shift.

• Capital expenditure guidance for 2025 remains at $110–$130 million, with $40–$60 million for growth capex and $70 million for maintenance.

• EI contract backlog at $1.5 billion and ES backlog at $1.2 billion, with most ES backlog expected to convert to revenue in the next 12 months.

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