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 one-time lease conversion and contract revenue recognition in Energy Infrastructure and offset by asset sales in LATAM.

• Gross margin before depreciation and amortization rose to $161 million (29% of revenue), up from $119 million (19%) in Q1 2024, driven by improved project mix and asset sales.

• Adjusted EBITDA reached $113 million, up from $69 million in Q1 2024.

• Free cash flow increased to $85 million, compared to $72 million in Q1 2024, aided by higher net earnings and lower capital expenditures.

• Leadership transition announced, with an 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.

• Net earnings were $24 million, reversing a net loss of $18 million in Q1 2024.

• Free cash flow was $85 million, up from $72 million.

• Bank-adjusted net debt to EBITDA ratio improved to 1.3x from 2.2x.

• Return on capital employed (ROCE) rose to 14.2% from 0.6%.

Outlook and guidance

• Energy Infrastructure and Aftermarket Services expected to remain core profitability drivers, contributing about 65–70% of gross margin before depreciation and amortization in 2025.

• EI contract backlog stands 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.

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

• Dividend increased by 50% for Q3 2024; share repurchases underway under NCIB.

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