Enerflex (EFX) Q1 2026 earnings summary

Executive summary

• Achieved revenue of $584 million in Q1 2026, up from $552 million in Q1 2025, driven by strong Engineered Systems (ES) activity in North America and increased Energy Infrastructure (EI) revenue from prior investments and project expansions.

• Adjusted EBITDA reached $137 million, up from $113 million in Q1 2025 and $123 million in Q4 2025, due to improved operational activity, higher gross margin, and cost savings.

• Net earnings were $43 million ($0.35/share), up from $24 million ($0.19/share) in Q1 2025 and a loss of $57 million in Q4 2025, reflecting higher gross margin, a $5 million gain on embedded derivatives, and lower finance costs.

• Free cash flow declined to $15 million from $85 million in Q1 2025, mainly due to higher working capital investment and capital expenditures.

• Entered a definitive agreement to divest most APAC operations, expected to close in H2 2026.

Financial highlights

• Gross margin before depreciation and amortization was $179 million (31% of revenue), up from $161 million (29%) in Q1 2025.

• Gross margin (GM) as a percentage of revenue: 24.8% in Q1 2026 vs. 23.2% in Q1 2025.

• SG&A expenses rose to $79 million, mainly from higher share-based compensation, but decreased sequentially from $83 million due to cost-saving initiatives.

• Cash provided by operating activities was $32 million, down from $96 million in Q1 2025.

• Dividend payout ratio (TTM) was 9.4%, up from 5.5%.

Outlook and guidance

• ES backlog stood at $1.3 billion, with a book-to-bill ratio of 1.5x, expected to largely convert to revenue within 12 months.

• Organic capital expenditures targeted at $175–$195 million for 2026, with $90–$100 million for growth, $70–$80 million for maintenance, and $15 million for PP&E and infrastructure.

• Working capital expected to remain relatively flat for the remainder of 2026.

• Priorities include leveraging core market positions, enhancing profitability, and maximizing free cash flow for growth and shareholder returns.

• Anticipates continued strong demand in North America and Latin America, especially if oil prices remain elevated.