Enerflex (EFX) Q2 2024 earnings summary

Executive summary

• Achieved record adjusted EBITDA of $122 million in Q2 2024, up from $107 million in Q2 2023 and $69 million in Q1 2024, reflecting strong operational performance and business optimization.

• Revenue for Q2 2024 was $614 million, up from $579 million in Q2 2023, driven by higher Engineered Systems and After-market Services revenues.

• Energy infrastructure and aftermarket services contributed 62% of gross margin before depreciation and amortization.

• Engineered Systems backlog stood at $1.3 billion, with most expected to convert to revenue within 12 months.

• Free cash flow for H1 2024 was $72 million, a significant improvement from a use of $23 million in 2023.

Financial highlights

• Q2 2024 consolidated revenue was $614 million, up from $579 million in Q2 2023 but down from $638 million in Q1 2024.

• Gross margin before depreciation and amortization was $173 million (28% of revenue), up from $145 million (25%) in Q2 2023.

• Adjusted EBITDA reached $122 million, compared to $107 million in Q2 2023 and $69 million in Q1 2024.

• Net debt at quarter-end was $763 million, with $126 million in cash and $512 million to $522 million in available liquidity.

• Bank-adjusted net debt-to-EBITDA ratio was 2.2x, down from 2.8x in Q2 2023, targeting 1.5x–2.0x medium term.

Outlook and guidance

• Full-year 2024 capital spending expected at the low end of $90–$110 million guidance, with up to $70 million for maintenance capex.

• Majority of $1.3 billion ES backlog expected to convert to revenue over the next 12 months.

• Targeting a bank-adjusted net debt-to-EBITDA ratio of 1.5x–2.0x over the medium term; current ratio is 2.2x.

• Energy infrastructure and aftermarket services expected to account for 55%–65% of gross margin before D&A in 2024.

• Growth capital to be allocated only to customer-supported, high-return opportunities.