EXECUTIVE MANAGEMENT TEAM Marc Rossiter Sanjay Bishnoi Patricia Martinez President & CEO SVP, Chief Financial Officer Chief Energy Transition Officer & President, Latin America David Izett Greg Stewart Phil Pyle Helmuth…
Transforming Natural Gas to Meet The Worlds Energy Needs PROVEN TRACK RECORD OF VALUE CREATION Complementary product lines and regions driving balanced revenue growth. Investing in recurring revenue sources to increase and…
ENERGY ACCESS IS FUNDAMENTAL TO SOCIAL PROGRESS 5
CONSUMPTION TRACKS GDP GROWTH Global Gross Domestic Product Global Aggregate Energy Consumption trillion 2010 US dollars (000 bcf equivalent) 300 High Economic History Projections 1,000 Growth History Projections non-OECD 250 800…
GLOBAL ENERGY DEMAND SATISFIED BY A DIVERSE FUEL MIX Projected Global Energy Consumption (000 bcf equivalent per year) 1000 +42% Natural gas is the worlds 900 ( 57,000 bcf) fastest growing source of 800 fossil fuel 700 600…
WITH GAS CONSUMPTION INCREASING ACROSS ALL SECTORS Global Natural Gas Consumption by Sector ('000 bcf) 250 200 History Projections Over time, natural gas use is expected to accelerate 150 from increased industrial activity,…
SUPPORTING A LESS CARBON-INTENSIVE WORLD Pounds of CO2 emitted per thousand cubic feet Up to Core products support a global transition 49% toward lower carbon fuel sources 229 Ancillary products support decarbonization 215 214…
INCLUDING DURING AN ENERGY TRANSITION Electricity generation from selected fuels (AEO2020 Reference case) billion kilowatthours 2019 Global energy demand will 6,000 continue to grow, primarily in the history projections 5,000…
POSITIONED FOR GROWTH
ALL PRODUCED GAS REQUIRES COMPRESSION AND PROCESSING (000 bcf) +57 200 191.4 Projected consumption increase 150 134.7 of 57,0001 bcf by 2050 requires billions 100 of compression, processing, and maintenance 50 investments 0…
GLOBAL LEADER IN DELIVERING NATURAL GAS SOLUTIONS Business Overview* Revenue: 1,217 MM Employees: 2,000 Operating Locations: 57 Manufacturing Facilities: 3 Countries: 17 Fleet HP: 715,000 0 Manufacturing Facility 90 bcf/d…
COMPLEMENTARY OFFERINGS ON A GLOBAL SCALE Engineered Systems Vertically Integrated Customized offerings for: Gas Compression and Gas platform Processing Plants, refrigeration solutions, Cryogenic Plants, Electric Power Generation, CO2…
SOLUTIONS FROM THE WELLHEAD TO PIPELINE 15 15
DIVERSIFICATION STRATEGY Complementary offerings of USA diversified product lines in Canada diversified geographies ROW Vertically Integrated platform provides differentiation Engineered Systems Focused on growth and AMS…
ADDITIONAL FOCUS ON RECURRING REVENUE GROWTH Recurring revenues stabilize financial performance Higher margins versus manufacturing Strategic goal of generating 50% of revenue from recurring sources Asset Ownership Any product on…
WHAT IS ASSET OWNERSHIP 1 2 Products engineered, built, Leased to Customers for Asset Ownership and owned by Enerflex varying durations on a = take-or-pay basis Contract Compression + BOOM 4 3 Contracted revenues provide May…
RATIONALE FOR ASSET OWNERSHIP C in millions Asset ownership stabilizes and 800 balances financial performance against a cyclical manufacturing business 600 400 200 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4…
CONTRACT COMPRESSION Contract Compression = leasing of necessary upstream gas compression infrastructure Demand is driven by both new production and maintenance of existing volumes Take-or-pay arrangements oriented toward…
STRONG U.S. CONTRACT COMPRESSION FUNDAMENTALS US Contract Compression Market1 (million horsepower) 16.0 Changing field conditions 14.0 History Projections require continual equipment modification, making rental 12.0 7.7% an attractive…
CAPTURING OPPORTUNITIES IN A SUPPORTIVE MARKET Low 170% 82% 39% High 43% Mid 18% Growth of US fleet from USA contract Diversified horsepower 130,000 hp to compression fleet profile across contract 350,000 hp since…
BUILD-OWN-OPERATE-MAINTAIN BOOM Any Engineered System or ITK product on a Build- Build-Own- Own-Operate-Maintain Opera te-Ma inta in (BOOM) basis in all target markets Larger scale compression and processing facilities…
BOOM EXPERIENCE CONTINUES TO GROW Early Processing and Compression Development Compression Facility, Bahrain Facility, Oman Facility, Oman Early Production Compression Compression Compression Gas Compression Facility, Gas…
PRIORITY TO GROW RECURRING REVENUES Recurring Revenue C in millions +8% 700 CAGR1 618.5 Recurring revenue 596.9 600 537.2 500 486.4 471.5 521.1 growth through 461.7 303.3 Recurring organicrevenue has investment 400…
ASSET OWNERSHIP RISKS 01 Counterparty Credit 03 Asset Performance 02 Well and/or basin dynamics Risks mitigated when paired with financial + basin due diligence and Enerflex AMS 26
OPTIMIZED PLATFORM POSITIONED FOR GROWTH 1 2 VERTICAL INTEGRATION FINANCIAL STRENGTH Differentiated global Manufacturing cash platform with product flows fund investment line synergies in Asset Ownership platform 3 4 DIVERSE…
COMMITTED TO SAFETY 2020 Global Consolidated Safety Record:1 0.04 0.61 0.13 LTI TRIR MVIR Total of Lost Total Recordable Motor Vehicle Time Incidents Injury Rate per Incidents per per 200,000 200,000 exposure 1,000,000 km…
ENHANCING AND STRENGTHENING COMMUNITIES Corporate citizenship through wellness and community development initiatives is an integral part of Enerflexs vision 29
FOCUSED REGIONAL PRESENCE 30
UNITED STATES USA1 Eng. Systems 390 MM Gas infrastructure Service 151 MM Rental 91 MM Total Revenue 632 MM Fleet: 355,000 HP demand driven by Average Fleet Utilization: 82%2 gas production from US shale plays Enerflex is…
REST OF WORLD LATIN AMERICA Rest of World1 Eng. Systems 41 MM Service 96 MM Regional gas production is Rental 216 MM TBD Total Revenue 353 MM expected to grow by Fleet: 310,000 HP approximately 80% by 2040 % of Consolidated…
REST OF WORLD MIDDLE EAST / AFRICA TheTBD Middle East accounts for 35% of the worlds proven gas reserves* 100,000 horsepower of owned and installed gas Rest of World1 compression and Eng. Systems 41 MM % of Consolidated…
CANADA % of Consolidated Revenues1 Canada NGL recovery drives Canada1 19.0% Eng. Systems 168 MM Service 56 MM USA 52.0% infrastructure demand Rental 8 MM Total Revenue 232 MM ROW in liquids-rich basins Fleet: 50,000 HP…
FINANCIAL OVERVIEW AND PROSPECTS
REVENUE GROWTH THROUGH COMPLEMENTARY OFFERINGS C in millions 2,045.4 2020 2019 26% 10% 1,696.2 1,703.3 502.9 19% 1,629.0 49% 1,553.4 71% 1,501.7 299.9 25% 1,405.0 529.4 494.2 346.8 418.6 1,227.1 1,217.1 500.4 438.2 1,130.6…
DISCIPLINED GROWTH THROUGH STRATEGIC INVESTMENTS CAPEX, M&A and ROCE Product Organic Stable sale cash Reinvestment investment Leads to Growth + flows + M&A Returns 1.5B reinvested over the past nine years C in millions 600…
BUSINESS MIX DRIVES PROFITABILITY EBITDA and EBITDA Margin C in millions Increased EBITDA coupled with 400.0 16.8% 16.9% higher EBITDA margins 15.7% 350.0 13.8% 13.2% 345.8 Supported by an asset ownership 300.0 10.9% platform…
GROSS MARGIN PROFILE Revenues (C in millions) and Gross Margin %1 by Product Line Q4 2020 Q4 2019 Q4 2020 Q4 2019 YTD YTD Engineered Revenue 96.1 319.8 598.6 1,448.5 Systems Gross Margin % 22.7% 24.9% 20.3% 19.9% Revenue 127.6…
POSITIVE FREE CASH FLOW AND BALANCE SHEET STRENGTH Free Cash Flow Before Net Capital Spending* Net Debt to EBITDA C in millions 300.0 250.0 240.8 200.0 190.4 2.38 143.2 1.79 150.0 136.2 1.54 126.5 114.2 112.8 1.19 105.1…
DIVIDEND HISTORY Annually (C/share) 0.50 0.46 0.45 0.42 0.40 The Company has 0.38 0.34 0.34 0.34 maintained a dividend through 0.35 0.30 0.30 0.28 the cycles since 0.25 0.24 2011 0.20 0.18 0.15 0.10 2011 2012 2013 2014…
IGNITING THE FUTURE OF ENERGY
CAPITAL ALLOCATION PRIORITIES Balance Sheet strength preserving liquidity to weather downturns. Organic growth of Asset Ownership platform in all Regions. Opportunistic Inorganic growth right assets, right places, right…
ADDITIONAL ORGANIC + INORGANIC REINVESTMENT C in millions 454.1 Up to 79% increase in EBITDA1 from next 1B of reinvestment 100.0 79% 100.0 3-year average EBITDA1 254.1M 254.1 Next 1B of CAPEX 10x EBITDA multiple 100M 5x EBITDA…
WITH OPTION TO CONSOLIDATE A FRAGMENTED MARKET US Contract Compression Market (total horsepower, 000s) 4,500 US contract compression market 4,000 consists of 4 to 5 large players and several small players 3,500 3,000 Roll-up…
PIVOT TO RECURRING REVENUES SUPPORTS VALUATION EV/NTM EBITDA Multiples1: 10.0 9.0 8.0 Implied multiple 7.0 expansion with 6.0 continued growth of 5.0 recurring revenue 4.0 product lines 3.0 2.0 1.0 0.0 Jan-20 Apr-20…
WHATS NEXT FOR ENERFLEX Current geographic platform provides the foundation for incremental growth in each operating region. Focus remains on profitably growing each of the Engineered Systems, After-Market Services, and Asset…
EXECUTING ON A POWERFUL STRATEGY Proven track record of Creating Shareholder Value Strong balance sheet and free cash flow allows Enerflex to pursue strategic growth opportunities to further expand the business. Revenues derived…
APPENDIX RECONCILIATIONS
FREE CASH FLOW 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Cash provided by operating activities 134,795 134,208 69,024 64,611 104,173 91,792 179,251 242,868 54,169 220,248 Net change in non-cash working capital and other 48,243…
GROSS MARGIN PROFILE BY PRODUCT LINE Three mont hs ended December 31, 2020 Engineered ( Canadian thousands) Total Systems Service Rentals Revenue 298,837 96,061 75,197 127,579 Cost of goods sold: Operating expenses 206,915 74,214…
GROSS MARGIN PROFILE BY PRODUCT LINE Twelve mont hs ended December 31, 2020 Engineered ( Canadian thousands) Total Systems Service Rentals Revenue 1,217,052 598,566 303,269 315,217 Cost of goods sold: Operating expenses 852,524…
COMPOSITION OF BORROWINGS ( Canadian thousands) December 31, 2020 December 31, 2019 Drawings on Bank Facility1 84,369 121,328 Senior Notes due June 22, 2021 40,000 40,000 Senior Notes due December 15, 20241 148,686 151,374…
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