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 Per Capita Energy Use vs. United Nations Human Development Index Score 5 Source: World Bank DataBank 2019; U.N. Human Development Reports.
CONSUMPTION TRACKS GDP GROWTH Global Aggregate Energy Consumption Global Gross Domestic Product (000 bcf equivalent) trillion 2010 US dollars 300 High Economic History Projections 1,000 Growth History Projections non-OECD 250…
GLOBAL ENERGY DEMAND SATISFIED BY A DIVERSE FUEL MIX Projected Global Energy Consumption (000 bcf equivalent per year) 1000 +42% Natural gas is the 900 ( 57,000 bcf) worlds fastest growing 800 source of 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 Core products support a global transition Up to toward lower carbon fuel sources 49% Ancillary products support decarbonization 229 fewer CO2…
INCLUDING DURING AN ENERGY TRANSITION Electricity generation from selected fuels (AEO2020 Reference case) billion kilowatthours 6,000 Global energy demand will continue to grow, primarily in 5,000 the form of electricity 4,000 36%…
POSITIONED FOR GROWTH 11
ALL PRODUCED GAS REQUIRES COMPRESSION & PROCESSING (000 bcf) +57 200 191.4 150 Projected consumption 134.7 increase of 57,0001 bcf by 2050 requires billions of compression, 100 processing, and maintenance investments…
GLOBAL LEADER IN DELIVERING NATURAL GAS SOLUTIONS Business Overview* Revenue: 1,055 MM Employees: 2,000 Operating Locations: 57 Manufacturing Facilities: 3 Countries: 17 Fleet HP: 765,000 Manufacturing Facility 0 90 bcf/d…
COMPLEMENTARY OFFERINGS ON A GLOBAL SCALE Engineered Systems Customized offerings for: Gas Compression and Gas Vertically Integrated platform Processing Plants, refrigeration solutions, Cryogenic Plants, Electric Power Generation,…
SOLUTIONS FROM THE WELLHEAD TO PIPELINE 15
DIVERSIFICATION STRATEGY USA Complementary offerings of Canada diversified product lines in diversified geographies ROW Vertically Integrated platform provides differentiation Focused on growth and Engineered maintenance of…
ADDITIONAL FOCUS ON RECURRING REVENUE GROWTH Engineered Systems Recurring revenues stabilize financial performance Higher margins versus manufacturing Strategic goal of generating Integrated Turnkey (ITK) 50% of revenue from…
WHAT IS ASSET OWNERSHIP 1 Products engineered, built, 2 Leased to Customers for and owned by Enerflex Asset Ownership 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 History Projections Changing field conditions 14.0 require continual equipment 12.0 modification, making rental an 7.1%…
CAPTURING OPPORTUNITIES IN A SUPPORTIVE MARKET Low 38% 190% 82% High 44% Mid 18% Growth of US fleet from USA contract Diversified horsepower 130,000 hp to compression fleet profile across contract 375,000 hp since…
BUILD OWN OPERATE MAINTAIN BOOM Any Engineered System or Build-Own- ITK product on a Build-Own- Operate-Maintain Operate-Maintain (BOOM) basis in all target markets Larger scale compression and processing facilities…
BOOM EXPERIENCE CONTINUES TO GROW Early Development Processing and Compression Facility, Oman Compression Facility, Bahrain 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 609.1 596.9 600 growth through 537.2 521.1 500 486.4 organic investment 471.5 461.7 Recurring revenue has…
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 in line synergies Asset Ownership platform 3 4…
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 per Injury Rate per Incidents per 200,000 exposure 200,000 exposure 1,000,000…
ENHANCING AND STRENGTHENING COMMUNITIES Corporate citizenship through wellness and community development initiatives is an integral part of Enerflexs vision 29
FOCUSED REGIONAL PRESENCE 30
USA USA1 Eng. Systems 254 MM Service 143 MM Gas infrastructure Rental 90 MM Total Revenue 487 MM Fleet: 375,000 HP Average Fleet Utilization: 82%2 demand driven by gas production from US shale plays % of Consolidated…
REST OF WORLD LATIN AMERICA Rest of World1 Eng. Systems 42 MM Service 98 MM Rental 213 MM Total Revenue 353 MM Fleet: 345,000 HP Regional gas production is expected to grow by % of Consolidated Revenues1 approximately 80% by…
REST OF WORLD MIDDLE EAST / AFRICA The Middle East accounts for 35% of the worlds proven gas reserves 145,000 horsepower of owned and installed gas Rest of World1 Eng. Systems 42 MM % of Consolidated Revenues1 compression and…
CANADA % of Consolidated Revenues1 Canada Canada1 Eng. Systems 149 MM 20% NGL recovery drives Service Rental 58 MM 7 MM USA 46% infrastructure demand Total Revenue 214 MM Fleet: 45,000 HP ROW 34% in liquids-rich…
FINANCIAL OVERVIEW AND PROSPECTS 35
REVENUE THROUGH COMPLEMENTARY OFFERINGS C in millions 2,045.4 TTM Q1 2021 2020 30% 26% 1,703.3 502.9 42% 1,696.2 49% 1,629.0 1,553.4 25% 1,501.7 299.9 28% 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 Less Product Organic cyclicality, sale cash flows Reinvestment investment + M&A Leads to sustained growth + 1.5B reinvested over returns the past nine years…
BUSINESS MIX DRIVES PROFITABILITY EBITDA and EBITDA Margin Increased EBITDA coupled with C in millions 400.0 higher EBITDA margins 16.8% 16.9% 350.0 15.7% 14.6% Supported by an asset ownership platform underpinned by…
GROSS MARGIN PROFILE Revenues (C in millions) and Gross Margin %1 by Product Line Q1 2021 Q1 2020 Engineered Revenue 72.2 225.4 Systems Gross Margin % 14.7% 23.1% Revenue 60.4 65.4 Rentals Gross Margin % 63.8% 62.4%…
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 1.63 126.5 124.8 1.54 114.2 112.8…
DIVIDEND HISTORY Annually (C/share) 0.50 0.46 0.45 0.42 0.40 0.38 The Company has maintained a 0.35 0.34 0.34 0.34 0.30 dividend through the 0.30 0.28 0.24 cycles since 2011 0.25 0.20 0.18 0.15 0.10 0.08…
IGNITING THE FUTURE OF ENERGY 42
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 2,500…
PIVOT TO RECURRING REVENUES SUPPORTS VALUATION EV/NTM EBITDA Multiples1: 12.0 10.0 Implied multiple 8.0 expansion with continued growth of recurring revenue 6.0 4.0 product lines 2.0 0.0 Apr-20 Jun-20 Aug-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…
GROSS MARGIN PROFILE BY PRODUCT LINE Three mont hs ended March 31, 2021 Engineered ( Canadian thousands) Total Systems Service Rentals Revenue 203,205 72,232 70,536 60,437 Cost of goods sold: Operating expenses 137,075 61,637…
COMPOSITION OF BORROWINGS ( Canadian thousands) March 31, 2021 December 31, 2020 Drawings on Bank Facility1 59,449 84,369 Senior Notes due June 22, 2021 40,000 40,000 Senior Notes due December 15, 20241 147,038 148,686 Senior…
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