Enerflex Ltd. press release

Enerflex Ltd. Announces Third Quarter 2026 Financial and Operational Results and Increased Dividend

2026-10-29

TSX - Toronto Stock Exchange · Natural Gas · Ethane · Natural Gas Liquids · Oil · Hydrogen · Canada · Corporate Finance

ADJUSTED EBITDA OF $129 MILLION, FREE CASH FLOW OF $102 MILLION AND RETURN ON CAPITAL EMPLOYED OF 15.8%

RECORD ES BOOKINGS AND BACKLOG OF $1.0 BILLION AND $2.1 BILLION, RESPECTIVELY

QUARTERLY DIVIDEND INCREASED BY ~17% TO US$0.035 PER SHARE; SUPPORTS DIRECT SHAREHOLDER RETURNS

CALGARY, Alberta, Oct. 29, 2026 (GLOBE NEWSWIRE) -- Enerflex Ltd. (TSX: EFX) (NYSE: EFXT) (“Enerflex” or the “Company”) today reported its financial and operational results for the three and nine months ended September 30, 2026.

All amounts presented are in U.S. Dollars unless otherwise stated.

MANAGEMENT COMMENTARY

Paul Mahoney, Enerflex's President and Chief Executive Officer stated: “Enerflex delivered a solid third quarter, highlighted by healthy cash generation, record bookings and backlog, notable commercial wins for behind-the-meter natural gas-fired power generation, and continued progress towards the strategic objectives highlighted during our May investor update. We are very pleased with the progress to date and adoption of operational and efficiency initiatives across our integrated company.

Enerflex’s focus is on competing intentionally in the markets where we can win and improving relentlessly through operational excellence. We remain confident in our ability to improve profitability, cash conversion, and returns through operational excellence, grow revenue ahead of our underlying markets, and deliver disciplined value adding growth for our shareholders. The momentum we are seeing in behind-the-meter natural gas-fired power generation, combined with investments to expand our Engineered Systems capacity and capabilities, reinforces our confidence in achieving our value creation objectives.

Behind-the-meter natural gas-fired power generation is becoming an increasingly important growth platform for Enerflex and complements the strength we continue to see in Enerflex’s core natural gas markets. Including awards secured in early Q4, our backlog of behind-the-meter natural gas-fired power generation now exceeds 1.75 gigawatts. We are uniquely positioned to support customers throughout the lifecycle of these assets, from design, engineering, manufacturing and assembly through commissioning, after-market services, operations, maintenance, and digital optimization enabled by ReliaCore™.”

Preet Dhindsa, Enerflex’s Senior Vice President and Chief Financial Officer, added: “Strong cash generation during the third quarter strengthened Enerflex’s financial position and provides significant flexibility as we continue to progress towards our strategic objectives. During the quarter, we completed the divestiture of the majority of our Asia Pacific operations, further sharpening our focus on core operating regions. Reflecting confidence in our business and outlook, the Board has approved an increase of approximately 17% to Enerflex’s quarterly dividend, aligning with our objective of providing meaningful direct shareholder returns. We remain focused on maintaining balance sheet strength and disciplined capital allocation, including investing in organic growth and evaluating selective value-enhancing tuck-in acquisition opportunities.”

SUMMARY RESULTS

| | Three months ended September 30, | | | Nine months ended September 30, | | | | | | | | | | | | | ($ millions, except per share amounts, percentages and ratios) | 2026 | | | 2025 | | | 2026 | | | 2025 | | | | | | | Revenue | $ | 623 | | | $ | 777 | | | $ | 1,789 | | | $ | 1,944 | | | Gross margin ("GM") | | 142 | | | | 172 | | | | 426 | | | | 439 | | | GM as a percentage of revenue ("GM %") | | 22.8 | % | | | 22.1 | % | | | 23.8 | % | | | 22.6 | % | | Selling, general and administrative expenses (“SG&A”) | | 64 | | | | 71 | | | | 224 | | | | 189 | | | Operating income | | 77 | | | | 102 | | | | 203 | | | | 249 | | | EBITDA1 | | 117 | | | | 122 | | | | 321 | | | | 361 | | | EBIT1 | | 79 | | | | 82 | | | | 209 | | | | 240 | | | Net earnings | | 55 | | | | 37 | | | | 128 | | | | 121 | | | Earnings per share - basic | | 0.45 | | | | 0.30 | | | | 1.05 | | | | 0.98 | | | Long-term debt | | 539 | | | | 648 | | | | 539 | | | | 648 | | | Net debt2 | | 312 | | | | 584 | | | | 312 | | | | 584 | | | Cash provided by operating activities | | 147 | | | | 74 | | | | 268 | | | | 166 | | | | | | | | | | | | | | | | | | | | Key Financial Performance Indicators (“KPIs”) | | | | | | | | | | | | | | | | | ES backlog3 | $ | 2,136 | | | $ | 1,071 | | | $ | 2,136 | | | $ | 1,071 | | | ES bookings3 | | 1,024 | | | | 339 | | | | 1,995 | | | | 909 | | | EI contract backlog4 | | 1,182 | | | | 1,370 | | | | 1,182 | | | | 1,370 | | | GM before depreciation and amortization (“GM before D&A”)5 | | 176 | | | | 206 | | | | 528 | | | | 542 | | | GM before D&A as a percentage of revenue ("GM before D&A %")5 | | 28.3 | % | | | 26.5 | % | | | 29.5 | % | | | 27.9 | % | | Adjusted EBITDA6 | | 129 | | | | 145 | | | | 394 | | | | 388 | | | Free cash flow7 | | 102 | | | | 43 | | | | 149 | | | | 89 | | | Bank-adjusted net debt to EBITDA ratio7,8 | | 0.6 | x | | 1.2x | | | | 0.6 | x | | 1.2x | | | | | Return on capital employed (“ROCE”)7,8 | | 15.8 | % | | | 16.9 | % | | | 15.8 | % | | | 16.9 | % |

_ 1 EBITDA is defined as earnings before net finance costs, income taxes, depreciation and amortization. EBIT is defined as earnings before net finance costs and income taxes. _ 2 Net debt is defined as total long-term debtlesscash and cash equivalents, as presented in the Financial Statements. 3 Refer to the “ES Backlog and Bookings” section of the MD&A for further details. 4 Refer to the “EI Contract Backlog” section of the MD&A for further details. 5 Refer to the “Gross Margin before D&A by Product Line and Recurring Gross Margin before D&A” section of the MD&A for further details. 6 Refer to the “Adjusted EBITDA” section of the MD&A for further details. 7 Refer to the “Non-IFRS Measures” section of the MD&A for further details. _8 Determined by using the trailing 12-month period.

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Enerflex’s consolidated financial statements and notes (the “Financial Statements”) and Management’s Discussion and Analysis (“MD&A”) as at September 30, 2026, can be accessed on the Company’s website at www.enerflex.comand under the electronic profile of the Company on SEDAR+ and EDGAR at www.sedarplus.caand www.sec.gov/edgar, respectively.

Q3/26 FINANCIAL OVERVIEW

Generated revenue of $623 million compared to $777 million in Q3/25 and $582 million in Q2/26. The decrease in revenue year-over-year was primarily attributable to the revenue recognized on the commencement of the Block 60 Bisat C Expansion Facility (“Bisat C Expansion”) in the Eastern Hemisphere (“EH”) in Q3/25, as well as the achievement of certain Engineered Systems (“ES”) project milestones in the prior-year period Recorded gross margin before depreciation and amortization of $176 million, or 28% of revenue, compared to $206 million, or 27% of revenue in Q3/25 and $173 million, or 30% of revenue during Q2/26. Compared to the second quarter, margins reflected a shift in revenue mix and project sequencing, with ES revenue improving sequentially, and margins consistent with the historical average for the ES product line Energy Infrastructure (“EI”) and After Market Services (“AMS”) product lines generated 68% of consolidated gross margin before depreciation and amortization during Q3/26 ES gross margin before depreciation and amortization was 17% in Q3/26, compared to 17% in Q3/25 and 18% in Q2/26

SG&A was $64 million for the three months ended September 30, 2026, down $7 million from Q3/25 primarily due to lower share-based compensation. Core SG&A(1)increased to $58 million from $53 million in Q3/25, reflecting costs to support growth and operational optimization in the business Adjusted earnings before finance costs, income taxes, depreciation, and amortization (“adjusted EBITDA”) of $129 million compared to $145 million in Q3/25 and $128 million in Q2/26. Compared to the prior year, results reflect the timing of project milestones and a higher level of operational activity in ES during the prior-year period. Cash provided by operating activities before changes in working capital (“FFO”) of $96 million in Q3/26 compared to $115 million in Q3/25 and $87 million in Q2/26. Prior year FFO benefited from the recognition of the Bisat C expansion partially offset by higher finance and income tax expense, while the sequential increase benefitted from higher net income Cash provided by operating activities (“CFO”) was $147 million, which included net working capital recovery of $51 million. This compares to cash provided by operating activities of $74 million in Q3/25 and cash provided by operating activities of $89 million in Q2/26 Free cash flow (“FCF”) increased to $102 million in Q3/26 compared to $43 million during Q3/25 and $32 million during Q2/26. The increase in FCF compared to prior year and prior period reflected higher CFO, including net working capital recovery of $51 million, being partially offset by higher capital spending Return on capital employed (“ROCE”)² was 15.8% in Q3/26, compared to 16.9% in Q3/25 and 15.4% in Q2/26. The sequential increase benefitted from lower average capital employed, predominantly due to a reduction in net debt. Compared to Q3/25, ROCE reflects lower trailing 12-month EBIT as the prior period benefitted from the upfront gain related to the Bisat C Expansion as well as lower share-based compensation Net earnings of $55 million or $0.45 per share in Q3/26 compared to $37 million or $0.30 per share in Q3/25 and $30 million or $0.25 per share in Q2/26. Compared to Q3/25, profitability benefited from the gain on the Asia Pacific disposition, lower net finance costs and tax expense, and a lower unrealized loss related to the redemption options of the Company's senior secured notes, partially offset by the prior-year recognition of the Bisat C Expansion Invested $42 million in the business, comprised of $26 million for growth, primarily allocated to expand the Company’s contract compression fleet in the U.S., and $16 million for maintenance and PP&E

STRATEGIC AND OPERATIONAL HIGHLIGHTS

Record ES backlog of $2.1 billion as at September 30, 2026 provides strong visibility into future revenue generation and business activity levels. Bookings of $1.0 billion during Q3/26 compared to $339 million in Q3/25, $488 million in Q2/26 and a trailing eight quarter average of $448 million. Bookings include a behind-the-meter (“BTM”) natural gas-fired power generation award of approximately 450 megawatts, as well as continued strength across compression and processing applications, reflecting broad-based demand across Enerflex's core markets ES book-to-bill ratio (calculated as bookings divided by revenue) was 3.0x during Q3/26 and 1.3x on a trailing eight-quarter average Subsequent to quarter-end, Enerflex secured an award to supply over 1.0 gigawatt of low emission BTM natural gas-fired power generation for a North American data center development. Combined with additional project awards, Enerflex’s backlog of BTM natural gas-fired power generation now exceeds 1.75 gigawatts, with deliveries extending through 2028. Enerflex’s U.S. contract compression business continues to perform well, led by increasing natural gas production in the Permian. Utilization remained consistent at 94% during Q3/26, with Enerflex’s fleet size increasing to 521,000 horsepower as at September 30, 2026. Enerflex continues to target customer supported contract compression fleet growth of 10% to 15% during 2026. Enerflex also continues to secure long-lead time components to support further growth into 2030 On September 30, 2026, Enerflex completed the previously announced divestiture of the majority of its operations in the Asia Pacific (“APAC”) region to INNIO Group for cash consideration of $62 million. The divested business was primarily focused on the Company's After-Market Services (“AMS”) product line. The transaction supports Enerflex's disciplined portfolio management strategy and further focuses the Company on its core operating regions Enerflex commercially launched its Reliacore™ digital platform during the quarter, including the integration of more than 900 assets, connecting equipment data with subject-matter experts to support lifecycle services management, and expanding the platform’s geographic reach to support assets in Argentina and Mexico. Several pilot installations were added across gas-production and gas-to-power conversion applications and the team implemented an intelligent callout system to improve customer support by optimizing resource deployment based on real-time asset health, technician availability, proximity, and technical expertise, thereby improving service efficiency and operational effectiveness. To support the execution of the Company’s BTM natural gas-fired power generation backlog and expected growth across Enerflex’s core markets, the Company is investing in expanding the capacity and capabilities of its ES business line. These investments, combined with on-going initiatives to enhance collaboration, leverage scale, improve operational efficiency, and solidify capabilities, are expected to significantly increase revenue capacity of Enerflex’s ES business line

SHAREHOLDER RETURNS

Enerflex’s Board of Directors has elected to declare the Company’s quarterly dividend in U.S. Dollars and approved an increase of approximately 17% to $0.035 per common share, effective with the dividend payable in November 2026. The increase reflects confidence in Enerflex’s business, strong financial position and long-term growth outlook, supported by record ES backlog and the highly contracted EI product line. The dividend increase is aligned with the Company’s commitment to disciplined capital allocation and providing meaningful direct shareholder returns

BALANCE SHEET AND LIQUIDITY

Enerflex exited Q3/26 with net debt of $312 million, which included $227 million of cash and cash equivalents. The increase in cash reflects proceeds of $62 million from the APAC divestiture on September 30th, as well as strong free cash flow generation, including collections and customer deposits at the end of the quarter. Net debt was reduced by $272 million compared to Q3/25. Enerflex’s bank-adjusted net debt-to-EBITDA ratio was approximately 0.6x at the end of Q3/26, down from 1.2x at the end of Q3/25 and 0.8x at the end of Q2/26

OUTLOOK

Enerflex's strategic priorities include:

| | (1) | driving productivity improvements across the Company’s global operations through operational excellence; | | | | | | | (2) | focusing on the highest-value growth opportunities and markets where the Company can win, including advancing opportunities in distributed power generation alongside its core natural gas infrastructure markets; and | | | | | | | (3) | allocating capital to drive long-term value creation through disciplined growth, maximizing free cash flow, and providing direct shareholder returns. |

We continue to see favorable multi-year fundamentals across our core markets, supported by increasing natural gas production and growing demand for reliable power and energy infrastructure. Operating results are expected to remain underpinned by the highly contracted EI product line and recurring nature of AMS, which generated 67% of consolidated gross margin before depreciation and amortization during the first three quarters of 2026.

Performance for Enerflex's ES product line continues to benefit from healthy demand across compression, processing, and power generation applications. ES backlog increased to a record level during the third quarter, providing strong visibility into future revenue generation and business activity levels into 2028. Enerflex continues to experience growing demand for BTM power generation solutions, particularly related to data center development, and is leveraging its integrated design, engineering, manufacturing, project execution, commissioning, after-market services, operations, maintenance, and digital capabilities to capitalize on these opportunities. Including awards secured in early Q4, our backlog of BTM natural gas-fired power generation now exceeds 1.75 gigawatts.

In addition to the initial equipment scope, these projects provide opportunities for future commissioning, installation, operations, maintenance, and digital service offerings through Enerflex’s ReliaCoreTMAsset Performance Management ecosystem, aligning with Enerflex’s commercial initiatives to support the full lifecycle requirements of BTM power generation development.

Capital Allocation

Enerflex is refining its organic capital expenditure guidance for 2026. The Company continues to target spending of $185 million to $195 million during 2026, which includes: (1) organic growth capital expenditures of approximately $100 million (unchanged from prior guidance); (2) maintenance capital expenditures of approximately $55 million (prior guidance of $70 million to $80 million); and (3) PP&E and infrastructure investments of $30 million to $40 million to support the Company's ES business line and activity in adjacent markets, including electric power generation (prior guidance of approximately $15 million).

Organic growth capital spending will continue to focus on customer-supported opportunities and is primarily allocated to expand the Company's contract compression fleet in the U.S. We continue to target customer-supported fleet growth of 10% to 15% during 2026 and are also securing long-lead time components to support fleet growth into 2030.

The reduction in forecasted maintenance capital reflects efficiencies as well as a shift of some spending into 2027.

As previously announced, Enerflex has authorized investments in its ES facilities and capabilities, including $30 million to $40 million included in Enerflex’s 2026 capital expenditure guidance and approximately $85 million expected to be incurred during 2027. These investments, combined with on-going initiatives to enhance collaboration, leverage scale, improve operational efficiency, and solidify capabilities, are expected to significantly increase revenue capacity of Enerflex’s ES business line.

Enerflex continues to evaluate selective, disciplined tuck-in acquisition opportunities. Inorganic growth will remain focused on enhancing capabilities and accelerating scale in the Company's core North American markets. All opportunities will be balanced with Enerflex's focus on maintaining a strong financial position and providing direct shareholder returns.

DIVIDEND DECLARATION

Enerflex is committed to paying a sustainable quarterly cash dividend to shareholders. The Board of Directors has elected to declare the Company’s quarterly dividend in U.S. Dollars and declared a quarterly dividend of $0.035 per share, payable on November 25, 2026 to shareholders of record on November 12, 2026.

CONFERENCE CALL AND WEBCAST DETAILS

Investors, analysts, members of the media, and other interested parties, are invited to participate in a conference call and audio webcast on Thursday, October 29, 2026 at 8:00 a.m. (MDT), where members of senior management will discuss the Company’s results. A question-and-answer period will follow.

To participate, register at https://register-conf.media-server.com/register/BIc017268162ca46e3bdf6f40bb35765ce. Once registered, participants will receive the dial-in numbers and a unique PIN to enter the call. The audio webcast of the conference call will be available on the Enerflex website at www.enerflex.comunder the Investors section or can be accessed directly at https://edge.media-server.com/mmc/p/u9hjajn4/.

NON-IFRS MEASURES

Throughout this news release and other materials disclosed by the Company, Enerflex employs certain measures to analyze its financial performance, financial position, and cash flows, including net debt-to-EBITDA ratio, ES backlog and bookings, EI contract backlog, free cash flow, GM before depreciation and amortization, and bank-adjusted net debt-to-EBITDA ratio. These non-IFRS measures are not standardized financial measures under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Non-IFRS measures should not be considered more meaningful than generally accepted accounting principles measures as indicators of Enerflex’s performance. For information which is incorporated by reference into this news release, refer to “Non-IFRS Measures” in Enerflex’s MD&A for the three and nine months ended September 30, 2026, which can be accessed on Enerflex’s website at www.enerflex.comand under the electronic profile of the Company on SEDAR+ and EDGAR at www.sedarplus.caand www.sec.gov/edgar, respectively.