CALGARY, Alberta, May 07, 2024 (GLOBE NEWSWIRE) -- Enerflex Ltd. (TSX:EFX) (NYSE:EFXT) ("Enerflex" or the "Company") today reported its financial and operational results for the three months ended March 31, 2024. Effective January 1, 2024, the Company changed its presentation currency from Canadian dollars ("CAD") to United States dollars ("USD") to provide more relevant reporting of the Company's financial position. As a result, all amounts presented in this release are in USD unless otherwise stated. Q1 2024 FINANCIAL AND OPERATIONAL OVERVIEW          Generated revenue of $638 million compared to $610 million in Q1/23 and $574 million in Q4/23. Higher revenue is mainly attributed to the Energy Infrastructure ("EI") product line. During Q1/24, Enerflex expanded the scope and extended the term of an existing Build-Own-Operate-Maintain ("BOOM") contract in the Eastern Hemisphere ("EH"). The contract supports the expansion of the Company's treated water solutions business, increases Enerflex's presence in a core operating country of Oman, and is expected to double Enerflex's revenue from the project and improve the Company's returns during its additional four-year term. As prescribed by International Financial Reporting Standards ("IFRS"), the contract is now being accounted for as a finance lease. Gross margin before depreciation and amortization of $119 million, or 19% of revenue, compared to $156 million, or 26% of revenue in Q1/23 and $159 million, or 28% of revenue during Q4/23. Adjusted earnings before finance costs, income taxes, depreciation, and amortization ("adjusted EBITDA") of $69 million compared to $90 million in Q1/23 and $91 million during Q4/23. Based on a review of a modularized cryogenic natural gas processing facility in Kurdistan (the "EH Cryo project") at the end of the quarter, delays and expected increased costs in the completion of the EH Cryo Project reduced gross margin and adjusted EBITDA by $41 million during Q1/24. Subsequent to Q1, Enerflex has provided its client partner with notice of Force Majeure, suspended activity at the EH Cryo project site and demobilized its personnel as further detailed in the Outlook section of this release. Cash provided by operating activities was $101 million, which included net working capital recovery of $83 million. This is a $103 million improvement over cash provided by operating activities in Q1/23. We are pleased with our on-going global efforts to efficiently manage working capital, although the Company does not expect the magnitude of the recovery realized over the past two quarters will be repeated. Free cash flow was $78 million in Q1/24 compared to $140 million during Q4/23 and a use of cash of $3 million during Q1/23. Invested $17 million in the business, including $8 million of growth investments for compression equipment that was deployed on contract with an existing client partner in the EH. Recorded Engineered Systems bookings of $420 million to bring total backlog at March 31, 2024 to $1.3 billion, providing strong visibility into future revenue generation and business activity levels. Enerflex's U.S. contract compression business continues to perform well, with utilization of 93% across a fleet size of approximately 424,000 horsepower. The fundamentals for contract compression in the U.S. remain strong, led by increasing natural gas production in the Permian. BALANCE SHEET AND LIQUIDITY Repaid $72 million of long-term debt, consistent with the Company's focus on strengthening its balance sheet. Enerflex's net debt balance was $743 million, which included $110 million of cash and cash equivalents, and the Company maintained strong liquidity with access to $548 million under its credit facility. Enerflex's bank-adjusted net debt-to-EBITDA ratio was approximately 2.2x compared to 2.3x at the end of Q4/23 and 2.9x at the end of Q1/23. MANAGEMENT COMMENTARY "We are beginning the year with strong operational results, as the Energy Infrastructure and After-market Services business lines continue to deliver solid and steady performance," said Marc Rossiter, Enerflex's President and Chief Executive Officer. "Visibility across the Company's business remains strong, supported by approximately $1.6 billion of contracted revenue that will be recognized over the coming years from our Energy Infrastructure assets. This will be supplemented by the recurring nature of our After-market Services business and a $1.3 billion Engineered Systems backlog. Our focus remains on further enhancing the profitability of core operations to enable continued debt reduction and enhance Enerflex's ability to focus on growth and return capital to shareholders." Mr. Rossiter continued, "Subsequent to the quarter, progress on our EH Cryo project was impacted by a drone attack in Kurdistan which tragically took the lives of four individuals and injured others. While no Enerflex personnel were directly impacted by this attack, Enerflex took quick action to safeguard our people and the project is currently suspended. We are working closely with our client partner to determine next steps." Preet Dhindsa, Enerflex's Senior Vice President and Chief Financial Officer, stated, "We are pleased with the Company's on-going efforts to efficiently manage the balance sheet, resulting in a further $83 million of working capital recovered during the first quarter. From a financial flexibility perspective, we remain well positioned, with our leverage ratio exiting the quarter at 2.2x and ample liquidity to support our global business. In 2024, Enerflex will continue to focus on generating free cash flow, repaying debt, and lowering net finance costs." SUMMARY RESULTS  Three months endedMarch 31,   ($ millions, except percentages)   2024     2023   Revenue $ 638   $ 610   Gross margin   87     119   Selling, general and administrative expenses ("SG&A")   78     78   Foreign exchange loss   1     8   Operating income $ 8   $ 33   Earnings before finance costs, income taxes, depreciation, and amortization ("EBITDA")   47     80   Earnings before finance costs and income taxes ("EBIT")   3     33   Net earnings (loss)   (18 )   10   Cash provided by (used in) operating activities   101     (2 )           Key Financial Performance Indicators ("KPIs")1         Engineered Systems ("ES") bookings $ 420   $ 383   ES backlog   1,266     1,139   Gross margin as a percentage of revenue   13.6 %   19.5 % Gross margin before depreciation and amortization ("Gross margin before D&A")   119     156   Gross margin before D&A as a percentage of revenue   18.7 %   25.6 % Adjusted EBITDA   69     90   Free cash flow   78     (3 ) Long-term debt   853     1,078   Net debt   743     884   Bank-adjusted net debt-to-EBITDA ratio   2.2     2.9   Return on capital employed ("ROCE")2   0.6 %   (0.1 )% 1 These KPIs are non-IFRS measures. Further detail is provided in the "Non-IFRS Measures" section of the Company's MD&A.2 Determined by using the trailing 12-month period. Enerflex's interim consolidated financial statements and notes (the "financial statements") and Management's Discussion and Analysis ("MD&A") as at March 31, 2024, can be accessed on the Company's website at www.enerflex.com and under the Company's SEDAR+ and EDGAR profiles at www.sedarplus.ca and www.sec.gov/edgar, respectively. OUTLOOK Industry Update Enerflex continues to ...