Slide 1: Company Overview
COMPANY OVERVIEW FEBRUARY, 2019
Slide 2: Forward Looking Statements Advisory
FORWARD LOOKING STATEMENTS ADVISORY • This presentation is issued by Enerflex Ltd. (“Enerflex” or the “Company”). This presentation is for information purposes only and is not intended to, and should not be construed to, constitute an offer to sell or the solicitation of an offer to buy securities o
Slide 3: Company Overview
COMPANY OVERVIEW Transforming Natural Gas to Meet The World’s Energy Needs PROVEN TRACK RECORD OF VALUE CREATION • Diversified revenues by geography and product lines • Increasing recurring revenues improves EBIT margins and supports multiple expansion • Strong balance sheet and free cash flow allow
Slide 4: Global Primary Energy Consumption
4 GLOBAL PRIMARY ENERGY CONSUMPTION Projected Global Energy Consumption (Quadrillion Btu) 900.0 Macro shift to cleaner fuel sources is underway. 800.0 700.0 600.0 Global natural gas consumption is expected to increase by over 500.0 69% from 2015 to 2050. 400.0 300.0 Natural gas is expected to 200.0
Slide 5: Production Growth in Key Markets
5 PRODUCTION GROWTH IN KEY MARKETS Expected Natural Gas Production in Enerflex’s Core Markets 80.0 Natural gas production expected to Growth by Region increase 86% from 2015 to 2050 in 70.0 Enerflex’s core geographic regions. 105% 80% 60.0 211% Enerflex is well positioned in key markets. 19% 50.0 •
Slide 6: Global Platform Delivering Full Cycle Natural Gas Solutions
6 GLOBAL PLATFORM DELIVERING FULL CYCLE NATURAL GAS SOLUTIONS Business Overview Revenue $1,703 MM Canada Employees ~2,300 Eng. Systems $230 MM Operating Locations 53 Service $61 MM Manufacturing Facilities 3 Rental $9 MM Countries 16 Total Revenue $300 MM Fleet: ~65,000 HP Revenue Overview Eng. Syst
Slide 7: Diversified Capabilities and Revenues
DIVERSIFIED CAPABILITIES AND REVENUES
Slide 8: Solutions from Wellhead to Pipeline
8 SOLUTIONS FROM WELLHEAD TO PIPELINE
Slide 9: Standardized and Customized Facilities
9 STANDARDIZED AND CUSTOMIZED FACILITIES Path to market through four core product offerings: Gas Compression • Reciprocating and rotary screw compression applications. Gas Plants • Dew point, refrigeration systems, amine plants, dehydration, and CO2 facilities. Cryogenic Plants • Modular design for
Slide 10: Recurring Revenue Focus
10 RECURRING REVENUE FOCUS Path to market through three core offerings: Rentals • Rental compression and processing in all target markets. After-Market Services • Full after-market services for all products. • Product commissioning and installation. • Contract operations and maintenance. Parts Distr
Slide 11: Financially Stable Business Positioned for Growth
FINANCIALLY STABLE BUSINESS POSITIONED FOR GROWTH
Slide 12: Revenue Growth Through Diversification
12 REVENUE GROWTH THROUGH DIVERSIFICATION C$ in millions $1,696.2 $1,703.3 $1,629.0 $1,501.7 $1,553.4 $1,405.0 $405.2 $422.8 $456.6 $355.7 $1,227.1 $397.5 $376.4 $1,130.6 $360.6 $761.6 $431.7 $603.8 $678.2 $779.1 $980.6 $422.5 $590.4 Geographic $466.1 diversification $444.0 $500.4 $438.2 $529.4 $494
Slide 13: Strong Activity Through 2019
13 STRONG ACTIVITY THROUGH 2019 C$ in millions Backlog $1,600 $1,400 Backlog provides visibility $1,200 for Engineered Systems $1,000 $800 revenue through 2019. $600 $400 $200 $0 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Canada USA ROW Backlog has grown by over 400% sin
Slide 14: Growth in Recurring Revenue
14 GROWTH IN RECURRING REVENUE Recurring Revenue June 2014 2015 July 2017 % of C$ in millions Acquisition of Axip Loss of GE Acquisition of Consolidated International Distributorship Mesa Exclusivity Compression Revenue $600 45% 40% 42% $500 33% 35% 30% 30% $400 29% 30% 27% 26% Recurring revenue 22%
Slide 15: EBITDA and EBITDA Margin
15 EBITDA AND EBITDA MARGIN C$ in millions 350.0 16.8% 300.0 13.8% 13.2% 250.0 11.4% 10.9% 10.4% 10.4% 225.2 200.0 214.1 9.0% 193.7 190.3 176.8 150.0 156.8 127.0 126.9 100.0 50.0 - 2011 2012 2013 2014 2015 2016* 2017* 2018* EBITDA EBITDA Margin % * Adjusted EBITDA as disclosed in the MD&A
Slide 16: A Disciplined Approach to Strategic Growth
16 A DISCIPLINED APPROACH TO STRATEGIC GROWTH Capex and M&A C$ in millions $600 507.8 $500 13.3% 12.2% Over C$1 billion $400 9.7% 9.9% 9.8% reinvested in 8.8% organic growth and $300 6.2% M&A opportunities 6.1% over the past seven $200 201.9 years. 180.2 132.2 $100 34.7 42.9 36.7 22.5 $0 2011 2012 2
Slide 17: Strong Free Cash Flows
17 STRONG FREE CASH FLOWS Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Cash provided by operating activities 134,795 134,208 69,024 64,611 104,173 91,792 179,251 242,868 Net change in non-cash working capital and other 48,243 15,531 (28,929) (61,053) (55,251) (41,385) 9,736 38,208 86,552
Slide 18: Strict Financial Management
18 STRICT FINANCIAL MANAGEMENT Net Debt to EBITDA 2.38 1.79 Strong balance sheet to fuel organic 1.19 1.09 growth, M&A, and 0.52 dividend growth. 0.30 2011 2012 2013 2014 2015 2016* 2017* 2018* (0.31) (0.70) * Calculated using Adjusted EBITDA as disclosed in the MD&A
Slide 19: Dividend History
19 DIVIDEND HISTORY Annually (C$/share) $0.42 $0.40 $0.38 $0.35 $0.34 $0.34 $0.34 $0.30 $0.30 $0.28 $0.25 $0.24 $0.20 2011 2012 2013 2014 2015 2016 2017 2018 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dividend Paid 0.24 0.25 0.29 0.31 0.34 0.34 0.35 0.39 Year-End Yield % 1.36 2.09 1.9 1
Slide 20: Capitalizing on Global Opportunities
CAPITALIZING ON GLOBAL OPPORTUNITIES
Slide 21: North America
21 NORTH AMERICA Natural gas production in North Growing demand for natural gas America is expected to grow by infrastructure in the US. approximately 46% by 2040. US Shale Is Driving Growth in Gas Production Enerflex Positioning Enerflex Has Significant Exposure to Growing US Shale Plays World-clas
Slide 22: Latin American Market
22 LATIN AMERICAN MARKET Natural gas production in the Continued limited capital lends itself region is expected to grow by to higher margin contract approximately 80% by 2040. compression opportunities. Enerflex Positioning 12 Extensive footprint in key growth markets including 10 Argentina, Colomb
Slide 23: Middle East and Africa
23 MIDDLE EAST AND AFRICA The Middle East accounts for Nearly 75% of Africa’s natural gas more than 40% of the world’s production is in North Africa.2 proven gas reserves.1 Enerflex Positioning 60 Successful and cost effective Turnkey Project capability. 50 Natural Gas Production (Tcf) 40 Large inst
Slide 24: Low Sensitivity to North American Gas Prices
24 LOW SENSITIVITY TO NORTH AMERICAN GAS PRICES C$ in millions C$/GJ 250.0 $10.00 $9.00 225.2 214.1 200.0 $8.00 193.7 190.3 $7.00 176.8 Geographic and product 150.0 156.8 $6.00 line diversification has 127.0 126.9 $5.00 reduced sensitivity of 100.0 $4.00 EBITDA to fluctuations in North American gas
Slide 25: Well Positioned for Global Growth
25 WELL POSITIONED FOR GLOBAL GROWTH Proven track record of creating shareholder value through Growth and Dividend Income. • Strong balance sheet and free cash flow allows Enerflex to pursue strategic growth opportunities to further expand the business. • Increased dividend by 75% since 2011. • High
Slide 26: Enerflex
ENERFLEX a ee =