Slide 1: Company Overview
COMPANY OVERVIEW August 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: Enerflex Overview
ENERFLEX OVERVIEW Transforming Natural Gas to Meet The World’s Energy Needs PROVEN TRACK RECORD OF VALUE CREATION • Complementary product lines and regions driving balanced revenue growth • Growing Asset Ownership to increase and stabilize margins • Strong balance sheet and free cash flow generation
Slide 4: Global Primary Energy Consumption
GLOBAL PRIMARY ENERGY CONSUMPTION Projected Global Energy Consumption (Tcf/yr) 900.0 800.0 Macro shift to cleaner fuel 700.0 sources is underway. 600.0 500.0 400.0 300.0 Global natural gas 200.0 consumption is expected to increase by over 69% from 100.0 2015 to 2050. 0.0 2015 2020 2025 2030 2035 204
Slide 5: Complementary Product Lines and Regions
COMPLEMENTARY PRODUCT LINES AND REGIONS
Slide 6: Global Natural Gas Production
GLOBAL NATURAL GAS PRODUCTION 0 28,000 bcf bcf 2017 Global Production = 128,000 bcf/year Source: US Energy Information Administration, International Energy Outlook 2017. 6
Slide 7: Global Platform Delivering Natural Gas Solutions
GLOBAL PLATFORM DELIVERING NATURAL GAS SOLUTIONS Business Overview Revenue $2,008 MM Canada Employees ~2,600 Eng. Systems $326 MM Operating Locations 53 Service $83 MM Manufacturing Facilities 3 Rental $13 MM Countries 16 Total Revenue $422 MM Fleet: ~70,000 HP Revenue Overview Eng. Systems $1,419 M
Slide 8: Focused Regional Presence
FOCUSED REGIONAL PRESENCE
Slide 9: United States
UNITED STATES USA Eng. Systems $963 MM Service Rental $162 MM $64 MM Growing demand for Total Revenue $1,189 MM natural gas Fleet: ~260,000 HP infrastructure driven by associated gas from US Shale Plays Enerflex is strategically positioned to grow its asset ownership and after-market services platfo
Slide 10: Latin America
LATIN AMERICA Rest of World Eng. Systems $130 MM Service $148 MM Natural gas production in the Rental $119 MM Total Revenue $397 MM regionTBD is expected to grow by Fleet: ~350,000 HP approximately 80% by 2040 Continued limited capital lends itself to higher margin contract compression opportunities
Slide 11: Middle East / Africa
MIDDLE EAST / AFRICA The Middle East accounts for TBD more than 30% of the world’s proven gas reserves* Approximately 100,000 Rest of World Eng. Systems $130 MM horsepower of owned and Service Rental $148 MM $119 MM installed gas compression Total Revenue $397 MM and processing facilities Fleet: ~35
Slide 12: Canada
CANADA Growing demand for natural gas infrastructure in Canada liquids-rich basins Eng. Systems $326 MM Service $83 MM Rental $13 MM Total Revenue $422 MM Petrochemical projects Fleet: ~70,000 HP will increase domestic consumption of NGLs Electric power opportunities remain attractive 0 bcf/d 11 bcf
Slide 13: Diversified Capabilities and Revenues
DIVERSIFIED CAPABILITIES AND REVENUES
Slide 14: Solutions from the Wellhead to Pipeline
SOLUTIONS FROM THE WELLHEAD TO PIPELINE 14
Slide 15: Executing on a Powerful Strategy
EXECUTING ON A POWERFUL STRATEGY Engineered Systems Customized offerings for: - Gas Compression - Gas Processing Plants - Cryogenic Plants - Electric Power Generation Rental compression and Integrated Turnkey processing of any Turnkey Engineered Systems, with local Asset Engineered System constructi
Slide 16: Revenue Growth Through Complementary Offerings
REVENUE GROWTH THROUGH COMPLEMENTARY OFFERINGS C$ in millions $2,008.4 TTM Q2 2019 2018 10% 10% $1,696.2 $1,703.3 $422.3 19% 20% $1,629.0 $1,553.4 71% 70% $1,501.7 $299.9 $1,405.0 $529.4 $494.2 $396.7 $1,227.1 $418.6 $500.4 $438.2 $1,130.6 $422.8 Engineered Systems Service Rentals $444.0 $232.8 $405
Slide 17: Growth in Recurring Revenue
GROWTH IN RECURRING REVENUE Recurring Revenue C$ in millions 589.7 $600 537.2 521.1 486.4 $500 471.5 461.7 Recurring revenue $400 375.0 growth through 321.0 323.5 organic investment $300 and strategic M&A. $200 $100 $0 2011 2012 2013 2014 2015 2016 2017 2018 TTM Q2 2019 Service Revenue Rental Revenu
Slide 18: Diversification Reduces Commodity Price Impact
DIVERSIFICATION REDUCES COMMODITY PRICE IMPACT Low Sensitivity to North American Gas Prices C$/ C$ in millions GJ 300.0 $10.00 280.2 $9.00 250.0 $8.00 225.2 $7.00 Complementary regions 200.0 193.7 214.1 $6.00 and product lines reduce 190.3 150.0 176.8 $5.00 dependency of EBITDA growth on North 156.8
Slide 19: Growing Asset Ownership to Increase and Stabilize Margins
GROWING ASSET OWNERSHIP TO INCREASE AND STABILIZE MARGINS
Slide 20: Disciplined Investment in Assets
DISCIPLINED INVESTMENT IN ASSETS CAPEX, M&A and ROCE Organic Leads To M&A Leads To Organic Leads To M&A Over C$1.1 billion Investment Investment Opportunities reinvested in organic Opportunities C$ in millions growth and M&A $600 opportunities over the $500 13.3% 13.3% past eight years. $400 9.7% 9.
Slide 21: Positive Free Cash Flow and Balance Sheet Strength
POSITIVE FREE CASH FLOW AND BALANCE SHEET STRENGTH Free Cash Flow* Net Debt to EBITDA C$ in millions 140.0 123.0 117.1 120.0 101.4 2.38 100.0 87.9 81.8 1.79 80.0 72.4 55.4 1.19 1.09 60.0 47.8 40.0 0.52 0.50 0.30 20.0 - 2011 2012 2013 2014 2015 2016** 2017** 2018** 2019** 2011 2012 2013 2014 2015 201
Slide 22: Stable Margin Growth…
STABLE MARGIN GROWTH… EBITDA and EBITDA Margin C$ in millions 350.0 16.8% 300.0 13.8% 13.2% 14.4% Approximately $150 250.0 11.4% 10.9% 280.2 million increase in 10.4% 10.4% 225.2 EBITDA since 2011 coupled with 200.0 9.0% 214.1 193.7 190.3 increasing EBITDA 176.8 150.0 156.8 100.0 127.0 126.9 margins
Slide 23: …and Sustained Dividend Growth
…AND SUSTAINED DIVIDEND GROWTH Annually (C$/share) $0.42 $0.42 $0.40 $0.38 $0.35 $0.34 $0.34 $0.34 $0.30 75% increase in $0.30 $0.28 dividend since 2011. $0.25 $0.24 $0.20 2011 2012 2013 2014 2015 2016 2017 2018 2019* Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 TTM Jun-19 Dividend Paid 0
Slide 24: Igniting the Future of Energy
IGNITING THE FUTURE OF ENERGY
Slide 25: What's Next for Enerflex
WHAT’S 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 Ownership product lines in all regions. • Asset Ownership remains the
Slide 26: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Organic growth of Asset Ownership platform in all Regions. Opportunistic Inorganic growth right assets, right places, right long-term returns. Dividend Growth • Dividend has grown or been maintained each year since 2011. • Enerflex is committed to maintaining this foc
Slide 27: Executing on a Powerful Strategy
EXECUTING ON A POWERFUL STRATEGY 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. EBITDA growth has a low correlation to fluctuations
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Slide 29: Appendix: Reconciliations
APPENDIX RECONCILIATIONS
Slide 30: Free Cash Flow
FREE CASH FLOW TTM Q2 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 2019 Cash provided by operating activities 134,795 134,208 69,024 64,611 104,173 91,792 179,251 242,868 244,004 Net change in non-cash working capital and other 48,243 15,531 (28,929) (61,053) (55,251) (41,385) 9,736 38,20