Slide 1: Company Overview November 2019
COMPANY OVERVIEW November 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: Proven Track Record of Value Creation
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 through the cyc
Slide 4: Global Primary Energy Consumption
GLOBAL PRIMARY ENERGY CONSUMPTION (‘000 Bcf) Projected Global Energy Consumption (Bcf/yr) 900.0 Macro shift to cleaner fuel sources is underway 800.0 700.0 600.0 Global natural gas consumption 500.0 is expected to increase by over 69% from 2015 to 2050 400.0 300.0 Demand is driven by industrial, 200
Slide 5: Complementary Product Lines and Regions
COMPLEMENTARY PRODUCT LINES AND REGIONS
Slide 6: Solutions from the Wellhead to Pipeline
SOLUTIONS FROM THE WELLHEAD TO PIPELINE Field Processing + Wellhead Gathering Systems Other Midstream Activities Equipment Supplies field compression for Engineers, designs, manufactures, Provides the critical equipment installs, and operates gas plants of customers need at the wellhead gathering sy
Slide 7: 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 Any Engineered System Integrated Turnkey on a leased or Build- Turnkey Engineered Systems, with local Asset Own-Operate-Maintain cons
Slide 8: Global Platform Delivering Natural Gas Solutions
GLOBAL PLATFORM DELIVERING NATURAL GAS SOLUTIONS Business Overview Revenue $2,038 MM Employees ~2,600 Operating Locations 53 Manufacturing Facilities 3 Countries 16 Fleet: ~700,000 HP Enerflex Manufacturing Facility 0 28,000 bcf bcf** Enerflex Operating Location Enerflex BOOM Assets *Trailing twelve
Slide 9: Focused Regional Presence
FOCUSED REGIONAL PRESENCE
Slide 10: United States
UNITED STATES USA Eng. Systems $979 MM Service Rental $166 MM $70 MM Growing demand for Total Revenue $1,215 MM natural gas Fleet: ~280,000 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 11: Latin America
LATIN AMERICA Rest of World Eng. Systems $105 MM Service $152 MM Natural gas production in the Rental $118 MM Total Revenue $375 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 12: 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 $105 MM horsepower of owned and Service Rental $152 MM $118 MM installed gas compression Total Revenue $375 MM and processing facilities Fleet: ~35
Slide 13: Canada
CANADA Growing demand for natural gas infrastructure in Canada liquids-rich basins Eng. Systems $365 MM Service $70 MM Rental $12 MM Total Revenue $447 MM Petrochemical projects Fleet: ~70,000 HP will increase domestic consumption of NGLs Electric power opportunities remain attractive 0 bcf/d 11 bcf
Slide 14: Diversified Revenues
DIVERSIFIEL REVENUES * ENERFLEX
Slide 15: Revenue Growth Through Complementary Offerings
REVENUE GROWTH THROUGH COMPLEMENTARY OFFERINGS C$ in millions $2,037.9 TTM Q3 2019 2018 10% 10% $1,696.2 $1,703.3 $447.3 19% 20% $1,629.0 $1,553.4 71% 70% $1,501.7 $299.9 $1,405.0 $529.4 $375.3 $494.2 $1,227.1 $418.6 $500.4 $438.2 $1,130.6 $422.8 Engineered Systems Service Rentals $444.0 $232.8 $405
Slide 16: Strategic Pivot Toward Recurring Revenues
STRATEGIC PIVOT TOWARD RECURRING REVENUES… Recurring Revenue C$ in millions 587.8 $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 $0 2011 2012 2013 2014 2015 2016 2017 2018 TTM Q3 2019 Service Revenue
Slide 17: Stabilizes EBITDA Through the Cycles
…STABILIZES EBITDA THROUGH THE CYCLES C$ in millions $800 $800 $600 $600 $400 $400 $200 $200 $0 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 2014 2015 2016 2017 2018 2019 Bookings Trailing 12-Month EBITDA* * Normalized for Goodwill impairm
Slide 18: Growing Asset Ownership to Increase and Stabilize Margins
GROWING ASSET OWNERSHIP TO INCREASE AND STABILIZE MARGINS
Slide 19: 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$1.2 billion Investment Investment Opportunities reinvested in organic Opportunities C$ in millions growth and M&A $600 16.4% opportunities over the $500 13.3% past eight years $400 9.7% 9.8
Slide 20: Positive Free Cash Flow and Balance Sheet Strength
POSITIVE FREE CASH FLOW AND BALANCE SHEET STRENGTH Free Cash Flow Before Net Capital Spending* Net Debt to EBITDA C$ in millions 300.0 252.5 250.0 2.38 190.4 1.79 200.0 1.19 1.09 150.0 136.2 126.5 105.1 114.2 112.8 0.52 0.57 100.0 0.30 67.4 72.7 50.0 2011 2012 2013 2014 2015 2016** 2017** 2018** 201
Slide 21: Stable Margin Growth
STABLE MARGIN GROWTH… EBITDA and EBITDA Margin C$ in millions 400.0 16.8% 15.8% Approximately $195 350.0 13.8% 13.2% 300.0 11.4% 10.9% 321.5 million increase in 250.0 10.4% 10.4% EBITDA since 2011 200.0 9.0% 214.1 225.2 coupled with 150.0 193.7 176.8 190.3 increasing EBITDA 156.8 margins 100.0 127.0
Slide 22: And Sustained Dividend Growth
…AND SUSTAINED DIVIDEND GROWTH Annually (C$/share) $0.50 $0.46 $0.45 $0.42 $0.40 $0.38 $0.35 $0.34 $0.34 $0.34 Over 90% increase in $0.30 $0.28 $0.30 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 Sep-19
Slide 23: Igniting the Future of Energy
IGNITING THE FUTURE OF ENERGY
Slide 24: 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 25: 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 26: 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 28: Appendix: Reconciliations
APPENDIX RECONCILIATIONS
Slide 29: Free Cash Flow
FREE CASH FLOW TTM Q3 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 91,792 179,251 242,868 244,936 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