Enerflex Reports Third Quarter 2012 Financial Results and

Enerflex Reports Third Quarter 2012 Financial Results and Announces
an Increased Quarterly Dividend 
CALGARY, ALBERTA -- (Marketwire) -- 11/12/12 -- Enerflex Ltd.
(TSX:EFX) ("Enerflex" or "the Company"), a leading supplier of
products and services to the global energy industry, today reported
its financial and operating results for the three and nine months
ended September 30, 2012.  


 
Financial Highlights                                                        
                                                                            
                              Three months ended           Nine months ended
(unaudited)                        September 30,               September 30,
                                                                            
($ millions, except                                                         
 per share amounts                        Change                      Change
 and percentages)          2012     2011     ($)       2012  2011(1)     ($)
----------------------------------------------------------------------------
Revenue                 $ 369.7  $ 282.3    87.4   $1,080.1  $ 843.3   236.8
Gross margin               67.3     53.6    13.7      195.6    157.3    38.3
Gross margin %             18.2%    19.0%              18.1%    18.6%       
Operating income(2)        28.5     22.0     6.5       78.1     53.6    24.5
EBITDA(2)                  40.2     36.0     4.2      109.8     90.4    19.4
Net earnings (loss)                                                         
  Continuing               20.9     17.0     3.9       55.2     39.0    16.2
  Discontinued             (1.4)   (54.3)   52.9       (9.8)   (57.1)   47.3
Earnings (loss) per                                                         
 share                                                                      
  Continuing               0.27     0.22    0.05       0.71     0.51    0.20
  Discontinued            (0.02)   (0.70)   0.68      (0.13)   (0.74)   0.61
                                                                            
(1) Results for the nine months ended September 30, 2011 have been prepared 
    on a carve-out basis. Enerflex became an independently operated and     
    listed company on June 1, 2011.                               
          
                                                                            
(2) Operating income and Earnings before Interest, Taxes, Depreciation and  
    Amortization ("EBITDA") are non-GAAP measures that do not have          
    standardized meanings and therefore are unlikely to be comparable to    
    similar measures presented by other issuers.                            

 
Enerflex reported improved results from continuing operations in the
third quarter of 2012, compared to the same period last year.
Revenues were higher in the Southern U.S. and South America, and
International segments. Net earnings from continuing operations
improved by $3.9 million (22.9%) or $0.05 cents per share as a result
of the increased revenues and corresponding higher gross margins,
partially offset by higher selling, general and administrative
expenses. The European Service and Combined Heat and Power ("CHP")
business has been reported as a discontinued operation since the
third quarter of 2011. During the third quarter of 2011, a total
impairment of $52.0 million was recorded.   
The Company recorded bookings for Engineered Systems of $143.4
million during the quarter, which was $171.2 million lower than the
comparable period last year and $123.5 million lower than the second
quarter of 2012. This decrease in bookings during the third quarter
of 2012, compared to the same period last year, was primarily due to
decreased activity in the Canada and Northern U.S. and the Southern
U.S. and South America segments. Weak natural gas prices and lower
natural gas liquids prices ("NGL") negatively impacted activity
levels by gas producers in the liquids rich shale resources in the
U.S. and unconventional resource basins in Canada. Increased activity
in the International segment resulted in an increase in bookings
during the third quarter of 2012 when compared to 2011. Backlog has
decreased to $775.4 million, which represents a decrease of $57.8
million (6.9%) over the prior year. Sequentially, the backlog
decreased by $145.8 million from June 30, 2012. 
"Enerflex reported strong third quarter and year to date results
largely due to higher 2012 opening backlog for Engineered Systems and
strong results from the International Service business," said J.
Blair Goertzen, Enerflex's President and Chief Executive Officer.
"While the Company has experienced a reduction in activity levels in
North America during the third quarter of 2012 in response to the
weak natural gas prices, inquiry levels have picked up to begin the
fourth quarter in the liquids rich shale resources in the U.S. In
addition, with increased bookings in Australia, and the Middle East
and North Africa regions, combined with strong backlog levels and a
strong balance sheet, the Company is well positioned for the
remainder of 2012 and into 2013."  
Third Quarter Highlights 
In the three and nine months ended September 30, 2012, Enerflex: 


 
--  Generated revenue of $369.7 million compared to $282.3 million in the
    third quarter of 2011. Revenues for the first nine months of 2012 were
    $1,080.1 million compared to $843.3 million during the same period of
    the prior year. The increases of $87.4 million, and $236.8 million,
    respectively, were a result of increased revenues in all Enerflex
    segments, with the exception of the third quarter of 2012, where
    revenues in the Canada and Northern U.S. segment were lower; 
    
--  Achieved a gross margin of $67.3 million or 18.2% during the third
    quarter of 2012 compared to $53.6 million or 19.0% during the same
    period of 2011, an increase of $13.7 million. Gross margin for the first
    nine months of the year totalled $195.6 million or 18.1%, an increase of
    24.4% over the same period of the prior year; 
    
--  Produced operating income of $28.5 million or 7.7% of revenue for the
    quarter compared to $22.0 million or 7.8% during the third quarter of
    2011. Operating income for the first nine months of the year was $78.1
    million or 7.2% of revenue, an increase of $24.5 million from the first
    nine months of 2011; 
    
--  Generated third quarter EBITDA of $40.2 million, an increase of $4.2
    million over the third quarter of 2011. EBITDA for the first nine months
    of 2012 was $109.8 million, an increase of $19.4 million over the first
    three quarters of 2011; 
    
--  Recorded net earnings from continuing operations in the third quarter of
    $20.9 million ($0.27 cents per share), an increase of $3.9 million over
    the same period last year. For the nine months ended September 30, 2012,
    net earnings from continuing operations were $55.2 million ($0.71 cents
    per share), compared to $39.0 million ($0.51 cents per share) in the
    same period of 2011; 
    
--  At September 30, 2012 backlog was $775.4 million compared to $833.2
    million at September 30, 2011, a decrease of 6.9%. Backlog at September
    30, 2012 decreased by $145.8 million or 15.8% from June 30, 2012; 
    
--  Exited the quarter with $125.6 million in cash, resulting in a net debt
    to EBITDA ratio of 0:1 and a net debt to equity ratio of 0:1; and 
    
--  Completed the sale of its 50% Joint Venture interest in Presson Descon
    Internation
al Limited ("PDIL") to its joint venture partner, Descon
    Engineering Limited. 

 
Subsequent to the end of the third quarter of 2012:  


 
--  Enerflex increased the annual dividend to shareholders by 16.7%,
    resulting in a declared quarterly dividend to shareholders of $0.07
    cents per share, payable on January 10, 2013 to shareholders of record
    on November 26, 2012. 

 
Financial Results 
Enerflex's $87.4 million or 31.0% period-over-period increase in
revenue to $369.7 million in the third quarter of 2012 was a result
of increased revenue in the Southern U.S. and South America and
International segments, partially offset by decreased revenues in the
Canada and Northern U.S. segment. Revenues increased as a result of
higher opening backlog for Engineered Systems and stronger Service
revenues in the International segment. Southern U.S. and South
America segment revenues increased $61.2 million compared to the same
period of last year, while Canada and Northern U.S. revenues
decreased by $14.1 million. The International segment increased
revenues by $40.2 million compared to the third quarter of 2011. 
During the first nine months of 2012, the Company generated $1,080.1
million in revenue as compared to $843.3 million in the same period
of 2011. The increased revenues in all of Enerflex's segments were a
result of higher opening backlog for the Engineered Systems product
line and stronger Service revenues in the International segment.
Canada and Northern U.S. revenues increased by $19.5 million,
International segment revenues increased by $92.2 million, and
Southern U.S. and South America revenues increased by $125.0 million
for the first nine months of 2012, compared to the same period in
2011. 
Gross margin of $67.3 million represented an increase of 25.6% over
the third quarter of 2011 primarily due to strong gross margin
performance in the Southern U.S. and South America, and International
segments. This was partially offset by lower gross margin performance
in the Canada and Northern U.S. segment as a result of a decrease in
Engineered Systems and Rental revenues, and lower overhead absorption
on Engineered Systems jobs. 
Gross margin for the nine months ended September 30, 2012 was $195.6
million or 18.1% of revenue as compared to $157.3 million or 18.6% of
revenue for the nine months ended September 30, 2011, an increase of
$38.3 million. Contributing to the gross margin increase over the
first nine months of 2012 was the continuing strong Engineered
Systems gross margin performance in all segments, partially offset by
lower overhead absorption, cost overruns and warranty claims on
certain projects in Casper, Wyoming. In addition, during the first
nine months of 2011, gross margin included $16.5 million with respect
to approved variation claims and the completion of a project on more
favorable terms than originally anticipated in the Middle East and
North Africa ("MENA") region.  
Backlog at September 30, 2012 was $775.4 million compared to $833.2
million at September 30, 2011, a 6.9% decrease over the comparable
period. This decrease was a result of lower activity in the Western
Canadian Sedimentary resource basins as a result of continuing
weakness in natural gas prices, and as a result of slowing activity
in the liquids rich shale resources in the Eagle Ford, Marcellus,
Permian and Woodford basins. This was partially offset by an increase
in the International segment as a result of increased activity in
Australia related to coal seam gas exploration and gas storage
projects, and increased activity in the MENA region related to gas
production for domestic use. As compared to June 30, 2012, backlog at
September 30, 2012 decreased by $145.8 million or 15.8%.  
Update on Discontinued Operations  
As noted in previous public disclosures, Enerflex would consider a
sale, partial sale, exit or combination thereof of the European
Service and CHP business. Enerflex conducted a process to sell this
business as a 'turn-key' operation to third parties. This process was
unsuccessful as offers received were not considered fair and
reasonable, resulting in the termination of the sale process.
Enerflex is now pursuing alternatives involving a partial sale and
wind up of the Service and CHP business between now and the end of
2012. The process is subject to and shall be conducted in compliance
with Dutch information and consultation rules. 
Quarterly Results Material  
Enerflex's consolidated financial statements as at and for the three
and nine months ended September 30, 2012, and the accompanying
management's discussion and analysis, will be available on the
Enerflex website at www.enerflex.com under the Investors section or
on SEDAR at www.sedar.com.  
Conference Call and Webcast Details  
Enerflex will host a conference call for analysts and investors on
Tuesday, November 13, 2012 at 9:00 a.m. MST (11:00 a.m. EST) to
discuss the Company's 2012 third quarter results. The call will be
hosted by Mr. J. Blair Goertzen, President and Chief Executive
Officer and Mr. D. James Harbilas, Vice President and Chief Financial
Officer of Enerflex Ltd. 
If you wish to participate in this conference call please call,
1.800.766.6630 or 1.416.695.6616. Please dial in 10 minutes prior to
the start of the call. No passcode is required. The live audio
webcast of the conference call will be available on the Enerflex
website at www.enerflex.com under the Investors section on November
13, 2012 at 9:00 a.m. MST (11:00 a.m. EST). Approximately one hour
after the call, a recording of the event will be available on the
Company's website.   
A replay of the teleconference will be available one hour after the
conclusion of the call until midnight, November 20, 2012. Please call
1.800.408.3053 or 1.905.694.9451 and enter passcode 9053421.  
About Enerflex  
Enerflex Ltd. is a single source supplier of products and services to
the global oil and gas production industry. Enerflex provides natural
gas compression and oil and gas processing equipment for sale or
lease, refrigeration systems and power generation equipment, and a
comprehensive package of field maintenance and contracting
capabilities. Through the Company's ability to provide these products
and services in an integrated manner, or as stand-alone offerings,
Enerflex offers its customers a unique value proposition.  
Headquartered in Calgary, Canada, Enerflex has approximately 3,200
employees worldwide. Enerflex, its subsidiaries, interests in
affiliates and joint ventures operate in Canada, the United States,
Argentina, Colombia, Australia, the United Kingdom, Russia, the
United Arab Emirates, Oman, Egypt, Bahrain, Indonesia and Singapore.
Enerflex's shares trade on the Toronto Stock Exchange under the
symbol "EFX". For more information about Enerflex, go to
www.enerflex.com. 
Advisory Regarding Forward-Looking Statements 
To provide Enerflex shareholders and potential investors with
information regarding Enerflex, including management's assessment of
future plans, Enerflex has included in this news release certain
statements and information that are forward-looking statements or
information within the meaning of applicable securities legislation,
and which are collectively referred to in this advisory as
"forward-looking statements." Information included in this news
release that is not a 
statement of historical fact may be
forward-looking information. When used in this document, words such
as "plans", "expects", "will", "may" and similar expressions are
intended to identify statements containing forward-looking
information. In developing the forward-looking information in this
news release, we have made certain assumptions with respect to
general economic and industry growth rates, commodity prices,
currency exchange and interest rates, competitive intensity and
shareholder, regulatory and TSX approvals. Readers are cautioned not
to place undue reliance on forward-looking statements, as there can
be no assurance that the future circumstances, outcomes or results
anticipated in or implied by such forward-looking statements will
occur or that plans, intentions or expectations upon which the
forward-looking statements are based will occur.  
Forward-looking information involves known and unknown risks and
uncertainties and other factors, which may cause or contribute to
Enerflex achieving actual results that are materially different from
any future results, performance or achievements expressed or implied
by such forward-looking information. Such risks and uncertainties
include, among other things, the impact of general economic
conditions; industry conditions, including the adoption of new
environmental, taxation and other laws and regulations and changes in
how they are interpreted and enforced; volatility of oil and gas
prices; oil and gas product supply and demand; risks inherent in the
ability to generate sufficient cash flow from operations to meet
current and future obligations, including future dividends to
shareholders of the Company; increased competition; the lack of
availability of qualified personnel or management; labour unrest;
political unrest; fluctuations in foreign exchange or interest rates;
stock market volatility; opportunities available to or pursued by the
Company, the reliability of Toromont's historical financial
information as an indicator of Enerflex's historical or future
results; potential tax liabilities if the requirements of the
tax-deferred spinoff rules are not met; the effect of Enerflex's
rights plan on any potential change of control transaction; obtaining
financing; and other factors, many of which are beyond its control.  
The foregoing list of factors and risks is not exhaustive. For an
augmented discussion of the risk factors and uncertainties that
affect or may affect Enerflex, the reader is directed to the section
entitled "Risk Factors" in Enerflex's most recently filed Annual
Information Form, as well as Enerflex's other publicly filed
disclosure documents, available on www.sedar.com. The reader is
cautioned that these factors and risks are difficult to predict and
that the assumptions used in the preparation of such information,
although considered reasonably accurate at the time of preparation,
may prove to be incorrect. Readers are cautioned that the actual
results achieved will vary from the information provided in this
press release and that such variations may be material. Consequently,
Enerflex does not represent that actual results achieved will be the
same in whole, or in part, as those set out in the forward-looking
information.  
Furthermore, the statements containing forward-looking information
that are included in this news release are made as of the date of
this news release, and Enerflex does not undertake any obligation,
except as required by applicable securities legislation, to update
publicly or to revise any of the included forward-looking
information, whether as a result of new information, future events or
otherwise. The forward-looking information contained in this news
release is expressly qualified by this cautionary statement.
Contacts:
Enerflex Ltd.
J. Blair Goertzen
President & Chief Executive Officer
403.236.6852 
Enerflex Ltd.
D. James Harbilas
Vice President & Chief Financial Officer
403.236.6857
www.enerflex.com
 
 
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