Enerflex Reports Stronger Fourth Quarter and Year End 2012 Financial Results and Announces Quarterly Dividend

Enerflex Reports Stronger Fourth Quarter and Year End 2012 Financial Results 
and Announces Quarterly Dividend 
CALGARY, ALBERTA -- (Marketwire) -- 02/28/13 -- 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 twelve months
ended December 31, 2012.  


 
Financial Highlights                                                        
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                             Three months ended         Twelve months ended 
(unaudited)                         December 31                 December 31 
($ millions, except                                                         
 per share amounts and                   Change                      Change 
 percentages)             2012     2011      ($)     2012    2011(1)     ($)
----------------------------------------------------------------------------
Revenue                $ 421.6  $ 383.8  $ 37.8 $ 1,501.7 $ 1,227.1 $ 274.6 
Gross margin              77.6     68.6     9.0     273.2     225.9    47.3 
Gross margin %            18.4%    17.9%             18.2%     18.4%        
Operating income(2)       36.5     26.5    10.0     114.6      80.1    34.5 
EBITDA(2)                 47.1     36.6    10.5     156.8     127.0    29.8 
Net earnings (loss)                                                         
  Continuing              27.0     17.7     9.3      82.3      56.7    25.6 
  Discontinued            (0.6)    (7.0)    6.4     (10.5)    (64.0)   53.5 
Earnings (loss) per                                                         
 share                                                                      
  Continuing              0.35     0.22    0.13      1.06      0.73    0.33 
  Discontinued           (0.01)   (0.09)   0.08     (0.14)    (0.83)   0.69 
                                                                            
(1) Results for the twelve months ended December 31, 2011 were 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 (Finance Costs), Taxes,   
    Depreciation and Amortization ("EBITDA") are non-GAAP measures that do  
    not have standardized meanings and therefore may not be comparable to   
    similar measures presented by other issuers.                            

 
Enerflex reported improved results for the fourth quarter and
year-ended December 31, 2012, compared to the same periods in the
prior year. The increases in revenue of $37.8 million, and $274.6
million, respectively, were due to higher revenue in the Southern
U.S. and South America, and International segments, partially offset
by lower revenue in Canada and the Northern U.S. The corresponding
increase in gross margin performance, partially offset by higher
selling and administrative expenses, resulted in net earnings from
continuing operations for the fourth quarter that were higher by $9.3
million (52.5%), and $25.6 million (45.1%) for the 2012 year.  
Enerflex exited 2012 with a backlog of $683.2 million, compared to
$986.1 million at the end of 2011, a decrease of $302.9 million
(30.7%). The decrease was attributable to lower bookings in all
segments. Sequentially, backlog decreased by $92.2 million from
September 30, 2012. The Company recorded bookings for Engineered
Systems of $242.6 million during the fourth quarter, which was $210.7
million lower than the comparable period last year on decreased
activity levels in the Canada and Northern U.S. and the International
segments. Bookings in the International segment for the fourth
quarter of 2011 benefited from a $228.0 million USD contract award
for a gas processing plant in the Sultanate of Oman. In the Southern
U.S. and South America segment, increased activity in liquids rich
resource basins resulted in an increase in bookings during the fourth
quarter of 2012 when compared to 2011. The decline in full year
bookings was attributable to softness in the Canada and Northern
U.S., and Southern U.S. and South America segments due to continuing
weak natural gas prices and lower natural gas liquids ("NGL") prices,
which produced a corresponding reduction in activity levels by
natural gas producers. In comparison to 2011, bookings in the
International segment were lower in 2012, particularly in the Middle
East and North Africa region, which included the large contract in
Oman, received during the fourth quarter of 2011.  
"The Enerflex management team is very pleased with our strong fourth
quarter and year-end financial results," said J. Blair Goertzen,
Enerflex's President and Chief Executive Officer. "Through improved
project execution and higher activity levels, we have successfully
delivered strong gross margin performance. The Canada and Northern
U.S. market continues to struggle with weak natural gas prices and
this trend is expected to continue during the first half of 2013. The
Southern U.S. and South America region has experienced a recovery in
bookings of late, and we remain cautiously optimistic for 2013 in
this region. Finally, there is no shortage of opportunities in our
International segment, however we expect that these potential project
awards will have long lead times which is consistent with project
awards in this segment. With a strong balance sheet, a continuing
focus on expanding our capabilities and a focus on controlling our
costs, we are right-sized for the challenges of 2013, and well
positioned to capitalize on the opportunities that will arise." 
Fourth Quarter and Twelve Months Highlights 
In the three and twelve months ended December 31, 2012, Enerflex: 


 
--  Generated revenue of $421.6 million compared to $383.8 million in the
    fourth quarter of 2011, an increase of $37.8 million or 9.8%. Revenue
    for the twelve months of 2012 was $1,501.7 million compared to $1,227.1
    million during the same period of the prior year, an increase of $274.6
    million or 22.4%; 
    
--  Achieved a gross margin of $77.6 million or 18.4% during the fourth
    quarter of 2012 compared to $68.6 million or 17.9% during the same
    period of 2011, an increase of $9.0 million. Gross margin for the year
    totalled $273.2 million or 18.2%, an increase of $47.3 million or 20.9%
    over the prior year; 
    
--  Produced operating income of $36.5 million or 8.7% of revenue for the
    quarter compared to $26.5 million or 6.9% during the fourth quarter of
    2011. Operating income for 2012 was $114.6 million or 7.6% of revenue
    compared to $80.1 million or 6.5% of revenue, an increase of $34.5
    million from 2011; 
    
--  Generated fourth quarter EBITDA of $47.1 million, an increase of $10.5
    million over the fourth quarter of 2011. EBITDA for the twelve months of
    2012 was $156.8 million, an increase of $29.8 million over 2011; 
    
--  Recorded net earnings from continuing operations in the fourth quarter
    of $27.0 million ($0.35 cents per share), an increase of $9.3 million
    over the same period last year. For the twelve months ended December 31,
    2012, net earnings from continuing operations were $82.2 million ($1.06
    cents per share), compared to $56.7 million ($0.73 cents per share) in
    2011, an increase of $25.5 million; 
    
--  Exited 2012 w
ith backlog of $683.2 million compared to $986.1 million at
    December 31, 2011, a decrease of 30.7%. Backlog at December 31, 2012
    decreased by $92.2 million or 11.9% from September 30, 2012; 
    
--  Exited the quarter with $145.0 million in cash, resulting in a net cash
    to EBITDA ratio of 0.26 :1 and a net cash to equity ratio of 0.05:1; 
    
--  Completed the reorganization of the Service business in response to
    lower activity levels in the Canadian market. The Company recorded
    reorganization costs of $1.5 million during the second quarter of 2012,
    resulting in a consequential reduction in costs for the remainder of
    2012; 
    
--  Completed the expansion of the Houston facility during the second
    quarter of 2012 and is fully operational. This expansion has doubled the
    capacity at this location, which will be used to serve the Southern
    U.S., South American and International markets for compression and
    processing equipment; 
    
--  Completed the sale of its 50% joint venture interest in Presson Descon
    International Limited ("PDIL") to its joint venture partner, Descon
    Engineering Limited in the third quarter of 2012; 
    
--  Increased the annual dividend to shareholders by 16.7%, resulting in a
    declared quarterly dividend to shareholders of $0.07 per share; and 
    
--  Filed a Notice of Intention to enter a normal course issuer bid with the
    Toronto Stock Exchange ("TSX"), whereby Enerflex is entitled to
    purchase, from time to time during the 12 months ended December 20,
    2013, up to 6,342,990 Common Shares, representing 10% of its public
    float as of November 30, 2012, determined in accordance with TSX rules.

 
Subsequent to the end of the fourth quarter of 2012: 


 
--  Enerflex declared the Company's quarterly dividend of $0.07 per share,
    payable on April 3, 2013, to shareholders of record on March 14, 2013. 

 
Financial Results 
Enerflex's $37.8 million period-over-period increase in revenue to
$421.6 million in the fourth 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. The increase was due to higher
Engineered Systems revenue and stronger Service revenues in all
operating segments. Revenue from the Southern U.S. and South America,
and International segments increased by $44.8 million and $27.4
million, respectively, compared to the same quarter of last year,
while Canada and Northern U.S. revenue decreased by $34.4 million as
a result of lower Engineered Systems and Rental revenues.  
During the year ended December 31, 2012, the Company generated
$1,501.7 million in revenue as compared to $1,227.1 million in 2011.
The increase was a result of higher opening backlog for the
Engineered Systems product line and stronger Service revenue,
partially offset by a reduction in Rental revenue. Canada and
Northern U.S. revenues decreased by $14.9 million, International
revenue increased by $119.6 million, and Southern U.S. and South
America revenue increased by $169.8 million in the year ended
December 31, 2012, compared to 2011.  
Gross margin for the quarter ended December 31, 2012 was $77.6
million or 18.4% of revenue as compared to $68.6 million or 17.9% of
revenue for the same period of 2011. The increase in gross margin of
$8.9 million (13.1%) was primarily due to strong gross margin
performance in the Southern U.S. and South America, and International
segments, partially offset by lower gross margin in the Canada and
Northern U.S. segment as a result of the decrease in Engineered
Systems and Rental revenues. Gross margin for the year ended December
31, 2012 was $273.2 million or 18.2% of revenue as compared to $225.9
million or 18.4% of revenue for 2011. The increase in gross margin of
$47.3 million (20.9%) during 2012 was a result of strong gross margin
performance in the Southern U.S. and South America, and International
segments, partially offset by lower gross margin in the Canada and
Northern U.S. segment compared to 2011. In addition, during 2011,
gross margin included $16.5 million with respect to approved
variation claims and the completion of a project on more favourable
terms than originally anticipated in the MENA region. 
The stronger gross margin in 2012 in the Southern U.S. and South
America segment was attributable to higher revenues and excellent
project execution. In the International segment, stronger plant
utilization and project execution in 2012, coupled with increased
revenues, drove an increase in gross margin. In Canada and the
Northern U.S., gross margin was lower in 2012 due to lower revenues,
lower plant utilization and project execution challenges in Casper,
Wyoming in the first half of 2012.  
Backlog at December 31, 2012 was $683.2 million compared to $986.1
million at December 31, 2011, a 30.7% decrease over the comparable
period. As compared to September 30, 2012, backlog at December 31,
2012 decreased by $92.2 million or 11.9%. In Canada and the Northern
U.S., the decrease was a result of low natural gas prices and a
corresponding drop in customer activity levels. In the Southern U.S.
and South America, bookings relating to the liquids-rich shale
resources in the Eagle Ford, Marcellus, Permian, and Woodford
resource basins temporarily slowed in the third quarter of 2012,
before recovering in the fourth quarter of 2012. The decrease in
International backlog was attributable to the Company's partial
fulfillment of the equipment orders destined for Australia (project
awarded in 2010) and the gas processing plant contract in the
Sultanate of Oman (awarded in 2011).   
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 Combined Heat and Power ("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. Enerflex
recorded additional reorganization costs during the second quarter of
2012 totaling $5.9 million to reflect anticipated termination
payments to employees, lessors and vendors under the applicable laws
in the Netherlands, in the event that part of the operations are
wound up. The partial sale and wind up process is ongoing and is
subject to and shall be conducted in accordance with, Dutch
information and consultation rules. 
Quarterly Results Material  
Enerflex's Consolidated Financial Statements as at and for the year
ended December 31, 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
Friday, March 1, 2013 at 9:00 a.m. MST (11:00 a.m. EST) to discuss
the Company's 2012 year-end 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,
1.866.226.1792 or 1.416.340.2216. 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 March 1,
2013 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, March 8, 2013. Please call
1.800.408.3053 or 1.905.694.9451 and enter passcode 3903899.  
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 3,300
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, the Company has 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 variation 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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