Enerflex Ltd. Reports Strong Second Quarter 2022 Results "Enerflex delivered another strong quarter, continuing to generate momentum in our business as we recover from the low activity levels we experienced over the last two years," explained Marc Rossiter, Enerflex's President and Chief Executive Officer. "Today, we are seeing sustained strength across all regions and product lines and are diligently protecting our margins through prudent cost control and planning efforts."
"With our base business in an advantageous position, we are focused on progressing the acquisition of Exterran Corporation," continued Mr. Rossiter. "Enerflex and Exterran have each announced strong business performance based, in part, on a strong macro environment for natural gas, capturing meaningful new bookings and advancing in-flight projects. Through strong cash flow generation and expected synergies of US$60 million compared to US$40 million at announcement, we anticipate deleveraging more quickly, bringing our bank-adjusted net debt to EBITDA to below 2.5 times within 12 to 18 months of closing. The global outlook for natural gas is as constructive as ever, confirming the logic of consolidating two global leaders in the natural gas infrastructure business into one leaner, more cost-competitive, and capable organization."
OVERVIEW
Protecting and expanding gross margins is one of Enerflex's top priorities. Driven by higher activity levels in the period, the Company's revenue increased by $49 million to $372 million, and its gross margin of $64 million, or 17.1%, increased by $10 million from the first quarter of 2022. Gross margins improved across all product lines and continue to trend positively towards pre-pandemic levels.
Reflecting the higher activity levels, Enerflex recognized earnings of $13 million, or $0.15 per share, and adjusted earnings before finance costs, income taxes, depreciation, and amortization ("EBITDA") of $45 million(1), increases of $13 million and $6 million, respectively, compared to the first quarter of 2022.
Enerflex's Engineered Systems bookings of $313 million(2) increased by 32% relative to the first quarter of 2022 and more than doubled compared to the second quarter of 2021. Margins on new bookings have expanded from those secured during the pandemic.
Enerflex grew its Engineered Systems backlog by $117 million during the quarter to a total of $737 million(2) at June 30, 2022, the Company's largest backlog in three years.
The Company maintained its strong financial position, closing the period with long-term debt and net debt balances of $346 million and $199 million, respectively. The bank-adjusted net debt to EBITDA ratio was a conservative 1.36 times(2), excluding non-recourse debt.
The Company continues to progress all matters that need to be addressed to close the proposed acquisition (the "Transaction") of Exterran Corporation ("Exterran"). See "Exterran Transaction Update" of this news release.