Enerflex (TSX:EFX), a small-cap dividend-paying energy infrastructure company.
Valued at $881 million by market cap, Enerflex is a global provider of energy infrastructure and energy transition solutions. It deploys natural gas, low-carbon, and treated water solutions from modularized products and services to integrated custom solutions.
In Q1 of 2024, Enerflex reported revenue of US$638 million, up from US$610 million in the year-ago period. It attributed higher sales to its energy infrastructure product line, where Enerflex expanded the scope and term of an existing build-own-operate-maintain contract in the eastern hemisphere. The contract supports the expansion of the company’s treated water solutions business and increases its presence in Oman.
Enerflex’s engineered systems business ended Q1 with bookings of US$420 million, bringing the total backlog to US$1.3 billion and providing investors with strong visibility into future revenue generation and business activity. Additionally, Enerflex emphasized that US$1.6 billion of contracted revenue tied to its energy infrastructure assets will be recognized in the coming years.
Enerflex ended Q1 with an operating cash flow of US$101 million and a free cash flow of US$78 million, allowing it to pay shareholders a quarterly dividend of $0.025 per share.
Comparatively, it paid less than US$3.5 million to shareholders via dividends, indicating a payout ratio of less than 5%.
Enerflex used the excess cash to repay long-term debt totaling US$72 million as it ended Q1 with a net debt of $743 million, including $110 million in cash. Enerflex stated its net-debt-to-EBITDA ratio was 2.2 times, much lower than the 2.9 times in the year-ago quarter.
Enerflex stock is priced at 25 times forward earnings, which might seem expensive for an energy company. However, it’s on track to more than double its adjusted earnings from $0.28 per share in 2024 to $0.65 per share in 2025.