Welcome!

News Feed Item

Enerflex Announces Strategic Acquisition of International Contract Compression, Processing and After-Market Services Business for US$430 Million

- Adds compression fleet and gas treating facilities under long-term rental contracts generating stable, repeatable and high margin revenue

CALGARY, ALBERTA -- (Marketwired) -- 06/01/14 -- Enerflex Ltd. (TSX: EFX) ("Enerflex" or the "Company"), announced today that it has entered into a definitive agreement to acquire the international contract compression and processing business, as well as the after-market services business of Axip Energy Services, LP ("Axip") for US$430 million in cash, subject to certain purchase price adjustments ("Acquisition").

The transaction is consistent with Enerflex's objective of increasing recurring revenue streams and expanding geographic markets while supporting the Company's strategy of being a global supplier of turnkey energy solutions through compression, processing and electric power equipment sales, after-market service and contract operations.

"This acquisition provides Enerflex with an established platform to expand into growing geographies in a business with attractive margins and recurring revenue. It accelerates our ability to deliver full cycle contract services and cross-sell fabrication product offerings into high-growth international markets," stated J. Blair Goertzen, Enerflex's President and Chief Executive Officer.

Key Highlights


--  Materially increases recurring revenue and gross margin. Contracted
    compression, processing and maintenance businesses are highly profitable
    and provide stable, predictable and repeatable cash flow;

--  Significantly increases size and scale of global product and service
    offerings;

--  Provides new access to attractive oil and gas producing countries
    including Mexico, Argentina, Brazil, Peru and Thailand. Enhances
    existing operations in Bahrain, Colombia, Malaysia and Indonesia and
    diversifies Enerflex's customer base and revenue streams;

--  Provides meaningful "cross-sell" fabrication revenue opportunities
    through expanded presence in attractive international regions;

--  Captures first-mover advantage in Mexico's recently announced oil and
    gas industry liberalization initiatives through Enerflex's ability to
    provide single-source solutions for fabrication, compression and
    processing and treating;

--  Adds a strong contract operations management team currently led by
    Patricia Martinez, Senior Vice President of Axip International Contract
    Services. Ms. Martinez will join Enerflex's executive management team as
    President, Latin America and will be responsible for the expansion and
    growth of the contract operations business and Enerflex's product sales
    in the region; and

--  The purchase price represents an acquisition multiple of 7.5x 2013
    EBITDA, after adjusting for certain non-recurring revenues and costs,
    which will not be required for the business going forward, and excluding
    any potential synergies. Enerflex expects the transaction to be
    immediately accretive to earnings per share.

Acquired Business

Axip's international contract compression and processing business and after-market service is a leading provider of global energy services. Headquartered in Houston, Texas, Axip's international business has 173 employees with operations in Mexico, South America, Southeast Asia and the Middle East. Key energy infrastructure assets to be acquired include a 448 unit compression fleet totaling approximately 285,000 horsepower, running at utilization levels above 90% and having an average fleet age of approximately 5.5 years. As well, the assets to be acquired include gas treating facilities in Mexico, Argentina and Peru. All members of the current Axip international senior management team will stay with the business following the closing of the Acquisition. For the year ended December 31, 2013, combined revenue and EBITDA from compression, processing and after-market services were US$128 million and US$57 million respectively, after adjusting for certain non-recurring revenues and costs, representing an EBITDA margin of 45%. The Acquisition does not include Axip's U.S. assets.

Financing of the Transaction

The Acquisition will be financed with at least C$125 million from cash-on-hand, with the balance funded through new C$675 million committed revolving and operating facilities led by The Toronto-Dominion Bank and Scotiabank. At closing, Enerflex's expected pro forma Net Debt/Trailing Twelve Month EBITDA ("TTM EBITDA") ratio will be approximately 2.0x. As at March 31, 2014, Enerflex had cash-on-hand of approximately C$219 million.

Closing of the Acquisition and Other Information

Closing of the Acquisition is subject to certain conditions, including receipt of several regulatory and third party approvals and is not expected to occur before June 30, 2014. These conditions are described in the definitive agreement for the Acquisition which will be available on SEDAR at www.sedar.com.

Advisor

Scotiabank is acting as financial advisor to Enerflex.

Conference Call and Webcast

Analysts, investors, members of the media and other interested parties are invited to participate in a teleconference and audio webcast on Monday, June 2, 2014 at 7:00 a.m. MDT to discuss the Acquisition.

To participate, please call 1.800.734.4208 (North America) or 1.416.981.9000 (Outside North America). Please dial in 10 minutes prior to the start of the call. No passcode is required. The live audio webcast of the teleconference will be available on the Enerflex website at www.enerflex.com under the Investors section on June 2, 2014 at 7:00 a.m. MDT.

Presentation slides for the conference call will be made available on the Enerflex website located at www.enerflex.com.

A replay of the teleconference will be available one hour after the conclusion of the call until midnight, June 9, 2014. Please call 1.800.558.5253 or 1.416.626.4100 and enter passcode 21718651.

About Enerflex

Enerflex Ltd. is a single source supplier of natural gas compression, oil and gas processing, refrigeration systems and electric power equipment - plus in-house engineering and mechanical service expertise. The Company's broad in-house resources provide the capability to engineer, design, manufacture, construct, commission and service hydrocarbon handling systems. Enerflex's expertise encompasses field production facilities, compression and natural gas processing plants, CO2 processing plants, refrigeration systems and electric power equipment servicing the natural gas production industry.

Headquartered in Calgary, Canada, Enerflex has approximately 3,100 employees worldwide. Enerflex, its subsidiaries, interests in associates and joint-ventures operate in Canada, the United States, Colombia, Australia, the United Kingdom, Russia, the United Arab Emirates, Oman, Bahrain, Indonesia, Malaysia 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

In the interest of providing readers with information regarding Enerflex, including management's assessment of the future plans and operations of Enerflex, certain statements contained in this news release constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "potential", "target" and similar words suggesting future events or future performance. In particular, this news release contains, without limitation, forward-looking statements pertaining to the following: certain anticipated strategic benefits of the Acquisition, including the anticipated effects of the Acquisition on Enerflex's recurring revenues, gross margins, international growth, and profitability; that the Acquisition will be accretive to the Company's earnings per share; that the Acquisition will provide access to new markets; that Enerflex will be able to cross-sell its current products; the possible advantages of being "first mover" in the Mexican market; expected additions to Enerflex's management team post-Acquisition; the sources of capital to fund the anticipated purchase price of the Acquisition, including the expectation that the new revolving credit facility will be available for use by Enerflex to fund a portion of the purchase price; certain of the assets expected to be acquired by Enerflex as a result of the Acquisition; Enerflex's expected pro-forma net debt and LTM (last twelve month) EBITDA ratios after the completion of the Acquisition; and the expected closing date of the Acquisition.

With respect to forward-looking statements contained in this news release, Enerflex has made assumptions regarding, among other things: the ability of Enerflex to execute and realize on the anticipated benefits of the Acquisition; the value and benefits of the Acquisition; that Enerflex's lenders will not amend, terminate or otherwise fail to provide the credit facilities described herein; that the acquired business will perform in a manner consistent with past periods; that no contractual or other arrangements in respect of the acquired business will be amended, modified or terminated as a result of the Acquisition, or otherwise; that all conditions to closing of the Acquisition, including receiving all required third party and regulatory approvals, will be provided in a timely manner and without unforeseen or onerous conditions; that the Company's presence in Mexico prior to the arrival of certain other competitors will prove advantageous; that the current commitments by certain Axip managers to continue with the business will remain accurate; expectations and assumptions concerning prevailing usage rates, exchange rates, interest rates, applicable tax laws; estimates of operating costs; anticipated timing and results of capital expenditures; the sufficiency of budgeted capital expenditures in carrying out planned activities; the state of the economy and the financial conditions of Enerflex's and Axip's customers; results of operations; business prospects and opportunities; the availability and cost of financing, labor and services; the impact of increasing competition; the effect of seasonality fluctuations; the risk of violations of law, breaches of policies or unethical behavior; property and casualty risks; injuries at the workplace or health issues; the risk of material adverse effects arising as a result of litigation; and events or series of events may cause business interruptions.

Although Enerflex believes that the expectations reflected in the forward looking statements contained in this news release, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this news release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause Enerflex's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the following: that the Acquisition may not close when planned (or at all) or on the terms and conditions set forth herein; the failure of Enerflex and/or Axip to obtain the necessary regulatory and other third party approvals required in order to proceed with the Acquisition; the risk that the proposed Acquisition could be modified, restructured or terminated; the failure of Enerflex to secure its new credit facility on terms satisfactory to it, or at all; volatility in market prices for oil and natural gas; incorrect assessment of the value of the Acquisition; risks inherent in operating in foreign and emerging markets; failure to realize the anticipated benefits and synergies of the Acquisition; the impact of general economic conditions; industry conditions, including the adoption of new 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 (including those that are expected to continue with the acquired business); labour unrest; political unrest; fluctuations in foreign exchange or interest rates; stock market volatility; opportunities available to, or pursued by, the Company; obtaining financing; and the other factors described under "Risk Factors" in Enerflex's most recently filed Annual Information Form available in Canada at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this news release speak only as of the date of this news release. Except as expressly required by applicable securities laws, Enerflex does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Non-GAAP Measures

This news release contains the term "Net Debt" and "EBITDA" (earnings before interest, tax, depreciation and amortization) which do not have a standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP") and therefore may not be comparable with the calculation of similar measures by other companies. "Net Debt" and "TTM EBITDA" in this news release are calculated in accordance with Enerflex's syncidated credit facility covenant calculation requirements. EBITDA provides the results generated by the Company's primary business activities prior to consideration of how those activities are financed, assets are amortized or how the results are taxed in various jurisdictions. EBITDA as presented is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with GAAP. These measures have been described and presented in this news release in order to provide readers with additional information regarding the Company's liquidity and its ability to generate funds to finance its operations and dividends.

Note on Certain Financial Information

Certain financial and other information provided herein in respect of Axip's international business that is subject to the Acquisition has been prepared by management of Axip on a "carve-out" basis in accordance with US generally accepted accounting principles which differ in certain respects from those principles that would have been followed had such financial information been prepared in accordance with Canadian GAAP. As at the date hereof, such "carve-out" financial information has not been audited and, as a result, may be subject to change. All historical financial information in respect of Axip and the International Business as the case may be, is based on information supplied by Axip. The Company has not independently verified such financial information and as such does not guarantee the accuracy and completeness of the information.

Contacts:
J. Blair Goertzen
President & Chief Executive Officer
403.236.6852

D. James Harbilas
Executive Vice President & Chief Financial Officer
403.236.6857

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
SYS-CON Events announced today that Dataloop.IO, an innovator in cloud IT-monitoring whose products help organizations save time and money, has been named “Bronze Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Dataloop.IO is an emerging software company on the cutting edge of major IT-infrastructure trends including cloud computing and microservices. The company, founded in the UK but now based in San Fran...
For basic one-to-one voice or video calling solutions, WebRTC has proven to be a very powerful technology. Although WebRTC’s core functionality is to provide secure, real-time p2p media streaming, leveraging native platform features and server-side components brings up new communication capabilities for web and native mobile applications, allowing for advanced multi-user use cases such as video broadcasting, conferencing, and media recording.
When you focus on a journey from up-close, you look at your own technical and cultural history and how you changed it for the benefit of the customer. This was our starting point: too many integration issues, 13 SWP days and very long cycles. It was evident that in this fast-paced industry we could no longer afford this reality. We needed something that would take us beyond reducing the development lifecycles, CI and Agile methodologies. We made a fundamental difference, even changed our culture...
Things are changing so quickly in IoT that it would take a wizard to predict which ecosystem will gain the most traction. In order for IoT to reach its potential, smart devices must be able to work together. Today, there are a slew of interoperability standards being promoted by big names to make this happen: HomeKit, Brillo and Alljoyn. In his session at @ThingsExpo, Adam Justice, vice president and general manager of Grid Connect, will review what happens when smart devices don’t work togethe...
"We formed Formation several years ago to really address the need for bring complete modernization and software-defined storage to the more classic private cloud marketplace," stated Mark Lewis, Chairman and CEO of Formation Data Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
"There's a growing demand from users for things to be faster. When you think about all the transactions or interactions users will have with your product and everything that is between those transactions and interactions - what drives us at Catchpoint Systems is the idea to measure that and to analyze it," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York Ci...
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
In the next five to ten years, millions, if not billions of things will become smarter. This smartness goes beyond connected things in our homes like the fridge, thermostat and fancy lighting, and into heavily regulated industries including aerospace, pharmaceutical/medical devices and energy. “Smartness” will embed itself within individual products that are part of our daily lives. We will engage with smart products - learning from them, informing them, and communicating with them. Smart produc...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in Embedded and IoT solutions, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 7-9, 2017, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and E...
@DevOpsSummit taking place June 6-8, 2017 at Javits Center, New York City, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @DevOpsSummit at Cloud Expo New York Call for Papers is now open.
SYS-CON Events announced today that Catchpoint, a leading digital experience intelligence company, has been named “Silver Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Catchpoint Systems is a leading Digital Performance Analytics company that provides unparalleled insight into your customer-critical services to help you consistently deliver an amazing customer experience. Designed for digital business, C...
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed ...
"We got started as search consultants. On the services side of the business we have help organizations save time and save money when they hit issues that everyone more or less hits when their data grows," noted Otis Gospodnetić, Founder of Sematext, in this SYS-CON.tv interview at @DevOpsSummit, held June 9-11, 2015, at the Javits Center in New York City.
“DevOps is really about the business. The business is under pressure today, competitively in the marketplace to respond to the expectations of the customer. The business is driving IT and the problem is that IT isn't responding fast enough," explained Mark Levy, Senior Product Marketing Manager at Serena Software, in this SYS-CON.tv interview at DevOps Summit, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.