Click here to close now.




















Welcome!

News Feed Item

Enerflex Reports Second Quarter 2014 Financial Results and Announces Quarterly Dividend

CALGARY, ALBERTA -- (Marketwired) -- 08/07/14 -- 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 six months ended June 30, 2014.

During the second quarter of 2014, there have been continuing positive market developments in liquids-rich plays in Canada and the United States; in the Alberta oil sands; and electric power opportunities. We have also seen encouraging signs relative to liquefied natural gas projects in Canada, the United States and AustralAsia regions. Enerflex has successfully converted these positive market developments into increased bookings in the second quarter of 2014 compared to 2013, building on momentum established in the first quarter of 2014. Sequentially, bookings have increased by $176.4 million in the second quarter of 2014 when compared to the first quarter of 2014, resulting in an increased backlog of $867.9 million at June 30, 2014.

On June 30, 2014, Enerflex completed the acquisition of the international contract compression and processing, as well as the after-market services business of Axip Energy Services, LP ("Axip") for approximately US$430 million in cash, including closing purchase price adjustments. 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 has 173 employees with operations in Argentina, Brazil, Colombia, Mexico, Peru, Indonesia, Malaysia, Thailand and Bahrain. Axip's energy infrastructure assets include a 448 unit compression fleet totaling approximately 285,000 hp and gas treating facilities in Mexico, Argentina and Peru. All members of the current Axip international senior management team have stayed with the business. The acquisition did not include Axip's U.S. assets.

The Company's results from operations will include the results of the Axip business beginning July 1, 2014 because of the closing date of June 30, 2014 for the acquisition. Only the statement of financial position for the acquired business has therefore been included at June 30, 2014, including the determination of any asset and liability adjustments required as a result of the allocation of the purchase price.

Enerflex reported earnings, normalized for one time transaction costs expensed as part of the acquisition, and the related tax impacts of $24.9 million, or $0.33 per share for the second quarter of 2014, and $30.0 million, or $0.38 per share for the first six months of 2014, compared to net earnings of $18.4 million, or $0.24 per share, and $33.8 million, or $0.44 per share, respectively, for the same periods in 2013. Normalized net earnings were higher in the second quarter of 2014 on higher gross margin and higher earnings from associates and joint ventures, partially offset by higher SG&A and income tax expenses. For the six months ended June 30, 2014, normalized net earnings were lower due to higher SG&A and income tax expenses, partially offset by higher gross margin and earnings from associates and joint ventures.

The Company's financial results for the quarter were in line with expectations, and improved on the same period last year. The results on a year-to-date basis are below expectations, largely as a result of previously disclosed cost increases in the International segment during the first quarter of 2014, and the related impact on gross margin. Where the cost increases have been customer driven, variation claims have been submitted, and are being vigorously pursued. For the six months ended June 30, 2014, results for the Canada and Northern U.S., and Southern U.S. and Latin America segments have improved. Overall results normalized for one time transaction expenses associated with the acquisition, which are included in SG&A and income tax expense, further improved for the second quarter and were in line with the prior year when looking at the first six months of 2014.

In July 2014, Enerflex was provided with the Letter of Intent for one new project in the MENA region, and one in the Latin American region. The project in MENA is for the rental of compression trains and for the provision of on-site operations, maintenance and services for a period of 48 months. The project in Latin America is for the rental of compressor units, and the associated operations and maintenance services for a period of 48 months. Coupled with a rental contract won earlier in the year in the MENA region for the rental of compressors and the associated operations and maintenance for a period of 24 months, the total horsepower that will be deployed to these three projects is approximately 60,000 hp. Lastly, Enerflex was successful in renewing a large service contract in the AustralAsia region for an initial contract term of 36-48 months, providing parts, service and technical support.

During the second quarter, Enerflex continued to achieve or exceed most of its 2014 strategic objectives, progressing towards the goal of generating 35%-40% recurring revenue on a trailing 12-month basis. The Axip acquisition will drive acceleration in the achievement of this goal. In terms of safety management objectives, Enerflex is ahead of its strategic objective of reducing its Company-wide total recordable injury rate to 1.8 with a rate of 1.6 at the end of June, 41% below the rate at June 30, 2013. The Company continues to work towards its strategic objective of a 10% EBIT margin, but has seen EBIT as a percentage of revenue, also calculated on a trailing 12-month basis, fall compared to the same periods last year, largely as a result of the cost increases in the International segment, and increases in SG&A. Successful variation claims, coupled with the EBIT benefit of the acquisition, should drive an increase in EBIT margin percentage over the remainder of 2014. The EBIT percentage normalized for one time transaction expenses associated with the acquisition was 8.7% for the second quarter of 2014, and 5.7% when calculated on a trailing 12-month basis. The EBIT percentages for the comparable periods in 2013 were 8.7% for the quarter and 8.0% on a trailing 12-month basis, respectively.

"The Company exited 2013 with strong backlog levels, and continued to see excellent booking activity through the second quarter of 2014, with second quarter booking levels almost $180 million higher, sequentially, than the first quarter of 2014. The recent Axip acquisition 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 and after-market services," said J. Blair Goertzen, Enerflex's President and Chief Executive Officer. "The improving market dynamics, coupled with our recent acquisition, have enabled the Company to capitalize on recent rental opportunities in MENA and Latin America that have arisen and are expected to continue. After first half year results that were adversely affected by cost increases previously anticipated and communicated, we would expect to deliver stronger results through 2014, as the higher opening backlog is converted to revenue, and as the Company continues to deliver improved recurring revenue from its Service and Rental business."


(unaudited)           Three months ended June 30, Six months ended June 30, 
($ millions, except                                                         
 per share amounts                         Change                    Change 
 and percentages)        2014      2013       ($)     2014     2013     ($) 
----------------------------------------------------------------------------
Financial Highlights                                                        
Revenue             $   446.1 $   311.0 $   135.1 $  778.5 $  664.3 $ 114.2 
Gross margin             86.0      64.4      21.6    137.3    125.4    11.9 
Gross margin %           19.3%     20.7%              17.6%    18.9%        
EBIT (1)                 30.5      27.1       3.4     40.5     49.9    (9.4)
EBIT %                    6.8%      8.7%               5.2%     7.5%        
Normalized EBIT (2)      38.6      27.1      11.5     49.6     49.9    (0.3)
Normalized EBIT %                                                           
 (2)                      8.7%      8.7%               6.4%     7.5%        
Net earnings (loss)                                                         
  Continuing             11.1      18.4      (7.3)    15.2     33.8   (18.6)
  Discontinued              -      (1.2)      1.2        -     (1.7)    1.7 
Normalized net                                                              
 earnings (2)            24.9      18.4       6.5     30.0     33.8    (3.8)
Earnings (loss) per                                                         
 share                                                                      
  Continuing             0.14      0.24     (0.10)    0.19     0.44   (0.25)
  Discontinued              -     (0.02)     0.02        -    (0.02)   0.02 
Normalized net                                                              
 earnings per share                                                         
 (2)                     0.33      0.24      0.09     0.38     0.42   (0.04)
Bookings (2)            414.3     317.5      96.8    652.2    506.8   145.4 
Backlog (2)             867.9     697.8     170.1    867.9    697.8   170.1 
                                                                            
(1)  Earnings before Interest (Finance Costs) and Taxes ("EBIT") is         
     considered an additional GAAP measure, which may not be comparable with
     similar additional GAAP measures used by other entities. See "Non-GAAP 
     Measures" in the Company's MD&A for the three and six month periods    
     ended June 30, 2014.                                                   
                                                                            
(2)  Normalized EBIT, normalized EBIT%, normalized net earnings and         
     normalized net earnings per share, bookings and backlog are considered 
     non-GAAP measures that do not have standardized meanings as prescribed 
     by GAAP, and are therefore unlikely to be comparable to similar        
     measures used by other entities. See "Non-GAAP Measures" in the        
     Company's MD&A for the three and six month periods ended June 30, 2014.

Work on an international project in Oman continued to experience customer driven scope and design variations during the first half of 2014. For the first six months of 2014, cost increases resulted in a corresponding decrease in gross margin of $17.6 million. With the project largely complete at the end of June 2014, the risk of further margin deterioration is significantly reduced. The Company has submitted and continues to pursue variation claims for cost increases on the project, and expects resolution during the second half of 2014. Variation claims are filed once forecast costs on a fixed price project exceed budgeted costs, as a result of increased scope or design changes to the project, which are common for engineering, procurement and construction contracts. To the extent that these cost increases are subsequently recovered through approved variation claims from customers, revenue will be recognized in the corresponding period. This results in volatility in gross margins for the International segment as additional costs are recognized as incurred on these projects, while revenue resulting from variation claims is recognized in the period that claims are approved.

Segmented Financial Results

Revenue for the second quarter and first six months of 2014 was $446.1 million and $778.5 million respectively, representing increases of $135.1 million and $114.2 million compared to the same periods in 2013. The increases were due to higher revenue in the Canada and Northern U.S., and Southern U.S. and Latin America segments, partially offset for the six months ended June 30, 2014 by lower International segment revenue.

Canada and Northern U.S. segment revenue increased by $61.0 million during the second quarter of 2014, and by $82.9 million for the first six months of 2014, on account of increased Engineered Systems revenue due to higher backlog, and higher Service revenue coming from increased parts and engine sales, which was partially offset by lower Rental revenue resulting from a decrease in the total horsepower under rental contracts.

Southern U.S. and Latin America segment revenue increased by $71.9 million in the second quarter of 2014 and by $75.2 million for the first six months of 2014, as a result of higher Engineered Systems revenue due to higher opening backlog, and higher Service revenue on increased service calls and parts sales, compared to the same periods in 2013.

International segment revenue increased by $2.1 million in the second quarter of 2014, and decreased by $44.0 million in the first six months of 2014. The increase in the second quarter of 2014 was a result of higher Service revenue, partially offset by lower Engineered Systems and Rental revenues compared to the same period in 2013. For the six months ended June 30, 2014, the decrease was on account of lower Engineered Systems revenue due to lower opening backlog, particularly in the AustralAsia and MENA regions, and lower Rental revenue, partially offset by an increase in Service revenue as a result of increased activity in the AustralAsia and MENA regions.

Gross margin for the second quarter of 2014 was $86.0 million or 19.3% of revenue compared to $64.4 million or 20.7% of revenue for the same period in 2013. The gross margin for the first six months of 2014 was $137.3 million or 17.6% as compared to $125.4 million or 18.9% of revenue for the same period of 2013. The increases were due to higher gross margin in the Canada and Northern U.S., and Southern U.S. and Latin America segments, partially offset by lower gross margin in the International segment.

The increase in gross margin in Canada and the Northern U.S. was due to the positive impact of higher revenue, lower warranty expense and stronger plant utilization, partially offset by lower project margins. The higher gross margin in the Southern U.S. and Latin America segment was due to higher revenues, improved project margins, and improved plant utilization, and for the six months ended June 30, 2014 partially offset by lower warranty releases. In the International segment, for the second quarter, lower gross margin was due to lower project margins, partially offset by slightly higher revenues and the corresponding impact on gross margin. Despite generally higher project margins in the first six months of 2014 in the International segment, the lower gross margin was driven primarily by cost increases on the Oman project due to scope and design variations, and schedule delays. In addition, lower revenues negatively impacted gross margin.

During the second quarter of 2014, Enerflex recorded bookings of $414.3 million compared to $317.5 million during the same period in 2013, an increase of $96.8 million. During the six months ended June 30, 2014, bookings were $652.2 million compared to $506.8 million during the same period in 2013, an increase of $145.4 million. The increase in the second quarter of 2014 was due to higher bookings in the Southern U.S. and Latin America, partially offset by lower Canada and Northern U.S. segment bookings. For the six months ended June 30, 2014, bookings were higher in all segments. Enerflex finished the second quarter with a backlog of $867.9 million, compared to $697.8 million at the end of the second quarter of 2013, an increase of $170.1 million or 24.4%. Sequentially, backlog has increased by $73.9 million since December 31, 2013.

Subsequent to the end of the second quarter of 2014, Enerflex declared a quarterly dividend of $0.075 per share, payable on October 3, 2014, to shareholders of record on August 27, 2014.

Quarterly Results Material

Enerflex's interim condensed financial statements for the three and six months ended June 30, 2014, and the accompanying Management's Discussion and Analysis, will be available on the Enerflex website at www.enerflex.com under the Investors section and on SEDAR at www.sedar.com.

Conference Call and Webcast Details

Enerflex will host a conference call for analysts, investors, members of the media and other interested parties on Friday, August 08, 2014 at 9:00 a.m. MDT (11:00 a.m. EDT) to discuss the second quarter 2014 financial results and operating highlights. The call will be hosted by Mr. J. Blair Goertzen, President and Chief Executive Officer and Mr. D. James Harbilas, Executive Vice President and Chief Financial Officer of Enerflex Ltd.

If you wish to participate in this conference call, please call 1.800.734.4208. 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 August 08, 2014 at 9:00 a.m. MDT (11:00 a.m. EDT). 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, August 15, 2014. Please call 1.800.558.5253 or 1.416.626.4100 and enter passcode 21728767.

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 3,400 employees worldwide. Enerflex, its subsidiaries, interests in associates and joint-ventures, operate in Canada, the United States of America, Argentina, Brazil, Colombia, Mexico, Peru, Australia, the United Kingdom, Russia, the United Arab Emirates, Oman, Bahrain, Indonesia, Malaysia, Singapore and Thailand. 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. Forward-looking statements and information contained in this press release include, but are not limited to: (i) the anticipated duration of weak natural gas prices and the effect thereof in Canada and Northern U.S. markets; (ii) expected bookings in Southern U.S. and Latin America; (iii) the nature and scope of challenges and opportunities in the International segment, including the nature and magnitude of cost estimates and the success of variation claims; and (iv) the emergence of liquefied natural gas projects in Canada, the U.S. and AustralAsia regions. 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 regulatory 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; 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:
For investor and media inquiries:
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
The speed of software changes in growing and large scale rapid-paced DevOps environments presents a challenge for continuous testing. Many organizations struggle to get this right. Practices that work for small scale continuous testing may not be sufficient as the requirements grow. In his session at DevOps Summit, Marc Hornbeek, Sr. Solutions Architect of DevOps continuous test solutions at Spirent Communications, explained the best practices of continuous testing at high scale, which is rele...
"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.
"We have been in business for 21 years and have been building many enterprise solutions, all IT plumbing - server, storage, interconnects," stated Alex Gorbachev, President of Intelligent Systems Services, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
In a recent research, analyst firm IDC found that the average cost of a critical application failure is $500,000 to $1 million per hour and the average total cost of unplanned application downtime is $1.25 billion to $2.5 billion per year for Fortune 1000 companies. In addition to the findings on the cost of the downtime, the research also highlighted best practices for development, testing, application support, infrastructure, and operations teams.
"We specialize in testing. DevOps is all about continuous delivery and accelerating the delivery pipeline and there is no continuous delivery without testing," noted Marc Hornbeek, Sr. Solutions Architect at Spirent Communications, in this SYS-CON.tv interview at @DevOpsSummit, held June 9-11, 2015, at the Javits Center in New York City.
How do you securely enable access to your applications in AWS without exposing any attack surfaces? The answer is usually very complicated because application environments morph over time in response to growing requirements from your employee base, your partners and your customers. In his session at @DevOpsSummit, Haseeb Budhani, CEO and Co-founder of Soha, shared five common approaches that DevOps teams follow to secure access to applications deployed in AWS, Azure, etc., and the friction an...
"Alert Logic is a managed security service provider that basically deploys technologies, but we support those technologies with the people and process behind it," stated Stephen Coty, Chief Security Evangelist at Alert Logic, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
Digital Transformation is the ultimate goal of cloud computing and related initiatives. The phrase is certainly not a precise one, and as subject to hand-waving and distortion as any high-falutin' terminology in the world of information technology. Yet it is an excellent choice of words to describe what enterprise IT—and by extension, organizations in general—should be working to achieve. Digital Transformation means: handling all the data types being found and created in the organizat...
The essence of cloud computing is that all consumable IT resources are delivered as services. In his session at 15th Cloud Expo, Yung Chou, Technology Evangelist at Microsoft, demonstrated the concepts and implementations of two important cloud computing deliveries: Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). He discussed from business and technical viewpoints what exactly they are, why we care, how they are different and in what ways, and the strategies for IT to tran...
The Internet of Everything (IoE) brings together people, process, data and things to make networked connections more relevant and valuable than ever before – transforming information into knowledge and knowledge into wisdom. IoE creates new capabilities, richer experiences, and unprecedented opportunities to improve business and government operations, decision making and mission support capabilities.
The Software Defined Data Center (SDDC), which enables organizations to seamlessly run in a hybrid cloud model (public + private cloud), is here to stay. IDC estimates that the software-defined networking market will be valued at $3.7 billion by 2016. Security is a key component and benefit of the SDDC, and offers an opportunity to build security 'from the ground up' and weave it into the environment from day one. In his session at 16th Cloud Expo, Reuven Harrison, CTO and Co-Founder of Tufin,...
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists addressed this very serious issue of pro...
With SaaS use rampant across organizations, how can IT departments track company data and maintain security? More and more departments are commissioning their own solutions and bypassing IT. A cloud environment is amorphous and powerful, allowing you to set up solutions for all of your user needs: document sharing and collaboration, mobile access, e-mail, even industry-specific applications. In his session at 16th Cloud Expo, Shawn Mills, President and a founder of Green House Data, discussed h...
Container technology is sending shock waves through the world of cloud computing. Heralded as the 'next big thing,' containers provide software owners a consistent way to package their software and dependencies while infrastructure operators benefit from a standard way to deploy and run them. Containers present new challenges for tracking usage due to their dynamic nature. They can also be deployed to bare metal, virtual machines and various cloud platforms. How do software owners track the usag...
Discussions about cloud computing are evolving into discussions about enterprise IT in general. As enterprises increasingly migrate toward their own unique clouds, new issues such as the use of containers and microservices emerge to keep things interesting. In this Power Panel at 16th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists addressed the state of cloud computing today, and what enterprise IT professionals need to know about how the latest topics and trends affect t...