Enerflex Ltd.

Ladies and gentlemen, thank you for standing by, and welcome to the NRFlex second quarter 2020 results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to end the conference to your speaker today. Stephan Ali, Director, Strategy, Risk and Investor Relations. Please go ahead, sir.

Good morning, everyone, and thanks for joining us. Here with me virtually are Mark Rossiter, Enerflex's President and Chief Executive Officer, Sanjay Bishnoi, Enerflex's Senior Vice President and Chief Financial Officer, and Ben Park, Enerflex's Vice President, Corporate Controller. During this call, we'll be providing our financial results for the three months ended June 30th, 2020, a brief commentary on the performance of our three business segments, and a summary of our financial position. Today's discussion will include forward-looking statements regarding Enerflex's expectations for future performance and business prospects. Forward-looking information involves risks and uncertainties, and the stated expectations could differ materially from actual results or performance. For more information, please see the advisory comments within our news release, MD&A, and other regulatory filings. Approximately one hour following the completion of this call, our recording will be available on our website under the investor section. During this call, unless otherwise stated, we'll be referring to the three months ended June 30th, 2020, compared to the same period of 2019. We'll proceed on the basis that you've all taken the opportunity to read yesterday's press release. I will now turn the call over to Mark.

Thanks, Stephan, and good morning, everyone. Before discussing the quarter, I want to first thank Enerflex's employees who have kept the natural gas, natural gas liquids, and electricity flowing for the benefit of our clients and energy consumers across all of our operating regions. Our people have limited the impact of COVID-19 such that each of our facilities and assets continue to operate without disruption. I'm proud of the resilience and positivity that all Enerflex employees have shown in navigating this uncertain situation. Globally, Government health and safety protocols in certain geographies continue to challenge our ability to maintain unrestricted access to active construction sites. While we have adapted to these restrictions in Latin America, our in-flight boom project in the Middle East continues to face hurdles in respect of in-country logistics and trucking. Nonetheless, we still expect all four previously announced booms to commence operation in mid to late 2020. provided that no further restrictions are imposed. In addition to COVID-19, the sector has seen significant volatility in oil prices. While we have seen a strong rebound off the March lows, the recovery appears fragile and has not yet translated to an increase in customer capital expenditures. That said, we're starting to see some demand for non-traditional applications, including high-efficiency gas-to-power combined cycle technologies, a combined heat and power project for a Canadian grain processor, and a large process refrigeration system for a petrochemical plant in Texas. While these are positives, we still anticipate that the broader weakness in engineered systems bookings will persist for at least the remainder of this year and into 2021. Aftermarket service, AMS for short, has so far proven resilient compared to prior downturns. AMS is an OPEX-oriented business that is most impacted when production volumes decrease. But if wells are flowing, equipment needs to be serviced to run reliably. We now have broader service capabilities compared to prior downturns and have service personnel in all operating regions to cushion an AMS downturn in any single region. For our global asset ownership platform, revenues and utilization during the quarter were healthier than anticipated. with the downside having so far been tempered by improving commodity prices. Importantly, we continue to make progress on previously announced projects that will expand our footprint in both Latin America and the Middle East, while in the USA we maintained an average fleet utilization of 82% during the quarter. Our teams continue to engage with customers to gain visibility on how fleet utilization might change going forward. Should the current commodity price environment weaken, producers in the USA segment may slow production, which will invariably affect demand for Enerflex's products and services. In the rest of the world segment, our business and that of our customers has a lower correlation to commodity prices and is instead driven by factors such as satisfying local electricity demand. This dynamic has translated to renewed interest in our rental fleet in Mexico, where we will redeploy several units that were expected to come online during the third quarter of 2020. Similarly, we are seeing projects in the Middle East being developed specifically to increase the role of natural gas in regional electricity generation. Our customers in the region continue to indicate that our natural gas projects and assets are critical to their overall development plans, having extended two of our boom projects during the quarter. Subsequent to the quarter, we also executed a letter of intent for a 10-year extension to a Middle East boom that has already been operating for nearly a decade. The significant investments we've made in our asset ownership platform should continue to add stability and predictability to our financial profile. We will continue focusing our efforts on what we can control, taking action to protect returns on our investments, maintain customer relationships, preserve fleet utilizations, and keep our customers' assets performing as promised. Overall, 2020 will be a difficult year for the engineered systems business, while the pace of global oil and gas demand recovery creates uncertainties for other Enerflex products and services. Despite these headwinds, we expect our asset ownership and AMS businesses will drive financial performance for the remainder of 2020 and into 2021. We continue to monitor performance and outlook in all of our operating regions and make cost reduction decisions in response to what we're seeing across the broader energy industry. Being proactive in this regard and maintaining a defensive balance sheet should keep us well positioned to weather this downturn and succeed as the industry recovers. I will now turn things over to Sanjay to review our financial results.