Enerflex Ltd.

Ladies and gentlemen, thank you for standing by, and welcome to the InterFlex fourth quarter and year-end 2021 results conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to turn the call over to your host, Stephan Ali, Vice President, Investor Relations and Strategy. You may begin.

Thank you, Operator, and good morning, everyone. Here with me 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 December 31st, 2021, 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, a 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 December 31st, 2021, compared to the same period of 2020. We'll proceed on the basis that you've all taken the opportunity to read yesterday's press release. I'll now turn the call over to Mark.

Thanks, Stefan, and good morning, everyone. To call 2021 a transition year would be an understatement. We entered the year with a very low backlog, no vaccinations, and a pervasive global uncertainty in the energy markets. The advent of vaccines has since led to a broad reopening of economies and a robust demand recovery for oil, natural gas, and natural gas liquids. Although our customers are continuing to exercise discipline in capital spending, Good projects with strong long-term returns tend to get funded, and supportive fundamentals have led to demand for everything from gas compression to gas processing to electric power solutions. Enerflex's fourth quarter results benefited from this momentum, delivering our highest quarterly revenue since the beginning of the pandemic. We continue to see healthy demand across each of our global regions, as evidenced by the strong engineered systems bookings of over $320 million. The recovery has been broad-based, with meaningful upticks coming from each of Canada, USA, and our rest of the world segments. We have been especially pleased with the increased bidding activity in Latin America, which was hard hit by COVID-19 and was expected to take much longer to recover. During the quarter, we commissioned a system to reduce flare gas and CO2 emissions in Colombia. Our teams did a good job of gaining margin traction for new bookings, though the overall market remains very competitive. In addition, we continue to navigate supply chain constraints that began to emerge in mid 2021. While these challenges have been manageable, we expect that our teams will be dealing with inflationary pressures on materials, freight costs, and delivery delays throughout 2022. Our energy transition team, formed in early 2021 and led by Patricia Martinez, continued to progress opportunities to meaningfully decarbonize the energy sector. Our deep expertise in modularized process solutions critical to the energy transition is the primary reason for our successful partnering with customers in this space. In addition to participating in several studies, we have executed multiple MOUs, project development term sheets, and engineering projects for strong counterparties who are seeking lower carbon solutions via CCUS, renewable natural gas, hydrogen, and electrification. Broad momentum within the energy transition space will require governmental policy that supports meaningful infrastructure spending on low carbon solutions. But nonetheless, certain customers are already exploring these opportunities and committing to either pilot projects or, in some circumstances, permanent facilities. For instance, in 2021, we were awarded the design, engineering, and fabrication of a hydrogen compression solution for a green ammonia plant. which, when commissioned in 2023, will be the largest of its kind in North America. We also electrified tens of thousands of horsepower in the compression space and continue to see strong demand for electrified solutions. More recently, we've entered into an arrangement with a major Canadian producer for a post-combustion CCUS pilot project, which has the potential to take the project site to net zero. While the energy transition landscape is still in its infancy, the early success of our team should help to solidify Interflex's position as a key partner for any customer who's seeking to decarbonize operations. Our aftermarket service to business performed as expected, gradually recovering from the industry downturn, despite the operational and travel restrictions caused by the pandemic. In 2022, we expect that our teams will have to navigate region-specific inflationary wage pressure and the same supply chain constraints as engineered systems, particularly regarding to the price and availability of OEM parts. Our energy infrastructure platform, formerly known as Rentals, demonstrated its resilience throughout 2021. Fourth quarter results benefited from improved revenues and higher utilizations from our U.S. contract compression fleet of approximately 400,000 horsepower that maintained an average utilization of 89%. Our fleet's performance was enhanced throughout the year from operational efficiencies captured through instrumentation and telemetry upgrades, which are maximizing uptime and value for our customers. In our rest of world segment, we secured a 10-year extension on a boom asset that has been operating since 2016. Renewals are particularly attractive to Enerflex and our shareholders as the extended revenues come with little or no new capital expenditure. Future quarters will also benefit from another large asset that we were awarded in early 2021 that commenced operations in early January 2022. Collectively, these assets reinforce our strategic goal of generating long-term stable cash flows. Overall, I'm very proud of our team's efforts and success throughout the year to keep our assets performing and our customers happy. Lastly, subsequent to the quarter, we announced our intention to close on an all-share acquisition of long-time industry participant Exterin. Since our announcement, we have progressed matters pertaining to regulatory, capital structure, and integration planning. Upon closing, this transaction will immediately create a true energy infrastructure company, and Enerflex remains focused on delivering on the strategic rationale of the acquisition, including increasing recurring pro forma gross margin to approximately 70% of total, striving for a sustainable cost structure through synergy realization, and providing better capabilities to our global client base. I'd like to thank all of our employees, customers, and suppliers for helping us execute on our strategy in 2021, and I look forward to the year ahead. I will now turn the call over to Sanjay Vishnoy to review our financial results.