Enerflex Ltd.

Good morning, ladies and gentlemen, and welcome to InterFlex fourth quarter and year-end 2022 earnings conference call. At this time, all participants are on a listen-only mode. Following InterFlex prepared remarks, we will conduct a question and answer session. Instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Stephan Alley, Vice President, Strategy and Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thanks for joining us on our fourth quarter and year-end 2022 earnings conference call. With me on the call today are Mark Rossiter, President and CEO, Sanjay Bishnoi, Senior Vice President and CFO, and Ben Park, Vice President, Corporate Controller. During today's call, we'll touch on highlights from our fourth quarter and year-end results, comment on our integration efforts related to the Exterrin acquisition, and outline our strategic priorities for 2023. Before I turn it over to Mark, I'll remind everybody that today's discussion will include non-IFRS and other financial measures, as well as 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, refer to the advisory statements within our news release, MD&A, and other regulatory filings, all available on our website and under our CDAR and EDGAR profiles. All dollar amounts discussed today are in Canadian dollars unless otherwise stated. I'll now turn it over to our President and CEO, Mark Rossiter.

Thanks, Stephan, and thanks to all our listeners for joining today's call. Just over a year ago, we announced the transformational acquisition of Xterrax. a transaction that would deliver on a decade-long strategy to grow our energy infrastructure platform to become more resilient, profitable, and better positioned for long-term success. Enerflex is now an infrastructure-first company that is strategically positioned to enable a sustainable future for energy through our vertically integrated low-carbon solutions. We're only four months into integration, and we're already realizing many of the strategic benefits of the Xterra acquisition. Our geographic footprint is concentrated in global gas-producing regions with approximately one-third of our gross margin deriving from each of North America, Latin America, and the Eastern Hemisphere, thereby insulating us from weakness in any single market, including a recent weakness in North American natural gas prices. Our expanded product offerings, namely compression, cryo or deep cut, and carbon capture and water treatment, are leading to constructive customer discussions across this broader opportunity set. Our scale and synergy realization has created operational efficiencies within our business lines. And finally, our large base of energy infrastructure will stabilize business performance no matter the macro environmental backdrop. Before I outline our strategic priorities for 2023 and speak to the considerable progress we're making on integration, I want to briefly address Enerflex's 2022 financial and operational results. Our energy transition team delivered in 2022, securing over $160 million of bookings, relate primarily to carbon capture projects that will collectively capture and permanently sequester over 1 million tons of co2 annually once in operation further within our north american business we sold over 500 000 horsepower of electric compression in 2022 two-thirds of our compressor sales in the region and we electrified a portion of our u.s contract compression fleet which entirely eliminates meaningful scope 1 greenhouse gas emissions for our customers As our customers strive to minimize their environmental footprint through carbon capture and electrification, we expect the demand for our energy transition solutions to grow meaningfully over time, making it a very important profit-making business line for our company. We also reported year-over-year increase across key financial metrics. Revenues are up $820 million. The majority of our gross margin came from occurring sources, Our adjusted EBITDA was $90 million higher, though it was impacted by foreign currency exposure, which Sanjay will discuss later. And our engineered systems bookings grew by almost $550 million, allowing us to expand our backlog by nearly $1 billion to close the year at a record $1.5 billion. Through the Exterrin acquisition, a large portion of our business is energy infrastructure assets in Latin America and the Eastern Hemisphere. where the need for reliable energy backstops the long-term fundamentals for natural gas. Our U.S. contract compression fleet continues to benefit from high demand, with utilization rates averaging over 95% in the fourth quarter and showing no sign of abating. In North America, more broadly, we do not anticipate that near-term weakness in natural gas prices will significantly impact our pipeline of opportunities. Our business is predominantly driven by energy infrastructure, which is insulated from commodity price volatility, and our North American engineered systems business makes up a smaller part of our global platform following the acquisition. For our engineered systems business, the vast majority of our recent bookings have been concentrated in crude oil or liquids-rich resource plays. Building on a solid 2022 results and our positive outlook on the key drivers of our business, our 2023 objectives remain keenly focused on the strategic priorities we laid out last year. The first being to maximize cash flow generation to deleverage as quickly as possible. Three of the four major infrastructure projects we developed last year are now in commercial operation, meaning we have significantly de-risked the cash flows associated with those projects. Like most of our large energy infrastructure assets, These three projects are underwritten by long-term take-or-pay contracts, where Enerflex carries no commodity, price, or volumetric risk. Coupled with the extern synergies we've captured in our record engineered systems backlog of over 1.5 billion, we have a clear line of sight in meeting our deleveraging target by the end of this year. It's worth noting quickly that the fourth major project, the cryogenic facility in Kurdistan, experienced some customer delays in 2022. However, the site was reanimated in the fourth quarter and is substantially back to full staffing levels. We now expect this project to be completed in 2024. The second strategic priority for 2023 is the successful integration of Xterrin. In the first 100 days post-close, we captured $40 million, or two-thirds of the $60 million target of synergies that we identified through the evaluation process. Finally, we have built a business that will continue to harness the strength of its diversification. whether that's geographic, counterparty, or product offerings, to capitalize on the global opportunity set, withstand market volatility, and continue executing on our business plan to generate value for our shareholders. I'll now turn it over to Sanjay to speak to the financial highlights from last night's release.