Enerflex Ltd.

Thank you for standing by and welcome to InterFlex Third Quarter 2023 Earnings Conference Call. At this time, all participants are in listening mode. After the speaker's presentations, there will be a question and answer session. To ask a question at that time, please press star 11 on your telephone. Please be advised that today's call is being recorded. I will now turn the call over to your host, Mr. Jeff Federley, Vice President, Corporate Development and Investor Relations. Please go ahead.

Thank you, Valerie, and good morning, everyone. Welcome to our third quarter 2023 earnings call. With me today is Mark Rossiter, President and CEO, Preet Dhinza, Interim CFO, and Ben Park, Vice President, Corporate Controller. During today's call, we'll touch on highlights from our third quarter results and provide an update on guidance and how we are progressing on our near and long-term strategic priorities. Before I turn it over to Mark, I'll remind everyone that today's discussion will include non-IFRS and other financial measures as well as forward-looking statements regarding Interflex'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 Plus and EDGAR profiles. All dollar amounts discussed today are in Canadian dollars. With that, I'll turn it over to our President and CEO, Mark Rossiter.

Thanks, Jeff, and thank you all for joining me on this morning's call. Last night, Enerflex reported its third quarter 2023 results, which reflect the significant progress we're making in advancing our strategic priorities, including the continued integration of Exterin. Our recent results and progress to date also underscore that we have more work ahead of us to unlock the full potential of our combined company. Our global footprint, expanded product offerings, and deepened ability to serve the energy value chain is generating operational results that are less influenced by the economics, rig counts, and commodity prices of any single region or producing basin. During the first nine months of 2023, approximately 60% of Enerflex's gross margin was generated from recurring sources, and markets outside North America contributed 43% of the company's total gross margin during the same period. I'm pleased to report that we delivered strong operating results across all of our geographies. Integration and synergy realization activities related to the Exterin acquisition remain on track. Since closed Exterin has captured approximately $50 million, sorry, Enerflex has captured approximately $50 million U.S. of annual run rate synergies and expects to realize the remaining U.S. $10 million for a total of U.S. $60 million of anticipated synergies within the next six months. In addition, the company continues to review opportunities to optimize its geographic footprint and business platform. To this end, we are in the process of consolidating our global manufacturing facilities from five to three, and in the early part of the fourth quarter, completed the sale of two non-core assets for gross proceeds of approximately $40 million. We expect these actions combined with additional optimization efforts will drive cash flow, enable continued debt reduction, and enhance our ability to generate shareholder returns over the mid and long term. Touching briefly on the quarter, Interflex delivered adjusted EBITDA of $122 million and operating cash flow of $71 million, demonstrating the strength and continued momentum from our occurring businesses as well as the North American Engineered Systems product line. We recorded strong engineered systems bookings in the quarter of $560 million, bringing our year-to-date total in the first nine months of 2023 to $1.4 billion, an increase of approximately $500 million year-over-year. Our bookings reflect demand originating from three continents and highlight robust customer activity levels, particularly in North America and notably for cryogenic and low-carbon solutions. Our bookings during the first three quarters of 2023 include $153 million for cryogenic projects outside of North America and US $111 million related to projects that advance our energy transition business strategy. A record engineered systems backlog of $1.6 billion provides strong visibility into revenue generation and business activity levels for 2024. Energy infrastructure contributed approximately 40% of gross margin during the quarter. This business is generating stable results, and we continue to evaluate opportunities to maximize performance across our geographic platform. Our U.S. contract compression fleet is operating at high utilization rates of 93% in the quarter. The aftermarket services business is benefiting from increased activity levels, inflationary price adjustments, and continued strong demand for spare parts. We remain committed to enhancing our financial position and repaid $41 million of long-term debt in the quarter, which is consistent with our focus on strengthening the balance sheet and enhancing the company's financial flexibility. However, our reported long-term debt declined by only $5 million in the quarter due to the negative impact of a strengthening U.S. dollar versus Canadian dollar. On today's call, I also have the pleasure of introducing Preet Dhinza, who we announced as our interim CFO last month, and Jeff Federley is our new VP of Corporate Development and Investor Relations. Preet is a seasoned financial leader with more than 25 years of experience primarily in the energy and financial service industries. He brings a proven track record of leading large international finance organizations, including through post-merger integration activities. Jeff is well-known to many listeners as a well-regarded thought leader in energy equity analysis. I'm excited to be working with Jeff and Preet at this important time for our company, and am confident that their experience will serve Enerflex shareholders well. Before I turn the call over to Preet, I'd like to emphasize that the underlying macro drivers for our business are robust, with the ongoing focus on global energy security, the growing need for low emissions natural gas, resulting in a strong demand for Enerflex's energy infrastructure and energy transition solutions. As customers aim to decarbonize their operations, Enerflex is poised to capitalize on the growing demand for sustainable energy infrastructure through our vertically integrated natural gas, produced water treatment, and energy transition offerings. With that, I'll turn it over to Preet to speak to the financial highlights of the quarter and provide an update on Enerflex's outlook for the balance of 2023 and 2024.