img108263785_0.jpg

 

Interim Condensed Consolidated Financial Statements

Interim Condensed Consolidated Statements of Financial Position (unaudited)

 

($ United States millions)

Notes

 

June 30, 2025

 

 

December 31, 2024

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

71

 

 

$

92

 

Short-term investments

 

 

 

3

 

 

 

-

 

Accounts receivable

2a

 

 

417

 

 

 

398

 

Unbilled revenue

2b

 

 

174

 

 

 

157

 

Energy infrastructure (“EI”) assets - finance leases receivable

3b

 

 

48

 

 

 

49

 

Inventories

4

 

 

304

 

 

 

258

 

Inventories - work-in-progress ("WIP") related to EI assets - finance leases receivable

4

 

 

91

 

 

 

35

 

Income taxes receivable

 

 

 

5

 

 

 

3

 

Prepayments

 

 

 

35

 

 

 

49

 

Total current assets

 

 

 

1,148

 

 

 

1,041

 

Unbilled revenue

2b

 

 

2

 

 

 

2

 

Property, plant and equipment ("PP&E")

 

 

 

98

 

 

 

96

 

EI assets - operating leases

3a

 

 

695

 

 

 

713

 

EI assets - finance leases receivable

3b

 

 

174

 

 

 

189

 

Lease right-of-use assets

 

 

 

62

 

 

 

58

 

Deferred tax assets

 

 

 

19

 

 

 

24

 

Intangible assets

 

 

 

33

 

 

 

37

 

Goodwill

 

 

 

428

 

 

 

422

 

Other assets

5

 

 

225

 

 

 

209

 

Total assets

 

 

$

2,884

 

 

$

2,791

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

$

470

 

 

$

413

 

Provisions

 

 

 

21

 

 

 

22

 

Income taxes payable

 

 

 

54

 

 

 

79

 

Deferred revenue

6

 

 

395

 

 

 

375

 

Lease liabilities

 

 

 

24

 

 

 

22

 

Total current liabilities

 

 

 

964

 

 

 

911

 

Deferred revenue

6

 

 

11

 

 

 

11

 

Long-term debt

7

 

 

679

 

 

 

708

 

Lease liabilities

 

 

 

50

 

 

 

47

 

Deferred tax liabilities

 

 

 

39

 

 

 

48

 

Other liabilities

 

 

 

14

 

 

 

17

 

Total liabilities

 

 

$

1,757

 

 

$

1,742

 

Shareholders’ equity

 

 

 

 

 

 

 

Share capital

8

 

$

501

 

 

$

505

 

Contributed surplus

9

 

 

669

 

 

 

678

 

Retained earnings

 

 

 

157

 

 

 

80

 

Accumulated other comprehensive loss

 

 

 

(200

)

 

 

(214

)

Total shareholders’ equity

 

 

 

1,127

 

 

 

1,049

 

Total liabilities and shareholders’ equity

 

 

$

2,884

 

 

$

2,791

 

 

See accompanying notes to the unaudited interim condensed consolidated financial statements.

 

img108263785_1.jpg

F-1 img108263785_2.jpg

 

Interim Condensed Consolidated Statements of Earnings (Loss) and Other Comprehensive Income (Loss) (unaudited)

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

($ United States millions, except per share amounts)

Notes

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Revenue

10,12

 

$

615

 

 

$

614

 

 

$

1,167

 

 

$

1,252

 

Cost of goods sold ("COGS")

12

 

 

476

 

 

 

478

 

 

 

900

 

 

 

1,029

 

Gross margin

 

 

 

139

 

 

 

136

 

 

 

267

 

 

 

223

 

Selling, general and administrative expenses ("SG&A")

11,12

 

 

61

 

 

 

75

 

 

 

118

 

 

 

153

 

Foreign exchange ("FX") loss

 

 

 

2

 

 

 

3

 

 

 

2

 

 

 

4

 

Operating income

 

 

 

76

 

 

 

58

 

 

 

147

 

 

 

66

 

Equity earnings from associates and joint ventures

 

 

 

1

 

 

 

-

 

 

 

1

 

 

 

-

 

Loss on financial instruments

 

 

 

-

 

 

 

(3

)

 

 

(2

)

 

 

(8

)

Unrealized gain on redemption options

 

 

 

15

 

 

 

-

 

 

 

12

 

 

 

-

 

Earnings before finance costs and income taxes (“EBIT”)

 

 

 

92

 

 

 

55

 

 

 

158

 

 

 

58

 

Net finance costs

13

 

 

18

 

 

 

23

 

 

 

41

 

 

 

49

 

Earnings before income taxes (“EBT”)

 

 

 

74

 

 

 

32

 

 

 

117

 

 

 

9

 

Current income taxes

 

 

 

14

 

 

 

22

 

 

 

36

 

 

 

36

 

Deferred income taxes

 

 

 

-

 

 

 

5

 

 

 

(3

)

 

 

(14

)

Income taxes

 

 

 

14

 

 

 

27

 

 

 

33

 

 

 

22

 

Net earnings (loss)

 

 

$

60

 

 

$

5

 

 

$

84

 

 

$

(13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified to profit or loss in subsequent periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on derivatives designated as cash flow hedges
   transferred to net loss, net of income tax expense

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

1

 

Unrealized gain (loss) on translation of foreign-
   denominated debt

 

 

 

32

 

 

 

(6

)

 

 

32

 

 

 

(21

)

Unrealized gain (loss) on translation of financial
   statements of foreign operations

 

 

 

(23

)

 

 

-

 

 

 

(18

)

 

 

6

 

Other comprehensive income (loss)

 

 

 

9

 

 

 

(5

)

 

 

14

 

 

 

(14

)

Total comprehensive income (loss)

 

 

$

69

 

 

$

-

 

 

$

98

 

 

$

(27

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share – basic

 

 

$

0.49

 

 

$

0.04

 

 

$

0.68

 

 

$

(0.10

)

Earnings (loss) per share – diluted

 

 

$

0.49

 

 

$

0.04

 

 

$

0.68

 

 

$

(0.10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding – basic

 

 

 

123,279,297

 

 

 

124,015,516

 

 

 

123,709,917

 

 

 

123,986,511

 

Weighted average number of shares outstanding – diluted

 

 

 

123,401,390

 

 

 

124,116,924

 

 

 

123,926,989

 

 

 

123,986,511

 

 

See accompanying notes to the unaudited interim condensed consolidated financial statements.

 

img108263785_2.jpg F-2 Interim Condensed Consolidated Financial Statements

 

 

Interim Condensed Consolidated Statements of Cash Flows (unaudited)

 

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

($ United States millions)

Notes

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

 

$

60

 

 

$

5

 

 

$

84

 

 

$

(13

)

Items not requiring cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

42

 

 

 

48

 

 

 

81

 

 

 

92

 

Equity earnings from associates and joint ventures

 

 

 

(1

)

 

 

-

 

 

 

(1

)

 

 

-

 

Deferred income tax expense (recovery)

 

 

 

-

 

 

 

5

 

 

 

(3

)

 

 

(14

)

Share-based compensation expense

11

 

 

3

 

 

 

2

 

 

 

-

 

 

 

8

 

Loss on financial instruments

 

 

 

-

 

 

 

3

 

 

 

2

 

 

 

8

 

Unrealized gain on redemption options

 

 

 

(15

)

 

 

-

 

 

 

(12

)

 

 

-

 

 

 

 

 

89

 

 

 

63

 

 

 

151

 

 

 

81

 

Net change in working capital and other

15

 

 

(93

)

 

 

(51

)

 

 

(59

)

 

 

32

 

Cash (used in) provided by operating activities

 

 

$

(4

)

 

$

12

 

 

$

92

 

 

$

113

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to:

 

 

 

 

 

 

 

 

 

 

 

 

 

PP&E

 

 

$

(6

)

 

$

(4

)

 

$

(8

)

 

$

(7

)

EI assets - operating leases

3a

 

 

(28

)

 

 

(6

)

 

 

(40

)

 

 

(20

)

Intangible assets

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

(1

)

Proceeds on disposal of:

 

 

 

 

 

 

 

 

 

 

 

 

 

EI assets - operating leases

 

 

 

4

 

 

 

-

 

 

 

13

 

 

 

2

 

Net proceeds (purchases) of financial instruments

 

 

 

2

 

 

 

(3

)

 

 

(5

)

 

 

3

 

Net change in working capital associated with investing activities

 

 

 

18

 

 

 

(3

)

 

 

4

 

 

 

(1

)

Cash used in investing activities

 

 

$

(10

)

 

$

(17

)

 

$

(36

)

 

$

(24

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Net proceeds (repayment) of the Revolving Credit Facility

7

 

$

32

 

 

$

152

 

 

$

(42

)

 

$

90

 

Repayment of the Term Loan

 

 

 

-

 

 

 

(120

)

 

 

-

 

 

 

(130

)

Lease liability principal repayment

 

 

 

(5

)

 

 

(6

)

 

 

(11

)

 

 

(10

)

Dividends

 

 

 

(4

)

 

 

(3

)

 

 

(10

)

 

 

(5

)

Stock option exercises

 

 

 

1

 

 

 

1

 

 

 

1

 

 

 

1

 

Shares repurchased - NCIB

8, 9

 

 

(14

)

 

 

-

 

 

 

(14

)

 

 

-

 

Deferred transaction costs

 

 

 

-

 

 

 

(1

)

 

 

-

 

 

 

(1

)

Cash provided by (used in) financing activities

 

 

$

10

 

 

$

23

 

 

$

(76

)

 

$

(55

)

Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies

 

 

$

-

 

 

$

(2

)

 

$

(1

)

 

$

(3

)

(Decrease) Increase in cash and cash equivalents

 

 

 

(4

)

 

 

16

 

 

 

(21

)

 

 

31

 

Cash and cash equivalents, beginning of period

 

 

 

75

 

 

 

110

 

 

 

92

 

 

 

95

 

Cash and cash equivalents, end of period

 

 

$

71

 

 

$

126

 

 

$

71

 

 

$

126

 

 

See accompanying notes to the unaudited interim condensed consolidated financial statements.

 

img108263785_1.jpg

F-3 img108263785_2.jpg

 

 

Interim Condensed Consolidated Statements of Changes in Equity (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive losses

 

 

 

 

($ United States millions)

 

Share
capital

 

 

Contributed
surplus

 

 

Retained
earnings

 

 

Foreign currency
translation adjustments

 

 

Hedging
reserve

 

 

Total

 

At January 1, 2024

 

$

504

 

 

$

678

 

 

$

58

 

 

$

(185

)

 

$

(1

)

 

$

1,054

 

Net loss

 

 

-

 

 

 

-

 

 

 

(13

)

 

 

-

 

 

 

-

 

 

 

(13

)

Other comprehensive (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(15

)

 

 

1

 

 

 

(14

)

Effect of stock option plans

 

 

1

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

Dividends

 

 

-

 

 

 

-

 

 

 

(5

)

 

 

-

 

 

 

-

 

 

 

(5

)

 At June 30, 2024

 

$

505

 

 

$

678

 

 

$

40

 

 

$

(200

)

 

$

-

 

 

$

1,023

 

At January 1, 2025

 

$

505

 

 

$

678

 

 

$

80

 

 

$

(214

)

 

$

-

 

 

$

1,049

 

Net earnings

 

 

-

 

 

 

-

 

 

 

84

 

 

 

-

 

 

 

-

 

 

 

84

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14

 

 

 

-

 

 

 

14

 

Effect of stock option plans

 

 

2

 

 

 

(1

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1

 

Shares repurchased - NCIB

 

 

(6

)

 

 

(8

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(14

)

Dividends

 

 

-

 

 

 

-

 

 

 

(7

)

 

 

-

 

 

 

-

 

 

 

(7

)

 At June 30, 2025

 

$

501

 

 

$

669

 

 

$

157

 

 

$

(200

)

 

$

-

 

 

$

1,127

 

See accompanying notes to the unaudited interim condensed consolidated financial statements.

 

 

img108263785_2.jpg F-4 Interim Condensed Consolidated Financial Statements

 

 

 

img108263785_3.jpg

Notes to the Interim Condensed Consolidated

Financial Statements (unaudited)

(All amounts in millions of United States dollars, except per share amounts or as otherwise noted.)

Note 1. Summary of Material Accounting Policies

(a)
Statement of Compliance

These unaudited interim condensed consolidated financial statements (“Financial Statements”) have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements and were approved and authorized for issue by the Board of Directors (the “Board”) on August 6, 2025.

(b)
Basis of Presentation and Measurement

The Financial Statements for the three and six months ended June 30, 2025 and 2024 were prepared in accordance with IAS 34 “Interim Financial Reporting” and do not include all the disclosures included in the annual consolidated financial statements for the year ended December 31, 2024. Accordingly, these Financial Statements should be read in conjunction with the annual consolidated financial statements. Certain comparative figures have been reclassified to conform to the current period’s presentation.

Preparation of these Financial Statements requires Management to make judgments, estimates, and assumptions based on existing knowledge that affect the application of accounting policies and reported amounts and disclosures. Actual results could differ from these estimates and assumptions. In particular, the impact of geopolitical events, such as imposed tariffs in the North American market, could materially impact customer and supplier arrangements, as well as interest and inflation rates, resulting in increased volatility and near-term uncertainty. Management has, to the extent reasonable, incorporated known facts and circumstances into estimates made, however actual results could differ from those estimates and those differences could be material. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The Financial Statements are presented in United States dollars ("USD"), Enerflex Ltd. ("Enerflex" or the "Company") presentation currency, rounded to the nearest million except per share amounts or as otherwise noted. Transactions of the Company’s individual entities are recorded in their own functional currency based on the primary economic environment in which it operates. The Financial Statements are prepared on a going concern basis under the historical cost basis with certain financial assets and financial liabilities recorded at fair value. There have been no significant changes in accounting policies compared to those described in the annual consolidated financial statements for the year-ended December 31, 2024 except for the change as per note 1(c) below.

(c)
Change in Accounting Policies
i.
Amendments to Current Accounting Policies

IAS 21 The Effects of Changes in Foreign Exchange Rates (“IAS 21”)

In August 2023, the IASB issued amendments to IAS 21 which specify how an entity should assess whether a currency is exchangeable and how to estimate the spot exchange rate when a currency is not exchangeable.

Under the amendment, a currency is considered to be exchangeable into another currency when an entity is able to obtain the other currency within a timeframe that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations. When a currency is not exchangeable, an entity estimates the spot rate as the rate at which an orderly transaction would take place between market participants at the measurement date that would reflect the prevailing economic conditions.

 

img108263785_1.jpg

F-5 img108263785_2.jpg

 

 

An entity is required to disclose information that would enable users to evaluate when and how a currency's lack of exchangeability affects financial performance, financial positions, and cash flows of an entity.

The amendment is effective for annual periods beginning on or after January 1, 2025 and has been adopted by the Company. There was no adjustment that resulted from its adoption on January 1, 2025.

Note 2. Accounts Receivable and Unbilled Revenue

(a) Accounts Receivable

Accounts receivable consisted of the following:

 

June 30, 2025

 

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

$

413

 

 

$

400

 

 

 

 

 

 

 

 

Less: allowance for doubtful accounts

 

 

(11

)

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables, net

 

$

402

 

 

$

389

 

 

 

 

 

 

 

 

Other receivables

 

 

15

 

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

417

 

 

$

398

 

 

 

 

 

 

 

 

Aging of trade receivables:

 

June 30, 2025

 

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current to 90 days

 

$

330

 

 

$

308

 

 

 

 

 

 

 

 

Over 90 days

 

 

83

 

 

 

92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

$

413

 

 

$

400

 

 

 

 

 

 

 

 

(b) Unbilled Revenue

Movement in Unbilled Revenue was as follows:

 

 

Six months ended

 

 

Twelve months ended

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Opening balance

 

$

159

 

 

$

309

 

Unbilled revenue recognized

 

 

366

 

 

 

766

 

Amounts billed

 

 

(351

)

 

 

(753

)

Transfer to other assets

 

 

-

 

 

 

(161

)

Currency translation effects

 

 

2

 

 

 

(2

)

Closing balance

 

$

176

 

 

$

159

 

 

 

 

 

 

 

 

Current unbilled revenue

 

$

174

 

 

$

157

 

Non-current unbilled revenue

 

 

2

 

 

 

2

 

Total unbilled revenue

 

$

176

 

 

$

159

 

 

 

img108263785_2.jpg F-6 Notes to the Interim Condensed Consolidated Financial Statements

 

 

 

Note 3. Energy Infrastructure Assets

The Company’s EI assets are comprised of Build-Own-Operate-Maintain (“BOOM”) assets and contract compression assets which are leased to client partners. At the inception of a lease contract, all leases are classified as either an operating lease or a finance lease in accordance with IFRS.

(a)
EI Assets – Operating Leases

EI assets under lease arrangements that are classified and accounted for as operating leases are stated at cost less accumulated depreciation and impairment losses. The estimated useful lives of these assets are generally between five and 30 years.

A reconciliation of the changes in the carrying amount of EI assets is as follows:

 

 

Six months ended

 

 

Twelve months ended

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Cost

 

 

 

 

 

 

Balance, January 1

 

$

1,059

 

 

$

1,142

 

Additions

 

 

40

 

 

 

59

 

Disposals1

 

 

(7

)

 

 

(119

)

Currency translation effects

 

 

11

 

 

 

(23

)

Total cost

 

$

1,103

 

 

$

1,059

 

Accumulated depreciation

 

 

 

 

 

 

Balance, January 1

 

$

(346

)

 

$

(278

)

Depreciation charge

 

 

(55

)

 

 

(111

)

Impairment

 

 

-

 

 

 

(1

)

Disposals1

 

 

2

 

 

 

27

 

Currency translation effects

 

 

(9

)

 

 

17

 

Total accumulated depreciation

 

$

(408

)

 

$

(346

)

Net book value

 

$

695

 

 

$

713

 

1 During the three months ended March 31, 2024, disposals include reclassification of a BOOM asset from an operating to a finance lease as a result of a contract modification.

Depreciation of EI assets - operating leases included in COGS for the three and six months ended June 30, 2025, was $29 million and $55 million (June 30, 2024 - $30 million and $56 million).

During the three and six months ended June 30, 2025, the Company recognized $50 million and $100 million of revenue related to operating leases in its Latin America (“LATAM”) and Eastern Hemisphere (“EH”) segments (June 30, 2024 – $58 million and $111 million), and $37 million and $74 million of revenue related to its North America (“NAM”) contract compression fleet (June 30, 2024 – $35 million and $71 million).

A summary of the carrying amount of EI assets by reporting segment is as follows:

EI assets - operating leases

 

June 30, 2025

 

 

December 31, 2024

 

NAM

 

$

295

 

 

$

286

 

LATAM

 

 

175

 

 

 

185

 

EH

 

 

225

 

 

 

242

 

Closing balance

 

$

695

 

 

$

713

 

 

 

img108263785_1.jpg

F-7 img108263785_2.jpg

 

 

(b)
EI Assets - Finance Leases Receivable

Lease arrangements for certain EI assets are considered finance leases when the risks and rewards of ownership are transferred to the lessee, which generally occurs in the following circumstances: ownership of the lease is transferred to the lessee by the end of the lease term; the lessee has the option to purchase the leased asset at a price that is sufficiently lower than the fair value at the date the option becomes exercisable for it to be reasonably certain, at the inception date, that option will be exercised; the term of the lease is for the major part of the economic life of the asset; or the present value of the lease payments amounts to substantially all of the fair value of the asset.

The majority of Enerflex's finance leases, which are primarily attributable to the EH reporting segment, have an initial term ranging from five to 10 years.

A summary of the gross and present value of future lease payments to be received under the Company's finance leases is shown below:

 

 

 

Minimum lease payments and unguaranteed
residual value

 

 

Present value of minimum lease payments and
unguaranteed residual value

 

 

 

June 30, 2025

 

 

December 31, 2024

 

 

June 30, 2025

 

 

December 31, 2024

 

Less than one year

 

$

50

 

 

$

49

 

 

$

48

 

 

$

49

 

Between one and five years

 

 

186

 

 

 

188

 

 

 

148

 

 

 

145

 

Greater than five years

 

 

45

 

 

 

54

 

 

 

26

 

 

 

44

 

 

 

$

281

 

 

$

291

 

 

$

222

 

 

$

238

 

Less: Unearned interest revenue

 

 

(59

)

 

 

(53

)

 

 

-

 

 

 

-

 

Closing balance

 

$

222

 

 

$

238

 

 

$

222

 

 

$

238

 

 

 

 

 

 

 

 

Six months ended

 

 

Twelve months ended

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Opening balance

 

$

238

 

 

$

204

 

Additions1

 

 

-

 

 

 

87

 

Interest revenue

 

 

9

 

 

 

22

 

Payments (principal and interest)

 

 

(25

)

 

 

(73

)

Other

 

 

-

 

 

 

(2

)

Closing balance

 

$

222

 

 

$

238

 

1During the three months ended March 31, 2024, additions included the conversion of a BOOM asset, which was previously accounted for as an operating lease, to a finance lease as a result of a contract modification.

The Company recognized non-cash selling profit related to the commencement of finance leases of nil for the three and six months ended June 30, 2025 (June 30, 2024 – less than $1 million and $3 million).

The average interest rates implicit in the leases are fixed at the contract date for the entire lease term. At June 30, 2025, the average interest rate was 7.6% per annum (December 31, 2024 – 7.6%). The finance leases receivable at the end of the reporting period were neither past due nor impaired.

 

 

 

img108263785_2.jpg F-8 Notes to the Interim Condensed Consolidated Financial Statements

 

 

 

Note 4. Inventories

Inventories consisted of the following:

 

 

June 30, 2025

 

 

December 31, 2024

 

Direct materials

 

$

115

 

 

$

85

 

Repair and distribution parts

 

 

97

 

 

 

94

 

Work-in-progress

 

 

75

 

 

 

62

 

Equipment

 

 

17

 

 

 

17

 

Total inventories

 

$

304

 

 

$

258

 

 

 

 

June 30, 2025

 

 

December 31, 2024

 

WIP related to EI assets - finance leases receivable

 

$

91

 

 

$

35

 

 

COGS includes inventory write-downs pertaining to obsolescence and aging, and recoveries of past write-downs upon disposition. The net change in inventory reserves charged to consolidated statements of earnings (loss) and included in COGS for three and six months ended June 30, 2025 was $1 million and $2 million (June 30, 2024 - $1 million and $1 million).

 

The cost related to construction of EI assets determined to be finance leases are accounted for as work-in-progress related to finance leases. Once a project is completed and enters service it is classified to COGS.

Note 5. Other Assets

Other assets comprise of the following:

 

 

June 30, 2025

 

 

December 31, 2024

 

Project asset

 

$

161

 

 

$

161

 

Investment in associates and joint ventures

 

 

28

 

 

 

26

 

Redemption option

 

 

29

 

 

 

17

 

Prepaid deposits

 

 

7

 

 

 

5

 

Total other assets

 

$

225

 

 

$

209

 

 

Note 6. Deferred Revenue

Changes in deferred revenue were as follows:

 

 

Six months ended

 

 

Twelve months ended

 

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

 

 

 

 

 

Opening balance

 

$

386

 

 

$

319

 

 

 

 

 

 

 

 

Cash received in advance of revenue recognition

 

 

274

 

 

 

1,067

 

 

 

 

 

 

 

 

Revenue subsequently recognized

 

 

(256

)

 

 

(996

)

 

 

 

 

 

 

 

Currency translation effects

 

 

2

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Closing balance

 

$

406

 

 

$

386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current deferred revenue

 

$

395

 

 

$

375

 

 

 

 

 

 

 

 

Non-current deferred revenue

 

 

11

 

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

$

406

 

 

$

386

 

 

 

 

 

 

 

 

 

 

img108263785_1.jpg

F-9 img108263785_2.jpg

 

 

Note 7. Long-Term Debt

Long-term debt is comprised of USD denominated Senior Secured Notes (the "Notes") and the three-year secured revolving credit facility (“RCF”) with both USD and Canadian dollar ("CAD") components.

Composition of the borrowings on the Notes and RCF were as follows.

 

 

 

Maturity Date

 

June 30, 2025

 

 

December 31, 2024

 

Notes

 

October 15, 2027

 

$

563

 

 

$

563

 

Drawings on the RCF

 

October 13, 2026

 

 

154

 

 

 

191

 

 

 

 

 

 

717

 

 

 

754

 

Deferred transaction costs and Notes discount

 

 

 

 

(38

)

 

 

(46

)

Long-term debt

 

 

 

$

679

 

 

$

708

 

 

 

 

 

 

 

 

 

 

Non-current portion of long-term debt

 

 

 

 

679

 

 

 

708

 

Long-term debt

 

 

 

$

679

 

 

$

708

 

 

The Notes have a maturity date of October 15, 2027 and bear interest at 9.0% per annum payable semi-annually in arrears.

The RCF has a maturity date of October 13, 2026 (the "Maturity Date"). The Company's limit under the RCF is $800 million, which may be increased by $50 million at the request of the Company, subject to the lenders’ consent.

Subsequent to June 30, 2025, Enerflex entered into an agreement to extend the maturity date of its RCF by three years to July 11, 2028, the availability remained unchanged at $800 million.

As part of the RCF, the Company can request issuance of up to $150 million in letters of guarantee, standby letters of credit, performance bonds, counter guarantees, import documentary credits, country standby letters of credit, or similar credits to finance the day-to-day operations of the Company. As at June 30, 2025, the Company utilized $87 million of this $150 million limit. The Company has an additional $70 million unsecured credit facility (“LC Facility”) with one of the lenders in its RCF. This LC Facility allows the Company request the same forms of credits as under the RCF. This LC Facility is supported by performance security guarantees provided by Export Development Canada. As at June 30, 2025, the Company had utilized $29 million of the $70 million available limit.

The weighted average interest rate on the RCF for the three months ended June 30, 2025 was 6.0% (December 31, 2024 - 7.4%). At June 30, 2025, without considering renewal at similar terms, the USD equivalent principal payments due over the next five years are $717 million, and nil thereafter.

The Company is required to maintain certain covenants on the RCF and the Notes. As at June 30, 2025, the Company was in compliance with its covenants, as shown below:

 

 

 

 

For the six months ended June 30,

 

2025

 

 

2024

 

 

Requirement

 

Performance

 

 

Performance

Senior secured net funded debt to EBITDA ratio1 – Maximum

 

2.5x

 

 

0.2

x

 

0.5x

Bank-adjusted net debt to EBITDA ratio2 – Maximum

 

4.0x

 

 

1.3

x

 

2.2x

Interest coverage ratio3 – Minimum

 

2.5x

 

 

5.4

x

 

3.9x

1 Senior secured net funded debt to EBITDA is defined as borrowings under the RCF less cash and cash equivalents, divided by trailing 12-month EBITDA as defined by the Company’s lenders.

2 Bank-adjusted net debt to EBITDA is defined as borrowings under the RCF and Notes less cash and cash equivalents, divided by the trailing 12-month EBITDA as defined by the Company’s lenders.

3 Interest coverage ratio is calculated by dividing the trailing 12-month EBITDA, as defined by the Company’s lenders, by interest expense over the same timeframe.

 

img108263785_2.jpg F-10 Notes to the Interim Condensed Consolidated Financial Statements

 

 

 

Note 8. Share Capital

The Company is authorized to issue an unlimited number of common shares without par value. Share capital comprises only one class of ordinary shares, carrying one voting right and one right to a dividend.

Changes in share capital were as follows:

Issued and Outstanding

 

Six months ended June 30, 2025

 

 

Twelve months ended December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of common shares

 

 

Common share capital

 

 

Number of common shares

 

 

Common share capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Opening balance

 

 

124,143,179

 

 

$

505

 

 

 

123,956,865

 

 

$

504

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

309,849

 

 

 

2

 

 

 

186,314

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares repurchased - NCIB

 

 

(1,875,000

)

 

 

(6

)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Closing balance

 

 

122,578,028

 

 

$

501

 

 

 

124,143,179

 

 

$

505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Enerflex announced on March 28, 2025 that the Toronto Stock Exchange ("TSX") approved the Company's application to implement a Normal Course Issuer Bid ("NCIB") for a portion of its common shares. Under the NCIB, the Company is authorized to acquire up to a maximum of 6,159,695 common shares or approximately 5% of its public float as at the application date, for cancelation.

The NCIB commenced on April 1, 2025 and will terminate no later than March 31, 2026. Purchases under the NCIB will be made in accordance with applicable regulatory requirements at a price per common share representative of the market price at the time of acquisition.

Enerflex entered into an automatic share purchase plan ("ASPP") with its designated broker that allows for the purchase of common shares during quarterly predetermined blackout periods and other periods when Enerflex may be in possession of material undisclosed information and would not ordinarily be permitted to purchase common shares. Purchases under the ASPP are determined by the designated broker in its sole discretion based on purchasing parameters set by Enerflex when Enerflex is not in blackout and in accordance with the rules of the Toronto Stock Exchange (“TSX”), applicable securities laws and the terms of the ASPP. Outside of the periods noted above, purchases under the NCIB will be completed at Enerflex's discretion and pursuant to the terms of the ASPP, as may be amended from time to time in accordance with the terms of the ASPP. All common shares purchased under the NCIB will be canceled. The Company intends to fund the purchases out of its available resources.

During the three months ended June 30, 2025, the Company repurchased 1,899,200 common shares and cancelled 1,875,000 of those common shares. The shares were purchased at a volume weighted average price of CAD $10.08 per common share for a total of $14 million. Contributed surplus was reduced by $8 million, which represents the excess of the purchase price of the common shares over their carrying value.

Note 9. Contributed Surplus

Contributed surplus consists of accumulated stock options less the fair value of the exercised options at the grant date, reclassified to share capital, and repurchase of shares through the NCIB.

Changes in contributed surplus were as follows:

 

 

June 30, 2025

 

 

December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Opening balance

 

$

678

 

 

$

678

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

(1

)

 

 

-

 

 

 

 

 

 

 

 

Shares repurchased - NCIB

 

 

(8

)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Closing balance

 

$

669

 

 

$

678

 

 

 

 

 

 

 

 

 

 

img108263785_1.jpg

F-11 img108263785_2.jpg

 

 

Note 10. Revenue

Revenue by product line was as follows:

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Energy Infrastructure ("EI")

 

$

147

 

 

$

141

 

 

$

300

 

 

$

370

 

After-Market Services ("AMS")

 

 

124

 

 

 

127

 

 

 

244

 

 

 

248

 

Engineered Systems ("ES")

 

 

344

 

 

 

346

 

 

 

623

 

 

 

634

 

Total revenue

 

$

615

 

 

$

614

 

 

$

1,167

 

 

$

1,252

 

 

 

Revenue by geographic location, which is based on destination of sale, was as follows:

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

United States

 

$

277

 

 

$

255

 

 

$

523

 

 

$

537

 

Canada

 

 

88

 

 

 

92

 

 

 

164

 

 

 

151

 

Argentina

 

 

46

 

 

 

40

 

 

 

103

 

 

 

76

 

Oman

 

 

31

 

 

 

32

 

 

 

63

 

 

 

157

 

Nigeria

 

 

33

 

 

 

40

 

 

 

61

 

 

 

58

 

Australia

 

 

17

 

 

 

15

 

 

 

35

 

 

 

33

 

Mexico

 

 

18

 

 

 

18

 

 

 

34

 

 

 

31

 

Brazil

 

 

15

 

 

 

16

 

 

 

29

 

 

 

31

 

Bahrain

 

 

14

 

 

 

10

 

 

 

29

 

 

 

21

 

Mozambique

 

 

21

 

 

 

-

 

 

 

21

 

 

 

-

 

Others

 

 

55

 

 

 

96

 

 

 

105

 

 

 

157

 

Total revenue

 

$

615

 

 

$

614

 

 

$

1,167

 

 

$

1,252

 

For the six months ended June 30, 2025, the Company had no individual customer which accounted for more than 10% of its revenue (June 30, 2024 – nil).

 

The following table outlines the Company’s unsatisfied performance obligations, by product line, as at June 30, 2025:

 

 

Less than one year

 

 

One to two years

 

 

Greater than two years

 

 

Total

 

EI

 

$

447

 

 

$

324

 

 

$

691

 

 

$

1,462

 

AMS

 

 

89

 

 

 

33

 

 

 

67

 

 

 

189

 

ES

 

 

1,181

 

 

 

39

 

 

 

7

 

 

 

1,227

 

 Total

 

$

1,717

 

 

$

396

 

 

$

765

 

 

$

2,878

 

 

Note 11. Selling, General and Administrative Expenses

SG&A expenses comprise of costs incurred by the Company to support the business operations that are not directly attributable to the production of goods or services.

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Core SG&A1

 

$

52

 

 

$

62

 

 

$

106

 

 

$

120

 

Share-based compensation

 

 

3

 

 

 

2

 

 

 

-

 

 

 

8

 

Depreciation and amortization

 

 

6

 

 

 

11

 

 

 

12

 

 

 

23

 

Bad debt expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2

 

Total SG&A

 

$

61

 

 

$

75

 

 

$

118

 

 

$

153

 

1 Core SG&A is primarily comprised of compensation, third-party services, and information technology expenses.

 

img108263785_2.jpg F-12 Notes to the Interim Condensed Consolidated Financial Statements

 

 

 

Note 12. Segmented Information

The Company has identified three reporting segments for external reporting:

•
NAM consists of operations in Canada and the U.S.
•
LATAM consists of operations in Argentina, Bolivia, Brazil, Colombia, Mexico, and Peru.
•
EH consists of operations in the Middle East, Africa, Europe, Australia, and Asia.

Each segment generates revenue from the EI, AMS, and ES product lines.

The accounting policies, determination of reportable operating segments, and allocation of corporate overheads is consistent with those disclosed in Note 3 "Summary of Material Accounting Policies" of the Company's annual consolidated financial statements for the year-ended December 31, 2024.

The following tables provide operating results for the Company’s reportable segments.

 

 

 

NAM

 

 

LATAM

 

 

EH

 

 

Total

 

Three months ended June 30,

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Segment revenue

 

$

435

 

 

$

439

 

 

$

89

 

 

$

100

 

 

$

93

 

 

$

97

 

 

$

617

 

 

$

636

 

Intersegment revenue

 

 

(2

)

 

 

(20

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2

)

 

 

(2

)

 

 

(22

)

Revenue

 

 

433

 

 

 

419

 

 

 

89

 

 

 

100

 

 

 

93

 

 

 

95

 

 

 

615

 

 

 

614

 

EI

 

 

38

 

 

 

37

 

 

 

69

 

 

 

63

 

 

 

40

 

 

 

41

 

 

 

147

 

 

 

141

 

AMS

 

 

64

 

 

 

72

 

 

 

15

 

 

 

16

 

 

 

45

 

 

 

39

 

 

 

124

 

 

 

127

 

ES

 

 

331

 

 

 

310

 

 

 

5

 

 

 

21

 

 

 

8

 

 

 

15

 

 

 

344

 

 

 

346

 

Revenue

 

 

433

 

 

 

419

 

 

 

89

 

 

 

100

 

 

 

93

 

 

 

95

 

 

 

615

 

 

 

614

 

EI

 

 

21

 

 

 

21

 

 

 

45

 

 

 

50

 

 

 

28

 

 

 

25

 

 

 

94

 

 

 

96

 

AMS

 

 

52

 

 

 

58

 

 

 

11

 

 

 

11

 

 

 

35

 

 

 

31

 

 

 

98

 

 

 

100

 

ES

 

 

273

 

 

 

247

 

 

 

5

 

 

 

17

 

 

 

6

 

 

 

18

 

 

 

284

 

 

 

282

 

COGS1

 

 

346

 

 

 

326

 

 

 

61

 

 

 

78

 

 

 

69

 

 

 

74

 

 

 

476

 

 

 

478

 

EI

 

 

17

 

 

 

16

 

 

 

24

 

 

 

13

 

 

 

12

 

 

 

16

 

 

 

53

 

 

 

45

 

AMS

 

 

12

 

 

 

14

 

 

 

4

 

 

 

5

 

 

 

10

 

 

 

8

 

 

 

26

 

 

 

27

 

ES

 

 

58

 

 

 

63

 

 

 

-

 

 

 

4

 

 

 

2

 

 

 

(3

)

 

 

60

 

 

 

64

 

Gross Margin

 

 

87

 

 

 

93

 

 

 

28

 

 

 

22

 

 

 

24

 

 

 

21

 

 

 

139

 

 

 

136

 

SG&A1

 

 

35

 

 

 

43

 

 

 

9

 

 

 

16

 

 

 

17

 

 

 

16

 

 

 

61

 

 

 

75

 

FX (gain) loss

 

 

2

 

 

 

-

 

 

 

(1

)

 

 

3

 

 

 

1

 

 

 

-

 

 

 

2

 

 

 

3

 

Operating income

 

$

50

 

 

$

50

 

 

$

20

 

 

$

3

 

 

$

6

 

 

$

5

 

 

$

76

 

 

$

58

 

1 Depreciation and amortization for the reporting segments are recorded in COGS and SG&A. During the three months ended June 30, 2025 the amount of depreciation and amortization in NAM was $15 million (June 30, 2024 – $18 million); LATAM was $10 million (June 30, 2024 – $17 million); and EH was $17 million (June 30, 2024 – $13 million).

 

 

NAM

 

 

LATAM

 

 

EH

 

 

Total

 

Six months ended June 30,

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Segment revenue

 

$

803

 

 

$

824

 

 

$

191

 

 

$

184

 

 

$

182

 

 

$

283

 

 

$

1,176

 

 

$

1,291

 

Intersegment revenue

 

 

(8

)

 

 

(36

)

 

 

-

 

 

 

-

 

 

 

(1

)

 

 

(3

)

 

 

(9

)

 

 

(39

)

Revenue

 

 

795

 

 

 

788

 

 

 

191

 

 

 

184

 

 

 

181

 

 

 

280

 

 

 

1,167

 

 

 

1,252

 

EI

 

 

74

 

 

 

73

 

 

 

143

 

 

 

120

 

 

 

83

 

 

 

177

 

 

 

300

 

 

 

370

 

AMS

 

 

124

 

 

 

138

 

 

 

35

 

 

 

30

 

 

 

85

 

 

 

80

 

 

 

244

 

 

 

248

 

ES

 

 

597

 

 

 

577

 

 

 

13

 

 

 

34

 

 

 

13

 

 

 

23

 

 

 

623

 

 

 

634

 

Revenue

 

 

795

 

 

 

788

 

 

 

191

 

 

 

184

 

 

 

181

 

 

 

280

 

 

 

1,167

 

 

 

1,252

 

EI

 

 

39

 

 

 

38

 

 

 

96

 

 

 

89

 

 

 

55

 

 

 

146

 

 

 

190

 

 

 

273

 

AMS

 

 

104

 

 

 

114

 

 

 

25

 

 

 

21

 

 

 

65

 

 

 

62

 

 

 

194

 

 

 

197

 

ES

 

 

495

 

 

 

468

 

 

 

11

 

 

 

28

 

 

 

10

 

 

 

63

 

 

 

516

 

 

 

559

 

COGS1

 

 

638

 

 

 

620

 

 

 

132

 

 

 

138

 

 

 

130

 

 

 

271

 

 

 

900

 

 

 

1,029

 

EI

 

 

35

 

 

 

35

 

 

 

47

 

 

 

31

 

 

 

28

 

 

 

31

 

 

 

110

 

 

 

97

 

AMS

 

 

20

 

 

 

24

 

 

 

10

 

 

 

9

 

 

 

20

 

 

 

18

 

 

 

50

 

 

 

51

 

ES

 

 

102

 

 

 

109

 

 

 

2

 

 

 

6

 

 

 

3

 

 

 

(40

)

 

 

107

 

 

 

75

 

Gross Margin

 

 

157

 

 

 

168

 

 

 

59

 

 

 

46

 

 

 

51

 

 

 

9

 

 

 

267

 

 

 

223

 

SG&A1

 

 

67

 

 

 

85

 

 

 

19

 

 

 

29

 

 

 

32

 

 

 

39

 

 

 

118

 

 

 

153

 

FX (gain) loss

 

 

2

 

 

 

-

 

 

 

(1

)

 

 

4

 

 

 

1

 

 

 

-

 

 

 

2

 

 

 

4

 

Operating income (loss)

 

$

88

 

 

$

83

 

 

$

41

 

 

$

13

 

 

$

18

 

 

$

(30

)

 

$

147

 

 

$

66

 

1 Depreciation and amortization for the reporting segments are recorded in COGS and SG&A. During the six months ended June 30, 2025 the amount of depreciation and amortization in NAM was $31 million (June 30, 2024 –$36 million); LATAM was $21 million (June 30, 2024 – $27 million); and EH was $29 million (June 30, 2024 – $29 million).

 

img108263785_1.jpg

F-13 img108263785_2.jpg

 

 

Note 13. Finance Costs and Income

Net finance costs were comprised of the following:

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Interest on debt

 

$

16

 

 

$

22

 

 

$

32

 

 

$

45

 

Accretion of Notes discount

 

 

2

 

 

 

2

 

 

 

4

 

 

 

4

 

Lease interest expense

 

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

Other interest expense

 

 

-

 

 

 

-

 

 

 

5

 

 

 

1

 

Total finance costs

 

$

19

 

 

$

25

 

 

$

43

 

 

$

52

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance Income

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1

 

 

 

2

 

 

 

2

 

 

 

3

 

Net finance costs

 

$

18

 

 

$

23

 

 

$

41

 

 

$

49

 

 

Note 14. Financial Instruments

The Company's financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, certain portion of other assets, derivative instruments, accounts payable, and borrowings under the long-term debt.

Designation and Fair Value of Financial Instruments

The Company's financial instruments at June 30, 2025 were designated and valued in the same manner as they were at December 31, 2024. Accordingly, with the exception of borrowings under the long-term debt, the estimated fair values of the Company's financial instruments approximated their carrying values at June 30, 2025.

The carrying value and estimated fair value of borrowings under the long-term debt as at June 30, 2025, was $679 million and $774 million, respectively (December 31, 2024 - $708 million and $804 million, respectively). The fair value of the Notes at June 30, 2025, was determined on a discounted cash flow basis with a weighted average discount rate of 5.2% (December 31, 2024 – 6.3%), while the fair value of the RCF approximates the amount outstanding under the RCF.

Derivative Financial Instruments and Hedge Accounting

Foreign exchange contracts are transacted with financial institutions to hedge foreign currency denominated obligations and cash receipts related to purchases of inventory and sales of products.

The following table summarizes the Company’s commitments to buy and sell foreign currencies at June 30, 2025

 

 

 

Notional amount

 

 

Maturity

Canadian Dollar Denominated Contracts

 

 

 

 

 

 

 

Purchase contracts

 

USD

 

$

24

 

 

July 2025 - Jan 2027

Sales contracts

 

USD

 

$

(5

)

 

July 2025 - July 2027

At June 30, 2025 the fair value of derivative financial instruments classified as financial assets was less than $1 million, and as financial liabilities was less than $1 million (December 31, 2024 - less than $1 million and less than $1 million).

Foreign Currency Exposure

The functional currency of the parent Company is CAD while the functional currency of the majority of the Company's subsidiaries is USD. The parent Company is therefore exposed to fluctuations of the CAD against the USD on its net investment in the USD functional subsidiaries. The Company hedges this exposure via a net investment hedge by designating a portion of the Company's USD borrowings as a hedging instrument. As a result, foreign exchange gains and losses on translation of $509 million in designated USD borrowings are included in accumulated other comprehensive losses for the three months ended June 30, 2025. The cumulative currency translation adjustments will be recognized in net earnings when there has been a reduction in the net investment in the foreign operations. If the CAD were to weaken by 5%, the Company could experience additional foreign exchange losses on its USD borrowings of approximately $25 million, which would be recorded in the consolidated statement of other comprehensive income (loss).

 

img108263785_2.jpg F-14 Notes to the Interim Condensed Consolidated Financial Statements

 

 

 

Note 15. Supplemental Cash Flow Information

Changes in working capital and other during the period:

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Accounts receivable1

 

$

(37

)

 

$

18

 

 

$

(17

)

 

$

8

 

Unbilled revenue

 

 

(11

)

 

 

(58

)

 

 

(17

)

 

 

(67

)

EI assets - finance leases receivable

 

 

8

 

 

 

11

 

 

 

16

 

 

 

26

 

Inventories

 

 

(35

)

 

 

(1

)

 

 

(46

)

 

 

(5

)

Inventories - WIP related to EI assets - finance leases receivable

 

 

(37

)

 

 

(2

)

 

 

(56

)

 

 

(3

)

Income taxes receivable

 

 

(1

)

 

 

2

 

 

 

(2

)

 

 

(2

)

Prepayments

 

 

4

 

 

 

2

 

 

 

14

 

 

 

7

 

Net assets held for sale

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2

 

Accounts payable and accrued liabilities and provisions2

 

 

40

 

 

 

(4

)

 

 

53

 

 

 

20

 

Income taxes payable

 

 

(19

)

 

 

3

 

 

 

(25

)

 

 

14

 

Deferred revenue

 

 

(6

)

 

 

(27

)

 

 

20

 

 

 

41

 

Other current liabilities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6

)

Foreign currency and other

 

 

1

 

 

 

5

 

 

 

1

 

 

 

(3

)

Net change in working capital and other

 

$

(93

)

 

$

(51

)

 

$

(59

)

 

$

32

 

1 Change in accounts receivable represents only the portions relating to operating activities.

2 Change in accounts payable and accrued liabilities and provisions represents only the portion relating to operating activities.

 

Cash interest and taxes paid and received during the period:

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Interest paid – short- and long-term borrowings

 

$

29

 

 

$

36

 

 

$

33

 

 

$

45

 

Interest paid – lease liabilities

 

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

Total interest paid

 

$

30

 

 

$

37

 

 

$

35

 

 

$

47

 

Interest received

 

 

1

 

 

 

1

 

 

 

2

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes paid

 

 

35

 

 

 

14

 

 

 

63

 

 

 

21

 

 

Note 16. Guarantees, Commitments, and Contingencies

Guarantees

At June 30, 2025, the Company had outstanding letters of credit of $116 million (December 31, 2024 – $116 million). Of the total outstanding letters of credit, $87 million (December 31, 2024 – $87 million) are funded from the RCF and $29 million (December 31, 2024 – $29 million) are funded from the $70 million LC Facility.

Commitments

The Company has purchase obligations over the next three years as follows:

 2025

 

$

417

 

 2026

 

 

129

 

 2027

 

 

22

 

 

Legal Proceedings

The Company or certain of its subsidiaries are involved in or subject to, in the normal course of business, lawsuits, claims and other legal proceedings that seek, among other things, compensation for alleged personal injury, breach of contract, property damage or other losses, punitive damages, civil penalties, or injunctive or declaratory relief. Some lawsuits, claims and legal proceedings involve acquired or disposed assets with respect to which a third party, the Company, or its subsidiary retains liability or indemnifies the other party for conditions that existed prior to the transaction. In accordance with

 

img108263785_1.jpg

F-15 img108263785_2.jpg

 

 

applicable accounting guidance, Enerflex and its subsidiaries accrue reserves for outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. The Company does not currently expect that any of the outstanding lawsuits, claims or legal proceedings will have a material adverse effect on Enerflex, including its consolidated financial position, results of operations or cash flows. Although Enerflex’s expectations and estimates are based on information known about the legal matters and its experience in contesting, litigating and settling similar matters, the results of any outstanding lawsuits, claims and other legal proceedings are inherently uncertain, and there can be no assurance that monetary damages, fines, penalties or injunctive relief resulting from adverse judgments or settlements in some or all of these outstanding lawsuits, claims or legal proceedings will not have a material adverse effect on Enerflex, including its consolidated financial position, results of operations or cash flows. The Company will reassess the probability and estimability of contingent losses as new information becomes available in these proceedings or otherwise.

As previously disclosed, in response to a fatal attack at an adjacent site in the second quarter of 2024, Enerflex declared Force Majeure on the EH project, suspended activity at the project site, and demobilized its personnel. Enerflex subsequently received notice from its customer purporting to terminate the project contract and commencing arbitration proceedings against Enerflex alleging breach of the project contract. Pursuant to the rules for arbitration agreed between Enerflex and its customer, the content of the proceedings is confidential and not otherwise publicly available. In Q4 2024, Enerflex delivered notice to the customer terminating the project contract, citing contractual rights relating to the continuing Force Majeure situation and circumstances that made it impossible for Enerflex to fulfill its obligations. Enerflex has brought a counterclaim against the customer to recover amounts owing to Enerflex following Enerflex’s termination of the project contract. As at June 30, 2025, the carrying value of the remaining assets associated with the project on the Company’s consolidated statement of financial position was $161 million. Notwithstanding its termination of the project contract, Enerflex maintains a $31 million Letter of Credit in support of its obligation under the project contract. Enerflex would view any drawing of the financial security in the prevailing circumstances as improper and would be considered as an additional amount owed by the customer.

In Q2 2025, the customer filed its Statement of Case in the arbitration alleging claims against Enerflex. Enerflex disputes these allegations and asserts that it acted in accordance with the project contract. Given the preliminary stage of the proceedings and the inherent uncertainty of arbitration, the final resolution of the arbitration is unknown and there can be no assurance that the outcome will not have a material adverse effect on Enerflex, including its consolidated financial position, results of operations or cash flows. Enerflex intends to vigorously defend itself against the customer’s claims while pursuing its own counterclaims against the customer as part of the arbitration.

Note 17. Seasonality

The energy sector in Canada and in some parts of the U.S. has a distinct seasonal trend in activity levels which results from well-site access and drilling pattern adjustments to take advantage of weather conditions. Generally, the Company has experienced higher revenue in the fourth quarter of each year related to these seasonal trends. Revenue is also impacted by both the Company’s and its customer’s capital investment decisions. The LATAM and EH segments are not significantly impacted by seasonal variations, while certain parts of the U.S. can be impacted by seasonal trends depending on customer activity, demand, and location. Variations from these trends usually occur when hydrocarbon energy fundamentals are either improving or deteriorating.

Note 18. Subsequent Events

Subsequent to June 30, 2025, Enerflex declared a quarterly dividend of CAD $0.0375 per share, payable on September 2, 2025 to shareholders of record on August 18, 2025. The Board will continue to evaluate dividend payments on a quarterly basis, based on availability of cash flow, anticipated market conditions, and the general needs of the business.

 

img108263785_2.jpg F-16 Notes to the Interim Condensed Consolidated Financial Statements

 

 

 

img108263785_4.jpg

 

 

img108263785_5.jpg

 

 

img108263785_6.jpg