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1. Company Snapshot

1.a. Company Description

Enerflex Ltd.supplies natural gas compression, oil and gas processing, refrigeration systems, energy transition solutions, and electric power generation equipment to the oil and natural gas industry.The company provides custom and standard compression packages for reciprocating and screw compressor applications; and designs, engineers, manufactures, constructs, and installs modular natural gas processing equipment, refrigeration systems, and electric power solutions, as well as engages in re-engineering, re-configuration, and re-packaging of compressors for various field applications; and modular processing equipment and waste gas systems for natural gas facilities.


It also offers after-market services, parts distribution, operations and maintenance solutions, equipment optimization and maintenance programs, manufacturer warranties, exchange components, long-term service agreements, and technical services.In addition, the company rents natural gas compressors totaling approximately 800,000 horsepower.It serves small to large independent producers, integrated oil and natural gas companies, midstream and petrochemical companies, power generation companies, users of natural gas-fired electric power, and carbon capture players in Canada, the United States, Argentina, Bolivia, Brazil, Colombia, Mexico, the United Kingdom, Bahrain Kuwait, Oman, the United Arab Emirates, Australia, New Zealand, Indonesia, Malaysia, and Thailand.


Enerflex Ltd.was founded in 1980 and is headquartered in Calgary, Canada.

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1.b. Last Insights on EFX

Enerflex Ltd.'s recent performance was negatively driven by the mixed fundamentals and investor underwhelm despite strong earnings. The company's Q4 2024 earnings and revenue surprises were significant, but investors seemed unimpressed. The robust contract backlog and increased shareholder returns, as highlighted in the Q4 earnings call, were overshadowed by geopolitical challenges and evolving market conditions. The strong operational performance, including adjusted EBITDA of $121 million and free cash flow of $76 million, was not enough to offset the investor skepticism. The reduced bank adjusted net debt-to-EBITDA ratio to 1.5X times at year-end was also not enough to boost investor sentiment.

1.c. Company Highlights

2. Enerflex's Q3 2025 Results Exceed Expectations

Enerflex reported strong Q3 2025 financial performance, driven by its energy infrastructure and aftermarket services business lines, with revenue reaching $777 million, a significant increase from $601 million in Q3 2024 and $615 million in Q2 2025. Gross margin before depreciation and amortization was $206 million or 27% of revenue. The company's adjusted EBITDA reached a record $145 million, up from $120 million in Q3 2024 and $130 million in Q2 2025. Earnings per share (EPS) came in at $0.4178, beating estimates of $0.2815. Free cash flow was $43 million, impacted by working capital investments and higher growth capital spend.

Publication Date: Nov -20

📋 Highlights
  • Revenue Growth:: Q3 revenue rose to $777M, up from $601M in Q3 2024 and $615M in Q2 2025.
  • Gross Margin Contribution:: Energy Infrastructure and Aftermarket Services accounted for 58% of gross margin before depreciation.
  • Adjusted EBITDA Record:: Achieved $145M, a 12.5% increase from Q3 2024 ($120M) and 11.5% from Q2 2025 ($130M).
  • Strong Backlog:: Engineered Systems backlog reached $1.1B, with 470,000 horsepower in the U.S. contract compression market.
  • Dividend Increase & Capital Plan:: Dividend raised 13% to CAD 0.0425/share, with 2025 capex targeting $120M for disciplined growth.

Business Line Performance

The Engineered Systems business line achieved record quarterly operating revenue due to favorable project sequencing and strong execution, contributing to the overall revenue growth. The company has a strong backlog of $1.1 billion in Engineered Systems and a growing presence in the U.S. contract compression market, with a fleet size of approximately 470,000 horsepower.

Capital Allocation and Dividend

Enerflex increased its quarterly dividend by 13% to CAD 0.0425 per common share, demonstrating its commitment to returning value to shareholders. The company is targeting a disciplined capital program in 2025 with total capital expenditures of approximately $120 million.

Growth Opportunities

The company is exploring opportunities in electrical power generation, including data centers, with over 500 megawatts of potential opportunities across its Engineered Systems and Energy Infrastructure business lines. Enerflex is well-positioned to capitalize on the growing demand for power generation solutions, particularly in the behind-the-meter power generation space.

Valuation and Return Metrics

With a P/E Ratio of 12.88 and an EV/EBITDA of 5.26, Enerflex's valuation appears reasonable. The company's Return on Capital Employed (ROCE) increased to 16.9% in Q3 2025, indicating efficient use of capital. The net debt-to-EBITDA ratio was approximately 1.2x, suggesting a manageable debt position. Analysts estimate next year's revenue growth at -1.8%, but Enerflex's strong backlog and growing presence in new markets provide a positive outlook.

Outlook and Risks

Lead times for engines and compressors are extending, with certain configurations delivering into 2027 or 2028, which may impact future revenue. However, Enerflex has taken steps to manage lead times by investing in strategic inventory tied to customer activity and commitments. The company's cautious and disciplined approach to new opportunities should help mitigate potential risks.

3. NewsRoom

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Is Enerflex (TSX:EFX) Still Undervalued After Its Recent Share Price Momentum?

Dec -04

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Enerflex Priced $400 Million Senior Unsecured Notes Offering

Dec -02

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Enerflex Up 2% In US Premarket As Announces $400 Million Senior Unsecured Notes Offering

Dec -01

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Enerflex Ltd. Announces $400 Million Senior Unsecured Notes Offering

Dec -01

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With 71% ownership, Enerflex Ltd. (TSE:EFX) boasts of strong institutional backing

Nov -29

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Enerflex Ltd. Announces the Appointment of Céline Gerson as New Independent Director

Nov -24

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RBC Capital Markets Maintains Enerflex's Outperform Rating, US$17 Price Target

Nov -14

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What The Latest Analyst Upgrades Mean For Enerflex’s Story and Valuation

Nov -08

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.72%)

6. Segments

Engineered Systems

Expected Growth: 4.5%

Enerflex Ltd.'s Engineered Systems segment growth of 4.5% is driven by increasing demand for natural gas processing and transmission infrastructure, expansion into emerging markets, and a growing focus on energy transition and decarbonization. Additionally, the company's strategic acquisitions and investments in digitalization and automation are enhancing operational efficiency and driving revenue growth.

Energy Infrastructure

Expected Growth: 4.8%

Enerflex Ltd.'s Energy Infrastructure segment growth of 4.8% is driven by increasing global demand for natural gas, rising LNG exports, and growing need for midstream infrastructure. Additionally, the company's strategic expansion into new markets, investments in digitalization, and focus on operational efficiency also contribute to its growth momentum.

After-Market Services

Expected Growth: 5.2%

Enerflex Ltd.'s 5.2% growth in After-Market Services is driven by increasing demand for maintenance and repair of existing energy infrastructure, expansion into new geographies, and strategic partnerships. Additionally, the company's focus on digitalization and technology advancements has improved operational efficiency, leading to higher margins and revenue growth.

7. Detailed Products

Gas Processing and Treating

Enerflex provides a range of gas processing and treating solutions, including gas compression, dehydration, and sweetening, to help customers optimize their gas production and transportation.

Engine and Compressor Stations

Enerflex designs and manufactures engine and compressor stations for the oil and gas industry, providing reliable and efficient compression solutions.

Electric Power Generation

Enerflex offers electric power generation solutions, including natural gas and biogas-powered generators, to provide reliable and efficient power generation.

Oil and Gas Production Equipment

Enerflex provides a range of oil and gas production equipment, including wellheads, separators, and treaters, to help customers optimize their oil and gas production.

Fabrication and Assembly Services

Enerflex offers fabrication and assembly services for the oil and gas industry, providing customized solutions for customers' specific needs.

Service and Maintenance

Enerflex provides service and maintenance solutions for the oil and gas industry, including equipment maintenance, repair, and overhaul.

8. Enerflex Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Enerflex Ltd. is medium due to the availability of alternative energy sources and equipment.

Bargaining Power Of Customers

The bargaining power of customers for Enerflex Ltd. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Enerflex Ltd. is medium due to the company's dependence on a few key suppliers for critical components.

Threat Of New Entrants

The threat of new entrants for Enerflex Ltd. is high due to the growing demand for energy solutions and the relatively low barriers to entry in the industry.

Intensity Of Rivalry

The intensity of rivalry for Enerflex Ltd. is high due to the competitive nature of the energy industry and the presence of several established players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 47.08%
Debt Cost 7.56%
Equity Weight 52.92%
Equity Cost 12.96%
WACC 10.41%
Leverage 88.98%

11. Quality Control: Enerflex Ltd. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Enerflex

A-Score: 5.7/10

Value: 7.7

Growth: 5.3

Quality: 5.5

Yield: 2.0

Momentum: 9.0

Volatility: 5.0

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NCS Multistage Holdings

A-Score: 5.3/10

Value: 7.9

Growth: 4.8

Quality: 6.9

Yield: 0.0

Momentum: 10.0

Volatility: 2.3

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Dawson Geophysical

A-Score: 4.5/10

Value: 7.2

Growth: 4.6

Quality: 3.2

Yield: 4.0

Momentum: 8.0

Volatility: 0.0

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Superior Drilling Products

A-Score: 4.3/10

Value: 7.2

Growth: 5.4

Quality: 7.2

Yield: 0.0

Momentum: 5.0

Volatility: 1.0

1-Year Total Return ->

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Newpark Resources

A-Score: 3.8/10

Value: 5.5

Growth: 1.7

Quality: 5.4

Yield: 0.0

Momentum: 5.0

Volatility: 5.3

1-Year Total Return ->

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DMC Global

A-Score: 3.4/10

Value: 9.1

Growth: 3.8

Quality: 3.1

Yield: 0.0

Momentum: 1.5

Volatility: 2.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

19.96$

Current Price

19.96$

Potential

-0.00%

Expected Cash-Flows