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Prudent

Financial

Management.

Organic Growth.

Positioned for

Suite 904, 1331 Macleod Trail SE, Calgary, AB, T2G 0K3 Canada

|

Tel: +1.403.387.6377 Toll-Free: +1.800.242.3178

MANAGEMENT’S DISCUSSION AND ANALYSIS

MAY 4, 2016

The Management’s Discussion and Analysis (“MD&A”) for Enerflex Ltd. (“Enerflex” or “the Company”) should be read in conjunction

with the unaudited Interim Condensed Financial Statements for the three months ended March 31, 2016, the Company’s 2015 Annual

Report, the Annual Information Form for the year ended December 31, 2015, and the cautionary statement regarding forward-looking

information and statements on page 12 of this report.

The MD&A focuses on information and key statistics from the unaudited Interim Condensed Financial Statements, and pertains to

known risks and uncertainties relating to the oil and gas service sector. This discussion should not be considered all-inclusive, as it

excludes possible future changes that may occur in general economic, political and environmental conditions.

FINANCIAL SUMMARY

Three months ended March 31,

($ Canadian thousands)

2016

2015

Total revenue

$ 271,702

$ 455,521

Gross margin

46,382

83,533

Selling and administrative expenses

47,681

49,906

Operating income

(1,299)

33,627

(Loss) earnings before finance costs and taxes (“EBIT”)

(91,130)

36,396

Net (loss) earnings

$ (93,565)

$ 22,858

Key Financial Performance Indicators

1

Bookings

$

65,019

$ 140,600

Backlog

$ 334,879

$ 715,132

Recurring revenue as a percentage of revenue

2

35.9%

28.2%

Gross margin as a percentage of revenue

17.1%

18.3%

EBIT as a percentage of revenue

2

(2.3)%

8.9%

(Loss) earnings before interest, tax, depreciation and amortization (“EBITDA”)

$ (68,514)

$ 55,109

Return on capital employed

(2.2)%

12.1%

Cash from operations

$ 50,367

$ 21,798

1

Key financial performance indicators used by Enerflex to measure its performance include revenue and EBIT. Certain of these key performance indicators are non-GAAP measures and certain

are additional GAAP measures. Further detail is provided in the Non-GAAP Measures sections.

2

Determined by taking the trailing 12-month period.

HIGHLIGHTS: FIRST QUARTER OF 2016

During the first quarter of 2016, the continuing commodity price challenges and reduced capital budgets for 2016 resulted in a

decrease in bookings of $75.6 million across all three segments compared to the same period in 2015, with the most notable

decrease of $55.4 million occurring in the United States of America (“USA”). The movement in exchange rates had an unfavourable

impact of $13.3 million on US dollar denominated bookings during the first quarter of 2016, compared to a favourable impact of $46.6

million for the first quarter of 2015. There were no project cancellations during the first quarter of 2016. Overall, backlog fell by $92.3

million during the quarter, as the lower booking levels were more than offset by Engineered Systems revenue. Service revenues

QUARTERLY REPORT FOR THE

THREE MONTHS ENDED MARCH 31, 2016