www.enerflex.com
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