Good day, and thank you for standing by. Welcome to the Enerflex Third Quarter 2025 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jeff Fetterly, Vice President, Corporate Development and Capital Markets. Please go ahead.

Thank you, Gigi, and good morning, everyone. With me today are Paul Mahoney, Enerflex's President and CEO; Preet Dhindsa, our CFO; and Ben Park, Enerflex's Controller. During today's call, our prepared remarks will focus on four key areas: one, the continued strong performance of Enerflex's business; two, our outlook going into 2026; three, capital allocation, including an increase in Enerflex's dividend; and four, some initial commentary from Paul and strategic priorities. Before I turn it over to Paul, I'll remind everyone that today's discussion will include non-IFRS and other financial measures as well as forward-looking statements regarding Enerflex'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 SEDAR+ and EDGAR profiles. As part of our prepared remarks, we will be referring to slides in our investor presentation, which is available through a link on this webcast and our website under the Investor Relations section. I'll now turn it over to Paul.

Thanks, Jeff, and thank you all for joining us on this morning's call. I'm pleased to join Enerflex at a very exciting time for the company. The Enerflex team has made significant operational, financial, and strategic strides in recent quarters. And I want to start off by thanking the team across our global operations for their energy, their commitment, and all of their efforts. We are pleased to report another strong quarter of financial and operating results. The energy infrastructure and aftermarket services business lines continue to be the foundation of our results, contributing 58% of gross margin before depreciation and amortization during the third quarter. The Engineered Systems business line benefited from favorable project sequencing and strong execution to generate the highest quarterly operating revenue in its history. First, I'll start with a few strategic and operational highlights. Enerflex's U.S. contract compression business continues to perform well, led by increasing natural gas production in the Permian. Utilization remains stable at 94% during Q3 across a fleet size of approximately 470,000 horsepower. Enerflex remains on track to grow its North American contract compression fleet to approximately 485,000 horsepower at the end of 2025. We expect to continue expanding this business in 2026 and we'll provide more specifics early in the new year. In the U.S., Enerflex was awarded a contract to construct a 200 million cubic standard feet per day cryogenic gas processing facility and associated natural gas compression. The project will be executed by the Engineered Systems business line and is scheduled for delivery during 2026 with a strategic client partner in the Permian Basin. The company continues to broaden and strengthen relationships within the midstream client partner base in the U.S., which includes strategic alliances and further developing relationships established through the acquisition of Exterran. During Q3, this resulted in Enerflex securing multiple orders for large compression equipment. In Oman, Enerflex successfully completed the construction and start-up of the Block 60 Bisat-C Expansion Facility for its client partner, OQ Exploration and Production. The project was delivered ahead of schedule and achieved first crude oil in less than 18 months. Enerflex's investment is supported by a long-term contract and reported as a finance lease. In Argentina, Enerflex delivered a state-of-the-art all electric gas compression station for a long-standing client partner in the Vaca Muerta shale play. Lastly, Enerflex received the prestigious Export-Import Bank of the U.S. Deal of the Year Award for its collaboration on a gas-to-energy project in Guyana. This first-of-its-kind project in Guyana will provide the natural gas conditioning and cryogenic infrastructure for generating 300 megawatts of power, reduce the country's dependence on imported fuels, and expand access to power in underserved communities. And now a few comments on each of our business lines. The Engineered Systems backlog as of September 30 of $1.1 billion provides strong visibility into future revenue generation and business activity levels. Bookings of $339 million during Q3 compared to a trailing 8-quarter average of approximately $320 million. The book-to-bill ratio, calculated as bookings divided by revenue and normalized for accounting treatment associated with the Bisat-C Expansion project, was 0.9x during Q3 and 1x on a trailing 8-quarter average, highlighting that the company is consistently replenishing its backlog in line with project execution. The outlook for Engineered Systems is supported by healthy bidding activity and backlog visibility that extends into the second half of 2026. Notwithstanding, Enerflex continues to closely monitor near-term risks, including tariffs and commodity price volatility and will proactively manage this business line. Activity levels for the ES product line during Q4 of 2025 are expected to reflect a pull forward of certain projects into the third quarter. Enerflex continues to expect gross margin for the ES business line in coming quarters to align more closely with historical averages, reflective of a shift in project mix. We believe the medium-term outlook for ES products and services is attractive, supported by anticipated growth in natural gas and produced water volumes across Enerflex's global footprint. Results for the aftermarket services business line benefited from increased activity levels and customer maintenance activities during the quarter. We expect these trends to continue into 2026. The Energy Infrastructure business continues to perform well, supported by approximately $1.4 billion of revenue under contract. Our U.S. contract compression fleet is an important part of our energy infrastructure asset base, and the fundamentals for this business remain strong. Operational KPIs for this business are highlighted on Slides 15 and 16 of our investor presentation. Slides 17 and 18 highlight our international Energy Infrastructure business, which includes approximately 1.1 million horsepower of operated compression and 24 build, own, operate and maintain or BOOM projects in Bahrain, Oman, and Latin America. The international Energy Infrastructure business has a strong contract position, with a weighted average term of approximately 5 years and is expected to provide a steady foundation to Enerflex's financial performance in the coming years. I would like to briefly comment on strategic priorities. Since joining Enerflex at the end of September, I've had the wonderful opportunity to visit the key parts of Enerflex's North American operation and interact across all levels of the company. The strength of Enerflex's people, culture, and position as a global leader have been evident. We expect to provide further insight into strategic priorities, including capital allocation, in coming months following continued strategic clarity and discussion with our Board of Directors. I would like to emphasize that our go-forward approach will focus on Enerflex's strengths and areas of excellence; stay true to the values that have guided the company for decades; and continue to emphasize discipline, providing meaningful direct shareholder returns and making investments that support long-term shareholder value creation. In the near term, Enerflex's priorities remain unchanged and include: enhancing the profitability of core operations; leveraging the company's leading position in core operating countries to capitalize on expected increases in natural gas and produced water volumes; and maximizing free cash flow to strengthen Enerflex's financial position, provide direct shareholder returns, and invest in selective customer-supported growth opportunities. Before I turn it over to Preet, I would like to briefly touch on emerging opportunities we are seeing in the electrical power generation part of our business, including opportunities associated with data centers. The delivery of modularized power generation solutions is a core competency of Enerflex, and our Engineered Systems business line has been delivering these types of solutions for over 30 years. Our international energy infrastructure asset base includes upwards of 100,000 horsepower of modularized power generation assets. The microgrid power generation market in North America is currently in a very much in formation stage. However, recent announcements from OEM suppliers and industry participants indicate the potential opportunities. Although power generation represents a modest portion of Enerflex's current Engineered Systems backlog and overall business, we are developing solutions that we believe can address a range of applications and are excited about opportunities in 2026 and beyond. For context, we are currently executing FEED studies for existing and potential client partners and evaluating over 500 megawatts of opportunities across our Engineered Systems and Energy Infrastructure business lines. We look forward to providing updates as Enerflex continues to develop this market opportunity. With that, I'll turn it over to Preet to speak to the financial aside.

Thanks, Paul, and good morning, everyone. I'll start with highlights from the third quarter. We generated revenue of $777 million in the third quarter compared to $601 million in Q3 2024 and $615 million in Q2 2025. Higher revenue is primarily attributable to the Bisat-C Expansion project that Paul highlighted, which contributed $116 million in revenue to the Engineered Systems product line, and strong execution of ES projects alongside a high level of operational activity, which led to certain project milestones being achieved earlier than expected. This results in revenue being realized in Q3 that was originally anticipated in later periods. Gross margin before depreciation and amortization was $206 million or 27% of revenue, including $14 million related to the Bisat-C Expansion project compared to $176 million or 29% of revenue in Q3 2024 and $175 million or 29% of revenue during Q2 2025. As Paul referenced, the EI and AMS product lines generated 58% of consolidated gross margin before depreciation and amortization during Q3 2025, lower compared to 65% during Q3 2024 and our guidance for the full year 2025 as a result of contribution from the Bisat-C Expansion project and strong ES activity. Energy Infrastructure performance continued to be strong with gross margin before G&A of $95 million compared to $91 million in Q2 2024 and $86 million in Q2 2025. Aftermarket Services gross margin before G&A was 21% in the quarter, benefiting from strong customer maintenance programs. SG&A was $71 million in the quarter, down $11 million from the prior year period, driven by cost-saving initiatives, improved operational efficiencies, and the absence of one-time integration costs incurred in Q3 2024, partially offset by higher share-based compensation. Adjusted EBITDA of $145 million is a new quarterly record for Enerflex that compares to $120 million in Q3 2024 and $130 million during Q2 2025. Adjusted EBITDA benefited from higher gross margin before depreciation and amortization, cost-saving initiatives, and operational efficiencies. Cash provided by operating activities before changes in working capital or FFO increased to $115 million compared to $63 million in Q3 2024 and $89 million in Q2 2025, a function of higher adjusted EBITDA. Free cash flow decreased to $43 million in Q3 2025 compared to $78 million during Q3 2024 due to working capital investments relating to the execution of projects in the ES business line and higher growth capital spending, offset partially by proceeds from the sale of EI assets in Latin America. We saw a build of $41 million in net working capital during the third quarter, primarily related to strong revenue recognition during the latter part of the quarter, which temporarily increased accounts receivable, strategic inventory investments to support future projects, including the purchase of select major components with increasing lead times, and continued investment in the Bisat-C Expansion project with $12 million spent during the third quarter. Return on capital employed increased to 16.9% in Q3 2025, a new record for the company compared to 4.5% in Q3 2024 and 16.4% in Q2 2025. Higher ROCE is a function of the increase in trailing 12-month EBIT and lower average capital employed, predominantly due to a decline in net debt. Net earnings of $37 million or $0.30 per share in Q3 2025 compared to $30 million or $0.24 per share in Q3 2024 and $60 million or $0.49 per share in Q2 2025. Compared to Q3 2024, profitability benefited from higher gross margin, lower SG&A expense, and lower finance costs, partially offset by a $16 million unrealized loss on redemption options related to senior secured notes. Now we'll touch on our strong financial position. Enerflex exited Q3 2025 with a net debt of $584 million, which included $64 million of cash and cash equivalents, a reduction of $108 million compared to Q3 2024 and $24 million compared to the second quarter of 2025. Enerflex's bank-adjusted net debt-to-EBITDA ratio was approximately 1.2x at the end of Q3 2025, down from 1.9x at the end of Q3 2024 and 1.3x at the end of Q2 2025. In early Q3, Enerflex entered into an amended and restated credit agreement with respect to a syndicated secured revolving credit facility. The maturity of the facility has been extended by three years to July 2028, and availability is unchanged at $800 million. Let me shift to capital allocation. First, on our CapEx plans. We invested $47 million in the business, consisting of $33 million in capital expenditures, $15 million for growth, and $14 million primarily related to the Bisat-C Expansion in the EH region. Enerflex continues to target a disciplined capital program in 2025 with total capital expenditures of approximately $120 million. This includes approximately $60 million for maintenance and property plant and equipment and $60 million allocated to growth opportunities. Disciplined capital spending will focus on customer support opportunities, primarily in the U.S. market. And now direct shareholder returns. Enerflex returned $11 million to shareholders in Q3 and $35 million during the first three quarters of 2025 in the form of dividends and share repurchases. The company repurchased 777,000 common shares at an average price of CAD 12.98 per share during Q2 2025 and a total of approximately 2.7 million common shares at an average price of CAD 10.93 since its normal course issuer bid commenced on April 1, 2025, to September 30. Under the NCIB, which expires March 31, 2026, the company is authorized to acquire up to a maximum of approximately 6.2 million common shares or approximately 5% of its public float as of the application date for cancellation. Enerflex's Board of Directors increased the company's quarterly dividend by 13% to CAD 0.0425 per common share, effective with the dividend payable in December 2025. The Board's decision to increase our dividend for a second consecutive year reflects confidence in our business and Enerflex's strong financial position and aligns with our priority to provide meaningful direct shareholder returns. Going forward, capital allocation decisions will be based on delivering value to Enerflex shareholders and a measure to get to Enerflex's ability to maintain balance sheet strength. In addition to disciplined growth capital spending, share purchases, and dividends, Enerflex will also consider further debt reduction to strengthen its balance sheet and lower net finance costs. Unlocking greater financial flexibility positions the company to respond to evolving market conditions and capitalize on opportunities to optimize its debt stack. I want to thank Enerflex employees for their efforts in continuing to deliver strong operational and financial results. With that, I'll turn the call back over to Paul for closing remarks.

Thanks, Preet. Let me reiterate that I'm pleased to join Enerflex at an exciting time for the company and appreciate all the efforts of the Enerflex team on making significant operational, financial, and strategic strides. We believe the long-term fundamentals driving our growth, including global energy security and the continued increase in demand for natural gas, remain firmly in place, and Enerflex is well positioned for those fundamentals. We will now hand the call back to the operator for questions.

Our first question comes from the line of Aaron MacNeil from TD Cowen.

Paul, congratulations on the new role. I can appreciate you're going to give us an update in the coming months. But I guess I'm just curious to know what the team is telling you throughout the early days of your tenure in terms of what they think Enerflex does really well and what they think needs to be improved? And how does your prior experience sort of inform your perspective?

Yes. Well, thank you, Aaron, for the question and the comments. First, let me start that the openness and transparency through my visitations for the first 30 days have been wonderful. I've probably met well over 1,300 to 1,400 people in 30 days. And so what I would say has been confirmation of really focusing and seeing the benefits still in front of us around ruthless focus on some execution levers. Being able to drive costs, price opportunities, and gross margin, along with driving working capital efficiency and the efficient use of capital remain priorities as Enerflex has demonstrated. I do see opportunities to enhance our core operation with digitization initiatives and efforts while staying focused on our investment discipline, that being around investing in core competent areas, core countries, and having a very strong specific line of sight for customer activity.

Okay, great. You mentioned mobile power in your prepared remarks. I was hoping you could dive a bit deeper into that. How do you think about the BlueSky potential for Enerflex? What would 500 megawatts of opportunities translate to in terms of potential revenue opportunity? And given the sort of immediacy of the demand of this sort of product, does the return or margin profile differ versus other products in the portfolio?

Great question. This is a very, very embryonic state, I would say, in power, and it's changing quite rapidly. It's clear that speed is a key differentiator and a key need. 500 megawatts could easily grow to well over 1 gigawatt is what I'm trying to say, using behind-the-meter need and application is seeing strong dialogue activity, quoting activity, balancing OEM delivery dates, and really being able to make committed opportunities coming forward. It's very dynamic. It's very much in an area that Enerflex has experience in. As I've said in my opening remarks, with 30 years of power experience. So we're very excited about the opportunity, very cautious, very disciplined, but it's a pretty dynamic situation at the moment.

Our next question comes from the line of Keith MacKey from RBC Capital Markets.

Welcome to the call, Paul. Maybe just to continue on the power angle. I know you noted it was across Engineered Systems and Energy Infrastructure. Can you maybe just detail a little bit more how you think you might be able to participate in both of those areas? And then as a follow-up, would just be what your readiness would be to capitalize on some of these opportunities? And certainly, as you mentioned, speed is of the essence. The market appears to be moving at a very fast rate with a lot of announcements out from various types of companies these days. So any incremental color you can give on that would be appreciated.

Yes, sure. As I mentioned, I think speed being directly correlated to some of the OEM delivery pieces is what we're working through at the moment. There's opportunity around the reciprocating engine space, with natural gas being cost-efficient, and speed being a differentiator, and Enerflex having a history and ability to execute; all of these are coming together. It's very dynamic. I see opportunities in Engineered Systems. But what we haven't mentioned is there's a strong opportunity for a follow-on aftermarket services play for operations and maintenance. So it's very exciting, and we're working very hard to build those partnerships. Partnerships here are going to be vital, not only with the supply base but also the power-related folks that are out there trying to solve this challenge or behind-the-meter activity and microgrid activity. And those partnership meetings and events have been occurring at a high pace.

Okay, very good. And just more broadly on the OEM engine availability. Can you just comment on your inventory levels to support or execute existing projects as well as your ability to continue to book new work? How do you feel about the supply chain both in Engineered Systems and aftermarket services from that standpoint?

Yes. Maybe I'll open up with some comments and then turn it to Preet here. But I've had the opportunity to meet with our major OEM suppliers in the first 30 days and get a really good understanding of what we could expect over the next 12 months. We have started to invest in some strategic inventory that is tied specifically to customer activity and customer commitment. So we've started to manage what our '26 commitments will be and what the lead times in our inventory position are.

The only thing I'd add is you see the investment in working capital, largely that's focused on the ES business, whereby long lead time equipment requires advanced bookings for that. So we've been doing that quarter-over-quarter. We feel good about customer-supported activities that will clearly procure these items as and when they arrive. But the longer lead times are an area of focus for us. And once again, we're starting to invest in inventory to meet customer support demand down the road.

Our next question comes from the line of Tim Monachello from ATB Capital Markets.

Congrats, Paul. First question, I just wanted to follow up on the power gen portfolio. You mentioned in your prepared remarks that you might be developing some additional product lines that you think may be better suited. My understanding is you have a pretty wide breadth of, I guess, megawatt packages that you can package for the market, but perhaps more suited to the smaller end of that. Can you talk a little bit about what the demand looks like in terms of package sizes and where your product lines fit in and what you might be developing?

Tim, it's Jeff. As Paul referenced in the prepared remarks, modularized is a core competency and focus for Enerflex. There is a very wide range of potential applications, both in size that you referenced and configurations. I don't think it's appropriate for us to get into the details of that in any specific nature on the call. But as we talked about, we see a wide range of applications and significant opportunities that could align with those as well.

Okay, I understand there's probably some competitive dynamics there. Can you talk a little bit about, I guess, where you are in that process, if you're going to have the product suite you think is optimized for demand right now? And when do you think that might be available?

As Paul referenced in the prepared remarks, this is a business on the Engineered Systems side that we participated in for over 30 years. We continue to be active in delivering power generation solutions, both domestically and internationally. We continue to be responsive to the customers and engage with the OEMs and the customers to continue to customize those as well. So from our perspective, we believe it's real time, but as Paul also referenced, this is an emerging and developing market that's moving quickly.

Yes, okay. That's helpful. In terms of, I guess, the natural gas compression market, can you talk about leading edge demand a little bit and where we stand for lead times on key components like Cat engines and compressors?

Yes, that's a good question, Tim. In the oil and gas production space, particularly in the Permian Basin, we see a constrained and disciplined capital environment affecting drilling and completions. However, operators are focused on maximizing their spending efficiency. Production optimization and efficiency are top priorities. From a compression perspective, centralization is still in progress, and we are noticing growth in various production technologies that utilize gas, particularly in gas lift production. The demand is not necessarily linked to drilling and completions but is more related to centralization and the use of gas for production optimization.

Okay. And lead times for the engines and compressors, where do we think we're at there?

Tim, it's Jeff. It's obviously been fairly widely publicized the increases in lead times associated with certain engines and configurations, and we certainly are seeing that. As Paul and Preet highlighted in their earlier remarks, we've been responding to that with inventory investments and engagement on the OEM side. But we're certainly seeing certain engine configurations where deliveries are now extending into 2027, and in some extreme cases, 2028, and it's really reflective of the convergence that you've seen in recent quarters between what have been traditionally more compression-oriented applications and power generation on the reciprocating engine side.

Okay, that's helpful too. And then just on the outlook, particularly for the Engineered Systems business. When you back out the Oman project, margins were really strong in the quarter. You guys have been guiding to margins coming down for a few quarters now. I think it's probably outperformed your expectations and ours. I guess, why do you think you can't keep that outperformance going? Because I would have imagined that your backlog and the mix in that backlog had been shifting towards negative or towards lower margins over the last number of quarters here?

Tim, you're right; we've been guiding toward historical Enerflex averages for a couple of quarters now. The Oman project, obviously, that contributed $14 million to gross margin, and $116 million came out of backlog for that into revenue. We still feel, given the mix, product mix in our backlog and bookings, that it is prudent to guide slightly to the mid-teen level historical averages. We feel that's still the right spot to be in. We're pleased with our results to date. As Paul mentioned, we're looking at operational efficiencies where we can. So over time, if we feel we're trending in an even more constructive direction, we'll advise. But right now, we feel good about the historical average gross margin, which is still something you should probably peg to.

And then last one for me. Can you help quantify how much was pulled forward from Q4 into Q3?

Tim, I think the easiest rule of thumb is when you look at the average revenue of the ES business over the last couple of years, it's been between $300 million and $325 million per quarter. If you look at what we reported, close to just over $400 million or close to $400 million, you back out the Bisat-C Expansion that we referenced, I think that would give you an indication of the strength of Q3 and the execution we saw in Q3 relative to normal cadence.

Okay, and you think that much of that comes out of Q4? Like the amount that you're above that cadence in Q3, you should be below it in Q4?

I don't know if we can give you a direct correlation. But as was referenced in the remarks, there was definitely some pull forward and accelerated execution that happened in the third quarter.

Thank you. At this time, I would now like to turn the conference back over to Paul Mahoney for closing remarks.

Before we close today's call, I'd like to take a moment to acknowledge the upcoming Remembrance Day in Canada and Veterans Day in the United States. We honor the courage and sacrifice of those who served and continue to serve in our armed forces, including many employees now part of the Enerflex family. Their dedication has safeguarded the freedoms and peace we enjoy today. Thank you for joining today's call, and we look forward to sharing our fourth quarter and year-end financial results in February.

This concludes today's conference call. Thank you for participating. You may now disconnect.