Enerflex (NYSE:EFXT) reported what management described as another “strong quarter” to close out 2025, highlighting solid performance across geographies, ongoing efforts to streamline operations, and continued demand tied to natural gas and related infrastructure.
During the company’s fourth-quarter earnings call, executives also provided 2026 capital spending guidance, discussed supply chain constraints around large engines, and detailed a definitive agreement to divest most of its Asia-Pacific (APAC) operations to INNIO Group.
Fourth-quarter results and business mix
Gross margin before depreciation and amortization was $177 million, or 28% of revenue, compared with $174 million (31% of revenue) in the year-ago quarter and $206 million (27% of revenue) in the prior quarter. Dhindsa said the energy infrastructure (EI) and aftermarket services (AMS) product lines generated 67% of consolidated gross margin before depreciation and amortization during the quarter.
Adjusted EBITDA was $123 million, compared to $121 million a year earlier and $145 million in the third quarter. Dhindsa said the sequential decrease reflected the pull-forward of Engineered Systems projects into Q3 and higher core SG&A in Q4. SG&A totaled $83 million, down $9 million from the prior year on cost savings and efficiencies, but up from $71 million in Q3 on higher stock-based compensation and third-party expenses.
Enerflex posted a net loss of $57 million, or $0.47 per share, versus earnings of $15 million ($0.12 per share) in the prior-year quarter. Dhindsa said results included $81 million of expenses related to redemption of the company’s 2027 senior secured notes. On a normalized basis, he said net income was $24 million, or $0.20 per share.
Return on capital employed was 16.9% in Q4, up from 10.3% in Q4 2024 and consistent with the third quarter. Dhindsa attributed the improvement versus the prior year to higher trailing 12-month EBIT and lower average capital employed, “primarily due to a decline in net debt.”
Free cash flow, balance sheet, and refinancing
Cash provided by operating activities before changes in working capital (FFO) was $60 million, down from $74 million a year ago and $115 million in Q3. Dhindsa noted FFO included $26 million of tax expense related to refinancing the company’s high-yield notes.
Free cash flow rose to a record $141 million in Q4, compared with $76 million in Q4 2024 and $43 million in Q3 2025. The company said working capital recovery of $119 million supported the quarter, benefiting from collections and project execution in Engineered Systems.
Dhindsa said Enerflex refinanced $563 million of 9% senior secured notes due 2027 with $400 million of 6.875% senior unsecured notes due 2031, along with availability under the company’s secured revolving credit facility. Management said the refinancing is expected to reduce annual interest costs and enhance tax efficiency, though it drove one-time costs in Q4, including a $42 million debt redemption cost and $26 million of withholding taxes, for a total one-time cost of $68 million. The company also fully derecognized an embedded derivative associated with redemption options in the 2027 notes.
Enerflex ended the quarter with net debt of $501 million, including $81 million of cash and cash equivalents. Dhindsa said net debt was down $115 million from Q4 2024 and down $83 million from Q3 2025, while the bank-adjusted net debt-to-EBITDA ratio was about 1x at year-end.
Engineered Systems backlog and activity trends
President and CEO Paul Mahoney said Enerflex’s energy infrastructure and aftermarket services businesses remained foundational, contributing 65% of gross margin before depreciation and amortization in 2025. He added that Engineered Systems continued to show strong project execution and ended Q4 with a $1.1 billion backlog.
Management reported Engineered Systems bookings of $377 million in Q4, compared with $301 million in Q4 2024 and $339 million in Q3 2025. The Engineered Systems book-to-bill ratio was 1.1x in the quarter and 1.0x on a trailing eight-quarter average, which Mahoney said supports ongoing backlog replenishment in line with execution.
Mahoney also described strong U.S. activity driven by customer collaboration and long-term partnerships, with orders in Q4 for large-scale compression, natural gas processing, retrofits, and power generation equipment. He said activity remained centered in the Permian and noted growing opportunities in the Haynesville linked to expected natural gas supply growth and LNG export capacity expansion. Enerflex also established a long-term framework agreement for compression solutions with a large integrated midstream customer in the U.S.
Contract compression utilization and engine lead times
Mahoney said Enerflex’s U.S. contract compression business performed well, with utilization stable at 94% in Q4 across a fleet of approximately 483,000 horsepower. He said the company increased its marketed fleet by 13% during 2025 and expects 2026 approved growth capital expenditures to deliver growth “at a similar pace or greater,” adding that Enerflex is securing long lead-time components to support growth in 2027.
During the Q&A, management addressed industry comments about large-engine lead times extending to roughly 110–120 weeks. Mahoney said the availability issue is not new and that the company’s 2026 plans are “secure,” with the team “positioning for 2027” given delivery constraints. He added that Enerflex took a more speculative approach in Q3 and Q4 to secure engines to meet 2026 commitments.
Mahoney said the longest lead times generally apply to “higher horsepower ranges,” and that the 120-week lead time is for only part of the product line rather than the entire portfolio. He also said expansion efforts by key equipment manufacturers could improve conditions over time.
APAC divestiture, power generation opportunities, and 2026 capital plan
Mahoney said Enerflex signed a definitive agreement to divest the majority of its APAC operations to INNIO Group. The business is principally in Australia, Indonesia, and Thailand and is primarily focused on the AMS product line. The transaction is expected to close in the second half of 2026, subject to customary conditions and regulatory approvals. After closing, Mahoney said Enerflex will continue delivering engineered systems solutions in APAC through local sales teams supported by manufacturing from its three North American facilities.
Mahoney described the divestiture as accretive and aligned with efforts to “simplify and optimize” while focusing on core regions: North America, Latin America, and the Middle East. He also said Enerflex and INNIO have a long-standing relationship, including Enerflex’s role as a channel partner across core regions.
On power generation, Mahoney said Enerflex is developing opportunities tied to AI and data centers and has:
- Received an order in early 2026 to supply power generation units for a large U.S. data center project, with delivery scheduled into 2027.
- Completed a front-end engineering and design study for another large U.S. data center power generation project.
- Executed contracts to supply power generation equipment to two North American customers.
Mahoney said the company is evaluating more than 1.5 gigawatts of opportunities across the Engineered Systems business line. In response to analyst questions about counterparty risk in power generation, he said Enerflex is taking a disciplined approach and characterized counterparties on the recent win and near-term pursuits as “very, very strong.”
Dhindsa guided to 2026 organic capital expenditures of $175 million to $195 million, including $90 million to $100 million of growth capital, $70 million to $80 million of maintenance capital, and about $15 million for PP&E and infrastructure to support Engineered Systems and adjacent markets, including power generation. He said organic growth capital will remain focused on customer-supported opportunities and will be primarily allocated to expanding the U.S. contract compression fleet. Management added that Middle East organic expansion is being evaluated but is not included in the 2026 plan.
On shareholder returns, Dhindsa said Enerflex repurchased 102,800 shares in Q4 at an average price of CAD 15.10 and approximately 2.8 million shares since the normal course issuer bid began on April 1, 2025, at an average price of CAD 11.08. In 2025, the company returned $40 million through dividends and repurchases. Dhindsa said the company will be “more prescriptive” on capital allocation after strategy work is completed, noting the current issuer bid expires at the end of March 2026.
About Enerflex (NYSE:EFXT)
Enerflex Ltd is a Calgary‐headquartered energy infrastructure company specializing in the design, fabrication, installation and aftermarket support of natural gas compression, processing, refrigeration and treatment equipment. Its product portfolio includes reciprocating and centrifugal compression systems, gas treating and refrigeration packages, fuel gas conditioning and liquid separation solutions. In addition to equipment sales, Enerflex delivers field services such as commissioning, maintenance, monitoring and parts supply to optimize asset performance throughout the lifecycle.
The company supports upstream, midstream and downstream energy customers through an integrated offering that spans engineering, procurement and construction (EPC) as well as modular fabrication.
