quarterly report for the three months ended ... - …€¦ · third quarter and first nine months...

www.enerflex.com

PrudentFinancial

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 NOVEMBER 9, 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 and nine months ended September 30, 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 13 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 OVERVIEW Three months ended Nine months ended September 30, September 30,($ Canadian thousands) 2016 2015 2016 2015

Total revenue $ 262,449 $ 425,242 $ 787,219 $ 1,270,484

Gross margin 64,016 86,490 174,632 251,518

Selling and administrative expenses 40,109 47,875 130,201 142,297

Operating income 23,907 38,615 44,431 109,221

Earnings (loss) before finance costs and taxes (“EBIT”) 24,076 40,574 (45,188) 115,757

Net earnings (loss) $ 18,154 $ 32,126 $ (58,652) $ 81,666

Key Financial Performance Indicators1

Bookings $ 371,717 $ 237,324 $ 591,145 $ 464,462

Backlog $ 574,451 $ 477,639 $ 574,451 $ 477,639

Recurring revenue as a percentage of revenue2 42.0% 31.1% 42.0% 31.1%

Gross margin as a percentage of revenue 24.4% 20.3% 22.2% 19.8%

EBIT (loss) gain as a percentage of revenue2 (5.8)% 9.3% (5.8)% 9.3%

Earnings before interest, tax, depreciation and amortization (“EBITDA”) $ 47,728 $ 60,551 $ 24,069 $ 169,724

Return on capital employed (4.4)% 11.2% (4.4)% 11.2%

Cash from operations $ 19,114 $ (509) $ 87,441 $ 44,833

1 Key financial performance indicators used by Enerflex to measure its performance include revenue and earnings before interest (finance costs) and taxes (“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.

QUARTERLY REPORT FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016

http://www.enerflex.com/

ENERFLEX LTD. / 2016 QUARTERLY REPORT 2

THIRD QUARTER AND FIRST NINE MONTHS OF 2016 OVERVIEWFor the three months ending September 30, 2016 the Company:

»» Generated revenue of $262.4 million compared to $425.2 million in the third quarter of 2015.

»» Reported EBIT of $24.1 million compared to $40.6 million in the third quarter of 2015.

»» Recorded bookings of $371.7 million, a 57% increase compared to the $237.3 million recorded during the same period last year.

»» Engineered Systems backlog at September 30, 2016 was $574.5 million, a 34.5% increase compared to the December 31, 2015 backlog of $427.2 million.

»» Issued 8,952,750 common shares for gross proceeds of $115.0 million, which will be used to fund future growth initiatives of the organization.

»» Reduced debt by $128.1 million during the quarter, resulting in the net debt to EBITDA ratio, as calculated for covenant compliance purposes, of below 1.3:1.

»» On October 7, 2016, the Company sold a property in Calgary, Alberta for proceeds of $12.9 million and a net gain of $11.4 million. This gain will be recognized during the fourth quarter of 2016.

»» Subsequent to September 30, 2016, the Company declared a quarterly dividend of $0.085 per share, payable on January 12, 2017, to shareholders on record on November 21, 2016.

»» On November 1, 2016, additional restructuring actions in the Gas Drive business were announced, inclusive of the closure of the Central Services distribution facility in Leduc and relocation of a branch in Red Deer. The costs of these actions will be recognized during the quarter ended December 31, 2016.

For the nine months ending September 30, 2016 the Company:

»» Generated revenue of $787.2 million compared to $1,270.5 million during the same period of 2015.

»» Reported EBIT of $(45.2) million compared to $115.8 million in the first nine months of 2015.

»» Incurred net capital expenditures of $13.5 million.

»» Recorded a $92.1 million goodwill impairment.

»» Recorded severance and restructuring costs of $6.7 million compared to $6.3 million in 2015 and closed six service branches in Canada as part of the restructuring of the Canadian service business.

CONSOLIDATED RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016The Company continues to experience the effects of low oil and natural gas prices, which resulted in reduced revenues in both the three and nine months ended September 30, 2016. Gross margin percentages for the same period increased primarily due to project margin improvements and an increased proportion of higher margin Rental revenue. The Company continues to monitor and respond to market conditions, most notably in Canada. Global headcount has been reduced to approximately 1,900 with severance and restructuring costs of $0.4 million and $6.7 million recorded during the third quarter and first nine months of 2016, respectively. SG&A expenses were lower reflecting the continued focus on controlling costs and decreased headcount.

3MANAGEMENT’S DISCUSSION & ANALYSIS

The following table sets forth revenue from continuing operations by product line for the three and nine months ended September 30, 2016:

Three months ended Nine months ended September 30, September 30,($ Canadian thousands) 2016 2015 2016 2015

Engineered Systems $ 142,628 $ 292,402 $ 443,898 $ 870,811

Service 73,049 96,841 214,950 289,977

Rental 46,772 35,999 128,371 109,696

Total $ 262,449 $ 425,242 $ 787,219 $ 1,270,484

Revenue during the third quarter and first nine months of 2016 was lower in total in comparison with the same periods of 2015, due to decreased revenues in Engineered Systems and Service as a result of a lower opening backlog and decreased parts and service sales respectively. Rental revenue increased as new rental contracts were completed and began to generate revenue. Please refer to the section “Segment Results” for additional information about results by geographic segment.

Gross Margin for the three months ended September 30, 2016 was $64.0 million or 24.4% of revenue compared to $86.5 million or 20.3% of revenue for the same period of 2015. Gross margin for the nine months ended September 30, 2016 was $174.6 million or 22.2% of revenue compared to $251.5 million or 19.8% of revenue for the nine months ended September 30, 2015. Gross margin decreased in the Canada and USA segments during the third quarter of 2016, partially offset by an increase in the Rest of World segment. For the first nine months of 2016, gross margin was lower in all segments. The increase in gross margin percentage was attributable to project margin improvements and an increased proportion of higher margin Rental revenue, which more than offset costs related to on-going warranty disputes and severance costs, and for the first nine months of 2016, higher inventory allowances. Severance costs, included in cost of goods sold, of $0.1 million and $2.2 million were recorded during the three and nine months ended September 30, 2016 compared to $0.7 million and $1.7 million in the same periods in 2015.

SG&A expenses were $40.1 million during the three months ended September 30, 2016, compared to $47.9 million in the same period of 2015. SG&A expenses were $130.2 million during the nine months ended September 30, 2016, compared to $142.3 million in the same period of 2015. The decrease was a result of lower compensation expense, partially offset by bad debt expenses. Compensation expense decreased due to lower headcount, reduced incentive accruals based on decreased profitability, partially offset by larger mark-to-market impacts on share based compensation, unfavourable foreign exchange movements and restructuring costs during the third quarter and first nine months of 2015.

Operating Income during the third quarter of 2016 was $23.9 million compared to $38.6 million in the same period of 2015. Operating income during the first nine months of 2016 was $44.4 million compared to $109.2 million in the same period of 2015. The decreases resulted from lower gross margin largely on reduced revenues, partially offset by reduced SG&A expenses.

EBIT for the third quarter of 2016 was $24.1 million compared to $40.6 million in the same period of 2015. EBIT for the first nine months of 2016 was a loss of $(45.2) million compared to earnings of $115.8 million in the same period of 2015. The decreases were due to lower operating income, and for the first nine months of 2016 the $92.1 million impairment of goodwill related to the Canada segment recorded in the first quarter of 2016.

Net Earnings from Continuing Operations for the third quarter of 2016 was $17.6 million or $0.23 per share, compared to $31.9 million or $0.40 per share in the same period of 2015. Net loss from continuing operations for the first nine months of 2016 was $(59.0) million or $(0.74) per share, compared to net earnings of $82.3 million or $1.04 per share in the same period of 2015. Net earnings were lower due to the decreases in EBIT in the three and nine months ended September 30, 2016, partially offset by lower income tax expense compared to the same periods of 2015. Lower income tax expenses were attributable to reduced earnings before tax and the impact of earnings taxed in foreign jurisdictions, partially offset in the first nine months of 2016 by the effect of unrealized exchange rate fluctuations on tax bases in foreign jurisdictions and the goodwill impairment in the first quarter of 2016, which was not deductible for tax purposes. Furthermore, approximately 8.9 million shares were issued during the third quarter of 2016, which has a dilutive effect on the per share metrics.

Net Earnings from Discontinued Operations for the third quarter of 2016 was $0.6 million or $0.01 per share, compared to $0.2 million or $0.00 per share in the same period of 2015. Net earnings for the nine months of 2016 was $0.4 million or $0.01 per share, compared to net loss of ($0.6) million or ($0.01) per share in the same period of 2015.


ENGINEERED SYSTEMS BOOKINGS AND BACKLOGThe following table sets forth the bookings and backlog by reporting segment for the following periods:

Bookings Three months ended Nine months ended September 30, September 30, ($ Canadian thousands) 2016 2015 2016 2015

Canada $ 20,721 $ 76,367 $ 61,293 $ 143,293

USA 320,011 101,532 442,160 241,167

Rest of World 30,985 59,425 87,692 80,002

Total bookings $ 371,717 $ 237,324 $ 591,145 $ 464,462

Backlog September 30, December 31,($ Canadian thousands) 2016 2015

Canada $ 85,904 $ 150,928

USA 376,479 152,931

Rest of World 112,068 123,345

Total backlog $ 574,451 $ 427,204

Bookings were higher in the third quarter of 2016 compared to the same period of 2015 due to improved bookings in the USA segment, partially offset by a drop in Canada and Rest of World. The stabilization of commodity prices in the quarter led to increased enquiries and a rebound in bookings, particularly in the USA segment. While the improvement in commodity prices has prompted some companies to proceed with projects, activity has not returned to historical levels. Furthermore, competition for the pipeline of work has intensified, putting pressure on awarded margins.

The movement in exchange rates had resulted in an increase of $3.2 million on US dollar denominated bookings during the third quarter of 2016 but resulted in a decrease of $9.6 million during the first nine months of 2016, compared to a favourable impact of $23.8 million for the third quarter of 2015 and a favourable impact of $61.5 million in the first nine months of 2015.

The Company is cautiously optimistic that further stability in commodity prices will drive customers to increase investment in the sector, which may lead to further increased demands for it’s products and services.

SEGMENTED RESULTS Canada Segment Results Three months ended Nine months ended September 30, September 30,($ Canadian thousands) 2016 2015 2016 2015

Segment revenue $ 60,923 $ 121,784 $ 182,828 $ 410,544

Intersegment revenue (599) (1,698) (3,271) (8,597)

Revenue $ 60,324 $ 120,086 $ 179,557 $ 401,947

Revenue – Engineered Systems $ 41,504 $ 90,202 $ 126,317 $ 297,296

Revenue – Service $ 15,445 $ 26,336 $ 43,674 $ 88,141

Revenue – Rental $ 3,375 $ 3,548 $ 9,566 $ 16,510

Operating (loss) income $ (542) $ 9,943 $ (11,368) $ 30,880

EBIT $ (506) $ 11,892 $ (101,110) $ 35,949

EBITDA $ 3,644 $ 16,291 $ (88,638) $ 48,303

Segment revenue as a % of total revenue 23.0% 28.2% 22.8% 31.6%

Recurring revenue as a % of segment revenue 31.2% 24.9% 29.7% 26.0%

Operating income as a % of segment revenue (0.9)% 8.3% (6.3)% 7.7%

EBIT as a % of segment revenue (0.8)% 9.9% (56.3)% 8.9%

EBITDA as a % of segment revenue 6.0% 13.6% (49.4)% 12.0%


The Canada segment is sensitive to capital expenditure budgets of oil and natural gas producers operating in Canada, which continue to be negatively affected by the significant decline in commodity prices.

The decrease in revenue of $59.8 million for the three months ended September 30, 2016 and $222.4 million for the first nine months of 2016, compared to the same periods in 2015, was attributable to lower revenue across all three product lines, largely driven by the current economic environment. Engineered Systems revenue was down on lower 2016 opening backlog of $150.9 million compared to $332.0 million at the start of 2015. Lower Service revenue reflects lower parts sales, while lower Rental revenue was due to a decrease in rental unit sales and reduced utilization of the Canadian rental fleet.

Operating income for the third quarter of 2016 decreased by $10.5 million, and for the first nine months was lower by $42.2 million, due to reduced gross margin partially offset by lower SG&A expenses. The decrease in gross margin resulted primarily from lower revenues, lower project margins, and severance costs of $0.1 million and $1.8 million in the first three and nine months of 2016, partially offset by improved warranty experience. For the first nine months of 2016, an increase in inventory allowances also reduced gross margin. The reduction in SG&A expense was attributable to lower compensation expense on lower headcount, and lower office and occupancy costs due to facility closures, partially offset by higher bad debt expenses, compared to the third quarter of 2015. For the first nine months of 2016, severance and restructuring costs of $3.5 million increased SG&A expenses compared to $1.0 million in the same period of 2015. For the first nine months of 2016, EBIT was lower due to a $92.1 million goodwill impairment in the first quarter of 2016.

USA Segment Results Three months ended Nine months ended September 30, September 30,($ Canadian thousands) 2016 2015 2016 2015

Segment revenue $ 106,231 $ 212,403 $ 321,594 $ 617,809

Intersegment revenue (2,370) (32,422) (13,604) (96,202)

Revenue $ 103,861 $ 179,981 $ 307,990 $ 521,607


Revenue – Service $ 25,829 $ 32,454 $ 79,559 $ 92,933

Revenue – Rental $ 2,779 $ 2,572 $ 9,819 $ 4,957

Operating income $ 6,422 $ 12,377 $ 19,424 $ 35,198

EBIT $ 6,404 $ 12,377 $ 19,376 $ 36,626

EBITDA $ 9,460 $ 15,512 $ 30,241 $ 44,413



Operating income as a % of segment revenue 6.2% 6.9% 6.3% 6.7%

EBIT as a % of segment revenue 6.2% 6.9% 6.3% 7.0%

EBITDA as a % of segment revenue 9.1% 8.6% 9.8% 8.5%

The recent performance of the USA segment has been largely dependent on activity in liquids-rich U.S. gas basins, which give rise to new orders for compression and process equipment for this region. Despite the significant decrease in oil prices, and the associated impact on NGL prices, the recent recovery in oil, natural gas, and NGL prices have led to an increased level of enquiries and a rebound in bookings.

The decreases in revenue of $76.1 million and $213.6 million for the three and nine months ended September 30, 2016 compared to 2015 resulted from a decrease in Engineered Systems revenue on lower opening backlog and reduced Service revenue on lower parts sales, partially offset by higher Rental revenue.

Operating income decreased by $6.0 million during the third quarter of 2016 and by $15.8 million during the first nine months of 2016 due to lower gross margin, partially offset by reduced SG&A expenses. Gross margin decreased primarily as a result of lower revenues partially offset by project margin improvements. The decrease in SG&A expenses was primarily a result of lower compensation expense on reduced headcount.


Rest Of World Segment Results Three months ended Nine months ended September 30, September 30,($ Canadian thousands) 2016 2015 2016 2015

Segment revenue $ 98,264 $ 125,758 $ 307,666 $ 347,650

Intersegment revenue – (583) (7,994) (720)

Revenue $ 98,264 $ 125,175 $ 299,672 $ 346,930


Revenue – Service $ 31,775 $ 38,051 $ 91,717 $ 108,903

Revenue – Rental $ 40,618 $ 29,879 $ 108,986 $ 88,229

Operating income $ 18,027 $ 16,295 $ 36,375 $ 43,143

EBIT $ 18,178 $ 16,305 $ 36,546 $ 43,182

EBITDA $ 34,624 $ 28,748 $ 82,466 $ 77,008



Operating income as a % of segment revenue 18.3% 13.0% 12.1% 12.4%

EBIT as a % of segment revenue 18.5% 13.0% 12.2% 12.4%

EBITDA as a % of segment revenue 35.2% 23.0% 27.5% 22.2%

Rest of World revenue decreased by $26.9 million in the third quarter and by $47.3 million in the first nine months of 2016, due to a reduction in Engineered Systems revenue on lower opening backlog and a decrease in Service revenue, partially offset by an increase in Rental revenue with new rental projects in the Middle East and Latin America beginning to contribute revenue. Service revenue decreased on lower service activity in Latin America and Australia, and reduced parts sales in Australia and Asia, partially offset by higher activity in the MEA region.

Operating income increased by $1.7 million in the third quarter as a result of improved gross margin and lower SG&A expenses. The increase in gross margin was a result of project margin improvements, and an increased proportion of higher margin Rental revenue, partially offset by the impact of lower in Engineered Systems and Service revenues. SG&A expenses decreased due lower compensation expense on reduced headcount.

Operating income for the first nine months of 2016 decreased by $6.8 million due to lower gross margin and higher SG&A expenses. Lower gross margin was attributable to the impact of reduced Engineered Systems and Service revenues, lower awarded margins, and increased costs associated with unresolved customer warranty disputes, partially offset by project margin improvements and an increased proportion of higher margin Rental revenue. SG&A expenses were higher in 2016 compared to 2015 due to costs associated with resolving customer disputes and unfavourable foreign exchange movements, partially offset by lower compensation expense on reduced headcount.


OUTLOOK

The decline in global commodity prices continues to negatively impact demand for the Company’s products and services. Lower commodity prices have led customers to curtail investments in large greenfield oil and natural gas developments which in turn has negatively impacted demand for the Engineered Systems product line.

That being said, commodity prices began to stabilize in the quarter, which led to increased enquiries and a rebound in bookings in the quarter, particularly in the USA segment. The improved bookings trend experienced during the second quarter of 2016 continued into the third quarter with increased bookings. The Company is cautiously optimistic that further improvement in commodity prices may cause customers to increase investment, which should translate to further demand for the Company’s products and services.

Enerflex’s financial performance also continues to benefit from the recurring revenue stream derived from new and existing long-term rental and service contract progress, and from a geographically diversified business. Enerflex will look to continue to preserve awarded gross margins and to aggressively manage SG&A expenses. Steps taken during 2015 and through the first nine months of 2016 have allowed a greater focus on key market opportunities and resulted in a lower headcount over the remainder of 2016, which will lead to material savings in the fourth quarter of 2016 and beyond.

Outlook by Segment

Canada

Even with the improvement of commodity prices in the third quarter of 2016, the Canada segment remains challenged. Management expects the Canada segment to continue to face headwinds until there is further improvement in commodity prices, which will allow customers in the region to expand their businesses. The current environment has resulted in reduced operating cash flows for customers, which in turn will result in continuing low activity levels through the remainder of 2016. Customers are expected to defer projects until there is greater clarity surrounding the commodity price environment into 2017.

USA

The recent performance of the USA segment has been largely dependent on activity in liquids-rich U.S. gas basins, which gave rise to new orders for compression and process equipment for this region. Despite the significant decrease in oil prices, and the associated impact on NGL prices, the recent partial recovery in oil, natural gas, and NGL prices have led to an improvement in enquiries bookings in the USA segment. The improvement in commodity prices during the third quarter of 2016 caused some customers to proceed with investment in the sector and Enerflex is cautiously optimistic that further stability in commodity prices will continue to drive increased enquiries and bookings during the remainder of 2016 and into 2017.

Rest of World

Enerflex is also cautiously optimistic about the outlook in the Latin America region. The development of the Vaca Muerta shale play in Argentina in the short to medium-term, and the on-going Energy Reform in Mexico in the medium to long-term, could generate material opportunities for Enerflex’s products and services. In Brazil, the Company is seeing an increased interest for natural gas fuelled projects as a means to reduce dependency on hydroelectric power. This interest, coupled with the associated gas expected from pre-salt oil production presents interesting opportunities for surface facilities. Additionally, infrastructure developments in Colombia, Peru, and Bolivia are expected to result in an increased Enerflex presence in these countries.

Within the MEA region, three large rental projects have increased the rental fleet in the region to over 100,000 horsepower, and will contribute to results through the remainder of 2016 and beyond. In addition, the Company has secured and is pursuing a number of large Engineering Systems and recurring revenue opportunities in the region.


ENERFLEX STRATEGY A summary of key strategic objectives is provided in the table below, along with a brief update on the performance against each objective to the end of the third quarter. The current weak market environment has challenged the achievement of several 2016 objectives.

2016 Strategic Objective Performance to September 30, 2016 Status

Establish and implement regional field service plans to grow Service revenue by 10%.

Low commodity prices and the impact on customer’s behavior have reduced demand for parts and service most notably in Canada. Service revenue has decreased in 2016 compared to 2015.

Behind target

Grow bookings for gas processing solutions by 20%.

Processing bookings are tracking above target and are expected to increase over the remainder of 2016.

Ahead of target

Deploy 100% free cash flow on BOOM natural gas facilities.

Capital was deployed during the third quarter to complete the rental projects in the MEA region and will assess new 2016 opportunities relative to internal return goals.

On-going

Continue progress in safety management programs and improve the Company-wide total recordable injury rate (“TRIR”) to 1.00 in 2016.

The TRIR at September 30, 2016 was 0.77, which is 41% below the September 30, 2015 rate of 1.30 and 23% below the 2016 goal of 1.00.

Ahead of target

Achieve recurring revenue as a percentage of total revenue of 35-40%.

Recurring revenue as a percentage of revenue for the period ended September 30, 2016 at 42.0% compares to a 31.1% recurring revenue percentage for the period ended September 30, 2015, calculated on a trailing 12-month basis, in part due to lower Engineered Systems revenue and increased Rental revenue.

Ahead of target

Align costs with revenue to progress towards the medium-term objective of a 10% EBIT margin.

EBIT margin was negative for the nine-month period ended September 30, 2016 compared to 9.3% for the same period in 2015, calculated on a trailing 12-month basis. Excluding the impact of goodwill impairment, severance and restructuring costs, and customer legal disputes, EBIT was 8.4% for the trailing 12-months ended September 30, 2016. For the same period in 2015, excluding the impact of severance and acquisition costs, EBIT was 10.0%.

Below target

QUARTERLY SUMMARY

Earnings Earnings Net (loss) (loss) earnings per share per share ($ Canadian thousands, except per share amounts) Revenue (loss) – basic – diluted

September 30, 20161 $ 262,449 $ 17,596 $ 0.23 $ 0.23

June 30, 20161 253,068 16,841 0.21 0.21

March 31, 20161 271,702 (93,477) (1.18) (1.18)

December 31, 20151 358,548 (33,423) (0.42) (0.42)

September 30, 20151 425,242 31,938 0.40 0.40

June 30, 20151 389,721 26,827 0.34 0.34

March 31, 20151 455,521 23,548 0.30 0.30

December 31, 20141 500,628 32,500 0.41 0.411 Amounts presented are from continuing operations.


NON-GAAP MEASURES Three months ended Nine months ended September 30, September 30,($ Canadian thousands) 2016 2015 2016 2015

EBITDA

Earnings (loss) before finance costs and taxes $ 24,076 $ 40,574 $ (45,188) $ 115,757

Depreciation and amortization 23,652 19,977 69,257 53,967

EBITDA $ 47,728 $ 60,551 $ 24,069 $ 169,724

Recurring Revenue

Service $ 73,049 $ 96,841 $ 214,950 $ 289,977

Rental 46,772 35,999 128,371 109,696

Total Recurring Revenue $ 119,821 $ 132,840 $ 343,321 $ 399,673

ROCE

Trailing 12-month EBIT earnings $ (66,068) $ 164,431 $ (66,068) $ 164,431

Capital Employed - beginning of period

Net Debt $ 376,984 $ 412,208 $ 420,559 $ 347,007

Shareholders’ equity 1,025,712 1,098,940 1,158,040 1,019,982

$ 1,402,696 $ 1,511,148 $ 1,578,599 $ 1,366,989

Capital Employed - end of period

Net Debt $ 249,564 $ 455,931 $ 249,564 $ 455,931

Shareholders’ equity 1,158,957 1,161,796 1,158,957 1,161,796

$ 1,408,521 $ 1,617,727 $ 1,408,521 $ 1,617,727

Average Capital Employed1 $ 1,485,123 $ 1,461,843 $ 1,485,123 $ 1,461,843

Return on Capital Employed (4.4)% 11.2% (4.4)% 11.2%

1 Based on a trailing five-quarter average.


FINANCIAL POSITION The following table outlines significant changes in the Statements of Financial Position as at September 30, 2016 compared to December 31, 2015:

($ Canadian millions) Increase (Decrease) Explanation

Working capital $ 72.8 Accounts receivable and deferred revenue was lower due to reduced Engineered Systems activity over the first nine months of 2016, while inventory was lower due to reduced Service inventory levels and the conversion of work-in-process into revenue. Accounts payable was lower due to the settlement of trade payables associated with purchases for work-in-process. Finally, the current portion of long-term debt was repaid in the second quarter of 2016. The combined movements of these balances led to the overall increase in working capital.

Rental Equipment $ (44.1) The decrease in rental assets is due to reduced capital spend during the first nine months of 2016, depreciation, and a weakening U.S. dollar relative to the Canadian dollar when comparing the September 30, 2016 exchange rate to December 31, 2015.

Total assets $ (289.9) The decrease in total assets is primarily related to the decrease in accounts receivable, fixed asset depreciation outpacing capital expenditures, and the weakening U.S. dollar relative to the Canadian dollar on a year-to-date basis, which unfavorably impacts U.S. dollar denominated assets. In addition to the factors discussed above, a goodwill impairment of $92.1 million was recorded in the first quarter of 2016.

Long-term debt $ (166.7) The decrease in long-term debt reflects the repayment of drawing on the Bank Facility during the third quarter of 2016, as well as the revaluation of U.S. dollar denominated debt over the first nine months of 2016.

Shareholders’ equity before non-controlling interest

$ 2.4 The increase in shareholders’ equity before non-controlling interest is due to the issuance of common shares in the third quarter of 2016, which increased share capital by $111.3 million. This increase was netted against by $58.7 million of net losses for the first nine months of 2016 and $33.1 million of other comprehensive losses due largely to unrealized losses on translation of financial statements of foreign operations.

There were no significant developments in the quarter related to the arbitration proceedings against Oman Oil Exploration and Production LLC (“OOCEP”). Previously disclosed variation claims are subject to the outcome of the arbitration proceedings. Approximately $30.5 million in milestone payments due from OOCEP are overdue and remain unpaid. Enerflex is unable to predict when the arbitration will be resolved.

BOUGHT DEAL EQUITY ISSUANCE On September 7, 2016, the Company closed the offering by issuing a total of 8,952,750 common shares at a price of $12.85 per common share for gross proceeds of approximately $115.0 million. The share issuance costs were approximately $5.1 million resulting in net proceeds of approximately $109.9 million. While the net proceeds of the offering are intended to fund growth initiatives, the net proceeds were immediately used to reduce amounts drawn on the Bank Facility.

LIQUIDITY The Company expects that continued cash flows from operations in 2016, together with cash and cash equivalents on hand and currently available credit facilities, will be more than sufficient to fund its requirements for investments in working capital and capital assets. As at September 30, 2016, the Company held cash and cash equivalents of $162.4 million and had cash drawings of $375.9 million against the Bank Facility, leaving it with access to $332.5 million for future drawings. The Company continues to meet its Bank Facility covenant requirements with a net debt to EBITDA ratio under 1.3:1 compared to the required ratio of under 3.0:1.


Statements of Cash Flow Three months ended Nine months ended September 30, September 30,($ Canadian thousands) 2016 2015 2016 2015

Cash, beginning of period $ 162,716 $ 110,118 $ 158,081 $ 158,069

Cash provided (used in) by:

Operating activities 19,114 (509) 87,441 44,833

Investing activities 3,846 (37,726) (4,543) (141,876)

Financing activities (23,409) 61,269 (76,227) 70,270

Exchange rate changes on foreign currency cash 93 2,002 (2,392) 3,858

Cash, end of period $ 162,360 $ 135,154 $ 162,360 $ 135,154

Operating Activities

The increase in cash provided by operating activities in the third quarter of 2016 was due to higher cash inflows associated with working capital changes, in addition to earnings from operations for the quarter.

Investing Activities

Cash used in investing activities in the third quarter of 2016 was lower with the fabrication of rental assets largely complete compared to the third quarter of 2015, when a number of rental fleet fabrication projects were underway.

Financing Activities

Cash used in financing activities in the third quarter of 2016 was higher due to the net proceeds of the equity offering and free cash flow generated by the Company being used to reduce cash drawings on the Bank Facility.

RISK MANAGEMENT In the normal course of business, the Company is exposed to financial and operating risks that may potentially impact its operating results. Risk management strategies are employed with a view to mitigating these risks on a cost-effective basis. Derivative financial agreements are entered into to manage exposure to fluctuations in exchange rates and interest rates, but not for speculative purposes. There have been no significant changes in risk since the 2015 Annual Report other than those described below.

Project Execution Risk

The Company has made progress with an integrated project risk management framework focusing on large projects involving multiple business units and geographies. This has been achieved in part by leveraging the knowledge of seasoned executives, with extensive project experience, improved project management processes, and through improved project governance with the establishment of a Risk Committee comprised of key management personnel that meet on a regular basis. Enerflex remains focused on preserving booked margins and achieved an overall pick up in project margins for all three segments during the quarter. Project execution risk management is also underpinned by the use of one ERP system. During the first half of 2016 and into early July 2016, the implementation of SAP for its operations in Latin America was completed, thus completing the implementation of SAP across Enerflex.

Energy Prices and Industry Conditions

There continues to be significant uncertainty and volatility in the oil and natural gas industry with commodity prices remaining weak. This weak price environment creates significant risk that industry capital expenditures will continue to be restrained. The Company has been proactive in maintaining financial flexibility, restructuring and implementing cost saving initiatives, and maintaining diversification of its revenue streams; but there is still high risk of reduced demand for Enerflex’s products and services, which could have a significant effect on its results of operations.

Credit Risk

The Company has remained diligent during the quarter in assessing credit levels granted to customers, monitoring the aging of receivables, and proactively collecting outstanding balances. The challenging economic conditions have resulted in financial failures in the industry although Enerflex has been able to maintain very low levels of doubtful debts, and during the third quarter of 2016 recorded a small increase in the allowance for doubtful accounts. For the nine months ended September 30, 2016, no individual customer accounted for more than 10% of its revenue.


CAPITAL RESOURCES On November 1, 2016, Enerflex had 88,179,192 shares outstanding. Enerflex has not established a formal dividend policy and the Board of Directors anticipates setting the quarterly dividends based on the availability of cash flow and anticipated market conditions, taking into consideration business opportunities and the need for growth capital.

FUTURE ACCOUNTING PRONOUNCEMENTSIFRS 9 Financial Instruments sets out the requirements for the classification and measurement of financial assets and liabilities and a substantially-reformed approach to hedge accounting and credit losses. The new Standard will come into effect on January 1, 2018.

IFRS 15 Revenue from Contracts with Customers specifies how and when to recognize revenue, as well as requiring entities to provide users of financial statements with more informative, relevant disclosures. The standard supersedes IAS 18 Revenue, IAS 11 Construction Contracts and a number of revenue-related interpretations. IFRS 15 will be effective for annual periods beginning on or after January 1, 2018. Application of the Standard is mandatory and early adoption is permitted.

IFRS 16 Leases sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract. The standard supersedes IAS 17 Leases and lease-related interpretations. IFRS 16 will be effective for annual periods beginning on or after January 1, 2019. Application of the Standard is mandatory and early adoption is permitted only if applied with IFRS 15.

The Company has commenced its assessment of the new Standards but has not yet determined the impact of these standards on it’s Interim Condensed Financial Statements.

RESPONSIBILITY OF MANAGEMENT AND THE BOARD OF DIRECTORSManagement is responsible for the information disclosed in this MD&A and the accompanying Interim Condensed Financial Statements, and has in place appropriate information systems, procedures, and controls to ensure that information used internally by management and disclosed externally is materially complete and reliable. In addition, the Company’s Audit Committee, on behalf of the Board of Directors, provides an oversight role with respect to all public financial disclosures made, and has reviewed and approved this MD&A and the Interim Condensed Financial Statements. The Audit Committee is also responsible for determining that management fulfills its responsibilities in the financial control of operations, including disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”).

INTERNAL CONTROLS OVER FINANCIAL REPORTINGThere have been no significant changes in the design of the Company’s ICFR during the three month period ended September 30, 2016, that would materially affect, or is reasonably likely to materially affect it’s ICFR.

SUBSEQUENT EVENTS Subsequent to September 30, 2016, the Company declared a dividend of $0.085 per share, payable on January 12, 2017, to shareholders of record on November 21, 2016.

On October 7, 2016, the Company sold a property in Calgary, Alberta to third party for proceeds of $12.9 million and a net gain of $11.4 million. This gain will be recognized during the fourth quarter of 2016.

On November 1, 2016, additional restructuring actions in the Gas Drive business were announced, inclusive of the closure of the Central Services distribution facility in Leduc and relocation of a branch in Red Deer. The costs of these actions will be recognized during the quarter ended December 31, 2016.


FORWARD-LOOKING STATEMENTSThis MD&A contains forward-looking statements, which are based on certain assumptions and analyses made by the Company derived from its experience and perceptions. For further information on the nature of forward-looking statements, and the related risks, uncertainties and assumptions, refer to the Company’s MD&A for the year ended December 31, 2015. The forward-looking statements in this MD&A, primarily in the Outlook and Enerflex Strategy sections, are subject to important risks, uncertainties, and assumptions, which are difficult to predict and which may affect the Company’s operations. The critical risks, uncertainties, and assumptions relating to these sections, include, without limitation: the impact of economic conditions including volatility in the price of oil, gas, and natural gas liquids, interest rates and foreign exchange rates; industry conditions including supply and demand fundamentals for oil and gas, and the related infrastructure; the ability to continue to build and improve on proven manufacturing capabilities and innovate into new product lines and markets; increased competition; insufficient funds to support capital investments required to grow the business; the lack of availability of qualified personnel or management; and political unrest. As such, actual results, performance, or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds or dividends the Company and its shareholders, will derive therefrom. The forward-looking statements included in this MD&A are made as of the date of this MD&A and other than as required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


INTERIM CONDENSED STATEMENTS OF FINANCIAL POSITION (unaudited) September 30, December 31, ($ Canadian thousands) 2016 2015

Assets

Current assets

Cash and cash equivalents $ 162,360 $ 158,081

Accounts receivable 236,817 330,270

Inventories (Note 3) 190,383 200,099

Income taxes receivable 7,476 7,937

Derivative financial instruments (Note 11) 446 1,131

Other current assets 8,701 10,547

Total current assets 606,183 708,065

Property, plant and equipment (Note 4) 115,410 144,979

Rental equipment (Note 4) 405,165 449,249

Deferred tax assets 54,343 41,714

Other assets 52,456 58,177

Intangible assets 38,538 44,301

Goodwill (Note 5) 636,932 748,604

1,909,027 2,195,089

Assets held for sale (Note 2) 10,324 14,175

Total assets $ 1,919,351 $ 2,209,264

Liabilities and Shareholders’ Equity

Current liabilities

Accounts payable and accrued liabilities $ 179,512 $ 245,459

Provisions (Note 6) 18,566 25,228

Income taxes payable 1,753 3,259

Deferred revenues 94,186 143,509

Current portion of long-term debt (Note 7) – 50,500

Derivative financial instruments (Note 11) 226 922

Total current liabilities 294,243 468,877

Long-term debt (Note 7) 411,924 528,140

Decommissioning liability 8,615 8,548

Deferred revenues 336 443

Deferred tax liabilities 34,666 36,833

Other liabilities 10,454 8,078

760,238 1,050,919

Liabilities related to assets held for sale (Note 2) 156 305

Total liabilities $ 760,394 $ 1,051,224

Shareholders’ equity

Share capital (Note 9) $ 350,667 $ 238,580

Contributed surplus 653,917 653,120

Retained earnings 36,027 115,397

Accumulated other comprehensive income 115,805 146,969

Total shareholders’ equity before non-controlling interest 1,156,416 1,154,066

Non-controlling interest 2,541 3,974

Total shareholders’ equity and non-controlling interest 1,158,957 1,158,040

Total liabilities and shareholders’ equity $ 1,919,351 $ 2,209,264

See accompanying Notes to the Interim Condensed Financial Statements, including guarantees, commitments and contingencies (Note 14).

INTERIM CONDENSED FINANCIAL STATEMENTS

15INTERIM CONDENSED FINANCIAL STATEMENTS

INTERIM CONDENSED STATEMENTS OF EARNINGS (LOSS) (unaudited)

Three months ended Nine months ended September 30, September 30,($ Canadian thousands, except per share amounts) 2016 2015 2016 2015

Revenue (Note 13) $ 262,449 $ 425,242 $ 787,219 $ 1,270,484

Cost of goods sold 198,433 338,752 612,587 1,018,966

Gross margin 64,016 86,490 174,632 251,518

Selling and administrative expenses 40,109 47,875 130,201 142,297

Operating income 23,907 38,615 44,431 109,221

Gain on disposal of property, plant and equipment 123 27 137 1,484

Equity earnings from associate and joint venture 46 1,932 2,336 5,052

Impairment of goodwill (Note 5) – – (92,092) –

Earnings (loss) before finance costs and income taxes 24,076 40,574 (45,188) 115,757

Net finance costs 3,489 3,729 11,347 10,888

Earnings (loss) before income taxes 20,587 36,845 (56,535) 104,869

Income taxes (Note 8) 2,991 4,907 2,505 22,556

Net earnings (loss) from continuing operations $ 17,596 $ 31,938 $ (59,040) $ 82,313

Earnings (loss) from discontinued operations (Note 2) 558 188 388 (647)


Net earnings (loss) attributable to:

Controlling interest $ 17,913 $ 31,885 $ (59,175) $ 79,351

Non-controlling interest 241 241 523 2,315

$ 18,154 $ 32,126 $ (58,652) $ 81,666

Earnings (loss) per share – basic

Continuing operations $ 0.23 $ 0.40 $ (0.74) $ 1.04

Discontinued operations $ 0.01 $ 0.00 $ 0.01 $ (0.01)

Earnings (loss) per share – diluted

Continuing operations $ 0.23 $ 0.40 $ (0.74) $ 1.04

Discontinued operations $ 0.01 $ 0.00 $ 0.01 $ (0.01)

Weighted average number of shares – basic 81,435,434 79,002,523 79,942,286 78,910,298

Weighted average number of shares – diluted 81,470,678 79,037,297 79,944,225 79,108,615

See accompanying Notes to the Interim Condensed Financial Statements.


INTERIM CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)



Other comprehensive income (loss):

Other comprehensive income (loss) that may be reclassified to profit or loss in subsequent periods:

Change in fair value of derivatives designated as cash flow hedges, net of income tax expense (recovery) (2016: $45; 2015: $(524)) 65 (648) (7) (1,794)

Gain (loss) on derivatives designated as cash flow hedges transferred to net earnings in the current year, net of income tax expense (2016: $468; 2015: $148) 174 (818) 1,369 862

Unrealized (loss) gain on translation of foreign denominated debt (2,226) (22,724) 16,632 (47,938)

Unrealized gain (loss) on translation of financial statements of foreign operations 11,943 60,765 (51,114) 121,793

Other comprehensive income (loss) $ 9,956 $ 36,575 $ (33,120) $ 72,923

Total comprehensive income (loss) $ 28,110 $ 68,701 $ (91,772) $ 154,589

Other comprehensive income (loss) attributable to:

Controlling interest $ 10,093 $ 36,688 $ (31,164) $ 74,903

Non-controlling interest (137) (113) (1,956) (1,980)

$ 9,956 $ 36,575 $ (33,120) $ 72,923

17INTERIM CONDENSED FINANCIAL STATEMENTS

INTERIM CONDENSED STATEMENTS OF CASH FLOWS (unaudited)


Operating Activities


Items not requiring cash and cash equivalents:

Depreciation and amortization 23,652 19,998 69,257 54,844

Goodwill impairment – – 92,092 –

Equity earnings from associate and joint venture (46) (1,932) (2,336) (5,052)

Deferred income taxes (Notes 2, 8) (2,134) (2,830) (11,157) (4,248)

Share-based compensation expense (Note 10) 4,273 823 5,366 1,446

Gain on sale of property, plant and equipment (905) (24) (936) (1,336)

42,994 48,161 93,634 127,320

Net change in non-cash working capital and other (Note 12) (23,880) (48,670) (6,193) (82,487)

Cash provided by (used in) operating activities $ 19,114 $ (509) $ 87,441 $ 44,833

Investing Activities

Additions to:

Property, plant and equipment (Note 4) (1,139) (3,505) (3,371) (12,053)

Rental equipment (Note 4) (289) (32,384) (16,094) (137,221)

Proceeds on disposal of:

Property, plant and equipment (Note 4) 4,779 27 4,987 2,874

Rental equipment (Note 4) 417 589 1,022 10,136

Change in other assets 78 (2,453) 8,913 (5,612)

Cash provided by (used in) investing activities $ 3,846 $ (37,726) $ (4,543) $ (141,876)

Financing Activities

Proceeds from equity financing (Note 9) 115,043 – 115,043 –

Share issuance costs related to equity financing (Note 9) (5,101) – (5,101) –

(Repayment of) proceeds from issuance of long-term debt $ (128,126) $ 67,589 $ (167,875) $ 84,658

Dividends (6,732) (6,715) (20,190) (20,085)

Stock option exercises 1,507 395 1,896 5,697

Cash (used in) provided by financing activities $ (23,409) $ 61,269 $ (76,227) $ 70,270

Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies $ 93 $ 2,002 $ (2,392) $ 3,858

(Decrease) increase in cash and cash equivalents (356) 25,036 4,279 (22,915)

Cash and cash equivalents, beginning of period 162,716 110,118 158,081 158,069

Cash and cash equivalents, end of period $ 162,360 $ 135,154 $ 162,360 $ 135,154



INTERIM CONDENSED STATEMENTS OF CHANGES IN EQUITY (unaudited)

Total Foreign Accumulated shareholders’ currency other equity before Share Contributed Retained translation Hedging comprehensive non-controlling Non-controlling ($ Canadian thousands) capital surplus earnings adjustments reserve income interest interest Total

At January 1, 2015 $ 229,534 $ 653,624 $ 96,503 $ 38,765 $ (1,946) $ 36,819 $ 1,016,480 $ 3,502 $ 1,019,982

Net earnings – – 79,351 – – – 79,351 2,315 81,666

Other comprehensive income (loss) – – – 75,835 (932) 74,903 74,903 (1,980) 72,923

Effect of stock option plans 7,940 (593) – – – – 7,347 – 7,347

Dividends – – (20,122) – – – (20,122) – (20,122)

At September 30, 2015 $ 237,474 $ 653,031 $ 155,732 $ 114,600 $ (2,878) $ 111,722 $ 1,157,959 $ 3,837 $ 1,161,796

At January 1, 2016 $ 238,580 $ 653,120 $ 115,397 $ 149,124 $ (2,155) $ 146,969 $ 1,154,066 $ 3,974 $ 1,158,040

Net (loss) earnings – – (59,175) – – – (59,175) 523 (58,652)

Other comprehensive (loss) income – – – (32,526) 1,362 (31,164) (31,164) (1,956) (33,120)

Bought deal equity financing 111,319 – – – – – 111,319 – 111,319

Effect of stock option plans 768 797 – – – – 1,565 – 1,565

Dividends – – (20,195) – – – (20,195) – (20,195)

At September 30, 2016 $ 350,667 $ 653,917 $ 36,027 $ 116,598 $ (793) $ 115,805 $ 1,156,416 $ 2,541 $ 1,158,957


19NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All amounts in thousands of Canadian dollars, except per share amounts or as otherwise noted.)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of Compliance

These Interim Condensed Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting (“IAS 34”) using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These Interim Condensed Financial Statements were approved and authorized for issue by the Board of Directors on November 9, 2016.

(b) Basis of Presentation and Measurement

These Interim Condensed Financial Statements for the three and nine months ended September 30, 2016 and 2015 were prepared in accordance with IAS 34 and accordingly, do not include all the disclosures included in the Annual Consolidated Financial Statements for the year ended December 31, 2015. Accordingly, these Interim Condensed Financial Statements should be read in conjunction with the Annual Consolidated Financial Statements. Certain prior year amounts have been reclassified to conform with the current period’s presentation.

Effective January 1, 2015, the Company realigned its reporting segments into the following categories: Canada, United States of America (“USA”) and Rest of World segments. The USA segment now includes the Northern United States Service business, as well as the Retrofit and Rentals operations both of which were previously reported in the Canada and Northern United States segment. The Rest of World segment includes what was previously the Latin America Engineered Systems, After-Market Service, and Rental businesses combined with what was previously the International segment. The Company reallocated goodwill using the relative fair value approach for the revised reportable segments.

These Interim Condensed Financial Statements are presented in Canadian dollars rounded to the nearest thousands, except per share amounts or as otherwise noted, and are prepared on a going concern basis under the historical cost convention with certain financial assets and financial liabilities recorded at fair value. There have been no significant changes in accounting policies compared to those described in the Annual Consolidated Financial Statements for the year ended December 31, 2015.

(c) New Policies, Standards, Interpretations and Amendments

The Company continues to assess the impact of adopting the following pronouncements from the IASB:

IFRS 9 Financial Instruments sets out the requirements for the classification and measurement of financial assets and liabilities and a reformed approach to hedge accounting. The new standard will come into effect on January 1, 2018.

IFRS 15 Revenue from Contracts with Customers specifies how and when to recognize revenue, and introduces more informative relevant disclosures. The standard supersedes IAS 18 Revenue, IAS 11 Construction Contracts, and a number of revenue-related interpretations. IFRS 15 will be effective for annual periods beginning on or after January 1, 2018. Application of the standard is mandatory and early adoption is permitted.

IFRS 16 Leases sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract. The standard supersedes IAS 17 Leases and lease-related interpretations. IFRS 16 will be effective for annual periods beginning on or after January 1, 2019. Application of the standard is mandatory and early adoption is permitted only if applied with IFRS 15.

The Company has commenced its assessment of the impact of the new standards but has not yet determined the impact of these standards on the Interim Condensed Financial Statements.


NOTE 2. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

Discontinued Operations

On February 3, 2015, the Company announced its intention to close the Production and Processing (“P&P”) manufacturing facility in Nisku, Alberta and exit the oil sands modular fabrication business. The business unit completed the fabrication of projects at the end of June 2015.

The following table summarizes the revenues and loss from discontinued operations:

Three months ended Nine months ended September 30, September 30, 2016 2015 2016 2015

Revenue $ – $ – $ – $ 32,496

(Recoveries) expenses (765) (255) (532) 33,370

Earnings (loss) before income taxes 765 255 532 (874)

Income tax expense (recoveries) 207 67 144 (227)

Earnings (loss) from discontinued operations $ 558 $ 188 $ 388 $ (647)

The following table summarizes cash from discontinued operations: Three months ended Nine months ended September 30, September 30, 2016 2015 2016 2015

Cash (used in) provided by operating activities $ (162) $ 4,380 $ (377) $ (8,255)

Cash provided by investing activities $ 162 $ 403 $ 377 $ 1,272

Net cash flow for the period $ – $ 4,783 $ – $ (6,983)

At September 30, 2016 P&P’s assets were stated at the lower of cost and fair value less costs to sell and were comprised of the following: September 30, December 31, 2016 2015

Property, plant and equipment $ 10,288 $ 14,156

Other current assets 36 19

Assets held for sale $ 10,324 $ 14,175

Accounts payable and accrued liabilities $ 156 $ 305

Liabilities related to assets held for sale $ 156 $ 305

During the quarter, Enerflex sold two of the three properties classified as assets held for sale for proceeds of $4.5 million and a net gain of $0.8 million. The remaining assets continue to be classified as held for sale as management remains committed to its plan to sell.

NOTE 3. INVENTORIES

Inventories consisted of the following:

September 30, December 31, 2016 2015

Equipment $ 17,266 $ 16,650

Repair and distribution parts 48,461 58,886

Direct materials 56,575 67,174

Work-in-process 68,081 57,389

Total inventories $ 190,383 $ 200,099

The amount of inventory and overhead costs recognized as an expense and included in cost of goods sold for the three and nine months ended September 30, 2016 was $198.4 million and $612.6 million, respectively (September 30, 2015 - $338.8 million and $1,019.0 million, respectively). Cost of goods sold includes inventory write-downs pertaining to obsolescence and aging together with recoveries of past write-downs upon disposition. The net amount charged to the interim condensed statement of earnings (loss) and included in cost of goods sold for the three and nine months ended September 30, 2016 was $2.1 million and $6.7 million, respectively (September 30, 2015 – $(0.4) million and $0.6 million, respectively).


NOTE 4. PROPERTY, PLANT AND EQUIPMENT AND RENTAL EQUIPMENT

During the three and nine months ended September 30, 2016, the Company acquired $1.1 million and $3.4 million in property, plant and equipment, respectively (September 30, 2015 - $3.5 million and $12.1 million) and $0.3 million and $16.1 million in rental equipment (September 30, 2015 - $32.4 million and $137.2 million).

Depreciation of property, plant and equipment and rental equipment included in earnings for the three months ended September 30, 2016 was $19.5 million (September 30, 2015 - $15.8 million), of which $18.0 million was included in cost of goods sold and $1.5 million was included in selling and administrative expenses (September 30, 2015 - $14.2 million and $1.6 million, respectively).

Depreciation of property, plant and equipment and rental equipment included in earnings for the nine months ended September 30, 2016 was $59.1 million (September 30, 2015 - $43.8 million), of which $54.7 million was included in cost of goods sold and $4.4 million was included in selling and administrative expenses (September 30, 2015 - $39.1 million and $4.7 million, respectively).

Impairment of property, plant and equipment and rental equipment included in earnings for the three months ended September 30, 2016 – nil (September 30, 2015 – nil). Impairment of property, plant and equipment and rental equipment included in earnings for the nine months ended September 30, 2016 was $0.3 million (September 30, 2015 – nil).

NOTE 5. GOODWILL AND IMPAIRMENT REVIEW OF GOODWILL September 30, December 31, 2016 2015

Balance, January 1 $ 748,604 $ 707,913

Adjustment – 4,363

Impairment (92,092) (36,900)

Currency translation effects (19,580) 73,228

Closing balance $ 636,932 $ 748,604

Goodwill acquired through business combinations was allocated to the Canada, USA, and Rest of World business segments, and represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. During the quarter, the Company did not identify any additional external indicators of impairment, and therefore did not complete an impairment assessment. During the first quarter of 2016, Enerflex recognized a goodwill impairment of $92.1 million for the Canada segment.

NOTE 6. PROVISIONS September 30, December 31, 2016 2015

Warranty provision $ 15,225 $ 20,208

Restructuring provision 525 2,623

Legal provision 122 50

Onerous lease provision 2,694 2,347

$ 18,566 $ 25,228

During the first quarter of 2016, the Company committed to, and started to implement, a plan to restructure the Canadian business segment due to deteriorating business conditions. The Company recognized a restructuring provision of $3.1 million for expected severance costs. The restructuring provision also includes remaining severance amounts related to the restructuring of the Process Construction business in Australia, accrued at December 31, 2015. The balance of the provision as of September 30, 2016 is $0.2 million for Canada and $0.3 million for Australia.

The Company previously entered into non-cancellable leases for several office spaces in Alberta, Canada and for one office space in Ontario, Canada. Due to the restructuring of Enerflex’s Gas Drive Service business, the Company ceased using these premises in March 2016. The majority of the leases will expire in 2017. Additionally, an office space that was leased in Edmonton, Alberta will expire in 2021. The Company intends to sub-let this space but at a discount to the lease payments. The resulting provision of $2.3 million represents the future payments for all non-cancellable leases and associated costs, net of anticipated sub-lease recoveries. To date, $0.7 million of the provision was reversed due to office sublets. The provision also includes amounts related to onerous leases previously accrued for the restructuring of the Process Construction business in Australia.


NOTE 7. LONG-TERM DEBT

The composition of the borrowings on the Bank Facility and the Notes was as follows:


Drawings on Bank Facility $ 375,948 $ 492,953

Notes due June 22, 2016 – 50,500

Notes due June 22, 2021 40,000 40,000

Deferred transaction costs (4,024) (4,813)

Subtotal $ 411,924 $ 578,640

Less: current portion of long-term debt – 50,500

$ 411,924 $ 528,140

The weighted average interest rate on the Bank Facility for the nine months ended September 30, 2016 was 2.4% (December 31, 2015 – 2.3%).

During the third quarter of 2016, the Company repaid $128.1 million of long-term debt. The repayment was primarily financed by the issuance of common shares through a bought deal financing. In the second quarter Enerflex repaid $50.5 million of senior notes that were due June 22, 2016. The repayment was financed by drawings on the Bank Facility. At September 30, 2016, without considering renewal at similar terms, the Canadian dollar equivalent principal payments due over the next five years are $415.9 million.

NOTE 8. INCOME TAXES

(a) Income Tax Recognized in Net Earnings

The components of income tax expense (recovery) were as follows:


Current income taxes $ 5,332 $ 7,804 $ 13,806 $ 26,577

Deferred income taxes (2,341) (2,897) (11,301) (4,021)

$ 2,991 $ 4,907 $ 2,505 $ 22,556

(b) Reconciliation of Tax Expense

The provision for income taxes differs from that which would be expected by applying Canadian statutory rates. A reconciliation of the difference is as follows:


Earnings before income taxes from continuing operations $ 20,587 $ 36,845 $ (56,535) $ 104,869

Canadian statutory rate 27.0% 26.0% 27.0% 26.0%

Expected income tax provision $ 5,558 $ 9,580 $ (15,265) $ 27,266

Add (deduct):

Impairment of goodwill not deductible for tax purposes – – 24,865 –

Exchange rate effects on tax basis 1,078 – 5,522 –

Earnings taxed in foreign jurisdictions (3,797) (4,292) (12,587) (2,211)

Expenses not deductible for tax purposes (20) 145 190 505

Impact of accounting for associates and joint ventures (78) (566) (772) (1,912)

Revaluation of Canadian deferred tax assets at new statutory rate – – – (1,069)

Other 250 40 552 (23)

Income tax expense from continuing operations $ 2,991 $ 4,907 $ 2,505 $ 22,556


The Company’s effective tax rate is subject to fluctuations in the Argentine peso and Mexican peso exchange rate against the U.S. dollar. Since the Company holds significant rental assets in Argentina and Mexico, the tax base of these assets is denominated in Argentine peso and Mexican peso, respectively. The functional currency is, however, the U.S. dollar and as a result, the related local currency tax bases are revalued periodically to reflect the closing U.S. dollar rate against these currencies. Any movement in the exchange rate results in a corresponding unrealized exchange rate gain or loss being recorded as part of deferred income tax expense or recovery. During periods of large fluctuation or devaluation of the local currency against the U.S. dollar, these amounts may be significant but are unrealized and may reverse in the future. Recognition of these amounts is required by IFRS, even though the revalued tax basis does not generate any cash tax liability or benefit in the future.

The Canadian statutory rate is the aggregate of the Canadian federal income tax rate of 15.0% (2015 - 15.0%) and the provincial income tax rate of 12.0% (2015 - 11.0%).

NOTE 9. SHARE CAPITAL AUTHORIZED

The Company is authorized to issue an unlimited number of common shares. Share capital comprises only one class of ordinary shares. The ordinary shares carry a voting right and a right to a dividend.

Issued and Outstanding September 30, 2016 December 31, 2015

Number Common Number Common of common share of common share shares capital shares capital

Balance, beginning of period 79,156,492 $ 238,580 78,618,026 $ 229,534

Exercise of stock options 50,450 768 538,466 9,046

Equity financing 8,952,750 111,319 – –

Balance, end of period 88,159,692 $ 350,667 79,156,492 $ 238,580

On September 7, 2016, the Company closed a bought deal equity financing (the “Offering”) for gross proceeds of $115.0 million. An aggregate of 8,952,750 common shares were issued at a price of $12.85 per share, which includes 1,167,750 common shares issued pursuant to the exercise in full of the over-allotment option. In connection with the Offering, the Company incurred $5.1 million ($3.7 million net of tax) in transaction costs which included $4.6 million in agent fees. Total transaction costs, net of tax, were applied against the gross proceeds in share capital.

NOTE 10. SHARE-BASED COMPENSATION

The share-based compensation expense (recovery) included in the determination of net earnings was:


Equity settled share-based payments $ 419 $ 476 $ 1,047 $ 1,651

Cash settled share-based payments 3,854 347 4,319 (205)

Share-based compensation expense $ 4,273 $ 823 $ 5,366 $ 1,446

Deferred share units (“DSUs”), phantom share rights (“SARs”), performance share units (“PSUs”), restricted share units (“RSUs”), and cash performance target plan (“CPTP”) are all classified as cash settled share-based payments. Stock options are equity settled share-based payments.

During the third quarter, the Board of Directors granted CPTP, PSUs, RSUs, SARs, and options to officers and key employees. The RSU, PSU, and DSU holders had dividends credited to their account during the period. The carrying amount of the liability relating to all cash settled share-based payments as at September 30, 2016 included in Current Liabilities was $1.9 million (December 31, 2015 - $2.5 million) and in Other Long-Term Liabilities was $8.2 million (December 31, 2015 - $6.1 million).


(a) Equity Settled Share-Based Payments September 30, 2016 December 31, 2015

Weighted Weighted average average Number exercise Number exercise of options price of options price

Options outstanding, beginning of period 2,776,268 $ 13.47 2,550,224 $ 13.71

Granted 599,428 13.27 781,092 11.69

Exercised 1 (50,450) 10.27 (538,466) 12.00

Forfeited (47,699) 12.75 (15,082) 14.69

Expired (134,886) 14.61 (1,500) 12.58

Options outstanding, end of period 3,142,661 $ 13.44 2,776,268 $ 13.47

Options exercisable, end of period 1,423,767 $ 13.28 1,156,525 $ 12.92

1 The weighted average share price of options at the date of exercise for the nine months ended September 30, 2016 was $12.29 (September 30, 2015 - $14.78).

The company granted 599,428 stock options for the nine months ended September 30, 2016 (September 30, 2015 – 781,092). Using the Black Scholes option pricing model, the weighted average fair value of stock options granted for the period ended September 30, 2016 was $2.83 per option (September 30, 2015 – $2.31).

The weighted average assumptions used in the determinations of fair values are noted below.


Expected life (years) 5.23 5.18

Expected volatility2 31.50% 28.84%

Dividend yield 2.60% 2.91%

Risk-free rate 1.0% 1.4%

Estimated forfeiture rate 1.5% 0.8%2 Expected volatility is based on the historical volatility of Enerflex over a five-year period, consistent with the expected life of the option.

The following table summarizes options outstanding and exercisable at September 30, 2016:

Options Outstanding Options Exercisable

Weighted Weighted Weighted Weighted average average average average Number remaining exercise Number remaining exercise Range of exercise prices outstanding life (years) price outstanding life (years) price

$11.04 - $11.76 1,209,461 4.54 $ 11.67 506,340 3.34 $ 11.64

$11.77 - $13.80 1,199,929 4.25 12.80 545,446 1.59 12.41

$13.81 - $20.75 733,271 4.34 17.41 371,981 4.24 16.78

Total 3,142,661 4.38 $ 13.44 1,423,767 2.90 $ 13.28

(b) Cash Settled Share-Based Payments

During the three and nine months ended September 30, 2016, directors’ fees and executive bonuses elected to be received in DSUs totalled $0.3 million and $1.3 million, respectively (September 30, 2015 - $0.4 million and $1.7 million, respectively). Weighted average Number grant date fair of DSUs value per unit

DSUs outstanding, January 1, 2016 396,436 $ 14.00

Granted 115,338 10.96

Exercised (16,994) 13.27

In lieu of dividends 9,984 11.10

DSUs outstanding, September 30, 2016 504,814 $ 13.27


NOTE 11. FINANCIAL INSTRUMENTS

Designation and Valuation of Financial Instruments

Financial instruments at September 30, 2016 were designated in the same manner as they were at December 31, 2015. Accordingly, with the exception of the long-term debt Notes, the estimated fair values of financial instruments approximated their carrying values. The carrying value and estimated fair value of the Notes as at September 30, 2016 was $40.0 million and $43.7 million, respectively (December 31, 2015 - $90.5 million and $93.2 million, respectively). The fair value of these Notes at September 30, 2016 was determined on a discounted cash flow basis with a weighted average discount rate of 4.3% (December 31, 2015 – 4.1%).

Derivative Financial Instruments and Hedge Accounting

Foreign exchange contracts are transacted with financial institutions to hedge foreign currency denominated obligations and cash receipts related to purchases of inventory and sales of products. The following table summarizes the Company’s commitments to buy and sell foreign currencies as at September 30, 2016:

Notional amount Maturity

Canadian dollar denominated contracts

Purchase contracts USD 2,996 October 2016 – January 2017

Sales contracts USD (9,352) October 2016 – June 2017

Sales contracts AUD (246) October 2016

U.S. dollar denominated contracts

Sales contracts EUR (508) October 2016

Great Britain Pound denominated contracts

Sales contracts EUR (1,517) October 2016 – August 2017

At September 30, 2016, the fair value of derivative financial instruments classified as financial assets was $0.4 million, and as financial liabilities was $0.2 million (December 31, 2015 - $1.1 million and $0.9 million, respectively).

Foreign Currency Translation Exposure

The Company is subject to foreign currency translation exposure, primarily due to fluctuations of the Canadian dollar against the U.S. dollar, Australian dollar and British pound. Enerflex uses foreign currency borrowings to hedge against the exposure that arises from foreign subsidiaries that are translated to the Canadian dollar through a net investment hedge. As a result, exchange gains and losses on the translation of USD $219.4 million in designated foreign currency borrowings are included in accumulated other comprehensive income for September 30, 2016. The following table shows the sensitivity to a 5% weakening of the Canadian dollar against the U.S. dollar, Australian dollar and British pound.

Canadian dollar weakens by 5% USD AUD GBP

Earnings from foreign operations

Earnings (loss) before income taxes $ 2,849 $ (544) $ 38

Financial instruments held in foreign operations

Other comprehensive income $ 9,183 $ 1,209 $ 241

Financial instruments held in Canadian operations

Earnings before income taxes $ 9,117 $ – $ –

Interest Rate Risk

The Company’s liabilities include long-term debt subject to fluctuations in interest rates. Notes outstanding at September 30, 2016 were at fixed interest rates and therefore the related interest expense would not be impacted by fluctuations in interest rates. The Bank Facility, however, is subject to changes in market interest rates.

The Company has entered into an interest rate swap to exchange the floating rate interest payments for fixed rate interest payments, which fix the London Interbank Offered Rates components of its interest payments on $70.0 million of its outstanding term debt until September 2017.

Under the interest rate swap agreement, Enerflex pays a fixed rate of 0.785% per annum plus the applicable credit spread. The interest rate swap agreement has an aggregate notional principal amount of $70.0 million. The fair value of the interest rate swap arrangement is the difference between the forward interest rates and the discounted contract rate. As at September 30, 2016, the mark-to-market of the interest rate swap was $0.1 million.


For each 1% change in the rate of interest on the remaining $284.1 million Bank Facilities, the change in interest expense for the nine months ended would be $2.8 million (December 31, 2015 – $3.0 million). All interest charges are recorded on the interim condensed statement of earnings (loss) as net finance costs.

Liquidity Risk

Liquidity risk is the risk that Enerflex may encounter difficulties in meeting obligations associated with financial liabilities. In managing liquidity risk, the Company has access to a significant portion of its committed facility with a U.S. lender and a Bank Facility for future drawings to meet future growth targets. As at September 30, 2016, the Company held cash and cash equivalents of $162.4 million and had drawn $375.9 million against the Bank Facility, leaving it with access to $332.5 million for future drawings.

A liquidity analysis of the financial instruments has been completed on a maturity basis. The following table outlines the cash flows associated with the maturity of financial liabilities as at September 30, 2016.

Greater Less than 3 months than 1 3 months to 1 year year Total

Derivative financial instruments

Foreign currency forward contracts $ 113 $ 7 $ – $ 120

Interest rate swap 106 – – 106

Accounts payable and accrued liabilities 179,512 – – 179,512

Long-term debt – bank facility – – 375,948 375,948

Long-term debt – notes – – 40,000 40,000

Other long-term liabilities – – 10,454 10,454

The Company expects that continued cash flows from operations in 2016, together with cash and cash equivalents on hand and available credit facilities, will be more than sufficient to fund its requirements for investments in working capital and capital assets.

NOTE 12. SUPPLEMENTAL CASH FLOW INFORMATION Three months ended Nine months ended September 30, September 30, 2016 2015 2016 2015

Cash used in by changes of non-cash working capital

Accounts receivable $ 4,508 $ (39,822) $ 93,453 $ 60,918

Inventories 3,696 38,318 9,716 48,785

Deferred revenue (9,176) (34,813) (49,430) (112,432)

Accounts and taxes payable and accrued liabilities and provisions (12,816) 13,630 (74,256) (32,411)

Foreign currency and other (10,092) (25,983) 14,324 (47,347)

$ (23,880) $ (48,670) $ (6,193) $ (82,487)

Cash paid during the period:


Interest $ 2,798 $ 3,248 $ 9,879 $ 9,580

Taxes 3,322 9,687 12,274 29,080


NOTE 13. REVENUE

Revenue by geographic location, which is attributed by destination of sale, was as follows:


USA $ 66,922 $ 166,076 $ 240,126 $ 471,312

Canada 58,609 111,944 161,811 374,837

Mexico 21,296 23,088 65,579 64,568

Oman 24,411 21,450 64,499 49,089

Argentina 25,394 20,803 58,751 47,542

Australia 14,751 37,212 55,418 122,079

Bahrain 10,965 11,086 34,608 24,437

Kuwait 18,227 – 18,217 824

Croatia 5,460 – 15,886 –

United Arab Emirates 2,638 2,081 13,060 4,163

Indonesia 4,267 2,425 11,445 5,425

Brazil 2,744 5,184 9,557 19,760

Nigeria 1,177 8,331 8,727 25,009

Other 5,588 15,562 29,535 61,439

Total Revenue $ 262,449 $ 425,242 $ 787,219 $ 1,270,484

NOTE 14. GUARANTEES, COMMITMENTS AND CONTINGENCIES

Operating leases relate to leases of equipment, automobiles and premises with lease terms between one and ten years. The material lease arrangements generally include renewal and escalation clauses.

The aggregate minimum future required lease payments over the next five years and thereafter is as follows:

2016 $ 4,731

2017 16,743

2018 12,820

2019 9,292

2020 5,821

Thereafter 8,500

Total $ 57,907

In addition, the Company has purchase obligations over the next three years as follows:

2016 $ 84,238

2017 35,510

2018 1,362

NOTE 15. SEASONALITY

The oil and natural gas service sector in Canada and in some parts of the USA has a distinct seasonal trend in activity levels which results from well-site access and drilling pattern adjustments to take advantage of weather conditions. Generally, Enerflex’s Engineered Systems product line has experienced higher revenues in the fourth quarter of each year while the Service and Rentals product line revenues are stable throughout the year. Rental revenues are also impacted by both the Company’s and its customers’ capital investment decisions. The USA and Rest of World segments are not significantly impacted by seasonal variations. Variations from these trends usually occur when hydrocarbon energy fundamentals are either improving or deteriorating.


NOTE 16. SEGMENTED INFORMATION

Enerflex has three reportable operating segments as outlined below, each supported by the Corporate office. Corporate overheads are allocated to the operating segments based on revenue. For each of the operating segments, the Chief Operating Decision Maker reviews internal management reports on at least a quarterly basis. For the nine months ended September 30, 2016, the Company had no individual customers which accounted for more than 10% of its revenue.

The accounting policies of the reportable operating segments are the same as those described in the summary of significant accounting policies.

Canada USA Rest of World Total

Three months ended September 30, 2016 2015 2016 2015 2016 2015 2016 2015

Segment revenue $ 60,923 $ 121,784 $ 106,231 $ 212,403 $ 98,264 $ 125,758 $ 265,418 $ 459,945

Intersegment revenue (599) (1,698) (2,370) (32,422) – (583) (2,969) (34,703)

External revenue $ 60,324 $ 120,086 $ 103,861 $ 179,981 $ 98,264 $ 125,175 $ 262,449 $ 425,242

Operating income (loss) $ (542) $ 9,943 $ 6,422 $ 12,377 $ 18,027 $ 16,295 $ 23,907 $ 38,615


Nine months ended September 30, 2016 2015 2016 2015 2016 2015 2016 2015

Segment revenue $ 182,828 $ 410,544 $ 321,594 $ 617,809 $ 307,666 $ 347,650 $ 812,088 $ 1,376,003

Intersegment revenue (3,271) (8,597) (13,604) (96,202) (7,994) (720) (24,869) (105,519)

External revenue $ 179,557 $ 401,947 $ 307,990 $ 521,607 $ 299,672 $ 346,930 $ 787,219 $ 1,270,484

Operating income (loss) $ (11,368) $ 30,880 $ 19,424 $ 35,198 $ 36,375 $ 43,143 $ 44,431 $ 109,221


Sep. 30, Dec. 31, Sep. 30, Dec. 31, Sep. 30, Dec. 31, Sep. 30, Dec. 31,As at 2016 2015 2016 2015 2016 2015 2016 2015

Segment assets $ 367,360 $ 406,343 $ 378,981 $ 401,265 $ 707,045 $ 793,743 $ 1,453,386 $ 1,601,351

Goodwill 157,169 249,261 138,165 148,134 341,598 351,209 636,932 748,604

Corporate – – – – – – (181,291) (154,866)

524,529 655,604 517,146 549,399 1,048,643 1,144,952 1,909,027 2,195,089

Assets held for sale 10,324 14,175 – – – – 10,324 14,175

Total segment assets $ 534,853 $ 669,779 $ 517,146 $ 549,399 $ 1,048,643 $ 1,144,952 $ 1,919,351 $ 2,209,264

NOTE 17. SUBSEQUENT EVENTS

Subsequent to September 30, 2016, Enerflex declared a quarterly dividend of $0.085 per share, payable on January 12, 2017, to shareholders of record on November 16, 2016.

On October 7, 2016, the Company sold a property in Calgary, Alberta for proceeds of $12.9 million and a net gain of $11.4 million. This gain will be recognized during the fourth quarter of 2016.

On November 1, 2016, additional restructuring actions in the Gas Drive business were announced, inclusive of the closure of the Central Services distribution facility in Leduc and relocation of a branch in Red Deer. The costs of these actions will be recognized during the quarter ended December 31, 2016.

29DIRECTORS AND EXECUTIVES

Head OfficeEnerflex Ltd.

Suite 904, 1331 Macleod Trail SE Calgary, AB T2G 0K3 Canada Tel: +1.403.387.6377 Fax: +1.403.236.6816 Email: [email protected] Web: www.enerflex.com

Robert S. Boswell 1, 4

DirectorDenver, CO

W. Byron Dunn 2, 4

DirectorDallas, TX

J. Blair GoertzenDirector President and Chief Executive Officer Calgary, AB

Wayne S. Hill 2, 5

DirectorToronto, ON

1 Chair of the Nominating and Corporate Governance Committee

2 Member of the Nominating and Corporate Governance Committee

3 Chair of the Human Resources and Compensation Committee

4 Member of the Human Resources and Compensation Committee

5 Chair of the Audit Committee

6 Member of the Audit Committee

H. Stanley Marshall 3

DirectorParadise, NL

Stephen J. SavidantChairmanCalgary, AB

Michael A. Weill 6

DirectorHouston, TX

Helen J. Wesley 6

DirectorCalgary, AB

D. James HarbilasExecutive Vice President and Chief Financial OfficerCalgary, AB

Bradley BeebePresident, Canada Calgary, AB

Marc RossiterPresident, United States of AmericaHouston, TX

Patricia MartinezPresident, Latin AmericaHouston, TX

Phil PylePresident, InternationalAbu Dhabi, UAE

Greg StewartSenior Vice President, Corporate Services and Chief Information OfficerCalgary, AB

Whistleblower ContactTel: +1.866.296.8654Email: [email protected]

[email protected] [email protected]

Web: www.openboard.info/ener/

DIRECTORS AND EXECUTIVES

mailto:[email protected]





http://www.openboard.info/ener/


SHAREHOLDERS’ INFORMATION

COMMON SHARESThe common shares of the Company are listed and traded on the Toronto Stock Exchange under the symbol “EFX”.

TRUSTEE, REGISTRAR, AND TRANSFER AGENT

CST Trust Company

Calgary, AB Canada

For shareholder inquiries:

CST Trust Company

2001 Boul. Robert-Bourassa, Suite 1600 Montreal, QC H3A 2A6 Canada

Mail: PO Box 700 Station B Montreal, QC H3B 3K3 Canada

Tel: +1.800.387.0825 or +1.416.682.3860 Fax: +1.888.249.6189 Email: [email protected] Web: www.canstockta.com

All questions about accounts, share certificates, or dividend cheques should be directed to the Trustee, Registrar, and Transfer Agent.

AUDITORSErnst & Young Calgary, AB Canada

BANKERSThe Toronto Dominion Bank Calgary, AB Canada

The Bank of Nova Scotia Toronto, ON Canada

INVESTOR RELATIONSEnerflex Ltd. Suite 904, 1331 Macleod Trail SE Calgary, AB T2G 0K3 Canada Tel: +1.403.387.6377 Email: [email protected]

Requests for Enerflex’s Annual Report, Quarterly Reports, and other corporate communications should be directed to [email protected].


http://www.canstockta.com/



Enerflex Head Office Suite 904, 1331 Macleod Trail SECalgary, Alberta T2G 0K3Canada

Tel: +1.403.387.6377

[email protected]



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