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

Thank you, Jill, and good morning, everyone. With me today are Paul Mahoney, President and CEO; Preet Dhindsa, CFO; and Ben Park, Enerflex's Controller. During today's call, our prepared remarks will focus on 3 key areas: one, the continued strong performance of Enerflex's business; two, our outlook, priorities and capital spending guidance for 2026; and three, an update on operational and strategic initiatives, including a definitive agreement to divest the majority of our operations in the APAC region. 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 profile. 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 on 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. We are pleased to report another strong quarter that caps off an excellent year for Enerflex. The strength of our financial and operating results is a testament to the resilience, commitment and deep knowledge of our global team. Today, we will share more about the consistency of Enerflex's results, our growing and relentless focus on execution and the strategic opportunities within a constructive natural gas market. Together, we believe these fundamentals position Enerflex for long-term value creation. Results during the fourth quarter reflect solid performance across our geographies and business lines as well as our ongoing efforts to optimize and streamline our business. The Energy Infrastructure and After-Market Services business lines continue to be the foundation of our results, contributing 65% of gross margin before depreciation and amortization in 2025. The Engineered Systems business line continued to demonstrate strong project execution and visibility for this business line remains solid, supported by a $1.1 billion backlog at the end of Q4 and healthy bidding prospects. Firstly, I would like to touch on our announcement related to Enerflex's operations in the Asia Pacific region. Enerflex has entered into a definitive agreement to divest the majority of its operations in the APAC region to the INNIO Group. This business operates principally in Australia, Indonesia and Thailand and is primarily focused on the AMS product line. Completion of the transaction is subject to standard closing conditions and regulatory approvals and is expected to close in the second half of 2026. Following close, Enerflex will continue to deliver Engineered Systems solutions in APAC, including natural gas compression, processing and electric power generation through local sales teams with equipment manufactured from the company's 3 facilities in North America. I would like to thank…

Thanks, Paul, and good morning, everyone. I'll start with highlights from the fourth quarter. We generated revenue of $627 million in the fourth quarter compared to $561 million in Q4 '24 and $777 million in Q3 '25. Higher revenue compared with prior year reflects strong execution and a high level of operational activity in the Engineered Systems product line. The sequential decline relates primarily to commencement of the Block 60 Bisat-C Expansion facility and the pull forward of certain projects into the third quarter. Gross margin before depreciation and amortization was $177 million or 28% of revenue compared to $174 million or 31% of revenue in Q4 '24 and $206 million or 27% of revenue during Q3 '25. The EI and AMS product lines generated 67% of consolidated gross margin before depreciation and amortization during Q4 '25. Energy Infrastructure performance continued to be strong with gross margin before D&A of $89 million compared to $86 million in Q4 '24 and $95 million in Q3 '25. After-Market Services gross margin before D&A was 22% in the quarter, benefiting from strong customer maintenance programs. SG&A was $83 million for the 3 months ended December 31, 2025, down $9 million from the prior year period, driven by cost savings initiatives, improved operational efficiencies and lower depreciation and amortization. On a sequential basis, SG&A increased from $71 million due to higher stock-based compensation and third-party expenses. Adjusted EBITDA of $123 million compares to $121 million in Q4 '24 and $145 million during Q3 '25. The sequential decrease in adjusted EBITDA was primarily related to the pull forward of certain ES projects into Q3 '25 and higher core SG&A in the fourth quarter. Return on capital employed was 16.9% in Q4 '25, an increase compared to 10.3% in Q4 '24 and consistent with the record…

Thanks, Preet. Over the course of 2025, we continue to advance our business, strengthened our financial position and took meaningful steps to enhance long-term shareholder value. While there remains important work ahead to fully realize our ambitions, I'm encouraged by the momentum across our global operations and confident in our ability to build on this foundation. Once again, we believe the consistency of Enerflex's results, our growing and relentless focus on execution and strategic opportunities within a constructive natural gas market position Enerflex for long-term value creation. We are excited about the path ahead for Enerflex and look forward to providing more detail in the coming months around Enerflex's strategy, capabilities and market opportunities. And before I hand the call back over to the operator, I too want to thank the 4,400 employees around the world for their commitment, resilience and focus on customers day in and day out. We will now hand the call back to the operator for questions.

[Operator Instructions] Our first question comes from the line of Aaron MacNeil with TD Cowen.

Yesterday, a large contract compression company in the U.S. noted that lead times on large engines has extended to 110 to 120 weeks. So I'm just hoping that you can speak to sort of the amount of the Engineered Systems backlog, potential orders, including power generation beyond the backlog and the sort of energy infrastructure organic growth that would have sort of an associated engine today? And then ultimately, do you see this as a constraint that would reduce your ability to execute on the business? And then maybe more directly as it relates to the 1.5 gigawatts of opportunities, like can you practically execute or like how much of it, I guess, could you practically execute on in the near term in light of those constraints?

Aaron, great question. First, I would say, the element of availability of engines and things is not a new phenomenon. This is something that we've been strategizing, grappling with for a bit now. I would say, our '26 is secure. We are currently positioning for 2027, given the light of the delivery constraints. And to answer the question relating to power generation, we did in Q4, if you remember and even Q3, a small element of putting more of a speculative position to secure engines such that we could deliver on our commitments in '26.

Got you. Okay. And then maybe keeping with the lead times. Again, I know you said you had '26 sort of locked in, but if lead times are effectively 2 years, is it fair to assume that you sort of now have a multiyear growth outlook for the contract compression business specifically? Like I'm thinking about you upticked the capital spend for next year or I guess, for this year. Like should we expect sort of that cadence to continue into 2027? And sort of do you have visibility to that today? And do you have customers sort of lined up ready to take that equipment today?

Yes. Great question. As we've stated, our CapEx position in '26, that demonstrates our commitment to further growth similar to what you've seen in '25. We do have customer-specific positions with that. I know there is some discussion around Permian Basin and what have you. But when it comes to gas processing, production of gas and the outlook of gas, yes, I think the statement that you've made around 2 years of confidence on growth is accurate.

[Operator Instructions] Our next question comes from the line of Tim Monachello with ATB Cormark Capital Markets.

Just a quick one to follow up on Aaron's question. Do you think that lead time, as you stated, 110 to 120 weeks is accurate across your product lines that you're seeing? Or is there some variability in lead times based on, I guess, the size of engines that you're looking at and end markets?

Yes. The stated 120 weeks is for a portion of the product line, I think, is the first thing to realize. And it does come in the higher horsepower ranges. I think it also -- which provides a little bit of potential opportunity. Expansion and operations in the key equipment manufacturers has been going on, and it's pretty fervent. So right now, a large horsepower, 120 weeks is the current lead time. But as we go out here over the next so many months, we should see some impact due to CapEx with the equipment manufacturers, number one. And two, there -- again, it's not the entire portfolio. It's a select piece of the portfolio that's actually 120 weeks.

Got it. And then having 2026 sort of secured, would you say, I don't know, the majority or almost all of the new orders that you received today won't be delivered in '26? Or do you still have capacity to book and turn work in '26?

If you're referring to data center power gen-related items, yes, most of that would be 2027 and beyond. Do we find opportunities here or there for book-to-bill business to pursue? That certainly is the plan, and that certainly is something that we do. But when it comes to the data center world, that would be more of 2027 and on in terms of deliveries.

And I meant more for the compression processing piece?

In terms of...

Like if you get an order for compression tomorrow, do you have enough, I guess, orders with your channel partners for engines and components that you could deliver an order in '26? Or is that sort of the outlook for '26 in terms of that backlog for baked in [indiscernible]?

Yes. Tim, it's Jeff. As Paul referenced in the remarks a minute ago, we've secured capacity to support our activity levels in '26, and that includes a book-and-bill as Paul referenced. And we also have a view for where activity and opportunities set for '26 going into '27 as well.

Okay. Apologies for asking the question twice here. Preet mentioned potential growth opportunities in the Middle East. I wonder if you can elaborate on how you -- on what those opportunities look like and how you would pursue those opportunities relative to your cost of capital and relative to your growth opportunities in North America?

Yes, Tim. So I mean, as we mentioned, the growth capital noted in our outlook is largely earmarked for the U.S. contract compression fleet, call it, 60% to 65% greater than prior year. Currently, in the growth capital, we don't have anything directly allocated to, call it, Oman, Bahrain, the countries you're currently in, good GCC countries. But we still are active in that market. We've got a team on the ground based out of Abu Dhabi who are quite well versed in that region. And those projects, as you probably mentioned earlier, don't come around every year. And if they do, when they do hit, they usually straddle a couple of year ends. And so we're active in the market. There are often good quality assets, the BOOM assets, whether finance or operating leases we see on our balance sheet, great counterparties, good economics, take-or-pay without direct volumetric or commodity price risk. So we like the asset class. But right now, we just put a marker out there that nothing in our current growth capital guidance speaks to those potential projects, but we are active exploring good markets in those good countries.

Okay. And then around capital allocation, I appreciate your prepared remarks there, Preet. But just curious, in terms of the NCIB that you have outstanding for the year, do you expect to exhaust that NCIB? Or how should we be thinking about your share repurchase activity in '26?

Tim, I mean, all the capital allocation levers that we've spoken about in the past are relevant growth capital, we put markers out there now. The dividend, as you know, we've increased as at Q3 last couple of years. And we've been active in the NCIB since inception, April 1 last year, purchased just under 5%, that being half of 5% of the authorized float that we had. But what I would say is that we'll be a little more prescriptive on capital allocation in the coming months once the strategy work is done. And right now, the NCIB is open until the end of March, and we'll make a call accordingly at that time.

Our next question comes from the line of John Gibson with BMO Capital Markets.

First, just wondering if you could maybe expand on the customers associated with these power gen contracts, are they with the order you signed or future orders you're working on? Is there any counterparty risk? Or are they all pretty high quality?

Yes, John, great question. In this market space, I think I used the word embryonic last quarter. So having a really strong disciplined approach on counterparties, on terms, on different conditions and whatnot is extremely important. But I would say that prime for us is counterparty risk, counterparty stability. So right now, in the recent win, very, very strong counterparty in the projects that we're pursuing here in the near term, very, very strong counterparty, well-developed relationships, well-developed understanding across the value stream, whether they're developers, real estate developers, power developers and then the hyperscalers. So that's been a key piece of our strategy and why we've kind of metered and been conservative, if you will, on our approach.

Okay. Great. And then last one from me. Just given the recent disposition, is your business kind of where it's at in terms of kind of where you want it overall? Or are there any other geographies or areas you're continuing to evaluate here?

Yes. Maybe I'll just give an overview, and Preet, you can jump in here. Early on, we've deployed more of a residual cash earnings type of North Star metric. And we've looked at all geographies, all business line, all countries and certainly continue to stay focused on that, and that's around creating shareholder value. So we continue to look at it. And I would say that's just a part of our normal discipline, operating discipline, but I wouldn't go beyond that.

The only thing I'd add is at deal close 3 years ago, we were in 27 countries. Most recently and currently, we're in 17. We'll monetize Asia Pacific, get down to likely 14 or so. And then we've got 7 core Canada, U.S., Oman, Bahrain, Brazil, Argentina and Mexico. To say, there's probably a few other noncore geographies we can get out of and free up some capital, working capital, close some bank accounts, improve our tax compliance positions in these countries. So just overly overall simplify and optimize, but there's probably a few more noncore countries to look at.

Congrats on a great year here.

Thank you.

I'm showing no further questions at this time. I would now like to turn it back to Paul Mahoney for closing remarks.

Thank you. Well, thank you for joining today's call. We look forward to sharing our first quarter financial and operation results in early May.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.