|By Marketwired .||
|May 12, 2014 05:20 PM EDT||
CALGARY, ALBERTA -- (Marketwired) -- 05/12/14 -- Enerflex Ltd. (TSX: EFX) ("Enerflex" or "the Company"), a leading supplier of products and services to the global energy industry, today reported its financial and operating results for the three months ended March 31, 2014.
During the first quarter of 2014, there have been continuing positive market developments in liquids-rich plays in Canada and the United States, in the Alberta oil sands, and electric power opportunities. We have also seen encouraging signs relative to liquefied natural gas projects in Canada, the United States and AustralAsia. These market developments have materialized into increased bookings in the first quarter of 2014 when compared to the same period in 2013, and an increased backlog.
Revenue trends were generally positive in most markets compared to the first quarter of 2013. The lower consolidated revenue in 2014 was attributable to the International segment, where lower opening backlog, and large projects in Oman and Australia that are nearing completion, contributed to a $54.5 million reduction in revenue from Engineered Systems.
As expected and stated in prior communications, continuing cost increases in the International segment in the first quarter of 2014 on a large project in Oman, and the related impact on gross margin, resulted in overall financial results for the Company that were below expectations. The cost increases were within the range previously communicated. Where the cost increases have been customer driven, variation claims have been submitted, and are being vigorously pursued.
Enerflex reported net earnings from continuing operations for the first quarter of 2014 of $4.0 million, or $0.05 per share, which were $11.4 million lower than the same period in 2013. The decrease in net earnings for the quarter was primarily a result of lower gross margin and higher SG&A expenses, partially offset by higher equity earnings and lower income tax expense.
Effective June 1, 2014, Enerflex has made a leadership change with the appointment of Mr. Philip A. J. Pyle as President, International. Enerflex has a strong regional business model and the location of this role is essential to the Company's continued international growth. Based in Abu Dhabi, Mr. Pyle will be responsible for overseeing and providing strategic and operational leadership for the international business. He brings over 25 years of extensive international operations experience through his leadership roles with multi-national companies. To support Enerflex's global growth strategy, Mr. William Moore has accepted the position of Senior Vice President, Business Development and Strategy and will be responsible for the development and execution of Enerflex's global growth objectives.
"The Company exited 2013 with strong backlog levels, and continued to see excellent booking activity through the first quarter of 2014, with a first quarter closing backlog almost $200 million higher than the first quarter of 2013. The improving market dynamics, coupled with our strong balance sheet, position the Company well to capitalize on opportunities that may arise. After first quarter results that were adversely affected by cost increases previously anticipated and communicated, we would expect to deliver stronger results through 2014, as the higher opening backlog is converted to revenue, and as the Company continues to deliver improved recurring revenue from its Service business. In addition, we are looking forward to leveraging the recent senior leadership changes in the International business, and with respect to business development."
(unaudited) Three months ended March 31, ($ millions, except per share amounts and percentages) 2014 2013 Change ($) ---------------------------------------------------------------------------- Financial Highlights Revenue $ 332.4 $ 353.3 $ (20.9) Gross margin 51.3 61.0 (9.7) Gross margin % 15.4% 17.3% EBIT (1) 10.1 22.8 (12.7) EBIT % 3.0% 6.4% Net earnings (loss) Continuing 4.0 15.4 (11.4) Discontinued - (0.5) 0.5 Earnings (loss) per share Continuing 0.05 0.20 (0.15) Discontinued - (0.01) 0.01 Bookings (2) 237.9 189.3 48.6 Backlog (2) 801.9 603.2 198.7 (1) Earnings before Interest (Finance Costs) and Taxes ("EBIT") is considered an additional GAAP measure, which may not be comparable with similar additional GAAP measures used by other entities. (2) Bookings and backlog are considered non-GAAP measures that do not have standardized meanings as prescribed by GAAP, and are therefore unlikely to be comparable to similar measures used by other entities.
As previously reported, work on an international project in Oman continued to experience substantial customer driven scope and design variations during the first quarter of 2014, which increased project costs by a further $16.2 million. This resulted in a corresponding decrease in gross margin of $12.9 million. These cost increases were within the range previously disclosed. With the project 80% complete at the end of March 2014, the risk of further margin deterioration is significantly reduced. The Company has submitted and continues to pursue variation claims for cost increases on the project, but does not expect resolution before the second half of 2014. Variation claims are filed once forecast costs on a fixed price project exceed budgeted costs, as a result of increased scope or design changes to the project, which are common for engineering, procurement and construction contracts. To the extent that these cost increases are subsequently recovered through approved variation claims from customers, revenue will be recognized in the corresponding period. This results in volatility in gross margins for the International segment as additional costs are recognized as incurred on these projects, while revenue resulting from variation claims is recognized in the period that claims are approved.
Segmented Financial Results
Revenue for the first quarter of 2014 was $332.4 million, representing a decrease of $20.9 million compared to the same period in 2013. Revenue was lower in the International segment, partially offset by higher revenue from the Canada and Northern U.S., and Southern U.S. and Latin America segments.
International segment revenue decreased by $46.2 million in the first quarter of 2014 due to lower Engineered Systems revenue driven by lower opening backlog, and large projects nearing completion in the MENA and AustralAsia regions, and due to the impact on revenue of the cost increases on the Oman project. This was partially offset by higher Service revenue on increased activity in the AustralAsia and MENA regions.
Canada and Northern U.S. segment revenue increased by $22.0 million during the first quarter of 2014 on account of increased Engineered Systems revenue due to higher backlog, and higher Service revenue coming from increased parts and engine sales, which was partially offset by lower Rental revenue resulting from lower rental unit sales.
Southern U.S. and Latin America segment revenue increased by $3.3 million in the first quarter of 2014 as a result of higher Service revenue on increased service calls and part sales, compared to the same period of 2013. Despite higher opening backlog to start 2014, Engineered Systems revenue was lower as a result of the timing of backlog conversion to revenue as deliveries have been pushed out, as a result of customer requirements. The associated revenue will be recognized in subsequent periods.
Gross margin for the first quarter ended March 31, 2014 was $51.3 million or 15.4% of revenue compared to $61.0 million or 17.3% of revenue for the same period in 2013. The decrease in gross margin was attributable to lower margin in the International segment partially offset by higher margins in the Canada and Northern U.S., and Southern U.S. and Latin America segments.
The increase in gross margin in Canada and the Northern U.S. in the first quarter of 2014 was due to the positive impact of higher revenue, lower warranty expense and stronger plant utilization, partially offset by less favourable project cost adjustments. The higher gross margin in the Southern U.S. and Latin America segment in the first quarter of 2014 was due to improved project margins and lower warranty expense. In the International segment, gross margin decreased primarily due to the impact of scope and design variations on the Oman project, which resulted in additional cost increases, and a corresponding erosion of gross margin.
The Company recorded bookings of $237.9 million during the first quarter of 2014, which were $48.6 million higher than the comparable period in 2013. This was due to a $30.3 million increase in bookings for the Canada and Northern U.S. segment as a result of improving market fundamentals, and the expansion into the Alberta oil sands and the electric power market, and a $33.9 million increase in International segment bookings due to increased activity in the AustralAsia region. This was partially offset by bookings for the Southern U.S. and Latin America segment that were $15.7 million lower in the first quarter of 2014 as the decline in bookings destined for international markets more than offset the increase in domestic bookings resulting from strong activity in liquids-rich U.S. gas basins. Enerflex finished the first quarter with a backlog of $801.9 million, compared to $603.2 million at the end of the first quarter of 2013, an increase of $198.7 million or 32.9%. Sequentially, backlog has increased by $7.9 million since December 31, 2013.
Subsequent to the end of the first quarter of 2014, Enerflex declared a quarterly dividend of $0.075 per share, payable on July 3, 2014, to shareholders of record on May 27, 2014.
Quarterly Results Material
Enerflex's interim condensed financial statements for the three months ended March 31, 2014, and the accompanying Management's Discussion and Analysis, will be available on the Enerflex website at www.enerflex.com under the Investors section and on SEDAR at www.sedar.com.
Conference Call and Webcast Details
Enerflex will host a conference call for analysts, investors, members of the media and other interested parties on Tuesday, May 13, 2014 at 9:00 a.m. MDT (11:00 a.m. EDT) to discuss the first quarter 2014 financial results and operating highlights. The call will be hosted by Mr. J. Blair Goertzen, President and Chief Executive Officer and Mr. D. James Harbilas, Executive Vice President and Chief Financial Officer of Enerflex Ltd.
If you wish to participate in this conference call, please call 1.800.618.8682. Please dial in 10 minutes prior to the start of the call. No passcode is required. The live audio webcast of the conference call will be available on the Enerflex website at www.enerflex.com under the Investors section on May 13, 2014 at 9:00 a.m. MDT (11:00 a.m. EDT). Approximately one hour after the call, a recording of the event will be available on the Company's website. A replay of the teleconference will be available one hour after the conclusion of the call until midnight, May 20, 2014. Please call 1.800.558.5253 or 1.416.626.4100 and enter passcode 21715349.
Enerflex Ltd. is a single source supplier of natural gas compression, oil and gas processing, refrigeration systems and electric power equipment - plus in-house engineering and mechanical service expertise. The Company's broad in-house resources provide the capability to engineer, design, manufacture, construct, commission and service hydrocarbon handling systems. Enerflex's expertise encompasses field production facilities, compression and natural gas processing plants, CO2 processing plants, refrigeration systems and electric power equipment servicing the natural gas production industry.
Headquartered in Calgary, Canada, Enerflex has approximately 2,900 employees worldwide. Enerflex, its subsidiaries, interests in associates and joint-ventures operate in Canada, the United States, Colombia, Australia, the United Kingdom, Russia, the United Arab Emirates, Oman, Bahrain, Indonesia, Malaysia and Singapore. Enerflex's shares trade on the Toronto Stock Exchange under the symbol "EFX". For more information about Enerflex, go to www.enerflex.com.
Advisory Regarding Forward-Looking Statements
To provide Enerflex shareholders and potential investors with information regarding Enerflex, including management's assessment of future plans, Enerflex has included in this news release certain statements and information that are forward-looking statements or information within the meaning of applicable securities legislation, and which are collectively referred to in this advisory as "forward-looking statements". Information included in this news release that is not a statement of historical fact may be forward-looking information. When used in this document, words such as "plans", "expects", "will", "may" and similar expressions are intended to identify statements containing forward-looking information. Forward-looking statements and information contained in this press release include, but are not limited to: (i) the anticipated duration of weak natural gas prices and the effect thereof in Canada and Northern U.S. markets; (ii) expected bookings in Southern U.S. and Latin America; and (iii) the nature and scope of challenges and opportunities in the International segment, including the nature and magnitude of cost estimates and variation claims. In developing the forward-looking information in this news release, the Company has made certain assumptions with respect to general economic and industry growth rates, commodity prices, currency exchange and interest rates, competitive intensity and regulatory approvals. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated in or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur.
Forward-looking information involves known and unknown risks and uncertainties and other factors, which may cause or contribute to Enerflex achieving actual results that are materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Such risks and uncertainties include, among other things, the impact of general economic conditions; industry conditions, including the adoption of new environmental, taxation and other laws and regulations and changes in how they are interpreted and enforced; volatility of oil and gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations, including future dividends to shareholders of the Company; increased competition; the lack of availability of qualified personnel or management; labour unrest; political unrest; fluctuations in foreign exchange or interest rates; stock market volatility; opportunities available to, or pursued by, the Company; obtaining financing; and other factors, many of which are beyond its control. The foregoing list of factors and risks is not exhaustive. For an augmented discussion of the risk factors and uncertainties that affect or may affect Enerflex, the reader is directed to the section entitled "Risk Factors" in Enerflex's most recently filed Annual Information Form, as well as Enerflex's other publicly filed disclosure documents, available on www.sedar.com. The reader is cautioned that these factors and risks are difficult to predict and that the assumptions used in the preparation of such information, although considered reasonably accurate at the time of preparation, may prove to be incorrect. Readers are cautioned that the actual results achieved will vary from the information provided in this press release and that such variation may be material. Consequently, Enerflex does not represent that actual results achieved will be the same in whole, or in part, as those set out in the forward-looking information. Furthermore, the statements containing forward-looking information that are included in this news release are made as of the date of this news release, and Enerflex does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.
J. Blair Goertzen
President & Chief Executive Officer
D. James Harbilas
Executive Vice President & Chief Financial Officer
The BPM world is going through some evolution or changes where traditional business process management solutions really have nowhere to go in terms of development of the road map. In this demo at 15th Cloud Expo, Kyle Hansen, Director of Professional Services at AgilePoint, shows AgilePoint’s unique approach to dealing with this market circumstance by developing a rapid application composition or development framework.
Dec. 20, 2014 03:00 AM EST Reads: 879
“We help people build clusters, in the classical sense of the cluster. We help people put a full stack on top of every single one of those machines. We do the full bare metal install," explained Greg Bruno, Vice President of Engineering and co-founder of StackIQ, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 19, 2014 11:45 PM EST Reads: 1,244
AppZero has announced that its award-winning application migration software is now fully qualified within the Microsoft Azure Certified program. AppZero has undergone extensive technical evaluation with Microsoft Corp., earning its designation as Microsoft Azure Certified. As a result of AppZero's work with Microsoft, customers are able to easily find, purchase and deploy AppZero from the Azure Marketplace. With just a few clicks, users have an Azure-based solution for moving applications to the...
Dec. 19, 2014 08:00 PM EST Reads: 828
The cloud is becoming the de-facto way for enterprises to leverage common infrastructure while innovating and one of the biggest obstacles facing public cloud computing is security. In his session at 15th Cloud Expo, Jeff Aliber, a global marketing executive at Verizon, discussed how the best place for web security is in the cloud. Benefits include: Functions as the first layer of defense Easy operation –CNAME change Implement an integrated solution Best architecture for addressing network-l...
Dec. 19, 2014 07:00 PM EST Reads: 1,229
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
Dec. 19, 2014 07:00 PM EST Reads: 850
“In the past year we've seen a lot of stabilization of WebRTC. You can now use it in production with a far greater degree of certainty. A lot of the real developments in the past year have been in things like the data channel, which will enable a whole new type of application," explained Peter Dunkley, Technical Director at Acision, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 19, 2014 06:00 PM EST Reads: 1,211
The major cloud platforms defy a simple, side-by-side analysis. Each of the major IaaS public-cloud platforms offers their own unique strengths and functionality. Options for on-site private cloud are diverse as well, and must be designed and deployed while taking existing legacy architecture and infrastructure into account. Then the reality is that most enterprises are embarking on a hybrid cloud strategy and programs. In this Power Panel at 15th Cloud Expo (http://www.CloudComputingExpo.com...
Dec. 19, 2014 11:30 AM EST Reads: 2,318
"BSQUARE is in the business of selling software solutions for smart connected devices. It's obvious that IoT has moved from being a technology to being a fundamental part of business, and in the last 18 months people have said let's figure out how to do it and let's put some focus on it, " explained Dave Wagstaff, VP & Chief Architect, at BSQUARE Corporation, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 19, 2014 11:00 AM EST Reads: 1,874
SYS-CON Media announced today that Aruna Ravichandran, VP of Marketing, Application Performance Management and DevOps at CA Technologies, has joined DevOps Journal’s authors. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. DevOps Journal brings valuable information to DevOps professionals who are transforming the way enterprise IT is done. Aruna's inaugural article "Four Essential Cultural Hacks for DevOps Newbies" discusses how to demonstrate the...
Dec. 19, 2014 10:00 AM EST Reads: 1,696
The move in recent years to cloud computing services and architectures has added significant pace to the application development and deployment environment. When enterprise IT can spin up large computing instances in just minutes, developers can also design and deploy in small time frames that were unimaginable a few years ago. The consequent move toward lean, agile, and fast development leads to the need for the development and operations sides to work very closely together. Thus, DevOps become...
Dec. 19, 2014 10:00 AM EST Reads: 1,976
"Our premise is Docker is not enough. That's not a bad thing - we actually love Docker. At ActiveState all our products are based on open source technology and Docker is an up-and-coming piece of open source technology," explained Bart Copeland, President & CEO of ActiveState Software, in this SYS-CON.tv interview at DevOps Summit at Cloud Expo®, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 19, 2014 09:00 AM EST Reads: 1,896
Verizon Enterprise Solutions is simplifying the cloud-purchasing experience for its clients, with the launch of Verizon Cloud Marketplace, a key foundational component of the company's robust ecosystem of enterprise-class technologies. The online storefront will initially feature pre-built cloud-based services from AppDynamics, Hitachi Data Systems, Juniper Networks, PfSense and Tervela. Available globally to enterprises using Verizon Cloud, Verizon Cloud Marketplace provides a one-stop shop fo...
Dec. 19, 2014 08:00 AM EST Reads: 1,887
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, p...
Dec. 19, 2014 07:00 AM EST Reads: 2,186
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover ...
Dec. 19, 2014 06:30 AM EST Reads: 2,183
ARMONK, N.Y., Nov. 20, 2014 /PRNewswire/ -- IBM (NYSE: IBM) today announced that it is bringing a greater level of control, security and flexibility to cloud-based application development and delivery with a single-tenant version of Bluemix, IBM's