Enerflex : Second Quarter 2020 Company Overview Presentation

COMPANY OVERVIEW

August 2020

FORWARD LOOKING STATEMENTS ADVISORY

This presentation is issued by Enerflex Ltd. ("Enerflex" or the "Company"). This presentation is for information purposes only and is not intended to, and should not be construed to, constitute an offer to sell or the solicitation of an offer to buy securities of Enerflex.

This presentation contains forward-looking information within the meaning of applicable Canadian securities laws. These statements relate to management's expectations about future events, results of operations and the Company's future performance (both operational and financial) and business prospects. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate", "plan", "contemplate", "continue", "estimate", "expect", "intend", "propose", "might", "may", "will", "shall", "project", "should", "could", "would", "believe", "predict", "forecast", "pursue", "potential", "objective" and "capable" and similar expressions are intended to identify forward-looking information. In particular, this presentation includes (without limitation) forward-looking information pertaining to: anticipated financial performance; future capital expenditures, including the amount and nature thereof; bookings and backlog; oil and gas prices and the impact of such prices on demand for Enerflex products and services; development trends in the oil and gas industry; seasonal variations in the activity levels of certain oil and gas markets; business prospects and strategy; expansion and growth of the business and operations, including market share and position in the energy service markets; the ability to raise capital; the ability of existing and expected cash flows and other cash resources to fund investments in working capital and capital assets; expectations regarding future dividends; expectations and implications of changes in government regulation, laws and income taxes; and other such matters. This forward-looking information is based on assumptions, estimates and analysis made in the light of the Company's experience and its perception of trends, current conditions and expected developments, as well as other factors that are believed by the Company to be reasonable and relevant in the circumstances.

All forward-looking information in this presentation is subject to important risks, uncertainties, and assumptions, which are difficult to predict and which may affect the Company's operations, including, without limitation: the impact of economic conditions including volatility in the price of oil, gas, and gas liquids, interest rates and foreign exchange rates; industry conditions including supply and demand fundamentals for oil and gas, and the related infrastructure including new environmental, taxation and other laws and regulations; business disruptions resulting from the COVID-19 pandemic; 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; political unrest; and other factors, many of which are beyond the Company's control. Readers are cautioned that the foregoing list of assumptions and risk factors should not be construed as exhaustive. While the Company believes that there is a reasonable basis for the forward-looking information and statements included in this presentation, as a result of such known and unknown risks, uncertainties and other factors, actual results, performance, or achievements could differ materially from those expressed in, or implied by, these statements. The forward-looking information included in this presentation should not be unduly relied upon. 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 through the SEDAR website (www.sedar.com).

The forward-looking information contained herein is expressly qualified in its entirety by the above cautionary statement. The forward-looking information included in this presentation is made as of the date of this presentation and, other than as required by law, the Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. This presentation and its contents should not be construed, under any circumstances, as investment, tax or legal advice. Any person accepting delivery of this presentation acknowledges the need to conduct their own thorough investigation into Enerflex before considering any investment in its securities. More complete information pertaining to Enerflex, in particular historical financial information, can be accessed through the SEDAR website (www.sedar.com) or at the Company's website (www.enerflex.com).

All figures in Canadian funds unless otherwise indicated.

2

EXECUTIVE MANAGEMENT TEAM

Marc Rossiter			Sanjay Bishnoi		David Izett
President & CEO	SVP, Chief Financial Officer	SVP, General Counsel

Greg Stewart	Patricia Martinez	Phil Pyle	Andrew Jack
President, USA	President, Latin America	President, International	President, Canada

3

Transforming Natural Gas to Meet The World's Energy Needs

PROVEN TRACK RECORD OF VALUE CREATION

• Complementary product lines and regions driving balanced revenue growth.

• Investing in recurring revenue sources to increase and stabilize margins.

• Strong balance sheet and free cash flow generation through the cycles.

• Proud history dating back to 1980.

ENERGY ACCESS IS FUNDAMENTAL TO SOCIAL PROGRESS

U.N. HUMAN DEVELOPMENT INDEX

Per Capita Energy Use vs. United Nations Human Development Index Score

1.00		Spain	Germany	SwedenAustralia Norway Finland	USA	Canada
0.90
	Uruguay		Oman
0.80	Philippines			Saudi	UAE
		Poland		Arabia

0.70

0.60 Namibia

Angola

0.50 Nigeria Ethiopia

Mozambique

0.40

Niger

0.30

0

1000

2000

3000

4000

5000

6000

7000

8000

ENERGY USE (KG OF OIL EQUIVALENT PER CAPITA)

5

CONSUMPTION TRACKS GDP GROWTH

Global Gross Domestic Product trillion 2010 US dollars

Global Aggregate Energy Consumption

('000 bcf equivalent)

300

250

200

150

100

HistoryProjections

non-OECD

High Economic

Growth

Reference

Low Economic Growth

High Economic Growth

Reference

1,000

History

Projections

non-OECD

800

600

400

50OECD

0

Low Economic Growth

200

OECD

0

2010

2020

2030

2040

2050

2010

2020

2030

2040

2050

World energy consumption rises over 40% between 2020 and 2050 in the EIA's Reference case

6

GLOBAL ENERGY DEMAND SATISFIED BY A DIVERSE FUEL MIX

Projected Global Energy Consumption

('000 bcf equivalent per year)

Natural gas is the world's fastest growing source of fossil fuel

Global natural gas

consumption is projected to increase by over 40% from 2020 to 2050

1000

900

800

700

600

500

400

300

200

100

0

134.7

+42%

(~ 57,000 bcf)

191.4

2010	2015	2020	2025	2030	2035	2040	2045	2050
		Liquids		Natural Gas		Coal			Nuclear			Renewables

		7
Source: EIA International Energy Outlook 2019.

INCREASED GAS CONSUMPTION IN ALL SECTORS…

Global Natural Gas Consumption by Sector

('000 bcf)

250

200	History	Projections

150

100

50

0

2010	2020	2030	2040	2050
		Buildings		Transportation			Power Generation		Industrial

Over time, natural gas use is expected to accelerate from increased industrial activity, natural gas-fired electricity generation, and transportation fueled by compressed and liquefied

natural gas

		8
Source: EIA International Energy Outlook 2019, Case: Reference.

…WHILE REDUCING CARBON INTENSITY

49%	Pounds of CO2 emitted per thousand cubic feet
Up to				- 49%
	229	215	214
	206
fewer CO2 emissions				161	157
vs. other					139
fossil fuels1					117

Environmental considerations support a shift to natural gas vs. other fossil fuels

Coal	Coal	Coal	Coal	Diesel Fuel Gasoline Propane	Natural
(Anthracite)(Bituminous)	(Lignite)	(Sub-	and	Gas
			bituminous) Heating Oil

		9
1 Source: U.S. Energy Information Administration

ALL PRODUCED GAS REQUIRES COMPRESSION AND PROCESSING

('000 bcf)
		+57
200		191.4
		Consumption increase
150	134.7	of ~57,0001 bcf by
	2050 requires $billions
		of compression,
100		processing, and
		maintenance
50		investments
0	2020	2050

		10
1 Based on EIA International Energy Outlook 2019, Case: Reference.

POSITIONED FOR GROWTH

GLOBAL DELIVERY OF NATURAL GAS SOLUTIONS

Business Overview*

Revenue	$1,672 MM
Employees	~2,100
Operating Locations	57
Manufacturing Facilities	3
Countries		17
Fleet:	~695,000 HP

0	32,000	Enerflex Manufacturing Facility
Enerflex Operating Location
bcf	bcf**

Enerflex BOOM Assets

*Trailing twelve-months for the period ended June 30, 2020.	12
** 2019 Global Production = 140,000 bcf/year.

EXECUTING ON A POWERFUL STRATEGY

Engineered Systems

Customized offerings for:

• Gas Compression
• Gas Processing Plants
• Cryogenic Plants
• Electric Power Generation

Integrated Turnkey ("ITK")

Turnkey Engineered Systems, with local construction and installation capabilities

After-Market Services

• Full after-market parts and services supply for all products
• Product installation and commissioning
• Contract operations and maintenance

Asset Ownership

Any Engineered

System or ITK product on a leased or Build- Own-Operate-Maintain ("BOOM") basis in all target markets

Recurring Revenues

13

SOLUTIONS FROM THE WELLHEAD TO PIPELINE

14

DIVERSIFICATION STRATEGY

Complementary offerings of diversified product lines in diversified geographies

Vertically Integrated

platform provides

differentiation

Focused on growth and

maintenance of gas production volumes

USA

Canada

ROW

Engineered

Systems

AMS

Asset Ownership

15

ADDITIONAL FOCUS ON GROWING RECURRING REVENUES

Engineered Systems

Integrated Turnkey ("ITK")

After-Market Services

Asset

Ownership

Recurring revenue streams offer greater stability and predictability of financial performance

Higher EBITDA margins versus

manufacturing

Strategic goal of generating

• 50% of revenue from recurring sources

Recurring Revenues

16

ASSET OWNERSHIP

Products engineered, built, and ownedby Enerflex

Contracted revenues provide valuable source of stable, predictable revenues and profits

1	2	Leased to Customers for
	Asset Ownership	varying durations

=

Contract Compression

+

BOOM

4 3

May include long-term operations & maintenance component

17

RATIONALE FOR ASSET OWNERSHIP

C$ in millions

$800

$600

$400

$200

$0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2012	2013	2014	2015	2016	2017	2018	2019	2020
			ES Bookings			Trailing 12-Month EBITDA*

		18
* Normalized for Goodwill impairments.

STRONG U.S. CONTRACT COMPRESSION FUNDAMENTALS

US Contract Compression Market1 (million horsepower)

Changing field conditions

16.0

14.0

12.0

History Projections

require continual equipment modification, making rental an attractive alternative to

6.4%

10.0CAGR

8.0

6.0

4.0

2.0

0.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Wellhead		Gas-Lift		Gathering		Processing

purchasing

Demand is expected to grow over the long term from both the maintenance and growth of produced gas volumes

		19
1 Spears & Associates Inc., April 2020.

CAPTURING OPPORTUNITIES IN A SUPPORTIVE MARKET

> 150%

82%

High 44%

Low 40%

Growth of US fleet from	USA contract
~130,000 hp to	compression fleet
> 335,000 hp since 2017	utilization %1

Mid 16%

Diversified horsepower profile across contract compression fleet2

1 Average utilization for the three months ended June 30, 2020.	20
2 High ≥ 801 horsepower; Mid = 251 - 800 horsepower; Low ≤ 250 horsepower.

BUILD-OWN-OPERATE-MAINTAIN

BOOM

Build-Own-

Operate-Maintain

Engineering	Fabrication	Installation	Operations &
&	Maintenance
& Design
	Commissioning

Any Engineered System

or ITK product on a

Build-Own-Operate-

Maintain ("BOOM")

basis in all target

markets

Larger scale

compression and

processing facilities

Longer-term contracts

vs. contract compression

21

BOOM PORTFOLIO CONTINUES TO GROW

Early Production

Compression

Facility, Oman

2009

	Compression
	Facility, Bahrain
Compression	Compression
Facility, USA	Facility, Oman
2014	2015
Compression	Processing and
Facility, USA	Compression
	Facility, Oman

Compression

Facility, Oman

Early

Development

Facility, Oman

Gas Compression	Compression
Facility,
Facility, Colombia	Argentina
2018	2020

UPGN Processing

Facility, Brazil

Field Depletion

Compression

Facility, Oman

22

PRIORITY TO GROW RECURRING REVENUES

Recurring Revenue C$ in millions

$600

$500

$400

321.0

$300

$200 262

$100

59

$0

+8%

					CAGR1							596.9	579.1
					537.2					521.1
		486.4				471.5	461.7
		375.0								395		373
323.5					385		299				345
				388					308
284		325
													202		206
								173				176
						153			154
				98
		50
39

Recurring revenue

growth through Recurring revenue has

organic investment grown by over $250

and strategic M&A million (8% CAGR1) since

2011

2011	2012	2013	2014	2015	2016	2017	2018	2019 TTM Q2
			Asset Ownership Revenue			Service Revenue	2020

		23
1 Compound annual growth rate period from 2011 - 2019 inclusive.

ASSET OWNERSHIP RISKS

01 CreditCounterparty

03 PerformanceAsset

02	Well and/or
basin
dynamics

Risks mitigated when paired with financial + basin due diligence and Enerflex AMS

24

OPTIMIZED PLATFORM POSITIONED FOR GROWTH

1

3

VERTICAL INTEGRATION		FINANCIAL STRENGTH
Differentiated global		Manufacturing cash
platform with product		flows fund investment
line synergies		in Asset Ownership
		platform

DIVERSE OFFERINGS		VALUE CREATION
Growing all product		Growing profitability
offerings in all		while maintaining
geographies - We are		strong returns
where the gas is

2

4

25

COMMITTED TO SAFETY

2019 Global Consolidated Safety Record:1

0.09 0.55 0.28

LTI	TRIR	MVIR
Total # of Lost	Total Recordable	Motor Vehicle
Time Incidents	Injury Rate per	Incidents per
per 200,000	200,000 exposure	1,000,000 km
exposure hours.	hours.	driven.
2019 Target = 0.00	2019 Target = 0.62	2019 Target = 0.25

		26
1 As at December 31, 2019.

ENHANCING AND STRENGTHENING COMMUNITIES

Corporate citizenship through

wellness and community

development initiatives is an integral part of Enerflex's vision

27

FOCUSED REGIONAL PRESENCE

UNITED STATES

				Enerflex Manufacturing Facility
				Enerflex Operating
0 bcf/d	25 bcf/d
Location

USA1

Eng. Systems	$724 MM
Service	$171 MM
Rental	$ 86 MM
Total Revenue	$981 MM

Fleet: ~335,000 HP Average Fleet Utilization: 82%2

% of Consolidated Revenues1

Canada 23.9%

USA

ROW 58.7% 17.4%

Gas infrastructure demand driven by associated gas from US shale plays

Enerflex is positioned to grow its asset ownership and after- market services platforms in key plays

Source: BP Statistical Review of World Energy 2020.	29
1 Trailing twelve-months for the period ended June 30, 2020.
2 For the three months ended June 30, 2020.

REST OF WORLD - LATIN AMERICA

Rest of World1

Eng. Systems	$ 37 MM
Service	$144 MM
Rental	$110 MM

Total Revenue $291 MM

Fleet: ~300,000 HP

% of Consolidated Revenues1

Canada 23.9%

USA

ROW 58.7%

17.4%

			Enerflex Operating Location
0 bcf/d
4 bcf/d

Enerflex BOOM Assets

Regional gas production is

TBD

expected to grow by approximately 80% by 2040

Continued success with ITK, BOOM, and recurring revenue projects is expected to lead Enerflex's growth

Source: BP Statistical Review of World Energy 2020.	30
1Trailing twelve-months for the period ended June 30, 2020.

REST OF WORLD - MIDDLE EAST / AFRICA

	Rest of World1	% of Consolidated Revenues1
	Eng. Systems	$ 37 MM
	Service	$144 MM
	Rental	$110 MM
Enerflex Operating Location	Total Revenue $291 MM	Canada
Enerflex BOOM Assets	Fleet: ~300,000 HP
			23.9%

USA

ROW 58.7%

17.4%

0 bcf/d	23 bcf/d

TheTBDMiddle East accounts for > 35% of the world's proven gas reserves*

• 100,000 horsepower of owned and installed gas compression and processing facilities

Positioned for growth in key markets including Oman, Bahrain, and Kuwait

*Source: BP Statistical Review of World Energy 2020.	31
1Trailing twelve-months for the period ended June 30, 2020.

CANADA

Canada1

Eng. Systems $332 MM

% of Consolidated Revenues1

Canada 23.9%

NGL recovery drives infrastructure demand

Service	$ 58 MM
Rental	$ 10 MM

Total Revenue $400 MM

Fleet: ~60,000 HP

ROW 17.4%

USA

58.7%

in liquids-rich basins

Petrochemical projects will increase domestic consumption of NGLs

Electric power

opportunities remain

attractive

0 bcf/d	12 bcf/d

Enerflex Manufacturing Facility Enerflex Operating Location

Source: Alberta Energy Regulator, 2020.	32
1Trailing twelve-months for the period ended June 30, 2020.

FINANCIAL OVERVIEW AND PROSPECTS

REVENUE GROWTH THROUGH COMPLEMENTARY OFFERINGS

C$ in millions

											$2,045.4
				$1,696.2	$1,629.0				$1,703.3	$503	$1,671.8
							$1,553.4
		$1,501.7						$300
		$1,405.0
										$400
			$529
				$494						$347
$1,227.1						$419
$500				$1,130.6
		$438				$423
								$291
$444				$405		$233	$356
				$457
		$398	$376
$361						$432				$1,196
									$981			$981
		$604		$762	$678			$779
		$590
$423				$466
2011 2012	2013 2014 2015	2016 2017	2018		2019 TTM Q2
												2020
		United States of America		Rest of World			Canada

TTM Q2 2020		2019
22%	12%	19%	10%
66%		71%

Engineered Systems		Service		Rentals

Exposure to several markets protects against spending fluctuations in any one particular segment

34

A DISCIPLINED APPROACH TO STRATEGIC GROWTH

CAPEX, M&A and ROCE

Organic	Leads			M&A	Leads		Organic	Leads		M&A
Investment	To		Opportunities	To		Investment	To		Opportunities
C$ in millions												17.5%
$600
$500			13.3%											12.2%
$400				9.7%	12.2%				9.4%	9.8%
8.8%
$300								6.2%	6.1%
$200
$100
$0
2011	2012	2013		2014	2015	2016*	2017*	2018*		2019* TTM Q2
														2020*
		Acquisition			Rental Additions		PP&E Additions				ROCE

Approximately C$1.5 billion reinvested in organic growth and M&A opportunities over the past nine

years

Over 90% of growth

capex deployed

toward Asset

Ownership platform, promoting sustained earning power from recurring revenues

		35
* ROCE derived from Adjusted EBIT, the latter calculated using adjusting amounts disclosed in the MD&A.

BUSINESS MIX DRIVES PROFITABILITY

EBITDA and EBITDA Margin
C$ in millions					16.8%			16.9%	16.5%
400.0
350.0							13.8%	13.2%	345.8
300.0				11.4% 10.9%					295.8
	10.4%	10.4%
250.0
200.0			9.0%					225.2
						214.1
			193.7		190.3
150.0				176.8
	156.8
100.0	127.0		126.9
50.0
-	2011	2012	2013	2014	2015	2016*	2017*	2018*	2019*	TTM Q2
										2020*

EBITDA		EBITDA Margin %

Over $150 million increase in EBITDA since 2011 coupled with increasing EBITDA margins

		36
* Adjusted EBITDA as disclosed in the MD&A.

GROSS MARGIN PROFILE

Revenues (C$ in millions) and Gross Margin %1 by Product Line

		Q2 2020	Q2 2019	H1 2020	H1 2019
Engineered	Revenue	149.2	385.0	374.6	730.4
Systems	Gross Margin %	16.6%	17.7%	20.5%	16.7%
Rentals	Revenue	61.2	64.5	126.6	123.0
Gross Margin %	64.6%	60.1%	63.4%	60.5%
After-Market	Revenue	77.0	92.5	152.0	173.3
Services	Gross Margin %	24.1%	21.7%	23.3%	21.0%

		37
1 Gross Margin % is inclusive of depreciation and amortization. See appendix for reconciliation to amounts presented in the MD&A.

POSITIVE FREE CASH FLOW AND BALANCE SHEET STRENGTH

Free Cash Flow Before Net Capital Spending*

Net Debt to EBITDA

C$ in millions
300.0
250.0									240.8
200.0								190.4		193.3					2.38
150.0		105.1		114.2 126.5	112.8	136.2							1.79
													1.30
100.0														1.19
		72.7												1.09
67.4													0.97
50.0											0.30						0.52
-	2011	2012	2013	2014	2015	2016	2017	2018	2019	TTM	2011	2012	2013	2014	2015 2016** 2017** 2018** 2019**TTM Q2
										Q2		(0.31)	(0.70)				2020**
										2020

Free cash flows fuel organic growth,	Balance sheet strength with a net
M&A, and dividend growth	debt to EBITDA of 1.3

*Amounts	presented exclude M&A and net capital spending and are available in the financial statements and accompanying notes for the respective years. See Appendix for	38
reconciliation to Free Cash Flow.
** Calculated using Adjusted EBITDA as disclosed in the MD&A. See Appendix for composition of consolidated borrowings.

DIVIDEND HISTORY

Annually (C$/share)
$0.50									History	Projections
									$0.46
$0.45								$0.42
$0.40							$0.38
$0.35				$0.34	$0.34	$0.34
$0.30		$0.28	$0.30
$0.25	$0.24
$0.20										$0.18
$0.15
$0.10
	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020*

The Company has

maintained a

dividend through

the cycles since

2011

		39
* Annualized estimated 2020 dividend following March 17, 2020 press release.

IGNITING THE FUTURE OF ENERGY

CAPITAL ALLOCATION PRIORITIES

Balance Sheet strength  preserving

liquidity to weather downturns.

Organic growth of Asset Ownership platform in all Regions.

Opportunistic Inorganic growth  right assets, right places, right long-term returns.

ADDITIONAL ORGANIC + INORGANIC REINVESTMENT…

Up to 79% increase in EBITDA1 from next	C$ in millions		453.3
$1B of reinvestment			100.0
				79%
3-year average EBITDA1	$253.3M	253.3	100.0
Next $1B of CAPEX	$100M
@10x EBITDA multiple
@5x EBITDA multiple	$200M
	---------------------------------
	$353.3M
	$453.3M	3-year avg.	$1B CAPEX	$1B CAPEX
		EBITDA1	@ 10x	@ 5x
1 Three-year average adjusted EBITDA for the period of 2017 - 2019 inclusive. See adjusted EBITDA as disclosed in the MD&A.			42

…WITH OPTION TO CONSOLIDATE A FRAGMENTED MARKET

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

US Contract Compression Market

(total horsepower, 000's)

335

US contract compression market consists of 4 to 5 large players and several small players

Roll-up of smaller players may accelerate growth

43

PIVOT TO RECURRING REVENUES SUPPORTS VALUATION

EV/NTM EBITDA Multiples1:
10.0
9.0		Implied multiple
8.0
7.0		expansion with
6.0
	continued growth of
5.0
	recurring revenue
4.0
3.0		product lines
2.0
1.0
0.0
EFX	Average Pure Play Contract Compression Peer	44
1 EV/NTM EBITDA multiple for Enerflex and the following companies: Archrock Inc., USA Compression Partners LLC. Source: Bloomberg

WHAT'S NEXT FOR ENERFLEX

• Current geographic platform provides the foundation for incremental growth in each operating region.
• Focus remains on profitably growing each of the Engineered Systems, After-MarketServices, and Asset Ownership product lines in all regions.
• Asset Ownership remains the best opportunity to stabilize earnings through the cycles.

EXECUTING ON A POWERFUL STRATEGY

Proven track record of Creating Shareholder Value

• Strong balance sheet and free cash flow allows Enerflex to pursue strategic growth opportunities to further expand the business.
• Revenues derived from complementary product lines and geographies.
• Improving margins from recurring revenue growth.
• Sustained value creation characterized by positive ROCE and healthy Free Cash Flow.
• Proud history dating back to 1980.

46

APPENDIX

RECONCILIATIONS

FREE CASH FLOW

		Dec-11	Dec-12	Dec-13	Dec-14	Dec-15	Dec-16	Dec-17	Dec-18	Dec-19	TTM Q2
		2020
Cash provided by operating activities	134,795	134,208	69,024	64,611	104,173	91,792	179,251	242,868	54,169	136,589
Net change in non-cash working capital and other	48,243	15,531	(28,929)	(61,053)	(55,251)	(41,385)	9,736	38,208	(221,749)	(95,784)
		86,552	118,677	97,953	125,664	159,424	133,177	169,515	204,660	275,918	232,373
Add back:
Net finance costs	7,011	5,661	5,518	9,771	15,310	14,056	12,727	19,145	18,578	20,617
Current income tax expense	17,293	22,435	23,256	45,949	32,097	20,742	27,525	20,871	31,720	26,977
Proceeds on the disposal of property, plant and
equipment								22,853	9,205	9,155
Proceeds on the disposal of rental equipment								6,935	4,454	3,229
Deduct:
Net interest paid	(8,525)	(6,356)	(5,408)	(8,999)	(13,657)	(13,116)	(11,957)	(18,373)	(18,398)	(20,407)
Net cash taxes (paid) received	(25,642)	(16,723)	(26,801)	(34,667)	(39,839)	(15,089)	(31,580)	(2,273)	(29,434)	(27,756)
Additions to property, plant and equipment								(16,920)	(46,322)	(35,877)
Additions to rental equipment:
Growth								(102,960)	(208,978)	(178,350)
Maintenance								(12,365)	(8,090)	(7,498)
Dividends paid	(9,266)	(18,606)	(21,798)	(23,499)	(26,804)	(26,921)	(30,066)	(33,676)	(37,548)	(38,472)
Net capital spending	33,993	(32,706)	(17,365)	(32,401)	(166,318)	4,244	(13,159)
Free cash flow	101,416	72,382	55,355	81,818	(39,787)	117,093	123,005	87,897	(8,895)	(16,009)
Free cash flow before net capital spending	67,423	105,088	72,720	114,219	126,531	112,849	136,164	190,354	240,836	193,332

49

GROSS MARGIN PROFILE BY PRODUCT LINE1

								Three months ended
									June 30, 2020
					Engineered
($ Canadian thousands)		Total		Systems		Service		Rentals
Revenue	$	287,438	$	149,197	$	77,034	$	61,207
Cost of goods sold:
Operating expenses		204,627		124,448		58,504		21,675
Depreciation and amortization		17,011		2,139		1,234		13,638
Gross margin	$	65,800	$	22,610	$	17,296	$	25,894
								Three months ended
									June 30, 2019
					Engineered
($ Canadian thousands)		Total		Systems		Service		Rentals
Revenue	$	541,874	$	384,953	$	92,452	$	64,469
Cost of goods sold:
Operating expenses		415,013		316,921		72,364		25,728
Depreciation and amortization		16,559		1,572		679		14,308
Gross margin	$	110,302	$	66,460	$	19,409	$	24,433

		50
1 For the three months ended June 30, 2020 versus the prior year period.

GROSS MARGIN PROFILE BY PRODUCT LINE1

								Six months ended
								June 30, 2020
				Engineered
($ Canadian thousands)		Total		Systems		Service		Rentals
Revenue	$	653,178	$	374,590	$	152,010	$	126,578
Cost of goods sold:
Operating expenses		460,622		297,781		116,556		46,285
Depreciation and amortization		33,024		4,249		2,058		26,717
Gross margin	$	159,532	$	72,560	$	33,396	$	53,576
								Six months ended
								June 30, 2019
				Engineered
($ Canadian thousands)		Total		Systems		Service		Rentals
Revenue	$	1,026,776	$	730,415	$	173,312	$	123,049
Cost of goods sold:
Operating expenses		794,309		608,671		136,978		48,660
Depreciation and amortization		33,395		3,058		1,333		29,004
Gross margin	$	199,072	$	118,686	$	35,001	$	45,385

		51
1 For the six months ended June 30, 2020 versus the prior year period.

COMPOSITION OF BORROWINGS

($ Canadian thousands)	June 30, 2020	December 31, 2019
Drawings on Bank Facility1	142,423	121,328
Senior Notes due June 22, 2021	40,000	40,000
Senior Notes due December 15, 20241	158,094	151,374
Senior Notes due December 15, 20271	125,396	120,916
Deferred transaction costs	(2,755)	(3,131)
	463,158	430,487

		52
1 Includes a US dollar-denominated component and is therefore subject to foreign exchange fluctuations between the US and Canadian dollar.