Exhibit 99.2

INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (unaudited)

($ Canadian thousands)	September 30, 2023		December 31, 20221
Assets
Current assets
Cash and cash equivalents	$	163,429	$	253,776
Short-term investments		10,652		-
Accounts receivable		489,141		455,841
Contract assets		192,896		186,259
Inventories (Note 3)		417,079		369,298
Work-in-progress related to finance leases (Note 3)		-		41,986
Current portion of finance leases receivable (Note 6)		96,036		60,020
Income taxes receivable (Note 12)		6,290		10,397
Derivative financial instruments (Note 16)		123		901
Prepayments		61,820		71,398
Total current assets		1,437,466		1,449,876
Property, plant and equipment (Note 4)		147,062		152,505
Energy infrastructure assets (Note 4)		1,207,854		1,237,550
Contract assets		254,997		223,179
Lease right-of-use assets (Note 5)		92,852		78,372
Finance leases receivable (Note 6)		224,819		234,484
Deferred tax assets (Note 12)		28,282		21,857
Intangible assets (Note 7)		82,897		102,773
Goodwill (Note 8)		667,200		674,396
Other assets (Note 9)		57,410		83,076
Total assets	$	4,200,839	$	4,258,068
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	601,633	$	628,086
Provisions		23,846		18,826
Income taxes payable (Note 12)		89,790		74,086
Deferred revenues		301,845		366,085
Current portion of long-term debt (Note 10)		54,080		27,088
Current portion of lease liabilities (Note 11)		24,701		20,125
Derivative financial instruments (Note 16)		37		977
Total current liabilities		1,095,932		1,135,273
Deferred revenues		30,728		33,435
Long-term debt (Note 10)		1,349,346		1,363,237
Lease liabilities (Note 11)		84,754		72,908
Deferred tax liabilities (Note 12)		73,859		88,550
Other liabilities		19,245		21,757
Total liabilities	$	2,653,864	$	2,715,160
Shareholders’ equity
Share capital	$	591,377	$	589,827
Contributed surplus		660,003		660,072
Retained earnings		171,329		164,200
Accumulated other comprehensive income		124,266		128,809
Total shareholders’ equity		1,546,975		1,542,908
Total liabilities and shareholders’ equity	$	4,200,839	$	4,258,068

¹ Certain balances as at December 31, 2022 have been re-presented as a result of measurement period adjustments for the acquisition of Exterran as required by IFRS 3 “Business Combinations”, refer to Note 2 “Acquisition” for more information.

See accompanying notes to the unaudited interim condensed consolidated financial statements, including Note 18 “Guarantees, Commitments, and Contingencies”.

  Interim Condensed Consolidated Financial Statements F-1

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (unaudited)

	Three months ended September 30,				Nine months ended September 30,
($ Canadian thousands, except per share amounts)	2023		20221		2023		20221
Revenue (Note 13)	$	778,173	$	392,813	$	2,379,887	$	1,087,959
Cost of goods sold		631,935		314,143		1,925,823		892,057
Gross margin		146,238		78,670		454,064		195,902
Selling and administrative expenses		114,850		55,102		330,256		145,252
Operating income		31,388		23,568		123,808		50,650
Gain on disposal of property, plant and equipment		44		9		17		88
Equity earnings from associates and joint ventures		1,203		353		1,998		1,199
Impairment of goodwill (Note 8)		-		(48,000)		-		(48,000)
Earnings before finance costs and income taxes		32,635		(24,070)		125,823		3,937
Net finance costs (Note 15)		32,188		4,522		92,699		12,853
Earnings before income taxes		447		(28,592)		33,124		(8,916)
Income taxes (Note 12)		(5,267)		4,216		16,709		10,909
Net Income (loss)	$	5,714	$	(32,808)	$	16,415	$	(19,825)
Income (loss) per share – basic	$	0.05	$	(0.37)	$	0.13	$	(0.22)
Income (loss) per share – diluted	$	0.05	$	(0.37)	$	0.13	$	(0.22)
Weighted average number of shares – basic		123,888,473		89,680,965		123,799,145		89,680,584
Weighted average number of shares – diluted		124,106,107		89,680,965		124,014,367		89,680,584

¹ Comparative figures through the Financial Statements represent Enerflex’s results prior to the closing of the acquisition of Exterran Corporation on October 13, 2022, and therefore do not reflect pre-acquisition historical data from Exterran.

See accompanying notes to the unaudited interim condensed consolidated financial statements.

F-2  

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

	Three months ended September 30,				Nine months ended September 30,
($ Canadian thousands)	2023		2022		2023		2022
Net income (loss)	$	5,714	$	(32,808)	$	16,415	$	(19,825)
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 recovery		318		518		(43)		578
(Gain) loss on derivatives designated as cash flow hedges transferred to net earnings in the current year, net of income tax expense		41		5		24		(34)
Unrealized gain (loss) on translation of foreign denominated debt (Note 16)		(17,811)		(3,531)		1,226		(4,425)
Unrealized gain (loss) on translation of financial statements of foreign operations		38,092		78,639		(5,750)		95,218
Other comprehensive income (loss)	$	20,640	$	75,631	$	(4,543)	$	91,337
Total comprehensive income (loss)	$	26,354	$	42,823	$	11,872	$	71,512

See accompanying notes to the unaudited interim condensed consolidated financial statements.

  Interim Condensed Consolidated Financial Statements F-3

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Three months ended September 30,				Nine months ended September 30,
($ Canadian thousands)	2023		2022		2023		2022
Operating Activities
Net income (loss)	$	5,714	$	(32,808)	$	16,415	$	(19,825)
Adjustments for:
Depreciation and amortization (Note 4)		71,125		21,695		197,178		65,643
Equity earnings from associates and joint ventures		(1,203)		(353)		(1,998)		(1,199)
Deferred income taxes (Note 12)		(18,528)		(3,275)		(26,447)		(4,937)
Share-based compensation expense (recovery) (Note 14)		(799)		3,097		8,736		4,479
(Gain) loss on sale of property, plant and equipment		(44)		(9)		(17)		(88)
Impairment of energy infrastructure assets (Note 4)		-		-		693		349
Impairment of goodwill (Note 8)		-		48,000		-		48,000
		56,265		36,347		194,560		92,422
Net change in working capital and other (Note 17)		14,602		1,366		(130,228)		(56,324)
Cash provided by operating activities	$	70,867	$	37,713	$	64,332	$	36,098
Investing Activities
Additions to:
Property, plant and equipment (Note 4)	$	(4,523)	$	(1,920)	$	(14,451)	$	(4,911)
Energy infrastructure assets (Note 4)		(20,944)		(26,612)		(104,855)		(41,307)
Intangibles assets (Note 7)		(227)		-		(5,802)		-
Proceeds on disposal of:
Property, plant and equipment		732		18		745		105
Energy infrastructure assets		4,766		10,601		24,862		13,294
Purchase of short-term investments		(7,780)		-		(7,780)		-
Investment in associates and joint ventures		-		(5,483)		-		(5,950)
Dividends received from associates and joint ventures		-		3,094		-		3,094
Net change in working capital associated with investing activities		(2,425)		26,094		(13,857)		24,739
Cash provided by (used in) investing activities	$	(30,401)	$	5,792	$	(121,138)	$	(10,936)
Financing Activities
Net proceeds from (repayment of) the Revolving Credit Facility (Note 10)	$	(27,698)	$	-	$	15,313	$	-
Repayment of the Term Loan (Note 10)		(13,520)		-		(13,520)		-
Net proceeds from the Bank Facility (Note 10)		-		12,201		-		32,879
Net repayment of the Asset-Based Facility (Note 10)		-		(6,178)		-		(17,039)
Lease liability principal repayment (Note 11)		(6,145)		(3,626)		(16,487)		(10,957)
Dividends		(3,095)		(2,242)		(9,281)		(6,726)
Stock option exercises (Note 14)		749		-		1,121		12
Deferred transaction costs		(779)		(453)		(3,422)		(7,045)
Cash used in financing activities	$	(50,488)	$	(298)	$	(26,276)	$	(8,876)
Effect of exchange rate changes on cash and cash equivalents denominated in foreign currencies	$	(728)	$	8,502	$	(7,265)	$	9,743
Increase (decrease) in cash and cash equivalents		(10,750)		51,709		(90,347)		26,029
Cash and cash equivalents, beginning of period		174,179		147,078		253,776		172,758
Cash and cash equivalents, end of period	$	163,429	$	198,787	$	163,429	$	198,787

See accompanying notes to the unaudited interim condensed consolidated financial statements.

F-4  

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(unaudited)

($ Canadian thousands)	Share capital		Contributed surplus		Retained earnings		Foreign currency translation adjustments		Hedging reserve		Accumulated other comprehensive income		Total
At January 1, 2022	$	375,524	$	658,615	$	274,962	$	44,544	$	109	$	44,653	$	1,353,754
Net loss		-		-		(19,825)		-		-		-		(19,825)
Other comprehensive income		-		-		-		90,793		544		91,337		91,337
Effect of stock option plans		16		1,289		-		-		-		-		1,305
Dividends		-		-		(6,727)		-		-		-		(6,727)
At September 30, 2022	$	375,540	$	659,904	$	248,410	$	135,337	$	653	$	135,990	$	1,419,844
At January 1, 2023	$	589,827	$	660,072	$	164,200	$	128,729	$	80	$	128,809	$	1,542,908
Net income		-		-		16,415		-		-		-		16,415
Other comprehensive loss		-		-		-		(4,524)		(19)		(4,543)		(4,543)
Effect of stock option plans		1,550		(69)		-		-		-		-		1,481
Dividends		-		-		(9,286)		-		-		-		(9,286)
At September 30, 2023	$	591,377	$	660,003	$	171,329	$	124,205	$	61	$	124,266	$	1,546,975

See accompanying notes to the unaudited interim condensed consolidated financial statements.

  Interim Condensed Consolidated Financial Statements F-5

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(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 unaudited interim condensed consolidated financial statements (the “Financial Statements”) have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, and were approved and authorized for issue by the Board of Directors (the “Board”) on November 8, 2023.

(b) Basis of Presentation and Measurement

The Financial Statements for the three and nine months ended September 30, 2023 and 2022 were prepared in accordance with IAS 34 “Interim Financial Reporting” and do not include all the disclosures included in the annual consolidated financial statements for the year ended December 31, 2022. Accordingly, these Financial Statements should be read in conjunction with the annual consolidated financial statements. Certain comparative figures have been reclassified to conform to the current period’s presentation.

The preparation of these Financial Statements requires management to make judgments, estimates and assumptions based on existing knowledge that affect the application of accounting policies and the reported amounts and disclosures. Actual results could differ from these estimates and assumptions. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The Financial Statements are presented in Canadian dollars, which is Enerflex’s (the “Company”) presentation currency, rounded to the nearest thousand, except per share amounts or as otherwise noted, and are prepared on a going concern basis under the historical cost basis 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, 2022.

(c) Current Accounting Policy Changes

i. IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”)

Effective January 1, 2023, the definition of accounting estimates was amended under IAS 8. Under the amended definition, a change in an input or a change in a measurement technique are changes in accounting estimates if they do not result from the correction of prior period errors. The amendment further clarifies that accounting estimates are monetary amounts in the financial statements subject to measurement uncertainty.

ii. IAS 12 Income Taxes (“IAS 12”)

In May 2021, the IASB issued amendments to IAS 12, which narrows the scope of the initial recognition exception under IAS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences. Under the amendments, the initial recognition exception does not apply to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. It only applies if the recognition of a related asset and liability give rise to taxable and deductible temporary differences that are not equal.

These amendments are effective for annual periods beginning on or after January 1, 2023, and the Company adopted these amendments as of January 1, 2023. There were no adjustments that resulted from the adoption of these amendments on January 1, 2023.

F-6  

NOTE 2. ACQUISITION

On October 13, 2022, the Company completed the acquisition (the “Transaction”) of Exterran Corporation (“Exterran”) for total consideration of $222.6 million. For more details see Note 7 “Acquisition” of the annual consolidated financial statements for the year ended December 31, 2022.

The preliminary purchase price allocation is based on Management’s best estimate of the fair value of the assets acquired and liabilities assumed as at October 13, 2022. As of the Transaction date, the Company was investigating options for the disposal of certain energy infrastructure assets. During the three months ended March 31, 2023, the Company sold these assets which resulted in the adjustment of fair value. The adjusted purchase price allocation resulted in decreases to energy infrastructure assets of $12.8 million and net working capital, $0.2 million, and increases to deferred tax assets, $3.5 million and goodwill, $9.5 million.

During the three months ended September 30, 2023, the Company finalized its assessment of deferred and current taxes, which led to further purchase price allocation adjustments resulting in decreases to deferred taxes of $6.8 million and current taxes of $9.5 million, and an increase to accrued liabilities of $1.8 million. The impact of these adjustments was a $14.5 million decrease to goodwill.

The total impact of these adjustments was a decrease of $5.0 million to goodwill, and resulted in total goodwill for the Transaction as at December 31, 2022 of $134.4 million (October 13, 2022 – $139.4 million). As at September 30, 2023, Management finalized the purchase price allocation.

During the three and nine months ended September 30, 2023, the Company incurred $6.2 million and $35.9 million (September 30, 2022 – $3.8 million and $14.1 million) of further restructuring, transaction, and integration costs directly related to the Transaction. These costs are included in cost of goods sold (“COGS”) and selling and administrative expenses (“SG&A”) in the interim condensed consolidated statements of earnings (loss).

NOTE 3. INVENTORIES

Inventories consisted of the following:

	September 30, 2023		December 31, 2022
Direct materials	$	93,093	$	107,575
Repair and distribution parts		149,122		136,876
Work-in-progress		147,788		98,297
Equipment		27,076		26,550
Total inventories	$	417,079	$	369,298
	September 30, 2023		December 31, 2022
Work-in-progress related to finance leases	$	-	$	41,986

The amount of inventory and overhead costs recognized as expense and included in COGS during the three and nine months ended September 30, 2023 was $631.9 million and $1,925.8 million (September 30, 2022 – $314.1 million and $892.1 million). COGS is made up of direct materials, direct labour, depreciation on manufacturing assets, post-manufacturing expenses, and overhead. COGS also includes inventory write-downs pertaining to obsolescence and aging, and recoveries of past write-downs upon disposition. The net change in inventory reserves charged to the interim condensed consolidated statements of earnings (loss) and included in COGS for the three and nine months ended September 30, 2023 was $0.1 million and $4.9 million (September 30, 2022 – $0.9 million and 1.8 million).

The costs related to the construction of energy infrastructure assets determined to be finance leases are accounted for as work-in-progress related to finance leases. Once a project is completed and enters service it is reclassified to COGS. During the three and nine months ended September 30, 2023 the Company invested nil and $4.7 million (September 30, 2022 – $19.1 million and $60.0 million) related to finance leases that commenced operations in the period. The Company does not have any finance lease projects in progress as at September 30, 2023.

  Notes to the Interim Condensed Consolidated Financial Statements F-7

NOTE 4. PROPERTY, PLANT AND EQUIPMENT AND ENERGY INFRASTRUCTURE ASSETS

	Land		Building		Equipment		Assets under construction		Total property, plant and equipment		Energy   infrastructure   assets1
Cost
December 31, 2022	$	23,559	$	151,400	$	90,698	$	4,585	$	270,242	$	1,529,166
Additions		-		799		2,256		11,396		14,451		104,855
Reclassification		120		2,170		10,859		(13,876)		(727)		-
Disposals		-		(852)		(3,180)		-		(4,032)		(29,790)
Currency translation effects		(15)		(327)		(2,146)		3,488		1,000		5,589
September 30, 2023	$	23,664	$	153,190	$	98,487	$	5,593	$	280,934	$	1,609,820
Accumulated depreciation
December 31, 2022	$	-	$	(58,666)	$	(59,071)	$	-	$	(117,737)	$	(291,616)
Depreciation charge		-		(8,111)		(13,232)		-		(21,343)		(125,503)
Impairment		-		-		-		-		-		(693)
Disposals		-		812		2,492		-		3,304		16,494
Currency translation effects		-		150		1,754		-		1,904		(648)
September 30, 2023	$	-	$	(65,815)	$	(68,057)	$	-	$	(133,872)	$	(401,966)
Net book value
December 31, 2022	$	23,559	$	92,734	$	31,627	$	4,585	$	152,505	$	1,237,550
September 30, 2023	$	23,664	$	87,375	$	30,430	$	5,593	$	147,062	$	1,207,854

¹ Certain balances as at December 31, 2022 have been re-presented as a result of measurement period adjustments for the acquisition of Exterran as required by IFRS 3 “Business Combinations”, refer to Note 2 “Acquisition” for more information.

Depreciation of property, plant, and equipment (“PP&E”) and energy infrastructure assets included in net income (loss) for the three and nine months ended September 30, 2023, was $49.9 million and $146.9 million (September 30, 2022 – $17.1 million and $50.0 million), of which $43.9 million and $133.1 million was included in COGS (September 30, 2022 – $16.7 million and $48.7 million) and $6.0 million and $13.8 million was included in SG&A (September 30, 2022 – $0.4 million and $1.3 million).

F-8  

NOTE 5. LEASE RIGHT-OF-USE ASSETS

	Land and buildings		Equipment		Total lease        right-of-use assets
Cost
December 31, 2022	$	94,107	$	25,058	$	119,165
Additions		16,863		16,374		33,237
Disposal		(8,612)		(3,440)		(12,052)
Currency translation effects		(298)		(380)		(678)
September 30, 2023	$	102,060	$	37,612	$	139,672
Accumulated depreciation
December 31, 2022	$	(27,157)	$	(13,636)	$	(40,793)
Depreciation charge		(12,520)		(5,305)		(17,825)
Disposal		6,903		3,696		10,599
Currency translation effects		101		1,098		1,199
September 30, 2023	$	(32,673)	$	(14,147)	$	(46,820)
Net book value
December 31, 2022	$	66,950	$	11,422	$	78,372
September 30, 2023	$	69,387	$	23,465	$	92,852

Depreciation of lease right-of-use (“ROU”) assets included in net earnings (loss) for the three and nine months ended September 30, 2023 was $7.6 million and $17.8 million (September 30, 2022 – $3.5 million and $10.6 million), of which $6.0 million and $13.3 million was included in COGS (September 30, 2022 – $2.9 million and $8.9 million) and $1.6 million and $4.5 million was included in SG&A (September 30, 2022 – $0.6 million and $1.7 million).

  Notes to the Interim Condensed Consolidated Financial Statements F-9

NOTE 6. FINANCE LEASES RECEIVABLE

The Company has entered into finance lease arrangements for certain of its energy infrastructure assets, with initial terms ranging from eight to 10 years.

The value of the finance leases receivable are comprised of the following:

	Minimum lease payments and    unguaranteed residual value				Present value of minimum lease payments    and unguaranteed residual value
	September 30,    2023		December 31    2022		September 30,    2023		December 31,    2022
Less than one year	$	101,985	$	73,614	$	96,036	$	60,020
Between one and five years		188,962		196,314		138,596		149,052
Later than five years		143,538		144,482		86,223		85,432
	$	434,485	$	414,410	$	320,855	$	294,504
Less: Unearned finance income		(113,630)		(119,906)		-		-
	$	320,855	$	294,504	$	320,855	$	294,504
					September 30, 2023		December 31, 2022
Balance, January 1					$	294,504	$	103,358
Acquisition						-		110,097
Additions						64,112		86,602
Interest income						24,158		14,801
Billings and payments						(61,032)		(33,740)
Other						(2,254)		-
Currency translation effects						1,367		13,386
Closing balance					$	320,855	$	294,504

The Company recognized non-cash selling profit related to the commencement of finance leases of $17.8 million for the nine months ended September 30, 2023 (September 30, 2022 – $6.6 million). Additionally, the Company recognized $7.7 million and $24.2 million of interest income on finance leases receivable during the three and nine months ended September 30, 2023 (September 30, 2022 – $3.0 million and $8.8 million). The total cash received in respect of finance leases was $20.2 million and $61.0 million for the three and nine months ended September 30, 2023 (September 30, 2022 – $5.2 million and $16.7 million), as reflected in billings and payments.

The average interest rates implicit in the leases are fixed at the contract date for the entire lease term. At September 30, 2023, the average interest rate was 9.2 percent per annum (December 31, 2022 – 9.4 percent). The finance leases receivable at the end of reporting period are neither past due nor impaired.

Subsequent to September 30, 2023, the Company disposed of certain assets that were accounted for as finance leases, resulting in the derecognition of the associated finance lease receivable of $32.8 million. The total balance of the finance lease receivable has been classified as current.

F-10  

NOTE 7. INTANGIBLE ASSETS

	Customer     relationships and other		Software		Total intangible   assets
Cost
December 31, 2022	$	151,310	$	74,303	$	225,613
Additions		-		5,802		5,802
Reclassification		-		727		727
Disposal		-		(1,401)		(1,401)
Currency translation effects		(1,256)		(1,980)		(3,236)
September 30, 2023	$	150,054	$	77,451	$	227,505
Accumulated amortization
December 31, 2022	$	(73,427)	$	(49,413)	$	(122,840)
Amortization charge		(13,531)		(8,414)		(21,945)
Disposal		-		1,401		1,401
Currency translation effects		1,044		(2,268)		(1,224)
September 30, 2023	$	(85,914)	$	(58,694)	$	(144,608)
Net book value
December 31, 2022	$	77,883	$	24,890	$	102,773
September 30, 2023	$	64,140	$	18,757	$	82,897

NOTE 8. GOODWILL AND IMPAIRMENT REVIEW OF GOODWILL

	September 30, 2023		December 31, 20221
Balance, January 1	$	674,396	$	566,270
Acquisition (Note 2)		-		134,444
Impairment		-		(48,000)
Currency translation effects		(7,196)		21,682
Closing balance	$	667,200	$	674,396

¹ Certain balances as at December 31, 2022 have been re-presented as a result of measurement period adjustments for the acquisition of Exterran as required by IFRS 3 “Business Combinations”, refer to Note 2 “Acquisition” for more information.

At September 30, 2023, Management determined that there were no indicators of impairment and that the previous assessment continued to best represent the recoverability of the Company’s goodwill.

As of the Transaction date, the Company was investigating options for the disposal of certain energy infrastructure assets. During the three months ended March 31, 2023, the Company sold these assets which resulted in the adjustment of fair value. During the three months ended September 30, 2023, the Company finalized its assessment of deferred taxes and income taxes payable which resulted in an adjustment of fair value. These adjustments are reflected in the December 31, 2022 comparative period which also resulted in a final adjustment to the purchase price allocation and goodwill. Refer to Note 2 “Acquisition” for more information.

  Notes to the Interim Condensed Consolidated Financial Statements F-11

NOTE 9. OTHER ASSETS

	September 30, 2023		December 31, 2022
Investment in associates and joint ventures	$	37,155	$	34,977
Prepaid deposits		18,319		13,972
Long-term receivables1		1,936		34,127
Total other assets	$	57,410	$	83,076

¹ During the three months ended March 31, 2023 the Company received proceeds of $28.0 million from the settlement of preferred shares.

NOTE 10. LONG-TERM DEBT

The three-year secured term loan (“Term Loan”) and the three-year secured revolving credit facility (“Revolving Credit Facility”) have a maturity date of October 13, 2025 (the “Maturity Date”). In addition, the Revolving Credit Facility may be increased by US$150.0 million at the request of the Company, subject to the lenders’ consent. The Maturity Date of the Revolving Credit Facility may be extended annually on or before the anniversary date with the consent of the lenders. The senior secured notes (the “Notes”) consist of US$625.0 million principal amount, bears interest of 9.0 percent, and has a maturity of October 15, 2027.

The Company obtained a $94.6 million (US$70.0 million) unsecured credit facility (“LC Facility”) with one of the lenders in its Revolving Credit Facility. This LC Facility allows the Company to request the issuance of letters of guarantee, standby letters of credit, performance bonds, counter guarantees, import documentary credits, counter standby letters of credit or similar credits to finance the day-to-day operations of the Company. This LC Facility is supported by performance security guarantees provided by Export Development Canada. As at September 30, 2023, the Company has utilized $18.2 million (US$13.5 million) of the $94.6 million (US$70.0 million) limit.

The Company is required to maintain certain covenants on the Revolving Credit Facility, Term Loan and the Notes. As at September 30, 2023, the Company was in compliance with its covenants.

The composition of the borrowings on the Revolving Credit Facility, Term Loan, and the Notes were as follows:

	Maturity Date		September 30, 2023		December 31, 2022
Drawings on the Revolving Credit Facility (US$700,000)		October 13, 2025	$	474,368	$	459,202
Drawings on the Term Loan (US$140,000)		October 13, 2025		189,280		203,160
Notes (US$625,000)		October 15, 2027		845,000		846,500
Deferred transaction costs and Notes discount				(105,222)		(118,537)
			$	1,403,426	$	1,390,325
Current portion of long-term debt			$	54,080	$	27,088
Non-current portion of long-term debt				1,349,346		1,363,237
Long-term debt			$	1,403,426	$	1,390,325

The weighted average interest rate on the Revolving Credit Facility for nine months ended September 30, 2023 was 7.7 percent (December 31, 2022 – 7.0 percent), and the weighted average interest rate on the Term Loan for the nine months ended September 30, 2023 was 8.9 percent (December 31, 2022 – 7.8 percent). At September 30, 2023 without considering renewal at similar terms, the Canadian dollar equivalent principal payments due over the next five years are $1,508.6 million, and nil thereafter.

F-12  

NOTE 11. LEASE LIABILITIES

	September 30, 2023		December 31, 2022
Balance, January 1	$	93,033	$	57,014
Acquisition		-		39,845
Additions		34,067		9,977
Lease interest		4,501		3,398
Payments made against lease liabilities		(20,989)		(19,156)
Currency translation effects and other		(1,157)		1,955
Closing balance	$	109,455	$	93,033
Current portion of lease liabilities	$	24,701	$	20,125
Non-current portion of lease liabilities		84,754		72,908
Lease liabilities	$	109,455	$	93,033

Future minimum lease payments under non-cancellable leases were as follows:

	September 30, 2023
2023	$	7,833
2024		27,889
2025		24,167
2026		17,932
2027		14,407
Thereafter		35,903
	$	128,131
Less:
Imputed interest		18,535
Short-term leases		134
Low-value leases		7
Lease liabilities	$	109,455

  Notes to the Interim Condensed Consolidated Financial Statements F-13

NOTE 12. INCOME TAXES

(a) Income Tax Recognized in Net Earnings

The components of income taxes were as follows:

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Current income taxes	$	13,261	$	7,491	$	43,156	$	15,846
Deferred income taxes		(18,528)		(3,275)		(26,447)		(4,937)
Income taxes	$	(5,267)	$	4,216	$	16,709	$	10,909

(b) Reconciliation of Income Taxes

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:

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Earnings before income taxes	$	447	$	(28,592)	$	33,124	$	(8,916)
Canadian statutory rate		23.4%		23.4%		23.4%		23.4%
Expected income tax provision	$	104	$	(6,690)	$	7,751	$	(2,086)
Add (deduct):
Change in unrecognized deferred tax asset		6,128		2,153		18,490		7,943
Impairment of goodwill		-		11,232		-		11,232
Exchange rate effects on tax basis		(2,018)		(1,523)		(135)		(4,259)
Earnings taxed in foreign jurisdictions		(7,711)		(361)		(9,463)		(1,630)
Amounts not deductible for tax purposes		(1,847)		(95)		-		148
Impact of accounting for associates and joint ventures		(282)		(83)		(468)		(281)
Other		359		(417)		534		(158)
Income taxes	$	(5,267)	$	4,216	$	16,709	$	10,909

The applicable statutory tax rate is the aggregate of the Canadian federal income tax rate of 15.0 percent (2022 – 15.0 percent) and the Alberta provincial income tax rate of 8.4 percent (2022 – 8.4 percent).

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 energy infrastructure assets in Argentina and Mexico, the tax base of these assets are denominated in Argentine peso and Mexican peso, respectively. The functional currency is 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 the local currency. 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 obligation or liability in the future.

F-14  

NOTE 13. REVENUE

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Energy Infrastructure1	$	189,977	$	82,820	$	569,109	$	218,164
After-Market Services		164,710		109,109		472,716		298,134
Engineered Systems		423,486		200,884		1,338,062		571,661
Total revenue	$	778,173	$	392,813	$	2,379,887	$	1,087,959

¹ During the three and nine months ended September 30, 2023, the Company recognized $62.4 million and $198.4 million of revenue related to operating leases in its Latin America (“LATAM”) and Eastern Hemisphere (“EH”) segments (September 30, 2022 – $19.1 million and $45.5 million), and $43.4 million and $122.5 million of revenue related to its North America (“NAM”) contract compression fleet (September 30, 2022 – $32.9 million and $91.9 million).

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

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
United States	$	342,486	$	244,715	$	987,605	$	566,662
Canada		91,309		58,853		249,714		189,185
Nigeria		57,734		392		210,287		11,662
Argentina		52,262		8,804		166,192		33,050
Oman		62,196		14,495		160,162		79,397
Iraq		44,896		225		155,835		768
Bahrain		16,192		7,207		109,576		25,879
Brazil		23,734		8,034		82,107		25,638
Australia		21,197		11,844		64,903		47,675
Mexico		19,071		17,285		58,404		43,915
Other		47,096		20,959		135,102		64,128
Total revenue	$	778,173	$	392,813	$	2,379,887	$	1,087,959

The following table outlines the Company’s unsatisfied performance obligations, by product line, as at September 30, 2023:

	Less than one year		One to two years		Greater than two years		Total
Energy Infrastructure	$	592,094	$	499,181	$	1,452,209	$	2,543,484
After-Market Services		97,776		37,861		91,227		226,864
Engineered Systems		1,231,082		334,855		-		1,565,937
	$	1,920,952	$	871,897	$	1,543,436	$	4,336,285

  Notes to the Interim Condensed Consolidated Financial Statements F-15

NOTE 14. SHARE-BASED COMPENSATION

(a) Share-Based Compensation Expense

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

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Equity-settled share-based payments	$	171	$	366	$	360	$	1,293
Cash-settled share-based payments (recovery)		(970)		2,731		8,376		3,186
Share-based compensation expense (recovery)	$	(799)	$	3,097	$	8,736	$	4,479

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

The Company granted PSUs and RSUs to officers and key employees during the nine months ended September 30, 2023 with a weighted average fair value of CAD $8.55 and USD $6.26 per share. The DSU, PSU, and RSU holders had dividends credited to their accounts during the period. The carrying value of the liability relating to cash-settled share-based payments at September 30, 2023 included in current liabilities was $8.9 million (December 31, 2022 – $13.5 million) and in other long-term liabilities was $11.4 million (December 31, 2022 - $13.8 million).

(b) Equity-Settled Share-Based Payments

	September 30, 2023					December 31, 2022
	Number of  options			Weighted  average  exercise price		Number of  options			Weighted  average  exercise price
Options outstanding, beginning of period		3,089,229		$	10.77		4,456,444		$	11.66
Exercised1		(188,977)			5.92		(47,120)			5.51
Forfeited		(305,107)			9.69		(27,286)			13.51
Expired		(208,147)			13.41		(1,292,809)			13.98
Options outstanding, end of period		2,386,998		$	11.06		3,089,229		$	10.77
Options exercisable, end of period		1,678,662		$	12.36		1,671,421		$	12.48

¹ The weighted average share price of options at the date of exercise for the nine months ended September 30, 2023 was $8.52 (September 30, 2022 – $7.89).

The following table summarizes options outstanding and exercisable at September 30, 2023:

	Options Outstanding						Options Exercisable
Range of exercise   prices1	Number outstanding		Weighted average remaining life (years)		Weighted average exercise price		Number outstanding		Weighted average remaining life (years)		Weighted  average  exercise  price
$5.51 – $6.68		555,752		3.75	$	5.51		288,587		3.63	$	5.51
$6.69 – $14.75		1,174,581		3.71		10.94		733,410		3.35		11.83
$14.76 – $16.12		656,665		1.43		15.97		656,665		1.43		15.97
Total		2,386,998		3.09	$	11.06		1,678,662		2.65	$	12.36

¹ The range of exercise prices equal the weighted average market price of the Company’s shares on the five days preceding the effective date of the grant based on prices from the Toronto Stock Exchange.

F-16  

(c) Cash-Settled Share-Based Payments

During the three and nine months ended September 30, 2023, the value of director’s compensation and executive bonuses elected to be received in DSUs totalled $0.6 million and $1.8 million (September 30, 2022 – $0.5 million and $1.6 million).

	Number of DSUs		Weighted average grant   date fair value per unit
DSUs outstanding, January 1, 2023		1,625,513	$	10.16
Granted		224,091		7.94
In lieu of dividends		13,611		8.62
Vested		(113,018)		9.56
DSUs outstanding, September 30, 2023		1,750,197	$	9.90

NOTE 15. FINANCE COSTS AND INCOME

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Finance Costs
Short- and long-term borrowings1	$	39,166	$	4,696	$	116,229	$	13,168
Interest on lease liability		1,531		658		4,501		2,019
Total finance costs	$	40,697	$	5,354	$	120,730	$	15,187
Finance Income
Interest income	$	8,509	$	832	$	28,031	$	2,334
Net finance costs	$	32,188	$	4,522	$	92,699	$	12,853

¹ Finance costs on short- and long-term borrowings relate primarily to interest on the Company’s Revolving Credit Facility, Term Loan and Notes that were issued during the three months ended December 31, 2022. Refer to Note 10 “Long-Term Debt” for more information on interest rates on the Revolving Credit Facility, Term Loan and Notes.

NOTE 16. FINANCIAL INSTRUMENTS

Designation and Valuation of Financial Instruments

Financial instruments at September 30, 2023 were designated in the same manner as they were at December 31, 2022. During the three months ended September 30, 2023, the Company entered into short-term investments which are measured at fair value through profit or loss. Accordingly, with the exception of the 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, 2023 was $845.0 million and $877.0 million, respectively (December 31, 2022 – $846.5 million and $869.3 million, respectively). The fair value of these Notes at September 30, 2023 was determined on a discounted cash flow basis with a weighted average discount rate of 9.3 percent (December 31, 2022 – 9.0 percent).

The Company previously held preferred shares that were initially recorded at fair value, subsequently measured at amortized cost and recognized as long-term receivables in Other assets. During the three months ended March 31, 2023 the Company redeemed these preferred shares and recognized a gain in excess of the carrying value, which is included in the interim condensed consolidated statements of earnings. The carrying value and estimated fair value of the preferred shares at December 31, 2022 was $28.0 million and $28.7 million, respectively.

  Notes to the Interim Condensed Consolidated Financial Statements F-17

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, 2023:

		Notional amount		Maturity
Canadian Dollar Denominated Contracts
Purchase contracts	USD	$	15,187	October 2023 – July 2024
Sales contracts	USD		(10,357)	October 2023 – September 2024

At September 30, 2023, the fair value of derivative financial instruments classified as financial assets was $0.1 million, and as financial liabilities was less than $0.1 million (December 31, 2022 – $0.9 million and $1.0 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 (“USD”), Australian dollar (“AUD”), and Brazilian real (“BRL”). 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, foreign exchange gains and losses on the translation of US$622.7 million in designated foreign currency borrowings are included in accumulated other comprehensive income (loss) for September 30, 2023. The following table shows the sensitivity to a five percent weakening of the Canadian dollar against the USD, AUD, and BRL.

Canadian dollar weakens by five percent	USD		AUD		BRL
Earnings (loss) from foreign operations
Earnings (loss) before income taxes	$	6,966	$	(13)	$	(1,233)
Financial instruments held in foreign operations
Other comprehensive income	$	16,023	$	366	$	205
Financial instruments held in Canadian operations
Loss before income taxes	$	(24,068)	$	-	$	-

The movement in net earnings before tax in Canadian operations is a result of a change in the fair values of financial instruments.

With the ongoing devaluation of the Argentine peso, caused by high inflation, the Company is at risk for foreign exchange losses on its cash balances denominated in Argentine peso (“ARS”). During the three and nine months ended September 30, 2023, the Company had foreign exchange losses of $17.3 million and $40.9 million, respectively, which represented 46 percent and 109 percent of the Argentina cash balance. If the ARS weakens by five percent, the Company could experience additional foreign exchange losses of approximately $1.8 million. There is a risk of higher losses based on the further devaluation of the ARS. The Company will continue to explore its options to minimize the impact of future devaluation.

Interest Rate Risk

The Company’s liabilities include long-term debt that is subject to fluctuations in interest rates. The Company’s Notes outstanding at September 30, 2023 has a fixed interest rate and therefore the related interest expense will not be impacted by fluctuations in interest rates. Conversely, the Company’s Revolving Credit Facility and Term Loan are subject to changes in market interest rates.

For each one percent change in the rate of interest on the Revolving Credit Facility and Term Loan, the change in annual interest expense would be $4.7 million. All interest charges are recorded in the interim condensed consolidated statements of earnings as finance costs.

F-18  

Liquidity Risk

Liquidity risk is the risk that the Company may encounter difficulties in meeting obligations associated with financial liabilities. In managing liquidity risk, the Company has access to a significant portion of its Revolving Credit Facility for future drawings to meet the Company’s requirements for investments in working capital and capital assets. As at September 30, 2023, the Company held cash and cash equivalents of $163.4 million and had access to $328.2 million on the Revolving Credit Facility.

	September 30, 2023
Total Revolving Credit Facility (US$700,000)	$	946,400
Less:
Drawings on the Revolving Credit Facility		474,368
Letters of Credit1		143,800
Available for future drawings	$	328,232

¹ This represents the letters of credit that the Company has funded with the Revolving Credit Facility. Additional letters of credit of $18.2 million (US$13.5 million) are funded from the LC Facility. Refer to Note 10 “Long-Term Debt” for more information.

The Company continues to meet the covenant requirements of its funded debt, including the Revolving Credit Facility, Term Loan and Notes. Senior secured net funded debt, defined as borrowings under the Revolving Credit Facility and Term Loan, net of cash, to EBITDA ratio is 1.0:1, compared to a maximum ratio of 2.5:1, and a net funded debt to EBITDA (“bank-adjusted net debt to EBITDA”) ratio of 2.7:1, compared to a maximum ratio of 4.5:1, and an interest coverage ratio of 4.2:1 compared to a minimum ratio of 2.5:1. The interest coverage ratio is calculated by dividing the trailing 12-month EBITDA, as defined by the Company’s lenders, by interest expense over the same timeframe.

A liquidity analysis of the Company’s financial instruments has been completed on a maturity basis. The following table outlines the cash flows, including interest associated with the maturity of the Company’s financial liabilities, as at September 30, 2023:

	Less than 3 months		3 months to 1 year		Greater than 1 year		Total
Derivative financial instruments
Foreign currency forward contracts	$	35	$	2	$	-	$	37
Accounts payable and accrued liabilities		601,633		-		-		601,633
Long-term debt – Revolving Credit Facility		-		-		474,368		474,368
Long-term debt – Term Loan		13,520		40,560		135,200		189,280
Long-term debt – Notes		-		-		845,000		845,000
Other long-term liabilities		-		-		19,245		19,245

The Company expects that cash flows from operations in 2023, together with cash and cash equivalents on hand, the Revolving Credit Facility and the Term Loan, will be more than sufficient to fund its requirements for investments in working capital and capital assets.

  Notes to the Interim Condensed Consolidated Financial Statements F-19

NOTE 17. SUPPLEMENTAL CASH FLOW INFORMATION

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Accounts receivable1	$	(32,081)	$	17,429	$	(32,377)	$	(28,944)
Contract assets		17,797		5,287		(38,455)		(8,272)
Inventories		(8,537)		(50,219)		(47,781)		(71,317)
Work-in-progress related to finance leases		-		(19,405)		41,986		(27,470)
Finance leases receivable		9,213		(5,956)		(26,351)		(41,770)
Income taxes receivable		2,125		(1,649)		4,107		(365)
Prepayments		(5,898)		(20,945)		9,578		(24,063)
Long-term receivables related to preferred shares		-		-		27,954		-
Accounts payable and accrued liabilities, and provisions2		9,035		10,630		(10,159)		47,677
Income taxes payable		(4,712)		(2,405)		15,704		(2,473)
Deferred revenue		258		50,917		(66,947)		83,239
Other		27,402		17,682		(7,487)		17,434
Net change in working capital and other	$	14,602	$	1,366	$	(130,228)	$	(56,324)

¹ The change in accounts receivable represents only the portion relating to operating activities.

² The change in accounts payable and accrued liabilities and provisions represents only the portion relating to operating activities.

Cash interest and taxes paid and received during the period:

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Interest paid – short- and long-term borrowings	$	18,198	$	1,768	$	88,554	$	10,856
Interest paid – lease liabilities		1,531		658		4,501		2,019
Total interest paid	$	19,729	$	2,426	$	93,055	$	12,875
Interest received		14,307		292		29,639		784
Taxes paid		12,512		9,766		34,544		15,946
Taxes received		-		133		500		2,581

Changes in liabilities arising from financing activities during the period:

	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Long-term debt, opening balance	$	1,408,304	$	345,951	$	1,390,325	$	331,422
Changes from financing cash flows		(41,218)		6,023		1,793		15,840
The effect of changes in foreign exchange rates		32,724		16,264		(1,186)		20,541
Amortization of deferred transaction costs		3,633		285		10,585		902
Accretion of Notes discount		1,821		-		6,991		-
Deferred transaction costs		(1,838)		(110)		(5,082)		(292)
Long-term debt, closing balance	$	1,403,426	$	368,413	$	1,403,426	$	368,413

F-20  

NOTE 18. GUARANTEES, COMMITMENTS, AND CONTINGENCIES

As of September 30, 2023, the Company had outstanding letters of credit of $162.0 million (December 31, 2022 – $175.1 million). Of the total outstanding letters of credit, $143.8 million (December 31, 2022 – $175.1 million) are funded from the Revolving Credit Facility and $18.2 million (US$13.5 million) (December 31, 2022 – nil) are funded from the LC Facility.

The Company has purchase obligations over the next three years as follows:

2023	$	232,642
2024		257,107
2025		3,428

Legal Proceedings

On January 31, 2022, the Local Labor Board of the State of Tabasco in Mexico (the “Labor Board”) awarded a former employee of Exterran MXN$2,152 million in connection with a dispute relating to the employee’s severance pay following termination of their employment in 2015.

Enerflex believes the order of the Labor Board is in error and has no credible basis in law or fact. In 2017, the Labor Board ruled that the former employee was entitled to approximately MXN$1.4 million as severance based on an appellate court’s determination that the employee’s salary was approximately MXN$3,500 per day. However, the Labor Board’s January 2022 order significantly increased the amount the employee is owed, ignoring the actual salary that had been established by the appellate court and using an amount the former employee never actually received while working for Exterran.

Enerflex has appealed the decision, and the appeal is pending before the courts in Mexico. In the meantime, the Company is pursuing all other available avenues to preserve its rights, including rights under the Agreement between the United States of America, the United Mexican States, and Canada (“USMCA”) investment treaty arguing that the conduct of the Labor Board in Mexico amounts to violations of protections available under the North American Free Trade Agreement.

The Company is involved in litigation and claims associated with normal operations against which certain provisions may be made in the Financial Statements. Management is of the opinion that any resulting settlement arising from the litigation would not materially affect the consolidated financial position, results of operations, or liquidity of the Company.

NOTE 19. SEASONALITY

The energy 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, the Company has experienced higher revenues in the fourth quarter of each year related to these seasonal trends. Revenues are also impacted by both the Company’s and its customers’ capital investment decisions. The LATAM and EH segments are not significantly impacted by seasonal variations, while certain parts of the USA can be impacted by seasonal trends depending on customer activity, demand, and location. Variations from these trends usually occur when hydrocarbon energy fundamentals are either improving or deteriorating.

  Notes to the Interim Condensed Consolidated Financial Statements F-21

NOTE 20. SEGMENTED INFORMATION

The Company has identified three reporting segments for external reporting:

· NAM consists of operations in Canada and the USA. The segment generates revenue from manufacturing natural gas infrastructure under contract, refrigeration, processing, and electric power equipment, including custom and standard compression packages and modular natural gas processing equipment, refrigeration systems and produced water treatment services, in addition to generating revenue from mechanical services and parts, and maintenance solutions, and operating our compression assets under contract for oil and gas and midstream customers.

· LATAM consists of operations in Argentina, Bolivia, Brazil, Colombia, Mexico and Peru. The segment generates revenue from operating Enerflex’s Energy Infrastructure assets under take-or-pay contracts, providing after-market services, including parts and components, as well as operations, maintenance, and overhaul services.

· EH consists of operations in the Middle East, Africa, Europe and Asia Pacific. The segment generates revenue by operating Enerflex’s Energy Infrastructure assets under take-or-pay contracts, manufacturing (focusing on large-scale process equipment), after-market services, including parts and components, as well as operations, maintenance, and overhaul services, and rentals of compression and processing equipment.

The accounting policies of the reportable operating segments are the same as those described in Note 3 “Summary of Significant Accounting Policies” of the Company’s annual consolidated financial statements for the year-ended December 31, 2022.

For internal Management reporting, the Company’s Chief Operating Decision Maker (“CODM”) has identified four operating segments which include: Canada; USA; Latin America; and Eastern Hemisphere. Each of the operating segments are supported by the Corporate head office. Corporate overheads are allocated to the operating segments based on revenue. In assessing its reporting and operating segments, the Company considered geographic locations, economic characteristics, the nature of products and services provided, the nature of production processes, the types of customers for its products and services, and distribution methods used. These considerations also factored into the decision to combine Canada and USA into one reporting segment. For each of the operating segments, the CODM reviews internal management reports on at least a quarterly basis.

For the nine months ended September 30, 2023, the Company had no individual customer which accounted for more than 10 percent of its revenue (September 30, 2022 – none).

F-22  

The following tables provide certain financial information by the Company’s reporting segments.

Revenues and Operating Income

	North America				Latin America				Eastern Hemisphere				Total
Three months ended    September 30,	2023		2022		2023		2022		2023		2022		2023		2022
Segment revenue	$	490,959	$	314,273	$	107,547	$	29,072	$	178,098	$	56,298	$	776,604	$	399,643
Intersegment revenue		3,742		(6,655)		(2)		-		(2,171)		(175)		1,569		(6,830)
Revenue	$	494,701	$	307,618	$	107,545	$	29,072	$	175,927	$	56,123	$	778,173	$	392,813
Energy Infrastructure		43,435		44,216		77,097		18,739		69,445		19,865		189,977		82,820
After-Market Services		103,602		75,515		14,896		7,119		46,212		26,475		164,710		109,109
Engineered Systems		347,664		187,887		15,552		3,214		60,270		9,783		423,486		200,884
Operating income (loss)	$	38,858	$	14,267	$	(13,257)	$	1,725	$	5,787	$	7,576	$	31,388	$	23,568
	North America				Latin America				Eastern Hemisphere				Total
Nine months ended    September 30,	2023		2022		2023		2022		2023		2022		2023		2022
Segment revenue	$	1,460,774	$	860,879	$	341,309	$	122,665	$	605,797	$	176,224	$	2,407,880	$	1,159,768
Intersegment revenue		(21,267)		(71,445)		(773)		(36)		(5,953)		(328)		(27,993)		(71,809)
Revenue	$	1,439,507	$	789,434	$	340,536	$	122,629	$	599,844	$	175,896	$	2,379,887	$	1,087,959
Energy Infrastructure		125,610		105,227		249,421		52,922		194,078		60,015		569,109		218,164
After-Market Services		285,143		209,645		50,576		21,134		136,997		67,355		472,716		298,134
Engineered Systems		1,028,754		474,562		40,539		48,573		268,769		48,526		1,338,062		571,661
Operating income (loss)	$	107,732	$	23,850	$	(9,540)	$	8,082	$	25,616	$	18,718	$	123,808	$	50,650
Segment Assets
	North America				Latin America				Eastern Hemisphere				Total
	Sep. 30,   2023		Dec. 31,   20221		Sep. 30,   2023		Dec. 31,   20221		Sep. 30,   2023		Dec. 31,   20221		Sep. 30,   2023		Dec. 31,   20221
Segment assets	$	1,464,017	$	1,602,755	$	690,553	$	829,676	$	1,155,825	$	828,517	$	3,310,395	$	3,260,948
Goodwill2		224,664		224,992		89,105		89,264		353,431		360,140		667,200		674,396
Corporate		-		-		-		-		-		-		223,244		322,724
Total segment assets	$	1,688,681	$	1,827,747	$	779,658	$	918,940	$	1,509,256	$	1,188,657	$	4,200,839	$	4,258,068

¹ Certain balances as at December 31, 2022 have been re-presented as a result of measurement period adjustments for the acquisition of Exterran as required by IFRS 3 “Business Combinations”, refer to Note 2 “Acquisition” for more information, as well as amendments to the Company’s reporting segments.

² The total amount of goodwill in the Canada and USA operating segments are $40.4 million and $184.3 million, respectively (December 31, 2022 – $40.4 million and $184.6 million, respectively).

NOTE 21. SUBSEQUENT EVENTS

Subsequent to September 30, 2023, Enerflex declared a quarterly dividend of $0.025 per share, payable on January 10, 2024, to shareholders of record on November 21, 2023. The Board will continue to evaluate dividend payments on a quarterly basis, based on the availability of cash flow, anticipated market conditions, and the general needs of the business.

  Notes to the Interim Condensed Consolidated Financial Statements F-23