Good morning, ladies and gentlemen, and welcome to Enerflex Fourth Quarter and Year-End 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to your host, Stefan Ali, Vice President, Strategy and Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thanks for joining us on our fourth quarter and year-end 2022 earnings conference call. With me on the call today are Marc Rossiter, President and CEO; Sanjay Bishnoi, Senior Vice President and CFO; and Ben Park, Vice President, Corporate Controller. During today's call, we'll touch on highlights from our fourth quarter and year-end results, comment on our integration efforts related to the Exterran acquisition and outline our strategic priorities for 2023. Before I turn it over to Marc, I'll remind everybody that today's discussion will include non-IFRS and other financial measures as well as forward-looking statements regarding Enerflex's expectations for future performance and business prospects. Forward-looking information involves risks and uncertainties, and the stated expectations could differ materially from actual results or performance. For more information, refer to the advisory statements within our news release, MD&A and other regulatory filings, all available on our website and under our SEDAR and EDGAR profiles. All dollar amounts discussed today are in Canadian dollars unless otherwise stated. I'll now turn it over to our President and CEO, Marc Rossiter.

Thanks, Stefan, and thanks to all our listeners for joining today's call. Just over a year ago, we announced the transformational acquisition of Exterran, a transaction that would deliver on a decade-long strategy to grow our energy infrastructure platform to become more resilient, profitable and better positioned for long-term success. Enerflex is now an infrastructure first company that is strategically positioned to enable a sustainable future for energy through our vertically integrated low-carbon solutions. We're only 4 months in integration, and we are already realizing many of the strategic benefits of the Exterran acquisition. Our geographic footprint is concentrated in global gas producing regions, with approximately 1/3 of our gross margin deriving from each of North America, Latin America and Eastern Hemisphere, thereby insulating us from weakness in any single market, including a recent weakness in North American natural gas prices. Our expanded product offerings, namely compression, cryo or deep cut and carbon capture and water treatment are leading to constructive customer discussions across this broader opportunity set. Our scale and synergy realization has created operational efficiencies within our business lines. And finally, our large base of energy infrastructure will stabilize business performance, no matter the macro environmental backdrop. Before I outline our strategic priorities for 2023 and speak to the considerable progress we're making on integration, I want to briefly address Enerflex's 2022 financial and operational results. Our energy transition team delivered in 2022, securing over $160 million of bookings that relate primarily to carbon capture projects that will collectively capture and permanently sequester over 1 million tons of CO2 annually once in operation. Further, within our North American business, we sold over 500,000 horsepower of electric compression in 2022, 2/3 of our compressor sales in the region and we electrified a portion of our U.S. contract compression fleet,…

Thanks, Marc, and good morning, everyone. Today, I will briefly touch on the key financial results from our release before turning to our updated financial guidance for 2023. First, readers of our financial statements will note that we have re-segmented our reporting in an effort to align with external disclosures with how we make decisions within the business. Our new reporting segments are North America, encompassing Canada and the United States, Latin America and Eastern Hemisphere. In addition, we are now including the net impact of finance leases in our adjusted EBITDA calculation, and we have introduced a distributable cash flow measure to best illustrate or better illustrate our cash-generating capabilities and assist users of the financial statements in understanding and assessing our operating cash flows and the free cash that we are generating to fund other nonoperating activities. Distributable cash flow for 2022 was $45 million or $116 million when $71 million of the onetime transaction costs are backed out. With the transaction behind us, the company can be expected to generate significant distributable cash flow, which can be used to strengthen the balance sheet, increase returns of capital to shareholders and continue growing the business. So as Marc mentioned, we closed the year in a position of considerable strength. Year-over-year improvements in revenue, gross margin and adjusted EBITDA were driven by increased activity in our North American Engineered Systems business and from the partial quarter of contribution from Exterran. Regarding fourth quarter results, top line revenues reached $690 million, and our gross margin was $127 million, 2/3 of which was generated from recurring sources. As a percentage of revenue, our gross margin of 18.4% was down slightly from the third quarter due to a lower average margin profile associated with the acquired Exterran portfolio. In the fourth quarter,…

When I look back at 2022, we reached some significant milestones that have important implications for Enerflex's long-term success. The health of our business has never been better. The utilization of our energy infrastructure assets is as high as it's ever been. We've completed 3 large infrastructure projects that have bolstered our cash flow profile and activity within our manufacturing business is very robust. When coupled with our rapid synergy capture and the execution of the largest backlog in our company's history, I'm confident that Enerflex will deliver on the priorities we've outlined: maximize cash flow to reduce debt, deliver on the integration and enable the energy transition by providing best-in-class energy solutions to our customers across the globe. I'll now pass the call back to the operator for questions.

[Operator Instructions] Our first question comes from Aaron MacNeil with TD Securities.

Sanjay, a lot's changed since you introduced 2023 guidance over a year ago, you've largely obviously maintained that with this quarter, but I'm hoping you can give us a bit more details on some of the puts and takes, comparing the current guidance to the original guidance. And specifically, I'm wondering are synergy realizations happening faster or slower than you expected? Is the backlog for Engineered Systems above or below your expectations and our Engineered Systems margins above or below your expectations? Is U.S. contract compression pricing better or worse than you expected? What about utilization, what's the negative impact of the delays for the Kurdistan project or any other slippage in large project time lines. And when you take all of these variables together, presumably others as well, have your internal projections increased or decreased over the past year and what's the order of magnitude?

Okay. Well, Aaron, I need a cup of -- solid cup of coffee to get all those in. I guess I'll start with your synergy question. I would say that our guidance of $60 million remains unchanged. I think the $40 million that we've been able to realize by day 100 is a little bit ahead of schedule. So I think that's a net positive. I think that you mentioned energy -- Engineered Systems backlog and margin. The bookings have been healthier. And I think it was really a lot of pent-up demand that we saw, like we do expect things ultimately will normalize. But with the bigger company, we do expect that we're going to see stronger bookings. So I think the bookings have been a positive to the forecast. I would say on the margin side, we were expecting a recovery, and I'd say that the recovery in margins is really on schedule. I don't think that we're ahead or behind there. You asked a little bit about the ECC business. I'm really proud of our ECC team in the states. They continue to really optimize the assets that we have. So I would say that the utilization has been ahead of our expectations when we first put guidance forward after completing the transaction. And then you also asked about Kurdistan. But before I go to Kurdistan, I do want to talk a little bit about just better tailwinds in the business. Like we are -- because of the bookings, we're seeing a little bit more activity. I think our AMS business, our teams around the world have done a great job not only of increasing margins in that business, but they're doing a fantastic job of collecting cash. And that really helps us from a just cash…

No, that's great. I guess just the one -- just overall, I don't want to put words in your mouth, but it sounds like your internal projections have probably increased since you originally put that guidance. Is that a fair statement?

Yes. I would say we're reaffirming the guidance, the $380 million to $420 million. And I think our confidence in that has gone up. So that's probably a different way to put it. But certainly, we're feeling really good about the initial modeling that was done and the expectations of what this transaction would better -- bring to Enerflex.

Maybe just as one follow-up question. One of your competitors in the U.S. contract compression space suggested that it will be pushing pricing higher with its Q4 disclosures, are there opportunities in your mind to reprice the U.S. fleet hire over the next 12 months? And is that contemplated in the guidance?

There is the opportunity. There has been the opportunity over the past couple of quarters. And indeed, the return we're getting on those assets is higher than it has been in previous quarters. I don't know that, that asset class in and unto itself and those incremental price increases on their own are enough to drive guidance higher. I think that there's a lot of good things going on at the business early in the year, and we'll see how the following quarters go.

Our next question comes from the line of Keith MacKey with RBC Capital Markets.

Just wanted to start out in Engineered Systems, some very strong bookings of $1.3 billion or so in 2022. Can you just talk, Marc, if you think we've hit peak booking levels? Or do you think 2023, 2024 could match or exceed what you saw in the business in 2022?

You're right, 2022 is a good year. I'm always very careful about providing guidance on go-forward bookings because it's difficult to do. Our pipeline of opportunities are robust. they're global in nature. They include compression and gas processing in just about every region within which we operate. So we are definitely working hard and we have internal targets for this year to be at least as good as last year. But I'm not going to say -- I really can't predict right now what 2023 is going to look like.

Okay. Fair enough. And maybe just finally on the synergies. So Sanjay, you mentioned you've got the $40 million of the $60 million so far, a little bit ahead of what you might have thought. Do you think ultimately the synergy number comes in ahead of that $60 million number? And what types of things do you think that would have to happen to exceed that number?

Yes. I think -- I'll give you my comments and maybe Marc can chime in, too. But we're -- again, I want to come back to we're reaffirming the $60 million guidance. Like that's -- our confidence in that number has gone up. And I think delivering $40 million in the first 100 days is a really good data point that we have really good line of sight to that $60 million. But yes, we're -- I think we're sort of assessing some of the puts and takes that we would have in synergies. And right now, we feel very comfortable with the $60 million and don't really feel like we want to expand that number. Maybe Marc can comment on a few things that might be sort of like positives or negatives. But right now, our official guidance is still the $60 million.

Keith, our goal, we will hit the $60 million. That's something we're very convicted on. But our long-term goal really reaches beyond hitting a synergy number. Our long-term goal in this consolidation transaction was to really deliver sector-leading SG&A levels, sector-leading cost structures and to use that extra volume to be a really competitive, cost-efficient business long term. That's what we're really focused on, putting a target out there for synergies and hitting the target for synergies is very important for short-term discipline and to make sure the market knows exactly what we're doing. But our goals are to get a company that's really efficient, that's got the lowest possible overhead, and that could very well point to synergies that are higher than $60 million. For now, I think that we stick to the $60 million. Our integration team and our leadership team is highly focused on getting that $20 million. And if we feel that it's materially higher than that, we'll communicate it to the market at that time.

Okay. And maybe just a quick follow-up on the G&A then. I know it's all embedded within the guide, but the total number, $175 million for Q4. What do you think is a good clean cash G&A quarterly number for 2023? Is it somewhere around that $90 million number?

So to Keith, I would say that if you back out all the one-timers and really important to recognize that we've got $57 million of deal expenses that's going through SG&A. We've got $18 million related to the foreign exchange issue, which doesn't count the $7 million of interest that you get back, that happens below the line. But we've got $18 million that hit us because of the FX issue, and we've got $12 million in share-based compensation that hit us there. We've also got some amortization of customer relationship assets that we've had to recognize as a result of the transaction that are noncash items that are going through SG&A. So when you add all that up, and you subtract it out of the $175 million, it actually gets you sort it like a mid-80s million number. But that's understanding that we haven't really taken any of the synergies out yet because we've made a lot of the decisions that lead to the synergies, but it was late in Q4, early in Q1. So I think a lot of that run rate of synergy is ahead of us and a lot of those synergies, like 90-plus percent of the synergies hit the SG&A line. So I actually think we should be able to do better than that $90 million number that you're putting out there because of the synergies.

Our next question comes from the line of Andrew Bradford with Raymond James.

I just want to -- like right from where you left off there, Sanjay, 90% of the synergies are at the SG&A line. And I'm wondering, have you identified at a time since taking it all in now, any more operating-oriented synergies that could develop over the next while it would be above and beyond the $60 million.

Yes, Andrew, this is Marc. In that $60 million in synergies, we had definitely contemplated simplification of the business, reduction in geographic footprint, and focusing our assets, especially our manufacturing assets around the world. We reaffirm the $60 million. We are striving to get more than that. It would be the best possible company we can be. But we -- as of today, we're not going past the $60 million. But I guess, rest assured that the simplification and focus theme is alive and well, and it is something that will continue for the next year and beyond that.

Okay. Okay. I'll just switch back over maybe just for a second to the backlog, if you don't mind. I wonder if you could just maybe speak to what the margin embedded in the backlog. And I appreciate all this will be in your guidance. But how does the margin embedded in that backlog compared to what we've seen evolve over the last few quarters in Engineered Systems revenue. And maybe describe any changes in the composition of the backlog as well. And also, I'm kind of interested in the residency time of projects within the backlog? Is that shortening or is it extending.

I'll take that, Andrew. The -- like we said in previous quarters, the margin in the backlog represents an improvement over what we saw really from mid-2020 through 2021 and 2022. We have to deliver on it and the supply chain issues that have largely disappeared from the headlines are still alive and well in execution. To take new orders today either for compression or gas processing, you're looking at 9 to 12 months delivery. Indeed, we've already booked some things in -- so far in 2023 that have a 2024 delivery date. So there is an extension of time that's happening as you can imagine when the backlog is built up. The nature of the backlog early in the pandemic recovery was heavily dominated by compression. And we talked about that in those quarters. We've definitely seen more carbon capture. We've seen more gas processing, and we've seen more downstream processing orders come into the backlog and those traditionally have been higher margin than compression. And so we look at the backlog, and we work all those expected margins into the guidance, and we reaffirm the guidance. So it's sort of the sum total of all those things. But in general, the backlog and the composition and the margin is better than it was a year ago. And I think that's pretty obvious, and I think we've been transparent from that point of view.

I appreciate that. And last question would be just, earlier in your commentary you identified that one of the reasons why the margin was -- the gross margin was sequentially lower was simply a lower margin profile from the acquired Exterran business. And I'm just wondering is -- are those margins -- so those are gross margins, so operating -- at the operating line. Is that part of -- like is remedying that or can we see convergence of that acquired margin to Enerflex's more traditional margins? Or is that kind of all part and parcel with the synergy guidance?

Yes. So I'd say -- the lower margins were really -- there was kind of 2 drivers, I would say. The first driver is on the manufacturing side. We actually had a few projects and one big one that was on hold, if you will. So we're earning some revenue, but not really making any profit there until that one sort of goes back into in the completion mode. So there was certainly an effect on the Engineered Systems side of the business on margins there. But then -- we also had an effect on just the infrastructure. And that was really just sort of bringing it into the house operating things a little bit more efficiently for the way that the Enerflex team is going to operate going forward. And for that point, Andrew, I would expect that we will see a normalization of how assets perform once we're fully integrated. So yes, and I guess the third point is we are bringing online 3 big projects. In fact, they're all online now, and those have very healthy margin profiles to them and have been going very well so far, knock on wood. And congratulations to the water team and our Middle Eastern team for bringing those assets online. So yes, I think you'll see a normalization to historical margins that you have seen from the infrastructure side of the house.

Our next question comes from the line of Tim Monachello with ATB Capital Markets.

First question for me, just on the Argentina FX losses that you had in the quarter. Obviously, there's a lot of devaluation in the pace of this quarter. And it's tough to repatriate cash, and you guys don't really disclose what your cash balances are in each geography. But can you help frame the conversation around how this looks like, how it might look going forward? Were cash balances higher than it has been historically average levels? And how do you think about the Argentina business on a go-forward basis, obviously, Exterran had a pretty large presence in Argentina.

Yes. Tim, I'll take the first half. Maybe I'll turn the second half over to Marc on how we see the business. So I think it's really important to quantify this $18 million loss. So where I would start is that it was really $14 million that was directly allocated to the devaluation. And then there was $4 million that was related to the cost of a hedge that was put in place by the legacy Exterran team, which -- it actually didn't protect us and so we won't be incurring that cost going forward. So really, we've got not an $18 million issue. We've got a $14 million issue. As you mentioned, the devaluation in the peso was pretty strong in the quarter. But even if we assume that, that continues, which I think is a conservative assumption, you've got to offset the $7 million that we gained in investing that cash. So really, it's a $7 million issue. And what I would tell you is that our team feels pretty strongly that we can do a better job on earning money on that money versus what we were historically seeing. So I think we're going to be able to skinny this out to even below it being a $7 million issue. But that's not to say that it won't be an issue going forward. It will be there; we're planning that it will be there. I just think that we're going to be able to manage it down to a very efficient number here. And the other thing that I would tell you, Tim, is that our expectation of the impact that this is going to have on 2023 is already baked into that $380 million to $420 million guidance that we've provided.

Tim, this is Marc. On the second part of your question, where does Argentina fit? It's a good question. We like our people in the region, we like our assets in the region, we have really good customer relationships in the region, and they're all sitting on top of one of the best shale resources in the world. From that point of view, I believe it's a very good operating region going forward. I've got a high degree of trust in Sanjay and his treasury team that we will manage the currency as best we can, but we are fully prepared for there to be some decay from quarter-to-quarter because of those things. When you add it all up, it's still a very attractive asset for us. It's a very attractive country to be in, and we'll operate it as such.

I guess one follow-up question there then. Can you talk about the contract terms that you have specifically when the contract or contracts generally expire? And I guess how do you compensate yourself in those contracts for the level of risk you're taking? Because clearly, this currency risk is pretty significant.

You're right. It's significant. Our customer contracts in Argentina are a blend of Rental contracts and BOOM contracts. The revenues are pegged to the U.S. dollar, and all the risk happens when we receive payment on a monthly basis. Now this isn't new to Enerflex. Like we've been in Argentina since 2014, and our teams have done a very good job of managing the currency since 2014 when we entered that market. Do we go for returns that are above average sort of a risk-adjusted return? Absolutely. And that risk-adjusted return and how much do you have to put on top of normal returns to account for the fact that the currency risk is more significant in Argentina than anywhere else. That's something that we've got experience in doing. And we will have continued challenges on the currency. But again, I've got a lot of faith in our commercial teams and our treasury teams to nullify that as much as possible and still maintain solid operations. And like I said before, is on top of one of the best shale resources in the world.

Are the contracts there, large and lumpy? Are there a number of smaller contracts that expired over a period of time?

It looks more like our U.S. rental fleet than it does large and lumpy.

Got it. Okay. Moving on, I'm just curious about how you're thinking about organic CapEx in 2023. Obviously, you put some guidance out there. But if you were to see some high-return projects or opportunities come through, how are you managing those? And is there [Indiscernible] on the CapEx? And maybe you can just talk a little bit about the opportunities that you're seeing today for BOOM projects globally.

Yes. Sure, Tim. First and foremost, I want to reiterate that our #1 objective is delevering the balance sheet and getting below 2.5x leverage ratio. So we are spending very little right now from a discretionary growth CapEx perspective. And that will continue until we have very clear line of sight to getting below 2.5x. And we're obviously with the excess cash there going to start thinking about how we return money to shareholders at that time. But really, right now, we are spending very little with the primary goal of getting leverage down below 2.5x.

And then once you're below that level, what should we expect for organic CapEx? And -- like how is the opportunity set globally like demand for these types of projects changed, I guess, over the last 6 months?

Yes. Look, I mean, I'd say demand is very strong. I think our teams have done a marvelous job of figuring out how to work constructively with our customers to take something that would have been a capital-intensive project and make it into something that we can either sell or something that we can run on an O&M basis. They've been very creative to do that. So the demand for the products and services that Enerflex provides is incredibly strong. And so that part hasn't gone away. I would say going forward, of course, we're going to look at how do we grow the business. It's going to come after we've delevered the balance sheet below 2.5x. And it's going to come after we've decided what the right method and quantum of returning value to shareholders is. And at that point, we'll assess the projects and we'll be looking at investing in ways that will be accretive to the company at that point. But it really is sort of a conversation that we are not prioritizing right now because we want to make sure that we get leverage, very clear line of sight to getting leverage down below 2.5x.

Okay. Got it. CCUS bookings were changed in 2022. How are you thinking about the quantum? And obviously, bookings are hard to call, but I guess, opportunities then in CCUS for '23 relative to '22.

I think, like I said to Keith earlier, the pipeline is positive, and we're working real hard to try to make 2023 leases as good as 2022. That's our goal and we'll take it quarter-by-quarter. You'll see the bookings as we report the quarters, and that's about as forward-looking as I would like to get on that front.

Okay. And then last one for me. You've got 2 water projects commissioned now that were in flight. And Exterran was very enthusiastic about its water business. How are you guys thinking about it? And are you enthusiastic as they were?

Yes, we are. Yes, we are. I mean, I'm pretty sure we mentioned this part of the transaction. Some of the water technology and the relationships they have provides this new set of growth opportunities for us. There are customers that we know, they are regions that we know, they're in certain geopolitical risk that's very good for us. So we like the opportunity that and we'll evaluate growth opportunities after we get below 2.5x of the water jobs right next to all of our natural gas and energy transition projects and the projects that generate the best return will be the ones that get that excess cash flow. But we do like it. The team -- the 2 projects within 2022 represented about $200 million worth of capital, roughly, and they executed them really well. And more or less on budget, more or less on time and so far, generating the turns that were anticipated in the model. So from that point of view, our confidence sort of Enerflex leadership confidence in the water business' ability to land projects, deliver them and operate them is very high. So it provides sort of another leg to the stool, if you will, in our energy infrastructure strategy.

Okay. And I guess Ali, I got one more follow-up on that. When you look across all of the portfolios at Exterran brought along with it and now that you have it under your umbrella, can you talk a little bit about the return profile of Exterran's business on a project basis compared to what your expectations in hurdle rates are and anaphylaxis?

It's -- they're similar. They're similar to what we used before. That being said, the go-forward is pretty straightforward. We know what our cost of capital is. We know what we have to do with respect to debt and returning cash to shareholders. I think there'll be plenty of free cash flow to go around in 2024 and beyond to get us that modest growth algorithm that we want to deliver. But to mention specific returns on specific Exterran assets, it's in line with the business, and we haven't been greatly surprised.

Our next question comes from Milan of -- Jamie Kubik with CIBC.

Most of them have been answered here, so I only have one, but can you provide any added commentary on the resolution of the B.C. government and Blueberry River First Nations and maybe the types of projects you're potentially seeing coming here and when you believe that could start to favorably impact your operations?

Thanks, Jamie. I think that the Canadian -- the Western Canadian Sedimentary Basin and specifically the Montney area is in need of liquids projects. There are several mid-streamers that have talked about sanctioning liquids projects. And we play a role in those. We've got the ability to build gas processing and liquid handling projects in Canada we have in the past and those are good projects. So to the degree that, that settlement will further development of that kind of critical infrastructure in the Basin. We will do our very best to be involved. And indeed, the sentiment from our customer base has definitely ticked upwards in the last month since that happened, no doubt about it. I think it's early innings on whether or not you'll see significant changes in our backlog driven by that decision specifically. But I think it's maybe the best news to come out of the Canadian macro story in a long time, and we'll see how -- we'll see if the orders flow in subsequent quarters.

Okay. That is helpful. And I'll sneak one more in here, actually. I mean, it's a bit on the same lines that Tim was asking is just, as it relates to your capital allocation priorities and when you hit your net debt-to-EBITDA target of 2.5x, like how should we be thinking about shareholder returns changing at that point? And can you talk a little bit more on that?

Once we get the debt below 2.5x, we will have the freedom to think about what cash return to shareholders looks like of a junior infrastructure company, which is really what we are becoming and how we want to manage the business. Once we think about what those kinds of returns look like for a junior infrastructure company, I think there will be free cash flow left over for the most accretive growth projects. And so it's balanced. It's 100% balance once we get below the 2.5x is we're going to balance our return of cash and balance the smart conservative growth going forward. That's the 2024 story and beyond. That's how we're thinking about it.

Our next question comes from the line of Cole Pereira with Stifel.

On the U.S. ES margin front, do you think they could hit prior cycle peaks? Or is that unlikely just given the change in the U.S. shale strategy? And do you think any weakness in gas markets called the Marcellus and Haynesville could impact the margin recovery? Or is that just a different type of compression unrelated to your more Permian-focused footprint?

Cole, we're not going to say exactly where we expect margins to shake out in U.S. Engineered Systems. We do expect them to go upwards, whether or not they're going to hit the peak of 2018 is just something we're not going to comment on. Secondly, I think your question was around does the current gas price have an impact on margins? Is that right?

Yes.

Yes. It's not helpful. We went to lengths in our prepared commentary to say a lot of our business is coming from crude oil plays and through that, you can read Permian. We don't have a significant amount of business in the Haynesville or the Marcellus. It's opportunistic, but it's not the core of our U.S. Engineered Systems strategy. The core of our business is really in the Permian and the Eagle Ford into the Bakken to a certain degree. And internationally, our U.S. Engineered Systems business, it's under their revenue line and the disclosures, but a lot of that represents business that the destination is overseas, Eastern Hemisphere. So it's -- you really can't draw a straight line between Henry Hub price and the Engineered Systems margin, which we think is a really positive thing, and it's sort of by design, if you will.

Got it. That's helpful. And just quickly on the Kurdistan project. So theoretically, if the project costs were to increase, can you just remind us if there's some sort of mechanism to recover that within the contract?

There's no automatic mechanism, but we have a good contract. We understand it very well. We've developed excellent relationships with our customer. And I'd like to say that I feel our team is managing any increase in costs very well. And all of that is included in the confirmation of our guidance.

We have a follow-up from the line of Aaron MacNeil with TD Securities.

I'll just squeeze one more in. Can you give us a sense of the owned and operated compression horsepower gas processing capacity and water infrastructure capacity split by the 2 new international segments, the Latin America and the Eastern Hemisphere segments, even a rough split would be great. And what I'm ultimately trying to get at is the drivers of each of those segments.

So you're asking like of the revenue in Eastern Hemisphere, how much comes from gas processing, how much comes from compression, how much comes from water in energy infrastructure specifically?

Yes. And just obviously, there's no specific disclosures on horsepower by segment. So just trying to get a sense.

Yes. I guess what I'd say, because we don't disclose that level of detail, Aaron. But I do think that it's helpful to know that our businesses in Latin America and the Eastern Hemisphere are very leveraged towards the recurring side of the business. So a lot of energy infrastructure in both of those areas and some aftermarket services as well. So that's generally speaking. As we sit here today, it's predominantly gas business, but the 2 water projects that have been brought online are in the Middle Eastern region. So that water exposure is really 100% right now in the Middle East, but we have a very energetic water team and their ambitions are global. So they're always looking at opportunities outside of the region. But I would say that most of what they are looking at today is really focused on the Middle Eastern region. And I expect that that's what we'll see from them in the shorter to medium term.

Maybe the better way to ask the question is you split the Rest of World segment in two, what's the split of invested capital between like, is it 50-50, 60-40, even just trying to get a sense of the magnitude?

I don't know that we disclosed that. I'm looking at ...

The total assets that are disclosed in the note disclosure in terms of associated with that. But I guess you could use that as a rough proxy, that's not exactly.

Okay. And where is that that's a which note in the ...

It's in the segmented note in those for the financials.

Okay. Okay. So yes, I think if you look through the segmented information in the financial statements, you'll get total assets by region.

We have a follow-up question from the line of Andrew Bradford with Raymond James.

To be fair, that disclosure was probably on page like 98, I read that late last night. But -- so one follow-up I have here is just thinking about the discussion around the lead time on major components as we were talking about that in the context of Engineering Systems. But I'm sort of thinking about it also in the context of EI projects, which as you said, you're not going to do much in 2023 as the priority is to allocate capital to the balance sheet, but -- cash flow to the balance sheet, but as '23 progresses, your guidance range has been to narrow, obviously. And your confidence on timing of hitting your debt thresholds will improve. And as that threshold date approaches will you be like in advance? Like should we -- I guess, short question, should we expect in 2023, even before you hit that debt threshold that you'll start talking more openly about what the bidding pipeline looks like on BOOM projects or anything like that.

Our -- yes, Andrew. I think that's all very logical. We're being quite pedantic about assuring the investor community that we're focused on debt reduction, and we are. At the same time, we are challenging our commercial teams to look at projects because some of the projects, especially in the Eastern Hemisphere and Latin America can take years to develop. So they're not doing nothing during this period of time where our primary capital allocation focus is debt reduction. And we feel very comfortable, Enerflex has an attractive growth algorithm going forward, once we get our balance sheet to where we think it needs to be long term. So the commercial teams are working. We've given them high hurdles and high targets to make sure that they're developing the very best possible business. And I think it's quite reasonable that in future quarters, we'll be able to communicate to the market the nature of the growth that we would look at once we reach those targets.

I'm showing no further questions in the queue. I would now like to turn the call back to Marc for closing remarks.

Thank you very much, operator. With no further questions, I would like to thank everyone for joining us today. We appreciate your time and interest in Enerflex, and we look forward to connecting you -- we look forward to connecting with you for our next update in May.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.