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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
_____________________________________
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 2, 2024
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CHART INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
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Delaware | 001-11442 | 34-1712937 |
(State of other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
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2200 Airport Industrial Drive, Suite 100, Ball Ground, Georgia 30107
(Address of principal executive offices) (ZIP Code)
Registrant’s telephone number, including area code: (770) 721-8800
NOT APPLICABLE
(Former name or former address, if changed since last report)
_____________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Common Stock, par value $0.01 | | GTLS | | New York Stock Exchange |
| Depositary shares, each representing 1/20th interest in a share of 6.75% Series B Mandatory Convertible Preferred Stock, par value $0.01 | | GTLS.PRB | | New York Stock Exchange |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 2, 2024, Chart Industries, Inc. (the “Company”) issued a news release announcing the Company’s financial results for the second quarter ended June 30, 2024, as well as supplemental information for the second quarter ended June 30, 2024. A copy of the news release is furnished with this Current Report on Form 8-K as Exhibit 99.1, and a copy of the supplemental information is furnished with this Current Report on Form 8-K as Exhibit 99.2. All information in the news release and the supplemental information is furnished and shall not be deemed “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Exchange Act, or otherwise be subject to the liability of that Section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporated it by reference.
The news release and supplemental information furnished with this Current Report on Form 8-K include measures of which exclude certain items required to be presented under generally accepted accounting principles (“GAAP”). These measures are not recognized under GAAP and are referred to as “non-GAAP financial measures” in Regulation G under the Exchange Act. The Company believes these measures are of interest to investors and facilitate useful period-to-period comparisons of the Company’s financial results, and this information is used by the Company in evaluating internal performance. The non-GAAP measures are reconciled to the most directly comparable GAAP measure in tables at the end of the news release and in the supplemental information.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No. | Description |
| 99.1 | |
| 99.2 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| Chart Industries, Inc. |
Date: August 2, 2024 |
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| By: /s/ Jillian C. Evanko
Jillian C. Evanko President and Chief Executive Officer |
Exhibit 99.1
Chart Industries Reports Second Quarter 2024 Financial Results
ATLANTA, – August 2, 2024 - Chart Industries, Inc. (NYSE: GTLS) today reported results for the second quarter ended June 30, 2024. Results shown are from continuing operations. When referring to any comparative period, all metrics are pro forma for continuing operations of the combined business of Chart and Howden (pro forma excludes the following businesses that were divested in 2023: Roots™, American Fan, Cofimco and Cryo Diffusion). The second quarter 2024 is the first year-over-year quarter that includes the full impact of the Howden acquisition which closed on March 17, 2023.
Second quarter 2024 highlights compared to second quarter 2023, pro forma:
•All-time record reported sales, backlog, gross profit, gross margin, reported and adjusted operating income and margin, reported and adjusted EBITDA and EBITDA margin
•Orders of $1.16 billion, an increase of 12.1% and an increase of approximately 40% excluding Big LNG
•Record sales of $1.04 billion, an increase of 18.8%; growth of 19.7% when eliminating foreign exchange headwind of (0.9%)
•Record reported gross margin of 33.8%, an increase of 310 basis points (“bps”)
•Record reported operating income of $167.8 million (16.1% of sales) and record adjusted operating income of $225.7 million (21.7% of sales), when adjusted for unusual items primarily related to the Howden integration and the consolidation and restructure of our Asia Pacific region into our Middle East and Africa region (now “AIMA”), increased 53.1%
•Record reported EBITDA of $229.6 million (record 22.1% of sales) and record adjusted EBITDA of $257.3 million (record 24.7% of sales) when adjusting for items referenced above, an increase of 37.2%
•Reported diluted earnings per share (“EPS”) of $1.10; adjusted diluted EPS of $2.18 includes the ($0.14) negative impact of the mandatory preferred dividend (this was not included in prior periods nor was it included in our prior full year adjusted diluted EPS outlook), and ($0.04) of negative FX impact.
•Net leverage ratio of 3.26, a reduction of 0.82 since the close of the Howden acquisition
•Reported net cash from operating activities of $116.1 million less capital expenditures of $28.1 million resulted in $88.0 million of free cash flow (“FCF”) (when excluding long-term, beyond one year, balance sheet account changes this would be $114.7 million which compares to our $175 million Q2 2024 outlook)
•Our record and growing financial metrics year-over-year and quarter-over-quarter have put us well on the way to our reiterated medium-term financial targets
“With record sales growth of 18.8%, record gross margin of 33.8%, record reported operating income, record reported operating margin, record EBITDA, and associated EBITDA margin, w. are on the path to our reiterated three-year medium-term targets of mid-teen organic sales
CAGR, reported gross margin in the mid-30%’s and our target net leverage ratio range of 2.0 to 2.5,” stated Jill Evanko, Chart’s CEO and President. “I would like to thank our One Chart team members who delivered these exceptional results safely, achieving our lowest quarterly total recordable incident rate in our history of 0.42 and nearing the $1 billion mark in commercial synergies between Chart and Howden.”
Second Quarter 2024 Summary
Second quarter 2024 sales of $1.04 billion were an all-time record in our pro forma history and included record sales in both the Specialty Products and Repair, Service and Leasing (“RSL”) segments. Second quarter 2024 sales increased 18.8% (19.7% if eliminating the foreign exchange headwind) when compared to the second quarter 2023 as we continue to deliver on our record backlog of $4.4 billion. Second quarter 2024 sales also increased 9.4% sequentially when compared to the first quarter of 2024. Each segment’s and each region’s sales grew when compared to the second quarter 2023, with RSL growing 26.2% and Specialty Products growing 20.8%. RSL also grew 19.8% sequentially when compared to the first quarter 2024 and comprised 34.7% of our total sales in the quarter.
Demand continues broad-based across our end markets and regions, with second quarter 2024 orders of $1.16 billion, an increase of 12.1% when compared to the second quarter 2023. Excluding Big LNG orders (of which there were none in the second quarter 2024 and one in the second quarter 2023), orders increased approximately 40% compared to the second quarter 2023. The second quarter 2024 had record orders in our Specialty Products segment including record orders for carbon capture (“CCUS”), metals, mining, water treatment and strong, globally diverse hydrogen and helium awards ranging from compressors for a green power application, liquefaction, fueling stations, vacuum jacketed pipe, and offloading equipment.
Third quarter 2024 order activity has started strong. RSL had a stronger than typical July 2024, including the receipt of a $10.5 million order for Power Africa power station spares, and further orders from this customer totaling over $25 million are also expected to be awarded in the second half 2024. We received an order for approximately $27 million for a significant petrochemical project in the Asia Pacific region where we will supply high-pressure vessels, gas coolers, and waste heat boilers. Space exploration orders in July 2024 were approximately $19 million. Airbus has awarded us a contract to fabricate a liquid hydrogen inner vessel sub system to integrate into an Airbus ZEROe physical demonstrator programme. The vessel will be used to test and prove the viability of LH2 fueled aircraft designs, processes, fuel, materials and equipment on the ground. This week, we signed a Memorandum of Understanding (“MOU”) with Verdagy where both parties will collaborate on hydrogen compression solutions to enhance Verdagy’s green hydrogen product offering.
LNG activity continues globally, including a conscious move of LNG operators to more modular solutions, specifically benefitting our IPSMR® process technology. This is evidenced by more customers notifying us of their selection to utilize our IPSMR® technology as well as our expanded Big LNG commercial pipeline of 32 potential projects (an increase from 30 last quarter) with 16 potential international projects considering using IPSMR® (an increase from 15 last quarter). We announced our liquefaction technology and equipment was chosen for Argent’s Port Fourchon anticipated 20 MTPA project (not yet booked into backlog). In LNG infrastructure, we booked our largest ever order for our Decin, Czech Republic facility for a LNG regas solution. LNG trailer orders in China continued their momentum in the first half of 2024, totaling 80 sold through June 30, 2024 year-to-date (103 as of July 29, 2024 year-to-date); this compares to 25 for the full year 2023 and 15 for the full year 2022. HLNG vehicle tank orders were over $10 million in both the first and the second quarter 2024, with year-to-date orders as of the end of the second quarter 2024 exceeding the full year 2023 HLNG vehicle tank orders (and July 2024 added another $4.7 million of HLNG vehicle tank orders). Our service and retrofit offering, particularly our Tuf-Lite IV fans, which have a uniquely designed backward sweep characteristic that offers improved efficiency and resiliency, continue to gain traction, as we booked orders in the second quarter 2024 for two separate U.S. LNG export facility customers to utilize these fans in their terminals. We are proud to support Cheniere’s debottlenecking efforts with our Tuf-Lite IV fans at both their Sabine Pass and Corpus Christi locations.
Artificial intelligence (“AI”) and in turn, more and larger data centers are driving an increasing need for batteries, cooling and storage in an energy intensive environment. Data centers could consume 9% of the United States’ electricity generation by 2030 — double the amount consumed today, according to a study released in July 2024 by the Electric Power Research Institute. This trend positively impacts us, and in the second quarter 2024 we received an approximately $40 million award from a data center provider for a specific, uniquely designed air-cooled heat exchanger for heat rejection. The data center and AI opportunity for us specifically based on 3 Gigawatts of data center addition per year is approximately $500 million, and as it expands to heavy industrial cooling, where our blowers, heat exchangers, and compressors play, this adds an additional incremental $600 to $800 million of addressable market per year.
Our commercial pipeline of opportunities for the next three years is at an all-time high, over $23 billion, and includes over $5 billion of hydrogen-related opportunities (approximately 35% of which are for the Americas, remainder for rest of the world).
Reported gross margin of 33.8% was our highest in pro forma history. This represents an increase of 310 bps from the second quarter 2023 and a sequential increase in gross margin of 200 bps compared to the first quarter 2024.
This strong gross margin for the second quarter 2024 contributed to record reported operating income of $167.8 million resulting in record reported operating margin of 16.1% and when adjusted for one-time and unusual items, specifically Howden integration and the consolidation of our APAC/India region into our Africa/Middle East region, resulted in a record adjusted operating income of $225.7 million and record adjusted operating margin of 21.7%. This contributed to our record EBITDA of $229.6 million (22.1% of sales), and adjusted EBITDA of $257.3 million (24.7% of sales).
Second quarter 2024 segment results (as compared to the second quarter 2023, pro forma continuing operations unless noted otherwise).
Cryo Tank Solutions (“CTS”): Second quarter 2024 CTS orders of $159.0 million increased 4.5% when compared to the second quarter 2023. Second quarter 2024 sales of $165.5 million increased 12.4% when compared to the second quarter 2023. Reported gross profit margin of 20.2% increased 170 bps compared to the second quarter 2023.
Heat Transfer Systems (“HTS”): Second quarter 2024 HTS orders of $269.6 million decreased 9.4% when compared to the second quarter 2023. When excluding the one Big LNG project award in the second quarter 2023, HTS orders grew over 300%. This increase was driven in part by our air cooler data center award and a small-scale LNG award in South America. Second quarter 2024 HTS sales of $236.7 million grew 3.4% compared to the second quarter 2023 and had associated reported gross profit margin of 25.7%, a 280 bps decrease compared to the second quarter 2023. This decrease resulted from certain lower margin projects that were completed and are no longer in our backlog.
Specialty Products (“SPC”): Second quarter 2024 Specialty Products orders of $423.7 million increased 48.4% when compared to the second quarter 2023. Second quarter 2024 Specialty Products sales of $277.6 million were an all-time high for the segment and increased 20.8% when compared to the second quarter 2023 driven by increasing throughput, the start of production at our new facility in Theodore, Alabama (“Teddy 2”), and timing of larger projects in backlog. Reported gross profit margin of 29.1% increased 430 basis points when compared to the second quarter 2023 and 420 basis points sequentially when compared to the first quarter 2024. As previously shared, we forecast Specialty Products sales mix to be a tailwind in 2024 relative to 2023, and the second quarter 2024 was a positive indicator of this trend.
Repair, Service and Leasing (“RSL”): Second quarter 2024 RSL orders of $312.4 million increased 0.5% when compared to the second quarter 2023, which included a South African Air Heater Element pack for $17.2 million and approximately $19 million of orders related to two large APAC aftermarket projects. Second quarter 2024 sales of $360.5 million were a historical record, and grew 26.2%. Reported RSL gross profit margin of 49.0% was a record driven by strong field service work which commanded higher margins. This level of gross margin for RSL is not consistently typical; as a reference, gross profit as a percent of sales in RSL has been at or above 43% each quarter since we closed on the Howden acquisition (RSL margins have been
on average 200 bps higher than RSL pro forma pre-acquisition, driven by cost and commercial synergies). As of June 30, 2024, our assets under management metric (Uptime, Framework agreements, LTSAs) has grown 27.0% since year-end 2023.
Commercial synergies to date have far exceeded year-three’s (2026) target of $350 million; cost synergies to date are on track to be ahead of year-three (2026) target of $250 million before year-end 2024.
Commercial synergies of $924 million to date far exceeded year-three’s target of $350 million. Cost synergies of $223 million to date are on track to be ahead of year-three (2026) target before year-end 2024. In the second quarter 2024, we executed a consolidation of two of our regional organization structures as part of further integration of Howden into Chart. Sourcing savings are ahead of schedule year-to-date 2024, with more expected in the second half 2024. Going forward we are accelerating the localization of products utilizing our global footprint. Within the third quarter 2024 we will complete the manufacture of the first Earthly Labs unit in Germany further expanding our European market opportunities for this product line.
Reiterating our target net leverage ratio of 2.0 to 2.5.
Reported net cash from operating activities of $116.1 million less capital expenditures of $28.1 million resulted in $88.0 million of free cash flow (“FCF”) (when excluding long-term, beyond one year, balance sheet account changes this would be $114.7 million which compares to our $175 million second quarter 2024 outlook). Our June 30, 2024 net leverage ratio was 3.26, as we continue to focus on executing to achieve our target net leverage ratio range of 2.0 to 2.5.
Our margins are strong, capital spending is anticipated to be related to our normal recurring capital spend as our significant capacity expansions complete, and working capital metrics continue to improve as a percent of revenue. As we had previously shared on our first quarter 2024 earnings call, we expected over $125 million of milestone payments in the second quarter 2024 for our top four projects and we collected all of that. In the second quarter 2024, our management of accounts receivable, accounts payable and inventory generated positive cash flows. The difference from our prior second quarter 2024 FCF outlook of $175 million was driven by timing. There were two decisions that occurred within the second quarter 2024 that affected cash flow. First, a major emergency field service situation arose within the second quarter 2024. We dedicated a large field service team from other work to respond, and the associated timing of cash payment will be in the second half 2024. We also had a key customer whose project has a cash milestone in the second half 2024 request that they needed specific steps taken to hold schedule and the related materials purchase occurred earlier than we had previously planned.
We continue to take opportunistic steps to optimize our balance sheet, including the completion of our reprice of our Term Loan B, which resulted in 85 basis points of interest rate reduction, or
approximately $14 million in annualized interest savings, as well as launching a targeted supply chain finance program to certain suppliers.
2024 Outlook
We anticipate our full year 2024 sales to be in the range of approximately $4.45 billion to $4.60 billion with forecasted full year 2024 adjusted EBITDA in the range of $1.08 billion to $1.15 billion. Our anticipated 2024 full year adjusted EPS range is $10.75 to $11.75. This range is based on an effective tax rate range of approximately 20% to 21% and a diluted share count of approximately 47 million. FCF guidance is in the range of approximately $400 million to $475 million.
Compared to our prior 2024 full year outlook the main drivers of the change are timing of sales recognition for backlog conversion on larger and longer projects (these are not cancellations; our cancellation rate remains substantially below 1% of backlog), negative foreign exchange, timing of larger awards in the second quarter 2024 having revenue impacts in 2025 and 2026 (we booked approximately $275 million for projects in late second quarter 2024 which will have 2025 and 2026 revenue impact) and a change to adjusted EPS calculation by no longer excluding the negative ($0.60) mandatory preferred dividend EPS impact.
Our previous sales outlook was expected to be in a range of $4.7 to $5.0 billion; previously forecasted full year 2024 adjusted EBITDA in the range of $1.175 to $1.30 billion; Reported free cash flow (FCF) guidance of $575 million to $625 million and prior anticipated 2024 full year adjusted EPS range of $12.00 to $14.00 which did not include the full year $0.60 negative impact of the preferred mandatory dividend and was based on a prior full year effective tax rate of 20%.
Medium Term Outlook
With our strong momentum, additional cost synergies identified and anticipated, Chart Business Excellence (“CBE”) productivity actions and backlog, we reiterate our medium-term outlook. These metrics do not include any additional Big LNG project revenue not already booked as of September 30, 2023. Further growth and margin is anticipated from several known big LNG projects awards not currently reflected in our backlog and not assumed in our guidance metrics, including IPSMR® for an integrated oil company’s (“IOC”) international Big LNG project, Argent LNG’s Port Fourchon 20 MTPA facility and Driftwood LNG’s 27 MTPA export terminal which is already permitted (these three Big LNG projects that are not yet in backlog total approximately $1.5 billion of Chart content).
We anticipate to sequentially grow sales in 2025 and 2026 each in double digits, continue our margin expansion and generate more cash with capital expenditures as a percentage of sales in the 2.0 to 2.5% range. Our medium-term financial targets are:
•Mid-teens organic revenue growth through 2026
•Reported gross profit margin of mid-30%’s by 2026
•Double-digit adjusted diluted EPS growth CAGR of mid-40%’s
•95-100% FCF conversion
•Return on invested capital (“ROIC”) of mid-teens
FORWARD-LOOKING STATEMENTS
Certain statements made in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the Company’s business plans, including statements regarding completed acquisitions, divestitures, and investments, cost and commercial synergies and efficiency savings, objectives, future orders, revenues, margins, segment sales mix, earnings or performance, liquidity and cash flow, inventory levels, capital expenditures, supply chain challenges, inflationary pressures including material cost and pricing increases, business trends, clean energy market opportunities including addressable markets, and governmental initiatives, including executive orders and other information that is not historical in nature. Forward-looking statements may be identified by terminology such as "may," "will," "should," "could," "expects," "anticipates," "believes," "projects," "forecasts," “outlook,” “guidance,” "continue," “target,” or the negative of such terms or comparable terminology.
Forward-looking statements contained in this press release or in other statements made by the Company are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control, that could cause the Company's actual results to differ materially from those matters expressed or implied by forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements include: the Company’s ability to successfully integrate the Howden acquisition and other recent acquisitions and achieve the anticipated revenue, earnings, accretion and other benefits from these acquisitions; slower than anticipated growth and market acceptance of new clean energy product offerings; inability to achieve expected pricing increases or continued supply chain challenges including volatility in raw materials and supply; risks relating to the outbreak and continued uncertainty associated with the coronavirus (COVID-19) and regional conflicts and unrest, including the recent turmoil in the Middle East and the conflict between Russia and Ukraine including potential energy shortages in Europe and elsewhere; and the other factors discussed in Item 1A (Risk Factors) in the Company’s most recent Annual Report on Form 10-K filed with the SEC, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement.
USE OF NON-GAAP FINANCIAL INFORMATION
This press release contains non-GAAP financial information, including adjusted net income, adjusted operating income, adjusted earnings per diluted share, net income attributable to Chart Industries, Inc. adjusted, free cash flow and adjusted free cash flow and EBITDA and adjusted EBITDA. For additional information regarding the Company's use of non-GAAP financial information, as well as reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), please see the reconciliation pages at the end of this news release.
The Company believes these non-GAAP measures are of interest to investors and facilitate useful period-to-period comparisons of the Company’s financial results, and this information is used by the Company in evaluating internal performance. With respect to the Company’s 2024 full year earnings outlook, the Company is not able to provide a reconciliation of the adjusted EBITDA, FCF or adjusted EPS because certain items may have not yet occurred or are out of the Company’s control and/or cannot be reasonably predicted.
CONFERENCE CALL
As previously announced, the Company has scheduled a conference call for Friday, August 2, 2024 at 8:30 a.m. ET to discuss its second quarter 2024 financial results. Participants wishing to join the live Q&A session must dial-in with the following information:
PARTICIPANT INFORMATION:
Toll-Free – North America: (+1) 800 549 8228
Toll North America and other locations: (+1) 289 819 1520
Conference ID: 39844
A live webcast and replay, as well as presentation slides, will be available on the Company’s investor relations website through the following link: Q2 2024 Webcast Registration. A telephone replay of the conference call can be accessed approximately two hours following the end of the call at 1-888-660-6264 with passcode 39844 through September 1, 2024.
About Chart Industries, Inc.
Chart Industries, Inc. is a leading independent global leader in the design, engineering, and manufacturing of process technologies and equipment for gas and liquid molecule handling for the Nexus of Clean™ - clean power, clean water, clean food, and clean industrials, regardless of molecule. The company’s unique product and solution portfolio across stationary and rotating equipment is used in every phase of the liquid gas supply chain, including engineering, service and repair from installation to preventive maintenance and digital monitoring. Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and CO2 capture amongst other applications. Chart is committed to excellence in environmental, social and corporate governance (ESG) issues both for its company as well as its customers. With 64 global manufacturing locations and over 50 service centers from the United States to Asia, Australia, India, Europe and South America, the company maintains accountability and transparency to its team members, suppliers, customers and communities. To learn more, visit www.chartindustries.com
For more information, click here:
http://ir.chartindustries.com/
Chart Industries Investor Relations Contact:
John Walsh
SVP, Investor and Government Relations
1-770-721-8899
john.walsh@chartindustries.com
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars and shares in millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| June 30, 2024 | | June 30, 2023 | | March 31, 2024 | | June 30, 2024 | | June 30, 2023 |
| Sales | $ | 1,040.3 | | | $ | 908.1 | | | $ | 950.7 | | | $ | 1,991.0 | | | $ | 1,439.6 | |
| Cost of sales | 688.7 | | | 627.5 | | | 648.4 | | | 1,337.1 | | | 1,009.7 | |
| Gross profit | 351.6 | | | 280.6 | | | 302.3 | | | 653.9 | | | 429.9 | |
| Selling, general and administrative expenses | 136.2 | | | 140.7 | | | 141.5 | | | 277.7 | | | 233.6 | |
| Amortization expense | 47.6 | | | 44.2 | | | 47.9 | | | 95.5 | | | 66.0 | |
| | | | | | | | | |
| Operating expenses | 183.8 | | | 184.9 | | | 189.4 | | | 373.2 | | | 299.6 | |
Operating income (1) – (3) | 167.8 | | | 95.7 | | | 112.9 | | | 280.7 | | | 130.3 | |
| Acquisition related finance fees | — | | | — | | | — | | | — | | | 26.1 | |
| Interest expense, net | 84.3 | | | 83.9 | | | 83.8 | | | 168.1 | | | 112.2 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Other expense, net | 3.6 | | | 1.3 | | | 3.2 | | | 6.8 | | | 3.0 | |
| Income (loss) from continuing operations before income taxes and equity in (loss) income of unconsolidated affiliates, net | 79.9 | | | 10.5 | | | 25.9 | | | 105.8 | | | (11.0) | |
| Income tax expense (benefit) | 15.5 | | | 2.4 | | | 8.8 | | | 24.3 | | | (4.3) | |
| Income (loss) from continuing operations before equity in (loss) income of unconsolidated affiliates, net | 64.4 | | | 8.1 | | | 17.1 | | | 81.5 | | | (6.7) | |
| Equity in (loss) income of unconsolidated affiliates, net | (1.3) | | | 1.5 | | | (0.3) | | | (1.6) | | | 1.1 | |
| Net income (loss) from continuing operations | 63.1 | | | 9.6 | | | 16.8 | | | 79.9 | | | (5.6) | |
| (Loss) income from discontinued operations, net of tax | (0.2) | | | 2.5 | | | (2.2) | | | (2.4) | | | 3.4 | |
| Net income (loss) | 62.9 | | | 12.1 | | | 14.6 | | | 77.5 | | | (2.2) | |
| Less: Income attributable to noncontrolling interests of continuing operations, net of taxes | 4.3 | | | 3.0 | | | 3.3 | | | 7.6 | | | 3.7 | |
| Net income (loss) attributable to Chart Industries, Inc. | $ | 58.6 | | | $ | 9.1 | | | $ | 11.3 | | | $ | 69.9 | | | $ | (5.9) | |
| | | | | | | | | |
| Amounts attributable to Chart common stockholders | | | | | | | | | |
| Income (loss) from continuing operations | $ | 58.8 | | | $ | 6.6 | | | $ | 13.5 | | | $ | 72.3 | | | $ | (9.3) | |
| Less: Mandatory convertible preferred stock dividend requirement | 6.8 | | | 6.9 | | | 6.8 | | | 13.6 | | | 13.7 | |
| Income (loss) from continuing operations attributable to Chart | 52.0 | | | (0.3) | | | 6.7 | | | 58.7 | | | (23.0) | |
| (Loss) income from discontinued operations, net of tax | (0.2) | | | 2.5 | | | (2.2) | | | (2.4) | | | 3.4 | |
| Net income (loss) attributable to Chart common shareholders | $ | 51.8 | | | $ | 2.2 | | | $ | 4.5 | | | $ | 56.3 | | | $ | (19.6) | |
| | | | | | | | | |
| Basic earnings per common share attributable to Chart Industries, Inc. | | | | | | | | | |
| Income (loss) from continuing operations | $ | 1.24 | | | $ | (0.01) | | | $ | 0.16 | | | $ | 1.40 | | | $ | (0.55) | |
| (Loss) income from discontinued operations | (0.01) | | | 0.06 | | | (0.05) | | | (0.06) | | | 0.08 | |
| Net income (loss) attributable to Chart Industries, Inc. | $ | 1.23 | | | $ | 0.05 | | | $ | 0.11 | | | $ | 1.34 | | | $ | (0.47) | |
| Diluted earnings per common share attributable to Chart Industries, Inc. | | | | | | | | | |
| Income (loss) from continuing operations | $ | 1.10 | | | $ | (0.01) | | | $ | 0.14 | | | $ | 1.25 | | | $ | (0.55) | |
| (Loss) income from discontinued operations | — | | | 0.06 | | | (0.04) | | | (0.05) | | | 0.08 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| June 30, 2024 | | June 30, 2023 | | March 31, 2024 | | June 30, 2024 | | June 30, 2023 |
| Net income (loss) attributable to Chart Industries, Inc. | $ | 1.10 | | | $ | 0.05 | | | $ | 0.10 | | | $ | 1.20 | | | $ | (0.47) | |
| | | | | | | | | |
| Weighted-average number of common shares outstanding: | | | | | | | | | |
| Basic | 42.04 | | | 41.97 | | | 42.03 | | | 42.03 | | | 41.96 | |
Diluted (4) (5) | 47.25 | | | 46.45 | | | 46.73 | | | 46.99 | | | 41.96 | |
_______________
(1)Includes depreciation expense of:
•$18.3, $18.7 and $18.0 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and
•$36.3 and $30.2 for the six months ended June 30, 2024 and 2023, respectively.
(2)Includes restructuring costs of:
•$4.3, $5.4, and $5.1 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and
•$9.4 and $7.0 for the six months ended June 30, 2024 and 2023, respectively.
(3)Includes deal-related and integration costs of:
•$7.4, $11.3 and $6.5 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and
•$13.9 and $93.0 for the six months ended June 30, 2024 and 2023, respectively.
(4)Includes an additional 5.00, 4.31 and 4.53 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S. generally accepted accounting principles (“GAAP”). If the hedge could have been considered, it would have reduced the additional shares by 2.69, 2.38 and 2.48 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively.
(5)Includes an additional 4.77 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the six months ended June 30, 2024. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S. GAAP. If the hedge could have been considered, it would have reduced the additional shares by 2.59 for the six months ended June 30, 2024.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, 2024 | | June 30, 2023 | | March 31, 2024 | | June 30, 2024 | | June 30, 2023 |
| Operating Activities | | | | | | | | | |
| Net income (loss) | $ | 62.9 | | | $ | 12.1 | | | $ | 14.6 | | | $ | 77.5 | | | $ | (2.2) | |
| Less: (Loss) income from discontinued operations, net of tax | (0.2) | | | 2.5 | | | (2.2) | | | (2.4) | | | 3.4 | |
| Net income (loss) from continuing operations | 63.1 | | | 9.6 | | | 16.8 | | | 79.9 | | | (5.6) | |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | | | | |
| Bridge loan facility fees | — | | | — | | | — | | | — | | | 26.1 | |
| Depreciation and amortization | 66.0 | | | 62.9 | | | 65.9 | | | 131.9 | | | 96.2 | |
| Employee share-based compensation expense | 4.1 | | | 2.6 | | | 6.0 | | | 10.1 | | | 6.6 | |
| Financing costs amortization | 4.7 | | | 4.4 | | | 4.7 | | | 9.4 | | | 7.2 | |
| | | | | | | | | |
| Unrealized foreign currency transaction gain | (0.2) | | | (2.6) | | | (13.5) | | | (13.7) | | | (0.9) | |
| Unrealized loss on investments in equity securities | 0.3 | | | 4.6 | | | 1.7 | | | 2.0 | | | 6.6 | |
| Equity in loss (income) of unconsolidated affiliates | 1.3 | | | (1.7) | | | 0.3 | | | 1.6 | | | (1.2) | |
| | | | | | | | | |
| Loss on sale of business | — | | | — | | | 7.8 | | | 7.8 | | | — | |
| Other non-cash operating activities | (0.8) | | | 1.3 | | | 1.8 | | | 1.0 | | | 1.4 | |
| Changes in assets and liabilities, net of acquisitions: | | | | | | | | | |
| Accounts receivable | 51.2 | | | (53.6) | | | (51.0) | | | 0.2 | | | (60.2) | |
| Inventories | 9.1 | | | (15.4) | | | (4.1) | | | 5.0 | | | (5.0) | |
| Unbilled contract revenue | (109.5) | | | (22.6) | | | (76.7) | | | (186.2) | | | (82.8) | |
| Prepaid expenses and other current assets | 5.6 | | | 4.8 | | | (48.6) | | | (43.0) | | | 12.4 | |
| Accounts payable and other current liabilities | 59.5 | | | 83.6 | | | (17.1) | | | 42.4 | | | 129.1 | |
| Customer advances and billings in excess of contract revenue | (11.3) | | | 27.8 | | | 17.3 | | | 6.0 | | | 34.6 | |
| Long-term assets and liabilities | (27.0) | | | (8.9) | | | (0.9) | | | (27.9) | | | (29.1) | |
| Net Cash Provided By (Used In) Continuing Operating Activities | 116.1 | | | 96.8 | | | (89.6) | | | 26.5 | | | 135.4 | |
| Net Cash Used In Discontinued Operating Activities | — | | | (5.2) | | | (5.5) | | | (5.5) | | | (75.9) | |
| Net Cash Provided By (Used In) Operating Activities | 116.1 | | | 91.6 | | | (95.1) | | | 21.0 | | | 59.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, 2024 | | June 30, 2023 | | March 31, 2024 | | June 30, 2024 | | June 30, 2023 |
| Investing Activities | | | | | | | | | |
| Acquisition of businesses, net of cash acquired | — | | | — | | | — | | | — | | | (4,339.8) | |
| | | | | | | | | |
| Capital expenditures | (28.1) | | | (20.9) | | | (46.1) | | | (74.2) | | | (52.3) | |
| Investments | (7.1) | | | (0.5) | | | (6.0) | | | (13.1) | | | (2.6) | |
| | | | | | | | | |
| | | | | | | | | |
| Other investing activities | (6.1) | | | (0.5) | | | 0.3 | | | (5.8) | | | (1.0) | |
| Net Cash Used In Continuing Investing Activities | (41.3) | | | (21.9) | | | (51.8) | | | (93.1) | | | (4,395.7) | |
| Net Cash Used In Discontinued Investing Activities | (2.5) | | | (2.1) | | | — | | | (2.5) | | | (2.1) | |
| Net Cash Used In Investing Activities | (43.8) | | | (24.0) | | | (51.8) | | | (95.6) | | | (4,397.8) | |
| Financing Activities | | | | | | | | | |
| Borrowings on credit facilities | 850.6 | | | 88.0 | | | 634.2 | | | 1,484.8 | | | 722.8 | |
| Repayments on credit facilities | (857.0) | | | (339.8) | | | (479.3) | | | (1,336.3) | | | (384.8) | |
| | | | | | | | | |
| | | | | | | | | |
| Borrowings on term loan | — | | | 250.0 | | | — | | | — | | | 1,747.2 | |
| Repayments on term loan | — | | | (3.8) | | | — | | | — | | | (3.8) | |
| Payments for debt issuance costs | (3.8) | | | (11.9) | | | (1.5) | | | (5.3) | | | (133.4) | |
| Payment of contingent consideration | — | | | (1.7) | | | — | | | — | | | (1.7) | |
| Proceeds from issuance of common stock, net | — | | | — | | | — | | | — | | | 11.7 | |
| | | | | | | | | |
| | | | | | | | | |
| Proceeds from exercise of stock options | 0.1 | | | 0.1 | | | 0.3 | | | 0.4 | | | 0.2 | |
| Common stock repurchases from share-based compensation plans | (0.1) | | | (0.1) | | | (3.0) | | | (3.1) | | | (2.7) | |
| | | | | | | | | |
| Dividend distribution to noncontrolling interests | — | | | (8.4) | | | — | | | — | | | (8.4) | |
| Dividends paid on mandatory convertible preferred stock | (6.8) | | | (6.8) | | | (6.8) | | | (13.6) | | | (13.7) | |
| Net Cash (Used In) Provided By Financing Activities | (17.0) | | | (34.4) | | | 143.9 | | | 126.9 | | | 1,933.4 | |
| Effect of exchange rate changes on cash and cash equivalents | (0.2) | | | (0.3) | | | (2.6) | | | (2.8) | | | 1.9 | |
| | | | | | | | | |
| | | | | | | | | |
| Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | 55.1 | | | 32.9 | | | (5.6) | | | 49.5 | | | (2,403.0) | |
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period (1) | 195.5 | | | 169.4 | | | 201.1 | | | 201.1 | | | 2,605.3 | |
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD (1) | $ | 250.6 | | | $ | 202.3 | | | $ | 195.5 | | | $ | 250.6 | | | $ | 202.3 | |
_______________
(1)Includes restricted cash and restricted cash equivalents of $3.2, $12.5, $12.8 and $1,941.7 as of June 30, 2024, June 30, 2023, March 31, 2024 and December 31, 2022, respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
| | | | | | | | | | | |
| June 30,
2024 | | December 31,
2023 |
| ASSETS | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 247.4 | | | $ | 188.3 | |
| Accounts receivable, less allowances of $5.1 and $5.9, respectively | 748.5 | | | 758.9 | |
| Inventories, net | 554.6 | | | 576.3 | |
| Unbilled contract revenue | 661.4 | | | 481.7 | |
| Prepaid expenses | 101.4 | | | 74.9 | |
| Other current assets | 131.4 | | | 134.3 | |
| Total Current Assets | 2,444.7 | | | 2,214.4 | |
| Property, plant, and equipment, net | 872.9 | | | 837.6 | |
| Goodwill | 2,929.6 | | | 2,906.8 | |
| Identifiable intangible assets, net | 2,645.4 | | | 2,791.9 | |
| Equity method investments | 104.6 | | | 109.9 | |
| Investments in equity securities | 102.0 | | | 91.2 | |
| Other assets | 178.3 | | | 150.6 | |
| TOTAL ASSETS | $ | 9,277.5 | | | $ | 9,102.4 | |
| | | |
| LIABILITIES AND EQUITY | | | |
| Current Liabilities | | | |
| Accounts payable | $ | 906.3 | | | $ | 811.0 | |
| Customer advances and billings in excess of contract revenue | 378.1 | | | 376.6 | |
| Accrued salaries, wages, and benefits | 65.5 | | | 81.5 | |
| Accrued interest | 91.4 | | | 92.5 | |
| Accrued income taxes | 39.2 | | | 60.0 | |
| Current portion of warranty reserve | 26.7 | | | 29.4 | |
| | | |
| Current portion of long-term debt | 259.8 | | | 258.5 | |
| Operating lease liabilities, current | 18.6 | | | 18.5 | |
| Other current liabilities | 140.6 | | | 138.2 | |
| Total Current Liabilities | 1,926.2 | | | 1,866.2 | |
| Long-term debt | 3,729.0 | | | 3,576.4 | |
| Long-term deferred tax liabilities | 569.5 | | | 568.2 | |
| Accrued pension liabilities | 6.7 | | | 6.7 | |
| Operating lease liabilities, non-current | 50.1 | | | 50.7 | |
| Other long-term liabilities | 86.9 | | | 95.2 | |
| Total Liabilities | 6,368.4 | | | 6,163.4 | |
| | | | | | | | | | | |
| June 30,
2024 | | December 31,
2023 |
| Equity | | | |
| Preferred stock, par value $0.01 per share, $1,000 aggregate liquidation preference — 10,000,000 shares authorized, 402,500 shares issued and outstanding at both June 30, 2024 and December 31, 2023 | — | | | — | |
| Common stock, par value $0.01 per share — 150,000,000 shares authorized, 42,804,031 and 42,754,241 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively | 0.4 | | | 0.4 | |
| Additional paid-in capital | 1,879.7 | | | 1,872.5 | |
| Treasury stock; 760,782 shares at both June 30, 2024 and December 31, 2023 | (19.3) | | | (19.3) | |
| Retained earnings | 978.3 | | | 922.1 | |
| Accumulated other comprehensive (loss) income | (90.0) | | | 10.8 | |
| Total Chart Industries, Inc. Shareholders’ Equity | 2,749.1 | | | 2,786.5 | |
| Noncontrolling interests | 160.0 | | | 152.5 | |
| Total Equity | 2,909.1 | | | 2,939.0 | |
| TOTAL LIABILITIES AND EQUITY | $ | 9,277.5 | | | $ | 9,102.4 | |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
OPERATING SEGMENTS (UNAUDITED)
(Dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30, 2024 | | June 30, 2023 | | March 31, 2024 | | June 30, 2024 | | June 30, 2023 |
| Sales | | | | | | | | | |
| Cryo Tank Solutions | $ | 165.5 | | | $ | 152.7 | | | $ | 159.7 | | | $ | 325.2 | | | $ | 276.2 | |
| Heat Transfer Systems | 236.7 | | | 236.0 | | | 253.6 | | | 490.3 | | | 403.5 | |
| Specialty Products | 277.6 | | | 236.7 | | | 236.5 | | | 514.1 | | | 362.9 | |
| Repair, Service & Leasing | 360.5 | | | 298.7 | | | 301.0 | | | 661.5 | | | 417.2 | |
| Intersegment eliminations | — | | | (16.0) | | | (0.1) | | | (0.1) | | | (20.2) | |
| Consolidated | $ | 1,040.3 | | | $ | 908.1 | | | $ | 950.7 | | | $ | 1,991.0 | | | $ | 1,439.6 | |
| Gross Profit | | | | | | | | | |
| Cryo Tank Solutions | $ | 33.4 | | | $ | 28.8 | | | $ | 32.8 | | | $ | 66.2 | | | $ | 50.3 | |
| Heat Transfer Systems | 60.8 | | | 67.3 | | | 70.1 | | | 130.9 | | | 108.6 | |
| Specialty Products | 80.8 | | | 61.0 | | | 58.9 | | | 139.7 | | | 96.9 | |
| Repair, Service & Leasing | 176.6 | | | 123.5 | | | 140.5 | | | 317.1 | | | 174.1 | |
| Consolidated | $ | 351.6 | | | $ | 280.6 | | | $ | 302.3 | | | $ | 653.9 | | | $ | 429.9 | |
| Gross Profit Margin | | | | | | | | | |
| Cryo Tank Solutions | 20.2 | % | | 18.9 | % | | 20.5 | % | | 20.4 | % | | 18.2 | % |
| Heat Transfer Systems | 25.7 | % | | 28.5 | % | | 27.6 | % | | 26.7 | % | | 26.9 | % |
| Specialty Products | 29.1 | % | | 25.8 | % | | 24.9 | % | | 27.2 | % | | 26.7 | % |
| Repair, Service & Leasing | 49.0 | % | | 41.3 | % | | 46.7 | % | | 47.9 | % | | 41.7 | % |
| Consolidated | 33.8 | % | | 30.9 | % | | 31.8 | % | | 32.8 | % | | 29.9 | % |
Operating Income (Loss) | | | | | | | | | |
| Cryo Tank Solutions | $ | 16.0 | | | $ | 10.5 | | | $ | 14.0 | | | $ | 30.0 | | | $ | 14.8 | |
| Heat Transfer Systems | 45.1 | | | 49.8 | | | 51.2 | | | 96.3 | | | 77.1 | |
| Specialty Products | 55.0 | | | 29.1 | | | 25.1 | | | 80.1 | | | 50.9 | |
| Repair, Service & Leasing | 98.0 | | | 45.6 | | | 65.1 | | | 163.1 | | | 78.7 | |
| Corporate | (46.3) | | | (39.3) | | | (42.5) | | | (88.8) | | | (91.2) | |
Consolidated (1) – (4) | $ | 167.8 | | | $ | 95.7 | | | $ | 112.9 | | | $ | 280.7 | | | $ | 130.3 | |
| Operating Margin | | | | | | | | | |
| Cryo Tank Solutions | 9.7 | % | | 6.9 | % | | 8.8 | % | | 9.2 | % | | 5.4 | % |
| Heat Transfer Systems | 19.1 | % | | 21.1 | % | | 20.2 | % | | 19.6 | % | | 19.1 | % |
| Specialty Products | 19.8 | % | | 12.3 | % | | 10.6 | % | | 15.6 | % | | 14.0 | % |
| Repair, Service & Leasing | 27.2 | % | | 15.3 | % | | 21.6 | % | | 24.7 | % | | 18.9 | % |
| Consolidated | 16.1 | % | | 10.5 | % | | 11.9 | % | | 14.1 | % | | 9.1 | % |
_______________
(1)Restructuring costs for the three months ended:
•June 30, 2024 were $4.3 ($1.9 - Repair, Service & Leasing, $1.2 - Specialty Products, $0.5 - Cryo Tank Solutions, $0.4 - Heat Transfer Systems and $0.3 - Corporate).
•June 30, 2023 were $5.4 ($3.7 - Corporate, $0.7 - Repair, Service & Leasing, $0.5 - Specialty Products, $0.3 - Cryo Tank Solutions and $0.2 - Heat Transfer Systems).
•March 31, 2024 were $5.1 ($2.3 - Repair, Service & Leasing, $1.3 - Specialty Products, $0.6 - Cryo Tank Solutions, $0.5 - Heat Transfer Systems and $0.4 - Corporate).
(2)Restructuring costs for the six months ended:
•June 30, 2024 were $9.4 ($4.2 - Repair, Service & Leasing, $2.5 - Specialty Products, $1.1 - Cryo Tank Solutions, $0.9 - Heat Transfer Systems and $0.7 - Corporate).
•June 30, 2023 were $7.0 ($3.7 - Corporate, $1.5 - Repair, Service & Leasing, $1.1 - Cryo Tank Solutions, $0.5 - Specialty Products and $0.2 - Heat Transfer Systems).
(3)Deal-related and integration costs for the three months ended:
•June 30, 2024 were $7.4.
•June 30, 2023 were $11.3.
•March 31, 2024 were $6.5.
(4)Deal-related and integration costs for the six months ended:
•June 30, 2024 were $13.9.
•June 30, 2023 were $93.0.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
ORDERS AND BACKLOG (UNAUDITED)
(Dollars in millions)
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| June 30,
2024 | | June 30,
2023 | | March 31,
2024 |
| Orders | | | | | |
| Cryo Tank Solutions | $ | 159.0 | | | $ | 155.0 | | | $ | 159.3 | |
| Heat Transfer Systems | 269.6 | | | 302.2 | | | 237.3 | |
| Specialty Products | 423.7 | | | 293.2 | | | 391.3 | |
| Repair, Service & Leasing | 312.4 | | | 319.7 | | | 333.9 | |
| Intersegment eliminations | — | | | (7.0) | | | (0.2) | |
| Consolidated | $ | 1,164.7 | | | $ | 1,063.1 | | | $ | 1,121.6 | |
| | | | | | | | | | | | | | | | | |
| As of |
| June 30,
2024 | | June 30,
2023 | | March 31,
2024 |
| Backlog | | | | | |
| Cryo Tank Solutions | $ | 358.2 | | | $ | 452.7 | | | $ | 367.5 | |
| Heat Transfer Systems | 1,709.7 | | | 1,708.9 | | | 1,685.9 | |
| Specialty Products | 1,806.4 | | | 1,259.6 | | | 1,678.2 | |
| Repair, Service & Leasing | 562.7 | | | 580.7 | | | 611.3 | |
| Intersegment eliminations | (11.0) | | | (37.0) | | | (11.8) | |
| Consolidated | $ | 4,426.0 | | | $ | 3,964.9 | | | $ | 4,331.1 | |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. – CONTINUING OPERATIONS TO ADJUSTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. (UNAUDITED)
(Dollars in millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Q2 2024 Diluted EPS | | Q2 2023 Diluted EPS | | Q1 2024 Diluted EPS | | YTD June 2024 Diluted EPS | | |
| Amounts attributable to Chart common stockholders | | | | | | | | | |
| Net income attributable to Chart Industries, Inc. | $ | 58.6 | | | $ | 9.1 | | | $ | 11.3 | | | $ | 69.9 | | | |
| Less: (Loss) income from discontinued operations, net of tax | (0.2) | | | 2.5 | | | (2.2) | | | (2.4) | | | |
| Income from continuing operations | 58.8 | | | 6.6 | | | 13.5 | | | 72.3 | | | |
| Less: Mandatory convertible preferred stock dividend requirement | 6.8 | | | 6.9 | | | 6.8 | | | 13.6 | | | |
| Reported income (loss) from continuing operations attributable to Chart (U.S. GAAP) | $ | 52.0 | | | $ | (0.3) | | | $ | 6.7 | | | $ | 58.7 | | | |
| Earnings (loss) per common share attributable to Chart Industries, Inc. – continuing operations | $ | 1.10 | | | $ | (0.01) | | | $ | 0.14 | | | $ | 1.25 | | | |
Unrealized loss on investments in equity securities and loss from strategic equity method investments (1) | 0.05 | | | 0.10 | | | 0.09 | | | 0.14 | | | |
Deal related and integration costs (2) | 0.15 | | | 0.16 | | | 0.31 | | | 0.46 | | | |
Howden amortization (3) | 1.00 | | | 0.99 | | | 1.00 | | | 1.99 | | | |
Restructuring & related costs (4) | 0.09 | | | 0.13 | | | 0.11 | | | 0.20 | | | |
Other one-time items (5) | 0.04 | | | — | | | — | | | 0.04 | | | |
| Tax effects | (0.25) | | | (0.33) | | | (0.31) | | | (0.56) | | | |
| Adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) | $ | 2.18 | | | $ | 1.04 | | | $ | 1.34 | | | $ | 3.52 | | | |
| Share Count | 47.25 | | | 46.45 | | | 46.73 | | | 46.99 | | | |
_______________
(1)Includes the mark-to-market of our inorganic investments in McPhy, Stabilis and certain of our minority investments as well as losses from strategic equity method investments.
•$2.4, $4.6, and $4.3 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $6.7 for the six months ended June 30, 2024.
(2)Includes third party support fees, one time costs due to acquisition and divestiture activities and other integration related costs of $7.4, $7.4 and $14.3 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $21.7 for the six months ended June 30, 2024.
(3)Howden amortization includes amortization expense related to acquired intangible assets of $46.9, $46.2 and $46.6 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $93.5 for the six months ended June 30, 2024.
(4)Includes restructuring costs of $4.3, $5.4, and $5.1 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $9.4 for the six months ended June 30, 2024. Restructuring charges in Q2 2024 primarily related to the restructuring of our Asia Pacific region into our Middle East & Africa region (AIMA).
(5)Other one-time items include asset impairments resulting from integrating Howden and Chart systems and a one time adjustment related to a 2022 settlement of $2.0 for both three and six months ended June 30, 2024.
_______________
Adjusted earnings per common share attributable to Chart Industries, Inc. is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to earnings per share in accordance with U.S. GAAP. Management believes that adjusted earnings per common share attributable to Chart Industries, Inc. facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other
companies. Prior to the second quarter of 2024, the impacts of the mandatory convertible preferred stock dividend were excluded from adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP). The impacts are now included in adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) and historical periods have been restated to reflect the change in treatment.
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO FREE CASH FLOW FROM CONTINUING OPERATIONS AND RECONCILIATION OF NET CASH USED IN OPERATING ACTIVITIES FROM DISCONTINUED OPERATIONS TO FREE CASH FLOW FROM DISCONTINUED OPERATIONS (UNAUDITED)
(Dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30,
2024 | | June 30,
2023 | | March 31,
2024 | | June 30,
2024 | | June 30,
2023 |
| Net cash provided by (used in) operating activities from continuing operations | $ | 116.1 | | | $ | 96.8 | | | $ | (89.6) | | | $ | 26.5 | | | $ | 135.4 | |
| Capital expenditures | (28.1) | | | (20.9) | | | (46.1) | | | (74.2) | | | (52.3) | |
| Free cash flow from continuing operations (non-GAAP) | $ | 88.0 | | | $ | 75.9 | | | $ | (135.7) | | | $ | (47.7) | | | $ | 83.1 | |
| | | | | | | | | |
| | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30,
2024 | | June 30,
2023 | | March 31,
2024 | | June 30,
2024 | | June 30,
2023 |
| Net cash used in operating activities from discontinued operations | $ | — | | | $ | (5.2) | | | $ | (5.5) | | | $ | (5.5) | | | $ | (75.9) | |
| Capital expenditures | — | | | — | | | — | | | — | | | (2.1) | |
| Free cash flow from discontinued operations (non-GAAP) | $ | — | | | $ | (5.2) | | | $ | (5.5) | | | $ | (5.5) | | | $ | (78.0) | |
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_______________
Free cash flow is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to net cash provided by (used in) operating activities in accordance with U.S. GAAP. Management believes that free cash flow facilitates useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of this non-GAAP measure may not be comparable to the calculations of similarly titled measures reported by other companies.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED)
(Dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2024 |
| | Cryo Tank Solutions | | Heat Transfer Systems | | Specialty Products | | Repair, Service & Leasing | | Intersegment Eliminations | | Corporate | | Consolidated |
| Sales | $ | 165.5 | | | $ | 236.7 | | | $ | 277.6 | | | $ | 360.5 | | | $ | — | | | $ | — | | | $ | 1,040.3 | |
| Operating income (loss) as reported (U.S. GAAP) | $ | 16.0 | | | $ | 45.1 | | | $ | 55.0 | | | $ | 98.0 | | | $ | — | | | $ | (46.3) | | | 167.8 | |
| Operating margin | 9.7 | % | | 19.1 | % | | 19.8 | % | | 27.2 | % | | | | | | 16.1 | % |
| Restructuring, transaction-related and other one-time costs | 2.5 | | | 3.3 | | | 6.4 | | | 41.8 | | | — | | | 3.9 | | | 57.9 | |
| Adjusted operating income (loss) (non-GAAP) | $ | 18.5 | | | $ | 48.4 | | | $ | 61.4 | | | $ | 139.8 | | | $ | — | | | $ | (42.4) | | | $ | 225.7 | |
| Adjusted operating margin (non-GAAP) | 11.2 | % | | 20.4 | % | | 22.1 | % | | 38.8 | % | | | | | | 21.7 | % |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED)
(Dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2023 |
| | Cryo Tank Solutions | | Heat Transfer Systems | | Specialty Products | | Repair, Service & Leasing | | Intersegment Eliminations | | Corporate | | Consolidated |
| Sales | $ | 152.7 | | | $ | 236.0 | | | $ | 236.7 | | | $ | 298.7 | | | $ | (16.0) | | | $ | — | | | $ | 908.1 | |
| Operating income (loss) as reported (U.S. GAAP) | $ | 10.5 | | | $ | 49.8 | | | $ | 29.1 | | | $ | 45.6 | | | $ | — | | | $ | (39.3) | | | $ | 95.7 | |
| Operating margin | 6.9 | % | | 21.1 | % | | 12.3 | % | | 15.3 | % | | | | | | 10.5 | % |
| Restructuring related, deal-related, integration and other one time costs | 2.7 | | | 0.8 | | | 3.4 | | | 44.5 | | | — | | | 7.3 | | | 58.7 | |
| Adjusted operating income (loss) (non-GAAP) | $ | 13.2 | | | $ | 50.6 | | | $ | 32.5 | | | $ | 90.1 | | | $ | — | | | $ | (32.0) | | | $ | 154.4 | |
| Adjusted operating margin (non-GAAP) | 8.6 | % | | 21.4 | % | | 13.7 | % | | 30.2 | % | | | | | | 17.0 | % |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED)
(Dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2024 |
| | Cryo Tank Solutions | | Heat Transfer Systems | | Specialty Products | | Repair, Service & Leasing | | Intersegment Eliminations | | Corporate | | Consolidated |
| Sales | $ | 159.7 | | | $ | 253.6 | | | $ | 236.5 | | | $ | 301.0 | | | $ | (0.1) | | | $ | — | | | $ | 950.7 | |
| | | | | | | | | | | | | |
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| Operating income (loss) as reported (U.S. GAAP) | $ | 14.0 | | | $ | 51.2 | | | $ | 25.1 | | | $ | 65.1 | | | $ | — | | | $ | (42.5) | | | 112.9 | |
| Operating margin | 8.8 | % | | 20.2 | % | | 10.6 | % | | 21.6 | % | | | | | | 11.9 | % |
| Restructuring, transaction-related and other one-time costs | 2.8 | | | 1.7 | | | 6.3 | | | 40.6 | | | — | | | 7.0 | | | 58.4 | |
| Adjusted operating income (loss) (non-GAAP) | $ | 16.8 | | | $ | 52.9 | | | $ | 31.4 | | | $ | 105.7 | | | $ | — | | | $ | (35.5) | | | $ | 171.3 | |
| Adjusted operating margin (non-GAAP) | 10.5 | % | | 20.9 | % | | 13.3 | % | | 35.1 | % | | | | | | 18.0 | % |
_______________
Adjusted operating income (loss) is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to operating income (loss) in accordance with U.S. GAAP. Management believes that adjusted operating income (loss) facilitates useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF OPERATING SEGMENT ORDERS TO PRO FORMA ORDERS, SALES TO PRO FORMA SALES AND GROSS PROFIT TO PRO FORMA GROSS PROFIT
(Dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2023 |
| | Cryo Tank Solutions | | Heat Transfer Systems | | Specialty Products | | Repair, Service & Leasing | | Intersegment Eliminations | | Corporate | | Consolidated |
| Orders | $ | 155.0 | | | $ | 302.2 | | | $ | 293.2 | | | $ | 319.7 | | | $ | (7.0) | | | $ | — | | | $ | 1,063.1 | |
| Less: Orders from American Fan, Cofimco and Cryo Diffusion (divested in fourth quarter 2023) | 2.9 | | | 4.7 | | | 7.6 | | | 8.7 | | | — | | | — | | | 23.9 | |
| Pro forma orders (non-GAAP) | $ | 152.1 | | | $ | 297.5 | | | $ | 285.6 | | | $ | 311.0 | | | $ | (7.0) | | | $ | — | | | $ | 1,039.2 | |
| | | | | | | | | | | | | |
| Sales | $ | 152.7 | | | $ | 236.0 | | | $ | 236.7 | | | $ | 298.7 | | | $ | (16.0) | | | $ | — | | | $ | 908.1 | |
| Less: Sales from American Fan, Cofimco and Cryo Diffusion (divested in fourth quarter 2023) | 5.5 | | | 7.0 | | | 6.9 | | | 13.1 | | | — | | | — | | | 32.5 | |
| Pro forma sales (non-GAAP) | $ | 147.2 | | | $ | 229.0 | | | $ | 229.8 | | | $ | 285.6 | | | $ | (16.0) | | | $ | — | | | $ | 875.6 | |
| | | | | | | | | | | | | |
| Gross Profit | $ | 28.8 | | | $ | 67.3 | | | $ | 61.0 | | | $ | 123.5 | | | $ | — | | | $ | — | | | $ | 280.6 | |
| Less: Gross Profit from American Fan, Cofimco and Cryo Diffusion (divested in fourth quarter 2023) | 1.6 | | | 2.1 | | | 3.9 | | | 3.9 | | | — | | | — | | | 11.5 | |
| Pro forma gross profit (non-GAAP) | $ | 27.2 | | | $ | 65.2 | | | $ | 57.1 | | | $ | 119.6 | | | $ | — | | | $ | — | | | $ | 269.1 | |
| Pro forma gross profit margin (non-GAAP) | 18.5 | % | | 28.5 | % | | 24.8 | % | | 41.9 | % | | — | % | | | | 30.7 | % |
_______________
Pro forma orders, pro forma sales, pro forma gross profit and pro forma gross profit margin are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to orders, sales, gross profit and gross profit margin in accordance with U.S. GAAP. Management believes that pro forma orders, pro forma sales, pro forma gross profit and pro forma gross profit margin facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) FROM CONTINUING OPERATIONS TO EBITDA PLUS ACQUISITION FINANCE FEES & LOSS ON EXTINGUISHMENT OF DEBT AND ADJUSTED EBITDA PLUS ACQUISITION FINANCE FEES & LOSS ON EXTINGUISHMENT OF DEBT (UNAUDITED)
(Dollars in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | June 30,
2024 | | June 30,
2023 | | March 31,
2024 | | June 30,
2024 | | June 30,
2023 |
| Net income (loss) from continuing operations | $ | 63.1 | | | $ | 9.6 | | | $ | 16.8 | | | $ | 79.9 | | | $ | (5.6) | |
| Income tax expense (benefit) | 15.5 | | | 2.4 | | | 8.8 | | | 24.3 | | | (4.3) | |
| Interest expense, net | 84.3 | | | 83.9 | | | 83.8 | | | 168.1 | | | 112.2 | |
| Acquisition related finance fees | — | | | — | | | — | | | — | | | 26.1 | |
| Loss on extinguishment of debt | 0.7 | | | — | | | — | | | 0.7 | | | — | |
| Depreciation and amortization | 66.0 | | | 62.9 | | | 65.9 | | | 131.9 | | | 96.2 | |
| EBITDA (non-GAAP) | 229.6 | | | 158.8 | | | 175.3 | | | 404.9 | | | 224.6 | |
Non-recurring costs (1) | 21.2 | | | 29.3 | | | 26.6 | | | 47.8 | | | 55.3 | |
| Employee share-based compensation expense | 4.1 | | | 2.6 | | | 6.0 | | | 10.1 | | | 6.6 | |
Unrealized loss on investments in equity securities and loss from strategic equity method investments (2) | 2.4 | | | 4.6 | | | 4.3 | | | 6.7 | | | 6.6 | |
| Howden FX Hedge | — | | | — | | | — | | | — | | | 2.8 | |
| Adjusted EBITDA (non-GAAP) | $ | 257.3 | | | $ | 195.3 | | | $ | 212.2 | | | $ | 469.5 | | | $ | 295.9 | |
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_______________
(1)Includes $7.4, $11.3, and $6.5 deal & integration costs, $0.0, $0.0, and $7.8 of divestment working capital charges related to fourth quarter 2023 divestitures, $4.3, $5.4, and $5.1 of restructuring costs, $7.5, $10.9, and $7.1 of step-up value amortization of inventory from the Howden acquisition, and $2.0, $1.7, and $0.1 of impairments and a one-time adjustment related to a 2022 settlement for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively. Includes $13.9 and $33.5 of deal & integration costs, $7.8 and $0.0 of divestment working capital settlement charges related to businesses divested in the fourth quarter of 2023, $9.4 and $7.0 of restructuring costs, $14.6 and $10.9 of step-up value amortization of inventory from the Howden acquisition, and $2.0 and $3.9 of impairments and a one time adjustment related to a 2022 settlement for the six months ended June 30, 2024 and June 30, 2023, respectively.
(2)Includes the mark-to-market of our inorganic investments in McPhy, Stabilis and certain of our minority investments as well as losses from strategic equity method investments.
•$2.4, $4.6, and $4.3 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $6.7 and $6.6 for the six months ended June 30, 2024 and June 30, 2023, respectively.
_______________
EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income (loss) from continuing operations in accordance with U.S. GAAP. Management believes that EBITDA and Adjusted EBITDA facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF ORDERS TO PRO FORMA ORDERS, SALES TO PRO FORMA SALES, GROSS PROFIT TO PRO FORMA GROSS PROFIT, ADJUSTED EBITDA TO PRO FORMA ADJUSTED EBITDA, AND OPERATING INCOME TO PRO FORMA ADJUSTED OPERATING INCOME (UNAUDITED)
(Dollars in millions)
| | | | | |
| Three Months Ended June 30, 2023 |
| Orders | $ | 1,063.1 | |
| Less: Orders from American Fan (divested in fourth quarter 2023) | 14.3 | |
| Less: Orders from Cofimco (divested in fourth quarter 2023) | 8.6 | |
| Less: Orders from Cryo Diffusion (divested fourth quarter 2023) | 1.0 | |
| Pro forma orders (non-GAAP) | $ | 1,039.2 | |
| |
| Sales | $ | 908.1 | |
| Less: Sales from American Fan (divested in fourth quarter 2023) | 19.5 | |
| Less: Sales from Cofimco (divested in fourth quarter 2023) | 10.9 | |
| Less: Sales from Cryo Diffusion (divested fourth quarter 2023) | 2.1 | |
| Pro forma sales (non-GAAP) | $ | 875.6 | |
| |
| Gross profit | $ | 280.6 | |
| Less: Gross profit from American Fan (divested in fourth quarter 2023) | 6.2 | |
| Less: Gross profit from Cofimco (divested in fourth quarter 2023) | 5.1 | |
| Less: Gross profit from Cryo Diffusion (divested fourth quarter 2023) | 0.2 | |
| Pro forma gross profit (non-GAAP) | $ | 269.1 | |
| Pro forma gross profit margin (non-GAAP) | 30.7 | % |
| |
| Adjusted EBITDA (non-GAAP) | $ | 195.3 | |
| Less: EBITDA from American Fan (divested in fourth quarter 2023) | 4.4 | |
| Less: EBITDA from Cofimco (divested in fourth quarter 2023) | 4.0 | |
| Less: EBITDA from Cryo Diffusion (divested fourth quarter 2023) | (0.6) | |
| Pro forma adjusted EBITDA (non-GAAP) | $ | 187.5 | |
| Pro forma adjusted EBITDA margin (non-GAAP) | 21.4 | % |
| |
| Operating income | $ | 95.7 | |
| Less: Operating income from American Fan (divested in fourth quarter 2023) | 4.3 | |
| Less: Operating income from Cofimco (divested in fourth quarter 2023) | 3.4 | |
| Less: Operating loss from Cryo Diffusion (divested fourth quarter 2023) | (0.7) | |
| Pro forma operating income (non-GAAP) | $ | 88.7 | |
| Pro forma operating income margin (non-GAAP) | 10.1 | % |
| Restructuring related, deal-related, integration and other one time costs | 58.7 | |
| Pro forma adjusted operating income (non-GAAP) | $ | 147.4 | |
| Pro forma adjusted operating income margin (non-GAAP) | 16.8 | % |
_______________
Pro forma orders, pro forma sales, pro forma gross profit, adjusted EBITDA, pro forma adjusted EBITDA, pro forma operating income and pro forma adjusted operating income are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to sales and net income (loss) from continuing operations in accordance with U.S. GAAP. Management believes that pro forma orders, pro forma sales, pro forma gross profit, adjusted EBITDA, pro forma adjusted EBITDA, pro forma operating income and pro forma adjusted operating income facilitate useful period-to-period
comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.
© 2024 Chart Industries, Inc. Confidential and Proprietary Second Quarter 2024 Earnings Call August 2, 2024
© 2024 Chart Industries, Inc. Confidential and Proprietary 2 Forward Looking Statements (1/2) CERTAIN STATEMENTS MADE IN THIS INVESTOR PRESENTATION ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING CHART’S BUSINESS PLANS, INCLUDING STATEMENTS REGARDING OBJECTIVES, FUTURE ORDERS, REVENUES, MARGINS, EARNINGS, PERFORMANCE OR OUTLOOK, BUSINESS OR INDUSTRY TRENDS AND OTHER INFORMATION THAT IS NOT HISTORICAL IN NATURE. FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “COULD,” “EXPECTS,” “ANTICIPATES,” “BELIEVES,” “PROJECTS,” “FORECASTS,” “INDICATORS”, “OUTLOOK,” “GUIDANCE,” “CONTINUE,” “TARGET,” OR THE NEGATIVE OF SUCH TERMS OR COMPARABLE TERMINOLOGY. FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESENTATION OR IN OTHER STATEMENTS MADE BY CHART ARE MADE BASED ON MANAGEMENT’S EXPECTATIONS AND BELIEFS CONCERNING FUTURE EVENTS IMPACTING CHART AND ARE SUBJECT TO UNCERTAINTIES AND FACTORS RELATING TO CHART’S OPERATIONS AND BUSINESS ENVIRONMENT, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND CHART’S CONTROL, THAT COULD CAUSE CHART’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE MATTERS EXPRESSED OR IMPLIED BY FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE CHART’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS INCLUDE: CHART MAY BE UNABLE TO ACHIEVE THE ANTICIPATED BENEFITS OF RECENT ACQUISITIONS, INCLUDING THE ACQUISITION OF HOWDEN (THE “ACQUISITION”) (INCLUDING WITH RESPECT TO ESTIMATED FUTURE COST AND COMMERCIAL SYNERGIES); REVENUES FOLLOWING THE ACQUISITION MAY BE LOWER THAN EXPECTED; OPERATING COSTS, CUSTOMER LOSSES, AND BUSINESS DISRUPTION (INCLUDING, WITHOUT LIMITATION, DIFFICULTIES IN MAINTAINING RELATIONSHIPS WITH EMPLOYEES, CUSTOMERS AND SUPPLIERS) RESULTING FROM THE ACQUISITION MAY BE GREATER THAN EXPECTED; SLOWER THAN ANTICIPATED GROWTH AND MARKET ACCEPTANCE OF NEW CLEAN ENERGY PRODUCT OFFERINGS; INABILITY TO ACHIEVE EXPECTED PRICING INCREASES OR CONTINUED SUPPLY CHAIN CHALLENGES INCLUDING VOLATILITY IN RAW MATERIALS AND SUPPLY; RISKS RELATING TO REGIONAL CONFLICTS AND UNREST, INCLUDING THE RECENT UNREST IN THE MIDDLE EAST AND THE CONFLICT BETWEEN RUSSIA AND UKRAINE, INCLUDING POTENTIAL ENERGY SHORTAGES IN EUROPE AND ELSEWHERE AND THE OTHER FACTORS DISCUSSED IN ITEM 1A (RISK FACTORS) IN CHART’S MOST RECENT ANNUAL REPORT ON FORM 10-K FILED WITH THE SEC, WHICH SHOULD BE REVIEWED CAREFULLY. CHART UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD- LOOKING STATEMENT.
© 2024 Chart Industries, Inc. Confidential and Proprietary 3 Forward Looking Statements (2/2) THIS PRESENTATION CONTAINS NON-GAAP FINANCIAL INFORMATION, INCLUDING ADJUSTED DILUTED EPS, “NET INCOME, ADJUSTED”, FREE CASH FLOW, FREE CASH FLOW, EBITDA, ADJUSTED EBITDA, ADJUSTED OPERATING INCOME, AND ADJUSTED OPERATING MARGIN. FOR ADDITIONAL INFORMATION REGARDING THE COMPANY'S USE OF NON-GAAP FINANCIAL INFORMATION, AS WELL AS RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE FINANCIAL MEASURES CALCULATED AND PRESENTED IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES ("GAAP"), PLEASE SEE THE RECONCILIATION SLIDES TITLED “ADJUSTED EPS RECONCILIATION”, “PRO FORMA ADJUSTED EPS RECONCILIATION”, “SECOND QUARTER 2024 ADJUSTED EBITDA”, “FREE CASH FLOW RECONCILATION TABLE”,”SEGMENT PRO FORMA RECONCILATION”, AND “Q2 2023 PRO FORMA RECONCILIATION TABLE”, INCLUDED IN, OR IN THE APPENDIX AT THE END OF, THIS PRESENTATION. WITH RESPECT TO THE COMPANY’S 2024 FULL YEAR EARNINGS OUTLOOK. THE COMPANY IS NOT ABLE TO PROVIDE A RECONCILIATION OF THE ADJUSTED EBITDA AND FREE CASH FLOW OUTLOOKS BECAUSE CERTAIN ITEMS MAY HAVE NOT YET OCCURRED OR ARE OUT OF THE COMPANY’S CONTROL AND/OR CANNOT BE REASONABLY PREDICTED. CHART INDUSTRIES, INC. IS A LEADING INDEPENDENT GLOBAL LEADER IN THE DESIGN, ENGINEERING, AND MANUFACTURING OF PROCESS TECHNOLOGIES AND EQUIPMENT FOR GAS AND LIQUID MOLECULE HANDING FOR THE NEXUS OF CLEAN - CLEAN POWER, CLEAN WATER, CLEAN FOOD, AND CLEAN INDUSTRIALS, REGARDLESS OF MOLECULE. THE COMPANY’S UNIQUE PRODUCT AND SOLUTION PORTFOLIO ACROSS STATIONARY AND ROTATING EQUIPMENT IS USED IN EVERY PHASE OF THE LIQUID GAS SUPPLY CHAIN, INCLUDING ENGINEERING, SERVICE AND REPAIR FROM INSTALLATION TO PREVENTIVE MAINTENANCE AND DIGITAL MONITORING. CHART IS A LEADING PROVIDER OF TECHNOLOGY, EQUIPMENT AND SERVICES RELATED TO LIQUEFIED NATURAL GAS, HYDROGEN, BIOGAS AND CO2 CAPTURE AMONGST OTHER APPLICATIONS. CHART IS COMMITTED TO EXCELLENCE IN ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE (ESG) ISSUES BOTH FOR ITS COMPANY AS WELL AS ITS CUSTOMERS. WITH OVER 48 GLOBAL MANUFACTURING LOCATIONS AND 41 SERVICE CENTERS FROM THE UNITED STATES TO ASIA, AUSTRALIA, INDIA, EUROPE AND SOUTH AMERICA, THE COMPANY MAINTAINS ACCOUNTABILITY AND TRANSPARENCY TO ITS TEAM MEMBERS, SUPPLIERS, CUSTOMERS AND COMMUNITIES. TO LEARN MORE, VISIT WWW.CHARTINDUSTRIES.COM .
© 2024 Chart Industries, Inc. Confidential and Proprietary 4 Agenda Q2 2024 Results and Key Drivers 2024 Outlook Medium Term Outlook
© 2024 Chart Industries, Inc. Confidential and Proprietary 5 Second Quarter 2024 Key Metrics $ millions, except per share amounts Q2 2024 Q2 20232 Change Continuing Operations 1 Total Orders $1,164.7 $1,039.2 12.1% 2 Total Orders Ex Big LNG 1,164.7 ~839 ~40% 3 Book to Bill (Total) 1.12 1.19 ++ 4 Backlog 4.4B ~3.9B ~13% 5 Sales 1,040.3 875.6 18.8% 6 Reported Gross Profit Margin % 33.8% 30.7% +310 bps 7 Reported Operating Margin % 16.1% 10.1% +600bps 8 Adjusted Operating Margin % (1) 21.7% 16.8% +490 bps 9 Reported Net Income 52.0 (5.6) ++ 10 Reported EBITDA (1) 229.6 151.0 52.1% 11 Reported EBITDA % of Sales (1) 22.1% 17.2% +490 bps 12 Adjusted EBITDA (1) 257.3 187.5 37.2% 13 Adjusted EBITDA % of Sales (1) 24.7% 21.4% +330 bps 14 Reported Diluted EPS 1.10 (0.12) ++ 15 Adjusted Diluted EPS (1) 2.18 0.93 134.4% 16 Net Cash From Operations 116.1 90.9 27.7% 17 Free Cash Flow (1) 88.0 70.0 25.7% Indicates record for any quarter in history; All metrics are pro forma2 y/y unless noted otherwise 1. Adjusted operating margin, EBITDA, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income (in the case of EBITDA and Adjusted EBITDA) or cash flow from operations (in the case of Free Cash Flow) in accordance with U.S. GAAP. Reconciliation tables, for these measures is provided in the appendix. 2. Pro forma “PF” includes Howden, excluding Roots , and excludes results of American Fan, Cofimco, and Cryo Diffusion. The pro forma results are included in the appendix. • Orders growth of 12.1%; ex Big LNG, orders grew approximately 40% • Record reported second quarter sales increased 18.8%; 19.7% ex FX • Record reported gross profit margin of 33.8% increased 310 bps • Record adjusted operating income of $225.7 million was a record 21.7% of sales; reported operating income of $167.8 million, at 16.1% of sales • Record adjusted EBITDA of $257.3 million was 24.7% of sales, an increase of 330 bps • Adjusted EPS of $2.18 includes $0.14 negative impact from the mandatory preferred dividend (which was not included prior), and $0.04 of negative FX impact.
© 2024 Chart Industries, Inc. Confidential and Proprietary 6 Key Takeaways Very strong operational margin1 resulted in multiple all-time record results in the second quarter 2024 • Reported gross margin of 33.8% drove reported operating margin of 16.1% (adjusted 21.7%) • Sales, reported gross profit and gross margin, reported and adjusted operating margin, reported and adjusted EBITDA and associated EBITDA margin were all the highest in our history Demand remains robust across broad-based end markets (+12.1%; + approx. 40% ex Big LNG vs. Q2 2023 PF) • Record orders in China, CCUS, water treatment, metals, infrastructure and lifecycle services (field service) • Data center cooling award in Q2 2024, ~$40M • Commercial pipeline for potential orders in next three years increased to ~$23 billion (from ~$22 billion) Three-year medium-term financial outlook through 2026 reiterated • Targets do not include any Big LNG not already booked in backlog as of 9/30/2023, nor any benefit from U.S. Hydrogen Hubs, nor any benefit from capital deployment (i.e., M&A or share repurchase) • Recent significant capacity capex investments completed or nearing completion; expectations for capex to trend to 2.0-2.5% of sales • 2024 updated outlook based on adverse FX, revenue timing shift and new project orders in Q2 2024 benefitting 2025 and 2026; ahead of plan operational margin benefitting near and medium-term June 30, 2024 net leverage ratio of 3.26X a reduction of 0.82X since the close of Howden • Second quarter 2024 net cash from operating activities of $116.1 million less capex of $28.1 million results in free cash flow of $88.0 million (when excluding long-term, beyond one year, balance sheet account changes this would be $114.7 million which compares to our $175 million Q2 2024 outlook); delta to prior outlook driven by business decisions to support two specific customer needs in second quarter 2024 with cash flows in second half 2024 • Reiterate our target financial target for net leverage of 2.0-2.5X 1. Adjusted operating margin, EBITDA, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income (in the case of EBITDA and Adjusted EBITDA) or cash flow from operations (in the case of Free Cash Flow) in accordance with U.S. GAAP. Reconciliation tables, for these measures is provided in the appendix. 2. Pro forma “PF” includes Howden, excluding Roots , and excludes results of American Fan, Cofimco, and Cryo Diffusion. The pro forma results are included in the appendix. All metrics are pro forma2 y/y unless noted otherwise
© 2024 Chart Industries, Inc. Confidential and Proprietary 7 Second Quarter 2024 Key Metrics All metrics are pro forma2 y/y unless noted otherwise 1. Adjusted EBITDA is not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP. A reconciliation table for Adjusted EBITDA is provided in the appendix under “Second Quarter 2024 Adjusted EBITDA”. 2. Pro forma “PF” includes Howden, excluding Roots , and excludes results of American Fan, Cofimco, and Cryo Diffusion. The pro forma results are included in the appendix. $1,039 $1,122 $1,165 Q2'23 Q1'24 Q2'24 $876 $951 $1,040 Q2'23 Q1'24 Q2'24 $91 ($90) $116 Q2'23 Q1'24 Q2'24 $188 $212 $257 Q2'23 Q1'24 Q2'24 Orders Sales Historical Record Net Cash from Operations Adjusted EBTIDA1 Historical Record +12% +19% +27% Excluding Big LNG, pro forma orders up approximately 40% Every segment increased year-over-year (“Y-O-Y”) led by RSL (strong field service) and Specialty Products Two strategic business decisions to support customers drove the delta vs. Q2 prior outlook Higher mix of full solutions and aftermarket growth coupled with Chart Business Excellence (“CBE”) productivity and cost synergy realization +37%
© 2024 Chart Industries, Inc. Confidential and Proprietary 8 Second Quarter 2024 Margin Performance 1. Pro forma “PF” includes Howden, excluding Roots , and excludes results of American Fan, Cofimco, and Cryo Diffusion. The pro forma results are included in the appendix. 2. EBITDA margin is not a measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP. Management believes EBITDA facilitate useful period-to-period comparisons of financial results and the information is used by us in evaluating our internal performance. A reconciliation table of EBITDA margin is provided in the attached appendix 30.7% 33.8% Q2'23 Q2'24 Reported 10.1% 16.1%16.8% 21.7% Q2'23 Q2'24 Reported Adjusted 17.2% 22.1%21.4% 24.7% Q2'23 Q2'24 Reported Adjusted Gross Profit Margin Operating Profit Margin EBITDA Margin2 Driven by Solutions Mix, Cost Synergies, and Productivity/CBE All metrics are pro forma1 y/y unless noted otherwise
© 2024 Chart Industries, Inc. Confidential and Proprietary 9 Synergy Update Commercial Synergies Cost Synergies Commercial Synergies $150M Year-1 $350M Year-3 $924M Cost Synergies $175M Year-1 $223M $250M Year-3 Target Executed1 Target Executed1 1 As of 7/31/2024 Note: Howden acquisition closed on March 17, 2023; Year 1 is through 3/17/24; Year 3 is through 3/17/26
Air cooled heat exchangers for data centers Storage tanks for a semiconductor company (near-shoring win) Tuf-Lite IV fans for multiple LNG export facilities LNG regas for industrial customer in EMEA Earthly Labs CCUS for C-Fuels Compressor packages to a Direct Reduction Iron (DRI) application Helium and NRU equipment in N. America Compressors for a renewable hydrogen project Q2 2024 Commercial Wins in Growing End Markets © 2024 Chart Industries, Inc. Confidential and Proprietary 10
© 2024 Chart Industries, Inc. Confidential and Proprietary 11 Leveraging Technologies Across Markets Our Solutions are Molecule and Policy Agnostic Markets Mission Critical Equipment Fans Mobile Equipment CompressorsAir Cooled Heat Exchangers (ACHX) Cryogenic Bulk Storage Tanks Digital Solutions Lifecycle Services Cold Boxes/ BAHX LTM Q2 2024 Orders by Segment CTS HTS SPC RSL Industrial Gas Independent Distribution Network Big LNG, ssLNG, FLNG, Data Center Traditional Energy Energy Recovery Hydrogen, Helium, CCUS, Water, Space, F&B, Gas by Rail, Nuclear, Marine, Biofuels, HLNG, Mining (electrification) Installation, Refurbishment, Services & Repair, Preventative Maintenance, Digital Monitoring, Leasing CTS HTS SPC RSL Supported by our offerings in: Process Technologies <- Across Traditional Energy to Energy Transition/ Specialty Markets -> Pie chart is percent of total LTM orders
© 2024 Chart Industries, Inc. Confidential and Proprietary 12 Data Center / AI-Related Wins and Opportunities Fans Brazed Aluminum Heat Exchangers (BAHX)Cold Boxes CompressorsAir Cooled Heat Exchangers (ACHX) Cryogenic Bulk Storage Tanks Chart’s Products For Data Center Applications Recent Wins Digital Solutions • Cooling and ventilation • Heat and energy recovery • Carbon Capture, Utilization and Storage (CCUS) • Onsite and back-up power • Software solutions Lifecycle Services Carbon Capture • ~$40 million data center air cooled heat exchanger (ACHX) Tuf-Lite IV Fans in Action Chart Solutions for DC + AI + Increased Energy Demand $500 million + opportunity next 3-years
© 2024 Chart Industries, Inc. Confidential and Proprietary 13 Nuclear/ Small Modular Reactor (SMR) ~$4.6B Fans & Blowers Water TreatmentPrimary Circulators Diaphragm CompressorsCryogenic Equipment Screw Compressors Chart’s Products for Nuclear Applications Recent wins in Nuclear/ SMR Chart Solutions Reactor Vessels • Air Conditioning, Cooling, Ventilation, and Filtration • Heat and Energy Recovery • Compression • Helium Circulation and Helium Refrigeration • Steam and Power Generation • Water Treatment Heat Exchangers Steam Turbine • On-grid coal-fired power replacement • Industrial hydrogen, steam, power, and heat • Diesel/ gas replacement for off-grid metals and mining • District heating fossil-fuel replacement • Data centers fossil-fuel replacement Market Demand • Fans for nuclear application in France and UK • Helium circulators & Helium refrigeration engineering study
© 2024 Chart Industries, Inc. Confidential and Proprietary 14 LNG Wins and Opportunities Orders Q2 2024 Notable LNG Highlights • Big LNG pipeline increased to $9.2 billion and 32 projects (from $8.6 billion and 30 projects at Q1’23) • Remains balanced between US & Int’l • Several IPSMR® technology selections for projects with orders not yet booked (US & Int’l) • ssLNG/ FLNG pipeline stable • Growing aftermarket, service, retrofit pipeline • Tuf-lite IV fans retrofit for two separate US LNG customers • Q2 2024 YTD HLNG vehicle tank orders have exceeded the full year 2023 and 2022 orders for this product • Chart’s IPSMR® process technology chosen for Argent LNG’s Port Fourchon LNG export facility (order not yet booked) • Q2 2024 YTD received orders for 80 LNG trailers in China compared to 25 and 15 in 2023 and 2022, respectively LNG Commercial Pipeline Y/Y growth vs. pro forma Q2’23 Q2’24 Total Chart 12.1% Chart ex Big LNG ~40% Heat Transfer Systems (9.4%) Heat Transfer ex Big LNG >300% Four Key Pillars of Chart’s LNG Offerings • Big LNG • Small Scale LNG/ Floating LNG (ssLNG/ FLNG) • LNG Infrastructure/ End Use Applications • Aftermarket and Service
© 2024 Chart Industries, Inc. Confidential and Proprietary 15 RSL: Executing the Aftermarket Strategy Key Aftermarket Statistics (as of 6/30/2024) • Assets under management (Uptime , framework agreements, and LTSAs) have increased by 27% since year-end 2023 through the end of Q2 2024 • Multiple synergies achieved and underway including Chart customers in refining, power and gas production facilities engaging with localized aftermarket teams for cooling fans and ACHX Key Aftermarket Wins in Q2 A. LTSA 3-year service for CNG stations B. Compressor LTSA in Turkey C. O&G customer lifecycle service award D. Singapore compressor retrofit E. Critical heater parts for power plant in Mexico Strong aftermarket start to Q3 2024, including a $10 million African Power Order RSL Segment ($M) Q2 2024 Q2 2023 PF1 % Change Orders $312.4 $311.0 +0.5% Sales 360.5 285.6 +26.2% Gross Margin 49.0% 41.9% +710 bps 1Pro forma “PF” includes Howden, excluding Roots , and excludes results of American Fan, Cofimco, and Cryo Diffusion. The pro forma results are included in the appendix to the accompanying earnings release.
© 2024 Chart Industries, Inc. Confidential and Proprietary 16 Free Cash Flow Drivers 1. Free Cash Flow is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to cash flow from operations in accordance with U.S. GAAP. Management believes that Free Cash Flow facilitates a useful period-to-period comparisons of financial results and the information is used by us in evaluating our internal performance. A reconciliation is included in the appendix of this presentation. FCF Bridge Q2 2024 $ millions Q2 2024 Net cash provided by operating activities $116.1 Less: Capital expenditures (28.1) Q2 2024 Free Cash Flow (non-GAAP)(1) $88.0 Long-term balance sheet changes not reflective of quarterly operational cash flow ~27 Emergency field service work within Q2 with 2H 2024 payment ~20 Strategic decision to order material ahead of 2H 2024 milestone to meet customers' schedules ~35 Q2 2024 prior Free Cash Flow outlook ~$175
© 2024 Chart Industries, Inc. Confidential and Proprietary 17 Working Capital Management As Reported $0.84B $0.81B $3.6B $4.0B Q2'23 Q2'24 NWC Annualized 1H Sales Q2 '23 Q2 '24 Change Accounts Receivable 787 748 (39) Inventory 675 555 (120) Accounts Payable 719 906 187 Trade Working Capital $742 $397 ($346) Trade Working Capital % of Sales 21% 10% Net Unbilled & Customer Advances 93 414 322 Net Working Capital $835 $811 ($24) Net Working Capital % of Sales 23% 20% NWC % of sales 23% NWC % of sales 20%
© 2024 Chart Industries, Inc. Confidential and Proprietary 18 Agenda Q2 2024 Results and Key Drivers 2024 Outlook Medium Term Outlook
© 2024 Chart Industries, Inc. Confidential and Proprietary Chart Industries 2024 Outlook 19 Guidance Metrics as of August 2, 2024 1. EBITDA, Adjusted EBITDA, and Free Cash Flow are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP (as is the case with EBITDA and adjusted EBITDA) and cashflows from operations in accordance with U.S. GAAP (as is the case with free cash flow). Management believes that EBITDA, Adjusted EBITDA, and Free Cash Flow facilitate useful period-to-period comparisons of financial results and the information is used by us in evaluating our internal performance. 2. Adjusted diluted EPS is a non-GAAP measure and should not be considered as an alternative to diluted EPS in accordance with U.S. GAAP. Guidance Comments Revenue $4.45 to $4.60 billion • Backlog conversion • Book & ship business led by aftermarket, service & repair • FX impact estimated to be (1.5%-0.5%) Adjusted EBITDA(1) $1.08 to $1.15 billion • Strong margin performance anticipate to continue from volume leverage, cost synergies and higher full solutions mix Free Cash Flow(1) $400 to $475 million • Working capital management • Cash milestone payment timing Adjusted Earnings per Share(2) Updated to include mandatory preferred dividend of ~($0.60) $10.75 to $11.75 • Excludes the full year impact of Howden depreciation & amortization related to acquired intangibles and PPE step-up • Interest and deferred financing expense ~$325 million (from ~$315 million) • Effective tax rate of approximately 20% to 21% (from ~20%) • Diluted share count of ~47 million (from 47-48 million) • Includes full year impact of ~($0.60) related to preferred dividend
© 2024 Chart Industries, Inc. Confidential and Proprietary 20 2024 H1 to H2 Adjusted EBITDA1 Bridge 2024 Adjusted EBITDA Guidance of $1.08 to $1.15 Billion H1 24 Actual Productivity/ CBE Incremental Big LNG Large Q1’24 Orders Begin Revenue Recognition Aftermarket Seasonality Incremental Cost Synergies H2 Backlog Conversion H2 24 Forecast $470M $18-20 $7-9 $20-25 $63-67 $25-75 $7-14 $610-$680M 1. Adjusted EBITDA is not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP. Management believes that adjusted EBITDA facilitates useful period-to-period comparisons of financial results and the information is used by us in evaluating our internal performance.
© 2024 Chart Industries, Inc. Confidential and Proprietary 21 Agenda Q2 2024 Results and Key Drivers 2024 Outlook Medium Term Outlook
© 2024 Chart Industries, Inc. Confidential and Proprietary 22 Medium-Term Financial Growth Formula Secular Growth Trends Energy Security Energy Access Sustainability Decarbonization Digitization Full Solution Offering Private and Public Spending 1 Does not include Big LNG not in backlog as of 9/30/2023; does not include future benefit from US Hydrogen Hubs and M&A 2 Adjusted diluted EPS is a non-GAAP measure and should not be considered as an alternative to diluted EPS in accordance with U.S. GAAP 3 Free Cash Flow is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to cashflows from operations in accordance with U.S. GAAP. Management believes that Free Cash Flow facilitates useful period-to-period comparisons of financial results and the information is used by us in evaluating our internal performance. 4 FCF conversion is calculated as FCF/ adjusted net income; 5 ROIC is calculated adjusted after tax operating profit / (total debt + total equity) Mid-teens CAGR Mid-30%’s Mid-40%’s CAGR Organic Revenue 1 Reported Gross Margin Adjusted Diluted Earnings per share 2 95-100%FCF Conversion 3,4 Mid-teens %Return on Invested Capital (ROIC) 5 3-Year Target Key Drivers • Diversified market growth • Backlog conversion • Cost synergy realization • Mix to full solutions and growth in aftermarket • Capital expenditures 2.0-2.5% of sales • Does not include additional Big LNG1, U.S. hydrogen hubs, M&A
Appendix 23© 2024 Chart Industries, Inc. Confidential and Proprietary
© 2024 Chart Industries, Inc. Confidential and Proprietary 24 $787 $748 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Accounts Receivable $675 $555 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Inventory $719 $906 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Accounts Payable $742 $397 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Trade Working Capital Trade Working Capital Management Source of Cash Source of Cash Source of Cash Source of Cash As Reported
© 2024 Chart Industries, Inc. Confidential and Proprietary Strong and Flexible Capital Structure Debt Covenant2: Net Debt / LTM Bank EBITDA(1) 4.08X 3.86X 3.59X 3.35X 3.40X 3.26X 6.0X 6.0X 6.0X 6.0X 6.0X 5.0X 0 1 2 3 4 5 6 7 Q1'23 (Howden close) Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Net Leverage (bank EBITDA) Net Leverage (covenant ceiling) 1. EBITDA is a non-GAAP measure and should not be consulted as an alternative to net income in accordance with U.S. GAAP. 2. Debt covenant leverage ceiling steps down from 6.0x to 5.0x starting April 1, 2024; steps down from 5.0x to 4.5x on April 1, 2025. • Liquidity of $980 million • Long-dated debt maturity profile with majority of debt due after 2029 • Opportunistically repriced TLB for second time in 9 months, resulting in 85bps spread reduction (~$14 million annualized interest savings) • Reiterate our financial policy that until we are within out target net leverage ratio range of 2.0-2.5X, we will not do any additional material cash acquisitions or share repurchases 25
Q2 2024 Segment Commentary © 2024 Chart Industries, Inc. Confidential and Proprietary 26 1. Pro-Forma “PF” includes full year Howden, excluding Roots , and excludes November and December 2022 results of American Fan, Cofimco, and CryoDiffusion. The pro forma results are included in the appendix to the accompanying earnings release. CTS Reported Y-O-Y $159.0 +4.5% $165.5 +12.4% 20.2% +170bps 0.96 HTS Reported Y-O-Y $269.6 (9.4%) + ~40% ex Big-LNG $236.7 +3.4% 25.7% (280bps) 1.14 SPC Reported Y-O-Y $423.7 +48.4% $277.6 +20.8% 29.1% +430bps 1.53 RSL Reported Y-O-Y $312.4 +0.5% $360.5 +26.2% 49.0% +710bps 0.87 All metrics are pro forma1 y/y unless noted otherwise Orders Sales Reported Gross Margin Book-to-Bill
© 2024 Chart Industries, Inc. Confidential and Proprietary 27 Broad Macro Tailwinds Positively Impacting Chart Industries REF Macro Drivers (Not All Inclusive) Specific Tailwinds How Chart Plays A Global Energy Transition and Access • Energy security, energy access, and energy/grid stability • Demand and government support for decarbonization • Equipment and process technology for the production, distribution & storage and end use of a molecule (i.e., LNG, H2) • Efficient equipment and services enabling emissions reduction across multiple industrial processes (e.g., metals, cement) B Clean Water Scarcity • More stringent regulatory environment; i.e., U.S. EPA regulations (April 2024) • Africa, Middle East & Asia facing water scarcity, investment in treatment plants and desalination • Full solution water treatment offering across multiple containments including arsenic and PFAS • Systems for environment remediation • Compression • Systems for water remineralization C Artificial Intelligence, inclusive of data center, battery, energy intensity • Electrification • Growth in demand for global computing power • Customer demand for decarbonization • Efficiency and safety solution for mining of critical minerals and electrification metals • Backup power for data center • Full solution carbon capture offering from high to low capture purity D Population and Economic Growth combined with Urbanization and Aging Infrastructure • Rising middle class • Global regulatory environment • Modernization requires molecule economy • Decarbonization of mobility (e.g., rail, truck, marine) • Supply and demand side equipment and technology for the molecule economy
© 2024 Chart Industries, Inc. Confidential and Proprietary 28 Chart’s End Market Opportunity Pipeline End Market Chart Standalone June 30, 2022 Prior Quarter March 31, 2024 Current Quarter June 30, 2024 Trend Big LNG • $5.35 billion • 24 projects • 3 int'l projects for potential IPSMR® • $8.76 billion • 30 projects • 15 int'l projects for potential IPSMR® • 1 int'l project selected IPSMR® technology (PO not yet booked) • $9.20 billion • 32 projects • 16 int'l projects for potential IPSMR® • 1 int'l project selected IPSMR® technology (PO not yet booked) ssLNG/FLNG • 276 potential projects in commercial pipeline • 461 potential projects in commercial pipeline • 444 potential projects in commercial pipeline Hydrogen • 512 customers & potential customers • 1,409 customers & potential customers • 1,547 customers & potential customers Carbon Capture • 301 customers & potential customers • $1.3 billion of approximate value of top 30 opportunities in CCUS commercial pipeline • 1,056 customers & potential customers $3.35 billion of approximate value of top 30 opportunities in CCUS commercial pipeline • 1,133 customers & potential customers $3.58 billion of approximate value of top 30 opportunities in CCUS commercial pipeline Water Treatment • 560 customers & potential customers • 977 customers & potential customers • 1,081 customers & potential customers Commercial opportunity pipeline of over $23 billion
© 2024 Chart Industries, Inc. Confidential and Proprietary 29 ESG and Sustainability Update • In the second quarter, Chart joined the United Nations Global Compact, a voluntary leadership platform for the development, implementation, and disclosure of sustainable and socially responsible business practices. • Chart was named a winner of the 2024 Enlightened Growth Leadership Best Practices Award by Frost & Sullivan for the second time. Chart was specifically recognized for our impressive reduction in greenhouse gas emissions against our targets; our growth excellence through strategic inorganic and organic investments; and our technological innovation and continuous improvement which support our mission of providing customers with solutions across the Nexus of Clean - clean power, clean water, clean food, and clean industrials. • In April 2024, Chart published is 5th annual Sustainability Report: https://gtls.io/ESG2023. • Key highlights include: • We reduced our greenhouse gas (GHG) emissions intensity in 2023 by 27% relative to 2022, achieving our goal of reducing GHG emissions intensity 50% by 2030 (relative to a 2020 baseline) seven years ahead of target. • We committed to rebaselining and conducting a double materiality assessment in 2024, at which point we plan to set updated interim targets. • We remain committed to reducing the amount of waste sent to landfill and increasing recycling across our facilities and are evaluating global recycling targets in 2024. • We actively track and monitor our water withdrawals and consumption across our operations and are committed to developing a better understanding of our environmental footprint so that we can make data-driven decisions to reduce our impact. We are evaluating water-related targets and are targeting 100% participation in our global tracking in 2024. • We utilize Sphera CRM and iPoint software to proactively monitor ESG in our supply chain. • We actively participate in the communities where we operate through donations and volunteering; 19.6% of our global team participated in Chart-related volunteering in 2023.
© 2024 Chart Industries, Inc. Confidential and Proprietary 30 Adjusted EPS Reconciliation Table Amounts attributable to Chart common stockholders Q2 2024 Diluted EPS Q2 2023 Diluted EPS Q1 2024 Diluted EPS YTD June 2024 Diluted EPS Net income (loss) attributable to Chart Industries, Inc. 58.6 9.1 11.3 69.9 Less: (Loss) income from discontinued operations, net of tax (0.2) 2.5 (2.2) (2.4) Income from continuing operations 58.8 6.6 13.5 72.3 Less: Mandatory convertible preferred stock dividend requirement 6.8 6.9 6.8 13.6 Reported income (loss) from continuing operations attributable to Chart (U.S. GAAP) 52.0 (0.3) 6.7 58.7 Earnings (loss) per common share attributable to Chart Industries, Inc. – continuing operations 1.10 (0.01) 0.14 1.25 Unrealized loss on investments in equity securities and loss from strategic equity method investments (1) 0.05 0.10 0.09 0.14 Deal related and integration costs (2) 0.15 0.16 0.31 0.46 Howden amortization (3) 1.00 0.99 1.00 1.99 Restructuring & related costs (4) 0.09 0.13 0.11 0.20 Other one-time items (5) 0.04 - - 0.04 Tax effects (0.25) (0.33) (0.31) (0.56) Adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) $2.18 $1.04 $1.34 $3.52 Share Count (millions) 47.25 46.45 46.73 46.99 1) Includes the mark-to-market of our inorganic investments in McPhy, Stabilis and certain of our minority investments as well as losses from strategic equity method investments. ($2.4, $4.6, and $4.3 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $6.7 for the six months ended June 30, 2024.) 2)Includes third party support fees, one time costs due to acquisition and divestiture activities and other integration related costs of $7.4, $7.4 and $14.3 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $21.7 for the six months ended June 30, 2024. 3) Howden amortization includes amortization expense related to acquired intangible assets of $46.9, $46.2 and $46.6 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $93.5 for the six months ended June 30, 2024. 4) Includes restructuring costs of $4.3, $5.4, and $5.1 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $9.4 for the six months ended June 30, 2024. Restructuring charges in Q2 2024 primarily related to the restructuring of our Asia Pacific region into our Middle East & Africa region (AIMA). 5) Other one-time items include asset impairments resulting from integrating Howden and Chart systems and a one-time adjustment related to a 2022 settlement of $2.0 for both three and six months ended June 30, 2024. Adjusted earnings per common share attributable to Chart Industries, Inc. is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to earnings per share in accordance with U.S. GAAP. Management believes that adjusted earnings per common share attributable to Chart Industries, Inc. facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies. Prior to the second quarter of 2024, the impacts of the mandatory convertible preferred stock dividend were excluded from adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP). The impacts are now included in adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) and historical periods have been restated to reflect the change in treatment.
© 2024 Chart Industries, Inc. Confidential and Proprietary 31 Pro Forma Adjusted EPS Reconciliation Table $ millions, except per share Q2 2024 Q2 2023 Net income (loss) attributable to Chart Industries, Inc. $58.6 $9.1 Less: (Loss) income from discontinued operations, net of tax (0.2) 2.5 Income from continuing operations 58.8 6.6 Less: Mandatory convertible preferred stock dividend 6.8 6.9 Reported income (loss) from continuing operations attributable to Chart 52.0 (0.3) Less: Net Income from American Fan, Cofimco and Cryo Diffusion (divested in fourth quarter 2023) _ 5.3 Pro forma reported income (loss) from continuing operations attributable to Chart $52.0 ($5.6) Pro forma earnings (loss) per common share attributable to Chart Industries, Inc. cont. operations 1.10 (0.12) Unrealized loss on investments in equity securities and loss from strategic equity method investments (1) 0.05 0.10 Deal related and integration costs (2) 0.15 0.16 Howden amortization (3) 1.00 0.99 Restructuring & related costs (4) 0.09 0.13 Other one-time items (5) 0.04 - Tax effects (0.25) (0.33) Adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) 2.18 0.93 Share Count 47.25 46.45 Pro forma “PF” includes Howden, excluding Roots , and excludes results of American Fan, Cofimco, and Cryo Diffusion. For footnote 1-5 reference slide 30 (“Adjusted EPS Reconciliation Table”) Adjusted diluted EPS is a non-GAAP measure and should not be considered as an alternative to diluted EPS in accordance with U.S. GAAP
© 2024 Chart Industries, Inc. Confidential and Proprietary 32 Second Quarter 2024 Adjusted EBITDA 1) Includes $7.4, $11.3, and $6.5 deal & integration costs, $0.0, $0.0, and $7.8 of divestment working capital charges related to fourth quarter 2023 divestitures, $4.3, $5.4, and $5.1 of restructuring costs, $7.5, $10.9, and $7.1 of step-up value amortization of inventory from the Howden acquisition, and $2.0, $1.7, and $0.1 of asset write-offs, impairments and other non-recurring charges for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively. Includes $13.9 and $33.5 of deal & integration costs, $7.8 and $0.0 of divestment working capital settlement charges related to businesses divested in the fourth quarter of 2023, $9.4 and $7.0 of restructuring costs, $14.6 and $10.9 of step-up value amortization of inventory from the Howden acquisition, and $2.0 and $3.9 of impairments and a one time adjustment related to a 2022 settlement for the six months ended June 30, 2024 and June 30, 2023, respectively. 2) Includes the mark-to-market of our inorganic investments in McPhy, Stabilis and certain of our minority investments as well as losses from strategic equity method investments.$2.4, $4.6, and $4.3 for the three months ended June 30, 2024, June 30, 2023 and March 31, 2024, respectively, and $6.7 and $6.6 for the six months ended June 30, 2024 and June 30, 2023, respectively. EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income (loss) from continuing operations in accordance with U.S. GAAP. Management believes that EBITDA and Adjusted EBITDA facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies. $ millions Consolidated Q2 2024 Q2 2023 Q1 2024 Net income from continuing operations 63.1 9.6 16.8 Income tax expense 15.5 2.4 8.8 Interest expense, net 84.3 83.9 83.8 Loss on extinguishment of debt 0.7 - - Depreciation and amortization 66.0 62.9 65.9 EBITDA (non-GAAP) 229.6 158.8 175.3 Non-recurring costs (1) 21.2 29.3 26.6 Employee share-based compensation expense 4.1 2.6 6.0 Unrealized loss on investments in equity securities and loss from strategic equity method investments (2) 2.4 4.6 4.3 Adjusted EBITDA (non-GAAP) 257.3 195.3 212.2
© 2024 Chart Industries, Inc. Confidential and Proprietary 33 Free Cash Flow and Pro Forma1 Free Cash Flow Reconciliation Table 1. Free cash flow is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to net cash provided by (used in) operating activities in accordance with U.S. GAAP. Management believes that free cash flow facilitates useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of this non-GAAP measure may not be comparable to the calculations of similarly titled measures reported by other companies. $ millions Q2 2024 Q2 2023 Net cash provided by (used in) operating activities from continuing operations 116.1 96.8 Capital Expenditures (28.1) (20.9) Free Cash Flow1 from continuing operations (non-GAAP) 88.0 75.9 Less: FCF from American Fan, Cofimco and Cryo Diffusion (divested in fourth quarter 2023) - 5.9 Pro forma Free Cash Flow from continuing operations (non-GAAP) 88.0 70.0
© 2024 Chart Industries, Inc. Confidential and Proprietary 34 Segment Pro Forma1 Reconciliation Three Months Ended June 30, 2023 $millions Cryo Tank Solutions Heat Transfer Systems Specialty Products Repair, Service & Leasing Intersegment Eliminations Corporate Consolidated Orders $155.0 $302.2 $293.2 $319.7 ($7.0) - $1,063.1 Howden standalone sales, net of Roots, American Fan, Cofimco and Cryo Diffusion divestiture impacts ($2.9) ($4.7) ($7.6) ($8.7) - $0.0 ($23.9) Pro forma orders $152.1 $297.5 $285.6 $311.0 ($7.0) $0.0 $1,039.2 Sales $152.7 $236.0 $236.7 $298.7 ($16.0) $0.0 $908.1 Howden standalone sales, net of Roots, American Fan, Cofimco and Cryo Diffusion divestiture impacts ($5.5) ($7.0) ($6.9) ($13.1) - - ($32.5) Pro forma sales $147.2 $229.0 $229.8 $285.6 ($16.0) $0.0 $875.6 Gross Profit $28.8 $67.3 $61.0 $123.5 $0.0 $0.0 $280.6 Howden standalone sales, net of Roots, American Fan, Cofimco and Cryo Diffusion divestiture impacts ($1.6) ($2.1) ($3.9) ($3.9) - - ($11.5) Pro forma Gross Profit $27.2 $65.2 $57.1 $119.6 $0.0 $0.0 $269.1 Pro forma Gross Profit % 18.5% 28.5% 24.8% 41.9% 0.0% 30.7% 1. Pro forma “PF” includes Howden, excluding Roots , and excludes results of American Fan, Cofimco, and Cryo Diffusion. The pro forma results are included in the appendix.
© 2024 Chart Industries, Inc. Confidential and Proprietary 35 Q2 2023 Pro Forma Reconciliation Table $millions Adjusted EBITDA (non-GAAP) 195.3 Less: EBITDA from American Fan (divested in Q4 2023) 4.4 Less: EBITDA from Cofimco (divested in Q4 2023) 4.0 Less: EBITDA from Cryo Diffusion (divested Q4 2023) (0.6) Pro forma adjusted EBITDA (non-GAAP) 187.5 Pro forma adjusted EBITDA margin 21% Operating Income 95.7 Less: Operating income from American Fan (divested in Q4 2023) 4.3 Less: Operating income from American Fan (divested in Q4 2023) 3.4 Less: Operating loss from Cryo Diffusion (divested Q4 2023) (0.7) Pro forma operating income (non-GAAP) 88.7 Pro forma operating income margin 0.0 Restructuring related, deal-related, integration and other one time costs 58.7 Pro forma adjusted operating income (non-GAAP) 147.4 Pro forma adjusted operating income margin 16.8% $millions Orders 1,063.1 Less: Orders from American Fan (divested in Q4 2023) 14.3 Less: Orders from Cofimco (divested in Q4 2023) 8.6 Less: Orders from Cryo Diffusion (divested Q4 2023) 1.0 Pro forma orders (non-GAAP) 1,039.2 Sales 908.1 Less: Sales from American Fan (divested in Q4 2023) 19.5 Less: Sales from Cofimco (divested in Q4 2023) 10.9 Less: Sales from Cryo Diffusion (divested Q4 2023) 2.1 Pro forma sales (non-GAAP) 875.6 Gross Profit 280.6 Less: Gross profit from American Fan (divested in Q4 2023) 6.2 Less: Gross profit from Cofimco (divested in Q4 2023) 5.1 Less: Gross profit from Cryo Diffusion (divested Q4 2023) 0.2 Pro forma gross profit (non-GAAP) 269.1 Pro forma gross profit margin 30.7% 1. EBITDA, Adjusted EBITDA, and Free Cash Flow are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP (as is the case with EBITDA and adjusted EBITDA) and cashflows from operations in accordance with U.S. GAAP (as is the case with free cash flow). Management believes that EBITDA, Adjusted EBITDA, and Free Cash Flow facilitate useful period-to-period comparisons of financial results and the info mation is used by us in evaluating our internal performance.
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Chart Industries (NYSE:GTLS)
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