8-K
CHART INDUSTRIES INC (GTLS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________
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): February 24, 2023
____________________________________
CHART INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
_____________________________________
| Delaware | 001-11442 | 34-1712937 |
|---|---|---|
| (State of other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
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
_____________________________________
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):
| ☐ | 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:
| 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 |
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 February 24, 2023, Chart Industries, Inc. (the “Company”) issued a news release announcing the Company’s financial results for the fourth quarter and fiscal year ended December 31, 2022, as well as supplemental information for the fourth quarter and fiscal year ended December 31, 2022. 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 generally accepted accounting principles (“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.
| Exhibit No. | Description |
|---|---|
| 99.1 | Chart Industries, Inc. News Release, dated February 24, 2023, announcing the Company's 2022 fourth quarter and fiscal year results. |
| 99.2 | Chart Industries, Inc. Supplemental Information for 2022 fourth quarter and fiscal year results. |
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.
| Chart Industries, Inc. | |
|---|---|
| Date: February 24, 2023 | |
| By: /s/ Jillian C. Evanko <br>Jillian C. Evanko<br>President and Chief Executive Officer |
3
Document
Exhibit 99.1
Chart Industries Reports Record Fourth Quarter and Full Year 2022 Results; Record Backlog Provides Strong Visibility to 2023
Atlanta, Georgia – February 24, 2023 - Chart Industries, Inc. (NYSE: GTLS) today reported results for the fourth quarter and full year ended December 31, 2022. All results reported are from continuing operations. Further details can be found in the supplemental presentation accompanying this release and published in the investor relations section of our website.
•Record fourth quarter 2022 and record full year 2022 backlog, sales, gross profit, and operating income
•Record full year 2022 orders of $2,779.9 million included our four highest order quarters in our history and increased 65.9% compared to 2021 (29.0% excluding Big LNG); fourth quarter 2022 orders of $525.9 million increased 14.1% from the fourth quarter 2021
•Record fourth quarter 2022 sales of $441.4 million contributed to record full year 2022 sales of $1,612.4 million, an increase of 22.4% (+21.4% organic, +4.8% inorganic offset by 3.9% foreign exchange headwind) compared to 2021
•Record fourth quarter operating income of $60.1 million (adjusted $75.0 million) and record fourth quarter operating income as a percent of sales of 13.6% (adjusted 17.0%) contributed to full year record operating income of $151.5 million
•Record reported EBITDA of $102.1 million in the fourth quarter 2022 (adjusted EBITDA of $97.5 million) and EBITDA as a percent of sales of 23.1% (adjusted 22.1%) driven by strong execution, continued pricing actions and small and large project work
•Reported fourth quarter 2022 non-diluted earnings per share (“EPS”) of $0.42; when adjusted for one-time items, fourth quarter adjusted non-diluted EPS was $1.67, a quarterly record, contributing to full year 2022 record non-diluted EPS of $2.21 and record adjusted non-diluted EPS of $4.69
•Fourth quarter 2022 net cash provided by operations of $30.5 million before $26.0 million of capital expenditures; when adjusted for one-time items, fourth quarter 2022 adjusted free cash flow of $71.5 million
•Reiterating Chart standalone 2023 full-year sales outlook of $2.10 billion to $2.20 billion and reiterating our associated 2023 full-year adjusted EBITDA outlook in the range of $440 million to $480 million
•Howden acquisition anticipated to close in the next 45 days and on-track to delivering our year-one synergy and financial commitments.
We set numerous full year 2022 and fourth quarter 2022 historical records.
| Orders | Net Sales | Backlog | Gross Profit | Operating Income | Operating Margin | |
|---|---|---|---|---|---|---|
| Q4 2022 | ✔ | ✔ | ✔ | ✔ | ✔ | |
| FY 2022 | ✔ | ✔ | ✔ | ✔ | ✔ |
Our four highest order quarters in our history were all in 2022. Full year orders of $2,779.9 million included three Big LNG orders totaling $620.7 million as well as a total of 12 floating LNG (“FLNG”), small-scale LNG and hydrogen liquefaction systems and associated equipment. Fourth quarter 2022 orders of $525.9 million included orders for our IPSMR® process technology and associated equipment for New Fortress Energy’s Fast4 and Fast5 LNG projects and was a 14.1% increase over the fourth quarter 2021 orders. The 2022 record orders contributed to record backlog of $2,338.1 million, a strong setup to our 2023 outlook. 2022 was the first time in our history that we booked multiple Big LNG projects in the same year, with three consecutive quarters (first through third quarters 2022) having Big LNG bookings. We anticipate Big LNG, small-scale LNG and FLNG demand to continue in 2023, and while no additional Big LNG orders are included in our 2023 outlook, we currently anticipate more than one project to move to Final Investment Decision (“FID”), with one expected in the first half 2023. To start 2023, we received an order for $115 million for our IPSMR® liquefaction systems from Wison Heavy Industry Co., Ltd. as well as an order for brazed aluminum heat exchangers into a floating LNG application for $19.5 million.
Fourth quarter 2022 sales of $441.4 million and full year 2022 sales of $1,612.4 million were our highest sales quarter and year in our history, and each of our segments had record sales in the full year 2022. Fourth quarter 2022 sales sequentially increased more than 8.5% in three of our four segments compared to the third quarter 2022, with RSL and HTS up 11.1% and 12.3%, respectively. CTS sales were flat to the third quarter 2022, which is consistent with the typical seasonal nature of industrial gas activity.
Full year 2022 sales grew 22.4%, despite the negative impact of foreign exchange of 3.9%, and a 79.2% decline in HLNG over-the-road vehicle tank sales (excluding HLNG from full year sales in both 2022 and 2021 would result in a 33.6% growth rate for the business year-over-year). Repair, Service and Leasing (“RSL”) and Heat Transfer Systems (“HTS”) segments full year 2022 sales were $209.6 million (+12.1% increase when compared to 2021) and $462.7 million (+76.1%), respectively. HTS benefitted from a strong small-scale, floating LNG and Big LNG year, as well as traditional energy applications’ orders growing in 2022. Cryo Tank Solutions full year 2022 sales of $504.3 million also grew 12.7% year-over-year, while Specialty Products sales increased 3.6% to $448.3 million. Specialty Products sales increased 39.7% when excluding HLNG over-the-road vehicle tank sales in each year.
Record fourth quarter 2022 reported gross profit of $124.3 million contributed to our full year record 2022 gross profit of $407.4 million. We have sequential quarter-over-quarter improvement in gross margin as a percent of sales, with reported gross margin in the fourth quarter 2022 of 28.2% (and each month’s reported gross margin as a percent of sales and operating margin as a percent of sales within the quarter sequentially increased, with our exit rate from December 2022 of reported gross profit as a percent of sales of 31%). When adjusted for one-time items of restructuring costs, specific customer concession, and the brazed aluminum heat exchanger installation costs, gross margin as a percent of sales for the fourth quarter 2022 was 29.9%. We intend to continue to robustly manage gross margin levels as we remain active on our pricing actions and expect tempering of the recent inflationary pressures for our main material input costs.
Reported operating income of $60.1 million for the fourth quarter 2022 resulted in record reported operating income as a percent of sales of 13.6%. When excluding the $14.9 million of operational one-time costs in the fourth quarter 2022, including specific costs related to the Howden acquisition (third party due diligence and legal costs primarily), adjusted operating income as a percent of sales was 17.0%, also a historical record.
Fourth quarter 2022 EBITDA of $102.1 million included one-time items related to the revaluation of our investment in Svante following its sale of securities to additional investors, including Chevron (gain of $23.3 million), share based compensation ($2.7 million) and the non-recurring costs reflected in adjusted operating income. When adjusting for these one-time items, adjusted EBITDA for the fourth quarter 2022 was $97.5 million.
Reported fourth quarter 2022 non-diluted earnings per share (“EPS”) of $0.42; when adjusted for one-time items primarily related to Howden deal-related costs, integration costs on other acquisitions, financing costs as well the gain from our revaluation of Svante and our mark-market of our inorganic investments, fourth quarter adjusted non-diluted EPS was $1.67. Full year 2022 reported non-diluted EPS of $2.21 is a historical record as is our adjusted non-diluted EPS for the full year of $4.69.
“Not only was 2022 a record year across nearly all financial metrics for our business, we continue to see broad-based demand as we head into 2023 across our full solution offering,” stated Jill Evanko, Chart’s CEO and President. “We are pleased with the progress of margin improvement, in particular our record adjusted operating income as a percent of sales of 17.0% in the fourth quarter and are excited to be progressing on track to closing the acquisition of Howden and the expectation of delivering year-one synergies at or above target. I want to thank our One Chart global team members for their efforts in executing a record year, and most importantly, doing so safely as we had our lowest number of safety incidents and total recordable incident rate to end 2022.”
Broad-based demand for our products and solutions continues into 2023 providing strong confidence in our 2023 through 2025 outlook driven by macro tailwinds and our Chart-specific differentiation including certifications, new products and a safe operating environment. January 2023 total Chart orders were over $285 million.
We continue to see widespread demand across our business, with one indicator of this being seven consecutive quarters with more than 60 orders each over $1 million. In the fourth quarter 2022, we booked 66 of these orders, bringing our full year 2022 to 263 orders each greater than $1 million. This is a 16.4% increase of orders of this magnitude compared to 2021. We also booked orders in 2022 with 327 new customers (729 total in the past two years) and 89 new first-of-a-kind orders (“FOAK”) (168 in the past two years combined). In the fourth quarter 2022, we received a FOAK order from TotalEnergies for one of our Spintube™ replacement heat exchanger bundles to be installed in a refinery in Europe, with the customer expecting significant efficiency gains by converting to a Spintube bundle.
Another one of our fourth quarter 2022 FOAK orders was a PFAS water treatment system with Yarmouth, Massachusetts – this will be the first full scale system for drinking water in the state of Massachusetts (only pilots have been run to date). Water treatment is one of the many macro tailwinds that we see in the Nexus of Clean™ - clean power, clean water, clean food and clean industrials. For water treatment, PFAS restrictions are going into effect in the United States this year, and the United States Inflation Reduction Act (“IRA”) includes $4 billion in drought resilience and $550 million for domestic water program funding (USA). Outside of the U.S., we have won three water treatment orders in 2022 in India (each o ver $3.5 million), and there is a growing trend for global government partnering to accelerate water and sanitation projects. We see the IRA as a significant tailwind to all of our Specialty Products order activity, and this has continued in 2023.
We signed agreements or Memoranda of Understanding (“MOU”) with 30 different partners in 2022, with a balance between hydrogen (38%), LNG and liquefaction (34%) and carbon capture, utilization and storage (“CCUS”) (25%), including 10 new MOUs executed in the fourth quarter 2022, with partners such as Wison Heavy Industry Co., Ltd. that in turn has already placed a meaningful order with us to start 2023. So far in 2023, we have executed three new agreements with additional partners, including Nikola for hydrogen offerings, and MOUs with Rotec for high flow reverse osmosis for water treatment and GenH2 to incorporate Chart equipment into their small-scale hydrogen liquefaction systems, inclusive of storage, brazed aluminum heat exchangers, cold boxes.
In addition to the U.S. IRA, other governments are committing funds and programs for green energy and supporting carbon emission reductions which we expect to drive further demand for our solutions globally, in particular in energy, hydrogen, water, food, and carbon capture. Examples of this include the recently announced European Green Deal Industrial Plan, India’s National Green Hydrogen Mission, and the continuation of the support for a hybrid of clean
energy sources. In February 2023, the European Investment Bank (“EIB”), the bank of the European Union, joined the India Hydrogen Alliance (“IH2A”), which Chart and Reliance Industries were founding members. The EIB is working with the Indian government on a credit facility to provide public sector investments supporting the large-scale green hydrogen hubs and projects with an indicative funding of EUR 1 billion.
The global CO2 shortage is impacting food, beverage and industrial applications, and therefore increasing demand and potential demand for our carbon capture and storage solutions. In the past month, we have received record inbound requests from customers and potential customers of breweries, food producers, and energy companies to help them address this situation. Of note, we have the largest pipeline of opportunities for CCUS in New Zealand and Australia in our history. Also, our Cryogenic Carbon Capture ™ technology and solutions are supporting development of decarbonization solutions for the lime industry. A first milestone achieved is represented by two recent pre-FEED orders from two of the largest lime producers, one of them being Carmeuse. There are many additional macro tailwinds related to ESG and sustainability and more examples are shown in the supplemental presentation.
Our own activities related to safety, productivity, differentiation through global and regional certifications, ESG-oriented internal activities to achieve our carbon emission reduction target of 30% by 2030 and carbon neutrality by 2050 (which we are reiterating as our goals for the combined Chart and Howden business) continue to be central to our One Chart operating environment. In the fourth quarter 2022, we hit our lowest total recordable incident rate in our history, and we received 11 certifications ranging from geographies including China, South Korea, Canada and the United States to end uses including rail, HLNG for buses and hydrogen.
Reported fourth quarter 2022 net cash provided by operating activities of $30.5 million with capital expenditures of $26.0 million; when adjusting for Howden-related costs, primarily financing and one-time items, adjusted free cash flow was $71.5 million.
For the fourth quarter 2022, net cash provided by operating activities was $30.5 million with capital expenditures of $26.0 million. Capital expenditures in the fourth quarter 2022 of $26.0 million included our decision to accelerate activity on the installation of our brazed aluminum heat exchanger (“BAHX”) furnace and production line in our Tulsa, Oklahoma flexible manufacturing facility, our New Iberia, Louisiana cold box rooftop expansion, and putting more leasing fleet assets into service. We accelerated capacity projects as demand for our BAHX cores and cold boxes continues at record levels, both for LNG applications of all sizes, traditional oil and gas applications as well as our Specialty Products full solution offerings for hydrogen, water treatment and carbon capture and storage. We also continue to see strong commercial activity for our standard leasing fleet, which is primarily mobile transports and ISO containers. When adjusted for Howden related costs, financing costs and other net income adjustments, adjusted free cash flow for fourth quarter 2022 was $71.5 million. We did not adjust fourth quarter 2022 adjusted free cash flow for a negative foreign exchange headwind of $1.4 million,
$8.9 million of accelerated capacity capital expenditures, or accounts receivable payments from four customers of $8.3 million that came in early January 2023 versus our original expectation of receipt in the fourth quarter 2022.
Chart standalone (excluding Howden) 2023 outlook reiterated and supported by record backlog of $2,338.1 million and a strong start to our order book in 2023; Chart and Howden combined outlook reiterated.
We are reiterating our 2023 sales outlook range of $2.10 billion to $2.20 billion, which includes only Big LNG projects that are in backlog as of December 31, 2022. We are confident in achieving this sales range, underpinned by five key items:
1.It is not unusual for project revenue to shift between quarters. We anticipate realizing pushed Q422 revenue in 2023 based on customer, project and material receipt timing.
2.Our outlook does not include any additional mid-size or large project orders between now and the end of the first half 2023, which could provide additional revenue in the second half of 2023.
3.Even though we are seeing early end market improvement in HLNG vehicle tank sales, our forecast for HLNG vehicle tank sales is flat with 2022.
4.As of December 31, 2022, we had record backlog of $2,338.1 million, with approximately 60% of the full year 2023 sales outlook already in backlog, which is meaningfully higher than in prior years
5.We have existing capacity to deliver on our backlog and any potential new orders that could materialize throughout the year.
We are reiterating our prior 2023 standalone full year adjusted EBITDA outlook which is anticipated to be in the range of $440 million to $480 million. Adjusted 2023 full year free cash flow, which also excludes any impact from the pending Howden acquisition, is reiterated in the range of $250 million to $300 million. We will be using EBITDA as a financial metric going forward and in light of the adjustments, costs and variable metrics and timing associated with the Howden acquisition, we will not provide standalone Chart adjusted earnings per share for 2023. Following the close of the Howden acquisition, we will provide updated combined company guidance for the calendar year 2023 for sales, adjusted diluted earnings per share, EBITDA and adjusted free cash flow. All of the current share count and interest information as of the first quarter 2023 is included in the supplemental presentation.
Seasonally, as in past years, our first quarter is typically our lowest quarter of the year, and we expect our normal first quarter seasonality. Given this and the timing of our backlog, we expect quarterly revenues, gross margin and operating margins will increase over the course of the year.
Our guidance does not include the impact of the pending acquisition with Howden, which is expected to close in the next 45 days. We are also adjusting for acquisition and divestiture costs, restructuring, and interest on Chart’s long-term debt to fund the Howden transaction placed in December 2022. Chart anticipates the absolute level of adjustments to decrease in 2024, and effective in the fourth quarter 2022, we are no longer adjusting strategic inventory items for free cash flow.
Howden acquisition anticipated to close in the next 45 days and on-track to deliver our year-one synergy and financial commitments.
We announced our definitive agreement to acquire Howden, a leading global provider of mission critical air and gas handling products and services, on November 9, 2022, with an anticipated closing date withiin the next 45 days. We completed our financing activities related to the transaction in December 2022, within our anticipated weighted average cost of debt range (previously stated range as 7% to 8.5% blended). The U.S. Hart-Scott-Rodino (HSR) antitrust waiting period expired with no further inquiries and the parties have also received clearances from all except two of our total required international regulatory approvals. Pending receipt of these two remaining international regulatory approvals, we now expect the transaction to close in the next 45 days.
Howden, like Chart, continued to experience strong demand from numerous macro tailwinds in their end markets in the fourth quarter 2022 and into the first quarter of 2023 as well as very strong backlog heading into the year, and therefore the previously shared 2023 outlook remains unchanged. We are reiterating our view for 12 months pro forma combined sales of $4.25 billion and associated adjusted 2023 EBITDA of approximately $1 billion for the Chart and Howden combined business, inclusive of year-one cost synergies of $175 million, and we continue to anticipate reaching our estimated pro forma net leverage ratio in the high 2x range by the end of 2024. Included in the supplemental presentation is a 2023 proforma outlook for the combined Chart and Howden business as well as a reiteration of our 2024 EBITDA outlook for the combined business.
As previously discussed, we are currently pursuing divestitures of two product lines related to the combined business. While these proposed divestitures are at preliminary stages and there can be no assurances of the completion of these activities, we continue to target a completion of these within the next three to six months and continue to anticipate combined proceeds of approximately $500 million from these divestitures.
Discontinued Operations: Settlement of the global plaintiff’s Pacific Fertility Clinic lawsuits booked in discontinued operations related to our primary pre-closing liability from the divestiture of the Cryobio business to Cryoport in 2020.
In connection with the October 1, 2020 divestiture of our cryobiological products business, Chart retained certain potential liabilities in connection with the alleged failure of a stainless steel cryobiological storage tank at the Pacific Fertility Center in San Francisco, California. As previously disclosed, the Company has been engaged in ongoing discussions in an effort to establish a settlement framework for the various lawsuits associated with the Pacific Fertility Center. After substantial discussions with the various constituent parties, the Company reached a preliminary settlement in late January 2023 to resolve these 217 cases. The preliminary settlement remains subject to the satisfaction of certain conditions, which the Company currently anticipates occurring as early as March 2023. The Company has taken a net charge of approximately $73.0 million, which is included in discontinued operations, representing the expected out-of-pocket payments in connection with the settlement and settlement costs. This preliminary settlement resolves the prior 2021 verdict awarded by a federal district court in the Northern District of California for the initially tried cases, which was on appeal, as well as the previously disclosed insurance dispute. We continue to evaluate the merits of the sole remaining lawsuit that is not included in the preliminary settlement in light of the information available. Based on the status of that lawsuit, a current estimate of reasonably possible losses in that case cannot be made; however, the Company does not anticipate the potential exposure to be material. This preliminary settlement and the expected out-of-pocket payments does not reflect third party recoveries which the Company is aggressively pursuing with respect to the underlying facts in these cases, and which the Company currently anticipates will result in recoveries approximating one-quarter or more of the Company’s out-of-pocket net payments.
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 and pending acquisitions, divestitures, and investments, cost 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 projected industry-wide investments, and U.S. and global governmental initiatives, including executive orders, environmental factors including carbon reduction targets, 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 close and integrate the pending Howden acquisition and other recent acquisitions and achieve the anticipated revenue, earnings, accretion and other benefits from these acquisitions; The Company’s ability to successfully close on its intention to divest the two product lines and achieve the anticipated proceeds from these divestitures; 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 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 gross profit as a percent of sales, adjusted earnings per non-diluted share, net income attributable to Chart Industries, Inc. adjusted, free cash flow and adjusted free cash flow and adjusted operating income, 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 and the slides titled "Fourth Quarter 2022 Earnings Per Share," “Fourth Quarter 2022 Free Cash Flow”, and “Fourth Quarter and Full Year 2022 Adjusted EBITDA” included in the supplemental slides accompanying this 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 2023 full year outlook, the Company is not able to provide a reconciliation of adjusted diluted earnings per share, adjusted EBITDA or adjusted free cash flow 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 will discuss its fourth quarter and full year 2022 financial results on a conference call on Friday, February 24, 2023 at 8:30 a.m. ET. A live webcast and replay will be available on the Company's investor relations website, ir.chartindustries.com. Participants wishing to join the live Q&A session may request a conference call dial-in number by registering in advance using the following registration link: Conference Registration (vevent.com)
About Chart Industries, Inc.
Chart Industries, Inc. is a leading independent global manufacturer of highly engineered equipment servicing multiple applications in the Energy and Industrial Gas markets. Our unique product portfolio is used in every phase of the liquid gas supply chain, including upfront engineering, service and repair. Being at the forefront of the clean energy transition, Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and carbon capture and storage amongst other applications. We are committed to excellence in environmental, social and corporate governance (ESG) issues both for our company as well as our customers. With over 25 global manufacturing locations from the United States to China, Australia, India, Europe and South America, we maintain accountability and transparency to our team members, suppliers, customers and communities. To learn more, visit www.Chartindustries.com.
For more information, click here:
http://ir.chartindustries.com/
Investor Relations Contact:
John Walsh VP, Investor Relations 770-721-8899 john.walsh@chartindustries.com
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars and shares in millions, except per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Sales | $ | 441.4 | $ | 378.9 | $ | 1,612.4 | $ | 1,317.7 |
| Cost of sales | 317.1 | 296.7 | 1,205.0 | 993.5 | ||||
| Gross profit | 124.3 | 82.2 | 407.4 | 324.2 | ||||
| Selling, general, and administrative expenses | 55.2 | 51.4 | 214.5 | 196.8 | ||||
| Amortization expense | 9.0 | 10.4 | 41.4 | 38.9 | ||||
| Operating expenses | 64.2 | 61.8 | 255.9 | 235.7 | ||||
| Operating income (1) (2) (3) (4) | 60.1 | 20.4 | 151.5 | 88.5 | ||||
| Acquisition related finance fees | 37.0 | — | 37.0 | — | ||||
| Interest expense, net | 15.5 | 3.3 | 28.8 | 10.7 | ||||
| Financing costs amortization | 0.8 | 4.8 | 2.9 | 8.3 | ||||
| Unrealized gain on investment in equity securities | (24.0) | (2.0) | (13.1) | (3.2) | ||||
| Realized gain on equity method investment | — | — | (0.3) | — | ||||
| Realized gain on investment in equity securities | — | (2.6) | — | (2.6) | ||||
| Foreign currency loss (gain) | 1.8 | 1.2 | (0.8) | 0.9 | ||||
| Other (income) expense, net | (0.4) | (0.1) | (1.9) | 0.3 | ||||
| Income from continuing operations before income taxes and equity in (loss) earnings of unconsolidated affiliates, net | 29.4 | 15.8 | 98.9 | 74.1 | ||||
| Income tax expense | 11.9 | 3.6 | 15.9 | 13.5 | ||||
| Income from continuing operations before equity in (loss) earnings of unconsolidated affiliates, net | 17.5 | 12.2 | 83.0 | 60.6 | ||||
| Equity in (loss) earnings of unconsolidated affiliates, net | (0.1) | 0.2 | (0.4) | 0.3 | ||||
| Net income from continuing operations | 17.4 | 12.4 | 82.6 | 60.9 | ||||
| Loss from discontinued operations, net of tax | (57.6) | — | (57.6) | — | ||||
| Net (loss) income | (40.2) | 12.4 | 25.0 | 60.9 | ||||
| Less: Income attributable to noncontrolling interests of continuing operations, net of taxes | 0.2 | 0.3 | 1.0 | 1.8 | ||||
| Net (loss) income attributable to Chart Industries, Inc. | $ | (40.4) | $ | 12.1 | $ | 24.0 | $ | 59.1 |
| CHART INDUSTRIES, INC. AND SUBSIDIARIES<br><br>CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) — (Continued)<br><br>(Dollars and shares in millions, except per share amounts) | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Amounts attributable to Chart common stockholders | ||||||||
| Income from continuing operations | $ | 17.2 | $ | 12.1 | $ | 81.6 | $ | 59.1 |
| Less: Mandatory convertible preferred stock dividend requirement | 1.4 | — | 1.4 | — | ||||
| Income from continuing operations attributable to Chart | $ | 15.8 | $ | 12.1 | $ | 80.2 | $ | 59.1 |
| (Loss) from discontinued operations, net of tax | (57.6) | — | (57.6) | — | ||||
| Net (loss) income attributable to Chart common stockholders | $ | (41.8) | $ | 12.1 | $ | 22.6 | $ | 59.1 |
| Basic earnings per common share attributable to Chart Industries, Inc. | ||||||||
| Income from continuing operations | $ | 0.42 | $ | 0.34 | $ | 2.21 | $ | 1.66 |
| Loss from discontinued operations | (1.54) | — | (1.59) | — | ||||
| Net (loss) income attributable to Chart Industries, Inc. | $ | (1.12) | $ | 0.34 | $ | 0.62 | $ | 1.66 |
| Diluted earnings per common share attributable to Chart Industries, Inc. | ||||||||
| Income from continuing operations | $ | 0.37 | $ | 0.29 | $ | 1.92 | $ | 1.44 |
| Loss from discontinued operations | (1.34) | — | (1.38) | — | ||||
| Net (loss) income attributable to Chart Industries, Inc. | $ | (0.97) | $ | 0.29 | $ | 0.54 | $ | 1.44 |
| Weighted-average number of common shares outstanding: | ||||||||
| Basic | 37.42 | 35.65 | 36.25 | 35.61 | ||||
| Diluted (5) (6) | 42.93 | 41.57 | 41.80 | 41.11 |
_______________
(1)Includes depreciation expense of:
•$10.5 and $10.4 for the quarter ended December 31, 2022 and 2021, respectively, and
•$40.5 and $41.7 for the year ended December 31, 2022 and 2021, respectively.
(2)Includes restructuring costs/(credits) of:
•$0.1 and $0.6 for the quarter ended December 31, 2022 and 2021, respectively, and
•$(1.0) and $3.5 for the year ended December 31, 2022 and 2021, respectively.
(3)Includes acquisition-related contingent consideration (credits)/charges in our Specialty Products segment of:
•$(1.1) and $(1.2) for the quarter ended December 31, 2022 and 2021, respectively, and
•$(3.9) and $1.1 for the year ended December 31, 2022 and 2021, respectively.
(4)Includes deal-related and integration costs of:
•$1.6 and $17.6 for the quarter and year ended December 31, 2022, respectively.
(5)Includes an additional 5.23 and 5.28 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the fourth quarter and full year 2022, 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 2.80 and 2.81 for the fourth quarter and full year 2022, respectively.
(6)Includes an additional 5.56 and 5.17 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the fourth quarter and full year 2021, respectively. 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 2.94 and 2.76 for the fourth quarter and full year ended 2021, respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Net Cash Provided By (Used In) Operating Activities | $ | 30.5 | $ | 20.4 | $ | 80.8 | $ | (21.3) |
| Investing Activities | ||||||||
| Acquisition of businesses, net of cash acquired | — | (36.0) | (25.8) | (205.1) | ||||
| Investments | (5.0) | (0.7) | (9.9) | (103.9) | ||||
| Capital expenditures | (26.0) | (16.2) | (74.2) | (52.7) | ||||
| Cash received from settlement of cross-currency swap agreements | — | — | 9.4 | — | ||||
| Government grants | (0.3) | 0.1 | (1.1) | 0.5 | ||||
| Net Cash Used In Investing Activities | (31.3) | (52.8) | (101.6) | (361.2) | ||||
| Financing Activities | ||||||||
| Borrowings on senior secured and senior unsecured notes | 1,940.0 | — | 1,940.0 | — | ||||
| Borrowings on revolving credit facilities | 132.0 | 717.0 | 635.3 | 1,361.1 | ||||
| Repayments on revolving credit facilities | (617.0) | (552.0) | (1,128.2) | (873.6) | ||||
| Repayments on term loan | — | (103.1) | — | (103.1) | ||||
| Payments for debt issuance costs | (4.7) | (3.0) | (4.7) | (3.0) | ||||
| Proceeds from issuance of common stock, net | 675.5 | — | 675.5 | — | ||||
| Proceeds from issuance of preferred stock, net | 388.4 | — | 388.4 | — | ||||
| Payments for equity issuance costs | (0.7) | — | (0.7) | — | ||||
| Proceeds from exercise of stock options | 0.3 | (0.1) | 2.2 | 6.9 | ||||
| Common stock repurchases from share-based compensation plans | (0.2) | (3.2) | (3.6) | (6.4) | ||||
| Net Cash Provided By Financing Activities | 2,513.6 | 55.6 | 2,504.2 | 381.9 | ||||
| Effect of exchange rate changes on cash | 3.0 | (3.8) | (0.5) | (3.1) | ||||
| Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | 2,515.8 | 19.4 | 2,482.9 | (3.7) | ||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period (1) | 89.5 | 103.0 | 122.4 | 126.1 | ||||
| CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD (1) | $ | 2,605.3 | $ | 122.4 | $ | 2,605.3 | $ | 122.4 |
_______________
(1)Includes cash and restricted cash equivalents of $1,941.7 and $0.2 classified within restricted cash on our consolidated balance sheet as of December 31, 2022 and December 31, 2021, respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
| December 31, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| ASSETS | ||||
| Cash and cash equivalents | $ | 663.6 | $ | 122.2 |
| Restricted cash | 1,941.7 | 0.2 | ||
| Accounts receivable, net | 278.4 | 236.3 | ||
| Inventories, net | 357.9 | 321.5 | ||
| Other current assets | 449.3 | 173.3 | ||
| Property, plant, and equipment, net | 430.0 | 416.0 | ||
| Goodwill | 992.0 | 994.6 | ||
| Identifiable intangible assets, net | 535.3 | 556.1 | ||
| Equity method investments | 93.0 | 99.6 | ||
| Investments in equity securities | 96.5 | 77.8 | ||
| Other assets | 64.2 | 46.2 | ||
| TOTAL ASSETS | $ | 5,901.9 | $ | 3,043.8 |
| LIABILITIES AND EQUITY | ||||
| Current liabilities | $ | 1,081.6 | $ | 693.9 |
| Long-term debt | 2,039.8 | 600.8 | ||
| Other long-term liabilities | 96.2 | 123.9 | ||
| Equity | 2,684.3 | 1,625.2 | ||
| TOTAL LIABILITIES AND EQUITY | $ | 5,901.9 | $ | 3,043.8 |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
OPERATING SEGMENTS (UNAUDITED)
(Dollars in millions)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Sales | ||||||||||||
| Cryo Tank Solutions | $ | 126.4 | $ | 133.5 | $ | 504.3 | $ | 447.4 | ||||
| Heat Transfer Systems | 148.4 | 71.9 | 462.7 | 262.7 | ||||||||
| Specialty Products | 117.4 | 131.9 | 448.3 | 432.9 | ||||||||
| Repair, Service & Leasing | 55.2 | 44.7 | 209.6 | 187.0 | ||||||||
| Intersegment eliminations | (6.0) | (3.1) | (12.5) | (12.3) | ||||||||
| Consolidated | $ | 441.4 | $ | 378.9 | $ | 1,612.4 | $ | 1,317.7 | ||||
| Gross Profit | ||||||||||||
| Cryo Tank Solutions | $ | 28.9 | $ | 22.5 | $ | 98.7 | $ | 93.5 | ||||
| Heat Transfer Systems | 37.2 | 6.4 | 90.6 | 35.6 | ||||||||
| Specialty Products | 32.4 | 39.9 | 138.6 | 145.5 | ||||||||
| Repair, Service & Leasing | 25.8 | 13.4 | 79.5 | 49.6 | ||||||||
| Consolidated | $ | 124.3 | $ | 82.2 | $ | 407.4 | $ | 324.2 | ||||
| Gross Profit Margin | ||||||||||||
| Cryo Tank Solutions | 22.9 | % | 16.9 | % | 19.6 | % | 20.9 | % | ||||
| Heat Transfer Systems | 25.1 | % | 8.9 | % | 19.6 | % | 13.6 | % | ||||
| Specialty Products | 27.6 | % | 30.3 | % | 30.9 | % | 33.6 | % | ||||
| Repair, Service & Leasing | 46.7 | % | 30.0 | % | 37.9 | % | 26.5 | % | ||||
| Consolidated | 28.2 | % | 21.7 | % | 25.3 | % | 24.6 | % | ||||
| Operating Income (Loss) | ||||||||||||
| Cryo Tank Solutions | $ | 17.8 | $ | 10.9 | $ | 54.0 | $ | 52.9 | ||||
| Heat Transfer Systems | 27.9 | (5.8) | 51.7 | (12.3) | ||||||||
| Specialty Products | 19.2 | 26.4 | 72.9 | 94.1 | ||||||||
| Repair, Service & Leasing | 18.7 | 7.2 | 51.0 | 23.3 | ||||||||
| Corporate | (23.5) | (18.3) | (78.1) | (69.5) | ||||||||
| Consolidated (1) (2) (3) (4) | $ | 60.1 | $ | 20.4 | $ | 151.5 | $ | 88.5 | ||||
| Operating Margin | ||||||||||||
| Cryo Tank Solutions | 14.1 | % | 8.2 | % | 10.7 | % | 11.8 | % | ||||
| Heat Transfer Systems | 18.8 | % | (8.1) | % | 11.2 | % | (4.7) | % | ||||
| Specialty Products | 16.4 | % | 20.0 | % | 16.3 | % | 21.7 | % | ||||
| Repair, Service & Leasing | 33.9 | % | 16.1 | % | 24.3 | % | 12.5 | % | ||||
| Consolidated | 13.6 | % | 5.4 | % | 9.4 | % | 6.7 | % |
(1)Restructuring costs/(credits) for the quarter ended:
•December 31, 2022 were $0.1 ($0.2 – Heat Transfer Systems and $(0.1) – Repair, Service & Leasing).
•December 31, 2021 were $0.6 ($0.5 - Heat Transfer Systems and $0.1 - Repair, Service & Leasing).
(2)Restructuring (credits)/costs for the year ended:
•December 31, 2022 were $(1.0) ($0.1 – Cryo Tank Solutions, $0.3 – Heat Transfer Systems and $(1.4) – Repair, Service & Leasing).
•December 31, 2021 were $3.5 ($0.3 – Cryo Tank Solutions, $1.7 – Heat Transfer Systems, $1.5 – Repair, Service & Leasing).
(3)Includes acquisition-related contingent consideration (credits)/charges in our Specialty Products segment of:
•$(1.1) and $(1.2) for the quarter ended December 31, 2022 and 2021, respectively, and
•$(3.9) and $1.1 for the year ended December 31, 2022 and 2021, respectively.
(4)Includes deal-related and integration costs of:
•$1.6 and $17.6 for the quarter and year ended December 31, 2022, respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
ORDERS AND BACKLOG (UNAUDITED)
(Dollars in millions)
| Three Months Ended | Year Ended December 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2022 | September 30, 2022 | 2022 | 2021 | |||||||||||||
| Orders | ||||||||||||||||
| Cryo Tank Solutions | $ | 139.7 | $ | 120.2 | $ | 508.4 | $ | 555.4 | ||||||||
| Heat Transfer Systems (1) | 235.8 | 357.7 | 1,417.6 | 312.0 | ||||||||||||
| Specialty Products | 96.4 | 202.9 | 665.5 | 648.6 | ||||||||||||
| Repair, Service & Leasing | 66.3 | 61.7 | 218.9 | 180.6 | ||||||||||||
| Intersegment eliminations | (12.3) | (13.1) | (30.5) | (20.5) | ||||||||||||
| Consolidated | $ | 525.9 | $ | 729.4 | $ | 2,779.9 | $ | 1,676.1 | As of | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||
| December 31,<br>2022 | September 30,<br>2022 | December 31,<br>2021 | ||||||||||||||
| Backlog | ||||||||||||||||
| Cryo Tank Solutions | $ | 371.0 | $ | 355.2 | $ | 346.8 | ||||||||||
| Heat Transfer Systems (1) (2) | 1,300.1 | 1,225.4 | 370.4 | |||||||||||||
| Specialty Products | 645.9 | 666.1 | 438.2 | |||||||||||||
| Repair, Service & Leasing | 57.0 | 41.6 | 56.5 | |||||||||||||
| Intersegment eliminations | (35.9) | (34.2) | (21.8) | |||||||||||||
| Consolidated | $ | 2,338.1 | $ | 2,254.1 | $ | 1,190.1 |
_______________
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF BASIC EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. TO NORMALIZED NON-DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES INC. AND ADJUSTED NON-DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. (UNAUDITED)
(Dollars in millions, except per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Basic share count | Adjusted share count (1) | Basic share count | Change for share count | Basic share count | Adjusted share count (1) | Basic share count | Change for share count | |||||||||
| Basic earnings per common share attributable to Chart Industries, Inc. – continuing operations (U.S. GAAP) | $ | 0.42 | $ | 0.44 | $ | 0.34 | $ | 0.10 | $ | 2.21 | $ | 2.24 | $ | 1.66 | $ | 0.55 |
| Investment equities mark-to-market | (0.61) | (0.63) | (0.06) | (0.57) | (0.25) | (0.25) | (0.12) | (0.13) | ||||||||
| Gains on purchase or sale | — | — | (0.07) | 0.07 | — | — | (0.07) | 0.07 | ||||||||
| Debt and debt refinance costs | 1.21 | 1.26 | 0.12 | 1.14 | 1.25 | 1.26 | 0.12 | 1.13 | ||||||||
| Mandatory convertible preferred stock dividend | 0.04 | 0.04 | — | 0.04 | 0.04 | 0.04 | — | 0.04 | ||||||||
| Tax effects | (0.01) | (0.01) | — | (0.01) | (0.06) | (0.06) | 0.01 | (0.07) | ||||||||
| Normalized non-diluted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) | $ | 1.05 | $ | 1.10 | $ | 0.33 | $ | 0.77 | $ | 3.19 | $ | 3.23 | $ | 1.60 | $ | 1.59 |
| Restructuring and related (2) | 0.22 | 0.23 | 0.21 | 0.02 | 0.58 | 0.59 | 0.60 | (0.02) | ||||||||
| Deal related and integration costs | 0.26 | 0.27 | 0.17 | 0.10 | 0.71 | 0.71 | 0.47 | 0.24 | ||||||||
| Start-up costs (organic) | 0.08 | 0.08 | 0.08 | — | 0.30 | 0.31 | 0.25 | 0.05 | ||||||||
| Other one time | — | — | 0.01 | (0.01) | — | — | 0.14 | (0.14) | ||||||||
| Tax effects | (0.01) | (0.01) | (0.07) | 0.06 | (0.15) | (0.15) | (0.22) | 0.07 | ||||||||
| Adjusted non-diluted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) | $ | 1.60 | $ | 1.67 | $ | 0.73 | $ | 0.94 | $ | 4.63 | $ | 4.69 | $ | 2.84 | $ | 1.79 |
_______________
(1)Includes adjusted basic share count of 35.88 for the quarter ended December 31, 2022 and 35.86 for the year ended December 31, 2022 which excludes impact of common shares issued in December 2022.
(2)Includes restructuring costs/(credits) of:
•$0.1 and $0.6 for the quarter ended December 31, 2022 and 2021, respectively, and
•$(1.0) and $3.5 for the year ended December 31, 2022 and 2021, respectively.
_______________
Normalized non-diluted earnings per common share attributable to Chart Industries, Inc. and adjusted non-diluted earnings per common share attributable to Chart Industries, Inc. are not measures 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 normalized non-diluted earnings per common share attributable to Chart Industries, Inc. and adjusted non-diluted 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.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO CHART INDUSTRIES, INC. TO NET INCOME, ADJUSTED (UNAUDITED)
(Dollars in millions)
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Net (loss) income attributable to Chart Industries, Inc. (U.S. GAAP) | $ | (40.4) | $ | 12.1 | $ | 24.0 | $ | 59.1 |
| Income attributable to noncontrolling interests of continuing operations, net of taxes (U.S. GAAP) | 0.2 | 0.3 | 1.0 | 1.8 | ||||
| Net (loss) income (U.S. GAAP) | (40.2) | 12.4 | 25.0 | 60.9 | ||||
| Financing costs amortization | 0.8 | 4.8 | 2.9 | 8.3 | ||||
| Unrealized foreign currency transaction loss (gain) | 0.1 | 4.7 | (4.1) | (1.1) | ||||
| Employee share-based compensation expense | 2.7 | 3.1 | 10.6 | 11.2 | ||||
| Realized loss (gain) on investment of equity securities | 0.3 | (2.6) | — | (2.6) | ||||
| Unrealized (gain) on investment in equity securities | (24.0) | (2.0) | (13.1) | (3.2) | ||||
| Realized gain on equity method investment | (0.3) | — | (0.3) | — | ||||
| Equity in loss (earnings) of unconsolidated affiliates, net | 0.2 | (0.2) | 0.5 | (0.3) | ||||
| Deferred income tax benefit | (1.7) | (7.9) | (1.7) | (7.9) | ||||
| Other non-cash operating activities | 7.9 | (7.3) | 11.3 | (4.8) | ||||
| Net (loss) income adjusted (non-GAAP) | $ | (54.2) | $ | 5.0 | $ | 31.1 | $ | 60.5 |
_______________
Net income adjusted is not a measure 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 net income adjusted, 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.
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW AND ADJUSTED FREE CASH FLOW (UNAUDITED)
(Dollars in millions)
| Three Months Ended December 31, | Year Ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Net cash provided by (used in) operating activities from continuing operations | $ | 30.5 | $ | 20.4 | $ | 80.8 | $ | (21.3) |
| Capital expenditures | (26.0) | (16.2) | (74.2) | (52.7) | ||||
| Free cash flow (non-GAAP) | $ | 4.5 | $ | 4.2 | $ | 6.6 | $ | (74.0) |
_______________
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 GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED)
(Dollars in millions)
| Year Ended December 31, 2022 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 504.3 | $ | 462.7 | $ | 448.3 | $ | 209.6 | $ | (12.5) | $ | — | $ | 1,612.4 | |||||||
| Gross profit as reported (U.S. GAAP) | 98.7 | 90.6 | 138.6 | 79.5 | — | — | 407.4 | ||||||||||||||
| Restructuring, transaction-related and other one-time costs | 9.3 | 11.4 | 9.6 | 1.8 | — | — | 32.1 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 108.0 | $ | 102.0 | $ | 148.2 | $ | 81.3 | $ | — | $ | — | $ | 439.5 | |||||||
| Adjusted gross profit margin (non-GAAP) | 21.4 | % | 22.0 | % | 33.1 | % | 38.8 | % | — | % | — | % | 27.3 | % | |||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 54.0 | $ | 51.7 | $ | 72.9 | $ | 51.0 | $ | — | $ | (78.1) | 151.5 | ||||||||
| Restructuring, transaction-related and other one-time costs | 9.5 | 11.8 | 10.9 | 2.0 | — | 11.8 | 46.0 | ||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 63.5 | $ | 63.5 | $ | 83.8 | $ | 53.0 | $ | — | $ | (66.3) | $ | 197.5 | |||||||
| Adjusted operating margin (non-GAAP) | 12.6 | % | 13.7 | % | 18.7 | % | 25.3 | % | — | % | — | % | 12.2 | % |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED) (CONTINUED)
(Dollars in millions)
| Three Months Ended December 31, 2022 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 126.4 | $ | 148.4 | $ | 117.4 | $ | 55.2 | $ | (6.0) | $ | — | $ | 441.4 | |||||||
| Gross profit as reported (U.S. GAAP) | 28.9 | 37.2 | 32.4 | 25.8 | — | — | 124.3 | ||||||||||||||
| Restructuring, transaction-related and other one-time costs | 1.0 | 4.5 | 2.0 | 0.3 | — | — | 7.8 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 29.9 | $ | 41.7 | $ | 34.4 | $ | 26.1 | $ | — | $ | — | $ | 132.1 | |||||||
| Adjusted gross profit margin (non-GAAP) | 23.7 | % | 28.1 | % | 29.3 | % | 47.3 | % | — | % | — | % | 29.9 | % | |||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 17.8 | $ | 27.9 | $ | 19.2 | $ | 18.7 | $ | — | $ | (23.5) | 60.1 | ||||||||
| Restructuring, transaction-related and other one-time costs | 1.1 | 4.4 | 1.6 | 0.4 | — | 7.4 | 14.9 | ||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 18.9 | $ | 32.3 | $ | 20.8 | $ | 19.1 | $ | — | $ | (16.1) | $ | 75.0 | |||||||
| Adjusted operating margin (non-GAAP) | 15.0 | % | 21.8 | % | 17.7 | % | 34.6 | % | — | % | — | % | 17.0 | % |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED) (CONTINUED)
(Dollars in millions)
| Year Ended December 31, 2021 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 447.4 | $ | 262.7 | $ | 432.9 | $ | 187.0 | $ | (12.3) | $ | — | $ | 1,317.7 | |||||||
| Gross profit as reported (U.S. GAAP) | 93.5 | 35.6 | 145.5 | 49.6 | — | — | $ | 324.2 | |||||||||||||
| Restructuring, transaction-related and other one-time costs | 7.9 | 13.0 | 6.4 | 6.9 | — | — | 34.2 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 101.4 | $ | 48.6 | $ | 151.9 | $ | 56.5 | $ | — | $ | — | $ | 358.4 | |||||||
| Adjusted gross profit margin (non-GAAP) | 22.7 | % | 18.5 | % | 35.1 | % | 30.2 | % | — | % | — | % | 27.2 | % | |||||||
| Operating income (loss) as reported (U.S.GAAP) | $ | 52.9 | $ | (12.3) | $ | 94.1 | $ | 23.3 | $ | — | $ | (69.5) | $ | 88.5 | |||||||
| Restructuring, transaction-related and other one-time costs | $ | 8.5 | $ | 13.8 | $ | 9.0 | $ | 7.0 | $ | — | $ | 7.1 | $ | 45.4 | |||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 61.4 | $ | 1.5 | $ | 103.1 | $ | 30.3 | $ | — | $ | (62.4) | $ | 133.9 | |||||||
| Adjusted operating margin (non-GAAP) | 13.7 | % | 0.6 | % | 23.8 | % | 16.2 | % | — | % | — | % | 10.2 | % |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED) (CONTINUED)
(Dollars in millions)
| Three Months Ended December 31, 2021 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 133.5 | $ | 71.9 | $ | 131.9 | $ | 44.7 | $ | (3.1) | $ | — | $ | 378.9 | |||||||
| Gross profit as reported (U.S. GAAP) | 22.5 | 6.4 | 39.9 | 13.4 | — | — | 82.2 | ||||||||||||||
| Restructuring, transaction-related and other one-time costs | 2.7 | 3.6 | 1.2 | 2.1 | — | — | 9.6 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 25.2 | $ | 10.0 | $ | 41.1 | $ | 15.5 | $ | — | $ | — | $ | 91.8 | |||||||
| Adjusted gross profit margin (non-GAAP) | 18.9 | % | 13.9 | % | 31.2 | % | 34.7 | % | — | % | — | % | 24.2 | % | |||||||
| Operating income (loss) as reported (U.S.GAAP) | $ | 10.9 | $ | (5.8) | $ | 26.4 | $ | 7.2 | $ | — | $ | (18.3) | $ | 20.4 | |||||||
| Restructuring, transaction-related and other one-time costs | $ | 2.9 | $ | 4.2 | $ | 1.4 | $ | 2.1 | $ | — | $ | 1.8 | $ | 12.4 | |||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 13.8 | $ | (1.6) | $ | 27.8 | $ | 9.3 | $ | — | $ | (16.5) | $ | 32.8 | |||||||
| Adjusted operating margin (non-GAAP) | 10.3 | % | (2.2) | % | 21.1 | % | 20.8 | % | — | % | — | % | 8.7 | % |
_______________
Adjusted gross profit and adjusted operating income (loss) are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to gross profit and operating income (loss) in accordance with U.S. GAAP. Management believes that adjusted gross profit and adjusted operating income (loss) 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.
23
a2023-02x24_gtlsq42022ea
N Y S E : G T L S 1 Jill Evanko Chief Executive Officer Presented by Joe Brinkman Chief Financial Officer Fourth Quarter and Full Year 2022 Earnings Call Exhibit 99.2
Forward-Looking Statements © 2022 Chart Industries, Inc. Confidential and Proprietary 2 CERTAIN STATEMENTS MADE IN THIS PRESENTATION ARE FORW ARD-LOOKING STATEMENTS W ITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORW ARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING THE COMPANY’S BUSINESS PLANS, INCLUDING STATEMENTS REGARDING PENDING AND COMPLETED DIVESTITURES, ACQUISITIONS AND INVESTMENTS, COST SYNERGIES AND EFFICIENCY SAVINGS, OBJECTIVES, FUTURE ORDERS, GROW TH RATES, 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 PROJECTED INDUSTRY-W IDE INVESTMENTS, GOVERNMENTAL INITIATIVES, INCLUDING EXECUTIVE ORDERS, ENVIRONMENTAL FACTORS INCLUDING CARBON REDUCTION TARGETS, AND OTHER INFORMATION THAT IS NOT HISTORICAL IN NATURE. FORW ARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY TERMINOLOGY SUCH AS "MAY," "W ILL," "SHOULD," "COULD," "EXPECTS," "ANTICIPATES," "BELIEVES," "PROJECTS," "FORECASTS," “OUTLOOK,” “GUIDANCE,” "CONTINUE," “TARGET,” OR THE NEGATIVE OF SUCH TERMS OR COMPARABLE TERMINOLOGY. FORW ARD-LOOKING STATEMENTS CONTAINED IN THIS PRESENTATION 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 W HICH ARE DIFFICULT TO PREDICT AND MANY OF W HICH ARE BEYOND THE COMPANY'S CONTROL, THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE MATTERS EXPRESSED OR IMPLIED BY FORW ARD- LOOKING STATEMENTS. FACTORS THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORW ARD- LOOKING STATEMENTS INCLUDE: THE COMPANY’S ABILITY TO SUCCESSFULLY CLOSE AND INTEGRATE THE PENDING HOW DEN ACQUISITION AND OTHER RECENT ACQUISITIONS AND ACHIEVE THE ANTICIPATED REVENUE, EARNINGS, ACCRETION AND OTHER BENEFITS FROM THESE ACQUISITIONS; THE COMPANY’S ABILITY TO SUCCESSFULLY CLOSE ON ITS INTENTION TO DIVEST THE TW O PRODUCT LINES AND ACHIEVE THE ANTICIPATED PROCEEDS FROM THESE DIVESTITURES; SLOW ER THAN ANTICIPATED GROW TH AND MARKET ACCEPTANCE OF NEW CLEAN ENERGY PRODUCT OFFERINGS; INABILITY TO ACHIEVE EXPECTED PRICE INCREASES OR CONTINUED SUPPLY CHAIN CHALLENGES INCLUDING VOLATILITY IN RAW MATERIALS COST AND SUPPLY; RISKS RELATING TO THE OUTBREAK AND CONTINUED UNCERTAINTY ASSOCIATED W ITH THE CORONAVIRUS (COVID-19) AND THE CONFLICT BETW EEN RUSSIA AND UKRAINE, INCLUDING POTENTIAL ENERGY SHORTAGES IN EUROPE AND ELSEW HERE, AND THE OTHER FACTORS DISCUSSED IN ITEM 1A (RISK FACTORS) IN THE COMPANY’S MOST RECENT ANNUAL REPORT ON FORM 10-K FILED W ITH THE SEC, W HICH SHOULD BE REVIEW ED CAREFULLY. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORW ARD-LOOKING STATEMENT. THIS PRESENTATION CONTAINS FOURTH QUARTER AND FISCAL YEAR 2022 NON-GAAP FINANCIAL INFORMATION, INCLUDING ADJUSTED NON-DILUTED EPS, NORMALIZED BASIC EPS, “NET INCOME, ADJUSTED”, FREE CASH FLOW , ADJUSTED 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 W ELL AS RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE FINANCIAL MEASURES CALCULATED AND PRESENTED IN ACCORDANCE W ITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES ("GAAP") , PLEASE SEE THE RECONCILIATION SLIDES TITLED “FOURTH QUARTER AND FULL YEAR 2022 EARNINGS PER SHARE,” “FOURTH QUARTER AND FULL YEAR 2022 ADJUSTED EBITDA” AND “FOURTH QUARTER 2022 FREE CASH FLOW ” INCLUDED IN, OR IN THE APPENDIX AT THE END OF, THIS PRESENTATION. PLEASE SEE THE RECONCILIATION TABLE AT THE END OF THE ACCOMPANYING EARNINGS RELEASE FOR THE “ADJUSTED GROSS PROFIT” AND “ADJUSTED OPERATING INCOME” RECONCILIATIONS, AS W ELL AS A RECONCILIATION AND ADDITIONAL DETAILS ON ADJUSTED NON-DILUTED EPS AND ADJUSTED FREE CASH FLOW . W ITH RESPECT TO THE COMPANY’S 2023 FULL YEAR EARNINGS OUTLOOK, THE COMPANY IS NOT ABLE TO PROVIDE A RECONCILIATION OF THE ADJUSTED EBITDA AND ADJUSTED EARNINGS PER DILUTED SHARE OR ADJUSTED FREE CASH FLOW , OR PRO FORMA COMBINED 2023 EBITDA 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 MANUFACTURER OF HIGHLY ENGINEERED EQUIPMENT SERVICING MULTIPLE APPLICATIONS IN THE ENERGY AND INDUSTRIAL GAS MARKETS. OUR UNIQUE PRODUCT PORTFOLIO IS USED IN EVERY PHASE OF THE LIQUID GAS SUPPLY CHAIN, INCLUDING UPFRONT ENGINEERING, SERVICE AND REPAIR. BEING AT THE FOREFRONT OF THE CLEAN ENERGY TRANSITION, CHART IS A LEADING PROVIDER OF TECHNOLOGY, EQUIPMENT AND SERVICES RELATED TO LIQUEFIED NATURAL GAS, HYDROGEN, BIOGAS AND CO2 CAPTURE AMONGST OTHER APPLICATIONS. W E ARE COMMITTED TO EXCELLENCE IN ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE (ESG) ISSUES BOTH FOR OUR COMPANY AS W ELL AS OUR CUSTOMERS. W ITH OVER 25 GLOBAL LOCATIONS FROM THE UNITED STATES TO ASIA, AUSTRALIA, INDIA, EUROPE AND SOUTH AMERICA, W E MAINTAIN ACCOUNTABILITY AND TRANSPARENCY TO OUR TEAM MEMBERS, SUPPLIERS, CUSTOMERS AND COMMUNITIES. TO LEARN MORE, VISIT WWW.CHARTINDUSTRIES.COM.
2023 Outlook 3
4 Reiterating Chart’s Full Year 2023 Standalone Outlook Revenue $2.10 billion to $2.20 billion Adjusted EBITDA $440 million to $480 million Cap Expenditures ~$60 million to $65 million Adj. Free Cash Flow $250 million to $300 million # Description $ millions 1 2023 Shippable Backlog as of 12/31/2022 $1,250 to 1,300 2 Repair, service, leasing book & bill business (not backlog) 220 to 225 3 Book & Ship drop-in standard product businesses 630 to 675 4 Initial revenue outlook range 2023 $2,100 to $2,200 1. It is not unusual for project revenue to shift between quarters. We anticipate realizing pushed Q422 revenue in 2023 based on customer, project and material receipt timing 2. Our outlook does not include any additional mid-size or large project orders between now and the end of the first half 2023, which could provide additional revenue in the second half of 2023 3. Even though we are seeing early end market improvement in HLNG vehicle tank sales, our forecast is flat with 2022 4. As of December 31, 2022, we had record backlog of $2,338.1 million, with ~60% of the full year 2023 sales outlook already in backlog, which is meaningfully higher than in prior years 5. We have existing capacity to deliver on our backlog and any potential new orders that could materialize throughout the year We are confident in delivering the above range (1) Assumes Howden deal-related interest is excluded and a tax rate of 19% © 2022 Chart Industries, Inc. Confidential and Proprietary
2023 Chart Standalone Segment Outlook © 2022 Chart Industries, Inc. Confidential and Proprietary 5 Primary End Markets GTLS projected organic growth rate Comments Heat Transfer Systems Liquefied Natural Gas Oil and Gas 50%+ • Record backlog • 2022 order strength in ssLNG, Big LNG • Traditional energy build Cryo Tank Solutions Industrial Gas 5% to 7% • Sustainability activity = more storage • Capital budgets in mid-single digits • LTAs updated Specialty Products Hydrogen, CCUS Water Treatment Food & Beverage Space, Gas By Rail 35% to 40% • Record backlog • U.S. Inflation Reduction Act • EU Green Deal Industrial Plan • Private sector investment • CO2 shortages Repair, Service, Leasing Storage & Transport Refurbishment Field Services and Monitoring 8% to 10% • Q422, Q123 service order strength • 2H 2022 increase in EU customers with MSAs for service and monitoring
2023 Demand Outlook is Strong and Supported by Numerous Macro Tailwinds 6 Our current commercial pipeline for the next 12 months totals over $11.5 billion Booked $285 million of orders in January 2023 • Specific solution opportunities of $8.2 billion • Over $100 million of liquid hydrogen trailer opportunities • 27 hydrogen liquefier opportunities being bid in various stages of progress, some with multiple trains • China re-opening • Multiple customers in a variety of regions ordering hydrogen equipment to start 2023 • Lifecycle service (within Repair, Service & Leasing) had the largest order month in December 2022 and a strong start to 2023 supporting strong first half 2023 RSL margins • Helium shortages driving new He liquefier potential customers and projects (quoting 5 currently) • CO2 shortages driving additional CCUS opportunities, in particular immediate-term for Earthly Labs CiCi • Steady growth in both domestic and international midscale liquefaction capacity © 2022 Chart Industries, Inc. Confidential and Proprietary
Meaningful Year-to-Date 2023 Orders YTD Through February 22, 2023 © 2022 Chart Industries, Inc. Confidential and Proprietary 7 LNG / OIL • LNG systems with APAC EPC $115M • Floating LNG BAHX $19.5M • USA ACHX for LNG $4.9M • Cryo plant BAHX $1.9M • UAE ACHX $0.9M WATER TREATMENT • PA wellsite water treatment $1.3M • California water treatment $1.1M • Indiana water plant CO2 $0.5M SPACE EXPLORATION • Exploration tanks $3.3M • Exploration tanks India $2.0M • Vacuum Insulated Pipe $2.2M HYDROGEN • LH2 expansion; O2 storage $63M • LH2 tanks $1.9M • LH2 tanks $1.7M • LH2 tanks $0.7M • LH2 S. Korea tank $0.5M INDUSTRIAL GAS • IG equipment $2.4 million • Customer storage, transport $1.6M • IG customer tanks $1.4M • IG customer2 tanks $1.4M • S. Africa customer trailers $1.3M • IG customer ACHX $1.3M • IG repair & service $0.8M • IG USA1 Feb $0.8M • IG USA2 Feb $0.8M • IG USA electronic tank $0.8M • India 20’ ISOs $0.8M • IG Thailand trailers $0.7M • IG EU Feb $0.6M FIELD SERVICE • M. East Lifecycle field service $2.6M • IG field service $0.3M CCUS / METHANE ELIMINATION • Fans for direct air capture $2.3M • Methane elimination $1.9M • 4 CiCi Oaks to beverage dist. $0.4M • KAUST expanded FEED $0.3M • Earthly CiCi NZ unit $0.2M
8 Pro Forma Combined Chart and Howden 2023 Outlook Levered Adj Free Cash Flow Bridge $M Approx. pro forma EBITDA, pre-commercial ~$1,000 Less: Interest Expense ~315 Less: Cash tax, working capital, capex ~250 Less: Costs to achieve synergies ~16 Levered pro forma adj. FCF ~$420 1. Pro forma Chart and Howden combined 2023 full year revenue of approximately $4.25 billion 2. Pro forma Chart and Howden combined 2023 full year adjusted EBITDA of approximately $1 billion, inclusive of year-one cost synergies of $175M a. First month of ownership will have $20 million of annualized synergy cost out b. First six months of ownership will have $75 million of annualized synergy cost out 3. Share count estimates of 42.7 million basic and 47 million diluted (Q1 2023 estimate) 4. Placed long-term debt in December 2022 a. Term loan will execute on Howden close b. Estimated net debt at close remains ~$4.2B c. Blended interest rate on debt ex. convertible notes is currently within the prior discussed 7% to 8.5% range d. SOFR rate of 4.55%; 12-month pro forma interest of ~$315M e. Excludes any impact to debt paydown from potential divestitures *Chart’s acquisition of Howden is currently pending regulatory approvals before closing © 2022 Chart Industries, Inc. Confidential and Proprietary
Pro Forma Adjusted EBITDA Bridge 2023 to 2024 Combined Chart + Howden 9 Reiterating our 2024 Combined EBITDA Forecast • Revenue growth led by energy transition markets and backlog conversion • Implied organic volume leverage of ~30% • Favorable mix driven by energy transition verticals • Cost synergies embedded in margin expansion and SG&A improvement *Chart’s acquisition of Howden is currently pending regulatory approvals before closing © 2022 Chart Industries, Inc. Confidential and Proprietary
Macro Tailwinds Continue to Build 10
11 Global Investment - Energy Transition GTLS: GAS TO LIQUID SYSTEMS® Latest update includes US Inflation Reduction Act (IRA) and European national funding; Recent EU Green Deal Industrial Plan (GDIP) is incremental to November 2022 update 76 64 20 108 109 22 Announced Planning Stage Committed 2021 2022 Projects in press announcements or preliminary study stage Feasibility of front-end engineering and design stage Final investment decision taken, under construction, commissioned or operational Announced Hydrogen Investment by Maturity through 2030 $240 billion total announced investments as of July 2021 as of October 2021 as of March 2022 as of November 2022 Global government spending for clean energy investment support Global Green spending in ’07-09 Financial Crisis Stimulus plans $1.215 Trillion $380B Global government clean energy investment support Global consumer energy affordability spending Source: IEA, Hydrogen Council © 2022 Chart Industries, Inc. Confidential and Proprietary
Recent Hydrogen News = Positive News for GTLS & Howden Canada • Introducing new tax credit of up to 40% for hydrogen production (2023-2030) • Federal government will distribute $800 million to 60 Canadian clean fuels companies United States • Biden Administration announced $750M to accelerate clean hydrogen technologies • NASA signed hydrogen molecule supply purchase agreement • Air Products and AES announce mega-scale hydrogen plant in Texas • PTC and DOE Hub funding also incentivizing private investment Africa • Masdar and McKinsey & Company said in a November 2022 published report that Africa could capture as much as 10% of global demand for green hydrogen by 2050 Australia • The Western Australian Government has earmarked land for seven renewable energy projects collectively valued at $70 billion. The projects are mainly hydrogen-related with steelmakers and mining companies the primary users Mexico • Jan 12, 2023- US, Canada and Mexico agree to cooperate on N. American clean hydrogen market Europe • EU Green Deal Industrial Plan Announced 2/1/2023 India • January 4, 2023 – India approves National Green Hydrogen Mission • February 2023 – EIB joins IH2A and offers support for 1B Euro facility for future funding, subject to approvals China & S. Korea • China 1+N policy for investments in renewables Positive Impact to Chart • For hydrogen liquefaction plants, excluding H2 production, Chart’s content is up to ~50% of cost of plant • Including H2 production and liquefaction, Chart content is up to ~15-20% and increases to up to ~20- 25% with Howden content • Chart’s leading certified storage and transport equipment will benefit from regional and global public & private investment Positive Impact to Howden • For gaseous hydrogen production facilities, Howden content would be approximately 10% of the cost of the facility • Natural gas pipelines can handle ~20% to 30% of hydrogen blended which would be a natural application for Howden’s compressors • Pipeline is expected to be the cheapest form of H2 transport over land (when at scale) *Chart’s acquisition of Howden is currently pending regulatory approvals before closing 12© 2022 Chart Industries, Inc. Confidential and Proprietary
* *** Potential for Chart or Howden Content * * ** * * * Source: CHF 1.9.23 * * * * * * * * * * US DOE Hub Applications Status * * * * *Chart’s acquisition of Howden is currently pending regulatory approvals before closing 13© 2022 Chart Industries, Inc. Confidential and Proprietary
Recent Water News = Positive News for GTLS & Howden Positive Impact to Chart • New groundwater projects will require treatment of contaminants (high volume of current proposals) • Ozone is only proven way to remove specific bacteria in surface water reservoirs; Our LOX systems will likely be required due to size • Our SDOX for emergency oxygen work well where high power cost comes into play • We are currently completing Sao Paulo water project • PFAS Bans and restrictions going into effect in States in 2023 (USA) • Inflation Reduction Act includes $4 billion in drought resilience and $550 million for domestic water program funding (USA) • US Infrastructure bill includes $55 billion for clean water over 5-years including $10 billion for emerging contaminants/ PFAS • Tunisia is receiving 285 million euro in financing from KfW and the European Union to accelerate water and sanitation projects • Drought in SW USA driving new groundwater projects • Asia Pacific is seeing government funding for clean drinking water and treatment of wastewater • Brazil federal water legislation to provide 99% of its population with access to drinking water by 2033 • Industrial emergency oxygen for Philippines and India becoming a key discussion topic Positive Impact to Howden • Aeration can account for over 60% of the power used in a treatment plant • Installed base of more than 2,500 Mechanical Vapor Recompression (MVR) compressors in more than 70 countries • Continue to leverage Howden’s water presence globally *Chart’s acquisition of Howden is currently pending regulatory approvals before closing 14© 2022 Chart Industries, Inc. Confidential and Proprietary
Recent GHG/CCUS News = Positive News for GTLS & Howden Positive Impact to Howden • Compression plays across the CCUS value chain • Leverage to CO2 capture, separation, transport, storage, and end usage • Tailored solutions for different types of CCUS applications (direct air capture, etc.) • Ability to pull Chart content into other CCUS application given use of compression across different technology solutions • European cement manufacturers have committed to reducing carbon emissions by 30% by 2030 • U.S. Leadership in Climate Change via announcements at COP27 by Biden Administration specific to Africa and smart agriculture • Continued expansion of the First Movers Coalition, a public- private partnership, for hard to decarbonize sectors • CO2 shortages in U.S., UK, Australia, New Zealand impacting food & beverage, industrial industries • The food system generates ~31% of GHG emissions: Positive Impact to Chart • Leader in post-combustion cryogenic carbon capture (CCC) • Equipment and process technology across a wide range of volume and CO2 concentration levels with Earthly Labs (smaller volumes) and SES (larger volumes) • ACHX, fans and tanks for all types of carbon capture and direct air capture technologies and applications • Sugar Creek cement plant pilot (DoE, FL Smidth, Eagle Materials) *Chart’s acquisition of Howden is currently pending regulatory approvals before closing 15© 2022 Chart Industries, Inc. Confidential and Proprietary
Recent Marine News = Positive News for GTLS & Howden Positive Impact to Chart • Operators are looking for upfront engineering optimization and complete solution package which Chart and Howden bring plus over 1500 technical engineering resources • Air coolers are critical elements of e-methanol • Chart currently has hydrogen cruise ship and hydrogen ferry (tug) in backlog Positive Impact to Howden • Howden can provide multiple technologies for e- methanol including compressors, mechanical vapor recompression for distillation, steam turbines for waste heat recovery • Large marine transport firms building sustainable fuel fleets, including e-methanol • Carbon Intensity Indicator (CII) in effect as of 1/1/2023: all ships will be required to have an enhanced Ship Energy Efficiency Management Plan (SEEMP) with an implementation plan for achieving the required CII that will need to be approved and kept on board. *Chart’s acquisition of Howden is currently pending regulatory approvals before closing 16© 2022 Chart Industries, Inc. Confidential and Proprietary
Operating Environment 17
18 Industry Input Costs Sources: LME (Aluminum), MEPS (Carbon and Stainless Steel), Freightos © 2022 Chart Industries, Inc. Confidential and Proprietary
Year-Over-Year Material Cost Change Three Main Raw Material Inputs 19 (48%)Carbon Steel (8%)Stainless Steel (21%)Aluminum Cost Change from 1/31/2022 to 1/31/2023 2022 • Increase in demand in construction and infrastructure led to an increase in prices of steel and aluminum • Shortage of key raw materials such as iron ore and aluminum contributed to price increases • Logistics challenges subsided in the year, yet still exist • The rise in energy prices contributed to the increase in raw material costs 2023 expectations • Demand for steel and aluminum expected to remain high • Impact of COVID-19 pandemic on the industry has subsided and expect that to remain stable • Cost of energy is more stable • Disruption in supply chain due to geo-political trade tensions could lead to variation in costs Cost Variation in 2022* 55% 42% 48% *Source: MEPS and LME (Aluminum) % change between the lowest and highest raw material cost in 2022 = (Max minus min) / max © 2022 Chart Industries, Inc. Confidential and Proprietary
Chart Pricing © 2022 Chart Industries, Inc. Confidential and Proprietary 20 • Americas & Global • 8 base price increases + surcharges • EMEA • 4 base price increases + surcharges Standard Product Pricing Long-term agreement pricing mechanisms in contracts Project based specific material pricing GTLS Three Main Pricing Approaches Pricing Actions Taken From Q1 2021 through Q4 2022 • Quarterly and semi-annual changes per index • Additional surcharges • Shortened bid validity • Lock in material early • Include escalation estimates 2023 Anticipated Pricing Approaches 1 2 3 • January 1, 2023 revised tier pricing • Selected price increases on specific products • Implement scheduled Q1 2023 price increase per contracts • Maintain shortened bid validity • Utilize on hand inventory from safety stock
Q4 and Full Year 2022 Results, Continuing Operations 21
22 Q4 and Full Year 2022 Record Reported Results 1) Adjusted operating income, adjusted operating margin, EBITDA and adjusted EBITDA are non-GAAP measures. Please see reconciliation tables at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measures. 165.7 249.1 223.2 296.3 FY21 FY22 Rep. & Adj. EBITDA (1) 1,190.1 2,338.1 Q4'21 Q4'22 Backlog 6.7% 9.4% 10.2% 12.2% FY21 FY22 Rep. & Adj. Operating Margin (1) 1,676.1 2,779.9 FY21 FY22 Orders 1,317.7 1,612.4 FY21 FY22 Sales +96.5% +32.8%+65.9% +200bps +22.4% +270 bps +50.3 % FY 378.9 441.4 Q4'21 Q4'22 Sales 460.9 525.9 Q4'21 Q4'22 Orders 1,190.1 2,338.1 Q4'21 Q4'22 Backlog 5.4% 13.6% 8.7% 17.0% Q4'21 Q4'22 Rep. & Adj. Operating Margin 40.1 102.1 58.0 97.5 Q4'21 Q4'22 Rep. & Adj. EBITDA +96.5% +68.1% +14.1% +830bps +16.5% +820 bps +154.6 % Q4 © 2022 Chart Industries, Inc. Confidential and Proprietary
© 2022 Chart Industries, Inc. Confidential and Proprietary 23 Q4 and Full Year 2022 Historical GTLS Records by Segment • Heat Transfer Systems Record orders of $1.42B Record sales of $462.7MM Record backlog of $1.3B Record operating income of $51.7M Record operating margin of 11.2% • Repair, Service & Leasing Record orders of $218.9MM Record sales of $209.6MM Record gross profit of $79.5MM Record gross margin of 37.9% Record operating income of $51.0MM Record operating margin of 24.3% • Cryo Tank Solutions Record sales of $504.3MM Record backlog of $371.0MM Record operating income of $54.0MM • Specialty Products Record Orders of $665.5MM Record sales of $448.3MM Record backlog of $645.9MM * Operating Margin is a record for years 2015-2022 • Heat Transfer Systems Record sales of $148.4MM Record backlog of $1.3B Record gross profit of $37.2MM Record operating income of $27.9M Record operating margin of 18.8% • Repair, Service & Leasing Record orders of $66.3MM Record gross profit of $25.8MM Record gross margin of 46.7% Record operating income of $18.7MM Record operating margin of 33.9% • Cryo Tank Solutions Record backlog of $371.0MM Record gross profit of $28.9MM Record operating income of $17.8MM • Specialty Products Space has record backlog, gross profit, and operating income Water treatment and Carbon Capture has record backlog Q4 FY
© 2022 Chart Industries, Inc. Confidential and Proprietary 24 12 Quarters Orders Trends $ millions Full year 2022 had our four highest order quarters in our history 285.8 244.5 262.7 417.0 417.2 447.9 350.2 460.9 636.8 887.8 729.4 525.9 - 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Orders Quarterly Orders Average Quarterly Orders 285.8 243.4 262.7 417.0 417.2 447.9 350.2 458.0 408.4 587.3 637.6 525.9 - 100.0 200.0 300.0 400.0 500.0 600.0 700.0 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Orders (ex. Big LNG) Quarterly Orders (ex. Big LNG) Average Quarterly Orders (ex. Big LNG) $millions 2022 2021 % change Chart total orders $2,779.9 $1,676.1 65.9% Big LNG 620.7 2.9 Chart orders ex Big LNG 2,159.2 1,673.2 29.0% Over-the-Road (OTR) Vehicle tanks 16.6 111.7 Chart orders ex Big LNG and OTR Tanks 2,142.6 1,561.5 37.2%
$millions 2022 2021 % change Chart total orders $2,779.9 $1,676.1 65.9% Big LNG 620.7 2.9 Chart orders ex Big LNG 2,159.2 1,673.2 29.0% Over-the-Road (OTR) Vehicle tanks 16.6 111.7 Chart orders ex Big LNG and OTR Tanks 2,142.6 1,561.5 37.2% Continued Strength in Base Business Orders © 2022 Chart Industries, Inc. Confidential and Proprietary 25 Full Year 2022 2021 % change Orders ($ millions) $16.6 $111.7 (85%) Customers who placed orders > than $50k 16 7 +129% New customers who placed orders > than $50k 9 1 N/A Customer who ordered onboard liquid hydrogen tanks 2 0 N/A
© 2022 Chart Industries, Inc. Confidential and Proprietary 26 Record Full Year 2022 Orders # Orders Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022 1 Venture Global (BKR) Plaquemines Phase 1 FNTP 135.5 135.5 2 Venture Global (BKR) Plaquemines Phase 2 FNTP 45.4 91.8 137.2 3 Cheniere (Bechtel) CCL Stage 3 LNTP & FNTP 47.5 300.5 348.0 4 BigLNG orders booked 228.4 300.5 91.8 0.0 620.7 5 FLNG (New Fortress Energy) FastLNG2 & 3 38.3 46.3 84.6 6 FLNG (New Fortress Energy) FastLNG4 46.8 46.8 7 FLNG (New Fortress Energy) FastLNG5 46.8 46.8 8 Southeastern US Utility ssLNG retrofit & expansion 26.8 26.8 9 Space exploration supersize tanks 16.1 12.5 28.6 10 Hydrogen liquefiers /Equipment 134.5 134.5 11 EU Member State military mobile equipment order 22.3 22.3 12 N. American hydrogen liquefaction, water treatment plant 108.0 LOI/no PO 108.0 13 N. American ssLNG facility 100.0 38.4 138.4 14 APAC FLNG 50.0 50.0 15 NAM FLNG 25.0 25.0 16 APAC Petrochem aftermarket 22.0 22.0 17 Other GTLS orders 370.1 341.3 354.6 359.4 1,425.4 18 Total GTLS Orders Booked 2022 636.8 887.8 729.4 525.9 2,779.9
Record Q4 and Full Year 2022 Sales 27 % change FY 2022 vs. 2021 Q4 ‘22 vs. Q4 ‘21 Reported sales 22.4% 16.5% Organic 21.4% 20.5% Inorganic 4.8% 0.2% FX (Currency) (3.9%) (4.2%) $millions 2022 2021 % change Chart total sales $1,612 $1,318 22.3% OTR Vehicle tanks 27 131 (79.4%) Chart sales ex OTR $1,585 $1,187 33.5% Total Chart and each of our four segments had record sales in full year 2022 (all %’s rounded) End Markets • CCUS +690% (small) • Space exploration +213% • Water treatment +140% • Hydrogen +48% • Food & beverage +9% Products • HTS systems +150% • Air cooled heat exchangers +58% • Brazed aluminum heat exchangers +51% • VRV +60% • Fans +8% • Storage equipment, +9% • Engineered tanks +8% • Mobile equipment +8% A B $millions Q4 2022 Q4 2022 Reported Sales $441.4 Negative foreign exchange impact $16.0 Delays in supply chain receipts in HTS & Specialty 20.9 Customer receipt timing preferences from year-end to 2023 11.3 Field service job deployment & of rebundle ACHX aftermarket timing 9.8 RSL field service customer chose to replace versus repair 7.0 Implied Q4 2022 with timing shifts $506.4 C
28 Sales & Operating Margin Trends • Q4 2022 reported operating income is a historical record • Q4 2022 reported operating income as a percent of sales is a historical record 1) Adjusted operating margin is a non-GAAP measure. Please see reconciliation table at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measure. $312 $289 $322 $328 $379 $354 $405 $412 $441 7.2% 10.0% 8.0% 4.2% 5.4% 5.7% 7.3% 10.1% 13.6% 13.0% 12.0% 11.8% 8.7% 8.7% 8.6% 9.9% 12.6% 17.0% 2.0% 7.0% 12.0% 17.0% $200 $250 $300 $350 $400 $450 $500 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Sales ($M) Op Margin % Adj Op Margin %(1)
© 2022 Chart Industries, Inc. Confidential and Proprietary 29 Fourth Quarter and Full Year 2022 Adjusted EBITDA $ millions, except per share amounts Consolidated Q4 2022 Q4 2021 Change v. PY YTD 2022 YTD 2021 Change v. PY Net income from continuing operations $17.4 $12.4 $5.0 $82.6 $60.9 $21.7 Income tax expense, net 11.9 3.6 8.3 15.9 13.5 2.4 Interest expense, net 16.3 3.3 13.0 31.7 10.7 21.0 Acquisition Related Finance Fees 37.0 - 37.0 37.0 - 37.0 Depreciation and amortization 19.5 20.8 (1.3) 81.9 80.6 1.3 EBITDA (1) $102.1 $40.1 $62.0 $249.1 $165.7 $83.4 Non-recurring costs 16.2 14.8 1.4 49.2 46.3 2.9 Share-based compensation 2.7 3.1 (0.4) 10.6 11.2 (0.6) Svante revaluation / MTM (23.6) 0.0 (23.6) (12.7) 0.0 (12.7) Def financing for Howden 0.1 0.0 0.1 0.1 0.0 0.1 Adjusted EBITDA (1) $97.5 $58.0 $39.5 $296.3 $223.2 $73.1 1) 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 in accordance with U.S. GAAP. Management believes that EBITDA and Adjusted EBITDA facilitate useful period-to-period comparisons of financial results and the information is used by us in evaluating our internal performance.
Fourth Quarter and Full Year 2022 Adjusted EPS © 2022 Chart Industries, Inc. Confidential and Proprietary 30 $ millions, except per share amounts Q4 2022 Q4 2022 at normalized share count 3 Q4 2021 Change v Q421 YTD 2022 YTD 2022 at normalized share count 3 YTD 2021 Change v. PYContinuing Operations Net income attributable to Chart Industries, Inc. $17.2 $17.2 $12.1 $5.1 $81.6 $81.6 $59.1 $22.5 Less: Mandatory convertible preferred stock dividend $1.4 $1.4 $1.4 $1.4 $1.4 $1.4 Income from continuing operations attributable to Chart $15.8 $15.8 $12.1 $3.7 $80.2 $80.2 $59.1 $21.1 Reported Basic EPS $0.42 $0.44 $0.34 $0.10 $2.21 $2.24 $1.66 $0.58 1 Investment equities mark-to-market, net of FX (0.61) (0.63) (0.06) (0.57) (0.25) (0.25) (0.12) (0.13) 2 Gains on purchase or sale - - (0.07) 0.07 - - (0.07) 0.07 3 Debt and debt refinance costs 1.21 1.26 0.12 1.14 1.25 1.26 0.12 1.14 4 Mandatory convertible preferred stock dividend 0.04 0.04 0.04 0.04 0.04 - 0.04 5 Tax effects (1) (0.01) (0.01) - (0.01) (0.06) (0.06) 0.01 (0.07) Normalized Basic EPS $1.05 $1.10 $0.33 $0.77 $3.19 $3.23 $1.60 $1.63 6 Restructuring and related costs 0.22 0.23 0.21 0.02 0.58 0.59 0.60 (0.01) 7 Deal related and integration costs 0.26 0.27 0.17 0.10 0.71 0.71 0.47 0.24 8 Start-up costs (organic) 0.08 0.08 0.08 - 0.30 0.31 0.25 0.06 9 Other one time - - 0.01 (0.01) - - 0.14 (0.14) 10 Tax effects (1) (0.01) (0.01) (0.07) 0.06 (0.15) (0.15) (0.22) 0.07 Adjusted Basic EPS (2) $1.60 $1.67 $0.73 $0.94 $4.63 $4.69 $2.84 $1.85 11 Acquisition financing equity issuance 3 $0.07 $0.06 Adjusted Basic EPS (2) $1.67 $4.69 (1) Tax effect reflects adjustment at normalized periodic rates (2) Adjusted Basic EPS and Normalized Basic EPS (both non-GAAP measures) are as reported on a historical basis. EPS adjustment reconciliation table is provided in accompanying press release financial tables. (3) Normalized Share count excludes the 5.92 million shares of Common Stock issued in our December 2022 offering. As such, it is a non-GAAP measure.
Fourth Quarter and Full Year 2021 to 2022 Adjusted EPS Walk © 2022 Chart Industries, Inc. Confidential and Proprietary 31 Adjusted Basic EPS Bridge Q4 2021 to Q4 2022 Adjusted Basic EPS Bridge FY2021 to FY2022 Q4 21 Adjusted Basic EPS Op Inc & Other FX Interest Tax Q4 22 Adjusted Basic EPS FY21 Adjusted Basic EPS Op Inc & Other FX Interest Tax FY22 Adjusted Basic EPS Adjusted Basic EPS and Normalized Basic EPS (both non-GAAP measures) are as reported on a historical basis. EPS adjustment reconciliation table is provided in accompanying press release financial tables.
Q3 2022 to Q4 2022 Adjusted EPS Walk © 2022 Chart Industries, Inc. Confidential and Proprietary 32 Adjusted Basic EPS and Normalized Basic EPS (both non-GAAP measures) are as reported on a historical basis. EPS adjustment reconciliation table is provided in accompanying press release financial tables. Adjusted Basic EPS Bridge Q3 2022 to Q4 2022 Q4 21 Adjusted Basic EPS Op Inc & Other FX Interest Tax Q4 22 Adjusted Basic EPS
Fourth Quarter 2022 Free Cash Flow 33 $ millions, consolidated, continuing ops Q4 2022 Act Adjustments Q4 ‘22 Adj. Net Income 17.4 17.4 Operating income adjustments 15.0 15.0 Tax affect on operating income adjustments (2.1) (2.1) Non operating income adjustments 4.6 4.6 Tax affect on non operating income adjustments 1.2 1.2 PY Tax adjustment 3.1 3.1 Deal financing and interest costs 45.2 45.2 Depreciation and amortization 19.5 19.5 Share based compensation 2.7 2.7 Financing costs amortization 0.8 0.8 Unrealized gain on investment in equity securities (24.0) (24.0) Unrealized foreign currency transaction loss (gain) 0.1 0.1 Equity in loss (earnings) of unconsolidated affiliates 0.2 0.2 Deferred income tax expense (benefit) (1.7) (1.7) Other non-cash operating activities 7.9 7.9 Changes in: Accounts Receivable 0.9 0.9 Inventory 9.7 9.7 Unbilled contract revenue 1.2 1.2 Accounts payable and other liabilities 27.0 27.0 Customer advances and billings in excess of (31.2) (31.2) Net cash provided by operating activities 30.5 67.0 97.5 Capital Expenditures (26.0) (26.0) Free Cash Flow / Adjusted Free Cash Flow 4.5 67.0 71.5 Changes not added back as compared to original forecast total $18.5 million and are as follows: 1. Capex acceleration for quicker progress on additional capacity given strength in demand in primarily BAHX and cold boxes ~$8.9 million accelerated 2. Foreign exchange headwinds of ~$1.4 million 3. Timing of AR receipts from December 2022 to 2023 (all received in first business days of January 2023) of $8.3 million from space customer ($2.5M), IG customer ($2.8M), energy customer ($1.7M) and railcar customer ($1.3M) “Free cash flow” and “adjusted free cash flow” are not measures 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. The Company believes this figure is of interest to investors and facilities useful period-to-period comparisons of the Company’s operating results. © 2022 Chart Industries, Inc. Confidential and Proprietary
Q4 and FY 2022 Segment Information 34
Heat Transfer Systems: LNG Opportunities for GTLS Pre Feb 24, 2022 GTLS April 29, 2022 GTLS July 29, 2022 GTLS October 28, 2022 GTLS February 24, 2023 GTLS BigLNG (greater than 5 MTPA) 1 • Number of reasonably possible projects to move to order stage in next 3 years 10 22 24 (excludes what is in backlog) 24 (excludes what is in backlog); +1 from last update 25 (excludes what is in backlog); +1 from last update 2 • Number of international projects contemplating using IPSMR® 1 2 3 4 5 3 • GTLS Associated Order Potential $ Not Yet Booked and including expanded scope / retrofit opps $1.25 billion $4.55 billion $5.35 billion $5.68 billion (excludes what is in backlog) $6.3 billion (excludes what is in backlog) 4 • GTLS Order $ Booked Year-to-Date / Full Year 2022 $0 $228.4 million $528.9 million $620.7 million $620.7 million ssLNG (5 MTPA and smaller) 5 • Number of reasonably possible projects to move to order stage in next three years 205 233 276 318 316 6 • Number of Floating LNG projects in bid pipeline 13 26 27 27 (excludes what is in backlog) 27 (excludes what is in backlog) 7 • GTLS Order $ Booked Year-to-date / Full Year 2022 0 $38.3 million $138 million $313 million $446 million © 2022 Chart Industries, Inc. Confidential and Proprietary 35
1) BNG Clean Fuel was signed in December 2022, publicly announced Jan 2023 Chart Executed 30 Individual MOUs in 2022 © 02 Chart Industries, Inc. Confidential and Proprietary 36 Category Q4 2022 Full Year 2022 YTD 2/23/2023 CCUS / CO2 1 8 Hydrogen (including liquefaction) 5 12 2 Water treatment 1 1 1 LNG (including liquefaction) 4 11 Total 11 32* 3 HYDROGEN / BIOFUELS CCUS LNG / ACHX WATER TREATMENT *Two of the 30 MOUs encompass both hydrogen and CCUS 1
Chart Q4 and Full Year 2022 First-of-a-Kind Orders Water Treatment Guyana Water Incorporated (GW) award for two projects to support water infrastructure initiative in Guyana Hydrogen Hyzon Motors with an order for liquid hydrogen onboard tank AdEdge water treatment technology and associated GTLS equipment ORCA IPSMR® and associated heat exchanger equipment Liquid hydrogen onboard vehicle tank Chart Offering Being Used in the Respective Application Fueling station, bulk tanks and associated metering equipment 89 new First-of-a-Kinds (FOAK) orders received in the full year 2022 168 new FOAK orders received in the past two years LNG Emission Reduction New Orca design mounted to a F650 truck chassis BioLCNG BioLCNG fueling station The first IPSMR® system being installed on a vessel © 2022 Chart Industries, Inc. Confidential and Proprietary 37
Chart Q4 and Full Year 2022 New Customers 38 Water Treatment Yarmouth, Massachusetts Fe/Mn PFAS Treatment system – first Flourosorb system in MA Hydrogen Hydrogen equipment solutions for Energy Vault’s Calistoga Project in California AdEdge water treatment technology and associated GTLS equipment SES cryogenic carbon capture technologyDosers Liquid hydrogen storage tanks Chart Offering Being Used in the Respective Application 327 new customers placed orders in the full year 2022 729 new customers in the past two years Food & Bev Dosing equipment for Wine on Wheels Small-scale CCUS Pre-FEED study order for our SES CCC technology for Carmeuse (lime industry) CCUS Small-scale carbon capture CiCi unit Earthly Labs CiCi Unit in Little Brown Jug’s brewery © 2022 Chart Industries, Inc. Confidential and Proprietary
Cryo Tank Solutions: Chart China Setting Records © 2022 Chart Industries, Inc. Confidential and Proprietary 39 2021 Records 2023 China Economic Outlook • Full year 2021 orders • Full year 2021 sales • Full year operating income • Full year operating income % of sales • Q4 2021 gross margin as a percent of sales • Q4 2021 operating income as a percent of sales • China standardized and expanded ISO manufacturing line supported total Chart ISO record sales • China re-opening December 5, 2022 supports a stronger 2023 • Government leadership finalized March 1, 2023 • Development of fueling stations in the market expected to support growth of our LNG trailers • Economic recovery in the southern and eastern regions is anticipated to stimulate demand for industrial gas business 2022 Records • Full year 2022 reported gross margin as a percent of sales • Full year 2022 reported operating income as a percent of sales • Q4 2022 reported gross margin as a percent of sales • Q4 2022 reported operating income as a percent of sales • 2022 reported and adjusted operating income as a percent of sales doubled compared to 2021 • Chart China has a safety total recordable incident rate (TRIR) of ZERO for 2022! • Highest number of ISO tanks ordered in history
Repair, Service, Leasing: Leasing Continues to Grow © 2022 Chart Industries, Inc. Confidential and Proprietary 40 Three- year Master Service Agreement (MSA) signed with VERBIO for LNG Vehicle Fueling Stations • Periodic Maintenance Monheim, Germany • 24/7 Helpdesk Service Monheim, Germany (daytime), Decin, Czech Republic (nighttime) • Parts Supply (3 levels – Starter Kit on Site/Monheim/Decin) • Training Monheim, Germany • Hypercare and Relocation Services Decin, Czech Republic # Description 2019 2020 2021 2022 1 Number of new signed leases 6 57 79 465 2 Number of assets in leasing fleet 58 118 137 171 3 Fleet assets + underway fleet additions 58 118 204 245 4 # of fueling stations with GTLS LTA service 0 8 63 95 5 # of lifecycle service customers N/A 63 111 142
Announced Definitive Agreement to Acquire Howden 41*Chart’s acquisition of Howden is currently pending regulatory approvals before closing
Combined Solutions Across the Nexus of Clean™ Valves / Vaporizers Expanders Liquefiers Cold Boxes BAHX ACHX Bulk & Microbulk Fans Transports Hydrogen Helium LNG Biogas Nuclear Energy recovery Biofuel / synfuels Biomass Fans Compressors Blowers Heaters Steam Turbines SaaS Vaporizers Cryo-lease Bulk tanks Dissolution equipment Water& Wastewater Treatment Desalination Blowers SaaS Transports Microbulk tanks Dosers Vaporizers Carbon capture Beverage & Food Compressors SaaS Transports Liquefiers Cold Boxes Expanders Heat exchangers Storage tanks Vaporizers VIP/VJP CCUS Metals processing Chemicals / Petrochem Cement Mining Marine Refrigeration Gas By Rail Fans Compressors Blowers Steam Turbines Heaters VentSim Software SaaS Howden additions Clean Water Clean Food, Beverage & Agriculture Clean Power Clean Industrials Clean End Market Solution Wholly-Owned Minority Ownership Chart Process Technologies In te gr at ed D ig ita l O ffe rin g Where Howden helps Chart’s presence and penetration 42*Chart’s acquisition of Howden is currently pending regulatory approvals before closing © 2022 Chart Industries, Inc. Confidential and Proprietary
43 Cryo Tank So lu t ionsHeat Transfer Sys tems One Chart Global Commercial Team Repa ir, Service & Leas ing Chart New Build Products • Air Cooled Heat Exchangers (ACHX) • Brazed Aluminum Heat Exchangers • Cold Boxes • Nitrogen Rejection Units (NRU) • Integrated systems • High Efficiency Flow Fans Chart New Build Products • Bulk and Micro Bulk Storage Tanks • ISO Containers • Packaged Gas Systems • Non-specialty mobile equipment • Vaporizers Chart Aftermarket • Repair and service • Aftermarket parts and maintenance • Global Leasing • Installations • Full lifecycle Chart New Build Products • Dosing equipment • HLNG vehicle tanks • Fueling Stations • LNG by Rail (Gas By Rail Offering) • Hydrogen equipment • Water treatment (PFAS remediation) • Carbon Capture equipment How We Think About The Business Spec ia l ty Products One Chart Global Engineering Team Howden New Build Products • Compressors • Blowers & fans • Rotary heaters • Steam turbines • VentSim™ Howden Aftermarket (47% of revenue ‘22) • Spare parts • Retrofits • Service • Software & digital Uptime Howden New Build Products • Compressors • Blowers & fans • Rotary heaters • Steam turbines • VentSim™ Howden New Build Products • Related to Industrial end markets • Compressors • Blowers & fans • Rotary heaters • Steam turbines One Chart Global Products – Operations – Aftermarket C ha rt H ow de nO ne C ha rt *Chart’s acquisition of Howden is currently pending regulatory approvals before closing © 2022 Chart Industries, Inc. Confidential and Proprietary
Complementary Exposure to Specialty Markets 44 Market What is in this category Approximate % of revenue Growth Drivers Chart Howden Combined Mkt growth ahead Aftermarket, repair, service • Field service • Remote monitoring • Spare parts 13% 48% 31% +20% Penetration of existing installed base Digital Uptime deployment Field service increasing with new builds and retrofits Continued expansion of 3rd party service capabilities Energy transition & renewables (new build) • Hydrogen • Biofuels & Synfuels • CCUS • Nuclear • LNG • Electrification • Water treatment • Infrastructure • Food & beverage 49% 32% 41% +20% to 30% Carbon emission reduction targets Government national hydrogen strategies Public sector incentives and taxes Industrials (new build) • Industrial gas • Cement • Marine • Metals 27% 14% 19% ~4-5% These markets are moving to ESG with CCUS and other alternatives Marine IMO2020 Moving to green metals Traditional Energy (new build) • Oilfield applications • Petrochemical 12% 6% 9% ~4-5% Traditional oil and gas and coal are moving toward efficiencies in existing asset base *Chart’s acquisition of Howden is currently pending regulatory approvals before closing © 2022 Chart Industries, Inc. Confidential and Proprietary
45 $ billions Chart TAM as of 02/24/2023 Howden TAM Estimate Combined TAM End-use of Products Near-term TAM(1) 2030 TAM CAGR(2) Near-term TAM(1) 2030 TAM CAGR (2) Near-term TAM(1) 2030 TAM CAGR(2) • Hydrogen • Biofuels & Synfuels • Nuclear • Energy recovery $4.50 26.8% $6.40 28.5% $10.90 27.8% • CCUS • Marine 1.00 27.5% 1.10 33.3% 2.10 30.8% • Food & beverage • Cannabis • Lasers • Space 1.20 10.1% 0.25 9.1% 1.45 10.0% • Electrification • Clean Infrastructure • OTR vehicles • Rail • Water treatment 3.00 16.5% 4.60 12.1% 7.60 14.0% $9.70 22.7% $12.35 24.3% $22.05 23.6% Specialty Products Total Addressable Market Increase (1) Near-term TAM is defined as cumulative addressable market opportunity now through 2026. Source; internal estimates (2) 2030 TAM is defined as cumulative addressable market opportunity now through 2030. Source: internal estimates *Chart’s acquisition of Howden is currently pending regulatory approvals before closing © 2022 Chart Industries, Inc. Confidential and Proprietary
Q4 2022 & Q1 2023 Howden Example Wins in the Nexus of Clean™ 46 Hydrogen Hydrogen Diaphragm compressors Howden Offering Being Used in the Respective Application Howden supplying hydrogen compression solution for Shell’s Holland Hydrogen 1 facility in Rotterdam, which, when complete will be Europe’s’ largest renewable hydrogen plant Hydrogen Hydrogen diaphragm compressors enabled with Howden’s digital analytics platform, Uptime pHYnix, an independent renewable hydrogen producer selected Howden to supply their Vitale plant, the first commercial-scale 10MW renewable hydrogen production plant in Spain Howden will install ventilation optimization system for Gold Fields South Deep gold mine to support a safe working environment & reducing the mine’s energy consumption Ventsim™ CONTROL system Ventilation Systems Reciprocating compressors enabled with digital Uptime Atura Power’s Niagara Hydrogen Centre in Ontario, Canada powered by renewable hydroelectricity, will produce 20MW of green hydrogen where the energy will be used to power electrolyzers to produce H2 *Chart’s acquisition of Howden is currently pending regulatory approvals before closing © 2022 Chart Industries, Inc. Confidential and Proprietary
• Howden and Hydrexia have signed a cooperation agreement focused on mobility applications, specifically hydrogen refuelling stations, and will combine their expertise to deliver complete refuelling stations solutions with a modularisation concept bringing cost and lead- time efficiencies for customers in Australia, New Zealand and Southeast Asia. • Hydrexia is the international business of China’s Hyfun (Hydrexia China), which have collectively delivered 58 HRS projects in China and South-East Asia since 2016. • Flagship projects include decarbonising the Shanghai- Pudong freight corridor supplying 300 hydrogen fuel cell logistics trucks for DHL China; and the world’s largest hydrogen refuelling station at 6,400 kg per day in Hebei, China. Howden Executed Two New MOUs 2023 Year-To-Date 47 Mining VentilationHydrogen Hydrogen Howden Offering Being Used in the Respective Application Marine MOU Executed • Howden and Foreship have signed a cooperation agreement focused on streamlining the ship building design process to incorporate Howden’s HV-TURBO compressors in Air Lubrication Systems (ALS), suitable for all types of vessels. • Howden’s ALS technology blows micro air bubbles under the hull of the vessel to reduce the resistance generated between the ship’s hull and the water, saving fuel as a result. • The ALS can save up to 8% on fuel consumption, also reducing carbon emissions. • This solution can support ship owners in meeting their carbon saving targets, given the new Carbon Intensity Indicator (CII) and Energy Efficiency eXisting ship Index (EEXI) regulations Hydrogen MOU Executed *Chart’s acquisition of Howden is currently pending regulatory approvals before closing © 2022 Chart Industries, Inc. Confidential and Proprietary
© 2022 Chart Industries, Inc. Confidential and Proprietary Howden & Chart Cost and Commercial Synergies • Additional cost synergy opportunities identified • Footprint consolidation –numerous additional offices and other sites resulting in identified $25M+ in potential synergies, exceeding our initial target • Consolidate Chart’s existing repair and refurbishment activities in Czech Republic into Howden’s CZ repair site • Howden China can utilize Chart’s pressure vessel for compression skids, digital NDT X-Ray • Detailed insourcing options providing further opportunities including China in-house sourcing of electrical panels • Additional commercial synergy opportunities identified • Utilize Howden EU repair for calibration support for Chart’s Flowcom offering • Specific customers in sustainable fuels and marine that are working on e-methanol looking for total solution, process optimization and a reliable partner for all critical components have approached us to discuss partnering • Potential for cold box assembly in Howden (Weihei, China), adding potential for another CB region Original Expected Commercial Synergies (Revenue) ~$150 ~$350 12 Months Post-Close Annual by Year 3 Original Expected Annual Cost Synergies ~$175 ~$250 12 Months Post-Close Annual by Year 3 *Chart’s acquisition of Howden is currently pending regulatory approvals before closing 48
Recognizing our One Chart Team and ESG Progress 49
Safety, Certifications and On-Time Delivery Focus 50 • Lowest 12 month rolling total recordable incident rate (TRIR) achieved • 28 sites with no accidents in 2022 (76% of our sites) • 35% reduction in 12/31/2022 TRIR compared to 12/31/2021 SAFETY Goal of Zero Accidents CERTIFICATIONS IN Q4 2022 Differentiation through leadership in qualifications • Chinese ML Cert (La Crosse, Wisconsin site) • Canadian Welding Bureau certification (Tulsa, Oklahoma, Q1 2023) • KGS Cert (New Iberia, Louisiana) • R110 certification for HLNG bus tanks • Renewal of ISO 9001 certification and extension of SELO license for export to China (Ornago, Italy) • Canadian Registration Notice (CRN) for hydrogen tank • Renewal of KGS Certification (Ball Ground, Georgia) • AAR Certificate (New Prague, Minnesota) • Railroad Commission of Texas renewal (Ball Ground, Georgia) • RDW approval – Netherlands Vehicle Authority HLNG (Georgia) • TPED Euro-Cyl Type Approval (Ball Ground, Georgia) © 2022 Chart Industries, Inc. Confidential and Proprietary
Congratulations to the winners of our Chart Global Innovation Contest Andrea Liuzzi • This year, we asked our global team members to submit their innovative ideas as part of a company-wide competition. We received hundreds of submissions from team members across the global organization. We narrowed this down to a list of finalists, and everyone at Chart had the chance to vote for the winner. • Each of our three winners is from a different Chart facility, and each idea is related to a different subject matter – field/tech service improvements, IT efficiencies, and ESG/marketing. This further demonstrates the diversity of our business and the variety of thoughts and perspectives across the global organization, which is something that has continued to allow us to innovate and establish ourselves as global leaders in the Nexus of Clean™. Adam McNeilly Rachita Gogoi Ornago, Italy La Crosse, Wisconsin (USA) Hyderabad, India
Congratulations! • On January 15, 2023, Howden won the 2022 “Visionary Business & Technology Disruptor in Energy” award at the World Clean Tech Awards in Dubai, UAE. • The World Clean Tech Awards recognize individuals and companies advocating the clean tech transformation mission. • On February 9, 2023, both Chart and Howden were named finalists for the “Hydrogen Technology of the Year” award in the 2023 Hydrogen Future Awards. • Finalists for the “Hydrogen Technology of the Year” category have been recognized for their exceptional performance, innovative design, and significant contributions to the growth and development of the hydrogen industry. *Chart’s acquisition of Howden is currently pending regulatory approvals before closing 52© 2022 Chart Industries, Inc. Confidential and Proprietary
Chart ESG Scorecard 2022 53© 2022 Chart Industries, Inc. Confidential and Proprietary Environmental Governance Social Targets In 2022, Chart Products… Completed/Ongoing Company Efforts Global D&I Committee Safety is our #1 Priority Engineering Fellows & Key Experts, Rotational Engineering Program, Internships/Co-ops (including micro internships), Emerging Leaders Program Chart Gives Back Diverse Board Structure Maintaining Governance in Supplier Network Ethics Training • Reduce carbon intensity 30% by 2030 compared to our 2020 baseline • Carbon neutral by 2050 • Replaced lighting to LED at all facilities • Recycling/waste management programs • Energy efficiency improvements • Transition to electric vehicles • Solar panel installations Treated over 4.5 billion gallons of water a day in the US Reduced over 500 million liters of diesel used by over- the-road trucks Produced about 50 million tons of LNG to replace coal fired power generation (non- US) Achieved historical low rolling 12-month TRIR as of 11/30/2022 Helped eliminate nearly 260 million pounds of PET (plastic) used in water bottles in the U.S. Launched our first employee resource group (ERG) in 2022 – Chart Network of Women (NOW) – to empower and elevate recruitment of women in the workplace Amount of $ Chart will match for team member donations % of team members who need to pass annual ethics training 100% Number of strategic investments in 2022 4 of 7 Directors are Female 4 of 7 Directors are Diverse Number of suppliers who we proactively monitor through our Riskmethods analytics software Number of strategic acquisitions in 2022 Number of sub-committees, each focused on a specific impact area related to D&I Key Talent Development Programs ERGs Included ESG metric in executive 2022 short-term bonus Governed with separate Chair and CEO – both Female Number of paid day(s) off per year for team members to support a community initiative of their choosing $250 20,000+ Targets • Increase female representation to 40% on our management committee by 2030 • Increase female representation to 35% in senior roles by 2030 • Achieve team member volunteer participation of 25% as part of our community program by 2030 *We continue to make improvements in our carbon emission reduction YOY. More information to be provided in our 2022 ESG report.
Howden ESG Scorecard 2022 54© 2022 Chart Industries, Inc. Confidential and Proprietary Environmental Governance Social Targets Helping Customers Achieve ESG targets… Targets Global Wellbeing Week Bright Futures Program Stay Secure Howden Ethics Point HotlineCompliance Week Reduce Scope 1 and 2 carbon footprint 50% by 2030 Carbon net zero by 2035 In 2021, rolled out a new High Potential Development Program (ACE) for fast-track succession and career development for high potential employees. In 2021, Howden launched their inaugural Compliance Week – a week of activities focused on building awareness and personal ownership of key aspects of compliance including anti-bribery, anti-trust, data privacy, trade compliance, agents, intellectual property, and more. 50% of production sites externally accredited to the ISO 14001 environmental standard in 2021 Increase female representation to 40% on our management committee by 2030 ACE Program Send zero waste to landfill at 50% of our operations by 2030 Reduce our mains water usage 30% by 2030 For example, a single gas-gas heaters are estimated to avoid 64,000 tons of carbon emissions from flue gas and enables the removal of 90% of Nitrate The annual impact from Howden’s installed equipment on customers’ emission avoidance is the equivalent of 245M tons of CO2. Increase female representation to 35% in senior roles by 2030 Achieve employee volunteer participation of 25% as part of our community program by 2030*Carbon emissions down 22% in 2022 on an absolute value, and well on track to 50% reduction by 2030. Mains water usage down 7%. *Goal is to certify all production sites by 2023 Joined the Carbon Disclosure Project in 2021. Received a C score in 2021 and B score in 2022. *Goal is to receive an A score by 2025. Since 2020, Howden holds their annual Stay Secure Howden cybersecurity training program focused on improving the policies and procedures of the business. Through Howden’s EthicsPoint Hotline, employees can report behaviors inconsistent with their Code of Conduct in an anonymous fashion. 80% of Howden locations actively developed Bright Futures initiatives in 2022. 120 Bright Futures projects in 2022. 13% of team members involved in volunteering throughout 2022. In 2022, introduced a Global Wellbeing Week to increase the teams’ awareness of physical, mental, emotional, and financial wellbeing through various activities and initiatives. Oxide preventing acid rain, poor air quality, and smog in surrounding areas. Aiming for Zero Accidents Implemented numerous global safety programs designed to increase safety – including Life Saving Behaviors, Think Safe, Cardinal Rules, and Visible Felt Leadership (VFL) programs, as well as holding monthly toolbox talks. *Chart’s acquisition of Howden is currently pending regulatory approvals before closing
© 2022 Chart Industries, Inc. Confidential and Proprietary 55 Our Emissions Reductions Targets, Reiterated Committed to reducing our carbon intensity 30% by 2030 compared to our 2020 baseline as well as pledging carbon-neutrality by 2050 [targets are inclusive of pending Howden acquisition] *Chart’s acquisition of Howden is currently pending regulatory approvals before closing
Appendix 56
Q4 Addback Detail (1/2) © 2022 Chart Industries, Inc. Confidential and Proprietary 57 Main category Detailed Description Q4 gross amount (+ added to / (-) reduced reported income) Impact to operating income Addback will exist in 2023? 1 Mark-to-Market of inorganic investments • McPhy MTM • Stabilis MTM • Minority investments, other (Liberty and HTEC) (0.3) No, net income only Yes 2 Inorganic investment revaluation • Chart’s investment in Svante from 2021 revalued based on Series E issuance (Dec 2022), led by Chevron and OGCI, net of Chart’s related costs (23.3) No, net income only No 3 Inorganic investment reval tax • Tax impact from the revaluation of Svante investment (related to #2 on this table) 5.3 No, net income only No 4 Deal & Integration related costs, non- Howden • Integration costs including IT system implementations, legal, travel related to Chart’s acquisitions completed (non-Howden) 4.6 Yes, operating and net income Only in 1H 2023 for Fronti, CSC 5 Brazed Aluminum Heat Exchanger Furnace Installation Expenses • BAHX furnace in Tulsa, Oklahoma factory (install Q4 2022) 2.6 Yes, operating and net income No 6 Customer concession • One-time concessions 0.7 Yes, operating and net income No
Q4 Addback Detail (2/2) © 2022 Chart Industries, Inc. Confidential and Proprietary 58 Main category Detailed Description Q4 gross amount (+ added to / (-) reduced reported income) Impact to operating income Addback will exist in 2023? 7 Restructuring • Specific to org structure changes, movement of people between facilities, sign-on bonuses $4.5 Yes, operating and net income Yes; will be smaller 9 Howden Expenses • Due diligence & OBS fees • Legal fees 6.1 Yes, operating and net income Yes 10 Financing Costs • Howden financing and debt costs 42.5 No, net income only No 12 Financing Costs • Additional interest on Howden funding 2.7 No, net income only Yes 14 Tax adjustment • Prior year one-time tax return true-up 3.1 No, net income only No 15 Tax effect on all above adjustments • Tax effect on gross adjustments in operating income as shown above (6.0) No, net income only Yes
59 Amended Bank Covenants Debt Covenant: Net Debt/ LTM Adjusted EBITDA 2023 2024 2025 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Prior 4.00X 4.00X 4.00X 4.00X 4.00X 4.00X 4.00X 4.00X Amended 6.00X 6.00X 6.00X 6.00X 5.00X 5.00X 4.50X 4.50X (1) Adjusted EBITDA is defined by Credit Agreement 2023 2024 2025 2026 2027 2028 2029 2030 2031 RCF TLB Converts Sr. Secured Sr. Unsecured $7 $273 $14 $714 $14 $14 $510 $1,356 $1,460 Debt Maturity Schedule ($m)Covenants and Credit Ratings Covenants: • Maximum Net Leverage • Minimum Interest Coverage Credit Ratings • Moody’s LTR B1 Stable • S&P LT Issuer Credit B+ Watch Positive © 2022 Chart Industries, Inc. Confidential and Proprietary
Capital Allocation Policy Deleverage Organic Growth Reiterate our financial policy that until we are within our target net leverage ratio range of 2-2.5, we will: Not do any additional material cash acquisitions Not do share repurchases Additional cash generation opportunities Two divestitures Above plan synergies Additional product line sales Sales of owned buildings 60© 2022 Chart Industries, Inc. Confidential and Proprietary
Fourth Quarter 2022 Adjustments $ millions, except per share amounts Q4 2022, Reported Adjustments Q4 2022, Adjusted Continuing Operations Sales $441.4 - $441.4 Cost of sales 317.1 (7.8) 309.3 Gross profit 124.3 7.8 132.1 Selling, general, and administrative expenses 55.2 (7.7) 47.5 Amortization expense 9.0 0.60 9.6 Operating expenses 64.2 (7.1) 57.1 Operating income 60.1 14.9 75.0 Non Operating Expense (income) 5.6 9.8 15.4 Income before equity in (loss) earnings of unconsolidated affiliates, net 17.5 42.1 59.6 Equity in (loss) earnings of unconsolidated affiliates, net (0.1) 0.4 0.3 Net income 17.4 42.5 59.9 Less: Income attributable to noncontrolling interests, net of taxes 0.2 - 0.2 Net income attributable to Chart Industries, Inc. $17.2 $42.5 $59.7 “Adjustments” and “Q4 2022, Adjusted” 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. Management believes that these adjustments facilitate useful period-to-period comparisons of our financial results, and this information is used by us in evaluating our internal performance. 61© 2022 Chart Industries, Inc. Confidential and Proprietary