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): July 29, 2022
____________________________________
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
NOT APPLICABLE
(Former name or former address, if changed since last report)
_____________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | 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 |
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 July 29, 2022, Chart Industries, Inc. (the “Company”) issued a news release announcing the Company’s financial results for the second quarter ended June 30, 2022, as well as supplemental information for the second quarter ended June 30, 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, datedJuly 29, 2022, announcing the Company's 2022exhibit991gtls-20220630pre.htmsecondquarterresults. |
| 99.2 | Chart Industries, Inc. Supplemental Information for 2022 second quarter 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: July 29, 2022 | |
| By: /s/ Jillian C. Evanko <br>Jillian C. Evanko<br>President and Chief Executive Officer |
3
Document
Exhibit 99.1
Chart Industries Reports 2022 Second Quarter Results
Atlanta, Georgia – July 29, 2022 - Chart Industries, Inc. (NYSE: GTLS) today reported results for the second quarter ended June 30, 2022. Further details can be found in the supplemental presentation accompanying this release and published in the investor relations section of our website.
•Second quarter 2022 was all-time record orders ($887.8 million), record backlog ($1,953.3 million), record sales ($404.8 million), record reported gross margin ($94.8 million) and record reported operating income ($29.6 million)
•Second quarter 2022 sales of $404.8 million were our highest quarter of sales in our history and increased 25.7% (19.0% organic) when compared to the second quarter of 2021 and 14.3% (12.4% organic) compared to the first quarter 2022
•Second quarter reported 7.3% operating income as a percent of sales (adjusted 9.9%) was our highest in the past year
•Net cash provided by operating activities was $35 million (adjusted of $54 million), resulting in free cash flow (“FCF”) of $18 million (adjusted FCF of $37 million), providing further confidence to our full year 2022 adjusted FCF outlook of $175 million to $225 million
•Acquired Fronti Fabrications (“Fronti”), a vacuum insulated cold box manufacturer, and CSC Cryogenic Service Center AB (“CSC”), a Nordic region service and repair business
•Received our American Society of Mechanical Engineers (ASME) XII certificate at our Theodore, Alabama facility, making us one of only 30 companies globally (34 sites) with this certification
•Second quarter 2022 reported non-diluted earnings per share (“EPS”) of $0.36; adjusted non-diluted EPS of $0.88 (excluding Mark-to-Market (“MTM”) from investment activity ($0.22 net of tax) and other specific one-time costs ($0.30 net of tax))
•2022 full-year sales guidance range of $1.725 billion to $1.80 billion is within the prior guidance range of $1.725 billion to $1.85 billion; associated 2022 full-year adjusted non-diluted EPS guidance is in the range of $5.20 to $5.60 (prior guidance of $5.35 to $6.50) on 35.86 million shares outstanding (prior 35.83 million) and a tax rate of 20% (prior tax rate of 19%)
New records were set in the second quarter 2022 across the business.
In the second quarter 2022, we achieved the highest order quarter in our history ($887.8 million), the highest sales quarter in our history ($404.8 million) and our seventh consecutive record backlog quarter ($1,953.3 billion).
In addition to record orders, backlog and sales, our second quarter 2022 was our all-time record gross margin dollars of $94.8 million (adjusted gross margin of $102.4 million) as well as record operating income of $29.6 million (adjusted operating income of $40.0 million). Reported operating income as a percent of sales of 7.3% was the highest in the past year and when adjusted for one-time costs from deal, integration, startup/capacity and restructuring, was 9.9%, also the highest in the past year. Reported gross margin as a percent of sales for the second quarter 2022 was 23.4%, and when adjusted for one-time costs related to integration and startup/capacity specific projects, was 25.3% adjusted as a percent of sales, reflecting both our continued progress on pricing versus input costs as well as the high shipment quarter of price/cost lagged backlog in our Cryo Tank Solutions (“CTS”) segment, which had the most long-term agreement price indexing timed into the second quarter 2022. As mentioned in prior quarters, realizing the continued benefits of these price and cost control actions sets up the second half of 2022 to continue to incrementally increase operating margin and gross margin, as well as both metrics as a percent of sales; with the additional backlog shipped in the second quarter from CTS, we expect CTS margin to sequential improve. Reported gross margin as a percent of sales in the second quarter 2022 was sequentially up more than 170 basis points in three out of our four segments when compared to the first quarter 2022. Additionally, both reported and adjusted operating income as percent of sales sequentially increased in three of the four segments, each increasing more than 270 basis points.
Our reported earnings per share of $0.36 included negative $0.22 from our mark-to-market adjustment as well as one-time specific costs primarily related to deals, year-one integration, startup & capacity of $0.30. In the second quarter, we completed the Tulsa, OK to Beasley, Texas air-cooled heat exchanger relocation/restructuring, substantially completed the SriCity, India capacity expansion and completed the Richburg, SC greenfield expansion costs (therefore, none of these costs will be addbacks going forward). Note that we did not addback the negative impact to sales or EPS from the foreign exchange (“FX”) rate changes and we anticipate that these will continue to be variable throughout the second half of 2022. We estimate the second quarter 2022 impact from the foreign exchange rate changes to be approximately negative $12 million to sales and approximately negative $0.05 to EPS. Adjusted EPS of $0.88 is our second highest in our history and reflects our continuing execution of price increases, cost controls while including an offset from the high shipment quarter of price/cost lagged backlog in our CTS segment.
The following table shows our records in the second quarter 2022 for orders, sales and backlog.
| Segment/Division | Orders | Net Sales | Backlog |
|---|---|---|---|
| Cryo Tank Solutions | |||
| Storage Equipment | ● | ||
| Engineered Tanks & Systems | ● | ||
| Mobile Equipment | |||
| Heat Transfer Systems | ● | ● | |
| Brazed Alum Heat Exchangers | ● | ||
| Systems | ● | ● | ● |
| Air Exchangers | ● | ● | |
| Fans | ● | ||
| VRV | ● | ● | |
| Repair, Service & Leasing | ● | ||
| Parts, Repairs, & Services | ● | ||
| Cryo Lease | |||
| Lifecycle Group | |||
| Air Coolers Aftermarket | |||
| Fans Aftermarket | ● | ● | |
| L.A. Turbine Aftermarket | ● | ||
| Specialty Products | ● | ● | |
| Hydrogen & Helium | ● | ● | ● |
| HLNG | |||
| Food & Beverage | ● | ||
| Space | ● | ● | |
| Water Treatment | ● | ● | ● |
| Carbon Capture | ● | ||
| Others | ● | ||
| Chart Industries | ● | ● | ● |
*Bullet point denotes record performance
Broad-based demand, including energy, LNG, space exploration, infrastructure and other specialty are drivers of record orders ($887.8 million) and backlog ($1,953.3 million).
Our first quarter 2022 was our highest order quarter in our history, with $636.8 million of new orders booked, including $228.4 million related to Big LNG export terminals. Our second quarter 2022 topped that record, with orders of $887.8 million, including approximately $300 million related to Big LNG (specifically our full notice to proceed on Cheniere’s Corpus Christi Stage Three LNG export terminal (“Cheniere CCL 3”)). Total Chart content on Cheniere’s CCL 3 project is over $350 million; the entire amount is in backlog as of June 30, 2022. The second quarter 2022 also marked our fifth out of the last six quarters setting new historical record orders and is our third consecutive record order quarter. This resulted in our seventh consecutive quarter of record backlog ($1,953.3 million); backlog is 80% higher than one year ago and sequentially 32% higher than the first quarter 2022. We continued our trend of more consistent and frequent orders that each were over $1 million, with 61 of them booked in the second
quarter 2022, making this our fourth consecutive quarter with over 60 individual orders each greater than $1 million.
We continue to witness what we shared during our first quarter 2022 earnings call regarding the increase in actual orders as well as inquiries from both public and private sector entities surrounding the need for infrastructure to access molecules to support energy security, access, independence and resiliency, all with the backdrop of the requirement for alternative sources of supply and continued focus on sustainability. The increase in immediacy for energy security has not come at the expense of the clean energy transition – rather there is a heightened focus on all energy. As the International Energy Agency (“IEA”) shared – the world has both the resources and technologies to tackle the energy security crisis and the climate crisis, addressing the need for immediate practical actions to navigate the current energy market turmoil, while underscoring the urgency of massively scaling up investment in clean energy. To that point, the IEA also recently stated that clean energy investments will be above $1.4 trillion this year, constituting about three-quarters of overall energy spending. And this week’s news on The Inflation Reduction Act of 2022, which addresses the United States’ adoption of solutions through strategic investments in technologies needed for all fuel types – from hydrogen, nuclear, renewables, fossil fuels and energy storage – to be produced and used in the cleanest way possible - certainly will further support the continued traction we have already seen in the commercial adoption of our Nexus of Clean offerings.
It was not only LNG related activity in the second quarter 2022 driving these new historical records. In the second quarter 2022, we booked orders with 85 new customers and 23 first-of-a-kind (“FOAK”) orders, bringing year-to-date FOAKs to 51 and orders with new customers to 169, both of which are on track to meet or exceed 2021’s FOAKs and new customers, demonstrating that there is considerable potential growth in our addressable market globally.
We continue to expect additional progress from other LNG export terminal operators to FID with the potential for additional Big LNG as well as ssLNG orders with Chart releases in the next six to twelve months.
Specialty Products orders continued to demonstrate consistency and strength, with the second quarter 2022 being our highest Specialty Products order quarter in our history as well as our sixth consecutive quarter of Specialty Products orders above $100 million. The $265.7 million of Specialty Products orders in the second quarter 2022 were driven by record orders for hydrogen, space exploration (including a $16 million commitment from a large space customer for product that will be produced in our supersized tank facility in Theodore, Alabama) and water treatment as well as continued elevated activity in the food & beverage end markets, including receiving our largest ever order for CO2 ORCAs (mobile units) and continued national accounts’ (such as Chick-Fil-A) store openings and replacement programs. The majority of the project work that
was booked in the second quarter 2022 will primarily be revenue recognized in 2023 through 2025.
Also, our customer and potential customer base continues to expand in the specialty applications. For example, as of the end of the second quarter 2022, we are in various different stages of discussions with over 550 different potential hydrogen customers (compared to just over 300 one year ago and just over 30 in April 2020) and over 300 different potential large-scale (SES) carbon capture potential customers, whereas at the end of 2021, we were speaking with just under 200 potential customers.
LNG, LNG, LNG.
We have previously discussed our LNG addressable market in three ways – first, Big LNG, for which year-to-date we have booked $528.9 million of related orders; second, small-scale and utility-scale LNG, which includes floating LNG and regasification opportunities; and third, LNG infrastructure, such as ISO containers, fueling stations, and trailers. Now, we will speak to our LNG addressable market in four ways – these three plus retrofit, refurbishment and replacement opportunities for which we are seeing increasing inquiries and activity. For example, we have jobs completed or underway year-to-date 2022 including removal and install of fans and motors and numerous field service repairs, and the Southeastern utility customer’s small-scale LNG order in the second quarter 2022 for $26 million is a replacement as well as an expansion project. The other opportunities in aftermarket are global and include heavy hydrocarbon removal systems, nitrogen rejection units, vacuum insulated pipe and Boil Off Gas (BOG) reliquefaction, to name a few.
In the second quarter 2022, we booked our third New Fortress Energy FastLNG liquefaction project (“Fast3”) as well as a small-scale LNG retrofit and expansion project with a Southeastern United States utility company. Combined, we booked $73.1 million of small-scale and floating LNG work in the second quarter 2022.
Also in our LNG and other molecule offering are our numerous regasification (“regas”) options for our customers, with our most recently introduced being our modular, movable and quick to deploy regas solution, the Drop and Go Regas (“DAGR 2.0”). This amongst our other regas equipment and technology has increased in demand since the focus on energy access and security has heightened. As an example, in the second quarter 2022 we sold two ISO containers and two skidded vaporizers to AFP (Alternative Fuel Partners), who connects the container with the vaporizer to make a unit that is shown on slide 27 of the supplemental presentation to provide emergency gas supply. Another customer, ITALGAS, has deployed 26 LNG regas units and we are also the 24/7 maintenance provider for these systems. We are currently quoting dozens of these opportunities for customers in Central Europe, in particular in Germany, where alternatives to pipeline gas are being explored.
Organic capacity expansions are on track and supported by backlog.
As our demand continues to be broad-based, we strategically choose to begin organic capacity expansions, and currently have four meaningful expansions underway. Portions of the related capital expenditures (“capex”) are in our full year capex outlook of approximately $55 million to $60 million (year-to-date through June 30, 2022 our capex was $29.8 million) as well as into our 2023 outlook. It is worth noting that these expansions all have backlog seeded to be first volumes when the capacity comes online.
•SriCity, India bulk tank capacity expansion (on existing property): construction work is complete as of the end of June 2022. Inspection, final occupancy certification and additional machinery is anticipated to be complete by the end of the third quarter 2022.
•Tulsa, Oklahoma (USA) brazed aluminum heat exchanger line (at existing facility): all equipment and training is on track, including delivery of the brazing furnace in the third quarter 2022.
•Goch, Germany GOFA industrial gas and hydrogen trailer capacity expansion (on existing property): underway, with operations set to begin in mid to late 2023. We received our first order totaling more than $20 million which will be produced in this expanded facility. The facility will also include a repair and service shop.
•Theodore (Teddy), Alabama (USA) supersized and jumbo tank new capacity (on existing property with opportunity to add adjacent property): Site work and equipment procurement is underway, with our first orders for this expansion received in the second quarter 2022, totaling $16 million for a space exploration customer (total space exploration orders in the second quarter 2022 were a record $30.7 million).
Margin improvement continues as we continue to respond to cost changes with pricing and surcharges, improving productivity; supported by certain macro challenges tempering.
We continued to implement price increases in the second quarter 2022 and held our surcharge the entire quarter as well. In addition to maintaining our short bid validity timing on project quotations, we have implemented five separate base price increases over the past six quarters and had three surcharge increases since implementing in the third quarter 2021. This is in addition to the quarterly or semiannual index-based adjustments in our long-term agreements with specific industrial gas customers.
Given the enormity of the macro challenges over the past 18 months, we monitor any changes needed on a daily basis. There have been some challenges that we have seen improving, albeit none to pre-COVID “normal”, and others that exist at the same challenging levels that we have been navigating for the past year, including an unprecedented inflationary environment.
The Good & The Improving:
•Availability of material is improving, although lead times continue to be much longer than typical. Our material and stock build throughout the second half of 2021 and first quarter of 2022 combined with our multiple sources of global and local supply has helped us with these challenges, as reflected in:
•Our 11 manufacturing locations that had 100% on-time delivery in the second quarter 2022,
•Our SriCity, India facility posted record sales and an increase of 25% in our tank capacity.
•Chart China had first half 2022 record tank production of 333 units, while first half sales of vacuum insulated pipe from this site exceeded the total 2021 sales.
•Historical record sales for Europe.
•Historical record sales for European storage tanks.
•Highest number of shipped and completed bulk tanks (Europe and India) in our history.
•Cost of two of our top three raw materials have tempered. Specifically, as of June 30, 2022, aluminum was down from the past three quarters’ highs and carbon steel (coil) was back to first quarter 2021 pricing.
•While regional logistic costs remained a challenge (and availability in Europe in particular), the second quarter 2022 was our first quarter (perhaps in our history, but at least in the past two years!) where our freight and logistics costs incurred were net neutral with what we were able to pass to our customers (net zero impact to our P&L). We expect this pattern of net neutrality to continue for the foreseeable future. Previously, logistics costs had a net negative margin impact of $1.4 million in the fourth quarter 2021 and net negative of $0.6 million in the first quarter 2022.
•Our team members around the world continue to execute and support the broad-based demand lead-time requirements. This is reflected in our low total Chart voluntary turnover of 6%, compared to 28% from other global industrial companies (based on the Bureau of Labor Statistics 2021 manufacturing voluntary turnover rate; the Bureau of Labor Statistics has indicated that the measure of employee-initiated job separations is likely to remain elevated for the rest of 2022) as well as the dedication of our teams to deliver. Chart China deserves special recognition for exceeding their original forecast for the second quarter 2022 on sales and operating income even while they were under COVID-19 related lockdowns for the majority of the quarter. From a global perspective, we have seen less COVID-19 related absences in the second quarter 2022.
•As of June 30, 2022, our team has achieved our lowest total recordable incident rate (“TRIR”) in our history at 0.57.
The Not Yet Improving:
•We continue to be under Force Majeure on certain United States gas supply since the first quarter 2022 which causes additional cost and inefficiencies, yet it has become part of our normal operating procedure to utilize one of our leasing fleet trucks to transport our own gasses as/if needed.
•Material input costs, while tempering as described above, continue to be much higher than pre-COVID levels.
•Inflationary pricing for non-Bill-of-Material (“BOM”) items such as utilities, expenses and service items remain high.
•Whereas we have seen certain tempering in raw material input costs, specific component buy-outs continue to face significant pricing challenges; we have been addressing these in changes to our pricing index constructs in specific agreements as well as in our surcharges.
More certifications drive further differentiation.
As we have previously indicated, our competitive advantage stems from a variety of portfolio attributes, whether our core cryogenic engineering and manufacturing expertise, our global manufacturing footprint, or our broad-based certifications around the world for handling high pressure, low temperature molecules. In many cases, these certifications are difficult to achieve, rare in some cases, and generally all take process and time. Therefore, the more we have, in particular in earlier stage end markets, the more competitive advantage we have. We received our American Society of Mechanical Engineers (ASME) XII certificate at our Theodore, Alabama facility in the second quarter 2022; there are only 30 companies globally (34 sites) that have this certificate, including us. Also, our Chart China factory is now certified for our duracyl product with a GB and DOT certification, and we are seeing international traction for our Earthly Labs small-scale carbon capture offering with our latest certification being the Canadian Registration in Alberta, Canada. Earlier in July 2022, our Chart China trailer facility passed the ASME XII qualification.
Continuing to build capabilities and expand addressable markets via acquisitions and new partnerships; all with immediate synergies.
In May 2022, we completed the acquisition of Fronti Fabrications, Inc. (“Fronti”) for $20 million (subject to customary adjustments). Fronti is a specialist in engineering, machining and welding for the cryogenic and gas industries, and also supplies new build pressure vessels, cold boxes and performs repairs with certification to American Society of Mechanical Engineers (ASME) code. With over 20 years of experience in liquefaction, heat exchangers and cold boxes, Fronti
adds a known team to expand Chart’s cold box manufacturing capacity and capability, including work currently underway on Chart hydrogen and helium liquefiers. Given our continued demand for Big LNG, small-scale LNG and hydrogen/helium liquefaction, having more than one United States cold box fabrication facility (in addition to our New Iberia, Louisiana location) adds agility and capacity to further improve our delivery lead-times and to prepare for the anticipated increase in demand in the coming years.
Also, within the second quarter 2022, we completed the acquisition of CSC Cryogenic Service Center AB, a Swedish company (“CSC”) for approximately $4 million. CSC brings a strong service footprint in the Nordic Region with many overlapping customers to Chart, allowing us to broaden our service and repair presence geographically. Our strong original equipment installed base and continued forecasted growth in the Nordic region will benefit from this localized support. Not only does this expand our geographic footprint, it broadens our repair and service capabilities for mobile equipment, in particular trailers, as well as ISO containers, stationary and transportable tanks, pumps, flowmeters and LNG fueling stations. An immediate synergy success with CSC was our June 2022 signing of a full care service and maintenance services agreement with one of our original equipment Nordic region customers for their LNG vehicle fueling station network.
In addition to this service & repair agreement, we signed seven other MOUs or long-term agreements (“LTA”) in the second quarter 2022, including another agreement for LNG, three for carbon capture (“CCUS”), two for hydrogen and one for air-cooled heat exchanger master supply.
Free cash flow positive and ahead of our prior expectations.
In the second quarter 2022, our net cash provided by operating activities was $35 million, and when adjusted for unusual items, was $54 million. Second quarter 2022 free cash flow (net of capital expenditures of $17 million) was $18 million (adjusted FCF of $37 million). We continue to expect our full year 2022 adjusted free cash flow will be in the range of $175 million to $225 million.
“We continue to see broad-based demand across our end markets, with expectations for additional LNG projects and retrofits as well as a global focus on the energy transition,” stated Jill Evanko, Chart’s President and CEO. “Our team continues to execute on delivering our record backlog while keeping all acquisition integrations, capacity and productivity projects on schedule. Stronger than anticipated free cash flow in the second quarter 2022 coupled with our sequential quarterly margin improvement, record order book and cost controls set up not only a strong second half of 2022 but an even stronger 2023 and 2024.”
2022 Guidance; Increased confidence in 2023 to 2025 outlooks.
Our current 2022 full year sales guidance is narrowed within the prior guidance range. Full year 2022 sales guidance is in the range of $1.725 billion and $1.80 billion, compared to the prior sales guidance range of $1.725 billion to $1.85 billion. Current associated adjusted non-diluted EPS guidance is in the range of $5.20 to $5.60, compared to prior adjusted non-diluted EPS guidance range of $5.35 to $6.50. Our prior higher-end guidance range is not likely at this point in the year given timing of revenue recognition on larger project work, less than anticipated HLNG vehicle tank demand recovery early in 2022 (which is timing versus lost business), and current macroeconomic market factors, including the inflationary environment and foreign exchange volatility. We have included in our current guidance the following considerations:
1.There were specific sales recognized in the second quarter 2022 that were pulled in from our previously forecasted third quarter 2022, taking advantage of the ability to ship older backlog sooner in the year. These were not additional sales above our guided sales.
2.The majority of the orders booked in the second quarter 2022, in particular given the widespread project work, will primarily be revenue recognized in 2023 through 2025, and have minimal to no impact on 2022 sales or EPS.
3.We do not include any second half 2022 additional Big LNG revenue from new orders in this outlook since the timing for revenue recognition is likely after 2022.
4.We do not include any meaningful second half 2022 recovery in our HLNG over the road vehicle tank demand in this guidance, which year-to-date 2022 has been significantly lower than originally anticipated heading into the year (this is viewed and articulated by our customers as temporary yet has been at very low order levels for longer than originally forecasted and is short-cycle book and ship product). Year-to-date through the second quarter 2022 HLNG vehicle tank orders were $10.7 million as compared to the same period in 2021 of $71.6 million.
5.We do not include any second half 2022 upside or “surprise” book and ship orders (product that books and ships in one to three months) for standard product (this does frequently occur yet is difficult to predict)..
6.An increase to our current shares outstanding in our outlook are 35.86 million (prior guidance was 35.83 million).
7.Full year estimated tax rate of 20% (prior guidance was 19%).
Our capital expenditures are expected to be in the range of $55 million to $60 million for the full year 2022 (compared to prior outlook of $50 million to $55 million), while our adjusted FCF is anticipated to be in the range of $175 million to $225 million (unchanged from prior guidance).
And to conclude, given that we have over $1.1 billion of backlog for 2023 and beyond, our confidence in our next three-year forecast is high.
FORWARD-LOOKING STATEMENTS
Certain statements made in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the Company’s business plans, including statements regarding completed acquisitions, divestitures, and investments, cost 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 governmental initiatives, including executive orders and other information that is not historical in nature. Forward-looking statements may be identified by terminology such as "may," "will," "should," "could," "expects," "anticipates," "believes," "projects," "forecasts," “outlook,” “guidance,” "continue," “target,” or the negative of such terms or comparable terminology.
Forward-looking statements contained in this press release or in other statements made by the Company are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control, that could cause the Company's actual results to differ materially from those matters expressed or implied by forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements include: the Company’s ability to successfully integrate recent acquisitions and achieve the anticipated revenue, earnings, accretion and other benefits from these acquisitions; slower than anticipated growth and market acceptance of new clean energy product offerings; inability to achieve expected pricing increases or continued supply chain challenges including volatility in raw materials and supply; risks relating to the outbreak and continued uncertainty associated with the coronavirus (COVID-19) and the conflict between Russia and Ukraine 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 "Second Quarter 2022 Earnings Per Share," “Segment Sales and Operating Margin Information,” “Segment Sales and
Gross Margin Information,” “Second Quarter 2022 Free Cash Flow”, “Segment Information”, and “Second Quarter 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 2022 full year earnings outlook, the Company is not able to provide a reconciliation of the adjusted earnings per non-diluted share 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 second quarter 2022 financial results on a conference call on Friday, July 29, 2022 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.
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 CO2 Capture 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:
Wade Suki, CFA
Director of Investor Relations
832-524-7489
wade.suki@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 | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2022 | June 30, 2021 | March 31, 2022 | June 30, 2022 | June 30, 2021 | ||||||
| Sales | $ | 404.8 | $ | 322.0 | $ | 354.1 | $ | 758.9 | $ | 610.5 |
| Cost of sales | 310.0 | 238.8 | 270.4 | 580.4 | 443.4 | |||||
| Gross profit | 94.8 | 83.2 | 83.7 | 178.5 | 167.1 | |||||
| Selling, general, and administrative expenses | 53.5 | 48.1 | 53.5 | 107.0 | 94.4 | |||||
| Amortization expense | 11.7 | 9.6 | 10.1 | 21.8 | 18.4 | |||||
| Operating expenses | 65.2 | 57.7 | 63.6 | 128.8 | 112.8 | |||||
| Operating income (1) (2) (3) (4) | 29.6 | 25.5 | 20.1 | 49.7 | 54.3 | |||||
| Interest expense, net | 4.4 | 2.2 | 3.2 | 7.6 | 4.2 | |||||
| Unrealized loss on investments in equity securities | 9.6 | 12.5 | 2.6 | 12.2 | 9.2 | |||||
| Financing costs amortization | 0.7 | 1.1 | 0.7 | 1.4 | 2.3 | |||||
| Realized gain on equity method investment | (0.3) | — | — | (0.3) | — | |||||
| Foreign currency (gain) loss | (1.7) | 0.9 | 1.6 | (0.1) | 0.9 | |||||
| Other (income) expense | (0.2) | 0.8 | (0.7) | (0.9) | 0.6 | |||||
| Income before income taxes and equity in (loss) earnings of unconsolidated affiliates, net | 17.1 | 8.0 | 12.7 | 29.8 | 37.1 | |||||
| Income tax expense | 3.5 | 1.3 | 2.1 | 5.6 | 4.4 | |||||
| Income before equity in (loss) earnings of unconsolidated affiliates, net | 13.6 | 6.7 | 10.6 | 24.2 | 32.7 | |||||
| Equity in (loss) earnings of unconsolidated affiliates, net | (0.2) | 0.1 | (0.3) | (0.5) | 0.2 | |||||
| Net income (5) | 13.4 | 6.8 | 10.3 | 23.7 | 32.9 | |||||
| Less: Income attributable to noncontrolling interests, net of taxes | 0.4 | 0.3 | 0.1 | 0.5 | 0.8 | |||||
| Net income attributable to Chart Industries, Inc. | $ | 13.0 | $ | 6.5 | $ | 10.2 | $ | 23.2 | $ | 32.1 |
| Net income attributable to Chart Industries, Inc. per common share: | ||||||||||
| Basic | $ | 0.36 | $ | 0.18 | $ | 0.28 | $ | 0.65 | $ | 0.90 |
| Diluted | $ | 0.31 | $ | 0.16 | $ | 0.25 | $ | 0.56 | $ | 0.79 |
| Weighted-average number of common shares outstanding: | ||||||||||
| Basic | 35.86 | 35.61 | 35.83 | 35.85 | 35.58 | |||||
| Diluted (6) (7) | 41.56 | 40.81 | 40.79 | 41.18 | 40.72 |
_______________
(1)Includes depreciation expense of:
•$10.0, $10.2 and $10.4 for the three months ended June 30, 2022, June 30, 2021 and March 31, 2022, respectively, and
•$20.4 and $20.9 for the six months ended June 30, 2022 and June 30, 2021, respectively.
(2)Includes restructuring costs of:
•$0.2, $0.3, and $0.1 for the three months ended June 30, 2022, June 30, 2021 and March 31, 2022, respectively, and
•$0.3 and $1.0 for the six months ended June 30, 2022 and June 30, 2021, respectively.
(3)Includes acquisition-related contingent consideration (credits)/charges of:
•$(0.2), $1.2, and $(0.8) in our Specialty Products segment for the three months ended June 30, 2022, June 30, 2021 and March 31, 2022, respectively, and
•$(1.0) and $2.0 in our Specialty Products segment for the six months ended June 30, 2022 and June 30, 2021, respectively.
(4)Includes deal-related and integration costs of:
•$5.1 and $4.2 for the three months ended June 30, 2022 and March 31, 2022, respectively, and
•$9.3 for the six months ended June 30, 2022.
(5)Includes $1.3 in income taxes and interest expense related to previous divestitures for the three and six months ended June 30, 2021.
(6)Includes an additional 5.44 and 5.08 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the three and six months ended June 30, 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 2.89 and 2.73 for the three and six months ended June 30, 2022, respectively.
(7)Includes an additional 4.72 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the three months ended March 31, 2022. 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 2.56 for the three months ended March 31, 2022.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
| Three Months Ended | Six Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2022 | June 30, 2021 | March 31, 2022 | June 30, 2022 | June 30, 2021 | |||||||
| Net Cash Provided By (Used In) Operating Activities | $ | 34.7 | $ | (36.6) | $ | (22.2) | $ | 12.5 | $ | (28.3) | |
| Investing Activities | |||||||||||
| Acquisition of businesses, net of cash acquired | (24.5) | — | (0.8) | (25.3) | (55.0) | ||||||
| Investments | — | (12.9) | (3.9) | (3.9) | (52.9) | ||||||
| Capital expenditures | (17.2) | (15.2) | (12.6) | (29.8) | (26.7) | ||||||
| Cash received from settlement of cross-currency swap agreement | 3.6 | — | — | 3.6 | — | ||||||
| Government grants and other | (0.1) | 0.1 | (0.2) | (0.3) | 0.3 | ||||||
| Net Cash Used In Investing Activities | (38.2) | (28.0) | (17.5) | (55.7) | (134.3) | ||||||
| Financing Activities | |||||||||||
| Borrowings on revolving credit facility | 179.3 | 236.4 | 254.0 | 433.3 | 424.1 | ||||||
| Repayments on revolving credit facility | (125.3) | (90.0) | (235.9) | (361.2) | (192.5) | ||||||
| Proceeds from exercise of stock options | 0.4 | 1.0 | 1.0 | 1.4 | 6.6 | ||||||
| Common stock repurchases from share-based compensation plans | (0.1) | (0.2) | (3.2) | (3.3) | (3.2) | ||||||
| Net Cash Provided By Financing Activities | 54.3 | 147.2 | 15.9 | 70.2 | 235.0 | ||||||
| Effect of exchange rate changes on cash | (1.0) | 0.3 | 1.3 | 0.3 | 0.3 | ||||||
| Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents | 49.8 | 82.9 | (22.5) | 27.3 | 72.7 | ||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period (1) | 99.9 | 115.9 | 122.4 | 122.4 | 126.1 | ||||||
| CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD (1) | $ | 149.7 | $ | 198.8 | $ | 99.9 | $ | 149.7 | $ | 198.8 |
(1)Includes restricted cash and restricted cash equivalents of $0.2 as of both March 31, 2022 and December 31, 2021 and $1.0 as of June 30, 2021.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
| June 30,<br>2022 | December 31,<br>2021 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | $ | 149.7 | $ | 122.2 |
| Accounts receivable, net | 279.2 | 236.3 | ||
| Inventories, net | 363.0 | 321.5 | ||
| Other current assets | 220.5 | 173.5 | ||
| Property, plant, and equipment, net | 407.2 | 416.0 | ||
| Goodwill | 984.9 | 994.6 | ||
| Identifiable intangible assets, net | 549.4 | 556.1 | ||
| Equity method investments | 97.0 | 99.6 | ||
| Investments in equity securities | 66.2 | 77.8 | ||
| Other assets | 50.5 | 46.2 | ||
| TOTAL ASSETS | $ | 3,167.6 | $ | 3,043.8 |
| LIABILITIES AND EQUITY | ||||
| Current liabilities | $ | 775.2 | $ | 693.9 |
| Long-term debt | 666.4 | 600.8 | ||
| Other long-term liabilities | 112.0 | 123.9 | ||
| Equity | 1,614.0 | 1,625.2 | ||
| TOTAL LIABILITIES AND EQUITY | $ | 3,167.6 | $ | 3,043.8 |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
OPERATING SEGMENTS (UNAUDITED)
(Dollars in millions)
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2022 | June 30, 2021 | March 31, 2022 | June 30, 2022 | June 30, 2021 | |||||||||||
| Sales | |||||||||||||||
| Cryo Tank Solutions | $ | 132.9 | $ | 97.8 | $ | 118.1 | $ | 251.0 | $ | 201.7 | |||||
| Heat Transfer Systems | 102.9 | 65.2 | 79.3 | 182.2 | 134.4 | ||||||||||
| Specialty Products | 115.3 | 106.8 | 107.5 | 222.8 | 184.1 | ||||||||||
| Repair, Service & Leasing | 55.4 | 54.6 | 49.3 | 104.7 | 96.0 | ||||||||||
| Intersegment eliminations | (1.7) | (2.4) | (0.1) | (1.8) | (5.7) | ||||||||||
| Consolidated | $ | 404.8 | $ | 322.0 | $ | 354.1 | $ | 758.9 | $ | 610.5 | |||||
| Gross Profit | |||||||||||||||
| Cryo Tank Solutions | $ | 21.6 | $ | 23.2 | $ | 25.4 | $ | 47.0 | $ | 48.4 | |||||
| Heat Transfer Systems | 14.8 | 11.2 | 10.1 | 24.9 | 27.0 | ||||||||||
| Specialty Products | 39.4 | 36.7 | 32.6 | 72.0 | 64.9 | ||||||||||
| Repair, Service & Leasing | 19.0 | 12.1 | 15.6 | 34.6 | 26.8 | ||||||||||
| Consolidated | $ | 94.8 | $ | 83.2 | $ | 83.7 | $ | 178.5 | $ | 167.1 | |||||
| Gross Profit Margin | |||||||||||||||
| Cryo Tank Solutions | 16.3 | % | 23.7 | % | 21.5 | % | 18.7 | % | 24.0 | % | |||||
| Heat Transfer Systems | 14.4 | % | 17.2 | % | 12.7 | % | 13.7 | % | 20.1 | % | |||||
| Specialty Products | 34.2 | % | 34.4 | % | 30.3 | % | 32.3 | % | 35.3 | % | |||||
| Repair, Service & Leasing | 34.3 | % | 22.2 | % | 31.6 | % | 33.0 | % | 27.9 | % | |||||
| Consolidated | 23.4 | % | 25.8 | % | 23.6 | % | 23.5 | % | 27.4 | % | |||||
| Operating Income (Loss) | |||||||||||||||
| Cryo Tank Solutions | $ | 9.9 | $ | 13.4 | $ | 14.1 | $ | 24.0 | $ | 29.0 | |||||
| Heat Transfer Systems | 5.7 | (0.5) | (0.2) | 5.5 | 3.3 | ||||||||||
| Specialty Products | 20.8 | 23.4 | 16.2 | 37.0 | 41.3 | ||||||||||
| Repair, Service & Leasing | 12.0 | 5.6 | 8.3 | 20.3 | 13.9 | ||||||||||
| Corporate | (18.8) | (16.4) | (18.3) | (37.1) | (33.2) | ||||||||||
| Consolidated (1) (2) (3) (4) | $ | 29.6 | $ | 25.5 | $ | 20.1 | $ | 49.7 | $ | 54.3 | |||||
| Operating Margin (Loss) | |||||||||||||||
| Cryo Tank Solutions | 7.4 | % | 13.7 | % | 11.9 | % | 9.6 | % | 14.4 | % | |||||
| Heat Transfer Systems | 5.5 | % | (0.8) | % | (0.3) | % | 3.0 | % | 2.5 | % | |||||
| Specialty Products | 18.0 | % | 21.9 | % | 15.1 | % | 16.6 | % | 22.4 | % | |||||
| Repair, Service & Leasing | 21.7 | % | 10.3 | % | 16.8 | % | 19.4 | % | 14.5 | % | |||||
| Consolidated | 7.3 | % | 7.9 | % | 5.7 | % | 6.5 | % | 8.9 | % |
_______________
(1)Restructuring costs for the three months ended:
•June 30, 2022 were $0.2 ($0.1 - Cryo Tank Solutions, $0.1 - Specialty Products).
•June 30, 2021 were $0.3 in our Heat Transfer Systems segment.
•March 31, 2022 were $0.1 in our Heat Transfer Systems segment.
(2)Restructuring costs for the six months ended:
•June 30, 2022 were $0.3 ($0.1 - Cryo Tank Solutions, $0.1 - Heat Transfer Systems, $0.1 - Specialty Products).
•June 30, 2021 were $1.0 ($0.3 - Cryo Tank Solutions and $0.7 - Heat Transfer Systems).
(3)Includes acquisition-related contingent consideration (credits)/charges of:
•$(0.2), $1.2, and $(0.8) in our Specialty Products segment for the three months ended June 30, 2022, June 30, 2021 and March 31, 2022, respectively, and
•$(1.0) and $2.0 in our Specialty Products segment for the six months ended June 30, 2022 and June 30, 2021, respectively.
(4)Includes deal-related and integration costs of:
•$5.1 and $4.2 for the three months ended June 30, 2022 and March 31, 2022, respectively, and
•$9.3 for the six months ended June 30, 2022.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
ORDERS AND BACKLOG (UNAUDITED)
(Dollars in millions)
| Three Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br>2022 | June 30,<br>2021 | March 31,<br>2022 | ||||||||||||
| Orders | ||||||||||||||
| Cryo Tank Solutions | $ | 106.1 | $ | 175.3 | $ | 142.4 | ||||||||
| Heat Transfer Systems (1) | 470.1 | 48.4 | 354.1 | |||||||||||
| Specialty Products | 265.7 | 190.6 | 100.5 | |||||||||||
| Repair, Service & Leasing | 47.4 | 41.4 | 43.4 | |||||||||||
| Intersegment eliminations | (1.5) | (7.8) | (3.6) | |||||||||||
| Consolidated | $ | 887.8 | $ | 447.9 | $ | 636.8 | As of | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| June 30,<br>2022 | June 30,<br>2021 | March 31,<br>2022 | ||||||||||||
| Backlog | ||||||||||||||
| Cryo Tank Solutions | $ | 331.9 | $ | 327.1 | $ | 365.8 | ||||||||
| Heat Transfer Systems | 1,003.8 | 345.1 | 639.5 | |||||||||||
| Specialty Products | 570.4 | 374.0 | 418.8 | |||||||||||
| Repair, Service & Leasing | 48.5 | 44.3 | 53.6 | |||||||||||
| Intersegment eliminations | (1.3) | (6.6) | (0.7) | |||||||||||
| Consolidated | $ | 1,953.3 | $ | 1,083.9 | $ | 1,477.0 |
_______________
(1)Heat Transfer Systems orders for the three months ended June 30, 2022 include big LNG orders of approximately $300.0 million.
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 | Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30,<br>2022 | March 31,<br>2022 | June 30,<br>2022 | June 30,<br>2021 | |||||
| Basic earnings per common share attributable to Chart Industries, Inc. (U.S. GAAP) | $ | 0.36 | $ | 0.28 | $ | 0.65 | $ | 0.90 |
| Investment equities mark-to-market, net (1) | 0.27 | 0.14 | 0.41 | 0.26 | ||||
| Tax effects | (0.05) | (0.03) | (0.08) | (0.05) | ||||
| Normalized non-diluted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) | $ | 0.58 | $ | 0.39 | $ | 0.98 | $ | 1.11 |
| Restructuring related costs (2) | 0.13 | 0.15 | 0.28 | 0.23 | ||||
| Deal-related and integration costs (3) | 0.14 | 0.12 | 0.26 | 0.22 | ||||
| Start-up costs (organic) (4) | 0.09 | 0.05 | 0.14 | 0.10 | ||||
| Tax effects | (0.06) | (0.06) | (0.12) | (0.10) | ||||
| Adjusted non-diluted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) | $ | 0.88 | $ | 0.65 | $ | 1.54 | $ | 1.56 |
_______________
(1)Investment equities mark-to-market, net includes:
•Unrealized loss on the mark-to-market adjustments of our investments in equity securities related to McPhy (Euronext Paris: MCPHY – ISIN; FR0011742329) and Stabilis Energy, Inc. (NasdaqCM: SLNG) of $9.6 and $2.6 for the three months ended June 30, 2022 and March 31, 2022, respectively, and an unrealized loss of $12.2 and $9.2 for the six months ended June 30, 2022 and June 30, 2021, respectively.
•Foreign currency loss of $1.6 for the three months ended March 31, 2022.
•Equity in loss of unconsolidated affiliates, net of $0.2 and $0.3 for the three months ended June 30, 2022 and March 31, 2022, respectively.
(2)Restructuring related costs of $4.5 and $5.3 for the three months ended June 30, 2022 and March 31, 2022, respectively, and $9.8 for the six months ended June 30, 2022 were comprised of relocation and facility start-up costs and departmental restructuring, including headcount reductions.
(3)Deal-related and integration costs:
•During the three months ended June 30, 2022 of $5.1, were comprised of pre-closing, due diligence and integration costs related to our acquisitions of L.A. Turbine, AdEdge Holdings, LLC, Earthly Labs Inc., AdEdge India, CSC Cryogenic Service Center AB and Fronti Fabrications.
•During the three months ended March 31, 2022 of $4.2, were comprised of pre-closing, due diligence and integration costs related to our acquisitions of Cryogenic Gas Technologies, Inc., L.A. Turbine, AdEdge Holdings, LLC, and Earthly Labs Inc. as well as integration costs from our investments in Transform Materials LLC and HTEC Hydrogen Technology & Energy Corporation.
(4)Start-up costs (organic) during the during the three months ended June 30, 2022 and March 31, 2022 of $3.4 and $1.8, respectively, were comprised of Richburg, South Carolina repair facility start-up costs, Tulsa, Oklahoma product line start-up costs and incremental costs related to our flex manufacturing facility in Tulsa, Oklahoma.
_______________
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 | Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | |||||
| Net income attributable to Chart Industries, Inc., (U.S. GAAP) | $ | 13.0 | $ | 6.5 | $ | 23.2 | $ | 32.1 |
| Income attributable to noncontrolling interests, net of taxes | 0.4 | 0.3 | 0.5 | 0.8 | ||||
| Net income (U.S. GAAP) | 13.4 | 6.8 | 23.7 | 32.9 | ||||
| Employee share-based compensation expense | 2.3 | 2.4 | 5.6 | 5.8 | ||||
| Financing costs amortization | 0.7 | 1.1 | 1.4 | 2.3 | ||||
| Unrealized foreign currency transaction (gain) loss | (3.2) | 1.7 | (4.3) | (2.9) | ||||
| Unrealized loss on investments in equity securities | 9.6 | 12.5 | 12.2 | 9.2 | ||||
| Equity in loss (earnings) of unconsolidated affiliates, net | 0.3 | (0.1) | 0.6 | (0.2) | ||||
| Realized gain on investment of equity method securities | (0.3) | — | (0.3) | — | ||||
| Other non-cash operating activities | (0.9) | (0.1) | 1.1 | 1.9 | ||||
| Net income, adjusted (non-GAAP) | $ | 21.9 | $ | 24.3 | $ | 40.0 | $ | 49.0 |
_______________
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 | Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | |||||
| Net cash provided by (used in) operating activities (U.S. GAAP) | $ | 34.7 | $ | (36.6) | $ | 12.5 | $ | (28.3) |
| Capital expenditures | (17.2) | (15.2) | (29.8) | (26.7) | ||||
| Free cash flow (non-GAAP) | 17.5 | (51.8) | (17.3) | (55.0) | ||||
| Non-recurring costs | 18.0 | — | 29.0 | 19.0 | ||||
| Divestiture related tax payments | 21.0 | 25.0 | ||||||
| Add back inventory for strategic build | 19.0 | |||||||
| Adjusted free cash flow (non-GAAP) | $ | 35.5 | $ | (30.8) | $ | 30.7 | $ | (11.0) |
_______________
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. Management believes that free cash flow and adjusted free cash flow 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
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED)
(Dollars in millions)
| Three Months Ended June 30, 2022 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 132.9 | $ | 102.9 | $ | 115.3 | $ | 55.4 | $ | (1.7) | $ | — | $ | 404.8 | |||||||
| Gross profit as reported (U.S. GAAP) | 21.6 | 14.8 | 39.4 | 19.0 | — | — | 94.8 | ||||||||||||||
| Restructuring related, deal-related, integration and other one time costs | 3.4 | 1.6 | 1.9 | 0.7 | — | — | 7.6 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 25.0 | $ | 16.4 | $ | 41.3 | $ | 19.7 | $ | — | $ | — | $ | 102.4 | |||||||
| Adjusted gross profit margin (non-GAAP) | 18.8 | % | 15.9 | % | 35.8 | % | 35.6 | % | — | % | — | % | 25.3 | % | |||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 9.9 | $ | 5.7 | $ | 20.8 | $ | 12.0 | $ | — | $ | (18.8) | 29.6 | ||||||||
| Restructuring related, deal-related, integration and other one time costs | 3.4 | 1.9 | 2.8 | 0.7 | — | 1.6 | 10.4 | ||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 13.3 | $ | 7.6 | $ | 23.6 | $ | 12.7 | $ | — | $ | (17.2) | $ | 40.0 | |||||||
| Adjusted operating margin (non-GAAP) | 10.0 | % | 7.4 | % | 20.5 | % | 22.9 | % | — | % | — | % | 9.9 | % | |||||||
| Three Months Ended June 30, 2021 | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 97.8 | $ | 65.2 | $ | 106.8 | $ | 54.6 | $ | (2.4) | $ | — | $ | 322.0 | |||||||
| Gross profit as reported (U.S. GAAP) | 23.2 | 11.2 | 36.7 | 12.1 | — | — | 83.2 | ||||||||||||||
| Restructuring, transaction-related and other one-time costs | 2.1 | 5.7 | 1.7 | 0.8 | — | — | 10.3 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 25.3 | $ | 16.9 | $ | 38.4 | $ | 12.9 | $ | — | $ | — | $ | 93.5 | |||||||
| Adjusted gross profit margin (non-GAAP) | 25.9 | % | 25.9 | % | 36.0 | % | 23.6 | % | — | % | — | % | 29.0 | % | |||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 13.4 | $ | (0.5) | $ | 23.4 | $ | 5.6 | $ | — | $ | (16.4) | 25.5 | ||||||||
| Restructuring, transaction-related and other one-time costs | 2.2 | 5.7 | 3.1 | 0.8 | — | 1.5 | 13.3 | ||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 15.6 | $ | 5.2 | $ | 26.5 | $ | 6.4 | $ | — | $ | (14.9) | $ | 38.8 | |||||||
| Adjusted operating margin (non-GAAP) | 16.0 | % | 8.0 | % | 24.8 | % | 11.7 | % | — | % | — | % | 12.0 | % |
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)
| Three Months Ended March 31, 2022 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 118.1 | $ | 79.3 | $ | 107.5 | $ | 49.3 | $ | (0.1) | $ | — | $ | 354.1 | |||||||
| Gross profit as reported (U.S. GAAP) | 25.4 | 10.1 | 32.6 | $ | 15.6 | — | — | 83.7 | |||||||||||||
| Restructuring related, deal-related, integration and other one time costs | 3.3 | 2.5 | 1.4 | 1.5 | — | — | 8.7 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 28.7 | $ | 12.6 | $ | 34.0 | $ | 17.1 | $ | — | $ | — | $ | 92.4 | |||||||
| Adjusted gross profit margin (non-GAAP) | 24.3 | % | 15.9 | % | 31.6 | % | 34.7 | % | — | % | — | % | 26.1 | % | |||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 14.1 | $ | (0.2) | $ | 16.2 | $ | 8.3 | $ | — | $ | (18.3) | 20.1 | ||||||||
| Restructuring related, deal-related, integration and other one time costs | 3.4 | 2.5 | 1.9 | 1.5 | — | 1.2 | 10.5 | ||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 17.5 | $ | 2.3 | $ | 18.1 | $ | 9.8 | $ | — | $ | (17.1) | $ | 30.6 | |||||||
| Adjusted operating margin (non-GAAP) | 14.8 | % | 2.9 | % | 16.8 | % | 19.9 | % | — | % | — | % | 8.6 | % |
_______________
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
a2022-07x29_gtlsq22022ea
N Y S E : G T L S 1 Jill Evanko CEO Presented by Joe Brinkman CFO Second Quarter 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 COMPLETED DIVESTITURES, ACQUISITIONS AND INVESTMENTS, COST SYNERGIES AND EFFICIENCY SAVINGS, OBJECTIVES, FUTURE ORDERS, REVENUES, MARGINS, EARNINGS OR PERFORMANCE, LIQUIDITY AND CASH FLOW , CAPITAL EXPENDITURES, SUPPLY CHAIN CHALLENGES, INFLATIONARY PRESSURES INCLUDING MATERIAL COST AND PRICING INCREASES, BUSINESS TRENDS, CLEAN ENERGY MARKET OPPORTUNITIES AND PROJECTED INDUSTRY- WIDE OPPORTUNITIES INCLUDING ADDRESSABLE MARKETS, GOVERNMENTAL INITIATIVES, INCLUDING EXECUTIVE ORDERS 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 INTEGRATE RECENT ACQUISITIONS AND ACHIEVE THE ANTICIPATED REVENUE, EARNINGS, ACCRETION AND OTHER BENEFITS FROM THESE ACQUISITIONS; SLOW ER THAN ANTICIPATED GROW TH AND MARKET ACCEPTANCE OF NEW CLEAN ENERGY PRODUCT OFFERINGS; INABIL ITY 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 AND THE OTHER FACTORS DISCUSSED IN ITEM 1A (RISK FACTORS) IN THE COMPANY’S MOST RECENT ANNUAL REPORT ON FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q FILED W ITH THE SEC, W HICH SHOULD BE REVIEWED CAREFULLY. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORW ARD-LOOKING STATEMENT. THIS PRESENTATION CONTAINS SECOND QUARTER 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 GROSS PROFIT, ADJUSTED GROSS PROFIT MARGIN, 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 “SECOND QUARTER 2022 EARNINGS PER SHARE,” “SECOND QUARTER 2022 ADJUSTED EBITDA” AND “SECOND 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 2022 FULL YEAR EARNINGS OUTLOOK, THE COMPANY IS NOT ABLE TO PROVIDE A RECONCILIATION OF THE ADJUSTED EARNINGS PER NON-DILUTED SHARE 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. 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. WE 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.
© 2022 Chart Industries, Inc. Confidential and Proprietary 3 Q2 2022: Continuing to Set Historical GTLS Records Q2 2022 notable items: • Record orders of $887.8 million • Record backlog of $1.953 billion • Record sales of $404.8 million • Record reported and adjusted gross margin of $94.8 million and $102.4 million • Record reported and adjusted operating income of $29.6 million and $40.0 million, respectively • EBITDA and Adjusted EBITDA of $43.7 million and $65.5 million • On-time delivery at 100% in 11 of our factories • First-of-a-Kind orders (“FOAK”) of 23 / YTD 51 • 85 new customers placing orders / YTD 169 *Adjusted gross margin and adjusted operating income are non-GAAP measures. Please see reconciliation table at the end of the accompanying earnings release for a reconciliations to the relevant GAAP measure.
© 2022 Chart Industries, Inc. Confidential and Proprietary 4 Another Consecutive Record Order & Backlog Quarter # Orders Q1 2022 Q2 2022 1H 2022 Rev Rec Timing 1 Venture Global (BKR) Plaquemines Phase 1 FNTP $135.5 135.5 2022-2024 2 Venture Global (BKR) Plaquemines Phase 2 (second 6 boxes out of 18 anticipated) 45.4 45.4 2022-2024 3 Cheniere (Bechtel) CCL Stage 3 LNTP 47.5 47.5 2022-2025 4 Cheniere (Bechtel) CCL Stage 3 FNTP, including air coolers 300.5 300.5 2022-2025 5 BigLNG orders booked in 1H 2022 228.4 300.5 528.9 6 FLNG (New Fortress Energy) FastLNG2 order booked in Q1 2022 / increase Q2 38.3 4.0 42.3 2022-2023 7 FLNG (New Fortress Energy) FastLNG3 order booked in Q2 2022 42.3 42.3 2022-2023 8 Southeastern US Utility ssLNG retrofit & expansion 26.8 26.8 2022-2024 9 Space exploration supersize tanks 16.1 16.1 2023-2024 10 Hydrogen liquefiers 134.5 134.5 2023-2025 11 EU Member State military mobile equipment order 22.3 22.3 2023-2025 12 Other GTLS orders booked in 1H 2022 370.1 341.8 711.9 2022-2024 13 Total GTLS 1H 2022 Orders Booked 636.8 887.8 $1,524.6
© 2022 Chart Industries, Inc. Confidential and Proprietary 5 Average Orders Per Quarter, ex Big LNG (2016-YTD 2022) $177.0 $215.0 $265.0 $296.0 $302.2 $419.0 $497.9 2016 2017 2018 2019 2020 2021 2022 Big LNG Orders, not shown on column graph Year $ millions 2018 2.9 2019 133.9 2020 1.1 2021 2.9 2022 YTD 6/30/22 528.9 Average 2021-2022 GTLS orders per quarter $445.3M Average 2016-2020 GTLS orders per quarter $251.0 million All years normalized to exclude divested businesses.
© 2022 Chart Industries, Inc. Confidential and Proprietary 6 July 2022: Start to Q3 Orders – Demand Continues Specific Order Wins Include: 1. 21 Railcar order, totaling over $12 million 2. ISO Container Letter of Intent, totaling over $10 million 3. 11 railcar order commitment, totaling over $6.5 million 4. Two liquid hydrogen portable fueling stations, totaling over $5.75 million 5. Water treatment system for India verbal award, $5 million 6. India EPC customer heat exchanger order, $3.4 million 7. LNG stations for new India customer (Megha Engineering), $3.1 million 8. LNG stations for new EU customer (Orange Gas), $2.2 million 9. Large LNG station for Nordic customer, $1.9 million 10.HLNG vehicle tank EU order, $1.7 million 11.Energy customer BAHX order, $1.4 million 12.Another energy customer BAHX order, $1.4 million 13.Energy customer ACHX order, $1.4 million 14. Industrial gas customer order for pipe and lifecycle services, $1.24 million 15.Three additional Orca transports for emerging emissions control customer, $1.2M 16.Cryogenic Tanks in Latin America, $1.1 million
© 2022 Chart Industries, Inc. Confidential and Proprietary 7 Second Quarter 2022 Summary $ millions, except per share amounts Q2 2022 Q1 2022 Q2 2021Consolidated Orders 887.8 636.8 447.9 % Change 39% 98% Backlog 1,953.3 1,477.0 1,083.9 % Change 32% 80% Sales 404.8 354.1 322.0 % Change (1) 14.3% / 11.7% 25.7% / 22.6% Basic Earnings per Share (EPS) $0.36 $0.28 $0.18 Adjusted Non-Diluted EPS (2) $0.88 $0.65 $0.80 (1) Q2’22 included $16.5 million, Q2’21 included $5.4 million, and Q1’22 included $6.4M in Big LNG project revenue. When excluding Big LNG, the second figures are the change from Q1’21 to Q1’22, and Q4’21 to Q1’22 (2) Adjusted Non-Diluted EPS (a non-GAAP measure) is as reported on a historical basis. Please see reconciliation tables in accompanying earnings release for a reconciliation to the relevant GAAP measure. Green box denotes historical record
© 2022 Chart Industries, Inc. Confidential and Proprietary 8 Beginning to See Input Material Cost Relief
© 2022 Chart Industries, Inc. Confidential and Proprietary 9 2022 Year-to-Date Pricing and Surcharge Actions As of July 29, 2022 Price Changes: • January 1, 2022: • Rolling IG Major index adjusted price updates • All standard price lists had pricing adjustment • HLNG vehicle tank customer specific price increase • 15% market condition surcharge in effect entire Q1 for non- contract customers • Select China price increases • February 18, 2022: distributors and direct accounts price increases in CTS and specialty products 1/1/2022 to 2/24/2022 2/24/2022-3/31/2022 3/31/2022 – 07/29/2022 Price Changes: Mid March 2022 • Additional base price increase in EMEA & India • Increased surcharge on customers globally Price Changes: • IG product pricing increased 5% to 10% for both LTA and non-LTA customers, reflecting material cost increases in Q1 2022 • Quarterly index adjustments (April 1 and/or May 1) for contracted products and another on July 1, 2022 • Additional price increase on standard products on May 6, 2022 • Increased surcharge • All prior actions remain in effect Standard product pricing (4 increases since July 1, 2021) Long-term agreement pricing mechanisms in contracts Project based specific material pricing with shorter bid validity timing GTLS Three Main Pricing Approaches
© 2022 Chart Industries, Inc. Confidential and Proprietary 10 GTLS Global Freight The second quarter 2022 was our second quarter where cost of freight was covered by freight charges to customers
© 2022 Chart Industries, Inc. Confidential and Proprietary 11 Organic Automation & Productivity Activities Decin, Czech Republic Robotic Welding of Bulk Tank Legs Ornago, Italy Automatic Grinding for all Vessels Ball Ground, Georgia (USA) Robotic Weld Cell for Beverage Changzhou, China Double Gun Welding for ISO Tanks La Crosse, Wisconsin (USA) Friction Stir Welding BAHX Beasley, Texas Laser Guided Arc Welding
© 2022 Chart Industries, Inc. Confidential and Proprietary 12 Sales & Operating Margin Trends $289 $322 $328 $379 $354 $405 10.0% 8.0% 4.2% 5.4% 5.7% 7.3% 12.0% 11.8% 8.7% 8.7% 8.6% 9.9% 0.0% 5.0% 10.0% 15.0% $200 $250 $300 $350 $400 $450 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Sales ($M) Op Margin % Adj Op Margin % (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. We did not addback for adjusted operating profit the following impacts, which we estimate totaled ~$13 million in the second quarter 2022, including : • Force Majeure from gas supplier’s costs and inefficiencies • Supplier expedite costs • Additional electricity, utility and gas costs in our shops globally • Inefficiencies due to carrying HLNG vehicle tank workforce with minimal order activity • Weather impacts to production including power outages 13.1%
Category Q4 2021 Addback Items Net of Tax Q4 2021 $M Q1 2022 Addback Items Net of Tax Q1 2022 $M 1 Restructuring and Severance • Severance costs • Xinye, China facility relocation • Corp HQ move from Cryoport facility • Tulsa ACHX consolidation to Texas • Restructuring certain repair activities 6.0 • Severance costs • Tulsa ACHX consolidation to Texas • Lery, France product line completion out of period costs 4.3 2 Debt Refi Costs • Write off amortization of prior bank fees from refinancing revolving credit facility 4.1 • NONE 0 3 Deal-related & integration costs • Pre-closing / acquisition DD costs • Integration costs (year 1 only) • Legal costs for the one specific pre-closing liability from cryobio divestiture • Doesn’t include amortization addback 4.9 • Pre-closing / acquisition DD costs • Integration costs (year 1 only) • Legal costs for the one specific pre-closing liability from cryobio divestiture • Doesn’t include any amortization addback 3.4 4 Organic startup costs • Startup of greenfield at Richburg, SC • Startup costs for Tulsa, OK flex mfg • Training costs on new product lines 2.3 • Startup of greenfield at Richburg, SC • Startup costs for Tulsa, OK flex mfg • Training costs on new product lines 1.5 5 Other Costs • Legal / settlement 0.3 • NONE 0 6 One-Time Gains • Gain on purchase of Earthly Labs from previous minority investment (2.1) • NONE 0 7 MTM of investments net of FX • Mark-to-Market (MTM) of investments in McPhy and Stabilis net of FX impacts (1.7) • MTM of investments in McPhy and Stabilis and unconsolidated affiliates, HTEC and Cryomotive, all net of FX total impact 4.2 © 2022 Chart Industries, Inc. Confidential and Proprietary 13 Addback Specifics by Category (Q4 2021/Q1 2022)
© 2022 Chart Industries, Inc. Confidential and Proprietary 14 Addback Specifics by Category (Q1 2022/Q2 2022) Category Q1 2022 Addback Items Net of Tax Q1 2022 $M Q2 2022 Addback Items Net of Tax Q2 2022 $M 1 Restructuring and Severance • Severance costs • Tulsa ACHX consolidation to Texas • Lery, France product line completion out of period costs 4.3 • Severance / restructuring costs • Completion of Tulsa ACHX consolidation to Texas • Completion of SriCity, India expansion 3.6 2 Deal-related & integration costs • Pre-closing / acquisition DD costs • Integration costs (year 1 only) • Legal costs for the one specific pre- closing liability from cryobio divestiture • Doesn’t include any amortization addback 3.4 • Pre-closing / acquisition DD costs • Integration costs (year 1 only) • Legal costs for the one specific pre- closing liability from cryobio divestiture • Doesn’t include any amortization addback 4.2 3 Organic startup costs • Startup of greenfield at Richburg, SC • Startup costs for Tulsa, OK flex mfg • Training costs on new product lines 1.5 • Startup costs for Teddy expansion • Startup costs for Tulsa, OK flex mfg • Training costs on new product lines 2.7 4 MTM of investments net of FX • MTM of investments in McPhy and Stabilis and unconsolidated affiliates, HTEC and Cryomotive, all net of FX total impact 4.2 • MTM of investments in McPhy and Stabilis and unconsolidated affiliates, HTEC and Cryomotive, (no FX impact included) 8.0
© 2022 Chart Industries, Inc. Confidential and Proprietary 15 Second Quarter 2022 Earnings Per Share (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. $ millions, except per share amounts Q2 2022 Q1 2022 Change vs. PQ YTD 2022 YTD 2021 Change v. PY Continuing Operations Net income attributable to Chart Industries, Inc. $13.0 $10.2 $2.8 $23.2 $32.1 ($8.9) Reported Basic EPS $0.36 $0.28 $0.08 $0.65 $0.90 ($0.25) 1 Investment equities mark-to-market, net of FX 0.27 0.14 0.13 0.41 0.26 0.15 2 Tax effects (1) (0.05) (0.03) (0.02) (0.08) (0.05) (0.03) Normalized Basic EPS $0.58 0.39 $0.19 $0.98 1.11 ($0.13) 3 Restructuring related costs 0.13 0.15 (0.02) 0.28 0.23 0.05 4 Deal related and integration costs 0.14 0.12 0.02 0.26 0.22 0.04 5 Start-up costs (organic) 0.09 0.05 0.04 0.14 0.10 0.04 6 Tax effects (1) (0.06) (0.06) - (0.12) (0.10) (0.02) Adjusted Basic EPS (2) $0.88 $0.65 $0.23 $1.54 $1.56 ($0.02)
© 2022 Chart Industries, Inc. Confidential and Proprietary 16 Organic Capital Expenditures Description Category Complete? 2022 Fcst 2023 Fcst 2024 Fcst 2025 Fcst Maintenance Capital Maintenance $20.0 $24.0 $24.0 $24.0 Tulsa BAHX Furnace Line Capacity 9.0 7.0 0.0 0.0 GOFA Germany Trailer Production Expansion Capacity/Automation 7.6 3.2 1.0 0.0 SriCity, India Production Expansion D&S Capacity Yes 3.5 0.0 0.0 0.0 Leasing Fleet Expansion Growth 4.0 5.0 5.0 5.0 Robotics and Augmented Reality Implementation Capacity/Productivity 1.0 5.0 5.0 5.0 Theodore, AL Production Expansion (IG, ORCA, CO2) Capacity/Automation 1.0 2.8 3.0 0.0 Product line moves from MN to Alabama (Permas) Productivity 3.0 0.4 0.0 0.0 CryoDiffusion VIP Manufacturing Line Implementation Capacity/Productivity Yes 0.3 0.0 0.0 0.0 Tulsa Flex Manufacturing Startup Capacity/Productivity 1.6 0.0 0.0 0.0 New Iberia Rooftop Expansion Capacity/Productivity 2.0 3.0 0.0 0.0 Theodore, AL Supersize Tank Expansion, ex land Capacity/Productivity 7.5 10.0 10.0 1.5 Chart Total $55-$60 $60.4 $48.0 $35.5 Chart YTD 6/30/2022 Actual Capex Spend $29.8
• Furnace delivery August 2022 • Planned start of validation core in November 2022 • Training of new staff in process Brazed Aluminum Heat Exchanger Line Tulsa, Oklahoma, USA © 2022 Chart Industries, Inc. Confidential and Proprietary 17
18 • The new building will be 200m (twice length of existing building) • Groundbreaking ceremony occurred in June 2022 in conjunction with celebrating 60 years of GOFA business • Construction to be completed by mid-2023 • Production start at the end of Q3 2023 • New RSL workshop in operation by end of 2023 Trailer Facility Expansion, Goch, Germany Expansion has ~$23M of orders already in backlog © 2022 Chart Industries, Inc. Confidential and Proprietary 18
19 • Economic Incentives Meeting with Al. Chamber of Commerce • Design build contractors underway • Completed high level equipment budget • Completed second draft of production line layout • Potential to expand to adjacent or nearby land for storage / further expansion Supersize and Bulk Tank Expansion Theodore, Alabama, USA Expansion has ~$16M of orders already in backlog © 2022 Chart Industries, Inc. Confidential and Proprietary 19
Increasing Demand for Extra Large Super Jumbo & Supersized Tanks: • Space Exploration • LNG • Biogas • Maritime ship fueling • Marine transport on bunker barges • Air separation © 2022 Chart Industries, Inc. Confidential and Proprietary 20 In Q2 2022, three more jumbo cryogenic tanks were sent from our facility in Decin, Czech Republic headed to Godorf, Germany – home to a new 100,000 ton per day bio-LNG plant. Each tank stores 1 million liters of LNG, which is enough to fuel more than 1,000 heavy haulage trucks with clean burning biogas.
© 2022 Chart Industries, Inc. Confidential and Proprietary 21 Segment Sales and Operating Margin Information (1) Adjusted Operating Margin % is a non-GAAP measure. Please see reconciliation table at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measure. Sales ($M, except %) Q2 ‘22 Q1 ‘22 % Chg PQ Q2 ‘21 % Chg PY Specialty Products 115.3 107.5 7.3% 106.8 8.0% Cryo Tank Solutions 132.9 118.1 12.5% 97.8 35.9% Repair, Service, Leasing 55.4 49.3 12.4% 54.6 1.5% Heat Transfer Systems 102.9 79.3 29.8% 65.2 57.8% Reported Op Income ($M, except %) Q2 ‘22 Q1 ‘22 % Chg PQ Q2 ‘21 % Chg PY Specialty Products 20.8 16.2 28.4% 23.4 -11.1% Cryo Tank Solutions 9.9 14.1 -29.8% 13.4 -26.1% Repair, Service, Leasing 12.0 8.3 44.6% 5.6 114.3% Heat Transfer Systems 5.7 -0.2 n.a. -0.5 n.a. Adjusted Op Income ($M, except %) Q2 ‘22 Q1 ‘22 % Chg PQ Q2 ‘21 % Chg PY Specialty Products 23.6 18.1 30.4% 26.5 -10.9% Cryo Tank Solutions 13.3 17.5 -24.0% 15.6 -14.7% Repair, Service, Leasing 12.7 9.8 29.6% 6.4 98.4% Heat Transfer Systems 7.6 2.3 230.4% 5.2 46.2% Adjusted Op Margin ($M, except %) Q2 ‘22 Q1 ‘22 Bps Chg PQ Q2 ‘21 Bps Chg PY Specialty Products 20.5% 16.8% 370 bps 24.8% -430 bps Cryo Tank Solutions 10.0% 14.8% -480 bps 16.0% -600 bps Repair, Service, Leasing 22.9% 19.9% 300 bps 11.7% 1120 bps Heat Transfer Systems 7.4% 2.9% 450 bps 8.0% -60 bps
© 2022 Chart Industries, Inc. Confidential and Proprietary 22 Segment Sales and Gross Margin Information (1) Adjusted Gross Margin % is a non-GAAP measure. Please see reconciliation table at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measure. Sales ($M, except %) Q2 ‘22 Q1 ‘22 % Chg PQ Q2 ‘21 % Chg PY Specialty Products 115.3 107.5 7.3% 106.8 8.0% Cryo Tank Solutions 132.9 118.1 12.5% 97.8 35.9% Repair, Service, Leasing 55.4 49.3 12.4% 54.6 1.5% Heat Transfer Systems 102.9 79.3 29.8% 65.2 57.8% Reported GM % ($M, except %) Q2 ‘22 Q1 ‘22 % Chg PQ Q2 ‘21 % Chg PY Specialty Products 34.2% 30.3% 390 bps 34.4% -20 bps Cryo Tank Solutions 16.3% 21.5% -520 bps 23.7% -740 bps Repair, Service, Leasing 34.3% 31.6% 270 bps 22.2% 1210 bps Heat Transfer Systems 14.4% 12.7% 170 bps 17.2% -280 bps Adjusted GM % ($M, except %) Q2 ‘22 Q1 ‘22 Bps Chg PQ Q2 ‘21 Bps Chg PY Specialty Products 35.8% 31.6% 420 bps 36.0% -20 bps Cryo Tank Solutions 18.8% 24.3% -550 bps 25.9% -710 bps Repair, Service, Leasing 35.6% 34.7% 90 bps 23.6% 1200 bps Heat Transfer Systems 15.9% 16.0% -10 bps 25.9% -1000 bps
© 2022 Chart Industries, Inc. Confidential and Proprietary 23 Full Solutions Platforms Across the Nexus of Clean Clean End Market Solution GTLS Process Technologies (Owned in Full) GTLS Process Technologies Through Minority Ownership GTLS Equipment Clean Power • Hydrogen • Helium • LNG • Biogas • BAHX • ACHX • Bulk & Microbulk • Fans • Transports • Valves / Vaporizers • Expanders • Liquefiers • Cold Boxes Clean Water • Water& Wastewater Treatment • Desalination • Bulk tanks • Dissolution equipment • Vaporizers • Cryo-lease Clean Food, Beverages & Agriculture • Small-Scale Carbon Capture • Clean Beverages • Microbulk tanks • Dosers • Vaporizers • Transports Clean Industrials • Post Combustion Carbon Capture • Hydrogen/He • Heat exchangers • Storage tanks • Vaporizers • VIP/VJP • Transports • Liquefiers • Cold Boxes • Expanders
© 2022 Chart Industries, Inc. Confidential and Proprietary 24 Specialty Products Average Orders Per Quarter Q2 2022: • Record orders and backlog even taking into account the very low HLNG vehicle tank YTD orders • 18 orders greater than $1 million each, with 8 orders greater than $5 million each • Broader, more diversified customers from more regions placing hydrogen orders • In various stages of discussions with 550 different potential hydrogen customers (nearly twice than one year ago) and 300 potential large scale carbon capture customers (50% more than at 12/31/2021)
© 2022 Chart Industries, Inc. Confidential and Proprietary 25 Heat Transfer Systems Average Orders Per Quarter Q2 2022: • Seeing increasing activity in intrastate trunkline compression projects, renewable diesel fuel and sustainable aviation fuel work expected to move from FEED stages to procurement in 2H 2022 • Additional greenfield petchem and PDH projects globally progressing • Increasing demand for air cooled heat exchangers reflected in record orders and backlog
© 2022 Chart Industries, Inc. Confidential and Proprietary 26 Increasing LNG Opportunities for GTLS – The Numbers Pre Feb 24, 2022 GTLS April 29, 2022 GTLS July 29, 2022 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) 2 • Number of international projects contemplating using IPSMR® 1 2 3 3 • GTLS Associated Order Potential $ Not Yet Booked and not including expanded scope / retrofit opps $1.25 billion $4.55 billion $4.950 billion 4 • GTLS Order $ Booked Year-to-Date 2022 $0 $228.4 million $528.9 million 5 • Number of & Potential $ Amount of Expanded Chart Scope on Projects Previously Included (ex retrofits) 7 / $200 million+ 6 • New Retrofit Opportunities Brought to us in Q2 2022 8 / $200 million+ ssLNG (5 MTPA and smaller) 7 • Number of reasonable possible projects to move to order stage in next three years 205 233 276 8 • Number of Floating LNG projects in bid pipeline 13 26 27 9 • GTLS Associated Order Potential $ $1.5 billion $1.75 billion $1.94 billion 10 • GTLS Order $ Booked Year-to-Date 2022 0 $38.3 million + LOI $138 million
© 2022 Chart Industries, Inc. Confidential and Proprietary 27 Chart’s Regas Capabilities Increasing in Demand • 15,000 gallons • Two vertical ambient air vaporizers • Peak flow 21,000 SCFH • A process skid and LNG offload module • Unmanned/remote operation • Typically refueled by Orca • 1m3 to 10m3 models available • Vertical or Horizontal Steel Outer Shell Newly Introduced Mobile Regas Offering LNG Permacyl
© 2022 Chart Industries, Inc. Confidential and Proprietary 28 LNG Retrofit, Replacement and Refurbishment Increasing Multiple jobs completed or underway year-to-date, such as: Removal and install of fans and motors BAHX repair with multiple deployments Repair, retrofit, replacement activities are global Other opportunities in aftermarket include: Heavy hydrocarbon removal systems (HHC) Nitrogen rejection units (NRU) Boil Off Gas (BOG) reliquefaction Carbon capture & storage additions Replacement / aftermarket parts Field service repairs
© 2022 Chart Industries, Inc. Confidential and Proprietary 29 Welcome to our Newest Inorganic Additions • Acquired for approximately $20 million • May 31, 2022 acquisition date • Immediately accretive • Vacuum insulated cold box, pressure vessel capabilities in particular for hydrogen, helium, ssLNG applications • Acquired for approximately $4 million • May 16, 2022 acquisition date • Immediately accretive • Nordic region repair, service, field service and monitoring capabilities
Děčín, Czech Republic Burago, Italy Goch, Germany Monheim, Germany Gablingen, Germany Léry, France Q2 2022: • Signed 66 new leases with customers in the second quarter 2022, as compared to 36 in Q2 2021. • The Parts, Repair, Service (“PRS”) business within RSL posted record net sales, gross profit $, operating income $ and operating margin as a percent of sales in the quarter. • Service & maintenance agreement for LNG fueling stations signed with EU customer. • Full care service and maintenance services agreement executed with a Nordic region customer. © 2022 Chart Industries, Inc. Confidential and Proprietary 30 Repair, Service & Leasing Gothenburg, Sweden Service Footprint Europe
© 2022 Chart Industries, Inc. Confidential and Proprietary 31 Cryo Tank Solutions Average Orders Per Quarter Q2 2022: • Storage equipment and engineered tanks & systems both had record sales • Seeing increasing demand in China for storage tanks • Record production of tanks in our SriCity, India facility as well as in our European facilities • Q2 2022 burned off meaningful backlog that was related to our most difficult category of price changes, our industrial gas long-term agreements
© 2022 Chart Industries, Inc. Confidential and Proprietary 32 ISO Containers: Benefits all Four Segments 产品标准：IMDG, ADR, RID, UIC, ASME, TC, DOT, GB 45ft 40ft NFE40ft China 20ft America 40ft 40ft Europe Certificated by BV 10ft 20ft
© 2022 Chart Industries, Inc. Confidential and Proprietary 33 Full Year 2022 Outlook Revenue $1.725 billion to $1.80 billion Non-Diluted Adj. EPS $5.20 to $5.60 Assumes 20% ETR and 35.86M shares outstanding Capital Expenditures Approximately $55 to $60 million Adjusted Free Cash Flow Approximately $175 to $225 million (1) The majority of the orders booked in the second quarter 2022, in particular given the widespread project work, will primarily be revenue recognized in 2023 through 2025, and have minimal to no impact on 2022 sales or EPS. (2) We do not include any second half 2022 additional Big LNG in this outlook for which the timing for revenue recognition could begin in 2022 (while this is certainly possible, we have excluded it in our current range). (3) We do not include any meaningful second half 2022 recovery in our HLNG over the road vehicle tank demand in this guidance, which year-to-date 2022 has been significantly lower than originally anticipated heading into the year (this is viewed and articulated by our customers as temporary yet has been at very low order levels for longer than originally forecasted and is short-cycle book and ship product). (4) We do not include any second half 2022 upside or “surprise” book and ship orders (product that books and ships in one to three months) for standard product (this does frequently occur yet is difficult to predict).
© 2022 Chart Industries, Inc. Confidential and Proprietary 34 Thank You to All of Our Interns! Baylor Univ.Technical Univ. LiberecTexas A&M Univ.Viterbo Univ.Georgia Tech Ohio State Univ. Georgia TechGeorgia Tech William Parth Evan Joseph Jacob Victor Abram Kirk Mariam Edward Trevor Texas A&M Univ. Kennesaw State Univ. Ava Grace Brigham Young Univ. The Lovett School (H.S.) Texas A&M Univ. Texas A&M Univ. Brigham Young Univ. Brigham Young Univ. Iowa State Univ.Univ. of Michigan. TU Delft European Business Academy Caidin Rebecca Steven Jeremy Antoni Pranav TU Delft Martin TU Delft Petra Michaela Petr Technical College Decin Univ. of Wisconsin- Stout Joseph John Kennesaw State Univ.
Appendix 35
© 2022 Chart Industries, Inc. Confidential and Proprietary 36 Second Quarter 2022 Adjustments (1) “Adjustments” and “Q2 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. $ millions, except per share amounts Q2 2022, Reported Adjustments Q2 2022, Adjusted Continuing Operations Sales $404.8 $404.8 Gross profit 94.8 7.6 102.4 Selling, general, and administrative expenses 53.5 (2.0) 51.5 Amortization expense 11.7 (0.8) 10.9 Operating income 29.6 10.4 40.0 Interest expense, net 4.4 (1.9) 2.5 Financing costs amortization 0.7 - 0.7 Unrealized loss (gain) on investments in equity securities 9.6 (9.6) - Realized gain on investment in equity securities 0.3 - 0.3 Foreign currency loss (gain) (1.7) - (1.7) Other income (0.8) (0.3) (1.1) Income tax expense 3.5 3.7 7.2 Income before equity in (loss) earnings of unconsolidated affiliates, net 13.6 18.5 32.1 Equity in (loss) earnings of unconsolidated affiliates, net (0.2) - (0.2) Net income 13.4 18.5 31.9 Less: Income attributable to noncontrolling interests, net of taxes 0.4 - 0.4 Net income attributable to Chart Industries, Inc. $13.0 $18.5 $31.5 Basic Earnings per Share $0.36 $0.52 $0.88
© 2022 Chart Industries, Inc. Confidential and Proprietary 37 Second Quarter 2022 Free Cash Flow (1) “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. Reconciliation to Net Income (U.S. GAAP) is provided in accompanying press release financial tables. (2) “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 facilitates useful period-to period comparisons of the Company’s operating results. $ millions, except per share amounts Consolidated Q2 2022 Q2 2021 Change v. PY YTD 2022 YTD 2021 Change v. PY Net income, adjusted (1) $22 $24 ($2) $40 $49 ($9) Depreciation and amortization $21 $20 $1 42 39 3 Accounts receivable ($28) ($33) $5 (45) (19) (26) Inventory ($21) ($28) $7 (56) (65) 9 Unbilled contract revenues and other assets ($22) ($30) $8 (58) (37) (21) Accounts payable and other liabilities $31 ($9) $40 27 (4) 31 Customer advances and billings in excess of contract revenue $32 $19 $13 63 9 54 Net Cash Provided By Operating Activities $35 ($37) $72 $13 ($28) $41 Capital expenditures ($17) ($15) ($2) (30) (27) (3) Free Cash Flow (2) $18 ($52) $70 ($17) ($55) $38 Adjustments Non-recurring costs $19 - $19 30 19 11 Divestiture related tax payments - $21 ($21) - 25 (25) Add back inventory for strategic build - - - 19 - 19 Adjusted Free Cash Flow (2) $37 ($31) $68 $32 ($11) $43
© 2022 Chart Industries, Inc. Confidential and Proprietary 38 Second Quarter 2022 Free Cash Flow (1) “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. Reconciliation to Net Income (U.S. GAAP) is provided in accompanying press release financial tables. (2) “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 facilitates useful period-to period comparisons of the Company’s operating results. $ millions, except per share amounts Consolidated Q2 2022 Q1 2022 Change v. PQ Net income, adjusted (1) $22 $18 $4 Depreciation and amortization $21 $21 $0 Accounts receivable ($28) ($17) ($11) Inventory ($21) ($35) $14 Unbilled contract revenues and other assets ($22) ($36) $14 Accounts payable and other liabilities $31 ($4) $35 Customer advances and billings in excess of contract revenue $32 $31 $1 Net Cash Provided By Operating Activities $35 ($22) $57 Capital expenditures ($17) ($13) ($4) Free Cash Flow (2) $18 ($35) $53 Adjustments Non-recurring costs $19 11 $8 Add back inventory for strategic build - 19 (19) Adjusted Free Cash Flow (2) $37 ($5) $42
© 2022 Chart Industries, Inc. Confidential and Proprietary 39 Second Quarter 2022 Adjusted EBITDA (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 our financial results, and this information is used by us in evaluating our internal performance. $ millions, except per share amounts Consolidated Q2 2022 Q2 2021 Change v. PY YTD 2022 YTD 2021 Change v. PY Net income from continuing operations $13.4 $6.8 $6.6 $23.7 $32.9 ($9.2) Income tax expense, net 3.5 1.4 2.1 5.6 4.5 1.1 Interest expense, net 5.1 3.4 1.7 9.0 6.5 2.5 Depreciation and amortization 21.7 19.8 1.9 42.2 39.3 2.9 EBITDA (1) $43.7 $31.4 $12.3 $80.5 $83.2 ($2.7) Non-recurring costs 19.5 26.3 (6.8) 34.4 26.1 8.3 Share-based compensation 2.3 2.4 (0.1) 5.6 5.8 (0.2) Adjusted EBITDA (1) $65.5 $60.1 $5.4 $120.5 $115.1 $5.4
© 2022 Chart Industries, Inc. Confidential and Proprietary 40 Second Quarter 2022 Adjusted EBITDA (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 our financial results, and this information is used by us in evaluating our internal performance. $ millions, except per share amounts Consolidated Q2 2022 Q1 2022 Change v. PQ Net income from continuing operations $13.4 $10.3 $3.1 Income tax expense, net 3.5 2.1 1.4 Interest expense, net 5.1 3.9 1.2 Depreciation and amortization 21.7 20.5 1.2 EBITDA (1) $43.7 $36.8 $6.9 Non-recurring costs 19.5 14.9 4.6 Share-based compensation 2.3 3.3 (1.0) Adjusted EBITDA (1) $65.5 $55.0 $10.5
© 2022 Chart Industries, Inc. Confidential and Proprietary 41 Sales & Gross Margin Trends $289 $322 $328 $379 $354 $405 29.1% 25.8% 22.8% 21.7% 23.6% 23.4% 29.9% 29.0% 26.5% 24.2% 26.1% 25.3% 15.0% 20.0% 25.0% 30.0% 35.0% $200 $250 $300 $350 $400 $450 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Sales ($M) Gross Margin % Adj Gross Margin % (1) Adjusted Gross 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. 28.5% We did not addback for adjusted gross profit profit the following impacts, which we estimate totaled ~$12.76 million in the second quarter 2022, including : • Force Majeure from gas supplier’s costs and inefficiencies • Supplier expedite costs • Additional electricity, utility and gas costs in our shops globally • Inefficiencies due to carrying HLNG vehicle tank workforce with minimal order activity • Weather impacts to production including power outages
© 2022 Chart Industries, Inc. Confidential and Proprietary 42 2021 Pricing Actions (As shown on Q4 2021 earnings call) second Half 2021 Q3 2021 Q4 2021 Increase in Material Costs from 6/30/2021 to 9/30/2021: • Aluminum +18% • Carbon steel +24% • Stainless steel +12% Increase in Material Costs from 1/1/2021 to 6/30/2021: • Aluminum +22% • Carbon steel +41% • Stainless steel +21% Price Changes: • July 1, 2021: Global IG LTA and standard price increases (PERMANENT) • August 1, 2021: Key IG EMEA Customers price increases (PERMANENT) • September 1, 2021: Surcharge on non-LTA or projects with material cost updates (TEMPORARY) • Throughout Q3: Project bids updated for material cost changes with shorter bid validity (PERMANENT) Price Changes: • October 2021: Additional base price increase into effect for all new orders (PERMANENT) • Implemented rolling IG major LTA mechanism more frequently (TEMPORARY) • Specific additional material passthrough of backlog (ONE- TIME) • Implemented storage fees at repair sites (PERMANENT) • Eliminated free freight on volume purchases (PERMANENT) • Increased surcharge % (TEMP) Change in Material Costs from 9/30/2021 to 12/31/2021: • Aluminum +0.5% increase • Carbon steel (13%) decrease • Stainless steel +7% increase Price Changes: • Q1 2021: IG Majors pricing mechanism is adjusted quarterly or semi-annually • Tiered distributor pricing for IG independents in place
© 2022 Chart Industries, Inc. Confidential and Proprietary 43 2021, 2022 Challenges, Actions & Progress (1/2) # Challenge Risk Level as of 12/31/2021 (as described on Q4 2021 earnings call) Risk Level as of 3/31/2022 Risk Level as of 4/29/2022 Risk Level as of 7/29/2022 Ongoing actions 1 Material Cost and Availability Improving availability of material; continue to anticipate that we will operate at these higher costs through 1H 2022 (view is in line with what was said on Q3 2021 earnings call regarding timing). Availability of certain material was shut down completely, or input material Availability of material improving yet costs are still very volatile Costs are tempering but regional availability still challenging in places such as EU • Additional safety stock purchased when cost on respective material is lower • Purchasing in China for other use • Quote validity <1 week • Added terms for matl adjustments to contracts 2 Supply Chain Disruption Improving somewhat from Q3 2021 perspective given the availability of transport Further disrupted by conflict and China COVID-19 lockdowns Improving with certain geographies more challenged than others; for EU, risk of gas and energy supply Same as 4/29/2022 update • Alternative sources and localization of supply • Reviewing Bills of Material to utilize alternative components or input matls • Working with customers on delivery of shipments • Qualifying external EU suppliers 3 Force Majeure on Delivery of Gas to Industrial Customer Facilities Force Majeure put back in place in Georgia, USA in early January 2022 and is still currently in place. Force Majeure lifted on nitrogen. Force Majeure issued for helium Force Majeures continue • We are utilizing different approaches to ensure appropriate amounts of helium are available for our shops, including a using helium transport trailer from our leasing fleet
© 2022 Chart Industries, Inc. Confidential and Proprietary 44 2021, 2022 Challenges, Actions & Progress (2/2) # Challenge Risk Level as of 12/31/2021 (as described on Q4 2021 earnings call) Risk Level as of 3/31/2022 Risk Level as of 4/29/2022 Risk Level as of 07/29/2022 Actions Taken / In Progress as of 4/29/2022 4 Labor Availability & Cost including COVID-19 resurgence Labor Needs continue to be addressed and limited turnover in our shops Unchanged from 12/31 Unchanged from 12/31 Unchanged from 4/29/2022 with the exception of less COVID-19 absences • Continuing to train our own welders • Various talent development programs • Partnerships with universities and other organization for access to talent, including military veterans 5 Weather Impacts Did not have Q4 2021 weather disruptions Had Texas freeze power/gas challenge for one day and one evening shift at Beasley, TX facility No April 2022 or Q2 known events While we had Q2 events impact us, we do not have anything forecasted for 2H 2022 • N/A 6 China Improved with no further electricity lockdowns/ restrictions at the current time COVID-19 government lockdowns impacting our production by one week Improving COVID-19 labor situation yet logistics impact in both Shanghai port and airports and the reopening in Shanghai is currently unpredictable; government stimulus on demand TBD Significantly better macro situation in Q3 2022 anticipated than experienced in Q2 2022 yet component shortages and lead times still a challenge • Chart China team stayed on campus to ship in both Q1 and Q2 2022 • Government proactively supporting economic policy