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): April 28, 2023
____________________________________
CHART INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
_____________________________________
| Delaware | 001-11442 | 34-1712937 |
|---|---|---|
| (State of other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
2200 Airport Industrial Drive, Suite 100, Ball Ground, Georgia 30107
(Address of principal executive offices) (ZIP Code)
Registrant’s telephone number, including area code: (770) 721-8800
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 |
| Depositary shares, each representing 1/20th interest in a share of 6.75% Series B Mandatory Convertible Preferred Stock, par value $0.01 | GTLS.PRB | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 28, 2023, Chart Industries, Inc. (the “Company”) issued a news release announcing the Company’s financial results for the first quarter ended March 31, 2023, as well as supplemental information for the first quarter ended March 31, 2023. 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.
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: April 28, 2023 | |
| By: /s/ Jillian C. Evanko <br>Jillian C. Evanko<br><br>President and Chief Executive Officer |
3
Document
Exhibit 99.1
Chart Industries Reports 2023 First Quarter Results and Increases 2023 Outlook
Atlanta, Georgia – April 28, 2023 - Chart Industries, Inc. (NYSE: GTLS) today reported results for the first quarter ended March 31, 2023. All first quarter 2023 results are Chart standalone full first quarter 2023 plus our stub ownership period of Howden following the completion of the acquisition from March 17, 2023 to March 31, 2023 unless otherwise noted. Further details can be found in the supplemental presentation accompanying this release and published in the investor relations section of our website.
•First quarter 2023 record backlog for Chart of $3.9 billion, as well as record backlog for both Chart standalone and Howden standalone
•First quarter 2023 orders of $747.7 million, driven by strong, continued broad-based demand across our end markets (including $121.1 million from Howden during our ownership period)
•Record sales of $537.9 million including record sales in Heat Transfer Systems (“HTS”) and Repair, Service and Leasing (“RSL”)
•Reported operating income of $36.2 million includes one-time costs primarily related to the Howden acquisition (which constituted 99% of the total adjusted costs); when adjusted, operating income of $72.5 million is an increase of 137% compared to the first quarter 2022
•Adjusted EBITDA of $102.2 million is 19.0% of sales, our highest adjusted EBITDA for any first quarter in our history, and reflects margin improvement from price/cost, Howden’s contribution, our full solution project offerings, and record RSL gross profit and operating profit
•Reported basic earnings per share (“EPS”) of ($0.51), or diluted EPS of ($0.46); when adjusted for one-time costs primarily related to the Howden acquisition, adjusted diluted EPS was $1.41
•Increasing our 2023 sales outlook to $3.66 billion to $3.80 billion (from $3.65 billion to $3.80 billion) and associated adjusted EBITDA of $780 million to $810 million (prior range of $770 million to $810 million) driven by earlier than previously anticipated synergy achievements to date (annualized cost synergies of $50.9 million achieved to date)
•Net cash from continuing operations of ($19.1) million and capital expenditures of $31.4 million; adjusted free cash flow of $16.1 million
•Reiterating our expected 2023 cash available for debt paydown which does not include any proceeds from potential divestitures that remain on track for completion in the second quarter 2023 or early third quarter 2023
Our first quarter 2023 results included record sales, record backlog, broad-based demand, and year-over-year improvement in reported and adjusted gross margin as a percent of sales, operating margin as a percent of sales and EBITDA margin as a percent of sales.
Our first quarter 2023 results were strong both for Chart and Howden with $747.7 million of orders booked contributing to record $3.9 billion backlog. Howden standalone, Chart standalone, and the combined business all ended the first quarter 2023 with record backlog. This includes record Chart standalone backlog in three of our four segments – Cryo Tank Solutions (“CTS”), HTS and Specialty Products.
Our broad-based global execution on pricing and on-time deliveries contributed to record sales of $537.9 million, and we are proud that our strong results are underpinned by our top priority of safety, with a March 31, 2023 combined total recordable incident rate (“TRIR”) of 0.56. Seventy-seven percent (77%) of Chart and Howden global locations have operated for more than a year without an accident. In March 2023, we had 25 of our global operations sites with 95% on-time delivery or better, and 16 of those with 100% on-time delivery.
Sales for 3 of our 4 segments, inclusive of the Howden two-week ownership period, grew more than 18% when compared to the first quarter 2022. RSL grew 144% in that timeframe, and Chart standalone first quarter 2023 RSL grew 11.2% compared to first quarter 2022. During first quarter 2023 we achieved record sales in RSL, HTS and Specialty Products (RSL and HTS had record sales on a standalone basis as well). Pro forma first quarter 2023 (Chart and Howden full quarter) sales grew approximately 15.9% excluding foreign exchange impacts when compared to the pro forma first quarter 2022 (Chart and Howden full quarter).
Numerous pricing actions taken the past two years, in conjunction with higher margin aftermarket, service and repair and more project work, delivered year-over-year first quarter 2023 reported gross profit as a percent of sales of 28.2%, a 460 basis point increase compared to the first quarter 2022. On an adjusted basis (adjusted primarily for one-time costs related to restructuring, integration and specific organic capacity installation costs), gross profit as a percent of sales was 28.6%, a 250 basis point improvement compared to the first quarter 2022.
Gross profit was negatively impacted by the low volume in our HLNG over-the-road vehicle tank product, with a decline in sales of 79% (or $11.2 million) from the first quarter 2022 to first quarter 2023. Yet even with this headwind, our operating margin increased from 5.7 to 6.7% and the related reported EBITDA margin as a percent of sales increased from 10.4% to 12.5% from first quarter 2022 to first quarter 2023. When adjusted for one-time items, of which 99% of the total adjusted costs were related to the Howden acquisition, adjusted EBITDA was 19.0%, an increase of 350 basis points compared to the first quarter 2022.
Reported basic EPS for the first quarter 2023 was ($0.51). Diluted EPS was ($0.46), or $1.41 when adjusted for costs primarily associated with the Howden transaction.
Note that in the first quarter 2023 we did not make any adjustments or addbacks to gross profit, operating income, diluted EPS or EBITDA for additional noteworthy expenses totaling approximately $5.9 million, including costs related to our La Crosse, Wisconsin required union contract vacation expense of approximately $1 million, the strategic decision to support the development of a first-of-a-kind offering for a customer that we anticipate will be a high volume offering in the future, and customer specific freight concessions.
Orders of $747.7 million included $121.1 million from Howden’s two-week stub period of ownership. Additionally, we booked a Big LNG order from Bechtel for air-cooled heat exchangers, brazed aluminum heat exchanger and ethylene storage tanks for Sempra Infrastructure’s Port Arthur Big LNG project. We also received an order for $115 million for our IPSMR® liquefaction systems from Wison Heavy Industry Co., Ltd. for small-scale LNG projects all driven by Chart’s IPSMR® technology, including one for end customer ENI. A separate order was also for brazed aluminum heat exchangers into a floating LNG application for $19.5 million. First quarter 2023 small-scale and floating LNG orders totaled $139 million, which was a 263% increase for these types of orders when compared to the first quarter of 2022. We also booked in excess of 60% more orders for hydrogen-related applications in the first quarter 2023 when compared to the first quarter 2022. We saw a continuation of rail car demand and multiple space exploration orders. And while our guidance does not include any new big LNG orders besides what is in backlog, we currently expect to book two to three additional Big LNG orders in 2023 (in addition to the first quarter 2023 Sempra Port Arthur work) and continue to have visibility to our expected ongoing Big LNG demand in the years ahead.
Macro tailwinds continue to support our end markets, including the U.S. Environmental Protection Agency’s (“EPA”) first ever proposed national standard to address PFAS contamination in drinking water, the Group of Seven (“G7”) support of continued natural gas and carbon capture and storage infrastructure, India’s green hydrogen incentives, and the U.S. Department of Energy’s (“DOE”) “Pathways to Commercial Liftoff” roadmap for scaling up advanced nuclear, clean hydrogen and long-duration energy storage.
Howden’s $121 million orders contribution to the first quarter 2023 included a wastewater treatment order in Ashbridges Bay, Canada with a new customer. This is for the first of ten compressors ordered to help manage wastewater treatment and we were selected based on improved efficiencies provided by our dual point control capabilities. This win contributed to our total Chart first quarter 2023 water treatment new build order growth of 34.6% when compared to the first quarter 2022.
Howden also booked multiple larger orders into our ownership period to end the first quarter 2023 with continued broad-based demand, including a South African main surface fan stations order for $7.8 million, a $3.4 million turbo compressor order, equipment retrofits in Vietnam and Taiwan for $3.2 million, and booster fans for an Australian customer for $2.8 million.
Howden’s industrial compressors (turbo compressors) had a record first quarter 2023 (full quarter) for orders, nearly twice their internal forecast and a record for this product line, which was driven by plants for non-ferrous Metals such as nickel, cobalt, and copper (directly linked to battery production).
Howden’s full standalone first quarter 2023 aftermarket, service and repair book-to-bill was 1.23. Howden also executed 23 long-term service agreements (“LTSA”) and framework agreements in the first quarter 2023 covering fans, compressors, steam turbines, and blowers, including a new LTSA with Sibanye Stillwater in South Africa for a three-year period.
We continued to penetrate our broad-based, global addressable market with 21 first-of-a-kind orders, orders with 90 new customers, and 82 orders that each were greater than $1 million, including 28 from Howden in our first quarter 2023 two-week stub period ownership.
Order momentum has continued in April 2023. Some examples of these wins include the finalization of a $5.3 million award of Marine blowers for South Korean ship builders, an order for LNG regas skid with a European customer for $4.8 million, a So2 blower order for $3.8 million, Howden reciprocating compressors for $3.3 million, South African Power customer spares and service orders of $2.8 million, another early commercial synergy win for hydrogen fueling station compressors for over $2.3 million, brazed aluminum heat exchanger (BAHX) energy applications with two different customers totaling $3.4 million, a water treatment solution for a mining customer in Canada of $1.1 million, offshore compressor parts and service for $1.1 million, 15 ISO containers for one customer at $1 million and multiple liquid hydrogen storage tank orders totaling over $7.5 million.
Synergy execution is on-track to achieve our year-one targets of annualized cost synergies of $175 million and commercial synergies of $150 million.
We continue to make early and ahead of schedule progress on our cost and commercial synergies related to the Howden integration. We reiterate our year-one cost synergy target of $175 million and our year-one commercial synergy target of $150 million (which is not included in our 2023 outlook).
To date, we have achieved over $50.9 million of annualized cost synergies, ranging from reductions in overlapping headcount, to insourcing savings, to elimination of redundant systems and activities. Details can be found in the supplemental presentation to this release on slides 31 to 39. Additionally, we are excited about the early achievement of commercial cross-selling and
the further identification of additional commercial opportunities by our team. Since closing on the Howden acquisition, we have expanded existing memorandums of understanding and signed new partnerships with 23 different partners to include both Chart and Howden content, including expanded agreements with ABB, and Carbon Cure and a new agreement with Iwatani. These 23 partnerships represent significant order potential for Chart in both the near and long-term, and we anticipate receiving orders before year-end 2023 from approximately 60% of these partners.
We have already booked wins through the utilization of Howden’s field service teams on Chart installation work in the United Kingdom, the securing of a multi-million dollar order for our small-scale carbon capture technology in biogas applications as the result of Howden’s expertise in this end market, as well as a multi-million dollar hydrogen compression win for gaseous fueling stations via one of Chart’s existing hydrogen customers.
An example of a commercial synergy win is utilizing Howden’s hydrogen compression in a series of hydrogen fueling stations in California, USA. The customer is a hydrogen liquefaction customer of Chart and is working with another party on gaseous stations. Chart standalone would not have had any opportunity for content on the gaseous hydrogen stations. Through having Howden compression in-house, we were able to win a $2.36 million order for Howden content and in conjunction with this commercial win, we have over $20 million dollars of future opportunity on Howden compression with these two customers for multiple hydrogen applications. In addition, in this same order, we are able to achieve a cost synergy by bringing the packaging in-house to a Chart United States location, that otherwise would have been outsourced by Howden on a standalone basis.
“We are extremely pleased to have closed on the acquisition of Howden earlier than anticipated and even more so with our synergy accomplishments in the first six weeks of operating as a combined company,” stated Jill Evanko, Chart’s CEO and President. “Not only did we close the first quarter 2023 with broad-based strength in the order book and multiple records, our first quarter 2023 adjusted EBITDA margin of 19.0% demonstrates the financial strength of the combined business.”
Focus on deleveraging and achieving our target year-end 2024 net leverage ratio range of 2.5X to 2.9X, with March 31, 2023 net leverage ratio for our banking covenant of 4.08X.
First quarter 2023 net cash from continuing operations was ($19.1) million. Capital expenditures of $31.4 million included $11 million related to the land for our Theodore, Alabama jumbo tank facility. Adjusted free cash flow of $16.1 million included adjustments for interest and bank fees, acquisition finance fees, Howden and legacy deal-related costs, and other operational addbacks, net of tax effects. Our first quarter 2023 net leverage ratio was 4.08X, better than our previously forecasted net leverage ratio of 4.25X.
In addition to funding the Howden acquisition on March 17, 2023, during the stub period we also funded approximately $75 million for the completion of the settlement of the Pacific Fertility Clinic lawsuits related to the divested Cryobio business, approximately $11 million for the land related to our Theodore, Alabama jumbo tank site expansion, and approximately $44 million related to Howden specific payments; none of these are cash outlays that will repeat.
We currently anticipate moving to the signing stage within the next several months on the two previously communicated potential product line divestitures, with one of these products lines expected to sign within the second quarter 2023, and the second within the second quarter 2023 or the first part of the third quarter 2023. More information can be found on slide 42 of the supplemental presentation.
We also have an agreed upon term sheet for the sale of a small Chart product line, which is expected to close, subject to the satisfaction of customary closing conditions, in the first part of the second quarter 2023, for 4.25 million euros. This small product line sale is contemplated in our guidance and will immediately improve our gross margin, operating margin and EBITDA margin.
Increasing our 2023 outlook and reiterating our 2024 adjusted EBITDA outlook.
Given the strong start to our synergy achievement, the continued demand in our commercial pipeline of the combined business, and our first quarter 2023 record backlog, we are raising our outlook for 2023 sales to be in the anticipated range of $3.66 billion to $3.80 billion (from the prior range of $3.65 billion to $3.80 billion), with associated adjusted EBITDA of $780 million to $810 million (from the prior range of $770 million to $810 million).
Our 2023 outlook for adjusted diluted EPS is in the expected range of $5.50 to $6.70 (unchanged from prior outlook) on approximately 47 million shares outstanding. Our 2023 outlook for free cash flow is in the anticipated range of $300 million to $350 million excluding any impacts from potential divestitures (unchanged from prior outlook), and our cash available for debt paydown is expected to be in the range of $275 million to $325 million (unchanged from prior outlook).
We expect to see the normal second quarter sequential increase in both Chart legacy and Howden’s business. Each quarter of a year typically represents approximately 25% of a full year for Howden. Regarding Big LNG projects, based on current customer schedules we expect to see a sequential increase in Big LNG sales and earnings in the second half 2023 compared to the first half 2023.
While our guidance does not include any new big LNG orders besides what is in backlog, we expect to book two to three additional Big LNG orders in 2023 (in addition to the first quarter
2023 Sempra Port Arthur work) and continue to expect ongoing Big LNG demand in the years ahead.
Additionally, we reiterate our 2024 adjusted EBITDA outlook of approximately $1.3 billion.
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 governmental initiatives, including executive orders and other information that is not historical in nature. Forward-looking statements may be identified by terminology such as "may," "will," "should," "could," "expects," "anticipates," "believes," "projects," "forecasts," “outlook,” “guidance,” "continue," “target,” or the negative of such terms or comparable terminology.
Forward-looking statements contained in this press release or in other statements made by the Company are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control, that could cause the Company's actual results to differ materially from those matters expressed or implied by forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements include: the Company’s ability to successfully integrate the Howden acquisition and other recent acquisitions and achieve the anticipated revenue, earnings, accretion and other benefits from these acquisitions; the Company’s ability to successfully close on its intention to divest the two product lines and achieve the anticipated proceeds from these divestitures; slower than anticipated growth and market acceptance of new clean energy product offerings; inability to achieve expected pricing increases or continued supply chain challenges including volatility in raw materials and supply; risks relating to the outbreak and continued uncertainty associated with the coronavirus (COVID-19) and the conflict between Russia and Ukraine including potential energy shortages in Europe and elsewhere; and the other factors discussed in Item 1A (Risk Factors) in the Company’s most recent Annual Report on Form 10-K filed with the SEC, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement.
USE OF NON-GAAP FINANCIAL INFORMATION
This press release contains non-GAAP financial information, including adjusted gross profit as a percent of sales, adjusted net income, adjusted earnings per diluted share, net income attributable to Chart Industries, Inc. adjusted, free cash flow and adjusted free cash flow and
EBITDA and adjusted EBITDA. For additional information regarding the Company's use of non-GAAP financial information, as well as reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), please see the reconciliation pages at the end of this news release and the slides titled "First Quarter 2023 Earnings Per Share," “Segment Information,” “First Quarter 2023 Free Cash Flow”, “Segment Information”, and “First Quarter 2023 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 second quarter 2023 outlook, and 2023 and 2024 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 first quarter 2023 financial results on a conference call on Friday, April 28, 2022 at 8:30 a.m. ET. 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. Please log-in or dial-in at least five minutes prior to the start time.
A live webcast and replay will be available on the Company's investor relations website, ir.chartindustries.com.
About Chart Industries, Inc.
Chart Industries, Inc. is a leading independent global leader in the design, engineering, and manufacturing of process technologies and equipment for gas and liquid molecule handing for the Nexus of Clean™ - clean power, clean water, clean food, and clean industrials, regardless of molecule. The company’s unique product and solution portfolio across stationary and rotating equipment is used in every phase of the liquid gas supply chain, including engineering, service and repair from installation to preventive maintenance and digital monitoring. Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and CO2 capture amongst other applications. Chart is committed to excellence in environmental, social and corporate governance (ESG) issues both for its company as well as its customers. With over 48 global manufacturing locations and 41 service centers from the United States to Asia, Australia, India, Europe and South America, the company maintains accountability and transparency to its team members, suppliers, customers and communities. To learn more, visit www.chartindustries.com
For more information, click here:
http://ir.chartindustries.com/
Investor Relations Contact:
John Walsh
VP, Investor Relations
1-770-721-8899
john.walsh@chartindustries.com
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars and shares in millions, except per share amounts)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, 2023 | March 31, 2022 | December 31, 2022 | ||||
| Sales | $ | 537.9 | $ | 354.1 | $ | 441.4 |
| Cost of sales | 386.4 | 270.4 | 317.1 | |||
| Gross profit | 151.5 | 83.7 | 124.3 | |||
| Selling, general, and administrative expenses | 93.5 | 53.5 | 55.2 | |||
| Amortization expense | 21.8 | 10.1 | 9.0 | |||
| Operating expenses | 115.3 | 63.6 | 64.2 | |||
| Operating income (1) (2) (3) (4) | 36.2 | 20.1 | 60.1 | |||
| Acquisition related finance fees | 26.1 | — | 37.0 | |||
| Interest expense, net | 25.5 | 3.2 | 15.5 | |||
| Financing costs amortization | 2.8 | 0.7 | 0.8 | |||
| Unrealized loss (gain) on investments in equity securities | 2.0 | 2.6 | (24.0) | |||
| Foreign currency (gain) loss | (1.1) | 1.6 | 1.8 | |||
| Other expense (income) | 0.8 | (0.7) | (0.4) | |||
| (Loss) income from continuing operations before income taxes and equity in loss of unconsolidated affiliates, net | (19.9) | 12.7 | 29.4 | |||
| Income tax (benefit) expense | (6.4) | 2.1 | 11.9 | |||
| (Loss) income from continuing operations before equity in loss of unconsolidated affiliates, net | (13.5) | 10.6 | 17.5 | |||
| Equity in loss of unconsolidated affiliates, net | (0.4) | (0.3) | (0.1) | |||
| Net (loss) income from continuing operations | (13.9) | 10.3 | 17.4 | |||
| Loss from discontinued operations, net of tax | (0.4) | — | (57.6) | |||
| Net (loss) income | (14.3) | 10.3 | (40.2) | |||
| Less: Income attributable to noncontrolling interests of continuing operations, net of taxes | 0.7 | 0.1 | 0.2 | |||
| Net (loss) income attributable to Chart Industries, Inc. | $ | (15.0) | $ | 10.2 | $ | (40.4) |
| Amounts attributable to Chart common stockholders | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| (Loss) income from continuing operations | $ | (14.6) | $ | 10.2 | $ | 17.2 |
| Less: Mandatory convertible preferred stock dividend requirement | 6.8 | — | 1.4 | |||
| (Loss) income from continuing operations attributable to Chart | (21.4) | 10.2 | 15.8 | |||
| Loss from discontinued operations, net of tax | (0.4) | — | (57.6) | |||
| Net (loss) income attributable to Chart common stockholders | $ | (21.8) | $ | 10.2 | $ | (41.8) |
| Basic earnings per common share attributable to Chart Industries, Inc. | ||||||
| (Loss) income from continuing operations | $ | (0.51) | $ | 0.28 | $ | 0.42 |
| Loss from discontinued operations | (0.01) | — | (1.54) | |||
| Net (loss) income attributable to Chart Industries, Inc. | $ | (0.52) | $ | 0.28 | $ | (1.12) |
| Diluted earnings per common share attributable to Chart Industries, Inc. | ||||||
| (Loss) income from continuing operations | $ | (0.51) | $ | 0.25 | $ | 0.37 |
| Loss from discontinued operations | (0.01) | — | (1.34) | |||
| Net (loss) income attributable to Chart Industries, Inc. | $ | (0.52) | $ | 0.25 | $ | (0.97) |
| Weighted-average number of common shares outstanding: | ||||||
| Basic | 41.94 | 35.83 | 37.42 | |||
| Diluted (5) (6) (7) | 41.94 | 40.79 | 42.93 |
_______________
(1)Includes depreciation expense of:
•$11.5, $10.4 and $10.5 for the three months ended March 31, 2023, March 31, 2022 and December 31, 2022, respectively.
(2)Includes restructuring costs of:
•$1.6, $0.1, and $0.1 for the three months ended March 31, 2023, March 31, 2022 and December 31, 2022, respectively.
(3)Includes acquisition-related contingent consideration credits in our Specialty Products segment of:
•$(6.7), $(0.8), and $(1.1) for the three months ended March 31, 2023, March 31, 2022 and December 31, 2022, respectively.
(4)Includes deal-related and integration costs of:
•$81.7 for the three months ended March 31, 2023 which includes costs related to the Howden acquisition such as interest, deal advisory and financing costs and $4.2 and $1.6 for the three months ended March 31, 2022 and December 31, 2022, respectively.
(5)Does not include an additional 4.35 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, 2023 as they are anti-dilutive for the period. Also, 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 2.40 for the three months ended March 31, 2023. Does not include an additional 0.18 shares issuable upon assumed conversion and exercise of share based awards as they are anti-dilutive for the three months ended March 31, 2023.
(6)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.
(7)Includes an additional 5.23 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the fourth quarter 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 2.80 for the fourth quarter 2022.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
| Three Months Ended | |||||||
|---|---|---|---|---|---|---|---|
| March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||
| Net Cash (Used In) Provided By Operating Activities | $ | (91.1) | $ | (22.2) | $ | 30.5 | |
| Investing Activities | |||||||
| Acquisition of businesses, net of cash acquired | (4,339.8) | (0.8) | — | ||||
| Investments | (2.3) | (3.9) | (5.0) | ||||
| Capital expenditures | (31.4) | (12.6) | (26.0) | ||||
| Proceeds from sale of assets | 0.1 | — | — | ||||
| Government grants and other | (0.6) | (0.2) | (0.3) | ||||
| Net Cash Used In Investing Activities | (4,374.0) | (17.5) | (31.3) | ||||
| Financing Activities | |||||||
| Borrowings on revolving credit facility | 634.8 | 254.0 | 132.0 | ||||
| Repayments on revolving credit facility | (45.0) | (235.9) | (617.0) | ||||
| Borrowings on senior secured and senior unsecured notes | — | — | 1,940.0 | ||||
| Borrowings on term loan | 1,463.7 | — | — | ||||
| Payments for debt issuance costs | (28.8) | — | (4.7) | ||||
| Proceeds from issuance of common stock, net | 11.7 | — | 675.5 | ||||
| Proceeds from issuance of preferred stock, net | — | — | 388.4 | ||||
| Payments for equity issuance costs | — | — | (0.7) | ||||
| Proceeds from exercise of stock options | 0.1 | 1.0 | 0.3 | ||||
| Common stock repurchases from share-based compensation plans | (2.6) | (3.2) | (0.2) | ||||
| Dividends paid on mandatory convertible preferred stock | (6.9) | -6900000 | — | ||||
| Net Cash Provided By Financing Activities | 2,027.0 | 15.9 | 2,513.6 | ||||
| Effect of exchange rate changes on cash | 2.2 | 1.3 | 3.0 | ||||
| Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents | (2,435.9) | (22.5) | 2,515.8 | ||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period (1) | 2,605.3 | 122.4 | 89.5 | ||||
| CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD (1) | $ | 169.4 | $ | 99.9 | $ | 2,605.3 |
(1)Includes restricted cash and restricted cash equivalents of $2.5, $1,941.7 and $0.2 as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
| March 31,<br>2023 | December 31,<br>2022 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | $ | 166.9 | $ | 663.6 |
| Restricted cash | 2.5 | 1,941.7 | ||
| Accounts receivable, net | 747.1 | 278.4 | ||
| Inventories, net | 601.8 | 357.9 | ||
| Other current assets | 714.0 | 449.3 | ||
| Property, plant, and equipment, net | 738.4 | 430.0 | ||
| Goodwill | 2,912.8 | 992.0 | ||
| Identifiable intangible assets, net | 3,105.8 | 535.3 | ||
| Equity method investments | 134.2 | 93.0 | ||
| Investments in equity securities | 65.1 | 96.5 | ||
| Other assets | 108.7 | 64.2 | ||
| TOTAL ASSETS | $ | 9,297.4 | $ | 5,901.9 |
| LIABILITIES AND EQUITY | ||||
| Current liabilities | $ | 1,781.2 | $ | 1,081.6 |
| Long-term debt | 4,051.6 | 2,039.8 | ||
| Other long-term liabilities | 757.7 | 96.2 | ||
| Equity | 2,706.9 | 2,684.3 | ||
| TOTAL LIABILITIES AND EQUITY | $ | 9,297.4 | $ | 5,901.9 |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
OPERATING SEGMENTS (UNAUDITED)
(Dollars in millions)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||
| Sales | |||||||||
| Cryo Tank Solutions | $ | 127.2 | $ | 118.1 | $ | 126.4 | |||
| Heat Transfer Systems | 167.5 | 79.3 | 148.4 | ||||||
| Specialty Products | 127.3 | 107.5 | 117.4 | ||||||
| Repair, Service & Leasing | 120.1 | 49.3 | 55.2 | ||||||
| Intersegment eliminations | (4.2) | (0.1) | (6.0) | ||||||
| Consolidated | $ | 537.9 | $ | 354.1 | $ | 441.4 | |||
| Gross Profit | |||||||||
| Cryo Tank Solutions | $ | 22.5 | $ | 25.4 | $ | 28.9 | |||
| Heat Transfer Systems | 41.3 | 10.1 | 37.2 | ||||||
| Specialty Products | 36.2 | 32.6 | 32.4 | ||||||
| Repair, Service & Leasing | 51.5 | 15.6 | 25.8 | ||||||
| Consolidated | $ | 151.5 | $ | 83.7 | $ | 124.3 | |||
| Gross Profit Margin | |||||||||
| Cryo Tank Solutions | 17.7 | % | 21.5 | % | 22.9 | % | |||
| Heat Transfer Systems | 24.7 | % | 12.7 | % | 25.1 | % | |||
| Specialty Products | 28.4 | % | 30.3 | % | 27.6 | % | |||
| Repair, Service & Leasing | 42.9 | % | 31.6 | % | 46.7 | % | |||
| Consolidated | 28.2 | % | 23.6 | % | 28.2 | % | |||
| Operating Income (Loss) | |||||||||
| Cryo Tank Solutions | $ | 4.9 | $ | 14.1 | $ | 17.8 | |||
| Heat Transfer Systems | 27.3 | (0.2) | 27.9 | ||||||
| Specialty Products | 22.1 | 16.2 | 19.2 | ||||||
| Repair, Service & Leasing | 33.8 | 8.3 | 18.7 | ||||||
| Corporate | (51.9) | (18.3) | (23.5) | ||||||
| Consolidated (1) (2) (3) | $ | 36.2 | $ | 20.1 | $ | 60.1 | |||
| Operating Margin (Loss) | |||||||||
| Cryo Tank Solutions | 3.9 | % | 11.9 | % | 14.1 | % | |||
| Heat Transfer Systems | 16.3 | % | (0.3) | % | 18.8 | % | |||
| Specialty Products | 17.4 | % | 15.1 | % | 16.4 | % | |||
| Repair, Service & Leasing | 28.1 | % | 16.8 | % | 33.9 | % | |||
| Consolidated | 6.7 | % | 5.7 | % | 13.6 | % |
_______________
(1)Restructuring costs/(credits) for the three months ended:
•March 31, 2023 were $1.6 ($0.8 - Repair, Service & Leasing and $0.8 - Cryo Tank Solutions).
•March 31, 2022 were $0.1 in our Heat Transfer Systems segment.
•December 31, 2022 were $0.1 ($0.2 - Heat Transfer Systems and $(0.1) - Repair, Service & Leasing).
(2)Includes acquisition-related contingent consideration credits in our Specialty Products Segment of:
•$(6.7), $(0.8), and $(1.1) for the three months ended March 31, 2023, March 31, 2022 and December 31, 2022, respectively.
(3)Includes deal-related and integration costs of:
•$81.7 for the three months ended March 31, 2023 which includes costs related to the Howden acquisition such as interest, deal advisory and financing costs and $4.2 and $1.6 for the three months ended March 31, 2022 and December 31, 2022, respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
ORDERS AND BACKLOG (UNAUDITED)
(Dollars in millions)
| Three Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2023 | March 31,<br>2022 | December 31,<br>2022 | ||||||||||||
| Orders | ||||||||||||||
| Cryo Tank Solutions | $ | 145.3 | $ | 142.4 | $ | 139.7 | ||||||||
| Heat Transfer Systems | 311.3 | 354.1 | 235.8 | |||||||||||
| Specialty Products | 179.5 | 100.5 | 96.4 | |||||||||||
| Repair, Service & Leasing | 123.7 | 43.4 | 66.3 | |||||||||||
| Intersegment eliminations | (12.1) | (3.6) | (12.3) | |||||||||||
| Consolidated | $ | 747.7 | $ | 636.8 | $ | 525.9 | As of | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| March 31,<br>2023 | March 31,<br>2022 | December 31,<br>2022 | ||||||||||||
| Backlog | ||||||||||||||
| Cryo Tank Solutions | $ | 531.3 | $ | 365.8 | $ | 371.0 | ||||||||
| Heat Transfer Systems | 1,590.1 | 639.5 | 1,300.1 | |||||||||||
| Specialty Products | 1,316.2 | 418.8 | 645.9 | |||||||||||
| Repair, Service & Leasing | 539.7 | 53.6 | 57.0 | |||||||||||
| Intersegment eliminations | (45.3) | (0.7) | (35.9) | |||||||||||
| Consolidated | $ | 3,932.0 | $ | 1,477.0 | $ | 2,338.1 |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF BASIC EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. TO NORMALIZED NON-DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES INC. AND ADJUSTED NON-DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. (UNAUDITED)
(Dollars in millions, except per share amounts)
| Q1 2023 Diluted EPS | Q1 2023 Basic EPS | Q1 2022 Basic EPS | Change vs. Q1 2023 | |||||
|---|---|---|---|---|---|---|---|---|
| Amounts attributable to Chart common stockholders | ||||||||
| (Loss) income from continuing operations | (14.6) | (14.6) | 10.2 | (24.8) | ||||
| Less: Mandatory convertible preferred stock dividend requirement | 6.8 | 6.8 | — | 6.8 | ||||
| Reported (loss) income from continuing operations attributable to Chart (U.S. GAAP) | (21.4) | (21.4) | 10.2 | (31.6) | ||||
| (Loss) earnings per common share attributable to Chart Industries, Inc. – continuing operations | $ | (0.46) | $ | (0.51) | $ | 0.28 | $ | (0.79) |
| Investment equities mark-to-market, net of FX (1) | 0.06 | 0.06 | 0.14 | (0.08) | ||||
| Debt and financing costs | 1.29 | 1.43 | — | 1.43 | ||||
| Mandatory convertible preferred stock dividend | 0.15 | 0.16 | — | 0.16 | ||||
| Tax effects | (0.31) | (0.35) | (0.03) | (0.32) | ||||
| Normalized earnings per common share attributable to Chart Industries, Inc. -continuing operations (non-GAAP) | $ | 0.73 | $ | 0.79 | $ | 0.39 | $ | 0.40 |
| Deal related and integration costs (2) | 0.55 | 0.61 | 0.12 | 0.49 | ||||
| Howden amortization | 0.25 | 0.28 | — | 0.28 | ||||
| Startup costs - organic | 0.03 | 0.03 | 0.05 | (0.02) | ||||
| Restructuring & related costs (3) | 0.03 | 0.03 | 0.15 | (0.12) | ||||
| Other one-time items | 0.01 | 0.01 | — | 0.01 | ||||
| Tax effects | (0.19) | (0.21) | (0.06) | (0.15) | ||||
| Adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) | $ | 1.41 | 1.54 | 0.65 | 0.89 | |||
| Share Count | 46.47 | 41.94 |
_____________
1.Includes the mark-to-market of our inorganic investments in Mcphy, Stabilis and other minority investments.
2.Includes investment banker fee, third party support fees, and hedge FX impact for the three months ended March 31, 2023.
3.Includes restructuring costs of:
•$1.6 and $0.1 for the three months ended March 31, 2023 and March 31, 2022, respectively.
_____________
Normalized non-diluted earnings per common share attributable to Chart Industries, Inc. and adjusted non-diluted earnings per common share attributable to Chart Industries, Inc. are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to earnings per share in accordance with U.S. GAAP. Management believes that normalized non-diluted earnings per common share attributable to Chart Industries, Inc. and adjusted non-diluted earnings per common share attributable to Chart Industries, Inc. facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO CHART INDUSTRIES, INC. TO NET INCOME, ADJUSTED (UNAUDITED)
(Dollars in millions)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31,<br>2023 | March 31,<br>2022 | December 31,<br>2022 | ||||
| Net (loss) income attributable to Chart Industries, Inc. (U.S. GAAP) | $ | (15.0) | $ | 10.2 | $ | (40.4) |
| Income attributable to noncontrolling interests of continuing operations, net of taxes (U.S. GAAP) | 0.7 | 0.1 | 0.2 | |||
| Net (loss) income (U.S. GAAP) | (14.3) | 10.3 | (40.2) | |||
| Financing costs amortization | 2.8 | 0.7 | 0.8 | |||
| Unrealized foreign currency transaction (gain) loss | 1.9 | (1.1) | 0.1 | |||
| Employee share-based compensation expense | 4.0 | 3.3 | 2.7 | |||
| Realized loss on investment of equity securities | — | — | 0.3 | |||
| Unrealized loss (gain) on investment in equity securities | 2.0 | 2.6 | (24.0) | |||
| Realized gain on equity method investment | — | — | (0.3) | |||
| Equity in loss of unconsolidated affiliates, net | 0.5 | 0.3 | 0.2 | |||
| Deferred income tax benefit | 3.5 | — | (1.7) | |||
| Other non-cash operating activities | 0.1 | 2.0 | 7.9 | |||
| Net (loss) income adjusted (non-GAAP) | $ | 0.5 | $ | 18.1 | $ | (54.2) |
_______________
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 (USED IN) PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW AND ADJUSTED FREE CASH FLOW (UNAUDITED)
(Dollars in millions)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31,<br>2023 | March 31,<br>2022 | December 31,<br>2022 | ||||
| Net cash (used in) provided by operating activities (U.S. GAAP) | $ | (91.1) | $ | (22.2) | $ | 30.5 |
| Capital expenditures | (31.4) | (12.6) | (26.0) | |||
| Free cash flow (non-GAAP) | (122.5) | (34.8) | 4.5 |
_______________
Free cash flow is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to net cash provided by (used in) operating activities in accordance with U.S. GAAP. Management believes that free cash flow facilitates useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of this non-GAAP measure may not be comparable to the calculations of similarly titled measures reported by other companies.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED)
(Dollars in millions)
| Three Months Ended March 31, 2023 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 127.2 | $ | 167.5 | $ | 127.3 | $ | 120.1 | $ | (4.2) | $ | — | $ | 537.9 | |||||||
| Gross profit as reported (U.S. GAAP) | 22.5 | 41.3 | 36.2 | 51.5 | — | — | 151.5 | ||||||||||||||
| Restructuring, transaction-related and other one-time costs | 0.4 | 1.0 | 0.7 | — | — | — | 2.1 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 22.9 | $ | 42.3 | $ | 36.9 | $ | 51.5 | $ | — | $ | — | $ | 153.6 | |||||||
| Adjusted gross profit margin (non-GAAP) | 18.0 | % | 25.3 | % | 29.0 | % | 42.9 | % | — | % | — | % | 28.6 | % | |||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 4.9 | $ | 27.3 | $ | 22.1 | $ | 33.8 | $ | — | $ | (51.9) | 36.2 | ||||||||
| Restructuring, transaction-related and other one-time costs | 0.4 | 1.1 | (4.9) | 11.6 | — | 28.1 | 36.3 | ||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 5.3 | $ | 28.4 | $ | 17.2 | $ | 45.4 | $ | — | $ | (23.8) | $ | 72.5 | |||||||
| Adjusted operating margin (non-GAAP) | 4.2 | % | 17.0 | % | 13.5 | % | 37.8 | % | — | % | — | % | 13.5 | % | |||||||
| 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 | % |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED) (CONTINUED)
(Dollars in millions)
| Three Months Ended December 31, 2022 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 126.4 | $ | 148.4 | $ | 117.4 | $ | 55.2 | $ | (6.0) | $ | — | $ | 441.4 | |||||||
| Gross profit as reported (U.S. GAAP) | 28.9 | 37.2 | 32.4 | 25.8 | — | — | 124.3 | ||||||||||||||
| Restructuring, transaction-related and other one-time costs | 1.0 | 4.5 | 2.0 | 0.3 | — | — | 7.8 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 29.9 | $ | 41.7 | $ | 34.4 | $ | 26.1 | $ | — | $ | — | $ | 132.1 | |||||||
| Adjusted gross profit margin (non-GAAP) | 23.7 | % | 28.1 | % | 29.3 | % | 47.3 | % | — | % | — | % | 29.9 | % | |||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 17.8 | $ | 27.9 | $ | 19.2 | $ | 18.7 | $ | — | $ | (23.5) | 60.1 | ||||||||
| Restructuring, transaction-related and other one-time costs | 1.1 | 4.4 | 1.6 | 0.4 | — | 7.4 | 14.9 | ||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 18.9 | $ | 32.3 | $ | 20.8 | $ | 19.1 | $ | — | $ | (16.1) | $ | 75.0 | |||||||
| Adjusted operating margin (non-GAAP) | 15.0 | % | 21.8 | % | 17.7 | % | 34.6 | % | — | % | — | % | 17.0 | % |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED) (CONTINUED)
(Dollars in millions)
_______________
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.
2
gtlsq12023earningscallde
Chart Industries, Inc. FIRST QUARTER 2023 EARNINGS APRIL 28, 2023
GTLS: GAS TO LIQUID SYSTEMS® Forward Looking Statements (1/2) CERTAIN STATEMENTS MADE IN THIS INVESTOR PRESENTATION ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING CHART’S BUSINESS PLANS, INCLUDING STATEMENTS REGARDING OBJECTIVES, FUTURE ORDERS, REVENUES, MARGINS, EARNINGS, PERFORMANCE OR OUTLOOK, BUSINESS OR INDUSTRY TRENDS AND OTHER INFORMATION THAT IS NOT HISTORICAL IN NATURE. FORWARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “COULD,” “EXPECTS,” “ANTICIPATES,” “BELIEVES,” “PROJECTS,” “FORECASTS,” “INDICATORS”, “OUTLOOK,” “GUIDANCE,” “CONTINUE,” “TARGET,” OR THE NEGATIVE OF SUCH TERMS OR COMPARABLE TERMINOLOGY. FORWARD-LOOKING STATEMENTS CONTAINED IN THIS PRESENTATION OR IN OTHER STATEMENTS MADE BY CHART ARE MADE BASED ON MANAGEMENT’S EXPECTATIONS AND BELIEFS CONCERNING FUTURE EVENTS IMPACTING CHART AND ARE SUBJECT TO UNCERTAINTIES AND FACTORS RELATING TO CHART’S OPERATIONS AND BUSINESS ENVIRONMENT, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND CHART’S CONTROL, THAT COULD CAUSE CHART’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE MATTERS EXPRESSED OR IMPLIED BY FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE CHART’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS INCLUDE: CHART MAY BE UNABLE TO ACHIEVE THE ANTICIPATED BENEFITS OF THE ACQUISITION OF HOWDEN (THE “ACQUISITION”) (INCLUDING WITH RESPECT TO ESTIMATED FUTURE COST SYNERGIES); REVENUES FOLLOWING THE ACQUISITION MAY BE LOWER THAN EXPECTED; OPERATING COSTS, CUSTOMER LOSSES, AND BUSINESS DISRUPTION (INCLUDING, WITHOUT LIMITATION, DIFFICULTIES IN MAINTAINING RELATIONSHIPS WITH EMPLOYEES, CUSTOMERS AND SUPPLIERS) RESULTING FROM THE ACQUISITION MAY BE GREATER THAN EXPECTED; OUR ABILITY TO SUCCESSFULLY CLOSE ON OUR INTENTION TO DIVEST TWO PRODUCT LINES AND ACHIEVE THE ANTICIPATED PROCEEDS FROM THOSE DIVESTITURES; SLOWER THAN ANTICIPATED GROWTH AND MARKET ACCEPTANCE OF NEW CLEAN ENERGY PRODUCT OFFERINGS; INABILITY TO ACHIEVE EXPECTED PRICING INCREASES OR CONTINUED SUPPLY CHAIN CHALLENGES INCLUDING VOLATILITY IN RAW MATERIALS AND SUPPLY; RISKS RELATING TO THE CONFLICT BETWEEN RUSSIA AND UKRAINE, INCLUDING POTENTIAL ENERGY SHORTAGES IN EUROPE AND ELSEWHERE AND THE OTHER FACTORS DISCUSSED IN ITEM 1A (RISK FACTORS) IN CHART’S MOST RECENT ANNUAL REPORT ON FORM 10-K FILED WITH THE SEC, WHICH SHOULD BE REVIEWED CAREFULLY. CHART UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENT. 2
GTLS: GAS TO LIQUID SYSTEMS® Forward Looking Statements (2/2) 3 THIS PRESENTATION CONTAINS FIRST QUARTER 2023 NON-GAAP FINANCIAL INFORMATION, INCLUDING ADJUSTED NON- DILUTED EPS, NORMALIZED BASIC EPS, “NET INCOME, ADJUSTED”, FREE CASH FLOW, ADJUSTED FREE CASH FLOW, EBITDA, ADJUSTED EBITDA, ADJUSTED OPERATING INCOME, AND ADJUSTED OPERATING MARGIN. FOR ADDITIONAL INFORMATION REGARDING THE COMPANY'S USE OF NON-GAAP FINANCIAL INFORMATION, AS WELL AS RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE FINANCIAL MEASURES CALCULATED AND PRESENTED IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES ("GAAP"), PLEASE SEE THE RECONCILIATION SLIDES TITLED “FIRST QUARTER 2023 EARNINGS PER SHARE,” “FIRST QUARTER 2023 ADJUSTED EBITDA” AND “FIRST QUARTER 2023 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 WELL AS A RECONCILIATION AND ADDITIONAL DETAILS ON ADJUSTED NON-DILUTED EPS AND ADJUSTED FREE CASH FLOW. WITH RESPECT TO THE COMPANY’S SECOND QUARTER 2023 OUTLOOK AND 2023 AND 2024 FULL YEAR EARNINGS OUTLOOK, THE COMPANY IS NOT ABLE TO PROVIDE A RECONCILIATION OF THE ADJUSTED EBITDA AND ADJUSTED EARNINGS PER DILUTED SHARE OR ADJUSTED FREE CASH FLOW OUTLOOKS BECAUSE CERTAIN ITEMS MAY HAVE NOT YET OCCURRED OR ARE OUT OF THE COMPANY’S CONTROL AND/OR CANNOT BE REASONABLY PREDICTED. CHART INDUSTRIES, INC. IS A LEADING INDEPENDENT GLOBAL LEADER IN THE DESIGN, ENGINEERING, AND MANUFACTURING OF PROCESS TECHNOLOGIES AND EQUIPMENT FOR GAS AND LIQUID MOLECULE HANDING FOR THE NEXUS OF CLEAN™ - CLEAN POWER, CLEAN WATER, CLEAN FOOD, AND CLEAN INDUSTRIALS, REGARDLESS OF MOLECULE. THE COMPANY’S UNIQUE PRODUCT AND SOLUTION PORTFOLIO ACROSS STATIONARY AND ROTATING EQUIPMENT IS USED IN EVERY PHASE OF THE LIQUID GAS SUPPLY CHAIN, INCLUDING ENGINEERING, SERVICE AND REPAIR FROM INSTALLATION TO PREVENTIVE MAINTENANCE AND DIGITAL MONITORING. CHART IS A LEADING PROVIDER OF TECHNOLOGY, EQUIPMENT AND SERVICES RELATED TO LIQUEFIED NATURAL GAS, HYDROGEN, BIOGAS AND CO2 CAPTURE AMONGST OTHER APPLICATIONS. CHART IS COMMITTED TO EXCELLENCE IN ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE (ESG) ISSUES BOTH FOR ITS COMPANY AS WELL AS ITS CUSTOMERS. WITH OVER 48 GLOBAL MANUFACTURING LOCATIONS AND 41 SERVICE CENTERS FROM THE UNITED STATES TO ASIA, AUSTRALIA, INDIA, EUROPE AND SOUTH AMERICA, THE COMPANY MAINTAINS ACCOUNTABILITY AND TRANSPARENCY TO ITS TEAM MEMBERS, SUPPLIERS, CUSTOMERS AND COMMUNITIES. TO LEARN MORE, VISIT WWW.CHARTINDUSTRIES.COM
GTLS: GAS TO LIQUID SYSTEMS® Executed to Date On-Schedule and to Targets 4 # Action What we said in November 2022 As of April 10, 2023 Status 1 Financing Did not expect to close into the bridge and would seek to limit amount of KPS Capital Partners (KPS) preferred stock Completed long term financing in December 2022; Closed without the bridge or ANY preferred issuance to KPS Completed Oversubscribed No KPS preferred 2 Weighted avg cost of debt 7% to 8.5% Actual well within the range Completed 3 Expected closing First half 2023 Q1 2023, actual Completed; One quarter early 4 Customer demand Strong demand in most end markets in both businesses Strong demand in most end markets in both businesses Unchanged from original 5 Backlog supporting 2023 More of next (2023) year’s forecasted revenue already booked than typical More of next (2023) year’s forecasted revenue already booked than typical Completed and unchanged from original 6 Synergy action & early achievement First days and weeks of ownership would yield quick-hit synergies First days and weeks of ownership have yielded quick-hit synergies Continuing to progress to original year-1 target © 2023 Chart Industries, Inc. Confidential and Proprietary
FIRST QUARTER 2023
GTLS: GAS TO LIQUID SYSTEMS® First Quarter 2023 Results Chart Q1 2023 plus Howden stub period (March 17 – March 31, 2023) 6 Comments (all related to Q1 2023 Chart including Howden Stub period results) unless noted: • RECORD total backlog • RECORD Howden backlog • RECORD Chart backlog • RECORD Sales • 21 First-of-a-Kind orders • 90 new customer orders • 82 orders greater than $1 million • Approximately 99% of our operating profit and EBITDA adjustments relate to Howden deal and integration costs Other Comments: • Q1 2023 pro forma (full quarter) combined business growth of 15.9% (ex FX) compared to Q1 2022 pro forma (1) Adjusted gross margin, EBITDA, and Adjusted EBITDA and Adjusted Diluted EPS are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income (in the case of EBITDA and Adjusted EBITDA) in accordance with U.S. GAAP. A reconciliation table for these measures in provided in the appendix under “First Quarter 2023 Adjusted EBITDA” and in the tables accompanying the earnings release. $ millions, except per share amounts Q1 2023 Chart + Howden Stub Period Q1 2022 GTLS Standalone Change Consolidated 1 Orders 747.7 636.8 +17.4% 2 Backlog 3,932.0 1,477.0 +166.2% 3 Sales 537.9 354.1 +51.9% 4 Reported GM % 28.2% 23.6% +460 bps 5 Adjusted GM% (1) 28.6% 26.1% +250 bps 6 Reported EBITDA (1) 67.4 36.8 +83.2% 7 Reported EBITDA % of Sales (1) 12.5% 10.4% +210bps 8 Adjusted EBITDA (1) 102.2 55.0 +85.8% 9 Adjusted EBITDA % of Sales (1) 19.0% 15.5% +350bps 10 Reported Basic EPS ($0.51) $0.28 11 Diluted EPS ($0.46) $0.25 12 Adjusted Diluted EPS (1) $1.41 $0.58 143.1% © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® © 2023 Chart Industries, Inc. Confidential and Proprietary 7 Q1 2023 Records "✔" indicates a record for combined business; "green ✔" indicates a record for Chart standalone 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 ✔ ✔ LA Turbine Aftermarket Specialty Products ✔ Hydrogen & Helium HLNG Food & Beverage ✔ Space Water Treatment ✔ Carbon Capture ✔ ✔ ✔ Others ✔ ✔ Chart Industries ✔ ✔ Chart standalone in the segment as well as with the combined Q1 results: • Heat Transfer Systems Record sales Record gross profit Record gross profit and operating income in systems • Specialty Products Record operating income (water) • Repair, Service & Leasing Record sales Record gross profit Record operating income CryoLease record gross profit and operating income Fans aftermarket record gross profit, gross profit as a % of sales, operating income, and operating margin LA Turbine aftermarket record gross profit as a % of sales, and operating profit as a % of sales Cryo Tank Solutions Mobile equipment record gross profit as a % of sales and operating profit as a % of sales
GTLS: GAS TO LIQUID SYSTEMS® © 2023 Chart Industries, Inc. Confidential and Proprietary 8 Q1 2022 v Q1 2023 Metrics Q1 2023 gross profit, operating profit and EBITDA as a percent of sales all included each of the following expenses that were NOT adjusted / NOT added back, totaling ~$5.9 million: • Full year BAHX Wisconsin union contract PTO accrual ~$1 million (HTS) • EU production employee required timing of benefits ~$0.3 million (CTS) • Standard cost roll on specific material ~$1.5 million (CTS) • Strategic FOAK sales at lower margins ~$1 million (Specialty) • Standard budget cost change on specific projects ~$0.9 (Specialty) • Startup manufacturing costs for flex mfg of $0.4 million (Specialty) • Q1 record snowfall in Minnesota (2 days lost production) ~$0.4 million (CTS) • Customer specific covered freight ~$0.4 million (CTS) (1) Adjusted gross margin, EBITDA, and Adjusted EBITDA and Adjusted Diluted EPS are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income (in the case of EBITDA and Adjusted EBITDA) in accordance with U.S. GAAP. . A reconciliation table for these measures in provided in the appendix under “First Quarter 2023 Adjusted EBITDA” and in the tables accompanying the earnings release. $354 $538 10.4% 12.5% 15.5% 19.0% 5.0% 10.0% 15.0% 20.0% $250 $300 $350 $400 $450 $500 $550 $600 Q1'22 Q1'23 Sales ($M) EBITDA % Adj EBITDA % $354 $538 23.6% 28.2% 26.1% 28.6% 20.0% 25.0% 30.0% $250 $300 $350 $400 $450 $500 $550 $600 Q1'22 Q1'23 Sales ($M) Gross Margin % Adj Gross Margin % $354 $538 5.7% 6.7% 8.6% 13.5% 2.0% 7.0% 12.0% $250 $300 $350 $400 $450 $500 $550 $600 Q1'22 Q1'23 Sales ($M) Op Margin % Adj Op Margin %
GTLS: GAS TO LIQUID SYSTEMS® Example New Build Order Wins Q1 2023 Space Exploration Received the purchase order for 5 1000m3 tanks and 3-125k LOX storage tanks for a large private space company 9 Big LNG Received the purchase order for air cooled heat exchangers, BAHX and ethylene tank for the Sempra Infrastructure Port Arthur LNG project from Bechtel Rail Cars Received a large purchase order for argon railcars CCUS, DAC Booked orders for Earthly Labs’ CiCi Elm for biogas for ~$2.7M, SES equipment order from KAUST for $4M and an ACHX order for a large DAC project for $2.8M Adicomp, Italy A total of 22 compressors sold in Q1 2023 to this customer for Biogas applications. Howden’s installed base in this sector is 76 in the last 2 ½ years. Ashbridges Bay, Wastewater Treatment, Canada First of ten compressors ordered from this new customer to efficiently manage wastewater treatment in Canada Food Ingredients Producer, Hungary Two steam turbines will provide up to 1.5 MW of power for this new customer, a corn processing plant, to reduce both reliance on the grid and the customer’s CO2 emissions whilst improving efficiency. . Dieffenbacher Energy GmbH, Austria New EPC customer building a waste heat recovery boiler with a Howden steam turbine. This system achieves a much higher plant efficiency and will significantly reduce CO2 emissions. © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Repair, Service, Leasing (RSL) Q1 2023 Key Wins 10 © 2023 Chart Industries, Inc. Confidential and Proprietary Q1 2023 New Example Howden LTSAs Arcelor-Mittal Africa New 3-year LTSA for their steel plant near Sasolburg, South Africa Kalagadi Manganese New LTSA 3 years Sibanye Stillwater New LTSA 3 years (signed in stub period of Chart ownership) Q1 2023 Howden LTSA and Framework Agreements executed = 23: • Axial fans = 6 • Blowers = 7 • Centrifugal fans = 3 • Centrifugal compressors = 2 • Steam turbines = 2 • Recip compressors = 3 245 total Howden LTSAs and Framework Agreements are currently active and the number is increasing each month Q1 2023 Chart key RSL wins • Big LNG fans retrofit = $5.3M • M. East field service = $2.8M • Fans aftermarket = $2.5M • Air cooler aftermarket = $2.2M • Air cooler aftermarket = $1.3M
GTLS: GAS TO LIQUID SYSTEMS® 23 Agreements / MOUs Now Include Chart AND Howden 11 Category Chart Howden Q1 2023 Total # of partnerships expanded to both Chart & Howden as of April 10, 2023 # of expanded partnerships to both Chart & Howden (April 11th to April 27, 2023) # of new partnerships including both Chart + Howden (April 11th to April 27, 2023) Total # of Chart + Howden expanded partnerships as of April 27, 2023 Multiple decarbonization/ efficiency/ energy transition 1 1 1 3 4 CCUS / CO2 2 1 3 Hydrogen (including liquefaction) 2 1 3 7 2 9 Water treatment 1 1 1 1 LNG (including liquefaction) 1 1 1 3 Marine Decarbonization 1 1 3 3 Total 4 2 6 12 8 3 23 Q1 2023 MOUs/partnerships New partners and partners that have expanded their MOUs / agreements to include both Chart & Howden In the period of March 17, 2023 to April 27, 2023 (1) Chart and Howden separately had agreements in place with Raven SR pre-close of the acquisition. (1)
GTLS: GAS TO LIQUID SYSTEMS® Macro Tailwinds Continue Globally (Examples 1/2) 12 # End Market Recent Activity Date of News Chart Impact 1 Water Treatment Environmental Protection Agency (EPA) proposed first ever national standard to address PFAS contamination in drinking water. EPA will require public water systems to monitor for six PFAS chemicals, notify the public and take action if applicable. March 2023 • Utilities picking up activity with numerous budgetary quotes out • Numerous Taas (treatment as a service) solutions being requested • Won aftermarket resin replacements and FOAK for PFAS in NJ 2 Hydrogen India plans to give green hydrogen fuel producers incentives worth at least 10% of their costs under a $2 billion scheme set to begin before the end of June. April 2023 • Well positioned in India hydrogen as founding member of IH2A • Leveraging additional India footprint and relationships via Howden, including Larsen & Toubro 3 Energy transition & LNG The Group of Seven (G7) provided support for the continued development of natural gas and carbon capture and storage (CCS) infrastructure to increase energy security while also pushing for low-carbon hydrogen, renewable energy, and carbon mitigation April 2023 • Benefits to multiple process technologies, equipment and solutions that Chart sells into energy transition (Chart + Howden) and energy recovery markets (Howden) © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Macro Tailwinds Continue Globally (Examples 2/2) 13 # End Market Recent Activity Date of News Chart Impact 4 CCUS The UK Chancellor of the Exchequer, announced that the next budget will include a £20 billion ($25 billion) investment program for carbon capture projects. This is the single largest investment in the technology outside of the U.S., with £1 billion planned for deployment every year. March 2023 • Strong UK position with customers via Howden • Combined CCUS offering includes both technology and/or equipment • Commercial traction in industrial CCUS, DAC and small-scale CCUS 5 Nuclear, hydrogen and energy storage The U.S. Department of Energy (DOE) released a “Pathways to Commercial Liftoff” roadmap for scaling up advanced nuclear, clean hydrogen and long-duration energy storage. March 2023 • 160 years of combined experience and full technology solution with mission critical equipment in house for all of these markets 6 Power plant emissions The Biden administration is preparing to unveil a proposal to require power plants to drastically reduce their greenhouse-gas emissions by 2040 as of 4/23/2023, If implemented, the Environmental Protection Agency would set limits so stringent that fossil-fuel-burning power plants probably would have to use technology to capture their carbon dioxide emissions April 2023 • Via Howden, direct access to existing power plant customers to help energy efficiency, aftermarket, service, repair and Uptime monitoring • Via Chart’s SEC CCC carbon capture technology, large scale capabilities • Both Chart and Howden have key equipment for CCUS, regardless of technology (ACHX, fans, compression, storage) © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Chart End Market Trends 14 # End Market Recent Activity Trend 1 Aftermarket, service, repair • Penetration of Howden and Chart installed base plus competitors’ installed base • Increasing demand for site services and LTSA supporting growth in parts orders • More brownfield retrofits occurring 2 Big LNG / ssLNG / FLNG • FID reached on Sempra Port Arthur plus FERC progressing more projects • Global ssLNG and FLNG market is increasing, in particular in APAC and Africa • New projects entering commercial pipeline each month 3 LNG infrastructure • ISO containers continue to be highly sought, LNG station demand is consistent • HLNG over the road tank demand is broadening (more customers) yet not igher than 2022 to date in 2023 4 Hydrogen • Regional and global interest in both gaseous and liquid solutions • All aspects of the hydrogen value chain are being commercially built • Take advantage of pending regulation to impose max distance between renewables stations (EU) 5 CCUS and water treatment • Small-scale Earthly Labs units continue to be in record demand • Larger industrial CCUS customers starting to spend equipment $s in addition to FEED studies • Water - New regulations and requirements are spurring multi-site cleanup discussions • Water a focus for international regions and governments (i.e. Brazil, India) • More customers looking at purchasing both CCUS and water solutions 6 Other Specialty • Space exploration demand broadening and frequency increasing • Food and beverage is consistent and seeing links to CCUS and water • Heightened demand for blowers linked to Nox reduction for power engines in marine 7 Cryo tank and trailers • Customers continue to expect mid-single digit growth in 2023 • Demand for trailers and railcars are following typical industrial gas trends 8 Electrification / mine safety • EHS Clean air requirements driving demand for mine cooling & ventilation solutions • Increasing electrification activity in various end markets driving demand • ESG focus across the industry
GTLS: GAS TO LIQUID SYSTEMS® 15 Strength in Backlog Supports Strong 2023 • Chart • Record backlog at 3/31/2023 • Approximately 60% of 2023 revenue outlook was in backlog as of 12/31/2022 • Chart’s revenue mix is ~65% to 70% project and ~30% to 35% book and ship • Howden • Record backlog at 3/31/2023 • Howden’s revenue mix is ~48% aftermarket and ~52% new build • The majority of new build ships within 12 months • Aftermarket book and ship timing typically 3 to 4 months © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® 16 Industry Input Costs Sources: LME (Aluminum), MEPS (Carbon and Stainless Steel), Freightos © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Chart Pricing (including Howden) © 2023 Chart Industries, Inc. Confidential and Proprietary 17 • Chart: Americas & Global 9 base price increases + surcharges (+ targeted Q1 2023 additionals) • Chart EMEA: 4 base price increases + surcharges • Howden: 6 base price increases + surcharges Standard Product Pricing Long-term agreement pricing mechanisms in contracts Project based specific material pricing GTLS Four Main Pricing Approaches Pricing Actions Taken From Q1 2021 through Q1 2023 • Quarterly and semi-annual changes per index • Additional surcharges • Shortened bid validity • Lock in material early • Include escalation estimates 2023 Anticipated Pricing Approaches 1 2 3 • January 1, 2023 revised tier pricing • Howden Q1 2023 pricing changes completed • Implement scheduled Q1 2023 price increase per contracts • Maintain short bid validity • Utilize on hand inventory • Include contingency in budgets LTSA for repair and service • Contracts include labor, material and transport increases for inflation, etc. throughout the period of the contract4 • Maintain pricing model and contract escalation
GTLS: GAS TO LIQUID SYSTEMS® Certifications: A Continued Differentiator 18 Successful recertification of Howden Germany AFM locations in ISO 45001, 14001 and SCC (all EHS) Howden UK achieved renewal of Avetta Quality certification, which is a pre-requisite for service work in UK on waste-water plants ISO 14001 for VRV Ornago, Italy and Burago, Italy ISO 45001 for VRV Ornago, Italy and Burago, Italy ASME U and National Board R renewal for the Ball Ground, Georgia (USA) facility Chart China (CCDEC) January 2023 passed annual CCC system audit Ball Ground, GA (USA) facility - 40 CFR 63 NESHAP Annual certification (Federal Clean Air Act National Emission Standard for Hazardous Air Pollutants) and Annual Storm Water Reporting AR-Version 2019 (Georgia Water Quality Control Act / Federal Clean Water Act) And not only did we have a record Q1 2023 for CCUS orders and backlog… now, as of April 22, 2023, our Earthly Labs CiCi is certified in Saskatchewan, Canada © 2023 Chart Industries, Inc. Confidential and Proprietary
SEGMENT INFORMATION
20 Cryo Tank So lut ionsHeat Transfer Systems One Chart Global Commercial Team Repair, Serv ice & Leasing Chart New Build Products • Air Cooled Heat Exchangers (ACHX) • Brazed Aluminum Heat Exchangers • Cold Boxes • Nitrogen Rejection Units (NRU) • Integrated systems • High Efficiency Flow Fans Chart New Build Products • Bulk and Micro Bulk Storage Tanks • ISO Containers • Packaged Gas Systems • Non-specialty mobile equipment • Vaporizers Chart Aftermarket • Repair and service • Aftermarket parts and maintenance • Global Leasing • Installations • Full lifecycle Chart New Build Products • Dosing equipment • HLNG vehicle tanks • Fueling Stations • LNG by Rail (Gas By Rail Offering) • Hydrogen equipment • Water treatment (PFAS remediation) • Carbon Capture equipment Segmentation Special ty Products One Chart Global Engineering Team Howden New Build Products • Compressors • Blowers & fans • Rotary heaters • Steam turbines • VentSim™ Howden Aftermarket (47% of revenue ‘22) • Spare parts • Retrofits • Service • Software & digital Uptime Howden New Build Products • Compressors • Blowers & fans • Rotary heaters • Steam turbines • VentSim™ Howden New Build Products • Related to Industrial end markets • Compressors • Blowers & fans • Rotary heaters • Steam turbines One Chart Global Products – Operat ions – Aftermarket C h ar t H o w de nO n e C h ar t © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Segment Information © 2023 Chart Industries, Inc. Confidential and Proprietary 21 Sales ($M, except %) Q1 ‘23 Q1 ‘22 % Chg PY Specialty Products 127.3 107.5 + 18.4% Cryo Tank Solutions 127.2 118.1 + 7.7% Repair, Service, Leasing 120.1 49.3 + 143.6% Heat Transfer Systems 167.5 79.3 + 111.2% Reported GM % ($M, except %) Q1 ‘23 Q1 ‘22 % Chg PY Specialty Products 28.4% 30.3% -190 bps Cryo Tank Solutions 17.7% 21.5% -380 bps Repair, Service, Leasing 42.9% 31.6% +1130 bps Heat Transfer Systems 24.7% 12.7% +1200 bps Adjusted GM % ($M, except %) Q1 ‘23 Q1 ‘22 Bps Chg PY Specialty Products 29.0% 31.6% -260 bps Cryo Tank Solutions 18.0% 24.3% -630 bps Repair, Service, Leasing 42.9% 34.7% +820 bps Heat Transfer Systems 25.3% 15.9% +940 bps Specialty Products gross profit Q1 2023 headwinds: • HLNG low volume carrying cost ~$3.1M • Less beverage product mix ~$1.8M • Strategic FOAK development and job budget ~$1.9M Cryo Tank Solutions gross profit Q1 2023 headwinds: • New production lines not fully efficient ~$1.8M • Standard cost rolls and weather- related lost production ~$2.0M
Heat Transfer Systems: LNG Opportunities for GTLS 22 Pre Feb 24, 2022 GTLS April 29, 2022 GTLS July 29, 2022 GTLS October 28, 2022 GTLS February 24, 2023 GTLS April 10, 2023 GTLS April 27, 2023 GTLS BigLNG (greater than 5 MTPA) 1 Number of reasonably possible projects to move to order stage in next 3 years 10 22 24 (excludes what is in backlog) 24 (excludes what is in backlog); +1 from last update 25 (excludes what is in backlog); +1 from last update 24 (excludes what is in backlog); note 1 project booked in Q1 2023 24 (excludes what is in backlog); note 1 project booked in Q1 2023 2 Number of international projects contemplating using IPSMR® 1 2 3 4 5 6 6 3 GTLS Associated Order Potential $ Not Yet Booked and including expanded scope / retrofit opps $1.25 billion $4.55 billion $5.35 billion $5.68 billion (excludes what is in backlog) $6.3 billion (excludes what is in backlog) $7.6 billion (excludes what is in backlog) $7.6 billion (excludes what is in backlog) ssLNG (5 MTPA and smaller) 4 Number of reasonably possible projects to move to order stage in next three years 205 233 276 318 316 348 349 5 Number of Floating LNG projects in bid pipeline 13 26 27 27 (excludes what is in backlog) 27 (excludes what is in backlog) 27 (excludes what is in backlog) 27 (excludes what is in backlog) 6 ssLNG / FLNG orders booked year-to-date 0 $38.3M $138M $313M $448M (as of 12/31/2022) N/A $139M © 2023 Chart Industries, Inc. Confidential and Proprietary
Specialty Products: Hydrogen and CCUS Opportunities 23 12/31/2022 GTLS standalone Current (4/27/2023) Chart and Howden % Change Hydrogen 1 Number of customers and potential customers 786 1,091 +38.8% 2 # of LH2 Liquefier opportunities 27 55 [90%+with Howden potential content] +103.7% 3 % growth in aftermarket, service and repair orders for hydrogen versus Q1 2022 N/A +14.7% N/A CCUS 4 Number of customers and potential customers 507 692 +36.5% 5 Approximate project value of top opportunities in global CCUS commercial pipeline ~$1.3 billion ~$2.1 billion +61.5% © 2023 Chart Industries, Inc. Confidential and Proprietary
Specialty Products: Food & Beverage and CCUS • Q1 2023 food & beverage and CCUS orders increased 30.9% and 36.9% when compared to Q1 2022 and Q4 2022, respectively • Q1 2023 customers include: Food & Beverage, CCUS and water cross-selling case study: City Brewery began as a food & beverage Chart customer, with doser equipment Then progress to CO2 tanks for carbonation Followed by a purchase of an SDOX (odor) water treatment system which reduces chemical handling and increases safety And most recently, City Brewery is working with us on ordering an Earthly Labs CiCi Elm unit 24© 2023 Chart Industries, Inc. Confidential and Proprietary
© 2023 Chart Industries, Inc. Confidential and Proprietary Specialty Products: Large Scale CCUS • Q1 2023 Chart and Howden stub period example CCUS wins include: • Direct air capture ACHX for large international oil company customer ($2.8 million) • Howden CCUS equipment provided to major EPC in support of leading international oil company, operating in Western Canada ($2.4 million); booked during stub period • Methane elimination application ($1.9 million) • KAUST expanded FEED and equipment order ($4.3 million) • Orsted: pre-feed SES CCC work on a 1,200 ton per day large-scale carbon capture plant to be built on a biomass facility • Large integrated oil & gas company’s new venture businesses engaged Howden for CCUS, globally, to develop novel carbon capture system • Q1 2023 customers include: 25
26 Specialty Products: Mine Safety & Emission Reduction • Q1 2023 (full quarter) for Mining Safety with orders worth $55 million with new build up over 80% and aftermarket up 46% compared to the first quarter 2022 • EHS Clean air requirements driving demand for mine cooling & ventilation solutions • Top selling products globally were our axial fans and centrifugal fans that are responsible for the primary ventilation in mines • A notable win was for our Ventilation Engineering Services (VES), part of our Ventsim portfolio. Early involvement with VES in determining a mine’s future ventilation needs is key in establishing a long-term relationship with the mine • Howden has supplied mine ventilation systems to all of the major mining companies globally About Ventilation Engineering Services (VES) VES is part of our Total Mine Ventilation Solutions – our integrated suite of products and services that provides efficiency and safety across a mine’s operations VES can help reduce costs and energy consumption VES helps provide comprehensive services from full ventilation design and survey to emergency preparedness, improvement plans, on demand ventilation feasibility and analysis of current and future ventilation requirements
Specialty Products: Water Treatment • First quarter Q1 2023 (including Howden stub period) water treatment new build orders were up 34.6% compared to Q1 2022 • Case study example as shown in the photo is the City of Houston water treatment plant - Equipment is a liquid oxygen system used in ozone generation Q1 2023 Key Successes April 2023 Howden Wastewater Treatment Win • Howden chosen to supply Southeast Wastewater Treatment Plant in Houston, Texas (USA) with turbo compressors enabled with Howden Uptime • The plant required specific equipment to correspond with its existing process control systems; we worked closely with the design engineers, customer and owner to provide a solution for the new blowers at the plant 27© 2023 Chart Industries, Inc. Confidential and Proprietary
COST AND COMMERCIAL SYNERGIES
GTLS: GAS TO LIQUID SYSTEMS® 29 Expected Annual Cost Synergies ~$175 ~$250 12 Months Post-Close Annual by Year 3 Synergy plan jointly developed by Chart and Howden with significant buy-in will drive successful execution ($M) Cost Synergies Overview ~40%: Outside Sourcing for Product Build and Insourcing Volume leverage at 2x size Insource Howden compressors on select projects Insource select third party manufacturing processes ~40%: Optimization and Resource Rationalization Leverage India engineering Back-office rationalization Indirect spend consolidation Agent overlap, insurance, licenses rationalization ~20%: Facilities Consolidate overlapping shops including in Houston, TX and Allentown, PA Consolidate two Hyderabad, India back-office buildings Leverage Howden Mexico and Chart Hudson Mexico Sell underutilized, highly desired property © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® 30 Expected Commercial Synergies (Revenue) Commercial Synergies Commercial synergies driven by the combined business’ complementary end markets and new geographies ~$150 ~$350 12 Months Post-Close Annual by Year 3 Existing Manufacturing Location Utilization to Gain Access to Customer Projects Fabricate cold boxes in Southeast Asia (2 locations); valuable for FLNG and non-US opportunities Access to the marine market and customers Bunkering for large jumbo bulk tanks Onboard vessel equipment Localized fabrication and engineering in India adds immediate opportunity for water treatment More content to provide to Chart cement customers and vice versa for CO2 Clean mine customer access can pull through Chart’s LH2 offering and HLNG onboard vehicle tank offering LH2 loading and storage systems HLNG and HLH2 for mine haul trucks Expected margins in line with broader combined company ($M) © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® 31 • We have achieved ~$50.9 million of annualized cost synergies in the six weeks since we closed on the Howden acquisition on March 17, 2023 • We have achieved over $11 million of commercial synergy orders in the first six weeks since we closed on the Howden acquisition on March 17, 2023 • This synergy achievement is ahead of original schedule • We also have verbal commitments for two hydrogen projects that will utilize Chart and Howden equipment as well as one global CCUS project (expect to book in coming months) # Category Description Synergy orders (Revenue) achieved to date $ millions Annualized cost savings achieved to date $ millions Original annualized year- one target $ millions 1 Cost Sourcing $20.4 $70 2 Cost Optimization and organization 30.3 70 3 Cost Facilities 0.2 35 4 Commercial Total commercial orders won to date 11.4 150 5 Total synergies achieved to date as of 4/27/2023 11.4 50.9 First 6 Weeks of Howden Ownership: Synergy Achievement (March 17, 2023 to April 27, 2023) © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Cost Synergy Targets & Achievements Since Acquiring Howden (from March 17, 2023 to April 27, 2023) (1/5) 32 # Category Description Status Actual Achieved March 17-April 10, 2023 Actual Achieved April 11-April 27, 2023 Total Achieved to Date (as of April 27, 2023) 1 Sourcing Total year 1 annualized target = ~$70 MILLION Over $9.7 MILLION ~$10.8 MILLION ~$20.4 MILLION 2 Insource Howden compressors on Chart projects in backlog Underway $9.0 $3.6 $12.6 3 Leverage 2X volume with rapid supplier negotiations Underway 0.51 6.99 7.50 4 Using Chart’s U.S. sites for Howden packaging Underway 0.10 N/A 0.10 5 Insource third party for insourcing pressure vessels in China Underway 0.06 0.15 0.21 6 Eliminate cost for outside JV/entity support in S. Korea Evaluating N/A N/A N/A 7 Leverage Mexico manufacturing Underway N/A N/A N/A 8 Insourcing of painting for centrifugal fans rotors from Howden India to Chart’s SriCity, India site (project started April 2023) Underway N/A N/A N/A 9 Insource control boxes in China (to Chart China) Underway N/A 0.02 0.02 10 Leveraging combined T&E card spend at one supplier Complete N/A N/A 11 Consolidate BV spend for certifications Underway N/A N/A 12 Elimination of external engineering support at Universities Complete N/A 0.01 0.01 13 Consolidation of specific engineering software Underway N/A N/A N/A 14 Marketing promotional spend consolidation Underway N/A 0.01 0.01 Additional synergies © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Cost Synergy Targets & Achievements Since Acquiring Howden (3/5) (from March 17, 2023 to April 27, 2023) 33 # Category Description Status Actual Achieved March 17-April 10, 2023 Actual Achieved April 11-April 27, 2023 Total Achieved to Date (as of April 27, 2023) 1 Optimization, Resources, and Organization Total year 1 annualized target = ~$70 MILLION Over $21.8 MILLION ~$8.9 MILLION OVER $30.3 MILLION 2 Rationalize executive team Complete $5.24 N/A $5.24 3 Reduced cost of Howden bank guarantees Complete 1.90 0.325 2.25 4 Reduction of one memberships, overlapping events Complete 0.22 N/A 0.22 5 Merged Giving Back and Bright Futures Programs Complete 0.25 0.02 0.27 6 Cancelled use of two Howden consultants Complete 0.40 N/A 0.40 7 Eliminated allocated PE management fee Complete 4.00 N/A 4.00 8 Renegotiate conference call services Complete 0.04 N/A 0.04 9 Consolidated software for one HR function Complete 0.16 N/A 0.16 10 Consolidated medical eval / travel software Complete 0.11 N/A 0.11 11 Eliminate use of 3rd party agency for M.East employees Complete 0.06 N/A 0.06 12 Leverage Howden Africa sales presence to market Chart products in Africa Region Complete 0.02 N/A 0.02 Additional synergies © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Cost Synergy Targets & Achievements Since Acquiring Howden (4/5) (from March 17, 2023 to April 27, 2023) 34 # Category Description Status Actual Achieved March 17-April 10, 2023 Actual Achieved April 11-April 27, 2023 Total Achieved to Date (as of April 27, 2023) 13 Optimization, Resources, and Organization, continued Consolidate regional verticals into global commercial Underway N/A N/A N/A 14 Functional SG&A rationalization Underway 8.80 6.15 14.95 15 India (or other low-cost) engineering Underway N/A 0.23 0.23 17 Consolidate shared services Underway N/A N/A N/A 18 Numerous additional indirect savings – insurance, benefits, etc. Underway N/A N/A N/A 19 Overlapping IT system licenses + HRIS reduction (completed one engineering) Underway N/A 0.02 0.02 20 Eliminated duplicate ratings agencies coverage Complete N/A 0.23 0.23 21 Reduced use of Howden external auditors Complete N/A 1.40 1.40 22 Implement LC cost reduction via bank fronted surety program Underway N/A N/A N/A 23 Stopped using two consolidation softwares Notified N/A 0.47 0.47 24 Sales agent reduction (1) Complete N/A 0.02 0.02 25 UK entity rationalization (elimination of stat audit) Underway N/A 0.03 0.03 26 Other entity rationalization (41 identified) Underway N/A N/A N/A Bank account rationalization Underway N/A 0.10 0.10 Additional synergies
GTLS: GAS TO LIQUID SYSTEMS® Cost Synergy Targets & Achievements Since Acquiring Howden (from March 17, 2023 to April 27, 2023) (5/5) 35 # Category Description All figures are annualized millions $ Status Actual Achieved March 17-April 10, 2023 Actual Achieved April 11-April 27, 2023 Total Achieved to Date (as of April 27, 2023) 1 Facilities Total year 1 annualized target = ~$35 MILLION N/A 0.20 0.20 2 US aftermarket site consolidation Underway N/A N/A N/A 3 Elimination of third party warehousing in Czech Republic Underway N/A N/A N/A 4 Sell underutilized real estate Underway N/A N/A N/A 5 Eliminate one office rental location in Atlanta, GA (USA) Underway N/A N/A N/A 6 Rationalize additional locations, EU and India Underway N/A N/A N/A 7 Consolidate shop locations in Korea Underway N/A N/A N/A 8 Multiple global sales office consolidations Underway N/A N/A N/A 9 Chinese manufacturing site rationalization Underway N/A N/A N/A 10 Additional footprint consolidations identified Underway N/A N/A N/A 11 Zhengzhou sales office consolidation (China) May 2023 N/A N/A N/A 12 Rationalizing manufacturing presence in Texas (USA) Underway N/A N/A N/A 13 Confidential manufacturing site restructuring Underway N/A 0.20 0.20 Additional synergies © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Commercial Synergies Targets & Achievements Since Acquiring Howden (from March 17, 2023 to April 27, 2023) (1/2) 36 # Synergy Description Status Actual Achieved March 17- April 10, 2023 Actual Achieved April 11-April 27, 2023 Total Achieved to Date (as of April 27, 2023) 1 Total year 1 commercial synergy target = $150 million (note that this is not included in our outlook) Over $7 MILLION Over $4.4 million ~$11.4 million 2 Expanded existing partnerships – see slide 8 Complete N/A N/A N/A 3 A Chart Canadian hydrogen liquefaction/equip customer project in backlog chose Howden compression Complete In cost In cost In cost 4 A Chart USA hydrogen liquefaction/equipment customer project in backlog chose Howden compression Complete In cost In cost In cost 5 GTLS Industrial gas orders increasing for South Africa from India; able to now service and repair in S. Africa region Complete N/A N/A N/A 6 Dry ice recovery solution order from independent distributor Compete N/A N/A N/A 7 Hydrogen compression to a green project that is a Chart hydrogen customer due to insourcing Complete N/A N/A N/A 8 Earthly Labs biogas order win including Howden; driven by Howden experience in biogas Complete N/A N/A N/A 9 Chart’s HLNG tanks chosen for a mining customer project Complete N/A N/A N/A 10 Expand more existing partnerships and MOUs Underway N/A N/A N/A © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Commercial Synergies Targets & Achievements Since Acquiring Howden (from March 17, 2023 to April 27, 2023) (2/2) 37 # Synergy Description Status Actual Achieved March 17- April 10, 2023 Actual Achieved April 11- April 27, 2023 Total Achieved to Date (as of April 27, 2023) 11 Will include Howden compressors in closed and pending CiCi (Elm) orders in Brewery and Dry Ice recovery Underway N/A N/A N/A 12 Additional small-scale and industrial scale CCUS penetration (Earthly Labs and SES) Underway N/A N/A N/A 13 Access to more BigLNG, FLNG and ssLNG due to localized mfg/fab Underway LNG slide LNG slide LNG slide 14 Further access to water treatment opportunities; globally+ in India via additional local presence and in house skidding Underway N/A N/A N/A 15 Further pull through of decarbonization solutions to mine, Cement, CCUS, marine, nuclear Underway N/A N/A N/A 16 First assistance for Chart aftermarket on a field project in UK (achieved b/c of Howden); able to support engineering to get to commission of UK fueling station Complete N/A N/A N/A 17 SES customer with test wells for CO2 sequestration needs CO2 compression and vaporizers Underway N/A N/A N/A 18 Verbal life-cycle service agreement for vehicle fuelling stations in Germany and UK via Chart, use Howden field service personnel to win Underway N/A N/A N/A 19 Addtl Chart hydrogen liquefier customer chose Howden compression for their project Complete N/A In Cost In Cost 20 Combined waste to energy offering with inbound from major WtE EU player (Chart water bath vaporizers, Howden combustion systems Underway N/A N/A N/A Additional synergies © 2023 Chart Industries, Inc. Confidential and Proprietary
38 Commercial and Cost Synergy Case Study: Hydrogen Chart’s hydrogen liquefaction customer has liquefier on order with Chart in 2022 Chart’s hydrogen liquefaction customer has a customer that is going to do gaseous hydrogen refueling stations in California With Howden, Chart now can provide hydrogen compression to the gaseous refueling stations Howden can quote competitively and meet customer’s lead time requirements because of insourcing of packaging at Chart’s West Coast USA facility Chart wins the compression station order for $2.36 million: • Commercial synergy on the stations • Cost synergy for insourcing of packaging • Additional cost synergy from insourcing of compression for the liquefier in backlog • Developed two customer relationships with numerous equipment opportunities for Howden and Chart ahead
GTLS: GAS TO LIQUID SYSTEMS® 39 Other Integration Accomplishments Achieved to Date March 17, 2023 to April 10, 2023 (as shown in 4-11-2023 IR Update) • Talent Programs • Added two high potential Howden team members to the Emerging Leaders Program • Cost avoidance / delivery improvements • Leverage a Chart specific senior level supplier relationship to improve past due supply chain items to Howden EU • Other meaningful cost milestones since close • Began consolidation of insurance coverages / policies • Issued an RFP for insurance providers to further reduce cost • Leveraging the global footprint and scale of the combined business • Developer of Ghana hydrogen project working with us on combined equipment offering • Discussions with Big LNG EPC looking at heat recovery project at existing facility which could use both Chart and Howden equipment • Potential helium customer is working with us to utilize both Chart and Howden equipment in the future • Air Separation customer requesting to utilise the combined Howden and Chart resources in Europe and US to support their turbo- expanders • Howden Africa green hydrogen commercial has three near-term leads including one with large African customer for hydrogen refuelling stations using Chart and Howden equipment • Egypt hydrogen liquefaction opportunity via Howden’s customer connections • Maintained safety as our #1 priority • March 31, 2023 total recordable incident rate (TRIR) of combined business of 0.56 © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® 40 Other Integration Accomplishments Achieved to Date April 11 to April 27, 2023 additions • Safety • Howden – Chennai (HIN - Chennai) surpassed 1 Million man-hours without any Lost time Incidents in April 2023 • Howden – Hosur (HIN -Hosur) surpassed 1.1 Million man-hours without any Lost time Incidents in April 2023 • Howden Mexico celebrated three years and 1.25 million hours without LTI • Talent Programs • Global commercial / product trainings completed • Moved Howden team member onto our Investor Relations team • Expanded Howden Germany’s Young Talent Circle to include a Chart Germany team member • Tools • Howden Select Screw Compressor Software is being made available to all Chart commercial teams • Leveraging best practices from both pricing programs • Other meaningful cost synergies underway • RFP statutory audits • Market penetration • Asked by Clean Hydrogen Partnership (European Commission and Hydrogen Europe) to be on the Advisory Board for a study for the European Commission on sustainable supply chain and industrialization of hydrogen technologies in Europe • Chart is a part of the Sustainable Hydrogen Powered Shipping Project (sHYpS), developing a liquid hydrogen (LH2) swappable storage solution for multiple types of vessels; now expanded to include Howden © 2023 Chart Industries, Inc. Confidential and Proprietary
BALANCE SHEET AND DEBT PAYDOWN
GTLS: GAS TO LIQUID SYSTEMS® Additional Cash for Debt Paydown 42 # Balance Sheet Activity Cash or RCF Capacity Expected completion date 1 Divestment of a small product line in France Both Q2 2023 2 Exit from minority investment of Odin/Liberty Both Complete 3 Potential divestiture of one previously ID’ed businesses (1) Both Q2 2023 4 Potential divestiture of second previously ID’ed businesses (1) Both Q2 – early Q3 ’23 5 Sale of specific property #1 Both Q3 2023 6 Sale of specific property #2 Both Q4 2023 7 Repatriation of stranded cash without tax ramification Both Q2-Q3 2023 8 Amended HSBC guarantee for India and European LC’s Capacity Q2 2023 9 Implement bank fronted surety program through insurers for LC capacity Capacity Q2 2023 10 Move Howden letter of credit to surety bond Capacity Q2 2023 11 Reduce amount of LC’s Capacity Q2 2023 • These items are incremental to operating free cash flow generated for debt paydown in the business • Anticipate an incremental approximately $500 million of cash available for debt paydown (excluding repatriation actions) • Total revenue and EBITDA impacts are contemplated in our 2023 and 2024 outlooks • Reiterating our year-end 2024 anticipated net leverage ratio of 2.5X to 2.9X, before divestiture proceeds • Reiterating no material acquisitions and no share repurchases until we are in our target net leverage range (1) The status of all identified potential divestitures and property sales is based on our current information and expectations regarding those projects. There can be no assurances that such divestitures and sales will be completed at all or within the timeframes indicated, or generate the level of proceeds currently anticipated. © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Q1 2023 Act YE 2024 fct Net Leverage (bank EBITDA) Net Leverage (covenant ceiling) Net Leverage Profile 43 4.08X 2.5-2.9X 4.5X 6.0X Debt Covenant: Net Debt/ LTM Adjusted EBITDA(1) Reiterate our financial policy that until we are within our target net leverage ratio range of 2- 2.5X, we will: Not do any additional material cash acquisitions Not do share repurchases Credit Ratings Moody’s LTR B1 Stable S&P LT Issuer Credit B+ Stable (1) Adjusted EBITDA is a non-GAAP measure and should not be consulted as an alternative to net income in accordance with U.S. GAAP Q1 2023 net leverage of 4.08X, ahead of 4.25X forecast from November 2022 © 2023 Chart Industries, Inc. Confidential and Proprietary
2023 OUTLOOK REITERATE 2024 EBITDA OUTLOOK
GTLS: GAS TO LIQUID SYSTEMS® Meaningful April 2023 Orders to Date 45 • Two year supply agreement signed for $5.3 million of EGR blowers for marine LNG market • LNG regas skid with European customer $4.8 million • So2 blower order $3.8 million • Howden recip compressors $3.3 million • South African Power customer spares and service orders $2.8 million • High demand for process gas screw compressors continues with $2.5 million of orders • Synergy win! Hydrogen fueling station compressors $2.3 million • BAHX energy application $2.1 million • BAHX energy application (different customer) $1.27 million • Air preheater maintenance in Turkish power plant $1.2 million • Water treatment solution for a mining customer in Canada $1.1 million • Offshore compressor parts and service $1.067 million • 15 ISO containers for one customer $1 million • Multiple industrial gas customer orders each ~$1 million • ACHX $875k • AFM mineral mine cooling spares in Australia $785k • Liquid hydrogen storage tank for industrial gas customer $700k • Space exploration customer tanks and install $600k © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® © 2023 Chart Industries, Inc. Confidential and Proprietary 46 2023 Consolidated Chart Industries Outlook $ millions except per share amounts Prior Guidance Consolidated Chart (1) Updated Guidance Consolidated Chart Direction Revenue $3,650-$3,800 $3,660 - $3,800 Adjusted EBITDA (2) $770-$810 $780 - $810 Cost Synergies in EBITDA $50-$60 $60+ Free cash flow (3,4) $300-350 $300 - $350 Cash available for debt paydown in 2023 $275 - $325 $275 - $325 Diluted share count ~47M ~47M Adjusted diluted EPS (5) $5.50-$6.70 $5.50 - $6.70 1) Prior guidance was provided March 17, 2023 2) EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP. Management believes that EBITDA and Adjusted EBITDA facilitate useful period-to-period comparisons of financial results and the information is used by us in evaluating our internal performance. 3) “Free cash flow” and “adjusted free cash flow” are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net cash provided by (used in) operating activities in accordance with U.S. GAAP. The Company believes this figure is of interest to investors and facilities useful period-to-period comparisons of the Company’s operating results. 4) From continuing operations 5) Adjusted diluted EPS (a non-GAAP measure) guidance excludes incremental intangible amortization related to Howden acquisition. Guidance DOES NOT include 1) proceeds from potential divestitures of ~ $500 million which are targeted to complete in the second quarter 2023 or early third quarter 2023 or 2) commercial synergies yet to be realized in 2023 Updating Guidance For Cost Synergies Ahead of Plan and Realized Commercial Synergies End Market Demand Remains Strong and Unchanged vs. March 17, 2023 Expectations
GTLS: GAS TO LIQUID SYSTEMS® Reiterating Pro Forma Adjusted EBITDA 2023 and 2024 Combined Chart + Howden 47 Reiterating our 2024 Combined EBITDA Forecast • Revenue growth led by energy transition markets and backlog conversion • Implied organic volume leverage of ~30% • Favorable mix driven by energy transition verticals • Cost synergies embedded in margin expansion and SG&A improvement © 2023 Chart Industries, Inc. Confidential and Proprietary
GTLS: GAS TO LIQUID SYSTEMS® Continue to Execute On-Schedule and to Targets 48 # Action What we said in November 2022 As of April 27, 2023 Status 1 Cost synergies, year 1 $175 million $175 million Additional opportunities for upside and buffer 2 Commercial synergies, year 1 $150 million $150 million with customer inbounds increasing Additional opportunities coming to us from customers 3 Proforma 2023 EBITDA outlook Approximately $1 billion Approximately $1 billion Unchanged from original 4 2024 EBITDA outlook Approximately $1.3 billion Approximately $1.3 billion Unchanged from original 5 Two specific divestitures Working to complete shortly after the close of Howden with anticipated potential proceeds of ~$500 million Expected completion in Q2 2023 or early Q3 2023 with anticipated potential proceeds of ~$500 million Unchanged from original 6 Net leverage ratio by end of 2024 2.5-2.9X, ex potential divestitures 2.5-2.9X, ex potential divestitures Unchanged from original 7 Target net leverage ratio & financial policy 2.0-2.5X target range; stay within published financial policy until this is achieved 2.0-2.5X target range; stay within published financial policy until this is achieved Unchanged from original (1) The status of all identified potential divestitures and property sales is based on our current information and expectations regarding those projects. There can be no assurances that such divestitures and sales will be completed at all or within the timeframes indicated, or generate the level of proceeds currently anticipated. © 2023 Chart Industries, Inc. Confidential and Proprietary
APPENDIX
GTLS: GAS TO LIQUID SYSTEMS® Q1 2023 Addback Detail © 2023 Chart Industries, Inc. Confidential and Proprietary 50 Main category Detailed Description Q1 2023 gross amount (+ added to / (-) reduced income) Impact to operating income Repeating in Q2-Q4 2023? 1 Mark-to-Market of inorganic investments • McPhy MTM • Stabilis MTM • Minority investments, other (Liberty and HTEC) 2.6 No, net income only Yes 2 Howden deal and integration related • Investment banker fee (deal, non-integration) • Third party support fees and travel (deal, non-integration) 30.0 Yes, operating and net income Yes 3 Financing fees and amortization • Howden deal related financing fees, interest and bank fees • Howden stub period amortization 71.6 No, net income only Yes 4 Deal & Integration related costs, non-Howden (1H 2023 only) • Integration costs including IT system implementations, legal, travel and earnout related to Chart’s acquisitions completed (non-Howden) (4.4) Yes, operating and net income Only will be in Q2 2023 5 Other one-time costs • BAHX furnace in Tulsa, Oklahoma factory (Q1 2023 final install + testing) – note that we had final installation and test that ran into Q1 and this will now not repeat (we had thought all one-time cost were in 2022; Earthly Labs Elm outside to in-house R&D startup (will not repeat after Q1 2023) • Concluded JV import legal matter 1.6 Yes, operating and net income No 6 Restructuring and related expense • Specific to org structure changes, movement of people between facilities, sign-on bonuses 1.2 Yes, operating and net income Yes, but minimal anticipated
GTLS: GAS TO LIQUID SYSTEMS® First Quarter 2023 Adjusted EBITDA © 2023 Chart Industries, Inc. Confidential and Proprietary 51 $ millions, except per share amounts Consolidated Q1 2023 Q1 2022 Change v. PY Q4 2022 Change v. PQ Net income from continuing operations ($13.9) $10.3 ($24.2) $17.4 ($31.3) Income tax expense, net (6.4) 2.1 (8.5) 11.9 (18.3) Interest expense, net 28.3 3.9 24.4 16.3 12.0 Acquisition Related Finance Fees 26.1 - 26.1 37.00 (10.9) Depreciation and amortization 33.3 20.5 12.8 19.5 13.8 EBITDA (1) $67.4 $36.8 $30.6 $102.1 ($34.7) Non-recurring costs 26.0 12.3 13.7 16.3 9.7 Share-based compensation 4.0 3.3 0.7 2.7 1.3 MTM / Svante Revaluation 2.0 2.6 (0.6) (23.6) 25.6 Howden FX hedge 2.8 0.0 2.8 0.0 2.8 Adjusted EBITDA (1) $102.2 $55.0 $47.2 $97.5 $4.7 % Sales 19.0% 15.5% +350 bps 22.1% -310 bps (1) EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP. Management believes that EBITDA and Adjusted EBITDA facilitate useful period-to-period comparisons of financial results and the information is used by us in evaluating our internal performance.
GTLS: GAS TO LIQUID SYSTEMS® First Quarter 2023 Adjusted EPS © 2023 Chart Industries, Inc. Confidential and Proprietary 52 (1) Tax effect reflects adjustment at normalized periodic rates (2) Adjusted Basic EPS, Normalized Basic EPS, Adjusted Diluted EPS, and Normalized Diluted EPS (all 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 Q1 2023 Diluted EPS Q1 2023 Basic EPS Q1 2022 Basic EPS Change v Q322 Continuing Operations Net income attributable to Chart Industries, Inc. (14.6) (14.6) 10.2 (24.8) Less: Mandatory convertible preferred stock dividend 6.8 6.8 - 6.8 Income from continuing operations attributable to Chart (21.4) (21.4) 10.2 (31.6) Reported EPS ($0.46) ($0.51) $0.28 ($0.79) 1 Investment equities mark-to-market, net of FX 0.06 0.06 0.14 (0.08) 2 Debt and financing costs 1.29 1.43 - 1.43 3 Mandatory convertible preferred stock dividend 0.15 0.16 - 0.16 4 Tax effects (1) (0.31) (0.35) (0.03) (0.32) Normalized EPS $0.73 $0.79 $0.39 $0.40 5 Deal related and integration costs 0.55 0.61 0.12 0.49 6 Howden amortization 0.25 0.28 - 0.28 7 Startup costs - organic 0.03 0.03 0.05 (0.02) 8 Restructuring & related costs 0.03 0.03 0.15 (0.12) 9 Other one-time Items 0.01 0.01 - 0.01 10 Tax effects (1) (0.19) (0.21) (0.06) (0.15) Adjusted EPS (2) $1.41 $1.54 $0.65 $0.89 Share Count (millions) 46.47 41.94 35.83
GTLS: GAS TO LIQUID SYSTEMS® First Quarter 2023 Free Cash Flow © 2023 Chart Industries, Inc. Confidential and Proprietary 53 $ millions, consolidated, continuing ops Q1 2023 Act Adjustments Q1 ‘23 Adj. Net Income (14.4) (14.4) Operating income adjustments 24.8 24.8 Tax affect on operating income adjustments (5.8) (5.8) Non operating income adjustments 2.2 2.2 Tax affect on non operating income adjustments (0.5) (0.5) Deal financing and interest costs 60.0 60.0 Tax affect on deal financing and interest costs (14.1) (14.1) Depreciation and amortization 33.3 33.3 Share based compensation 4.0 4.0 Financing costs amortization 2.8 2.8 Unrealized gain on investment in equity securities 2.0 2.0 Unrealized foreign currency transaction loss (gain) 1.9 1.9 Equity in loss (earnings) of unconsolidated affiliates 0.5 0.5 Deferred income tax expense (benefit) 3.5 3.5 Other non-cash operating activities 0.7 0.7 Changes in: - Accounts Receivable (6.6) (6.6) Inventory 10.4 10.4 Unbilled contract revenue (83.1) (83.1) Accounts payable and other liabilities 19.1 19.1 Customer advances and billings in excess of 6.8 6.8 Net cash provided by operating activities (19.1) 66.6 47.5 Capital Expenditures (31.4) (31.4) Free Cash Flow / Adjusted Free Cash Flow (50.5) 66.6 16.1 (1) Free cash flow” and “adjusted free cash flow” are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net cash provided by (used in) operating activities in accordance with U.S. GAAP. The Company believes this figure is of interest to investors and facilities useful period-to-period comparisons of the Company’s operating results.
GTLS: GAS TO LIQUID SYSTEMS® First Quarter 2023 Adjustments © 2023 Chart Industries, Inc. Confidential and Proprietary 54 $ millions, except per share amounts Continuing Operations Sales $537.9 - $537.9 Cost of sales 386.4 (2.1) 384.3 Gross profit 151.5 2.1 153.6 Selling, general, and administrative expenses 93.5 (22.6) 70.9 Amortization expense 21.80 (11.60) 10.2 Operating expenses 115.3 (34.2) 81.1 Operating income 36.2 36.3 72.5 Non Operating Expense (income) 23.6 (16.0) 7.6 Income before equity in (loss) earnings of unconsolidated affiliates, net (13.5) 78.4 64.9 Equity in (loss) earnings of unconsolidated affiliates, net (0.4) 0.6 0.2 Net income (13.9) 79.0 65.1 Less: Income attributable to noncontrolling interests, net of taxes 0.7 - 0.7 Net income attributable to Chart Industries, Inc. ($14.6) $79.0 $64.4 Q1 2023, Reported Adjustments Q1 2023, Adjusted “Adjustments” and “Q1 2023, 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