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 29, 2022
____________________________________
CHART INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
_____________________________________
| Delaware | 001-11442 | 34-1712937 |
|---|---|---|
| (State of other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
2200 Airport Industrial Drive, Suite 100, Ball Ground, Georgia 30107
(Address of principal executive offices) (ZIP Code)
Registrant’s telephone number, including area code: (770) 721-8800
NOT APPLICABLE
(Former name or former address, if changed since last report)
_____________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 | GTLS | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On April 29, 2022, Chart Industries, Inc. (the “Company”) issued a news release announcing the Company’s financial results for the first quarter ended March 31, 2022, as well as supplemental information for the first quarter ended March 31, 2022. A copy of the news release is furnished with this Current Report on Form 8-K as Exhibit 99.1, and a copy of the supplemental information is furnished with this Current Report on Form 8-K as Exhibit 99.2. All information in the news release and the supplemental information is furnished and shall not be deemed “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Exchange Act, or otherwise be subject to the liability of that Section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporated it by reference.
The news release and supplemental information furnished with this Current Report on Form 8-K include measures of which exclude certain items required to be presented under generally accepted accounting principles (“GAAP”). These measures are not recognized under generally accepted accounting principles (“GAAP”) and are referred to as “non-GAAP financial measures” in Regulation G under the Exchange Act. The Company believes these measures are of interest to investors and facilitate useful period-to-period comparisons of the Company’s financial results, and this information is used by the Company in evaluating internal performance. The non-GAAP measures are reconciled to the most directly comparable GAAP measure in tables at the end of the news release and in the supplemental information.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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 29, 2022 | |
| By: /s/ Jillian C. Evanko <br>Jillian C. Evanko<br><br>Chief Executive Officer and President |
3
Document
Exhibit 99.1
Chart Industries Reports 2022 First Quarter Results
Atlanta, Georgia – April 29, 2022 - Chart Industries, Inc. (NYSE: GTLS) today reported results for the first quarter ended March 31, 2022. Further details can be found in the supplemental presentation accompanying this release and published in the investor relations section of our website.
•First quarter 2022 all-time record orders of $636.8 million, our fourth record order quarter out of the past five quarters, contributed to our sixth consecutive record backlog quarter ($1,477.0 million); First quarter 2022 orders included $228.4 million of Big LNG export terminal releases
•First quarter 2022 sales of $354.1 million were our highest first quarter sales in our history and increased 22.7% when compared to the first quarter of 2021 (an increase of 27.0% excluding Big LNG in both periods)
•First quarter reported gross margin as a percent of sales of 23.6% (adjusted 26.1%) was the highest in a year and in-line with the expected trend of increasing sequential gross margin and operating income as a percent of sales improvement for the remainder of 2022
•Executed a Letter of Intent (“LOI”) with Greenstone Renewables for Chart to be their exclusive technology and equipment supplier for their 100% renewable solar hydrogen liquefaction project expected to proceed to Final Investment Decision (“FID”) in 2022
•First quarter reported non-diluted earnings per share (“EPS”) of $0.28; adjusted non-diluted EPS of $0.65 excluding Mark-to-Market (“MTM”) from investment activity and other one-time costs
•Updated 2022 full-year revenue outlook of $1.725 billion to $1.85 billion and associated full-year adjusted non-diluted EPS guidance of $5.35 to $6.50
Energy independence, resiliency, security and sustainability are key drivers of record orders ($636.8 million) and backlog ($1,477.0 million); accelerating activity in both Liquefied Natural Gas (“LNG”) and Specialty Products.
The first quarter 2022 was our highest order quarter in our history, with $636.8 million of new orders booked, including $228.4 million related to Big LNG export terminals. This is our second consecutive record order quarter and four out of our last five quarters set new order quarter records. This resulted in our sixth consecutive quarter of record backlog ($1,477.0 million); backlog is 58.1% higher than one year ago. Also in the first quarter 2022, we booked 65 orders that each were over $1 million (more than twice as many as the first quarter 2021) along with 84 new customers and 28 first-of-a-kind (“FOAK”) orders including a first Earthly Lab’s CiCi Elm unit sale to new customer Troeg’s Brewery, with continued broad-based demand in Specialty Products across a variety of applications.
In addition to the broad-based demand we experienced exiting 2021 and to start 2022, demand for our products, in particular LNG and other energy alternative solutions and equipment, accelerated as the result of the Russia-Ukraine conflict that began February 24, 2022. We have seen an increase in actual orders as well as inquiries from both public and private sector entities surrounding the need for infrastructure to access molecules to support energy security, access, independence and resiliency, all with the backdrop of the requirement for alternative sources of supply and continued focus on sustainability. For example, the United Kingdom as part of their revised energy strategy, has doubled its 2030 hydrogen target. What is critical to note is that this recent activity has spotlighted the need for construction and action now to address these topics.
Specific examples of new orders received reflecting the acceleration of energy activity following the initiation of the Ukraine-Russia conflict include:
•Combined, the three pillars of our LNG business are the most active in our history; (1) Big LNG export terminals, (2) small-scale LNG (“ssLNG”) globally and (3) LNG infrastructure. We booked three Big LNG project orders in the first quarter 2022:
•$135.5 million order with Full Notice to Proceed (“FNTP”) brazed aluminum heat exchanger assemblies and corresponding cold boxes for Venture Global Plaquemines Phase 1 (10 MTPA).
•$47.5 million order for Limited Notice to Proceed (“LNTP”) for Cheniere’s Corpus Christi Stage Three terminal. We anticipate this project moves to FNTP in 2022.
•$45.4 million order for six of the eighteen BAHX assemblies and cold boxes for Venture Global’s Plaquemines Phase 2 export terminal project.
•We closed 2021 with four small-scale liquefaction projects booked the last week of the year. In the first quarter of 2022, the trend of ssLNG projects continued, with our order from New Fortress Energy (“NFE”) for their FastLNG2 project. Continuing this trend into the second quarter 2022 was our receipt of a Letter of Intent (“LOI”) from NFE for FastLNG3.
•Shell publicly announced its intent to build LNG fueling stations for long-haul transportation in India. We have continued to see global LNG station demand including 14 stations booked in the first quarter 2022, three of which were with an international oil company.
And while not in our guidance, we continue to expect additional progress from other LNG export terminal operators to FID with the potential for additional Big LNG as well as ssLNG orders with Chart releases in 2022.
Specialty Products orders continued to demonstrate consistency and strength, with the first quarter 2022 being our fifth consecutive quarter of Specialty Products orders above $100 million. We are also seeing numerous synergy sales opportunities across our Nexus of Clean™ newly acquired companies – ranging from cross-selling water treatment solutions to food and beverage customers to cross selling carbon capture processes to water customers. Two examples from the first quarter 2022:
•We are partnering with Simmons Foods for our third installation at the state-of-the-art industrial wastewater treatment site and processing facility in Southwest City, MO by providing super-oxygenation technology for their efficient wastewater treatment.
•We are working with International Flavors & Fragrances (“IFF”) in a unique application for odor reduction and efficient wastewater treatment at the Jacksonville, FL flavor and fragrances site. Removal of all surface aerators was made possible by providing super-oxygenation technology for their efficient wastewater treatment. This same customer is doing an engineering study with our Sustainable Energy Solutions’ (“SES”) cryogenic carbon capture technology.
Gas By Rail™, carbon capture and space exploration orders each grew over 20% when compared to the first quarter of 2021, while water treatment grew over 500%. Food & beverage orders grew 14% for that same period, driven by first quarter 2022 new restaurant starts and distributor activity significantly (20%) over plan. While the first quarter of any given year in food and beverage orders typically can be slow due to weather, this year we did not see slowdown. Additionally, Chick-Fil-A started an upgrade program with our tanks, and we are proud to provide our nitrogen dosers to a major beverage company for their newly released, first of a kind, nitrogen-infused cola. Our expectation is that demand for our food & beverage products will continue to increase throughout 2022. As we expected, we did not book any hydrogen or helium liquefier orders in the first quarter, yet demand for our hydrogen equipment continued, with $30 million of hydrogen-related equipment orders. What is also noteworthy in hydrogen is the increase in the variety of customers as well as the broader geographic locations of these orders; for example, in the past six months, we have increased the number of individual hydrogen customers that have placed orders with us by 70% and we received our first orders from Nikola and expanded our customer set to South Korea, including SK Korea.
Delivering on our record backlog is supported by our organic investment in capacity and automation as well as strategic sourcing actions. We recognized our highest first quarter sales in our history in the first quarter of 2022 ($354.1 million).
To open the second quarter 2022, we received a tens of millions order from a European government organization for mobile equipment. This order is one of many that supports increasing and strong volume for our in-flight capital project of capacity expansion in our Goch, Germany trailer manufacturing facility. This order builds upon our record trailer order year in 2021 and a very strong first quarter of 2022, with 140 trailers ordered globally.
As we continue to anticipate growing sales across our solutions offerings, our capacity expansion capital plan combined with our automation activities remains on schedule. In the first quarter 2022 we completed the implementation of our vacuum insulated pipe (“VIP”) line in Lery, France, and we expect our additional brazed aluminum heat exchanger (“BAHX”) line to be operating in Tulsa, Oklahoma by the first quarter of 2023. Our SriCity, India tank capacity expansion is already partially in operation this month and expected to be fully complete by July 2022.
Our sales in the first quarter 2022 were $354.1 million, our highest first quarter sales in our history, driven by a combination of sequential order growth in Cryo Tank Solutions as well as timing and record backlog heading into the year. Sales increased 22.7% when compared to the first quarter of 2021 (27.0% when excluding Big LNG from both periods) and reflected record sales in water treatment, carbon capture, Heat Transfer Systems (“HTS”) project work, and Repair Service and Leasing (“RSL”) parts, repair, service as well as fans aftermarket.
Throughout 2021, we strategically decided to increase our on-hand inventory balance as the result of increases in material costs and the frequently discussed availability challenges of materials. This decision resulted in lower than typical free cash flow in 2021. We entered 2022 with higher than typical inventory levels, yet at the time anticipated that free cash flow for 2022 would reflect the tempering of these challenges as the year progressed. Given the uncertain supply chain and material cost environment that worsened as the result of the Russia-Ukraine conflict, we have chosen to continue to strategically build safety stock of key raw material inputs, including carbon steel, stainless steel and aluminum, especially given our ability to source these globally while attempting to procure them at lower cost points in the market. This continued strategic safety stock inventory build resulted in lower than typical free cash flow for the first quarter 2022 yet allows us to meet our customers’ ongoing delivery timelines and record demand levels, thereby continuing to secure additional business. Even with these challenges and this strategic decision, our net cash used by operating activities was only ($22) million, and when adjusted for unusual items, was $8 million. This included an increase to our inventory of $35 million in the first quarter of 2022, driven by the strategic sourcing decisions we made to add safety stock (+$19 million), the increases in material costs and the purchasing of material for our larger projects that were booked in the fourth quarter of 2021 and the first quarter of 2022. Even considering the inventory headwinds, we continue to anticipate that with the payment schedules for Big LNG project work in backlog that our full year 2022 adjusted free cash flow will be in the range of $175 million to $225 million.
Continued progress on pricing and cost actions are reflected in our first quarter 2022 reported gross margin as a percent of sales of 23.6% (adjusted gross margin as a percent
of sales of 26.1% when excluding restructuring and organic startup capacity costs), demonstrating our progress in incremental and sequential quarterly improvement in our margin profile.
As 2022 began, we continued to take further pricing and cost reduction actions to progress faster against our lagging cost to price backlog. During the first quarter, we took additional steps than what was originally anticipated after seeing the material availability and cost impacts after the start of the Russia-Ukraine conflict. We implemented additional price increases in the first quarter 2022 and increased our temporary surcharges yet again and combined with our 2021 actions are expected to cover our additional costs on new orders. We have made additional progress in the first quarter on addressing the continuing inflationary and unique macro challenges as well as bringing new capacity online. Examples include (details can be found on slides 11 through 18 of the supplemental presentation):
•Availability of material is improving particularly in the United States following a very challenging month of March 2022 globally, yet we continue to generate alternative, localized as well as global sources of supply while reviewing alternative component sources. Additionally, we were faced with Force Majeure on our nitrogen gas supply in the Southeast United States from our gas suppliers throughout the first quarter 2022. This has since been lifted yet we are now under Force Majeure for helium supply in various regions of the United States indefinitely, causing additional cost and inefficiencies. We continue to find new alternative supply and when possible, we also have utilized one of our trailers from our leasing fleet to transport our own gas.
•Logistic costs, including availability of drivers and trucks remained a challenge. As we previously described, additional logistics costs had a net negative margin impact of $1.4 million in the fourth quarter 2021. This meaningfully improved to a net negative margin impact of $0.6 million in the first quarter 2022 and we took even further steps by product type to ensure this continues to sequentially improve to a net zero impact (which is anticipated no later than the third quarter 2022). Additionally, generally we did not miss shipments as the result of the logistics situation.
•January and February 2022 were our two highest months of COVID-19 absences globally since the start of the pandemic/endemic in March 2020. We had 295 team members out with COVID in January 2022 and 109 in February 2022, yet we have become more agile in adapting to these types of challenges and taking advantage of our flexible manufacturing options. Therefore, it did not meaningfully impact our sales in the first quarter 2022. We actually had nine shops with 100% on-time delivery in the first quarter 2022 (up from eight in the fourth quarter 2021) as well as 17 facilities with over 95% on-time delivery in the first quarter 2022.
•While we lost an entire week of production at our Chart China facility in the month of March 2022 due to government COVID-19 lockdowns, our team members managed to ship to our forecast. Nice job, Chart China team!
•Our CryoDiffusion vacuum insulated pipe manufacturing line is complete and running as of the first quarter 2022 and we anticipate our SriCity, India capacity expansion project to be fully operational by the third quarter 2022.
The steps taken in the second half of 2021 as well as the first quarter of 2022 resulted in our improving reported gross margin as a percent of sales of 23.6%, a sequential increase of 190 basis points over the fourth quarter of 2021. While this still lagged behind first quarter 2021 gross margin percentage given the timing differences between raw material cost increases and our corresponding pricing actions, as discussed elsewhere, we expect this timing gap to narrow as the year progresses. When adjusted for one-time items including primarily restructuring and organic startup capacity costs, gross margin as a percent of sales in the first quarter 2022 was 26.1%, which was not adjusted for first quarter impacts such as our highest four week stretch of COVID-19 absences, inefficiencies from Force Majeures issued by our gas suppliers to our factories, higher transport and logistics costs, additional team member retention payments as well as other labor inefficiencies.
Our first quarter 2022 reported non-diluted EPS of $0.28 included a negative impact of $0.14 ($0.11 net of tax) from the quarter’s mark-to-market of our inorganic investments as well as operational one-time costs related to restructuring, startup/capacity and deal and integration totaling $0.26 net of tax. When adjusting for these items, adjusted non-diluted EPS was $0.65. Sequentially when compared to the fourth quarter 2021, our addbacks to earnings per share, excluding the mark-to-market gains and losses of our inorganic investments net of FX, are down 42%, which demonstrates our expectation that we will continue to have fewer adjustments to EPS as the result of acquisition integrations completing after year one of ownership, not anticipating any debt or refinance costs in 2022 and the timing of new organic capacity and product lines coming online throughout the year.
“We are pleased with our pricing and cost reduction progress, reflected in our improving gross margin as a percent of sales and expected to continue throughout the remainder of the year,” stated Jill Evanko, Chart’s President and CEO. “In addition, we continue to hit key milestones of one-year acquisition integrations on schedule while completing capacity and productivity projects throughout 2021 and 2022. These activities also support our ability to deliver our solutions on-time to our customers as we continue to see record demand, including the first quarter of 2022 being our sixth consecutive quarter of setting a new historical backlog record and our highest order quarter ever.”
Additional Partnerships Executed in Q1 2022.
In the first quarter 2022, we continued to build upon our industry partnerships via investment, collaborations, LOIs, and MOUs. We are pleased to share the following partnerships that were executed this quarter:
•Executed a LOI with Greenstone Renewables for Chart to be their exclusive liquefaction technology and equipment supplier for their 100% renewable solar hydrogen production project expected to proceed to Final Investment Decision (“FID”) in 2022.
•Signed an agreement with an industrial gas customer to be their tank and heat exchanger supplier for their global hydrogen projects.
•Joined Cemvita Factory as a founding member of their Gold Hydrogen technology.
•Funded Hy24’s first hydrogen investment, one year after our decision to be an anchor partner in the world’s first hydrogen pure play investment fund (originally “FiveT Hydrogen Fund”).
•Announced our collaboration with Calgon Carbon Corporation (“Calgon Carbon”), a wholly owned subsidiary of Kuraray Co., Ltd. (TYO: 3405) (“Kuraray”) and ChartWater™. We will partner in offering PFAS water treatment systems using granular activated carbon (GAC) media enabling ChartWater™ and Calgon to combine their capabilities for solutions that will cost-effectively provide safe drinking water to small community water systems and under-resourced rural communities across the United States.
•Completed our AdEdge (ChartWater™) joint venture with AdEdge India, allowing us regional capabilities to sell our water treatment solutions across India.
Update 2022 Outlook With Increased Confidence in Higher 2023 and 2024 Outlooks.
Our anticipated 2022 full year sales outlook is in the range of $1.725 billion to $1.85 billion with associated non-diluted adjusted EPS of $5.35 to $6.50, both revised from our prior guidance. There are a few noteworthy items in our current outlook:
•Our current sales outlook includes approximately $25 to $40 million of Big LNG related revenue in the year from orders booked in the first quarter 2022. We reiterate that our sales timing is expected to sequentially increase throughout the year, with the Big LNG revenue primarily in the latter part 2022.
•Recently, key customers for our HLNG vehicle tank products lowered their 2022 purchasing forecasts (timing shift is anticipated to 2023) as the result of the macroeconomic challenges in the vehicle industry. This primarily impacts our second quarter 2022.
•We consider uncertainty around shutdowns and logistics in China in the near-term in this outlook.
•The higher-end of the range requires specific larger opportunities in our commercial pipeline to be booked as orders in the coming few months.
•Our assumed weighted shares outstanding in the current outlook are 35.83 million, an increase from our prior guidance of 35.6 million shares.
•We are assuming a 19% effective tax rate (unchanged from prior guidance).
•As we said previously, we anticipate the first half of 2022 will include a margin drag from historical levels from the ongoing macro challenges but increasingly be offset as the year progresses by the positive impact from actions we have taken to date.
•Also, important to note is that prior to the first quarter 2022, there was immaterial Big LNG in our backlog for 2022 and beyond. Now with Big LNG orders booked and anticipating additional Big LNG orders later this year, our 2023 through 2025 outlooks all increase meaningfully.
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, 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 recent acquisitions and achieve the anticipated revenue, earnings, accretion and other benefits from these acquisitions; slower than anticipated growth and market acceptance of new clean energy product offerings; inability to achieve expected pricing increases or continued supply chain challenges including volatility in raw materials and supply; risks relating to the outbreak and continued uncertainty associated with the coronavirus (COVID-19) and the conflict between Russia and Ukraine and the other factors discussed in Item 1A (Risk Factors) in the Company’s most recent Annual Report on Form 10-K filed with the SEC, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement.
USE OF NON-GAAP FINANCIAL INFORMATION
This press release contains non-GAAP financial information, including adjusted gross profit as a percent of sales, adjusted earnings per non-diluted share, net income attributable to Chart
Industries, Inc. adjusted, free cash flow and adjusted free cash flow and 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 2022 Earnings Per Share," “Segment Sales and Gross Margin Information,” “First Quarter 2022 Free Cash Flow”, “Segment Information”, and “First Quarter 2022 Adjusted EBITDA” included in the supplemental slides accompanying this release.
The Company believes these non-GAAP measures are of interest to investors and facilitate useful period-to-period comparisons of the Company’s financial results, and this information is used by the Company in evaluating internal performance. With respect to the Company’s 2022 full year earnings outlook, the Company is not able to provide a reconciliation of the adjusted earnings per non-diluted share or adjusted free cash flow because certain items may have not yet occurred or are out of the Company’s control and/or cannot be reasonably predicted.
CONFERENCE CALL
As previously announced, the Company will discuss its first quarter 2022 financial results on a conference call on Friday, April 29, 2022 at 8:30 a.m. ET. Participants may join the conference call by dialing (877) 312-9395 in the U.S. or (970) 315-0456 from outside the U.S., entering conference ID 5393386. Please log-in or dial-in at least five minutes prior to the start time.
A taped replay of the conference call will be archived on the Company’s website, www.chartindustries.com. You may also listen to a recorded replay of the conference call by dialing (855) 859-2056 in the U.S. or (404) 537-3406 outside the U.S. and entering Conference ID 5393386. The replay will be available beginning 11:30 a.m. ET, Friday, April 29, 2022 until 11:30 a.m. ET, Friday, May 6, 2022.
About Chart Industries, Inc.
Chart Industries, Inc. is a leading independent global manufacturer of highly engineered equipment servicing multiple applications in the Energy and Industrial Gas markets. Our unique product portfolio is used in every phase of the liquid gas supply chain, including upfront engineering, service and repair. Being at the forefront of the clean energy transition, Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and CO2 Capture amongst other applications. We are committed to excellence in environmental, social and corporate governance (ESG) issues both for our company as well as our customers. With over 25 global manufacturing locations from the United States to China, Australia, India, Europe and South America, we maintain accountability and transparency to our team members, suppliers, customers and communities. To learn more, visit www.Chartindustries.com.
For more information, click here:
http://ir.chartindustries.com/
Investor Relations Contact:
| Wade Suki, CFA |
|---|
| Director of Investor Relations |
| 832-524-7489 |
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, 2022 | March 31, 2021 | December 31, 2021 | ||||
| Sales | $ | 354.1 | $ | 288.5 | $ | 378.9 |
| Cost of sales | 270.4 | 204.6 | 296.7 | |||
| Gross profit | 83.7 | 83.9 | 82.2 | |||
| Selling, general, and administrative expenses | 53.5 | 46.3 | 51.4 | |||
| Amortization expense | 10.1 | 8.8 | 10.4 | |||
| Operating expenses | 63.6 | 55.1 | 61.8 | |||
| Operating income (1) (2) (3) (4) (5) | 20.1 | 28.8 | 20.4 | |||
| Interest expense, net | 3.2 | 2.0 | 3.3 | |||
| Financing costs amortization | 0.7 | 1.2 | 4.8 | |||
| Unrealized loss (gain) on investments in equity securities | 2.6 | (3.3) | (2.0) | |||
| Realized gain on investment in equity securities | — | — | (2.6) | |||
| Foreign currency loss | 1.6 | — | 1.2 | |||
| Other income | (0.7) | (0.2) | (0.1) | |||
| Income before income taxes and equity in (loss) earnings of unconsolidated affiliates, net | 12.7 | 29.1 | 15.8 | |||
| Income tax expense | 2.1 | 3.1 | 3.6 | |||
| Income before equity in (loss) earnings of unconsolidated affiliates, net | 10.6 | 26.0 | 12.2 | |||
| Equity in (loss) earnings of unconsolidated affiliates, net | (0.3) | 0.1 | 0.2 | |||
| Net income | 10.3 | 26.1 | 12.4 | |||
| Less: Income attributable to noncontrolling interests, net of taxes | 0.1 | 0.5 | 0.3 | |||
| Net income attributable to Chart Industries, Inc. | $ | 10.2 | $ | 25.6 | $ | 12.1 |
| Net income attributable to Chart Industries, Inc. per common share: | ||||||
| Basic | $ | 0.28 | $ | 0.72 | $ | 0.34 |
| Diluted | $ | 0.25 | $ | 0.63 | $ | 0.29 |
| Weighted-average number of common shares outstanding: | ||||||
| Basic | 35.83 | 35.55 | 35.65 | |||
| Diluted (6) (7) | 40.79 | 40.62 | 41.57 |
_______________
(1)Includes depreciation expense of:
•$10.4, $10.7 and $10.4 for the three months ended March 31, 2022, March 31, 2021 and December 31, 2021, respectively.
(2)Includes restructuring costs of:
•$0.1, $0.7, and $0.6 for the three months ended March 31, 2022, March 31, 2021 and December 31, 2021, respectively.
(3)Includes acquisition-related contingent consideration (credits)/charges of:
•$(0.8), $0.8, and $(1.2) in our Specialty Products segment for the three months ended March 31, 2022, March 31, 2021 and December 31, 2021, respectively.
(4)Includes deal-related and integration costs of $4.2 and $4.9 for the three months ended March 31, 2022 and December 31, 2021, respectively.
(5)In conjunction with the amendment of our credit facilities in 2021, we recognized charges of $4.1 in unamortized debt issuance cost write offs associated with previous credit facilities and new debt issuance costs, which are classified as financing costs amortization for the three months ended December 31, 2021.
(6)Includes an additional 4.72 and 4.74 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 and 2021, respectively. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S. generally accepted accounting principles (“GAAP”). If the hedge could have been considered, it would have reduced the additional shares by 2.56 and 2.57 for the three months ended March 31, 2022 and 2021, respectively.
(7)Includes an additional 5.56 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the fourth quarter 2021. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S. GAAP. If the hedge could have been considered, it would have reduced the additional shares by 2.94 for the fourth quarter 2021.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, 2022 | March 31, 2021 | December 31, 2021 | ||||
| Net Cash (Used In) Provided By Operating Activities | $ | (22.2) | $ | 8.3 | $ | 20.4 |
| Investing Activities | ||||||
| Acquisition of businesses, net of cash acquired | (0.8) | (55.0) | (36.0) | |||
| Investments | (3.9) | (40.0) | (0.7) | |||
| Capital expenditures | (12.6) | (11.5) | (16.2) | |||
| Government grants and other | (0.2) | 0.2 | 0.1 | |||
| Net Cash Used In Investing Activities | (17.5) | (106.3) | (52.8) | |||
| Financing Activities | ||||||
| Borrowings on revolving credit facility | 254.0 | 187.7 | 717.0 | |||
| Repayments on revolving credit facility | (235.9) | (102.5) | (552.0) | |||
| Repayments on term loan | — | — | (103.1) | |||
| Payments for debt issuance costs | — | — | (3.0) | |||
| Proceeds from exercise of stock options | 1.0 | 5.6 | (0.1) | |||
| Common stock repurchases from share-based compensation plans | (3.2) | (3.0) | (3.2) | |||
| Net Cash Provided By Financing Activities | 15.9 | 87.8 | 55.6 | |||
| Effect of exchange rate changes on cash | 1.3 | — | (3.8) | |||
| Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents | (22.5) | (10.2) | 19.4 | |||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period (1) | 122.4 | 126.1 | 103.0 | |||
| CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD (1) | $ | 99.9 | $ | 115.9 | $ | 122.4 |
_______________
(1)Includes restricted cash and restricted cash equivalents of $0.2 as of both March 31, 2022 and December 31, 2021 and $1.0 as of March 31, 2021.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
| March 31,<br>2022 | December 31,<br>2021 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | $ | 99.7 | $ | 122.2 |
| Accounts receivable, net | 253.0 | 236.3 | ||
| Inventories, net | 350.6 | 321.5 | ||
| Other current assets | 207.5 | 173.5 | ||
| Property, plant, and equipment, net | 412.4 | 416.0 | ||
| Goodwill | 991.3 | 994.6 | ||
| Identifiable intangible assets, net | 544.7 | 556.1 | ||
| Equity method investments | 100.9 | 99.6 | ||
| Investments in equity securities | 78.0 | 77.8 | ||
| Other assets | 47.8 | 46.2 | ||
| TOTAL ASSETS | $ | 3,085.9 | $ | 3,043.8 |
| LIABILITIES AND EQUITY | ||||
| Current liabilities | $ | 721.6 | $ | 693.9 |
| Long-term debt | 618.1 | 600.8 | ||
| Other long-term liabilities | 116.8 | 123.9 | ||
| Equity | 1,629.4 | 1,625.2 | ||
| TOTAL LIABILITIES AND EQUITY | $ | 3,085.9 | $ | 3,043.8 |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
OPERATING SEGMENTS (UNAUDITED)
(Dollars in millions)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31, 2022 | March 31, 2021 | December 31, 2021 | |||||||
| Sales | |||||||||
| Cryo Tank Solutions | $ | 118.1 | $ | 103.9 | $ | 133.5 | |||
| Heat Transfer Systems | 79.3 | 69.2 | 71.9 | ||||||
| Specialty Products | 107.5 | 77.3 | 131.9 | ||||||
| Repair, Service & Leasing | 49.3 | 41.4 | 44.7 | ||||||
| Intersegment eliminations | (0.1) | (3.3) | (3.1) | ||||||
| Consolidated | $ | 354.1 | $ | 288.5 | $ | 378.9 | |||
| Gross Profit | |||||||||
| Cryo Tank Solutions | $ | 25.4 | $ | 25.2 | $ | 22.5 | |||
| Heat Transfer Systems | 10.1 | 15.8 | 6.4 | ||||||
| Specialty Products | 32.6 | 28.2 | 39.9 | ||||||
| Repair, Service & Leasing | 15.6 | 14.7 | 13.4 | ||||||
| Consolidated | $ | 83.7 | $ | 83.9 | $ | 82.2 | |||
| Gross Profit Margin | |||||||||
| Cryo Tank Solutions | 21.5 | % | 24.3 | % | 16.9 | % | |||
| Heat Transfer Systems | 12.7 | % | 22.8 | % | 8.9 | % | |||
| Specialty Products | 30.3 | % | 36.5 | % | 30.3 | % | |||
| Repair, Service & Leasing | 31.6 | % | 35.5 | % | 30.0 | % | |||
| Consolidated | 23.6 | % | 29.1 | % | 21.7 | % | |||
| Operating Income (Loss) | |||||||||
| Cryo Tank Solutions | $ | 14.1 | $ | 15.6 | $ | 10.9 | |||
| Heat Transfer Systems | (0.2) | 3.8 | (5.8) | ||||||
| Specialty Products | 16.2 | 17.9 | 26.4 | ||||||
| Repair, Service & Leasing | 8.3 | 8.3 | 7.2 | ||||||
| Corporate | (18.3) | (16.8) | (18.3) | ||||||
| Consolidated (1) (2) (3) | $ | 20.1 | $ | 28.8 | $ | 20.4 | |||
| Operating Margin (Loss) | |||||||||
| Cryo Tank Solutions | 11.9 | % | 15.0 | % | 8.2 | % | |||
| Heat Transfer Systems | (0.3) | % | 5.5 | % | (8.1) | % | |||
| Specialty Products | 15.1 | % | 23.2 | % | 20.0 | % | |||
| Repair, Service & Leasing | 16.8 | % | 20.0 | % | 16.1 | % | |||
| Consolidated | 5.7 | % | 10.0 | % | 5.4 | % |
_______________
(1)Restructuring costs for the three months ended:
•March 31, 2022 were $0.1 in our Heat Transfer Systems segment.
•March 31, 2021 were $0.7 ($0.3 - Cryo Tank Solutions and $0.4 - Heat Transfer Systems).
•December 31, 2021 were $0.6 ($0.5 - Heat Transfer Systems and $0.1 - Repair, Service & Leasing).
(2)Includes acquisition-related contingent consideration (credits)/charges of:
•$(0.8), $0.8, and $(1.2) in our Specialty Products segment for the three months ended March 31, 2022, March 31, 2021 and December 31, 2021, respectively.
(3)Includes deal-related and integration costs of $4.2 and $4.9 for the three months ended March 31, 2022 and December 31, 2021, respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
ORDERS AND BACKLOG (UNAUDITED)
(Dollars in millions)
| Three Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2022 | March 31,<br>2021 | December 31,<br>2021 | ||||||||||||
| Orders | ||||||||||||||
| Cryo Tank Solutions | $ | 142.4 | $ | 129.5 | $ | 117.2 | ||||||||
| Heat Transfer Systems (1) | 354.1 | 104.9 | 117.5 | |||||||||||
| Specialty Products | 100.5 | 144.5 | 182.3 | |||||||||||
| Repair, Service & Leasing | 43.4 | 40.5 | 45.9 | |||||||||||
| Intersegment eliminations | (3.6) | (2.2) | (2.0) | |||||||||||
| Consolidated | $ | 636.8 | $ | 417.2 | $ | 460.9 | As of | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| March 31,<br>2022 | March 31,<br>2021 | December 31,<br>2021 | ||||||||||||
| Backlog | ||||||||||||||
| Cryo Tank Solutions | $ | 365.8 | $ | 245.8 | $ | 346.8 | ||||||||
| Heat Transfer Systems | 639.5 | 361.4 | 370.4 | |||||||||||
| Specialty Products | 418.8 | 270.5 | 438.2 | |||||||||||
| Repair, Service & Leasing | 53.6 | 57.4 | 56.5 | |||||||||||
| Intersegment eliminations | (0.7) | (1.0) | (21.8) | |||||||||||
| Consolidated | $ | 1,477.0 | $ | 934.1 | $ | 1,190.1 |
_______________
(1)Heat Transfer Systems orders for the three months ended March 31, 2022 include big LNG orders of $228.4 million.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF BASIC EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. TO NORMALIZED NON-DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES INC. AND ADJUSTED NON-DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. (UNAUDITED)
(Dollars in millions, except per share amounts)
| Three Months Ended | ||||
|---|---|---|---|---|
| March 31, 2022 | December 31, 2021 | |||
| Basic earnings per common share attributable to Chart Industries, Inc. (U.S. GAAP) | $ | 0.28 | $ | 0.34 |
| Investment equities mark-to-market, net (1) | 0.14 | (0.03) | ||
| Gain on remeasurement of investment (2) | — | (0.07) | ||
| Debt refinance costs (3) | — | 0.12 | ||
| Tax effects | (0.03) | — | ||
| Normalized non-diluted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) | $ | 0.39 | $ | 0.36 |
| Restructuring related costs (4) | 0.15 | 0.21 | ||
| Deal-related and integration costs (5) | 0.12 | 0.14 | ||
| Start-up costs (organic) (6) | 0.05 | 0.08 | ||
| Other one-time items (7) | — | 0.01 | ||
| Tax effects | (0.06) | (0.07) | ||
| Adjusted non-diluted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) | $ | 0.65 | $ | 0.73 |
_______________
(1)Includes unrealized loss (gain) on the mark-to-market adjustments of our investments in equity securities related to McPhy (Euronext Paris: MCPHY – ISIN; FR0011742329) and Stabilis Energy, Inc. (NasdaqCM: SLNG) of $2.6 and $(2.0) for the three months ended March 31, 2022 and December 31, 2021, respectively, foreign currency loss of $1.6 and $1.2, for the three months ended March 31, 2022 and December 31, 2021, respectively, and equity in (loss) earnings of unconsolidated affiliates, net of $(0.3) and $0.2 for the three months ended March 31, 2022 and December 31, 2021 respectively.
(2)Includes a $2.6 gain from the remeasurement of our initial 15% investment in Earthly Labs Inc. for the three months ended December 31, 2021.
(3)Includes debt refinance costs of $4.1 related to the refinance of our credit facilities during the three months ended December 31, 2021.
(4)Restructuring related costs during the three months ended March 31, 2022 and December 31, 2021 of $5.3 and $7.4, respectively, were comprised of relocation and facility start-up costs and departmental restructuring, including headcount reductions.
(5)Deal-related and integration costs:
•During the three months ended March 31, 2022 of $4.2, were comprised of pre-closing, due diligence and integration costs related to our acquisitions of Cryogenic Gas Technologies, Inc., L.A. Turbine, AdEdge Holdings, LLC, and Earthly Labs Inc. as well as integration costs from our investments in Transform Materials LLC and HTEC Hydrogen Technology & Energy Corporation.
•During the three months ended December 31, 2021 of $4.9, were comprised of pre-closing, due diligence and integration costs related to our acquisitions of Cryogenic Gas Technologies, Inc., L.A. Turbine, AdEdge Holdings, LLC, and Earthly Labs Inc. as well as integration costs from 2020 acquisitions including Alabama Trailers, BlueInGreen, LLC and Sustainable Energy Solutions, Inc. Deal-related and integration costs during the three months ended December 31, 2021 also include acquisition related contingent consideration, income taxes and interest expense related to previous divestitures.
(6)Start-up costs (organic) during the during the three months ended March 31, 2022 and December 31, 2021 of $1.8 and $2.8, respectively, were comprised of Richburg, South Carolina repair facility start-up costs, Tulsa, Oklahoma product line start-up costs and incremental costs related to our flex manufacturing facility in Tulsa, Oklahoma.
(7)For the three months ended December 31, 2021, other one-time costs include labor disruption, freight, sourcing and safety costs directly related to manufacture and fulfillment of critical care products. Other one-time costs for the quarter ended December 31, 2021 also include costs related to commercial and legal settlements and storm damage.
_______________
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>2022 | March 31,<br>2021 | |||
| Net income attributable to Chart Industries, Inc., (U.S. GAAP) | $ | 10.2 | $ | 25.6 |
| Income attributable to noncontrolling interests, net of taxes | 0.1 | 0.5 | ||
| Net income (U.S. GAAP) | 10.3 | 26.1 | ||
| Employee share-based compensation expense | 3.3 | 3.4 | ||
| Financing costs amortization | 0.7 | 1.2 | ||
| Unrealized foreign currency transaction gain | (1.1) | (4.6) | ||
| Unrealized loss (gain) on investments in equity securities | 2.6 | (3.3) | ||
| Equity in loss (earnings) of unconsolidated affiliates, net | 0.3 | (0.1) | ||
| Other non-cash operating activities | 2.0 | 2.0 | ||
| Net income, adjusted (non-GAAP) | $ | 18.1 | $ | 24.7 |
_______________
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>2022 | March 31,<br>2021 | |||
| Net cash (used in) provided by operating activities (U.S. GAAP) | $ | (22.2) | $ | 8.3 |
| Capital expenditures | (12.6) | (11.5) | ||
| Free cash flow (non-GAAP) | (34.8) | (3.2) | ||
| Non-recurring costs | 11.0 | 5.0 | ||
| Add back inventory for strategic build | 19.0 | — | ||
| Adjusted free cash flow (non-GAAP) | $ | (4.8) | $ | 1.8 |
_______________
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 (used in) provided by operating activities in accordance with U.S. GAAP. Management believes that free cash flow and adjusted free cash flow facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED)
(Dollars in millions)
| Three Months Ended 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 | % | |||||||
| Three Months Ended March 31, 2021 | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 103.9 | $ | 69.2 | $ | 77.3 | $ | 41.4 | $ | (3.3) | $ | — | $ | 288.5 | |||||||
| Gross profit as reported (U.S. GAAP) | 25.2 | 15.8 | 28.2 | 14.7 | — | — | 83.9 | ||||||||||||||
| Restructuring, transaction-related and other one-time costs | — | 1.4 | 0.8 | 0.1 | — | — | 2.3 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 25.2 | $ | 17.2 | $ | 29.0 | $ | 14.8 | $ | — | $ | — | $ | 86.2 | |||||||
| Adjusted gross profit margin (non-GAAP) | 24.3 | % | 24.9 | % | 37.5 | % | 35.7 | % | — | % | — | % | 29.9 | % | |||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 15.6 | $ | 3.8 | $ | 17.9 | $ | 8.3 | $ | — | $ | (16.8) | 28.8 | ||||||||
| Restructuring, transaction-related and other one-time costs | 0.2 | 1.6 | 1.9 | 0.1 | — | 1.9 | 5.7 | ||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 15.8 | $ | 5.4 | $ | 19.8 | $ | 8.4 | $ | — | $ | (14.9) | $ | 34.5 | |||||||
| Adjusted operating margin (non-GAAP) | 15.2 | % | 7.8 | % | 25.6 | % | 20.3 | % | — | % | — | % | 12.0 | % |
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED) (CONTINUED)
(Dollars in millions)
| Three Months Ended December 31, 2021 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | |||||||||||||||
| Sales | $ | 133.5 | $ | 71.9 | $ | 131.9 | $ | 44.7 | $ | (3.1) | $ | — | $ | 378.9 | |||||||
| Gross profit as reported (U.S. GAAP) | 22.5 | 6.4 | 39.9 | $ | 13.4 | — | — | 82.2 | |||||||||||||
| Restructuring, transaction-related and other one-time costs | 2.7 | 3.6 | 1.2 | 2.1 | — | — | 9.6 | ||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 25.2 | $ | 10.0 | $ | 41.1 | $ | 15.5 | $ | — | $ | — | $ | 91.8 | |||||||
| Adjusted gross profit margin (non-GAAP) | 18.9 | % | 13.9 | % | 31.2 | % | 34.7 | % | — | % | — | % | 24.2 | % | |||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 10.9 | $ | (5.8) | $ | 26.4 | $ | 7.2 | $ | — | $ | (18.3) | 20.4 | ||||||||
| Restructuring, transaction-related and other one-time costs | 2.9 | 4.2 | 1.4 | 2.1 | — | 1.8 | 12.4 | ||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 13.8 | $ | (1.6) | $ | 27.8 | $ | 9.3 | $ | — | $ | (16.5) | $ | 32.8 | |||||||
| Adjusted operating margin (non-GAAP) | 10.3 | % | (2.2) | % | 21.1 | % | 20.8 | % | — | % | — | % | 8.7 | % |
_______________
Adjusted gross profit and adjusted operating income (loss) are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to gross profit and operating income (loss) in accordance with U.S. GAAP. Management believes that adjusted gross profit and adjusted operating income (loss) facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.
21
a2022-04x29_gtlsq12022ea
Chart Industries FIRST QUARTER 2022 EARNINGS CALL Exhibit 99.2
Forward-Looking Statements © 2022 Chart Industries, Inc. Confidential and Proprietary 2 CERTAIN STATEMENTS MADE IN THIS PRESENTATION ARE FORW ARD-LOOKING STATEMENTS W ITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. FORW ARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING THE COMPANY’S BUSINESS PLANS, INCLUDING STATEMENTS REGARDING COMPLETED DIVESTITURES, ACQUISIT IONS AND INVESTMENTS, COST SYNERGIES AND EFFICIENCY SAVINGS, OBJECTIVES, FUTURE ORDERS, REVENUES, MARGINS, EARNINGS OR PERFORMANCE, LIQUIDITY AND CASH FLOW , CAPITAL EXPENDITURES, SUPPLY CHAIN CHALLENGES, BUSINESS TRENDS, CLEAN ENERGY MARKET OPPORTUNITIES INCLUDING ADDRESSABLE MARKETS, GOVERNMENTAL INIT IATIVES, INCLUDING EXECUTIVE ORDERS AND OTHER INFORMATION THAT IS NOT HISTORICAL IN NATURE. FORW ARD-LOOKING STATEMENTS MAY BE IDENTIFIED BY TERMINOLOGY SUCH AS "MAY," "W ILL," "SHOULD," "COULD," "EXPECTS," "ANTICIPATES," "BELIEVES," "PROJECTS," "FORECASTS," “OUTLOOK,” “GUIDANCE,” "CONTINUE," “TARGET,” OR THE NEGATIVE OF SUCH TERMS OR COMPARABLE TERMINOLOGY. FORW ARD-LOOKING STATEMENTS CONTAINED IN THIS PRESENTATION OR IN OTHER STATEMENTS MADE BY THE COMPANY ARE MADE BASED ON MANAGEMENT'S EXPECTATIONS AND BELIEFS CONCERNING FUTURE EVENTS IMPACTING THE COMPANY AND ARE SUBJECT TO UNCERTAINTIES AND FACTORS RELATING TO THE COMPANY'S OPERATIONS AND BUSINESS ENVIRONMENT, ALL OF W HICH ARE DIFFICULT TO PREDICT AND MANY OF W HICH ARE BEYOND THE COMPANY'S CONTROL, THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE MATTERS EXPRESSED OR IMPLIED BY FORW ARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORW ARD-LOOKING STATEMENTS INCLUDE: THE COMPANY’S ABILITY TO SUCCESSFULLY INTEGRATE RECENT ACQUISITIONS AND ACHIEVE THE ANTICIPATED REVENUE, EARNINGS, ACCRETION AND OTHER BENEFITS FROM THESE ACQUISIT IONS; SLOW ER THAN ANTICIPATED GROW TH AND MARKET ACCEPTANCE OF NEW CLEAN ENERGY PRODUCT OFFERINGS; INABILITY TO ACHIEVE EXPECTED PRICE INCREASES OR CONTINUED SUPPLY CHAIN CHALLENGES INCLUDING VOLATILITY IN RAW MATERIALS COST AND SUPPLY; RISKS RELATING TO THE OUTBREAK AND CONTINUED UNCERTAINTY ASSOCIATED W ITH THE CORONAVIRUS (COVID-19) AND THE CONFLICT BETW EEN RUSSIA AND UKRAINE AND THE OTHER FACTORS DISCUSSED IN ITEM 1A (RISK FACTORS) IN THE COMPANY’S MOST RECENT ANNUAL REPORT ON FORM 10-K AND QUARTERLY REPORTS ON FORM 10-Q FILED W ITH THE SEC, W HICH SHOULD BE REVIEW ED CAREFULLY. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORW ARD-LOOKING STATEMENT. THIS PRESENTATION CONTAINS FIRST QUARTER 2022 NON-GAAP FINANCIAL INFORMATION, INCLUDING ADJUSTED NON-DILUTED EPS, “NET INCOME, ADJUSTED”, FREE CASH FLOW , ADJUSTED FREE CASH FLOW , EBITDA, ADJUSTED EBITDA, ADJUSTED GROSS PROFIT, ADJUSTED GROSS PROFIT MARGIN, ADJUSTED OPERATING INCOME, AND ADJUSTED OPERATING MARGIN. FOR ADDITIONAL INFORMATION REGARDING THE COMPANY'S USE OF NON-GAAP FINANCIAL INFORMATION, AS W ELL AS RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE FINANCIAL MEASURES CALCULATED AND PRESENTED IN ACCORDANCE W ITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES ("GAAP") , PLEASE SEE THE RECONCILIATION SLIDES TITLED “FIRST QUARTER 2022 EARNINGS PER SHARE,” “FIRST QUARTER 2022 ADJUSTED EBITDA” AND “FIRST QUARTER 2022 FREE CASH FLOW ” INCLUDED IN, OR IN THE APPENDIX AT THE END OF, THIS PRESENTATION. PLEASE SEE THE RECONCILIATION TABLE AT THE END OF THE ACCOMPANYING EARNINGS RELEASE FOR THE “ADJUSTED GROSS PROFIT” AND “ADJUSTED OPERATING INCOME” RECONCILIATIONS, AS W ELL AS A RECONCILIATION AND ADDITIONAL DETAILS ON ADJUSTED NON-DILUTED EPS AND ADJUSTED FREE CASH FLOW. W ITH RESPECT TO THE COMPANY’S 2022 FULL YEAR EARNINGS OUTLOOK, THE COMPANY IS NOT ABLE TO PROVIDE A RECONCILIATION OF THE ADJUSTED EARNINGS PER NON-DILUTED SHARE OR ADJUSTED FREE CASH FLOW, BECAUSE CERTAIN ITEMS MAY HAVE NOT YET OCCURRED OR ARE OUT OF THE COMPANY’S CONTROL AND/OR CANNOT BE REASONABLY PREDICTED. CHART INDUSTRIES, INC. IS A LEADING INDEPENDENT GLOBAL MANUFACTURER OF HIGHLY ENGINEERED EQUIPMENT SERVICING MULTIPLE APPLICATIONS IN THE ENERGY AND INDUSTRIAL GAS MARKETS. OUR UNIQUE PRODUCT PORTFOLIO IS USED IN EVERY PHASE OF THE LIQUID GAS SUPPLY CHAIN, INCLUDING UPFRONT ENGINEERING, SERVICE AND REPAIR. BEING AT THE FOREFRONT OF THE CLEAN ENERGY TRANSITION, CHART IS A LEADING PROVIDER OF TECHNOLOGY, EQUIPMENT AND SERVICES RELATED TO LIQUEFIED NATURAL GAS, HYDROGEN, BIOGAS AND CO2 CAPTURE AMONGST OTHER APPLICATIONS. WE ARE COMMITTED TO EXCELLENCE IN ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE (ESG) ISSUES BOTH FOR OUR COMPANY AS W ELL AS OUR CUSTOMERS. W ITH OVER 25 GLOBAL LOCATIONS FROM THE UNITED STATES TO ASIA, AUSTRALIA, INDIA, EUROPE AND SOUTH AMERICA, W E MAINTAIN ACCOUNTABILITY AND TRANSPARENCY TO OUR TEAM MEMBERS, SUPPLIERS, CUSTOMERS AND COMMUNITIES. TO LEARN MORE, VISIT WWW.CHARTINDUSTRIES.COM.
Heightened Focus on Energy Resilience, Independence, Accessibility, Security and Sustainability Since February 24, 2022 © 2022 Chart Industries, Inc. Confidential and Proprietary 3 European Commissioner for Energy stated that Russia’s aggression against Ukraine has dramatically transformed the geopolitical environment of Europe’s energy security… and will require alternative sources of supply… Lithuania became the first European nation to announce that they would stop importing Russian gas European Commission developed a platform for the common purchase of LNG and hydrogen with member states Morocco is studying options at several ports to build a floating or land-based facility to import liquefied natural gas U.K. issued a new energy strategy, focusing on energy security and urgency of accelerating the solutions for net zero New import terminals planned for Italy, Germany and France Germany will build 2 small-scale LNG (ssLNG) terminals Dutch Gate and Belgian Zeebrugge terminals are to be expanded by 2024 and Polish terminal in 2023 The Estonian and Finnish governments have agreed to the joint leasing of a floating LNG terminal Bulgaria and Romania obtained access to the DESFA LNG station off Athens Spain plans to open a never-before-used LNG plant as European storage base Australian government is going to accelerate 7 natural gas projects DOE FERC is accelerating permitting in the U.S, including an export licenses and approval extensions granted Multiple new SPAs signed for Big LNG, US Export Facilities …..All of this continues with the backdrop of accelerating renewable energy sources and hydrogen
…Contributing to Q1 2022 Record Orders, Backlog and Numerous Other Highlights © 2022 Chart Industries, Inc. Confidential and Proprietary 4 Other Q1 2022 notable items: • EMEA & India first quarter 2022 orders were a 9% sequential increase over the fourth quarter 2021 and the strongest first quarter of a year in the history of the region. • Completed MOU with a major industrial gas customer for liquid hydrogen equipment • Executed LOI to be exclusive hydrogen liquefaction provider to Greenstone Renewable • Completed first investment in Hy24 Fund • Became a founding member of Cemvita Factory’s Gold Hydrogen • Currently quoting on 30 different hydrogen liquefaction projects with 30 different potential customers • Completed two SES CCUS engineering studies so far and have another two underway
Another Consecutive Record Order & Backlog Quarter © 2022 Chart Industries, Inc. Confidential and Proprietary 5 Continued increasing interest in the actual order book as well as in the pipeline, which we will discuss today: • LNG, LNG, LNG • Railcars abound! • Food & beverage new store buildouts and replacements • Food & beverage customers interested in water treatment & small-scale CCUS • Hydrogen demand expanding geographically and with new customers • Industrial CCUS engineering and feasibility work • Space exploration equipment (new entrants and more accessibility) Q1 2022 Orders $M 1 Venture Global (BKR) Plaquemines Phase 1 FNTP $135.5 2 Venture Global (BKR) Plaquemines Phase 2 (first 6 cold boxes out of 18 anticipated) 45.4 3 Cheniere (Bechtel) CCL Stage 3 LNTP 47.5 4 BigLNG orders booked in Q1 2022 228.4 5 ssLNG (New Fortress Energy) FastLNG2 order booked in Q1 2022 38.3 6 Other GTLS orders booked in Q1 2022 370.1 7 Total GTLS Q1 2022 Orders Booked 636.8
First Quarter 2022 Summary © 2022 Chart Industries, Inc. Confidential and Proprietary 6 (1) Q1’22 included $6.4 million and Q1’21 included $14.7 million in Big LNG project revenue. When excluding Big LNG, the second figures are the change from Q1’21 to Q1’22, and Q4’21 to Q1’22 (2) Adjusted Non-Diluted EPS (a non-GAAP measure) is as reported on a historical basis. Please see reconciliation tables in accompanying earnings release for a reconciliation to the relevant GAAP measure. $ millions, except per share amounts Q1 2022 Q4 2021 Q1 2021 Consolidated Orders 636.8 460.9 417.2 % Change 38.2% 52.6% Backlog 1,477.0 1,190.1 934.1 % Change 24.1% 58.1% Sales 354.1 378.9 288.5 % Change (1) -6.5% / -8.2% 22.7% / 27.0% Basic Earnings per Share (EPS) $0.28 $0.34 $0.72 Adjusted Non-Diluted EPS (2) $0.65 $0.73 $0.78 Green box denotes historical record
Sales & Gross Margin Trends © 2022 Chart Industries, Inc. Confidential and Proprietary 7 (1) Adjusted Gross Margin % is a non-GAAP measure. Please see reconciliation table at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measure. $289 $322 $328 $379 $354 29.1% 25.8% 22.8% 21.7% 23.6% 29.9% 29.0% 26.5% 24.2% 26.1% 20.0% 25.0% 30.0% $200 $250 $300 $350 $400 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Sales ($M) Gross Margin % Adj Gross Margin % 28.2% +190 bps We did not addback for adjusted gross profit the following impacts, which we estimate totaled ~$7.5 million in the first quarter 2022 and which we anticipate will improve throughout the remaining three quarters of 2022: • Additional logistics and freight costs • COVID impacts • Inefficiencies from Force Majeure from gas supplier • China COVID-19 shutdown of factory for one week • Higher transport costs • Supplier expedite costs • Additional team member retention • Inefficiencies from robotic cell repair • First-time manufacture inefficiencies of water skids in Tulsa, OK • Additional electricity and gas costs in our shops in EU • Unexpected costs to repair collapsed storm sewer in New Prague, MN
© 2022 Chart Industries, Inc. Confidential and Proprietary 8 Addback Specifics by Category Category Q4 2021 Addback Items Q4 2021 $M Q1 2022 Addback Items Q1 2022 $M 1 Restructuring and Severance • Severance costs • Xinye, China facility relocation • Corp HQ move from Cryoport facility • Tulsa ACHX consolidation to Texas • Restructuring certain repair activities 7.4 • Severance costs • Tulsa ACHX consolidation to Texas • Lery, France product line completion out of period costs 5.3 2 Debt Refi Costs • Write off amortization of prior bank fees from refinancing revolving credit facility 4.1 • NONE 0 3 Deal-related & integration costs • Pre-closing / acquisition DD costs • Integration costs (year 1 only) • Legal costs for the one specific pre- closing liability from cryobio divestiture • Doesn’t include amortization addback 4.9 • Pre-closing / acquisition DD costs • Integration costs (year 1 only) • Legal costs for the one specific pre-closing liability from cryobio divestiture • Doesn’t include any amortization addback 4.2 4 Organic startup costs • Startup of greenfield at Richburg, SC • Startup costs for Tulsa, OK flex mfg • Training costs on new product lines 2.8 • Startup of greenfield at Richburg, SC • Startup costs for Tulsa, OK flex mfg • Training costs on new product lines 1.8 5 Other Costs • Legal / settlement 0.4 • NONE 0 6 One-Time Gains • Gain on purchase of Earthly Labs from previous minority investment (2.6) • NONE 0 7 MTM of investments net of FX • Mark-to-Market (MTM) of investments in McPhy and Stabilis net of FX impacts (0.8) • MTM of investments in McPhy and Stabilis and unconsolidated affiliates, HTEC and Cryomotive, all net of FX total impact 5.1 Operating Income and refinance Addbacks were 42% less in Q1 2022 than in Q4 2021
First Quarter 2022 Earnings Per Share © 2022 Chart Industries, Inc. Confidential and Proprietary 9 (1) Tax effect reflects adjustment at normalized periodic rates (2) Adjusted Basic EPS and Normalized Basic EPS (both non-GAAP measures) are as reported on a historical basis. EPS adjustment reconciliation table is provided in accompanying press release financial tables. $ millions, except per share amounts Q1 2022 Q4 2021 Change vs. PQ Continuing Operations Net income from continuing operations $10.2 $12.1 ($1.9) Reported Basic EPS $0.28 $0.34 ($0.06) 1 Investment equities mark-to-market, net of FX 0.14 (0.03) 0.17 2 Gains on purchase or sale - (0.07) 0.07 3 Debt refinance costs - 0.12 (0.12) 4 Tax effects (1) (0.03) 0.00 (0.03) Normalized Basic EPS $0.39 $0.36 $0.03 5 Restructuring related costs 0.15 0.21 (0.06) 6 Deal related and integration costs 0.12 0.14 (0.02) 7 Start-up costs (organic) 0.05 0.08 (0.03) 8 Other one-time items - 0.01 (0.01) 9 Tax effects (1) (0.06) (0.07) 0.01 Adjusted Basic EPS (2) $0.65 $0.73 ($0.08)
© 2022 Chart Industries, Inc. Confidential and Proprietary 10 2021, 2022 Challenges, Actions & Progress (1/2) # Challenge Risk Level as of 12/31/2021 (as described on Q4 2021 earnings call) Risk Level as of 3/31/2022 Risk Level as of 4/29/2022 Actions Taken / In Progress as of 4/29/2022 1 Material Cost and Availability Improving availability of material; continue to anticipate that we will operate at these higher costs through 1H 2022 (view is in line with what was said on Q3 2021 earnings call regarding timing). Availability of certain material was shut down completely, or input material Availability of material improving yet costs are still very volatile • Additional safety stock purchased when cost on respective material is lower • Purchasing in China for other use • Quote validity <1 week • Added terms for matl adjustments to contracts 2 Supply Chain Disruption Improving somewhat from Q3 2021 perspective given the availability of transport Further disrupted by conflict and China COVID-19 lockdowns Improving with certain geographies more challenged than others; for EU, risk of gas and energy supply • Alternative sources and localization of supply • Reviewing Bills of Material to utilize alternative components or input matls • Working with customers on delivery of shipments • Qualifying external EU suppliers 3 Force Majeure on Delivery of Gas to Industrial Customer Facilities Force Majeure put back in place in Georgia, USA in early January 2022 and is still currently in place. Force Majeure lifted on nitrogen. Force Majeure issued for helium • We are utilizing different approaches to ensure appropriate amounts of helium are available for our shops, including a using helium transport trailer from our leasing fleet
© 2022 Chart Industries, Inc. Confidential and Proprietary 11 2021, 2022 Challenges, Actions & Progress (2/2) # Challenge Risk Level as of 12/31/2021 (as described on Q4 2021 earnings call) Risk Level as of 3/31/2022 Risk Level as of 4/29/2022 Actions Taken / In Progress as of 4/29/2022 4 Labor Availability & Cost including COVID-19 resurgence Labor Needs continue to be addressed and limited turnover in our shops Unchanged from 12/31 Unchanged from 12/31 • Continuing to train our own welders • Various talent development programs • Partnerships with universities and other organization for access to talent, including military veterans 5 Weather Impacts Did not have Q4 2021 weather disruptions Had Texas freeze power/gas challenge for one day and one evening shift at Beasley, TX facility No April 2022 or Q2 known events • N/A 6 China Improved with no further electricity lockdowns/ restrictions at the current time COVID-19 government lockdowns impacting our production by one week Improving COVID-19 labor situation yet logistics impact in both Shanghai port and airports and the reopening in Shanghai is currently unpredictable; government stimulus on demand TBD • Chart China team stayed on campus to ship in Q1 2022 • Chart China backlog supports Q2 2022 forecast • Demand for Chart China export product continues
2021 Pricing Actions (As shown on Q4 2021 earnings call) © 2022 Chart Industries, Inc. Confidential and Proprietary 12 First Half 2021 Q3 2021 Q4 2021 Increase in Material Costs from 6/30/2021 to 9/30/2021: • Aluminum +18% • Carbon steel +24% • Stainless steel +12% Increase in Material Costs from 1/1/2021 to 6/30/2021: • Aluminum +22% • Carbon steel +41% • Stainless steel +21% Price Changes: • July 1, 2021: Global IG LTA and standard price increases (PERMANENT) • August 1, 2021: Key IG EMEA Customers price increases (PERMANENT) • September 1, 2021: Surcharge on non-LTA or projects with material cost updates (TEMPORARY) • Throughout Q3: Project bids updated for material cost changes with shorter bid validity (PERMANENT) Price Changes: • Q1 2021: IG Majors pricing mechanism is adjusted quarterly or semi-annually • Tiered distributor pricing for IG independents in place Price Changes: • October 2021: Additional base price increase into effect for all new orders (PERMANENT) • Implemented rolling IG major LTA mechanism more frequently (TEMPORARY) • Specific additional material passthrough of backlog (ONE- TIME) • Implemented storage fees at repair sites (PERMANENT) • Eliminated free freight on volume purchases (PERMANENT) • Increased surcharge % (TEMP) Change in Material Costs from 9/30/2021 to 12/31/2021: • Aluminum +0.5% increase • Carbon steel (13%) decrease • Stainless steel +7% increase
© 2022 Chart Industries, Inc. Confidential and Proprietary 13 2022 Year-to-Date Pricing and Surcharge Actions As of April 25, 2022 and anticipated for 2H 2022 Price Changes: • January 1, 2022: • Rolling IG Major index adjusted price updates • All standard price lists had pricing adjustment • HLNG vehicle tank customer specific price increase • 15% market condition surcharge in effect entire Q1 for non- contract customers • Select China price increases • February 18, 2022: distributors and direct accounts price increases in CTS and specialty products 1/1/2022 to 2/24/2022 2/24/2022-3/31/2022 Q2 2022 QTD Price Changes: Mid March 2022 • Additional base price increase in EMEA & India • Increased surcharge on customers globally Price Changes: • IG product pricing increased 5% to 10% for both LTA and non- LTA customers, reflecting material cost increases in Q1 2022 • Quarterly index adjustments (April 1 and/or May 1) for contracted products • All prior actions remain in effect Standard product pricing (4 increases since July 1, 2021) Long-term agreement pricing mechanisms in contracts Project based specific material pricing with shorter bid validity timing GTLS Three Main Pricing Approaches
© 2022 Chart Industries, Inc. Confidential and Proprietary 14 Example: Global Freight Chart Freight Actions Taken: • Eliminated free freight on volume purchases • Utilizing alternative freight and transport providers • Increased surcharge on standard tank shipments • Refined process to ensure actual cost at the time of shipment
Estimate of Organic Capacity & Automation Capex © 2022 Chart Industries, Inc. Confidential and Proprietary 15 # Description Category Done? 2021 Act 2022 Fcst 2023 Fcst 1 Maintenance Capital Maintenance $24.3 $22.0 $24.0 2 Tulsa BAHX Furnace Line Capacity 4.2 7.0 7.0 3 GOFA Germany Trailer Production Expansion Capacity/Automation 0.1 7.6 3.2 4 SriCity, India Production Expansion D&S Capacity 1.9 5.5 0.0 5 Leasing Fleet Expansion Growth 8.4 3.0 5.0 6 Robotics and Augmented Reality Implementation Capacity/Productivity 3.0 2.0 5.0 7 Theodore, AL Production Expansion (IG, ORCA, CO2) Capacity/Automation 0.0 2.6 2.8 8 Product line moves from MN to Alabama (Permas) Productivity 0.3 2.6 0.4 9 CryoDiffusion VIP Manufacturing Line Implementation Capacity/Productivity Yes 0.0 0.5 0.0 10 Tulsa Flex Manufacturing Startup Capacity/Productivity 2.7 1.3 0.0 11 Richburg, SC Greenfield Startup Capacity Yes 6.0 0.0 0.0 12 Corporate HQ move (from Cryoport building) Mandatory Yes 1.8 0.0 0.0 13 Additional capacity expansions for 2023-2025 Capacity/productivity Specifics will be shared at investor day 15 Chart Total $52.7 $54.1 $47.4 16 Chart Q1 2022 Actual Capex Spend $12.6
• All major equipment ordered • Fin presses, saws, machining equipment installed • Construction of foundations underway • Construction of stacking & defixturing pits underway • Expected furnace delivery in August 2022 • Planned production test in November 2022 • Training of new staff in process Brazed Aluminum Heat Exchanger Line Tulsa, Oklahoma, USA © 2022 Chart Industries, Inc. Confidential and Proprietary 16
Manufacturing Site Expansion Sri City, Andhra Pradesh, India • Doubling of existing manufacturing floor space • Production building erected and flooring near completion • Electrical, utility, fire water network installation underway • Sheet shearing and rolling machines ordered • Production staff increased 35% year-over-year (YTD) • Partial utilization of expanded facility in April 2022 • Anticipated full utilization beginning in July 2022
Segment Sales and Gross Margin Information © 2022 Chart Industries, Inc. Confidential and Proprietary 18 (1) Adjusted Gross Margin % is a non-GAAP measure. Please see reconciliation table at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measure. Sales ($M, except %) Q1 ‘22 Q4 ‘21 % Chg PQ Q1 ‘21 % Chg PY Specialty Products 107.5 131.9 -18.5% 77.3 39.1% Cryo Tank Solutions 118.1 133.5 -11.5% 103.9 13.7% Repair, Service, Leasing 49.3 44.7 10.3% 41.4 19.1% Heat Transfer Systems 79.3 71.9 10.3% 69.2 14.6% Reported GM % ($M, except %) Q1 ‘22 Q4 ‘21 Bps Chg PQ Q1 ‘21 Bps Chg PY Specialty Products 30.3% 30.3% 0 bps 36.5% -620 bps Cryo Tank Solutions 21.5% 16.9% 460 bps 24.3% -280 bps Repair, Service, Leasing 31.6% 30.0% 160 bps 35.5% -390 bps Heat Transfer Systems 12.7% 8.9% 380 bps 22.8% -1010 bps Adjusted GM % ($M, except %) Q1 ‘22 Q4 ‘21 Bps Chg PQ Q1 ‘21 Bps Chg PY Specialty Products 31.6% 31.2% 40 bps 37.5% -590 bps Cryo Tank Solutions 24.3% 18.9% 540 bps 24.3% 0 bps Repair, Service, Leasing 34.7% 34.7% 0 bps 35.7% -100 bps Heat Transfer Systems 15.9% 13.9% 200 bps 24.9% -900 bps
Full Solutions Platforms Across the Nexus of Clean © 2022 Chart Industries, Inc. Confidential and Proprietary 19 Clean End Market Solution GTLS Process Technologies (Owned in Full) GTLS Process Technologies Through Minority Ownership GTLS Equipment Clean Power • Hydrogen • Helium • LNG • Biogas • BAHX • ACHX • Bulk & Microbulk • Fans • Transports • Valves / Vaporizers • Expanders • Liquefiers • Cold Boxes Clean Water • Water& Wastewater Treatment • Desalination • Bulk tanks • Dissolution equipment • Vaporizers • Cryo-lease Clean Food, Beverages & Agriculture • Small-Scale Carbon Capture • Clean Beverages • Microbulk tanks • Dosers • Vaporizers • Transports Clean Industrials • Post Combustion Carbon Capture • Hydrogen/He • Heat exchangers • Storage tanks • Vaporizers • VIP/VJP • Transports • Liquefiers • Cold Boxes • Expanders
© 2022 Chart Industries, Inc. Confidential and Proprietary 20 The Nexus of Clean is Happening Now First of a Kinds (FOAKs) Q1 2022 = 28 Total New Customers Q1 2022 = 84 Q1 2022 successes from our acquisitions and Founder’s Innovation Team demonstrate the Nexus of Clean™ • L.A. Turbine had the highest order quarter in 5 years • Earthly Labs had historical record high orders • AdEdge and Chart’s lifecycle field service team together will complete a design/build groundwater remediation project • Water treatment for H2 production - 3 NDAs signed • BlueInGreen’s (“BIG”) Treatment as a Service (“TaaS”) used by AdEdge; orders won for PFAS/arsenic TaaS • Leveraged Chart’s India presence to win major water project • BIG introduced SES to International Flavors & Fragrances (“IFF”) who is now doing a SES CCC study • Launched our “Sustainable Brewery Solutions” package – an all- encompassing approach to beer brewing operations – rain harvesting, water treatment & reuse, CCUS and dosing • Synergy sales of non-water tanks to Simmons (BIG customer) Specialty Products Orders Q1 2022 = $101M # of Potential H2 Customers = 419 # of Potential SES CCC Customers = 252 Actual H2 Customers = +70% since 10/2021 Total Orders >$1 million Q1 2022 = 65
© 2022 Chart Industries, Inc. Confidential and Proprietary 21 Specialty Products – GTLS Gas By Rail™ Backlog: - Seven LNG fuel tenders and 25 ethylene railcars - 20 argon railcars (including 10 booked in Q1 2022) Potential additional railcar orders in the next 18 months: - Possibility of 2 to 30 additional argon railcars - Potential for additional 10 Ethylene cars - Potential for 60 additional LNG tender cars Other areas of Gas By Rail that Chart can offer - Nitrogen and Oxygen - Liquid Hydrogen – a new design of tank car underway Liquid Ethylene, LNG, LH2 (~30,000 gallons net) Liquid Argon (LOX, LN2 Available) (~17,200 gallons net) - Chart LNG Fuel Tenders - Provide clean burning natural gas to one or two freight locomotives - Displaces up to 80% of the diesel fuel required to power the locomotive
© 2022 Chart Industries, Inc. Confidential and Proprietary 22 Increasing LNG Opportunities for GTLS – Here’s Why Macro Tailwinds Chart Specific • Energy security, resiliency, stability, accessibility • Regulatory support and progress including FERC approved U.S. Gulf Coast projects moving to FID • Module, mid-scale approach to export terminals is gaining traction beyond the U.S. Gulf Coast, including in regions such as South Africa • Infrastructure exists but ssLNG and regas / import infrastructure needs to be built in conjunction with export • IPSMR® and IPSMR®+ continue to receive qualification by LNG operators, including international companies; most recently qualified by TotalEnergies • IPSMR® received another process patent in December 2021 and many international patents • Our offering is global and regional, and includes solutions for liquefaction, equipment on Big LNG, ssLNG and LNG infrastructure plus repair and service • Our process lends itself to retrofitting for increased gas output even in brownfield locations • IPSMR® efficiency leads to lower CO2 per tonne of LNG • Chart’s heavy hydrocarbon process handles the extreme gas compositions while maximizing LNG production • IPSMR® is proving to be an ideal solution for FLNG
Increasing LNG Opportunities for GTLS – The Numbers © 2022 Chart Industries, Inc. Confidential and Proprietary 23 Pre Feb 24, 2022 GTLS Perspective April 29, 2022 GTLS Perspective BigLNG (greater than 5 MTPA) • Number of reasonably possible projects to move to order stage by 2024 10 22 • Number of international projects contemplating using IPSMR® 1 2 • GTLS Associated Order Potential $ $1.25 billion $4.55 billion • GTLS Order $ Booked Year-to-Date 2022 $0 $228.4 million ssLNG (5 MTPA and smaller) • Number of reasonable possible projects to move to order stage by 2024 205 233 • Number of Floating LNG projects in bid pipeline 13 26 • GTLS Associated Order Potential $ $1.5 billion $1.75 billion • GTLS Order $ Booked to Date 2022 0 $38.3 million + LOI
© 2022 Chart Industries, Inc. Confidential and Proprietary 24 Full Year 2022 Outlook Revenue $1.725 billion to $1.85 billion Non-Diluted Adjusted EPS $5.35 to $6.50 Assumes 19% ETR and 35.83M shares outstanding Capital Expenditures Approximately $50 to $55 million Adjusted Free Cash Flow Approximately $175 to $225 million (1) Includes approximately $25 to $40 million of Big LNG related revenue in the year; primarily latter part of 2022 (2) HLNG vehicle tank products lowered 2022 purchasing forecasts (timing shift is anticipated to 2023) (3) We consider uncertainty around shutdowns and logistics in China in the near-term in this outlook (4) Assumed weighted shares outstanding are 35.83 million; prior guidance was 35.6 million shares (5) We are assuming a 19% effective tax rate (unchanged from prior guidance) (6) Anticipate the first half of 2022 will include a margin drag from historical levels from the ongoing macro challenges but increasingly improve throughout 2022 (7) The higher-end of the range requires specific larger opportunities in our commercial pipeline to be booked as orders in the coming few months
© 2022 Chart Industries, Inc. Confidential and Proprietary 25 At 3/31/2022, we achieved our lowest 12-month rolling Total Recordable Incident Rate (TRIR) in our history In 2021, we reduced our GHG Intensity metric by ~14% Scope 1 and Scope 2 emissions declined almost 4% in 2021 Scope 2 emissions reduced by ~10% We increased the percentage of electricity sourced from renewables We instituted an ESG component to our short-term incentive awards Our Global D&I Committee, made up of more than 50 team members from around the world, advanced community involvement We contribute to the United Nations Sustainable Development Goals including Clean Water and Sanitation (6), Affordable and Clean Energy (7), Decent Work and Economic Growth (8), Responsible Consumption and Production (12) and Climate Action (13) We have an independent Board of Directors, the majority of which are female and diverse, with a separate Chairman and CEO We proactively monitor our supply chain in order to ensure proper governance in our client and supplier network We look forward to seeing you on May 5, 2022 for our investor day at the NYSE (NYC, NY) Our 2021 (Third Annual) Sustainability Report Highlights
Recognizing our Leadership in Safety © 2022 Chart Industries, Inc. Confidential and Proprietary 26 Tom Drube, VP of Engineering and Chart Engineering Fellow • Recipient of the distinguished Charles H. Glasier Safety Award 2022, presented annually by the Compressed Gas Association (CGA) to an individual in recognition of their safety leadership in the industrial gas industry. • Tom has spent more than 30 years volunteering his expertise in service to the CGA, providing invaluable leadership towards ensuring the safe design of compressed gas containers.
Appendix 27
First Quarter 2022 Adjustments © 2022 Chart Industries, Inc. Confidential and Proprietary 28 $ millions, except per share amounts Q1 2022, Reported Adjustments (1) Q1 2022, Adjusted (1) Continuing Operations Sales $354.1 $354.1 Gross profit 83.7 8.7 92.4 Selling, general, and administrative expenses 53.5 (1.8) 51.7 Amortization expense 10.1 - 10.1 Operating income 20.1 10.5 30.6 Interest expense, net 3.2 (1.3) 1.9 Financing costs amortization 0.7 - 0.7 Unrealized loss (gain) on investments in equity securities 2.6 (2.6) - Foreign currency loss 1.6 (1.6) - Other income (0.7) (0.7) Income tax expense 2.1 3.0 5.1 Income before equity in (loss) earnings of unconsolidated affiliates, net 10.6 13.0 23.6 Equity in (loss) earnings of unconsolidated affiliates, net (0.3) 0.4 0.1 Net income 10.3 13.4 23.7 Less: Income attributable to noncontrolling interests, net of taxes 0.1 - 0.1 Net income attributable to Chart Industries, Inc. $10.2 $13.4 $23.6 Basic Earnings per Share $0.28 $0.37 $0.65 Non-diluted share count 35.83 35.83 35.83 (1) “Adjustments” and “Q1 2022, Adjusted” are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP. Management believes that these adjustments facilitate useful period-to-period comparisons of our financial results, and this information is used by us in evaluating our internal performance.
First Quarter 2022 Adjusted EBITDA © 2022 Chart Industries, Inc. Confidential and Proprietary 29 (1) “EBITDA” and “Adjusted EBITDA” are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP. Management believes that EBITDA and Adjusted EBITDA facilitate useful period-to-period comparisons of our financial results, and this information is used by us in evaluating our internal performance. $ millions, except per share amounts Consolidated Q1 2022 Q4 2021 Change v. PQ Net income from continuing operations $10.3 $12.4 ($2.1) Income tax expense, net 2.1 3.6 (1.5) Interest expense, net 3.9 3.3 0.6 Depreciation and amortization 20.5 20.8 (0.3) EBITDA (1) $36.8 $40.1 ($3.3) Non-recurring costs 14.9 14.8 0.1 Share-based compensation 3.3 3.1 0.2 Adjusted EBITDA (1) $55.0 $58.0 ($3.0)
First Quarter 2022 Free Cash Flow © 2022 Chart Industries, Inc. Confidential and Proprietary 30 (1) “Net income, adjusted” is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP. Reconciliation to Net Income (U.S. GAAP) is provided in accompanying press release financial tables. (2) “Free Cash Flow” and “Adjusted Free Cash Flow” are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to net cash provided by (used in) operating activities in accordance with U.S. GAAP. The Company believes this figure is of interest to investors and facilitates useful period-to period comparisons of the Company’s operating results. $ millions, except per share amounts Consolidated Q1 2022 Q1 2021 Change v. PY Net income, adjusted (1) $18 $25 ($7) Depreciation and amortization $21 $19 $2 Accounts receivable ($17) $14 ($31) Inventory ($35) ($36) $1 Unbilled contract revenues and other assets ($36) ($7) ($29) Accounts payable and other liabilities ($4) $4 ($8) Customer advances and billings in excess of contract revenue $31 ($11) $42 Net Cash Provided By Operating Activities ($22) $8 ($30) Capital expenditures ($13) ($11) ($2) Free Cash Flow (2) ($35) ($3) ($32) Adjustments Non-recurring costs $11 $5 $6 Add back inventory for strategic build $19 $0 $19 Adjusted Free Cash Flow (2) ($5) $2 ($7)
Segment Information © 2022 Chart Industries, Inc. Confidential and Proprietary 31 (1) Adjusted Operating Margin % is a non-GAAP measure. Please see reconciliation table at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measure. Sales ($M, except %) Q1 ‘22 Q4 ‘21 % Chg PQ Q1 ‘21 % Chg PY Specialty Products 107.5 131.9 -18.5% 77.3 39.1% Cryo Tank Solutions 118.1 133.5 -11.5% 103.9 13.7% Repair, Service, Leasing 49.3 44.7 10.3% 41.4 19.1% Heat Transfer Systems 79.3 71.9 10.3% 69.2 14.6% Reported Op Income ($M, except %) Q1 ‘22 Q4 ‘21 % Chg PQ Q1 ‘21 % Chg PY Specialty Products 16.2 26.4 -38.6% 17.9 -9.5% Cryo Tank Solutions 14.1 10.9 29.4% 15.6 -9.6% Repair, Service, Leasing 8.3 7.2 15.3% 8.3 0.0% Heat Transfer Systems -0.2 -5.8 n.a. 3.8 -105.3% Adjusted Op Income ($M, except %) Q1 ‘22 Q4 ‘21 % Chg PQ Q1 ‘21 % Chg PY Specialty Products 18.1 27.8 -34.9% 19.8 -8.6% Cryo Tank Solutions 17.5 13.8 26.8% 15.8 10.8% Repair, Service, Leasing 9.8 9.3 5.4% 8.4 16.7% Heat Transfer Systems 2.3 -1.6 n.a. 5.4 -57.4% Adjusted Op Margin ($M, except %) Q1 ‘22 Q4 ‘21 Bps Chg PQ Q1 ‘21 Bps Chg PY Specialty Products 16.8% 21.1% -430 bps 25.6% -880 bps Cryo Tank Solutions 14.8% 10.3% 450 bps 15.2% -40 bps Repair, Service, Leasing 19.9% 20.8% -90 bps 20.3% -40 bps Heat Transfer Systems 2.9% -2.2% 510 bps 7.8% -490 bps Heat Transfer Systems (excl Big LNG project) 0.3% -2.2% 250 bps -4.8% 510 bps