Chart Industries Credit Rating Outlook Changed to “Positive” at Moody’s
- Moody's upgrades Chart Industries, Inc.'s credit outlook from 'Stable' to 'Positive'.
- Chart's credit ratings affirmed with a corporate family rating of 'B1', senior unsecured rating of 'B3', and senior secured notes rating of 'Ba3'.
- Speculative grade liquidity rating upgraded to SGL-2 and credit impact score upgraded to CIS-3.
- The upgrade reflects Chart's strong backlog, successful Howden acquisition, and progress towards deleveraging goals.
- Chart's CEO, Jill Evanko, emphasizes commitment to financial policy and target net leverage range of 2.0X to 2.5X.
- None.
Insights
The positive shift in Moody's outlook on Chart Industries' credit ratings is indicative of the company's robust financial health and improved risk profile. The affirmation of ratings, coupled with the upgrade in liquidity rating, suggests that Chart has a solid order backlog and is successfully executing its post-acquisition strategy, particularly the integration of Howden. Investors should note that the company's commitment to deleverage, as evidenced by its target net leverage ratio, is a conservative financial strategy that could bolster balance sheet strength and potentially enhance creditworthiness over time.
However, it's important to assess the implications of the company's decision to avoid material cash acquisitions and share repurchases until its leverage targets are met. While this approach supports fiscal prudence, it may also slow down the pace of growth through acquisitions, which is a common strategy in the industrial sector for achieving scale and diversification. Stakeholders should weigh the benefits of a stronger balance sheet against the opportunity costs of foregone investments.
The upgrade of Chart's speculative grade liquidity rating to SGL-2 signifies a higher confidence in the company's ability to meet its financial obligations in the short term. For lenders and credit investors, this is a reassuring sign of liquidity risk mitigation. The improvement in the credit impact score to CIS-3 should also be seen as a reflection of the company's operational performance and strategic initiatives that are resonating with credit rating agencies.
It's essential to scrutinize the long-term sustainability of the company's credit profile, especially in the context of the industrial gas market's cyclical nature. While current market tailwinds are favorable, investors should remain vigilant about the potential impact of economic downturns on Chart's business segments. The company's focus on clean energy is commendable, but the transition to such markets can be fraught with unpredictability and regulatory changes that may affect future credit assessments.
The reference to 'secular market tailwinds' in the announcement aligns with the broader industry trend towards clean energy solutions, where Chart Industries operates. This shift is likely to open up new revenue streams and could provide a competitive edge as global demand for environmentally sustainable technologies grows. The company's strategic positioning in this sector could be a key driver of its outperformance and may influence investor sentiment positively.
On the flip side, investors should be mindful of the competitive dynamics within the clean energy and industrial gas markets. As more players enter the space, spurred by the attractive growth prospects, Chart's ability to maintain or expand its market share will be critical. Continuous innovation, cost efficiencies and strategic partnerships are likely to be significant factors in sustaining the company's growth trajectory and, by extension, its creditworthiness and stock performance.
ATLANTA, April 09, 2024 (GLOBE NEWSWIRE) -- Chart Industries, Inc. (NYSE: GTLS) (“Chart”), a leading global solutions provider to clean energy and industrial gas markets, announces that Moody’s Ratings (Moody’s) has changed the outlook on Chart’s credit ratings from “Stable” to “Positive”. Moody’s affirmed Chart’s corporate family rating of “B1”, senior unsecured rating of “B3”, senior secured notes rating of “Ba3” and senior secured bank credit facilities rating of “Ba3”. At the same time, Chart’s speculative grade liquidity rating was upgraded to SGL-2 and credit impact score was upgraded to CIS-3.
These ratings actions reflect Chart’s strong backlog, outperformance of commercial and cost synergy targets associated with the Howden acquisition, and progress in deleveraging towards its 2.0X to 2.5X net leverage target as well as secular market tailwinds.
“This ratings action demonstrates continued strength in our business,” stated Jill Evanko, Chart’s CEO and President. “We are committed to our financial policy of deleveraging and will not do any material cash acquisitions or share repurchases until we are in our target net leverage range of 2.0X to 2.5X.”
About Chart Industries
Chart Industries, Inc. is an independent global leader in the design, engineering, and manufacturing of process technologies and equipment for gas and liquid molecule handling for the Nexus of Clean™ - clean power, clean water, clean food, and clean industrials, regardless of molecule. The company’s unique product and solution portfolio across stationary and rotating equipment is used in every phase of the liquid gas supply chain, including engineering, service and repair and from installation to preventive maintenance and digital monitoring. Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas, and CO2 capture amongst other applications. Chart is committed to excellence in environmental, social, and corporate governance (ESG) issues both for its company as well as its customers. With 64 global manufacturing locations and over 50 service centers from the United States to Asia, Australia, India, Europe, and South America, the company maintains accountability and transparency to its team members, suppliers, customers, and communities. To learn more, visit www.chartindustries.com.
Investor Contact:
John Walsh
VP, Investor Relations
770-721-8899
john.walsh@chartindustries.com
FAQ
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