Chart Industries Reports 2023 First Quarter Results and Increases 2023 Outlook
ATLANTA, April 28, 2023 (GLOBE NEWSWIRE) -- Chart Industries, Inc. (NYSE: GTLS) today reported results for the first quarter ended March 31, 2023. All first quarter 2023 results are Chart standalone full first quarter 2023 plus our stub ownership period of Howden following the completion of the acquisition from March 17, 2023 to March 31, 2023 unless otherwise noted. Further details can be found in the supplemental presentation accompanying this release and published in the investor relations section of our website.
- First quarter 2023 record backlog for Chart of
$3.9 billion , as well as record backlog for both Chart standalone and Howden standalone - First quarter 2023 orders of
$747.7 million , driven by strong, continued broad-based demand across our end markets (including$121.1 million from Howden during our ownership period) - Record sales of
$537.9 million including record sales in Heat Transfer Systems (“HTS”) and Repair, Service and Leasing (“RSL”) - Reported operating income of
$36.2 million includes one-time costs primarily related to the Howden acquisition (which constituted99% of the total adjusted costs); when adjusted, operating income of$72.5 million is an increase of137% compared to the first quarter 2022 - Adjusted EBITDA of
$102.2 million is19.0% of sales, our highest adjusted EBITDA for any first quarter in our history, and reflects margin improvement from price/cost, Howden’s contribution, our full solution project offerings, and record RSL gross profit and operating profit - Reported basic earnings per share (“EPS”) of (
$0.51) , or diluted EPS of ($0.46) ; when adjusted for one-time costs primarily related to the Howden acquisition, adjusted diluted EPS was$1.41 - Increasing our 2023 sales outlook to
$3.66 billion to$3.80 billion (from$3.65 billion to$3.80 billion ) and associated adjusted EBITDA of$780 million to$810 million (prior range of$770 million to$810 million ) driven by earlier than previously anticipated synergy achievements to date (annualized cost synergies of$50.9 million achieved to date) - Net cash from continuing operations of (
$19.1) million and capital expenditures of$31.4 million ; adjusted free cash flow of$16.1 million - Reiterating our expected 2023 cash available for debt paydown which does not include any proceeds from potential divestitures that remain on track for completion in the second quarter 2023 or early third quarter 2023
Our first quarter 2023 results included record sales, record backlog, broad-based demand, and year-over-year improvement in reported and adjusted gross margin as a percent of sales, operating margin as a percent of sales and EBITDA margin as a percent of sales.
Our first quarter 2023 results were strong both for Chart and Howden with
Our broad-based global execution on pricing and on-time deliveries contributed to record sales of
Sales for 3 of our 4 segments, inclusive of the Howden two-week ownership period, grew more than
Numerous pricing actions taken the past two years, in conjunction with higher margin aftermarket, service and repair and more project work, delivered year-over-year first quarter 2023 reported gross profit as a percent of sales of
Gross profit was negatively impacted by the low volume in our HLNG over-the-road vehicle tank product, with a decline in sales of
Reported basic EPS for the first quarter 2023 was (
Note that in the first quarter 2023 we did not make any adjustments or addbacks to gross profit, operating income, diluted EPS or EBITDA for additional noteworthy expenses totaling approximately
Orders of
Macro tailwinds continue to support our end markets, including the U.S. Environmental Protection Agency’s (“EPA”) first ever proposed national standard to address PFAS contamination in drinking water, the Group of Seven (“G7”) support of continued natural gas and carbon capture and storage infrastructure, India’s green hydrogen incentives, and the U.S. Department of Energy’s (“DOE”) “Pathways to Commercial Liftoff” roadmap for scaling up advanced nuclear, clean hydrogen and long-duration energy storage.
Howden’s
Howden also booked multiple larger orders into our ownership period to end the first quarter 2023 with continued broad-based demand, including a South African main surface fan stations order for
Howden’s industrial compressors (turbo compressors) had a record first quarter 2023 (full quarter) for orders, nearly twice their internal forecast and a record for this product line, which was driven by plants for non-ferrous Metals such as nickel, cobalt, and copper (directly linked to battery production).
Howden’s full standalone first quarter 2023 aftermarket, service and repair book-to-bill was 1.23. Howden also executed 23 long-term service agreements (“LTSA”) and framework agreements in the first quarter 2023 covering fans, compressors, steam turbines, and blowers, including a new LTSA with Sibanye Stillwater in South Africa for a three-year period.
We continued to penetrate our broad-based, global addressable market with 21 first-of-a-kind orders, orders with 90 new customers, and 82 orders that each were greater than
Order momentum has continued in April 2023. Some examples of these wins include the finalization of a
Synergy execution is on-track to achieve our year-one targets of annualized cost synergies of
We continue to make early and ahead of schedule progress on our cost and commercial synergies related to the Howden integration. We reiterate our year-one cost synergy target of
To date, we have achieved over
We have already booked wins through the utilization of Howden’s field service teams on Chart installation work in the United Kingdom, the securing of a multi-million dollar order for our small-scale carbon capture technology in biogas applications as the result of Howden’s expertise in this end market, as well as a multi-million dollar hydrogen compression win for gaseous fueling stations via one of Chart’s existing hydrogen customers.
An example of a commercial synergy win is utilizing Howden’s hydrogen compression in a series of hydrogen fueling stations in California, USA. The customer is a hydrogen liquefaction customer of Chart and is working with another party on gaseous stations. Chart standalone would not have had any opportunity for content on the gaseous hydrogen stations. Through having Howden compression in-house, we were able to win a
“We are extremely pleased to have closed on the acquisition of Howden earlier than anticipated and even more so with our synergy accomplishments in the first six weeks of operating as a combined company,” stated Jill Evanko, Chart’s CEO and President. “Not only did we close the first quarter 2023 with broad-based strength in the order book and multiple records, our first quarter 2023 adjusted EBITDA margin of
Focus on deleveraging and achieving our target year-end 2024 net leverage ratio range of 2.5X to 2.9X, with March 31, 2023 net leverage ratio for our banking covenant of 4.08X.
First quarter 2023 net cash from continuing operations was (
In addition to funding the Howden acquisition on March 17, 2023, during the stub period we also funded approximately
We currently anticipate moving to the signing stage within the next several months on the two previously communicated potential product line divestitures, with one of these products lines expected to sign within the second quarter 2023, and the second within the second quarter 2023 or the first part of the third quarter 2023. More information can be found on slide 42 of the supplemental presentation.
We also have an agreed upon term sheet for the sale of a small Chart product line, which is expected to close, subject to the satisfaction of customary closing conditions, in the first part of the second quarter 2023, for 4.25 million euros. This small product line sale is contemplated in our guidance and will immediately improve our gross margin, operating margin and EBITDA margin.
Increasing our 2023 outlook and reiterating our 2024 adjusted EBITDA outlook.
Given the strong start to our synergy achievement, the continued demand in our commercial pipeline of the combined business, and our first quarter 2023 record backlog, we are raising our outlook for 2023 sales to be in the anticipated range of
Our 2023 outlook for adjusted diluted EPS is in the expected range of
We expect to see the normal second quarter sequential increase in both Chart legacy and Howden’s business. Each quarter of a year typically represents approximately
While our guidance does not include any new big LNG orders besides what is in backlog, we expect to book two to three additional Big LNG orders in 2023 (in addition to the first quarter 2023 Sempra Port Arthur work) and continue to expect ongoing Big LNG demand in the years ahead.
Additionally, we reiterate our 2024 adjusted EBITDA outlook of approximately
FORWARD-LOOKING STATEMENTS
Certain statements made in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning the Company’s business plans, including statements regarding completed acquisitions, divestitures, and investments, cost synergies and efficiency savings, objectives, future orders, revenues, margins, segment sales mix, earnings or performance, liquidity and cash flow, inventory levels, capital expenditures, supply chain challenges, inflationary pressures including material cost and pricing increases, business trends, clean energy market opportunities including addressable markets, and governmental initiatives, including executive orders and other information that is not historical in nature. Forward-looking statements may be identified by terminology such as "may," "will," "should," "could," "expects," "anticipates," "believes," "projects," "forecasts," “outlook,” “guidance,” "continue," “target,” or the negative of such terms or comparable terminology.
Forward-looking statements contained in this press release or in other statements made by the Company are made based on management's expectations and beliefs concerning future events impacting the Company and are subject to uncertainties and factors relating to the Company's operations and business environment, all of which are difficult to predict and many of which are beyond the Company's control, that could cause the Company's actual results to differ materially from those matters expressed or implied by forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements include: the Company’s ability to successfully integrate the Howden acquisition and other recent acquisitions and achieve the anticipated revenue, earnings, accretion and other benefits from these acquisitions; the Company’s ability to successfully close on its intention to divest the two product lines and achieve the anticipated proceeds from these divestitures; slower than anticipated growth and market acceptance of new clean energy product offerings; inability to achieve expected pricing increases or continued supply chain challenges including volatility in raw materials and supply; risks relating to the outbreak and continued uncertainty associated with the coronavirus (COVID-19) and the conflict between Russia and Ukraine including potential energy shortages in Europe and elsewhere; and the other factors discussed in Item 1A (Risk Factors) in the Company’s most recent Annual Report on Form 10-K filed with the SEC, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement.
USE OF NON-GAAP FINANCIAL INFORMATION
This press release contains non-GAAP financial information, including adjusted gross profit as a percent of sales, adjusted net income, adjusted earnings per diluted share, net income attributable to Chart Industries, Inc. adjusted, free cash flow and adjusted free cash flow and EBITDA and adjusted EBITDA. For additional information regarding the Company's use of non-GAAP financial information, as well as reconciliations of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States ("GAAP"), please see the reconciliation pages at the end of this news release and the slides titled "First Quarter 2023 Earnings Per Share," “Segment Information,” “First Quarter 2023 Free Cash Flow”, “Segment Information”, and “First Quarter 2023 Adjusted EBITDA” included in the supplemental slides accompanying this release.
The Company believes these non-GAAP measures are of interest to investors and facilitate useful period-to-period comparisons of the Company’s financial results, and this information is used by the Company in evaluating internal performance. With respect to the Company’s second quarter 2023 outlook, and 2023 and 2024 full year earnings outlook, the Company is not able to provide a reconciliation of the adjusted earnings per non-diluted share or adjusted free cash flow because certain items may have not yet occurred or are out of the Company’s control and/or cannot be reasonably predicted.
CONFERENCE CALL
As previously announced, the Company will discuss its first quarter 2023 financial results on a conference call on Friday, April 28, 2022 at 8:30 a.m. ET. Participants wishing to join the live Q&A session may request a conference call dial-in number by registering in advance using the following registration link. Please log-in or dial-in at least five minutes prior to the start time.
A live webcast and replay will be available on the Company's investor relations website, ir.chartindustries.com.
About Chart Industries, Inc.
Chart Industries, Inc. is a leading independent global leader in the design, engineering, and manufacturing of process technologies and equipment for gas and liquid molecule handing for the Nexus of Clean™ - clean power, clean water, clean food, and clean industrials, regardless of molecule. The company’s unique product and solution portfolio across stationary and rotating equipment is used in every phase of the liquid gas supply chain, including engineering, service and repair from installation to preventive maintenance and digital monitoring. Chart is a leading provider of technology, equipment and services related to liquefied natural gas, hydrogen, biogas and CO2 capture amongst other applications. Chart is committed to excellence in environmental, social and corporate governance (ESG) issues both for its company as well as its customers. With over 48 global manufacturing locations and 41 service centers from the United States to Asia, Australia, India, Europe and South America, the company maintains accountability and transparency to its team members, suppliers, customers and communities. To learn more, visit www.chartindustries.com
For more information, click here:
http://ir.chartindustries.com/
Investor Relations Contact:
John Walsh
VP, Investor Relations
1-770-721-8899
john.walsh@chartindustries.com
Exhibit 99.1
Chart Industries Reports 2023 First Quarter Results
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars and shares in millions, except per share amounts)
| Three Months Ended | |||||||||||
| March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||||
| Sales | $ | 537.9 | $ | 354.1 | $ | 441.4 | |||||
| Cost of sales | 386.4 | 270.4 | 317.1 | ||||||||
| Gross profit | 151.5 | 83.7 | 124.3 | ||||||||
| Selling, general, and administrative expenses | 93.5 | 53.5 | 55.2 | ||||||||
| Amortization expense | 21.8 | 10.1 | 9.0 | ||||||||
| Operating expenses | 115.3 | 63.6 | 64.2 | ||||||||
| Operating income (1) (2) (3) (4) | 36.2 | 20.1 | 60.1 | ||||||||
| Acquisition related finance fees | 26.1 | — | 37.0 | ||||||||
| Interest expense, net | 25.5 | 3.2 | 15.5 | ||||||||
| Financing costs amortization | 2.8 | 0.7 | 0.8 | ||||||||
| Unrealized loss (gain) on investments in equity securities | 2.0 | 2.6 | (24.0 | ) | |||||||
| Foreign currency (gain) loss | (1.1 | ) | 1.6 | 1.8 | |||||||
| Other expense (income) | 0.8 | (0.7 | ) | (0.4 | ) | ||||||
| (Loss) income from continuing operations before income taxes and equity in loss of unconsolidated affiliates, net | (19.9 | ) | 12.7 | 29.4 | |||||||
| Income tax (benefit) expense | (6.4 | ) | 2.1 | 11.9 | |||||||
| (Loss) income from continuing operations before equity in loss of unconsolidated affiliates, net | (13.5 | ) | 10.6 | 17.5 | |||||||
| Equity in loss of unconsolidated affiliates, net | (0.4 | ) | (0.3 | ) | (0.1 | ) | |||||
| Net (loss) income from continuing operations | (13.9 | ) | 10.3 | 17.4 | |||||||
| Loss from discontinued operations, net of tax | (0.4 | ) | — | (57.6 | ) | ||||||
| Net (loss) income | (14.3 | ) | 10.3 | (40.2 | ) | ||||||
| Less: Income attributable to noncontrolling interests of continuing operations, net of taxes | 0.7 | 0.1 | 0.2 | ||||||||
| Net (loss) income attributable to Chart Industries, Inc. | $ | (15.0 | ) | $ | 10.2 | $ | (40.4 | ) | |||
| Amounts attributable to Chart common stockholders | |||||||||||
| (Loss) income from continuing operations | $ | (14.6 | ) | $ | 10.2 | $ | 17.2 | ||||
| Less: Mandatory convertible preferred stock dividend requirement | 6.8 | — | 1.4 | ||||||||
| (Loss) income from continuing operations attributable to Chart | (21.4 | ) | 10.2 | 15.8 | |||||||
| Loss from discontinued operations, net of tax | (0.4 | ) | — | (57.6 | ) | ||||||
| Net (loss) income attributable to Chart common stockholders | $ | (21.8 | ) | $ | 10.2 | $ | (41.8 | ) | |||
| Basic earnings per common share attributable to Chart Industries, Inc. | |||||||||||
| (Loss) income from continuing operations | $ | (0.51 | ) | $ | 0.28 | $ | 0.42 | ||||
| Loss from discontinued operations | (0.01 | ) | — | (1.54 | ) | ||||||
| Net (loss) income attributable to Chart Industries, Inc. | $ | (0.52 | ) | $ | 0.28 | $ | (1.12 | ) | |||
| Diluted earnings per common share attributable to Chart Industries, Inc. | |||||||||||
| (Loss) income from continuing operations | $ | (0.51 | ) | $ | 0.25 | $ | 0.37 | ||||
| Loss from discontinued operations | (0.01 | ) | — | (1.34 | ) | ||||||
| Net (loss) income attributable to Chart Industries, Inc. | $ | (0.52 | ) | $ | 0.25 | $ | (0.97 | ) | |||
| Weighted-average number of common shares outstanding: | |||||||||||
| Basic | 41.94 | 35.83 | 37.42 | ||||||||
| Diluted (5) (6) (7) | 41.94 | 40.79 | 42.93 | ||||||||
_______________
(1) Includes depreciation expense of:
$11.5 ,$10.4 and$10.5 for the three months ended March 31, 2023, March 31, 2022 and December 31, 2022, respectively.
(2) Includes restructuring costs of:
$1.6 ,$0.1 , and$0.1 for the three months ended March 31, 2023, March 31, 2022 and December 31, 2022, respectively.
(3) Includes acquisition-related contingent consideration credits in our Specialty Products segment of:
$(6.7) ,$(0.8) , and$(1.1) for the three months ended March 31, 2023, March 31, 2022 and December 31, 2022, respectively.
(4) Includes deal-related and integration costs of:
$81.7 for the three months ended March 31, 2023 which includes costs related to the Howden acquisition such as interest, deal advisory and financing costs and$4.2 and$1.6 for the three months ended March 31, 2022 and December 31, 2022, respectively.
(5) Does not include an additional 4.35 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the three months ended March 31, 2023 as they are anti-dilutive for the period. Also, the associated hedge, which helps offset this dilution, cannot be taken into account under U.S. generally accepted accounting principles (“GAAP”). If the hedge could have been considered, it would have reduced the additional shares by 2.40 for the three months ended March 31, 2023. Does not include an additional 0.18 shares issuable upon assumed conversion and exercise of share based awards as they are anti-dilutive for the three months ended March 31, 2023.
(6) Includes an additional 4.72 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the three months ended March 31, 2022. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S.GAAP. If the hedge could have been considered, it would have reduced the additional shares by 2.56 for the three months ended March 31, 2022.
(7) Includes an additional 5.23 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the fourth quarter 2022. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S. GAAP. If the hedge could have been considered, it would have reduced the additional shares by 2.80 for the fourth quarter 2022.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in millions)
| Three Months Ended | |||||||||||
| March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||||
| Net Cash (Used In) Provided By Operating Activities | $ | (91.1 | ) | $ | (22.2 | ) | $ | 30.5 | |||
| Investing Activities | |||||||||||
| Acquisition of businesses, net of cash acquired | (4,339.8 | ) | (0.8 | ) | — | ||||||
| Investments | (2.3 | ) | (3.9 | ) | (5.0 | ) | |||||
| Capital expenditures | (31.4 | ) | (12.6 | ) | (26.0 | ) | |||||
| Proceeds from sale of assets | 0.1 | — | — | ||||||||
| Government grants and other | (0.6 | ) | (0.2 | ) | (0.3 | ) | |||||
| Net Cash Used In Investing Activities | (4,374.0 | ) | (17.5 | ) | (31.3 | ) | |||||
| Financing Activities | |||||||||||
| Borrowings on revolving credit facility | 634.8 | 254.0 | 132.0 | ||||||||
| Repayments on revolving credit facility | (45.0 | ) | (235.9 | ) | (617.0 | ) | |||||
| Borrowings on senior secured and senior unsecured notes | — | — | 1,940.0 | ||||||||
| Borrowings on term loan | 1,463.7 | — | — | ||||||||
| Payments for debt issuance costs | (28.8 | ) | — | (4.7 | ) | ||||||
| Proceeds from issuance of common stock, net | 11.7 | — | 675.5 | ||||||||
| Proceeds from issuance of preferred stock, net | — | — | 388.4 | ||||||||
| Payments for equity issuance costs | — | — | (0.7 | ) | |||||||
| Proceeds from exercise of stock options | 0.1 | 1.0 | 0.3 | ||||||||
| Common stock repurchases from share-based compensation plans | (2.6 | ) | (3.2 | ) | (0.2 | ) | |||||
| Dividends paid on mandatory convertible preferred stock | (6.9 | ) | — | ||||||||
| Net Cash Provided By Financing Activities | 2,027.0 | 15.9 | 2,513.6 | ||||||||
| Effect of exchange rate changes on cash | 2.2 | 1.3 | 3.0 | ||||||||
| Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents | (2,435.9 | ) | (22.5 | ) | 2,515.8 | ||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period (1) | 2,605.3 | 122.4 | 89.5 | ||||||||
| CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD (1) | $ | 169.4 | $ | 99.9 | $ | 2,605.3 | |||||
(1) Includes restricted cash and restricted cash equivalents of
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in millions)
| March 31, 2023 | December 31, 2022 | ||||||
| ASSETS | |||||||
| Cash and cash equivalents | $ | 166.9 | $ | 663.6 | |||
| Restricted cash | 2.5 | 1,941.7 | |||||
| Accounts receivable, net | 747.1 | 278.4 | |||||
| Inventories, net | 601.8 | 357.9 | |||||
| Other current assets | 714.0 | 449.3 | |||||
| Property, plant, and equipment, net | 738.4 | 430.0 | |||||
| Goodwill | 2,912.8 | 992.0 | |||||
| Identifiable intangible assets, net | 3,105.8 | 535.3 | |||||
| Equity method investments | 134.2 | 93.0 | |||||
| Investments in equity securities | 65.1 | 96.5 | |||||
| Other assets | 108.7 | 64.2 | |||||
| TOTAL ASSETS | $ | 9,297.4 | $ | 5,901.9 | |||
| LIABILITIES AND EQUITY | |||||||
| Current liabilities | $ | 1,781.2 | $ | 1,081.6 | |||
| Long-term debt | 4,051.6 | 2,039.8 | |||||
| Other long-term liabilities | 757.7 | 96.2 | |||||
| Equity | 2,706.9 | 2,684.3 | |||||
| TOTAL LIABILITIES AND EQUITY | $ | 9,297.4 | $ | 5,901.9 | |||
CHART INDUSTRIES, INC. AND SUBSIDIARIES
OPERATING SEGMENTS (UNAUDITED)
(Dollars in millions)
| Three Months Ended | |||||||||||
| March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||||
| Sales | |||||||||||
| Cryo Tank Solutions | $ | 127.2 | $ | 118.1 | $ | 126.4 | |||||
| Heat Transfer Systems | 167.5 | 79.3 | 148.4 | ||||||||
| Specialty Products | 127.3 | 107.5 | 117.4 | ||||||||
| Repair, Service & Leasing | 120.1 | 49.3 | 55.2 | ||||||||
| Intersegment eliminations | (4.2 | ) | (0.1 | ) | (6.0 | ) | |||||
| Consolidated | $ | 537.9 | $ | 354.1 | $ | 441.4 | |||||
| Gross Profit | |||||||||||
| Cryo Tank Solutions | $ | 22.5 | $ | 25.4 | $ | 28.9 | |||||
| Heat Transfer Systems | 41.3 | 10.1 | 37.2 | ||||||||
| Specialty Products | 36.2 | 32.6 | 32.4 | ||||||||
| Repair, Service & Leasing | 51.5 | 15.6 | 25.8 | ||||||||
| Consolidated | $ | 151.5 | $ | 83.7 | $ | 124.3 | |||||
| Gross Profit Margin | |||||||||||
| Cryo Tank Solutions | 17.7 | % | 21.5 | % | 22.9 | % | |||||
| Heat Transfer Systems | 24.7 | % | 12.7 | % | 25.1 | % | |||||
| Specialty Products | 28.4 | % | 30.3 | % | 27.6 | % | |||||
| Repair, Service & Leasing | 42.9 | % | 31.6 | % | 46.7 | % | |||||
| Consolidated | 28.2 | % | 23.6 | % | 28.2 | % | |||||
| Operating Income (Loss) | |||||||||||
| Cryo Tank Solutions | $ | 4.9 | $ | 14.1 | $ | 17.8 | |||||
| Heat Transfer Systems | 27.3 | (0.2 | ) | 27.9 | |||||||
| Specialty Products | 22.1 | 16.2 | 19.2 | ||||||||
| Repair, Service & Leasing | 33.8 | 8.3 | 18.7 | ||||||||
| Corporate | (51.9 | ) | (18.3 | ) | (23.5 | ) | |||||
| Consolidated (1) (2) (3) | $ | 36.2 | $ | 20.1 | $ | 60.1 | |||||
| Operating Margin (Loss) | |||||||||||
| Cryo Tank Solutions | 3.9 | % | 11.9 | % | 14.1 | % | |||||
| Heat Transfer Systems | 16.3 | % | (0.3 | )% | 18.8 | % | |||||
| Specialty Products | 17.4 | % | 15.1 | % | 16.4 | % | |||||
| Repair, Service & Leasing | 28.1 | % | 16.8 | % | 33.9 | % | |||||
| Consolidated | 6.7 | % | 5.7 | % | 13.6 | % | |||||
_______________
(1) Restructuring costs/(credits) for the three months ended:
- March 31, 2023 were
$1.6 ($0.8 - Repair, Service & Leasing and$0.8 - Cryo Tank Solutions). - March 31, 2022 were
$0.1 in our Heat Transfer Systems segment. - December 31, 2022 were
$0.1 ($0.2 - Heat Transfer Systems and$(0.1) - Repair, Service & Leasing).
(2) Includes acquisition-related contingent consideration credits in our Specialty Products Segment of:
$(6.7) ,$(0.8) , and$(1.1) for the three months ended March 31, 2023, March 31, 2022 and December 31, 2022, respectively.
(3) Includes deal-related and integration costs of:
$81.7 for the three months ended March 31, 2023 which includes costs related to the Howden acquisition such as interest, deal advisory and financing costs and$4.2 and$1.6 for the three months ended March 31, 2022 and December 31, 2022, respectively.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
ORDERS AND BACKLOG (UNAUDITED)
(Dollars in millions)
| Three Months Ended | |||||||||||
| March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||||
| Orders | |||||||||||
| Cryo Tank Solutions | $ | 145.3 | $ | 142.4 | $ | 139.7 | |||||
| Heat Transfer Systems | 311.3 | 354.1 | 235.8 | ||||||||
| Specialty Products | 179.5 | 100.5 | 96.4 | ||||||||
| Repair, Service & Leasing | 123.7 | 43.4 | 66.3 | ||||||||
| Intersegment eliminations | (12.1 | ) | (3.6 | ) | (12.3 | ) | |||||
| Consolidated | $ | 747.7 | $ | 636.8 | $ | 525.9 | |||||
| As of | |||||||||||
| March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||||
| Backlog | |||||||||||
| Cryo Tank Solutions | $ | 531.3 | $ | 365.8 | $ | 371.0 | |||||
| Heat Transfer Systems | 1,590.1 | 639.5 | 1,300.1 | ||||||||
| Specialty Products | 1,316.2 | 418.8 | 645.9 | ||||||||
| Repair, Service & Leasing | 539.7 | 53.6 | 57.0 | ||||||||
| Intersegment eliminations | (45.3 | ) | (0.7 | ) | (35.9 | ) | |||||
| Consolidated | $ | 3,932.0 | $ | 1,477.0 | $ | 2,338.1 | |||||
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF BASIC EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. TO NORMALIZED NON-DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES INC. AND ADJUSTED NON-DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHART INDUSTRIES, INC. (UNAUDITED)
(Dollars in millions, except per share amounts)
| Q1 2023 Diluted EPS | Q1 2023 Basic EPS | Q1 2022 Basic EPS | Change vs. Q1 2023 | ||||||||||||
| Amounts attributable to Chart common stockholders | |||||||||||||||
| (Loss) income from continuing operations | (14.6 | ) | (14.6 | ) | 10.2 | (24.8 | ) | ||||||||
| Less: Mandatory convertible preferred stock dividend requirement | 6.8 | 6.8 | — | 6.8 | |||||||||||
| Reported (loss) income from continuing operations attributable to Chart (U.S. GAAP) | (21.4 | ) | (21.4 | ) | 10.2 | (31.6 | ) | ||||||||
| (Loss) earnings per common share attributable to Chart Industries, Inc. – continuing operations | $ | (0.46 | ) | $ | (0.51 | ) | $ | 0.28 | $ | (0.79 | ) | ||||
| Investment equities mark-to-market, net of FX (1) | 0.06 | 0.06 | 0.14 | (0.08 | ) | ||||||||||
| Debt and financing costs | 1.29 | 1.43 | — | 1.43 | |||||||||||
| Mandatory convertible preferred stock dividend | 0.15 | 0.16 | — | 0.16 | |||||||||||
| Tax effects | (0.31 | ) | (0.35 | ) | (0.03 | ) | (0.32 | ) | |||||||
| Normalized earnings per common share attributable to Chart Industries, Inc. - continuing operations (non-GAAP) | $ | 0.73 | $ | 0.79 | $ | 0.39 | $ | 0.40 | |||||||
| Deal related and integration costs (2) | 0.55 | 0.61 | 0.12 | 0.49 | |||||||||||
| Howden amortization | 0.25 | 0.28 | — | 0.28 | |||||||||||
| Startup costs - organic | 0.03 | 0.03 | 0.05 | (0.02 | ) | ||||||||||
| Restructuring & related costs (3) | 0.03 | 0.03 | 0.15 | (0.12 | ) | ||||||||||
| Other one-time items | 0.01 | 0.01 | — | 0.01 | |||||||||||
| Tax effects | (0.19 | ) | (0.21 | ) | (0.06 | ) | (0.15 | ) | |||||||
| Adjusted earnings per common share attributable to Chart Industries, Inc. (non-GAAP) | $ | 1.41 | 1.54 | 0.65 | 0.89 | ||||||||||
| Share Count | 46.47 | 41.94 | |||||||||||||
_____________
1. Includes the mark-to-market of our inorganic investments in Mcphy, Stabilis and other minority investments.
2. Includes investment banker fee, third party support fees, and hedge FX impact for the three months ended March 31, 2023.
3. Includes restructuring costs of:
$1.6 and$0.1 for the three months ended March 31, 2023 and March 31, 2022, respectively.
_____________
Normalized non-diluted earnings per common share attributable to Chart Industries, Inc. and adjusted non-diluted earnings per common share attributable to Chart Industries, Inc. are not measures of financial performance under U.S. GAAP and should not be considered as an alternative to earnings per share in accordance with U.S. GAAP. Management believes that normalized non-diluted earnings per common share attributable to Chart Industries, Inc. and adjusted non-diluted earnings per common share attributable to Chart Industries, Inc. facilitate useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO CHART INDUSTRIES, INC. TO NET INCOME, ADJUSTED (UNAUDITED)
(Dollars in millions)
| Three Months Ended | |||||||||||
| March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||||
| Net (loss) income attributable to Chart Industries, Inc. (U.S. GAAP) | $ | (15.0 | ) | $ | 10.2 | $ | (40.4 | ) | |||
| Income attributable to noncontrolling interests of continuing operations, net of taxes (U.S. GAAP) | 0.7 | 0.1 | 0.2 | ||||||||
| Net (loss) income (U.S. GAAP) | (14.3 | ) | 10.3 | (40.2 | ) | ||||||
| Financing costs amortization | 2.8 | 0.7 | 0.8 | ||||||||
| Unrealized foreign currency transaction (gain) loss | 1.9 | (1.1 | ) | 0.1 | |||||||
| Employee share-based compensation expense | 4.0 | 3.3 | 2.7 | ||||||||
| Realized loss on investment of equity securities | — | — | 0.3 | ||||||||
| Unrealized loss (gain) on investment in equity securities | 2.0 | 2.6 | (24.0 | ) | |||||||
| Realized gain on equity method investment | — | — | (0.3 | ) | |||||||
| Equity in loss of unconsolidated affiliates, net | 0.5 | 0.3 | 0.2 | ||||||||
| Deferred income tax benefit | 3.5 | — | (1.7 | ) | |||||||
| Other non-cash operating activities | 0.1 | 2.0 | 7.9 | ||||||||
| Net (loss) income adjusted (non-GAAP) | $ | 0.5 | $ | 18.1 | $ | (54.2 | ) | ||||
_______________
Net income adjusted is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to net income in accordance with U.S. GAAP. Management believes that net income adjusted, facilitates useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of this non-GAAP measure may not be comparable to the calculations of similarly titled measures reported by other companies.
RECONCILIATION OF NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW AND ADJUSTED FREE CASH FLOW (UNAUDITED)
(Dollars in millions)
| Three Months Ended | |||||||||||
| March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||||
| Net cash (used in) provided by operating activities (U.S. GAAP) | $ | (91.1 | ) | $ | (22.2 | ) | $ | 30.5 | |||
| Capital expenditures | (31.4 | ) | (12.6 | ) | (26.0 | ) | |||||
| Free cash flow (non-GAAP) | (122.5 | ) | (34.8 | ) | 4.5 | ||||||
_______________
Free cash flow is not a measure of financial performance under U.S. GAAP and should not be considered as an alternative to net cash provided by (used in) operating activities in accordance with U.S. GAAP. Management believes that free cash flow facilitates useful period-to-period comparisons of our financial results and this information is used by us in evaluating internal performance. Our calculation of this non-GAAP measure may not be comparable to the calculations of similarly titled measures reported by other companies.
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED)
(Dollars in millions)
| Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | ||||||||||||||||||||||
| Sales | $ | 127.2 | $ | 167.5 | $ | 127.3 | $ | 120.1 | $ | (4.2 | ) | $ | — | $ | 537.9 | |||||||||||||
| Gross profit as reported (U.S. GAAP) | 22.5 | 41.3 | 36.2 | 51.5 | — | — | 151.5 | |||||||||||||||||||||
| Restructuring, transaction-related and other one-time costs | 0.4 | 1.0 | 0.7 | — | — | — | 2.1 | |||||||||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 22.9 | $ | 42.3 | $ | 36.9 | $ | 51.5 | $ | — | $ | — | $ | 153.6 | ||||||||||||||
| Adjusted gross profit margin (non-GAAP) | 18.0 | % | 25.3 | % | 29.0 | % | 42.9 | % | — | % | — | % | 28.6 | % | ||||||||||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 4.9 | $ | 27.3 | $ | 22.1 | $ | 33.8 | $ | — | $ | (51.9 | ) | 36.2 | ||||||||||||||
| Restructuring, transaction-related and other one-time costs | 0.4 | 1.1 | (4.9 | ) | 11.6 | — | 28.1 | 36.3 | ||||||||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 5.3 | $ | 28.4 | $ | 17.2 | $ | 45.4 | $ | — | $ | (23.8 | ) | $ | 72.5 | |||||||||||||
| Adjusted operating margin (non-GAAP) | 4.2 | % | 17.0 | % | 13.5 | % | 37.8 | % | — | % | — | % | 13.5 | % | ||||||||||||||
| Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||||
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | ||||||||||||||||||||||
| Sales | $ | 118.1 | $ | 79.3 | $ | 107.5 | $ | 49.3 | $ | (0.1 | ) | $ | — | $ | 354.1 | |||||||||||||
| Gross profit as reported (U.S. GAAP) | 25.4 | 10.1 | 32.6 | 15.6 | — | — | 83.7 | |||||||||||||||||||||
| Restructuring related, deal-related, integration and other one time costs | 3.3 | 2.5 | 1.4 | 1.5 | — | — | 8.7 | |||||||||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 28.7 | $ | 12.6 | $ | 34.0 | $ | 17.1 | $ | — | $ | — | $ | 92.4 | ||||||||||||||
| Adjusted gross profit margin (non-GAAP) | 24.3 | % | 15.9 | % | 31.6 | % | 34.7 | % | — | % | — | % | 26.1 | % | ||||||||||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 14.1 | $ | (0.2 | ) | $ | 16.2 | $ | 8.3 | $ | — | $ | (18.3 | ) | 20.1 | |||||||||||||
| Restructuring related, deal-related, integration and other one time costs | 3.4 | 2.5 | 1.9 | 1.5 | — | 1.2 | 10.5 | |||||||||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 17.5 | $ | 2.3 | $ | 18.1 | $ | 9.8 | $ | — | $ | (17.1 | ) | $ | 30.6 | |||||||||||||
| Adjusted operating margin (non-GAAP) | 14.8 | % | 2.9 | % | 16.8 | % | 19.9 | % | — | % | — | % | 8.6 | % | ||||||||||||||
CHART INDUSTRIES, INC. AND SUBSIDIARIES
RECONCILIATIONS OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS) (UNAUDITED) (CONTINUED)
(Dollars in millions)
| Three Months Ended December 31, 2022 | ||||||||||||||||||||||||||||
| Cryo Tank Solutions | Heat Transfer Systems | Specialty Products | Repair, Service & Leasing | Intersegment Eliminations | Corporate | Consolidated | ||||||||||||||||||||||
| Sales | $ | 126.4 | $ | 148.4 | $ | 117.4 | $ | 55.2 | $ | (6.0 | ) | $ | — | $ | 441.4 | |||||||||||||
| Gross profit as reported (U.S. GAAP) | 28.9 | 37.2 | 32.4 | 25.8 | — | — | 124.3 | |||||||||||||||||||||
| Restructuring, transaction-related and other one-time costs | 1.0 | 4.5 | 2.0 | 0.3 | — | — | 7.8 | |||||||||||||||||||||
| Adjusted gross profit (non-GAAP) | $ | 29.9 | $ | 41.7 | $ | 34.4 | $ | 26.1 | $ | — | $ | — | $ | 132.1 | ||||||||||||||
| Adjusted gross profit margin (non-GAAP) | 23.7 | % | 28.1 | % | 29.3 | % | 47.3 | % | — | % | — | % | 29.9 | % | ||||||||||||||
| Operating income (loss) as reported (U.S. GAAP) | $ | 17.8 | $ | 27.9 | $ | 19.2 | $ | 18.7 | $ | — | $ | (23.5 | ) | 60.1 | ||||||||||||||
| Restructuring, transaction-related and other one-time costs | 1.1 | 4.4 | 1.6 | 0.4 | — | 7.4 | 14.9 | |||||||||||||||||||||
| Adjusted operating income (loss) (non-GAAP) | $ | 18.9 | $ | 32.3 | $ | 20.8 | $ | 19.1 | $ | — | $ | (16.1 | ) | $ | 75.0 | |||||||||||||
| Adjusted operating margin (non-GAAP) | 15.0 | % | 21.8 | % | 17.7 | % | 34.6 | % | — | % | — | % | 17.0 | % | ||||||||||||||
_______________
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.
