Chart Industries, Inc. · NYSE:GTLS
Chart Industries — Merger or Acquisition (November 2022)
35 slides from Chart Industries's merger presentation, Nov 14, 2022
Slide 1: Supplemental Information on the Acquisition of Howden
Exhibit 99.1 N Y S E : GTLS Supplemental Information on the Acquisition of Howden November 14, 2022 GTLS: GAS TO LIQUID SYSTEMS®
Slide 2: Forward-Looking Statements
Forward-Looking Statements Forward-Looking Statements Certain statements made in this investor presentation are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning Chart’s business plans, incl
Slide 3: Chart's Acquisition of Howden
Chart’s Acquisition of Howden P Doubling Nexus of Clean™ Opportunities P Expanded End-Market and Geographic Reach P Strong Earnings Mix (Accretive to Pro Forma EBITDA Margin with $1B of Combined EBITDA and Enhanced Free Cash Flow Generation) P Identified Cost and Commercial Synergies P Committed Fin
Slide 4: Creating the Global Energy Transition and Hydrogen Leader
Creating the Global Energy Transition and Hydrogen Leader Combined Impact $1.7B $2.0B $3.8B Revenue (2022E) Target Revenue (1) (1) ~15% to 20% >10% ~15% Growth Rate Target Adj. EBITDA (1) (1) Low 20s% Low 20s% Mid 20s% Margins % Aftermarket ~15% 45%+ ~30% Target Free Cash 85%+ 90%+ >90% (2) Flow Con
Slide 5: Agenda
Agenda Strategic Combination ▪ Why Howden ▪ How Howden expands Chart’s specialty markets, First-of-a-Kind and new customers ▪ What are the benefits from the increase in aftermarket, service and repair Financial Profile ▪ Cost and Commercial Synergy Details ▪ Historical Howden Financial Information ▪
Slide 6: Why Howden
Why Howden 6
Slide 7: Continuing the Chart Playbook to Increase Access to Specialty and Nexus of Clean Markets
Continuing the Chart Playbook to Increase Access to Specialty and Nexus of Clean™ Markets 1. Brings Chart immediate access to customers and commercial projects that otherwise could not readily be accessed without significant organic investment and time ▪ Strong engineering team with track record of
Slide 8: Chart and Howden Have Dramatically Transformed in the Past Few Years
Chart and Howden Have Dramatically Transformed in the Past Few Years… (1) 2019 LTM 9/30/2022 2019 LTM 8/31/2022 ▪ LNG▪ Coal▪ Energy transition ▪ Oil and gas End Market ▪ Industrial gas▪ Oil and gas▪ Hydrogen ▪ Industrial gas Majority ▪ Specialty (H2, etc)▪ CCUS, water, electrification (2) ▪ ~590 Upt
Slide 9: Both Companies' Bolt-On Acquisitions Bring More Specialty and Nexus of Clean Access
…And Both Companies’ Bolt-On Acquisitions Bring More Specialty and Nexus of Clean™ Access Over the past three years, both Chart and Howden have completed strategic bolt-on acquisitions to expand their solution offerings into the Nexus of Clean™ (Chart) and purpose of enabling vital processes, which
Slide 10: How Howden Expands Chart's Specialty Markets, First-of-a-Kind and New Customers
How Howden Expands Chart’s Specialty Markets, First-of-a-Kind and New Customers 10
Slide 11: Combined Solutions Across the Nexus of Clean
Combined Solutions Across the Nexus of Clean™ Chart Process Technologies Clean Solution End Market Wholly-Owned Minority Ownership ▪ Hydrogen ▪ BAHX▪ Valves / Vaporizers▪ Fans ▪ Helium ▪ ACHX▪ Expanders▪ Compressors ▪ LNG Clean ▪ Bulk & Microbulk▪ Liquefiers▪ Blowers ▪ Biogas ▪ Fans▪ Cold Boxes▪ Hea
Slide 12: Complementary Exposure to Specialty Markets
Complementary Exposure to Specialty Markets Approximate % of Revenue Market Key Applications Growth Drivers Chart Howden ▪ Penetration of existing installed base ▪ Field service ▪ Capabilities on non-Howden assets Aftermarket, Repair, Service▪ Remote monitoring ~14% ~48% ▪ Criticality of operation d
Slide 13: Howden is a Leading Player in Hydrogen
Howden is a Leading Player in Hydrogen All hydrogen applications and projects require compression technology; a significant subset need liquefaction Howden strengthens Chart’s position as a hydrogen leader with: ▪ 100+ years of experience in hydrogen applications ▪ The largest installed base of comp
Slide 14: Howden's Product Portfolio Applicable Across the Hydrogen Value Chain
Howden’s Product Portfolio and Technical Capabilities Are Applicable Across the Hydrogen Value Chain Production Transportation Storage Utilization Pipelines (Natural gas and Wind Solar Electrolysis High Pressure Industries: Existing, hydrogen) Tanks Decarbonized and New Tube Trailer Low / Medium Pre
Slide 15: Combined Leadership Role in the Hydrogen Value Chain – Liquid Hydrogen
Combined Leadership Role in the Hydrogen Value Chain – Liquid Hydrogen Production Storage and Transport End Use ▪ BAHX and cold boxes▪ Bulk liquid tanks▪ Bulk and microbulk liquid tanks ▪ ACHX▪ LH2 transport trailers▪ LH2 transport trailers ▪ Storage▪ ISO Containers▪ Fueling stations ▪ Turboexpander
Slide 16: Combined Leadership Role in the Hydrogen Value Chain – Gaseous Hydrogen
Combined Leadership Role in the Hydrogen Value Chain – Gaseous Hydrogen Production Storage and Transport End Use ▪ Turboexpanders▪ Turboexpanders▪ Vaporization systems ▪ SES Cryogenic Carbon Capture ▪ H2 transport trailers▪ Vacuum insulated pipe technology▪ ACHX▪ Valve boxes ▪ Air cooled heat exchan
Slide 17: Howden Brings New First-of-a-Kind and New Partnerships
Howden Brings New First-of-a-Kind and New Partnerships Howden First-of-a-Kind Examples Partnerships Biofuels (with Waste to E-Methanol Green Steel Hydrogen) Hydrogen Howden and Raven SR partnership (Raven SR is a clean fuels company transforming waste into clean hydrogen and synthetic fuels) Howden
Slide 18: Howden Helps Marine Customers Improve Emissions
Howden Helps Marine Customers Improve Emissions How it Works: ▪ Technology is based on blowing air under the hull of the vessel creating a carpet of bubbles ▪ Air bubbles distribution across the hull surface reduces the resistance generated between the ship’s hull and the water Where is it Used: ▪ A
Slide 19: Stronger Together in Water Treatment and Wastewater
Stronger Together in Water Treatment and Wastewater LOX and SDOX-CS are used in municipal collection systems to eliminate H2S odor and corrosion WATER REUSE ExVel Turbo Fans are used for vapor compression for Zero Liquid Discharge (ZLD). ZLD is made possible and/or more economical when using our hig
Slide 20: Complementary Equipment for Carbon Capture and Storage
Complementary Equipment for Carbon Capture and Storage Example Case Study: Breweries CO2 Capture 1 7 ▪ Chart Earthly Labs CO2 capture equipment 5 ▪ Howden booster blowers in low pressure environments ▪ Howden air compressors to actuate valves in capture process 3 2 CO2 Separation & Processing 6 ▪ Ch
Slide 21: Details of Expected Cost and Commercial Synergies
Details of Expected Cost and Commercial Synergies 21
Slide 22: Cost Synergies
Cost Synergies ~40%: Outside Sourcing for Product Build and Insourcing Expected Annual Cost Synergies ▪ Volume leverage at 2x size ($M) ▪ Insource Howden compressors on select projects ▪ Insource select third party manufacturing processes ~40%: Optimization and Resource Rationalization ~$250 ▪ Lever
Slide 23: A Global Footprint to Serve Customers Locally
A Global Footprint to Serve Customers Locally Chart Howden Howden Seoul, S. Korea office and entity ~35% ▪ Leverage LH2 and EMEA H2 in-country presence ~25% Asia-Pacific Howden ~40% Johannesburg, South Africa Americas Howden Chennai, India ▪ Local content & ▪ Fabricate cold boxes reduced cost from ▪
Slide 24: Commercial Synergies
Commercial Synergies Existing Manufacturing Location Utilization to Gain Expected Commercial Synergies (Revenue) Access to Customer Projects ($M) ▪ Fabricate cold boxes in Southeast Asia (2 locations); valuable for FLNG and non-US opportunities ~$350 Access to the marine market and customers ▪ Bunke
Slide 25: Commercial Synergies with Chart's Minority Investments
Commercial Synergies with Chart’s Minority Investments Howden Content That Could Potentially Be Used in Projects Chart’s Minority Application / Market Investment ▪ Reciprocating compressors for liquefaction or compression for high HTEC Hydrogen production pressure gas and stations ▪ Diaphragm compre
Slide 26: Coordinated Integration Team
Coordinated Integration Team ▪ Massimo Bizzi, currently Howden COO, will be Integration Lead ▪ Key contributor to Howden’s operational improvements and resulting EBITDA margin expansion ▪ Specialist in leading highly engineered products businesses ▪ Holds a M.Sc. And a Ph.D. in Chemical Engineering
Slide 27: Historical Financials and Financial Outlook for the Combined Business
Historical Financials and Financial Outlook for the Combined Business 27
Slide 28: 2019 – 2022 Financial Summary: Driving Growth and Margin Expansion
2019 – 2022 Financial Summary: Driving Growth and Margin Expansion 2019 2020 2021 2022E 2019 2020 2021 2022E Orders $1.3B $1.2B $1.7B >$2.6B $1.6B $1.4B $1.8B $2.0B $1.2B $1.2B $1.3B ~$1.65-1.7B $1.5B $1.4B $1.6B $2.0B Revenue ~13% % Aftermarket 15% 13% 14% 46% 43% 46% 48% With Big LNG Adjusted (2)
Slide 29: Howden Drives Aftermarket Opportunity Across the Combined Business
Howden Drives Aftermarket Opportunity Across the Combined Business ~40% of Installed Base Aftermarket Agreements ~200 Assets ~6,000 New Build Additions to Entitlement Achieved Currently Covering >2K Assets Connected to Uptime Installed Base per Year Howden's Aftermarket Business Significant Go-Forwa
Slide 30: Financing Overview
Financing Overview 30
Slide 31: Transaction Financing Overview
Transaction Financing Overview Existing Chart Net Debt (9/30/22) Financing Overview ($M) $4.4B purchase price supported by: Drawn Revolving Credit Facility ($1B) $581 ▪ Bridge Financing Convertible Notes due 2024 258 Less: Cash (90) ▪ $3.375B fully committed 364-day bridge facility with six-month Ne
Slide 32: Overview of Certain Key Terms of Preferred Stock Issued to Seller
Overview of Certain Key Terms of Preferred Stock Issued to Seller Security▪ Series A Cumulative Participating Convertible Preferred Stock Maturity▪ Perpetual ▪ Approximately $1.1B Principal Amount ▪ In certain circumstances, $450M of the preferred may be replaced with common equity issued to seller
Slide 33: Strengthening Our Position in the Nexus of Clean While Adding High Margin, Resilient Aftermarket
Strengthening Our Position in the Nexus of Clean™ While Adding High Margin, Resilient Aftermarket ✓ Extended access to bigger and growing profit pools within the energy transition value chain ✓ New geographies, new markets, new customers ✓ Doubles aftermarket exposure, adding resiliency to growth th
Slide 34: Appendix
Appendix 34
Slide 35: Chart Industries Adjusted EBITDA and Free Cash Flow Conversion Reconciliation
Chart Industries Adjusted EBITDA and Free Cash Flow Conversion Reconciliation $ millions, except per share amounts FY 2019 FY 2020 FY 2021 Consolidated Net sales 1,215.5 1,177.1 1,317.7 Net income from continuing operations $31.4 $70.3 $60.9 Income tax expense, net 2.8 15.0 13.5 Interest expense, ne
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