Chart Industries, Inc. · NYSE:GTLS
Chart Industries — Merger or Acquisition (January 2023)
52 slides from Chart Industries's merger presentation, Jan 6, 2023
Slide 1: January 2023 Investor Update
January 2023 Investor Update January 6, 2023 NYSE: GTLS Exhibit 99.1
Slide 2: 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, including statements regarding
Slide 3: Chart's Announced Acquisition of Howden
Chart’s Announced Acquisition of Howden
Slide 4: Transaction Overview
Secured long-term debt financing of ~$4B including updated RCF, towards lower end of 7-8.5% target range (completed December 2022) Raised $1.1B in equity through a combination of common stock and depositary shares representing mandatory convertible preferred stock Transaction Overview 11 93 165 0 0
Slide 5: Attributes Continuing the Chart Playbook to Increase Access to Specialty and Nexus of Clean Markets
Attributes Continuing the Chart Playbook to Increase Access to Specialty and Nexus of Clean™ Markets Brings Chart immediate access to customers and commercial projects that otherwise could not readily be accessed without significant organic investment and time Strong 750+ person engineering team wit
Slide 6: Chart and Howden Have Dramatically Transformed in the Past Few Years
Chart and Howden Have Dramatically Transformed in the Past Few Years… Confirm placement End Market Majority Technology Capabilities Financial Metrics(2) 2019 LTM 9/30/2022 Oil and gas Industrial gas LNG Industrial gas Specialty (H2, etc) Coal Oil and gas Energy transition Hydrogen CCUS, water, elect
Slide 7: 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 8: Chart's Public Transformation
Chart’s Public Transformation Before 2018 2020 Chart Industries Investor Day Note: Figures as-reported during stated period Today Higher customer concentration / lower geographic diversity Heavy reliance on single large LNG projects Significant backlog with PetroChina that went away in 2016 ($150M)
Slide 9: Howden's Private Transformation
Howden’s Private Transformation Before 2018 2020 Chart Industries Investor Day Today Disparate organizational structure Exposure to low margin businesses Heavy exposure to coal and upstream oil and gas end markets Limited actions taken for cost rationalization Limited digital linkage in aftermarket,
Slide 10: Benefits of the Chart and Howden Combination
Benefits of the Chart and Howden Combination
Slide 11: Benefits of the Combination
Benefits of the Combination 11 93 165 0 0 0 89 89 89 51 163 220 249 166 63 157 195 53 191 191 191 0 71 133 More first-of-a-kind full solution opportunities in the Nexus of Clean™ Less cyclicality: expands aftermarket, service and repair, and creates balance between project-based and book and ship or
Slide 12: Combined Solutions Across the Nexus of Clean
Combined Solutions Across the Nexus of Clean™ Alternate version Valves / Vaporizers Expanders Liquefiers Cold Boxes BAHX ACHX Bulk & Microbulk Fans Transports Hydrogen Helium LNG Biogas Nuclear Energy recovery Biofuel / synfuels Biomass Fans Compressors Blowers Heaters Steam Turbines SaaS Vaporizers
Slide 13: Howden Product Portfolio
Howden Product Portfolio 11 93 165 0 0 0 89 89 89 51 163 220 249 166 63 157 195 53 191 191 191 0 71 133 VentSim™ Design Uptime Software & Digital Reciprocating Screw Diaphragm Centrifugal Compressors Gas-Gas Heater Air Preheater Rotary Heaters Blowers & Fans Rotary Blowers Turbo Blowers Centrifugal
Slide 14: Chart Product Portfolio
Chart Product Portfolio 11 93 165 0 0 0 89 89 89 51 163 220 249 166 63 157 195 53 191 191 191 0 71 133
Slide 15: Expanding Exposure to Additional Markets
Expanding Exposure to Additional Markets 11 93 165 0 0 0 89 89 89 51 163 220 249 166 63 157 195 53 191 191 191 0 71 133 Industrial Gas Howden additions LNG Food & Beverage Biofuels Marine Systems Critical Care Metal Mining Energy & Chemical Hydrogen Space Cannabis Lasers Tunnel & Metro Biomass Over
Slide 16: Chart's Customer Base of Industry Leaders
Chart’s Customer Base of Industry Leaders GTLS: GAS TO LIQUID SYSTEMS® Chart’s top ten customers typically represent greater than 30% of annual sales In 2021, Chart sold to over 400 new customers globally
Slide 17: Howden's Diverse Customer Base of Industry Leaders
Howden’s Diverse Customer Base of Industry Leaders GTLS: GAS TO LIQUID SYSTEMS® 11 93 165 0 0 0 89 89 89 51 163 220 249 166 63 157 195 53 191 191 191 0 71 133 Howden has no customer with more than 4% concentration and top ten are typically less than 15% of revenue therefore reducing Chart’s customer
Slide 18: Combination Reduces Chart's Cyclicality
Combination Reduces Chart’s Cyclicality 11 93 165 0 0 0 89 89 89 51 163 220 249 166 63 157 195 53 191 191 191 0 71 133 Chart 2008 - 2018 Chart as of 9/30/22 Chart + Howden 1 >90% of sales related to traditional oil & gas and industrial gas 38% of sales related to traditional O&G and industrial gas 2
Slide 19: Increasing Exposure to High Growth, High Margin Specialty End Markets
Increasing Exposure to High Growth, High Margin Specialty End Markets
Slide 20: Macro Tailwinds Increasing Globally (1/2)
Macro Tailwinds Increasing Globally (1/2) # End Market Recent Activity Date of News How Howden Helps Chart 1 Hydrogen Masdar and McKinsey & Company said in a November 2022 published report that Africa could capture as much as 10% of global demand for green hydrogen by 2050. November 2022 Africa manu
Slide 21: Macro Tailwinds Increasing Globally (2/2)
Macro Tailwinds Increasing Globally (2/2) # End Market Recent Activity Date of News How Howden Helps Chart 4 Hydrogen Canada introducing new tax credit of up to 40% for hydrogen production (2023-2030) November 2022 Chart can have a broader offering for partner HTEC in Canada 5 CCUS / Food & Beverage
Slide 22: Complementary Exposure to Specialty Markets
Complementary Exposure to Specialty Markets Market What is in this category Approximate % of revenue % of revenue Growth Drivers Chart Howden Combined Mkt growth ahead Aftermarket, repair, service Field service Remote monitoring Spare parts 14% 48% 31% +10-20% Penetration of existing installed base
Slide 23: Howden and Chart are Leading Players in Hydrogen
Howden and Chart are Leading Players in Hydrogen Combined ~160 years of hydrogen experience Howden has 100+ years of experience in hydrogen applications and their reciprocating compressors are market leading in efficiency and low maintenance cost Chart has over 57 years of hydrogen experience and is
Slide 24: Chart Industries 2022 Investor Day TAM
Chart Industries, Inc. 2022 Investor Day $B Chart TAM as of 10/28/2022 Howden TAM Estimate Combined TAM End-use of Products Near-term TAM(1) Near-term TAM(1) Near-term TAM(1) Hydrogen Biofuels & Synfuels Nuclear Energy recovery $4.50 $6.40 $11.00 CCUS Marine 1.00 1.10 2.10 Food & beverage Cannabis L
Slide 25: Combined Hydrogen Offering
Combined Hydrogen Offering Our TAM gets much larger with access to all the gas production, processing and handling applications around the world (e-fuels, ammonia, compressed H2, etc.) Howden’s compressor portfolio fits nicely with applications in the developing H2 transport markets (gas-based stati
Slide 26: Howden's Product Portfolio Across the Hydrogen Value Chain
Howden’s Product Portfolio and Technical Capabilities Are Applicable Across the Hydrogen Value Chain Production Transportation Storage Utilization Waste Gasification Wind Solar Electrolysis Natural Gas Biomass Biomass Gasification Partial Oxidation Waste Hydrogen Gas Hydrogen Liquefaction Steam Meth
Slide 27: Combined Leadership Role in the Hydrogen Value Chain – Liquid Hydrogen
Combined Leadership Role in the Hydrogen Value Chain – Liquid Hydrogen Liquid Hydrogen Production Storage and Transport End Use BAHX and cold boxes ACHX Storage Turboexpanders Liquefaction process technology SES Cryogenic Carbon Capture technology Repair and service Ultra-pure water treatment Screw
Slide 28: Combined Leadership Role in the Hydrogen Value Chain – Gaseous Hydrogen
Combined Leadership Role in the Hydrogen Value Chain – Gaseous Hydrogen Gaseous Hydrogen Production Storage and Transport End Use Turboexpanders SES Cryogenic Carbon Capture technology Air cooled heat exchangers Turboexpanders H2 transport trailers ACHX Axial and centrifugal fans in amine based CCUS
Slide 29: Howden Brings New First-of-a-Kind and New Partnerships
Howden Brings New First-of-a-Kind and New Partnerships E-Methanol Biofuels (with Hydrogen) Green Steel Waste to Hydrogen Partnerships Howden equipment is used in Shell’s Red II Green project converting an existing refinery into biofuel; receive vegetable oil as feedstock for renewable diesel Howden
Slide 30: Recent Howden Wins in the Nexus of Clean
Recent Howden Wins in the Nexus of Clean™ Water Treatment Two separate contracts signed with the energy self-sufficient Tuas Water Reclamation Plan (WRP) Project Singapore’s first integrated water and solid waste treatment facility Renewable Energy Contract with Redstone Concentrated Solar Project i
Slide 31: Stronger Together in Water Treatment and Wastewater
Stronger Together in Water Treatment and Wastewater Blowers and Compressors provide aeration for biological wastewater processes LOX and SDOX-CS are used in municipal collection systems to eliminate H2S odor and corrosion ExVel Turbo Fans are used for vapor compression for Zero Liquid Discharge (ZLD
Slide 32: CO2 Capture
CO2 Capture Chart Earthly Labs CO2 capture equipment Howden booster blowers in low pressure environments Howden air compressors to actuate valves in capture process CO2 Separation & Processing Chart Earthly Labs CO2 separation and processing Howden compressors to handle CO2 – winery, distillery, bio
Slide 33: Details of Expected Cost and Commercial Synergies
Details of Expected Cost and Commercial Synergies
Slide 34: Expected Annual Cost Synergies
Expected Annual Cost Synergies Sourcing (~35%) Benefit from volume leverage Chart able to utilize Howden machines where currently using competition Chart and Howden to insource third party, sub-contracted processes Indirect Spend (~20%) Rationalization (~45%) Facility and resource consolidation to r
Slide 35: A Global Footprint to Serve Customers Locally
11 93 165 0 0 0 89 89 89 51 163 220 249 166 63 157 195 53 191 191 191 0 71 133 Chart Howden ~40% Americas ~25% Asia-Pacific ~35% EMEA A Global Footprint to Serve Customers Locally Howden Johannesburg, South Africa Local content & reduced cost from shipping adds to probabilities of winning on increas
Slide 36: Expected Commercial Synergies (Revenue)
Expected Commercial Synergies (Revenue) Sourcing (~35%) Benefit from volume leverage Chart able to utilize Howden machines where currently using competition Chart and Howden to insource third party, sub-contracted processes Indirect Spend (~20%) Rationalization (~45%) Facility and resource consolida
Slide 37: Howden Drives Aftermarket Opportunity Across the Combined Business
Howden Drives Aftermarket Opportunity Across the Combined Business Confirm placement Significant Go-Forward Aftermarket Opportunity Strengthen visibility and increase coverage of existing Howden installed base P Accelerate customer attachment via Howden Uptime adoption, long-term service and framewo
Slide 38: Howden's Digital Offering Overview
Howden’s Digital Offering Overview Uptime Ventsim™ Design Simulates the ventilation environment Accurately model, design, evaluation, and optimize underground mine ventilation systems Sold as a license Ventsim technology is used globally in over 80% of large operating mines along with majority of ve
Slide 39: Howden's Uptime Technology in Action
Howden’s Uptime Technology in Action Situation Howden’s Uptime Solution Identifies wear or developing failures Advises on efficiency improvements and maintenance actions Supported by a Digital Twin Models root cause scenarios Visualization tools to plot vibration patterns and identify changes Custom
Slide 40: Howden's Ventsim Case Study
Howden’s Ventsim™ Case Study Situation Howden’s Ventsim™ Solution Customer was trying to maximize safety while minimize carbon emissions and energy usage One of the largest operational costs for an underground mine is the ventilation system. In the case of this mine, there was a total of approximate
Slide 41: Chart Standalone Repair, Service & Leasing Growth
Chart Standalone Repair, Service & Leasing Growth to ~14% of Revenue from ~0% in 2017 © 2021 Chart Industries, Inc. Confidential and Proprietary Geographic Footprint European RSL Capabilities RSL LTAs with key customers Portfolio additions with higher % aftermarket Expanded Leasing Fleet Remote Moni
Slide 42: Combined Business Aftermarket, Service and Repair
Combined Business Aftermarket, Service and Repair of 31% of Revenue © 2021 Chart Industries, Inc. Confidential and Proprietary Geographic Footprint European RSL Capabilities RSL LTAs with key customers Portfolio additions with higher % aftermarket Expanded Leasing Fleet Remote Monitoring Categories:
Slide 43: Financial Information
Financial Information
Slide 44: 2019 – 2021 Historical Financial Summary
$1.6B $1.4B $1.8B $1.5B $1.4B $1.6B 46% 43% 46% 16%(2) 16%(3) 16%(3) 85% 88% 89% $1.3B $1.2B $1.7B $1.2B $1.2B $1.3B 15% 13% 14% 15% 18% 17% 80% 82% 76% 2019 – 2021 Historical Financial Summary Adjusted EBITDA Margin(1) Orders Revenue FCF Conversion(5) % Aftermarket 2019 2020 2021 2019 2020 2021 Not
Slide 45: EBITDA 2023 to 2024 Walk
EBITDA 2023 to 2024 Walk (1) Margin expansion and SG&A include projected $55M incremental net cost synergy benefits vs. FY23E adjusted EBITDA.
Slide 46: Transaction Financing Overview
Transaction Financing Overview Pro Forma Net Leverage At Close 2024E Estimated Net Debt ~$4.2B ~$3.3-3.5B Estimated LTM EBITDA(1) ~$1.0B ~$1.3B Implied Net Debt / EBITDA 4.25x High 2x Ongoing Net Debt / EBITDA Target 2.0 – 2.5x Estimated LTM EBITDA includes applicable cost synergies. Additional De-L
Slide 47: Illustrative Pro Forma Adjusted Annualized FCF Bridge
Illustrative Pro Forma Adjusted Annualized FCF Bridge Estimated LTM EBITDA includes applicable cost synergies Does not include cash cost to achieve synergies of $16mn in first 12 months. Levered Adj. FCF Bridge $mn Comment Est. pro forma EBITDA 12 months (1) ~$1B Annualized first year ownership Less
Slide 48: Together, a Stronger ESG Leader
Together, a Stronger ESG Leader 11 93 165 0 0 0 89 89 89 51 163 220 249 166 63 157 195 53 191 191 191 0 71 133 “Chart’s vision is to be the global leader in the design, engineering and manufacturing of highly engineered technologies and equipment for the Nexus of Clean™ - clean power, clean water, c
Slide 49: Topic of Interest
Topic of Interest
Slide 50: Chart's Industry Input Costs
Chart’s Industry Input Costs
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Slide 52: Chart Industries Adjusted EBITDA and Free Cash Flow Conversion Reconciliation
Chart Industries Adjusted EBITDA and Free Cash Flow Conversion Reconciliation “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 Adjust
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