Slide 1: Fourth Quarter and Full Year 2023 Earnings Call
Fourth Quarter and Full Year 2023 Earnings Call February 28, 2024 © 2024 Chart Industries, Inc. Confidential and Proprietary
Slide 2: Forward Looking Statements (1/2)
Forward Looking Statements (1/2) 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 REGA
Slide 3: Forward Looking Statements (2/2)
Forward Looking Statements (2/2) THIS PRESENTATION CONTAINS NON-GAAP FINANCIAL INFORMATION, INCLUDING ADJUSTED NON-DILUTED EPS, NORMALIZED BASIC EPS, “NET INCOME, ADJUSTED”, FREE CASH FLOW, ADJUSTED FREE CASH FLOW, EBITDA, ADJUSTED EBITDA, ADJUSTED OPERATING INCOME, ADJUSTED OPERATING MARGIN, AND AD
Slide 4: All Figures Presented are Continuing Operations
All Figures Presented are Continuing Operations Unless otherwise noted • Chart Industries closed on the Howden acquisition on March 17, 2023 • Our fourth quarter 2023 and full year 2023 results shown are from continuing operations • The following divestitures were completed in 2023: • The Roots busi
Slide 5: Agenda
Agenda Q4 and Full Year 2023 Results Supply Chain and Productivity / Capacity 2024 Drivers and Outlook © 2024 Chart Industries, Inc. Confidential and Proprietary 5
Slide 6: Fourth Quarter 2023 and Full Year Key Messages
Fourth Quarter 2023 and Full Year Key Messages Achieved record results in all financial metrics(1) • Record Q4 2023 orders of $1.21 billion grew 28% YoY and 7% sequentially • Record Q4 2023 backlog of $4.28 billion grew 24% YoY and 3% sequentially • Record Q4 2023 sales of $1.02 billion grew 13% YoY
Slide 7: Fourth Quarter 2023 Key Metrics
Fourth Quarter 2023 Key Metrics Indicates record for any quarter in history $ millions, except per share amounts Continuing Operations Q4 2023 Q3 2023 Change Q4 2022 PF(2) Change 1 Orders 1,209.1 1,127.3 +7.2% 942.7 +28.3% 2 Book to Bill (Total) 1.19 1.26 1.12 3 Backlog 4,278.8 4,140.7 +3.3% 3
Slide 8: Full Year Pro Forma 2023 Key Metrics
Full Year Pro Forma 2023 Key Metrics $ millions, except per share amounts 2023 PF(2) 2022 PF(2) Change Continuing Operations 1 Orders 4,495.2 4,623.4 (2.8%) 2 Orders ex Big LNG ~$4.1B ~$4.0B ~3% 3 Book-to-Bill (Total) 1.23 1.40 4 Backlog 4,278.8 3,449.5 +24.0% 5 Sales 3,657.7 3,294.2 +11.0% 6 Report
Slide 9: Orders and Backlog Trends
Orders and Backlog Trends Pro Forma Orders Backlog $4.28B $1.21B $1.13B $1.10B $1.06B $4.14B $3.96B $525M Q1'23 Q2'23 Q3'23 Q4'23 Q2'23 Q3'23 Q4'23 Q4 2023 orders up 7%, sequentially Q4 2023 backlog up 3%, sequentially Q4 2023 orders up 28% YoY Q4 2023 backlog up 24% YoY Quarterly Book to Bill Ratio
Slide 10: Margin Trends
Margin Trends Pro Forma Reported Gross Profit Margin Pro Forma EBITDA Margins Medium-term target of mid-30% $1,015 $1,015 24.2% 32.9% 21.5% 21.7% 21.7% $908 $898 $908 $898 30.9% 30.8% 18.9% $837 $837 17.5% 29.1% 16.6% 15.7% Q1'23 Q2'23 Q3'23 Q4'23 Q1'23 Q2'23 Q3'23 Q4'23 Sales ($M) Gross Margin % Sa
Slide 11: Reported Segment Results
Reported Segment Results Reported Gross Profit Reported Operating $ millions Sales Margin Margin Commentary Q4 23 Q3 23 Q4 23 Q3 23 Q4 23 Q3 23 Cryo Tank $205.6 $159.0 22.6% 22.1% 11.0% 10.8% • Sales driven by throughput, additional location’s capacity, timing of Solutions backlog revenue recognitio
Slide 12: Q4 2023 Free Cash Flow
Q4 2023 Free Cash Flow $ millions Q4 2023 Income from continuing operations 51.4 Depreciation & amortization 67.9 Deferred income tax benefit (79.3) Other reconciliations from net income(1) 7.5 Changes in working capital 197.8 Change in other assets & liabilities(2) (115.0) Cash flow from operations
Slide 13: Net Leverage and Debt Reduction
Net Leverage and Debt Reduction Debt Covenant: Net Debt / LTM Bank EBITDA(1) Sources and Uses of Cash in Q4 2023 • Total debt paydown and change in cash totaling 6.0X 6.0X $291 million • Gross proceeds of $195 million from American Fans, 4.5X Cofimco, and CryoDiffusion; Net proceeds of $183 million
Slide 14: Agenda
Agenda Q4 and Full Year 2023 Results Supply Chain and Productivity / Capacity 2024 Drivers and Outlook © 2024 Chart Industries, Inc. Confidential and Proprietary 14
Slide 15: Supply Chain Input Costs
Supply Chain Input Costs US – Carbon Steel – Hot Rolled Coil US – Stainless Steel 304 – Hot Rolled Coil LME Aluminum Global Container Freight Index 3Y (USD) Source: LME (Aluminum), MEPS (Carbon and Stainless Steel), Freightos © 2024 Chart Industries, Inc. Confidential and Proprietary 15
Slide 16: Actions to Increase Throughput in 2024
Actions to Increase Throughput in 2024 Capital for Automation and Productivity • New SPV automated long seamer investments (multiple sites) • New machines for screw compressor capacity • New plating machines for screw compressor lead times • New CNC and CNC milling capabilities in South Africa Addit
Slide 17: Agenda
Agenda Q4 and Full Year 2023 Results Supply Chain and Productivity / Capacity 2024 Drivers and Outlook © 2024 Chart Industries, Inc. Confidential and Proprietary 17
Slide 18: Chart Industries 2024 Outlook
Chart Industries 2024 Outlook Guidance Metrics as of February 28, 2024 Guidance Comments • Total sales revenue growth of 28% to 37% vs. pro forma 2023 Revenue $4.7B to $5.0B • FX impact estimated to be 0.5% to 1.0% vs pro forma 2023 • 63% of YE23 backlog is expected to ship in 2024 • Benefits from v
Slide 19: 2024 Sales Framework
2024 Sales Framework $100M ~$5.0B $300M $100M Sales growth driven primarily by $100M backlog conversion: ~$4.7B $625M • Big LNG ($150M to $200M for delivery $200M in 2024) • Teddy 2 new capacity ($50M to $60M for delivery in 2024) • Commercial synergies ($50M to $125M $85M for delivery in 2024) $230
Slide 20: 2024 Adjusted EBITDA Framework
2024 Adjusted EBITDA Framework $125M ~$1.3B $100M ~$1.175B EBITDA growth driven by backlog $160M conversion and cost synergy ($50M) realization: • Remain on track to achieve $250 $60M million of cost synergies in Year 3 $130M • Investing in automation to leverage existing footprint in addition to ad
Slide 21: 2024 Segment Commentary
2024 Segment Commentary 2024 Sales Growth vs. Pro Segment Primary End Markets Forma 2023 Comments • Record backlog Heat Traditional energy • Gaining momentum in International Big LNG with IPSMR® Transfer LNG (4 pillars) ~ 40% to 50% • Strong synergy wins to date, globally Systems Energy recovery • P
Slide 22: Considerations for 2024
2024 Considerations Considerations for 2024 Positives Neutrals Watch Items • Record backlog as of 12/31/2023; above • Industrial gas majors demand expected to be • Geopolitical uncertainty potentially delaying historical backlog coverage ratio for 2024 as stable in 2024, typically low-to-mid-single
Slide 23: Q1 2024 Considerations
Q1 2024 Considerations • The addition of Howden, inclusive of higher aftermarket and service, is anticipated to moderate, though not remove, our normal seasonal patterns from Q4 to Q1 • The timing of sales from incremental new capacity (i.e., Teddy 2) begins in Q2 2024 and will ramp through the year
Slide 24: Financial Targets
Financial Targets 2023 Base Year 3 -Year Target (1) Organic Revenue(2) $3.66B Mid-teens CAGR Adjusted Diluted Earnings per share(3) $6.09 Mid-40%’s CAGR Reported Gross Margin Mid-30%’s FCF Conversion(4) 95% to 100% 1. 3-year targets represent FY23 through FY26. 2. Organic revenue CAGR is based on pr
Slide 25: Thank You OneChart Team
Thank You OneChartTM Team Obtained multiple “first” Improved Total Recordable Exceeded year-one commercial certifications including Korea Incident Rate (TRIR) to 0.53 and cost synergies ahead of plan Gas Safety (KGS) LH2 trailer (0.52 in January 2024) approval Booked orders with 322 new Booked 106 f
Slide 26: Appendix
Appendix © 2024 Chart Industries, Inc. Confidential and Proprietary 26
Slide 27: Full Year 2024 Key Assumptions for Frameworks
Full Year 2024 Key Assumptions for Frameworks Interest Expense and Deferred Financing Fees ~$315 million Tax rate ~20% Depreciation & Amortization ~$270 million Adjusted Depreciation & Amortization(1) ~$110 million Stock compensation expense ~$18 million Non-controlling interest ~$12 million Diluted
Slide 28: Chart's End Market Opportunity Pipeline
Chart’s End Market Opportunity Pipeline End Market Chart Standalone Prior Quarter Current Quarter Trend June 30, 2022 September 30, 2023 December 31, 2023 Big LNG • $5.35 billion • $8.5 billion • $8.5 billion (Feb 2024 = $8.6 billion) • 24 projects • 29 projects • 29 projects (Feb 2024 = 30 projects
Slide 29: Strategic Partnership and Project Highlights
Strategic Partnership and Project Highlights 75 Memoranda of Understandings (MOUs) and partnerships executed in 2022 and 2023 67% Percentage of these partners who have placed orders with us 106 First-of-a-Kinds (FOAKs) in 2023 322 New customers in 2023 © 2024 Chart Industries, Inc. Confidential and
Slide 30: Policy Update
Policy Update Section 45Q Section 45V LNG Moratorium • Tax credit increased to $85/ton for CO2 • Tax credit provides up to $3/kg for low • Temporary pause on pending decisions on capture & sequestration (CCS) carbon intensity hydrogen exports of LNG to non-FTA countries until the DoE can update the
Slide 31: Current Debt Maturity Profile
Current Debt Maturity Profile $ million 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2024 2025 2026 2027 2028 2029 2030 2031 Bonds TLB RCF - Drawn RCF - Unused No significant maturities until 2030 © 2024 Chart Industries, Inc. Confidential and Proprietary 31
Slide 32: Fourth Quarter 2023 Net Income & EBITDA Bridge
Fourth Quarter 2023 Net Income & EBITDA Bridge $ millions, except per share amounts Q4 2023, Q4 2023, Reported Adjustments Adjusted Continuing Operations (GAAP) (Non-GAAP) Sales $1,015.0 - $1,015.0 Cost of sales $680.7 ($8.0) $672.7 Gross profit $334.3 $8.0 $342.3 Selling, general, and administrativ
Slide 33: Q4 2023 Addback Detail
Q4 2023 Addback Detail Q4 2023 gross amount Impact to (+ added to / (-) Operating Main Category Detailed Description reduced income) Income • McPhy MTM Mark-to-Market of No, net income 1 • Stabilis MTM 2.6 inorganic investments only • Minority investments, other (Liberty and HTEC) Howden deal, integ
Slide 34: Fourth Quarter 2023 Adjusted EPS
Fourth Quarter 2023 Adjusted EPS $ millions, except per share amounts Q4 2023 Diluted EPS FY 2023 Diluted EPS Continuing Operations Net income attributable to Chart Industries, Inc. 47.8 47.9 Less: Mandatory convertible preferred stock dividend 6.8 27.3 Income from continuing operations attributable
Slide 35: Fourth Quarter 2023 Adjusted EBITDA
Fourth Quarter 2023 Adjusted EBITDA $ millions, except per share amounts Change vs. Q4 2023 Q4 2022 Change vs. PY Q3 2023 Consolidated PQ Net sales 1,015.0 441.4 573.6 897.9 117.1 Income from continuing operations before equity in earnings of $51.3 $17.4 $33.9 $11.6 $39.7 unconsolidated affiliates,