Chart Industries, Inc. · NYSE:GTLS
Chart Industries — Q1 2024 Earnings Presentation
30 slides from Chart Industries's earnings presentation, May 3, 2024
Slide 1: First Quarter 2024 Earnings Call
First Quarter 2024 Earnings Call May 3, 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: Agenda
Agenda Q1 2024 Results Key Drivers 2024 Outlook Medium Term Outlook © 2024 Chart Industries, Inc. Confidential and Proprietary 4
Slide 5: First Quarter 2024 Key Messages
First Quarter 2024 Key Messages All metrics are on a pro forma combined continuing operations basis (1) Achieved multiple first quarter financial record results • Orders, backlog, sales, reported and adjusted gross margin, reported and adjusted operating margin, reported and adjusted EBITDA and asso
Slide 6: First Quarter 2024 Key Metrics
First Quarter 2024 Key Metrics Indicates record for any first quarter in history $ millions, except per share amounts Continuing Operations Q1 2024 Q1 2023 PF(2) Change 1 Total Orders $1,121.6 $1,075.6 +4.3% 2 Book to Bill (Total) 1.18 1.33 3 Backlog $4.3B $3.9B +10% 4 Total Sales $950.7 Rep
Slide 7: Q1 2024 Balance Sheet & Cash
Q1 2024 Balance Sheet & Cash Will it repeat in any other Ref Cash Item Amounts in Q1 ‘24 ($M) 2024 quarter? A Senior notes interest payment (semi-annual) 79.0 Q3 2024 B Term loan B (TLB)/ Revolving credit facility (RCF) interest payment 41.3 Each quarter, lower C Bonus 34.3 NO D Teddy2 capex cash sp
Slide 8: Second Quarter 2024 Free Cash Flow Drivers
Second Quarter 2024 Free Cash Flow Drivers $ millions Q1 Q2 Forecast Free Cash Flow (Operating cash less capex) (1) ($135.7) ~$175 Key Drivers of Free Cash Flow: Specific Q2 2024 Cash Outflows (non-operating): • Project payments of $125+ million across top 4 • Divestiture-related working capital set
Slide 9: Pro Forma Segment Results
Pro Forma Segment Results Reported Gross $ millions Orders Sales Profit Margin Commentary Q1 24 Q1 23 PF Q1 24 Q1 23 PF Q1 24 Q1 23 PF Cryo Tank $159.3 $166.8 $159.7 $141.1 20.5% 20.6% • Orders impacted by timing of rail car customers Solutions • Sales driven by broad based demand, recovery in Europ
Slide 10: Pro Forma Last Twelve Months (LTM) Metrics
Pro Forma Last Twelve Months (LTM) Metrics Pro forma Reported Orders Pro forma Sales ~$3.7B ~$4.6B ~$4.4B ~$4.5B ~$3.6B ~$3.3B 2022 2023 Q1 24 LTM 2022 2023 Q1 24 LTM PF Reported Gross Profit Margin 31.0% 31.6% PF Adjusted EBITDA Margin 21.0% 22.3% ~$3.7B 16.3% 27.8% ~$3.7B ~$3.6B ~$3.6B ~$3.3B ~$3.
Slide 11: Agenda
Agenda Q1 2024 Results Key Drivers 2024 Outlook Medium Term Outlook © 2024 Chart Industries, Inc. Confidential and Proprietary 11
Slide 12: Broad Macro Tailwinds Positively Impacting Chart Industries
Broad Macro Tailwinds Positively Impacting Chart Industries Macro Drivers REF (Not All Inclusive) Specific Tailwinds How Chart Plays A Global Energy Transition • Energy security, energy access, and • Equipment and process technology for the and Access energy/grid stability production, distribution &
Slide 13: Hydrogen for Heavy Duty Transport
Hydrogen for Heavy Duty Transport Energy Observer 2 by EO Concept Chart is Helping to Broaden the Use of Hydrogen for Mobility Application • Liquid Hydrogen (LH2) • Increased Marine/Maritime capabilities with Teddy2 facility • Full solution offering across the value chain from infrastructure to onbo
Slide 14: Chart's Water Treatment Offering
Chart’s Water Treatment Offering Regulatory Update • In April, the Environmental Protection Agency (EPA) issued its first-ever, national, legally enforceable drinking water standard for PFAS ChartWater • ChartWater has deployed over 1,000 systems treating a variety of contaminants in drinking water,
Slide 15: Sustainable Aftermarket Model
Sustainable Aftermarket Model Aftermarket and service revenue opportunity is a multiple of OE revenue Readiness to >50 service Serve centers New Equipment and project revenue feeds… >6,000 new build Installed Base Mgt adds to installed Deep Domain & Campaigning base per year Expertise Driving >2,000
Slide 16: 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 16
Slide 17: Agenda
Agenda Q1 2024 Results Key Drivers 2024 Outlook Medium Term Outlook © 2024 Chart Industries, Inc. Confidential and Proprietary 17
Slide 18: Chart Industries 2024 Outlook
Chart Industries 2024 Outlook Guidance Metrics as of May 3, 2024 Guidance Comments • Total sales revenue growth of 32% to 40% vs. pro forma 2023 Revenue $4.7B to $5.0B • FX impact estimated to be approximately flat vs pro forma 2023 • 63% of YE23 backlog is expected to ship in 2024 • Benefits from v
Slide 19: 2024 Considerations
2024 Considerations Positives Neutrals Watch Items • Record backlog as of 3/31/2024; above • Industrial gas majors demand expected to be • Geopolitical uncertainty potentially delaying historical forward backlog coverage ratio for stable in 2024, typically low-to-mid-single or accelerating announcem
Slide 20: Agenda
Agenda Q1 2024 Results Key Drivers 2024 Outlook Medium Term Outlook © 2024 Chart Industries, Inc. Confidential and Proprietary 20
Slide 21: Return on Invested Capital
Return on Invested Capital Mid- • Step up in Chart’s Return on Invested Capital (ROIC) Driven by: Teens Low- • Shift to lower capital Aftermarket business Teens • Capital expenditures representing 2.0-2.5% of revenue • Higher mix of full solution revenue 7.6% • Continued focus on ROIC as it is a com
Slide 22: Medium-Term Financial Growth Formula
Medium-Term Financial Growth Formula Secular Growth Organic Operating Profit Deleveraging Adjusted EPS Trends Sales Margin Growth Growth Expansion 2.0-2.5X Net Energy Security Mid-Teens 30-35% Leverage Target Mid-40% CAGR1 CAGR1 Leverage2 Full Solution Full Solution and Energy Access Offering Afterm
Slide 23: Appendix
Appendix © 2024 Chart Industries, Inc. Confidential and Proprietary 23
Slide 24: 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 (“D&A”) ~$270 million Adjusted Depreciation & Amortization(1) ~$110 million Stock compensation expense ~$18 million Non-controlling interest ~$12 million
Slide 25: Chart's End Market Opportunity Pipeline
Chart’s End Market Opportunity Pipeline End Market Chart Standalone Combined Chart Current Quarter Trend June 30, 2022 December 31, 2023 March 31, 2024 Big LNG • $5.35 billion • $8.5 billion (Feb 2024 = $8.6 billion) • $8.76 billion (increase driven by project • 24 projects • 29 projects (Feb 2024 =
Slide 26: First Quarter 2024 Net Income & EBITDA Bridge
First Quarter 2024 Net Income & EBITDA Bridge $ millions, except per share amounts Q1 2024, Q1 2024, Reported Adjustments Adjusted Continuing Operations (GAAP) (Non-GAAP) Sales $950.7 - $950.7 Cost of sales $648.4 ($8.3) $640.1 Gross profit $302.3 $8.3 $310.6 Selling, general, and administrative exp
Slide 27: Q1 2024 Addback Detail
Q1 2024 Addback Detail Q1 2024 gross amount Impact to (+ added to / (-) Operating Main Category Detailed Description reduced income) Income Mark-to-Market of • McPhy MTM inorganic investments • Stabilis MTM No, net 1 4.3 & Strategic Equity • Minority investments, other (Cryomotive, income only Metho
Slide 28: First Quarter 2024 Adjusted EPS
First Quarter 2024 Adjusted EPS $ millions, except per share amounts Q1 2024 Diluted EPS Continuing Operations Net income attributable to Chart Industries, Inc. $13.5 Less: Mandatory convertible preferred stock dividend 6.8 Income from continuing operations attributable to Chart $6.7 Reported EPS $0
Slide 29: First Quarter 2024 Adjusted EBITDA
First Quarter 2024 Adjusted EBITDA $ millions Q1 2024 Consolidated Net sales 950.7 Net income from continuing operations $16.8 Income tax expense, net 8.8 Interest expense, net 83.8 Depreciation and amortization 65.9 EBITDA (1) $175.3 Non-recurring costs 26.6 Employee share-based compensation 6.0 Un
Slide 30: Net Leverage Ratio
Net Leverage Ratio Debt Covenant: Net Debt / LTM Bank EBITDA(1) 6.0X 6.0X 6.0X 6.0X 6.0X 4.08X 3.86X 3.59X 3.35X 3.43X Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Net Leverage (bank EBITDA) Net Leverage (covenant ceiling) 1. EBITDA is a non-GAAP measure and should not be consulted as an alternative to net income