Chart Industries, Inc. · NYSE:GTLS
Chart Industries — Q3 2022 Earnings Presentation
47 slides from Chart Industries's earnings presentation, Oct 28, 2022
Slide 1: Third Quarter 2022 Earnings Call
N Y S E : G T L S 1 Jill Evanko CEO Presented by Joe Brinkman CFO Third Quarter 2022 Earnings Call Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Statements © 2022 Chart Industries, Inc. Confidential and Proprietary 2 CERTAIN STATEMENTS MADE IN THIS PRESENTATION ARE FORW ARD -LOOKING STATEMENTS W ITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGAT ION REFORM ACT OF 1995. FORW ARD-LOOKING STATEMENTS INCLUDE STATEMEN TS CONCERNI
Slide 3: Macro Tailwinds Increasing Specialty 2030 TAM and LNG Opportunities
Macro Tailwinds Increasing Specialty 2030 TAM and LNG Opportunities 3
Slide 4: Full Solutions Platforms Across the Nexus of Clean
© 2022 Chart Industries, Inc. Confidential and Proprietary 4 Full Solutions Platforms Across the Nexus of Clean Clean End Market Solution GTLS Process Technologies (Owned in Full) GTLS Process Technologies Through Minority Ownership GTLS Equipment Clean Power • Hydrogen • Helium • LNG • Biogas • BAH
Slide 5: Key Macro Tailwinds
© 2022 Chart Industries, Inc. Confidential and Proprietary 5 Key Macro Tailwinds Energy Security = LNG CO2 Shortages Sustainability & the Inflation Reduction Act • LNG demand continues to grow: near-term and through 2035 • 130+ MTPA of LNG will come online this decade; expect more than these project
Slide 6: Hydrogen Investments This Decade are Increasing
© 2022 Chart Industries, Inc. Confidential and Proprietary 6 Hydrogen Investments This Decade are Increasing Mid-2021 Mid-2022 (One Year Later) Hydrogen Projects under development globally through 2030 Direct investment through 2030 announced Increase in announced clean hydrogen production capacity
Slide 7: Pipeline of customers & potential customers
Pipeline of 363 customers & potential customers • +21% vs. Q2 2022; +142% vs. 12/31/2021 YTD 9/30/2022 • Pre-IRA leads = 17.5/month avg • Post-IRA leads = 32.4/month avg Earthly Labs ss-CCUS • 60 days prior to IRA – new commercial opportunities of $5.56M • 75 days post IRA – new commercial opportuni
Slide 8: Specialty Products Total Addressable Market Increase
© 2022 Chart Industries, Inc. Confidential and Proprietary 8 Specialty Products Total Addressable Market Increase Prior TAM TAM as of 10/28/2022 Market End-use of Products Near-term TAM(1) 2030 TAM Near-term TAM(1) 2030 TAM Drivers of Expanded Opportunity Hydrogen & Helium • H2/He Liquefaction • Tra
Slide 9: Tailwinds Reflected in Our Q3 & YTD 2022 Order Book
© 2022 Chart Industries, Inc. Confidential and Proprietary 9 Tailwinds Reflected in Our Q3 & YTD 2022 Order Book # Orders Q1 2022 Q2 2022 Q3 2022 YTD 2022 1 Venture Global (BKR) Plaquemines Phase 1 FNTP $135.5 $135.5 2 Venture Global (BKR) Plaquemines Phase 2 FNTP 45.4 $91.8 137.2 3 Cheniere (Bechte
Slide 10: Average Orders Per Quarter, ex Big LNG (2016-YTD 2022)
© 2022 Chart Industries, Inc. Confidential and Proprietary 10 Average Orders Per Quarter, ex Big LNG (2016-YTD 2022) $177.0 $215.0 $265.0 $296.0 $302.2 $419.0 $544.4 2016 2017 2018 2019 2020 2021 2022 Big LNG Orders, not shown on column graph Year $ millions 2018 $2.9 2019 133.9 2020 1.1 2021 2.9 20
Slide 11: Q3 2022 Results
Q3 2022 Results 11
Slide 12: Q3 2022: Historical GTLS Records
Q3 2022: Historical GTLS Records © 2022 Chart Industries, Inc. Confidential and Proprietary 12 Q3 2022 notable items: • Record backlog of $2.254 billion • Record sales of $412.1 million • Record reported gross margin of $104.6 million • Record reported operating income of $41.7 million • Reported op
Slide 13: Third Quarter 2022 Summary
Third Quarter 2022 Summary Second highest order quarter in our history (after Q2 2022 was a record order quarter) including hydrogen liquefaction project, three separate customer commitments for ss/FLNG work, and FNTP on Venture Global’s Plaquemines 2 ($91.8M in the qtr) resulting in record backlog
Slide 14: Sales & Gross Margin Trends
© 2022 Chart Industries, Inc. Confidential and Proprietary 14 Sales & Gross Margin Trends There are ongoing inflationary and supply chain challenges that continue to impact our business which we do not include in our adjusted operating margin. We estimate these totaled $3.5 million in Q3 2022; if ad
Slide 15: Sales & Operating Margin Trends
© 2022 Chart Industries, Inc. Confidential and Proprietary 15 Sales & Operating Margin Trends (1) Adjusted Operating Margin % is a non-GAAP measure. Please see reconciliation table at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measure. There are ongoing in
Slide 16: Third Quarter and YTD 2022 Earnings Per Share
© 2022 Chart Industries, Inc. Confidential and Proprietary 16 Third Quarter and YTD 2022 Earnings Per Share (1) Tax effect reflects adjustment at normalized periodic rates (2) Adjusted Basic EPS and Normalized Basic EPS (both non-GAAP measures) are as reported on a historical basis. EPS adjustment r
Slide 17: Q3 2021 to Q3 2022 EPS and Adjusted EPS Walk
Q3 2021 to Q3 2022 EPS and Adjusted EPS Walk © 2022 Chart Industries, Inc. Confidential and Proprietary 17 Reported non-diluted EPS Bridge Q3 2021 to Q3 2022 Adjusted non-diluted EPS Bridge Q3 2021 to Q3 2022
Slide 18: Chart's Differentiation
Chart’s Differentiation 18
Slide 19: Industry Input Costs
19 Industry Input Costs © 2022 Chart Industries, Inc. Confidential and Proprietary
Slide 20: Continued Actions Taken by Chart Team in Q3 2022
© 2022 Chart Industries, Inc. Confidential and Proprietary 20 Continued Actions Taken by Chart Team in Q3 2022 Pricing Cost Control Partnerships with Focus Building on Specific Differentiators • Specific long-term agreement index price adjustments occurred • Surcharges remain in place • Continued wi
Slide 21: Q3 2022 Differentiation in Action
Q3 2022 Differentiation in Action © 2022 Chart Industries, Inc. Confidential and Proprietary 21 MOUs/Partnerships = 8 Certifications FOAK / New Customer Examples Category Ptnr MSA CCUS / CO2 4 1 Hydrogen 2 LNG 1 1 Liquefaction 1 • Australian approval CarboMax 100HP • Korean (KGS) approval ES-534 for
Slide 22: Organic Automation & Productivity Activities
Organic Automation & Productivity Activities 22 Ornago, Italy Automated Perliting System Tulsa, Oklahoma (USA) VIP Bellows Machine Richburg, SC (RSL) East Liquid Cylinder Repair Line Beasley, Texas Order to Mfg Paper Free New Iberia, LA (USA) Remote Laser Guided Welding Changzhou, China Welding Mach
Slide 23: Brazed Aluminum Heat Exchanger Line Tulsa, Oklahoma USA
Brazed Aluminum Heat Exchanger Line Tulsa, Oklahoma USA • Fin presses, saws, machining equipment are operational • Fin, bar washers, sheet handling system, drying oven installed • Furnace delivered and in place • Planned start of validation core November 2022 • Will utilize post braze production in
Slide 24: Supersize and Jumbo Tank Expansion – Alabama (USA)
Supersize and Jumbo Tank Expansion – Alabama (USA) 24 Mobile Bay Existing Chart Facility Interactive Map – Mobile County Revenue Commission (mobilecopropertytax.com) R A N G E L IN E R D -1 9 3 New Site Canal Access to Mobile Bay QUICK FACTS • 51 Acre Site • (5) Buildings • Barge Slip • Rail Spur
Slide 25: GOFA Trailer Facility Expansion Goch, Germany
GOFA Trailer Facility Expansion Goch, Germany • Groundwork started Q3/2022 • Production start at beginning of Q4 2023 • ESG point: Heat pump with low energy consumption & highly insulated building • ESG point: Planting numerous trees to lower our CO2 emissions
Slide 26: Q3 2022 Segment Information
Q3 2022 Segment Information 26
Slide 27: Heat Transfer Systems
Heat Transfer Systems © 2022 Chart Industries, Inc. Confidential and Proprietary 27 Q3 2022: • Record backlog, operating income and operating margin for the segment • Record sales in BAHX, systems and VRV • 27 individual orders each over $1 million • Big LNG: booked $91.8 million Venture Global Plaq
Slide 28: Increasing LNG Opportunities for GTLS – The Numbers
© 2022 Chart Industries, Inc. Confidential and Proprietary 28 Increasing LNG Opportunities for GTLS – The Numbers Pre Feb 24, 2022 GTLS April 29, 2022 GTLS July 29, 2022 GTLS October 28, 2022 GTLS BigLNG (greater than 5 MTPA) 1 • Number of reasonably possible projects to move to order stage in next
Slide 29: Market Move to Modular and/or Mid-Scale Liquefaction & Our IPSMR Process Technology
© 2022 Chart Industries, Inc. Confidential and Proprietary 29 Market Move to Modular and/or Mid-Scale Liquefaction & Our IPSMR® Process Technology • Benefits of IPSMR® include: • Saves power cost or increases LNG production for a given gas turbine power available • Uses BAHX which are compact with s
Slide 30: Specialty Products
Specialty Products 30 Q3 2022: • Sequential decline in orders driven by one hydrogen liquefaction order in Q3 vs. multiple liquefiers in Q2 2022 • Sales sequential decline driven by HLNG vehicle tank continued softness ($4M sales decline sequentially) and timing of specific project revenue recogniti
Slide 31: Cryo Tank Solutions
Cryo Tank Solutions 31 Q3 2022: • Sequential sales decline from Q2 2022 driven by the pull-in of shipping lower margin backlog to Q2 2022, EMEA holiday summer period as well as foreign exchange impacts (USD/Euro and USD/INR) • $21 million in traditional railcar orders from 2 customers • Record 226 I
Slide 32: Repair, Service & Leasing
© 2022 Chart Industries, Inc. Confidential and Proprietary 32 Repair, Service & Leasing Q3 2022: • Record orders, gross profit, operating income • L.A.Turbine record aftermarket sales • Sales sequential decline was driven by timing of international field service work in Q3 that moved to Q4 2022 due
Slide 33: 2022 Outlook and Preliminary 2023 Outlook
2022 Outlook and Preliminary 2023 Outlook 33
Slide 34: Full Year 2022 Outlook
© 2022 Chart Industries, Inc. Confidential and Proprietary 34 Full Year 2022 Outlook Revenue $1.65 billion to $1.70 billion due to currency headwinds and revenue timing on specific Specialty Products projects Non-Diluted Adj. EPS $5.00 to $5.25 Assumes 17% ETR 35.87M shares outstanding Capital Expen
Slide 35: Full Year 2023 Preliminary Outlook
© 2022 Chart Industries, Inc. Confidential and Proprietary 35 Full Year 2023 Preliminary Outlook Revenue $2.10 to $2.20 billion Non-Diluted Adj. EPS $7.50 to $8.50 Assumes 19% ETR and 35.87M shares outstanding Capital Expenditures Approximately $60 to $65 million Adjusted Free Cash Flow Approximatel
Slide 36: Giving Back and Making a Difference
Giving Back and Making a Difference 36
Slide 37: Women's Business Collaborative Company of Purpose
© 2022 Chart Industries, Inc. Confidential and Proprietary 37 Women’s Business Collaborative Company of Purpose
Slide 38: Finalists in the 2022 S&P Global Energy Awards
© 2022 Chart Industries, Inc. Confidential and Proprietary 38 Finalists in the 2022 S&P Global Energy Awards Energy Transition - LNG • Recognizes a company for operational excellence, exemplary corporate innovation, leadership, and company performance in liquefied natural gas (LNG) Deal of the Year
Slide 39: Thank You to Our Welding Council Team Members!
© 2022 Chart Industries, Inc. Confidential and Proprietary 39 Thank You to Our Welding Council Team Members! Greg Larson Weld Engineering Leader La Crosse, WI Jane Wu Welding Engineer Changzhou, CN Travis Lerohl Non-Destructive Test Manager/Trainer New Prague, MN Xiaolong Li Welding Engineer Changzh
Slide 40: Appendix
Appendix 40
Slide 41: Near-Term and 2030 Specialty Products TAM Build
Near-Term and 2030 Specialty Products TAM Build © 2022 Chart Industries, Inc. Confidential and Proprietary 41 Category Changes to Near-Term TAM Changes to 2030 TAM 1 Hydrogen & Helium • Run rate of order activity demonstrating additional, sooner project movement • Global acceptance of liquid hydroge
Slide 42: Third Quarter 2022 Adjustments
© 2022 Chart Industries, Inc. Confidential and Proprietary 42 Third Quarter 2022 Adjustments (1) “Adjustments” and “Q2 2022, Adjusted” 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 belie
Slide 43: Addback Specifics by Category (Q2 2022/Q3 2022)
Addback Specifics by Category (Q2 2022/Q3 2022) 2020 Chart Industries Investor Day 43 Category Q2 2022 Addback Items Net of Tax Q2 2022 $M Q2 2022 Addback Items Net of Tax Q3 2022 $M 1 Restructuring and Severance • Severance / restructuring costs • Completion of Tulsa ACHX consolidation to Texas • C
Slide 44: Segment Sales and Operating Margin Information
© 2022 Chart Industries, Inc. Confidential and Proprietary 44 Segment Sales and Operating Margin Information (1) Adjusted Operating Margin % is a non-GAAP measure. Please see reconciliation table at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measure. Sales
Slide 45: Segment Sales and Gross Margin Information
Segment Sales and Gross Margin Information 45 (1) Adjusted Gross Margin % is a non-GAAP measure. Please see reconciliation table at the end of the accompanying earnings release for a reconciliation to the relevant GAAP measure. Sales ($M, except %) Q3 ‘22 Q2 ‘22 % Chg PQ Q3 ‘21 % Chg PY Specialty Pr
Slide 46: Third Quarter 2022 Free Cash Flow
46 Third Quarter 2022 Free Cash Flow (1) “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. Reconciliation to Net Income (U.S. GAAP) is provided in accompanying press release fina
Slide 47: Third Quarter 2022 Adjusted EBITDA
© 2022 Chart Industries, Inc. Confidential and Proprietary 47 Third Quarter 2022 Adjusted EBITDA (1) “EBITDA” and “Adjusted EBITDA” are not measures of financial performance under U.S. GAAP and should not be considered as an a lternative to net income in accordance with U.S. GAAP. Management believe