EXHIBIT 99.1
| [CHART LOGO] | NEWS RELEASE | |||
| Chart Industries, Inc. | Contact: | Don A. Baines | ||
| 5885 Landerbrook Drive | Chief Financial Officer | |||
| Cleveland, OH 44124 | Chart Industries, Inc. | |||
| Phone: 440.753.1490 | 440.753.0005 | |||
| www.chart-ind.com | ||||
| CHT-1180-P |
CHART INDUSTRIES REPORTS FIRST-QUARTER EARNINGS
OF $.02 PER SHARE
CLEVELAND, OH - April 30, 2001 - Chart Industries, Inc. (NYSE:CTI) today reported financial results for its first quarter ended March 31, 2001. Chart reported first-quarter sales of $89.0 million and net income of $0.02 per share.
Sales for the first quarter of 2001 increased 29.0 percent to $89.0 million from $69.0 million for the corresponding quarter in 2000. Net income was $405,000, or $0.02 per diluted share, for the first quarter of 2001 compared with a net loss of $385,000, or $0.02 per diluted share, for the first quarter of 2000.
Commenting on Chart's first-quarter results, Arthur S. Holmes, Chairman and Chief Executive Officer, said, "Our first-quarter operating results were somewhat stronger than expected due to a favorable sales mix. Although originally anticipated to be soft, our 2001 first-quarter sales were close to our strong fourth quarter of 2000.
"Each of our three business segments produced sales growth over the same quarter of last year, resulting in a 29 percent increase. Our operating income of $8.2 million was down slightly from the fourth quarter of 2000, as expected, but 61 percent better than the same quarter of 2000. Net income for the first quarter was impacted by a non-cash interest charge of $822,000 and a net of tax cumulative effect charge of $88,000 related to the application and adoption of the new accounting rules for derivative financial instruments. This non-cash charge reduced net income per diluted share by $0.02.
"Our biggest businesses saw flat to softer order intake this quarter. The Distribution & Storage (D&S) segment order flow continued to be stable with new orders at the same level as last quarter and consistent with current sales levels. In the Applied Technologies (AT) segment, we have experienced a slow down of orders for certain product lines. The depressed market conditions for
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Chart Industries 1st Quarter Earnings 2001
the Process Systems and Equipment (PS&E) business have continued. In addition to the delayed recovery of the industrial gas market, the relatively active hydrocarbon processing market has not generated firm orders. These projects appear to be very viable but continue to delay order award dates. We have taken steps to reduce manpower levels and other costs for the slower product lines, particularly in the PS&E segment. Further reductions and consolidations are being studied for implementation if the recovery continues to delay.
"Based upon our understanding of current economic conditions, we anticipate 2001 to have revenue growth compared with 2000, but lower gross margins due to the anticipated sales mix and lower pricing in the PS&E segment. The current trend of lower interest rates will be beneficial to Chart going forward. We also plan to use internal cash flows generated to invest in our leading growth businesses and hope to obtain outside financing to accelerate their introduction to the market. Overall, our profitability is expected to improve compared with 2000.
"In summary, our challenge is to continue to improve operating performance under soft economic conditions and reduce debt. We are taking decisive actions to reduce costs, sell under-performing assets and promote growth initiatives."
Financial highlights are as follows (all figures are in thousands of dollars except per-share amounts, which are based on average shares outstanding on a diluted basis):
Three months ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2001 | 2000 | % Increase | ||||
Sales | $89,032 | $68,992 | 29.0% | |||
Gross profit | 27,069 | 19,760 | 37.0% | |||
Net income (loss) | 405 | (385) | N/M | |||
Net income (loss) per share - assuming dilution | 0.02 | (0.02) | N/M | |||
N/M = Not meaningful
CONSOLIDATED FIRST-QUARTER 2001 FINANCIAL RESULTS
Sales for the first quarter of 2001 were $89.0 million versus $69.0 million for the first quarter of 2000, an increase of $20.0 million, or 29.0 percent. The improvement in sales compared to the first quarter of 2000 is largely driven by projects in the PS&E segment. Sales for the current quarter included heat exchangers and cold boxes for the Trinidad project, acoustic liquefaction equipment and several smaller hydrocarbon projects. Also contributing to the higher sales was the AT segment, which had increased sales in the LNG alternative vehicle fuel equipment, medical oxygen and biological storage markets compared with the first quarter of 2000. Gross profit for the first quarter of 2001 was $27.1 million versus $19.8 million for the first quarter of 2000, an increase of $7.3 million, or 37.0 percent. Gross profit margin for the first quarter of 2001 was 30.4 percent versus 28.6 percent for the first quarter of 2000. The increases in gross profit and gross profit margin occurred largely in the PS&E segment, where the gross margin increased from 9.2 percent in the first quarter of 2000 to 28.1 percent in the first quarter of 2001, and gross profit increased by $5.3 million. These increases were the result of better volume in hydrocarbon equipment, particularly the Bechtel jobs for the Trinidad LNG Expansion project.
Selling, general and administrative (SG&A) expense for the first quarter of 2001 was $17.6 million, versus $13.5 million for the first quarter of 2000. This increase reflected higher employee benefit costs for medical coverage and workers' compensation. SG&A expense as a percentage of sales increased to 19.8 percent for the first quarter of 2001 versus 19.5 percent for the first quarter of 2000.
The Company recorded $1.2 million of goodwill amortization in the first quarter of 2001 and 2000.
The Company entered into two interest-rate collars covering a total of 50 percent of the Company's term debt shortly after entering into its Credit Facility in 1999. The collars are intended to mitigate the risk of increasing interest rates by providing a cap on the base rate paid while also giving the counterparties to the transaction a floor on the interest rate received. Under newly adopted accounting rules for derivative financial instruments, the Company recognized a charge to earnings in the first quarter of 2001 for the change in fair value of the interest rate collars despite making no actual payments under the floor provisions. The fair value of the interest rate collars is determined by the expectation of future interest rates and is, therefore, difficult to predict. The liability relating to the collars of $1.0 million recorded by the Company at March 31, 2001 represents the market's estimate of payments above actual rates to be made over the life of the collars.
Net interest expense for the first quarter of 2001, excluding the charge related to the interest rate collars, was $6.3 million compared with $6.2 million for the first quarter of 2000, reflecting higher average borrowings during the period. As of March 31, 2001, the Company had borrowings of $264.8 million under its Credit Facility and was icompliance with all related covenants.
Cash used in operations for the first quarter of 2001 was $5.6 million compared with cash provided by operations of $8.0 million in the first quarter of 2000. The Company's 2001 first-quarter operating cash flow primarily reflects increasing inventory levels, as shipments slowed in certain product lines, as well as reductions in accrued expenses, including customer rebates and employee incentives.
Capital expenditures for the first quarter of 2001 were $2.0 million compared with $1.2 million in the first quarter of 2000. The Company believes that $1.4 million to $2.0 million per quarter is the normal maintenance level for capital expenditures.
The Company forecasts sufficient cash flow from operations and available borrowings to fund principal and interest payments, working capital requirements and capital expenditures for the current fiscal year. The Credit Agreement amendment, which provided relief on financial covenants, and the additional liquidity facility agreed upon during the fourth quarter of 2000 expire at the end of 2001. The Company is currently evaluating its options related to the Credit Facility.
ORDERS AND BACKLOG
Chart's consolidated orders for the first quarter of 2001 totaled $73.0 million, compared with orders of $84.9 million for the fourth quarter of 2000. Chart's consolidated firm order backlog at March 31, 2001, was $89.9 million, compared with $108.1 million at December 31, 2000.
AT orders for the first quarter of 2001 totaled $29.8 million, compared with $43.7 million for the fourth quarter of 2000. The fourth-quarter orders for MRI cryostats were bundled together to cover several quarters of shipments, and were therefore much larger than normal. The MRI cryostats line has seen a slow down in requested shipments. The segment has also experienced a slow down in orders for cryogenic components, especially vacuum-insulated pipe.
D&S orders for the first quarter of 2001 totaled $32.9 million, compared with $32.6 million for the fourth quarter of 2000. Orders have been lower in D&S over the last two quarters, reflecting some economic softness and tighter budgeting by our customers.
PS&E orders for the first quarter of 2001 totaled $10.3 million, compared with $8.5 million in the fourth quarter of 2000. Orders in this segment are lower after two strong quarters in early 2000, which included large awards for the Trinidad LNG Expansion project. The Company has experienced continued weak order flow in this segment in both the industrial gas and hydrocarbon processing markets notwithstanding stronger quote activity in natural gas and petrochemical processing.
GENERAL
This release contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to, unanticipated slowdowns in the Company's major markets, the impact of competition, the effectiveness of operational changes
expected to increase efficiency and productivity, the ability of the Company to satisfy covenants under its Credit Facility, the ability of the Company to obtain outside financing for business development initiatives, the extent of product liability claims asserted against the Company, and worldwide economic and political conditions and foreign currency fluctuations that may affect worldwide results of operations.
Chart Industries, Inc. manufactures standard and custom-built industrial process equipment primarily for low-temperature and cryogenic applications. Headquartered in Cleveland, Ohio, Chart has domestic operations located in 14 states and international operations located in Australia, China, Czech Republic, England, Germany and Singapore.
For more information on Chart Industries, Inc., visit the Company's home page web site atwww.chart-ind.com.
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Chart Industries 1st Quarter Earnings 2001CHART INDUSTRIES, INC.
QUARTERLY SEGMENT INFORMATION (UNAUDITED)
LAST FIVE-QUARTER TREND
2000 | 2000 Second Quarter | 2000 Third Quarter | 2000 Fourth Quarter | 2001 First Quarter | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sales | (Dollars in thousands) | ||||||||||||||||
| Applied Technologies | $ | 29,518 | $ | 33,855 | $ | 35,409 | $ | 38,170 | $ | 34,124 | |||||||
| Distribution & Storage Equipment | 32,208 | 35,792 | 36,166 | 33,763 | 33,579 | ||||||||||||
| Process Systems & Equipment | 7,266 | 9,277 | 16,437 | 17,839 | 21,329 | ||||||||||||
| Total | $ | 68,992 | $ | 78,924 | $ | 88,012 | $ | 89,772 | $ | 89,032 | |||||||
Gross Profit | |||||||||||||||||
| Applied Technologies | $ | 11,999 | $ | 13,454 | $ | 14,391 | $ | 14,606 | $ | 13,479 | |||||||
| Distribution & Storage Equipment | 7,090 | 8,088 | 7,890 | 6,243 | 7,603 | ||||||||||||
| Process Systems & Equipment | 671 | 2,111 | 4,670 | 4,816 | 5,987 | ||||||||||||
| Total | $ | 19,760 | $ | 23,653 | $ | 26,951 | $ | 25,665 | $ | 27,069 | |||||||
| Gross Profit Margin | |||||||||||||||||
Applied Technologies | 40.6 | % | 39.7 | % | 40.6 | % | 38.3 | % | 39.5 | % | |||||||
Distribution & Storage Equipment | 22.0 | % | 22.6 | % | 21.8 | % | 18.5 | % | 22.6 | % | |||||||
Process Systems & Equipment | 9.2 | % | 22.8 | % | 28.4 | % | 27.0 | % | 28.1 | % | |||||||
| Total | 28.6 | % | 30.0 | % | 30.6 | % | 28.6 | % | 30.4 | % | |||||||
| Orders | |||||||||||||||||
| Applied Technologies | $ | 31,907 | $ | 35,620 | $ | 37,010 | $ | 43,722 | $ | 29,822 | |||||||
| Distribution & Storage Equipment | 41,279 | 35,070 | 45,769 | 32,638 | 32,881 | ||||||||||||
| Process Systems & Equipment | 7,270 | 30,472 | 31,889 | 8,518 | 10,297 | ||||||||||||
| Total | $ | 80,456 | $ | 101,162 | $ | 114,668 | $ | 84,878 | $ | 73,000 | |||||||
| Backlog | |||||||||||||||||
| Applied Technologies | $ | 27,366 | $ | 28,767 | $ | 29,939 | $ | 35,205 | $ | 29,155 | |||||||
| Distribution & Storage Equipment | 34,020 | 32,057 | 40,337 | 39,227 | 38,066 | ||||||||||||
| Process Systems & Equipment | 7,403 | 27,744 | 43,163 | 33,686 | 22,653 | ||||||||||||
| Total | $ | 68,789 | $ | 88,568 | $ | 113,439 | $ | 108,118 | $ | 89,874 | |||||||
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Chart Industries 1st Quarter Earnings 2001CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars and shares in thousands, except per share amounts)
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2001 | 2000 | |||||
| Sales | $ | 89,032 | $ | 68,992 | ||
| Cost of sales | 61,963 | 49,232 | ||||
| Gross profit | 27,069 | 19,760 | ||||
| Selling, general and administrative expense | 17,624 | 13,466 | ||||
| Goodwill amortization expense | 1,232 | 1,207 | ||||
| 18,856 | 14,673 | |||||
| Operating income | 8,213 | 5,087 | ||||
| Other income (expense): | ||||||
| Gain on sale of assets | 366 | |||||
| Interest expense - net | (7,125 | ) | (6,237 | ) | ||
| (7,125 | ) | (5,871 | ) | |||
| Income (loss) before income taxes, minority interest and | ||||||
| cumulative effect of change in accounting principle | 1,088 | (784 | ) | |||
| Income tax expense (benefit) | 574 | (421 | ) | |||
| Income (loss) before minority interest and cumulative | ||||||
| effect of change in accounting principle | 514 | (363 | ) | |||
| Minority interest, net of taxes | 21 | 22 | ||||
| Income (loss) before cumulative effect of change | ||||||
| in accounting principle | 493 | (385 | ) | |||
| Cumulative effect of change in accounting principle, net of taxes | 88 | |||||
| Net income (loss) | $ | 405 | ($385 | ) | ||
| Net income (loss) per common share: | ||||||
| Income (loss) before cumulative effect of change in accounting principle | $ | 0.02 | ($0.02 | ) | ||
| Cumulative effect of change in accounting principle | 0.00 | 0.00 | ||||
| Net income (loss) per common share | $ | 0.02 | ($0.02 | ) | ||
| Net income (loss) per common share - assuming dilution: | ||||||
| Income (loss) before cumulative effect of change in accounting principle | $ | 0.02 | ($0.02 | ) | ||
| Cumulative effect of change in accounting principle | 0.00 | 0.00 | ||||
| Net income (loss) per common share - assuming dilution | $ | 0.02 | ($0.02 | ) | ||
| Shares used in per share calculations | 24,382 | 23,899 | ||||
| Shares used in per share calculations - assuming dilution | 24,612 | 23,899 | ||||
CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
| March 31, 2001 | December 31, 2000 | ||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current Assets | |||||
| Cash and cash equivalents | $ | 3,268 | $ | 4,921 | |
| Accounts receivable, net | 54,372 | 53,917 | |||
| Inventories, net | 71,432 | 66,987 | |||
| Other current assets | 29,711 | 31,006 | |||
| Total Current Assets | 158,783 | 156,831 | |||
| Property, plant and equipment, net | 62,321 | 63,382 | |||
| Goodwill, net | 171,211 | 173,128 | |||
| Other assets, net | 27,139 | 28,148 | |||
| TOTAL ASSETS | $ | 419,454 | $ | 421,489 | |
| LIABILITIES & SHAREHOLDERS' EQUITY | |||||
| Current Liabilities | |||||
| Accounts payable | $ | 37,130 | $ | 36,265 | |
| Customer advances | 478 | 1,790 | |||
| Billings in excess of contract revenue | 2,979 | 2,630 | |||
| Accrued expenses and other liabilities | 39,597 | 44,770 | |||
| Current portion of long-term debt | 28,446 | 25,484 | |||
| Total Current Liabilities | 108,630 | 110,939 | |||
| Long-term debt | 246,868 | 244,386 | |||
| Other long-term liabilities | 11,073 | 11,320 | |||
| Shareholders' Equity | 52,883 | 54,844 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 419,454 | $ | 421,489 | |
The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
Chart Industries 1st Quarter Earnings 2001CHART INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2001 | 2000 | |||||
| OPERATING ACTIVITIES | ||||||
| Net income (loss) | $ | 405 | ($385 | ) | ||
| Adjustments to reconcile net income (loss) to net cash | ||||||
| (used in) provided by operating activities: | ||||||
| Cumulative effect of change in accounting principle | 88 | |||||
| Gain on sale of assets | (366 | ) | ||||
| Depreciation and amortization | 4,871 | 4,842 | ||||
| Income from joint venture | (219 | ) | ||||
| Foreign currency transaction gain | (159 | ) | (149 | ) | ||
| Minority interest | 21 | 52 | ||||
| Deferred income taxes | 388 | |||||
| Contribution of stock to employee benefit plans | 684 | 681 | ||||
| Increase (decrease) in cash resulting from changes in operating | ||||||
| assets and liabilities: | ||||||
| Accounts receivable | (1,699 | ) | 10,041 | |||
| Inventory and other current assets | (4,645 | ) | (9,018 | ) | ||
| Accounts payable and other current liabilities | (3,995 | ) | 1,067 | |||
| Billings in excess of contract revenue and | ||||||
| customer advances | (918 | ) | 864 | |||
| Net Cash (Used In) Provided By Operating Activities | (5,566 | ) | 8,017 | |||
| INVESTING ACTIVITIES | ||||||
| Capital expenditures | (1,950 | ) | (1,213 | ) | ||
| Proceeds from sale of assets | 900 | |||||
| Other investing activities | 290 | (692 | ) | |||
| Net Cash Used In Investing Activities | (1,660 | ) | (1,005 | ) | ||
| FINANCING ACTIVITIES | ||||||
| Borrowings on revolving credit facilities | 28,396 | 33,532 | ||||
| Repayments on revolving credit facilities | (19,837 | ) | (28,791 | ) | ||
| Principal payments on long-term debt | (2,961 | ) | (7,564 | ) | ||
| Treasury stock and stock option transactions | (77 | ) | 1 | |||
| Net Cash Provided By (Used In) Financing Activities | 5,521 | (2,822 | ) | |||
| Net (decrease) increase in cash and cash equivalents | (1,705 | ) | (4,190 | ) | ||
| Effect of exchange rate changes on cash | 52 | (963 | ) | |||
| Cash and cash equivalents at beginning of period | 4,921 | 2,314 | ||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 3,268 | $ | 5,541 | ||
