Earnings call transcript Q2 2023

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Operator

Good morning and welcome to the Chart Industries, Inc. 2023 Second Quarter Results Conference Call. [Operator Instructions] The company’s release and supplemental presentation were issued earlier this morning.

If you have not received the release, you may access it by visiting Chart’s website at www.chartindustries.com. A company replay of today’s broadcast will be available following the conclusion of the call until Monday, August 28, 2023. contained company’s is release. information replay in press the The

are statement. to company that company revise to are forward-looking Before risk refer factors fact, earnings statements the The the and regarding like the not statements. remind publicly information update any to in included call we begin, SEC. and this obligation latest would or filings you undertakes forward-looking the Please no during statements historical, company’s in forward-looking release made with

I to President to CEO. like would Evanko, Please Jill over now conference the turn ahead. Chart and Industries’ go

Jill Evanko

you, for With our morning. Thank thank and Joe CFO. Michelle you joining us Brinkman, is today all this me

which ownership activities, cost X.Xx a to other prior to our now key second operational to are XXXX meet full closing and results year puts stronger end to X.Xx and cash including anticipated, as generation after originally Howden compared first than the progress considerable commercial our our We ratio than XXXX. ever, in pleased synergies, we expectation anticipate on of earlier record quarter our XXXX of deleveraging middle leverage of share position net us goal quarter

details, presentation to please into X of Slide the get we Before we these morning. this released refer

continuing definitive executing on to business March results XX, our discussed completion sell Roots all for acquisition Howden of ownership They results to our result a financial XXXX First, entire relate the operations. to Ingersoll-Rand. our the exclude the the period of agreement following Roots as

no use for We it is pay-down. clearance proceeds this later we close regulatory and the share debt for Roots earlier that are to XX. the divestiture, intend than August to week, excited We to expected received

takeaways. key summarizes X Slide

contributed for was Chart for and Our X.XX, ending backlog as business Howden. to quarter backlog second both well as record book-to-bill record XXXX combined the which

realized over million have commercial of and annualized synergies $XX $XX cost synergies. over million We of

result example, way in heat this a commercial $XXX award funded in Middle over received for million brazed Our synergy as billion and from customer’s well the government month, presence compressors by to the a yesterday, Walloon large ammonia $XX.X a By for of customers’ customer win study exchangers a European boxes commercial synergy booked Union. physical $X order teams mid-June. for key which as region. approximately for of And the East for million we project carbon Chart just pipeline separate increased cold came a we Howden’s and with operation, an capture aluminum synergy the the and engineering as in

margin record adjusted gross record of XX.X% posted of reported margin XX.X%. $XXX.X of adjusted profit of margin and XX.X%, and gross We adjusted EBITDA EBITDA million

adjusted free Partners, a or X.XXx helped Our for XXXX. we second which sell to was Also second net When related cash the X.XXx quarter, drive adjustments, $XX.X two second for for announced flow net quarter in divestitures. when flow only the million income a basis reported standalone free quarter leverage million. cash formaed $XX.X Howden backlog, pro on and of reported was in Roots already agreement fan business PXX $XX million our mentioned this the received we earlier EBITDA. And divestiture. clearance record for Cofimco and is definitive executed the Wednesday, orders, had profit week, I to that half to On gross second expected close

we divestitures deal done. have each synergy neither divestitures potential prior purchase targets multiples the we that the asset complete. executing to total These anticipate and in our impacts to of when for nor that with were in approximately defined Cofimco perimeter two steps are line $XXX continue that Note the Roots million prices

for prices divestitures to we cash how the optimize shared have multiples and we structure As adapt maximum potential sales previously, opportunity. we the

manufactured fans energy why original part information A product to Cofimco a the in part traditional standalone our only, is dedicated Italy. and Cofimco equipment of team a in flow of sells selling fans dedicated legacy Cofimco. on one portfolio. markets with primarily as building axial are we more offering, little specifically Chart

With low operating operate complement synergies fans, see highly in and Howden’s with are environments, numerous extreme noise addition fans Tuf-Lite our differentiated that capabilities of the we which cooling there.

fans are energy solution more Additionally, both facilities the primarily in Howden markets serving transition cooling focusing their and which on purchasing in customers are Tuf-Lite full end optimizing offerings.

either align out billion. marks we outlook schedule add our of on ongoing in mantra we are XXXX or of forward include of coming $X.X on look have X, to early we laid reiterating EBITDA because targets. our approximately X against We ahead And or To-date, executing continuing and months. step time the they plan adjusted XXXX and with and schedule Slides finally, our to check of each executed our green

Brinkman now macro talk continuing background will for our about expected the demand.

Joe Brinkman

markets. on and This book order is or end ways adds our Nexus and of applications we and out in X stands Slide Slide what in What breadth these to tax full across addition both of consistency continues ability X play Globally, level, Clean our variety announced supported the the solutions and approach have grow. to are been the at markets to molecule-agnostic a sectors. by numerous seeing private public positive, subsidies direct macro be which is incentives. for low-carbon of

mandates turn many demand more low anticipated solutions. in across industries, our drive which full for renewable is expect for We to emissions carbon

anticipated are business clean map national here road alone, activities months strategy hydrogen drive to coming some The in the of few in are U.S. was released. that examples and growth past additional years. the our In

decade. and to XXXX the Lithium have coming the and to Germany expected NASA space requiring and months. to grow and disclose a to organization proposed signed Space output exploration plan agreement pack PFAS form go in the to to Africa, Indian expected the in framework human effect from is Africa South end product market triple year. is for rule hydrogen the into EPA’s a of any an this businesses the by

of still later funding this to believe are programs Energy’s in come second selections beyond XXXX as such U.S. IRA is expected determined, this some the and half seeing more United as year. end of today our are Department of markets of We hydrogen reflected in the States certain specifics hub and and

on On strong multiple very a activity, all the markets the impact and mine and top years in both service long-term way expected busy. and quarter safety in through infrastructure geographies. Slide starting we impacting future are repair as row, being across to seeing aftermarket in Yesterday positive particular, well the service second multiyear XX, as agreements executed, of was LNG

compression wins, synergy heard one Jill the synergy some service a legacy Howden we you agreement Chart As mention X-year for was received service. customer hydrogen with another

comprises of service reminder, aftermarket XX% repair over As a and revenues. our

big year-to-date, book to stages this big an evolution, application. second LNG and we upon in LNG-related half market transition the with We various of global LNG have continue so the far received in expect energy and needs additional X order depending awards as

The intelligent spend offerings. energy is and and our with critical and transition demand mining, Ventsim driving in which well fits cooling is an for minerals responsible increasing there fans

we activity engineering Additionally, increasing capture purchasing studies existing energy potentially helium seeing are their helium at locations. traditional to with the more customers

rockets investing near commercial readiness, the exploration in next-generation vehicles heavy infrastructure. As space are launch these companies vital developing lift

tank with for sites fuse is known as storage, facility the strategic both and Our launch location molecule water increased reduces client ideally to positioned X to cryogenic also access proximity expansion, theater consequent its capacity transportation demand forward Teddy Alabama ribbon-cutting with any coming tanks larger dimensions shop of risks our built We with associated ceremony to than globally. moving costs of considerable XX% such with and look a this the tanks

solutions. forget should are in our resulting more global not activity the higher other opportunities. in is for regulations EPA, this interest a end for the as PFAS temperatures, There new water treatment We generating about treatment creating water such win as an market also treatment as increased factors as service driving and more increasing desalinization need global is such

won our Technologies AdEdge a treatment full-scale project near via order $X.X Chicago. we site million Water for for upgrade month, this a groundwater remediation plant Just

of water are where We the tenders well also positioned. large half expect in a XXXX in market treatment we India, second

With customers will Slide opportunity from our commercial about which on XX. talk solutions has buying pipeline Jill multiple broadened, us,

Jill Evanko

our million is water Our just customers and on XX%. so notification and Wison XX% Hemisphere. that over over potential force customers a opportunities Chart to of increased LNG base. end is treatment the the have capture in in that quarter, customer for a as synergy over global in good we of and hydrogen, Industry and $XX.XX LNG Heavy orders. project our early number order of That by received potential Eastern one $XX we currently QX total includes billion from noting and demonstration million X%, ‘XX, pipeline sales XX continues Slide opportunities market of One carbon a morning, commercial breadth Worth $X ahead well since is of of a of we the numerous as be small-scale the view this

States of contemplating customers using row LNG You in for the in an can upcoming outside IPSMR international United their projects big increase the on potential see table. Chart’s technology first the

and to LNG share locations too. while South under modular the as move trains Asia lend International minimize improve we we Oceania. are customers we to itself America, are to costs, work that address customers reduce are, are technology East, can’t site who include and And Southeast IPSMR which these the NDAs looking can time-to-market, Africa, project Middle

hydrogen our orders Framework for Mobility with and on for Chart and than the us will placed development the of about executed together, agreements Over synergy an of book order And we of which combination since a I point XX% Howden We content to of our multiple decarbonization our the signed at aerospace Howden saw acquisition, globally. newer XX company year-end, of Chart would these Howden to Frame Agreement the of of us and agreements $X regularly for development. of we we expanded variety these like of importance Examples many in commercial part increase on which and our applications agreements span whom are in least to in shown before Mechanical MOU and Master place or a closed penetration partnerships, as synergy couple solutions, markets. partnerships, with speak million more executed through executed both The these related have already. for a commercial with fans cover end Recompression that orders such execution energy agreements clean offerings Agreement see I key quarter. the expect out. we partners an an partners Veolia, commercial technical turbo strategy. we XX, applications. Slide Vapor XX% have a a Siemens We attribute as of

to orders resulted history applications. as greater in I over billion. million pleased in on the orders wins we the am to $XX a steady I on mentioned multiple orders, that ranging across booked Slide share the first with The and side month’s had frequency right-hand of million, and our see customer of you synergy is It this time for of XX, outlook. shown Africa, XXXX broad-based breadth XXXX over we have wastewater to individual continued $X each the for earlier, quarter in from X.XX, today scope demand has $X.XXX blowers XXXX and an additional for Australian ventilation EGR This supporting million of into July. increasing larger as marine. XXX orders $X of individual Second were Book-to-bill mine X over than slide, our

growth and we at order ahead. more-and-more continue cubic cryogenic a differentiate exploration. world’s orders XX first-of-a-kind first kind with expand we ourselves. Slide to was of meters see X,XXX QX XX for largest example shows One booked areas space tanks XX of and the the new that customers, With for opportunity

transported picture of investor from meters. a only the may huge definitely that the Some being huge, our was Chart and that’s remember in prior China cubic tank X,XXX of deck, facility you

over opportunities segment RSL I of sales, that RSL had growth the Repair pro want by XXXX XX% had performance second business. Aftermarket, to to and second of profit, records the a our the the forma record orders Already the in quarter. emphasize that, and operating us. second XXXX income brings when combined sales, for of XX.X% Service in and the compared gross to quarter increased quarter

have bottom Howden our of with you agreements, key a the the We XX,XXX executed Howden RSL added assets specifically, of and tool stand-alone Howden’s as solution in quarter, service continue digital only identified posting Chart’s aftermarket approximately represents has digital where the field Howden Slide see segment, further the global they segment Howden of installed and system-to-date. in and performance sites process across to July which quarter sequentially the those our into base Howden’s XXX we XX%. that some ahead installed loaded to cross this in pricing expand but legacy the assets. and tool, customer aftermarket as to in tools long-term service train our sales incorporate We scope growing third XX. Chart teams can team, customer Chart base products. second both continue driver into XX% the the Leveraging plan record installed legacy uptime examples management for well base and And are was on over continue approximately taking go and Chart

is there steel although of X generally, that our of now the supply in the Carbon prior of XX our time still has delays of are is The lead key costs. Slide last declined XX XX months below chain. is takeaway improving, supply and chain our cost month tiers

improved less have higher in far of and we last Steel been finally, consistent the than more pre-COVID levels. X had to Stainless years. in and at case than has the availability the While LME Aluminum back XXX has freight to has early returned costs drivers. and challenges is continues fewer freight XXXX And levels, been and seen in Year-to-date, typical availability cost Aluminum volatile

Slide XX And the this pro for apples-to-apples shown is of is on the so it’s and basis. ex routes. business. results Chart forma in XXXX an reminder, total, Roots, a QX The as shows period excluding Howden

records on right-hand are page. shown the all as the pleased the of We extremely with financial side

quarter really, of point of in gross both backlog really we XXXX that above of our margin show contributed XX.X%. supports our that margin. record gross adjusted the adjusted the confidence adjusted and think of XX.X%. It XX.X% combined and key the reported one XXXX EBITDA this takeaways visibility to strength from outlook. our margin second out specifics And backlog the a the business. Record have is I Let performance, me few and

And some get recall when to ago were of we year may you and the over mid-XXs a predicting in XX%. to

are obviously, of we going to now. stay So plan north And number forward. where we that’s that

forma. Additionally, to grew pro EBITDA both also reported QX compared XXX reported gross bps XXXX margin margin

multiple compared to where to second last and EBITDA posted results So and I second regional stellar share ‘XX want XX% East moment quarter the sales to a congratulate XX%, Middle in of XX% take region year. up second With some quarter up bookings Africa of the our performance, quarter and up records.

the Pac as region percent income orders posted China sales Our our operating and in quarter. had India record of and region a record Asia

of reported and Second basis. of quarter XXXX foreign second XX.X% and of sales the also pro impacts forma XX.X% Inclusive excluding $XXX.X of quarter and excluding approximately and a sales million to moved compared quarter XXXX, needs grew Roots when XXXX had chain based approximately on negative half. we million FX, $XX were that supply customer second to million, $XXX second timing shifts the exchange on

we billion If would second together, you of for sales $X all had XXXX. have been in those the above quarter

our ahead. project-based as us full also coming quarterly for business, solution gives to that offering, have us few this in would our have sequential about sales quarter, it more say individual and the into I minutes we gives we years backlog sales while the the moved in And more every is Joe sales, we from going visibility second shifts expected growth. a component note well talk to half as

pleased provided net quarter operating million free from million, of the of year guide net $XX.X free cash $XXX flow contributes operational We second quarter million. second cash our quarter $XX.X $XXX $XX.X activities full million. strong our to with flow CapEx our this The was of million, of cash of flow reiteration cash our are to adjusted generation very for

the on quarter, and both our XX. synergy combined on are gross percent Howden you business we gross activities; continuous really progression cost, early our the across full that reported you shows is achievement, improvement sales projects described the focus really a which Slide organization, in cost records. adjusted of I can continued by the the XX are driven and This second Slide excellence solution margin price as and see on margin just bringing

synergy We year-one close approximately synergy have XX% since achieved cost acquisition. of and XX% commercial of target our year-one the of our the target,

as work of achieved have outsourced the $XX.X two from streamlining also opportunities, annualized and in-sourcing potential identified existing of back-office additional teams as activities. cost synergies more million activity cost see We additional footprint we such synergy and together consolidation more

$XX date. million booked with orders We achievement are to cross-selling, synergy of commercial of the thrilled earlier-than-anticipated

On wins million, already, the Slide I some award can frequency. we with bottom These as capture are which, included & commercial recent for Wilcox mentioned largest-ever XX, utilize Babcock synergy see and in Earthly Labs, will over small-scale you Howden our of increasing carbon of Chart and $X equipment.

the for which that’s with and We million operation Slide an a are more-and-more the customer And have synergy European and Union. a physical project, ethane Howden’s backed see that eight Walloon to Government boxes excited presence carbon truly to member as to contracts were $XX.X well synergy of capture Eastern XX. is on the large engineering award already related and carbon commented in a result we in region. awarded cold And the $XXX,XXX Middle order can July, I capture having provide you team recovery by

of rapid comes All in members. achievement from these our global One team results Chart synergy

about culture, into a Often, team. try culture the asked combined the this how to I describe of spirit, put I and I thought long the our could time to am words,

So a of into lot an and I put thought analogy TV game where have a landed to that I show. was

You have analogy. show. just game you But this daughter don’t turned up loves Fifth going tell XX-year-old show, Grader, you, which understand I’m this it not. can my if So you’re Smarter to to TV I to Than It’s look called know definitely A Are this

collaborative action when it with utilize haven’t to team, get and team. supportive experience expertise, to quotes our If watch shows idea One and celebrate and to area. even at again, win. bit culture. great synergy seen early see analogy is order, our a portion out you best In Slide wins foster on the Houston related win the faced needed the do rebuild And I’d a from is XX, team’s yourself to with What of an a that you global to to a the our call which challenges. customer that order it of in can least in offer an environment your surround culture

the to culture to say Howden’s Houston The collaboration our in lift together, capacity able customer. on crane was Slide compressor. Beasley, Service have training to examples we Charts And accomplishment spirit in-house glad Center not of yes did site to embedded were further help. customers’ XX. Texas is with the the

on last our couple and starting the let’s The XX, on the approval since we Slide Green which progress to X weeks made in So additional activity goals. issued route. just divestiture updates Text that deleveraging last shows June deck meaningful of on have toward sections investor our here close move already the are to discussed XX, ago. I’ve we

received So and which me a We in to property $XX.X that noteworthy settlement of cash touch was sales accomplishments. week. cash the $X.X on to resulted underway. sheet agreements Howden us balance of repatriate in actions We’ve totaling million the working anticipated XXXX. more let related cash cash two and quarter, repatriated building seller the the so of about approximately this to few acquisition, capital executed other and from anticipate completed from both are million China million, globally And these $XX many incremental or we an close successfully and third in amongst second half to

as anticipated. our we Until our I’ve XXXX into policy, additional net our well high accelerate previously XX. as given on quarter mentioned, will earlier maintain than reach shared net Slide ratio to target, of on shown second our already Slide leverage progress our Our activities range Xx financial on we that originally cash as expect and ratio activities shown as And we operating from leverage XX. X.XX

outlook home So Joe bring us our with here.

Joe Brinkman

guidance table. On our Slide we have XX,

are of the adjusted We partially free reiterating the reflect same the for time, offset a flow. EPS proceeds higher of tax our in cash XX% adjusted lower we raising routes end revenue, use debt adjusted to ranges by XXXX. of for At rate and and are reduction, EBITDA

and debt stay divestitures. planning tuned. numerous the rate, Roots is reduce tax proceeds million place Cash have now expected reflects to available from paydown in to for We and that Cofimco $XXX so $XXX million the strategies

a highlights year the of we versus slide Turning reasons some XX. to why higher the the second to of have This half half. first Slide expect

our the First, normal quarter free move and expect through with sequentially we in-line we revenue, seasonality, earnings year. as grow flow each cash to

helped and LNG ramping of hydrogen. in our overall big broader our even and we hydrogen. starting and additional earlier medium mix both to now factories. Second, including projects projects absorption see This replacement are timing based on activity and is These accretive to orders, to projects are on based repairs drive and small in in backlog are chart

We also opportunity detailed pipeline. in commercial commercial and ramp synergy we our which both including increasing anticipate synergies, earlier, cost a

price one catching I cost cost. price call Last price timing of up and is favorable We still remain on the given will out are disciplined on price increases.

Our as of unchanged XXXX billion EBITDA XX. on $X.X outlook remains shown Slide

today we momentum feel ability our building these results. confident in described a the to fast deliver we With in pace,

Jill Evanko

entire our a team. We with will Chart One close huge thank you prepared remarks our to

container, iso few. certifications, the Michelle, company up XX% by XX can beyond for achieved job named XX. were approval we please capture One to Q&A. And sites Harald it Chart with Great You see a second closed hydrogen for top incredible open the liquid team. the now name quarter a in carbon Carbon accomplishments free world We and Slide from numerous on first-ever X-year more, type or results injury the of financial including the our

Operator

Thank ISI. West, go Evercore you. [Operator Please Instructions] from Our first ahead. James question comes

James West

Joe good morning, and and Jill, team. Thanks,

Jill Evanko

morning. good James, Hey,

James West

with the is the thinking incrementals incrementals there look business So things like thinking at several curious about forward the the quarters business? but the a the you’re cost but the as here about given maybe business years, here, you’re integration in a expansion and you how several about over execute the the backlog going for of about the margin and moving thinking for you’re wins lot next on Jill, of of how the what different even next how factors and play sell lot should

Jill Evanko

margin, definitely further. to continuing levers we both these margin in pull see Yes. exciting James, And to expand have reported to that really for build what question. even record that as start upon and is for that us the Thanks, we times gross the now adjusted with

going about So the I’m but right because XX% say they through mid-XXs or I not give different full well. will the certainly mix. it point project multiple take and it’s reported in give is as periods visibility be does up terms we that business, what to we solution, the and taking But year. to It’s across to will whole half specific expansion that actions, us the banging a of on truly a like because with the the a advantage I our and projects of great not having. keep aftermarket work is that I’d the one backlog so is project to will quarter. that I in that RSL It’s in hit as it’s technology, really for backlog a opportunity I’m margin positive home And now the that only the years. that the are margins pleased us. growth having you’re the to service XX% coming more that margin to anticipate the when second in to better offering repair. And have and a really particular also, not of typically, with visibility, mix a years only as something that just not that coming accretive

later this progress we certainly, this year will we XXXX. really and in had And earlier the is than the anticipated synergies, another think full and certainly drop see achieved then we as through on start that year cost item that to

share consistently mid-XX% ahead margin we reasonable November a detailed say of I’d is us. the outlook So will gross X-year very at our Day. And Investor also

James West

Right.

Got Okay. it.

hubs capitalize follow-up, going in on see we’re the And forward on because talk significantly then also for We’ve for next capitalize and how DOE. the come this follow-up question question a of with a you’ll respect think I here a here $X had out hydrogen short Looking you from the – that. U.S. way to which hydrogen market announcement just of to billion to but on maybe you how your hydrogen the see to hydrogen DOEs out months. to playing recent capitalize, [indiscernible] to intends about kind opportunity? several awards Could demand

Jill Evanko

commercial in pace commented of the perspective. I U.S. that And the prepared DOE in we’re think terms even seeing around last don’t the IRA backlog, activities being – I the Yes. in the mean the current activity the of in that from hydrogen actually picked now. will reflected sector the is couple this of some remarks result backlog definitely a think I leader is hubs from and any from up Joe in hydrogen right really the I think of public activity fact but years, our

experience, and pre XXX So that or opportunity the years hub activity. plus Howdens our rotating. compression with And now stationary here, years a synergy million $XX ahead yesterday, that’s these have huge on really we XX of plus state hydrogen and are so – with we of commented couple wins hydrogen bringing the into

hub. the of beneficiaries be will We

while doing for for a of of and time week, apply also it’s be are where transporter operate do a the one to but those providing company just hub the just as in to are those to earlier directly because going also don’t we production beneficiary the use or spent that the DOE this Canadian is we’re be with and hub equipment will And and the which then we as typically applicants to West, we to So states applying some suppliers that think has – you that’s hub the winners. company only the really the that’s well. the And ahead, interesting, government is U.S. federal yesterday not opportunities in liquid. with which partners, these activity play so see U.S.-based is going out Midwest, storage

might have something specifically, Illinois, selling is why because seeing state kilogram so they the in a that think you’re $X I side. but that like activity this on incentive, get wrong, much production state I or

we’ve the in the I DOE chain. market year. addressable Again, really well excited And the before hydrogen I’m see bring to benefit order excited we in last But we’ve this what U.S. through ahead. fairly – to well about to XXXX. But think book across nobody value darn hydrogen it cared captured So to later the our it the few awards in pretty stand done I’m years. actual see

James West

Got it.

Okay, thanks, Jill.

Jill Evanko

Thanks, James.

Operator

next Nolan Ben comes ahead. you. Please Stifel. Thank The question go of from

Ben Nolan

Thanks. Hey, Jill.

Jill Evanko

Ben. Hi

Ben Nolan

We in Illinois. hear

spending most curious – only about to respect. sure. so I’m I the guess, now, I that of you my you have have days big on. billion $XX that and us – with thing number it for is, if you realistic how time Howden the that We’re good at talking are I few guys think think the actual that of into? for do terms changed we the frame how XX, about think bring my that you? fits you. at think also, should just do you’d things say of percentage how about orders a of mean think, conversion all, at [indiscernible]. to about have orders question. you were the about The for for you in you pipeline – Has mean, of that then have of have – in mind that what into you to that sort I what’s the line what what’s I fit leagues But you’re would that in one Like comes to Joe, currently things sight a –

Jill Evanko

is spending question. the at another money, ground for us. million plus good Ben, Thanks, that definitely remediation Chicago And near water project Yes. in but $X for Illinois

XX into Commercial in look – your of about Officer, CRM our pipeline or potential it’s what’s our say, our $XX yes, the to at so complaining not force accelerating months talk wins the I coming the would sector system. With growth. in to Belling, activity Midwest. and we it’s private almost when amount And the there that in that what is on next we’re sales Chief typically of definitely daily and and, said, So question I billion, the public

of $X So synergy a time the sense a about that plus-ish orders time gives you of The frame. is billion frame. XX-month

So the subtext next year, that $XX that’s million. to

project we’re When seeing and seeing as we we’re being more more of a look and Howden at what activity result frequently. definitely awards together,

individual. about comment the So plus

quarter, million was were doubled greater basis. a on it individual XXX $X second orders stand-alone think I from than in we essentially that’s each, what the

we way a of better that of would And subjective, commercial project pipeline plus getting based which is typically at say, on based needs if bit so etcetera. the a a has wins. I’d customer on on a that look funding, our of We frequency get we’re probability, teams XX% right? sense the Our and anything is of much little where the side kind visibility say more

to So rate probability, you that we of XX% on historically, apply XX% that about a anything and win group. probability Then pretty easily kind that’s the would have metric. higher had

so. If rate definitely percent were the I of of it’s it’s specific have the higher seeing probably in a business. to back kind win say be a a apply quarter We’re business. I’d envelope, that to I don’t probability win able been only rate combined or yet higher a on XX%

So see we acceleration. will

we therefore, visibility larger much backlog the XXXX, more had ever projects. the will as either And on anticipate based greater we heading see stand-alone basis into We head than have business will into before. on year a

expertise-wise, of and global So the package. Howden definitely to to our And team the with number geographically, sell being attribute one breadth accelerant by probably ability bigger the having an us. a that really I

Ben Nolan

Alright. I That’s appreciate, helpful. Jill. thanks

Jill Evanko

Ben. Thanks,

Operator

you. Thank

ahead. Marc Cowen. Next question go comes Please of Bianchi from TD

Marc Bianchi

discussion to order I little the follow wanted bit. on a Thanks.

help billion. track? You book-to-bill an of have sort think second a be $X.X quarter do second that in could hoping and What big see you the the the to to kind we was for that’s comfortable back of award XXXX as then also And orders, to of half need related we about half. I in in quantify LNG on those. expectation guidance

Jill Evanko

question. the for Mark, Thanks,

LNG with the side. start me Let big

IPSMR would is one said said quarter. way we a be that first at worded would this share also call and – XXX one And if equipment, the have that probably able half expect it, one technology would we involve This $XXX – let’s not but would million. were the – between two to not second in both not I’m the mark-ish one, them. XXX one is it’s around think specific it number but it won would – in we I million sure starting be so did then smaller the because obviously, we’ve we $XXX the of anticipate we be technology million – with least the those So between one $XXX the we’re be one. with to and project, second and said Typically, trains. And half, IPSMR in we or

into book-to-bill above one. the XXXX. second comfortable in above based want year. had the we’d One seeing or to into your head lot then heading of second to a be question into normal historically prior That kind only is higher into not to the combined backlog. to where the a words, in book-to-bill of we than XXXX comfortable And that the be goes to was than the XXXX That heading what half we with typically see business want question the half really have if we’re to we heading higher on booked to follow-on

that requires or one a So above.

Marc Bianchi

so much. Thanks Great.

Jill Evanko

Thanks, Marc.

Operator

The next Please comes of Citigroup. go you. Gruber question from Scott ahead. Thank

Scott Gruber

Good Yes. morning.

Jill Evanko

Hey, Scott.

Scott Gruber

prepared case? thinking there second the should heard half. in revenue that as midpoint And could up about remarks of still the I catch it If Is revenue year for base the fair? be the full sounds be some like correctly, the guidance we

Jill Evanko

Yes.

So correctly again, you did And things atypical the it’s projects we that move months project delivery our not in side are these in length. especially on because quarters hear some movements. for between to business, XX because had

And midpoint of the would comfortable. heard there comments the which you anywhere the high be get in end and is is series to coming you a comfort and end drivers our prepared backlog medium our quarter, ways guide yes, level into higher the our third below correctly. So projects additional of to the ranging from the wide at

Scott Gruber

posting not XQ? the trajectory repeat the Were expand very side any expecting cost Got to that the build quarter strong you operating the leverage. margin thinking there with it. upon margin the one-offs obviously, been XQ are should expectation And now about profile may in be XQ Or margin to XQ? then continue each strong percent that and XQ you consensus synergies here restrain were on after still margins and we How XQ and has and margins? the a to that

Jill Evanko

the I Yes. I There continue think posted above be at what XX% we you next. that XX% it’s mean we’re some things to and going move best to we where not to are mark. going way we’re to quarter mixed where to quarter XX.X% wouldn’t we margin, is answer from above can between say is this are, that XX.X% seeing. That but or XX% move that not is certainly quarters that

So as operating that’s related from second a we general perspective, we as synergy sit margin expect half, the EBITDA from to today execute margin – and the continue as gross the well against to well. grow where in improvement and that

Scott Gruber

color. you, the Jill. appreciate I it. Got Thank

Operator

next from Please of The question Burwell you. comes Jefferies. Sam Thank go ahead.

Sam Burwell

morning, good Jill. Hey,

Jill Evanko

Sam. Hi,

Sam Burwell

of tax a wanted looming. the I guys tax know West ask and kind in you more rules I I got we on bit spearheaded already, of of lenient this plug on would to credit. touch this I hydrogen, I’ll were XXV a we at that a week. a it you treasury that different way. guidance little claim know the from addressed James know around credit sent you earlier how benefit was signatory Clearly, that can that out letter think but

of irrespective are how us out, for are, some hydrogen rules the the going give can boost half efforts going. margin in equipment sort you this up unlock the and what And are those on ends shaking in on to if color year XXXX? think demand back orders of any curious specialty you lobbying and then do clarity having just of just So guidance how then

Jill Evanko

the your Sam. last part question point, the I’ll and Yes. with on clarity the of rules. start Great And there

And I unlocking have anything and customers incentive IRS saying, in the but IRA, the more these to, more booked are around hear we how funding, hey, and so else, with the orders ramifications for some credit can’t understanding think top-tier won’t who IRA. systems certainly order parameters of haven’t understanding the how work. an a at the people the anything but say systems look really who with of I than catalyst we is yet the or than us want you I don’t

capture time, as last takes think at this are I And of So, seeing are anything, little customers I even the catalyst we think I are would here And lot that mean later are not And these the this to stakeholders. in are least like this in our then clarity year answer the scale. acts CCUS from I hubs, millions a people catalyst pre-FEED incentives I get have resides. studies in is efforts, of them. year. that a loosely in dollars incentives terms to think hydrogen to moving say in I through stuff orders on the the this is a seeing we folks the here of DOE really a tied And get policy. with we super book DOE side that definitely we the of to or are unlocking certainly, XX think will is, that – the and the for bit into carbon pragmatic of to what activity order majority think conversations early one those we FEED ones guys the content the of number lobbying ultimate answer that this I this we late and year, stuff of putting the larger in saw clear And action clarity

the we in thing them, hub are right. actually a to not Again, supplier I DOE would kind we start-up these it I about of hydrogen other blue-chip The name. like are What members, is like are not right. These the about names, funding. are

So, the their their potential going a to you balance so that. into long hydrogen have not way but to own have you hub, that only projects sheets, answer link

is to be I question, efforts amongst think feedback answer the of lobbying elements these is yes. half second that on, get going timeframe. all spot we of the your the And

Sam Burwell

you. Thank Awesome. Alright.

Jill Evanko

Thanks.

Operator

Please go from Pavel Thank you. Raymond The of James. Molchanov comes ahead. next question

Pavel Molchanov

am of link I Thanks themes here. for up taking two my to try going to questions. kind different

treatment availability the I am of of the And green in facilitate freshwater. can projects. headwinds water how been solutions of the has One hydrogen to hydrogen of areas charts projects plenty creation curious green

Jill Evanko

equipment because from one we and are that And market. much buying end to customers very macro than these to technology and these that seeing you. I but question and the Thanks more more are I yes, – appreciate end also nexus talk for the around think Pavel. us solutions, of it markets we clean, call inter more Good linkages,

starting linkage portfolio we the building fundamental which way the So, capture premises certainly and take or the is in one the hydrogen water strategic have. of business, beverage our of that carbon out to to of food to hold is

or, that Our that accelerants kind different hear high the of water the one green summer the hydrogen in ahead treatment people service, in PFAS for is whether we technologies heard again, certainly regularly. treatment to of it’s Joe – that talk temperatures regs a space, and get various about the you trying Br. as

We stage capability time. through XXX-plus hit That’s for water are green have electrolyzer answer. which all make a trial in treat if to our we front really an that containerized it you water treatment, multiple talking electrolysis. type hydrogen about contaminants capabilities, at But pure contaminants rain water one out our added technologies, sits treatment can pilot basically are of on all there, of

And see the related that the green of decel so up to to globally we link side things to hydrogen.

getting our a truly And hydrogen, is truly is water. clean water problem treatment-wise. green is have business markets view but we when EPA are the this regulations the very So, my potential a problem the water-wise the because for just highest are positioned U.S. growth in well contemplating international treatment even for

So, up opportunities, water but play just the treatment, lots not only with linking pure green hydrogen also play. of

Pavel Molchanov

very Thanks much.

Jill Evanko

Thanks Pavel.

Operator

go Please Thank Rice. ahead. Johnson comes from you. of The next question Martin Malloy

Martin Malloy

Good morning.

Jill Evanko

Hi Martin.

Martin Malloy

for year? ratio Hi. see you capital leverage Great to acceleration walk for us flow get EBITDA talk to range, next targets. maybe year wondering from the of half of a this next free second could I working guidance the if your net and timetable to the year to maybe cash usage about was

Jill Evanko

Sure.

company. a coming – activities, we on we the And multiple progresses. got combined darn say I call there of did debt to – miss? have have We what say, $XX about should see, CapEx be have that second as then the we we optimization are out component, cost we we that. I little where out haven’t what from a Howden fairly interest I got this here the got year ways. working from XXX but operate And coming than expense. I EBITDA both want moments things will full But should half down, low opportunistic But back year, divestitures it, no, kind say be think working for capital then If that, weighted you the specifically the I the is that additional right, so let’s there is And – which to the of will you million pay balance have available you we and the expense, sure you I from around organic consistent figure sheet in will that million we CapEx of the year total capital the in XX walk do business average in to through can what other of generally, And including first flow think those have ahead do Chart for separately. our would pretty the we third got cash get we for any I XXXX. CapEx the months the you projects the as side $XXX – of and about XXXX, think will captured make more given announced that of so different year, half this the nuance quarter net on cash or in got would interest we even out better later

Joe Brinkman

Working capital.

Jill Evanko

capital, rate. need that Working we taxes. tax interest, to optimize Taxes, really

that in – XXX I XXX gave get you doesn’t that XX% ish And like get XXXX. that number. you So, I of got kind use for in – can have that

Martin Malloy

you. Thank Okay.

Jill Evanko

Marty, thank you.

Operator

go next question Eric of Stine ahead. Please comes The from you. Thank Craig-Hallum.

Eric Stine

and Hi Joe. Jill

Jill Evanko

Hey Eric. morning. Good

Eric Stine

Good Hey. morning.

to mean great – continues be just back I to XXXX on. combined the do outlook. at come area to this first want mean have from the And still hear that skepticism So, an business. I EBITDA you people look I I

you on order mean kind You maybe laid on between down revenues it very and how despite mean you margin or high? the be then just I feel worried spent there confident or lot out of with break get lot a that that’s that line, you I an are confidence visibility. you is about more And your I out is view get are that needs – anything like that there. of level in seems mean you could basis. there done extremely time the to in mean, there, to there of anything a are like you there I

Jill Evanko

Yes. the XXXX the detailed Marty, Thanks give for and smiling X question, was I will outlook years we question from but give our the Day. Eric. Analyst at on for will And last we –

we percent Yes, that differently, done. listen, needs I of sales. to have discussed. year more said we James’ will we intend follow. increase think I earlier, More margin years. we million. take that as getting off don’t be $XX mix And number, we think to to I the coming a stay margin below there. a the But but can’t that. achievement here cost our that crucial in with in there metrics And I to But get directionally, gross those north sat are now to said again to certainly, – answered, ago that’s synergy We will XX% continue also expect increasing year we I like the things, don’t even expect that, And get mid-XXs margins on question be and is of that So, done. and as to that one, things our obviously, pedal we gross have mix to shifts things things, drop those think foot always like

see business team bit unlock out Continuous mean of Stubbings, that And that Improvement we we of to fundamental across said much we that productivity dedicated those improvement goods Chart’s improvement productivity is our a and and like the organization. is the SVP a Howden’s that that standardized background more are going But briefly excellence on and And think initiatives. take a to Integration what two under such head are Curtis that is we premises excellence. I reduction through would cost things, well I in to organization. those formalized is approach XXXX, business what continuous the And happen can underway of synergies have and implemented sold into term. focused and under roll a productivity cost we combined is continuous there as targeted this across by a I I loose – quite laser to to

then growth. to on price/cost. part unlock we that think can get I answer can’t are key is margin things your my last that lazy question two And

years So where Joe prepared purposeful the we Br. that mentioned it, can advantage to the it way. that we hold hold the couple said of going price, it if or and chain the we us in it Xx the Xx that let’s time can really with fact ago, supply right on take the I a was that of and wrong of hit is this kind remarks, because way tempering, now storm mentioned

Eric Stine

Thank Okay. you.

Operator

Please you. Thank of Ati The Goldman Modak comes Sachs. ahead. from next question go

Ati Modak

morning team. Good Hi.

Jill Evanko

Hi Ati.

Ati Modak

meaningfully the EBITDA add is also you the deleveraging smaller? these what divestitures target additional plan? I Good morning. on nature sounds divestitures? that the $XXX Could on Congrats Is you just from touch potential think that? – it wondering noted slides, color of you or divestitures. can we that is see that And additional for In the the announced, million on maybe like track. to the it impact was about add Any could there? should

Jill Evanko

Yes. Thanks Ati.

we the congratulations. wanted pleased And how date funding am we I the pleased thank the four First too. step divestiture the key do done times I of it. know all, you remarks, roots for timeframe like and second in that think to get my said process were I We that really the that in on for to

little one more potential So, that markets. the amount or we make we is in we gotten works there sales comment to our I a optimizing order have I trying ticking early. in on a we divestiture really on teams schedule anything is – understands what everybody seen each how and ideas portfolio tried and cash. end defined think that divestitures, have two they work the achievement it in how along and against exceptional focused what And are as of say achievement these are we people synergy together sure these wanted on would commercial that than to really And day-to-day that maximize on to synergy perimeter of bit and I has The have they generated side. additional some as to hour-to-hour an for do

have are else this seen So, would not that, specific distraction but part that at executive of portfolio there or in play anything not that consider one to mind, we a as does see does of team play. There we synergistic. or a not is okay, kind constantly is if an looking I have as as the we

comment a are So, that four says, evaluating we a regular I we optimized it’s portfolio in. have and are basis on that would to the we say make months this is sure most

or make and ‘XX for So, EBITDA of out for stopping what for to there through opportunities. to material specific we for nothing both think point our [indiscernible]. out that the our of want terms is having we is of what then probably part that EBITDA we your we tweaks. to some can wouldn’t without of for fact last the And tweaks, there I routes but look get be outlooks besides ‘XX, take have the laid question, they will impact the always outlook, And that out take more didn’t original in impact, perimeter and we

So, it or long a that’s Ati. answer of answer, question think your was kind to actually, I the thanks, but short

Ati Modak

Appreciate the color. Thank you.

Operator

Capital Rob from Lake ahead. question next Please The Brown, Street go you. Thank comes Markets.

Rob Brown

Jill morning Joe. Good and

Jill Evanko

Rob. Good morning

Rob Brown

give there of legacy wanted on follow in further? sort back terms to grow see charter really business the Just it little the getting a Howden’s more what that that going? there getting activity remains color of to terms into business what in Is to and opportunity you just back just aftermarket of

Jill Evanko

corralling job underappreciated. Howden definitely we I levers bridge the love Krug feel repair the done water by I that, commercial over have go And like world customer after. said Buffalo legacy been able have maybe in and like up and that of I base tool portfolio. piece It’s expert his that that good sites in for our I – Yes. team to There in getting LTSA getting what’s and service aftermarket a outside our business. really the feel underappreciated to really so it’s are installed it to a the Mark to team been that of little many the through sale. probably be of and XX% have

uptime The Thank So, don’t through we just the designs group the that are chart on digital that we just – spear that and sphere tip to prototypes and that. working on we so brought taking you really know. I had the XX% legacy capability original and more some of touched to getting are build, the pilots some Chart you. Howden even through haven’t us, and

there. XX-plus we many, the there weren’t outside Europe, U.S. And physically else because footprint we of then just or just think great I is locations of that? you had many us before of gives So, Brinkman, that opportunity anywhere never small more legacy even pockets the opportunities anywhere itself in what outside add on

Joe Brinkman

Jill with of from legacy roughly level brings focus that high being of different Yes. And the versus aftermarket aftermarket it basically revenue little percentage as pointed footprint with with just of U.S. such the a most global was I for Howden there. revenue were Chart there. in the focus of Europe the the part, legacy the bit a a just based to mean Chart there out, half Howden

here. infrastructure So, focus not and aftermarket the legacy just with Chart’s transforming experience the aftermarket resources and really opportunities human deep physical, only targeting – Chart’s on the but is

progress in and it’s So, going nicely.

Rob Brown

Thank you. Great. Okay.

Operator

last Tuohy Brothers. The Craig go from Shere comes you. ahead. Please question of Thank

Craig Shere

morning. me for Thanks taking Good in.

Jill Evanko

Good morning Craig.

Craig Shere

big per LNG one. everything, also three executing real big question or having you and another quarter first quick of LNG what had legs My is Congratulations next in on the call. a two Just but prospects just year. guided on orders on specifically

Jill Evanko

call understanding mean number Craig, Yes. throughout listen, categories, yes, what The we for really big two, is the the floating, of four – the I big as all Number and LNG. and we as think infrastructure right, business three Thank LNG thanks LNG four categories, would small-scale LNG, or is year. you, it’s aftermarket. four number is

my and brownfielding elements. all in continuing on or bullish So, is of those repair four add-ons. view this that’s And service very

is And some right. shifting, of them

ago. of will bit bit little are nuanced it did I it’s little because a a than maybe of year these time different one So, take each they a – looks is and

confusion that had coming fray. doing everybody big And while LNG, the from participants you great, a ago, the proven it their year thought offtakers are LNG operators in have can big that FERC, as So, well. now into and some terminal about and or you they even And have that saw etcetera. FID really brother have that you it, export into done the key do a had was

these offtake FIDs through less operators I of move think helped confusion So, ahead having of also a to are in market. base is who smaller because there that build, who the some has is going of

are which year, scale, North you to the is is that history decade. that year. now X $XXX or that there gives projects I a a into happen. runway about us ‘XX, mean we nice in ‘XX, category, booked, for look threw that happen big Well, on. projects on Hemisphere. activity seeing this certainly continues award orders, consecutive think, the And with America three have year And you talking projects in last the multiple in get in So, of floating. I let our following got two ‘XX, big really that LNG APAC continuing Eastern small for alone we this view multiple go look this I never million – is before this that that shift. customer morning, through and small-scale $XX.X a in is Then in second million LNG

because tank our that’s vehicle HLNG demand have We uptick focus And to on America has that of been in fits horrible think great off where our LNG where point have but jumping That’s in the going next that is been, also you opportunities seen right. I category. then third, it’s just the onboard tank. there, been in liquid starts few is years, and portfolio outside be the hydrogen the future to infrastructure, North this have for

great stations we we that avenue and actually heavy-duty have to play liquid LNG hit. trailers an do trucks fueling another that’s to trucks But hydrogen ISOs, line play. product and because So, interesting heavy-duty still right. that keep LNG want is think

seeing that are able have you then import in one the is seen in studies gas the some are but and for creates haven’t is ton LNG, particular, activity in be to – rejection And these of we different, the hydrocarbon United I of underway for and removal got composition because heavy that exporting to if we States unit, last have all it. numerous that these a problem of operators. think to You LNG a you category, to-date, NRU where nitrogen

couple see activity on years. that some and coming of think will I NRU in the So, HHC you tack

Craig Shere

Thank you.

Operator

to will turn for remarks. the I you. Evanko call closing back Thank Jill

Jill Evanko

Thanks great Michelle. Have weekend. a Thank Friday great you, everybody. a Bye-bye. and

Operator

today. thank you Ladies conclude disconnect and and your does gentlemen, lines. call you this for conference that the ask for your We please participation

Chart Industries (GTLS) 28 Jul 232023 Q2 Earnings call transcript