Chart Industries (NYSE:GTLS), during its latest earnings call, reported record operating income, EBITDA, EBITDA margin, and adjusted EBITDA margin for the third quarter of 2023. The company achieved approximately $500 million in cash proceeds from divestitures, including the sale of American Fans to Arcline for $111 million. Chart Industries, with $1.13 billion of orders, resulting in a record backlog of $4.14 billion, expects revenue to surpass $1 billion in the fourth quarter of 2024.
Key takeaways from the call:
- Chart Industries generated net cash from operating activities of $104.4 million and $142.2 million when adjusted for transaction fees.
- The company achieved $135.6 million of cost synergies and surpassed their year one commercial synergy target with $297.9 million of synergy orders booked.
- Chart Industries' gross and EBITDA margins have consistently been at or above 30% and 17.5%, respectively, since the Howden acquisition.
- The company's repairs, service, and leasing segment performed exceptionally well, with a book-to-bill ratio of 1.22 and a record backlog of $609.7 million.
- Chart Industries has a commercial pipeline of over $20.3 billion, including $1.3 billion in potential synergy orders.
- The company is optimistic about the LNG market and sees increasing demand in water treatment and carbon capture.
CEO Jill Evanko expressed confidence in the company's growth prospects, citing the increasing commercialization of hydrogen and growing demand for end-use applications such as mobile refuelers and fueling stations. Evanko also highlighted the growing backlog coverage and the expected progression of EBITDA margins in 2024.
The company reported strong performance in the APAC and India region, with record bookings and excellent cash conversion. The region is expected to drive synergy orders, particularly in countries like Australia, Japan, and Korea. In China, the company has performed well, repatriating $35 million in cash and anticipating increased demand in the region.
Chart Industries updated its full-year 2023 sales forecast to approximately $3.45 billion to $3.5 billion, with adjusted EBITDA guidance reflecting lower revenue in 2023. For 2024, the company expects revenue of approximately $5.1 billion, with EBITDA forecasted at $1.3 billion and free cash flow in the range of $575 million to $625 million.
Evanko mentioned that the company has qualified with a significant international oil company, which opens up a new market within the LNG industry. She expects this new LNG opportunity to be a high-dollar project, with a size and content at the upper end of the company's historical range.
The company has a strong focus on deleveraging and optimizing its balance sheet. They are on track to achieve their target net leverage range of 2.5 to 2.9 by mid-2024. The company has accelerated capital spending for a tank and rail expansion project in Alabama to meet market demand.
During the call, the company also discussed the progress of a project as of June 30th and the expected completion of building columns by Sunday. This acceleration helped secure $58 million of third-quarter 2023 orders specifically for this facility.
The company has a strong order book, with a 72% increase in non-Big LNG orders. They have also seen momentum in end markets related to clean energy and climate policies. The water treatment and carbon capture markets are experiencing macro tailwinds, and the company has received orders from new customers in these markets.
InvestingPro Insights
In light of the article, the following real-time data and tips from InvestingPro can provide additional insights into Chart Industries' financial performance and outlook.
InvestingPro Tips highlights that Chart Industries has seen accelerating revenue growth and strong earnings, allowing for potential dividend payments. Analysts anticipate sales growth this year and predict the company will be profitable. However, there is a declining trend in earnings per share, and the stock price movements are quite volatile. You can find more tips at InvestingPro GTLS.
From the InvestingPro Data, we note that Chart Industries has a market cap of $4130M. The company's P/E ratio stands at 51.67, and its revenue for the last twelve months as of Q2 2023 is $2293.1M, representing a growth of 56.41%. The company's gross profit for the same period is $657.5M, with a gross profit margin of 28.67%.
These insights, along with 8 additional InvestingPro Tips and numerous other real-time metrics, can be accessed with the InvestingPro product. For more information, please visit InvestingPro Pricing.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.