CHART INDUSTRIES INC Q4 FY2023 earnings call

Management Statement and Operational Highlights:

• Howden Acquisition: Exceeded original year one commercial and cost synergy targets. Commercial synergy awards to date ~$530M, exceeding year three target. Achieved over $181M of cost synergies. Contributed to less cyclicality, broader geography, less customer concentration.
• 2023 Results: Record fourth quarter and full year sales. Pro forma full year 2023 sales $3.66B. Full year gross margin 31%. Fourth quarter sales $1.02B, record, up 13% sequentially.
• 2024 Outlook: Anticipate segment and regional growth. Diverse end markets include energy (LNG, hydrogen), specialty products (marine, space, metals), CCUS, with increasing project sizes. Aftermarket service and repair off to strong start.

Segment Performance:

• Cryo Tank Solutions (CTS): Fourth quarter sales were record, with sequential increase. Ended 2023 with highest order and sales quarter. Teddy 1 and 2 capacity coming online.
• Heat Transfer Systems (HTS): Had record backlog, especially from Big LNG activity. $385 million of Big LNG related awards in 2023.
• Repair Service and Leasing (RSL): Orders over $328 million in third full quarters of Howden ownership, up 25% in 2023. Long-term service agreements and framework agreements increased over 4% year-over-year.

Guidance:

• 2024 sales expected in range of $4.7B to $5B.
• Adjusted EBITDA forecasted $1.175B to $1.3B.
• Free cash flow guidance $575M to $625M.
• Drivers include Big LNG, Teddy 2 backlog conversion, stronger backlog coverage, commercial synergies.

Risks:

• Red Sea situation causing 2-3 week delays on certain routes, though no major impacts on material availability yet.
• LNG export moratorium in US causing timing uncertainty in domestic LNG opportunities, but international inbounds filling in.
• Timing of revenue recognition due to project size and engineering changes, affecting quarter-to-quarter results.

Q: On commercial synergies, how much momentum can continue?

A: Jill Evanko says there's a lot of runway ahead, with pipeline of potential commercial synergy awards above $1B in coming years.

Q: On carbon capture, are activities larger?

A: Jill Evanko says seeing increasing size of awards for small-scale carbon capture, but larger scale industrial opportunities have increasing pipeline but not yet consistently in order book.

Q: On first quarter 2024 expectations, EBITDA decline?

A: Jill Evanko says normal seasonality, but aftermarket service repair mitigates it somewhat, with specific cash uses in Q1 but not repeating in Q2.