Chart Industries, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Backlog: LNG makes up ~25% of backlog; commercial pipeline ~$24 billion.
• Orders: $1.32 billion orders (+17.3% vs Q1 2024) included Woodside Louisiana LNG Phase 2; strong activity in space exploration, HLNG vehicle tanks, nuclear, marine, etc.
• Financials: Sales $1 billion (+6.6% organic); gross margin 33.9% (4th consecutive above 33%); adjusted EBITDA $231.1 million (23.1% of sales, +80bps); adjusted diluted EPS $0.99; free cash flow -$80.1 million (improvement vs Q1 2024).
• Tariffs: Anticipated gross impact from tariffs ~$50 million; team taking mitigating actions.
• Data Center: ~$400 million opportunity in next 12-18 months based on dedicated resource and customer pipeline.

Segment Performance

• Cryo Tank Solutions (CTS): Q1 2025 orders $152.6 million, down 4.2% vs Q1 2024; sales $153 million, down 4.1% vs Q1 2024; adjusted operating income margin 12.7%, up 220 basis points.
• Heat Transfer Systems (HTS): Q1 2025 orders $220.7 million, down 7% vs Q1 2024; sales $267.3 million, up 5.4% vs Q1 2024; adjusted operating margin 25.5%, up 460 basis points.
• Specialty Products: Q1 2025 orders $487.7 million, up 24.6% vs Q1 2024; sales $276.1 million, up 16.7% vs Q1 2024; adjusted operating income margin 18.9%, up 560 basis points; gross margin 30.3%, first above 30% since 2022.
• Repair Service & Leasing (RSL): Q1 2025 orders $454.6 million, up 36.1% vs Q1 2024; sales up 1.3% vs Q1 2024; adjusted operating margin 32.4%, down 270 basis points; expected mid-40% gross margin.

Guidance

• Full year 2025 sales expected $4.65 billion to $4.85 billion; adjusted EBITDA expected $1.175 billion to $1.225 billion, with second half higher than first half.
• Target net leverage ratio 2 to 2.5 expected to be achieved in 2025.

Risks

• Uncertainty in global tariffs and general economic conditions.
• Potential softness in industrial gas, hydrogen in the Americas.
• Concerns over cancellations of projects in backlog.

Question and Answer

• Q: Exposure to China, fabrication, shifting fabrication? A: Manufacture cryo tanks, industrial gas, power gen in China; some exemptions on tariffs reduced exposure by ~40%.
• Q: Tariff impact, offsetting, EBITDA guide? A: Mitigating actions taken; backlog-driven business and aftermarket help maintain EBITDA guide.
• Q: Macro risks, backlog coverage? A: Diverse end markets; watch industrial gas and hydrogen in Americas; backlog provides confidence.
• Q: HTS chunky orders? A: Bullish end markets; strong pipeline of $20 million to $140 million orders.
• Q: Aftermarket risks? A: Consistent performance historically; backlog provides confidence, but economic uncertainty could affect retrofits.
• Q: Tariffs, price increases, margin? A: Price increase in April; mitigating actions to manage impact on margin.
• Q: Nuclear, water treatment? A: Nuclear in retrofitting, SMR, nuclear/helium; water treatment on sdox, oxidation, etc.