Delaware | 001-11442 | 34-1712937 | ||
(State of other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
3055 Torrington Drive, Ball Ground, Georgia | 30107 | |||
(Address of principal executive offices) | (ZIP Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Chart Industries, Inc. | |
Date: April 18, 2019 | |
By: /s/ Jillian C. Evanko Jillian C. Evanko President and Chief Executive Officer | |
• | Booked $135 million equipment order for Venture Global’s Calcasieu Pass LNG export terminal project and a $20 million order for Golar’s floating LNG Gimi project in Q1 2019. Won a $30 million order for another big LNG project this week (Q2 2019). |
• | Finalized long term agreements with two key LNG fueling system customers for over the road trucking applications, and a Memorandum of Understanding (“MOU”) with the Indian Oil Corporation Ltd. (“IOCL”) to develop LNG infrastructure for transport, storage and liquefaction in India. |
• | First quarter 2019 orders of $461.2 million increased 60% over the first quarter of 2018 (51% organically) reflecting an expected ramp in big LNG order activity, and continued strength in all three segments’ base businesses. |
• | Took restructuring actions that will result in anticipated additional annual operating income of $6.5 million, furthering our year to date margin expansion execution beyond pricing and sourcing. |
• | Reported EPS of $0.03 versus $0.13 in the first quarter of 2018. Adjusted EPS of $0.39, a 117% increase over the first quarter of 2018 adjusted EPS of $0.18. |
• | Announced Chart Investor Day on November 14, 2019 in La Crosse, Wisconsin. |
• | Increased 2019 revenue and adjusted EPS guidance. 2019 full year revenue guidance is $1.29 billion to $1.34 billion and adjusted EPS guidance is $2.70 to $3.05 (inclusive of 2019 portion of Calcasieu Pass and Golar Gimi projects). |
• | Increased 2019 big LNG order pipeline expectations to $600 million to $800 million from $400 million to $500 million. |
Jillian Evanko |
Chief Executive Officer |
630-418-9403 |
jillian.evanko@chartindustries.com |
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | December 31, 2018 | |||||||||
Sales (1) | $ | 289.3 | $ | 244.1 | $ | 290.1 | |||||
Cost of sales | 222.2 | 177.2 | 216.2 | ||||||||
Gross profit | 67.1 | 66.9 | 73.9 | ||||||||
Selling, general, and administrative expenses | 55.3 | 46.6 | 41.4 | ||||||||
Amortization expense | 7.2 | 5.5 | 6.2 | ||||||||
Operating expenses | 62.5 | 52.1 | 47.6 | ||||||||
Operating income (1) (2) (3) (4) | 4.6 | 14.8 | 26.3 | ||||||||
Other expenses: | |||||||||||
Interest expense, net | 5.3 | 6.4 | 3.5 | ||||||||
Financing costs amortization | 0.4 | 0.3 | 0.3 | ||||||||
Foreign currency (gain) loss and other | (0.1 | ) | 1.8 | 0.6 | |||||||
Other expenses, net | 5.6 | 8.5 | 4.4 | ||||||||
(Loss) income from continuing operations before income taxes | (1.0 | ) | 6.3 | 21.9 | |||||||
Income tax (benefit) expense | (2.0 | ) | 1.6 | 3.7 | |||||||
Net income from continuing operations | 1.0 | 4.7 | 18.2 | ||||||||
Income from discontinued operations, net of tax | — | 1.6 | 29.7 | ||||||||
Net income | 1.0 | 6.3 | 47.9 | ||||||||
Less: Income attributable to noncontrolling interests of continuing operations, net of taxes | 0.1 | 0.5 | 0.2 | ||||||||
Net income attributable to Chart Industries, Inc. | $ | 0.9 | $ | 5.8 | $ | 47.7 | |||||
Income from continuing operations | $ | 0.9 | $ | 4.2 | $ | 18.0 | |||||
Income from discontinued operations, net of tax | — | 1.6 | 29.7 | ||||||||
Net income attributable to Chart Industries, Inc. | $ | 0.9 | $ | 5.8 | $ | 47.7 | |||||
Basic earnings per common share attributable to Chart Industries, Inc. | |||||||||||
Income from continuing operations | $ | 0.03 | $ | 0.14 | $ | 0.58 | |||||
Income from discontinued operations | — | 0.05 | 0.94 | ||||||||
Net income attributable to Chart Industries, Inc. | $ | 0.03 | $ | 0.19 | $ | 1.52 | |||||
Diluted earnings per common share attributable to Chart Industries, Inc. | |||||||||||
Income from continuing operations | $ | 0.03 | $ | 0.13 | $ | 0.56 | |||||
Income from discontinued operations | — | 0.05 | 0.91 | ||||||||
Net income attributable to Chart Industries, Inc. | $ | 0.03 | $ | 0.18 | $ | 1.47 | |||||
Weighted-average number of common shares outstanding: | |||||||||||
Basic | 31.57 | 30.91 | 31.29 | ||||||||
Diluted (5) | 33.81 | 31.66 | 32.39 |
(1) | Includes sales and operating income for VRV, included in the E&C and D&S East segment results since the acquisition date, November 15, 2018 as follows: |
• | Sales were $22.1 (E&C: $8.6, D&S East: $13.5) for the three months ended March 31, 2019 and $14.1 (E&C: $3.8, D&S East: $10.3) for the three months ended December 31, 2018. |
• | Operating (loss) income was $(8.1) (E&C: $(2.8), D&S East: $(5.3)) for the three months ended March 31, 2019 and $(2.0) (E&C: $(2.2), D&S East: $0.2) for the three months ended December 31, 2018. |
(2) | Includes depreciation expense of: |
• | $8.8, $7.2, and $7.1 for the three months ended March 31, 2019, March 31, 2018, and December 31, 2018, respectively. |
(3) | Includes restructuring costs of: |
• | $7.4, $0.9, and $0.9 for the three months ended March 31, 2019, March 31, 2018, and December 31, 2018, respectively. Restructuring costs incurred during the first quarter of 2019 related to the consolidation of certain of our facilities within our E&C segment, streamlining commercial activities within our Lifecycle business, geographic realignment of manufacturing capacity in D&S East, as well as departmental restructuring, including headcount reductions. |
(4) | Includes transaction-related costs of: |
• | $0.9 and $1.3 for the three months ended March 31, 2019 and 2018, respectively. |
(5) | Includes an additional 1.69 and 0.48 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the three months ended March 31, 2019 and December 31, 2018, respectively. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S. generally accepted accounting principles (“GAAP”). If the hedge could have been considered, it would have reduced the additional shares by 1.20 and 0.48 for the three months ended March 31, 2019 and December 31, 2018, respectively. |
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | December 31, 2018 | |||||||||
Net Cash (Used In) Provided By Operating Activities | $ | (33.2 | ) | $ | 20.0 | $ | 55.4 | ||||
Investing Activities | |||||||||||
Acquisition of businesses, net of cash acquired | (2.8 | ) | (12.5 | ) | (213.3 | ) | |||||
Capital expenditures | (5.9 | ) | (6.2 | ) | (9.2 | ) | |||||
Government grants | (0.2 | ) | 0.1 | — | |||||||
Net Cash Used In Investing Activities | (8.9 | ) | (18.6 | ) | (222.5 | ) | |||||
Financing Activities | |||||||||||
Borrowings on revolving credit facilities | 18.8 | 38.0 | 223.4 | ||||||||
Repayments on revolving credit facilities | (27.0 | ) | (26.8 | ) | (193.5 | ) | |||||
Repayments on term loan | — | — | (2.9 | ) | |||||||
Payments for debt issuance costs | — | (0.3 | ) | (1.2 | ) | ||||||
Proceeds from exercise of stock options | 8.3 | 1.3 | 5.4 | ||||||||
Common stock repurchases | (2.7 | ) | (2.2 | ) | (0.3 | ) | |||||
Net Cash (Used In) Provided By Financing Activities | (2.6 | ) | 10.0 | 30.9 | |||||||
DISCONTINUED OPERATIONS | |||||||||||
Cash Provided By (Used In) Operating Activities | — | 3.0 | (31.7 | ) | |||||||
Cash (Used In) Provided By Investing Activities (1) | — | (0.4 | ) | 133.5 | |||||||
Cash Provided By Discontinued Operations | — | 2.6 | 101.8 | ||||||||
Effect of exchange rate changes on cash | (1.5 | ) | 3.9 | (4.7 | ) | ||||||
Net (decrease) increase in cash, cash equivalents, restricted cash, and restricted cash equivalents | (46.2 | ) | 17.9 | (39.1 | ) | ||||||
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period (2) | 119.1 | 131.4 | 158.2 | ||||||||
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD (1) | $ | 72.9 | $ | 149.3 | $ | 119.1 |
(1) | Includes proceeds from sale of CAIRE of $133.5 for the three months ended December 31, 2018 |
(2) | Includes restricted cash and restricted cash equivalents as follows: |
• | $1.0 in other assets at March 31, 2019, |
• | $6.5 ($5.5 in other current assets and $1.0 in other assets) at March 31, 2018, and |
• | $8.7 ($7.7 in other current assets and $1.0 in other assets) at December 31, 2018. |
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 71.9 | $ | 118.1 | |||
Accounts receivable, net | 205.2 | 194.8 | |||||
Inventories, net | 234.7 | 233.1 | |||||
Other current assets | 133.4 | 115.7 | |||||
Property, plant, and equipment, net | 384.6 | 361.1 | |||||
Goodwill | 537.1 | 520.7 | |||||
Identifiable intangible assets, net | 322.5 | 330.4 | |||||
Other assets | 23.9 | 23.8 | |||||
TOTAL ASSETS | $ | 1,913.3 | $ | 1,897.7 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities (1) | $ | 579.2 | $ | 366.6 | |||
Long-term debt | 318.0 | 533.2 | |||||
Other long-term liabilities | 122.6 | 108.9 | |||||
Equity | 893.5 | 889.0 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 1,913.3 | $ | 1,897.7 |
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | December 31, 2018 | |||||||||
Sales | |||||||||||
Energy & Chemicals | $ | 105.6 | $ | 89.9 | $ | 101.7 | |||||
D&S West | 118.0 | 100.6 | 118.3 | ||||||||
D&S East | 68.7 | 55.1 | 72.0 | ||||||||
Intersegment eliminations | (3.0 | ) | (1.5 | ) | (1.9 | ) | |||||
Consolidated (1) | $ | 289.3 | $ | 244.1 | $ | 290.1 | |||||
Gross Profit | |||||||||||
Energy & Chemicals | $ | 19.3 | $ | 19.4 | $ | 21.6 | |||||
D&S West | 40.0 | 36.1 | 37.8 | ||||||||
D&S East | 8.9 | 11.8 | 15.3 | ||||||||
Intersegment eliminations | (1.1 | ) | (0.4 | ) | (0.8 | ) | |||||
Consolidated | $ | 67.1 | $ | 66.9 | $ | 73.9 | |||||
Gross Profit Margin | |||||||||||
Energy & Chemicals | 18.3 | % | 21.6 | % | 21.2 | % | |||||
D&S West | 33.9 | % | 35.9 | % | 32.0 | % | |||||
D&S East | 13.0 | % | 21.4 | % | 21.3 | % | |||||
Consolidated | 23.2 | % | 27.4 | % | 25.5 | % | |||||
Operating Income (Loss) | |||||||||||
Energy & Chemicals | $ | (1.3 | ) | $ | 2.8 | $ | 4.7 | ||||
D&S West | 25.6 | 22.2 | 23.5 | ||||||||
D&S East | (2.3 | ) | 3.7 | 5.8 | |||||||
Corporate | (16.3 | ) | (13.5 | ) | (6.9 | ) | |||||
Intersegment eliminations | (1.1 | ) | (0.4 | ) | (0.8 | ) | |||||
Consolidated (1) (2) (3) (4) | $ | 4.6 | $ | 14.8 | $ | 26.3 | |||||
Operating Margin (Loss) | |||||||||||
Energy & Chemicals | (1.2 | )% | 3.1 | % | 4.6 | % | |||||
D&S West | 21.7 | % | 22.1 | % | 19.9 | % | |||||
D&S East | (3.3 | )% | 6.7 | % | 8.1 | % | |||||
Consolidated | 1.6 | % | 6.1 | % | 9.1 | % |
(1) | Includes sales and operating income for VRV, included in the E&C and D&S East segment results since the acquisition date, November 15, 2018 as follows: |
• | Sales were $22.1 (E&C: $8.6, D&S East: $13.5) and $14.1 (E&C: $3.8, D&S East: $10.3) for the three months ended March 31, 2019 and for the three months ended December 31, 2018, respectively. |
• | Operating (loss) income was $(1.1) (E&C: $0.1, D&S East: $(1.2)) and $1.0 (E&C: $(1.0), D&S East: $2.0) for the three months ended March 31, 2019 and for the three months ended December 31, 2018, respectively. |
(2) | Restructuring costs for the three months ended: |
• | March 31, 2019 were $7.4 ($4.5 – E&C, $0.3 – D&S West, $2.4 – D&S East, and $0.2 – Corporate). |
• | March 31, 2018 were $0.9 ($0.2 – E&C, $0.2 – D&S East, and $0.5 – Corporate). |
• | December 31, 2018 were $0.9 ($0.2 – E&C and $0.8 – D&S East and a credit of $0.1 – Corporate). |
(3) | Includes transaction-related costs of: |
• | $0.9 and $1.3 for the three months ended March 31, 2019 and 2018, respectively. |
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | December 31, 2018 | |||||||||
Orders | |||||||||||
Energy & Chemicals (1) (2) | $ | 263.9 | $ | 93.7 | $ | 86.9 | |||||
D&S West | 114.1 | 130.6 | 116.8 | ||||||||
D&S East (3) | 83.2 | 63.9 | 69.6 | ||||||||
Consolidated | $ | 461.2 | $ | 288.2 | $ | 273.3 |
As of | |||||||||||
March 31, 2019 | March 31, 2018 | December 31, 2018 | |||||||||
Backlog | |||||||||||
Energy & Chemicals (1) (2) (4) | $ | 410.5 | $ | 213.3 | $ | 253.0 | |||||
D&S West | 127.1 | 137.3 | 129.8 | ||||||||
D&S East (3) | 196.2 | 126.3 | 185.4 | ||||||||
Consolidated | $ | 733.8 | $ | 476.9 | $ | 568.2 |
(1) | E&C orders and backlog include a $135 million order for the cold box and brazed aluminum heat exchanger equipment content on Venture Global’s Calcasieu Pass liquefied natural gas (LNG) export terminal project. |
(2) | E&C orders include $12.8 and $2.5 in orders related to VRV for the three months ended March 31, 2019 and December 31, 2018, respectively. E&C backlog as of March 31, 2019 and December 31, 2018 includes $42.4 and $39.3 related to VRV, respectively. |
(3) | D&S East orders include $12.7 and $8.7 in orders related to VRV for the three months ended March 31, 2019 and December 31, 2018, respectively. D&S East backlog as of March 31, 2019 and December 31, 2018 includes $38.4 and $42.3 related to VRV, respectively. |
(4) | Included in the E&C backlog as of March 31, 2019, March 31, 2018, and December 31, 2018 is approximately $40 million related to the previously announced Magnolia LNG order. |
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | December 31, 2018 | |||||||||
Earnings per diluted share as reported (U.S. GAAP) – Continuing Operations | $ | 0.03 | $ | 0.13 | $ | 0.56 | |||||
Restructuring and transaction-related costs (1) | 0.23 | 0.05 | 0.06 | ||||||||
VRV integration and inventory costs (2) | 0.09 | — | 0.04 | ||||||||
Other (3) | 0.03 | — | (0.05 | ) | |||||||
Dilution impact of convertible notes (4) | 0.01 | — | — | ||||||||
Adjusted earnings per diluted share (non-GAAP) – Continuing Operations | $ | 0.39 | $ | 0.18 | $ | 0.61 |
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | December 31, 2018 | |||||||||
Earnings per diluted share as reported (U.S. GAAP) – Discontinued Operations | $ | — | $ | 0.05 | $ | 0.91 | |||||
Gain on sale of CAIRE business (5) | — | — | (1.06 | ) | |||||||
Restructuring costs (6) | — | — | 0.11 | ||||||||
Dilution impact of convertible notes (7) | — | — | 0.02 | ||||||||
Adjusted earnings per diluted share as reported (U.S. GAAP) –Discontinued Operations | $ | — | $ | 0.05 | $ | (0.02 | ) |
Three Months Ended | |||||||||||
March 31, 2019 | March 31, 2018 | December 31, 2018 | |||||||||
Earnings per diluted share as reported (U.S. GAAP) – Consolidated | $ | 0.03 | $ | 0.18 | $ | 1.47 | |||||
Restructuring and transaction-related costs (1) | 0.23 | 0.05 | 0.17 | ||||||||
VRV integration and inventory costs (2) | 0.09 | — | 0.04 | ||||||||
Other (3) | 0.03 | — | (0.05 | ) | |||||||
Gain on sale of CAIRE business (5) | — | — | (1.06 | ) | |||||||
Dilution impact of convertible notes (4) | 0.01 | — | 0.02 | ||||||||
Adjusted earnings per diluted share (non-GAAP) – Consolidated | $ | 0.39 | $ | 0.23 | $ | 0.59 |
(1) | During the first quarter of 2019, we recorded $7.4 restructuring costs primarily related to the consolidation of certain of our facilities within our E&C segment, streamlining commercial activities within our Lifecycle business, geographic realignment of manufacturing capacity in D&S East, as well as departmental restructuring, including headcount reductions. We also incurred $1.5 in transaction-related and other one-time costs during the first quarter of 2019. |
(2) | Includes $1.7 and $1.6 in expense recognized in cost of sales related to inventory step-up for the first quarter of 2019 and the fourth quarter of 2018, respectively. We also incurred $2.2 related to VRV integration activities in the first quarter of 2019. |
(3) | Includes an expense of $0.2 recorded to the cost of sales related to the estimated costs of the aluminum cryobiological tank recall for the first quarter of 2019. Includes a $0.8 expense and a $1.8 tax benefit related to the effect of the Tax Cuts and Jobs Act for the first quarter of 2019 and the fourth quarter of 2018, respectively. |
(4) | Includes an additional 1.69 and 0.48 shares related to the convertible notes due 2024 and associated warrants in our diluted earnings per share calculation for the three months ended March 31, 2019 and December 31, 2018, respectively. The associated hedge, which helps offset this dilution, cannot be taken into account under U.S. generally accepted accounting principles |
(5) | Includes gain on sale of the CAIRE business of $34.3, net of taxes of $2.6, for the fourth quarter of 2018. |