On March 17, 2023 we completed the Howden Acquisition pursuant to the previously disclosed Equity Purchase Agreement dated as of November 9, 2022. The acquisition purchase price was $4,404.9. We financed the purchase price for the Howden Acquisition with proceeds from borrowings under our Amended SSRCF, Term Loan, common and preferred stock issuance and a private offering of Secured Notes and Unsecured Notes. See Note 9, “Debt and Credit Arrangements,” for more information.

Howden is a leading global provider of mission critical air and gas handling products providing service and support to customers around the world in highly diversified end markets and geographies. The combination of Chart and Howden is complementary and furthers our global leadership position in highly engineered process technologies and products serving the Nexus of Clean™ – clean power, clean water, clean food and clean industrials.

We preliminarily allocated the acquisition consideration to assets acquired and liabilities assumed based on their preliminary estimated fair values as of the acquisition date. The preliminary estimated fair value of the acquired tangible and identifiable intangible assets were determined based on inputs that are unobservable and significant to the overall fair value measurement. It is also based on estimates and assumptions made by management at the time of the acquisition. As such, this was classified as Level 3 fair value hierarchy measurements and disclosures.

The excess of the purchase price over the preliminary estimated fair values is assigned to goodwill. The preliminary estimated goodwill was established due to expected cost synergies, anticipated growth of new customers, and expansion of equipment portfolio and process technology offerings. The final assignment of goodwill to our reporting units has not yet been completed as of the date of these condensed consolidated financial statements. Goodwill recorded for the Howden Acquisition is not expected to be deductible for tax purposes.

The Howden purchase price allocation below is preliminary, pending completion of the fair value analyses of acquired assets and liabilities as well as certain other analyses. Given the acquisition closed late in the first quarter of 2023, we expect adjustments in the purchase price allocation may be significant. As additional information becomes available, we will further revise the preliminary acquisition consideration allocation during the remainder of the measurement period, which shall not exceed twelve months from the closing of the Howden Acquisition. Those areas that are subject to change include the following:

•gathering sufficient information to estimate the fair value of acquired intangible assets, including assessing projections and other assumptions used in our valuation models, and determining whether the intangible assets identified below represent a complete listing of intangible assets, and


Net assets acquired:
Cash and cash equivalents	$	62.5
Restricted cash	2.6
Accounts receivable	461.2
Inventories	248.8
Unbilled contract revenue	194.7
Prepaid expenses	58.5
Other current assets	112.1
Property, plant and equipment	287.6
Identifiable intangible assets	2,591.0
Equity method investments	10.1
Other assets	168.1
Accounts payable	(383.7)
Customer advances and billings in excess of contract revenue	(268.1)
Accrued salaries, wages and benefits	(104.2)
Accrued income taxes	(51.4)
Current portion of warranty reserve	(28.5)
Current portion of long-term debt (1)	(1.6)
Other current liabilities	(62.5)
Long-term deferred tax liabilities	(729.4)
Operating lease liabilities	(54.6)
Finance lease liabilities	(8.1)
Accrued pension liabilities	(6.4)
Other long-term liabilities	(5.6)
Total identifiable net assets assumed	2,493.1
Noncontrolling interest (2)	(26.5)
Goodwill	1,938.3
Net assets acquired	$	4,404.9

Assets acquired net of cash, cash equivalents and restricted cash	$	4,339.8


	Weighted-average Estimated Useful Life	Preliminary Estimated Asset Fair Value
Finite-lived intangible assets acquired:
Customer relationships	10.0 years	$	1,315.0
Backlog	3.0 years	359.0
Technology and software	12.0 years	319.0
Total finite-lived intangible assets acquired	9.1 years	1,993.0
Indefinite-lived intangible assets acquired:
Trade names		598.0
Total intangible assets acquired		$	2,591.0

Chart’s condensed consolidated financial statements include Howden’s sales and net income of $109.7 and $6.0, respectively, from date the of acquisition through March 31, 2023. We incurred $4.9 and $25.4 in transaction related costs during the fourth quarter of 2022 and the first quarter of 2023, respectively, related to the Howden Acquisition which were recorded in selling, general and administrative expenses on the condensed consolidated statements of operations and comprehensive (loss) income. The transaction related costs were incurred by Chart as Howden did not incur any transaction related costs after close of the Howden Acquisition and these costs are not included in Howden’s net income for our two weeks of ownership. No interest expense is allocated to Howden’s net income for our two weeks of ownership.

The following unaudited pro forma combined financial information for the three months ended March 31, 2023 and 2022 gives effect to the Howden Acquisition as if it occurred on January 1, 2022. The unaudited pro forma information is not necessarily indicative of the results of operations that actually would have occurred under the ownership and management of the Company. In addition, the unaudited pro forma information is not intended to be a projection of future results and does not reflect any operating efficiencies or cost savings that might be achievable.

•the effect of increased interest expense related to the repayment of the Howden term loans, senior notes and revolving credit facility net of the additional borrowing on the Chart senior secured revolving credit facility and senior secured and unsecured notes,

On May 31, 2022, we acquired 100% of the equity interests of Fronti for approximately $20.6 in cash (subject to certain customary adjustments) or $20.4 net of $0.2 cash acquired. Fronti is a specialist in engineering, machining and welding for the cryogenic and gas industries, and also supplies new build pressure vessels and cold boxes, and performs repairs with certification to American Society of Mechanical Engineers (ASME) code. The preliminary estimated fair value of the total net assets acquired include goodwill, identifiable intangible assets and other net assets at the date of acquisition in the amounts of $14.4, $5.3 and $0.9, respectively (as previously reported $14.3, $5.3 and $1.0, respectively).

On May 16, 2022, we acquired 100% of the equity interests of CSC Cryogenic Service Center AB (“CSC”) for approximately $3.8 in cash (subject to certain customary adjustments). CSC brings a strong service footprint in the Nordic region with many overlapping customers to Chart, allowing us to broaden our service and repair presence geographically.

The purchase price allocations of Howden, Fronti Fabrications and CSC Cryogenic Service Center (the “acquisitions”) are preliminary and are based on provisional fair values and subject to revision as we finalize third-party valuations and other analyses. Final determination of the fair values may result in further adjustments to the value of net assets acquired.

As defined in Note 2, “Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, 2022, we preliminarily allocated the acquisition consideration to tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary estimated fair values as of the acquisition date. The preliminary fair value of the acquired tangible and identifiable intangible assets was determined based on inputs that are unobservable and significant to the overall fair value measurement. The preliminary fair value is based on estimates and assumptions made by management at the time of the acquisition. As such, the acquisitions are classified as Level 3 fair value hierarchy measurements and disclosures.

The fair value of contingent consideration was $16.9 for our Sustainable Energy Solutions, Inc. business (“SES”) and $3.2 for our BlueInGreen, LLC business (“BIG”) at the date of acquisitions and was valued according to a discounted cash flow approach, which included assumptions regarding the probability of achieving certain targets and a discount rate applied to the potential payments. Potential payments are measured between the period commencing April 1, 2023 and ending on December 31, 2028 based on the attainment of certain earnings targets. The potential payments related to both SES and BIG contingent consideration on a combined basis is between $0.0 and $31.0. The estimated fair value of contingent consideration related to SES decreased by $7.4 and $0.5 for the three months ended March 31, 2023 and 2022, respectively. The decrease in estimated fair value of contingent consideration related to SES during the current period was due to the lower probability of achieving technical milestones within the agreed upon time. The fair value of contingent consideration related to BIG did not change and decreased by $0.3 for the three months ended March 31, 2023 and 2022, respectively. The earn-out period for BIG ended December 31, 2022, and the payment is expected to be paid out in May 2023.

In connection with the Earthly Labs acquisition, Chart will pay to the sellers a royalty on sales of carbon capture units for residential use launched for sale to the public by Chart in an amount equal to 4% of such sales. Potential royalty payments shall be paid to the sellers during the three year period following Chart’s launch of this product. This product has not yet been developed and as such, the fair value of the contingent consideration liability that arises from this arrangement was insignificant as of March 31, 2023 and December 31, 2022.

Valuations are performed using Level 3 inputs as defined in Note 2, “Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, 2022 and are evaluated on a quarterly basis based on forecasted sales and earnings targets. Contingent consideration liabilities are classified as other current liabilities and other long-term liabilities in the condensed consolidated balance sheets. Changes in fair value of contingent consideration, including accretion, are recorded as selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive (loss) income.